Spring cleaning to-do list for your finances
Touching up the scratched paint in the hallway. Replacing those missing tiles in the bathroom. Refinishing the kitchen cupboards. Raking the yard. Turning out your closets. You no doubt have your own list of special tasks on your spring cleaning agenda.
But what about your personal finances? They deserve at least as much attention as the duvet cover in the guest bedroom.
For some timely tips on making your finances sparkle, click through the links below.
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Sweep away high-interest debt. |
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Make your estate plan gleam. |
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Spruce up your home insurance. |
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Polish your portfolio. |
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Clear out the clutter in your financial records. |
Sweep away high-interest debt
Are you in the habit of carrying an outstanding balance on your credit card? Typically, the interest charges can be quite high. Department store or retail cards may charge even higher rates of interest.
To reduce your total interest costs, consider taking out a line of credit to pay off your outstanding card balances. You'll be left with just one monthly payment, at a significantly lower rate. If the line of credit is secured - by your home, for example - you'll get an even better rate.
Tip: If you are carrying loans where the interest is deductible (such as loans taken out to earn taxable investment or business income), remember that the interest rate you're paying is reduced by your marginal tax rate.
For example, if you're in a 40% tax bracket, a 5% loan where the interest is deductible costs you only 3% after tax. It may be to your advantage to let these loans ride while you focus on reducing non-deductible debt.
Make your estate plan gleam
Gather together all the elements of your estate plan, including:
Are they all up-to-date? Do any of your beneficiary designations need to be amended, in order to reflect changes in your marital status or the addition of a new family member? Your lawyer or financial planner can offer you assistance if needed.
Spruce up your home insurance
If you purchased your home insurance more than five years ago, double-check to make sure your coverage is sufficient. Chances are you've added to the contents in your home, and you may need to increase your coverage accordingly.
Tip: Many insurers will offer you a discount on one or both policies if you have both homeowner's and automobile coverage with the same company.
Polish your portfolio
This is an ideal time to conduct a mini-review of how your investments are doing. After all, you need to gather all your information together anyway so that you can complete your personal income tax return by the end of April.
Remember that capital losses carried forward from previous years can be used to reduce taxable capital gains.
Tip: If you have both registered and non-registered accounts, it can be advantageous, from a tax-perspective, to hold fully taxable interest-earning assets in the registered account, where their compound growth will be completely tax-deferred until withdrawn. Investments that generate Canadian dividends and capital gains should be held in the non-registered account, since the tax benefits are effectively lost when the assets are in a registered plan.
Clear out the clutter in your financial records
It's a good idea to hang on to several years of income tax and business records, in case you ever have to verify a claim with the tax department or satisfy a query from a lender or insurer. Other items, however, such as credit card receipts, household bills, and interim statements for your investment accounts can be disposed of once you've checked them for accuracy.
To guard against identity theft, be sure to dispose of these items appropriately - by shredding them or tearing them up. They contain important personal information that you don't want to fall into the wrong hands.
Ready to take control of your high-interest debt? A ScotiaLine® Personal Line of Credit may offer a solution. Click here to find out more.
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