Tag Archives: CBC

May 1: Best from the blogosphere

By Sheryl Smolkin

As soon as the sun comes out and daytime temperatures hover above zero, Canadian gardeners get itchy to plant flowers and vegetables. But depending on the part of the country and how far north you live, the optimum dates for planting differ. And if you take a chance and put in your garden too early you run the risk of having delicate seedlings ravaged by an unwelcome frost.

Here are links to some helpful information about gardening in Saskatchewan:

The goal of the  Northern Saskatchewan Gardening Manual is to encourage people to grow gardens, specifically in Northern Saskatchewan where many people still think that the climate is too harsh for growing a prosperous garden. This manual can help you to:

  • Start and maintain a healthy and prosperous garden in Northern Saskatchewan
  • Start gardening in containers
  • Start gardening in raised garden beds
  • Learn more about gardening, plant basics, and/or
  • Work as part of a group to create a community/shared garden.

The Old Farmer’s Almanac Planting Dates Calculator for Saskatoon not only tells you when to sow vegetables indoors and plant in the ground, but also when to harvest — and it is customized to your location based on the nearest weather station. For example, lettuce can be planted outside in early May but wait until the first of June for peppers. You can also receive planting reminders and a copy of this planting calendar by email.

LandscapeSaskatchewan.com says when planting vegetables, find an area, which will receive at least five to six hours of direct sunlight daily. Take into consideration: the amount of space you have available as some vegetables need more growing room than others; your own requirements for canning, freezing or table use; local frost dates and climate conditions. For a longer harvest period, plant vegetables at staggered time intervals.

Interviewed by CBC last year, Rick Van Duyvendyk, the owner of Dutch Growers Garden Centre in Saskatoon suggested that customers try watermelons or cantaloupes for a change. “Put them in a pot [then] put them outside during the May long weekend,” he said. “Once you get to September, cover them with a frost blanket. Two weeks into September, you’ll have watermelons that are 17 pounds.”

And also on CBC News l Saskatchewan, landscape designer Heather Lowe, the owner of Heather Lowe: Landscape Design in Regina offered 5 tips on how to add beautiful fall colour to your garden. She says don’t worry about matching colours, because in nature all kinds of colours blend together beautifully. “You can plan a garden around any season but try to have it be at peak beauty in the season you use it most,” she concludes.


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

April 3: Best from the blogosphere

By Sheryl Smolkin

It’s almost two weeks since the 2017 federal budget was tabled, so there is lots of “second day” commentary in the mainstream media to draw on for this issue. Saskatchewan also tabled a budget including some provisions that will impact your bottom line.

In the lead up to the federal budget trial balloons were floated regarding making employer-paid premiums for health insurance taxable benefits and changing the taxable rates for capital gains, but none of these dire predictions came to pass.

In the Ottawa Citizen, Kate McInturff, a senior researcher at the Canadian Centre for Policy Alternatives wrote that the budget is a first step to better the lives of women in Canada. She reports that the government will spend $100.9 million over five years to establish a National Strategy to Address Gender-Based Violence — a problem that has directly affected more than one million women in the past five years.

Erin Anderssen at the Globe and Mail offers seven things to know about Canada’s new parental benefits. Once the provinces pass job protection legislation, parents will be able to stretch their leave out for 18 months, but this will mean stretching benefits at a lower rate. The government is expected to move quickly, but the changes may not happen until next year.

Contrary to pre-budget expectations, Lee Berthiaume notes in a Canadian Press article that life-long pensions for veterans were not included in the Liberal government’s second budget. Finance Minister Bill Morneau’s new fiscal plan did contain new spending for veterans and their families, specifically $725 million in promised additional benefits over five years. Still, as welcome as the new money will be, the big question for many veterans is how the government plans to bring back life-long pensions as an option for those injured in uniform.

Hello Uber tax, goodbye transit credit says CBC News. The proposed levy on Uber and other ride-hailing services will for the first time impose GST/HST on fares, in the same way they are charged on traditional taxi services. The non-refundable public transit tax credit — a so-called boutique tax credit introduced by the previous Conservative government — will be phased out on July 1. The credit enabled public transit users to apply 15% of their eligible expenses on monthly passes and other fares toward reducing the amount of tax they owe.

And closer to home, the Saskatchewan budget hikes provincial sales tax to 6% and for the first time, the tax will apply to children’s clothes. CBC presents an analysis of how the PST hike will hit you in the pocketbook.

The government will also wind down the government-owned Saskatchewan Transportation Company, which it says would have required require an anticipated subsidy of $85 million over the next five years.

There were 574 layoff notices attached to this budget, including cleaners in government buildings and workers at the Saskatchewan Transportation Company.

Other notable provincial budget measures include:

  • The exemption for the bulk purchase of gasoline is being scrapped and a tax exemption for diesel fuel is being reduced to 80% of the amount purchased.
  • So-called sin taxes on booze and cigarettes are going up.
  • Various tax credits — including for education and tuition expenses — are being eliminated.
  • Effective July 1/17saskatchewan will apply provincial sales tax to life, accident and health insurance premiums.
  • The Saskatchewan government says it will offset some of the tax increases by reducing income taxes by a half-point on July 1, 2017 and by the same amount on July 1, 2019.


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Mar 27: Best from the blogosphere

By Sheryl Smolkin

It’s that time of month again. Here are a series of personal finance videos for your viewing pleasure.

Rob Carrick at the Globe and Mail says an overlooked way to prepare for retirement is to establish the groundwork for working beyond age 65 when you are still in your 40s and 50s.

Another interesting Globe and Mail video offers valuable advice on avoiding financial fraudsters including how to protect your computer and online passwords.

Bridget Casey from Money after Graduation posted three ways to spring clean your finances last April, but her suggestions are still relevant a year later. She says one of the first things you should do is get your free credit report.

Former gambler turned personal finance coach Beau Humphreys shares his journey from drowning in debt to financial freedom with Jessica Moorhouse in her Mo’ Money podcast.

In this video from CBC The National, Christine Burak and Natalie Kalata report that Canadians are living longer healthier lives but they are having more difficulty saving for a longer period of retirement.


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Burn your mortgage: An interview with author Sean Cooper

By Sheryl Smolkin

Click here to listen
Click here to listen

If you think you can’t possibly afford to buy a home or that paying off your mortgage is a pipe dream, Burn Your Mortgage is the must-read book of the year. Today I’m pleased to be interviewing author Sean Cooper for savewithspp.com.

By day, Sean is a mild-mannered senior pension analyst at a global consulting firm. By night he is a prolific personal finance journalist, who has been featured in major publications, including the Toronto Star, the Globe and Mail and MoneySense. He has also appeared on Global News, CBC, CP24 and CTV News Network.

Thanks for agreeing to chat with us today Sean.

My pleasure, Sheryl.

Q: As a 20 something, why did you decide to buy a house?
A: Well I guess a lot of people strive for home ownership. My parents were my biggest influence. We always owned a home growing up, so I thought that owning a home was kind of the path to financial freedom.

Q: How much did your home cost, and how much was your down payment?
A: I purchased my home in August 2012 for $425,000 dollars. My down payment was $170,000, leaving me with a mortgage of $255,000. I didn’t go out and spend the massive amount the bank approved me for. I could have spent over $500,000 dollars but I found a house with everything that I needed for $425,000 and because of that I was able to pay off my mortgage in three years.

Q: How on earth did you save a down payment of $170,000 dollars? How long did it take you to save it, and how many hours a week did you have to work to do so?
A: Yes, it was definitely a sizable down payment for one person. I pretty much started saving my down payment while I was in university. I was able to graduate debt free from university and while I was there, I was working as a financial journalist. I was also working at the MBA office, and employed part-time at a supermarket. When I got my full-time job I was saving probably 75%-80% of my paycheck. I wasn’t living at home rent free. I was actually paying my mother rent.

Q: Kudos for your determination and stamina. Do you think working three jobs is actually a practical option for most people, particularly if they have young families?
A: No. As I emphasize in the book, that’s how I paid off my mortgage as a financial journalist on top of working at my full time job. While for somebody like me who is single it makes sense, it’s probably not realistic if you have a spouse and children. But there are plenty of things you can do to save money.

Q: Many people again think they would never, never be able to save up enough for a down payment. Can you give a couple of hints or tips that you give readers in your book that will help them escalate their savings?
A:
Definitely. First of all, you absolutely have to be realistic with your home buying expectations. You can’t expect to be able to buy the exact same house that you grew up in with three or four bedrooms and two stories. But you can at least get your foot in the door of the real estate market by perhaps buying a condo, or a town house, and building up equity, and hopefully moving up one day. Think about creative living arrangements. Rent a cheaper place than a downtown condo. Find a roommate.

Q: How can prospective home buyers use registered plans like their RRSP or TFSA to beef up their savings and get tax breaks?
A: If you are a first time home buyer, I definitely encourage you to use the home buyers plan. The government allows you to withdraw $25,000 dollars from your RRSP tax-free (it has to be repaid within 15 years). If you are buying with your spouse, that’s $50 000 dollars you can take out together. That’s a great way to get into the housing market. The caution I can offer is when you withdraw the money, make sure that you fill in the correct forms so you are not taxed on the withdrawal. If you’re not a first time home buyer, then I would definitely encourage you to use a Tax Free Savings Account, because it’s very flexible, and although you don’t get a tax refund, the balance in the plan accumulates tax-free.

Q: After shelter, which means mortgage and rent, food is a pretty expensive cost. How can people manage their food costs while still eating a healthy, varied diet?
A: I offer a few tips in my book. First of all, try to buy items like cereal and rice in bulk and on sale. Another tip I offer is to buy in season. I probably wouldn’t buy cherries during the winter  because they would cost me a small fortune. Try to buy apples instead, and during the summer if you enjoy watermelon, definitely buy it then. Try to be smart with your spending, and that way you can cut back on your grocery bill considerably.

Q: I enjoyed the section in your book about love, money, and relationships. Can you share some hints about how couples can manage dating and wedding costs, to free up more money for their house?
A: People like to spend a fair amount on their weddings these days, and there’s nothing wrong with that, but you just have to consider your financial future, and how that’s going to affect it. Also, when it comes to dating, make sure that you and your potential partner are financially compatible and have similar financial goals. For example, one might be a saver while the other is a spender. Sit down and make sure both of you are on the same page financially, and then find common financial goals, and work towards them.

Q: How can prospective home buyers determine how much they can actually afford?
A: If you are ready to start house hunting, I would definitely encourage you to get pre- approved for a mortgage. Basically, the bank will tell you how much money you can afford on a home. That way you don’t waste time looking at houses out of your price range. However, just because the bank says you can spend $800,000 doesn’t necessarily mean you have to spend that much.

Also don’t forget you will have to pay for utilities, property taxes, and home insurance plus repairs and maintenance. Come up with a mock budget ahead of time, and see how that will affect your current lifestyle. I would say if over 50% of your month income is going towards housing, that’s too much.

Try to kind of balance home ownership with your other financial goals, whether they are saving towards retirement, or even going on a vacation. That way all of your money won’t be going towards your house, and you will actually be able to afford to have fun and save towards other goals as well.

Q: You’re living in the basement and you rented the first floor. Why did you decide to do that, instead of vice versa?
A: Well I’m just one person living on my own, and upstairs there are three bedrooms and two bathrooms. I wouldn’t know what to do with all the space, so it made sense to live in the basement, because to be honest I lived in basement apartments for several years before that, so it wasn’t really much of an adjustment. I mean, personally I’d rather rent out the main floor than get a second or third job. It’s all about kind of maximizing all of the space that you have, and looking for extra ways to earn income.

Q: We rented the basement in our first house. Why did you decide to write the book?
A:
When I paid off my mortgage, a lot of people reached out to me for home buying advice. In the media, there seems to be a lot of, I guess, negativity surrounding real estate and big cities.

I always hear that the average house costs over a million dollars in Toronto and Vancouver. It seems like for millennials home ownership is really out of reach. I wanted to write a book to really inspire them and show them that home ownership is still a realistic dream, and it is still achievable if you are willing to be smart about your finances.

Q: Congratulations Sean. It’s a great book. I’m sure people reading and listening to this podcast will want to run out and buy it. Where can they get a copy?
A: They can order a copy on Amazon. It will also be available in Chapters and other major book stores across Canada.

Well that’s very exciting. Good luck.

Thanks so much.

 

 

 

 

 

You can purchase Burn Your Mortgage by Sean Cooper on Amazon.

This is an edited transcript of a podcast interview conducted in February 2017.

Oct 25: Best from the blogosphere

By Sheryl Smolkin

Major changes to the mortgage rules announced by Finance Minister Bill Morneau in early October have both existing homeowners and people planning to buy a home for the first time scratching their heads. They are wondering precisely what the changes are and how they will be personally impacted.

Here are some blogs and media articles that may answer some of their questions (and yours).

In his blog Dave the Mortgage Planner, Dave Larock presents a three- part look at the new mortgage reality:

Part 1 looks at changes effective October 17th.  Beginning on that date all insured mortgage applications will be underwritten using the Bank of Canada’s Mortgage Qualifying Rate (MQR). As of the date the blog was written  the MQR was set at 4.64%, which is about double what you would actually pay for a market five-year variable-rate mortgage, and that gap helps ensure that the borrowers most vulnerable to rate rises can afford higher payments when the time comes.

Part 2 covers additional rule changes that will take place November 30th. Until now, the rules for insuring low-ratio mortgages have been more lenient than those used for high-ratio mortgages, in recognition of the fact that low-ratio loans have more paid-in equity, which makes them inherently less risky. But after November 30, the qualifying rules used to underwrite portfolio-insured low-ratio loans will be the same as those that are used to underwrite insured high-ratio loans.

Part 3 explains why Dave believes these changes are necessary, and who the winners and losers are in the new world of mortgages. For example, he says Canadian home owners in hot markets, where property values are better protected when lending standards are raised and household debt accumulation slows are winners. However losers include high-ratio borrowers, who just saw the rate that lenders use to qualify them for a five-year fixed-rate (which most of them are choosing) more than double.

In a CTV News story, Meredith McLeod reports that until now, buyers with more than a 20% down payment opting for mortgage insurance have escaped stress testing. They were able to obtain low-ratio insurance sold through two private insurers, but backed by the federal government, subject to a 10% deductible. Starting Nov.30, new criteria for low-ratio insurance will take effect. To qualify, the mortgage’s amortization period must be 25 years or less, the purchase price be less than $1 million, the property has to be owner-occupied, and the buyer must have a credit score of 600 or more.

While the new mortgage rules respond to legitimate concerns about escalating home prices in the red-hot Toronto and Vancouver real estate markets, it is still unclear how they will impact smaller cities and towns in other provinces where prices are more stable, or in some cases even dropping. Todd Kristoff, a Regina mortgage broker told CBC there has already been a correction of roughly five percent over the last several years in Saskatchewan and therefore the changes are not necessarily needed in this province.


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Aug 4: Best from the blogosphere

By Sheryl Smolkin

Every week in this space we offer examples of some of the blogs and personal finance articles we believe represent the Best from the Blogosphere. That’s why we were interested in a list recently published by LSM Insurance of the Top 50 Canadian Personal Finance Websites using various online metrics described in the accompanying article.

Here are several blogs (as opposed to mainstream media outlets) that made the list, and the “most shared content” that helped them get there.

Tom Drake at the Canadian Finance Blog was #10 on the list. How to Calculate Your Credit Score For Free has been a perennial favourite. Drake says that it’s actually fairly easy to see where you stand when it comes to your credit score. All you need to do is visit this credit score estimator and fill in the fields. Once you have done so, the calculator will tell you what range your score falls into.

Young and Thrifty was ranked #13. Sean Cooper helped to put this blog over the top with his guest post How to Achieve Findependence at Age 31. His three step approach is to achieve mortgage freedom by renting the top floor of his house and living in the basement apartment; have multiple income streams – by day he is a pension analyst, and by night he is a financial journalist and landlord; and, frugal living. You can see his own blog here.

The 24th spot went to Mo Money Mo Houses where How Can She Afford That? She Can’t, That’s How generated considerable interest. Jessica Moorhouse says people may appear to be more affluent than you are because they have big houses or fancy cars, but if they are in debt up to their eyeballs, it’s all an illusion. In order to maintain a lifestyle in the black, her parents had to live frugally. They only bought what they needed and lived fairly simply. To this day, that’s how she still lives her life and that’s why she is also not in debt.

At #30, Nelson Smith on Sustainable Personal Finance got the blogosphere buzzing when he wrote about Living in a Shipping Container – really! After their life is over making trips across the ocean, shipping containers are often auctioned off to the highest bidder. Sometimes these high bidders are businesses looking for cheap storage options. Or, if you want to get really crazy, you can build a house with them. Before you poo-poo the idea, Smith says that you can check out some pictures of houses built from storage containers in his blog post.

And rounding out the list at #50, Nancy at Money on Trees questions whether Netflix is really all you need. As a first time home buyer with little discretionary income, she says she simply cannot afford to spend $80 a month on satellite or cable. What she really misses are sports but even these are becoming more accessible as major events like the 2014 Sochi Olympics and CBC’s Hockey Night in Canada are streamed online. We have also been watching many Pan Am events online this summer and displaying then on our “smart” television which has a bigger screen.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Derek Foster tours Saskatchewan

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In October best-selling author and self-proclaimed “idiot millionaire”, Derek Foster, toured Saskatchewan talking to people about how to invest in their future.   He spoke to groups in Regina, Saskatoon, North Battleford and Kindersley about his straightforward approach to investing and why he thinks SPP is a “no brainer” for people looking for a retirement savings plan.

If you missed hearing Derek’s presentation, we’ve captured several media interviews from his visit to Saskatchewan:

Global Morning News Regina on October 23, 2014:  http://goo.gl/19f8gU;

Global Morning News Saskatoon on October 28, 2014:  http://goo.gl/6q8kUO;

CBC Radio’s Saskatoon Morning on October 30, 2014:  http://goo.gl/0OZGjh.

Do you have any money saving tips that you use to help build your retirement fund? Share your ideas with us, http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Financing Post-Secondary Education: It’s a family affair

By Sheryl Smolkin

21Aug-packingforcollege

Before your child heads off to university or college this year, you need to have a frank discussion about how much it will cost and how much you can afford to contribute to his or her tuition and living costs.

If you opened a registered educational savings plan (RESP) when Janice or Jasper was much younger, that nest egg will be a big help. Some young people have also had summer or part-time jobs for many years and have a healthy balance in their savings account.

But with the escalating costs of post-secondary education, chances are that most students will be looking to “the Bank of Mom and Dad” for some assistance, even if that only means living rent free while going to school in their home city.

According to the D+H Student Index survey of 752 Canadian high-school and post-secondary students, when talking to their parents about the cost of school, one in three students say the conversation revealed a gap between the cost of post-secondary education and the financial support their parents could offer. Students only realized the need to line up other sources of financing after having these family conversations.

Fortunately, it’s not taboo for Canadian families to talk about money. Four in five students (80%) say they don’t have any difficulty talking to their parents about money. For the majority of students (55%), the family discussion on how to finance post-secondary education happens in grade 11 or 12.

Reflecting on these conversations, Canadian students say if they could do it again, they would go in with a more realistic idea of the cost of post-secondary education (36%) and have the conversation earlier (26%).

According to Statistics Canada, on average, undergraduate students paid $5,772 in tuition fees in 2013-2014. Over four years, that is more than $20,000 for tuition, before considering other expenses such as books and additional academic fees or any living expenses.

Canadian students usually line up a variety of sources to cover the cost. The top five sources of funding are:

  • 43%: Parents are paying
  • 43%: Student savings
  • 41%: Government federal and/or provincial loans
  • 41%: Summer jobs
  • 39%: Scholarship money or grants

When parents offered financial support over 1/3 of students said the support was unconditional. However in some cases students were required to get good grades (41%); work in the summer (39%); and/or work part-time during the school year (19%)

Three-quarters of students who took out student loans say they could not afford post-secondary education without one. Nine in ten (89%) say the loans helped them pursue their education and career goals.

A recent CBC article reports that Canadians graduate with an average student debt load of $25,000. But for many others the amount is much higher, particularly if they study for professions like law, medicine or engineering.

High debt loads are not only a financial stress but can delay the time it takes individuals or couples to reach certain milestones, such as having children, getting married or owning property.

Therefore, the sooner parents and children talk about and begin saving for post-secondary education, the better. To the extent possible, students should also be encouraged to select a field of study leading to jobs where there is a healthy demand for new graduates.

 

Book Review: FAMILY, KIDS, MONEY

By Sheryl Smolkin

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Kevin O’Leary is one of North America’s most successful entrepreneurs, as well as a star of CBC’s Dragon’s Den and ABC’s Shark Tank (where he will appear exclusively next season). He has co-founded, funded and sold numerous companies in a wide range of industries. Kevin is currently the Chairman of O’Leary Funds, a billion dollar mutual fund and O’Leary Mortgages. He also co-hosts CBC’s The Lang and O’Leary exchange.

In his most recent book “Cold Hard Truth on Family, Kids and Money,” O’Leary takes a life cycle approach to decisions creating a financial family dynasty. Unlike most of the books we have reviewed in this space, the focus is less on the precise details of budgeting or saving money and more how to choose a mate, build a long-lasting marriage and pass on good financial skills to your children.

He starts by describing his mother’s second marriage which lasted 46 years because it was based not just on love, but on shared personal and financial values. He says, “Marriage is like a pizza pie, where love is only one slice.” Therefore, he firmly believes couples should date for at least three years to really get to know each other before marriage.

He also recommends that couples complete individual “financial due diligence” work sheets before sealing the deal. This comprehensive questionnaire covers educational background, employment history, personal debt and any criminal history.

O’Leary acknowledges that this may not seem very romantic. However he says there is nothing that will kill the romance faster than finding out after the wedding when you apply for a mortgage that your partner is deeply in debt and has a terrible credit history.

Not surprisingly, he also believes the reason many arranged marriages work out is because before setting up a first date a good matchmaker will consider the couple’s temperament, education, personal values and attitudes towards money.

When it comes to the kids, O’Leary says the most important thing you can give them is your time. But an early MBA (money and banking awareness) comes a close second. Every financial interaction with your child is an opportunity to teach by example whether you are buying groceries or visiting your investment advisor.

Because financially illiterate children turn into financially illiterate adults, he encourages parents to teach them the basics at home from a very early age. “There’s no need to make lessons too complex for kids. Don’t spend too much. Mostly save. Always invest. These are the building blocks,” he says.

Always an entrepreneur, O’Leary is a big fan of the wealth that family businesses can create. But he uses anecdotal examples to illustrate the money mistakes you can make in a family business and the fixes. For example, he says don’t be in a rush. It’s better to do your research first and produce a quality product. And if the business doesn’t make money in three years, he advises you to cut your losses and move on. It’s a hobby not a business.

Finally, he confronts head on some tough issues like the financial implications of a divorce and the high cost of retirement homes and long-term care. He is an unabashed advocate for the purchase of long-term care insurance.

The book covers a lot of territory and in some sections it feels like a series of individual essays rather than a cohesive whole. Even if you do not fully agree with every aspect of O’Leary’s business-like approach to love and money, you are bound to find some good ideas to apply to your own family and finances in this 262-page book.

You can buy Cold Hard Truth on Family, Kids and Money online from Indigo. The paperback costs $11.47 and the Kobo version sells for $12.99.

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Raising funds goes global

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

Whether you are starting a business, writing a book or spearheading a charitable cause, you may need to raise money. Crowdsourcing or crowdfunding web sites allow you to globally market your campaign well beyond the boundaries of your own community or province.

For example, you can raise money on Indiegogo for just about anything including community, health-related and environmental projects. In fact, in June 2012 Max Sidorov, a Toronto college graduate used Indiegogo to raise over $700,000 to send tormented school bus monitor Karen Klein on a vacation, with lots to spare.

In another recent project, Courtney B.C. resident Shawn Wood almost tripled his initial goal of $5,000 to finance a dream wedding for his fiancé Emily Niinmets who has terminal lymphoma.

And even celebrities are getting in on the act. In a six week campaign, author Margaret Atwood raised U.S. $94,995 (original target $85,000) to develop an online event space where artists and performers can connect with fans and aficionados called Fanado.

You can opt for one of two funding models.

  • With flexible funding, you pay 4% to Indiegogo if you reach your target amount, or 9% if you do not. This encourages people to set reasonable goals and promote their campaigns through other forms of social media.
  • A fixed funding option also costs 4% if you reach your objective, but if you do not, you receive nothing and your contributors are refunded.

Currency exchange fees may also apply and there is a 3% fee for credit card processing plus a $25 wire fee for non-U.S. campaigns.

Your campaign is built online using the Indiegogo platform and will typically include one or more videos and text. One-click social media integration, direct email and announcement features are designed to help spread the word, raise awareness and increase funding. Indiegogo also uses an algorithm they call the “gogofactor” to select the most active campaigns featured on its homepage.

Kickstarters is another popular crowdfunding site limited to raising money for creative projects. The catch is that unless you raise all the money you need, you don’t get any of it. If the project is successfully funded, the credit cards of all contributors are charged on the same day and Kickstarters deducts a 5% fee.

Until recently it has been largely inaccessible to many Canadians as participants had to satisfy the requirements of Amazon Payments including having a U.S. bank account and a major U.S. credit or debit card.

However, with the recent launch of Kidstarters Canada, this popular platform is more accessible to creative Canadians. For example, The Aesthetic Studio of Toronto has raised $96,708 (original goal $55,000) to develop little customizable robots and entrepreneur Y.Z. (full name not provided) has raised 147% of the money he needs to develop a token card  designed to hold 8 Toronto Transit Commission tokens and fit into your wallet’s credit card slots.

A research report released last year by industry publication The Daily Crowdsource says crowdfunding has gone from a $32 million market to a $123 million market in the past two years.

Ninety-three per cent of successful campaigns offer donors incentives for contributing. For example, Toronto-based Matthew Ogelsby’s drive to raise $10,000 to expand his comic book series, “Romantically Apocalyptic Books of Captein” generated $51,873. For a $10 donation, contributors got pdfs of two previous books. CDs, greeting cards and an autographed print were added to the package for larger donations.

Kickstarters reports that the average crowdfunding campaign tries to raise $5,000 and 56% of all campaigns fail. With an average campaign target of $3,700, 80% of Indiegogo projects fail.

“The most successful campaigns are proactive, have a good pitch and find an audience that cares,” says Indiegogo spokesperson Rose Levy.  “The campaigns with the greatest challenges are those where participants think all they have to do is post their story and the money will pour in.”

The U.S. Securities Exchange Commission has recently passed equity crowdfunding rulings that allow backers to reap eventual financial returns on investments. The investment scale for businesses and start-ups is much larger than for typical donation-based crowdfunding campaigns.

The Ontario Securities Commission issued a progress report stating their interest in moving forward with the development of a regulatory framework for equity crowdfunding. However, the report highlights the difficult balance that must be attained to provide investors with adequate protection against the risks of investing through this new marketplace without imposing excessive regulatory burdens on issuers and funding portals that would unduly impede the effectiveness of this means of raising capital.

For the pros and cons of crowdfunding, see this CBC article. Filmaker Ian MacKenzie has compiled a list of crowdfunding sites with links for various purposes.

Have you had a personal experience with crowdfunding as a donor or a fundraiser? Share your tips with us at http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card. And remember to put a dollar in the retirement savings jar every time you use one of our money-saving ideas.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

31-Oct Winter travel Planning your winter getaway
07-Nov Augmenting your income Seasonal jobs
14-Nov Work expenses Why you should pack a lunch