Author Archives: George Boelcke

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.

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

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.

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

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?

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

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.

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

Yes, You Can Get a 10% Investment Return

Last week marked the 10th anniversary of the Lehman Brothers bankruptcy on October 15th, 2008. That was the straw that broke the camel’s back and what caused massive selloffs in investments of all kinds and the unofficial start of the financial meltdown from Wall Street to home owners. Eventually, it ended up wiping out three trillion dollars of wealth. Of the biggest investment firms failing kind of made the meltdown official.

At this depth of the meltdown, vast numbers of investors took their money out of the market. Yet, if you had invested in the Standard and Poor 500 – which is a basket of the largest 500 corporations, on the day before Lehman Brothers went bankrupt, you would today have a return of 11% per year for the last decade.

I talk about investing, in basic terms, a couple of times a year, and it never fails that I get two or three emails that using a 10% return isn’t reasonable. Or the question is where to get that kind of return. Well – here is proof once again. At the worst day since the great depression, it once again paid to invest and not pull your saving out. Yes, an 11% average annual return for the last decade. THAT is a long enough time period to be a fair measurement. If you want to go back over 50 years, the S&P return is still over 10%.

Do the research for five minutes and your own due diligence, but anyone under age 40 or so doesn’t need complex investing advice. They’re 20 or more years from retirement and can ride out three or four more cycles. Nothing could be better for someone in their 20s than to have their money in the S&P. It’s diversified because it’s 500 companies around the globe, it doesn’t need management fees or a broker and has a 50 plus year proven track record. I’m not sure what else anyone would need.

By the way, for anyone older than their 40s, a so-called 60-40 portfolio of 60% stocks and 40% bonds bought the day before the great meltdown would have been an 8% return on this 10th anniversary.

Time heals all investments. When the market corrects, lots of people panic, instead of seeing it as a temporary setback that has more upside than downside. No, you won’t more than maybe 5% this year. No, you won’t be down like you were in 2008, or up more than 25% as was the case a couple of years ago. If you’re not invested for the longer term of more than five years – stay away. If you’re needing to be up on a weekly basis – stay away. For the rest of the world, set it and forget it. Don’t even open your statements more than once a years. You’ll be happy you did….

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

$10 Cell Plan,Free Cruise, Generic Drugs & Costco

Unlimited $10 cell phone plans: Yes, but it’s the U.S. – a great reminder of how badly we get ripped off here in Canada. But if you go to the U.S. a number of times a year, or if you’re there for the winter, you should know this. Taking your Canadian phone means a U.S. roaming plan that’s around $5 a day or $30 a month. That’s a lot more expensive than getting yourself a U.S. phone and a U.S. plan. The $10 is at unrealmobile.com and is for one GB of high speed data plus unlimited calls and texts. Just check what the rate is for calls to Canada. It runs on the Sprint network so you just need an unlocked phone and a $5 SIM card from Sprint or also AT&T.

Plan B, which is what I have, is a $3 plan from Ting. That’s a flat per month. When you use it in any month, it triggers $3 for 100 texts, and $6 for unlimited calls. It’s just for my three or four U.S. trips, but I’m also going to switch to unreal now. (For a review, go to Clark Howard’s website at clark.com – he’s the best U.S. consumer help guru that loved the service when he recently tested it.

A free cruise, but only if you’re a smoker. Yes, sounds kind of strange, but this one time, a bad habit can be rewarded. In September and October each year, a number of cruise lines offer seasonal Maritimes to New England cruises. The one I was on last year started in Quebec City with three stops in the Maritimes, then Maine, and ending in Boston. Other cruise lines follow a similar itinerary. Here’s the free part: A carton of cigarettes is around $140 here. Duty free on the ship, it’s about $40 Canadian. Since there’s a few stops in Canada before heading for the U.S., buy a few cartons, then get off in Halifax or St. John’s, walk two blocks to the post office, and mail them to yourself. Once you’ve docked in the U.S., you’re restricted to bring back one carton into Canada. While you’re still inside the country, AND have access to duty free, you’ve got that window of opportunity. Six or seven cartons will save you the price of your cruise.

Generic prescriptions are massively cheaper than the brand name drugs. Don’t think of generic meaning “not as good.” Generic if the financial word for “less expensive.” I needed three prescriptions filled after some dental surgery yesterday and asked the Costco pharmacy to make it generic. If it’s from a doctor, just ask him or her to put “generic OK” on the prescription when possible. I paid $31 total instead of $74 for the brand names (Tylenol 3 being one of them that I can pronounce). For someone with no insurance, that mattered to me. And do go to Costco. What 99% of people don’t know is that the law says pharmacies have to serve you. The law in every province and state is that you can go to Costco without a membership to get your prescription filled. You won’t regret the savings. If they won’t let you in, just as the door person to get you a manager, and remind them of the pharmacy exemption.

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

Your Email Questions

Two email questions from the Okanagan in the last few weeks that are worth talking about. After all, if one person takes the time to email a question, there’s a rule of thumb that 100 others are wondering the same thing.

The first one is from someone asking if she can use the simple $20 will kit from Staples. She’s single, but has ‘complicated assets’ as she describes it.

Yes, that kit should be fine. The will is your wishes of who gets what asset or what percentage of your total estate, whether it’s complicated or not. The second part is that it decides on an executor. That’s the quarterback, with the help of an estate lawyer to make sure it’s all legal and correct, who steps into your position. In other words, that person now has control of liquidating the assets, keeping them in place, etc. Complicated or not isn’t really part of your will. It’s picking the person to do that and deciding where your estate goes. (if complicated is a mixed family, businesses, partnerships, a trust, or the likes, spending a few hundred bucks with a lawyer will be well worth it, instead. Better safe than leaving your loved ones sorry…)

The second email is a really good question. The person has a used SUV with 188,000 km on it. Should he trade it now for another newer-used vehicle or keep driving it? Now remember that I always only answer questions of what I would do, because I never have all the information, details, and other factors.

There’s kind of a psychological wall at 200,000 km. That’s when it seems to buyers that the vehicle is really really used. Under 200k, means you’ll likely get a few more bucks if you do sell it. Dealers aren’t interested in something that old. Trade ins have to go through their service department, and the little things, the safety inspection, etc. are too expensive to recover. They also don’t want the reputational hit of selling something that old. In other words – never trade something older than five or six years old. Dealers will just call a wholesaler to get rid of it immediately and it’ll end up on what’s called a mud-lot – a very very used car independent dealer.

My main decision factor is whether my vehicle is reliable. That’s my number one concern. If you’re not sure, have a mechanic check it out. That $100 or so doesn’t guarantee another few years of driving, but it’ll help you decide what you should do. The other question is what would you replace it with? If you can sell yours privately for $6,000 and get a newer one with 100,000 less km on it for $1,500 or so – that may be worth it. If you’ll just end up spending more money on another one with mileage just as high – that wouldn’t make sense. So there isn’t a black or white answer, and I sure wish there was a guaranteed predictor of reliability. But even if you need some repairs, Consumer Report uses the rule of thumb that it’s fine to spend about half the value on repairs before you should bail and replace it.

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

Back to School Financial Tools For Ages 5 to 25

Hurray for most parents this back to school week. Likely, not so much for students…

This might be a good time of the year to talk about financial tools for your kids or grandkids from elementary school to university age.

However, we should start with parents: Almost 80% of them do not talk to their kids about finances or money at all. That’s a failsafe recipe for dooming their financial success as adults – period. If you don’t – who will? If you need the tools and what-to-do, go to Mosaic or Amazon and invest the $20 in the Money Tools book. Start with the chapter of “For parents of kids aged 4 to 40.”

If your child is going into elementary school, you’re around the age when they’ll start to get an allowance. I believe the only way to do that is to have them earn it. Set it up with whatever chores match their age and ability. Do not give them free and unearned money. News flash: That’s not how real life works as an adult. Do that now and it’ll be a decade of pain, debt, and borrowing from you until they learn that hard lesson for themselves. You get what you earn. Non-negotiable rule number two is that one-third goes into savings, one-third into giving, and one-third for spending.

Going into Junior High, it’s time for the just about teenagers to learn financial responsibility for themselves. Ask other parents what they do when your 12 to 14 year old loses their backpack or something else for the fifth time? The parent buys the sixth one. That’s insane! Stuff costs money – money you had to earn. Before the start of school, make the rule really clear that the second or third time (that’s your call) whatever they’ve lost is going to get replaced with their allowance money. They’re also now old enough to set up a savings account and an investment account under your name. Now is also the time to start talking about saving for a car, and make it clear you’ll match whatever they save up to a certain amount.

In High School, your child is now just a few years away from being an adult – whether you think of them as such, or not. Financial stuff will get really serious in just a few years for them. Most of the predictors of how they’ll handle that are fixed already, based on the last decade. Since a car is just around the corner, give them the Money Tools book and pay them some money for a book report on the car buying chapter. Knowledge is power – and way more powerful if they have a stake in it and are treated as semi-adults in being the driver of the research and purchase decision.

Going into university is a whole different world for both parents and students. As parents, I’d make absolutely certain, and in writing, that the financial ground rules are really clear. For example: We will let you live at home as long as you’re a full-time student, we will pay x amount of money every semester for your books and courses, a certain amount for this or that, etc.

For students, it’s really difficult for them to visualize themselves five or ten-years out. It’d be incredibly insightful to have them meet a few 30-something graduates that have huge student loans and what that financial pressure is like, and what they have to forego, even a decade after graduation. That’ll impact whether pizza and beer is coming from their student loan money. Yes, over 50% use it for vacations, eating out, and the likes. If you have the Money Tools book, there are lots of insights for kids going into, now in, or just graduating students that are incredibly powerful.

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

See What Facebook Knows About You (and sells to advertisers)

More than 18 million of us are on Facebook (FB), and for those under 35, it’s over 80%. That means millions of us are being marketed to every day. And you have to remember that you are NOT their customer. Their customers are the people paying them – and that’s advertisers. You’re just their product.

That FB readily and frequently sells all of your data and friends list became very public with the Cambridge Analytica scandal. Since then, FB has made it possible for you to actually see what they have on you, and it’ll be quite a surprise.

You can now go into your notifications, then settings and pull something called “your FB information.” I did that last week, and after five hours, FB sent me an email that it was ready. After 11 years on FB, the file was 14mb in about 50 different categories.

Here are the exact steps to pull yours:

Notifications – Settings – General – On top you’ll have Your Facebook Information – Download your information (just make sure all items are checked off) Then click “create file” and you’ll get an email that they’re working on it. Then a second email when it’s ready for you to download and view.

Ad interests: This is a long and complete list FB has of the ads to really target to me. These are the industries that will pay extra to target me because FB thinks it’s something I’m really interest in. If that were true, it’d be something I’m more likely to click on and buy. Some are legit, such as books, personality types, publishing, and anything to do with Arizona. Some are totally out to lunch: Continental airlines? One of the worst in North America? Reality shows, Virgin mobile, and dance troupes are out to lunch. And FB now thinks I’m looking for hair products ads. Wrong…but I didn’t catch why they think that until I saw that I had “liked” a post from a hair salon who is my client. That one click now has a dozen advertisers target me as interested.

Advertisers who uploaded my contact list to use: That’s scary if you don’t have your privacy settings locked down. In my case, they tried and didn’t get it. It’s a list of over 100 companies, 80% of which I’ve never heard of.

Comments is a section of everything over the past 11 years that I’ve ever posted on Facebook to someone. That’s pretty scary. It comes from my browser which I clean up regularly, but FB has it all and remembers it. The posts section gave me the thousands of people and every item they had ever posted on my page. That’s from 2,000 people I’m on FB with over 11 years…

Messages section has every note you’ve ever sent to someone, even if you deleted (unfriended) them. This is where you’ll find the painful reminders, and all the exchanges with your ex-spouse or the likes. FB keeps it to use keywords to market to you, just like Google looks through your emails.

My login history gives me the full list of every single time I’ve logged into FB. It’s down to second and which of my computers and what browser. Guess I can use that as an alibi if I ever get arrested to prove I couldn’t have been at the crime scene as I was on FB at the time…

The lessons, other than the shock of seeing what FB really knows about you is that you have to lock down your account. Spend the two minutes b going to settings – then the privacy section. Change the “who can see your posts and who can see your friends list (that should be “nobody”). Go to ads and click that they’re not allowed to use your information and lastly, go to “apps and websites” and select only those shown who you’ll allow to access all your information.

Finally, here is the article from CNN that gave me incentive to go look. The insights from their writer are worth reading: http://money.cnn.com/2018/03/24/technology/facebook-data/index.html

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

Perception Vs. Reality Can Really Cost You

In the 1980s, A&W was being clobbered in sales by the McDonalds ¼ pounder Big Mac. So they launched a one-third pound burger, and at a lower price. It didn’t work at all…because most customers thought a quarter pound was bigger, and thus a better deal, than a third of a pound. Perception versus reality and great marketing made customers think the Big Mc was a better deal and bigger.

In that same way, we lose our minds when there’s a sale: It seems logical to want to get a deal, lots of times, a deal isn’t a deal. But we see that big sale sign, our brain shuts down and our wallet opens up.

I was in a mall last week walking past a national retailer on my way to Tim’s. They had massive posters in the window promoting: Buy one and get the second at 50% off. OK, one a full sticker price, the other half price. That translates to a 25% discount. I’m not even going to question whether someone really needed two of whatever…

As I walked past the store, one of the staff was coming out, and it turned out that she was also heading for Tim’s and ended up right in front of me in the lineup. So I asked her if the 50% of the second item was going well? “Oh for sure” was her answer. “It’s better than when we have our 40% off everything sale.” WHAT? 40% off doesn’t do as well as 25% off? Yup – we’re suckers for the sign that says 50% off without ever looking at the fine print.

One more example. But this one is probably one of the most misleading and false ads I’ve ever seen. It ran on one of the CFL football games a few weeks ago: It’s an ad from Home Hardware. A realtor appraises a house for a family at $375,000. They then paint the entire house with some kind of Home Hardware paint and have a different realtor in to re-appraise the place. That guy says your place is worth $485,000.

Hands up if anyone on the planet really believes $300 of paint will increase the sale price of your home by $110,000. No – didn’t think so. I haven’t seen it since, so let’s hope it’s been pulled by complaints to the regulators.

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