There is no shortage of debate over whether certain debts are good or bad or whether there is even such a thing as good debt. Million Dollar Journey says that good debts exist , and Big Cajun Man comes down on the all-debt-is-bad side . I think a large component of the disagreement is semantic. Debt comes paired with something positive. Borrowing to go to school gives you an education and a debt. The education part is good and the debt part is bad. When people say that this is a good debt, they mean that you’re better off with both the education and the debt than you are with neither. But by itself the debt is still bad. So am I just playing semantic games? I don’t think so. By getting the semantics right, we can change behaviour in a positive way. We should say that debt is bad, education is good, and that (most of the time) the advantage of education outweighs the disadvantage of having student loans. Phrased this way, it’s clear that minimizing the debt is desirable. ...

Conventional wisdom is that the Guaranteed Income Supplement (GIS) is clawed back 50 cents for each additional dollar of income. However, with the GIS top-up introduced in 2011, the total clawback rose to 75% within a range of income. This makes it even more important to take into account the GIS clawback when helping low-income seniors plan their finances. Service Canada provides a set of tables to help seniors determine their GIS and Allowance payment amounts . These tables apply only to seniors who are receiving the maximum Old Age Security (OAS) amount. Starting with your yearly income excluding OAS, GIS, and Allowance, you can look up your monthly GIS or Allowance. However, the tables won’t give you a simple picture of how GIS works. The Service Canada tables make it easy for seniors to look up the GIS payments, but they’re cumbersome for planning out different scenarios. Rather than focusing on yearly income, I prefer to think about monthly income. And for couples, in...

Despite the fact that I’m interested in the debate about whether we’re in a housing bubble and whether we’re headed for a housing crash that takes down our economy, I have no opinion myself. I care what happens, but I don’t know what will happen. Two of my favourite writers on this topic are Larry MacDonald, who likes to shoot down housing bear arguments , and Potato, who likes to shoot down MacDonald’s arguments . I won’t enter their debate except to make some observations about housing affordability metrics. Housing bears tend to focus on debt-to-income ratios. They look at how many years of income your mortgage (and other debts) represent. Of course, you can’t spend all your income on debt repayment; there’s interest to pay, and you probably need to eat. So, the actual number of years needed to pay off a debt is much higher than the debt-to-income ratio. If we focus on just the debt-to-income ratio, the situation in Canada seems dire. The average ratio in Canada keeps hit...

Guess what’s in this picture. I’ll give you a hint. It’s not a board for either of the old games Bridge-It or Chinese Checkers. It’s also not your skin after seeing an allergy doctor. Another good guess would be an overhead shot of one of those man-made forests with trees all planted in a grid, but that’s not it either. It’s a pie chart of my asset allocation in an RBC RRSP. This account holds less than a dollar and it’s apparently 100% cash. I got a 5-page statement of my account. My wife got a similar statement for her pennies. Way back when banks used to pay interest on cash balances, my wife and I cleaned out these accounts, but there was a small rounding error due to interest payments. Now we get yearly statements along with a newsletter containing RBC’s market outlook . I sure hope things pick up soon. My returns for nearly 20 years have been zero. I keep thinking that one of these decades RBC will contact us about closing these accounts. More likely they’ll ...

Big Cajun Man explains the steps to get tax breaks related to having a disabled child. Parents generally want the best for their children, including disabled children. Special schooling and other types of programs for these children can be very expensive. Taking advantage of all available tax breaks is important. The Blunt Bean Counter looks at the important decision for small corporate business owners of whether to pay themselves salaries or to draw dividends. In part 2 he crunches the numbers, and in part 3 he explains further issues to consider. Preet Banerjee interviews Ben Rabidoux in his latest podcast. The topic is the current state of Canadian real estate. Retire Happy Blog gives some statistics to allow you to compare your financial position to averages, but goes on to explain the problems with this sort of comparison. Jonathan Chevreau reviews the book Pound Foolish by Helaine Olen.

Casinos are proof that governments love money more than people. As the Ontario Lottery and Gaming Corporation (OLG) continues with plans to overhaul and expand their casinos and other gambling operations, I’m struck by how irrelevant it is to discuss whether this is good for the people. We debate the wisdom of making gambling available everywhere, but we always end up expanding more so governments can get more revenue. I have no religious or philosophical objection to gambling; I enjoy a little gambling myself once in a while. But how many casinos do we really need so that people can satisfy their gambling itch occasionally? The answer is that this question is irrelevant. What matters is that expansion will bring in more money. Never mind that casinos are a net loss to the country as a whole. Casinos cost money to operate, so government revenue is less than gamblers’ losses. Casinos create some jobs, but take away more jobs because gamblers buy fewer good and services. In ...

A few weeks ago, a reader I’ll call Jeremy asked a question about how to handle HST for a practice run with a partner I’ll call Sandy . Sales tax specialist Andrew Davis (contact details below) was good enough to help me sort out HST rules for Jeremy. Here is Jeremy’s situation: Sandy runs a business in Ontario offering an HST-exempt service out of an office she rents. The service Jeremy offers is HST-taxable. Because Jeremy offers a different but complementary service to the public, Sandy suggested that Jeremy offer his service out of Sandy’s office space. To compensate Sandy for directing customers to Jeremy and providing office space, supplies, computers, etc., Sandy suggests that Jeremy pay her 40% of his revenues. The complication comes with how to handle the HST. Jeremy must charge his clients the HST, but how should it be split between Jeremy and Sandy. How to handle HST starts with exactly who is contracting with the customers. Here are some possibilities: Case 1 : J...