The other website that I run is Real Estate related, as that’s one of my biggest interests. One question I get asked all the time, being a Canadian, is “do you think our housing prices are going to drop like the American ones did?” The answer to this is quite simple: absolutely not!

While over the next few years we may see a slight correction in the market due to the recession which it would be silly to say Canada will avoid, we won’t be seeing anything like what is happening in the USA, mainly for one reason: Canada never had sub-prime mortgages, at least not at a mainstream level like what has taken place in the United States.

Sub-prime mortgages offered people who otherwise wouldn’t be able to afford a home the opportunity to buy one anyways. This artificially inflated demand, which created upwards pressure on prices and led to high housing prices in the USA. Canada has also had a housing boom, but it wasn’t artificial, the economy has been good and as such people have been buying more.

In short, while the American demand was artificial, Canada’s is very real. We will likely see a slowdown in growth, and potentially even a small decrease in housing prices, but it definitely won’t be for the same reason as the American real estate market is in trouble.

Popularity: 3% [?]

A big thank you to Frugal Trader from Million Dollar Journey for hosting this week’s Carnival of Personal Finance. This Baby Education Edition featured the post from The Penny Mine “Teaching Kids the Importance of a Dollar“. I encourage everybody to read as many of the articles from the carnival as they can: I’ve only just begun and am overwhelmed by the quality of the posts and the information contained within.

Great work to everybody involved!

Popularity: 6% [?]

I’m going to stick a disclaimer up here just to make sure everybody understand this: this system is not for everybody. If you get a credit card and make frivolous purchases until you’ve hit the limit and then have trouble paying things off, this system is not for you. However, if you’re one of the readers who are responsible with credit cards and never (or very rarely) carry a balance, this post is for you.

In today’s capitalist society, there aren’t many legitimate ways to get free money. In fact, there aren’t many legitimate ways to get free money in any society. So when this opportunity is given to you, you should pounce on it as quickly as you can. Cash back credit cards are one of these “free money” offers.

If you have a no-annual-fee cash back credit card on which you never carry a balance, you’re going to be getting free money back. In Canada, our cash back cards are generally limited to around 1% cash back, but with the Amex Blue Cash card, our American friends can take advantage of up to 5% cash back on purchases at drugstores, gas stations and grocery stores.

1% isn’t very much money, but when you make all of your daily purchases at 1% cash back, it adds up. I almost never use my debit card, except at places which don’t accept credit. As such, almost all of my day-to-day expenses go on my credit card and at the end of the month, when I’ve spent anywhere from $500 to $800, I can expect to get a few dollars back at the end of the year. Sure, $60 to $96 isn’t a fortune, but it’s free money that I can use to go out for dinner one extra time, that I can just stick in a savings account or invest for retirement. It’s also non-taxable.

If you’re the type of person who pays off their credit card monthly, you’re losing money by not having a cash back card, so go apply for one today! For Americans I would recommend the Amex Blue Cash card and if you happen to live in Canada, the TD Rebate Rewards card or the Citibank Enrich card are two of the best.

Stay tuned, as later this week I’ll be posting a full comparison of the best cash back credit cards in Canada!

Popularity: 5% [?]

I’ve seen quite a few people make quite a few financial mistakes over the years, and heard of others as well. Part of saving money involves not making awful financial decisions which will cost you more in the long run. Here are five of these decisions that I strongly advise you stay away from at whatever cost:

• Payday loans. These are absolutely one of the worst financial choices you can make as once you’re in it’s incredibly difficult to get out of the loop. They charge outrageous fees that will cripple you the first time you use the service and force you to go back. From there, it’s an endless circle. If you’re stuck for cash for a few days, ask a friend or a relative for a temporary loan, use a credit card (with the full intent of paying it off of course) or try selling some books or CDs at a pawn shop for a few bucks. Anything except payday loan places

• Not having emergency funds. I couldn’t count the number of people I know with absolutely no form of emergency funds. If you get sick and can’t work, if you’re in an accident, if your car breaks down and you need to fix it, these are all things that emergency expenses are supposed to cover: the unexpected, which does happen! You need to be prepared for it, and not having emergency funds is a great way to spiral yourself into credit card debt and financial suicide.

• Paying off your debt with retirement savings. You’ll not only face penalties for doing this, but you’ll lose all growth potential that money had in the first place. If you start spending that money there’s a good chance you’ll continue to spend that money until your retirement savings are all but gone. Always do your best to keep your retirement savings for just that purpose: retirement.

• Credit card debt. This one is pretty obvious: when you’re paying up to 30% APR on credit cards, only a few years can result in you paying double what you initially did for a certain item. Try getting 0% APR cards and paying them off as quickly as possible, using this article as a guide to avoid being penalized.

• Using a HELOC to try and get rid of debt. At first glance, this may seem to be a good option: using the equity in your house to bring your debts down to a manageable level. However, you haven’t considered that while that HELOC may only be at 7% instead of 20%, the loan is over 30 years. You’ll normally end up paying more in interest over those 30 years than you would if you just did your best to pay the credit cards off within a year or two.

Stay away from all of these options. There’s no good to come of using any of them and they’ll do you more financial harm than good in the long run. A lot of them are common sense, but they do bear mentioning: if you’re in the situation where you’re doing any of the aforementioned, you need to do your best to get out of that situation for financial freedom.

Popularity: 23% [?]

With Good Friday well into motion I’d like to wish everybody a happy long weekend!

Popularity: 5% [?]

If you read yesterday’s article about the traps balance transfer cards have, then you should be well aware that in order to take advantage of these cards you need to be extremely careful.  However, if you are organized and willing, you can pay off some old debts.

Not only can you pay off debt with these cards, but you can also profit if you’re in a situation where you have no high-interest debt. What follows is a step-by-step guide for those looking to pay off high debt with 0% APR balance transfer cards and those looking to take advantage of the system to get a little bit of extra cash.

Getting the Money:

Once you’ve received and activated your new 0% APR balance transfer card, you need to be able to either receive that money as a cheque or to transfer it to a current high-rate credit card. The easiest way to do this is to call the credit card issuer and request a balance transfer cheque and then deposit it in your bank account. Then either use that money to pay your high-interest credit card bill or put it in a high yield savings account to profit.

Some companies don’t issue balance transfer cheques however, which makes this next part slightly more complicated: you’ll need a second credit card, with no balance. Request a balance transfer from the new 0% APR card to your existing card with no balance, and then request a credit balance refund from the existing card (as you will now have a credit on the account). If that card is from a physical bank (such as TD, CIBC, Chase, etc) you can always go into the branch and they can give you the money on the spot or just transfer it into your chequing account.

Profiting (or paying off debt):

The safest way to profit from balance transfer cards is simply to stick the money in a high yield savings account.  All you need to do is stick the money in the account and remember to have the money available to make the minimum payments. Personally, I would recommend having minimum payment money available in your chequing account and budgeting that cost in rather than taking money out of the high yield savings account every month. It takes ING Direct up to 5 days to put money into my regular bank account after I’ve requested it: by knowing you have enough money in your savings account to pay the minimum payments in time you don’t have to worry and you don’t have to withdraw your money up to a week early to make sure you can get that money in time. To be on the safe side, I would also pay the minimum 48 to 72 hours ahead of when it’s actually due, as that’s how long it can take for electronic bill payments to be processed.

If you’re using your new card to pay off debt, the strategy to use is more or less the same, except you’re transferring your balance to a credit card (or HELOC, or car loan, etc) instead of a high yield savings account. Again, make sure you have the funds to pay the minimum immediately available, and take care to pay a few days in advance to avoid technical glitches resulting in your interest rate reverting back to the default.

If you have a 0% balance transfer card with a $5000 limit and put it in a savings account at 4%, you will make $200 over one year. It’s not much, but considering it takes very little effort to make that kind of money, accumulating cards and continuously doing this can result in a good amount of extra cash. As for debts, you can save yourself a year’s interest at 20% on your debt which can make a huge difference to your financial lifestyle.

Popularity: 3% [?]