North Americans are a collection of spenders who must learn the hard way to practice what our grandparents have always known: A penny saved is a penny earned.

Consider that about 43% of North Americans spend more than they earn, according to estimates from the federal government, and the average household carries some $8,000 to $10,000 in credit-card debt.

To make matters worse, the average North American no longer saves money. That’s tumbled from a 10.8% average savings rate in 1984 into negative territory today. It’s no wonder that many of us have been living way above our means for some time.

But that is getting harder and harder to do. Available credit for people to finance their lifestyles has shrunk if not dried up altogether and many North Americans are standing by in shock watching their mortgage payments surge while the value of their 401(k)s / RRSP’s drop.

It’s clear we need to start spending less and saving more. That may sound easier said than it’s done. The key is to be aware of your where your money is going and take steps to stop the leaks.

Here are five simple tips that could save you hundreds of dollars a month:

1. Cash back at the pump

In the past five months gasoline prices have dropped 56%, from an average price of $4.11 to $1.80 a gallon or 72 cents a litre. Somehow, households found the money to pay the higher price and survive so now people should take that excess money they are saving and bank it.

Jean Chatzky, author and personal finance expert suggests using the money you were spending on gasoline to build up that rainy day fund or to pay some your holiday expenses instead of racking up more debt.

2. Dinner Savings

Another great way North Americans can cut costs each month is to eat at home, says Jonathan and David Murray, twin brothers who are financial advisers.

According to a recent Zagat survey, North Americans will spend an average of $34 this year every time they go out to eat dinner, that’s for one dinner, drink and gratuity; $76.00 if they live in one of the 20 most expensive cities. If a couple does that four times in a month the expense is close to $300 in low-cost areas and $600 in higher-cost regions, and if you have more than one drink or are treating family or friends, costs can add up quickly.

Plan a dinner or party at home and ask guests to bring a dish. If you’re big on getting together with friends, family and work associates, this could save you hundreds of dollars a month.

3. Renegotiate Household Bills

You may not be able to negotiate with the gas company or the electric company, but you can with credit cards, cable and phone services, among others. Do the homework and find out what competing cable companies, for example, are offering and ask your provider to renegotiate your bill. You may have to get through to a manager but Chatzky said she recently did this and got her monthly bill reduced by $50.

4. Smart shopping

Retailers are poised to have one of the worst holiday shopping seasons in decades and are offering deep discounts to move merchandise. But smart shoppers can save even more money by hunting down coupons. Before ordering online or going to a store, go to sites like Couponcabin.com and Ultimatecoupons.com or Google the name of a store and often you’ll get a coupon code to enter at checkout. You can save 10% to 20% or more on the total order or maybe get free shipping.

There are also coupons to print out and take to the store for deeper discounts. And don’t be afraid to pit one retailer against another by asking for a price match on sale items.

5. Keep the receipt

It is important to hang on to all your store receipts and keep track of sales. Savvy shoppers can possibly save even more on purchases by checking back to see if the retailers lower prices even further. If that happens within two weeks of your purchase, most stores will credit you the difference.

We hope that you can layer into your shopping habits the following tips as a means to start saving money fast and easy.

Toronto Bankruptcy Trustees

I came across this fantastic news today in the Toronto Sun newspaper that will give investors some peace of mind:

If you find yourself in financial trouble and have to declare bankruptcy, your registered retirement savings are now safe from your creditors.

Recent amendments to Canada’s Bankruptcy and Insolvency Act now rule that for bankruptcies occurring after July 7, 2008 creditors can no longer go after your Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs) or Deferred Profit Sharing Plans (DPSPs) to pay off owing debts.

In the past, only some of your investments such as certain segregated funds and pension funds were protected from creditors. Now, you don’t have to worry that all your retirement savings will be forfeited if you go bankrupt. However, to prevent intentional protection of funds, any money put into registered plans in the 12 months before a bankruptcy (or longer) may not be subject to this new rule.

Several provinces (Manitoba, Saskatchewan, P.E.I., and Newfoundland) already provide creditor protection. Those laws will remain in place and the new federal law applies everywhere else. Quebec law protects some registered retirement plans but this new law appears to cover all RRSPs in Quebec.

All Canadians will benefit from this new rule change in the following ways:

– Retirement protection for small business owners:

In 2003, the Canadian Federation of Independent Business conducted a survey of members that found 91% of small business owners used RRSPs as a retirement savings vehicle. CFIB has been calling on the government to protect these retirement savings for years. Many small business owners and professionals put their personal assets at risk. The CFIB survey says only 28% of small business owners have already-protected formal pension plans. This rule will help small business owners protect one of their main retirement savings strategies while still investing other money in their business.

– Greater diversification:

As we all know, you should spread your investments around to reduce your risk. Before this amendment, if protection from bankruptcy was a concern for your retirement savings your investment choices may have been limited. Now you and your advisor can look at the universe of investments to choose what works best for your retirement portfolio.

- Potential fee savings: Bankruptcy-protected segregated funds have higher fees due to the creditor protection and other unique features. Investors can now work with their financial advisers to see if there are appropriate alternative strategies that can save them some money.

Most GTA – Greater Toronto Area -  financial advisers can help you determine if this rule change affects your personal financial planning strategies. Consult a Toronto bankruptcy expert to find out more details about how these changes could affect your situation. If you find yourself in financial difficulty consult your local non-profit credit counselling agency. Their counsellors can help you decide if bankruptcy is the right course of action for you.

Bankruptcy Toronto

Most people are very concerned about their home and what happens to it if they file bankruptcy. There are only two options: you keep it or you lose it.

To keep your home you need to answer YES to the following questions:

Do you want to keep the house? (Not everyone wants to keep their house. If you don’t then filing bankruptcy will allow you to “walk away” from a house).

Is the mortgage current or if it is not current, have you negotiated a plan with your mortgage company to make it current? (Your mortgage is “current” if you aren’t behind in any of your payments.). If it is not current your mortgage company may have concerns about your ability to pay.

Are your property taxes and utilities current? If they are not, your mortgage company may be concerned about the city or the utilities registering liens against your house.

Do you have the ability to make your future mortgage, property taxes and utilities payments? Even if you’ve never missed a payment in the past, if it looks like you aren’t going to be able to make your payments in the future then your mortgage company may use your bankruptcy to cancel your contract (and that means sell your home).

Can you afford to pay for the equity in your home? If you think that you may have equity in your home or you aren’t certain what this means then go to “What if there is equity in my home?”

If you answered NO (or even MAYBE) to any of these questions you should probably consider whether or not you can afford to keep the house you’re in. Keep in mind that when you file bankruptcy you no longer have to make payments towards your unsecured debts and therefore you may actually have more money available to pay your mortgage, property taxes and utilities. If you haven’t already done so, flip to our page on budgets to determine whether or not you have the ability to pay for your house.

If you answered YES to all of these questions then, in most cases, your house will not be affected by your bankruptcy. That’s not to say that your mortgage company can’t cancel your mortgage contract if you file bankruptcy – legally they can demand full payment. It’s just very unlikely that they will. The mortgage company makes their money off the interest that you pay (and not by selling houses). If you have been a good customer and you have the ability to continue making payments, then that’s what the mortgage company is going to want you to do.

It’s very important that you know your rights and responsibilities in regards to your secured creditors, including your mortgage, BEFORE you file bankruptcy. Be certain to discuss your situation in detail with your trustee.
What if there is equity in my house?

If there is equity in your home when you file bankruptcy then you’ll be required either to pay the trustee an amount equal to your equity or the trustee will be forced to seize and sell your home.

The following example demonstrates how a trustee might determine if you had any equity in your home.

“A real estate agent appraises your house at $150,000 and you owe the mortgage company $120,000. I’ve got $30,000 in equity, right?”

Not necessarily. The amount of equity in this house should be calculated as follows:

In this particular example, the trustee would expect the bankrupt to pay $14,500 before their bankruptcy was completed, if the bankrupt wanted to retain possession of their home.

You should discuss the equity in your home and the required repayment terms with your trustee before you file your assignment.

Bankruptcy Toronto

The cost of bankruptcy in Toronto, Ontario is largely dependent on your personal situation – although not completely since there are some common expenses that you should certainly take into the account when trying to determine the cost of filing bankruptcy in your case.

Below we provide a summary of some of the costs you can expect in regards to a bankruptcy process in Toronto, but for a thorough explanation of all the costs, we recommend that you interview several Trustees in your area.

Costs in a Bankruptcy Process in Toronto

First of all, when filing personal bankruptcy you will have to make a contribution to your bankruptcy estate to cover administrative costs, court fees, communication and government filing fees.

Next, you must pay a share of your “surplus income” into your estate. If you or your family earn over a certain amount each month, you will lose a fraction of your earnings over that limit.

You should also keep in mind that you will lose some of your assets, as well as any tax refunds and GST credits you would normally acquire during the bankruptcy period. You will also lose any windfalls (lottery winnings, inheritance) you receive throughout the bankruptcy.

For the most part, your total cost of filing bankruptcy will be determined mostly by your monthly income, your family size, and your assets.

Determining the actual final numbers can be difficult, so it’s recommended that you speak directly with a professional. Please note that an initial consultation is normally at no charge.

A trustee in bankruptcy is a person licensed by the Superintendent of Bankruptcy to handle the process of proposals and bankruptcies. Only licensed trustees can provide bankruptcy services. Although they represent creditors (those who are owed money), trustees are officers of the court who also advise debtors of their options with respect to debt problems.

If a person or company is unable to meet its debt obligations, it is said to be insolvent.

When that happens, there are three main Bankruptcy options:

• Bankruptcy – This is where assets of an individual or company are liquidated and the proceeds are given to people who are owed money. (Some assets are exempt from liquidation, depending on the province.)
• Proposal – This is where an offer is made to people who are owed money in an effort to settle the debt.
• Receivership – This usually happens to companies, not individuals. This is where a secured creditor (often a bank or other large creditor represented by a receiver) comes in and generally takes control of the assets of the company.

There are also three main individuals in the process:

• Debtor – The person or company that owes the money.
• Creditor – The person or company that is owed the money.
• Trustee – The people who are licensed to administer the proceedings.

When this happens, Bankruptcy Trustees then;

• advise debtors of their options with respect to debt problems;
• prepare official documentation that is both filed with the Superintendent of Bankruptcy and used to notify creditors;
• ensure the validity of claims;
• ensure that debtors are provided with mandatory counselling and access to mediation services if there is a dispute regarding any income they are required to contribute;
• sell the debtor’s assets (except those that are exempt from seizure) and hold the proceeds in trust for distribution to the creditors;
• assess the debtor’s conduct both before and during a bankruptcy, as well as the cause(s) of the bankruptcy; and
• make an application for a debtor’s discharge (in the case of individual debtors).

No matter which form you choose, it is important to understand what bankruptcy can and cannot do for you. It is very good for eliminating credit card debt, but some debts are considered obligatory and very rarely are discharged. Tax debts, student loans, child support, and spousal support all are such debts. If your debt load is comprised of such factors, look for an alternative to bankruptcy by calling a Toronto Bankruptcy Trustee and asking as many questions as you need to feel comfortable.