February 26, 2010, 5:00 am

Fill Tax with QuickTax: TFB is Giving 2 Copies!

by: The Financial Blogger    Category: Taxes

Earlier this week, I was telling that I tried filling my taxes with QuickTax. I have received a free copy and I really liked it! The great news is that I have also 2 more copies to give away!

The version is QuickTax Standard (you can find more info in my QuickTax review) and worth about $40. We are shipping it for free to 2 Canadians!

QuickTax Tax Filling Software Giveaway rules:

Since I am doing the giveaway today, I have decided to put it with my Financial Ramblings (usually posted on Saturday’s). For the occasion, I have also thought of making a Special Canadian Financial Ramblings. So here are the great Canadian read for this week:

10 ways to save money on a new car @ Million Dollar Journey

Time to be contrarian? @ Intelligent Speculator

Finish to learn dealing with nerds @ Four Pillars

Force your kids to play Wii? @ The Rat

More QuickTax giveaway @ Where Does All My Money Go

Spending Money Wisely @ Canadian Finance Blog

Semi-retired calculations @ Canadian Dream

Hidden advantages of dividend investing @ The Dividend Guy

Prove that you are a valuable employee @ Thicken My Wallet

DRIP info on Tim Horton’s @ Canadian Capitalist

Student Credit Card Check List @ Studenomics

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February 25, 2010, 5:00 am

You Need Guts To Handle Your Personal Finance

by: The Financial Blogger    Category: Personal Finance

According to Wikipedia, courage can be defined as: The quality of a confident character not to be afraid or intimidated easily but without being incautious or inconsiderate. I’d say that being confident about many aspects of your personal finance can bring you to another level. However, one must not let down their guard and remember to continue being cautious, considerate and to remain humble  😉

Be courageous enough to pay off your debt

Paying off your debt ahead of schedule requires other sacrifices. One must be brave enough to live you can afford not the same lifestyle of the Jones (richer or less courageous neighbors)  next door. It is hard to give up the vacation down south for 2 weeks a year instead paying off your debts. However, if you can master your envy and enjoy life, you will be in a much better financial position in a few years!

Be courageous enough to ask for a promotion

I had recently mentioned how I got 3 raises in the span of 12 months and how I positioned myself to get another 2 raises this year. While I did an analogy with poker, I could have also mentioned that it requires guts to ask for raises and promotions during tough economic times. However, if you are not the one who is asking for more, you can be sure that someone else will take his share of the pie (and probably yours at the same time!). Money doesn’t come  simply because you come into the office at 8 am and work hard.  Sometimes, you have to shake the trees to get the fruit!

Be courageous enough to take risk

As the definition of courage mentions, one must be brave and confident enough to do things others don’t without taking stupid risks. During the past 5 years, I have taken my share of risks (I quit my job, borrowed money to invest, borrowed money to buy the house I wanted, borrowed money to start a company, etc). I can basically say that I am where I am because of my tendency to use other people’s money. Being more conservative would have seriously reduced my level of financial stress but I would not be living in a great house and making a 6 figure income today. It is all part of taking risks and calculating the rewards attached to them. I do not always calculate the risks of my actions (I still think that if I have to go bankrupt, I need to do it in my 20s!) but I certainly always calculate the potential rewards attached to the risk I am taking.

Be courageous enough to believe in yourself

This leads me to my final point: believe in yourself; in your abilities, in your talent. We all have great potential in something, we just have to be quick enough to find it and improve our life with it! If you believe you can increase your net worth, get a promotion, pay off your debts or start a company, then do it!

My own definition of courage

In light of this article, being courageous is not only to become confident without being careless. Being courageous means being able to leave one’s comfort zone to face the living chaos of life in order to be able to improve your own life.

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February 24, 2010, 5:00 am

How More Americans Are Moving Away From The Traditional Banking System

by: The Financial Blogger    Category: Banks and You

I had read in an interesting report published by well known firm, Breton Woods, comparing the cost of a prepaid debit card vs a regular checking account in the United States. While prepaid debit cards are not a big deal in Canada, I was curious to learn more about why scores of Americans are turning their backs on traditional banks by trying alternatives.

Who doesn’t have a bank account?

There are around 60 million adults that do their transactional business while avoiding banks. I guess that the recent recession helped increase this number and therefore, the popularity of prepaid debit cards.

Most of them are found within minority groups; poor people, people without college education and those who do not really use their bank accounts. As many individuals now work with a day-to-day money management budget, they prefer to keep their cash in pocket instead of having to transact with a financial institution. As making money under the table and receiving cash in an envelope became reality for many of them, a regular bank account seems to be a money-eating-box-of-fees with aggressive appetite!

No bank account, what are your alternatives?

As I previously mentioned the prepaid debit cards gained a lot of popularity in the past decade. It allows an individual to load money on a debit card that is accepted almost everywhere (the access is comparable to a regular credit card). While this option may seem expensive since you have to pay fees each time you reload the card, Breton Woods showed that it is a great alternative for specific individuals helping them save up to 35% in banking fees.

Other marginal options include using check cashing services (like ACE’s), payday loans (very expensive!) and pawn shops. It really seems that we are going backwards as these individuals prefer having cash in their hands regardless of the fees (check cashing services can easily take more than 4% of the amount you want to cash).

So if it expensive, why are they doing it?

In my opinion, there are 2 major reasons why some Americans have decided to give up their banking accounts. The first one is because they have completely lost their faith in the banking industry (can you blame them?). There is an uncomfortable sentiment towards banks since they “got the country into financial trouble”, they were saved in extremis by the Government and paid themselves fat bonus check as early as 2009. Let just say that they didn’t behave like socially responsible corporate citizens!

The other reason comes from a lack of financial education. People who have a hard time managing their money get easily frustrated when paying overdraft fees, NSF checks and other banking fees related to poor money management. Cash or prepaid debit cards won’t “let them down” as once there is no money left, you just can’t do anything!

In the end, I still believe that you are better with a checking account but in some cases, financial education has to start with cash in your pocket!

image source: Sam Howzit

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February 23, 2010, 5:00 am

What Can I Deduct to Pay Less Tax? File Your Income Tax with QuickTax Review

by: The Financial Blogger    Category: Taxes

Now that we have almost completed the RRSP season for the 2009 income tax year, it is now time to think about one of the most painful financial activities: file taxes!

I’ve recently been contacted by Intuit (the famous producer of Quicken) to review their latest QuickTax 2009 income tax software. So they sent me a QuickTax 2009 standard edition so I can work with it for a while and to file my own income taxes.

What Can I Deduct to Pay Less Income Tax?

This is probably the biggest question when it comes down to filing your income tax reports; what expenses can I claim to reduce my taxable income (to pay Less tax)! We all want to deduct from our income as many expenses as possible. Well QuickTax claims to offer over 40 deductions and credits in all. Now let’s see how great they were when I installed the Canadian tax filing software:

File taxes by myself instead of paying my accountant?

I always pay an accountant to file my taxes because I don’t really want to do it. This year (while I will still send my tax paperwork to my accountant), I’ll try QuickTax on my side and see how it goes.

My first impression when installing the Canadian tax filing software: I am impressed; easy to install, already provides great tax updates in the very first pages of the application. There is also a Q&A section that opens on the right side at each step of your tax forms. They are relevant tax topics that help you while claiming your expenses, filing your taxes and looking for more tax deductions.

File taxes through a step by step method

At the beginning, QuickTax encourages you to go with the step by step method. Basically, the Canadian tax filing software will ask you questions related to your financial situation in 2009 so it can direct you towards what you can claim on your tax report, which expenses to be claimed, and all the deductions and credits relevant to your fiscal situation.

Doing the step-by-step method while filing your taxes is a great way to start. Then, I would suggest taking some time to browse the tax credit and deduction sections of the software to make sure that answering the questions got you everything you can claim on your taxes.

5 things I liked about QuickTax

#1 It’s very easy and convenient

#2 You can go back to any section at any time

#3 You can go forward to any section at any time

#4 You don’t have to file your taxes in one shot, you can save your income tax report to continue later

#5 Deductions and tax credits are easy to find and understand

File taxes with the right Canadian Tax Filing Software:

Depending on your needs and your budget, several versions of QuickTax are available. I have gathered them in a chart comparing their tax filing features:

QuickTax Price$29.99$34.99$69.99$99.99
T4s & donationsXXXX
Pension Income SplittingXXXX
Medical, RRSPs,
spousal/dependant credits,
Investments, rental propertyXXX
Business expenses and
self-employment income
Comprehensive financial
EasyStep Interview walks you through your return, finds every credit you deserve and double-checks for errors as you go3T4's and donation onlyXXX
NEW! Guides you through life changes that can affect your taxesXXX
Includes government-approved forms and up-to-date tax law changesXXXX
Does all the calculations for you - and they're GUARANTEED accurate4XXXX
NEW! Easily carry-forward data from UFile® and other tax software (desktop only)5XXX
Pension Income Splitting Optimizer helps you divide pension income between spouses for your maximum refund6XXX
Searches your return to see if you qualify for any of 400+ deductions - with the Deduction ToolboxXXX
Carries forward personal info & unused credits from your 2008 QuickTax tax returnXXX
Import e-tax slips directly into your QuickTax forms - with the QuickTax Automated Tax Return7XXX
Helps you prepare spousal returns simultaneously (and maximizes credits between partners)XXX
Get a bigger refund next year, too! Includes RRSP optimizing toolsXXX
Extra guidance for investment sales such as stocks, bonds, mutual funds & employee stock plansXXX
Additional help for rental property income, expenses & refinancingXXX
Helps you calculate capital gains & lossesXXX
Helps you maximize self-employment deductionsXX
Track business expenses year-roundXX
Imports from QuickBooks & Quicken8Quicken onlyXX
Business Interview helps you find tax advantagesXX
Helps you maximize your eligible business expensesXX

Any Tax questions about QuickTax Software?

As I previously mentioned, this was the very first time I have tried a Canadian tax filing software. While I really liked what I have seen of QuickTax, I didn’t do any comparables yet. If you have any questions regarding how to file your taxes or how QuickTax works, please feel free to comment and I’ll try to help!


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February 22, 2010, 5:00 am

Investing Without a Plan

by: The Financial Blogger    Category: Investing Ideas,Investment, Market and Risk

I swear to God, some people walk into a bank thinking it is a McDonald’s!

A colleague of mine walked into my office the other day with her eyes so big they were ready to pop out of their sockets.

“Have you seen this? ING is offering 3% (annualized rate) for the next 3 months on an RRSP contribution! This is way more than what we offer!” she said, panicked by the thought of losing accounts to the big orange online monster.

“So what?” I replied almost as interested by her announcement as I was when they said there were going to add a bus line on Sunday morning.

“How can I compete with this? The Bank won’t budge on their GIC rates and we are so far away from this offer!” she insisted (that’s it, I think her eyes dropped from her head and started some break dancing on my desk).

“Do you know that if your client invests $5,000 for 3 months at a 3% rate (annualized) he will make about $35? How can you not compete with a huge profit of $35? What is your client going to do in 3 months since he will only retire in 30 years?”. I knew the answer: he will transform himself into another rat (i.e. rate shopper!). But the key is that he won’t get much from jumpin’ from one rate to another (especially with the marvellous rates we have in the industry!).

Unfortunately, some people prefer to see financial advisors as trustworthy as mechanics or politicians. Therefore, they prefer to trust themselves and invest in something they understand. 3%. That, they understand. They don’t figure it’s only for 3 months and that they won’t do much after this period. They understand the 3% concept and they are happy with it.

The key point is not to manipulate our clients and make them invest in something else. The point is to help them understand that they are losing their time and most importantly their money chasing ridiculous rates for 3 months when they won’t be touching this money for the next 30 years.

Each investor should have a plan. He should know how much he invests, where he invests and (most importantly) why he does it this way. If you are investing without knowing the answers to those 3 questions, you are not investing in the right way. Then, you are in serious trouble and I hope you are putting a lot of money aside because you won’t make it to retirement…

Notice that I didn’t talk about how much you will make. This question is useless as nobody knows the real answer. However, if you stay invested during the next 30 years, you should be making around 4 to 6% depending on your investor profile. In any case, it will be better than investing in GIC’s!

I have living examples to prove it: I had looked at one of my clients who invested his money in an investment strategy back in 2004. As of the end of 2009, he was making an annualized return of 5.13% (with a balanced fund). While he was making more than any 5 year GIC back in 2004 (they were giving about 4.50% to 4.75%), it was also tax efficient and liquid at any time. In addition to that, we have to mention that his portfolio went through the worst investing period of all time. Therefore, I am ready to bet that he will be making much more than 5% annualized rate at the end of 2010 while the other individual will have to renew his money at 3% for 3 months…and then… 3% for the next 5 years?

Next time you see an investment promotion, don’t ask yourself if it’s a good deal or not, ask yourself if it fits your investing strategy or not 😉

image source: Beau B

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