I have a cartoon in my office of two men stranded on a desert island looking very ragged and forlorn. One turns to the other and says “do you think they’ll find us”? The other says “don’t worry, I owe Canada Revenue”. No matter how many times I read it, the message still rings true. You can only hide for so long.

Although it’s never too late to clean it up, it’s best to stay on top of filing the returns from year to year to avoid unnecessary penalties, interest and judgments by the Canada Revenue Agency. It is imperative to recognize throughout the year if insufficient income tax is being deducted at source. Many people think their tax situation remains static from year to year even though their personal situation may change. Recognizing how changes impact taxes is key to avoiding a future tax problem. Dual sources of income, such as a full time job and an additional part time job, may bump you into another tax bracket causing an income tax debt at years end. Investments surrendered during the year might be considered taxable income and as often they have only a minimal amount of income tax withheld at source. Self-employed persons such as sub-trades are responsible for their own income tax installments which all too often get missed due to fluctuating income.

Avoidance can only continue for so long. Eventually the ostrich must lift his head out of the sand. Reduce stress and view filing taxes a matter of “spring” financial cleaning. Gather all tax documents and organize them into two piles: an income pile and a tax deduction pile. Schedule time in your busy life to fill out the necessary tax forms and either paper file or net file. If you are feeling overwhelmed with the task at hand, enlist the help of others, such as a tax preparer or accountant. The end result will be a de-cluttered financial closet. Ignorance may be bliss but knowing where you stand with the tax man is always better than not knowing.

Creditors make funds readily available because they understand this. Credit allows the ability to get what we want now and affords us time to accumulate money to pay for those purchases. Creditors even award us for spending in the form of points and discounts. Apparently, we need credit to improve our credit score to obtain more credit. So what’s the problem?

While there are many successful and financially responsible 30-somethings that have clearly defined financial goals and know how to properly manage their income- to-debt ratio there are unfortunately, an equal amount of consumers who live well beyond their means. Many find themselves frustrated that they never seem to “get ahead” and yet they continue to consume and their debts keep mounting.

The idea of “ keeping up with the Joneses” has never gone out of style. It’s as popular now as it was in the 50’s and perhaps more so since credit provides us the opportunity to obtain what we desire now instead of saving for the future. If you thought by 30ish you would no longer be coerced by peer pressure, think again. Simple weddings have gone by the wayside thanks to reality bridal shows. Chances are if your friends lead a lifestyle filled with the latest tech toys, big screen TV’s, designer wardrobes and the latest vehicle you will be influenced to do same.

By the age of 30, setting and planning financial goals should be a priority. So much of life is planned and yet our financial roadmap often gets diverted as we fixate on our short term wants. Without a plan, we roam through our days without an agenda and are surprised when time passes as quickly as it does and what we hoped to achieved has not yet been accomplished.

At this age, spending should be much more disciplined and savings made automatic. Paying down debt should become a top priority especially on high interest credit cards. It’s ok to say” no”. It may be time to accept personal responsibility for your spending choices and lose the “I deserve” attitude. Start looking for ways to tighten your belt and stop feeling like you must spend every “found” cent.

Like planning for a trip, we need to plan the things we want in life. Pack the right items, discard what we can do without and start looking forward to the adventure. Enjoy life but remember 40 is just around the corner.

All of us have limited finances.  Some just have a higher limit. While an extra golf round this week may tip the scales for some, others may be weighing if the added price tag of a new Landrover is worth it for them. We must constantly remind ourselves of our own limited capacity and accept the reality of our finances no matter what income level.   

Saying no is actually liberating. It allows us to be in control instead of being controlled. It is not a sign of weakness or failure but rather frees us of contrived notions that we can afford to live well beyond our means. Saying no allows us to live within our means and stops us from treating credit as income to support our desires.

Try it sometime and see. Next invitation you don’t think you should accept due to cost, say no. Or better yet say, “I can’t afford it”.  There.  Done. Elephants in the room. I would bet the first time you say it there will be hesitation and perhaps you will even feel embarrassed. But it will pass and soon you’ll be singing the praises of “no”. Your friends will catch on and may even join in on this trendy new word. Sure there may be a little less socializing, but saying “no” also means no unwanted accumulating debt.

Be a Bookworm

There are many free activities at the Halifax Public Libraries for all ages. For example, why not check out the Lego Block party, Mad Science presentation, puppet shows or even do some arts & crafts. www.halifaxpubliclibraries.ca/programs

Create

The Art Gallery of Nova Scotia have a few events for the price of admission or free to members. Why not go the “March Break Spy Challenge” or take a guided tour. www.artgalleryofnovascotia.ca

Clay Café is another popular destination any day of the week. There are many pieces to paint which are very reasonable and you could go back each day for the entire week to work on the piece.
www.claycafe.ca

Discover & Learn

The Discovery Center and the Museum of National History both have some amazing exhibits. Admission is not free but very reasonable. Check out Little Ray’s Reptile Zoo at the Museum and while you are there don’t forget to give Halifax’s favorite tortoise a big hello.
www.discoverycentre.ns.ca

Surf the Waves

If you’re not interested in putting on a wet suit and heading to Lawrencetown to do some real surfing, try the Spryfield Lions Wave Pool. A family pass is cheap and there’s no chance of getting hit in the head with a surf board.

www.halifax.ca/rec/centrescaptainspry.html

Just like adults, kids need down time from their job, school. Consider this a time to reconnect with them and enjoy even the small stuff.

Of all the reasons for financial difficulty, the most common one I hear in my office is “a series of unfortunate events”. This transit strike is a perfect example. Six weeks without income causes many to start playing the “robbing Peter to pay Paul” game. Mortgages still need to get paid. Groceries still need to be bought. Creditors rarely wait for payments. The situation only gets more desperate if the transit worker is the sole provider for the household.

The financial burden is affecting more than just 750 striking workers. Let’s not forget about the 55,000 commuters (who made some 96,000 trips a day with Metro Transit) who have had to find alternate means of transportation including pitching in for car pools and even paying for taxis. We have all heard stories of students and part-time workers who have had to leave their jobs as they had no means to get to work or the cost to get there would have exceeded their pay cheque. Their decisions were made out of necessity not choice. Without proper planning for such an occasion, a period of reduced income or increased monthly expenses can very easily cause over-extended credit.

Businesses are also affected. Many professional office appointments are being rescheduled until after the strike as clients have no means of transportation. Empty appointments mean lost revenue. Inability to find staff to work shifts can mean reduced store hours affecting a business’s bottom line.

The longer the issues sit on the table to be resolved, the greater financial pressure many will encounter.

Preparing you income tax return is a chore that few enjoy. For many, they prefer to farm out the requirement to a qualified tax preparer rather than take the task on themselves.  In either case, there are few key points that every taxpayer should be made aware.

The 2011 income tax filing deadline is April 30, 2012. Self-employed persons have until June 15, 2012 to file their return, however if there is a balance owing, interest starts accumulating after April 30, 2012 if the balance is not paid.

While the end of April may still seem quite far away, the deadline for RRSP contributions is less than a week away (February 29, 2012). This is a critical deadline if you intend to contribute to savings in the form of an RRSP for the tax year of 2011 while reducing your taxable income for 2011. I suggest marking this date on the calendar and not leaving a conversation with the bank or a financial advisor until the last moment.  Often contributions to RRSP’s will reduce taxable income to allow a refund to be generated, which can then be reinvested or at the very least, avoid a tax liability from being incurred.

I’m often surprised by the number of taxpayers who seek my financial advice and do not believe they are required to file an income tax return.  If you must pay income tax or have earnings on which CPP contributions must be paid, you are required to file a tax return. Furthermore, if you disposed of investments, capital property or if the Canada Revenue Agency (CRA) requests that you file a return you must do so.  Many individuals may also choose to file an income tax return as a way to take advantage of such credits as GST rebates or the Child Tax Benefit Credit (CTBC).

You don’t need to be an accountant to annually familiarize yourself with changes to the Income Tax Act.  We sometimes forget that circumstances such as a change of martial status, relocation or care giving an ageing parent can affect the way we file our return.  The Canada Revenue Agency (CRA) has a free on-line tutorial explaining the basics of taxation, the tax filing process in Canada, roles and responsibilities and how to complete a basic tax return.

www.cra-arc.gc.ca

Go out for dessert and a special coffee or make a candlelight dinner at home featuring their favorite meal.

Demonstrate your love

Women are suckers for public demonstrations of love. Show up at her work with any gift and give it to her in front of her friend/co workers and I guarantee she’ll melt after the embarrassment fades.

Make it personal

A handwritten love letter is always appreciated or offer to give a one hour massage to your sweetie. Grab your guitar and strum a little love song to the one you love.

Made with Love

Bake some heart shaped cookies or make her breakfast in bed.

Get Active

Go skating on the Oval and hold hands while you skate. Make a date to meet at the Art Gallery and spend a few moments staring at more beauty besides your loved one.

A Rose by Any Other Name

Roses are not the only option for Valentines Day. Buy another less expensive variety. I’m always amazed at how lovely the flowers are at places like Costco. Most importantly, deliver them yourself. The additional cost of delivery adds up.

Candy is Dandy

Godiva out of your price range? Hit the bulk barn or Freak Lunch Box and create your own special bag of goodies.

E-z Choices

If your darling lives in another city, send a free e-card to express your devotion.

 And if all else fails, turn on any “Air Supply” song and suffer through it for one evening. Thank goodness it only happens once a year.

Cost of transit: Metro Transit adult pass: 70 per month=$840 annually

Cost of Owing a Vehicle:

Average car payment: $450 per month =$5,400 annually

Average MacPass cost: $1.40 per day x 5 days a week x52 weeks =$364 annually

Average Auto Insurance: $1,200 annually

Average Monthly Parking Downtown: $140 monthly =$1680 annually

Average Cost of Repairs: $1,200 annually

Average price of Gas: $90 week x52 weeks= $4,680 annually

Total Average Cost to maintain a vehicle annually: $14,524

Vehicle costs such as gas, insurance and bridge passes are continuously rising while wages remain relatively unchanged. The cost benefit of using public transit allows many consumers to redirect those proceeds to pay a mortgage on a home they could otherwise not afford or pay for a child’s university education or afford other lifestyle choices. For many Metro residents, however, it simply allows them to live within their means without incurring debt to supplement their income.

There are many of us who truly need a vehicle as condition of our employment. For those that do not, perhaps they should pause and consider if the vehicle is truly a need or simply another desire. And if a want, what would you do with the annual savings of $13,684 by taking the bus? Can we afford not to take advantage of the savings?

With recent studies reporting Canadians spending $1.50 of every dollar earned, the face of bankruptcy is also changing. Let’s call them the “working poor”. The face of bankruptcy today is your neighbour, your co-worker, your child’s teacher, the hospital nurse, even the bank employee. The list goes on and on. Debt affects everyone nowadays. We are quick to criticize people who seek bankruptcy protection, however, often the true causes of bankruptcy have nothing to do with over-spending or poor money management. Illness, marital breakdown, a series of unfortunate events, reduced household income as a result of the death of a spouse, cessation of child support, or even temporary job loss can cause a person who has been living just at their threshold to get behind the eight ball enough that they never recover.

Most individuals have already been to their banks requesting a consolidation of their debts and have been turned away for a multitude of reasons, such as debt-ratio being too high, seasonal income, no co-signers or poor credit score. Many consumers resort to high-interest payday loan companies to bridge the gap.

The federal Bankruptcy & Insolvency Act affords an honest but unfortunate insolvent individual protection from creditors. Granted, there are always a few bad apples that spoil the bunch, but very few people WANT to file for bankruptcy. It is usually out of necessity.

The fact that someone recognizes a debt problem and seeks assistance for their financial circumstances should not been seen as a sign of weakness but rather a sign of strength. It takes a much bigger person to admit to a debt problem rather than hide from it.

If you take my challenge, as so many of my transitioning debtors have done, I can promise you many things will happen.

You will notice patterns immerging. You buy a morning coffee on your way to work. You stop on the way home to pick up take out because you are tired. It’s easier to give the kids money for what they desire then argue about if they really need it.

You start to pay attention to your spending. Imagine someone stole $100 from your wallet. You would be upset and would want justice. Now imagine you take out $100 from an ATM on Saturday morning and head to the Farmers Market. Within one hour, poof, the money disappears but you have no sense of remorse or unjust feelings as it was your choice. Writing down purchases makes the spending real. We see it, we believe it. We acknowledge it and are either angered by our decision to spend or satisfied with our choice.

You begin to question needs vs wants. Life is expensive and most of what we desire in life is also expensive. Pausing for a moment to write down purchases makes us take the time to self-analyse and determine if the purchase really matters to us or can we let it go and still be happy.
You challenge yourself. After noticing that you spend daily, you play a game with yourself. You begin to see if you can go one day without spending anything or perhaps even two. You recognize your spending behaviour and try to modify it.

You value the dollars you earn. I love the slogan `you are richer than you think`. Saving for what really matters can happen even on a modest income if you pay attention and make even the simplest of daily choices.
I`ll let you in on a little secret about how to save money. SPEND LESS. It`s that simple.