Category Archives: Blog

Wow! 4 Years Back, Someone “Got It” And Cared Enough To Share

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Dear George, I miss hearing you on the radio program!

I am xxx and we corresponded with one another about my bankruptcy and credit way back in 2020. The advice you gave me was incredibly helpful and, because of you and your book, I was able to become more “literate and intelligent” about my situation.

I am very happy to tell you that, through a young financial advisor in xxxbank, I was given tools to apply to my situation by opening up a xxx account and taking advantage of their line of credit utilization, and finally becoming a member of Borrowell to confirm my monthly rental payments, that my credit rating began to flower and, even xxx at xxxbank could not believe how fast it came up by doing the things I have just mentioned.

On May 15th of this year, the bankruptcy on my credit report came off and with the help of xxx from xxxbank, I was able to get a xxxVisa with a $6,000 credit limit and xxx also fixed me up with a Credit Line for emergencies or extenuating circumstances.  He told me to keep that one in my “safe box” in my home, which I did.

He also advised me to immediately stop Capital One because of their outrageous fees and “annual membership charge” which I was so very happy to do at the beginning of July, after I paid my small Borrowell monthly fee, which now I do not need.  He also recommended that I make sure and pay my balance off every month, which I am.

The relief, satisfaction and sense of accomplishment I have felt is beyond expressing. I tell you all this George, because you were a primary motivator for me and I only knew about you from your radio segment and I also got your book which is filled with excellent advice for people like me. I am in deepest gratitude to you for your willingness to write to me that very long letter on October 19, 2020. Blessings be upon you, xxx

Hello xxx – how wonderful you emailed me. Super happy for you xxx! You deserve it!

Now just promise me one thing to always remember: Bank employees are not your friends – they are ALL on bonuses and commissions. xxx may be the best guy on the planet but you made him a TON of income when he sold you (yes, he did) a credit card AND a line of credit that you shouldn’t have gotten, that he B.S.’d you into the standard “for emergencies” and that, when used, will help you with a next new going broke project. Once your credit score is over 700, if it were me (and it’s not) I’d close it and get a simple savings account and put a few bucks in a month until you have three months of your expenses. THAT is “for emergencies.” Borrowed money ADDS interest and is the worst strategy for “emergencies.” But that’s how it’s sold to everybody that now owes an average of $21,000 on them (Canadian Bankers Association stat).

How great you’re winning with money – keep it up!!!

George

When The Market Drops You’re A Big Winner

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It was about 10 years ago when I first shared the (now) two page chapter in the Money Tools book of how to make your teenager a millionaire. Then, it became a huge hit on my radio program and I added a two page PDF as a give-away during book signings of the details, where to invest, how to, etc.

I almost never hear back from anyone I talk to, email, or who reads sections of the book. That’s not how it works. If I were to look for, or wait for, feedback, I’d be really depressed. I believe in “Do your best and God does the rest.” I never will know or find out. But I do know that at least eight families had their kid or kids start on implementing that chapter. With the S&P 500 (where anyone under age 40 should invest as an ETF fund with next to no fees) setting new records almost every week, rough math says those kids now in their mid to late 20s have over $50,000 already.

Will they “stick around” when the market has a huge drop in a one-hour period? THAT I don’t know – and will never find out. But if you look at historical returns, they will average over 10% every year. A big drop is a signal for an even bigger bounce-back. The only exception would be if the world ends or capitalism and corporations cease to exist.

Stick around – don’t check your investments every day – don’t open your statements every month – set it and forget it. How old are you? 30 or 40 or whatever? This is your retirement money and that day ain’t today!

A Great Mortgage Broker Ad

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The hardest thing for renters is to get into owning their first home. Whether it’s a condo, duplex or single family home, the down-payment and Trudeau stress test make it next to impossible. But we’ve talked about that over the past years multiple times.

Last week I heard a great ad from a mortgage broker. Sure, the radio ads are only 30-seconds and it’s a little misleading and leaves out all the details, but the numbers are correct and reinforce why “getting in” is the hardest step – but so worth it over the long term.

The numbers don’t matter in the ad, but the logic does: If you’re paying $1,500 rent over the next five years, you’ll be paying $90,000 to your landlord. A $250,000 home will cost you around $1,440 in mortgage payments and will give YOU $30,000 in paid down equity in the five years. Call us…

Plus, you build equity a second way: Through the increase in property values. Some years it’s a ton – some years it’s nothing – but historical averages (just search for that term) show that equity builds around 5 percent a year. Right now, excluding the insanity of Vancouver and Toronto) the market is on fire for any homes under $500,000.

I’m in a duplex where the other half sold in November. Fast forward to today, and the lady has already seen the market value increase by over $60,000! That doesn’t happen each six months, and she doesn’t care as she’s not selling. But that’s pretty impressive – but only to make a point that you’re never building equity off your monthly payments or ever seeing a value increase if you’re renting!

How (And Why?) To Blow A TON Of Money in 30 Seconds Or Less

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Is it dumb, lazy, complacent, naive, uncaring or what? I don’t know and I really don’t care because it’s not my money.

Twice last week, I witnessed two people drop a staggering amount of money for no reason other than…read the first line…

When I was going into a store, there was a guy out front trying to boost his car from another one. He had the booster cables hooked up and didn’t look happy. Fast forward less than five minutes as I came out of the store. Now I saw the open hood and the fact that he had the booster cables connected backwards! I stopped and said: Excuse me, but heads up that you’ve connected them backwards. He looked at me like I had two heads and said: I got this. The tone translated that to “f off and mind your own business.” Before I even got to my car I heard a big boom behind me…as his battery exploded. Guess he “didn’t got this.” Best guess is that it also did a bunch of damage to his electrical system and computer. Most likely it’ll end up costing him a thousand bucks or more for the “f off.”

Also last week, I met a couple who purchased about $12,000 in furniture, TV, etc. from a national retailer on a one-year no payment no interest plan about 11 months ago or so. I had gifted them a copy of my Money Tools book and they DID ask what the CCP (credit management degree) behind my name stood for. I asked them if they had the paperwork for the financing. No – they didn’t think so. Hmmm… twelve grand financed and you can’t hang onto the three pieces of paper that came with it?

But I venture on: You do know that you HAVE to pay this off in full 364 days from the date of purchase (not delivery or pickup) right? Why they ask? Because if you don’t, the (around 26% or more) interest gets added to your financing RETROACTIVELY for the full “free” year if it’s not paid in full. So, on day 365 you ow the $12,000 and an instant extra $3100! Plus it’s now $260 of interest a month. Their response: No. That doesn’t sound right. That’s not what the salesman told us.

All I could do was respond with: Oh – OK and leave. Someone with a credit management degree gives you a heads up that you’re about to flush $3100 down the toilet and your response is that that doesn’t “sound right?” Re-read the first line again… Although I would love to see the look on their faces when the next statement arrives in a few weeks…

An Amazon 50% “Extra” Markup?

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There have been vast numbers of investigative stories and reports (that you can easily find) that purchasing online can come with some traps. For years, it’s been known that shopping online with an Apple product, such as your Iphone, will show you higher prices for lots of retailers – most notably on travel related websites.

There have also been stories related to Amazon (and/or their re-sellers) playing with their pricing. I’ve read them, but it was only two weeks ago that I found it out for myself. Amazon is no longer (and hasn’t been for some time) the least expensive place for a vast number of categories and products. We’ve talked about, that and it’s been discussed everywhere by consumer advocates. Amazon is now about convenience and those people are typically not price sensitive. OK, their money to blow – not mine.

Three months ago I purchased a Microsoft Surface mouse for $44 on Amazon. It was the best price available for a specific product I needed. Fast forward to two weeks ago, I needed another one. On Amazon I found my old invoice and clicked “buy again.” It did get me to the same/right product but now $65 or almost 50% higher!

Clearly that wasn’t going to happen and I was somewhere between LOL and WTF. I found the product on Best Buy for the correct full retail price of $44 and purchased it. (Now, however, on day 10 of getting Best Buy to stop sending junk email promotions that I did not sign up for as guest and that three tries haven’t stopped. Shame on them for spamming!)

The next day I wanted to test what had happened to trigger this “rip off” pricing. So, I deleted all my history and cache and went back to Amazon without logging in. I searched for the same Microsoft Surface Mobile mouse and…ta da: Back to the “real” price of $44.

Buyer beware! If you love Amazon and chose to have Prime and like the convenience of re-ordering and dislike the few minutes of price shopping – they don’t love you back!!

A MasterCard Rate That More Than DOUBLED!

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If you have a Servus Credit Union MasterCard, your rate just went from 12.26% to 25.99% effective July 1st! Bet you didn’t know – bet you didn’t read the section on your statement!

Run – don’t walk – away. And do it TODAY if you ever even have the smallest possibility of not paying your balance in full every month. Not if you hope to always pay it off (hope isn’t a financial strategy). Not if you’ll try to (trying is lying) and not if that’s now clearly needing to be your goal (a goal isn’t a financial strategy).

Read the credit scoring chapter to see why, but if you need to replace this card, FIRST apply for a low-rate card BEFORE you cancel and return the Servus MasterCard. It will protect your credit rating in multiple ways if you do it in that order!

Right now, there are more than a dozen low rate cards on the market. Yes, most of them have also increased their rate – but by a percent – not by almost 14%!!

Fifty-five, Unemployed and Faking Normal

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Most of us who are, already know this: It’s much harder, financially, to be single than to be living with someone in a relationship. There’s a basic cost of living that includes rent or mortgage, insurance, utilities, food, cable, phone and transportation. That’s just the basics. You pick the amount, but let’s call it $1,500 to $2,000 net per month.

For us singles, we’re paying that full amount. For those who are married, living with a partner or roommate, it’s almost the same amount, other than a small increase in food costs. Rent or mortgage payments don’t change if it’s one person or seven people paying it and  your cable company doesn’t care how may people watch what they’re billing you each month.

For women who are widowed, divorced or single it’s even harder. Arguably, they are paid 15 to 25 percent less than their male counterparts. They also have a harder time finding a job – especially in the last 12 years since the 2008 economic meltdown.

So I wanted to share an excerpt from a book called: Fifty-five, Unemployed, and Faking Normal by Elizabeth White. You can order it from Mosaic or online. Here’s an excerpt of the books’ introduction:

“You know her. She is in your friendship circle, hidden in plain sight. Her clothes are still impeccable bought in the good years when she was still making money.

To look at her, you would not know that her electricity was cut off last week for nonpayment or that she meets the eligibility requirements for food stamps.

But if you paid attention, you would see the sadness in her eyes, that hint of fear in her otherwise commanding voice.

These days she buys the $1.99 trial-size jug of Tide to make ends meet. You didn’t know laundry detergent came in that size.

You invite her to the same expensive restaurants that the two of you have always enjoyed, but she orders mineral water now, instead of the $12 glass of Chardonnay.

She is frugal in her menu choices, meticulous, counting every penny in her head. She demurs dividing the table bill evenly to cover desserts, designer coffees, and second and third glasses of wine, she did not consume.

She is tired of trying to keep up appearances. Faking normal is wearing her out.

There are no media stories about her. Her slide out of the middle class is not sensational enough.

A friend says she’s broke, not poor, and there’s a difference. She lives without cable, her gym membership, or nail appointments. She discovered that she can do her own hair.

She has no retirement savings – no nest egg. She exhausted that a long time ago. There is no expensive condo from which to draw equity and no husband to back her up.”

Kind of makes you think – and hopefully to be on the lookout for someone in your circle of friends.

Broke Is the New Rich

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One of first chapters in the Money Tools book is called Broke Is the New Rich: It’s pretty much for anyone under age 40 or so who’s mentally decided they just can’t ever get ahead.

Being broke isn’t fun. It’s also stressful and leaks into every other area of our life from concentrating at work to relationship fights to bouts of depression. But a lot of times it’s not necessary. Last week I hired a taper/mudder to do my basement stairs and storage room – something I absolutely can’t/and refuse to do. He texted me before coming out on Saturday. “Good morning, George. I barely have any gas. I think I can make it out there. But making it back will be a problem. I know this may seem a little unprofessional of me but I figured it’s just best to be honest.”

His text was a roundabout way of double checking that he was going to get some money for the day of work. He did make it here and started the work. It turns out both him and his girlfriend worked for a painting company for over a week that stiffed both of them for their entire pay. It’ll now be a while before the Labour Board will get him paid. He’s 20-something and obviously honest and motivated to work on the side, he’s reliable (THE most important trait an employer looks for or should look for) and talented. He’s likely just ‘in between money’ and a victim of circumstances.

Before you find yourself needing to send that type of text, or to ask the question, stop for a second. No matter how broke or cash poor you are, get yourself some mini-emergency money. Put a $10 bill in your glovebox with your registration. It’s emergency gas money. It’s not an emergency to get you to McDonalds. It’s emergency gas money to be able to drive to a job that will make you money. As soon as you can afford it, change that $10 bill to a $20 and your stress level, constantly worrying about it, or having to send that text is gone.

At home, hide a $20 bill somewhere. It’s emergency food money. Not a skip the dishes emergency, or liquor store crisis – it’s for milk, cereal, bread-type emergency. As soon as you can afford it, up it to two $20 bills, then a $50 bill instead, and when you can, hide a nice brown $100 bill somewhere.

If that sounds small or silly, you either haven’t been in that stressful situation, or don’t understand how others could be. But it’s more common than you’ll ever know, and it works and it’s worth it to reduce your stress level by a lot.

When you’re ready, set up a proper emergency account (see page 223 of the Money Tools book). Start by getting it to one week of your net pay and work your way up to three months of all your expenses.

From the $10 bill tucked away up to three months money in the bank – all of them take an emergency and turn it into an inconvenience.

Contrast that story with the one in the Money Tools book: Michael really wanted to get out from under his $3,200 credit card balance. Luckily, his work schedule came out with a New Years day opportunity. He had the chance to work a 10-hour shift on January 1st at double-pay. That would earn him over $640. It would mean passing up his New Years’ eve plans to attend a party. The party turned out to be his priority. The night cost him over $300 as he later admitted, versus $640 of extra income. Had he chosen the alternative to work, he would have been close to a thousand-dollar positive swing in his finances.

Talk about two very different 20-somethings! As I’ve said before: Don’t tell me what your financial priorities are – show me where you’re spending your money and I’ll know where your financial priorities really are.

My guy will be successful. Michael is just playing a huge self-defeating financial game, the reason we’re poorer than we think, and my question in frustration if I should just mail him the $1,000.

The Reasons We’re Awful At Managing Our Money

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These are some excerpts from an older, but superb, article by Morgan Housel on the website Motley Fool. Here are some of the highlights that probably apply to almost all of us:

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.

For investments, our definition of “long term” is the time between now and the next downturn in the market.

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 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.

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.

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.

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.

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.

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.