Author Archives: George Boelcke

Online Reviews, Story Ads & Amazon’s Problem

Someone last week emailed me an article by a pretty good financial tools website called Motley Fool. It was an article featuring a new credit card that they described as having “lucrative rewards and monstrous perks…sign up today while the card is still available…”

Sorry, but nothing in there is monstrous or lucrative and even more bad news: If you scroll down to the very last tiny font line it states that “this is a promotional message.” In other words, the company is being paid to send out this ad in the form of an article! No need to compare cards as this pretend article is guised in the form of a review.

Most people that buy online do look at a few reviews before they make a purchase. And, since Amazon is the giant in the online purchasing world, that’s the place people need to be careful. Since vast numbers of shoppers do the purchases on their phone, they tend to only look at the first two or three reviews and then buy, without scrolling down to pages and pages of other feedback.

The rumours have been around for some time that Amazon’s reviews are manipulated and can’t be trusted. Now, as first reported by Clark Howard, Amazon has admitted to it. Employees have taken bribes to take down negative reviews.

Why does it happen? You have to remember that most products are sold by 3rd parties on Amazon. Those sellers list on Amazon and mostly have the items shipped through Amazon for big fees and commissions. It’s their main source of sales and if the top two reviews are negative, people will move on.

For other sites, it might not be manipulations, but you have to remember that many – if not most – are sponsored sites. The sites get paid by companies to be prominently featured. If they’re not – they’ll stop paying to be on the site! In other words, you’re not getting a full or accurate rating on them. That’s something that the Wall Street Journal has documented for years.

Two of those are Canadian mortgage rates comparison sites:ratesupermarket.ca and rate and ratespy.com. Lenders pay to be on there, so you will see what those who are paying want you to see!

The best evidence of this is a recent ad by Angie’s list. It’s a site to find a variety of home contractors. “Angie’s list has selected millions of customer reviews…” Did you catch that? The words are: has selected – because they’re known to cut negative reviews, or those contractors won’t pay to be on their site! An investigative report found that they do that some years ago already.

Be careful when you’re looking at reviews or paid ads that seem like articles, and always scroll down to more than the first two or three reviews before you make a purchasing decision.

The Rules of Purchase Returns Are Changing

How much of a hassle should it be to return something you purchased? There’s a fine line between the few who massively abuse it, and those of us who need to return something that doesn’t fit, won’t work, turned out to be overpriced, or needs to be exchanged. And retailers are tightening up on all of us.

Over $400 billion of merchandise is returned for a refund in North America each year. That’s a ton of product! Retailers claim that costs them $400 billion in sales, but that’s just not true. Lots of the merchandise is put back on the shelves to sell again, and a part of it goes to the secondary market, to places such as Marshalls or Winners.

Habitual returners are about one percent of customers. But, because of them, all of us are going to pay the price through more hassle to return something. Retailers have been really generous with returns, thinking it’d have a big impact on increased sales. Costco and Sears with their incredibly generous return policies led the way that all retailers matched to some degree or another. That’s going to change to a new way of thinking that returns aren’t going to be a right, but a privilege. That’ll take a lot of re-educating and push-back.

The coming new way will be that you’ll earn the right to return something by how much business you give that store and whether you’re part of their loyalty program. So, they’ll have to track your purchase history, which means you’ll have to give up your privacy rights in order for them to do that.

If you’re old enough, you’ll remember a third-party called Telecheque. If you wanted to pay by cheque, they’d phone in your name and bank info and that company would authorize your payment. For returns, the company is called Retail Equation. Smaller stores or chains will track your purchases and it’ll be this third-party that will decide if you can return something or not.

Two Christmas Tips & Calgary’s Olympic Bid

Two Christmas tips that only work now, and not Christmas Eve: As there are three paydays left for most of us, take a couple hundred bucks out of each pay and stash it away for your Christmas bills. It’ll make budgeting for it a lot easier and lets you pay cash, instead of using your credit card this year to avoid the hangover in January!

And this year, as it’s early enough, get your family to pick names. No, you’re not obligated to buy presents for everyone including your third cousin’s girlfriend’s parents! Honest! You can leave out the young kids from the draw, but for adults, get your family to agree that you’ll pick one or two people and not gift-give the whole world.

So 56% of Calgarians voted yesterday to not proceed with their Olympic bid. My gut reaction is that it was a good move for the tax payers of the city. Sure, it would have had some significant benefits for the city, but many of those can’t be measured…

It also seems like most Calgarians have access to the internet. In spite of all the talk and promises that the $5.1 billion gamble wouldn’t be over – that’s just nonsense. Anyone can take 10 seconds to see all the horror stories of EVERY city that’s hosted the games and their billions of cost overruns. I can barely predict my bills for next month and you’re telling me that a projection on that many projects, and that complexity, eight years out is totally accurate? Not a snowballs’ chance in h$%&.

If the bid committee had told Calgarians that the budget was $5.1 but explained how they’d be able to make it at (for example) $8 billion, there would have been a lot more credibility. Plus, any internet search will quickly let anyone see that any glowing economic projections normally need to be divided by two or four to be close to accurate. It defies logic to state that it’ll inject x dollars into the local economy. Those projections have never been accurate for massive conventions, the subsidies for businesses to relocate, or Olympic bids. It’s always assuming people just “find” that money for tickets, restaurants, merchandise, etc. When half the country can’t find $400 for an emergency, this money isn’t “new” money – it’s just NOT being spent on something else, instead.

Yes, it would have been a big boost to the Calgary economy, but maybe it’s for the best to not ask Calgarians to write a blank cheque that they won’t be able to cash…

Yes, Your Credit Card Terms Can & Will Change

A recent email from Barb reminded me of something we haven’t talked about for some time.

Her husband received a call from TD advising them that their credit card would now be charged an annual fee. Apparently, that should have been the case all along, but didn’t get charged for the first two years.

Needless to say, she was a little choked and thought they should be honouring the terms that they originally signed up for. She’s right, but she’s also totally wrong.

Card issuers don’t have any morals – they have profit margins to meet. She also, mistakenly thought that her business mattered to the card issuer – it doesn’t. They have a million plus accounts and one person being mad or leaving isn’t going to register on their financial results.

Annual fees are pure profit and it’s something they wish they could charge every cardholder for an ever-increasing amount each year. It’s kind of like bank service charge in their world.

But before you tell them to stuff it, you need to stop and think. If you do, your credit score will go down, and that will impact your line of credit rate and other borrowing. It’s not hard to understand if you read the credit score chapter in the Money Tools book, because your score impacts so much of your life.

If you have one or two credit cards, first apply for another card that’s more to your liking, lower rate, better perks, lower or no annual fee. That card issuer looks at your credit report with this other card you want to cancel still in existence. Once it arrives, then call the card issuer to cancel the one you want to get rid of.

Your credit score factors in the length of time you’ve had your cards. So if you’ve had one card for 10 years, and the other for two years, the average time is six years. If you cancel the 10-year card first, the average time drops to only two and that’ll drop your score. That’s also the reason to often consider keeping your 10-year card even if you don’t want to use it anymore…it has a big positive impact on your credit score. You can cut it up so you’re not tempted to use it, but don’t call to cancel it. Now, that’s assuming it doesn’t have an annual fee. If it does, take the small credit score drop for the big savings on the annual fees!

The Fine Print of Travel Purchases & Library Fines Alternatives

I’m back from my nightmare cruise last week. But at least my experience can be your lesson learned, or at least your heads-up.

If you have an airline ticket, once you’re on the plane, the airline is obligated to get you to your destination. But sometimes stuff happens. If that airport is closed, they’ll detour – but will eventually get you to where you’re going, even if that has to include putting you up in a hotel somewhere along the way at your expense.

My cruise last week was only on-track for an hour before Norwegian realized that hurricane Wilma wasn’t going to let us go to the Mexican Riviera. By the time we would have gotten to Puerta Vallarta the winds would be 80 plus miles an hour. But, when you book a cruise, they have the total right to change their itinerary. You pay for a one-week cruise without a guarantee of the advertised ports. Instead of 30 degrees and three Mexico stops, we ended up with San Francisco (I was just there) San Diego (I was there last year and will be again in two weeks) and Ensenada, Mexico.

We also didn’t see the sun the entire week and never saw anything above 15 degrees. But that can’t be blamed on Norwegian Cruise Lines as they honoured the cruise for the week. It just falls under the category of “stuff happens.”

One more thing: I really love responsible people. A lady checked out a poetry book from a Louisiana library that his son returned it last week…84 years later when he was cleaning out his Mom’s possessions. The financial good news is that the library waived the $3 late charge. Responsible AND a financial savings…bonus!

Even better is what the L.A. libraries are doing with kids who don’t return books or movies on time. They’re now allowed to ‘read off’ their late fees! Instead of charging their parents the overdue fees, kids just need to go to the library to read and work off their fees. I love that total win-win!!

Norwegian Cruise Lines

Last week I was on the brand-new Norwegian Cruise Lines (NCL) ship the Bliss on what was scheduled to be a Mexican Riviera cruise, but only got from our LA departure port to San Francisco, San Diego, and Ensanada (20 miles south of San Diego), thanks to hurricane Wilma.

If you’re a smoker, sadly, you want to avoid NCL at all cost. If I’m not mistaken, that’s still around 25% of the population, myself included. But that’s not NCL math: There is one smoking area way out of the way in a windy corner of one of the upper decks. It holds around 20 people and is standing room only the entire day. It’s, by far, the most popular area on the ship.

Plan B, if you want to light up, is a cigar lounge that holds 16 people. Plan C is even worse: It’s in a segregated and closed in area of the casino. That way you can have two smokes while also leaving behind a hundred buck donation in a slot machine….

When 20 to 25 percent of the population smokes or vapes, over 4,000 passengers include around 1,000 that smoke. With NCL it won’t take you long to figure out that you’re really not welcome on the ship.

That may well be, or become, the norm on other cruise lines, but you’re not likely to find that out until you’ve paid, committed, and are on board. If you know which cruise line still welcomes your business, send me an email as I’d love to promote them!

In Case Of A Postal Disruption

Here is a heads up that you should do each and every month. Whether it’s in the event of a Canada Post strike or not, you need to do a little check list of all your bills.

You know I really want you to do a budget, then you’ll have it anyway, but do a little list of all the bills you have to pay in a month. With no mail, or if you ever don’t get your mail, you still have to pay the monthly payment. I forgot, I didn’t get an invoice, or any of those excuses don’t get you off the hook.

The payment is yours to make and all the legal documents say that they’re due – whether you get a statement, reminder, invoice or not. A little check list will just be an easy way to see that you’ve made a payment to everybody during a strike, or in any month.

Make sure you add the annual bills such as house or car insurance, property tax, etc. on the list, too. If you don’t pay something like a utility bill, the service charge is around 2.5% for being a day late. On the other hand real debt such as your credit cards or line of credit, absolutely destroy your credit rating if you’re late. And that stays on your credit file for seven years. That’s a lot of damage for missing a payment, or not being pro-active during a postal strike, or any month.

Hotwire Price Alerts Are (at best) Only Marketing

Hurray! At the end of the month I get to go to Winnipeg! But I needed a reasonably priced car rental. One of the places I normally shop is hotwire.com which has a “price drop alert” and will email you when prices drop. Since it was $51 for the smallest of small cars – that’s what I did. Sorry, Winnipeg but at the end of October there isn’t a massive wave of tourists wanting to come to Portage & Main to pay that much for a one-day rental…

In total, hotwire sent me six price drop alerts for around $39. On one of them I clicked through to book that within 30 seconds of the email alert receipt. Nope…the least expensive one was still $51…and didn’t change the entire two weeks of looking.

So it’s pretty obvious that the hotwire alerts are somewhere between useless and simply marketing to give them an excuse to email you. For the entire two weeks, priceline.com was $5 cheaper anyway and today (October 13th) their price for the same compact car on the same day was $29 versus the hotwire $48.

Sad but true: Skip hotwire on car rentals and on any so-called price alerts. I’m going to miss them because I’ve dealt with them quite a bit over the past number of years. And, sadly, their media relations department chose not to reply to my inquiries for comment.

Sears, Book Sales, Credit Card Marketing & Bruce Springsteen

NBC news reports, as of an hour ago, that Sears in the U.S. may be filing for bankruptcy in the next few days. A few years ago I commented that Sears and Best Buy wouldn’t last: Sears Canada went under this January, and now in the U.S. where they has not been profitable for eight years. Best Buy is still around, but shrinking a lot in the U.S.

Great news: Books are back! As someone who has written 18, and has nine actively selling books, I loved that news. Hardcover sales are up 5% in the last five years, and softcover books are up over 17% in that time. The Kindle, Nook, and other e-readers are fading, but then, it’s always been known that your retention reading from a screen is less than an actual physical book.

The sad news is that 33% of high school graduates, and 42% of university grads, never read another book the rest of their lives. (from a book industry study group) Yet, if someone reads only two books on credit, finance, and/or investing they’d be smarter, and significantly better off than 95% of all adults…and that includes most bank staff!

Two banks right now are heavily promoting their credit cards by touting that they have fraud alerts to protect you. Sorry, but that’s marketing and not factual. You’re totally protected against fraud by federal law and not by the good graces of credit card companies. If it wasn’t your charge, it’ll be taken off your statement and they’ll issue you a new card – period. Don’t fall for the marketing. If you’re looking for a new credit card  you need to remember three tips:

Cut up the one it’s replacing but don’t cancel it with the card issuer or it’ll drop your credit score. Cutting it up keeps it alive but also keeps you from the temptation of using that one, too! If you ignore that advice, there’s an 80% chance you’ll have your old one and your new one maxed out within two years. If you sometimes run a balance, it needs to be one of the 11.9% rate cards. If you always pay in full, look for the perks that you’ll actually use and a low annual rate.

Sometimes fraudsters are really clever and I certainly have a lot of empathy for people who are victims. But I have zero sympathy for a lady named Mary. She was conned out of $11,500 by a Bruce Springsteen impersonator (first reported by CBS Chicago). The story was that Springsteen was getting a divorce so all his money was tied up and needed iTunes gift cards and cash. Springsteen, along with New England NFL player Rob Gronkowski (who’s actually in the Money Tools book) are two of the most conservative public figures with their money! Sorry, Mary, but I can’t find an ounce of sympathy: A zillionaire is hitting you up for a few buck? And he wants it in iTunes gift cards? And he does it off his Facebook fan page?

A Retired Couple’s Financial Nightmare

Good morning George:

My husband and I are both retired. We own our house with no mortgage. But we have a line of credit of 27,000 on it (at prime plus 1 and it keeps going up)….we have a zero % loan on a truck with 24,000 still owing for another two years. We do have a savings account of 45,000… We both receive a OAS and CPP each month ($ 2,600 total ) but unfortunately our truck payments are taking just about ½ of that…..we are doing our best to live on our pension incomes without taking too much of the savings each month 😊

My question is because of our age do you think  that we should pay the truck off now  out of the 45,000 saving account then we’d have the truck payment gone and have more income to do more with our lives while we are still reasonable healthy to do so….

We now realize buying that truck and tying ourselves up for 6 yrs. was a BIG mistake ☹ but the damage is done and horse is out of the barn…

 

OK, a few things first:

-This email hit me really hard and was rather depressing for a number of reasons.

-I’m sharing it, and talking about it, because it is not an isolated story, but quite common, and getting more so for a lot of seniors.

-The numbers have been rounded to not make it too complex to walk through.

-When I share the odd time that the $20 Money Tools book will save you a hundred bucks on literally every page, I KNOW this couple would never have made the truck purchase or likely have run up the credit line if they’d read either of those chapters first!

Good news: Everybody “sold” you and has made a bunch of money at your expense! The bank won because you’re in a huge financial trap. Your line of credit is a $90 interest only payment (at 4.7% and rising) and thus you’ll pay it for decades without ever paying off a dime. The car dealer’s 0 interest was likely the reason you got the truck at a payment of half your fixed income. They made the profit, and likely sold you some add-ons buried into the payment. So everybody did well…

Your good news is that you have a four-year old truck that will last another decade. You’re right – you can’t change the past, and it’s now worth less than half of what you paid, and likely worth less than you still owe. So love it, take care of it, and drive it into the ground. The other good news is that this is easy to “fix” to create some breathing room.

For anyone not on a fixed income, the fastest way to become debt free is to keep $1,000 in emergency savings and pay off everything else. (The Money Tools book “step up” plan)

In your cases, being retired and having a $2600 fixed income, I would do it a little different, and you have two choices:

1..Pay off the LOC from your $46,000 savings and reduce it to a $5000 limit (as an emergency account). Your savings may be 0.25% at most, so your LOC is NINE TIMES the rate and you’ll never pay it off. And that’ll go up with one or two more prime increases in the next six months to be 12 times the interest you make on savings.

That $90 saving isn’t much, but since it’s all interest, it’s a total gain. Then leave the truck at $1,000 payments for the next two years and subsidize your income from drawing down some savings. It won’t be much of a lifestyle, but there’s a fixed end in sight and zero temptation to “drop down” on how much you pay on the truck.

Option 2 is what I would do: You’ve worked too hard to not have some financial freedom, to go out for dinner the odd time, etc. to live on $1500 for two more years while you’re healthy. It’s stressful, because you have utilities, cable, truck insurance, food, etc. so there’s literally nothing left over – in fact, you’re using some of your savings each month just to tread water.

I would pay off the truck from savings today. Yes, you’re giving away (not getting the benefit of) the last two years of 0 percent, but the financial insanity of those payments will be over. That should or could stop dipping into savings to meet your monthly expenses.

The math says keep the zero percent truck and pay off the LOC but this isn’t purely about math with your situation.

That leaves the LOC. It’s $90 a month to tread water. Now to decide if that’s just going to be around for the rest of your life because of your fixed income, or whether you want to spend 10 to 15% of that income to get it paid off. That’s your call:

25 years to pay it off = 248 a month

15 years = 302

10 years = 372

5 years = 587

See now how the bank has won huge? There’s zero chance you can pay it off in any reasonable amount of time, so their total income (the interest total) is massive…and we all trick ourselves into just looking at the low rate… Even if you paid it off in 15 years, by that time they’ll have made about $12,000 in interest…90 bucks at a time…

You can’t use the rest of your savings ($46000 less truck payoff) leaves $22000 to pay off your credit line. You have to at least keep 6 months of your expenses a full emergency fund.