31 Ways to Max Out Your TFSA (or IRA)

TFSA savingsWhy $5,500? 

$5,500.00. This is the amount that you can contribute to a TFSA or IRA this year. Let’s talk about how you can max it out, or if you don’t have a TFSA or IRA in your country, how you can max out your savings and investing power as well.

If you aren’t sure what a TFSA is, start here. If you do not have TFSAs in your country, scroll down just a little more.
(IRA information can be found here. Remember, I’m a Canadian gal, so IRAs are not my forte.)

TFSA 31 ways to save

TAX FREE SAVINGS ACCOUNTS

A Tax-Free Savings Account is an account that is designed to help you save money. The funds that are deposited into a TFSA account can be invested, and the earnings from the account are tax free. Since you do not get a tax deduction for contributions to a TFSA, the benefit is from the tax-free earnings, and the ability to withdraw from the TFSA at any time without penalty.

There are guidelines and rules as to how much you can contribute into a TFSA, and how much you can withdraw and re-contribute.

Here’s the example from the CRA:

“Since opening her TFSA in 2009, Jenny has contributed the maximum TFSA dollar limit in each year. By the end of 2016, she has accumulated a total of $46,500 in her TFSA account. In 2017 Jenny makes a $5,500 contribution, the TFSA dollar limit for 2017. Later that year, she withdraws $3,000 for a trip. Unfortunately, her plans change and she cannot go. Since Jenny already contributed the maximum to her TFSA earlier in the year, she has no TFSA contribution room left.

If Jenny wishes to re-contribute part or all of the $3,000 she withdrew, she will have to wait until the beginning of 2018 to do so. The $3,000 will be added to her TFSA contribution room at the beginning of 2018.

If she re-contributes any of the withdrawn amount before 2018, she will have an excess amount in her TFSA and will be charged a tax equal to 1% of the highest excess TFSA amount for each month that the excess remains in her account.”

TFSAs are not only for retirement savings, but are also great vehicles for saving for a house purchase, a trip, a new car, or anything else you are working towards. 

TFSA 31 ways to save

How to find $5,500 over the year:

Now that we are clear on how to use a TFSA, let’s focus on how to max it out. In 2018, the maximum contribution amount is $5,500.  This the goal to contribute.

The Simple Way:

There are 52 weeks in a year. $5,500 divided by 52 = $105.77/week. You could set up an automatic transfer for $105.77 weekly.
Are you paid bi-weekly? Your automatic withdrawals should be set at $211.54 to save $5,500.00 a year.

How to fill that account without using your weekly income:  

Bonus Pay

Let’s say you receive a bonus each year of $1,000.00 as part of your performance package. If you directly contribute that to your TFSA, your weekly savings would decrease to $86.54. That’s a lot more manageable, but you need to know yourself and make sure that bonus goes directly to your savings account: do not pass go, do not spend $200!

Raises

If you receive a raise at work (congratulations!), immediately calculate the difference between the previous pay amount and the new pay amount. Set up an automatic transfer to deduct that amount from your account and move it to the TFSA before you see it in your chequing account. Resist the urge to inflate your lifestyle – those few dollars will serve you better if saved for a future time.

Overtime

Did you stay to finish a project, or to complete paperwork? Maybe you signed up for a few hours here and there. Move that money immediately to your TFSA. More money for savings, and no change to your weekly pay. Win Win!

Expenses

Do you get reimbursed for gas for running errands at work? Bank it. Do you get tips? Bank it. Anything extra, bank it.

Tax Refunds

Tax refunds is the government’s way of returning the excess money it collected from you throughout the year. At the same time, it’s a great feeling if you have a few bucks (or many bucks!) coming your way. Since a tax refund is not part of your weekly budget, bank it. You will not miss it, and it will go a long way to filling up your TFSA.

Declutter for Profit

My method for decluttering includes four boxes. I have a KEEP box, a TOSS box/bag, a SELL box and a RELOCATE box.
Without going into a lot of detail:
Keep: things that I want to keep
Toss: things that are garbage, and things that have no value to someone else
Sell: things that are still in good condition and are unwanted. I start with a sell box, and anything not saleable is donated.
Relocate: things that belong in another room or part of another project that need to be dealt with at another time.
When your sell box is full, it’s time to decide the best way to sell these items. You could have a yard/garage sale, vendor sale, sell online with Craigslist, Kijiji or Ebay, or any other method of posting your wares. (There are tons of resources for how to price your used goods, but the easiest way I find the going rates is to look at what others are selling it for.)

Any profits that you receive, you know what to do. Bank it!

No Spending Challenge

Challenge the family or your partner or yourself to not spend money in a category for a period of time. That’s the equation. What you save, bank it.

Example:
For two weeks, your budget usually includes eating out 2-4 times. Instead of eating out, challenge yourself to make from the pantry. Take the money from eating out, and bank it!

For a month, challenge yourself to find no-cost entertainment. Take that amount saved, and bank it.

TFSA 31 ways to save

Hustle a little

Have you looked into any side gigs? Most common side gigs for cash:

  • Listings for one-time assistance, like handyman items or snow shovelling/grass cutting
  • Errands for seniors or housebound individuals
  • Haul loads to the dump
  • Caring for children, pets or houses
  • Clean houses or offices
  • Be a (paid) companion or assistant to someone with a disability or to a senior 

These are just a few examples of what you could spend a couple of hours on, and make some extra dough.

Hustle a bit more

These ideas tend to be more permanent or may require more preparation time to set up:

  • Start a landscaping/grass cutting business in the neighbourhood
  • Sell products from home (see more about that here)
  • Drive for Uber or Lyft
  • Seek out a part time job
  • Build an online business
  • Resell goods online or in consignment stores
  • Tutor or teach a skill

Cut the fat

By making changes to what takes the money OUT of your wallet, you can start directing more to your savings. Think of what is automatically withdrawn from your accounts as these are likely to be missed when considering where to tighten a budget. Here are some ideas where you could save (up to) enough to fill that TFSA:

    • Switch to no-fee banking
    • Move emergency funds or other savings to a high interest savings account
    • Cancel credit cards with annual fees in favour of one without
    • Music subscriptions: do you use this? Can you get it for free? Can you do without for a while? Is there a family plan instead of paying individual rates?
    • Television: consider downgrading or cancelling cable and subscription programs in the summer. A lot of people are outside most of the time, and wouldn’t miss the programming.
    • Cell phone: are you paying for any extras? Have you called and asked for a lower rate? As cell phone services are changing all the time, look around for a cheaper option. If you can’t find one, then negotiate to keep a rate the same in exchange for your contract. (If you are signing a two-year contract, you could ask to keep your rate plan from before and avoid the new customer increase.)

TFSA 31 ways to save

BIG ways to save:

  • Do you need a three-bedroom house? Could you live in a two-bedroom apartment? Consider the cost of utilities, rent, taxes, etc. Can you downsize and live as well?
  • Depending on the needs in your house, do you need multiple cars? Are you living somewhere that you could downsize and save? Could you use occasional services and save as opposed to paying for maintenance, gas, insurance and/or car payments?
  • Do you have a collection that you are no longer interested in? Are there other collectors that would pay for your collection? (Hard questions: do you have anyone to pass it on to, and would they appreciate it? If not, then you might be kinder to your children by liquidating it now for what it’s worth, instead of forcing them to feel guilty and not knowing the true value.) Do you have a room full of Beanie Babies, vinyl’s, model cars, Barbie Dolls, etc?
  • Do you have a second home, like a cottage or trailer, that you do not use as often as you once did? Can you rent it or sell it?

Do you have collections? Do you have anyone to pass it on to who would truly appreciate it? If not, then be kinder by liquidating it now for what it’s worth, instead of creating survivor's guilt about selling it for less than its… Click To Tweet

DID YOU KNOW?

If you save $5,500 in your TFSA account annually, and invest with a modest 6% return, here’s your savings over twenty years: (source)

 
Year:  Contribution 6% Return
Year 1 $5,500 $5,830
Year 2 $11,000 $11,680
Year 3 $16,500 $17,881
Year 4 $22,000 $24,453
Year 5 $27,500 $31,421
Year 6 $33,000 $38,806
Year 7 $38,500 $46,634
Year 8 $44,000 $54,932
Year 9 $49,500 $63,728
Year 10 $55,000 $73,052
Year 11 $60,500 $82,935
Year 12 $66,000 $93,411
Year 13 $71,500 $104,516
Year 14 $77,000 $116,287
Year 15 $82,500 $128,764
Year 16 $88,000 $141,990
Year 17 $93,500 $156,009
Year 18 $99,000 $170,870
Year 19 $104,500 $186,622
Year 20 $110,000 $203,319

WOW

In twenty years, your money has nearly doubled – and that’s with a modest 6% return. If you invested with a 10% return, you would have $318,376! 

There are more than thirty ways to save and make money in this article. Between that and a weekly automated savings, and the motivation from you to do the work, there is a 100% chance of success.

AND… if you fill your TFSA to the brim, then move on up to door #2: Your RRSP!  Follow me on Twitter, Instagram and Facebook for more how-to money advice. You can also sign up for email updates here (it’s free!).

TFSA 31 ways to save

Real Estate: 10 Simple Steps on Buying and Selling Property in Ontario

simple steps to buy and sell property
Venturing through the blogging community has afforded me the opportunity to see and read how different property transactions can be from country to country. Here’s the “average” real estate transaction process in Ontario.

Start Here

1.    The majority of buyers start with a Real Estate Agent. This is a person who is registered and licenced through an association that regulates the real estate agent’s position. The agent is the authorized individual who will arrange access to houses that are for sale, and takes the buyer through them. 

 The Bank

2.    Around the same time that the buyer is selecting an agent, the buyer should also have a bank representative or a mortgage broker who is obtaining a pre-approval for a mortgage, if one is required. A pre-approval gives the buyer an idea of what they could be approved for, if and when they need financing to purchase a home. 

All the houses… and then the contract

3.    The buyer looks at homes… often, many homes. Some people only need to see a few, and others will visit tens of houses, sometimes hundreds, before finding the one that meets their needs.  Once a home is found, the agent will write up an Agreement of Purchase and Sale, which is an offering to the sellers of what the buyers want. It’s a contract that sets out the following:
 
a.    The price the buyer is willing to pay
b.    The non-refundable deposit the buyer is willing to put down
c.    The closing date
d.    How long the seller can take to answer the contract
e.    The date for title search (to make sure the title to the property is clear and without problems)
f.     What the buyer wants included in the house purchase
g.    What the seller will not include in the house purchase
h.    What the seller rents (like a water heater) that the buyer is willing to assume
i.      Any conditions, like the buyer needs time to have the bank approve the contract, or to do an inspection of the property, or a myriad of other options.  

Seller’s Turn

4.    The seller will review the offer, and if the seller accepts, this creates the Agreement of Purchase and Sale.
 
real estate buy sell
 

Buyer’s Next Steps

5.    The buyer then needs to contact the bank for approval on financing for that house, seek out insurance, obtain an inspection, etc. Those are the most common conditions. While the buyer is working on these, the seller cannot entertain any other offers, as the seller has entered into this agreement pending waiver or fulfillment of the conditions.
 

The Old Handshake… on paper.

6.    Once the buyer waives all conditions, the buyer and the seller have made the contract firm and binding, and the agreement then should be delivered to the lawyers. If the buyer and seller are strangers, they will need their own lawyer. The lawyer will need the agreement in order to start work on the files.
 

Out of sight….

7.    Between the time that the buyer and seller sign the agreement, the lawyers’ offices will be hard at work. The buyer’s lawyer checks to make sure that the property is what the seller said it was, and that no one else has a claim to the property. The seller’s lawyers’ office starts the process of cleaning up any outstanding taxes, mortgages, etc that are to be paid on closing.
 

Time to Pack

8.    The buyer and seller do not have much to do during this time, other than to pack their homes, and to contact their utility companies. The buyer may need to finalize some steps with the bank to ensure all is well with financing.
 

Autograph, anyone? And on this one, and this one, and this one.

real estate buy sell9.    Closer to the date selected for closing, each party meet their prospective lawyer to sign some paperwork. The seller leaves a key with his lawyer, and the buyer brings in money to their lawyer.
 

Keys before Money or Money then Keys?

10.On the day of closing, the lawyers will exchange money for keys. They will also exchange the deed, which is done electronically. Because much of the process is electronic (like receiving mortgage money or registering a deed), it is unclear as to what time the transaction will close. The registration process is available until 5 pm that day. Also, once the transfer/deed is registered, that is the actual moment that ownership changes hands. The buyer will receive keys, and the seller will receive proceeds, or the money he sold his house for.
 
While there are so many variables to the above, most of the transactions close on the date chosen in the Agreement. It’s a good system, and pretty simple to follow, in my opinion.
 
 
real estate buy sell
 
Do you have questions on real estate? Ask me anything. With more than ten years in the legal part of real estate, and more than 15 years in rentals, property management, bank lending and more, I am more than happy to answer your questions. 
  
DISCLAIMER
This post is for entertainment purposes only, and shall not be relied upon. The steps above are for the purposes of illustrating a straightforward property transaction in Ontario and shall not be construed as legal advice, legal instruction or otherwise. Any questions or concerns with particulars of the above should be presented to the appropriate expert in that field of study.
 
 

Minimum Wage: the unsaid truth

The Argument About Minimum Wage

 How many people do you think make minimum wage? Can you count it in a percentage? Do you think that it’s a majority? If it’s a majority, then there’s a problem that our society is not seeking out skill training, and if we, as a country, are not attracting jobs that are higher than entry level, unskilled positions, then we, as a country, are seriously failing.
The value of the dollar varies in the hands of the beholder. This beholder has two college degrees, and is making a lower/mid 5 figure salary. XB and Mr. XB are not blessed with children, so we work hard at our jobs. As a result, we stress out when things go wrong, and give up off-time and weekends to ensure that the work is done and done right.
Side note #1: Ontario recently increased the minimum wage to $14/hour in January, 2018 and scheduled the next increase to $15/hour in January, 2019. 
Side note #2: Someone recently said: Take care of yourself, because killing yourself over a job ends in one fact: your position will be advertised before your obituary. 

How much is that a year?

A $15 min wage is a $30k/year salary. In Ontario, that means if you are fulltime, you would gross about $30k before taxes, and get two weeks paid vacation a year. This is for a minimum wage job.
College educated people are working in this area for barely above minimum wage, and benefits are a rare commodity.
It appears that we are seeing a push to increase minimum wage jobs (because who will pay much more?), and a push that is decreasing the amount of money that educated people are making, in comparison. Anything above the dreaded “minimum wage” title is supposed to be gravy.

Why go to college?

Isn’t this the question of the decade! Why go to college? What is the point of spending $25k or more on transportation, supplies, text books, food, tuition, time… why do this if all that is offered is slightly above minimum wage, if that?
Until people start realizing that $15/hour is not a fair representation of minimum wage OR …

WAIT!

Is it that those who employ either the minimum wage earner or the college-educated support staff/labourers are so heinously greedy? Or is it time that they started sharing the wealth and start paying their staff a decent wage?

Example Time

Let’s look at people who are making $40,000.00 a year.  This is a “decent” wage to most. But is it? Off the top, you lose 22% on taxes, CPP and EI. That means take-home pay is $31,200.00.
In Niagara, the average two-bedroom apartment in a decent building is $1,200.00/month. A mortgage on a $300,000 house would be $1,500.00. Then you have utilities… say $300/month. Insurance. Taxes. Maintenance. Repairs.

So, is a college education enough to own a home?

$31,200/12 months = $2,600.00. If you have a home that is “modest”, chances are you spent more than $300k. Using this example, I would say it’s fair to assume costs of home ownership, without repairs or any extras, cable tv or internet packages or telephone, would eat up close to $2,000/month. That leaves $600 for food, entertainment, transportation, health care, retirement savings, repairs, replacement of household goods, insurances, etc. Are we not allowed modest home ownership as a single income family?

I can hear the naysayers out there: get a second income, a roommate, etc. Find cheaper housing. Cut the extras.
Why are we allowing people to tell us to live in sub-par housing, have sub-par services, and deal with making less? Where do you live for less today?

Factor in children.
  • Child care.
  • Debt.
  • Annual vacation.
  • Education.
  • Student loans.
  • Transportation.
  • Elderly parents or grandparents.

I no longer think that the problem is minimum wage. If the government is saying that a basic job should pay $30k annually on a full-time basis, then that tells me a skilled, educated person who is support staff or labourer for an employer should make nearly twice as much as the example above.

So… then what?

So instead of saying the minimum wage needs increasing, we should be looking at those who are in the middle. A minimum wage increase of $2.40 (the most recent jump to $14/hr) is a cut for those who make more. We will pay more, as the companies charge more to pay for the increase in wages. We will lose options, because the cost of doing business has increased significantly. Our dollar in our pocket will not go as far. And yet, the wealthier people, the employers, the ones living in houses twice the modest price, and driving cars as much as a third of the modest price of a house, … they say, well, everyone is on salary here, or makes more than minimum wage, so it doesn’t affect them.

It doesn’t affect them.

It doesn’t affect the employers that futures are bleak, employees of the middle can no longer afford housing, and there is not a decent income anymore, because the employer needs to afford their lifestyle. (Think about a particular $19.9 million yacht up for sale recently.) It doesn’t affect employers because support staff is replaceable, trainable, and shapeable.
And for those like me, who have an opinion, well, we are not desirable. We are replaceable. We affect the bottom line.
Let’s affect it together  Talk about this problem. Let’s find a solution together.
This is why I blog.