By Sheryl Smolkin

Whether you are saving for retirement or for other long-term goals, the key is that you have to spend less than you earn.

In What is “Saving?” Gail Vaz-Oxlade says it’s also important to distinguish between saving to buy a car or go on a vacation which is planned spending and saving for another chapter in your life like retirement.

Big Cajun Man says in I did my RRSP and TFSA Now What? that opening accounts and depositing money are just the beginning. Unless you develop an investment strategy and make sure you aren’t paying exorbitant fees, your money won’t grow the way it should.

The Toronto Star’s Ellen Roseman recently wrote a great column about How to plan for retirement on a low income. She says people who expect to receive the guaranteed income supplement (GIS) to top up their old age security (OAS) pension after age 65 should save in a TFSA and not an RRSP because TFSA withdrawals will not impact GIS eligibility.

First Foundation is an Alberta and Saskatchewan based financial services company. In their owngrowprotect blog they have started a 52 week money challenge. The author of Go To Disney Land or Pay Bank Fees, Your Choice! calculates that his family can save over $500 per year by shifting to no-fee banking which in ten years will add up to a family visit to Disneyland.

And Mark Seed from My Own Advisor asks the million-dollar question how much money do you need to retire well? He says that the magic number is indeed $1m or more. Even if some costs disappear in retirement like saving for retirement itself and mortgage payments there are costs in your future like property taxes, utilities, gas and food that are going to grow over time.

For those of you who think saving $1m before you retire is an unattainable goal, frugal lawyer Dave explains how he reached $1M net-worth by the age of 34 in this post on the Million Dollar Journey blog. It helped that he rode his bike to work instead of buying an expensive car like many other young lawyers in his firm.

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

If an alien parachuted into Canada in the first two months of the year and needed to quickly understand the what, when, why and how of registered retirement savings plans (RRSPs), there is no better source of information than Gordon Pape’s new book RRSPs The Ultimate Wealth Builder.

The prolific writer has authored and co-authored over 20 books with down-to-earth investment advice, many of which have become best sellers. And this one is definitely another winner.

RRSPs were created by Louis St. Laurent’s Liberal government and have been around since 1959. Of course as Pape explains, there have been many important tweaks along the way.

• Contribution levels have jumped from 10% of earned income (maximum of $2,500) to 18% of the previous year’s earned income (maximum of $24,270 in 2014.)*
• Since 1996, unlimited carry-forwards of unused contribution room have been permitted.
• Contributions can be made until age 71. The maximum age was reduced to age 69 as part of the government’s austerity program in 1997, but raised back to 71 in the 2007 budget. Now there is growing demand to bump it up further to age 73.
• Registered retirement income funds (RRIFs) were added to the program in the 1970s, allowing taxpayers to further tax-shelter funds after retirement subject to mandatory minimum withdrawals.

Early chapters of the book set the scene with an extensive RRSP vocabulary (Chapter 2) and the rules relating to contribution levels, deadlines, carry-forwards and spousal plans (Chapter 3).

In Chapter 4 Pape says the most common mistake people make is to walk into their bank and say, “I want to buy an RRSP.” “You invest in an RRSP so the type of RRSP you select will have a huge impact on how your money will grow over the year,” he says.

If you are a regular RRSP contributor, you may think you have little to learn about the subject. But here are a few interesting tidbits I picked up that you may not be aware of:

• You can contribute in one year and defer your tax deduction to a later year when your earnings are higher and the deduction is worth more.
• If you don’t have sufficient cash but you have a self-directed RRSP, you can make a contribution “in kind” of another qualified investment at its fair market value. For example you can contribute a $5,000 GIC maturing in three years.
• If you receive a retiring allowance or severance pay it can be transferred directly to your RRSP without withholding tax even if you do not have contribution room. You can transfer in $2,000 times the number of years or part years you were with the employer up to and including 1995 without withholding tax. You can also make an additional tax-free contribution of $1,500 for each year or part year prior to 1989 in which no money was vested for you in a pension plan or deferred profit sharing plan.

Pape also shares important details about making RRSP withdrawals for buying a home or returning to school and the complex RRSP mortgage and repayment rules.

For example, did you know that if your RRSP funds are used to invest in a mortgage for you or your children, interest payments have to be made at market rates?

In addition, non-arm’s length RRSP mortgages must be administered by an approved lender under the National Housing Act and insured either through Canada Mortgage and Housing or a private company like Genworth MI Canada.

Chapters 12, 13 and 14 thoughtfully address the perennial questions: RRSP or mortgage pay down? RRSP or debt pay down? RRSPs or Tax-free savings accounts.

The one area where I disagree with Pape is on the merits of an employer-sponsored Group RRSP. He says they are often not a great deal because employers can’t contribute to them directly; Group RRSP contributions reduce your total contribution level for the year; and Group RRSPs frequently offer a limited number of investment options.

In my experience working as Canadian Director of Research for a global actuarial consulting firm, smart employers view their Group RRSP as an important attraction and retention tool. They generally incent employee participation by grossing up salary to match or partially match employee contribution levels.

In addition, fees are often lower than individual RRSPs opened with retail financial institutions and there is a large (but not too large) selection of diversified investment funds for employees to choose from. Interactive websites plus in person and online education are also frequent valuable group RRSP add-ons.

What I do not disagree with is that RRSPs can be a powerful machine for creating wealth that you ignore at your peril! RRSPs The Ultimate Wealth Builder can be purchased online from Indigo books for $13. An e-reader version is also available for $13.99 from the Kobo bookstore.

*Contributions to the Saskatchewan Pension Plan of up to $2500/year form part of your RRSP contribution limits. You can also transfer $10,000 from your RRSP to SPP each year until you are 71 without tax consequences. In 2013 the SPP balanced fund earned 15.77%.

By Sheryl Smolkin

It’s only February 11^th and it feels like personal finance writers should have run out of things to say about RRSPs by now, but somehow they still find more to write about.

One of the more interesting things I came across this week was the results of a BMO survey that reported 69% of Canadians expect the Canada Pension Plan (or Quebec Pension Plan) to cover their retirement costs with nearly one-third, planning to “rely heavily” on it. This is despite the fact that CPP has an average monthly payout of less than $600 a month! And many people are also pegging their hopes on an inheritance or a lottery win to fund their golden years.

Well, someone once told me that lotteries are “a tax on the statistically challenged,” so you should probably take careful note of Brenda Spiering’s blog on brighterlife.ca discussing how much you can contribute to an RRSP.

The annual maximum contribution for 2013 is the lesser of $23,820 and 18% of your earned income for the previous year. But you may also have unused contribution room from previous years that has been carried forward and you can over-contribute up to $2,000 without a penalty.

But don’t forget to save some RRSP contribution room to make your $2,500 maximum Saskatchewan Pension Plan contribution.

Also, check out Gail Vaz-Oxlade’s interesting  2014 RRSP Update. Did you know that kids CAN have an RRSP although they can’t have a Tax-free Savings Account until they’re 18? If a child contributes when she doesn’t have to pay any tax, don’t claim the deduction. Hold it for later when her income and her tax rate go up so she gets a bigger bang for her buck.

On moneysmartsblog.com Mike Holman pokes a few holes in the RRSP Myth that an RRSP is only advantageous if your marginal tax rate in retirement is lower than your marginal tax rate when contributing.

He gives examples to show that when you make a contribution to an RRSP the tax deferred from RRSP contributions is calculated at your marginal tax rate (or close to it, if your RRSP contributions span more than one tax bracket). However, when you withdraw money from your RRSP or RRIF – the tax is calculated using your average tax rate (after other income sources such as pensions) which is typically lower.

Finally on retirehappy.ca, blogger Scott Wallace weighs in on the new Pooled Pension Plans to be offered by the federal government and some provinces such as Quebec and Saskatchewan. PRPPs are intended to provide a savings vehicle for small business or self- employed people who don’t have access to larger pension plans..

Scott says the industry already has low cost Group RRSPs and DC pension plans. And of course my readers already know that SPP allows employers to set up an easy, no-cost workplace plan. That’s why I agree with Scott that the real issue is not creating new kinds of retirement savings accounts but finding ways to make more people save!

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

When you are planning to fully or partially retire, there are many decisions to make. Most Canadians are aware that they can elect to start receiving their Canada Pension anytime between age 60 and 70.

But many do not know that as of July 2013 if they become eligible for OAS benefits at age 65 they can also choose to defer receiving benefits for up to five years.

Regardless of whether you choose to defer your OAS or not, you must apply for benefits from this program when you wish to begin receiving payments.  It may make sense to wait, however, if at age 65 your income is still high enough that your benefits would be fully or partially clawed back. That would occur if you have net income between $71,592 and $115,716 on your tax return, and assuming you expect it to decline in future.

OAS is paid to seniors over 65 who are Canadian citizens or legal residents and have lived in Canada for at least 10 years after turning age 18. People living outside Canada at the time of application must have resided in Canada for at least 20 years after their 18th birthday. Your employment history is not a factor. A full OAS benefit is based on 40 years of Canadian residence.

For the period beginning January 2014, maximum OAS benefits are $551.54 per month or $6,618,48 per year. Benefits are indexed to inflation and adjusted quarterly. If you decide to delay collecting OAS beyond age 65, the benefit will be increased by 0.6 per cent for each month of delay to a maximum of 36%.

Therefore, based on the current annual benefit level (excluding future inflation), the pension you receive beginning at age 70 will be $9001.13.

Marissa Verskin, a senior tax manager at Toronto accounting firm Crowe Soberman, says the decision on whether to delay collecting OAS or claim it right away should depend on your personal situation. This includes your life expectancy, current and projected future income level and your expected rate of return.

Some of the other circumstances that may influence your decision are if you have chosen to work beyond age 65 or if you anticipate receiving a large one-time capital gain or lump sum at retirement (i.e., for accumulated sick leave credits or severance pay).

Doug Runchey of DR Pensions Consulting spent 32 years with Human Resources and Skills Development Canada. He says if you choose to defer receiving OAS beyond age 65 you can’t “double dip.”

That means if you are only eligible for a partial OAS pension because you have less than the 40 years of residence required for a full benefit, you can’t use the deferral period to both increase your OAS pension by counting it as additional years of residence and also receive a 0.6 per cent per month increase for voluntary deferral.

Service Canada is required to count the deferral period either as additional years of residence or a period of voluntary deferral — whichever is of the greatest benefit to the client.

Runchey also says there could be another collateral advantage to voluntary deferral of OAS. “If you delay and increase your OAS by 36 per cent to $9001.13 per year, you also effectively increase the maximum income claw back threshold to $131,599 from $115,716,” he says.

If you have started receiving your OAS benefits within the last six months but think you can benefit from the deferral, you can write to Service Canada and ask them to cancel your benefits for now. Once your request is approved, you will have to pay back the benefits received. Then you can reapply for OAS at a later date.

By 2023, gradual changes in the age of OAS eligibility from age 65 to age 67 will be fully phased in. This change will not affect OAS applicants or recipients born before March 31, 1958. But people born between April 1, 1958 and January 31, 1962 will have a date of eligibility between ages 65 and 67. For example, a person born in June or July 1961 will be not be eligible to collect OAS until age 66 plus eight months.

Also see:
Old Age Security
Changes to the Old Age Security program – Service Canada
Voluntary deferral of OAS – Retire Happy
Getting what’s yours when it comes to government pensions

By Sheryl Smolkin

The depths of winter (and this has been one of the worst I can remember) seems to be the time when we all wish we could retire somewhere warm but figure we will never be able to afford it. After all, post- Christmas credit card bills have to be paid and finding the money for SPP and RRSP contributions may not be at the top of your “to do” list.

But now is the time to set up an automatic withdrawal plan for next year’s retirement savings plan contributions so in February 2015 you won’t be faced with the same dilemma.

It is also important to make retirement savings a part of an overall financial plan that you review often to make sure it still works for you, says Dave Dineen at Brighter Life. When you make your financial plan, Robb Engen on Boomer & Echo says there are 4 Big Rip-Offs To Watch Out For including mortgage life insurance.

Kerry K. Taylor (aka squawkfox) has been saving in an RRSP for about 17 years or half of her life. She recently blogged about how a can of cat food scared her into saving for retirement.

“I always thought seniors eating cat food to afford food was a myth. I wanted to be sure. [So I asked a woman in the grocery store line who was buying 25 cans about her cats.],” says Taylor. “She threw me a side-eye and said nothing. Whether she ate the cat food or not didn’t matter. [Since then], my fear of eating Fancy Feast in retirement [has been] very real.”

And once you have contributed to an RRSP, don’t forget that you will completely defeat the purpose if you treat it like a normal bank account and make withdrawals for reasons such as paying down debt. In an excellent Financial Post column Should you raid your RRSP to pay debt? Melissa Leong does the math.

She reminds us that if you need $8,000 for credit card debt, you’ll have to withdraw $10,000 to have enough to pay the full bill. Furthermore, once the money is withdrawn the contribution room is lost forever.

One case where it may make sense to take a loan from your RRSP is to Help Pay for Your Education with the Lifelong Learning Plan (LLP). However, as Tom Drake explains on the Canadian Finance blog, you are borrowing from yourself, but it is still a loan. You have to repay your RRSP, or face the tax consequences which can be quite hefty if you aren’t careful.

There is also a lost opportunity cost that comes with withdrawing money from your RRSP. While you can use the money for your LLP and education, you won’t be earning a return on it until you pay it back. You’ll have to decide if this approach is worth it for you.

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

Today we are continuing with the 2014 savewithSPP.com series of podcast interviews with personal finance bloggers. Kerry K. Taylor aka Squawkfox is one of my perennial favorites.

Kerry started blogging in 2008 and has since been voted Canada’s Number One Money Blogger by the Globe and Mail.  She also wrote a book called “397 Ways to Save Money.” In Kerry’s own words, “Squawkfox explores frugal living topics that are sexy, delicious, and fun.”

Thank you for joining me today, Kerry.

Thanks so much, Sheryl. It’s a pleasure talking to you.

Q. How did you end up writing a personal finance blog?

A. I grew up in a very thrifty family. When I started my first job in an IT firm a lot of the engineers I was working with were just blowing through their paychecks.

Meanwhile, I was riding my bicycle to work and bringing my own lunch. They wanted to know how I managed to max out my RRSP every year. So I started creating little emails about how biking was great for your butt and good for your bank account. I also wrote about really earthy, fun things like how soaking dried beans could change your life.

They loved it and repeatedly forwarded my emails. My email list became so big that the engineers said I should have a blog so they could check it regularly and comment.  So I started the blog and my audience kept growing.

At some point I was just overwhelmed with how many readers I was getting.  And then I was voted Canada’s Top Money Blogger at the Globe and Mail and HarperCollins offered me a book deal.

Q: So who is your audience?

A. That’s a great question. I’m always overwhelmed when I see who is emailing me and commenting on my Facebook page or my Twitter posts. And it’s really people of all ages. Internet savvy seniors email me and say, “I wish my daughter or my son were more thrifty like you,” and then they forward my posts to them. I have college students who read my site because I write a lot about my student debt days.

Q: How frequently do you post? 

A: I don’t really keep a posting schedule and I think that surprises a lot of bloggers. However, the average length of my blogs is probably anywhere from 1600 words to 2100 words. And I usually include a lot of photographs or descriptions and an infographic to explain my frugal approach. So I generally aim for a few posts a month.

But, you know, if I don’t really have anything I think is worth saying to a large group of people, I just don’t say it. Because I don’t want to bug people I want to make sure I only put my really good stuff out there.  And it seems to have worked for me so far.

Q: Tell me about the range of topics you’ve blogged about. 

A: Well, anything from cutting your costs on groceries, to the cost of childcare, to the cost of raising kids. It’s really varied. I think money can touch every aspect of your life if you open your eyes and you see it.

For example, I was in a Starbucks a couple of years ago, and people were buying frappuccinos and I thought, what are they made of? I can probably make that at home. And, sure enough, I made a $4 tall frappuccino for something like 32 cents. That was a post idea right there that just happened by keeping my eyes open.

Sometimes it’s a career post; sometimes it’s a food post; sometimes it’s a tough love post. I wrote one about the real reason you have no money.  I did that kind of tough love thing because I was tired of people emailing me that they’re broke. And I said, “Well, then, do something about it.”

Q: So, how many hits does your blog typically get?

A: It depends. I’ve been on the front pages of Yahoo. I get a lot of social sharing on Facebook. I don’t usually give out the number but I’m not a teeny, tiny blog. I’m currently probably one of the higher traffic personal finance blogs on the internet.

Q: Tell me about some of your more popular blogs.

A: Well, the frappuccino one was unusually popular with readers. Anytime I knock off a product and make it cost less, it really strikes a nerve.

I wrote an article in my first year of blogging, called “Six Words That Make Your Resume Suck,” and that’s been hugely popular with people because it’s got a strong voice and a sense of humour.

People also love the tough love stuff when I kind of dish it out because I’m mean, but I’m kind of a friendly mean.  I think one popular blog that really surprised me was “how keeping your fridge well stocked and clean can really cut your costs.”

Q: What about your wedding blog?

A: Oh, my wedding blog. How to get married for 239 bucks. It was insanely popular.

I basically started with the premise, what do you need to get married? You need a marriage license and the services of a commissioner of sorts. Add those two together and it costs under 250 bucks.

So anything over that cost is really adding to your wedding expenses needlessly because the bubble machine and the horse-drawn carriage aren’t going to do diddly to get you hitched. Then I explained how I bought my wedding dress at a huge discount on eBay. I think I spend a hundred bucks on it.

I called around to see how much wedding cakes cost and discovered that as soon as you say the wedding word, you’re paying the marriage mark-up. I think my post about how I had a very frugal wedding really hit a note with people because rather than blow all that cash on one day, I saved it and bought a house. People either loved or loathed it, so it was a fun post to share.

Q: So you previously lived in rural B.C. Where exactly were you located?

A: I was in an area called Vernon, British Columbia and I lived on an organic farm with my husband’s family. We moved just recently to Toronto. I’m from Mississauga, and I wanted to come back home to live in the big city again.

Q: I understand you and your husband decided that Carl would be the primary, weekday caregiver for your daughter Chloe. Why was that decision made and how is it working out?

A: Both my husband and I work full time but for the first year when Chloe was home, Carl went on parental leave because he qualified for it at work. Because I’m self-employed, I don’t qualify, so we looked at the budget, we looked at the benefits he got at work, and we just decided that one of us is going to stay home with the baby and why not Carl? He loved it and it turned out he was the first guy in his office to take parental leave and after he did this, two other fellas from his office did the same thing.

Q: So what are some of the spin-offs from blogging? How has it changed your life?

A: Well, I never knew I had a voice that people connected to and I think that was a really big surprise for me. As a result of the blog I was asked to write books for a big publisher, which I really enjoyed.

I love talking about money in a really down-to-earth style that is very accessible to people. And I think it’s just fun to put up a post that is so different from what everyone else writes, because I kind of look at things sideways and try to be a little sassy about saving money.

Q. So how long do you think it will go on? Do you ever run out of ideas?

A: No. I have a book that’s so full of ideas it makes my head spin. It’s just a matter of finding the time to write. Ever since we became parents, writing has been really tough in the evenings and on the weekends.

Q: If you had one piece of advice for readers who want to better manage their finances so they can meet their financial objectives including a well-funded retirement, what would you say?

A: Well, I think a lot of people say focus on the small stuff, but I say you should focus on the big stuff!

Look at where you live, how much house you own, and how much house you owe to the bank. How much rent do you pay a month? All these really big decisions add up to a lot of money. The car you drive, or the car you don’t drive, that’s a lot of money as well.

We need to be more careful about these really big decisions because a couple of hundred extra bucks a month off your rent or your mortgage means that you can put that money into your RRSP or tax-free savings account. That’s real money you can retire on later.

Thanks Kerry.

It was my pleasure Sheryl.

—

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 Kerry K. Taylor on Squawkfox, you can find it here and sign up  to receive an email each time a new blog is posted.

If you do sign up, Kerry will send you a free ninety-two page e-book, called ‘Frugal Food and Fitness.’

By Sheryl Smolkin

RRSP season is in full swing and since the beginning of the year, we have been bombarded with a media blitz suggesting few Canadians are saving enough and exhorting us to maximize contributions to our retirement savings plans by the end of February.

If you wonder what all this retirement planning is for, anyway, take a look at Sandi Martin’s blog or boomer & echo. She says planning for that inevitable day when you stop collecting a paycheque, or invoicing clients, or collecting ad revenue is an exercise that will let you spend more money than vaguely worrying about “saving enough” or “running out” will.

In order to save enough to retire worry-free, you need to figure out how much you will need. On the Canadian Finance blog Tom Drake suggests that for every dollar of annual income you need in retirement you should plan to have $20 in savings. That doesn’t include the value of your home because it is not earning income.

You can save in many different kinds of accounts including the Saskatchewan Pension Plan, employer-sponsored pension plans and RRSPs. But Jonathan Chevreau at MoneySense says investing in a tax-free savings account (TFSA) should be a priority for most Canadians. In fact he says the moment you make your January contribution, you should start accruing for the next year’s installment, even if it means parking in short-term cash vehicles and paying a little tax for the balance of the calendar year.

Brighter Life discusses how you can pay yourself from your retirement savings when you retire. Some of the options are annuities, registered retirement income funds, and payments from several kinds of locked-in accounts holding funds transferred from locked-in company pension plans.

And Jim Yih on retirehappy.ca reminds us that one area of tax planning that does not receive enough attention is the designation of beneficiaries when it comes to Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs).

When you open up an RRSP or RRIF, you are opening up a special contract under the Income Tax Act, which allows you to designate one or more beneficiaries. Far too often, this is done too casually and without enough thought. More importantly, as your circumstances change, like marriage, divorce or children, you should consider reviewing your beneficiaries to make sure you have the right people designated.

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

I got my first library card when I was five years old and could print my name. I was an avid library user in Cornwall, Ontario where I grew up. I also worked in the library for three summers when I was in university.

But over the last several decades I’ve been buying books instead of borrowing them. Even buying paperbacks and trading them with family members became quite expensive. When I got an eReader app for my tablet computer a few years ago, I found I was spending even more on books because it was just so easy using wifi to order and charge them to my credit card.

Then I learned that eBooks are available from the Toronto Public Library and they can be downloaded at any hour of the day or night without leaving my comfy desk chair. Of course popular titles often have long waiting lists, but I can put a hold on a book and when it’s my turn, I get an email.

The Saskatchewan Public Library system offers members the same convenience. The seven regional libraries in Saskatchewan are:

• Lakeland Library Region (North Battleford area),
• Wapiti Regional Library (Prince Albert area),
• Wheatland Regional Library (Saskatoon area),
• Parkland Regional Library (Yorkton area),
• Chinook Regional Library (Swift Current area),
• Palliser Regional Library (Moose Jaw area)
• Southeast Regional Library (Weyburn area).

However, the eBook collection is shared by the whole province. So if you take a look at the websites for these regional libraries, you will see the same collection of available titles.

You can use your library card to download eBook and eAudiobook titles from library2go for either one or two weeks. When the loan period is up, your items are returned automatically so you don’t have to worry about getting them back on time. You can have a total of ten eBooks and eAudiobooks signed out at one time from library2go. Materials can also be renewed.

Or check out Project Gutenberg on the web for a huge selection of classic eBook titles. Regardless of what part of the world you live in you can download books in the public domain on which copyright has expired from this site for free. Some of the most popular titles are Grimm’s Fairy Tales, The Importance of Being Earnest, Wuthering Heights and Moby Dick.

Recently I decided that battery life on a tablet is not adequate for long plane trips so I decided to buy a dedicated eReader. I opted for a Kobo Glow that weighs only 6.5 ounces, fits in my purse and has a screen so I can read in the dark. It is rated for around 70 hours of use with the light at 15-20 percent.

The device cost $129.95 plus tax. But I figure that I only have to borrow and read 10 library books to amortize the cost. Of course I still buy books occasionally, particularly if I’m travelling for extended periods. But because I use the library regularly, my book buying budget is now much more manageable.

Do you have any ideas for saving money? Share your money saving 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.

By Sheryl Smolkin

“Best from the blogosphere” took three weeks off, but all of our favourite bloggers kept right on writing, so there is lots of great content for our first issue of 2014.

Many of you may have made financial New Year’s resolutions like paying off debt, spending less and saving more. On retirehappy.ca, Jim Yih says you will achieve your goals if you keep it simple, take responsibility and stay disciplined.

Krystal Yee’s top financial goal is to retire as early as possible. Therefore, on givemebackmyfivebucks.com she explains that she decided to divert $110 bi-weekly from excess mortgage payments to RRSP savings to ensure she saves at least $750/year for retirement. Then she will use her annual tax refund to pay down her mortgage.

Marie Engen at Boomer & Echo says you can save money by making major purchases at the right time of year. If you plan ahead you can realize substantial savings. For example, her Calendar of Saving Money suggests that January white sales are a good time to stock up on linens.

If you are looking for new ways to boost your earnings, a guest blogger on the Canadian finance blog offers 4 ways to generate income in your personal life. So if you have decided to finally clean out overflowing closets and drawers, you may be able to sell everything from good as new clothing to DVDs online.

And finally, if you are one of those lucky people who belong to a defined benefit pension plan, Sean Cooper’s blog on milliondollarjourney.com explains the financial implications of retiring early, depending on whether your pension will be reduced or you are eligible for an unreduced retirement.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information 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

If one of your New Year’s resolutions is to finally get serious about your family finances, How to Eat an Elephant by financial planner Frank Wiginton is a book you may want to take a look at.

For many years when Wiginton’s clients have approached him to make a financial plan he has asked them to bring in a series of documents. Clients often said that the amount of work they had to do and the quantity of information they needed to pull together was overwhelming.

To help them overcome this fear and stress, he began breaking down the required information into smaller, much more manageable bite-sized pieces – i.e., “small bites of the elephant.”

This was the genesis of the “twelve step program” in his book covering topics ranging from goal setting, debt management, and insurance to retirement savings, estate and tax planning. Wiginton suggests that by using this guide and doing about four hours a month of “homework” readers can develop a realistic financial roadmap.

Each chapter includes a breezy discussion of the topic, “Frank thoughts” from the author and anecdotes about how using these techniques have benefitted certain individuals. At the end of each brief chapter summary you are directed to easy-to-use web tools that help you to collect the information and use the strategies described in the previous section.

I particularly like that Chapter 1 asks readers to “blue sky,” prioritize and price a list of 50 things they want to do right now. Then by identifying the major things that must happen to accomplish each goal, reviewing the list regularly and sharing goals with others they have a better chance of making their goals a reality.

Chapter 2 teaches you how to create a net worth statement and by Chapter Three, Wiginton finally  deals with the dreaded “b” word – budgeting. That’s where he gets into “needs vs. wants” and ways to break “the spending habit.” Ideas like using cash only, saving 10% and re-negotiating mortgages and telecommunications bills are not new, but seeing them in one comprehensive list is helpful.

When it comes to retirement planning, Wiginton says the first step is to determine what you want to do in retirement and what it will cost. Then he presents various retirement savings options and the tax implications of each one.

Wiginton notes that you may actually need less money than you think to retire because:

1. You will pay lower taxes when you no longer are employed.
2. For many people, expenses are lower once the mortgage is paid off and the kids have left home.
3. People tend to spend less with age.

For example, when people are 60 to 70 years old they tend to be a lot more active than when they are 70 to 80 and the trend grows more pronounced with age.

As a result, in calculating what clients need, he usually reduces the amount of spending required by 15 or 20% around age 75 and by another 15 to 20% at age 85. However, he says that increasing costs of long-term care for seniors do have to be factored into the equation.

This is an engaging and clearly written book that runs to 274 pages of smallish print. There are no quick fixes but if you are prepared to work through it “one bite at a time,” by the end you will have a much better understanding of your finances and a plan that will help you achieve your personal financial goals.

The book is available in paperback or for Kobo and can be ordered for about $16.00 from the Chapters/Indigo website.