Category Archives: Blog

Want to Assure Your Teenager Succeeds? It’s Three Things

The Wall Street Journal recently reported on an extensive study of teenagers and their odds of being in poverty. The stats were pretty depressing, but the way out was also quite impressive and easy.

No matter what background, ethnicity, poverty growing up, etc. the odds of any teenagers getting into, or staying, in poverty are less than six percent if they just do three things:

Finish high school

Hold a full-time job

Don’t marry or have a kid until after age 21

That doesn’t seem so hard. If that’s true, the odds are more than 94% that your teenager will have financial success for a lifetime. If any one of these three isn’t done, the odds increase quite quickly, because each have a significant ramification on their income and lifestyle.

These three basic things really are incredibly important for any teenager to know – and to carry through on.

Step two would be how to now become financially successful. That also isn’t that hard to do. In the Money Tools book is a two page chapter on how to make your teenager a millionaire. In short: Save $9,300 by the time you’re 21 and invest it. The money will double every seven or eight years until they’re ready for retirement. At that point, it’ll be over one million dollars without saving another dime.

The challenge for parents or grandparents is that their kids or grandkids don’t listen to them. Yes, it’s true – I hear that over and over again. It doesn’t help that 80% of parents don’t talk to their kids about money or finances, but that was then – this is now. You can’t live for a better past and you need to remember that you can’t make a horse drink. Lead them to water and remember that, when the student is ready, the teacher appears.

Go to Mosaic (they have a bunch of signed copies) or to Amazon and get the Money Tools book. When they’re ready, they’ll use it. But don’t wait for the “ah-ha” moment where they tell you that you’ve been right all along and now they’ve seen the light. It won’t happen! You have to know that they’ll learn when they’re ready. All you can do is give them the tools and the information and keep an open line of communication. That way they know they can ask without judgments or lectures.

That’s it! I harp on this every week and maybe get one or two emails a month with positive feedback. If I were to think I should be getting hundreds of emails, I’d be incredibly depresses. It’s my job – and your job – to plant the seeds. It’ll be their job to grow up and to grow those seeds into something beautiful – if they choose to – and when they choose to.

Financial Worries Are Literally Making Young People Sick

A study of millennials, those around 18 to 35 years old by Northwestern Mutual, found them to be anxious, worried, sick, and often depressed about their debts and finances.

The study found about 70% of this generation experienced anxiety because of their incomes, and 53% because of worries in losing their jobs. More than a quarter of them admit that their financial stress impacts their job performance. Of course it would! Imagine a lot of debt and barely being able to make it through the month. Now your boss wants to see you. What do you think is one of the first things to flash through their mind? Oh boy – I might lose my job. And what do you think the odds are that someone in financial stress will every stick their head above the crowd or would ever make any suggestions for fear of being targeted? No chance.

Their cell bill gets paid on their credit card, one paycheque is wiped out with rent, the other will their car payment, utilities, and other necessities. Then the credit card for spending money to keep up appearances while they’re sinking further into the hole.

It’s not a fun way to go through life – whether it’s older adults, or those just out of school and now working. That kind of stress leaks out. It’ll manifest itself in physical sickness or depression. But that happens when nobody is around. I’ve been there – I’m not making this up! To the world, and most often to their parents, they continue to put on their happy face as if everything is great.

There are solutions. They’re not complicated and won’t take all that long to implement – honestly.

First, get down to Mosaic, or go to Amazon, and invest the $20 in the Money Tools and Rules book. No, it’s not a cop-out for me to make a net of $4 from you. One-third of the book is literally targeted to millennials. Three chapters in there will give you the tools and confidence to change your life around. You may not do it – but that’s up to you. Here are a few steps that will decrease your financial stress in a hurry:

Pay out your cell contract and switch to a 2nd tier carrier like Koodoo or Fido for around half of what you’re paying. There’s $60 a month

If you have a credit card balance, switch it to one that’s 11% not 20% and no annual fee. On a $4,000 balance, there’s $150 or so a month

No more lunch, snacks, or coffee out until you get your finances under control: Your work has coffee – no it’s not the same, but it’s free! There’s probably $200 if you were to be honest with yourself.

$400 saved right there is the same as a $600 raise. Now get a no fee savings account and put at least $75 a paycheque in there. Within six months you’ll have $1,000 in emergency savings and $2,400 less spent that’ll show up in your lower credit card balance or chequing account.

There’s more – but just do this for a six month test drive. If you’re overwhelmed, email me off the back of the book at yourmoneybook.com

Starting Or Rebuilding Credit

Having a decent credit rating in today’s society really isn’t an option – it’s almost a must-have. Apartment management companies will make their decisions based on your credit score, bonding companies, large numbers of hiring managers, not to mention all financial institutions, for everything from opening an account to your ATM limit, a credit card, or loan, will pull your credit score.

That makes it critical for you to get and keep a decent and clean credit report, or to rebuild it after something has gone off the rails. You HAVE to read the credit score and the building credit chapters in the Money Tools book. That $20 investment at Mosaic on Bernard or Amazon will literally turn into thousands of dollars saved on any financial stuff – or even getting the job or apartment you want!

If you’re starting credit, you’re building it. If you’re re-establishing credit, you’re healing AND starting credit again. They’re both similar in what you need to do.

The simplest way is through either a small limit credit card of a cash-collateral loan. The smaller the financial institution, such as a credit union, instead of a bank, the more they’ll help. Sorry, but to the banks, you’re one person out of the ten million credit cards they already have – and they can do without one more. Get a credit card with a $500 limit and never charge more than $100 on it. You need to keep your balance at less than 20% of the limit. In a year, they’ll increase your limit and inside a year and a half, you’ve got perfect credit if you don’t start applying at a dozen other places and going badly into debt.

Don’t believe me? Below is a print of the credit score of an 88 year old. Less than two years ago, she needed a small credit card. That’s exactly what I set up for her. Today, her credit score is 832! 850 is a perfect score, so she’s in the top one percent of the country at age 88, in a nursing home, living on old age pension!

If you need to first heal your credit, a cash-collateral loan is borrowing $2,000 or so but leaving that $2,000 with the lender as collateral. Set it up for 12 months and the tiny bit of interest you pay is worth the cost to re-establish your credit. First ask if they’ll do an RRSP loan. That’s a win-win-win to build credit again, save for retirement, and build your credit. But if they say no, it’s only because they cannot take the RRSP for collateral. Then, plan B is the cash-collateral loan. Once you’ve done that, don’t do anything else. Your bad credit will get older and start to drop off your credit report, but the new loan will be fresh, up to date, and reporting monthly to the credit bureaus. Don’t borrow more – you can’t speed up the calendar. Get this done and take a one or two year time out and you’ll be back on top!

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!