Key Personal Finance Lessons to Learn From This Crisis

The Covid-19 pandemic has put all our financial plans to the test and has reminded us why we all need to make plans to begin with. The first half of 2020 has been extraordinary and there is still so much uncertainty ahead of us.

Let’s look at five key lessons that have been reinforced by the pandemic and what we can do to help navigate the unknowns to come.

Stocks Can Be Volatile

One of the biggest risks for a long-term stock market investor is abandoning a sound investment strategy by panic-selling after a stock market downturn and making a temporary loss a permanent one. 

Individual stocks can certainly lose all their value and go bankrupt. However, the whole stock market cannot go bankrupt. A diversified, balanced portfolio will lose money about one out of four years but will generally trend upwards over time and is highly unlikely to have a negative return over a five-year period.

After a significant stock market decline, the odds of stocks rising generally increase. 2020 has been no exception. 

When you invest in stocks, you must expect to lose money in a given day, month, year, and occasionally over a multi-year period. Stock market investing is kind of like physical fitness, though. If you lift weights enough days in a row, you will build muscle. If you walk around the block enough times, you will burn more calories. When you invest in stocks, if you do it long enough, you will see results.

Debt Is Dangerous

The Bank of Canada had an interest rate announcement recently and left rates unchanged. Financial projections in their Monetary Policy Report suggest the economy may not be back at full capacity for three years, and as a result, interest rates may not rise until 2023.

In fact, new Bank of Canada Governor Tiff Macklem was unusually clear with Canadians that “if you’ve got a mortgage, or if you’re considering to make a major purchase, or you’re a business and you’re considering making an investment, you can be confident that interest rates will be low for a long time.”

The Bank has decreased the prime rate by 1.5 per cent so far in response to COVID-19 and as a result, borrowing costs for mortgages have followed suit, with five-year fixed and variable mortgage rates both plunging below two per cent. Borrowers who took out mortgages in 2018 in particular may find themselves in an interesting position. Five-year fixed rates were well over three per cent for most of that year. Home equity lines of credit may have rates between 2.45 and 2.95 per cent right now. Borrowers who are a couple years into their mortgage term may be able to use their line of credit to make lump-sum prepayments of 10 to 20 per cent of their original mortgage principle without penalty. Their debt would immediately be at a lower interest rate with interest-only payments. The line of credit debt could then be converted to a regular fixed payment of principal and interest at rates of around two per cent. Some borrowers may be able to save hundreds of dollars per month in interest charges.

Low rates are good for borrowers in the short term, but in the long term, taking on too much debt can limit one’s ability to save for other goals like retirement. So, while the Bank’s intention behind lower rates is to encourage spending and inflation, be careful not to let your own spending and debt derail your financial plan.

Emergency Funds Have a Purpose

Banks have provided payment deferrals for mortgages and other debts in response to the pandemic lockdown. The federal government came to the rescue with weekly Canada Emergency Response Benefit (CERB). Had they not, many Canadians may have had a tough time staying afloat.

Recession-proof professionals such as dentists saw their incomes stop overnight, not to mention the millions of other Canadians who have become unemployed or underemployed due to COVID-19.

Anyone who did not have an emergency fund before would be wise to try to build one going forward. An emergency fund can be a savings account, but other options include a Tax Free Savings Account (TFSA) or home equity line of credit. One problem with using a TFSA as an emergency fund is if the investments are aggressive and exposed to stocks, there is a risk that when the funds are needed, stocks could be down.

Don’t Lose Sight of Spending

Consumer spending declined significantly in the initial weeks following lockdown. It is tough to spend money when you are confined to your home. One key lesson some of us may have learned is how blurred the line between basic necessities and discretionary spending has become.

Workers who were lucky enough to maintain their incomes during lockdown likely saw their expenses decline and savings rate increase. In fact, Statistics Canada reported the household savings rate hit 6.1 per cent in the first quarter of 2020 — the highest level in almost 20 years.

One of the challenges savers may experience is lifestyle creep. As our incomes rise, spending tends to follow suit. The result may be a never-ending cycle of limited saving capacity. So, now may be a good time to set up a regular savings plan to invest money monthly while spending may still be lower than normal. If saving happens automatically, and is budgeted, you may not even notice the missing money.

Prepare For The Worst

Many people know someone who has contracted COVID-19. Some have been relatively unscathed, while others have become quite sick. Some have died. This is a good reminder that everyone, even young, healthy people should plan for the risk of disability or death.

The best way to mitigate against these risks, at least financially, is with insurance. Any working age Canadian who is not financially independent should have disability insurance to replace their income if they cannot work. Disability insurance pays a monthly benefit to a disabled recipient.

Anyone with financial dependents should also have life insurance. Life insurance pays out a lump sum benefit to replace someone’s future income for their family.

Everyone, even young, healthy people should plan for the risk of disability or death!

Basic group insurance plans may not provide sufficient coverage for an employee. Optional or third-party coverage may be necessary to be adequately insured.

Wills, powers of attorney, and similar estate documents should be a consideration for any adult, even if they do not have dependents.

Doom and gloom aside, COVID-19 may have taught some of us about the importance of living for today as well. Life is short. So, while saving and delayed gratification are certainly important, this may be a good time to re-establish a balance between saving for a rainy day and living for today.


Lessons Learned from a Home Inspection

Once you’ve secured your dream home with an accepted offer, things start to get exciting. However, even if the property looks great, the only way to be sure everything checks out is to hire a professional home inspector. 

Home inspections can teach you so much about your new house, including how to maintain it and which repairs need to be carried out now or in the near future. Inspectors can also help uncover a property’s mysteries or even find nasty surprises you’ll want to know about – and possibly renegotiate on – before the sellers hand over the keys. 

Don’t Skip This Step

We get it – in hot markets where multiple offers are common, sellers may prefer dealing with buyers who have no conditions attached to their offer, including not insisting on a home inspection. However, forgoing an inspection is a bad idea.

If there’s ever an issue with the house that you want to go back to the seller about, without an inspection you haven’t done your due diligence so you’re not covered. 

Home inspectors assess a property’s main systems and check that the structure is sturdy, safe and to code. They can also alert you about necessary repairs or deficiencies. 

Inspectors are there to give a fair assessment of the building and, if he/she sees something serious, he/she will tell the buyer to get it looked into further or to obtain a quote for the repairs. It’s a great chance to learn about your new house.

The homeowners should accompany the inspector during the process, rather than wait for a written report. When on site, homeowners get all the information and, by the time the inspection is finished, they have a better understanding of what’s going on, so they can put the final report into context.

Can Discover DIY Projects Gone Wrong

Scroll through social media and it’s not hard to find examples of improvised repairs, such as DIY decks being held up with a single post, electrical configurations that can lead to fire hazards, or ill-conceived ideas where someone cut out part of a supporting floor joist to get more headroom in the basement. Inspectors see it all and will advise you what needs fixing. 

It May Uncover Unwanted Roommates

The last thing you want in your new home is a wasp’s nest or raccoons in the attic, bats in the walls or carpenter ants chewing your wood framing. An inspector takes a close look for signs of trouble and can help provide peace of mind.

New or Nearly-New Should Also Be Inspected

If you are purchasing a new property arrange for a pre-delivery inspection. This step is conducted with the builder before you take possession of your home, where you walk through the property and verify that all work has been completed.

The inpector will make sure all the t’s are crossed and the i’s are dotted. 

It’s always safer to get an inspection, because no one wants unwanted suprises.  


Walk-In vs. Cabinet Pantries

Let’s explore the pros and cons of these popular kitchen storage options.

When you’re building a new home or redesigning your existing kitchen it is only natural to decide whether to go with a walk-in or cabinet pantry. Some homeowners want wall-to-wall shelves and customized inserts, while others are satisfied with just a few shelves and pullouts tucked inside a kitchen cabinet. Here are the pros and cons of both styles.

Walk-In Pantries

Pro: Have More Storage Capacity

Walk-in pantries are a home chef’s best friend. They take the cake when it comes to sheer volume of storage space. With multiple walls of floor-to-ceiling shelves, they’re big enough to store dozens of ingredients, cookbooks, snacks, pots, pans, medium to large cooking appliances and more.

Con: Storage is More Spread Out

Bigger isn’t always better, especially when you’re in the mood to whip up a quick dinner. It may take a few extra minutes to gather your ingredients in a large walk-in pantry. You may have trouble remembering where you put your sugar and flour. Walk-in pantries are also some distance away from appliances and prep space, which can reduce efficiency when you’re cooking. Some homeowners prefer the convenience of having ingredients on hand in their kitchen.

Pro: Can Be Better Organized

Cabinet pantries aren’t inefficient by any means, but walk-in pantries let you get a little more creative with your organization techniques. You can sort your items by row or column, by food group and so on. The limit is only your imagination.

Con: Require More Upkeep

Unfortunately, a highly organized pantry comes at a price. More space, more shelves equals more to keep clean and tidy. It takes time and effort to dust off dirty surfaces and declutter shelves. If you’re looking to cut back on your weekly to-do list, you may prefer a cabinet pantry with less storage and less upkeep.

Pro: Can Store Appliances with Ease

Cabinet pantries can house toasters, coffee makers and mixers too, but it’s usually at the expense of valuable storage space. Walk-in pantries can comfortably fit larger appliances like microwaves, slow cookers, juicers and deep fryers, freeing up kitchen counter space and they’re easy to grab when you need them. Some pantries may even have enough space for a second refrigerator or freezer.

Con: Take Up a Lot of Space

A major downside to walk-in pantries is that they require a lot of space to be functional and efficient. If you’re designing a new kitchen or remodeling an existing one, you’ll have to shrink your kitchen’s footprint to accommodate a walk-in pantry. This can be an issue for homeowners who are short on space and want to maximize the size of their kitchen.

Cabinet Pantries

Pro: Storage Space is More Centralized

Cabinet pantries confine all of your snacks, ingredients and small appliances to a single space. You don’t have to spend time searching through several walls of shelves to find what you need. Less time looking means more time cooking.

Con: Have Limited Storage Space

A single cabinet devoted to pantry storage won’t be enough for some homeowners, especially avid cooks. While you can fit larger appliances inside a cabinet pantry, they use a lot of the limited space. One way to get an excellent storage capacity with cabinet pantries is to have more than oneinto your kitchen, but that will eat up more counter space.

Pro: Storage is More Accessible

Having your pantry in the middle of your kitchen will cut down on the time you spend walking to and from your pantry. Placing it next to your refrigerator and across from your range will create a super efficient workstation.

Inside features can also increase your cabinet pantry’s accessibility. Pullout drawers, for instance, allow you to see every snack and ingredient at once, which reduces the amount of time you’ll spend rummaging. They’re easy on your back too.

Pro: Don’t Take Up a Lot of Space

Cabinet pantries are on the smaller side compared to walk-in pantries. Most measure 24 to 36 inches wide. They’re an efficient storage solution for small or medium-size kitchens, providing a little extra shelf and drawer space without giving up too much in return.

Con: Take Up Counter Space

You’ll definitely lose some counter space, no matter how small your cabinet pantry may be. If you’re designating multiple cabinets as pantry storage, be prepared to give up a significant amount of prep space. Either way, it’s important to navigate the delicate balance of storage and counter space with care. This loss is felt less in larger kitchens but can impact the way a smaller kitchen functions.

Consider the size of your kitchen and the way you cook when deciding what type of pantry is best for you.


Things To Know About Earwigs

This Blog is for my oldest daughter who just doesn’t like these critters. 

Spoiler Allert: Your ears are probably safe

Canadians aren’t the only ones enjoying the outdoors in our beautiful summer. So are earwigs. Here are a few things you should know about these creatures.

The Name Translates to Ear Wiggler

There are differing opinions about where the word earwig comes from. Some say the shape of their wings resembles an ear. (My daughter is now more freaked out as she didn’t know they had wings and could fly.) Other say they were thought to crawl into your ear and eat your brain - gross. 

However, different languages have similar translations. In French they are called perce-oreille or ear piercer; in German, ohrwurm - ear worm and in Russian, ukhovertka - ear turner. 

They Prefer Rotting Plants

Bugs can crawl into a human ear, but the earwig would rather eat your decomposing plants than your temporal lobe.

However, this insect isn’t strictly vegetarian. It will also eat smaller bugs to satisfy their appetite. So I think your much larger brain is safe.

They Will Pinch

Earwigs are not venomous and bites are rare; however, their pincers can be used if necessary. According to researchers, a pinch is a defence mechanism. The earwig won’t chase after you, but if you are itching to pick one up - they will pinch- so maybe wear gloves when doing so.

Warmer Weather Means More of Them

Similar to other Canadians who go south in the winter, earwigs can survive the cold but they love the warmth and so do their young. Most emerge as adults in early July, If June is warm, then the survival rate for eggs and the young is higher.

They Have Wings  

Earwigs rarely fly - but the way their wings work is a phenomenon that intrigues scientists around the world. Without any muscle activation, the wings can grow up to 10 times their size and fold back perfectly.

They Love Fish Oil

If you find yourself with a lot of these bugs a way to trap them is with fish oil. Grab a sardine can (or any other oily tinned fish), keep in the oil and fill the rest with dirt. The earwigs will crawl right in.

They Help The Environment

Since earwigs feed on decaying plant material, they help dispose of it. What’s more, they will also keep your garden clear of slug eggs, aphids and other smaller pests.


5 Must-Haves In A Home Office

Working from home maybe come the new normal, these essentials will keep you comfortable and productive.

When working from home you have probably realized that a desk area on a kitchen counter or the dining table isn’t the best setup. Once you’ve chosen a room or area for your office, here are five must-haves to include.

Comfortable Chair

Make sure you have the right chair for the job. This is especially important if you work at a computer. Look for a chair that supports your back and encourages good posture. Features to look for include adjustable seat, arms and back, as well as legs on rollers and a seat that swivels so you can easily get in and out of the chair and reach for things without straining.

No matter the type of chair you choose, be sure to take stretch breaks and move around throughout the day. And go to the sofa or armchair for relaxing or reading.

Work Surface That Fits Your Needs

The size of your desk or work surface will depend on the size of your office and budget. Consider different desk types and even creative repurposing of other furniture pieces. Think about how you’ll be working and the items you’ll want to have close at hand. To help keep your work surface neat, invest in attractive desk organizers and plan for at least a few shelves or drawers for things you use or reference less frequently.

A Place for Everything

Most of us haven’t reached the point of having a paperless office, and keeping paper organized is easier with the right mix of drawers, and shelves. If you don’t have a lot of papers to file or objects to display, a simple cabinet on wheels or shelf might offer enough storage. 

Good Task Lighting

A standard ceiling light provides overall light but you may also want to include task lighting for reading and other close work. A desk lamp, wall sconces and natural light from windows can help increase your lighting.

Electrical Outlets for Equipment

If you live in an older home, electrical outlets may be limited. Be sure you have enough for your electrical equipment. Keeping cords and wiring out of sight is easiest with storage areas that are flush against the wall. But if you’re planning a floating or freestanding desk, you can use cord covers to keep wiring neat and safe.

And don’t forget to include something that makes you happy or inspires you, whether it’s a sunny window, a treasured artwork or a furry companion to keep you company.

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