Tag Archives: MoneySense

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.


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.

May 16: Best from the blogosphere

By Sheryl Smolkin

For the last week, the images I cannot get out of my mind are the pictures and videos of Fort McMurray burning. Every week on savewithspp.com we post blogs that discuss retirement savings and how readers can fund their life after work. But the major asset most of us are depending on to augment government benefits is the equity in our family homes. Imagine having that wiped out in minutes as you flee to safety.

The only good news has been the incredible bravery and grace of everyone involved from first responders to neighbors to governments at all levels. Also, as the Globe and Mail reports, insurance companies across Canada have already begun deploying mobile response units and flying in personnel to the province from across the country to prepare to assess the damage and issue emergency cheques.

Money will never replace photos albums or family heirlooms, but it will go a long way to help people rebuild their lives. That’s why this week we are going to feature a few things you need to know about insuring your home and your possessions against loss or theft.

In a Toronto Star article, Home insurance: 10 things you need to know, Andrew Wicken says the cost to rebuild your home plays a big role in determining the amount you pay for home insurance. Check with your broker or agent to see if you have guaranteed replacement coverage. This ensures you will receive the amount that it actually costs to replace your home and not the amount on your policy. Not all policies have this coverage and rules vary across insurance companies.

What Every Canadian Should Know About Home Insurance Policies posted on InsuranceHotline.com points out the importance of “loss of use” coverage. If your home is uninhabitable after a claim, then loss of use insurance will help your family manage while your home is being rebuilt or repaired. Hotel expenses, meals, and incidental expenses are covered by this portion of your home insurance policy, typically for a specified period of time or to a maximum dollar amount.

The Insurance Bureau of Canada reminds homeowners that it’s your responsibility to report any changes to your property. Contact your insurance professional before you:

  • Renovate your home
  • Install a pool or spa
  • Set up a home-based business, such as a daycare
  • Lease all or a portion of your property
  • Purchase jewellery or art.

Keeping your insurance company informed with an accurate and up-to-date description of your home and contents can help speed up the claims settlement process after a loss.

The U.S.- based Hanover Fire & Casualty Insurance Company outlines some ways to save money on your home insurance. For instance things that might earn you a discount include:

  • A home burglary alarm system
  • Dead bolt locks
  • Fire alarms and sprinklers
  • Updated heating systems
  • Updated wiring and electrical systems
  • A home near a fire hydrant or fire department
  • A home located near a police department
  • Well-structured and maintained stairs, sidewalks, driveways, and entrances

And finally, MoneySense author Gabrielle Bauer describes Home insurance as defending your castle. When buying home insurance, she says you’re almost always better off using an independent broker who deals with a number of insurance companies, so he/she can get you the best price possible. Also, to keep your premiums more affordable, she suggests bundling your home and auto insurance policies together because it could cut 15% off your total bill.

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The Canadian Red Cross is accepting donations for the Alberta Fires Emergency Appeal. Ten banks in Canada are also accepting cash donations. All individual donations will be matched by the Government of Canada.

 

Feb 1: Best from the blogosphere

By Sheryl Smolkin

In this space we typically provide links to interesting work by our favourite personal finance writers about topics ranging from money-saving tips to retirement savings to retirement lifestyle. But many of these prolific bloggers have also posted great videos on YouTube with helpful tips and tricks for people looking for ways to better manage their money.

So keeping in mind the old adage that “a picture can be worth a thousand words,” this week we identify a series of videos featuring pundits you already know well. While some of these videos are not new, they have stood the test of time.

Take a minute to watch at least a few of them, and let us know whether you would like to see more video content on savewithspp.com.

Sean Cooper is a pension administrator by day and a hard-working personal finance writer by night. Watch him burn the mortgage he paid off in 3 years and reveal his super saver secrets.

One of a kind blogs like How to get married for $239 by Kerry K. Taylor, aka Squawkfox have have been read by thousands of eager fans. In this video she discusses with the Globe and Mail’s Rob Carrick, How to stop wasting money.

In Life After Financial Independence as part of his Tea At Taxevity series, actuary Promod Sharma interviews author and former MoneySense editor Jonathan Chevreau about his post-retirement projects, including the Financial Independence Hub.

TV personality and personal finance guru Gail Vaz-Oxlade is interviewed on Toronto Speaks: Personal Finance about spending beyond your budget.

Studies suggest that 6 out of 10 Canadians do not have a retirement plan. Why is that number so high? Retire Happy’s Jim Yih shares a couple of theories about why it’s hard to plan for 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.

Dec 21: Best from the blogosphere

By Sheryl Smolkin

Recently Rob Carrick at the Globe and Mail wrote Prepare for the worst and make 2016 the year of the emergency fund. According to Carrick, the emergency fund is how you survive a financial setback without raiding your retirement savings, adding to your line of credit debt or borrowing from relatives. “Think of an emergency fund as insurance against a short-term setback that affects your long-term financial goals,” Carrick says.

20 Reasons Why You Need am Emergency Fund by Trent Hamm on thesimpledollar.com lists all of the obvious reasons (job loss, illness, urgent medical expenses) why you may need to tap into an emergency fund plus a few you never thought of. Some more obscure examples are:

  • Your identity is stolen, locking you out of your credit cards and/or bank account for a while until the issue gets straightened out.
  • An unexpected professional change forces you to relocate quickly.
  • A relative or friend of yours passes away suddenly in another part of the country (or the world).
  • You discover your partner is cheating on you, and for your own safety and peace of mind you have to pack your bags quickly and go.

How much do you need to save in your emergency fund? Typically financial experts suggest three to six months of fixed (as opposed to completely discretionary expenses). Emergency fund calculators from RBC and moneyunder30.com can help you figure out how much you should set aside.

Jason Heath at MoneySense is not a big fan of emergency funds if that means a substantial amount of cash sitting in a bank account doing nothing. He says, “I’m all for having the potential to cover 6 months of expenses in the event of an emergency. But I’d rather someone be able to do so through a combination of modest savings and ideally, a low-interest rate debt facility like a secured line of credit.”

Gail Vax-Oxlade believes the TFSA is a perfect place to stash your emergency fund. She says, “The best thing about the TFSA is its flexibility. You can take money out of your TFSA at any time for any purpose, without losing the contribution room, which makes this account the number one choice for socking away an emergency fund. So even if you take money out in one year, you can put it back the next, without affecting that year’s contribution limit ($5,500 for 2016).”

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.

Nov 23: Best from the blogosphere

By Sheryl Smolkin

This week we are back to everyone’s favourite topic – how to get ready for retirement. If you haven’t already maxed out your 2015 Saskatchewan Pension Plan, RRSP and TFSA contributions, now is the time to make sure you are “on plan” before you start spending more than you can afford in the run up to the holiday season.

If you are not a Globe & Mail regular reader, check out the new Globe Retirement series. I particularly like Boomer retirement planning: A nine-step guide to ease your mind by our perennial favourite Rob Carrick. The publication’s online fee disclosure tool will show you how the advisory fees you pay compare with other investors.

Michael James on Money writes about Retirement Spending Stages. While there is evidence that older seniors spend less, he says spending too much in the early years of retirement could mean in your later years all you have left to live on is government benefits and any pension streams you may have.

In Save like this, retire like that – My story about early retirement in style Mark Seed interviews “RBull” from Canadian Money Forum who retired in 2014 in his 50s. He estimates that his savings rate averaged a little over 20% for about 20+ years. Approximately two years before retiring he sold almost all his stock positions to purchase broad market ETFs to simplify the portfolio, increase diversity and keep fees low.

Dan Wesley who blogs at Our Big Fat Wallet is in an enviable position. His TFSA and RRSP are Maxed Out and he is trying to decide where where to put his additional savings. Options include paying down the mortgage, opening a TFSA for his wife and opening a taxable investment account.

In MoneySense, Jon Chevreau discusses Saving mistakes you’re probably making. The single biggest mistake of course is NOT saving at all, says Adrian Mastracci, president of Vancouver-based KCM Wealth Management Inc. The easiest thing in the world is to spend 100% of what you earn or even worse, fall into debt. Chevreau says at the root of the failing-to-save mistake is the failing-to-live-within-your-means error.

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.

Oct 26: Best from the blogosphere

By Sheryl Smolkin

As I write this, perhaps the most newsworthy item of the last week has been the election of the new Liberal Prime Minister Justin Trudeau. But it will be weeks and months before we know what impact the change in government will actually have on our day to day lives and the Canadian economy.

So today, we go back to basics and draw on the writings of many of our favourite personal finance bloggers and mainstream media pundits who day in and day out, produce articles that help us better manage our money.

The thought of being unemployed is terrifying, but the odds are it will happen to you or a close family member at least once in your lifetime. On Money We Have, Barry Choi writes about How to Prepare for Unemployment. He suggests that you have an emergency fund; a side hustle and that you improve your skills.

Gail Vaz-Oxlade tackles Parenting on a Budget. She says the trick to not letting kids’ expenses get way out of hand is to allocate a specific amount to each child’s activities and needs, and stick with the plan. Start by listing all the things your children do for which you must lay out some of your hard-earned bucks.

Krystal Yee has been vegetarian for almost two years now. She shares on Give me back my five bucks her one month experiment moving from vegetarian to vegan. She anticipates higher than normal grocery bills and that it will be tough to change her habits, but she is hoping that one month will turn to two months and the result will be a new lifestyle.

If you wonder where your money goes, you’ll enjoy The crunch years: Where the money goes by Matt McCleern on MoneySense. McCleern tracked every cent he spent digitally, over the last 12 years. He says transportation and daycare were real budget busters, but the best financial decision he ever made was to aggressively pay down his mortgage.

And in the Huffington Post, Pramod Udiaver discusses five major trends that will affect how you retire. They are increasing longevity; the lower return environment; fewer defined benefit pension plans; and growing health care costs.

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.

Sept 14: Best from the blogosphere

By Sheryl Smolkin

Over the last weeks the stock markets have been bouncing all over the place and now we are told that the Canadian economy is officially in recession. While it is natural to be concerned, particularly if you are close to retirement, the general consensus from most experts is to have confidence in your financial plan and stay the course. Today, and in coming weeks we will provide you with information to help you weather the storm.

In How to make sense of markets gone mad, Toronto Star personal finance writer Adam Mayers says this is a market correction of significant proportions. It could be short and sharp, or it may be long and lingering depending on how the real economy reacts. It may be tough to take the gyrations, but what it does do is set the stage for the next big rise.

Rob Carrick at the Globe and Mail says It’s decision time for your ‘dead’ money. If the summer market decline hasn’t stoked your appetite to buy stocks, he suggests that all the cash piling in your account is pretty much dead money. That’s true if you’re leaving the money uninvested, and also if you’ve taken the good sense step of keeping your cash in a high interest investment account.

MoneySense authors Jessica Bruno and Dean DiSpalatro consider What the recession means for your portfolio. They interviewed Jay Nash, portfolio manager at Roberts Nash Advisory Group, National Bank Financial, in London, Ontario. Nash’s message to clients is straightforward: The recession was largely focused in the energy sector, with other areas of the economy performing well. Most importantly, June’s solid data—pushed along by consumer spending—was better than expected.

Protecting your retirement income from the stock market by Wayne Rothe is on Retire Happy. Rothe reviews “Your Retirement Income Blueprint,” by Winnipeg financial advisor Daryl Diamond. Diamond writes about the impact of market gyrations on the “retirement risk zone.” This is generally the five years immediately before and after retirement age. A big drop in the value of your investments during this period can be disastrous.

And finally, Michael James on Money questions How Much Diversification Do You Need? He says, “Diversification is simple for indexers like me. We own all stocks for as low a cost as possible. There is no such thing as ‘di-worse-ification’ because we have no opinions about one stock being better than others. There is no reason to fret over active mutual funds because index funds are cheaper and cover the same asset classes.”

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

BOOK REVIEW: Wealthing Like Rabbits

By Sheryl Smolkin

I don’t often review personal finance books because it seems to take an inordinate amount of time to wade through yet another statement of the obvious just to glean enough cogent information to give readers a taste of what the book is all about.

But when I read accolades from the likes of Gail Vaz-Oxlade, Preet Bannerjee, Roma Luciw, Dan Bortolotti plus a whole bunch of my other favourite personal finance bloggers in the introductory pages of the book, I thought I’d better keep on going to find out what all of the fuss is about.

Author Robert R. Brown says Wealthing Like Rabbits is written to be a fun and unique introduction to personal finance and suggests that any book that includes sex, zombies and a reference to Captain Picard is “an absolute must read,” regardless of genre.

Brown starts out by asking how many rabbits there would be after 60 years if 24 rabbits were released on a farm on a great big island. Before providing an answer to this question, he introduces the need to save for retirement, although he doesn’t begin to predict how much you or I will need. His only conclusion is that “more is better” because it is better to be 65 years old with $750,000 saved than 65 years old with $75,000 saved.

Then he reveals that there would be 10 billion rabbits after 60 years and launches into a discussion of the history and key features of registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). Subsequently he riffs about how many zombies there would be in England if France sent 100/week for 40 years.

If you are still with me, you may wonder — what is the point of all this?

Not surprisingly of course, it’s to illustrate the power of compounding, whether in relation to rabbits, or money or zombies. We learn that just $100/wk deposited in an RRSP earning 6% for 40 years will add up to a nest egg of $624,627.

But the positive and the negative impact of compounding interest are also very cleverly brought home in later chapters. I particularly liked the comparison of brothers Mario and Luigi who both had similar incomes and $100,000 for a down payment on a house. They went to the bank to find how big a mortgage they were eligible for.

Mario’s banker told him “he could afford” to buy a house for $525,000. Luigi told the mortgage specialist he needed $10,000 for closing costs and the $90,000 balance had to cover at least 20% of the purchase price of the house so the most he would be willing to spend is $450,000.

The story continues with Mario buying a 3,000 square foot home for $525,000. Luigi sticks to his budget and buys a 1,600 square home nearby for $350,000. Over 20 years, compound interest on the mortgage means that Mario ends up paying $807,538 for his house while Luigi only has to fork out $538,359.

Similarly, when it comes to debt, Brown illustrates that high interest credit card debt can quickly escalate if balances are not paid off every month. Even I did not realize until recently that if you miss your payment due date by even as little as one day, the interest-free grace period completely disappears. In fact you have to pay interest on the amount of each transaction from the date each and every purchase was made.

Brown also reviews the characteristics of a line of credit; a home owner’s line of credit; bank loans and consolidation loans. While generally he believes all of these can cause severe damage to your financial health, he recognizes that when handled properly, they each have their place.

But he draws a line in the sand when it comes to payday loans. Never, ever get a payday loan, Brown says.

He gives the example of Buddy who borrows $400 from a payday loan place because his furnace broke down. He is charged $21 for every $100 he borrows for just two weeks. Two weeks later he pays the payday lender $484. That’s 21% for only 14 days, which works out to 546% annually. And that’s only the beginning.

If Buddy can’t pay in two weeks the payday loan company will charge him an NSF penalty and continue to accumulate stratospheric interest rates on the whole amount. Further defaults mean he will likely be hounded both by telephone at home and at work day and night. The file may be handed over to an even more aggressive collection agency.

In the second last chapter, Brown offers a brain dump of financial tips (which he doesn’t call “Fifty Shades of Brown”):

    • Spousal RRSPs are cool.
    • MoneySense magazine is a great source of personal finance information.
    • Eat dinner at home. Then go out for a fancy coffee and desert to Starbucks.
    • Buy life insurance, not mortgage insurance from your bank.
    • Read Preet Banerjee’s book Stop Overthinking Your Money for the skinny on life insurance.
    • Use the noun“wealth” as a verb. So instead of saving $150/week in your RRSP you will be wealthing your money.

And finally, Brown’s parting words at the end of the book are “you’ve got to show up.” Put some money away for your future. Live in a house that makes sense. Be smart about how you spend your money. Spend less than you earn. Be comfortable living within your means. He says it really is that simple.

Wealthing Like Rabbits is funny and engaging and it hits all the personal finance bases. Regardless of whether you are a Millennial, a Gen Xer or a Boomer, you will find lots of tips on how to save more, spend less and still have a lot of fun along the way. 

The book can be purchased in hardcover for $16.95 and the epub and kindle versions are available for $7.99.