By Sheryl Smolkin

A CIBC poll conducted by Nielsen reveals that younger Canadians are more optimistic about their retirement and ability to save but they are less likely to be taking action. The poll also found that expectations of older Canadians fall dramatically.

Thirty per cent of Canadians aged 18-24 say they expect to live better in retirement than they do today but the number falls to 17% for 25-34 year olds and continues to drop to three percent of those aged 55-64.

Despite their optimism, younger Canadians are less likely to have started saving. Forty percent of 18-24 year olds and 23% of 25-34 year olds say they have not yet started saving for retirement, compared to just 16% of Canadians overall.

The poll results suggest that although younger Canadians are positive about their future retirement plans, they may be relying too much on time to meet their retirement goals and not taking necessary actions now that could help them realize their goals.

“Time is on the side of younger Canadians who have many years to retirement, but that’s only an advantage if you take action and use those years to start accumulating savings,” says Christina Kramer, Executive Vice President, Retail and Business Banking, CIBC. “While it’s not surprising that younger Canadians are optimistic about how they expect to retire, the fact that so many people nearing retirement aren’t as hopeful speaks to the importance of having a financial plan in place earlier on.”

The poll also revealed that the majority of Canadians (58%) believe it is still possible to put money away each month and retire in their 60s, particularly 18-24 year olds (71%), and to a similar extent, 25-34 year olds (68%).

This is a positive finding, according to Kramer. “Considering how often we hear talk of the increasing cost of living, it’s good news that so many Canadians, especially younger people, still think saving for retirement is achievable,” she says. “The key is to make a plan and take steps to begin saving – the sooner you start putting money aside and earmarking it for your retirement, the longer you’ll have for your money to grow.”

Advice for focusing on retirement savings

• Talk to an advisor: Meet with an advisor to understand your options, and work with them to develop a plan that can help you in managing multiple financial priorities and staying on track over the long term.
• Contribute regularly: Set up a regular investment plan to automatically withdraw smaller amounts throughout the year, rather than trying to find the funds for a large lump payment at the deadline.
• Save at work: Many employers offer group retirement savings plans, defined contribution plans or the Saskatchewan Pension Plan to their employees and top up employee contributions by a specified amount. Save at work and take advantage of this free money.
• Don’t lose sight of the longer term: While it is important to address immediate financial needs such as debt reduction or saving for a large purchase, it is equally important to keep future goals such as retirement in sight. 

The Saskatchewan Pension Plan is a defined contribution retirement savings plan open to all Canadians. If you have RRSP contribution room, you can save $2,500/year or transfer in $10,000 from another RRSP. In 2013 the SPP balanced fund earned 15.8% and this fund has average a return of 8.1% since it started in 1986. For more details about the plan and how to enrol, see the SPP website.

By Sheryl Smolkin

I’m back at my desk after a week in Orlando with my daughter’s family, including our two year old granddaughter. While Disney and pool time were lots of fun, I’m not sorry to return to late summer weather in Canada. In my book, clear skies and 20 degrees is as good as it gets.

As the new the business year kicks off,  Best from the Blogosphere gets back to some retirement basics. How much do you need to retire? When can you afford to retire? Where do you want to retire?

In How much you need to save for retirement,  GetSmarterAboutMoney.ca says how much you need to retire depends on your age, your lifestyle and the amounts you will receive from government benefits. There is a useful link to a calculator from Service Canada to estimate your income in retirement and seven tips for last minute savers.

While the best known vehicles for retirement savings are Registered Retirement Savings Plans and defined contribution plans like the Saskatchewan Pension Plan, for the last five years Canadians over18 have also been able to open tax free savings accounts.  My Own Advisor’s Mark Seed reminds us of some of the very best things about the TFSA.

Many people have been diligent about saving and accumulated significant amounts, but they are still apprehensive about retiring and dipping into their savings. Boomer & Echo’s Marie Engen answers the question Can I afford to retire? for one couple. She says their challenge is to shift from savings and asset gathering mode to spending mode  — something even the greatest savers have the most trouble doing.  As a result, they may needlessly deny themselves a pleasurable retirement.

Donna McCaw says on Retire Happy that delayed retirement is a retirement plan. In other words, larger numbers of Canadians are choosing to work longer because they like their jobs or they need the money. She quotes D. Banda of the American Association of Retired persons who claims, “Older workers are changing the workplace to an extent women did 30 years ago when they started entering the force in greater numbers.”

And finally, where you retire can have a significant impact on both your finances and quality of life. In his MoneySense blog Financial Independence, Jonathan Chevreau says you should test out the retirement lifestyle in your community to ensure it is a good fit. He concludes that where he lives in Long Branch, Ontario meant an hour commute each way when he worked in downtown Toronto, but it’s a perfect retirement haven.

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.

By Sheryl Smolkin

 

 

Hi, as part of the SavewithSPP.com continuing series of podcast interviews with personal finance bloggers, today, I’m talking to Tom Drake, author of the personal finance blogs Canadian Finance and Balance Junkie. He also partners on three other sites and writes guest posts on several others.

Tom lives with his wife and two boys in Edmonton. He’s a financial analyst for all of the Sobeys stores west of Ontario. He’s always looking for ways to reduce any expenses, while continuing to save money, in part because his wife is a full-time homemaker.

Welcome Tom.

Hi Sheryl, thanks for having me here.

Q. When did you start blogging Tom?
A. I started in early 2009. I hadn’t really thought about my personal finances too much prior to that. I was never totally terrible with money, but in about a six month span, we got married, and soon after that, we were expecting our first child, and we were also looking to buy a house when the market dipped in early 2009. So those three things kind of put personal finance right at the forefront in my mind.

Q. What were your goals for the blog when you started blogging, and have they changed over time?
A. Well, they have a little. When I first started, it was certainly more about the three major events that I’ve already mentioned. Nowadays, I try to cover as many personal finance topics as possible because through Google searches and even people emailing me directly I discover a lot of topics that I can kind of help them with their own personal finances, even if it’s not something that I’ve had to deal with myself.

Q. How frequently do you blog?
A. Lately it’s been about two or three times a week on the “Canadian Finance” blog. I have multiple blogs, so I’m probably doing something every day. I also post one to two times a month on “Balance Junkie,” and soon I’ll be writing on “Retire Happy” as well.

Q. What other blogs do you have?
A. Well, within Canada, it’s the Canadian Finance blog and Balance Junkie and I’m also a partner with Jim Yih on Retire Happy.

Q. To what extent is there an overlap between the topics that you would feature or write about on your own blog and that, for example, you or Jim or his other bloggers would post on his blog?
A. Well, Jim Yih is very dedicated to the retirement niche, which I honestly haven’t thought about it much. I save money in my RRSP and have savings in my TFSA as well, but I don’t have a huge retirement planning goal right now. So I don’t cover those topics as much. So I’d say my blog is about more general personal finance issues and his is very targeted on retirement issues.

Q. So what will you be writing about on Retire Happy?
A. On Canadian Finance, I cover a lot of tips on how to save money, reduce your utility bills and such. Most of the people who read Retire Happy are beyond that, and they’re looking for ways to use their money better. So I’ll probably be covering things like making sure that your credit card has a decent rewards plan and products like TurboTax. Just about anything that can help people use products that are out there and add something a little more than just retirement to that blog.

Q. Now, you say that retirement hasn’t been your focus as yet. May I ask how old you are?
A. Just about to turn 37 this week.

Q. I see, well, you know what, you’re getting closer to that break point. I think 40 is when the light goes on.
A. Yeah, exactly. I do save a decent amount. I just don’t have a full retirement plan. I don’t know if I’m going to retire at 50 or 70 at this point.

Q. Unlike Tim Stobbs who says he’s retiring at 45.
A. Oh, that would be nice, but I’ll say 50 at the earliest.

Q. There’s probably over a dozen well-known personal finance bloggers or more in Canada. What’s different about your blog? Why do you think it’s a must read?
A. Well, I think with any personal finance blog, readers are going to gravitate to someone that kind of fits their situation. So as a family man in my mid-30s, I get a lot of readers that sort of fit that same mold. Also, archived articles from other staff writers I have had from time to time add a different dimension.

Q. How many hits do you typically get for each blog?
A. I don’t really look at it per post. So much of it is search traffic. I get a few thousand in a day. But as a total network of all the sites that I own, or am in partner with, we get over 500,000 page views in a month.

Q. Wow. You said all the sites that you own or partner with. You’ve told me about two and about working with Jim. Are there others?
A. Yes, Jim Yih gets all the credit for this model, which is basically taking a 50/50 partnership where we focus on our strengths. I like writing personal finance posts, but I’m not as efficient at it as a lot of these other writers. So the people I partner with are really good writers.

Jim’s been writing for over a decade in newspapers and on his own site, even before we turned it into Retire Happy. I’ve also partnered up with Miranda Marquit down in the States. She can be found pretty much in any personal finance blog that you look at. She’s a big freelancer.

These people don’t want to deal with creating a site, working on things like search engine optimization, how to monetize the site, so they actually make some money from it. Those are more of my strengths actually than the actual writing. So it’s been a good partnership with both of them.

And the third person I’m partnering with is Kevin at Out of Your Rut which is another American blog. Again, he’s more of a freelancer. But he has a site and we work to make sure that site makes money as well and gets the traffic.

Q. One of the more popular blogs you’ve posted related to the Smith Maneuver, which allows you to deduct mortgage interest as an investment expense. Can you tell me how that works?
A. Basically what you need is a re-advanceable mortgage. And what that means is as you pay down your principle, you have a home equity line of credit that will increase. So if you pay $500 down on your principle, your L.O.C. increases by that amount. You can use that line of credit to invest in dividend bank stocks.

The goal is that the stocks you pick have a higher dividend percentage than the interest rate you’re paying on your mortgage. Then you can use those dividends to accelerate your mortgage pay down. So ultimately your debt level stays the same.

A lot of people don’t like that, because you’re not really reducing your debt, and you’re leveraging it for investing. But I’m comfortable with it. The dividends I have are certainly making a higher percentage than what I’m paying on a mortgage currently. Obviously, the risks are the way that the mortgage rates go in the future. But dividends have some preferential tax treatment as well, which also helps.

Q. So when did you implement a Smith Maneuver personally?
A. Probably about 2010. Buying my house in 2009, I got the Scotia STEP mortgage which includes a line of credit. But since I had exactly a 20% down payment, I couldn’t actually borrow anything yet because I hadn’t paid down any additional principle. So after about a year of that mortgage, I started out with the Smith Maneuver, and using that extra equity on the house to invest in stock.

Q. So you’ve got a day job. You’ve got two kids. You’ve got your work with your own blog and others. What advice would you give to busy people to fit it all in?
A. I don’t get a lot of sleep. So if you can do a 19-hour day, you can fit a lot. But otherwise, certainly prioritize family first. Obviously, I’ve got my day job. But as soon as I come home, I spend time with my family. Once the boys are in bed, then I go into business mode and write a blog post or deal with various technical issues and such, up until 1:00am or later.

Q. That’s amazing. I’m one of those people who needs my sleep. So you’ve mentioned a number of people you’ve worked with, but who are your favourite personal finance bloggers?
A. Well, some of the ones that originally got me into personal finances haven’t been blogging as much, like Mike at Money Smarts or Preet at Where does all my money go?

Million Dollar Journey is certainly the reason I started blogging. It’s what got me into the Smith Maneuver too actually, and so I still read that one quite a bit. And I read Jim Yih’s stuff a lot. But Robb at “Boomer & Echo” is certainly a great writer.

Q. So if you had to look at all the time you’re spending on this, are you doing it for love or are you doing it for money?
A. I do make a full-time income with my online business, but my wife is staying at home with our kids. So it’s her full time income basically. It’s worth it to juggle sort of both jobs right now, to allow her that time with the kids.

Q. If you had only one piece of advice to people who want to save money and optimize their savings, what would it be?
A. I think the biggest advice for me is basically to have a positive cash flow. I’m not a big fan of budgeting myself. It’s something I don’t think people always stick to. But the cash flow is just simple calculation to make sure that you’re bringing in more than you’re spending. So you want to make sure you’re saving and covering all your bills. And you certainly want to make sure that you’re not going into a negative cash flow. It’s the simplest way to improve your finances.

Thanks very much Tom. It was a pleasure to talk to you.

Thank you. It was great conversation.

—

This is an edited transcript of the podcast you can listen to by clicking on the graphic under the picture above. If you don’t already follow Tom’s blogs “Canadian Finance and Balance Junkie” you can find them here and here. Subscribe to receive blog posts by email as soon as they’re available.

 

By Sheryl Smolkin

 

“More Money for Beer and Textbooks” by Kyle Prevost and Justin Bouchard is 200 easy-to-read and digest pages of down-to-earth advice about how to finance a post-secondary education without going into massive debt. And the authors do not advocate living an austere party-free existence.

Both are in their mid-twenties and graduated from the University of Manitoba. Kyle is a high school teacher and Justin is the Dean of Residence at St. John’s College on the University of Manitoba Campus. They also blog at myuniversitymoney.com and  youngandthrifty.ca.

They recognize how difficult it is to get a high school or university student to sit down and read a book that won’t be on a final exam — particularly a personal finance book!

That’s why instead of counselling extreme frugality, they look at post-secondary education from the perspective of two guys who wish they knew then, what they know now. They figure they would each be at least $5,000 richer if they had taken their own advice.

They start off by comparing the cost of four years of school living away from home (about $80,000) to living at home (about $34,000). They also run the numbers for a two year college degree ($30,000 vs. $11,000). Nevertheless, they conclude that higher education is and will continue to be an excellent investment in an information-based economy.

When evaluating whether going away to school is a worthwhile investment, they weigh the pros and cons of on and off campus living for students.

One interesting living option proposed is for parents with more than one child attending the same school to consider buying a house with additional bedrooms for renters to help defray the mortgage costs. Prohibitive housing costs in cities like Vancouver or Toronto may make this idea impractical, but it could be a workable solution in smaller college towns.

For kids or their parents who think Canada and provincial student loans are the answer, the comprehensive section on applying and qualifying for student loans and paying them back is an eye opener.

The application process is so complex, the book gives a checklist of 16 types of information to have available before even beginning to complete the online form. And depending on parental income, it is assumed that the Bank of Mom & Dad will make a major contribution to school costs.

Repayment of student loans doesn’t start until six months after the end of university, but interest starts accruing at the end of the final semester. Former students can opt for a variable interest rate of prime plus 2.5% or a fixed interest rate of prime plus 5%. A bankruptcy will not wipe the slate clean but a Repayment Assistance Plan is available in limited circumstances.

The chapter on scholarships and bursaries reveals the surprising fact that every year in Canada about $7-million in free money earmarked for post-secondary education goes unclaimed. There are lots of great suggestions about where to find scholarships and12 scholarship tips anyone can use.

For example, the authors say don’t just Google “scholarships” and apply for the top three like everyone else. The people who really succeed in the realm of scholarships are those who apply EVERYWHERE.

Too much trouble?

Most scholarship applications are similar and once a student has applied to several, he/she can cut and paste the rest with a little creative tweaking. And if the application process is really complicated, the odds are the applicant won’t have much competition.

There are also lots of good illustrations of how scholarship applicants can market themselves. For example, a former McDonald’s employee can emphasize the positive by describing the experience as “building practical business and communications skills in an entry-level position while learning how to contribute positively to building a team atmosphere.”

Providing references with a summary of activities and attributes they may not be fully aware of is another great suggestion that could result in detailed and glowing letters of support for scholarship applications.

Trying to keep costs down while still having a good time?

Kyle and Justin suggest students drink at home instead of in a bar to improve their “booze-to-dollar” ratio. They can also score free soft drinks and save money each time they offer to be the designated driver. For those with the space and inclination, they even suggest making homemade beer or wine can as another way to minimize cash spent on alcohol!

Other chapters deal with summer jobs, student tax returns, credit cards, budgeting basics and the importance of choosing an “in demand” career.

As both educators and recent graduates, the authors are able to strike the right balance between a breezy presentation and delivering lots of useful information. This book can be the catalyst for important discussions between parents and their college-bound offspring.

More Money for Beer and Textbooks can be purchased for $14.40 online at Chapters.

By Sheryl Smolkin

See Part 1 and Part 2.

In the first two parts of this series on how to save money for retirement we focused on how to get started and some of the registered and unregistered savings plans available to Canadians.

This final segment looks at some other ways (in no particular order) you can both grow and preserve your retirement savings. And making sure your children are educated to effectively manage their finances is a big part of this discussion.

1. Keep fees low: You ignore investment fees at your peril, says Toronto Star personal finance editor Adam Mayers in a recent article. The simple chart below illustrates what happens if you invest $6,000 a year for 40 years in a registered retirement savings plan. It assumes your RRSP earns a little over 5% a year and ignores taxes.
   1. In a utopian fee-free world, your money is worth $785,000 in 40 years.
   2. In a 1-per-cent fee world, you’ll have $606,000 (23% less).
   3. In a 2-per-cent fee world, you’ll have $435,000 (45% less).
   4. Annual fees in the Saskatchewan Pension Plan (SPP) average 1%.
2. Understand your risk tolerance: You should have a realistic understanding of your ability and willingness to stomach large swings in the value of your investments. Investors who take on too much risk may panic and sell at the wrong time. Other factors affecting your risk tolerance are the time horizon that you have to invest, future earning capacity, and the presence of other assets such as a home, pension, government benefits or an inheritance. In general, you can take greater risk with investable assets when you have other, more stable sources of funds available.
3. Develop an asset allocation plan: Once you understand your risk tolerance, you can develop an asset allocation strategy that determines what portion of your retirement account will be held in equities (stocks) and fixed income (bonds, cash). The investment allocation in the SPP balanced fund is illustrated below.
4. Rebalance: The asset allocation in your portfolio will change over time as dividends are paid into the account and the value of the securities you hold goes up or down. Rebalancing helps you reap the full rewards of diversification. Trimming back on a winner allows you to buy a laggard, protect your gains, and position your portfolio to benefit from a change in the market’s favorites.
5. Auto-pilot solutions: Balanced funds including the SPP balanced fund are automatically rebalanced. In your RRSP or company pension plan Target Date Funds (TDFs) are another way to ensure your investments reflect your changing risk profile. Developed by the financial industry to automatically rebalance as you get closer to retirement. TDFs are typically identified by the year you will need to access the money in five year age bands, i.e. 2025, 2030 etc. They are available in most individual registered retired savings plans and in your employer-sponsored group RRSP or pension. However, all TDFs are not alike so consider the investment fees as compared to the expected return before jumping in.
6. Educate yourself: Personal finance blogs contain a wealth of information about everything from frugal living to tax issues to how to save and invest your money. You can find out about some of them by listening to our podcast series of interviews on savewithspp.com or reading the weekly Best from the Blogosphere posts. Some posts are better than others so caveat emptor. But blogs like Retirehappy and Boomer & Echo have huge archives so you can find answers to virtually any virtually personal finance question.
7. Choose your retirement date carefully: We are living longer so your money has to last longer. And starting in April 2023, the age of eligibility will gradually increase: from 65 to 67 for the Old Age Security (OAS) pension. Even if you are among the minority who have a defined benefit pension, retiring early means you will get a reduced amount. Whether you keep working because you need the money or you love your job, you will have a more affluent retirement if you work full or part-time until age 65 or longer.
8. Develop other income streams: One of the things that stayed with me after reading Jonathan Chevreau’s book Findependence Day is the importance of having multiple income streams in retirement. So even if you are saving at work or in an individual RRSP, don’t put all your eggs in one basket. While you may not want to work at your current job indefinitely, you may be able to use your skills or hobbies to do something different after retirement. For example before I retired I was a pension and benefits lawyer. Now I augment my retirement income by writing about workplace issues.
9. Start RESPs for your kids: The following two Globe and Mail articles by financial columnist Rob Carrick brought home to me the impact that your children’s debt and failure to launch can have on your retirement.
   1. Carrick on money: Will millennials ruin parents’ retirement dreams?
   2. Parents of Gen Y kids face their own financial squeeze

Registered educational savings plans allow you to accumulate money for your children’s education tax free and receive government grants that add to your savings. When the money is paid out, your child pays taxes, typically at a lower rate. Saving for your kids’ education now so they can minimize student loans down the road is one of the best investments you can make in your future ability to retire sooner rather than later.

10. Raise financially literate children: And last but not least, educate your children about money so they grow into financially responsible adults. Every event from the first allowance you give your kids to buying Christmas gifts to planning for college is a teachable moment. Someday your offspring may be managing your money and ensuring you are properly taken care of. That’s when all of your great parenting skills will definitely come home to roost!

By Sheryl Smolkin

 

Welcome to the back to school issue of Best from the blogosphere. Regardless of what part of the country you live in, days are getting shorter, nights are cooler and there is a touch of colour on the few leaves that are already drifting to the ground.

That can only mean that soon the kids will be back in school and your “to do list” includes school supplies and provisions for school lunches.

In the Toronto Star, Dana Flavelle reports on a survey that says back to school shopping is going to be more expensive this year. Just over half of Canadians polled said they will spend more $200 on their sons and daughters (at 54% and 56% respectively), while 12% will fork over more than $400 for clothing and school supplies. To help stay on budget you may want to re-visit Back to school shopping: A teachable moment posted on savewithspp.com last year.

On Brighter Life, Diana Mancuso writes about preparing your child for back-to-school. Whether this is the first time youa re sending your child to school or you are a seasoned pro, preparation is always key to ensuring a smooth transition from summer vacation to the classroom.  For example, easing into back-to-school bedtime and morning routines plays a crucial role at this time of year.

If your child is heading off to college, you may be interested in Tori Flood’s article on Yahoo!NEWS discussing the dorm gadgets you don’t want to forget when heading back to school. Some of these like a smart TV and a wireless router may seem pretty over-the-top, particularly for students on a beer budget. But I really like the hot pot that can boil water like an electric kettle and also cook food directly so hungry students can avoid having to use the hotplate in the communal kitchen. A white noise machine might also be useful in noisy dorms.

Should your child have a smart phone or a dumb phone or any phone at all? Yahoo tech columnist Dan Tynan says give younger kids a dumb phone. A simplified feature phone that lets you talk to them and get their location is more than enough for most pre-tweens. Like training wheels on a bike, dumb phones are an excellent way to teach kids how to communicate through technology.

And going back to school isn’t just for kids. If you have been thinking about taking courses to upgrade or change careers, take a look at 10 ways you can afford to go back to school on Canadian Living. For example, you can use the federal government’s lifelong learning plan to take money out of your RRSP – without paying a penalty – to help pay for your post-secondary studies. Also, you don’t have to be a kid to have a registered educational savings plan (although the government will not augment your contributions),

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.

By Sheryl Smolkin

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.

 

By Sheryl Smolkin

In this week’s Best from the blogosphere we revisit some of our old favourites who have appeared repeatedly in this space.

First of all, congratulations to Robb and Marie Engen who are pioneers in the world of personal finance blogging. This week they are Celebrating Four Years Of Boomer & Echo. Their articles have been featured in the Globe and Mail, MoneySense, the National Post, and MSN Money.  They’ve been interviewed and quoted in numerous online and print magazines, and recognized as one of the best personal finance blogs in Canada.  Robb also writes a bi-weekly column in the Toronto Star.

On retirehappy, Jim Yih crunches the numbers to find out if it makes good financial sense to Rent or own vacation property in Vernon, B.C. He concludes that the amount of $16,000/year it would cost to carry the property probably cannot be recouped by renting the unit for part of the year. He also decides that renting makes more sense because the property may not increase significantly in value over time.

Tim Stobbs keeps us up-to-date on his retirement journey on Canadian Dream: Free at 45. Therefore I was initially surprised when I saw I Hate Hard Work is the title of one of his recent blogs. But it makes more sense when he clarifies that he would rather work smart than work hard. That means even at the office he tends to focus most of his efforts on high impact items, so although he doesn’t work hard Tim says he is more effective than the majority of his co-workers.

“I just refuse to spend lots of time working on something when in fact if I focus on the core items I can get 80% of the work done with a mere 20% of my effort,” he says.

The Big Cajun Man, Allen Whitton reminds us that Lifestyle Creep is like “Feature Creep,” a term used in high tech development teams, where someone keeps trying to shove more and more into a release of software or hardware, thus slowing things down, and eventually making the whole thing unusable. In other words, if every time you get a raise or pay off a debt you use the money to buy a bigger house, a newer car or more consumer goods, your financial picture will never really improve.

And on Brighter Life, Kevin Press asks the perennial question, Why is financial literacy such a stubborn problem? He shares the following thoughts:

First, he thinks it’s a mistake to argue that personal finance is uniquely difficult to teach and learn. It is a complex and technical subject certainly, but so are dozens of others. We could just as easily be sweating about why so few Canadians understand how to take care of their cars.

Second, the complexity of the subject is not the issue. The problem is the way we are trying to teach it. Adult learning theory explains a number of things about how adults prefer to be taught new information.

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.

By Sheryl Smolkin

Hi,

As part of the savewithspp.com continuing series of podcast interviews with personal finance bloggers, today I’m talking with Dan Wesley, author of the personal finance blog “Our Big Fat Wallet.”

Dan is in his late 20s, he recently got married and he lives with his wife in Calgary. Finance isn’t just his hobby, it’s his career. He currently works in the corporate finance group of a large petroleum company.

A couple of unique things you should know about Dan:

• He’s an accountant with a professional designation and a bachelor’s degree in accounting.
• He’s never had any consumer debt.
• He pays his credit cards in full every month.
• He is able to get discounts on virtually everything he buys.

Welcome Dan.

Thank you.

Q: First of all, tell our listeners, why is your blog called “Our Big Fat Wallet”?
A: I guess the name originally began as a joke. When I was in college, I had a roommate who used to say I had a big fat wallet because I carried a lot of coupons and that made it look bigger. And I still do carry coupons. So that’s where the name comes from.

Q: Why did you start blogging and what are your goals for the blog?
A: I started my blog because I’m passionate about all things related to finance and I wanted to empower people to take control of their own finances no matter what their age or their financial situation is. I’m hoping my blog will be a place people can learn about all topics related to finance, but also have fun and interact with others as well.

Q: And how long have you been blogging?
A: Four months.

Q: How frequently do you post?
A: I usually post three times per week on Sunday, Tuesday and Thursday. It was a bit of a struggle keeping that up during tax season, but I managed to pull it off so I’m hoping to continue that schedule in the future.

Q: Tell me about the range of topics that you blog about.
A: I write about everything related to personal finance with more of a Canadian focus, and specifically focusing on saving, investing and frugal living.

Q: There’s probably over a dozen well-known personal finance bloggers in Canada. What do you think is different about your blog and why do you think it’s a must-read?
A: I think the main difference with my blog is that I’m a professional accountant and I work in the finance sector, so readers are getting two perspectives. They’re getting my own personal opinion, but also the technical side as well. But I also try to make my blog as much fun as possible. So I’ve been doing some random company facts articles that tend to get a lot of attention.

Q: How many hits do you typically get for each blog?
A: It’s tough to say because it’s a pretty wide range. My most popular content has thousands of hits and seems to become more popular over time.

Q: What are some of the more popular blogs that you’ve posted.
A: The most popular content so far has been my “interesting facts” post on Costco. A couple of months ago, I posted some facts about Costco that a lot of people don’t know, and it was recently featured in The Globe and Mail and The Huffington Post. Some other popular content has been “Why I gave up on Air Miles,” “How to reduce your mortgage penalty” and “How I multiply my savings.”

Q: So tell me a couple of interesting facts about Costco that our readers might not have heard about.
A: Well, they don’t mark their products by more than 15%. They have some of the lowest staff turnover in all of the retail sector. They haven’t raised the price of their hot dog combo since 1985. Just things like that, people find really interesting.

Q:  As noted in your introduction, you say you can get a discount on anything. Share some of your secrets with us.
A: There’s lots of different ways that you can get discount. For example, when I book a flight, I use discounted flight credits that I bought online, and then I’ll wait until there’s a seat sale to book the flight. West Jet flight credits other people can’t use are sometimes sold at a discount on Kijiji.

Q: What are some other examples of unusual ways to save money that readers or listeners may not be aware of?
A: For groceries, I actually started trading coupons with people last year. I bought a coupon book and I traded with other people who had the same coupon book but didn’t need certain coupons that I needed. And so far I’ve saved over $300 this year on groceries just through coupon trading.

Big ticket items like furniture or a car or a house, I always negotiate off the list price. So when we bought our house, I managed to get about $30,000 in upgrades thrown in just through negotiating with the builder.

Another big way get a discount is to time your purchase. We bought our car later in the year when the new models were coming out, and the dealer was trying to get rid of cars from the previous year and we saved $2,500 off the list price.

Q: So how did you manage to graduate from University with no debt and $10,000 in assets? What are your secrets?
A: The secret is, there is no secret. I did that basically by living within my means and making a detailed budget and sticking to it. So I didn’t have a lot of income for most of those five years.

Q: Did you live with your family or did you live away from home?
A: I lived away from home during the school year, but I moved home during the summer to save money and I worked full time. I bought used text books. I saved on transportation costs by living on campus. We didn’t really go to any fancy restaurants ever. Oh, and I applied for scholarships, as many as I could, even if I didn’t think I had a chance.

Q: Did you work part-time as well when you were in school?
A: No. I wanted to focus more on completing assignments and extra-curricular activities. But during the summer, I worked full-time, probably more than full-time, sometimes at two jobs.

Q: What kind of jobs did you do in the summer?
A: I worked at a casino. And I also worked mowing lawns. Just odd jobs that students normally have, fast food, things like that.

Q: Do you have a mortgage on your family home?
A: Yes, but we managed to save 20% to the down payment to avoid the CMHC Insurance cost. And then we used the builder’s lawyer to avoid paying the legal fees, which saved us around $1,500.

Q: Do you have a favourite personal financial blogger that you read religiously?
A: It’s tough to pick one but I’d probably say Robb Engen’s blog, “Boomer and Echo.” I’ve followed it for years now and he’s been a big help to me. I like that blog because Robb deals with everyday financial issues that anyone can relate to. And he writes in a way that anyone can understand.

Q: Your blog is fairly new. Have you had any sort of money-making opportunities or spin-offs yet as a result of writing this blog?
A: I’ve been lucky enough to pick up a writing job. I’ve been writing for the website howtosavemoney.ca, just on basic tips and tricks on how to save money. And I’ve also received two job offers in the past couple of months, which is flattering, but I’m happy and not looking to leave my current job. But other than that, no. The blog is pretty much brand new.

Q: If you only had one piece of advice to give young people heading off to university or starting their first job, what would it be?
A: It’s probably tough to pick one, but two big things: live within your means and make a budget. If you do those things, I think your finances will take care of themselves whether you’re in school or just starting out in the workforce. And when I say making a budget, I mean make a detailed budget and stick to it.

Thanks very much Dan. It was a pleasure to talk to you.

Thank you.

—

This is an edited transcript of the podcast you can listen to by clicking on the graphic under the picture above. If you don’t already follow Dan’s blog “Our big fat wallet” you can find it here. Subscribe to receive blog posts by email as soon as they’re available.

 

By Sheryl Smolkin

I’m on a mission to find new retirement bloggers to feature in this space who have interesting insight for SPP members of all ages who are planning to retire in the near or distant future.

I discovered Your retirement income blueprint today. This week’s blog Donor-directed taxes – You decide who gets your money! Is fascinating. If at age 71 you don’t need your mandatory RRIF withdrawals to live on, melt down your registered account and the tax liability through a donor-directed charitable giving fund and direct your tax dollars to causes you care about. The net result may also reduce your income to a level where you can avoid the OAS clawback.

GetSmartAboutMoney.ca tackles the perennial question How much you need to save for retirement? It also includes 7 tips for last minute savers including some tough love. The author suggests if you have to choose between saving for retirement and your children’s education, put money in your RRSP first. Let your children get jobs or borrow to help pay for their education. Later, you may be able to help them pay off their student loans, which carry lower interest rates.

On My Own Advisor, Mark tells Gary’s story about how he and his wife retired comfortably on less than $1 million in invested assets which seems to be the big, scary number these days. They bought a 35’ 5^th wheel and a truck to tow it a they spend winters in Myrtle Beach and come back to Canada in the summers. They also can afford occasional cruises to warmer climates.

The Blunt Bean Counter Mark Goodfield is posting “the best of previous blogs” while he concentrates on improving his golf game this summer. In One Big Happy Family – Until We Discuss the Will he tackles the taboo subject of whether you should discuss your will with your family.

And Retired Syd who writes Retirement: A full time job, just finished up a five-week visit to Manhattan on her annual home-exchange vacation. She saw the city with the fresh eyes of a tourist, as she guided friends around. The notes she receives from readers help her to also view her retirement (six years and counting) in a new and more appreciative way.

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.