Category Archives: Blog

About That $4.6 Million Fuel Bill…

It wasn’t a good end for the 700 plus passengers aboard the Crystal Symphony. Instead of docking back in Miami, they were detoured and delayed 24 hours and ended up in the Bahamas.

It turns out that the parent company out of Hong Kong (Genting Hong Kong) filed for bankruptcy. That immediately had the fuel supplier going to court over their outstanding $4.6 million in fuel charges (over $1.2 million for the Symphony alone). A judge issued an arrest warrant on Friday to seize the vessel upon entering US waters. When the company became aware of the warrant, it caused them to (of course) make sure they weren’t going to get into the US jurisdiction, but find another place to disembark the passengers – far away from US authorities.

While the company has suspended operations until at least April, two of their ships are still out at sea. However, those passengers may be a little “safer” since on will end in Aruba on January 30th and the other in Argentina on February 4th.

Here’s the full story in today’s USA Today: https://www.usatoday.com/story/travel/cruises/2022/01/22/crystal-cruises-arrest-warrant-unpaid-bills/6621793001/

Or the video from this mornings’ CBS News: https://www.cbsnews.com/news/crystal-symphony-cruise-ship-arrest-warrant-unpaid-fuel-bahamas/

Rising Cable Bills – Shrinking Customer Base

The cost of cable and internet keep rising while the number of customers keeps shrinking. For the first time, less than half of Canadians have cable TV from Shaw, Bell or Telus. That’s a massive drop from just six years ago when three-quarters of us had cable TV!

https://www.thestar.com/business/opinion/2022/01/15/the-plot-thickens-in-rogers-cable-cutting-horror-story.html

However, I couldn’t bring myself to cut the cord this month when my Shaw contract was up. But I also decided that there was no chance I’d be paying the $165 (pre-GST) I had on my previous two-year contract. (Most channels, no specialty channels, so-called 600 internet, time-shift and Crave).

Shaw no longer has a retention department that I dealt with two years ago. Supposedly every customer service person is now responsible for keeping customers – if not happy, at least staying with the company. The only real way to get a deal is to give your current provider their 30-day notice. You will always, always get a better deal as a new customer somewhere else. That applies to cell carriers just as much as subscriptions, internet and cable providers, and many other industries.

I went on the Shaw website “chat” to give my cancellation notice, because you need to always remember: If it’s not in writing it didn’t happen! This way I could do a screen print as confirmation. The agent certainly asked why, but only came up with some changes around the margin to possibly get my bill to $145. No thanks. I had three Telus mail offers to “occupant” in my hands and all of them were significantly less.

The Telus website had the offer information but no details. I had no idea what I was getting for channels, whether it included a news package, what time-shift would cost, etc. (Dear Telus: If you hadn’t decided to hide all the details, I’d now be customer!) But before I had to worry about it (since I had a month) Shaw actually called me! Within 10 days of my cancellation notice, someone was phoning me, and even left some contract options on the voice message.

When I returned the call the following week, all of a sudden I was down to $102 (giving up my $5 time-shift, Crave and reducing my internet speed from their 600 to 300, and after a one-time $300 bill credit which works out to a $12.50 reduction each of the 24 months on the contract.) That 38% rate drop, even if I had to part with a couple of downgrades) was reasonable, and close enough to the Telus offer to stay with Shaw for another two years.

Even if you hate the thought of haggling, or changing providers, give your current company their 30-days notice and wait a couple of weeks. Then you can re-decide if you want to stay put or switch providers. Since our numbers keep plummeting, it’s likely someone will reach out to you and show you some love…or at least the common sense of treating existing customers close to the same as the smokin’ deals new customers get!

Spend $45 to Save $36,000

Two weeks ago, I received an email from a listener asking for some financial feedback. The email had enough in it to fill an hour or more, but here are the highlights:

This middle-aged couple has done really well in their investments. They have significant RRSPs and contribute 5% to their pension plan. They do have an RRSP loan at a good rate – and I won’t fuss about that.

They live within their means, no extravagant spending, small mortgage at a great rate, and an income of over $100,000.

On the debt side, it’s a different story. When they bought the Money Tools book, they immediately found $12,000 savings! Pretty good for a $20 investment! I keep saying: You go to almost any page and you’ll find a way to save money in whatever area! In their case, they have a line of credit that’s insured with life and disability. That’s one of THE biggest ripoffs in the financial field. The bank’s profits are 50 to 60%. Never get your insurance from the bank – ever. He immediately called to cancel it, but was on hold for 1 1/2 hours and never did talk to someone. Well, don’t bother calling. Write a three sentence letter that you want it cancelled as of today and deliver it to your branch. Banks can have a way of ignoring a call, claiming they never received it, etc. in order to protect their profit. In writing and delivered gets it done.

Their line of credit has been around since finances weren’t so good in the 1980s. It’s around $40,000 at a rate of over six percent! The rate is always prime plus something. That rate may have been OK when things weren’t so good, today it’s a massive overcharge. His credit score is over 780! He’s in the top 10% most credit worthy people in the country and ought to pay prime! 3% over for the last 10 years and on-track to only pay it off in another decade is over $25,000 in extra interest! All he did was go to equifax and pull up his credit score! When rates go up, lenders move up your rate. When your credit improves, they’re not voluntarily passing on a lower rate! You have to know your score and go ask – or demand it or fire your bank.

In the case of this couple, I wouldn’t move the credit line, but just get from the 10-year plan to one that pays it off pretty easily by Christmas this year. They have $20,000 in savings. Read the step up debt repayment section: First pay off your debts, then start saving. In their case, they should keep $5,000 for emergencies, dump $15,000 onto the credit line and pay $2,000 a month to get it done. It will take another six months to pay off the RRSP loan, and by June next year, they’d be debt free – instead of the 10-year payment plan they are on.

With a great income and getting really mad and motivated, they would be

$25,000 insurance cancellations for the 10 years the line of credit would take to pay off on their current plan

or: $25,000 (roughly) to pay off the line of credit 10 years sooner

$11,000 paying off the RRSP loan (the interest isn’t tax deductible) nine years sooner (by next summer)

That’s $36,000 of savings by spending $20 on the book and $25 on pulling their credit score. That’s a pretty good return!!

Then, next June to December, they can save the $500 they were paying on the RRSP, the $2,000 they were paying on the line of credit for six months or a total of $15,000 by just re-directing what they had been paying on their debts!

RRSP Deadline and Choices

It’s the month before RRSP deadline for 2021 contributions. A couple of things you should remember and consider:

If you’re in debt, focus on paying off your debts, instead of savings. I’m not saying take the next decade with that, but stop everything else and get a single-minded focus on paying off your bills. Then go back and start with all that money you’re no longer paying to your car, line of credit, or credit card and start saving with amounts nobody else can match.

If you just put your RRSPs into savings, you’re getting maybe half a percent interest. That isn’t going to work. There’s something called the Rule of 72. Take your return divided by 72 and that’s how long it takes for your money to double. So at half a percent, it’ll be 36 years. Better returns such as at least 8% will double your money in nine or so years. Of course, your age, how often there’s time for the money to double, and how much risk you can tolerate versus your age, other assets, and when you need the money matters a lot.

A big question is why don’t people invest properly and just put it into savings.

Researchers in California some years ago, led by Sheena Iyengar, set up tables to sell gourmet jams in front of a grocery store. One booth had six different jams available, the other had a wider selection of 24 jams on display and available for tasting. The purpose of the experiment was to determine whether quantity to choose from had any impact on how many sold. And did it ever – but in the opposite way: 30% of those who stopped at the six-jam booth made a purchase, but only three percent at the bigger booth made a purchase of some kind! We prefer to make quick decisions but that becomes impossible with 24 selections so we freeze and don’t make a purchase (or decisions) at all. The same holds true for investments. People want a choice but not an over-whelming choice or people will freeze and “think about it” without making a decision at all.

But then – not making a decision is still a decision.

Happy 2022 – Financially Speaking

The good news: It’s a new year! The chance to start over, to resolve to do better, to do more, or in the case of your payments and all that interest – to do a lot less.

The bad news? You’re already broke! How is that? Well, our debts are more than 173% of our disposable income now, half of us have no savings at all (thanks in large part to the never-ending pandemic but now-ended government support), and almost 70% of us don’t make RRSP contributions. Why? Because every dollar we earn goes to make a long list of lenders really rich and there’s simply nothing left at the end of the month.

So when it comes to making some commitments about our debt, credit and all those bills, perhaps we should think small to make sure we set ourselves up for a win, and not a sure-fire let-down. But small doesn’t mean pointless, small just means some little steps you can actually keep, that’ll pay off big for 2022. These five are over and above the chapter in the Money Tools & Rules book “Do you have half an hour” – small things that you can change immediately:

 First – Annual bills kill your budget, but they’re not surprises. We know they’re coming – but we haven’t got the money to pay them. If it doesn’t cost you a bunch of interest or fees, set them up on a monthly payment plan. Whether it’s your property tax, car or home insurance, a monthly payment plan is a whole lot less painful than paying them by credit card or off your line of credit over the next few years.

 Second – Set yourself a credit limit. Pick a dollar figure below which you’ll pay by debit card or cash. Maybe $20 or $30 bucks – that’s it. But anything below that, you’ll spend with real money, instead of running up debts. It’ll become a great habit and will cut down your credit card balance in huge ways. After all, look at your statement. Almost all the charges are for pretty mickey mouse amounts that add up in huge debts – twenty bucks at a time..

 Third – Keep your vehicle for another year. If you believe a cool car is a status symbol and a must-have, you’re doomed to be in debt for decades to come. Not to mention that almost 50% of people trade their vehicle and STILL owe more than it’s worth – that’s financial suicide. The goal should be to drive a reliable vehicle that doesn’t have payments with it . Imagine a couple of years without car payments and the huge financial advantage you’ll create for yourself. And remember: Those $400 car payments are really over $600 in gross earnings. If you can’t get a $600 raise – here’s a way to get it – you’ll just be giving it to yourself!

 Fourth – Close your overdraft. I know – it’s like being hooked on drugs. It’s so convenient and always there and you can’t live without it any more. Well, that’s what the banks were counting on, and where they make a huge amount of their profit. But it’s killing you. Just a $1,000 overdraft will cost you between $200 and $300 in interest and fees. It’s a one-time pain to cancel the overdraft, but it’s worth it. Then zero in your account is actually zero instead of minus $1,000 or more.

 Fifth – Change to a credit card that isn’t a credit card.
For those with a card balance, it isn’t the $600 charges, it’s the dozens of $20 or $30 charges that really add up. Sure, you want to pay it off, but it isn’t a priority each month and you keep sinking deeper into debt at 20% plus. Get yourself an American Express Green card. That’s not a credit card – it’s a charge card. At the end of the month, there are no payments to make – the balance has to be paid off in full. Oh sure, the first month that’ll be painful. But after that, you’ll watch what you’re charging pretty carefully, and you’ll never ever have a credit card balance again. What’s that kind of financial freedom worth in knowing for a fact you will never have a credit card balance again?

And maybe you can have a detox for January? How about no shopping of anything for any reason that isn’t an absolute necessity such as food and gas?

About That $1.3 Million Bill You Forgot…

According to multiple media reports from yesterday, the NHL’s Arizona Coyotes owe $1.3 million in tax arrears. In a statement from the club, the Coyotes blame “human error” for the outstanding bill.

In my past life as finance manager, I’ve done a ton of collections. But I’ve never had a company tell me tell me they “forgot” a bill for over a million bucks. You’d think that someone, somehow would remember… The club claims that they’ll do an immediate investigation, “deeply regret the inconvenience” and will have the state and local taxes paid today.

Well, yes. That’s a given since the City of Glendale has told the team that they wouldn’t be allowed into the building if the outstanding amount isn’t paid by December 20th.

In the last few years, the troubled Coyotes have certainly been getting a lot of media attention. Unfortunately, it hasn’t been in the sports section. It’s been in the business section outlining their financial troubles.

Paying the arrears is just a band aid for the team. At the end of this season their lease of the Glendale arena is also expiring. And having this financial story at the same time as they’re working on a $1.7 BILLION arena area proposal with the City of Tempe isn’t great timing.

Of course, any financial trouble story involving the Coyotes brings up the inevitable questions of how long they’ll stay in Arizona, whether they’re for sale, or moving the team (the latest rumour is Houston). All of which are, once again, being denied by the team. I’ve been to a few Coyote home games. I love the arena and the surrounding restaurant/shopping/NFL team area. I just don’t love the drive from Phoenix or Scottsdale. With attendance averaging around 12,000 it’s easy to get a below-face value ticket. But it’s not a recipe for success or for paying a lot of million dollar bills on time…

Last year (you can scroll back for the story “Want a Free Christmas Next Year?”) I managed to save around $1,200 by just dropping my toonies into a jar for the entire year.

So it seemed logical that making it toonies AND loonies this year, I would end up with even more money. But, it turns out that was a bust. Sadly.

Not only was 2021 a “full” Covid year which reduced my trips out of the house, I also received four Tim’s gift cards. So every trip for a $1.85 coffee that used to get me a toonie and loonie in change from a five dollar bill went on my gift cards this year. Thank you to the two people who gifted them to me. But no change meant no coins into the savings jar.

This years’ total was $875. Sure I was disappointed – but that’s still a ton of money and cost me exactly nothing to save. If you didn’t do it last year, try it for 2022. Maybe in a “more” normal world the thousand dollar savings mark will be possible again!?!?

Thinking Of a Cruise? Not Yet…

If you’re a fellow cruise fan or addicted like I am, I’m sorry to tell you that you should probably wait another year.

This morning I priced out a Norwegian cruise (the Bliss) from L.A. to Mexican Riviera the first two weeks in January. Its one of the blocks on the calendar when travel is at its lowest (thus should be cheapest) since people just spend a ton of money on Christmas and it’s a month before most people think seriously about any winter holiday. But the price seems way too high, the obstacles are significant, and I’m not sure you want to be that close and personal with 3,000 other people for a while longer…

The price: $2,900 all inclusive for two people for a week? No way! That’s way too expensive. Sure, they’ll include a bunch of perks right now (free wi-fi, 3 upgraded restaurant visits and unlimited drinks). Sure, the actually cruise price will drop in the next month…but that only helps people living within driving distance to L.A. The rest of us need to book an airline ticket way in advance or that already overpriced flight will go even higher!

The obstacles: If you’re not vaccinated – forget it. They may (but not with all cruise lines) allow you on the ship (the rules change weekly) but you’ll be isolated onto certain decks and sections. If you have a mixed vaccine (like I do) you’ll be allowed on (I think) but treated as unvaccinated. The CDC and all Canadian medical institutions say you’re fully vaccinated, but some cruise lines, Italy, and other countries don’t agree.

You will also need a Covid negative test before you get on your return flight. You’ll be able to get off the ship by around 9 am, but then have to find a Covid test place, and get it one, and pay for it (I think it’s around $200), and then wait for the written results, and then get to the airport. The odds of making a flight back home that day seem remote. That means you may need to pay for a night in a hotel and the cab fare to get tested, to the hotel and to the airport!

The friends who wanted the cruise info will end up at an all-inclusive in Cabo and not on a cruise. Smart decision for so many reason right now. Sure I want to cruise again but not for that kind of money and not with those hurdles and unknowns…Sad but true.

The Best Example Of Nonsensical Polls

At least once a month some financial institution or another puts out a poll on something. They typically hire a polling firm to ask a couple of questions about certain financial products, buying intentions, or whatever. Then, their PR department sends out a press release and it gets picked up by everyone from Bloomberg news to radio stations and newspapers.

Why do it? It’s free advertising (other than paying for the poll) and generally gets wide coverage. And that builds their business and gives them a great deal of mileage on building credibility. For the media outlets, it’s something they can talk about for a day or so that takes zero reporting effort because they have the press release that just needs to be copied and pasted.

But there’s a problem: Most of them are somewhere between junk or wrong and questionable at best. A few years ago it was something like: 20% of Canadians plan to buy a new home next year. Well, that one doesn’t even pass the logic test of houses for sale vs around 50 million people wanting to buy one… But it got a lot of coverage. The real figure, if someone wants to go back and a) find the poll and b)find the actual home sales that year, is probably less than a tenth of that.

In the non-financial world, here’s my best example of poll nonsense from the September federal election: 71% of Canadians are “completely certain” they will vote in the election next week. It was an Ipsos poll done for Global News between September 15th and 18th – so a week before the election. That was close enough where you’d think people would actually know., We’re not talking about a hypothetical question a year out. We’re talking about the following week!

In reality, according to Elections Canada the voter turnout rate was 62.5%! That included everything from advance polls to mail, special ballots and election day voters. Would it be fair to say some people who thought they wouldn’t vote actually did? Of course! How many? Who knows – we can only guess. But that would have been at least a few million or so. That makes the 71% “completely certain” more like 50-55 percent….

It might be worthwhile to think of a lot of these polls more as entertainment than anything you can take to the bank.

Go to The Keg And Not The Bay

OK. That’s not fair to The Bay. It’s also our spending at Amazon, Walmart, and a ton of other online stores right now. It’s almost entirely our “fault” that we’re in a wave of temporary inflation and supply-chain shortages. You can blame it on the pandemic and the drastic change in where we spend our money.

In normal times, when the world is on its axis and rotates properly, we spend about 75% of our money on services and 25% on products. But, when we’re at home, we’re not going to the movies, hockey games, concerts, or The Keg. We’re spending our money through our phones and computers buying “stuff.” Sure, there are supply-chain issues such as computer chips for cars, and one resin plant in Texas on temporary shut-down created shortages in everything from paint to garage doors. But the vast majority of shortages comes from tripling our purchase of “stuff” instead of services.

The faster we get back to the normal 75-25 spending on services vs. goods, the faster supply-chain issues will get resolved, and local businesses from restaurants to hairdressers, bars to movie theatres will heal. That should also cure the temporary inflation. Because, right now, there is way more demand for “stuff” than there is supply. Right now, there are more than 65 container ships off the coast of Los Angeles waiting to dock and unload. That’s where the “stuff” is that you ordered online. In the meantime, businesses that provide services are still way down in revenues and sales.

Those are the businesses that’ll heal our economy – not your online purchases from China! That’s why you should go to The Keg and not The Bay.

Yesterday, that’s where I went for the turning-teenager birthday party of a neighbor. It was my first restaurant visit since the start of the pandemic 18 months ago! Win-win that someone else paid AND that it happens to be my favorite restaurant chain in the country. But even a higher-end quality restaurant like The Keg is still down about a hundred reservations a day because you’re still online instead of in line!

If The Keg is indicative of what happens when you get there, you need not worry. You’ll get a table, and you won’t be standing in line forever. The process of showing your ID and vaccination proof took them less than a minute for our party of six. In some provinces, including Alberta on November 15th, you’ll need to re-print your vaccination certificate to include the QR code (or you can download it on your phone). That’ll make the process to get into any venue even quicker and more efficient.

If you need a reminder or refresher of why to cut down on buying “stuff” re-read page 216 of the Money Tools & Rules book. And sometime next week, get out from under your screen and support a “service” business in your community. Whether it’s a hockey game or a movie, a dinner out or whatever. The faster we get back to the normal 75-25 spending balance the faster we’ll get back to something resembling “normal.”