|  A new generation of high-interest loans All Kathleen Zane wanted to do was buy a couch. Instead, she says she ended up with $5,850 in debt and a personal loan with an annual interest of 29.99 per cent. “I was crying,” Zane says of the moment she says she realized how high her interest rate was. Debt from high-interest instalment loans, a fairly new product which has gained popularity in recent years, is becoming increasingly common among Canadians with low credit scores or short credit histories. And critics say the loans can be as treacherous for consumers as payday loans. Here’s what to know about these financial products and the lenders that offer them.  COVID-19 benefits: What’s ending and what’s new It’s the end of an era. As of this Saturday, the federal government is pulling the plug on a number of COVID-19 benefits, including the Canada Recovery Benefit (CRB), which replaced the Canada Emergency Response Benefit (CERB). But Ottawa isn’t completely rolling up its COVID-19 safety net. Instead, it announced a more targeted program called the Canada Worker Lockdown Benefit, part of a $7.4-billion plan to help support workers and businesses into the spring. Here’s what to know about the new lockdown benefit.  Is the big city worth the big job? Researchers at the University of California Berkeley and the U.S. Census Bureau found that moving from a smaller community to a larger, higher-wage area reduces real earnings. That's because, their research concludes, "housing costs consume more than 100 per cent of the nominal earnings gain that a typical worker obtains from moving to a larger or higher-earnings commuter zone." With new, COVID-era flexibility in the form of remote positions and hybrid work models, that calculation is expected to shift even more, according to some economists. ___________________________ – THE QUESTION – “I’m on maternity leave now and my husband and I are considering whether we can afford for me to stay home full time after the one year leave is over? Our monthly expenses are about $5500. Currently, my maternity EI benefits are $2000 per month. His income is about $45,000 – $50,000 per year with a seasonal pattern (he’s in landscaping). He would like to do an online master’s program in counselling starting in 2022 which would take about three years and the average income afterward is $65,000. I think he can work through that period at least part-time and in the summers. Tuition is approximately $27,000. We have some savings and investments. In my name, $67,000 in RRSP, $48,000 in a LIRA (which I cannot access until age 55), $18,000 in a TFSA, $18,000 in a TFSA (earmarked for the baby’s education), and $19,000 in a group retirement plan through work. We have an emergency fund of $20,000. We have sinking funds for travel and a replacement car. My husband has a TFSA of $18,000 and we have $8,500 saved specifically for my husband’s education. My income, if I returned to work, would be about $67,000 per year, and I’m due to return in January 2022. We would like a second child within a year to 18 months. It might make sense for me to work for the minimum to qualify for EI again or about six months. My husband may be able to stay home with the baby, especially in the winter while he doesn’t have much work anyway. I was just wondering if we could feasibly bridge the gap until his career begins without me working based on our savings and investments, or any other creative forms of income? Perhaps we could use the RRSP for tuition (LLP) or income?“ — A Money123 reader “The first item on your list should be a detailed budget breaking down your expenses into discretionary and nondiscretionary expenses. You may find there may be areas you can cut back on. You will be entitled to approximately $4,300 annually in the Canada Child Benefit in 2022. You are able to use your RRSP towards the Lifelong Learning Plan by redeeming $10,000 per year to a maximum of $20,000. As your husband has already contributed $8,500, his tuition of $27,000 will be covered between the RRSP and the savings dedicated for his education. It may be in your best interest to return to work in January as you will be able to collect EI benefits for a full 12 months after you have your second child. If you plan on having a baby in 12 to 18 months, your husband will not be entitled to EI benefits as he is self-employed. The majority of your savings will have to be liquidated if you choose not to go back to work in January as there will be an accumulation of over $94,000 in shortfall over the next three years. Upon the arrival of your second child and assuming your EI is $24,000 per year while your husband's income is approx. $35,000 per year, you will be left with a shortfall of approximately $14,000. This shortfall can be covered by liquidating a portion of your TFSA account. There is also a shortfall of approximately $35,000 after your EI runs out (est. 2024) which can be covered by redeeming $25,000 of your RRSP and $15,000 of your husband's TFSA account. There will be a 30 per cent withholding tax – you will receive most of it back when you file your tax return. There will also be tuition tax credits available that will significantly reduce the tax liability. You should consider establishing a family RESP for your new baby as well as your future children. At the end of the day, you want to be able to fulfill your dreams and although there may be some short-term pain, your goals are achievable because you made the decision to save a portion of your salary at a young age!” — Sheldon Craig, certified financial planner, Craig Consulting and KindWealth ___________________________ Want your money question answered by an expert? Get in touch! | 
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