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What to do with unused RESP money
– moneysense.ca
Q: My wife and I have a son aged 25 years old and a daughter age 27 years old who have both completed college and are both now living on their own and working full-time. We saved and used only a portion of the money that we had contributed to a family RESP to assist them with tuition and living expenses while they attended college.
We now realize our children will not be pursuing further education and we still have $54,000 in the RESP.
What are our options to reduce tax implications when we withdraw or transfer the money from the RESP to another investment account? Neither myself or my spouse has any available RRSP room. Further, is there anything we can do at this time to minimize the penalties or clawbacks the CRA will impose as a result of us not using all the RESP money for the original intended purpose?
—Kevin
A: It sounds like you and your wife have a good Registered Education Savings Plan (RESP) problem, Kevin. I’d rather have too much in my RESP than not enough. Most parents are in the latter situation…
What is a TFSA? Only 1 in 5 knows the answer
– moneysense.ca
Our query about TFSAs was of 20 questions we put to readers in an online quiz aimed at beginners in January. More than 2,600 attempted this question, but only 21% got it right. To put that in context the average score on our beginner quiz was 76%. No other question scored lower than 55%. What’s most surprising—at least to us—is that it wasn’t meant to be a trick question.
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The result supports what the financial advisors have long said about the TFSA: that a large number of people still don’t fully understand what they are or how to use it.
What’s in a name?
MoneySense has long argued that TFSA is a lousy name…
How to Improve Your Credit Score: Collections Edition
– ratesupermarket.ca
This monthly series by personal finance specialist Amanda Reaume focuses on how to improve something that many people overlook: your credit score. These posts will give you tips and tricks to improve your chances of getting approved for better rates when you apply for credit – leading to better student loans, car loans and even mortgages.
The last thing anyone wants is to be so behind on repaying debt that they end up in collections.
When your account goes to a collections agency, it likely means that that you’ve failed to pay bills and you were unable to set up or stick to a new repayment schedule. Usually, this happens between three and six months after you first default on your debt, and it can definitely impact your credit score, and subsequently, your future finances.
If your account goes into collections, it’s usually because you’re facing extreme financial difficulties. It can be scary and stressful, but there is a way out.
Why is my credit score affected by being in collections?
Your credit score is a crucial factor that banks and other lenders consider before they lend you any money…
Minor Tweaks Won't Solve The Payday Loan Crisis
– walletpop.ca
The proposed changes are relatively minor (such as a prohibition on making a new loan until seven days have passed since the borrower repaid their last loan), and these new recommendations follow already enacted changes reducing the amount a payday lender can charge on a loan (from $21 per $100 borrowed last year to $18 per $100 borrowed this year).
Payday loans are a problem, because as all astute readers will have already surmised, “$18 on a hundred” isn’t as good as it sounds. If you borrow and repay every two weeks, it is the equivalent of an annual interest rate of 468%. How does that impact borrowers?
The payday loan data from our Joe Debtor study shows that:
1 in 4 (25%) people who file a bankruptcy or consumer proposal owe money on a payday loan (up from 18% two years ago);
They have 3.4 payday loans with a total outstanding of just under $3,000 (up 9% from 2 years ago);
They owe 121% of their monthly take home pay in payday loans; and
Payday loans make up 9% of payday loan borrower’s total unsecured debt of $34,255…