Author Archives: George Boelcke

Bankruptcy Stats Are On the Rise…and Alternatives…

There were multiple media stories a few weeks ago that the bankruptcies and proposals in Canada are rising rapidly. They were up over 9% from April a year ago nationally.

OK, that’s true. But…First, it’s comparing a pretty low year, so the percentages are quite misleading – percentages almost always are. Just look at the report that Vancouver home sales were up 44% last month over a year ago. Yes, but off an incredibly brutal April last year. So I always want to see the real numbers and not the percentages. In BC there were 22 more actual bankruptcies than a year ago, in Alberta exactly 100 more, and less than 150 for the whole country. (That’s bankruptcies and not proposals where there is some kind of payback set up through a trustee).

Every single bankruptcy is a very personal and often tragic or heartbreaking story. Yet, every person who has to file, should also be admitting that they caused it and are responsible in one way – some small or big way – or another. There is zero chance someone who is debt free will ever file for bankruptcy.

For anyone coming out of bankruptcy the question to ask is if they’ve learned that lesson and will never go down the debt road again. Then, read the rebuilding credit chapter in the Money Tools book for the five steps (and only five) to rebuilding your credit.

For anyone wondering if they can make it back from the edge of financial trouble, here are a few things to consider:

-There is a recession coming. I first started talking about it a year ago. It’s going to rain – get an umbrella now. Pay off what you can. Not a few bucks extra here and there – read the step up plan to pay off your debts smallest to largest.

-Most people also don’t need to file for bankruptcy. Canada does not have a debtor prison. It’s perfectly OK to stop paying your credit card. They’ll call, they’ll have a fit, they’ll send you nasty letters but that’s it. Tell them calmly that you don’t have the money and you can email them your bills in order of priority and your income. They’re not even going to want it – trust me.

-Ask  yourself if you have your priorities straight: Food, shelter and utilities are fist. If you have enough income for a roof over your head and food you’re doing OK. Everything else comes after that. When you’re out of money on paying your priorities – the rest will have to wait – period.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Careful With lowestrates.ca and Aviva Insurance!

Ah, another day, another incorrect online insurance quote. In my new part-time job to compare rates online, there appears to be a few more companies where your quote isn’t going to be close to your actual rate.

Lowestrates.ca is one of a number of sites you’ll find on the first search page under “insurance quotes.” They are not an insurance company or a broker, so they’re not liable for the common bait and switch – or “your quote isn’t actually your rate.” But you do need to know what happens after you fill in your online quote and it pops up with “your best quote” before you get your hopes up.

Mine was $824 and came up with Aviva Insurance. Since they don’t sell directly, the referral (and how lowestrates.ca makes their money) was to Surex Direct Insurance. Surprise, surprise, the actual quote from them through Aviva was actually $895. Yup – another quote, another “not close” in being over by $71.

Aviva chose not to reply to an inquiry. To their credit, lowestrates did reply to my email with an apology for the lack of communication. They also reached out to the broker and claim that the quote provided was “accurate to the dollar.” The broker, Surex, claimed that the information I provided wasn’t accurate. It’s totally false, but an excuse or reason why the “real” quote wouldn’t match the online quote. Their response indicated that “date first insured” was June 2001 “based on autoplus.” Nope – my first insurance entered accurately was a long ways prior to that.

Again, their information is false and there’s no chance you or me have of getting it accurate. Hands up if you have your insurance receipt from 19 years ago to prove your prior coverage? No – didn’t think so… According to a ballpark figure of a police officer friend about 10% of drivers don’t even have their current pink card with them.

The Statute of Limitations for most crimes and for keeping your tax records is about a third of that time. Yet insurance companies will punish you if you “only” have 19 years accident free coverage. Again, that’s inaccurate – but 19 years just isn’t enough to get a decent insurance rate?

It certainly isn’t right or logical, but is that legal or allowed by law? Has any consumer rights group ever asked why 19 years of coverage STILL isn’t enough for the lowest premiums? If so, send me a note as I want to contact them. I’ve also sent an inquiry to the Superintendent of Insurance to find out. Stay tuned…

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Just Do It (Some of it) NOW

Just Do It (Some Of It) Now

The Nike slogan is “Just Do It” and everybody aged 18 and up, the sooner the better, should take that to heart. Or at least do some of it. There’s a chapter in the Money Tools book entitled: Do You Have a Half Hour?

In life there are tons of things we just never get around to – for all of us at all ages. We’re too busy, maybe next week, it’s not a priority, or whatever the reason or excuse. If you don’t take the first step you’ll never take the second step – and that chapter has about a dozen things that take less than half an hour.

If you look at your bank account and have an extra $200 you might want to save it. But it’s likely you won’t – or at least if you’re in your 20s because you don’t have an investment or TFSA (tax free savings) account, or an RRSP set up. That’s just one no-brainer example. If you take less than half an hour to set up an investment account with just a $20 deposit you’ll have it if and when you have some extra money, a bonus, or maybe some cash for your birthday. But if you don’t even have an investment account, you’ll never detour the money to it. If you’ve done the half hour basics, it’s two clicks and you’ve added to your investments.

Just taking this one example at age 18 to 25 has a staggering impact down the road. Here is a chart of what just $1,000 savings gets you in compounded interest down the road if you set it and forget it (from taxtips.ca):

$1,000 in just GICs over 50 years turns to $16,000. If you’re already 25 or so, over 39 years it’ll be $7,700.

But you’re 18 to 25 so that’d be a total waste of investments. If you put it into a basket of the top 500 companies in the world (that’s called the S&P 500) the $1,000 turns into $135,000 over 50 years. If you’re already mid-20’s it’ll be $77,000.

That’s a lousy $1,000 saved – never mind if you read the teenage millionaire chapter and do it quicker for a return of $1.1 million. Or you can hope you’ll get your $900 Canada Pension – good luck with that.

So the half hour today pays off huge – but you need someone to print you off this returns chart for you to believe it. And then you have to get off your butt and make the half hour. If that’s not worth your time – I can’t help you!

George Boelcke – Money Tools & Rules book – yourmoneybook.com

The Personal Insurance: Online Quote vs Reality

Since I always do what I teach on the radio and in my books, this year I needed to get my car insurance re-quoted. For a decade, Belair (formerly Canadian Direct Insurance) has pretty much been the least expensive – but that appears to be over. Enjoy their ads on the CFL games and leave it at that…

Most insurance companies will now let you get a basic quote online. One of them is The Personal. You’ll get what they term “your insurance premium estimate” with a long legal waiver that states that the quote is based on your information supplied, and is an estimate and not a guarantee. Fair enough. It goes on to state that your rate quote can change based on “additional information.” That would include your credit score and pulling your drivers abstract and anything you didn’t complete online.

OK. But what if your online information is entire accurate, your drivers abstract is totally clean, your credit score is fine, and you want exactly the coverages you filled out? Shouldn’t your quote be the same as the final calculations? You bet! But with The Personal, it wasn’t even close! I have no idea if it’s just a come-on, totally misleading, or just a rip-off.

Here is the online quote for $614 a month. After a 30-minute call to their Calgary office, it turns out the actual rate would be $759, or over 23% higher! (Excluding my change to $2 million liability for $90 and their so-called “accident rate waiver” of $55 for a total of $904.)

Needless to say, I was stunned. When I asked the agent what DIFFERENT information she had entered that I had NOT done, she confirmed that nothing was different. When I asked how the premium increased by 23%, she couldn’t answer it. She did indicate she would “ask one of our technicians” and get back to me. To her credit, she did leave me a message the following day: The online quote uses ‘an average group discount’ to calculate your premiums and it does have a waiver on the site.

Well, not true: When you first start entering information (on many sites) you’re asked if you’re part of any group or association. Some are just to make you feel better, some larger ones such as being a Federal or City employee or working for a large company, can get you some worthwhile discounts. But I had checked the box that I am not part of any. So to tell me that their online site uses ‘an average group discount’ is just a big fat lie. It states right on the email quote that it “DOESN’T include savings you may be eligible for through your employer, professional asocial, etc.”

Does a website waiver just give an insurance company full permission to mislead someone doing an online quote? Is it just a total waste of time to get an online quote? Is this even legal? The Personal chose not to reply to my emails, but I’m awaiting to hear back from the Alberta Regulators…stay tuned…

What Are the Odds You’ll Win At These Financial Issues?

Let’s set some odds of whether these things are likely to happen:

-The Canucks winning the Stanley Cup next year?

-Your son, daughter or grandkid getting a good deal on buying a vehicle? The typical sales person sells three or four vehicles a week. Your son, daughter or grandkid buys three or four in a lifetime.

OK, how about getting a good deal in the dealership finance office? There are usually two business managers, so they see 3 or 4 customers a DAY. They’re former sales people who are 100% on commission and your 18-30 year old has no idea of what they need to avoid, or ask, or even understands a lot of what they’re being told or are signing.

-What are the odds they’ll get a better than most people deal with anything at their bank? I bet the odds are tiny. If you don’t believe me, just google all the bank investigate reports of rip-off under: CBC Go Public. You’d be amazed how easily they can sell them an overdraft they’re stuck in for a decade or more, a service charge package that’s overpriced, or a line of credit they’ll have for an average of 16 years.

A new JD Power survey found that eight out of 10 people want financial advice from their bank. That’s way too many and from the totally wrong source! The staff of financial institutions are on commission or bonus pay! They are sales staff – period. That is not the people from whom you should want – or should get – financial advice if you want it to be of benefit to you versus them! Big commissions, big fees, annual fees, low returns, selling you an overdraft, or another credit card, aren’t likely what those eight out of 10 people are looking for, especially your 18-30 year old.

-Credit cards: Millennials tend to use their debit card more than a credit card, and that’s a great thing. But what are the odds they’ll shop around for the right credit card versus just being sold the one from their bank?

Credit card marketing staff consists of some of the best marketing minds in the country…your graduate has never had a credit card in his or her life… Having one is so convenient and always lets them buy today and pay…well – whenever…until they reach their limit and then their statement will show that little line hidden on there: At minimum payments, it will take 27 years to pay off your balance.

Victory doesn’t happen in the game – it happens in practice. The same way, financial wins aren’t in retirement – they’re in your today actions.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Saving vs. Spending & Getting Financial Advice

Who do you want your kids or grandkids to get financial information from?

Breaking news: Your kids or grandkids will not listen to you – sorry. It’s wrong, it’s sad, but it’s true – and you already know that. So it’ll be from an advertisement or something they find online. Both of those are from companies who have a vested interest in selling your kids or grandkids. If that sounds true, go to Mosaic or Amazon and get them a copy of the Money Tools book. Mosaic has a bunch of signed copies and at least you have some assurance the content isn’t selling anyone anything! You’re also welcome to go to my website (yourmoneybook.com) and click on the radio stories to send them the link to our grad stories, or print something out for them.

Let me give you an example: Mike Riley is the former quarterback of the Edmonton Eskimos – he’s now with the BC Lions, but still well respected in Edmonton. So a local investment firm has signed him to promote their investment seminars. In their radio ad Mike Riley says he’ll be “sharing my secret financial strategies…” WHAT? He may be a great football player, but who on earth would listen to him on investments? Would your dentist then fix your car or your hairdresser renovate your house? Besides, there is no such thing as a ‘secret investment strategy’ – honestly.

Investing, or saving versus spending, is an even harder concept for 20 somethings to believe. For most anyone under age 30 is rather like our view on climate change. There’s a need, we understand that, but there isn’t the urgency, and we certainly aren’t moved enough to pay much of a price for doing anything.

Why? Because the payoff seems too far down the road. Ask anyone in their 50s or 60s how important retirement savings are. You’ll get a far different answer than from someone in their 20s facing the decision of the Vancouver concert versus putting the money away into investments. For both climate change, not growing your savings, or a host of other issues, there isn’t enough of a motivation to do much this week, this month, or this year.

Intellectually, every 20 something can be taught that 100 bucks saved today turns into more than $10,000 in retirement. But the opportunity cost (fancy economics term of losing the potential) isn’t painful enough today. Oh, it sure will be down the road, but it’s not a choice 90% of us make or made in our 20s. The big problem is that a 20 year old needs to save for 47 years and 12 months a year. That’s 1,128 paydays where they’ll be tested on spending vs. savings and I guarantee that 90% of them will fail that test month after month and for years!

If nothing else, make anyone in your family that’s between 16 and 25 read the two page chapter in the Money Tools book on page 167 on how to become a teenage millionaire. Yes, it really is two pages. Understanding how car loans, credit cards, student loans, etc. work is a bonus – but those two pages can change their entire life if they just knew what to do – and how to do it.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

Buying Corporate Return Tax Software?

If you have a reasonably simple company return to do, you’ll need to file a T2 return. If you have a reasonable understanding of assets, liabilities, and your income statement, there isn’t a reason you can’t do it yourself in about an hour or two. If so, it’ll save you around $500 over an accountant doing your return – but only if you’re comfortable with it.

Two companies sell T2 tax software. You’ll need to buy the “business incorporated” program. The two are from UFile or Intuit (Quicken). They both do the same thing – obviously – but are VERY different prices.

UFileT2 is $147 with a $25 coupon (below). Intuit Turbotax Business is $250. I have no idea why it’s double the price for something that does the same thing. Their media relations spokesperson Bryan Tritt promises to get back to me with an answer to that question. I’ve been waiting over 90 days to hear back as of today…Guess no answer is still an answer…

If you’re not sure you have the basic knowledge to do it, the UFile program is on-line for free. You only pay once you’re ready to press the “submit to CRA” button. So give it a go…and both programs have warnings if something is missing or incorrect in your numbers…

George Boelcke – Money Tools & Rules book – yourmoneybook.com