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After an indulgent summer, here’s how to get back on your financial track
by FCNB on 


After an indulgent summer, here’s how to get back on your financial track

As the cool breeze blows through my window these days, I find myself asking, where did the summer go?

Sure, it’s not technically over until September 22nd, but try telling that to the kids who are back in the classroom and the frazzled parents who are trying to get their families back in to some sort of routine. I bet they won’t be laughing!

Between the longer days, the trips to the beach, the lazy bonfire nights, and vacation days, summertime can feel like such an indulgence. And, before you know it, fall sneaks up on you, carrying a heap of responsibilities with it.

More than likely, you’ve opened your wallet in the midst of your summer fun – and in some cases, maybe you’ve overspent once or twice.

So you got off track

It’s normal to stray from your financial plans, but try not to get discouraged. No one ever said it was easy to do (unless they were trying to sell you something). Now is a great time to make a September resolution, according to life coach Lisa Carpenter in a CBC interview.

Here are some tips to help you get back on track for your financial goals.

1. Identify your most important financial goal

If you have more than one financial goal, you can take advantage of the time that’s passed since you last made them. One will likely be more of a priority than the others – paying down debt, for instance, would take precedence over saving for a nonessential item. In other cases, it could be the opposite – replacing your car before it dies might have to come before paying off debt. Follow your own judgement – there is no “one size fits all” in the financial world!

2. Make a new plan

Ask any pro athlete - a goal is just a goal until you have a plan to achieve it. The plan can be as simple or as complicated as you want it to be – and we have a budgeting tool that can help you do just that.

3. Plan for next year

The big expenses that come up around September are fresh in your mind – so plan for next year. Try to start setting money aside right now so that when it’s time to buy school supplies, textbooks, sports registration fees, car inspections – you’ll be ready.

4. Set reminders for yourself

Maybe it’s a calendar reminder on your phone, or a note in your agenda, or even an email that you schedule to yourself in advance. Regardless of how, the why stays the same: you want to stay accountable to yourself on your goals. We lead busy lives – it’s easy to lose sight of your goals, so a little tap on the shoulder can help remind you of what’s important in the long term.

And if you stray from your plan again, no problem. Just go back to step one and try again!



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Life Insurance - The Basics
by FCNB on 

Life Insurance - The Basics


Talking about life insurance can be morbid – there I said it. And, when I sat down with my husband to tell him we were expecting a child and the second comment out of my mouth was that we needed to increase our life insurance, you had better believe that he thought I was being morbid. But, here’s the thing: people don’t buy life insurance because they like thinking about why they need it, rather they buy it to protect their loved ones. As much as I don’t like the thought of dying, I HATE the thought of leaving my husband and two young children without the resources that they need to thrive.


What does it cover?


Life insurance can provide funds that can be used to pay for day-to-day expenses by replacing the income of the deceased. It can also provide funds that can be used for other costs such as the funeral, legal costs, debts or taxes.


How does it work?


Buying life insurance can be complicated; there are many products available in the market from different providers. Each company that sells insurance might have different features and benefits (known as riders, which are outlined in your policy), but the types of insurance products offered by each company tend to be relatively similar. Over the next few paragraphs, I’ll try to provide some clarity on how life insurance works. 


Life insurance is a contract between the policy owner (consumer) and the insurer (company who underwrites the policy). For traditional life insurance, the policy owner will pay an agreed upon premium over a period of time and the insurer will pay out a set amount (death benefit) in the event of the death of the policy owner.


What are the different types of life insurance?


As mentioned above, there are different types of life insurance to cover many different scenarios. Here are the three common ones:  


Term – A term policy pays a death benefit if the insured person dies during the term of the policy. Term insurance is intended to cover temporary insurance needs. For example, someone may decide to purchase a 25 year term insurance policy to cover a mortgage. Terms can range for a period of time such as 5, 7, 10 or twenty year terms, or until the insured person reaches a certain age, such as 60 or 65. During the term, the insured person would pay set premiums, which tends to be lower at the beginning of the term, but may be higher in later years. At the end of the term, the premiums end and the insurance coverage ends.


Whole Life – A whole life policy is an insurance policy that generally has set premiums with both a death benefit and an accumulated a cash value. If a policy holder decides to surrender their policy prior to death, the cash value from the proceeds of the savings component would be paid out. In some cases, policy holders can also borrow against the cash value.


Universal – A universal life policy pays a death benefit if the insured person dies, but it also provides tax sheltered savings in the form of an investment account. As with all insurance, to hold a Universal Life policy, you pay premiums. Part of your premium goes towards funding your death benefit, while the rest goes into a tax-sheltered fund (a reserve account) that earns investment returns. You can choose to increase the amount that goes in to the reserve account and make decisions on how that excess amount is invested. Upon death, in most cases, the company pays the death benefit agreed upon in the policy, and the money from the savings component is also paid to your beneficiary (ies), however there are other options available and it’s important to understand what those options are when you’re establishing the policy.


Before buying in to this type of contract, find out what the surrender charges (fees) are if you want to get out of the policy in the first ten years. If you decide to surrender the policy there may be tax implications as well. Additionally, administrative charges on this type of insurance product tend to be higher than on term products.


What else do you need to know?


In addition to the products mentioned above, there are other individual life insurance policies available, and different companies may have different benefits available depending on the type of policy you purchase. It’s important to understand the type of policy you are buying, any administrative fees as well as any surrender charges if you cancel your policy. Talking about your individual situation with a professional, such as an accountant, about the tax implications associated with insurance policies may also help inform your decision. Make sure your insurance agent is licensed to sell in the province – search the insurance license database by clicking here. As well, have an in-depth conversation with your insurance agent and never sign anything that you don’t understand or aren’t comfortable with.


The Financial and Consumer Agency of Canada (FCAC), an independent body that works to protect and inform consumers, has a calculator to help you determine your insurance needs. We also have information on choosing an insurance provider, making a claim and avoiding insurance fraud, click here for more resources. 


Dealing with the death of a loved one is complicated enough without adding in extra stress about finances. In the event something were to happen to me, I want my husband to have the peace of mind knowing that our family’s financial future isn’t in jeopardy so he can be there for my boys emotionally and physically. Knowing we’ve taken care of our life insurance needs gives me the peace of mind today so that I can focus on my family’s day-to-day adventures!




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Question of the Week: What is tenant's insurance and why do I need it?
by FCNB on 


Question of the Week: What is tenant's insurance and why do I need it?


You’ve bought your textbooks, paid your tuition and moved into your apartment to kick off the academic year. But have you purchased tenant insurance? If you’re renting an apartment or house – or have a child who is -  it’s a good idea to get a policy that protects your possessions.


What is tenant's insurance?


Tenant's insurance can protect your possessions in the case of theft, loss or damage. It can cover:


  • damage to or loss of your possessions
  • personal property stolen from your vehicle
  • accidental damage you cause to any part of the apartment building or rental unit
  • injury caused to visitors
  • additional living expenses if your rental unit is damaged by an event covered in your policy, and you cannot live there while it is being repaired


Do I need tenant's insurance?


The short answer is yes. If you are renting your home, you need tenant's insurance, because your landlord's insurance does not protect your stuff. As a tenant, you're responsible for any damage you cause to your apartment, its contents and the rest of the building, as well as any accidental injury you cause to visitors and other tenants. Your insurance should cover the cost of replacing everything in your home if it is destroyed or stolen. It should also cover your liability to others.


When purchasing tenant's insurance, make sure the policy meets your needs, provides enough coverage and fits your budget. Policies differ among companies so always read your policy document carefully to understand how you are protected before buying insurance.


Got your attention? More in-depth details on how to get started with tenant's insurance can be found in this blog post; or, to learn more about different types of insurance, visit the Insurance section of our website. You may also be interested in our series on moving into your first apartment.



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On your doorstep: Protecting yourself from high-pressure sales
by FCNB on 


On your doorstep: Protecting yourself from high-pressure sales

Did you hear last month that the City of Saint John put out a public notice warning residents about door-to-door salespeople making misleading statements about the city’s water quality?

The salespeople were from a private company trying to sell residents water softeners by making claims that the city’s drinking water may be hazardous to their health.

Unfortunately, this type of incident isn’t happening just in Saint John.
FCNB is responsible for the Direct Sellers Act.  This Act requires companies and individuals selling items door-to-door to obtain a licence.  Several companies are licensed in New Brunswick to sell water softeners, air purifiers and heat pumps door-to-door. However, it is a violation of the Act for these companies and their salespeople to use misleading information to try to convince the homeowner to purchase their product.

Earlier this month, Natural Resources Canada also issued a consumer caution about salespeople visiting Canadian homes trying to sell furnaces, hot water heaters and other similar equipment using misleading and high-pressure sales tactics.

Protect yourself

Door-to-door sales are considered high-pressure sales because they happen in the comfort and safety of your own home.  The best way to protect yourself is to be aware of some high pressure tactics that may be used by salespeople. The scenario could look like this.

The salesperson may:
  • Visit your home unexpectedly.
  • Ask to inspect your furnace or hot water heater.
  • Misrepresent themselves as working for your municipality, a utility company, a provincial organization or a heating/water/air purifying company.
  • Make you believe they are backed by your municipal, provincial or federal government.
  • Make you believe they are backed by ENERGY STAR®, EnerGuide or the former ecoENERGY program.
  • Try to convince you they should inspect your equipment, your tap water or your home’s air quality.
  • Tell you something is wrong with your equipment, your water quality or air quality.
  • Try to convince you to buy or rent their equipment.
  • May say it is a one-time offer only available now.

Know who’s knocking at your door

Did you know that someone going door-to-door to sell products or services in New Brunswick needs to be licensed by FCNB? As part of this licensing process, these direct sellers must undergo a criminal record check. This provides a screening process for individuals entering your home.

If you find a salesperson at your door, be sure to ask to see their licence. The licence will include:
  • the date the licence was issued and its expiry date
  • the salesperson’s name and address
  • the business name and address
  • the product they are licensed to sell
  • the signature of FCNB’s director of consumer affairs



For more tips on how to keep yourself safe from scams and frauds, check out our tips on door-to-door sales.

Before signing a contract

Purchasing and installing a heat pump, water softener or air purifier is a personal choice. But before you sign a contract, consider the following tips. Not only will they help you choose the right product for your home, they will also help you choose the right contractor for your install.

Heat pumps: A heat pump is a big investment, starting at about $3,000 for a mini-split and up to $20,000 or more for a central-ducted system. To make sure that a heat pump is right for your home, consider these factors:
  • Keep the heat in. Make sure your home is well insulated and draft-proof first.
  • Not every heat pump works the same. Some are more efficient than others and will do a good job heating a home when outside temperatures fall to -25 degrees Celsius. Others lose their effectiveness once it hits -15 C, and require additional heating sources.
  • Shop around. Get quotes, read up on different available brands and functions, and understand what Heating Seasonal Performance Factor (HSPF), Seasonal Energy Efficiency Ratio (SEER) and BTU means.  Make sure you understand before you buy.
  • Consider your home’s size and layout. Larger houses will require higher-capacity pumps to heat and cool them properly. For ductless heat pumps, open concept layouts or large rooms yield more savings on your energy bill.
  • Expect some maintenance. You will need to clear snow from the outside unit in the winter and clean or change filters regularly.
  • Understand your financing options. Compare the cost of financing (total cost of credit – interest rate %) with a finance company or your local financial institution. If you plan on leasing, understand the term of the lease (term, rate, cost of borrowing, termination clause, etc.).
  • Understand the warranty and coverage. Many top heat pump brands require the dealer to be certified in order to offer the longest warranties available. Ensure the compressor − the most expensive part to replace − is covered. Also, ask about the warranty on the installation job. Contractors should guarantee their work for at least three months.

Air purifiers: Research the pros and cons of air purifiers before making a purchase. In many cases, you can take some simple steps to reduce indoor air irritants. Some portable air purifiers use either electrostatic-precipitator or ionizer technology that could produce some ozone, a lung irritant. Start your research by visiting the Natural Resources Canada website.

Water filtration systems: Before purchasing a water filtration system, consider having your water tested by a laboratory accredited either by the Standards Council of Canada (SCC) or the Canadian Association of Laboratory Accreditation (CALA). Some Service New Brunswick offices are also designated pick-up and drop-off points for water tests. You can find more information here. If you are connected to a municipal water system, call your local municipality to get more information about your drinking water quality.

Choosing a contractor

Selecting the right equipment to install in your home is very important, but the company you choose to do the install is equally critical. While a company may quote you a price range over the phone, you should be wary of getting an actual quote or recommendation without a home evaluation. Ask for referrals from friends and/or seek references from the company.  Search online for positive feedback from other homeowners by  checking the Better Business Bureau and general Google reviews. Make sure the contractor you select carries liability and workers’ compensation coverage and employs licensed tradespeople.

Bottom line

Before committing to purchasing from a door-to-door salesperson, make sure you’ve done your due diligence in learning about out the equipment and seeking out the installer. Don’t feel pressured by these door-to-door salespeople and sign a contract on impulse.
Before you sign, get a copy of the contract and take the time to read it. Make sure you are purchasing what is right for your needs. Remember, if a deal sounds too good to be true, it probably is.



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No Need To Be Salty About Student Debt
by FCNB on 


No Need To Be Salty About Student Debt

Heading off to university? It’s an exciting time, with lots of new adventures and experiences ahead of you.

One of those new experiences is living on your own (or with roommates) and being responsible for your own expenses. Those bills can include housing, school supplies, groceries, utilities, transportation and more.

As you embark on this new journey, be aware that credit card companies tend to heavily market their products to new college and university students – sometimes quite aggressively. Students have the potential to be big spenders – on everything from books and products for class, to meals out and entertainment, to new technology.

When someone gets in over their head with debt, credit card companies can make a lot of money off of interest and fees. No one takes on credit thinking they will get in over their heads, but it can happen even with the best of intentions.

Debt Regret - 77 % of graduates have it

What if I were to tell you that the decisions you make today related to credit cards and debt can impact your lifestyle and career options in the future? They can; in both the long and short term. 

In fact, three in four Canadian graduates have regrets about their student debt (this includes loans and lines of credit), and 25 percent wish they would have avoided adding to other debts, such as credit card debt*. And, 30 percent wished they had been thriftier or lived on a tighter budget while attending school. 

The toll that high amounts of debt can take on a person should not be underestimated. These graduates revealed that their debt load had:

  • delayed them from pursuing a career in their chosen field
  • delayed them from getting married, buying a home and having children
  • prevented them from saving as much as they should for emergencies or retirement
  • delayed them from paying down debt as quickly as they should

Of those polled who were still paying off debts, Atlantic Canadians anticipated that they would need 7.1 years to pay off their debt with an average debt load upon graduation of $28, 413.

Some educational institutions, recognizing the stress created by student debt, have even gone so far as to increase their mental health services for students to address this financial stress**. 

No One Wants to be the Mayor of Regretsville

Credit card companies often try to entice students with offers for free t-shirts or chances to win a trip if you apply. Do not feel rushed or pressured into applying.  Instead, talk to a parent or trusted adult before filling in the application to ensure that you are thinking critically about the decision to take on the responsibility of credit card debt.

Credit cards can be helpful in establishing a good credit history, which helps when planning major purchases that may require additional debt (such as a mortgage, additional education, etc). The caveat being that good credit history is only established when you make your payments on time, and don’t take on too much debt. However, if you have difficulty making payments, or if you overextend your debt, you can create the wrong kind of credit history.   

#creditgoals

If getting a credit card is something that you are considering, it’s important to learn how to use credit responsibly.

Tips to spend smart:

  • Do a comparison of a few different credit cards and what they are offering. At this point in your life, a card with no annual fee and a low-interest rate should be at the top of your “must have features” list. Other features such as free groceries or free movies can be a nice bonus when living on a restricted budget.   However, keep in mind that free is not free if you carry a balance on the card!  Interest charges add up quickly.
  • Just because you qualify for a certain amount, doesn’t mean you can afford it! Understand all of the costs (fees, interest rate and other non-interest finance charges) and be sure they will fit into your student budget.
  • Don’t get #FOMO – if you try to keep up with your friends by purchasing new gadgets and entertainment, you will quickly dig yourself into a debt hole that will be hard to climb out of.
  • Have a plan to pay off the credit before you use it. It’s best to pay your monthly balance in full, but your plan should at least be to make more than the minimum monthly payment until your balance is paid off.
  • Avoid cash advances, which charge interest immediately, unlike purchases.
  • Limit the number of cards you have and keep the limit low to avoid overspending.

Taking the time to assess your needs, shopping around and having a plan will help set you on the right path to avoiding debt pitfalls as you begin the exciting new journey through university.

Check out our infographic explaining how interest works on a credit card, and here’s a link to more tips on dealing with debt.

FCNB, we can help you build the skills to pay your bills! For more budgeting tips, check out our Spend Smarter website, follow us on Facebook, Twitter and Instagram!

________________________________________
*According to an Ipsos Reid poll from 2017: https://www.ipsos.com/en-ca/news-polls/BDO-student-debt-2017-09-18 


 

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