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December 2019

Psychology of Retirement

Retirement in the models described above is simply quitting your job. Retirement can be thought of as leaving a job or task to do another task. People rarely sit around and do nothing unless they are not able to do any work. People will want to find something to do, no matter what it is and whether they are paid for it or not.

A better definition of retirement is doing what you love and having control over your resources. Do you have to suffer for 50 years to do what you love? Many people talk of “paying your dues”. Why not do what you love now? Yes, there are many responsibilities to consider, and doing what you love means being much more mindful of how things get done, how things are paid for and who gets affected. Doing what you love is hard for most people because it means being different; it forces you to shed many fears and issues and become what you want to be. People are scared to face this reality, so they do a job that gets them by, “pays the bills”, and allows them to hang onto their current beliefs. Happiness may be compromised in this choice, as well as health and other aspects of life that are believed to be important.

Retirement is really about a state of mind. It is not only about the money. The money aspect as well as health, relationships, time and resources should all be planned because these areas are what the money is supposed to be used for. As jobs become more and more uncertain, golfing at age 65 is becoming more and more irrelevant.

The model of retirement from the 1970’s was used to sell a dream of leisure that was not very easy to materialize. Once the lifespan allowed it to materialize, the money became more and more elusive to fund the dream. Today the possibilities still exist, but you will have to make them yourself rather than relying on society for the dream prescribed to you. There are many assumptions and myths that are made regarding retirement, and some of them will be discussed below.

A retirement switch turns on when you turn 65 and no other age. This assumption was made in the past, but today, retirement ages are being pushed back to between 65 and 70 years old for the poor, and earlier than 60 for the wealthy. For the entrepreneur or self-employed person, there is no age as this model has been abandoned. The age of 65 is one possibility of when to retire, but it is not the only one. There really isn’t a set age any more to make this change; it will depend on what you want to do.

There are other people who postpone retirement indefinitely because they would not know who they would be without their jobs. If they don’t work, they feel useless, a burden to society, or second class citizens. These people may have more than enough wealth; but there are also people who work past age 65 because of financial lack. This did not happen in the past because people did not manage their retirement directly. The trend over the last 20 years is to shift responsibility for retiring to the retiree rather than the employer or the government. This is why RRSPs were introduced, why the TFSA was introduced, and why company pensions are becoming fewer and less reliable. If you have a pension plan, it is becoming defined contribution versus defined benefit. Defined contribution means that people would have to invest their own money and bear the risk of their losses, whereas for defined benefit this was not expected. Health costs were also covered up to and into retirement – and the trend is to privatize these services more, so that people will have to pay for themselves, either directly or through private insurance. Provincial health insurance is covering fewer items each year, work benefits are covering more each year, and more services are being charged for and outsourced to private companies.

People assume that retirement “just comes” like death, and they have to deal with it. There are stories of people who worked for 50 years continuously, and right after retiring at age 65 either die suddenly or become severely ill. Some go into depression or go into a state of decay where nothing is interesting to them anymore. Why is this? These people did not know what to do when they stopped working. Was retirement right for them? Why not stake out what you are going to do when the time comes and ease into it? Planning is done for life changes like when you leave high school, after university and even after having children – why not retirement? It makes the financial burden much easier to plan because you don’t have to guess what you need. You can test this out beforehand. The idea of clinging to a job for an identity will not be needed because you have found something to do before the “void” of indecision or transition takes place. Nature doesn’t allow a vacuum, so if you find yourself with “nothing to do”, something will always come in to replace what you have left. The trick is for that something to be what you intended rather than unconscious. You technically do not have to retire, or can retire constantly in spite of age, health, circumstances or options.

There is no prescription for retirement, just like there is no prescription for starting a business, doing a piece of art or finding the perfect trip. These depend heavily on what someone is looking for, and what appeals to them. The first question for the future retiree to ask is: What do I want to be? Secondary questions are: What do I want to do? How can my skills be put to the best use? What activities make me the happiest? What kind of lifestyle do I want to have? Understandably these questions are not easy to answer and they will take time to figure out. There may need to be some tinkering and trial and error before you know where you want to be and what you will need to get there. The good news is that you have a lot of time to experiment.

How much money do you need to retire? This is very much an individual question and it varies widely. There isn’t even a useful range to give out. Some people can live on CPP and OAS only, while for others $100,000 per year is not enough for their needs. If someone tries to give you a prescribed model, be mindful that it likely will not work for you unless you fit the intended consequences that the model is designed for. If you are living the average life and require the average amount of money to pay for it – the model may be useful. Any differences from this model that you want to make will have to be thought through by you to make sure that they are covered.

Do you want to: Learn how the world of money really works without the need of a time consuming or expensive course of study Discuss what you want to achieve according to your horizon Restructuring your finances to achieve your goals Advice that is not affiliated with any institution or any product – an independent opinion

Cash Advance Lenders

In order to get a car title loan, the individual must own their own car. For those who do own the ‘pink slip’, they often would rather not put their vehicle at risk. A secured loan in default results in the loss of property. Most people need their vehicle to get back and forth to work. It takes a certain kind of desperation for a person to risk their vehicle in order to solve a financial emergency.

Pawn shops work for people who have valuable personal items can pawn them off for a percentage of their fair market value. It is important to understand the terms and conditions of these secured loans so you don’t lose your property. Like car title loans, a pawnbroker will sell the property to collect on the loan as well as make profit from it.

When people think about short-term loans, they often consider a cash advance loan lender because there is no collateral necessary to obtain fast cash. It is a simple online transaction which will land a few hundred dollars directly into the borrower’s bank account, usually within 24 hours as long as the following day is a working business day. Credit challenged applicants do not have to worry about the state of their credit history. These loans are processed without credit scores as a qualification factor. These lenders want a working bank account, proof of employment and a minimum amount of take-home pay. Since there is no collateral to collect if the loan goes into default, a lender will sell the balance off to a collection agency. At this point the bad debt will be another negative on your credit history since collection companies report to the credit bureaus.

A budget is a good money management tool to help stay in control of your monthly income. If you truly do not want to have to use short-term cash lenders, you will need to build an emergency savings account. Learn to reallocate funds within your own budget. Divvy up your paychecks according to your payment dates. If you have one pay period more burdened than another, reallocate funds from a different paycheck to cover the extra load. There are many people who have learned to juggle their money among living expenses. Those who live beyond what their income affords will be the ones who turn to other money options when unexpected costs creep in. Income can only be stretched so far without some sort of additional problem creep into the money books.

Personal Saving

First, many people buy products spontaneously without planning to buy them in advance. That is, they buy a product or service, and decide to buy it, only immediately before they make the actual purchase. Most of us fall prey to unplanned spending every now and then. Retailers put a lot of effort to encourage unplanned spending. Take for example the sweets at the checkout of the supermarket, or the sales table in the middle of the toy store. Temptations like these make it much harder to control spending. Of course, these are many more examples how retailers can motivate people to make unplanned purchases. Luckily, there are many ways to limit these kinds of expenditures. You can, for example, make a shopping list before going to shop, hold less money in your pockets to decrease the tendency to buy food items on your way home, or leave your credit card at home when visiting the shopping mall. Besides, never go shopping when you are hungry. It makes you vulnerable to buying unplanned food items and overfilling your cart.

Second, people tend to think it is more difficult for them to save money now (and spend less) than it will be in the future. For example, they want to go out of dinner this evening, they want to buy their partner a sweet gift, or they are planning to do something nice in the weekend. Obviously, in the short term people are aware and think of many things they want to spend money on. When they think about the future, they don’t know yet what they will be doing by then. As such, they are less aware of the temptations they will be facing in the future that might prevent them from saving more. Hence, they think it will be easier to save in the future. The point is, however, that they will also think this in a few months from now. Consequently, people tend to postpone saving more all the time. One way to avoid postponement is by committing yourself now to increase your savings rate at a certain point in the future. For example, you may want to consider arranging that a greater percentage of your monthly salary is automatically transferred to your savings account from a certain point in the future.

Spring Investment Property Form Guide

Size up the investment property market

To make sure you’re backing a winner – and getting the best value – you’ve got to research extensively. Ensure you’re across all the investment property magazines and websites for general property purchase tips and strategies and then do as much investigation into the market/markets you’re exploring as possible. Talk to local real estate agents and local residents and read as much about the local area as you can. The more you know, the more well-informed a purchase you’ll be able to make.

Hunt like a pro

To make the most of your time and find the right property as quickly as possible, take a serious approach to your property pursuit. Plan your Saturdays thoroughly and set up a system for documenting the properties you’ve seen, the agents you’ve met and the sale prices of the properties you’ve been watching.

Get in front with a pre-approval

There’s nothing worse than finding the right property only to miss out because you haven’t got your finances in order. Before you do anything this buying season, speak to us about your borrowing options and to get your pre-approval organised. Having a pre-approval also gives you a clear idea of your price range, so you don’t waste time looking at properties you can’t afford.

Zombie Debts

The principle behind this business deal is simple. All debts at some point of time become uncollectable as they have passed the time period laid down in the statute of limitations. This time period could range from 3 to 7 years. This period varies from state to state. At this point collection companies who wish to make some money from this deal will buy the debt at a fraction of its value. It can be understood that older the debt the less its market value. Thus a debt over 8 years will cost a fraction of the money that would be paid for a debt that is 3 years old.

In earlier times the collection agents had a free field and could use any method to recover the outstanding debt. This could include threats and intimidation. However The Fair Debt Collection Practices Act passed in 1996 has put a premium on all forms of coercion. This act lays down the limits under which a collection agency can run and any infringement of this can be reported to the authorities. However there have been cases where the collection agents subvert this act to collect something out of the outstanding debt. Yet, despite this act, the debt that is very old does not debar collection agents from buying the debt and trying to recover it. The aim of the collection agent who has purchased the debt at a very, very low price is to recover a portion of the debt and thus make some money in the bargain.

These zombie debts can appear at any time and this is often referred to as re-aging of debts. This is illegal but it happens all the time. There have been cases recorded where an original debt that has been discharged in a bankruptcy re-appears as a Zombie debt. This re-aging of debts needs to be guarded against. But if it does happen some prudent action is required to contain the damage. Thus an individual need to be aware of the following.

  • He must as a rule check his credit report at regular intervals and see if any such entry is there. In case such an entry appears it is incumbent on the person to check with the credit bureau and get the entry rectified.
  • Be informed. The fact that you are not aware of the statute of limitations will not hold water. Thus in case contacted by a debt collector be aware of your rights and act so. You can follow-up by contacting your state’s Attorney General’s Office and the Better Business Bureau. This is not the end and it should be followed up by contacting the agency that issues the license to a collector in the state you live and complain about this ‘zombie’ debt that has been re-aged. Remember all collectors have to be licensed.

The debt – buying industry is lucrative business and information available shows that some of these collection companies have earned enormous sums of money running into thousands of dollars by purchasing Zombie debts. They will even purchase debts that have passed the statute of limitations and try and recover some part of the debt. There have been cases where a debtor with a 9-year-old debt has been approached by these agents. They thrive on the ignorance of the debtor and hold the fear of a prison term as well.

However it must be mentioned that after a 7 year period a debt cannot appear in your credit report. It does not matter whether the debt is still outstanding against your name or has lapsed. If such a thing happens then it is best to report this anomaly to the credit bureau. Remember that there is a good chance that the debt has already been written off, but collection agents will still buy it, as it is their business. They thus buy the debt at a few pennies to a dollar. The debt collectors know that the entire debt cannot be recovered and hence they will go in for a settlement, an adjustment where the debt owner pays only a part of the debt. But the basic ingredient on which these collector’s thrive is ignorance and lack of information.

Though Zombie debts are illegal, yet they are very much a part of the American scenario. Thus in case you are approached by a debt collector for recovery of an old debt than the following steps may be taken.

  • Contact the credit bureau and report the wrong entry in the Credit report. Make it a point to demand documentary proof from the debt collector about the debt. The debt collector is under obligation to give this information within 30 days; in case he is unable to do so then you are home and dry.
  • In case a collector persists in his attempt to collect a bill that has been paid long back, or passed the statute of limitations then report him under the federal Fair Debt Collections Practices Act. The bill collector could end up paying a massive civil penalty as well as subject to fraud and harassment charges