Dig savings out of your taxes
ONE – Re-assess your Property Taxes
If the property values in your community have fallen significantly, make sure that your tax assessment is in line with the values, so that you benefit from the savings. What’s your property value? Here’s how you can check. (credit: Toronto Star).
If it’s not fair, apply for a re-assessment. In communities where property values have fallen, the savings in property taxes can be substantial.
TWO – Claim all your expenses
If you are self-employed, do you do your own taxes? Or, do you have a professional accountant (CPA) do your taxes for you?
I hope the latter.
If your taxes aren’t being done a professional, you could be missing out on some big tax savings. If you think that these kinds of professional accountants are expensive…you are right.
However, in the end it is often more expensive to pay the government thousands of dollars in unnecessary taxes than to pay a good accountant a few hundred dollars to find these savings. If you are frugal, you can try out the accountant once to see if you are missing any deductions. Then, take the lessons learned and go back to doing your own taxes using those very tips.
Find savings in your expenses
THREE – Look for an expense to cut and save that money
You can easily increase your savings by cutting back on ‘designer’ coffee or by quitting bad habits. These are great starts, but there are other bigger ways to build your savings. Take a serious look at your hobbies or the style to which you’ve become accustomed to living.
For example…can you really justify that huge amount that goes to a personal trainer or for protein supplements, golf, skiing, and other sports? Yes, these activities are healthy, but most of all, expensive. If have an issue to deal with – like debt – cut back what you spend on a hobby. It doesn’t have go be forever, just until you are back in the green. Green is always good.
FOUR – Review your debt payments
Take a good look at your credit card activities for the last few months. See anything there that you really didn’t need? I’ll bet you see quite a few impulse purchases that you can quite comfortably live without.
Another thing, leave the cards at home, cash is king.
Studies show that people tend to spend 15% more when we pay for things with credit.
Here are some facts:
- The average Canadian household who puts everything on credit could save more than $3,000/year if they buy everything with cash instead.
- Sure, they’d have to give up their points or cash back, but assuming they used the best cash back cards in Canada, they’d only be giving up a mere $400. Do the sums, cash wins.
Next, look at the interest rates on any of your debt payments such as credit card, line of credit, that type of thing. It doesn’t matter how low your interest rate is, shop around, take notice of what other companies charge for the same type of program, I’ll bet you can do better. Your savings will thank you.
Here’s the math:
- If you pay 5% interest on your line of credit, you may be able to show your bank that others pay 3.5% and get them to do the same for you.
- If you pay 20% interest on a credit card, see if your credit card company has a lower interest-rate card. You may be able to get them to move you to a 12% card, or you may be able to find an even better rate somewhere else.
- If you have a mortgage, have a chat with a mortgage broker and make sure you have the best rate possible.
Here’s more information on how to get the lowest interest rates:
- If you carry balances on credit cards or store cards, review your balances and your monthly payments.
- If you have a balance of around $1,000 on one card, you may be making $30 monthly payments.
- Find a way to pay off this balance using what we discussed last week, a bonus from work, a tax refund, or increase your payments.
- Once you’ve paid off this debt, you’ll have $30 more to work with each month. Use this approach on your next smallest debt, eliminate it, and you’ll free up even more money for saving each month.
If you struggle to make the minimum payments on your debts, your best move may be to sit down with a Licensed Insolvency Trustee and have them review your financial situation. They can recommend the best options to get your finances and savings back on track.
FIVE – Track your spending and create a spending plan
The very best way to identify areas where can save money is by manually tracking where you spend. When you see it all in black and white, you will be surprised how much you spend and where you can cut back.
Do it for one month.
A lot of people think they know where they spend, and the results of this one month exercise will be a bit of a shock.
Here’s the truth – you don’t know how much you really spend until you take the time to track it. It’s a plan and simple savings fact.
Once you’ve identified where and how you spend your money, you will also see where you can increase your savings. As a result, more money in your bank.
Set an amount that you think is reasonable to spend and stick to it. To make sure you do this, create a spending plan…otherwise known as a budget. Get in touch to learn how to create your own, realistic spending plan, and stick to it.
Finally, I’m Judith Cane, Canada’s Money Coach. I’m here to help you. Give me a call today if you want to get control over your money instead of your money controlling you. 613-875-5834.