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The future of cash in Canada

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There have never been more ways to pay for something as there are now and the oldest way — cash — is on the decline, especially in Canada. But some experts are raising concerns about the risks of a cashless society.

Timothy Lane, deputy governor of the Bank of Canada, outlined a few reasons to reconsider going completely cashless during a recent talk about cryptocurrency at the University of Calgary.

“Cash works even when the systems are down, when the power goes out and people can still make payments using bank notes,” said Lane. “Second, bank notes offer privacy for your transactions. You can use them without giving anyone your personal or your banking information. Using cash avoids the risk of being hacked or having your card compromised.”

The Bank of Canada staff economists considered all of this in a discussion paper released this fall called “Is a Cashless Society Problematic?” The paper cites the consistent decline of cash payments in Canada for decades.

It also mentions an analysis by Forex Bonuses, which declared Canada the top country in the world embracing cashless technology. A very close second was Sweden, a country where the government is now studying how going cashless could affect the nation.

The findings, referenced in the paper released by the Bank of Canada, focused on indicators such as the number of credit cards per person and the volume of cashless transactions.

Cashless systems aren’t perfect

To save drivers time and to reduce traffic congestion, New York state switched to cashless toll booths at Grand Island, where millions of tourists travelling to Niagara Falls pass through every year.

For users without a pass, the state mails the registered owner a bill. The complication is mailing bills to Canadian addresses attached to license plates. The state can’t access that information, which they didn’t fully consider when implementing the system.  

Still, New York governor Andrew Cuomo has said he wants the cashless system to be implemented statewide by 2020.

Meanwhile, the Royal Canadian Legion experimented with cashless fundraising efforts this year with their digital Remembrance Day poppy.

“It gives us an opportunity to perhaps reach a younger Canadian audience,” said Pamela Sweeny, executive director of the Royal Canadian Legion. “We feel that, in this day and age, most people aren’t walking around with wallets and change purses.”

Canadians could purchase, personalize and post a digital poppy, while still contributing money to veterans. An opportunity they might not have had if they were limited to putting cash into a box.

The future of digital payments

Andreas Park, an associate professor of finance at the University of Toronto, supports these initiatives and believes in a cashless society.

“I would really appreciate it if cash would go. I think it is inconvenient,” said Park, who read the paper released by the Bank of Canada with interest.

Andreas Park, an associate professor of finance at the University of Toronto, says cash is “inconvenient.” (University of Toronto)

“They did discuss, for instance, the possibility of introducing a digital currency, which would then be issued by the central bank,” said Park. “I hope that they actually will be going with it because I like the idea of a digital currency being issued alongside the mobile banking and the banking system.”

The Bank of Canada authors describes this technology as “simple monetary value stored electronically … [that] can be used to make payments.”

Concerns about seniors and security

We aren’t there yet, and Park acknowledges the concerns around going cashless.

“My mother, she’s old and she has dementia and, for her, dealing with a card is just too difficult. The only way she can spend money is with cash,” said Park. “Now, this is a small part of the population. In Canada, this would be probably under two or three per cent of people actually insisting on using cash. But it’s not nothing.”

Park also says when you depend on electronic systems, you’re susceptible to hacks and power outages. Still, he believes the benefits far outweigh the risks.

“I think this would put us in the best spot, and I’d like cash to go away cause I think cash creates risk,” said Park. “Imagine how much you could save by not having to worry about people stealing money from others. Because if somebody steals your wallet, your money is gone.”

In concluding their paper, the authors leave little debate in which way we’re headed.

It reads, “We find that a cashless society would not generally cause material system-wide problems.”

In other words, we’re moving toward becoming completely cashless, whether we like it or not.

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Real Estate

7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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Real Estate

10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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