Tag Archives: MoneySense

May 13: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Making ends meet with a “work optional” retirement

Writing in MoneySense, Jonathan Chevreau has a new take on how we should approach retirement. Rather than planning to put down the tool box forever and live off pensions and savings, he writes about a “work optional” retirement.

Chevreau says he learned of the phrase “when it was uttered by financial planner Doug Dahmer, founder of Burlington, ON-based Retirement Navigator.” He asked Dahmer to define it, and his reply was “it’s working because you want to, not because you have to… It relates to those who purposely choose to continue to work, despite already having achieved a financially feasible retirement.”

This optional work, Dahmer states in the MoneySense article, should be doing something you love on your own time schedule for someone you want to do it for. The money, the article notes, should be money “that at the end of the day, is not needed: it’s simply an added bonus.”

“In practice, then, achieving the status of ‘work optional’ is almost exclusively limited to those who are self-employed,” notes Chevreau. “The self-employed are not accountable to the bidding of bosses or shareholders, can choose to limit their customers only to those with whom they love to work, and they can choose to either outsource or delegate to others the aspects of the job they don’t enjoy. They can pick and choose their own schedules.”

This is very good thinking. Save with SPP knows a number of people who retired from their 9 to 5 jobs, and are now doing things like teaching line dancing, consulting (one friend is a consulting agronomist), starting home businesses embroidering things, and so on. They are either continuing to do things they loved to do, or learning new things.

Chevreau’s article goes on to note that for those saving on their own, without a workplace pension, it’s pretty expensive to save enough money so that you never need to work again.

Quoting U.S. author Tanja Hester’s published work on the subject, Chevreau notes that “full early retirement – ‘in which you never need to work again [for money]’—means if you are an investor that you will need to save between 25 and 35 times your annual expenses by the time you leave active employment.”

And Hester, notes Chevreau, has a “magic number” for full early retirement – “annual spending times 30 + 10 per cent contingency. Then there is the safe annual withdrawal rate, which ranges between three and four per cent per annum.”

When you are on a fixed income in retirement, unexpected repairs are a bane of your existence. A “work optional” retirement might allow you to have that contingency fund set aside to help you out when something out-of-the-ordinary occurs.

If you don’t have a workplace pension plan, or you want to augment the plan you have, take a hard look at the Saskatchewan Pension Plan. It’s unique, in that it not only offers low-cost professional investing and the benefits of pooling, but there’s a full array of lifetime annuity options available to turn your savings into lifetime income.

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, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22

Why some Canadians choose to retire to other countries

Let’s face it – it’s hard to find good things to say about winter in Canada when it’s 40 below with the windchill and the snow is piling up in your laneway.

Save with SPP knows a number of people who head south for the winter every year. And there are others who leave Canada for good and live out their golden years abroad. We took a look around to find out some of the reasons why some of us take this step.

Well, one reason might be finding not only warmer weather, but a lower cost of living, reports MoneySenseRetiring in North America, the site advises, means you’ll need an average of about $625,000 in the bank at age 65 (or an equivalent pension), or “annual retirement income of $55,000.”

But this amount, the site notes, is enough to let you “live in luxury” in a variety of other countries, including Colombia, Ecuador, Mexico and Malaysia, all modern countries with much lower living costs. You can, the article says, get a three-course meal at a restaurant for about $10 in some of these countries, and rents are in the low hundreds, rather than the low thousands.

The Roam New Roads site also cites lower living costs and a better climate in France, Panama, Thailand or Belize. Some offer low-cost national healthcare, the article notes, as well as lively culture, history, and wonderful culinary expertise.

However, there are other factors to bear in mind if you are moving away from your home country, notes the Escape From America blog. You can be homesick, which “leads to many expatriates returning home every single year,” often a costly process. Retirement abroad means little or no time with family and friends, a “forced loneliness,” the blog reports. Culture, language, accessibility (driving a car) are all other potential downsides in a faraway land, the article says.

The government of Canada’s website notes that living outside Canada will have an impact on your taxes, and may change how you are able to receive your Canada Pension Plan and Old Age Security benefits. If you are living outside the country for part of the year, there may be provincial or territorial requirements for your healthcare – a set amount of time you must reside in your homeland in order to keep your benefits. Or, you may have to try and arrange health coverage for the foreign country. It’s certainly a cost to be aware of.

So putting it all together, you can live on less money by moving to another country, where your retirement savings will allow you to trade middle-of-the-road living here for luxury and new adventures there. You’ll be free of snow shovelling and dark winter afternoons. But, if you get homesick, the cost of travelling back will put a dent in your now-lowered cost of living. You may find yourself isolated by language and culture. And you’ll have to figure out how to keep your healthcare or find an alternative.

It’s a big commitment, and not for everyone, but on a cold winter day, it’s nice to imagine heading down to the beach.  Any sort of retirement, be it here in the good old northland or off in some exotic sunny country, will require income. If you’re dreaming about retirement, take some time to put away a few dollars now for that eventual future. You’ll be happy you did. And a great destination for retirement savings is a Saskatchewan Pension Plan account.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

The “baffling unpopularity” of annuities

What if there was a way to convert some or all of the money you’ve saved up for retirement into cash for life – monthly payments for as long as you live?

And once you made this conversion, you’d no longer have to make any investment decisions for this money; you’d just have to trot over to the Super Mailbox each month to collect a cheque.

There is just such a product, the annuity, but for some reason, it’s not something people choose very often. Writing in MoneySense, David Aston calls annuities “the best retirement product that hardly anyone buys,” adding that they amount to a sort of do-it-yourself defined benefit (DB) plan.

“Like DB pensions, (annuities) provide guaranteed income for as long as you live. But while employer pensions are considered the gold standard of retirement income plans, few Canadians ever think about annuities,” writes Aston, calling their unpopularity “baffling.”

Aston says that for some people, such as those with wealth or who have DB pensions from work, an annuity is probably not necessary. And others don’t like the idea of “their finality – once you give your cash to the insurance company, you’re locked in for life.” There’s no more “growth potential” for this investment and you can’t tap into it for lump sum amounts, he explains.

But, says Aston, they are ideal for cash flow. Many people buy an annuity which, along with government pensions, “meets all your non-discretionary needs,” such as keeping the lights on, the furnace going, and the rent paid via the steady, predictable and guaranteed income. And if you convert part of your retirement savings to an annuity, you can “afford to take more risks with the rest of your portfolio.”

One would imagine that those who took out annuities prior to the market downturn in 2008 are happy with their choice, because while you may miss out on investment gains, you also miss out on investment losses with an annuity.

In a video posted to Save with SPP, Moshe Milevsky, Professor of Finance at York University’s Schulich School of Business, calls annuities “insurance against something that is really a blessing, longevity.” Because the annuity pays you for life, you can never run out of money, he notes.

Writing in the Globe and Mail financial columnist Rob Carrick notes that unlike withdrawing money from a RRIF or other vehicle, the withholding tax on an annuity is not automatically deducted but is taxed the same as regular income, he explains.

He reports that a good time to consider buying an annuity is when you are older. “The later you buy, the shorter the period of time the insurer selling an annuity expects to have to pay you. As a result, payments are higher than they would be if you bought at a younger age,” he explains.

The cost of an annuity depends on current interest rates, which have been quite low for a while but are rising, which is good news for annuity buyers.

The Saskatchewan Pension Plan (SPP) is somewhat unique in that it can convert your savings into an annuity. They offer four different kinds of guaranteed annuities, and your money continues to be invested by SPP while you sit back and wait for the monthly cheque. For full details, check out the Retirement Options chapter in the SPP Retirement Guide.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Home is where the hat is – unless it’s cheaper somewhere else

At the office, where we were involved in pension plan communications, we used to joke (as 30-somethings) about what our future retirement would look like.

One theory at the time was that where you would be in retirement would depend on your future income. If you had a big income, you’d be in the Big Smoke. If you didn’t, you’d be shopping for a double-wide trailer in rural New Brunswick.

While that’s an extreme example, our predictions from the ‘90s are coming true. Sometimes your retirement income will impact where you’ll live.

“If retirees could take their pick,” notes an article in Pay Day, posted on Yahoo! Finance, “most would probably want to spend their golden years somewhere warm, beautiful and affordable.” However, if a retiree is relying only on CPP and OAS, the article says, the list gets a little shorter.

The article suggests Moncton, NB; Lacombe, AB; Stratford, ON; Brandon, MB and Halifax, NS as places where limited dollars go the longest. These cities are selected because real estate is affordable, they have great services and healthcare, and the quality of life is high. Taxation rates and value for the dollar are also factors.

A similar list can be found in MoneySense.ca. The top seven retirement destinations are Moncton; Joliette, QC; Ottawa, ON; Winnipeg, MB; Canmore, AB and Victoria BC.

The MoneySense list looked for places that had “a thriving arts scene… a strong sense of community… easy access to airports… and pleasant weather.” Good transit is also important, the article notes.

We see many of our friends selling their big houses in Toronto and moving to smaller, more affordable communities elsewhere in the province. The idea here is that the proceeds from the sale of the house in the city are more than enough to buy a house in a smaller town, and you can bank the difference.

An important step you can take today to deal with tomorrow’s retirement living decisions is to bank a bit of your salary for life after work. The Saskatchewan Pension Plan provides you with an end-to-end system that turns your savings into investments, and those investments into future income.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Oct 1: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Canada rises to ninth place in world retirement rankings
Pat yourself on the back, Canada – we’re the ninth-best country in the world to retire in.

Canada has moved up from 11th place to 9th place in the Natixis Investment Managers’ Global Retirement Index, reports MoneySense. Canada moved up a couple of places, the magazine reports, because of “improving economic conditions and environmental factors.”

The index takes into account 18 factors, such as “Finances in Retirement, Material Wellbeing, Quality of Life, and Health,” reports MoneySense. Canada has the “second-highest air quality and seventh-highest personal happiness scores in the entire index,” the article notes. A stronger job market last year pushed our unemployment rate lower, the article adds.

The top five countries were Switzerland, Iceland, Norway, Sweden and New Zealand. The next five were Australia, Ireland, Denmark, Canada, and the Netherlands.

Save with SPP notes that most of the Top 10 countries were hockey-playing country. Coincidence?

The USA, while good at hockey, came in at 16th overall, the magazine notes.

“Precarious” workers have less access to retirement savings: report
A report by the Canadian Centre for Policy Alternatives has found that only 40 per cent of workers in “precarious” jobs have access to retirement savings plans at work. That compares unfavourably, notes an article in Benefits Canada, to the 85 per cent of “secure professionals” who do have access to such plans at work.

The secure professional group, the article says, “was classified as having a full-time, permanent job for at least 30 hours per week, working for one employer that provides benefits and that they expect to be working for in one year’s time.” The “precarious” group, the article states, are either full time without these factors or working part time or contract.

The takeaway is that the so-called “gig” economy often leaves workers without workplace pension plans or retirement savings benefits. They must shoulder their own retirement savings program – easier said than done.

A nice “do-it-yourself” retirement program is the Saskatchewan Pension Plan. You decide how much you’ll contribute, and you can vary your contributions as you see fit over your working life. Check them out at www.saskpension.com.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

 

Jun 18: Best from the blogosphere

A look at the best of the Internet, from an SPP point of view

Workplace pensions disappearing, putting savings onus on you
Writing in the Financial Post, Jason Heath notes that while most Canadian retirees think they saved enough for retirement (42 per cent said they had saved enough, 44 per cent wished they had saved a little more), much of that saving – about 25 per cent on average — came from their workplace pension plans. That’s a problem going forward, Heath writes, because workplace pension plans are becoming quite scarce.

“There have been trends in Canada towards reducing employee pension coverage, shifts towards temporary and contract workers and an increase in self-employment,” he writes. “These all put more personal responsibility onto today’s workers to save proactively to be tomorrow’s happy retirees.

Many of us already know that the Saskatchewan Pension Plan provides a great way for us to save on our own. Those savings can augment your company’s plan or can represent your own personal retirement plan. Sign up today – visit saskpension.com for more details.

What are the best places to retire in Canada?

MoneySense magazine recently put together a video on how to choose a place to retire in Canada.

The magazine says that retirees want to live somewhere that is close to an airport, has a thriving arts and culture scene, good weather, and good healthcare.

What places made their list? Number 1 choice was Victoria, B.C. MoneySense says B.C. has the warmest weather in Canada, and Victoria, while a bit pricey (over $574,000 for the average home), is steeped in history and culture and blessed with fine hospitals.

Taking second place was Ottawa, a larger city with more than 974,000 residents, which has many museums and art galleries, a good and mid-sized airport, and excellent healthcare. Housing is still a bit expensive, with the average price around $481,000.

Number 3 was Orillia, Ontario, which is about two hours’ north of Toronto. This beachfront town of 32,000 has lots of history and culture, a large casino nearby, and boasts affordable housing averaging under $300,000.

An unofficial runner-up selected by the Save with SPP blog might be Saskatoon, Saskatchewan, a fine, young-feeling university city with great healthcare and those long, sunny, and non-humid summer days of bright sunshine. Northern lights in the winter, too.

Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Sept 18: Best from the blogosphere

In early September the Bank of Canada raised its key interest rate by another .25% up to one percent from .75%. This decision followed the first hike in July and could be just the second in a string of increases, some economists have predicted in light of the announcement.

In this issue of Best from the Blogosphere, we sample several interesting media articles and blogs that will help you understand how rising interest rates will impact your both ability to manage debt and carry a mortgage.

Robert McLister, mortgage columnist at the Globe and Mail offers 10 things to ponder now that the Bank of Canada has put every mortgage lender on alert. He says adjustable-rate borrowers (whose mortgage payments float with prime rate) will see their payments jump about $12 a month for every $100,000 of mortgage balance.

He also notes that variable rates can still make sense for strong borrowers with a financial cushion or those who might need to break their mortgage early (since variable-rate penalties are usually lower).

But to justify the risk of a variable mortgage, McLister suggests that you look for a rate that’s at least two-thirds of a percentage point less than your best five-year fixed option. That buys you insurance against three more rate hikes.

Kerry K. Taylor aka Squawkfox discusses 6 ways an interest rate hike affects your finances. For example, variable-rate mortgages, or adjustable-rate mortgages, will see an increase as financial institutions increase their lending rates. Home equity lines of credit (HELOCs) and lines of credit will cost more. Student loan interest rates can be either fixed or variable (floating). As with mortgages, Taylor says those repaying a variable-rate student loan will see their interest rate go up immediately, while those on fixed rates won’t see a jump until it is time for renewal.

In MoneySense, Martin MacMahon and Denise Wong consider What the latest rate hike means for you. Economist Bryan Yu with Central 1 Credit Union told the authors that people carrying a lot of debt on their credit card will probably start to notice higher interest charges. “They’re going to be facing the quarter-point increase on terms of that debt for their servicing… That’s a quarter point on an annual basis. So, it is going to be a bit of a pinch going forward, ” he says. “In these circumstances people should be looking at paring back some of that debt over time.”

The Globe and Mail’s David Berman explores why even though interest rates are rising, your savings account isn’t growing. Many financial institutions have already passed along this week’s central bank quarter-percentage-point hike to borrowers, raising their prime lending rates to 3.2% on Thursday – but you may need a powerful microscope to see any increase in your savings rates. “Why? The simple reason is because lenders can get away with it,” Berman says.

James Laird, co-founder of Ratehub.ca and president of CanWise Financial mortgage brokerage believes at some point, as rates in Canada continue to rise, there will be an adjustment to all deposit and savings products.  “But it just seems to be that [financial institutions] just don’t look at it as closely as they do on their lending side,” he concludes.

The bank’s decision to raise its key lending rate to one per cent on September 6th, from 0.75 per cent, apparently surprised the markets, which sent the loonie soaring. The Canadian dollar, which had been trading around 80.5 cents U.S. in the morning, spiked by more than a cent to around the 82-cent mark immediately after the Bank of Canada’s announcement. It’s the highest level the currency has seen since June 2015.

So If you have invested in U.S. stocks or have American dollars socked away in a bank account for your next vacation south of the border, the spike in the value of the loonie as a result of the interest hike is bad news. But the soaring loonie as a result of the Bank of Canada’s interest rate announcement is great news if you are planning a U.S. vacation that is priced in American dollars. However, a higher loonie could also slow Canada’s economic momentum, as it will make exports more expensive.


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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Aug 21: Best from the blogosphere

By Sheryl Smolkin

If you want to take a break from swimming and sunning in the waning days of summer, here is our latest selection of personal finance vides for your viewing pleasure.

There was a lot of panic recently after the Bank of Canada finally raised its overnight rate after seven years. In her  latest video, Jessica Moorhouse gives a quick recap on what this interest rate hike was all about and what you should do about it (especially if you’re in debt!).

The Globe and Mail’s personal finance columnist Rob Carrick offers several ideas to reduce the impact of the interest rate increase on your finances. If you have a mortgage, he suggests paying down the principal, even with money you were planning to put into an RRSP.

Father Jonathan Chevreau and his daughter Helen are interviewed on CBC Business news about what it is like when “boomerang kids” move home years after they left the first time.

Click here to listen

Kornel Szreibjer, host of Build Wealth Canada interviewed Randy Cass CEO of Nest Wealth, a robo advisor service. Robo-advisors are a class of financial advisers that provide financial advice or portfolio management online with minimal human intervention. For more ways to listen to the podcast click here.

 

And finally, couples manage finances in different ways. MoneySense profiles three different couples who talk about their financial goals and steps they have taken to meet them.


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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Burn your mortgage: An interview with author Sean Cooper

By Sheryl Smolkin

Click here to listen
Click here to listen

If you think you can’t possibly afford to buy a home or that paying off your mortgage is a pipe dream, Burn Your Mortgage is the must-read book of the year. Today I’m pleased to be interviewing author Sean Cooper for savewithspp.com.

By day, Sean is a mild-mannered senior pension analyst at a global consulting firm. By night he is a prolific personal finance journalist, who has been featured in major publications, including the Toronto Star, the Globe and Mail and MoneySense. He has also appeared on Global News, CBC, CP24 and CTV News Network.

Thanks for agreeing to chat with us today Sean.

My pleasure, Sheryl.

Q: As a 20 something, why did you decide to buy a house?
A: Well I guess a lot of people strive for home ownership. My parents were my biggest influence. We always owned a home growing up, so I thought that owning a home was kind of the path to financial freedom.

Q: How much did your home cost, and how much was your down payment?
A: I purchased my home in August 2012 for $425,000 dollars. My down payment was $170,000, leaving me with a mortgage of $255,000. I didn’t go out and spend the massive amount the bank approved me for. I could have spent over $500,000 dollars but I found a house with everything that I needed for $425,000 and because of that I was able to pay off my mortgage in three years.

Q: How on earth did you save a down payment of $170,000 dollars? How long did it take you to save it, and how many hours a week did you have to work to do so?
A: Yes, it was definitely a sizable down payment for one person. I pretty much started saving my down payment while I was in university. I was able to graduate debt free from university and while I was there, I was working as a financial journalist. I was also working at the MBA office, and employed part-time at a supermarket. When I got my full-time job I was saving probably 75%-80% of my paycheck. I wasn’t living at home rent free. I was actually paying my mother rent.

Q: Kudos for your determination and stamina. Do you think working three jobs is actually a practical option for most people, particularly if they have young families?
A: No. As I emphasize in the book, that’s how I paid off my mortgage as a financial journalist on top of working at my full time job. While for somebody like me who is single it makes sense, it’s probably not realistic if you have a spouse and children. But there are plenty of things you can do to save money.

Q: Many people again think they would never, never be able to save up enough for a down payment. Can you give a couple of hints or tips that you give readers in your book that will help them escalate their savings?
A:
Definitely. First of all, you absolutely have to be realistic with your home buying expectations. You can’t expect to be able to buy the exact same house that you grew up in with three or four bedrooms and two stories. But you can at least get your foot in the door of the real estate market by perhaps buying a condo, or a town house, and building up equity, and hopefully moving up one day. Think about creative living arrangements. Rent a cheaper place than a downtown condo. Find a roommate.

Q: How can prospective home buyers use registered plans like their RRSP or TFSA to beef up their savings and get tax breaks?
A: If you are a first time home buyer, I definitely encourage you to use the home buyers plan. The government allows you to withdraw $25,000 dollars from your RRSP tax-free (it has to be repaid within 15 years). If you are buying with your spouse, that’s $50 000 dollars you can take out together. That’s a great way to get into the housing market. The caution I can offer is when you withdraw the money, make sure that you fill in the correct forms so you are not taxed on the withdrawal. If you’re not a first time home buyer, then I would definitely encourage you to use a Tax Free Savings Account, because it’s very flexible, and although you don’t get a tax refund, the balance in the plan accumulates tax-free.

Q: After shelter, which means mortgage and rent, food is a pretty expensive cost. How can people manage their food costs while still eating a healthy, varied diet?
A: I offer a few tips in my book. First of all, try to buy items like cereal and rice in bulk and on sale. Another tip I offer is to buy in season. I probably wouldn’t buy cherries during the winter  because they would cost me a small fortune. Try to buy apples instead, and during the summer if you enjoy watermelon, definitely buy it then. Try to be smart with your spending, and that way you can cut back on your grocery bill considerably.

Q: I enjoyed the section in your book about love, money, and relationships. Can you share some hints about how couples can manage dating and wedding costs, to free up more money for their house?
A: People like to spend a fair amount on their weddings these days, and there’s nothing wrong with that, but you just have to consider your financial future, and how that’s going to affect it. Also, when it comes to dating, make sure that you and your potential partner are financially compatible and have similar financial goals. For example, one might be a saver while the other is a spender. Sit down and make sure both of you are on the same page financially, and then find common financial goals, and work towards them.

Q: How can prospective home buyers determine how much they can actually afford?
A: If you are ready to start house hunting, I would definitely encourage you to get pre- approved for a mortgage. Basically, the bank will tell you how much money you can afford on a home. That way you don’t waste time looking at houses out of your price range. However, just because the bank says you can spend $800,000 doesn’t necessarily mean you have to spend that much.

Also don’t forget you will have to pay for utilities, property taxes, and home insurance plus repairs and maintenance. Come up with a mock budget ahead of time, and see how that will affect your current lifestyle. I would say if over 50% of your month income is going towards housing, that’s too much.

Try to kind of balance home ownership with your other financial goals, whether they are saving towards retirement, or even going on a vacation. That way all of your money won’t be going towards your house, and you will actually be able to afford to have fun and save towards other goals as well.

Q: You’re living in the basement and you rented the first floor. Why did you decide to do that, instead of vice versa?
A: Well I’m just one person living on my own, and upstairs there are three bedrooms and two bathrooms. I wouldn’t know what to do with all the space, so it made sense to live in the basement, because to be honest I lived in basement apartments for several years before that, so it wasn’t really much of an adjustment. I mean, personally I’d rather rent out the main floor than get a second or third job. It’s all about kind of maximizing all of the space that you have, and looking for extra ways to earn income.

Q: We rented the basement in our first house. Why did you decide to write the book?
A:
When I paid off my mortgage, a lot of people reached out to me for home buying advice. In the media, there seems to be a lot of, I guess, negativity surrounding real estate and big cities.

I always hear that the average house costs over a million dollars in Toronto and Vancouver. It seems like for millennials home ownership is really out of reach. I wanted to write a book to really inspire them and show them that home ownership is still a realistic dream, and it is still achievable if you are willing to be smart about your finances.

Q: Congratulations Sean. It’s a great book. I’m sure people reading and listening to this podcast will want to run out and buy it. Where can they get a copy?
A: They can order a copy on Amazon. It will also be available in Chapters and other major book stores across Canada.

Well that’s very exciting. Good luck.

Thanks so much.

 

 

 

 

 

You can purchase Burn Your Mortgage by Sean Cooper on Amazon.

This is an edited transcript of a podcast interview conducted in February 2017.

Feb 13: Best from the blogosphere

By Sheryl Smolkin

There is always lots of speculation prior to the federal budget about possible tax changes. Last week we noted that Prime Minister Trudeau publically backed off from rumoured changes to the taxability of employer-contributions to group health and dental plans.

However, in the Financial Post Jamie Glombek writes about more tax changes to watch out for in the upcoming federal budget. He covers tax rates, “boutique tax credits,” employee stock options, capital gains inclusion rates and possible changes that may be of interest to small business owners.

MoneySense has a great slide show profiling 10 personal finance heroes you really need to meet. For example, star tennis player Milos Raonic learned to save 90% of his income. Philippe Alberigo, from Whitby, Ont worked several jobs and started stock investing at a young age. When he hit 22 in 2014, he had a $100,000 portfolio.

Financial trainer and blogger Avraham Byers writes in the Huffington Post that The Snowball Method Can Help You Put Your Debt On Ice. Method 1 which he calls the Debt Avalanche prioritizes paying off your debts from the highest to lowest in order to minimize the amount of interest you pay. In contrast, Method 2 – Debt Snowball tells you to pay off your debts from smallest balance to largest — ignoring your interest rates. The idea is that paying off your smaller debts sooner will give you confidence and financial momentum to stick with your plan to the end.

Leo T. Ly, a blogger who is new to this space blogs at ISaved5k. He says the first step to save $1 M is for young people to research the jobs/career that have the potential to make six figures salary a year in the industry in which they want to build a career and get the required training. The second step is to minimize various kinds of debt.

In 2016, millennial personal finance expert and award-winning blogger Jessica Moorhouse announced she was quitting her 9 to 5 job to become a full-time entrepreneur. In Here’s What Happened to My Finances After I Quit My Job she explains that in 2016 she made just over $34,000 from her side business and she made sure she had an emergency fund of $25,000 before she took the plunge. She also embarked on a “spending cleanse” to simplify her life and be smarter with her money.


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