“Saving is a fine thing. Especially when your parents have done it for you” – Winston Churchill
Yes, plan for the future and look into your options such as RESPs for our children but make sure you remind yourself that your children’s education will not support you in retirement. Financial advisors are beginning to stress this last point and it is important to remember that if our children want to get a higher education, there are many paths and options and a few of those include youth getting summer jobs, applying to the hundreds of thousands of scholarships available to students, budgeting for food and books and living a simpler life while in College or University. We don’t need to necessarily stress the “starving student” lifestyle but we also do not want to stress the “starving retiree” either. In sum, if you need to choose between education funds and retirement funds, you need to put yourself first, then you will be in a secure enough position to give your children the best financial advice possible.
Good Debt: any money borrowed to buy an appreciating asset where the cost of servicing the loan does not affect your ability to save to the appropriate level & where the principal will be fully repaid before your retirement
Bad Debt: Everything Else
In sum, divide bad debt by your annual income and if that percentage is over 25%, it is time to make larger payments to reduce this number and make sure you also keep good debt at a minimum.
Finances and Your Family: One step to a brighter financial future..
(RESP) Registered Education Savings Plan: This is a registered education tax -free savings program with the government of Canada. It is estimated that any higher education in the next ten years will be approximately 45,000-75,000. Saving a small amount annually for your children’s education is a great way to give them their inheritance-or a portion of their inheritance- when they truly need it. As soon as possible, apply for a SIN number for your children (Call 1-800 O Canada, 1-800-622-6232) and start saving. Ask your financial advisor about your options and how much the government will match in your child’s account annually. You could receive up to 100.00 per year in government grants for opening the account. Remember that you can not take the money out so deposit the minimum amount but do so consistently.
How are student loans affected by a proposal or a bankruptcy?
It depends on the age of the student loan.
If the bankruptcy or proposal is filed more than 7 years since the end of your last semester using student loan funds, then the loan is dischargeable. When the process is done, the debt is gone.
If the bankruptcy or proposal is filed more than 7 years since the end of your last semester using student loan funds, the loan is still included in the consumer proposal or bankruptcy. No collection action can be taken against you during the process, but once the bankruptcy is discharged or the consumer proposal is complete, the loan is collectible again. Discuss this with your Trustee, as interest will still accrue, and you should have a plan to address it.
There is a provision in the Bankruptcy Act that if a person demonstrates true financial hardship, and the bankruptcy was file less than 7 years, but more than 5 years, after the last semester, the court may order that the debt does not survive.