Author Archives: George Boelcke

Two Really Smart People Gave Me Really Bad Advice

On my computers, I’m working with Microsoft Office 2007, and it was time to get current with an upgrade to Office 2016. The program can be purchased for a one-time price of $79 with licenses for three computers. Yet, buddy number one, who is actually in the computer business, suggested I should really do it as Office365 with monthly payments of seven bucks to also get the upgrades as they come out.

I have perfectly good nine-year old word, excel, powerpoint and outlook programs. $7 a month for the rest of my life on EACH of my computers? What can possibly be upgraded frequently enough to justify spending $1,260 over the next five years versus $79? No chance – that’s insane. But that’s EXACTLY how Microsoft and a ton of companies with monthly fees make their money.

Buddy number two wanted to get a newer iPhone. I just purchased an iPhone 6 for $240 two weeks ago. And for those, Apple will replace the battery for $35 to avoid a bunch of U.S. lawsuits. I offered him the name of the company in Winnipeg that sells these, as I’ve bought four phones from them.

He looked like I had three heads when I suggested that. But I can get one for free with my carrier! No, it’s  not free. To which he responded, well, with a new two-year plan… Yes, a highly intelligent man really thought he was getting a brand new iPhone for free.

Intellectually, he knew it wasn’t really free. Yet all the marketing from his carrier and that part of our brain that tricks us had him convinced enough to block out the facts and the logical part of his brain. He’ll be trapped for another two years contract at close to double what he ought to pay to get this supposed “free” phone!

Two Vehicle Shopping Heads Up Stories

Ford has a national ad that they’ll make your first three payments for you to a max of $1,500. Firstly, if you’re a cash buyer, and you should be, they’ll give you the same amount as a cash rebate.

This ad campaign reminds me of a nice retired gentleman when I was finance manager in Kelowna. He was buying a half ton to tow his 5th wheel. He really wanted a three-quarter ton, but couldn’t afford the price difference.

At that time, there was also an offer that the manufacturer would make the first three payments, but there wasn’t a limit on how much those payments could be. So I had the sales person find him a three-quarter ton and set it up for a one year loan at about $4,000 a month payments. That way he had the first three for free, and that $12,000 saving got him the truck he really wanted. He was a cash purchaser, so the huge payments weren’t an issue since he had the money. Since then, the payments have always been capped. There’s always an angle and a trick. 540 of them are in the Money Tools book. That $20 at Mosaic will turn into a ton of savings if you just read one or two of the chapters! In this case, if your payments will be $300 or so, times three, you’re leaving $600 on the table. Go to your bank or credit union, get the loan and take the full $1,500 rebate instead of the three payments that only add up to $900!

If You Want a Vehicle That Lasts 300,000 KM

Consumer Report does THE most extensive research and surveys on vehicle reliability. That’s great news if you’re looking for a new (or better yet, almost new) vehicle. If you keep your vehicles for a long time, you need to have the list from Consumer Report of vehicles that should last you for at least 300,000 km:

Unfortunately, nine of them are imports, which makes them more expensive to buy, but that may be worth the initial outlay if you can drive it for 8 to ten years:

Honda Accord, Civic, and CR-V

Toyota Prius, Camry, 4Runner, Corolla, Sienna and Highlander

and rounding out the top 10 is the Ford F150

With technological improvements, all vehicles are way more reliable than they were a decade ago. But these ten are the best of the best, according to Consumer Report.

On the other hand, Forbes just put out their list of the 13 worst vehicles to buy. From best in snow to the vehicles to avoid, I’ll post the link to their research and story on my website:

http://www3.forbes.com/business/13-new-cars-to-avoid-for-2016/?utm_campaign=Cars-To-Avoid-2016-CAN&utm_source=Facebook&utm_medium=referral

Is TappCar Still In Business?

Tappcar is an alternative to Uber in a lot of cities, including here in Edmonton. Five months ago, someone suggested I should check them out and do a story about them. Well, I tried – but no luck.

Late October I was able to quickly download their app onto my phone and then hit a brick wall. It wouldn’t let me enter my user information, or set up an account, or payment type. November 1st I sent an email to support, then to their media relations department, and another one, another one, and another one to both, without any response.

Five months later, I’ve given up. I’m not sure they want any users, or are still in business…

Some Reasons We’re Awful at Managing Money

These are some excerpts from a superb article by Morgan Housel on the website Motley Fool. I’ll link the whole article as it’s well worth reading at least twice!

But here are some of the highlights that probably apply to almost all of us:

We get upset when we hear on TV that the government is running a deficit. It doesn’t bother you that you heard this on a TV you bought on a credit card in a home you purchased with a no-money-down mortgage and a big line of credit.

People usually get better at things over time. We’re better farmers, faster runners, safer pilots, and more accurate weather forecasters than we were 50 years ago.

But there’s something about money that gets the better of us. It’s one of the only areas in life we seem to get progressively dumber at.

We don’t realize that when we say we want to be a millionaire, what we probably mean is that we want to spend a million dollars, which is literally the opposite of being a millionaire.

Our definition of “long term” is the time between now and the next downturn in the market.

We lack enough basic financial knowledge to even realize that we’re making mistakes. People’s lack of understanding about things like compound interest and inflation can lead them to believe they’re making good financial decisions when in reality they’re tripping over themselves with failure.

The single largest expense we’ll pay in our lifetime is interest. You’ll spend more money on interest than food, vacations, cars, school, clothes, dinners out, and all forms of entertainment. You do this because you don’t save enough and demand a lifestyle you can’t actually afford. The future owns your income.

For every $1 raise we receive, our desires rise by $2 or more.

We spend lots of money on material stuff to impress other people without realizing those other people couldn’t care less about us. You’d be shocked at how few people care where your purse was made or how much noise your car makes.

We don’t learn from other people’s financial problems. By the time we get the hang of making smart money decisions, our life expectancy rounds to zero.

We take out $50,000 in student loans to earn a degree in a subject you’re not interested in, doesn’t offer marketable job skills, and for which you have no intention of working in — all by age 22.

We’re part of the roughly half of all people who can’t come up with $2,000 in 30 days for an emergency, even though we’re also part of the roughly 100% of us who will need to come up with $2,000 in 30 days for an emergency at some point in our life.

We associate all of our financial successes with skill and all of our financial failures with bad luck.

We hire a doctor to manage our health, an accountant to do our taxes, a lawyer to manage your legal problems, a dentist to fix our teeth, and a pilot to fly when we travel. You wouldn’t consider doing it differently. Then, with no experience, you go about investing willy nilly, all by yourself.

Link: http://www.fool.com/investing/general/2014/02/10/77-reasons-youre-awful-at-managing-money.aspx

My Savings Are Missing

I’m confused, and don’t have a good answer here – just questions:

If you lose five pounds, you can step on a scale and see that your weight is down and – yes – your five pounds are gone. You have actual evidence of it!

That’s not the case when it comes to our so-called savings. If a store sells you something at 30% off, where’s that 30%? You paid $200 and saved $60, but you never see the actual savings! Sure, you have less of a charge on your credit card, or that supposed extra $60 still in your bank account – but it’s not the same as seeing it.

When you realize you should cut out one of your many weekly stops at Tim’s or Starbucks, intellectually you realize you’ll be ahead about five or six bucks every week. You might even do the math and get pumped that this translates to almost $300 a year, and you’d be right. Except there’s one problem: Where’s the money? Show me the money! There isn’t a cashier or someone who sends you that $300 a year and THAT is what makes it hard to stick with the plan, at least in my opinion.

I recently quit smoking and converted to vaping. It was a $130 one-time expense for the battery, cylinder and liquids, and it is a lot less chemicals in my lungs, and a lot of so-called savings over buying cigarettes. I actually did a little excel sheet now taped on my fridge to motivate me by looking at the savings in not buying cigarettes. That excel sheet says I’ve saved $244 bucks so far. But I don’t see it, or feel any richer! Where’s my money?

I’m still motivated, but not as much when I started to realize there wasn’t actually any extra money coming my way. It stinks that I don’t have any answers. Sure, I’m not spending the money on cigarettes a day, but the only way to HAVE that saving is to spend it daily and put it into a jar. Yet, somehow I don’t have that kind of money. Who has an extra $10 to $14 a day? Yes, I had it every day, come heck or high water to buy cigarettes. But when it comes to saving it, spending it to save makes little sense to my brain. If that’s my best thinking, small wonder others don’t bother skipping Tim’s or Starbucks…

The Future For Online Financial Stuff Is Here

The future is here..well, it’s next door in the U.S.  I deal with one of the smaller U.S. banks out of Florida. When I called last week, it was the usual: Name, account number, phone access pass code, address, and verify the last transaction in your account. The usual 200 step process to verify identity. But then, the lady asked me if I wanted voiceprint access. Yes! She simply took a recording of my voice into her computer and from now on: No more identity questions! The computer recognizes my voice and that’s all they need. Love it, love it!

Setting up online access at Canada Revenue Agency isn’t easy. It’s actually a multi-step process. You need to enter your personal information, and then some trick questions from last year’s tax return that only you would actually know. Then you’ll need to call their Winnipeg Tax Office to answer some more questions based on your last return. At that point, they’ll send you a code to enter and you’re set up. The first thing I did when I had them on the phone is to thank them for all that security. The guy was a little surprised, but if you’ve heard any of the I.R.S. horror stories from the U.S. you’d be thankful, too, as the IRS lost $21 billion to fraud last year.

Finally, get ready for something called two-step authentication. In the old days, or now ending days, you just needed to log in with your user name and password. That’s rapidly changing to add a second step to verify it’s you and not a hacker. The second step will be to send you a text on your phone, or an email with a code number that you need to enter. It’s already the law with Amazon for sellers, and will be for banks, Ebay, and many others. When you enter that second step, it’ll let you into your account. You can tell the system to “keep” this number if you’re always at your same computer. However, when you do a clean up on it, you’ll need to get a new access code again.

It’s a bit of a pain, but in the big picture of financial accounts, or companies where you can spend money online, and who have your credit card information, it’s well worth it!

Love This: Young Millennials Don’t Use Credit Cards

Well, finally some good news…sort of. This is based on U.S. stats, but let’s hope some of it applies here in Canada.

Credit card issuers are very stressed out: Millennials, those around 18 to 35 really don’t want, and don’t use credit cards. Only one in three even have them, they use the sparingly, and don’t carry much of a credit card balance.

Since they’re over 65 million people, it’s going to impact the future profits of card issuers. But why such a drastic change from their parents? It’s actually easy to explain. The U.S. had a massive financial meltdown from 2008 to at least 2010. So the vast majority of millenials would have lived at home at that time. They saw a parent, or relatives lose their job. Millions were home when the sheriff knocked on the door with a foreclosure notice, or had to move when their parents turned in the keys. They saw entire neighbourhoods wiped out, vehicles get repossessed, and felt the tension, fights, and stress at home.

Just like the students from Stoneman Douglas school in Florida will never be the same again when it comes to their view on guns. For a generation that’s labeled as having literally an 8 second attention span, their focus on gun regulations will last a lot longer. In that same way, the kids who saw the financial meltdown first hand will remember that for a lifetime.

Sadly, we don’t learn the horrific lessons of others. These things generally have to hit us personally, before we take notice. That’s generally the most frustrating thing for parents to realize when teaching their kids, even giving their adult kids feedback and advice. People don’t move until they’ve been moved. But when we’ve had that near-death financial experience, we generally get really smart, really soon, and it tends to last.

That’s the big picture, and the positive. On the reality side, 41% of them are buried in student loan debt and their income isn’t close to what their parents made. However, card issuers don’t really have to worry: Sadly, after age 30, credit card balances, even for millennials double, according to FICO, the company that creates credit scores.

An Expensive Disease Called FOMO?

It turns out that vast numbers of people in their 20s and 30s have a new condition called FOMO, which stands for Fear Of Missing Out.

Having grown up with social media, their priority is not buying stuff, but buying experiences. Whether it’s the super cool holiday, the sold-out concert, a trip to the Grey Cup, the safari to Africa, or whatever interests them. Everybody can buy a sofa or big screen TV, but their spending priorities are on experiences, so as not to feel left out when their friends post some of theirs on social media.

While their parents or grandparents may have accidentally lucked out in being at Woodstock, or having seen Elvis in concert – it’s a financial priority for this generation. While I’m a little bit envious, I wonder if our older generations aren’t better off financially because of our different priorities.

Experiences cost a lot more money. They’re also a one-off in that it’s the trip, the concert, and then it’s over, and the big bucks are spent. We certainly don’t need a lot more “stuff” in our life or our homes, older generations have also spent money. They’ve spent it on a television, dining room furniture, a sofa and the likes that may last a decade vs. a one-off experience. Which is better? That depends on the priorities of the person doing the spending.

Today’s 18 to 30 year olds don’t want to own things – they only want access to things. No box of DVDs, just streaming. No CD, but gotta have iTunes. No car, just ride shares or day rentals. No books, just kindle. Makes me wonder how ready retailers are for this group being the largest in the country. As a reminder, Blockbusters refused an offer to sell their business to a start-up called Netflix for $50 billion. Blockbusters is now just a memory and Netflix is worth over $65 billion.

There Are Businesses That Don’t Love You

Valentine’s Day is the day of love. To us who are single, it’s known as February 14th…

But there are businesses that don’t love you back. Here are a few examples from the last week:

American Express charges around $600 annual fees for their Platinum card. The people that could afford that would certainly be millionaires. But, according to Smart Money magazine, the percentage of American millionaires with that card is 6.2%. But their percentage who have a Sears card is 43%. Yes – you become a millionaire by not wasting $600 at a time.

The Federal Government apparently doesn’t love us. The online filing start for 2017 returns was to be this past Monday. It’s now moved to February 26th. No idea why – it’s the latest I can remember and doesn’t make sense to me.

It turns out Rogers doesn’t love their clients. Another week, another CBC Go Public story. I’ve linked it here: http://www.cbc.ca/news/business/rogers-employees-pressure-to-sell-1.4481128

No matter why you call Rogers, apparently there is huge pressure on staff to sell you something – anything! According to the investigative report, here is a sample interview question if you want to work there: If an elderly lady calls to cancel her TV sports channels because her husband just died, how do you convince her to keep them AND add more channels? Selling modems to people who don’t have computers, pushing their new credit card, adding second lines to home phones, and the list goes on. If you’re a client, you need to go through your bill with a fine tooth comb. If you can’t figure it out – get someone else to look at it to find any charges you shouldn’t have!

Apparently 18-23 year olds don’t love saving or investing: This is pretty shocking: According to a survey by Microinvesting, over 45% of 18-23 year olds spend more money on coffee than savings. Oh, and over a third of 24-35 year olds have the same coffee priority!

Lastly, I’ll give you a money-saving tip for this Valentine’s day. Take your partner to the card store. Both of you find the perfect Valentine’s card, give it to each other, read it, then put it back on the rack and leave the store. There…romantic or what? You’re welcome…