What kind of credit card does your college student need?

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

Kids going away to college or university for the first time are typically bombarded by credit card offers from the big banks at frosh week events. If the bills are paid every month a personal credit card can be the first step to a positive credit rating.

To compare available terms on student credit cards take a look at this quick comparison table. However, there are other options that will allow you to more easily monitor your child’s credit card use and step in quickly if there is a problem.

Because my husband and I each have a personal credit card in addition to the card we use jointly for most family purchases, we decided that the best solution was to get my daughter another card on my account and one for my son on my husband’s account.

We never worried that they would abuse our trust because we check our accounts very frequently online, and if a problem did arise, we knew we could nip it in the bud pretty quickly.

But if you are not comfortable with giving your college-age children their own card or a card on your existing account, another option is a reloadable prepaid card.

If you are considering a prepaid card, carefully check out the sign up and monthly maintenance fees for this type of account. And keep in mind that these cards typically do not involve any credit reporting, so they will not help your offspring build a credit history.

Secured credit cards are also available. They allow you to put down a deposit at the bank that secures the balance. Your child can’t exceed a preset limit and he will begin to build a credit history. But you will have to co-sign, so closely monitor the card.

Whatever type of card you select, here are some ways you can educate your kids so they will use their new privileges wisely:

Interest mounts up: Do the math together. For example, my CIBC Infinite VISA card charges interest at 19.99 per cent a year or .05476 a day. Compare that to the .5 per cent annual Advantage for Youth Interest Rate CIBC is currently paying on its Premium Growth Accounts!

Pay bills in full: Be a good example. Avoid paying interest by paying your bills in full. Make it clear that anyone who can’t afford to pay off credit card bills each month can’t afford the items charged to the card.

The credit limit is irrelevant: Set personal spending limits. Just because a card has a credit limit of $1,000 or $20,000 doesn’t mean a cardholder should charge to the max. Unless your child is spending for budgeted items and will have cash on the due date, tell him to forget it until he has saved up the money.

Break the rules, forfeit the card: Be clear about the rules of engagement. Make sure your teenager knows if he overspends, or uses the card for unauthorized purposes, it will be cancelled. No ifs, ands or buts.

Understanding how credit cards work and learning to use them properly is an important part of your children’s financial education. By helping them to understand the potential pitfalls of buying on credit when they go away to school, you may save them a great deal of grief later.

Do you have tips for college or university students researching credit card options? 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:

05-Sept College/University What kinds of insurance does your child need?
12-Sept Kid’s allowance How much and what your children have to do to get an allowance?
19-Sept Extracurricular activities How many and how much?

Aug 26: Best from the blogosphere

By Sheryl Smolkin

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In this week’s roundup we feature series of blogs about the pros and cons of home ownership plus blogs from some of our other favourites that are great reads. 

In How To Figure Out If A Home Is A Good Investment, She Thinks I’m Cheap teaches you how to do the math to find out whether you can afford a home. He also explores whether or not it makes sense to buy the largest home your bank or mortgage broker says you can afford.

Since the end of July, Gail Vaz-Oxlade has published excerpts from Chapter 4 of her book Money Rules. This very readable five part narrative tell the story of Jason (divorced with two children) and the issues he encounters when purchasing a home.

Chapter 4: A Home of My Own (Part 1)

Chapter 4: A Home of My Own (Part 2)

Chapter 4: A Home of My Own (Part 3)

Chapter 4: A Home of My Own (Part 4)

Chapter 4: A Home of My Own (Part 5)

Whether you are saving for a new home or saving for retirement, you may think you have cut out all of the fat and you can’t allocate another dollar a month from your budget to savings. That’s when Canadian Dream: Free at 45 blogger Tim Stobbs  Avoids Saving Boredom by taking risks and trying out new money-saving ideas even if many don’t work.

A continuing theme in all of the blogs we write or refer you to is that saving money is not rocket science. You just have to spend less than you make. On Retire Happy blogger Jim Yih reiterates the basic principles of saving while readily acknowledging that Building Wealth is Simple, Not Easy

And finally, Kerry K. Taylor aka Squawkfox learns that The crazy cost of daycare in Toronto is about 1/3 more than she paid in B.C. and calculates how much she has to earn in order to afford it.

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.

Stay at home or go away to school?

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

There are many pros and cons to weigh if you are still debating whether to attend college or university in your home town or go away to school. A crowded, messy dorm room and doing your own laundry for the first time may seem like a small price to pay for your independence.

However, the real cost of leaving home prematurely could be a huge debt that takes years to pay off. A March 2013 report from BMO’s Wealth Institute says that tuition and other costs for a four-year university degree now can cost more than $60,000. Due to tuition inflation, this amount could rise to more than $140,000 for a child born in 2013.

Of course, if there is no college or university in your hometown or you are interested in a program that is not offered locally, staying at home may not be an option. Regardless of what your decision is, here are some ideas for students who want to trim their expenses to avoid leaving school with a huge debt.

  1. Scholarships: Apply for scholarships or bursaries. The selection criteria are not always based solely on high grades. You can find out what scholarships are available from the school you plan to attend and websites like scholarshipscanada.com and studentawards.com.
  2. Accommodations: To get the true “college” experience you may want to live in residence on campus for at least the first year. However, it may be less expensive to share an apartment with one or more roommates and prepare your own food. If grandma or another close relative lives in the town where you plan to study, consider asking if you can board for a nominal amount.
  3. Trade services for a room: One single Mom I know is training to be a midwife, so she is frequently on call at night and on weekends. Her tenant gets free rent for helping her with child care outside of normal daycare hours. Similarly, an elderly homeowner may be willing to offer free or cheap accommodation if you agree to help out with yard work, shovelling snow and buying groceries.
  4. Get a job: Get a part-time job and a summer job to defray current expenses and save money for the next semester’s tuition. Some schools have work/study programs and offer students on-campus work. While it would be nice to get work in the field you are training for, take what you can get and don’t be afraid to get your hands dirty.
  5. Take a reduced course load: If you take fewer courses over a longer period, it may be easier to balance school and a part-time job. Also, your annual tuition expenses will be lower.
  6. Choose a co-op program: Co-op programs typically require that students work in a relevant business or industry for several semesters a year. Co-op terms are generally unpaid, but employers participating in these programs frequently hire successful students for paid summer work and jobs after graduation.
  7. Enroll in online courses: The Centre for Distance Education offers distance education for Saskatchewan residents. You can get distance degrees including undergraduate programs and a highly rated Executive MBA from Alberta’s Athabasca University. Many of these courses can be applied towards your degree or a diploma at another institution, reducing the time it takes to complete your program.
  8. Check your employee benefits: If you are planning to go back to school part-time, check your employee benefits. Many enlightened employers will pay all or part of tuition once you satisfactorily complete the program. Generally, but not always, the course must relate to skills needed to do your job.
  9. Join the military: Enroll in the Canadian Armed Forces through the Regular Force Officer Training Plan (ROTP) and you will receive free university tuition, books and academic equipment in addition to a salary with benefits. You can attend the Royal Military College or an approved Canadian university. Finally, you will have a guaranteed job upon graduation.

    In return for having your university education paid for, you will have to serve between 36 and 48 months, calculated on the basis of two months’ service for each month of subsidized education.

  10. Live frugally: A student loan, the proceeds of your summer earnings and an allowance from your parents (if you are lucky) will have to last for the whole term. Figure out what you can afford to spend and stick to your budget. If you have a credit card, don’t use it unless you can afford to pay it off every month. Remember that the credit rating you generate now will follow you into the workforce and can affect your ability to buy a home or a car in future.

Do you have tips for students deciding whether to go away to school or study at a local college? 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:

29-Aug College/University Credit card options for your college kid
05-Sept College/University What kinds of insurance does your child need?
12-Sept Kid’s allowance How much and what your children have to do to get an allowance?

Aug 19: Best from the blogosphere

By Sheryl Smolkin

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Whether you are going back to work or back to school this fall, this week we highlight blogs that will help you pay down current debt and avoid going into debt in future.

10 Steps to a Debt Free Life starts with the cardinal rule: Spend less money than you earn. And Big Cajun Man says once you no longer have any debt, save the money instead of going on a spending binge.

While living frugally may seem to be an impossible challenge, Gail Vaz-Oxlade once again reminds us that Frugality = Deprivation. Not!

One way many youg people are keeping expenses down these days is by cutting the cord to either cable or satellite television services. On howtosavemoney.ca SavingMentor explains why regardless of what you may have read to the contrary, Netflix Canada can be a pretty good deal.

If you are a college or university student, taking out student loans may seem like an inevitable necessity. But before you do, read about What to consider when taking student loans on myuniversitymoney.com.

And finally, if you are not sure what career options to pursue, don’t forget to consider a lucrative trade. On milliondollarjourney.com you can find out about how apprenticeships work and and how you can earn while you learn.

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.

Back to school shopping: A teachable moment

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

One end-of-summer ritual for families with school age children is the annual pilgrimage to buy school supplies and fall clothes. But the cost of back-to-school shopping seems to escalate more every year, particularly if name brand clothing, tablet computers and smartphones are on the list.

However, getting ready for the new school term is an ideal time for you to help your child learn the difference between “needs” and “wants.” It is also an opportunity to teach them basic financial literacy skills like budgeting and managing their money.

Start by making a list of what each child requires including school uniforms (if applicable) and school supplies. Then go through closets to see what still fits and what you can salvage from last year. You will likely find clothing items in good condition that are too small for one child but can be used by another. Backpacks and desks may yield a supply of paper, pens and calculators left over from last year.

Then go online with your children to find out the price you can expect to pay for the key items on your list. Check out several different stores to find the best deals. Once you have a price list, create a budget with each child. If you can afford it, you may wish to add some “wiggle room” for unexpected purchases.

Depending on the age of your children, they can shop alone or with you. But regardless of the new gadgets or trendy items they are attracted to, remind them they have to stay on budget. Encourage them to comparison shop and wait for sales if possible to make their money go further.

Try not to shop when you or your children are tired, hungry or pressed for time. In these circumstances, you may end up taking the path of least resistance and overspend just to get it over with.

Here are some other hints for keeping your costs down and making back to school shopping a teachable moment:

  1. Get receipts: You may think you know what school supplies your child needs, but more often than not, this year’s teacher will want something different than the teacher asked for last year (i.e. individual binders for each subject instead of one large binder with dividers). Receipts mean you can easily return anything you don’t need.
  2. Don’t buy everything at once: There are always sales. Children don’t need winter clothing in September, so wait until a better selection at lower prices is available later in the fall. Also, hand-me-downs in good condition will likely surface once other families realize their children can no longer wear last year’s snowsuit.
  3. Name brands: Generally name brands and goods that have logos are more expensive than generic products. However, don’t fully discount your child’s need to conform in order to be accepted. You may be able to meet your child part-way and purchase some of these items at discount malls or end of season sales.
  4. Coupons: Look in the local paper and online for discount coupons. If you or your child have a smart phone, mobile coupons may also be an option.
  5. Lost, damaged items: How many times have you had to purchase a math set because pieces were lost or replace lunch boxes that disappeared on the school bus? Lost cell phones or computers can be particularly expensive to replace.

Some loss or breakage is inevitable. However, you can help your kids to become more responsible if you make it clear that if they are careless they will have to contribute to the cost of replacement items out of their allowance or earnings from a part-time job. Also, make sure that they know that where big ticket items go missing, you may not be able to afford to replace them at all.

Do you have tips for back to school shopping? 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:

22-Aug College/University Stay at home or go away to school?
29-Aug College/University Credit card options for your college kid
04-Sept College/University What kinds of insurance does your child need?

July 2013 return

SPP posted a return of 1.67 to the balanced fund (BF) and 0.07 to the short-term fund (STF). The year to date return in the BF is 7.15% and in the STF is 0.34%.

Market index returns for July 2013 were:

Index July 2013 return (%)
S&P/TSX Composite (Canadian equities) 3.19
S&P 500 (C$) (US equities) 2.41
MSCI EAFE (C$)
(Non-north American equities)
2.59
DEX Universe Bond (Canadian bonds) 0.19
DEX 91 day T-bill 0.10

Click here for a complete list of returns.

Aug 12: Best from the blogosphere

By Sheryl Smolkin

blogospheregraphic

By mid-August we’ve turned the corner on summer and many of us are considering the best ways to save both money and time as we prepare for the busy fall season ahead.

There is nothing like a simple economical home-cooked meal with friends and family to make you happier, according to a study cited on the Chatelaine website.

On Squawkfox blogger extraordinaire Kerry K. Taylor explains SCOP (the  Scanner Price Accuracy Voluntary Code) and how it can help you get groceries up to $10 free if the scanned price of a non-ticketed item is higher than the shelf price or any other displayed price.

If you haven’t started a Registered Educational Savings Plan for your kids yet, check out Jim Yih’s blog on retirehappy.ca. He gives four great reasons why RESPs are a more attractive option than ever for saving towards your children’s education.

If you regularly contribute to RESPs but are contemplating a change to your investment strategy, take a look at Robb Engen’s RESP portfolio on boomer & echo.

And finally, if you just got a new job or a promotion and you are negotiating your salary, don’t miss Salary Negotiation – How a Small Increase Becomes Big Money on shethinksimcheap.com.

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.

12 ways to make money on a garage sale

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

I’m pretty sure some people have made a significant amount of money on garage sales but I’m not one of them. When my mother moved from her house to a condo we had garage sales for several weeks running as we cleaned out the house, but they were very demoralizing, particularly for Mom.

It didn’t matter whether the items were treasured keepsakes or formerly expensive items of clothing, nobody wanted to pay more than a dollar or two for anything. In the end it would have been easier to package up most things and give them to a charity or thrift store right away, rather than dealing with a two-stage process.

However, if I had read 14 Ways to Make Money at a Yard Sale before we started, maybe our sales would have been more successful.

Here are some of the better suggestions (in no particular order) that might help you recoup a reasonable amount for all of your efforts:

  1. Get the word out: Put up plenty of signs with the date, address and directions at major intersections. Create a Facebook Event Page. Put an ad in a community or neighbourhood paper. Post information about the sale on Kiji or Craigslist in your area with pictures of some of the big ticket items.
  2. Display: Display items attractively. Avoid cardboard boxes with a jumble of things by using folding tables. Borrow or rent hanging racks for clothing. While it is preferable to have everything out on the driveway or front lawn so passing drivers can easily see what you are selling, make sure you have garage space to quickly store things if it looks like rain.
  3. What’s not on sale: If possible, move or cover anything that is not for sale. If your garden tools or children’s bikes are visible you may turn your back for a minute and find they have been taken or sold for a pittance by mistake.
  4. Check the pockets: Make sure none of the items you are selling have money or other valuable items like jewelry in the pockets. Also watch for credit card receipts or any other documents that could lead to identity theft.
  5. Electrical appliances: Are you getting rid of a blender, toaster or Aunt Minny’s heating pad? Plug an extension cord into an electrical outlet so potential buyers can be sure that the item works.
  6. Pricing: Price items by groups. For example, $2 for paperback books or 3 for $5. All items of children’s clothing for $2. Make sure there are labels with clearly visible prices so prospective buyers will not have to ask you about every item. If you are selling an expensive object or piece of art, tape a newspaper ad or computer print-out to illustrate its value.
  7. Holding items: Only hold items for a buyer if they give you at least a 50% non-refundable deposit and specify how long you will hold the item for. Get the person’s cell phone number and full name so you can check in with him if he does not arrive by the allotted time.
  8. Closing the deal: Be sure to have ample bills and coins available for making change and provide shopping bags and card board boxes for toting items home. Don’t leave a money box around. It is preferable to wear a belly pack.
  9. Bargaining: Everyone wants to bargain. But early in the day don’t be afraid to say that you think the item is worth the price you set but you may be more flexible later in the afternoon. If an item is big and awkward to move consider taking less to get rid of it as soon as possible.
  10. Free drinks: Buy a few cases of water or soda and put them on ice in a cooler. Advertise that every buyer also gets a free drink. You may be surprised how many people may be more inclined to browse longer and even buy something on a hot day.
  11. Music: Draw attention to your sale. Play music in the background to entice buyers and keep them relaxed and shopping for more items.
  12. Get help: The problem when we ran garage sales for Mom was that we were simultaneously cleaning the house. I think the sales would have been more successful if we had people doing nothing but selling who could also help us pack up at the end of the day.
  13. Cash and carry: Post a sign that all sales are final and that all purchases must be paid for and removed from your premises on the day of sale.

Do you have tips for people planning yard or garage sales? 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:

15-Aug Back to school Back to school shopping: A teachable moment
22-Aug College/University Stay at home or go away to school?
29-Aug College/University Credit card options for your college kid

Aug 5: Best from the blogosphere

By Sheryl Smolkin

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The weather is about as good as it gets across Canada in early August, but it won’t be long before the leaves start to fall and temperatures plummet. That’s when some of us start wondering if we can afford retire somewhere warm.

If you are starting to do the research, take a look at the two part series The Pros, Cons, and Considerations of an International Retirement and 10 Best International Places to Retire on TopRetirements.com.

The pros and cons of Ecuador as a retirement destination is on the Wall Street Journal blog called MarketWatch so it is primarily geared to Americans, but there is also lots of useful information for other expats.

Another interesting U.S. post from the N.Y. Times considers how you can go abroad to places like Vietnam and Australia but keep working during at least the early part of your retirement.

But when it comes right down to it, even a tropical climate can’t replace close friends and family. That’s why you may decide to stay put and retire where everyone knows your name.

Regardless of where you decide to hang your hat for the next chapter, see seven habits of happily retired people shared by Brighter Life blogger Dave Dineen. He advocates trying new things, looking after yourself, caring for others and staying engaged.

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.

What to do on your staycation

By Sheryl Smolkin

SHUTTERSTOCK
SHUTTERSTOCK

I am convinced that there are two kinds of people in this world. The first group includes workaholics who never use up all of their paid vacation days. The second group carefully plans how each vacation day will be used and yearns for more.

This dichotomy was recently illustrated in the results of the 2013 Expedia.ca Vacation Deprivation Survey which revealed that employed Canadians forfeit an average of two days of vacation per year which could be used to relax or travel. This amounts to 32 million untaken days and $5.1 billion in wages handed back to employers.

Yet many Canadians show a strong desire to take time off, with one in five employed Canadians saying they would take a lower salary for more vacation time (22 per cent). Also, “an extra vacation day” tops the list of perks employees would like to receive as a reward for company loyalty.

In many organizations vacation days cannot be carried over to the next year, so it’s “use it or lose it.” But even if you can’t afford to take expensive trips to exotic locations, there are plenty of good options for taking a staycation close to home.

Wikipedia describes a staycation as “a period in which you or your family stays home and participates in leisure activities within driving distance, sleeping in your own beds at night.” You might make day trips to local tourist sites, swimming venues or engage in activities such as horseback riding, paintball or visiting museums.

The benefits of staycations are that they are far less costly than a vacation involving travel. There are no lodging costs and travel expenses are minimal. However, to make it feel like a vacation, budget for local trips, one or two meals out and tickets to local attractions.

Since 2011 the Government of Saskatchewan has funded the “Saskatchewanderer” project. One creative, energetic and motivated student has been hired each summer to discover everything that makes Saskatchewan great. Their job was to visit, video and blog about special events, little known gems and remote locations in the province.

You can learn from their experience. Andrew’s 2011 Adventure, Jeff’s 2012 Adventure and Caitlin’s 2013 Adventure include lots of terrific ideas about things to do on your staycation regardless of what part of the province you live in. Also check out the The Saskatchewanderer on Facebook.

Already this summer, a few of the places and events Caitlin has visited include Regina’s 46th Annual Mosaic: A Festival of Cultures; the PotashCorp Children’s Festival in Saskatoon; Grasslands National Park; and Hudson Bay, SK.

In contrast, Jonathan Chevreau, the editor of Moneysense and author of Findependence Day has a different take on staycations. In a blog posted on June 17th, he says one type of staycation is where you continue to work, but on your own projects rather than for your employer. You can also tackle various chores or home improvement projects.

If you still have a day job but have reached the point where you have several weeks of paid vacation a year, Chevreau says you may find a working staycation is an excellent trial run for retirement. He wrote the first edition of Findependence Day in the summer of 2008 during paid vacation weeks from his newspaper staff columnist job.

Whether you decide to travel on your vacation or spend the time working on pet projects closer to home, don’t forfeit paid vacation days. In years to come, no one will have fond memories of the extra time you put in at the office. But your children and your grandchildren will remember your quality time together, even if you went no further than the pup tent pitched in the front yard.

Do you have tips for people planning staycations? 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:

8-Aug Garage sales How to make money on your garage sale
15-Aug Back to school Back to school shopping: A teachable moment
22-Aug College/University Stay at home or go away to school?