Terrifying financial tales

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Witches and ghosts soar through the air, 

Watching while goblins spend without care, 

Their careless mistakes will ignite quite a scare, 

Read these terrifying financial tales if you dare…

Drowned by Debt

Jane is 25 years old and is over her head in debt. As in $50,000 over her head. 

When she took out her first student loan six years ago, it didn’t seem like a big deal. It wasn’t like she had to make payments while she was in school and she knew she would get a great job upon graduation.   

Four years of school turned out to cost $40,000.

And then… there was the credit card. 

At the age of 19, she got her first credit card. Jane loved the freedom the card offered and started using it instead of cash and debit. This started out innocently. A small purchase here or there–shopping, movies, going out with friends, etc. She even enjoyed treating friends to a drink or a meal every once in a while.

Life was good.

Jane was able to make her minimum payments on time with the money from her part-time job. As a reward, her credit card company offered to increase her limit.

Soon, she found herself using her credit card for every purchase big and small, until one day, when she was making a routine purchase, her card was suddenly declined. 

When she looked at her credit card statement, she realized she had reached her limit–a full $10,000. 

Jane just started a great new job at a local company in Halifax, but had to move back in with her parents after school. She wants to buy a house someday, but has no idea where to begin paying off her debt and feels like her whole pay cheque goes toward her payments.

Debt has dragged Jane deep down into the darkness.

How to survive debt dangers:

1.     Create a budget and stick to it. While some student debt may not be avoidable, there are ways to reduce your costs while you’re in school, such as working part-time, living at home, or sharing rent and expenses with roommates.

2.     Pay off your credit card in full each month and never spend money you don’t have.  Credit cards can be used responsibly and often have a grace period where you can pay off your full balance without accumulating any interest.

3.     Meet with a financial expert before it’s too late. Your financial institution can help you budget and will help you determine what products and services meet your needs.

Homeowner Nightmare

Allan and Lori just bought their dream home outside of Fredericton. Allan works in town and Lori stays home to take care of their young daughter, Sam. 

While they carefully saved for the recommended down payment and are cautious spenders, there are a lot of costs involved in homeownership that came as a big surprise.

Electricity bills were higher than expected and they had forgot to budget for property taxes. 

Maintenance, home repairs, cable, and internet–the bills were growing out of control.

Although money was tight, they still got by. 

That was however, before Allan slipped outside and broke his wrist. He didn’t have insurance.

Now Allan is off work and the bills aren’t slowing down. 

Their mortgage payments are now behind and they’re afraid they’ll lose their home.

Allan and Lori’s dream of homeownership quickly turned into a nightmare.

How to keep the dream alive:

1.     Budget carefully and learn about the costs of homeownership.

2.     Have an available emergency fund. Experts say that you should have the equivalent of three months’ net income set aside or have it available on a line of credit for emergencies only.

3.     Creditor insurance is important. Most financial institutions offer insurance on loans and mortgages to protect you in case you are unable to work. This can help cover your payments if you find yourself on leave from work.

4.     If you do find yourself in this scenario and haven’t prepared, do not be afraid to meet with a financial expert. There are often short term solutions, such as the ability to skip payments or the ability rearrange your payment schedule to help get you back on track.

Rosemary’s Retirement

Rosemary never wanted to think about retirement. She started working right out of high school, so retirement seemed like a lifetime away. Plus, she was sure she’d eventually have a pension. 

She started a family, bought a house, and moved up the ranks in her company. Everyone considered Rosemary successful… including Rosemary.  

Although Rosemary enjoyed a comfortable lifestyle and stayed debt-free most of her life, she never got into the habit of saving. If asked about retirement, she’d say, “I’ll start saving next year”. 

Now Rosemary is getting older. Her kids have moved out and she’s starting to think about retirement more and more.

The pension she was sure she’d have when she began her career never happened.

She has good equity, but little savings.

Will I have to sell my house just to retire? Will I have to work forever? These are the questions constantly running through her mind.

Now, every night before falling asleep, she’s haunted by fear.

Praying for Rosemary’s retirement can’t save her.

How to resurrect retirement:

1.     Start saving early and often. You don’t need to put a lot of money away in order to make progress. The key is setting aside a bit of money on a regular basis. With most financial institutions, you can set up automatic withdrawals from your account that are deposited into a retirement savings plan. These can be customized to fit your schedule–weekly, biweekly, monthly, etc.

2.     Plan to increase your savings as your salary increases.

3.     Take advantage of any savings options your employer has available. Employers sometimes offer group RRSPs and will match a portion of your contributions.

4.     If you find yourself in this scenario, speak to your financial expert. He or she can help you determine a plan to save at any point in your life and can help you take advantage of specific products that meet your needs.

Freaky Fraud

John always considered himself financially savvy. He was on top of his income and expenses, took care of his credit, and filed his income taxes on time. 

This year, at tax time, he received an email from Canada Revenue Agency about an expected tax refund. 

The email asked him to input his banking information online, so that CRA could deposit his refund. The email certainly looked official and John was keen to have his funds returned. 

He input the information without hesitation.

Two days later when he checked with his financial institution, his account was empty and his credit card was maxed out. 

His financial institution is trying to help him, but it will take time to sort out. 

He can’t believe he was taken advantage of by an online scam.

Now, his future lies in purgatory.

How to avoid these villains:

1.     If you receive an email like this, delete it. Legitimate financial institutions and government agencies never ask for your account information by email.

2.     If you’re ever unsure of legitimacy, just ask.

3.     If you find yourself in this situation, seek help immediately. Your financial institution is a great place to start.