An RESP is set up usually by a parent or other family member by way of a contract with an institution (the scholarship fund) for the benefit of their child. The standard wording in the contract results in the RESP being considered an asset of the parent or other person that is divisible among their creditors in the bankruptcy. If you are in this situation, speak to your Licensed Insolvency Trustee about buying the RESP back from the bankruptcy so that it can continue to be of benefit to your child when he or she starts their post-secondary level of education. The purchase price and terms of payment can be negotiated but generally start at the dollar amount that the trustee would get if the RESP plan was collapsed. The usual payment terms are that you must pay the settlement amount for the RESP before you are discharged.
Please see related article – Will I Lose my RESP in a Consumer Proposal?
Decreasing independence is not something that anyone likes to think about, but needing help making legal and financial decisions can happen at any time and for a wide range of reasons. If you’re a senior citizen, you should begin planning ahead for your future. If you get ill, have an accident or even if you are just away for a period of time, having someone you trust who is ready and able to help you can save time and trouble.
In other words, plan ahead, appoint a power of attorney and sign a power of attorney document. This is a legal document in which you name one or more people to be your attorney (decision-maker) to manage your financial affairs.
This is an important plan because you need someone you can trust to look after your affairs if you can no longer look after them yourself.
I have always believed (because my parents told me) that owning a house was better than paying rent. The house will go up in value – the rent goes to a landlord and you get nothing in return. Now that I am at the stage of life that I can start thinking of owning a home, I am questioning – should I do it? When I pay rent, if anything goes wrong, I phone the building superintendent and it gets fixed a few days later while I am at work. And yes, rent does go up each year, but only a little. And if I decide to move, my only cost is the moving company. My friends who have bought a house talk about the negotiations with the mortgage company or bank. Plus, after they move in, they had to buy drapes, carpets, insurance, security equipment, gardening equipment and G-d knows what else. They tell me that the house will go up in value and it will be their retirement. I ask what will happen if mortgage rates go up or the roof leaks or windows need to be replaced. They tell me that they will get a line of credit secured on the house – but is this not just eating up the equity for their retirement? I keep thinking about ketchup soup, K D dinners that I sometimes had in college. I really like the freedom that I have.
So, what is my plan? I realize that I will retire someday and will need money to do that. I am not going to buy the biggest house that I can afford and then, if anything bad happens, my debt load will rule my life. I will hedge my bet by buying a small house (hopefully not too far in the burbs) or a condo in the city to cut down the travel time and cost. Works for me and keeps my sanity.
But what if I meet someone and we talk marriage and kids – OMG. All bets are off.
Every time a new client is told that they have to surrender their plastic when they file a debt consolidation proposal or bankruptcy, they get this blank look on their face. The look translates into: How am I going to live? The answer is: quite well, thank you. By spending millions of dollars on advertising, the lending institutions have convinced all consumers that we need credit cards to show the world how
great our credit is. A gold or platinum credit card is somehow the best. And we get points also – over the next eight years, you will be able to fly somewhere at a time of year that you would not go anyway. Buying something for cash, shame on you. It must mean that you have no credit. At the very least, it means that people with lots of cash, will find you pretty soon.
Who do you think is paying for all of these frills and loyalty programs? Of course, it is you. Don’t buy into it. There are enough deductions from you pay cheque that you cannot avoid. Why volunteer more?
Living on cash (or close to it) means that you are in absolute full control of your spending. You likely have budgeted your spending habits so that you know what your basic weekly or monthly repeating costs are (rent, food, clothing, transportation costs, etc.) as well as the variable “feel good” costs of entertainment, restaurants, vacation, gym, etc. Of course, emergencies will always happen. So, open a savings account and put a small amount away by a regular automatic payroll deduction similar to what you are likely doing for an RRSP.
You should also have a credit (even a prepaid credit card) for an immediate emergency. It should have a reasonable limit and be used only in a true emergency. Think “need” instead of “want.”The best result of cash is that I always spend less when I am paying cash. Your mind seems to be telling you that you are actually spending money that you worked hard to earn. Not a bad thought to keep.