Author Archives: George Boelcke

Credit Card Fraud? Issuers Don’t Really Care

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If that headline doesn’t sound right or logical, you’re correct. Unfortunately, it’s true. For card issuers having to absorb fraudulent charges is just a cost of doing business and built into their 20% interest rates.

My Mastercard had fraudulent activity in October last year. The card was cancelled and re-issued and the charge was taken off my account. The same card had ANOTHER fraud charge in January of this year. Same thing: card cancelled, re-issued and charge taken off. The first time was a charge around $900 or so and the fraudsters second charge got the issuer to block the card and email me for confirmation it was my activity. It wasn’t and that triggered the cancellation.

The second time it was a $400 or so charge and, again, a second charge attempt triggered the fraud block. That got me to pull my statements from October to January. Surely, there had to be something easily traced.

My credit cards do not leave my possession. Nobody has the number, expiry and/or security number and it hasn’t been used on an email. It had been used at physical places like Walmart, Rona, etc. (card present transactions) and online at one small retailers, Air Canada and Westjet. That’s it. But there HAD to be a common denominator AFTER the card was replaced in October (new number and security code) and AGAIN replaced in January.

It took me less than five minutes to find that small retailer in Ontario who had my card information just before the first fraud and again in December with the new number and security number. As it was the ONLY common transaction and the card never left my wallet or home, that was the place (or a hack or employee) where the fraudsters got my information. All other online charges were once and not with both new numbers!

I immediately sent a letter personally addressed to the Senior Consumer Card Fraud Manager. A form letter two weeks later just stated ‘we’ve received your inquiry and will get back to you.’ Totally useless, but it meant the manager received my letter.

The investigation should have taken about five minutes: Check the computer if George is correct that it’s the only common retailer with his (two different) cards from October to January. Then punch in the retailers name and check if there have been any other frauds from their millions of other card holders where there had been a charge from that retailer.

It’s doubtful they did – and it’s doubtful I’ll ever hear from them again. That’s as sad as it is true…

Zig When Others Are Zagging

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We’ve talked about that logic a number of times over the years when it comes to financial tools. These days – right now – it’s really critical that you think about doing the opposite of what financial institutions, mortgage lenders and utility companies want you to do.

With the high utility rates last fall, the marketing was to get you to lock in your rates “before they go higher.” The pitch was to have you think you’re getting a good deal at the time. Well – maybe. And I certainly know people who took a long term locked-in contract. Fast forward six to nine months and the rates are down significantly from those “good deal” fixed rates that large numbers of people are now stuck with.

What you will not see or hear in any bank advertising is any campaign to get you to lock in your savings. Term deposits, CDs, whatever are at a pretty good rate compared to what they were before the last two years of rate increases. Are rates going down as early as this winter? Depends on which economist you ask. Are they close to peaking and will at least stabilize? That’s a pretty reasonable bet, according to most economists. So, at this point, the fixed savings investments are about as high in rate as can reasonably be predicted. That’s why the last thing financial institutions want you to do is to now lock in those high/higher rates. That would mean they’re out a lot of interest payments to customers when they drop.

Since their profit is the spread from what they pay out to depositors to what they lend out, they obviously want tiny savings rates and high lending rates.

Who are the credit card issuers that have “won” the rate battle so far? The ones who sold variable rate cards. Why? Because they go up with every prime rate increase. What are they going to market to you now? Take that variable card and consider locking it in for a fixed rate. Why? Because rates are or should be close to the max right now. Your zagging would be their winning!

Mortgages work the same way. What you WILL see right now are ads to get you to lock in today’s rates. We’ve talked about that around a month ago or so – how long a term should you take on a mortgage renewal to be ‘up’ again when rates will/have/start to come down? If mortgage lenders have their way, everyone would take another five-year term right now.

Zig when they want you to zag: Lock in savings at a high rate – consider a fixed-rate gas or utility plan (if you must) at low rates and have your mortgage term land in the sweet spot when rates are down (again).

Crypto Gambling Update

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Over the past few days I had the chance to read some advance reviews, and hear a great podcast interview with the author of an upcoming book.

I can’t wait until the book is out at the end of July. This is going to be one very insightful book, based on what I’ve read. That crypto isn’t an investment, and is never going to replace real money as a currency should be apparent to anyone who has done some basic due diligence or research. However, author Ben McKenzie also explains a lot of the inside dealings in ways us non-crypto people can understand.

And one more part to the crypto mess: A large number of so-called celebrities and “influencers” promoted crypto companies of one kind or another. They’re not being sued – and rightfully so – for promoting…well…crap. Any crap, any product, whatever it is in order to get paid for the promotion to their fans or followers. One legitimate mega star is (and has always been) one of the sharpest business people that avoided getting dragged into this:

Graduating to Financial Adulthood

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Graduating to financial adulthood is not about taking a university course or living entirely debt free. It also isn’t about your age. The essence of being a financial adult is that you set your priorities and you are in control of your finances and money, instead of your money controlling your life (or lack of a life). You’re proactive versus reactive and out of control. If you do these well, or even know how to do some of these, congratulations! You’ve graduated!

You have at least one week of income as a basic preliminary emergency fund.

For anything expensive, you shop around before taking on any new debt. This includes shopping for the best interest rate, examining your insurance, scrutinizing your cell phone contract, and monitoring your credit card interest rate if you usually carry a balance. Kids impulse-buy until they’re out of money; financial adults don’t tend to spend until they’re broke.

You have an RRSP and/or Tax Free Savings Account and make a regular monthly contribution. It doesn’t  matter how small it is – at least you’ve started and have traction.

Whether you’re single or married, rich or broke, you have a properly completed will. It may be a $20 do it yourself kit if you’re single, or a lawyer-prepared one if it’s more complex and you have kids.

You know the actual amount of your net take-home pay every month. You can’t control your money if you don’t even know the exact amount you net. Don’t keep talking about your gross pay as if you had that to spend.

You spend less than your monthly take-home pay. You may (at the start) have 10 cents left, or $1,000 – but you’re spending less than you earn. Financial adults figure out how to pay for something, and then buy it, not the other way around.

You have a proper filing system for your financial records. It may only be six large envelopes for each of the last six years, or a ton of file folders (if you’re super organized by choice). Kids get to say “I lost it.” Financial adults don’t have that option.

You have at least two specific and measurable financial goals. Saving more in your RRSPs, or paying off your credit card are not financial goals – that’s a hope and a dream. It needs to be specific: Save $150 a month in RRSPs is specific and measurable. Reduce your credit card balance by $200 or more every month until it’s paid off is a measurable and specific goal that significantly boosts your odds that it will happen.

You do not lock yourself into longer-term fixed expenses by signing contracts for cell phone plans, gym memberships, alarm systems, electricity contracts, etc.

You define “I can afford it” as the ability to pay cash for something, and not by the amount of the monthly payment.

Two Financial Mistakes We Keep Making

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Almost every week, there’s another media story of a condo or apartment building fire. In almost every story you’ll hear that families lost everything, and didn’t have insurance.

Renters insurance costs around $100 or $200 and you really need to have it – or get it today! Your landlords insurance does not cover your stuff. If there’s a fire, you need to have your own coverage. If you don’t, you’re not just out everything you own, but are also liable for the landlord’s stuff in your rental. That includes the fridge, stove, any furniture, carpet, etc. Nobody ever thinks it’ll happen to them – until it does. That $100 or so will pay off huge in the event of a claim. You’re not insuring the building, but only the $10,000 or $20,000 of your content – that’s why it’s so inexpensive. If, on the other hand, you’re a landlord, give that heads up to your tenant. You can’t make them do it – but lack of knowledge shouldn’t be the reason they don’t have coverage.

The second financial mistake applies to hundreds of thousands of people: It’s over-financing their vehicles. In the event of a write-off, or theft of your vehicle, the insurance company will not pay off what you owe. That you over-financed it is your problem and not theirs. What you owe has nothing to do with what the insurance company will cover.

They’ll pay you the “fair market value” only. They insured the value of your vehicle, they didn’t insure the amount of your loan. If you’re buying a new one, buy something called full replacement for under $50 that’ll give you two or three years where they’ll replace it without depreciation. For everyone else, figure out what your loan amount is, then look on Autotrader to get a rough idea of your value. THAT value is close to what you’ll get from the insurance company. Hundreds of people a day are finding out that they’re short thousands of dollars to pay off their car loan. Don’t be one of them!

Funny Or Not Funny Financial Stories

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Here are three short stories that will make you think, make you furious, or just shake your head:

Cox Media Group had a story of a wedding guest who received an email from the bride. The guest had given a gift of about $150. The email was asking, if she would like to “gift adjust” the amount as it wasn’t in line with the average of what others had gifted. Oh boy…how would you react to that note?

In Minnesota, Jessica Baker and her husband had an invite to a wedding. But, at the last moment, their babysitter cancelled. After they didn’t attend, they received a bill two weeks later for $75.90 to cover the meal for them as no-shows to the wedding.

And the strangest story has to go to an idiot in Chicago by the name of Brandon Preveau. After breaking up with his girlfriend, he purchased a $600 beater car, registered it in her name, and parked it at Chicago’s O’Hare airport. After 30 days of tickets, the vehicle was towed, and accumulated a total of $105,000 in parking tickets and storage charges. Three years later, his ex girlfriend is still in court trying to prove she doesn’t owe money – and never owned the vehicle…

The Shelf Price Vs Register Price

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A BIG heads up that we are currently in a wave of pricing errors that can cost you a lot. With constant inflation changes and labour shortages, the error rate between the price you see on the shelf (when you decide whether to buy something or not) and what rings through at the register is at an all-time high.

The quantity of “errors” has reached the levels where Dollar Tree and Family Dollar are currently being sued in multiple states in the U.S. for consumer protection violations in increasing prices at checkout over those posted on the shelves.

As always, watch the screen when a cashier scans your items. If you’re not sure it’s right, or missed something, ask them to go back, to stop, to check it. If you’re in the self-serve lane, you can scan at your own speed and, if something doesn’t seem right, leave it out or get it checked. After all – it’s your money!

My Biggest Ever Price Gauging

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Yes, grocery prices are all up – a lot. But how much of it is legitimate and how much of it is just simply price gauging – or at least increasing mark-ups to a much higher profit margin?

Sure, it’s always done with “inflation” and “everything is more expensive” as an excuse. Just like COVID was the excuse for a ton of bad behaviors, customer no-service, etc. for most businesses.

For a few years, this (and other flavours) 1 litre juice was $1 at President’s Choice (Loblaw/No Name store). When it increased to $1.25 two months ago, I was surprised at a 25% increase, but wrote that off to inflation. This past week, the price changed to $2.25. That isn’t inflation. A 225% price increase is the largest price gauging I’ve ever seen. Of course, I’m not buying it. Of the top 10 things I buy all the time, I’ve now replaced 9 of them. But I wonder how many people think “it’s only an extra buck and a quarter…. Since Loblaws just announced record profits for the last quarter, I’m guessing there are enough people who just shake their heads and buy anyway…

Oh, and Dollar Tree (and likely all other chains) now have a base price of $1.50 – up from $1.25 last year. At least that “seems” like a reasonable inflation increase.

Lastly, if you ever need to get emergency air into your tires at a gas station, air is also subject to inflation. Who knew air doubled in price? Yes, it’s now a toonie for “air”!

New Homeowner Surprises? I Don’t Think So

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A new survey of 1,000 homeowners by Real Estate Witch (an education platform) found that 9 out of 10 home buyers in the last three years were totally unprepared for a bunch of extra expenses after their purchase. In fact, 73% stated that they had regrets in their purchase due to these expenses.

While the survey is from the U.S., it wouldn’t be any different in Canada. But I would argue that almost none of these are a surprise at all. Sure, you hear the comment that most of the time, buying is cheaper than renting, but that’s just not the case at all – most of the time – for most people. When the survey found that, on average, homeowners say they pay an extra $17,500 in annual expenses, assuming that’s accurate, I wonder how many are necessary or could have been avoided.

Here are the categories of the surprises in the survey and their percentages:

33% property taxes: Nice try. Property taxes are right on the listing sites and sheet. It’s one of the first things anyone can access on any listing before even getting in the car!

27% renovations: Sorry, but that’s a “wanna do” vs. a have-to-do before even moving in. Ten seconds in the home and anyone can tell what they HAVE to fix and what they’d LIKE to fix.

27% utilities: Every realtor can get any seller to give you a copy of the last utility bill. It’s not a surprise to have to pay for electricity and gas, and the amount can be obtained really quickly and easily.

25% roof work – 15% foundation repair: Unless you’re buying a brand new home with new-home warranty, things like this will show up on any home inspection. That $400 must-do can save you a ton of money by either walking away or having the seller fix these things before you close the sale. Sure, sometimes they’re a surprise and shock. But that is the exception and not the rule.

23% insurance: There’s insurance on your vehicle, so needing insurance for your new home isn’t a surprise – ever. You may not have all the details the actual policy asks for, but you can get an idea online inside of two minutes and the only thing you need to actually know is the rough square footage and age of the roof. Then play with various deductibles and you’ll be within a hundred bucks or so.

22% appliance repair – 21% appliance replacement: Repairs happen, but is replacement a surprise, a need or a desire for (as an example) all new shiny and matching stainless steel?

19% yard work: Yup – a condo has someone take care of all that. If it’s a duplex or a house you walked around before buying it. Surely you noticed there were plants, grass, bushes and trees, didn’t you? Besides, that time is enjoyable and the money spent is very little. Think of it as “outdoor therapy” instead of complaining about it. You GET TO have a yard, instead of a 60 square foot concrete balcony or basement suite.

16% home cleaning: I’m not even going to dignify that with a comment – sorry.

A very long time ago, a realtor friend told me that anyone buying a home needs to have an additional $10,000 to spend. The figure may be higher, but buying a home is way more about the money than almost anything else. Read the home buying chapter of the Money Tools book. It’ll save you literally thousands of dollars and a ton of pain. And sometimes the best home buy is one you don’t make in the first place! It doesn’t need to be now – if you can’t afford it, don’t have all the answers or numbers – walk away. That way the dream of your own home won’t turn into a long-term nightmare.