Tax Free Savings Accounts (TFSA) would yield a far greater 'bang-for-the-buck' if they were paying 5-6% or more to those who seek to shelter their
savings from their taxable income. But they're not paying 5-6 %, in fact, they're paying virtually nothing, so where is the benefit?
Recently I had a buddy of mine ask me what I knew about TFSA's as he was wondering if he should add more money to his account to shelter it from taxes. Upon review, we discovered that his TFSA was paying him 0.25% (that's POINT 25%) on the $8,000 that he had accumulated in this account.
So I went through the math and took $8,000 and multiplied it by 0.25% and it didn't matter how many times I re-entered the data the answer still came out the same: $20.00!. Now if you are in the top marginal tax rate and would claim that $20.00 as income at the end of the year, you would pay ... $10.00 in taxes. Hmmmmm.
My buddy poured himself another cup of java, (thankful that he wasn't outside in the - 26C deep freeze) and asked if it would be better to put the dough from his TFSA onto his mortgage (Personal Line of Credit / PLC)?
So, I went through the math (again) and took the $8000. that he currently held in his TFSA and multiplied it by the 3.5% interest rate on his existing mortgage (PLC) and it came out to $280.. In short, he would save $280 in interest on his mortgage by simply taking the cash from his TFSA and depositing this on his PLC. A bit of a 'no brainer', eh?
Now I went on to explain to him that because he has a PLC he also has access to that money in the event of an unanticipated financial crunch, much like the flexibility offered by his low yielding TFSA.
Not all situations are exactly the same but if you have the opportunity to save $10.00 in taxes or save $280.00 in interest costs, well, I think you can figure it out.
Hearty Cabbage Soup
With the New Years Resolutions in high gear (they still are aren't they?) I have been making a point of exercising daily, eating breakfast and eating healthier. Yep, even I have had a tendency to sneak a few choco chip cookies at 9-10 pm ... but not now!
Beverley and I have been out cross country skiing several times since December and even took up snow-shoeing recently to mix with my regular power walk/jog. The sub-zero weather of late has made this extremely challenging.
On the theme of eating healthy, keeping in shape, reducing cholesterol and staying warm I pulled out an old Cabbage Soup recipe from years gone by. Cabbage is in the Super Food group, is low in fat/calories, fills you up quick and can be kept in the fridge for several days. All of this said, don't confuse this recipe with the 'Cabbage Soup Diet' http://www.cabbage-soup-diet.com/
You will need a big soup pot or Dutch Oven for this, along with:
1/2 head - thinly sliced/chopped green cabbage
1 - 28 oz can of diced tomatoes
4 - cups of H20
2 - cups of beef broth (prefer over poulette but you can use either)
2 - tablespoons of tomato paste
2 - medium sized carrots - sliced
2 - medium sized onions - chopped
2 - stalks of celery - sliced
2 - garlic cloves
2 - bay leafs
chili peppers (optional) or your favourite hot sauce(also optional)
pepper to taste
The neat thing about this recipe is that you can zing it up by adding lentils, chick peas, kidney beans or any of your favourite soup ingredients.
Put the 4 cps of water into the pot and bring to a boil, while chopping up your cabbage
and remaining veggies. Once boiling, add the carrots and reduce the heat to medium and
pour yourself a glass of wine.
After about 5-7 minutes, add the beef broth, onions, celery ... ahhh, toss everything in
and leave on medium with the lid on for about 20-25 minutes (or 2 glasses of wine, whatever
comes first) But DO NOT put this on the stove for an hour or two as this will eliminate the benefit of the natural vitamins in the vegetables.
This soup will fill you up fast and goes great with a big slice of whole wheat bread and glass
of cold milk ... or chardonnay.
Thanks for stopping by and the best to you and your family throughout 2011.
DIG IN!
Jeff & Beverley
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