Think long term. Contribute your maximum to an RRSP or employer-based retirement plan. Your money will compound and grow, building up your retirement savings, and you don't have to pay tax on it until you start taking it out. If you were to contribute $1,000 a year at rate of six per cent interest a year for 20 years to an RRSP, you’d end up with $42,199.86.
Credit
Check your credit rating. Banks and lenders use this rating to evaluate your credit worthiness. Contact a credit bureau (such as Equifax) to find out your credit rating. You can get your credit report mailed to you for free or get it immediately online for a small fee. If you believe your rating is inaccurate, request an adjustment and the credit bureau will investigate your claim.
Establish your own credit. Even if you're married, each spouse should have a credit card in his or her own name to establish a credit history, Biscott advises. Divide responsibility for the utility bills for the same reason.
Switch to a low-rate credit card. Change from a credit card with a high interest rate of 19 per cent to one with a low interest rate of 12 per cent. Even if the low-interest card charges an annual fee, it’s still worth it. "If you're someone who never carries a balance, then get an Aeroplan card or one that will save you on gas or groceries, but if you carry a balance, even a few times a year, choose a lower-interest credit card," advises Pat Foran, author of The Smart Canadian's Guide to Saving Money (John Wiley and Sons, 2008, $26.99).
Renegotiate your credit card interest rate. Go to Bankrate.ca to compare different Canadian credit cards. Then contact your credit card company to negotiate a lower interest rate. You'll be in a better position if you have a good credit rating (FICO score).
"If you miss paying your credit card bill for two or three months, that throws up a red flag on your credit rating," Foran warns. And would the company waive the annual fee? Some may, some may not. "It never hurts to ask," Foran says.
Pay down credit card debt. Transfer your credit card balance to a card with lower interest. You'll immediately put yourself in a better position. For example, if you're carrying $2,000 on an 18 per cent card, you'll rack up $360 in annual interest fees. But if you transfer the $2,000 to an 11 per cent card, you'll only incur $220 in annual interest charges. Then start chipping away at your debt. Tip: Beware of cards with zero per cent introductory offers, because that rate usually expires after a short time to be replaced with a much higher one.
Page 2 of 4 – Get information on how taxes and insurance can affect your money earned on page 3.
