Category Archives: Blog

You May Want to Stay Grounded This Summer

Last night, Air Canada president Michael Rousseau announced that the airline would be making significant flight cut-back starting tomorrow and extending through the summer.

WHAT? Yes, like other airlines, they aren’t close to ready for the resumption of 2019 passenger volume and demand with a shortage in every position from call centres to pilots. That’s resulting in massive quantities of delays and flight cancellations. To help (not solve) the issue, airlines are reducing their flight schedule to match their current staffing levels. The alternative is the continuous chaos and massive delays experienced across North America every day. Last weekend, the hold time to contact Delta Airlines just to re-schedule a cancelled flight was 697 minutes. Do you have a cell plan or battery or the patience to sit at an airport and stay on hold for over 11 hours?

In May I thought I’d be able to resume my annual summer week in Phoenix. When I check a random week in August the airfare was double and a sub-compact car rental was quoting at $450! $1,100 just to get there and to get around? No chance. And don’t kid yourself: Economics 101 is that fewer flights mean (even) higher prices. And Westjet will immediately match (increase) their ticket prices to the same levels.

In the U.S. the airlines are hoping to get closer to some kind of reasonable normal by Thanksgiving. That’s in October! Be ready for a lot more pain, cost, and hassle with airline travel for some time to come. Or join me in sticking with staycations for this year…

Hang On a Few More Months

If you’ve been thinking/wanting/needing a new or newer vehicle – hang on a bit longer. If you’ve bought one in the last year – sorry: You overpaid a lot – I mean a lot! If you didn’t have a choice, your only hope is to keep the vehicle for a long time: The old saying: Drive it into the ground.

For those who waited, there are already small price reductions and more to come. For both new and used vehicles, relief is on the way if you hold on until the fall. As inventories for new vehicles grow, the prices will drop with more supply and less demand. 20 of something on a dealer lot and tens of thousands coming out of the factory is going to soften prices pretty quickly.

It’ll then reduce used vehicle prices in tandem. The first ones will be the dealership used cars. It will take another 90 days or so for the private sellers to get a reality check that their ‘yesterday’ price is no longer realistic. Many will try – few will get a buyer and then those prices will also adjust. Just make sure you don’t pay attention to the Auto Trader recommendations of “good deal” or not!

Before you start shopping (and then financing your purchase), however, read the Money Tools & Rules chapter on car buying. A $20 book and a 10-minute read, just in that chapter, is potentially going to save you thousands of dollars!

When You’re In Charge of Your Own Retirement Finances

We talk about finances all the time, and one of the biggest financial decisions is probably your retirement savings. That’s more critical when you’re older but way easier to accomplish when you’re younger. Now, this is not a shot against the current government, but a comment about government programs overall.

There are a few things the government does really well. Included in that list is the military, foreign affairs and the passport office which is just incredibly efficient and well-run. But generally, any government programs are not very effective, and you will always be able to do better, and do more on your own, without waiting or hoping the government will come to your rescue. They won’t – and by the time you’re done waiting for a bailout package, or meaningful help from the government – you’ll be dead, honestly.

There is no place where that is clearer than with our Canada Pension Plan: The CPP pays a maximum of $884 to you in retirement. Let’s use this $884 maximum, even though the average pension benefit recipient gets $481.

Let’s take the lowest working person in the country. We’ll take someone who works from age 18 to age 65 and makes $2,000 a month. So this is a person who never gets a promotion, never gets a raise, and never improves on that income – someone who literally makes a small $2,000 a month throughout their entire working life.

Until retirement, every month, this person has $42.28 deducted from their pay towards CPP. The employer portion is the same, because employers match the deduction. So, for this person, every pay period, $84.56 goes towards their CPP in order to get a maximum of $884 each month after retirement. Simple math so far?

Now, if this person took that same $84 a month and invested it, at a 10% return over their lifetime, they would have $1,084,000! That translates to a monthly pension of $9,033! Let me say that again: Taking the same CPP deduction of someone who makes $2,000 a month for life, and investing it on their own, would have a pension of over $9,000 a month, AND he or she would leave an inheritance of over $1 million to their family.

THAT is why I want you to pay yourself first every month, and have some savings deducted right off your pay where you won’t miss it. What would you rather have? The $884 CPP, or your own $9,000 each month?

My Grad Commencement Address: About Marshmallows

 

If I were doing a commencement address at some graduation this month, it’d be about marshmallows.

That was a Stanford experiment in the late ’60s, that’s been proven to be incredibly accurate, and replicated right up to a few years ago. Researchers gave four to six year olds a marshmallow, pretzel, cookie, or some treat the kids really wanted. They then told the kids they could eat it whenever they wanted. But if they waited 15 minutes, they would get another one to double their treat.

It turns out that this delayed gratification was a powerful and accurate indicator of their marks, their education level, their weight, and their financial success as adults.

Maybe the marshmallow test for graduate age people is 15 days before making impulse decisions. Maybe it’s leaving the credit card at home during the week. Maybe it’s the most powerful financial tool of paying yourself first in savings before spending, or maybe it’s too late, and they’re doomed anyway.

Broke is the new rich. That was the T-shirt a 20-something guy wore at a festival. His age is certainly right in that thinking – even though it’s so wrong and so self-destructive. The millennial generation age 18 to 35 can be forgiven for wondering if they’re ever going to get any financial traction. There are over 85 million of them in North America who, on average have less than $1,000 saved.

There’s a great quote from Shaquille O’Neal: “It is not about how much money you make. The question is are you educated enough to KEEP IT?”

You may think that the average 20 something can’t get ahead. Yes you can! Get your debt under control, or have the delayed gratification to not get into debt in the first place. Start with your first paycheque, or starting this week, have two percent taken right out of your account and transferred into investments. There’s no chance you’ll miss that $60 or so. Then, every six months, up it by one percent. Again, you’ll never miss $20 or $30 until you’re saving 10 percent. Every hundred bucks saved is nearly $9,000 when you retire.

But that’s a BIG marshmallow test that only one or two people from a grad class will embrace. If you’re one of those few people, or want to be, read four short chapters in the Money Tools book and you can get really pretty quickly and easily. If not, remember me as you’ll want to email me in a decade when you’re broke and need help.

The mark you get on your lifetime financial learning isn’t an A to an F. It’s measured in your investment account balance and your debt, and you get a new mark every month for the rest of your life. It might be a mark of minus 30,000 in debt, or a mark of plus $45,000 in investments…

20 Is the New 15 In Restaurants (And Walmart?)

Part of our run-away inflation is that we’re going to restaurants again – a lot! But servers are making less money than ever while working harder, and it’s something you didn’t know.

While your only contact is pretty much your server, behind the scenes are bartenders, hostesses, bussers, runners, kitchen staff and others who you aren’t tipping. Since you’re not coming into the restaurant with a wad of five dollar bills to hand out, those staff still do get a part of your tip. Different restaurants do it in different ways, but the most common in the industry is called tip-out. It’s a tip distribution system that does get some of your tip money to those other staff who are instrumental in making the server look good and able to function. In most restaurants and chains, their indirect tips have increased in the last few months when the restaurant increased the tip-out amount to a range of six to eight percent.

To translate that into English: A server who rings out (collects) $1,000 during their shift pays the restaurant an additional 6 to 8% over and above that. So they’re responsible for turning over $1070.00 if we use 7% as a tip-out. The server has collected a bunch of credit card charges, some gift cards, some cash, and tips. At the end of the shift, the computer adds up all of the charges for food, drinks, etc. that were charged to his or her swipe card (account) to come up with the total amount plus the added ring out. Whatever is left over is their real tip income for the shift. The seven percent is then distributed to those bartenders, hostesses, bussers, runners and kitchen staff (depending on how the restaurant has the people and the distribution percentages set up).

Since that tip-out has increased, it’s decreased the servers income unless you make 20 percent the new 15! They’re sharing more – keeping less. A $1,000 total for a server may generate 15% tips…but not likely since some tip less, others don’t tip at all! But let’s use 15%: The server has collected $1,150 and pays the restaurant $1,000 and the 7%, or $1,070. That leaves $80, or an actual tip of 8%! On an average 20% tip (oh how servers wished that were the case) the actual take-home amount would be $200 in tips, less the 7% ring-out or $130 net (13% of the customer bills total). So now you know…and now you have to decide the next time you’re eating out!

Walmart somehow also seems to think 20 is the new 15. But that’s not a good thing in the retail business. Again, lots of products have gone up in price. But not 25%! Like Covid and the Russian invasion of Ukraine (see the story from last week) became reasons to lie or use as excuses, it makes me wonder if retailers aren’t using this time to move up their profit margins under the radar…

There are lots of examples, but here’s my most obvious one. Once a year I buy a new pair of the least expensive jeans I can find. They’re for outside work season from painting to kneeling on the garage floor, or in the yard, and don’t last more than a year before I replace them. For a few years, that’s been Walmarts’ $15 jeans. These cheapest jeans I can find are $20 this year. No way – no how – no chance I’m paying that. Has Walmart’s long-standing campaign of “roll-back” pricing turned to “roll-forward?” It isn’t the price of denim, or any improvement in quality, or that much increase in freight costs….I’m sure they can still fit a few hundred thousand into each container leaving China…. But, judging by the empty racks, I’m very much in the minority in not swallowing a 25% price hike. Sad but true…

Update 5/25/22: Costco now has their own jeans under their Kirkland line for $17. The material is really good quality, they fit well and come in a wide range of sizes including odd numbered ones. Since they don’t have change rooms, buy them, and go into the washroom to try them on. Then you can exchange or return before leaving the store.

Why Overpay THAT Much?

Loyalty is always a two-way street when it comes to the brands and the products we buy.

With some of the insane (and unjustified) price increases so far this year, loyalty to any one product can shred your wallet. That’s entirely unnecessary when there are normally substitutes that are just as good! I would estimate that there must be almost a dozen items that I’ve changed since the start of the year because of price increases of over 25%. Sorry, that’s not inflation – that’s taking advantage of the “everything is going up” resigned attitude to stick it to me.

Other items have always been less expensive, but brand-name companies know how loyal we are. Here’s a great example: I was loitering in the pharmacy area of Walmart two weeks ago waiting for a prescription. At the end of the aisle (companies pay for that prime spot) was a sale on Tylenol.

Costco 390 tablets for $22.99 = $0.059 per

While I stood there for about 10 minutes, at least a half dozen people walked by and grabbed one of the packages. Yet, right beside these, just not on the end-aisle were the no-name acetaminophen. Same product without the brand name!

Costco Kirkland Acetaminophen 500 tablets down to $0.016 per

They’re almost 350% cheaper! Yet nobody reached the two feet further to save three and a half times the money! No, that wasn’t very scientific, but it sure got me wondering where else we buy something blindly because of loyalty instead of checking the price!

For comparison, assuming it has to be Tylenol for some specific reason, here are the Walmart and Rexall prices from the same day:

Walmart 200 pack at $0.09 per Rexall 200 pack at $.135 per

While not everyone has a Costco membership, their no-name at 1.6 cents per compared to Rexall at over 8 times as much is a reason to re-think your brand loyalty, to shop around, and to consider a Costco membership (because half of it would have been paid for with this one purchase).

It’s Grad Season

Happy May to the two types of graduates: Those who are graduating from high school, and those graduating from university.

If you’re now entering the work force, your life is going to be radically different. If you’re still living at home, you’ll now have money coming in with only a limited number of bills to pay. If you’re also moving out of the dorm, or your parent’s home, the bills can quickly to exceed your income. That could likely make you more broke than you’ve been BEFORE you started earning a paycheque.

If you were to be honest with yourself, you’ll admit, at least to yourself, that you stopped listening to your parents advice quite some time ago. Bad news: You’ve now got very little time to get your financial house in order. More bad news: You (and most of the country) isn’t really financially literate. Even more bad news: You’ve got a ton of pent-up wants and needs that you’re going to purchase with little money. And the worst news: Your income, and the fact that you have a small credit rating, lets you borrow.

With rent, a car payment, some utilities, your cell phone bill, credit card payment, and needing to eat, I’d bet most of your 2019 paycheques are spent. Yes, you read that right: Those debts have payments that aren’t going away anytime soon because you have a two-year cell contract, do need to live somewhere that charges rent, and have a car payment until 2031 or longer.

Adults can take a long time to go broke. Graduates often accomplish that in just a few months. When you get there – you can’t get out for a decade or longer. Ask anyone in their 30s what they’d do differently with their finances if they could be your age again.

Maybe somebody in your family will go to Amazon (the link is on my website) and invest the $20 to gift you the Money Tools and Rules book. You can read a few of the chapters in an hour or less. Read the “Broke is the new rich” chapter. That’ll explain how that doesn’t need to be your life. Read the chapter on specific things to do or not do for just one year after you graduate, and the how to buy a vehicle chapter. Since you have a credit card, read those 30 pages to see how they become your worst nightmare no matter what their ads tell you.

Knowledge is power. You learned that in high school or university. However, your financial learning is just starting, and this is one lifetime course you definitely can’t afford to fail.

Ford’s $5 Billion Dollar Bet Pays Off This Week

Today (Monday 4/25/22) Ford will deliver it’s new F150 Lightning. It’s an electric vehicle that’s part of Ford’s $30 billion electric vehicle spending to 2025. If you’ve heard about it all weekend, it’s because Ford is taking the marketing approach of Tesla for the rollout and the first delivery.

Nothing matters more to Ford than the F150. It’s not only the largest selling truck, with brand loyalty more so than the entire Ford name. Buyers of the F150 are incredibly loyal. They don’t trade for a Ram or a Chevy, they tend to be loyal to F150, often for generations. The release of the F150 Lightning this coming week is a bet that’s already paid off for Ford. Their original projections (and production plans) were for 40,000 vehicles. Their order-bank is already at 150,000 and growing and the reviews have been beyond anyone’s expectations.

Yes, it’s electric. If you were someone who made fun of (or envied) the little Prius you passed on the highway with its 50 MPG, this Ford truck – yes, a work truck – will have a EPA rating of 68 MPG. An electric truck rated at 68 MPG! Sure, lots of people and businesses, to whom this truck is targeted, will still have range anxiety and may wait and see. But it might not be for long with the obvious gas cost savings and lowest cost of ownership of any Ford truck. Plus, “it hauls ass and tows like a beast,” according to Ford CEO Jim Farley.

A 15.5″ touchscreen and 11 outlets that can power anything and everything on a job site – and can actually power your house for three days in the event of an outage! In North America only around 5% of vehicles are electric. That’s less than a quarter of Europeans, but the F150 Lightning might be a real game-changer.

Blame It On the Rain

That was the name of a song by a late 80’s R&B duo called Milli Vanilli. It turned out that they were just lip-synching – including their appearance at the Grammy Awards. In the worlds of one of the group “we were in constant fear of being discovered.”

The group didn’t last, but the blame-game and flagrant misleading (OK, lying) is alive and well. It happened within a month of the Covid pandemic in March of 2020 with a lot of businesses blaming Covid for anything and everything.

Within 10 days of the Russian invasion of Ukraine, US President Biden was blaming rising gas prices on Russia calling it the “Putin price increase.” It’s total b.s. and a poll done last week showed that less than six percent of respondents blame Russia, but the line keeps getting used. Oil was already around $90 a barrel before the war, then went to around $100. Nice try, President Biden. But someone has to be blamed when people get mad.

Politicians have no control over oil prices or supply chain issues. They also don’t have control over the weather tomorrow – honestly! Sure, in the US, voters can blame President Biden for not even getting his calls answered or messages returned by the Saudi government for weeks at a time. Oil is a world-wide commodity. The only way the price drops is when the supply exceeds the demand as every person would have seen in the past two years. Cut the demand of any product and the price drops. Increase the demand without more product and the price jumps until equilibrium is reached again. Economics 101.

But whichever party is not in power blames the current administration and claims they would deal with this. You know it’s b.s. when they don’t actually tell you anything about how they would do that. Yet it works. The current party blames someone – anyone while the opposition blames the government.

Milli Vanilli may have been in constant fear of being discovered, but sadly, businesses and politicians don’t have those same morals when it comes to blame, excuses, evading responsibility or the likes. Stuck in between are the voters who don’t really care who is to blame, but care a lot that it’s addressed. Or at least that someone understands.

How to Complain to Get Results

As I’m now in the middle of a bunch of problems with Amazon, it occurred to me that most people don’t really know how to complain effectively. Oh, sure we complain, but you need to do it in a way that the business will help you, refund you, fix the issue, or even just pay attention to you.

We typically call the 800-no service number and get mad. And after we give them a piece of our mind, we often end with “I’ll never deal with you again.”

What’s the point of working to make you happy just to have you deal somewhere else?

If a relative needs help with something, would you? Of course! You know them, like them, they say please and thank you, they’re grateful and you feel great that your time and talents made a difference to someone. THAT is what you need to remember when you call the 800 number. You’re dealing with someone that will take 50 to 100 or more calls in a shift, makes maybe $15 an hour, has supervisors pushing to deal with stuff quickly, and has been talking to mad people, many of whom lie, for six hours already.

Always stay calm, don’t raise your voice, don’t threaten, stick to the facts, and start with a one-sentence statement of what you want. Say please, and be pleasant, and tell the person you really appreciate them helping you. That will solve 75% of your issues. Do write down the date, time, and name of the person you’re speaking to.

Step two is to escalate the matter if you’re running into a brick wall of no help. Find a vice president of customer service, marketing, your bank’s regional manager, or whatever area your complaint falls under. Go online or ask one of your kids to do it for you. You want the contact information for a regional manager or vice president. The CEO isn’t calling you back, but one or two levels down, that person will pass your SOS request to someone that WILL fix it for you – guaranteed.

Send an email or a letter – one page tops. Again, write what you’d like at the top, remind them how loyal you’ve been and how shocked you are that such a great company hasn’t fixed this for you. Include the dates, times, and who you called already, with no results. I’ll guarantee you’ll have someone get in touch within 24-hours!

With Amazon, I found the email for the Canadian VP on Linked-in. The next day I had $60 refunded on my seller account, and someone from his office on the phone.

With my cable company, and the world’s slowest internet, the Vice President’s office had a “special issues” incredibly helpful supervisor call me from their BC office the same day, and a technician was at my house the next morning, with a follow-up visit, and a call every week to see how my internet was now performing.

Stay focused, factual, calm, and nice and you’ll get what you deserve. You really do catch more flies with honey than with vinegar.