July 28: Best from the blogosphere

By Sheryl Smolkin

185936832 blog

This week we highlight a series of posts of particular interest to readers who are retired and those who are contemplating retirement.

The big question everyone has when planning their retirement is “how much can I spend so I won’t run out of money.” Mark at MyOwnAdvisor considers various approaches like the rule of 20 and the rule 0f 25. But he concludes there are no hard and fast rules when it comes to determining your retirement number other than taking the first step and figuring out what you’ll likely spend in retirement.

In a short video, Globe and Mail personal finance columnist Rob Carrick interviews Bruce Sellery, author of The Moolala Guide to Rockin’ Your RRSP. Bruce says if you save 10% a year you will probably have enough to retire. To calculated how much you must save, multiply the annual amount you need by 20. So savings of $1 million will be required to pay yourself $50,000/year.

On Boomer & Echo, Marie Engen writes about how downsizing might not be the way to finance your retirement. Moving to a smaller, cheaper place can free up home equity for living expenses and reduce annual housing costs.  But moving is expensive and often a new place can cost more than the one you sold.

Escaping work may be the dream you are working towards, but if you get bored or your investments take a dive you may want to find full or part-time work. Tom Drake on CanadianFinance blog gives five hints for retirees looking for a job. He advises you not to say you are retired as it will give the impression that your best working days are behind you.

If when to start payment of your CPP pension isn’t confusing enough, the answer is further complicated if you are currently receiving a CPP survivors pension. Jim Yih on RetireHappy presents  an interesting case study on combined CPP benefits where compared to the other two choices age 65 is never the best time to start collecting CPP.

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.

July 21: Best from the blogosphere

By Sheryl Smolkin

185936832 blog

This week we bring you blogs from some old favourites as well as some new finds.

On the Canadian Personal Finance Blog, Big Cajun Man reminds us of some of the hidden costs of going away to university that you or your child may not have budgeted for. Don’t forget computers and other devices; trips home; and non-refundable activity fees.

The Frugal Trader shares on Million Dollar Journey how he finally hit the million dollar net worth milestone. Starting at about $200,000 in 2006 he reached his goal by spending less than he earned; aggressively paying off debt; and buying long-term appreciating assets.

We follow Tom Drake on the Canadian Finance Blog, but in a recent interview we became aware he also owns and writes for Balance Junkie. In a recent blog on that site he shares the following three ways to change your lifestyle to save money: Less entertainment, more education; exercise more and eat healthy; and get enough sleep.

On July 7, 2014, Blonde on a Budget  started a year-long shopping ban. Her goal is to spend less, save more and learn to enjoy what she already has. Here are the rules of her shopping ban.

Finally, Kevin Mercadante’s blog Out of Your Rut is referenced in this space for the first time. He recently wrote an interesting post about breaking free of the constraints of being middle class.

Kevin says it takes a lot of time, effort and financial resources to maintain the stereo typical middle-class, suburban lifestyle. The resources that you devote to the chase can take away from other directions in your life that might not only be more productive, but might also better suit your personality and preferences.

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.

Big Cajun Man shares RDSP, RESP expertise

By Sheryl Smolkin

Alan Whitton and his son Rhys
Alan Whitton and his son Rhys

 

podcast picture
Click here to listen

Hi,

As part of the savewithspp.com continuing series of podcast interviews with personal finance bloggers, today I’m talking to the “Big Cajun Man,” author of the Canadian Personal Finance Blog.

In real life, he is actually, Alan Whitton, a mild-mannered government civil servant and father of four, living in Ottawa. Alan has been blogging about finance and consumerism for about ten years, focusing on real life experiences.

As a result, he has written extensively about Registered Disability Savings Plans and parenting a disabled child.

Welcome, Alan.

My pleasure Sheryl.

Q: First of all Alan, tell our listeners where your alter ego name, “Big Cajun Man,” came from.
A:  Well, I was playing golf with friends and was wearing a straw hat and someone yelled at me, “What do you think you are, some kind of big stinking Cajun man?” and the guys I was playing with have called me that ever since.

Q: Why did you start blogging?
A: Well, I started initially just on BlogSpot as sort of an open letter to my mother because at the time, my wife was pregnant with our fourth child, who was a bit of a surprise. Then I realized I could write about other things and I was always interested in money so I figured I’d just start blogging about it.

Q: How frequently do you post?
A: I try to write four or five posts in a week. The Friday post is usually a ‘best of’ what I’ve seen during the week.

Q: How long are the blogs and how complex are they? Do they vary?
A: Oh, it’s usually somewhere between four and eight paragraphs. What shows up, or what I read about or something that happens in my life is usually the catalyst for the more interesting ones.

Q: Tell me about some of the topics you write about.
A: Well, family and money and how families work with money, a little bit on investing, a lot more on disability and how families can deal financially with kids with disabilities or loved ones with disabilities. And that really, again, arose because when Rhys was diagnosed on the autism spectrum, I had to learn about all this so I figured I’d write about it too.

Q: And, how old is Rhys now?
A: He is 9. I have three beautiful daughters who are 24, 22 and 20, and my son who has just turned 9. It’s a multi-generational family. That’s why I end up writing about things like university costs and parenting a 9-year old.

Q: There are probably over a dozen personal finance bloggers in Canada. What’s different about your blog. Why do you think it’s a must read?
A: I don’t know. I mean, my point of view as a father of a multi-generational family is interesting. I always have had a different perspective on things. I leave a lot of the specific investing ideas to some of the more qualified chaps like Michael James and Rob Carrick. I mostly just talk about John Public’s point of view of things.

Q: How many hits do you typically get for your blogs?
A: Between 8,000 and 12,000 a month. It started off very slowly and I think with the backlog of over 2,500 posts there’s a lot of people who just search and end up finding me accidentally.

Q: What are some of the more popular blogs you’ve posted?
A: Well, anything under my RDSP and RESP menus are popular, like how to apply for your child’s disability tax benefits. And on the RDSP side of things all the fights I’ve had with TD about putting money in and taking money out. Also, surprisingly, I wrote one simple blog that just said “I am a civil servant,” and let me tell you, that one caused no end of excitement.

Q: What is the essence of that particular blog?
A: I was trying to blow up some of the very negative views people have about civil servants. I mean, I worked in the private sector for over 20 years. I‘ve been a civil servant for 4 years.

Q. Tell me some of the key features of Registered Disability Savings Plans and what parents of disabled children need to know about them.
A: Well, just that right now they’re sort of the poor stepson at most financial institutions. I mean they’re not very flexible. Typically, at worst, they’re really just savings accounts. You can buy GICs or the bank’s mutual funds, which usually have very high management fees.

From what I can tell so far, TD Waterhouse is the only trading partner or trading house that has an RDSP where you can actually buy whatever you want like ETFs. But even the TD plan is not very well set up. It’s pretty cumbersome to put money into.

Q: What’s cumbersome about it?
A: Well, I can’t set up a weekly automatic withdrawal. I have to put money aside into another TD trading account. Then I have to phone up every once in awhile and transfer the money from the trading account into the RDSP. And then I have to call back after the money’s cleared to say, “And now I want to buy these ETF’s or index funds.”

Q: Why is that?
A: I don’t know. I’ve asked TD that a whole bunch of times. It’s just the way the system works. I’ve poked at them as best I can. I’ve asked a few other people to poke at them, but I haven’t really received a satisfactory answer.

Q: Are there legislative rules about how you can invest RDSPs?
A: Not, necessarily. It’s just the banks are putting that kind of limit on things because it’s not a big money maker for them. They’re not going to make a fortune on amounts people deposit into RDSPs.  Whereas with RESPs, there are more people with kids going to university.

Q: What are the contribution limits on RDSPs?
A: The overall lifetime limit for a particular beneficiary is $200,000. Contributions are permitted until the end of the year in which the beneficiary turns 59. Up to a certain amount every year, depending on how much money you make, will be matched by the government.

Based on parental income, an RDSP can get a maximum of $3,500 in matching grants in one year, and up to $70,000 over the beneficiary’s lifetime. A grant can be paid into an RDSP on contributions made to the beneficiary’s RDSP until December 31 of the year the beneficiary turns 49.

Q: Do you have a favorite personal finance blogger that you read religiously?
A: I’ve got a couple. I like reading Michael James “On Money”, but he’s a friend of mine. I really like the Canadian Capitalist, but he’s sort of taken a hiatus. “Boomer & Echo” and the “Canadian Couch Potato” are quite good and so is “My Own Advisor.” I’ve met most of these guys at various conferences. I also read Squawkfox and have had extensive correspondence with her on Twitter.

Q: What, if any, money making opportunities or spin-offs have there been as a result of your blogging career?
A: Well, I don’t do this for the money which is obvious given how little I make at it. This is more of a cathartic thing for me.

Q: If you had only one piece of advice to readers or listeners about getting their finances in order, what would it be?
A: Get out of debt. Debt is a bad thing. There’s no such thing as good debt. It’s all bad. Don’t fool yourself into thinking there’s livable debt like a mortgage or maybe paying for your university. Somehow carrying debt has been normalized in the last 30 years or so but it’s still really not ok.

Thank you very much, Alan. It was a pleasure to talk to you.

Thanks for the opportunity Sheryl.

This is an edited transcript you can listen to by clicking on the link above. You can find the Canadian Personal Finance Blog here.

July 14: Best from the blogosphere

By Sheryl Smolkin

185936832 blog

This week we have a mixed bag of posts for your summer reading from the world of the ever-prolific personal finance bloggers we track.

Brighter Life presents a series of both get your health and get your finances in shape tips from other bloggers. One of my favourites is from Jeremy Biberdorf, author of Modest Money. He says too many people think the path to financial freedom is to focus heavily on either frugality or earning more money. The trick is actually to find a healthy balance of both worlds. The more extra income you earn, the fewer sacrifices you have to make in your daily life.

Many of us are card-carrying members of the sandwich generation with responsibility for both elderly parents and young children. On Moneycrashers Michael Lewis discusses six must-have conversations you need to have when caring for elderly parents. If you have to tell a parent that it is time to stop driving or take over the finances of an aging relative, you will appreciate this information.

How much do you really need to retire? $1 million? $2 million? On Retire Happy Donna McCaw says your expectations may be too high.  Only about half of the Boomers polled by Scotiabank are doing any planning and most of that planning is only financial in nature, No one mentioned planning for their lifestyle, healthy living, building social networks outside of work or any of the other aspects this major transition brings.

Boomer & Echo blogger Robb Engen says  Investors Should Embrace Simple Solutions. He refers to a young investor seeking feedback on his investment portfolio. While he has wisely opted for low fees by investing in ETFs, seven funds are too many as it may require a lot of fine-tuning to keep the asset allocation in line with his original strategy.  

And finally, on the Canadian Finance Blog, Tom Drake exposes 5 Lies About Your Credit Report. Did you know that if you paid off your debt to a collection agency rather than paying the original vendor the information stays on your credit report?

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.

BOOK REVIEW: HOW NOT TO MOVE BACK IN WITH YOUR PARENTS

By Sheryl Smolkin

10Jul-carrick

The same day I was planning to review “How not to move back in with your parents: The young person’s guide to financial empowerment,” the author and Globe and Mail personal finance columnist Rob Carrick wrote a column revealing how difficult it is for students to get summer jobs to pay for their education and quantifying the cost of post-secondary study.

He cited the Yconic/Abacus Data Survey of Canadian Millennials, conducted for The Globe and Mail earlier this year of 1,538 young people aged 15 to 33. The study found that just over one-third of young people worked more than 30 hours per week at their last summer job. Another 23 per cent worked less than 30 hours at the same job, while the rest were either working multiple part-time jobs, looking for work or taking summer classes.

According to the survey, earnings from summer jobs and other savings totalled less than $2,500 for 46 per cent of students prior to starting college or university, while another 23 per cent had $2,500 to $5,000. However, a year of undergraduate education away at school including tuition, books and living expenses can easily cost $20,000 or more.

That’s why the information in Carrick’s latest book is so valuable. Every new parent should get a copy when they leave the hospital with their precious bundle of joy and beginning at a young age children should be taught the basic principles of financial literacy outlined in the book.

The first chapter discusses sources of funding for college or university and the basics of Registered Educational Savings Plans (RESPs). It is important that new parents understand that the combination of government grants and compounding mean that by opening an account in their child’s first year, saving for a college education becomes almost painless.

He also zeroes in on avoiding the debt trap and the perennial student dilemma: go to school at home or go away to school? He suggests that if the out-of-town program is going to make the student more successful or give him/her the edge in building a career, the additional cost can more easily be justified.

Successive chapters deal with banking, saving, budgeting and the pros and cons of buying a car. Later in the book he looks to the future and covers off the financial implications of buying a home; weddings and kids; and, insurance and wills.

Every chapter has a useful hot list. Examples are:

  • Tips for saving money in your student years
  • Expert tips on building a solid credit rating
  • Five rookie financial mistakes to avoid
  • Ten things you need to know about your company pension plan
  • Top mortgage tips for first-time buyers
  • Top reasons not to buy mortgage life insurance from your bank

Regardless of how well parents and their offspring plan and save, Carrick recognizes that kids may need to move home for some period of time when they are out of work or looking for a job. In fact he did so himself after he finished university.

In those circumstances, parents will have to make “boomerang decisions” like:

  • Whether they should charge room and board
  • Whether to provide some day-to-day spending cash
  • Whether to push their child to take any job you can get.

But kids also need their part by acting like adults, making non-financial contributions and keeping parents updated on their job search. Recognizing that parents may have useful contacts and advice can also help to avoid friction.

The principles of good money management for students and parents Carrick discusses are not new. However, they are introduced and packaged in a way that makes sense for both cohorts.

It’s well worth the couple of hours it will take you to read the book and a good reference you can dip into from time to time in the future when your family is at an age and stage where specific information will apply.

The book can be purchased for $16.57 online at Chapters.

10Jul-Carrickphoto

 

July 7: Best from the blogosphere

By Sheryl Smolkin

185936832 blog

After two weeks of vacation in lovely (except for the mosquitoes) Muskoka, I’m back. And so are all of our favourite personal finance bloggers with lots of interesting material. In particular, we welcome back Kerry K. Taylor (aka Squawkfox) who has been on sick leave.

In her classic comeback post Kerry questions whether Dollarama’s $3 HDTV antenna is worth it.  The bottom line is that she was able to receive as many channels on the $3 antenna as on the $67 model she bought at Future Shop. Her readers also have made interesting comments about what worked and what didn’t in their part of the country when they ditched cable or satellite TV.

Alan Whitton (The Big Cajun Man) gives us three financial rules of thumb to live by: Spend less than you make; don’t confuse spending less with saving money if you are buying an item you don’t really need; and lifestyle creep is dangerous and an excuse to build up debt.

Sean Cooper wrote about how he reached $500,000 in net worth by age 29 in this post on Million Dollar Journey. He worked at multiple jobs, lived with his parents until he had a significant down payment on a house and rented out the top floor of his home while living in the basement apartment.

Mark Seed at My Own Advisor joins the legion of Canadians who are opting for VOIP telephone services instead of Bell or Rogers. For $4.95/month he got to keep his home phone number using Fongo Home Phone and after several months he states categorically that it was the right decision.

And last but not least, a free e:book Understanding Unretirement written by Today’s Economy blogger and Sun Life Financial Assistant Vice-President, Market Insights Kevin Press draws on six years of company research to explore why retirement in today’s economy is different and harder to achieve but could be better than ever before.

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.