PARTICIPANT HANDBOOK

An Each One, Teach One: Literacy Before Lending project

Overview of all Workshops

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COPYRIGHT/PERMISSION TO REPRODUCE

The Each One, Teach One workshop materials are covered by the provisions of the Copyright Act, by Canadian laws, policies, regulations and international agreements. Such provisions serve to identify the information source and, in specific instances, to prohibit the reproduction of materials without written permission. Permission to use the EOTO materials may be granted to other Canadian credit unions and financial institutions who make an agreement to abide by the principles of staff-lead member education, non-commercial purposes and delivery; and, commitment to not promote specific products or services of any particular institution. Please contact us at the address below to discuss signing on to become an EOTO delivery partner credit union or financial institution in your community.

COMMERCIAL REPRODUCTION

Reproduction of multiple copies of any of the Each One, Teach One workshop materials, in whole or in part, for the purposes of commercial redistribution is prohibited, except with written permission from the Vancity Community Foundation. Through the permission-granting process, we ensure individuals/organizations wishing to reproduce EOTO materials have access to the most accurate, up-to-date versions. To reach us about using EOTO in your own community, please write to us at eachoneworkshops@vancity.com, or visit our website at www.eachoneworkshops.ca. These materials were developed with the generous financial support of the Vancity Community Foundation (through its commitment to support financial literacy in communities) and with significant in-kind support of the financial literacy team at Vancity credit union.

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Module 1

Introduction to Basic Banking Not all financial institutions—FIs for short—are created equal. Within the family of FIs that people use for their day-to-day banking needs, there are two types that are recommended and two we strongly urge people to avoid. The ones to avoid are cheque cashing and payday loans outlets. We have a whole module just on that topic, so if you use them to do your basic banking and want to know why we recommend you stop, flip to Module 5: Loans

You Don’t Want. Whether you decide to open your day-to-day chequing and savings accounts with a bank or a credit union, there are a few important things to consider. That’s what we’ll cover in this mini Basic Banking workshop lesson.

How to choose the right financial institution for your needs

Branch location and hours Although you may not need to go in to your branch often, if you get an account that allows in-person banking, it’s nice to develop a relationship with the tellers at your branch. It will make you more comfortable to ask questions about services and banking needs you may have in the future. Another reason to bank with an institution that has a branch near your home or work is to avoid paying ATM fees when you withdraw cash. If you bank with Bank A but use the ATM for Bank B, you’ll pay a fee to each bank. This could be up to $4 per transaction.

Languages It’s important that you feel comfortable and confident when speaking to a banker about your financial needs and goals, so try to find an institution that has staff who speak your mother tongue. Services Opening a new bank account is not difficult, but there can be lots of decisions to make about the kinds of services you’ll need or want.

If, for instance, you have family overseas, you may want an account that charges a low fee to send international money transfers. If you do a lot of ATM banking, you may want unlimited transactions.

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Fees Knowing your own habits with how you use your money is an important consideration when setting up a new bank account since you want to make sure you have the services you use most

without the burden of fees. Some of the things to consider:

• Will you primarily be using an ATM card to deposit and withdraw funds from your account? If so, you’ll want an account that permits enough transactions that you won’t pay additional fees each month.

• Do you prefer to do your banking in-person with a teller? If so, you need an account that allows this interaction at no cost.

• Are you a mobile app person who will do most of your banking online or with your phone? Make sure the FI you join has the tools you need and allows you to use them without fees.

• Do you write cheques to pay your bills? Find out how much cheques cost before you open

a new account. Other considerations You may want to research other questions before opening an account. For instance, you may want to know what the financial institution’s policies are around certain social or political issues, what charities and community organizations they support, whether they offer discounts or perks for joining or to certain demographic groups. Think about the kind of business you want to do business with.

For more information about this topic, attend our interactive Basic Banking

workshop where you’ll learn about:

• The benefits of having financial literacy

• What is a financial institution (FI)?

• How to choose the right financial institution

• Basic Banking 101

• How to choose the right account

• Understanding account fees

• Understanding how interest is calculated

• What you need to open an account at a new FI

• How to use accounts responsibly

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Module 2

Introduction to Basic Budgeting Understanding basic budgeting is an important skill to have. You don’t have to create spreadsheets or do complicated math to benefit from basic budgeting, which is really just making a detailed list of all your expected income and expenses each month. A budget is just a tool—albeit an important one—to help you manage your money so you don’t spend more than you have and so that you’ll be prepared in case you face a situation where you have unexpected bills.

If you’re living pay cheque to pay cheque, making the effort to create a simple budget can help you reduce the worry that comes from not being sure if you’ll have enough money to pay rent. If you’re making a good income and wonder where all your money has gone at the end of a month, a budget will help you, too. Basically, budgeting is an exercise that everyone, from teenagers to senior citizens, will benefit from.

How to create a basic budget The first step to creating a budget is as easy as looking at your bank and credit card statements and making a list of the different places you regularly spend money. If you’re someone who uses your debit or credit card for purchases (as opposed to cash) then this is a straight-forward exercise you can do on a single sheet of paper. Start by getting your bank and credit card statements from last month and write down how much money you brought in from all sources—from earned income to tax benefits to support payments you receive. Put that total at the top of your page. Then, make a list for all your expenses, starting with the big ones that never change from

month-to-month, like rent or mortgage, your utility and phone bills, child or spousal support payments, car payments and so on. Once you have those expenses written down, write down your variable spending on things like eating out, groceries, entertainment, clothes, and such.

Why basic budgeting is so helpful

Once you have last month taken care of, go through the process for two months ago and then three months ago to get a good picture of your spending patterns. Often, people will be surprised to see how much money they spend on coffee and muffins, or on trips to discount stores where they only spend a few dollars at a time, but over the course of a month adds up to hundreds of dollars. Now, if you’re not making ends meet and having to rely on your credit card to pay bills, you have good information for where you can start to reduce spending. This is where you move from

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creating a budget to actively budgeting your spending, deciding to allow yourself up to a certain dollar amount for activities that are not necessary. The process is really quite simple and should take you less than a couple of hours to do the first

time. And the key here is to keep it up moving forward—keep tracking your income and expenses.

Using your budget to achieve your financial goals

Changing your behaviour is where budgeting gets a little trickier since our spending habits are often connected to things like socializing with friends, coping with stress, reacting to not having enough time to prepare for our day while we’re still at home…

So, the next step in being a savvy budgeter is setting a goal for yourself that directly connects to rewards for living within your budget. For instance, making a promise to yourself that once you pay off half of your credit card debt, you’ll treat yourself to a movie night. Or once you have a certain amount of money saved, you take the amount of money you’ve been putting in your savings account each month and do something frivolous and fun with it. But it’s important to keep up your new good spending habit, so treat yourself once and then get back to paying off your debts and building your savings until you reach your next goal. If you have money stress, taking the initiative to do some basic budgeting will very likely help

you sleep better. According to Canadian research, one in two Canadians have a budget and of those people, 90% of them stick to it. The very act of knowing where your money is going and where you’d rather be putting it is powerful information. Give it a try for a month or two and see what you can learn about your spending and savings habits—and if being on top of your spending helps you to sleep better.

For more information about this topic, attend our interactive Basic Budgeting

workshop where you’ll learn more about topics such as:

• What a budget is

• Why you should create a budget

• Needs versus wants

• Seven steps to budgeting

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Module 3

Why Filing Taxes in Canada is a Good Idea Before you skip over this section since… taxes, who wants to talk about those?... consider this: In Canada, there are many benefits to filing your tax return every year, even if you are a low-income earner. Why? Because you may be entitled to credits or benefits which could give you either an immediate refund on taxes you’ve already paid or make you eligible for certain benefits from the government. And if you have children, these amounts together could be over a

thousand dollars a year. But first, let’s cover your rights and responsibilities as a Canadian resident and income-earner.

Your responsibilities The self-assessment tax system is considered the most economical and efficient way to collect income tax.

The tax system depends on the CRA to interpret and apply the law in a uniform and impartial way, and for taxpayers to make an honest self-assessment of their tax payable each year.

You are responsible for

1. Filing an income tax and benefit return by the filing deadline Generally, your return has to be filed on or before April 30, and your balance owing must

be paid on or before April 30. However, in 2020, the filing deadline has been extended to June 1 and your balance owing must be paid on or before September 1. Self-employed persons — if you or your spouse or common-law partner carried on a business in the last year, your return has to be filed on or before June 15. But, if you have a balance owing, you still have to pay it on or before April 30. Even if you can't afford to pay the income tax that you owe, you should file your tax return by the annual deadline in order to avoid any late-filing penalties.

2. Providing the CRA with accurate and complete information to assess your return and benefits

correctly

3. Paying the correct amount of tax Additionally, you’re also responsible for

• Getting help when you need it

• Getting a Social Insurance Number

• Keeping your information up to date, in particular your marital status and direct deposit information

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Your rights as a taxpayer When you deal with the CRA, you can expect to be treated fairly under clear and established rules. The CRA has a Taxpayer Bill of Rights which is on their website.

Taxpayer relief provisions If extraordinary circumstances or difficulties prevent you from filing your return or paying your taxes on time, the taxpayer relief provisions may allow the CRA to

• Cancel or waive penalties or interest

• Accept certain late, amended, or revoked elections

• Refund or reduce the amount payable beyond the normal three-year period

Extraordinary circumstances You might not be able to meet your tax obligations on time if any of the following occurs:

• A natural or human-made disaster, such as a flood or fire

• A personal misfortune such as a serious illness or accident

• An error in a CRA publication

• A civil disturbance or disruption in services, such as a postal strike

• An inability to pay due to financial hardship You can apply for taxpayer relief if you experience any of these situations.

Complaints and disputes You may have a dispute about the way you were assessed or a complaint about the service you received from the CRA. Often, the dispute or complaint is caused by a lack of information or by a simple miscommunication. What to do: Call CRA and speak to an agent. If you still do not agree with their assessment or decision, you have the right to a formal review.

Common benefits and tax credits Since benefits, credits and basic amounts change from year-to-year and, in light of the financial upheaval many families are facing with Covid-19-related lay-offs and time off, it’s impossible to provide an accurate list of all the entitlements. But the following are among the most common and a good place to start, as good motivation to file your tax return this year. Each of the credits and benefits links to a government webpage where you can find up-to-date

information.

Children and family benefit and tax credits Note that this is not an exhaustive list. There are other benefits and credits available to families but these are the most commonly used. The links below lead you to the official page on the government of Canada’s website with the most up-to-date information.

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1. Childcare expenses (link) 2. Provincial and territorial programs (link) 3. Caregiver (Infirm children under 18) (link) 4. Universal Childcare Benefit (link)

Adult benefits Note that this is not an exhaustive list. There are other benefits and credits available to adults and seniors but these are the most commonly used. The link leads you to the official page on the government of Canada’s website with the most up-to-date information.

1. Age Amount (for individuals 65 years old and older) (link) 2. Canada Worker’s Benefit (formerly the Working Income Tax Benefit) (link) 3. Caregiver Amount (Infirm dependents 18-years-old and over) (link) 4. Caregiver Amount (Spouse or common-law partner) (link)

5. Disability Amount (link) 6. Disability Supports Deduction (link) 7. GST/HST credit (link) 8. Home Accessibility Expenses (link) 9. Eligible Dependent (link) 10. Medical Expenses (link) 11. Moving Expenses (link) 12. Pension Income Amount (link) 13. Guaranteed Income Supplement (seniors) 14. Student Loan Interest (link) 15. Tuition, Education, Textbook Amounts (link)

16. Volunteer Firefighter and Search and Rescue Amount (link)

New income support for low and modest income families in 2020 The Federal Government has proposed to provide a one-time special payment by early May 2020 through the Goods and Services Tax credit (GSTC), doubling the maximum annual GSTC payment amounts for the 2019-20 benefit year. The average payment for those applicable individuals will be close to $400 for single individuals and close to $600 for couples.

The Federal Government has also proposed to increase the maximum annual Canada Child Benefit (CCB) payment amounts for the 2019-20 benefit year by $300 per child. The overall increase for families receiving CCB will be approximately $550 on average; these families will receive an extra $300 per child as part of their May payment. The proposed enhancements of these two credits can give a single parent with two children and low to modest income nearly $1,500 in additional short-term support.

Income that is not taxed You do not have to report certain amounts in your income, including the following:

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1. Compensation received from a province or territory if you were a victim of a criminal act or a motor vehicle accident

2. Lottery winnings 3. Most gifts and inheritances

4. Amounts paid by Canada or an ally (if the amount is not taxable in that country) for disability or death due to war service

5. Most amounts received from a life insurance policy following someone's death 6. Most payments commonly referred to as strike pay, even if you perform picketing duties 7. Income from provincial and territorial child tax credit programs 8. Any GST/HST credit 9. Most amounts received from a Tax-Free Savings Account (TFSA)

When is my tax return due? For all individuals, other than self-employed people, tax returns should be filed by April 30. However, for 2020, the deadline has been extended to Jun 1.

For more information about this topic, attend our interactive workshop, Why Filing Taxes in Canada is a Good Idea where you’ll learn more about topics such as:

• What is income tax?

• What does income tax pay for?

• Federal government expenses

• Who has to pay income tax?

• Benefits of filing a tax return

• How are taxes calculated?

• Deductions you may claim

• Tax credits you may claim

• Province-specific tax credits

• Children and family benefits and tax credits

• Adult benefits

• Income that is not taxed

• Your responsibilities

• Your rights

• Where to find help with your tax return

• How to file your own tax return

• What documents you need to file

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Module 4

Credit Cards and Prepaid Cards: Costs and Obligations Credit cards and prepaid cards may look the same in your wallet and act the same when you buy something, but there are important differences you need to know about to use them to your advantage.

Credit cards: Advantages

1. You can buy now, pay later 2. There is no need to carry cash 3. It keeps a record of purchases 4. It helps you create a credit history 5. It allows you to buy and pay for items online 6. It has Zero Liability Policy — if your credit card is lost or stolen, or if someone uses your

credit card number to make transactions you didn’t authorize, you will be reimbursed for the purchases.

Credit cards: Disadvantages The disadvantages of credit cards are not inevitable; they are determined by how you use the credit card. If you are able to manage your purchases and payments, then these disadvantages

will not apply to you. However, if you carry a balance, then some of the following will apply: 1. It can be difficult to budget if you aren’t aware of your purchases. It is very important to

watch your spending when using a credit card to ensure you don’t overspend. 2. Late payments can affect your credit rating and may include conditions that are hard to

understand. 3. If you don’t pay in full, items will have a higher cost (including interest and finance

charges.)

Consider credit card features The best credit cards aren’t necessarily the ones that let you collect reward points; the best cards are the ones that meet your personal needs. For instance, if you use your credit card infrequently and for small purchases, you may want a card that has a low annual fee. On the other hand, if you travel regularly you may be enticed by a credit card with travel insurance or purchase protection. The point is that not all credit cards have the same features, and you should pick your credit card based on your particular needs.

Credit card features

Annual fees There is a wide range of credit card options now, with annual fees ranging from $0 up to $300. Many basic credit cards come with a no-fee or a low-fee (<$50) option. On the other hand, gold or premium credit cards have more benefits/features but charge an annual fee of $100 or more.

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Reward points Many cards offer rewards such as Air Miles, travel points or cash back. It’s important to look at

the fine details of the rewards program since there is generally an associated cost. Some of the questions to consider before signing up for a rewards card with an annual fee:

1. Will you benefit from a reward program that offers travel benefits? 2. How much do you have to spend to earn enough reward points to make use of them? In

some cases you would have to spend tens of thousands of dollars to earn one flight. And you could pay $120 per year to collect those points.

Interest rates

Many department stores offer easy-to-get credit cards to encourage you to shop at their store. Some will also give you a discount of 10% or 20% on your first purchase with the credit card. Before you sign a contract for a store credit card, find out what the interest rates are. They are normally higher than financial institution’s credit cards.

Insurance Some cards offer travel insurance, most offer some level of purchase protection.

How to use a credit card A credit card can be a helpful and convenient purchasing tool. It also presents certain risks. Using your card without discretion may result in expensive interest payments and debt. To avoid the financial complications of using your credit card, consider the following strategies.

1. Never let your credit card reach its spending limit Always keep part of your credit available for emergencies and other unplanned expenses. Maxing out your credit cards can also be seen by lenders as a negative on your credit report.

2. Know what your purchase will really cost Remember: if you charge a purchase to your card and don't pay it off right away, you'll end up spending more than the original price.

3. Know the difference between needs and wants Before making a purchase, ask yourself, "Do I really need this?" You can lower your monthly expenses by avoiding purchases you can do without.

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4. Always make more than the minimum payment Low minimum payments are designed for convenience, but not for quick payment of your balance.

5. Use credit wisely: never miss or skip a payment Skipping one or two monthly payments and then paying off the balance in full on the third month will have a negative impact your credit rating.

Prepaid credit cards Prepaid credit cards are more convenient than carrying cash, but they do not build an individual’s credit. Plus, prepaid cards often come with a price. Both major credit card companies, MasterCard and Visa, offer such cards, but it is the issuers—banks and credit unions—that set the fees (not Visa or MasterCard). Issuers are required to list their fees although there are no limits to these fees yet. Fees may

include the following:

• Activation fees

• Transaction fees (to withdraw money from ATM, check card balance, replace card, load more money)

• Monthly maintenance fees when cards aren’t used

Prepaid credit card fees In Canada, we have approximately 40 different prepaid credit card options. Some are reloadable, others are not (so once you spend the money you need to purchase a new card).

Prepaid credit cards are available through financial institutions (banks and credit unions), retailers (gas stations, grocery store, etc.), and even Canada Post. Fees vary dramatically, so shop for one that works for you. Here’s a real-life example of how a $100 prepaid credit card, originally purchased for $106.95, was used for a $20 cash advance and a $50 grocery bill, but the cardholder only got $70 of purchasing power for their money. January loaded $100 card+$6.95 annual fee Purchase = $106.95 cost ATM cash advance $20+$1.50 fee Balance = $78.50 Monthly fees of $4 for January to May ($20) Balance = $58.50

Grocery purchase $50.00 Balance = $8.50 Monthly fees May, June, July ($12) Balance = $0.00

Ten questions to ask before you buy a prepaid credit card In addition to the four previous considerations, you should also ask these 10 questions when you purchase a prepaid credit card:

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1. What regulations apply? 2. Is there an activation fee? 3. What other fees apply? 4. Is there an expiry date?

5. What if I lose it? 6. How can I get my balance? Is there a fee? 7. Can I cancel the card? 8. Where can I use it? 9. Would another form of payment be better? 10. Are the terms acceptable to me?

For more information about this topic, attend our interactive workshop, Credit

Cards and Prepaid Cards: Costs and Obligations where you’ll learn more about topics such as:

• What is a credit card?

• What is a prepaid card?

• What are the advantages of credit and prepaid cards?

• What are the disadvantages of credit and prepaid cards?

• Credit card features

• How to use a credit card

• Before you apply for a credit card

• Terms and conditions

• Cost of credit

• Knowing your credit card rights

• What to do if you apply and are turned down

• Prepaid credit card fees

• Terms and conditions of prepaid credit cards

• Lost or stolen prepaid cards

• Security for prepaid cards

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Module 5

Loans You Don’t Want A loan you don’t want is any loan that is expensive or difficult to repay. Loans from payday loan companies (like Money Mart or The Cash Store) are bad loans, as are loans from pawnshops and money borrowed as a cash advance on a personal credit card. What these all share in common is that they all have fees or interest rates that take advantage of your need for cash and make it hard to get out of debt.

Why payday loans are loans you don’t want Payday loans are very expensive. They are small, short-term loans ($1500 or less) that must be

repaid within 62 days. You do not provide any security, such as using your vehicle, as collateral to get a payday loan because your next pay cheque is the collateral. On the surface, a payday loan may not seem that expensive but consider this: Most payday lenders charge between $15 and $17 per $100 borrowed and expect repayment within 14 days. So, assuming a person gets a $300 loan with a $17 per $100 fee, that will be a charge of $51. That is an interest rate equivalent of 440%, far higher than a 14-day cash advance on a credit card ($2.25 or 19.5% per year) or overdraft protection ($2.07 or 18% per year). If the client does not pay back the loan as agreed, the payday lender will generally charge an additional 30% interest on the outstanding principal.

Why pawnshop loans are loans you don’t want Pawnbrokers make fixed-term loans to customers who use their collateral (jewellery, electrical appliances, cell phones, etc.) to guarantee the loan. Pawnshops allow customers to borrow on the appraised value of an item for a period of time, often 30 days. However, pawnshop loans are usually renewable. At some pawnshops, customers can extend the loan indefinitely by paying only the interest. Customers can get their pawned item back when the loan and interest are

repaid. If a loan is not repaid, and no monthly interest payment is made, the broker will sell the item and cancel the debt. The problem is that appraisals are usually very low. For example: John purchased a 42-inch TV for $1000 about three years ago. He needs money to purchase a used car and decides to sell his TV at a pawnshop. The owner of the pawnshop knows that a three-year-old TV will only sell for between $200 and $300 to a retail customer and might not sell at all. But he knows a used electronics wholesaler who will buy it for between $100 and $150. So, the owner offers John $100 for his TV.

If John wants to buy his TV back, he’ll be charged 20% interest on the loan, meaning he’ll need to repay $120 to borrow $100 against a TV he purchased for $1000. And if he doesn’t repay the loan, he will lose his $1000 TV and will have only gained $100.

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Why credit card cash advances are bad loans

Some people use credit cards for a cash advance because it is quick and convenient. However, this convenience is outweighed by the serious cost of borrowing money in this way. Interest rates for cash advances are typically around 30% which is much higher than the standard rates for regular credit card purchases.

Repayment terms

It’s important to understand the terms of borrowing money before you borrow. This means that you should always read the fine print of any agreement before you sign it. You should also familiarize yourself with the important details of any contract to avoid penalties and fines and to reduce the cost of borrowing. These details include:

• The date of the first payment

• The penalty for making a late payment

• The total cost of the loan, including fees and interest

Bank loan Bank and credit unions expect you to make a payment of an agreed amount every month on a specific day. If you’re a couple of days late in making your monthly payment, you will be charged interest on the portion you were meant to repay. As long as you make the payment within a few days of your due date, usually no action will be taken against you.

Payday loans Clients have 62 days to repay a payday loan. If they don’t, then the company that lent the client money will start to call them. Many people report being harassed several times a day when they are late in making their payday loan, despite laws that are meant to prevent this kind of harassment.

Pawnshops The law for how long a pawnshop is required to hold onto a pawned item before it tries to sell it varies by province. If an individual is late in making a payment, they may find that the pawned item has been sold.

For more information about this topic, attend our interactive workshop, Loans

You Don’t Want where you’ll learn more about topics such as:

• What is a good loan vs. a bad loan?

• Payday loans

• Pawnshop loans

• Credit card cash advance

• Interest rates and fees

• What happens if … ?

• How interest is calculated

• Repayment and late payment

• Debt collection agencies

• Other kinds of loans

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Module 6

Loans: Costs and Obligations Before we talk about costs and obligations, let’s talk about reasons you’d get a loan.

When borrowing money makes sense Credit has both advantages and disadvantages. By using it wisely, we can benefit from the advantages and reduce the disadvantages. Although there are many reasons to borrow money — and certainly many reasons we might find ourselves in need of money — there are, financially speaking, only a few financially sound reasons to borrow money:

To make an investment

• Buying a residence or rental property

• Education

• Tools, equipment or a vehicle for a job

• Investing in an RRSP (retirement)

• Investing for higher returns

To reduce interest payments

• Moving credit card debt to a line of credit

• Consolidating high-interest debts into lower interest loan

To simplify payments

• Consolidating several debt payments into one loan with one monthly payment

To build credit history

• Getting a small loan you pay on-time to show you are responsible

When borrowing money may not make sense in the long term

Just as there are good reasons to borrow money, there are also times when borrowing money is not a good idea for your long-term financial health. It’s generally not a good idea to borrow money for the following reasons:

To engage in uncontrolled spending

• Buying consumer goods that are impulse buys or wants, not needs

To pay monthly bills

• Unless you also reduce your bills, borrowing money to cover your monthly obligations will put you in a more difficult position as each month passes

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To borrow for someone else

• It’s one thing to co-sign a loan, but you should never borrow money for someone else, since you will be legally responsible for the loan if that person is unable to pay you back

To make risky investments

• If someone has a deal that they guarantee will make you money, be very careful. Borrowing money to invest, even in the stock market, can be risky.

Costs and obligations of loans

Costs There are three basic, different types of loans that meet different types of borrower needs.

Each type of loan carries different rates or fees. 1. Line of credit (also known as a credit line) A line of credit, or credit line, is like insurance—it’s a loan you get before you need it. It’s considered a revolving fund, which means you withdraw the money as you need it, pay it back and borrow it again if you need to. If you’re not using the funds, there are no costs since you only pay interest on amounts you’ve withdrawn. The interest in a line of credit is based on your credit rating and will typically be one of the best rates you can get for a loan.

2. Personal loan A personal is money you borrow at one time and have deposited to your account. Loan durations generally range from as little as six months to as long as seven years. You can choose to have the interest set as a fixed rate, which is usually between 5% and 10%, depending on the type of personal loan and your credit rating, or as variable, which changes with the prime lending rate. 3. Mortgage A mortgage is a loan you get to purchase a primary residence or rental property. Although

mortgages are similar to personal loans they’re different in two key ways. Where a personal loan may be a few thousand dollars, mortgages are usually hundreds of thousands of dollars, and mortgage payments are usually stretched over a period of 10 to 25 years.

Obligations A loan agreement is a legally binding contract, so when considering a loan, make sure you know the following: 1. The interest rate 2. How the interest is calculated

There are fixed open, fixed closed, variable open and variable closed loans. 3. What your regular payment will be Your payment is calculated before you sign the loan.

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4. Prepayment terms Are there fees or penalties if you want to pay your loan off early?

For more information about this topic, attend our interactive workshop, Loans: Costs and Obligations where you’ll learn more about topics such as:

• Reasons to borrow money

• Minimum requirements for borrowing money

• Things to consider when borrowing money

• Types of loans

• Lines of credit (credit lines)

• Personal loans: What to consider

• Consolidation loans

• High interest vs. consolidation loans

• Payment terms: Amortization

• Mortgages

• Questions you should ask before you sign a loan agreement

• Interest rates and amortization

• Knowing your rights

• If you are turned down for credit

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Module 7

Debt Smarts According to recent Statistics Canada research, Canadians carry more debt today than we ever have. So, if you have debt, you are not alone. There are many tools available to help you manage your debts, and we will be looking at how to make smart use of these tools. To understand how to make debt smart decisions, we need to understand the difference between good kinds of debt and bad kinds of debt. We consider borrowing that is future-focused

to be good debt. Certain kinds of debts — like investing in a new home or new career — can often improve your financial health in the long run. For example, spending money now on your education may mean that in the future you have much more earning power. Bad debts are debts you take on to make short-term purchases of goods and services that don’t appreciate in value. For example, while it’s nice to buy new shoes or go out to fancy restaurants, if you’re using your credit card to pay for these things — especially if you don’t have the money to pay off your credit card at the end of the month — then you’re taking on bad debt.

Because new televisions and vacations don’t have any long-term financial value, it’s usually a bad idea to borrow money to buy these things. It’s better to save money for them and then make the purchase.

Signs of debt problems There are many signs that it may be time to consider debt management alternatives. If you’re struggling to make minimum payments — or if you’re regularly only able to make minimum payments — you may be having debt problems. Similarly, if you’re uncertain about the total amount of debt you owe, it might be time to take a more serious look at your finances and come up with a plan to deal with your debts. Here are a few other signs of debt problems:

1. Making minimum payments on credit cards 2. Using overdraft protection as regular cash flow 3. Using credit card cash advances 4. Borrowing money from payday lenders 5. Debt collectors are calling 6. Being uncertain of one’s total debt load 7. Using one loan to pay another 8. Considering consolidating debts 9. Having wages garnished and/or assets seized 10. Living near the limit on credit cards 11. Missing payments

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Debt smart options If you find yourself in a situation where you’re struggling with debt, please don’t despair. There are options available to you. In fact, we recommend that you follow this six-step plan for dealing with debt.

Step 1: Negotiate with your creditors

The first step in dealing with debt — and the best thing to do before seeking credit counselling services — is to meet with your financial institution and/or creditors directly. Since they want to be repaid, they will make time to meet with you. Your creditors may be able to offer you a lower interest rate product or offer to consolidate your debts into one loan that will be easier and less expensive to manage. Always seek advice from reputable sources, such as financial advisors and staff at the financial institution where you bank. Unfortunately, negotiating with your creditors doesn’t always work and may not always be to your benefit. A creditor is not obligated to negotiate new terms.

Step 2: Ask your FI about a consolidation loan If you are unable to renegotiate the terms of your debt, you might consider asking your FI for a consolidation loan. A consolidation loan gathers all of your debts together into one, manageable debt with a single interest rate and a single payment schedule. Basically, the FI pays off your debts, and in return you make a single monthly payment to the FI. However, getting a consolidation loan isn’t always the best course of action. In order for it to

save you money, it must have a lower interest rate than your outstanding debts. Getting a consolidated loan means that you must not get access to new credit or loans for its duration. Practically speaking, it may be a good idea to destroy all but one credit card to help you stick to the plan.

How to be your own debt manager There are many ways that you can serve as your own debt manager. By taking a few proactive steps — and by sticking to your plan — you can manage your own debt without the help of financial institutions or other third parties. Remember, you are your own and best advocate.

1. Contact your creditors/lenders First, figure out what your best outcome will be. Then, figure out exactly how much you can afford to pay each month toward your debt. You may have to do a budget to figure this out. Ask your creditor to reduce your interest rate and to agree to a structured monthly payment plan that you can afford. Some creditors have hardship programs that include a standard interest rate and a set monthly payment. Some of these programs may be for the life of the debt or for a set period of time (six months, 12 months) after which the rates will return to normal. Every creditor has different policies.

2. Get free consultations Make an appointment with a credit counselling company or a trustee in bankruptcy that offers free consultations. You do not need a referral to speak with a credit counsellor, and there should not be any fee for the discussion. If you meet in person, take a spouse or friend when

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possible, if appropriate. Two minds paying attention during this time is helpful. Take notes during all consultations and any phone calls with creditors and lenders, because it can be confusing at times — even for people in the financial industry.

3. Set up auto-payments Many creditors will require you to agree to auto-payments as a condition of enrollment. Even if it isn’t required, auto-payments can be a great help. Auto-payments prevent late or missed payments that can cause you to default. If you default while on a creditor’s program, they have the right to remove you and are not obligated to re-enroll you.

4. Don’t apply for any new credit Some creditors will require that you not take on any new unsecured debt while the terms of your agreement are in effect.

5. Monitor your accounts Your balances should be going down steadily. Pay close attention to your balance, payments and interest rates, as mistakes may occur. Your credit card’s statement will calculate the number of years required to pay off the debt.

6. Stick to your budget Stay motivated by researching other peoples’ stories of their journey to becoming debt-free.

For more information about this topic, attend our interactive workshop, Debt

Smarts where you’ll learn more about topics such as: What are debt smarts? Good debt vs. bad debt The cost of credit Signs of debt problems Your debtor rights Debt smart options

Step 1: Negotiate with your creditors Step 2: Ask FI about a consolidation loan Does consolidation make sense? Step 3: Apply for a low-interest credit card

How to be your own debt manager Step 4: Debt management program DMP Stage 1: Credit counselling DMP Stage 2: Consumer proposal Consumer proposal — the basics Consumer proposal — costs

DMP Stage 3: Bankruptcy Low-income vs. surplus income DMP — comparisons Ways to avoid debt problems

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Module 8

Building a Healthy Credit History Your credit history is like your financial resume; it’s a snapshot of how you deal with the money that you borrow.

What a credit history is Your credit history helps lenders decide whether you are creditworthy—that is, whether they can lend you money and expect that you will repay it. Your credit history is shared in a credit report. This report is a collection of data about how you use credit. It includes:

• Whether you pay your bills and repay loans on time

• How many credit cards you have and their balances

• How much credit you have available to you

• If you have filed for bankruptcy in the last seven years

• How many times you have been late with payments within the past 60 days

• What your monthly debts are

Why your credit history is important Good credit plays an important role in your life, whether you’re aware of it or not. Your credit history will impact your ability to qualify for loans and credit cards, get cell phone service, rent an apartment or home, and sometimes even get a job.

Benefits of a good credit history Any lender you approach for credit will review your credit history information. If your credit history is excellent, you will be more likely to qualify for a higher loan and you will pay a lower interest rate on money borrowed. Many insurance companies also look at an applicant’s credit history and set their premiums according to the credit score: a better score means lower

monthly premiums. Landlords will use your credit history to gauge how likely you are to pay your rent on time. Phone companies and cable service providers examine your credit history to determine if you'll be a responsible customer.

Challenges of a bad credit history A credit history check that shows a record of bankruptcy, collection liens, foreclosures, and other financial missteps can affect your ability to get an affordable mortgage, rent an apartment, or even get a good job.

What a credit score is Your credit score is a judgment about your financial health at one specific moment in time. It indicates the risk you represent for lenders compared with other consumers. To calculate your

credit score, lenders look at the details of your credit history. Specifically, they look at these five areas:

1. Previous payment history (about 35% of score)

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2. Current level of indebtedness (about 30% of score) 3. Length of credit history (about 15% of score) 4. Number and/or frequency of new credit inquiries (about 10% of score) 5. Types of credit you have (about 10%)

The specific calculations for credit scores are not known to borrowers, but what’s clear about these figures is that the largest portion of your credit score is based on your payment history—how well and how regularly you’ve paid your bills. It’s also important to remember that your credit score changes over time and as you make use of your credit, which is good news if you want to improve your credit score, assuming you pay your bills on time.

Why you want to have a good credit score There are three simple reasons that you should want a good credit score: 1. A good credit score gives you access to credit cards. 2. A good credit score gives you access to personal loans. 3. A good credit score gives you access to better interest rates. This will save you money on your credit cards and loans.

For more information about this topic, attend our interactive workshop, Building

a Healthy Credit History where you’ll learn more about topics such as:

• What a credit history is

• Why your credit history is important

• What is in your credit history

• Types of credit inquiries

• Non-Canadian credit history

• What a credit score is

• Why you want to have a good credit score

• How to build a good credit score

• Credit score challengers

• Four things to do if you’re having trouble paying your bills

• Why you should get your credit report once a year

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Module 9

Identity Theft and Fraud Prevention Identity theft is the crime of stealing another person’s identifying information for the purposes of getting money or credit in their name. It may involve making purchases on somebody else’s credit card or getting a personal loan. Fraud occurs when an identity thief uses stolen personal and banking information to get money or credit using someone else’s identity. According to the Canadian Anti-Fraud Centre, in 2014

about 42 000 Canadians reported some form of mass marketing fraud. The CAFC estimates that this fraud costs Canadians about 75 million dollars a year. Essentially, identity theft and fraud both involve using a victim’s personal information to steal money. For victims, this can be costly and stressful.

What information do thieves want? Identity thieves who want to commit fraud look for very specific kinds of information about

you—specifically, information they can use to impersonate you for the purposes of acquiring credit or money under your name. Typically, they want to know these six things about you:

• Your full name

• Your address

• Your date of birth

• You Social Insurance Number

• Your bank account details, such as your account numbers and balances

• Your credit card number and expiry date

What documents should you protect from strangers? Identity thieves can find out a lot about your personal information by looking at your personal, financial and medical documents — but only if you make them easy to find. If an individual has access to these documents, they may have enough information about you to steal your identity. By protecting these documents, you can secure yourself against fraud.

• Bank statements

• Credit card statements

• Driver’s license

• Car registration

• Computer passwords

Some tips to help keep your personal information safe These are just a few of the ways you can protect yourself from some of the most common fraud and identity theft scams.

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Lottery scams You cannot win money or a prize in a lottery unless you have entered it yourself, or someone else has entered it on your behalf. So if you didn’t play, you haven’t won. Don’t provide information.

Money transfer requests A scammer posing as a lawyer or bank representative advises you that a long-lost relative has died and left you a huge inheritance. Don’t provide your banking details.

Phishing scams If you get an email that asks you to visit a website to ‘update,’ ‘validate’ or ‘confirm’ your account information, be skeptical. Do not click the link since those sometimes contain viruses that can infect your computer. Rather, go to your web browser and visit the site in question to see if there’s a notice on your account. If not, you can safely delete the email message.

Telephone scams You get a phone call and the caller tells you your computer is infected with a virus and ask for permission to help you remove it. Granting someone the ability to control your computer allows them to install malicious software on your computer that can capture sensitive data you keep online, including your banking and personal identity information.

Job-related scams Be wary of any potential employer who asks to see your Social Insurance Number before you sign an employment contract. They may be trying to steal your SIN.

Stealing garbage and recycling

Identity thieves might need only one or two documents to find all the information they need to perpetrate a fraud. It’s best to destroy and shred any documents that contain your personal information.

Public Wi-Fi access When using free public Wi-Fi, you need to be careful about what sites you visit and what information you share during your Internet session. Wi-Fi hotspots are not a good place to do your online banking or shopping, since they usually have weak security which identity thieves know how to take advantage of.

For more information about this topic, attend our interactive workshop, Identity Theft and Fraud Prevention where you’ll learn more about topics such as:

• What is identity theft?

• What information do thieves want?

• Tricks thieves use to steal information

• Job-related scams

• Stealing garbage and recycling

• Cheque fraud

• Public Wi-Fi access

• How to protect yourself

• Protect your card information

• Shred or destroy documents

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• Register your phone number on the national Do Not Call List

• Be safe when online shopping

• Protect your cheques

• Protect your computer

• Never leave personal information in your car

• Check credit card statements every month

• Protect passwords and PINs

• Keep your personal documents safe

• Check your credit report

• If you’re a victim of fraud or identity theft

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Module 12

Understanding Contracts

What is a contract?

A contract is voluntary agreement, written or spoken, between two or more parties that is enforceable by law. Although we may not think regularly about contracts, most of us have already entered into many of them. Some of these may be ‘minor,’ like a contract with a cellphone or Internet company. Some may be larger, like the contract for a mortgage. Regardless of the kinds of contracts you might have right now, it’s important to understand how they work, as well as your rights as a consumer before you enter into a contractual agreement.

What makes a contract valid? For a contract to be considered valid, it typically requires the following four elements: 1. A valid contract requires a meeting of the minds between the parties demonstrating that

they both understand and agree to the essentials of the deal.

• The first step in creating a contract is to make sure that both parties are talking about the same deal, so that when they subsequently agree to enter into the contract, they are both agreeing to the same thing. It may seem obvious until you realize that the ‘vintage red car’ you planned to buy from your brother-in-law isn't the Ferrari, it's his Pinto. Take

the time to communicate your understanding of the deal to the other party and listen carefully to the specifics.

2. A valid contract requires a consideration — i.e., something of value exchanged by each of

the parties, such as cash, goods or a promise to do something.

• After the parties reach a meeting of the minds regarding the deal, they must both exchange something of value in order to create a contract. Often, one party provides its goods or services in exchange for the cash of the other party. But consideration can take many other forms, as long as each party is giving up something of value to convince the other party to enter into the contract.

3. A valid contract requires an agreement to enter into the contract, typically by both parties signing a written document, although oral contracts can be valid, too, in some situations.

• When both parties understand the deal and understand what type of considerations they will exchange, they are ready to form an agreement. Usually, the parties demonstrate that negotiations have ended and an agreement has been reached by signing a contract, unless it is an oral agreement.

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4. For a contract to be valid, both parties need to be considered legally competent, meaning

that the parties are not minors and are of sound mind.

• Persons lacking sound mind usually cannot enter into contracts because, the reasoning goes, they lack the ability to understand what they are doing and to create a ‘meeting of the minds.’ Be sure that the party you're working with is legally competent to enter into a contract. Otherwise, your signed contract may be void and unenforceable. Watch out for the following situations:

o Minors cannot enter into contracts without the additional signature of their parents or guardians. The age of majority is different from province to province, so you have to know what it is in the place where you are signing the contract.

o Persons lacking sound mind are generally those who are mentally disabled or impaired by the use of drugs or alcohol to such an extent that they cannot understand the significance of their acts.

o Persons who lack authority to act on behalf of someone else may not be able to

legally bind that other person or company. Make sure that the person signing on behalf of a company or other person has the legal authority to do so.

For more information about this topic, attend our interactive workshop, Understanding Contracts where you’ll learn more about topics such as:

• What is a contract?

• What makes a contract valid?

• Housing rental

• References a landlord can ask for

• CMHC — housing for newcomers

• Your rights as a cellphone customer

• Cellphone contracts 101

• Should you sign a contract?

• Advantages and disadvantages of car leases

• Advantages of rent-to-own merchandise

• Disadvantages of rent-to-own merchandise

• Questions to ask before you sign a rent-to-own contract

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Module 13

Financial Wellness for Seniors

What is financial abuse?

Financial abuse is theft of money, property or personal information. It can also include the misuse of money or property, or withholding funds. It’s usually a pattern rather than a single event, occurring over a long period of time and it may not be detected until funds are severely depleted. Financial abuse can negatively impact your health by reducing the resources available for proper housing, good nutrition, medication and healthy connections.

Who might abuse your trust?

In many instances, the people taking advantage of someone financially may be those that are known and trusted. A financial abuser may be a trusted person in your life, such as your:

• Spouse

• Adult child

• Grandchild

• Other family members

• Caregiver

• Friend

• Neighbour

Why do financial abusers target seniors?

Perpetrators of financial abuse target seniors because they see seniors as vulnerable and easily taken advantage of. What's more they may make any number of the following assumptions about older adults:

• Seniors may not survive long enough to follow through on legal interventions.

• Seniors may not make convincing witnesses in legal proceedings.

• Seniors may be unsophisticated about financial matters.

• Seniors may not realize the value of their assets, particularly homes that have

• appreciated significantly. Older people are also more likely to receive assistance with daily activities such as finances and home maintenance, which presents more opportunities for abuse. In the end, abusers

believe that targeting seniors will allow them to get away with it. Fortunately, by educating ourselves we can take steps toward preventing these abuses from ever happening.

Health & mental capacity It's important to acknowledge that as we age our bodies and minds undergo changes and we may eventually find ourselves in a position where we're personally and legally no longer able to take care of ourselves. We may lose our mental capacity. You are presumed to have mental capacity until established otherwise, usually by medical opinion or a judge’s decision.

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Loss of capacity can be sudden and evident. For example: If you are in an accident and you cannot make financial decisions, someone will be appointed to be your substitute decision-maker. However, sometimes loss of capacity can be gradual and less clear, like with dementia. Mental capacity can fluctuate depending on many factors, such as:

• Stress or anxiety

• Effects of medication or forgetting to take medication

• Exhaustion and time of day

• Diabetes and fluctuating blood sugar levels

• Alcohol and recreational drug use mixed with medication for illness Abusers look for and take advantage of incapacity. But whether it's a long-term health issue or a sudden accident, the loss of mental capacity can be devastating, especially if you don't have a plan in place for dealing with your life, finances and property. No matter what your age, plan for loss of mental capacity.

Preventing financial abuse Unfortunately, financial abuse does not stop on its own. It may even require the intervention of the police and court system. However, by taking a proactive approach, you can minimize your exposure to certain kinds of risks. Here are several ways of preventing financial abuse before it happens:

• Be wary of phone or email requests asking for banking or personal information—your financial institution will not call you to ask for this information.

• Keep your financial, personal information including personal identification numbers in a safe place.

• Keep track of your accounts and legal documents.

• Keep a record of financial transactions and changes to legal documents.

• Read contracts and other documents carefully – consult with a lawyer or someone you trust before signing papers.

• Tell someone if you think you are experiencing financial abuse: a friend, family member, health care or social services professional, legal or financial advisor, or member of your

faith community or local authorities.

• For major decisions involving your home or other property, get your own professional legal advice before signing any documents.

• Keep in touch with a variety of friends and family so you don't become isolated.

• Use autopay features, such as: o Auto deposit for government and pension cheques o Auto pay for regular bills

• If money is lent, write down the following: o The amount o The person’s name o The date of the loan

• Do not sign any blank documents.

• Resist pressure to rush into helping loved ones, even if it seems like an emergency.

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For more information about this topic, attend our interactive workshop, Financial

Wellness for Seniors where you’ll learn more about topics such as:

• What is financial abuse?

• Who might be an abuser?

• Why do financial abusers target seniors?

• Health & mental capacity

• Warning signs

• Examples of financial abuse

• Preventing financial abuse

• What can be done about financial abuse?

• Counterfeit bank notes

• Advanced planning tools: Will

• Advanced planning tools: Power of attorney

• Advanced planning tools: Joint bank accounts