Trash Your Debt offers sensible advice on slaying the debt monster

June 17, 2021

Getting rid of debt is very similar to de-cluttering. You want to take action, but when you actually sit down and look over just how much there is – more than can be got rid of quickly – it soon becomes daunting, and easier to retreat than to move forward.

Trash Your Debt, by Arnold D. Fredrick, is a nice little book that can help you make progress.

He tells the tale of his early days of maxed out credit cards, car loans, medical bills (he’s in the U.S.) and more, leaving “about $25 per two weeks for food,” and finding themselves “$100 more in the hole every two weeks.” He had out of control debt that was growing, he explains.

The way forward, he writes, is “do something! Sounds a little simple, but in that simple statement lies the secret. Doing something is going to get you out of debt years faster than doing nothing. Doing something will propel you to financial freedom and out of the slavery of debt.”

First, he advises, write down the “why” of getting out of debt, the goals you want to achieve, and the “daily, weekly or monthly steps to achieving your goal.” The goals are important – setting a target means you can measure your progress.

The how involves setting a budget, he writes. And it involves the seemingly simple idea that you must “stop spending more than you make.” He likens the situation to a bathtub that leaks – the more leaks you have (expenses), the more money it takes to fill the tub.

When he looked at his family’s income and expenses, he saw that he was consistently spending more than he earned. So he made spending cuts – cable TV was cut to basic, lunches for work were packed, a meal plan assisted grocery shopping, they bought in bulk and on sale, they shopped for a better phone plan, and more. “Save all the savings,” he says.

Another nice concept in the book is that of the “10 per cent, 10 per cent, 80 per cent” rule. Consider giving 10 per cent to charity, save 10 per cent for your future, and live on the remaining 80 per cent, he explains.

In addition to setting aside money for good causes or charity, setting aside 10 per cent “for you” is essential. “So many people go through life working for someone else and never pay themselves from what they earn,” he explains. Putting away money as you start your career can make your retirement much easier, he notes.

Fredrick is not a believer in cash. He likes a “Visa check card,” (similar to a debit card) because he has a record of all his spending and can quickly spot “trends” where his family may be overspending. With cash, you get no such record, he says. He also recommends cancelling credit cards as soon as you pay them off. Try, he writes, to pay off the higher-interest card first.

Near the end of the book he says there is a monster within us that gets in the way of financial freedom. “The monster is the thing within you that stops you from achieving your greatest potential. For some, the monster is fear – fear of success, fear of change, fear of being responsible or fear of failure. Fear is a strong monster.”

The monster can be killed, he concludes, by small, steady and daily actions. “Don’t let a single day go by without taking a stab at your monster,” he says.

This is a fun, candid, and well-thought-out little book that’s a fine addition to your financial bookshelf.

Just as we can kill a large debt by chipping away at it slowly and regularly, we can also build up our retirement savings little by little. The Saskatchewan Pension Plan permits you to contribute via your online banking platform. SPP can be set up as a bill, and you can chip in little amounts — $10 from a scratch ticket, $5 from returning empties, $100 from a yard sale – as you go. You’ll be amazed how those tiny additions to your nest egg can add up. Check out SPP today!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


June 14: BEST FROM THE BLOGOSPHERE

June 14, 2021

Boomers don’t think they’ll have enough – but aren’t aware of potential healthcare costs in retirement

It’s often said that if you don’t have a workplace pension plan, you will have to fall back on the “safety net” of the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). You’ll be able to augment those benefits with your own Registered Retirement Savings Plan (RRSP) nest egg, the party line suggests.

But new research from HomeEquity Bank and Ipsos, reported on by The Suburban, finds that 79 per cent of Canadians 55 and older “say they can’t bank on RRSPs, the CPP and OAS for a comfortable retirement.”

In short, they don’t think those sources will provide them with as much income as they want.

The survey goes on to note that “four in 10” of the same over-55 group think they may have to “access alternative lending options for their retirement planning toolboxes,” including accessing the equity in their homes via a reverse mortgage.

Traditionally, the article notes, older folks would “downsize” the family home, selling it and buying something smaller and/or cheaper. “That’s long been considered the right thing to do,” the article tells us.

However, states HomeEquity CEO Steven Ranson in the article, “downsizing isn’t as attractive as it used to be. Given the amount of risk associated with moving and finding another suitable home, more than a quarter of older homeowners are considering accessing the equity in their homes instead of selling to help fund their retirements.”

What could be behind this concern over retirement income?

One possibility is the possibility of expensive post-retirement healthcare costs, suggests an article in Canadian HR Reporter.

The magazine cites research from Edward Jones as saying that “66 per cent (of Canadians 55+) admit to having limited or no understanding of the health and long-term care options and costs they should be saving for to live well in retirement.” The article says that the cost of a private nursing home room – on average, in Canada – is a whopping $33,349 per year.

While not all of us wind up in long-term care, one might assume that you want to make sure you still have a little money set aside for that possibility – right?

The Edward Jones survey found that 23 per cent of those surveyed feel their retirement savings will last them only about 10 years, the article notes. Thirty-one per cent don’t know how long their savings will last, the article adds.

This is a lot to take in, but here’s what the survey results seem to tell us. Boomers worry they won’t have enough money in retirement – and many aren’t aware of the huge cost of long-term care late in life. Perhaps those who are aware of long-term care costs are realizing they might run short in their 80s or beyond?

So what to do about this? First, if you can join a pension plan at work, do. Often, your employer matches your contributions, and the income you’ll receive in retirement is worth a small sacrifice in the present.

No pension plan to join at work? No problem – the Saskatchewan Pension Plan has all the retirement tools you need. For 35 years they’ve delivered retirement security by professionally investing the contributions of members, and then providing retirement income – including the possibility of a lifetime annuity – when those members get the gold watch. Check them out today.

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


How the pandemic has changed the way we save and spend

June 10, 2021

As – touch wood – we begin to see the end of the COVID-19 pandemic, we ought to begin to see a return to normal, at least in terms of how we save money and how we spend it.

But the pandemic has changed the way we do those things, research by Save with SPP has found.

According to CTV News, the pandemic “has changed grocery shopping forever.”

It’s expected, for instance, that the trend towards online grocery shopping will continue even after the pandemic.

“The online buying, based on the numbers that we have now, I don’t think it’s ever going to go away,” Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, tells CTV. “I think more and more people will continue to buy food online, regularly, whether it’s through order and pick-up or to get the food delivered.”

And it’s not just big grocery stores, the article notes. The owner of a small Nova Scotia-based meat shop says she thinks online ordering and curbside pickup will continue after the all-clear is given on the pandemic.

The Times of India says there are six lasting money lessons from the pandemic that we all can learn.

“One thing that the pandemic has made us all realise is that we can all save way more than we think. We were forced to stop eating out, go shopping, partying, go to movie theatres or concerts etc. While these are the things we will want to do as things slowly go back to normal, we have had a glimpse of how much we can save if we do not indulge in them as often as we used to,” the article begins.

The point of having an emergency fund has been underscored by the pandemic, the Times notes. The job loss many of us experienced impacted our workplace benefits, prompting some to consider self-insuring, the article adds.

The pandemic also shows us the danger of high-interest debt – what happens with it when our work is reduced or outright ended.

“High-interest debt, like credit card or personal loan, is harmful to you financially even when you have a regular paycheque in your hand. The damage caused by them increases many folds if you are out of a job. Further, if you are unable to pay on time, the piling interest rate can increase the debt amount,” the Times tells us.

A Toronto Sun article provides seven tips – aimed at small business owners, but useful for all of us – based on lessons learned from toughing it out during the pandemic.

Keep track of your credit score, and pay down debt, the article advises. Diversify your investments. Stick to a budget, and set up an emergency fund, the article tells us. “You don’t want to be caught off guard when it comes to unexpected expenses,” we are told. Finally, the Sun says, get back on track with your retirement savings.

There’s a general theme to these messages, and it is a good one to listen to. We’ve been limited on spending, and are often involuntarily saving more, for more than a year. A spending “explosion” is expected when things are fully reopened. The experts here are warning us not to go overboard, to follow a budget, to continue to save, and to wade, rather than jump, back into the re-opened economy.

Retirement saving is a great thing to be doing in good times or bad. With the Saskatchewan Pension Plan, you are in control of how much you want to contribute to your future retirement. If money is tight, you can gear down; if money is more plentiful, you can contribute more. And the money you do contribute will be professionally invested for you. It will be waiting once you punch the timeclock for the last time. Check out SPP today.

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


June 7: BEST FROM THE BLOGOSPHERE

June 7, 2021

In Japan, has 70 become the new 60?

Here in Canada, 70 is the latest you can start taking your Canada Pension Plan payments, and a date when you can begin thinking about what to do with your registered retirement savings plan.

But in Japan, according to HRMAsia, it’s the new retirement age – up from age 65.

Companies, the magazine reports, will now be “required to retain workers until they are 70 years old.” The reason for this legislative change, we are told, is two-fold. Due to the fact that Japan has a falling birthrate and an aging population, there’s a labour shortage. The aging population is also driving up the cost of pensions, the article notes.

The legislation’s main focus is allowing workers to stay on the job longer. The old retirement age of 65 is no more, the article says, and legislation permits workers to stay on past the new, higher age limit of 70, or to work in retirement as freelancers.

It’s an interesting decision. Here in Canada, there was talk at one time – and later, federal legislation – that would have moved the start of Old Age Security to age 67, for some of the same reasons the Japanese are citing. While the present government reversed this plan, we are now experiencing some of the same issues Japan is experiencing. It’s something to keep an eye on.

Could we see an era of super inflation once again?

When we tell the kids that we once lived through an era where wage and price controls limited our pay raises to six per cent – and where mortgages and car loans had teenage interest rates attached to them – their eyes doubtless glaze over at this litany of impossible-sounding boomer factoids.

Could the crazy interest rates we saw in the ‘80s ever return?

One U.S. professor says yes. Speaking to CNBC in an article carried in Business Insider, Prof. Jeremy Siegel of Wharton says “I’m predicting over the next two, three years, we could easily have 20 per cent inflation with this increase in the money supply.” The increased money supply Stateside is due to “unprecedented” fiscal and monetary stimulus, he states.

Money supply is up 30 per cent since the beginning of 2021.

“That money is not going to disappear. That money is going to find its way into spending and higher prices,” Siegel states in the article.

“The unprecedented monetary expansion, the unprecedented fiscal support, you know, I think excessive, was first going to flow into the financial markets, into the stock market, and then once we’re reopening, and we’re right at that cusp, it was going to explode into inflation,” he concludes.

When you’re saving for retirement, it’s usually a very long-term deal. You may not starting drawing upon any of your savings until you are 70, and there’s a chance you will still be banking on retirement money until you are in your mid-90s. So a balanced approach, a portfolio that has exposure to Canadian and international stocks, bonds, real estate and other sectors is the way to go to avoid having all your nest eggs in the same basket. If you don’t want to take on nest egg management yourself, rest assured that the Saskatchewan Pension Plan is there to manage things for you. Their Balanced Fund has averaged an impressive eight* per cent rate of return since the plan’s inception 35 years go.

*Past performance does not guarantee future results.

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


How you can learn to save like Grandma

June 3, 2021

We always remember arriving at grandma’s house in Saint John, NB, back in the ‘60s, and being treated to homemade pickles, chow-chow, and even mayonnaise. Grandma’s house was fill of jams, jellies, and other preserves, and their impressive vegetable patch featured herbs, carrots, and much more.

Grandma bolstered her grocery supply with home cooking, preserves, and garden produce.

Save with SPP took a look around the Interweb to see if anyone else has gathered together saving tips from their grandparents – and we found quite a few.

At the Koho.ca blog, writer Brittany Bell lists budgeting – our grandparents knew enough to spend less than what they brought home – as well as prudent spending, and finding “simple ways to save.”

Other old-school saving ideas include coupon clipping, saving your change, buying grocery items in bulk and taking advantage “of all available deals and discounts” when shopping online or offline.

The A Cultivated Nest blog adds a few more.

Make your own, the blog advises – you can create your own “cleaning supplies, your own DIY beauty products, your own gifts.” We learn again about growing your own herbs and making your own preserves, but there’s also the idea of “cut your own” which makes sense – buy a watermelon and cut it up, and do the same with a whole chicken. Every cut made at the grocery store by staffers will cost you, the blog advises.

Other good tips include using cash and not credit, to “repair or upcycle” things rather than just throwing them away, and to consider buying used instead of new.

Country Living magazine rolls out some additional ideas.

Buy direct from the farmer, the article advises. Learn to sew so you can save on tailoring costs and minor clothing repairs. “Make meat an accent,” rather than the bulk of your meal plan, we learn. Make soup more often, we are told – it is filling, nutritious, and an easy way to use up leftovers. Start saving – “it’s never too late” and make it automatic, the article continues.

Finally, the article says, “eat in,” and enjoy your own cooking while saving money.

These all ring true when we think of our grandparents. As far as we can remember, none of them used credit cards – if they had them, they were for an emergency. They didn’t have lines of credit on their houses. So, when they wanted something, they had to save up for it. These are all still sensible ideas today.

If you want to retire, you’ll have to save up for it. If you have a pension plan at work, great – that’s a big part of the battle. But if you don’t, or if you want to augment your workplace savings, check out the Saskatchewan Pension Plan. The SPP gives you all you need to make your retirement savings plan automatic – you can make contributions automatically from your bank account, and increase them over time as you earn more. What you chip in is professionally invested at a very low cost, and can – when you retire – be paid out to you in the form of a lifetime annuity. Check out the SPP, celebrating 35 years of operations, today!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


SPP appoints new Executive Director

June 1, 2021

The Saskatchewan Pension Plan (SPP) Board of Trustees is pleased to announce the appointment of Shannan Corey as Executive Director of the Plan effective June 1, 2021.

Coming to us with 30 years’ experience, Shannan spent many years in the actuarial pension industry managing complex pension challenges for a broad range of clients, accumulating deep expertise working with legislation and pension administration operational needs. After obtaining
her professional HR designation, she enhanced her experience over the last 10 years through broader consulting and private industry sector roles. This enabled her to pursue her passion of providing innovative and relevant services to members by taking on key roles with other pension-focused member service organizations in Saskatchewan.

Shannan’s formal training includes a Bachelor of Science Degree in Mathematics from the University of Saskatchewan, and Associate Actuary and CPHR designations.

This appointment is as a result of the retirement of Katherine Strutt on July 31, 2021. Ms. Strutt led the organization for more than 30 years, guiding the Plan through several eras of change and enhancement.

The Board looks forward to continued success of the Plan under Ms. Corey’s leadership and thanks Ms. Strutt for her service and dedication to SPP.

SPP is a voluntary defined contribution pension plan established by the Government of Saskatchewan. It offers an alternative for small businesses that do not offer their own pension plans, provides cost-effective professional investment management of retirement savings, and allows employees full portability of pension savings between employers.

Bonnie Meier
Director of Client Service
bmeier@saskpension.com
306-463-5419