Retirement in Canada by 40: Is it Doable?

Dreaming of moving to Florida for your retirement? How about Hawaii? What if you could do this by the age of 40? It may just be well in reach if you start putting measures in place early and have laser-like focus toward that goal.

Early Retirement By the Numbers

According to Statistics Canada, since 2009 the average retirement age has risen slowly but steadily, reaching 62.3 in 2011. In the United States, the average adult retires at 61, according to a Gallup poll. In Australia, men retiring within the last five years were 61.5 to 63.3, on average, and women were 59.6, according to the Australian Bureau of Statistics. Whereas in Japan, the average worker retires at 69.1, and in Luxembourg, the average retirement age is 57.6, according to the Paris-based Organisation for Economic Co-operation and Development.

Based on those averages, financial experts consider an early retirement age to be under 55, and typically between the ages of 50 and 55. But in some countries, like India, for instance, where two-thirds of the population is 35 or younger, this, more youthful working population has its goal set to retire even earlier. Here are some tips on making it happen:

What will you need to do: Dropping out of the workforce years before everyone else, means you have to be completely debt free, and have a solid foundation, with savings equal to about 25 times the income you wish to achieve in retirement, taking any government pensions or payments into account.

Most people will need 70 percent to 80 percent of their pre-retirement income in order to maintain their standard of living during retirement, by which time they will have ideally paid off home mortgages and any other major debt, according to advisors.

1. Pay Off Significant Debt

Most financial experts agree that paying down debt like mortgages, car loans and other significant obligations is key for early retirement.

The latest mortgage market survey from the Canadian Association of Accredited Mortgage Professionals shows that 15 per cent of homeowners have been increasing the amount of their payments in recent years, down from 19 per cent in the 1990s and early 2000s. Instead, owners are increasingly paying down their mortgages with lump-sum amounts. Sixteen per cent of owners did this in recent years, a rate that has crept higher since the 1990s.

However striking a balance with paying down debt and saving for retirement is just as important. Just as you get the biggest benefit from mortgage prepayment in your early years of home ownership, so do your retirement savings profit from contributions made when you’re young. So if retirement by 40 is your goal – then striking a balance between paying down debt and savings for retirement is necessary.

2. The 4% Rule

A basic financial rule of thumb maintains that you can withdraw about 4% from a retirement portfolio per year — or 1/25th of the balance. That means you should be able to safely withdraw about $40,000 per year from a $1,000,000 retirement portfolio — added to whatever you might be receiving (or expecting to receive later) from the government. Earnings and interest will presumably make up the difference annually, making it possible to withdraw 4% a year indefinitely. (Market fluctuations may affect this, of course.)

However this rule is based on the assumption that the retirement fund will need to last only three decades. For those who want to retire by 40 – Most advisors now advice withdrawing with a 3% rule instead. By withdrawing 1% less each year early retirees should have enough funds to last four decades.

3. Use Tax-Free Savings and Investment Instruments to Help you with Retirement Goals

In a recent article on Aspire-Canada, we explored how Tax Free Savings Accounts (TFSA’s) could make you a millionaire. Part of the reason is the tax free benefits and the ability to build up a significant retirement fund. Asset allocation will be key is this strategy as a limited savings account yielding 2% will not be sufficient to get you moving towards this goal.

Tax free accounts are even more important as anticipated rates of return and inflation are wild cards. Taxes are also a big consideration for early retirees, given that many people save most of their money in retirement accounts that are taxable, which levy penalties for withdrawals before a certain age.

Living for an additional 50 years in retirement puts an onerous amount of pressure any portfolio to keep pace with inflation. This means that a comprehensive approach that works in tax strategy to save an investment is key for those who want to retire early.

4. Retirement Doesn’t Mean You Need to Completely Stop Working

You can still earn a solid income from working from home on the projects you enjoy. Ideally, at this young age its important to stay active and occupied. Many people use this time to work on hobbies and still get paid to do the things they love. Whether its doing additional consulting work, tutoring or renting out extra space, having an additional cash boost every month can help keep you afloat in early retirement. Put this extra income boost as one of your early retirement goals to protect you from swings in investment income and rising inflation.

Some Concerns:

Those who retire in their 40s will have to wait decades, until at least 60, before they are eligible for benefits like the Canada Pension Plan, Old Age Security, or the Guaranteed Income Supplement (GIS) and they are likely to collect less in benefits than Canadians who pay into the system for a longer time. They may also need their money to last for an additional 40 to 50 years.

Many people underestimate how much money they will need, because spending on leisure activities, such as travel, often increases immediately after retirement. For those who retire in their 60s, spending on leisure activities tends to trail off after a decade or so, but that is when health-care costs generally pick up. In addition to good government-based healthcare plans additional health coverage to cover any gaps that may exist is also a good idea.

A solid approach is key towards building up a sizeable fund for early retirement. Think you are on track? Send us your comments.

This article by Keisha Blair first appeared on and was distributed by the Personal Finance Syndication Network.

Why Can’t I Put My Parent PLUS Loan in an Income Based Repayment Program?


Dear Steve,

I have significant student loan debt and applied for IBR and was denied, due to there being a PLUS (parent) loan in my record.

I did not participate in anyway in the creation of any PLUS loan. My suspicion is that it was created fraudulently using my identifying information from when I co-signed on a loan for my daughter (three years prior to this fraudulent loan). This situation goes bask to 1999.

What is your take on why having a PLUS loan in one’s loan consolidation bars an individual from IBR?

Additionally, any thoughts out how to get an erroneous or fraudulent PLUS loan removed from one’s “portfolio”? In this case there is no legitimate signed loan application in the file. This loan was “robo” created most likley.



Dear Michele,

Sadly I don’t make the government rules, just report on them. A Parent PLUS loan can be put into an income driven repayment program, just not an Income Based Repayment (IBR) plan.

Let’s assume the loan was created fraudulently. But the question is after 16 years, how are you going to prove that? Are you willing or able to hire an attorney to pursue this matter and even so, what is the statute of limitations for going after any party involved? You can always file a complaint with the Consumer Financial Protection Bureau or the Department of Education Ombudsman and ask for help with the presumed fraud.

You can certainly ask for documentation from the servicer but it would be a horrible long-shot to get that loan unwound now.

Parent PLUS loans are handled through a different repayment plan, the Income Contingent Repayment (ICR) plan. See this article for details on what you can do, “The Best Way to Lower Parent PLUS Loan Payments.”

So you should be able to deal with the PLUS loan separately and the rest of the loans in an IBR. But while you pursue these options, just keep in mind an income driven repayment program is now a silver bullet or magic wand. There are big consequences people rarely talk about. Read this.

Before I go I wanted to leave you with three easy action items you jump on right now to address your situation. Just click here.


Get Out of Debt Guy – Twitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.

Choosing Beneficiaries for Your Retirement Plans

You contribute to your retirement plans on a regular basis. You track your growth to make sure that you’ll have a comfortable retirement. But what happens if you die unexpectedly? Do you recall who you chose to be your beneficiaries? And are you sure that your choice is the best way to achieve your goals?

To help us answer that question, we contacted Ryan C. Edwards, CFP®. He’s an investment executive at helping people achieve overall financial success.

Q: What happens if we don’t name a beneficiary?

Mr. Edwards: If you don’t name a beneficiary on a retirement plan or an IRA, the assets in the plan will be probated according to your will. Probate can be a lengthy and costly process, so most people want to avoid probate by listing specific primary and contingent beneficiaries on their retirement plans. The beneficiaries will have almost immediate access to the assets at no additional cost to the estate.

Additionally, by listing a beneficiary, you protect the assets from creditors. If you don’t list a beneficiary, the probate court will consider the assets in the plan part of your estate and subject to creditors.

Finally, if you do not name a beneficiary for your retirement plan or IRA, then you limit the ability to stretch the IRA over the recipient’s lifetime. A non-spouse listed beneficiary can take a lump sum distribution, take the assets out over a five-year period, or take the assets out over a lifetime. The advantage of taking the assets over a lifetime is that it allows for tax-deferred growth and can provide more control over any taxes paid. An unlisted beneficiary (one determined by probate court) can only take the assets by lump sum or over a five-year period, eliminating the lifetime option. This can result in higher taxes on both the assets in the plan and earned income as well as a missed opportunity for growth for the recipient. Depending on the size of the account, hundreds of thousands of dollars of tax-deferred growth could be the cost of not naming a beneficiary.

Q: Can I change beneficiaries?

Mr. Edwards: Yes, you can change beneficiaries on retirement plans and IRAs. However, if you are married in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), your spouse generally must sign off on changing the primary beneficiary to anyone different from him/her.

Q: Am I limited to relatives when choosing a beneficiary? Or could I select anyone?

Mr. Edwards: You are not limited to relatives when choosing beneficiaries on retirement plans (exception noted for spouses in community property states). You can select absolutely anyone; in fact, you can list charitable organizations and trusts as beneficiaries.

Q: What happens if I prefer the money to go to an organization (like my church, the ASCPA, or other non-profit organization)? Can I name them as the beneficiary?

Mr. Edwards: Absolutely. Because the organization is a non-profit, they will not pay any taxes on withdrawals from the retirement plan. Most non-profits will withdraw all of the funds immediately upon receipt.

Q: Can a minor (underage) child be a beneficiary?

Mr. Edwards: Yes, a minor can be listed as a beneficiary, but this is where I caution parents. The most common scenario involves parents who list spouses as primary beneficiaries and their minor children as contingent beneficiaries. By listing minors as beneficiaries, the assets do avoid probate; however, the minor children have access to the funds with no strings attached when they reach the age of majority (18-21 depending on state). Most parents are not comfortable with the idea of an 18-year old having access to a windfall, whether it is from retirement plans, IRAs, or life insurance. Also, if you do want to list a minor child as a beneficiary of a retirement plan or IRA, be sure to list a guardian/custodian of the assets in estate planning documents. Otherwise, the appointment of a custodian or guardian could be a lengthy ordeal requiring probate.

I often suggest meeting with an experienced estate planning attorney and tax accountant to consider making a trust the contingent beneficiary. There are a couple of different types of trusts that could be established. A testamentary trust would be created by the parents’ wills and would receive the retirement plan assets. Because the trust is not created until death, the assets would likely still pass through the probate process.

An unfunded living trust could also be established prior to death and be listed as the beneficiary of the retirement plan. The primary benefit of having a living trust is that the plan would avoid probate; however, the cost of setting up and maintaining the trust has to be taken into account. Again, an experienced estate planning attorney can really help parents make informed decisions.

Q: Is there a reason that I wouldn’t want money going to my adult children?

Mr. Edwards: Definitely. If your adult child is a spendthrift or is a poor manager of money, then you may want to consider alternate beneficiaries or a trust that enables you, with the help of a trustee, to control the money according to the instructions you provide for the trust.

Another situation in which you may not list an adult child as a beneficiary is if he/she does not need the assets. Because retirement plans/IRAs grow tax deferred, you may want to consider skipping a generation and listing grandchildren as beneficiaries. If anyone other than a spouse inherits an IRA, he/she typically establishes a beneficiary IRA and has to take out required minimum distributions (RMDs) each year based on his/her life expectancy. The two factors that determine the amount of the RMD are your life expectancy and the value of the account on December 31 of the preceding year. The larger the value and the shorter your life expectancy, the larger the RMD. So, by listing younger beneficiaries, you can “stretch” the IRA distributions over a longer period of time and allow for greater tax deferred growth. Sometimes this is called a stretch IRA.

Another way in which you might utilize a stretch IRA is if you don’t need any income from your IRA during your retirement. At age 70.5, you are required to start taking RMDs from your IRA. If you don’t need the income from your IRA but still want to leave your adult children an inheritance, you can still stretch your IRA with life insurance. Although I have never utilized this technique, you can use your RMDs to buy life insurance, list your adult children as the beneficiaries of the life insurance policy, and list grandchildren as the beneficiaries of IRA. By doing this, you provide your adult children with an inheritance while also stretching your IRA over longer life expectancies.

Again, you would want to discuss this plan with an experienced tax planner and estate planning attorney as generation skipping transfer tax could come into play.

Q: Do I have any control on how the beneficiary spends the money?

Mr. Edwards: You can control how the beneficiary spends money by listing a trust as the beneficiary of the retirement plan or IRA. Within the trust documents, you can establish for what expenses the trustee is allowed to withdraw assets from the trust for the benefit of the beneficiary. You can give the trustee as much latitude as you deem necessary. A common trust arrangement for a beneficiary is to allow withdrawals from the trust for health, education, maintenance, and support until he/she reaches a certain age. At that age, the beneficiary will receive the balance of the assets in the trust. This arrangement protects the beneficiary by allowing the trustee to meet specific financial needs until the assets are turned over at the listed age.

Choosing a beneficiary for your retirement plan is an important decision. Make sure you consider the options carefully and seek out appropriate professional advice.

This article by Gary Foreman first appeared on The Dollar Stretcher and was distributed by the Personal Finance Syndication Network.

How to Lock in a Super-Low Mortgage Rate

Mortgage rates have been trending upward for a few weeks, so if you’re starting the process of buying a home, now might be a good time to lock in your rate.

Deciding when to lock isn’t just about market conditions, because if you’re not prepared to complete the loan process within a certain time frame, you could end up paying hundreds of dollars in fees for locking in too early.

What Does it Mean to Lock In a Mortgage Rate?

“Locking in” refers to the lender and the borrower entering an agreement about how much the loan will cost, no matter the day your transaction closes. Common lock agreements are for 15, 30 or 45 days, and if your loan doesn’t close by the agreed-upon deadline, whether or not it’s a result of factors beyond your control, you’ll be subject to fees to extend the lock.

Even though it can be a little intimidating to lock in a rate and start the countdown timer on completing your mortgage, it can protect you from whatever happens in the market between the time you receive pre-approval and final approval for the loan. It can take more than a month to process a loan application — a lot can happen in that time frame, and if you don’t lock in your pricing, you may end up paying much more than you thought you would.

“They commit to particular pricing regardless of what happens in the market, as long as the borrower can get their end done within that timeframe,” said Joe Parsons, a senior loan officer with PFS Funding, a mortgage bank in Dublin, Calif. There are risks whether or not you decide to lock in a rate or not (meaning you float the rate): “If the pricing gets worse after I’ve locked, I’m still going to get that pricing. The converse is not true. … I am not going to get that lower rate because I entered into the agreement with the lender.”

For the borrower, trying to time the market to get a marginally better rate may not be worth the risk of rates spiking, Parsons said, particularly with the amount of volatility in the market right now.

“I’m advising, in general, people these days lock at the time that we have a complete loan package ready to go to underwriting,” he said.

Giving Yourself Time Is Key

At the same time, it’s important to leave yourself enough time to complete the loan application process, which can easily get delayed. Carlos Jaime, a loan officer and owner of CTC Brokers in California, said he cautions borrowers against leaving little room for error, just to save money (it’s cheaper to lock in a rate for a shorter period, say 15 days instead of 30). Common causes for longer loan application processes include appraisal delays, receipt of IRS transcripts (particularly around tax season) or the borrower failing to provide necessary documents in a timely manner.

Jaime and Parsons both said that, ideally, borrowers are working with knowledgeable loan officers who can confidently advise borrowers about the best time to lock in a rate and for how long. Once you give your loan officer the go-ahead to request a rate lock and he or she receives confirmation of that action, you’re on the clock to get everything done. Still, that doesn’t mean you should feel like all the pressure to make these decisions is on you.

“The biggest thing is educate yourself for sure, but at the same time use your loan officer to your advantage, you know, use them to help shoulder some of that responsibility,” Jaime said. “Keep in contact with your loan officer, and ask them questions, and they’ll be able to advise you to your specific situation.”

Having better credit gives you access to lower interest rates on a home loan, which can potentially give you more buying power. So before you even begin your search for a home, you may want to check your credit reports and credit scores to see where you stand. You may find errors that are dragging your scores down, or you may decide to take a little extra time to work on your credit to bring your scores up. You can get your free credit reports annually from, and you can get a free credit report summary, updated monthly, on

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This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.

39 Etiquette Tips That Can Help Make You a Success

In today’s culture, parents are increasingly challenged in mentoring their children with the fundamental rules of etiquette. Economic struggles have replaced the once-common casual family dining experience with fast food restaurants, giving parents less of an opportunity to teach dining etiquette to their children. Even worse, cellphones, iPads, Facebook and Instagram have replaced conversation in households and neighborhoods, eliminating another opportunity for parents to teach communication etiquette to their kids.

When kids enter the real world and begin their job search they may face a tremendous etiquette learning curve that could result in being passed over for a job for some minor faux pas they didn’t learn to correct at home. Not to worry. I’m here to help. There are five key areas of etiquette every parent should teach their kids while they’re still young.

How to Communicate

  1. Look everyone in the eye for no more than five seconds at a time, then divert your glance for another five seconds. Practice will turn this into a habit.
  2. Not every thought that comes into your head should come out of your mouth. Vet your thoughts. Speaking your mind does not mean sharing every thought. Some thoughts are not appropriate and could cause irreparable damage to your relationships.
  3. Never criticize, condemn or complain about anyone to another relationship. It’s a giant red flag. People will assume that you are bad-mouthing them and will try to stay away from forming any strong relationships with you.
  4. Never gossip. Most gossip is bad, negative and damages relationships.
  5. Gather as much information about your relationships as you can. At a minimum gather the following information: birthdays, hobbies, interests, schools attended, where they grew up, current family background (married? kids?), where they live, dreams or goals they are pursuing.
  6. Make Hello Calls, Happy Birthday Calls and Life Event Calls.

Eating Etiquette

Believe it or not, many people don’t know proper dining etiquette. They may have grown up eating while they watch T.V. or sitting at a table in a fast food restaurant. In the adult world of the successful, you need to know how to eat at social settings. Let’s go down the list:

  1. As soon as you sit in your chair, take the napkin off the table and drape it over your lap.
  2. Never begin eating until everyone has their meal.
  3. Never chew with your mouth open.
  4. Never talk while you’re chewing your food.
  5. Never dip any food you’re eating into a sauce everyone is using.
  6. Don’t wolf down your food. Eat at the same pace as everyone else at the table.
  7. Never hold a spoon, fork or knife with your fist.
  8. Outside fork is for salads, inside fork for the meal.
  9. Never make gestures while your utensils are in your hands.
  10. Never reach for anything like salt and pepper. Always ask someone to pass things like that.
  11. Don’t slouch at the table. Sit straight up.
  12. After the meal, excuse yourself and go to the bathroom and make sure you don’t have any food in your teeth. Carry a toothpick or something similar in your wallet or purse wherever you go.

Dress Etiquette

You have to learn how to dress in life. There’s a certain way to dress for work and job interviews. You’re going to go to all sorts of social events: weddings, formal dinners, informal dinner parties, engagement parties, funerals, birthday parties, picnics, etc. You need to know how to dress. Here’s a basic rundown:

  1. Work and Job Interviews – Some professions have special-purpose clothing like construction, roadwork, electricians, etc. If you work in an office, dress like your boss or your boss’s boss. In some offices, it’s business casual, in others it’s a suit and tie for men. For woman it’s slacks or skirts and open collars – heels, or no heels are OK.
  2. Weddings, Wakes, Funerals – In most cases, this will be suit and tie for men. For women, it’s the same as work clothes but many women like to wear more formal gowns or a more stylish cocktail dress, usually worn with heels. Some cultures have special dress codes you need to be aware of.
  3. Formals – Usually formals are black-tie optional, black tie or white tie for men. Optional usually means a dark suit, tie or black bow tie and dark shoes. Black tie means black tuxedo, dark shoes, white tie means black tailcoat, white wing-collar shirt, white bow tie, black shoes for men. For women it’s a long formal gown or short cocktail dress or dressy long skirt and top, usually worn with heels. White ties are very rare.

Introducing Yourself

In life, you will be forced into situations where you will meet new people. This is an opportunity to develop valuable relationships. Some may be your next employer, future spouse, next best friend, future co-worker, investor or future business partner. There are five basic rules to making introductions:

  1. Smile
  2. Firm Handshake
  3. Make Eye Contact
  4. In one sentence explain who you are, why you’re there and who you know at the event.
  5. Ask questions about the person you’re introducing yourself to. (You can see a list of questions to ask here.)

Basic Manners

  1. “Yes”
  2. “Please”
  3. “Thank you”
  4. “Excuse me,” when interrupting or entering a conversation
  5. Don’t interrupt someone while they are talking.
  6. Don’t roll your eyes when someone says something you disagree with.
  7. Don’t look away when someone is talking to you.
  8. Never check your cellphone when talking to someone.
  9. Stay positive and keep criticisms and negative comments to yourself.
  10. Compliment, compliment, compliment
  11. Thank anyone hosting an event, dinner, etc.
  12. Never curse or use inappropriate language during social events.
  13. Never be rude.

This story is an Op/Ed contribution to and does not necessarily represent the views of the company or its partners.

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This article by Tom Corley was distributed by the Personal Finance Syndication Network.

11 States Where Employers Can’t Check Your Credit

In most of the country, a potential employer can review your credit report when evaluating you for a job you applied for, and it’s a very controversial practice, to say the least. There’s a growing movement to restrict these credit checks, and on May 6, New York City Mayor Bill de Blasio signed a law preventing most employers from requesting or using a job applicant’s credit history in the hiring process.

Last year, 39 bills were introduced in 19 states aimed at restricting employer credit checks, but such restrictions exist in only 11 states, according to the National Conference of State Legislatures. New York state isn’t among them (though legislation was proposed on a state level last year), but the changes in New York City affect millions of workers.

“Using credit checks during the hiring process to screen applicants disproportionately affects low-income applicants and applicants of color, and this legislation prevents the vast majority of employers from doing so,” reads a news release from the mayor’s office. There are exceptions to this ban on credit checks: Credit checks are still allowed for “law enforcement and other professions involving a high level of public trust or access to sensitive information,” in addition to employers who must run employee credit checks under federal law.

The vast majority of employers don’t check prospective employees’ credit — in a 2012 survey from the Society of Human Resource Management, only 13% of respondents said they check all employees’ credit history, and 53% of hiring managers said they don’t do it at all. Still, it’s something many consumers worry about. It’s a good idea to review your free annual credit reports before applying for jobs to make sure they’re free of inaccurate information (here’s how to dispute errors) and that you can explain any negative information they may contain.

If you work in one of the 11 states with laws restricting employer credit checks, you may not have as much to worry about. There are exceptions to the restrictions, so you should check individual states’ policies if you’re concerned, but here are the states where there are laws prohibiting employers from checking applicants’ credit under certain circumstances:


Keep in mind that employer credit checks are limited to credit reports — a potential employer can’t request your credit scores. It’s a good idea for you to review your scores (you can get two free credit scores, updated every 30 days, from, because they are based on credit reports and can alert you to issues that may arise between times you review your credit reports.

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This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.

How to Actually Make Experts’ Money Advice Work for You

Personal finance is rarely a required subject in high school and college, leaving many on their own to figure out money management. When you research online, you are often bombarded with many different opinions on the topic. Asking experts can often leave you lost in the financial jargon. It is easy to feel overwhelmed, stressed and frustrated by the information. Between paying off debts, saving, investing, and budgeting, there is a lot to consider for every penny. Here are some tips below to stay sane while figuring out your finances.

1. Create a Plan

Sometimes it can seem like there are just too many things to think about. Creating a plan can help you feel some control over the process. It’s important to determine where you stand financially right now and what goals are most important to you. Are you trying to pay off a mortgage, save for your kid’s college education or make sure your retirement is on track? Then it can be a good idea to break down each of your long-term goals into short-term action plans.

2. Focus on One Thing at a Time

Once you have your overall big picture set up, you can focus on each piece. There are several aspects to money management and you may feel less stressed if you look at them and plan for each part separately. If you are working with a professional, it can be a good idea to dedicate chunks of time or sessions to the pieces you need the most help with, from saving for retirement, building credit to deciding whether to buy or rent.

3. Check In & Get Support

Now that a plan is in motion, it’s important to check up on your progress. Track where you are every month and take active steps if it does not seem like you are making good progress on your goals. (If you’re building credit, for example, you can track your credit score progress using free tools like those at

It may feel isolating if you are struggling with your finances. It can be a good idea to seek out others who are just as focused. Whether it be from a family member, friend, co-worker, online community or professional adviser, it’s a good idea to reach out when you need support.

4. Be Honest, But Stay Positive

One of the most important aspects of personal finance is being honest with yourself and others about your situation as well as your knowledge and objectives. Staying positive can make a big difference. If you aren’t happy with where you are, try to focus on what you’re learning or how far you’ve come. Also, you can think about all the things you like about your life besides money.

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This article by AJ Smith was distributed by the Personal Finance Syndication Network.

I’m Not a U.S. Citizen. Can I Get a Mortgage?

Immigrants are having a significant impact on the U.S. housing market. According to the Research Institute for Housing America, immigrants accounted for nearly 40% of the net increase in U.S. homeowners from 2000-2010. Meanwhile, the same group estimates that U.S. homeownership rates among Hispanic immigrants will hit 50% by the year 2020.

Overall, their numbers are still relatively small, representing only 11.2% of owner-occupied homes in 2014, according to the Joint Center for Housing Studies. Even so, that’s up from 6.8% 20 years earlier.

So immigrants are clearly buying homes. But what sort of obstacles and challenges do they face that native-born homebuyers do not?

To be sure, there are no legal barriers to foreign nationals buying property, owning homes or obtaining loans in the U.S. Foreign investors buy U.S. property and do business with U.S. banks all the time – getting a mortgage and buying a home is simply more of the same, on a smaller scale.

“Residency of any kind is not a requirement for home ownership in the U.S.,” said Jason Madiedo, president of Alterra Home Loans, in Las Vegas, Nev. “The challenge for the consumer is to gain financing.”

Documenting Foreign Financial Info Can Be a Challenge

For a legal immigrant with an established employment and credit history in this country, the process of buying a home is much the same as it is for a citizen. However, there are still certain challenges that non-citizens may face when seeking to buy a home in the U.S. that native-born borrowers are unlikely to encounter.

“It becomes a little more difficult for a foreign national to buy an owner-occupied property unless they’re here with a job in the U.S.,” said Bill Ashmore, president of IMPAC Mortgage in Irvine, Calif. “The longer somebody’s here and the more they can document their income through tax returns, the better off they are.”

Even if they’ve established themselves professionally and financially in their home countries, recent arrivals may find it challenging to get a mortgage in the U.S., Ashmore said.

One of the major reasons is because the information needed to document income and credit is coming from abroad. That means the information may need to be translated into English, or may be in a different format or based on different conventions than American bankers are used to – for example, there will be no W-2s for earnings abroad.

There’s also the matter of verifying the validity of information provided by unfamiliar individuals or institutions.

“Are you going to accept the profit and loss statement of the accountant?” he asked.

As a result, many foreign nationals tend to simply pay cash for home purchases, which Ashmore termed the “path of least resistance.”

That’s not to say that foreign financial information can’t ever be used in obtaining a mortgage from a lender in this country. Ashmore said his company is presently developing a program in cooperation with about 25 foreign banks to enable borrowers to document assets abroad. However, potential borrowers would need to have accounts with a participating bank to benefit.

Alternative Measures of Credit, Income Sometimes Needed

Non-citizen homebuyers tend to fall into two groups, according to Madiedo, who is past president of the National Association of Hispanic Real Estate Professionals. The first group, he said, are affluent foreign nationals with the financial resources to buy property in the U.S. and the ability to come and go as they wish.

The second, he said, are the ones who come here seeking work and opportunity, people he calls “the type that this country was built on.”

“These folks have a much harder time obtaining financing,” he said.

The way some immigrants handle their finances is part of the issue, Madiedo said, given that many prefer to do their transactions in cash. As a result, they don’t build a credit history. (If you want to see if you have a credit history, you can check your free annual credit reports through, and you can check your free credit report summary every month on

“What we run into is, number one, a thin-credit or no-credit situation,” he said. “Many immigrants tend to be credit-adverse, which limits their options.”

For borrowers who haven’t established traditional credit, some lenders will use alternative methods of qualifying them for a loan, such as looking at rent payments, or phone and utility bills. But doing so is more labor-intensive for the lender and the loans carry higher interest rates than those done with conventional underwriting.

Another issue that sometimes arises with immigrant families is that many persons may contribute to the household income, rather than the one- or two-earner households that lenders are more accustomed to.

“One of the challenges we’re seeing from an underwriting perspective is the multigenerational family,” Madiedo said.

In such a household, you may have grandparents, parents and children all working and contributing to the loan payment. Documenting all that income, and proving that everyone will be an occupant in the home, is a challenge in today’s lending environment, Madiedo said.

Not all lenders will be willing to go through the extra steps needed to underwrite such loans, although Fannie Mae, Freddie Mac and the FHA do have certain loan products that accept both nontraditional credit and varied income sources.

“The key for consumers is to be working with the right lender who understands their cultural nuances and packages the loan into whatever (product) works for them,” Madiedo said.

Nonpermanent Residents Can Still Get Loans

Another type of immigrant borrower is those who do not have permanent residency (green card) status, but who have come to the U.S. on temporary visas because they have special professional skills that are in demand.

From a lender’s perspective, one concern with such borrowers is how long they will be able to remain in the country. As such, they may need to provide a statement from their employer/sponsor attesting to the expected duration of their employment, Ashmore said.

Both Fannie Mae and Freddie Mac offer mortgage programs that are available to nonpermanent resident aliens who are here on a temporary work visa (H1B or H2B), according to information provided by IMPAC Mortgage. Down payment requirements are higher than the minimums allowed on other Fannie and Freddie loans, however, and other restrictions may apply.

Nonpermanent resident aliens may also be able to go outside of the Fannie/Freddie structures for what are called non-agency loans, which have fewer restrictions but also have higher interest rates and down payment requirements.

What About Undocumented Immigrants?

What about undocumented, or illegal, immigrants? Many are surprised to learn that even here, it’s still possible to get a mortgage and buy a home.

A standard loan application will require the borrower to provide a Social Security number and indicate their citizenship or residency status. But those requirements aren’t established by law – those are requirements imposed by the agencies backing those loans, such as Fannie Mae, Freddie Mac or the FHA. And there are certain types of non-agency loans that don’t have those requirements.

For some loans, a borrower may use what is called an Individual Taxpayer Identification Number (ITIN) instead of a Social Security number. This is an alternative form of taxpayer identification that is issued to foreign nationals working in the U.S. who are ineligible for Social Security.

Lenders themselves aren’t equipped to check a person’s immigration status – Ashmore said that if a person has their financial and credit information in order, the lender really doesn’t have a way of knowing what their immigration status might be.

“If somebody’s going to come to me, I’m not going to check that their driver’s license is right, I’m going to do a fraud check,” he said. “It’s more documenting your ability to repay, rather than whether you’re illegal or not,” he said.

ITIN mortgages aren’t widely available, and are generally offered by small community lenders who are willing to put in the extra effort needed to underwrite them, according to Madiedo. Interest rates typically run about 2-3 percentage points above what someone would pay on a conventional 30-year loan, he said.

Madiedo said that undocumented immigrants who obtain mortgages tend to be dependable borrowers with low default rates. They also tend to keep their loans for a long time, being less likely than other mortgage borrowers to refinance to a lower rate or sell the property before the note is paid off.

“The loans perform extremely well, so it’s a good investment opportunity,” he said.

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This article by Kirk Haverkamp was distributed by the Personal Finance Syndication Network.

What’s the Difference Between a Charge Card & a Credit Card?

Have you ever noticed that some cards offered by major banks are not actually credit cards, but are in fact charge cards? These products look just like credit cards, and are in many ways similar, but there some important differences.

With a credit card, account holders can choose to avoid interest by paying their entire month’s statement balance in full, or they may carry a balance and incur interest charges. But with a charge card, each month’s statement balance must be paid in full and on time, or the cardholder will be considered in default.

Most credit cards are issued with a preset credit limit. Cardholders can charge up to that limit, and if they need to charge more, they must first call to have a larger line of credit extended. Typically with a charge card, there is no predefined credit limit. Cardholders who are concerned that a large charge might not be approved can contact the card issuer and get a charge pre-approved, but otherwise they may not have an indication of their charging ability until a purchase is denied.

A credit card will also have a different structure of rates and fees. For example, since credit card issuers can make a profit on interest charges, they have the ability to offer cards with no annual fee. On the other hand, charge card issuers will almost always have to charge an annual fee to recover their cost of doing business. And by its nature, a charge card will tend to lack features such as promotional financing, balance transfers and cash advances. In addition, there are dozens of banks and credit unions that issue credit cards, but there are very few companies that issue charge cards, such American Express and Diner’s Club. Finally, charge cards are generally offered to applicants with an excellent credit history, while there are a variety of different credit cards that are marketed to people with varying credit profiles. (You can get two of your credit scores for free on to give you an idea of whether you’ll meet a card issuer’s credit guidelines.)

What These Types of Cards Have in Common

Both credit cards and charge cards are considered forms of credit, so a cardholder’s payment history will be reported to the three major consumer credit reporting agencies. Cardholders with both types of cards can improve their credit by making their payments on-time, but they can also hurt their credit if they fail to make their minimum payment on time. The difference is that with a charge card, the minimum payment is always equal to the last statement’s entire balance.

Otherwise, both types of cards can offer valuable rewards in the form of cash back, points or miles. Furthermore, both these types of cards can offer cardholder benefits such as travel insurance, purchase protection and concierge services. Nevertheless, charge cards tend to be more feature-filled than many credit cards, as they appeal to a higher end of the marketplace that is willing to pay annual fees.

Having It Both Ways

American Express, which is a major issuer of charge cards, offers a feature to cardholders that allows them to extend payment in some cases. Its Pay Over Time program allows its charge card customers to finance charges in one of three ways:

  1. Extended Payment can be applied to charges of $100 or more.
  2. Select & Pay Later allows cardholders to manually select individual charges on which to extend payment.
  3. Sign & Travel lets cardholders automatically extend payment on eligible travel expenses.

In each case, the purchases move from the charge card balance to the Pay Over Time balance, and are subject to standard interest rates based on the cardholder’s credit-worthiness.

Which Should You Choose?

A credit card can be the better option for anyone who needs to regularly carry a balance on their purchases. However, those who may need to carry a balance occasionally may find a charge card with an extended payment option to be sufficient. Those who are confident that they will always pay each month’s balance in full can feel free to choose from either credit or charge cards, depending on which one offers them the most desirable features and benefits.

When you examine both the similarities and differences between credit and charge cards, the right product for your needs will become clear.

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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This article by Jason Steele was distributed by the Personal Finance Syndication Network.

How One Family Saved $4,800 on Food in a Year

What would you do with an extra $50 to $250 a month? Pay off credit card debt? Build an emergency savings fund? Take a much-needed vacation? There’s a good chance you are throwing away that much money month after month, and if you stop, you’ll be able to put it to better use.

You just need to stop wasting so much food.

Laura McElfresh from Aurora Colorado, has learned firsthand how the savings can add up. With seven children ages 3-21, the $800 to $900 the family used to spend each month on food didn’t seem unreasonable, but it was putting a strain on the family budget. McElfresh says she planned meals, used coupons and thought she was doing pretty well. She remembers reading that Americans throw away about 25% of their food, and thought “no way.”

But in 2012, after the holidays, she had an epiphany. “I remember the week after New Year’s going through the fridge and throwing away a kitchen-sized trash bag of food” she says. She realized that throwing away a quarter of her food that meant she was wasting $255 a month, or $2,700 a year. “My grandmother who survived the Depression with her family of six small children would have rolled over in her grave if she knew what I’d done,” she said.

She resolved to change.

First, she got creative. “Grandma rarely had a recipe,” she says. “She used what was fresh from the garden, what was already in the house, and her meals were sort of a smorgasbord of bits and pieces from what was in the fridge. The ham she cooked, half a jar of home canned peaches, bread from the morning, leftover green beans, whatever she had on hand.  And no matter how many people there were at her table there was always enough.”

McElfresh says she realized that if she started serving more side dishes like her grandmother did, the main dish would go further, and there would be another bonus: It would encourage everyone to eat more veggies and sides.

A Recipe for Savings

McElresh has a “go to” meal she calls “Stuff in a Pan” that she says is a great way to use up whatever is on hand.

Start with meat — ham, chicken, sausage etc. (For her large family, she uses two pounds of meat.) Add potatoes or veggies such as zuchinni or spaghetti squash. Then throw in seasonings and condiments you find in your fridge such as onion, garlic, leftover corn or green beans, cheese, olives, “that carrot that needs to be used up in the back of the fridge” etc. One version she calls “Stuff Italiano” can be made with spaghetti sauce, or a Mexican version can be made with taco meat and salsa.

Turn ‘Trash’ Into Meals

McElresh now makes it a habit to freeze and label leftovers, even when the amounts are small. “It seems silly when you start doing it, but I’m always amazed at how many great meals come out of what would be trash,” she says. For example, if there is a leftover pork chop or bit of pork roast, she will freeze it. Over time, she’ll have enough to warm up with barbecue sauce for sandwiches. “I take it as a personal challenge to see what I can make out of ‘trash’ at our house!” she says.

She also recommends a periodic “freezer challenge.”  For one week, the goal is to use what is in the freezer. She might buy essentials like milk, eggs, butter or snacks, but as much as possible she tries to use what she already has on hand. She says she searched the Internet — “What can I make with frozen broccoli?” – until she came up with tried-and-true recipes, many of which she shares on her blog.

Clean Out Your Fridge

Experts often recommend rotating food in the fridge and pantry so that older food is front and center, where it is most likely to be used, and McElfresh agrees it is essential. “I learned quickly that I absolutely had to clean out the fridge every three to five days in order for this to work,” she says. “I rotate food to the front of the fridge that needs to be used most quickly and tuck the stuff that lasts longer back to the back.  Cut up produce that is looking sad and put it out at snack time.” She says tackling this chore more frequently means less time and waste than if she waited longer. “And I have less guilt knowing that my money is feeding us, not the landfill,” she says. 

Bring Less Home 

Learning not to buy things she didn’t need was her most important lesson, she says. When she started paying attention to things she was throwing away she found recurring themes: fresh fruit, leftover meals, side dishes and “always the celery and carrots (that) would get slimy in the back of the vegetable drawer … and big bags of precut lettuce.”

So, for example, she stopped buying fresh celery unless she knew she needed it for a specific recipe. The rest was immediately chopped, frozen and ready for a cooked dish. She says she buys heads of romaine lettuce now instead of the bags of cut-up salad mix. “It lasts forever in the fridge,” she says. Although prepping it is a little more work she says doesn’t wind up wasting it or making another trip to the store because she needs some lettuce for tacos.

McElfresh efforts paid off big time. She was able to feed her large family on $400 to $500 a month, a savings of $400 or more a month, which adds up to roughly $4,800 a year. She says, “In the end, I learned I really didn’t need to spend so much if I just use what I already have and buy less.”

Image courtesy of Laura McElfresh

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This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.