Car Shopping

Next to buying a house, buying your car is likely going to be the biggest purchase of your life with implications 10 to 15 years into the future. Given how important this purchase is, it's incredibly important that you do your research, and come up with up a plan long before you step foot on the car lot.

The first thing you should consider is what you want in a car, and what you need in a car. For most people safety systems and size are the two biggest factors you should consider in the needs category. Wants, which can be just as important, are things like entertainment systems, design features, a more powerful engine, or leather seats, for example. Once you have a list of what it is you're looking for, it's time to look at what cars are available that match your requirements, and are in your price range.

Determining what you can afford is one thing, but you have to also consider what you should be spending on transportation. Although this will ultimately give you a monthly limit of what you can afford, the last thing you want to do is share this information with your car dealer. Most dealerships will try and distract you from the overall cost of a vehicle by discussing a monthly payment which in Canada can often be based on up to 84 monthly payments. the difference between payments for 48 months at 0 percent interest compared to 84 months at even 2 percent is more than $2000 on a $30000 vehicle. Also make sure to consider the total cost of ownership. This includes things like insurance, gas, and maintenance. these may be similar to a vehicle you already own, or they may increase significantly. It's important to know what may change with your new car, so do some research, and speak to your insurance broker.
 
Now that you've decided what you can afford, look at the terms of a purchase at your dealership of choice, and find out if you can afford the vehicle you want under those terms. Once you know if you can afford this vehicle, it's time to start negotiating. The best piece of advice I can offer on this subject is to remove the emotion, as best as you can. This can be extremely hard, especially as we often find ourselves in difficult situations leading up to the purchase of a new vehicle. The reality is that you need to ensure that the dealership thinks that they are more interested in completing the sale than you are. This puts the ball in your court for the negotiations.

If you're looking at a small car, there isn't a significant amount of room to negotiate on price anymore. For this reason, you should consider negotiating for items and add-ons that add a lot of value for you, but don't cost the dealership much. All weather floor matts, bumper protectors,  undercoating, and other accessories are all expensive for you, and don't cost the dealer as much. Negotiating this way allows you to both come out ahead.

When you are talking price, it's important to keep your cards to yourself as long as possible. I suggest
that you research applicable national incentives you may be eligible for, such as recent graduate rebates, loyalty incentives etc. By keeping these discounts to yourself, you can eat away at the dealer level profit as you discuss price, and after coming to a reasonable agreement, add on these discounts. In this way, the dealer can't claim that they are already losing money on the deal with all of your national level discounts. If you play your cards right, you should see your sales person smile once you reveal the discounts you're eligible for.

Keep in mind when you're negotiating that a lot of the money the dealership makes will come out of fees added on to the price of the vehicle. For this reason, you should always talk about the actual, cost, fees included, of the vehicle you're looking at. Getting a great price, and then paying significant amounts in administrative fees somewhat defeats the purpose of negotiating in the first place.

Once you've come to an agreement with the sales person, you can expect a trip to the financing office where you'll likely be presented with a number of extended warranty options, and other high profit add-ons. Dealerships wouldn't offer extended warranties if they didn't make money off of them for. That alone should be enough reason for you to say no.

The last, and biggest point, is that you need to be prepared to walk away. This may not be necessary, but knowing what alternatives you have, maybe another dealer who sells the same brand in a neighbouring town, or another car brand altogether, telling the dealer that you're willing to go elsewhere provides the dealer with a significant incentive to give you what you want. If you're being reasonable, there's a good chance the dealer won't let you leave, or they'll be in touch the next day to try and salvage the deal.

What did you learn during your negotiations. Comment below to help the community learn how your experience can save them money in the future.

Credit Card Review - Amazon Visa

The average credit card allows you to make purchases around the world without having to carry foreign currency, (just remember to set up a travel notification with your card issuer), but there’s a catch. Most cards will automatically exchange your purchases into your native currency while adding a 2.5% fee for the convenience. There are a few cards which don’t add this fee, but my favourite is the Amazon Visa card.

Like all cards, the Amazon Visa card uses the visa exchange rate and converts your purchases for you, but this card does it without adding on a conversion fee. On top of that you’ll also earn 2% back on purchases at Amazon.ca, and 1% back everywhere else. When you add it all up, you’ll come out way ahead relative to using the typical credit card. Below is an example to show you what I mean:

EXAMPLE

Spending $5000 on a regular credit card

Cost of your item(s)                         $5000
Currency Conversion (at 1.125)        $5625

Spending $5000 on your Amazon Visa

Cost of your item(s)                         $5000
Currency Conversion (at 1.10)        $5500

Savings                                             $125

The idea that you will regularly spend $5000 on your credit card may seem unreasonable, particularly if you're here to get financial advice to help get yourself out of debt. However, a family of four on a trip out of the country could easily spend $5000 on hotels, travel, food, and admissions over the course of a week or more. The average family staying at a Disney World hotel for example, could easily exceed this amount in less than a week.

I've said it before, and I'll say it again, if you're going to spend money, you may as well get rewarded for it. The Amazon Visa will save you the 2.5% convenience fee on your transaction, but it will also give you 2% back on purchases at Amazon.ca and 1% back on purchases everywhere else. When you consider that the best Credit Cards usually top out at 2% back, you're coming out way ahead when the foreign exchange convenience fee is added in.

Once you reach $20 in rebates, there will automatically be a $20 statement credit applied to your next bill. Plus, if you apply at Amazon.ca you'll get a $20 Amazon.ca gift certificate on approval.

Financial Checkups

Every couple of months, at a minimum, you should review your financial standing and how you are progressing towards your goals. In some circumstances you’ll need to do this review based on changes in your life instead of sticking to a firm timeline. These changes can include, but are not limited to, changes to the make up of your family, like the birth of a child, or moving, especially with a simultaneous career change, and changes to your financial situation, like an inheritance, a raise, or a temporary or permanent reduction in income. All of these situations necessitate the review of your finances. If you are the reason for this change, it’s important that you look at your finances before you voluntarily change your situation. I don’t pretend to be perfect, and despite reviewing my finances before I bought my house, I was very close to going into the red each month for about six months after I moved. Careful planning and consideration reduce the risk of making a financial mistake, but you can’t know of, or plan for, all eventualities.

The first step in your financial reviews should be a quick look at your budget, taking into account any
changes to your income or expenses. This will give you the necessary information to determine if you’ll need to make any changes to your spending or saving plans. There’s no point in cutting back on something that you enjoy and is a good value if you still have extra money at the end of the month. Similarly, you can’t spend more money following a raise, if your circumstances have allocated that money for you already.

Now that you know how your budget has been impacted, it’s time to reconsider those priorities of yours in order to ensure that everything is still in line with your goals. If at anytime your budgeted goals no longer reflect what you’re working towards, it’s time to review your budget or your goals. As you can see, if you’ve read some of the other posts on my blog, a lot of the topics we cover are related, and doing just one thing can’t help you achieve your goals.

Once you’re done with your financial review, you’ll know that you’re progressing as planned towards your next financial milestones. If your circumstances change, or a couple of months has passed by, it’s time to start all over again. As I wrote this post, I had the chance to reconsider my own financial goals, and I ended up making some tweaks to realign my budget with my goals. These exercises should help you to reduce financial stress and the stress and/or guilt you feel spending on yourself. The idea being that when you know how much money you have, and where it's going, spending within your budget can be guilt free.

Saving Money on Insurance - Deductibles

Sadly accidents are a fact of life, and therefore so is insurance. Most of us do a pretty good job shopping around for the lowest rate, but is there more we could do to save ourselves some money, without reducing our coverage?

Most of us have an aversion to risk, and for that reason we usually over estimate the likelihood of accidents and incidents in our daily lives. The constant coverage on the news and prime time TV of car accidents and trouble throughout the world don’t help either.  But you’re probably asking yourself, “how does this apply to insurance deductibles?”. The answer is pretty clear.

Every year we are faced with the question of whether we should renew our insurance coverage with our current providers, or seek out a better deal eslewhere. In addition, it’s become more and more common to be offered insurances at the point of purchase these days, particularly for expensive electronics. In both circumstances, you’re left to decide what coverage you need, what kind of a deductible you want, and in some cases, how long you want to be covered against certain perils. While the answers to most of these questions are deeply personal, deductibles are an area where you can  apply some basic math to help guide your decision.

The decision ultimately comes down to how often you expect to need to use your insurance coverage  of the insurance companies to make that data public. So instead, we’re left to try and quantify a variable that we really don’t know much about. If I were to ask you how often you expected you might be in a car accident for example, you’d likely have a hard time coming up with a figure. Even if you did come up with a number, could you point to any evidence to support it?
today cover a loss. This would be easy to decide if we had easy access to the data associated to the use of insurance, but I’d suggest that it goes against the business model,

So what are you left to do? Well, go online, call in, or talk to your insurance broker, and see what the cost differences are for the variable deductibles that are available to you. Once you’ve determined how much you can save yearly, by increasing your deductible, divide the increase in the deductible by the yearly cost savings, and that will give you the number of years you’ll need to be accident free in order to come out ahead. In some circumstances you find that it can make sense if you expect to remain accident free for only a few years. In other cases, you would need to be accident free for 10 or more years.

Once you’ve determined your time frame, it’s time to consider how realistic it is for you to avoid an accident for that long. At the end of the day, your driving ability is only one portion of the equation. You’ll also need to consider how much you drive, where and at what times you tend to drive, any other drivers who may drive your car under your insurance,  etc. Only then can you realistically decider if increasing your deductible is potentially going to save you money.

As you can see, there is no hard and fast rule for selecting a deductible. The right answer for you is dependant on a number of factors, and this is a decision that you’ll have to review at least once a year. Since your insurance likely renews once a year, that is a great time to re-examine your coverage, your insurance provider, and of course your deductibles.

Maximizing Returns - Emergency Funds - Tying up YOUR money

For some reason financial gurus the world over are constantly recommending that everyone have 3 months worth of expenses sitting in a cash account 24 hours a day, 365 days a year in case a catastrophic emergency comes up. This sounds like great advice, but really, how often do these situations occur?

Given the way the world works these days, there are few people who need to keep large sums of liquid cash sitting in an account earning little to no interest in case the worst happens. Instead, people should be taking that money, and investing it in their future. Ideally, we’d all be debt free, and if not, why not save yourself the interest on a loan, or even worse a credit card, by directing that money to your highest cost debt. This way, you’ll reduce your interest payments, and reduce the impact of compound interest to get out of debt that much faster. If you are debt, or at least consumer debt free, take that extra money and start saving for your retirement. Get your money working for you in a TFSA or RRSP, investing in your future and taking advantage of compound interest.

If the worst were to happen, and you needed access to money for the short term, why not get rewarded for that spending, and use a credit card interest free for your applicable grace period, (usually 21 days). If you’ll need that money longer than 21 days, pay off your credit card with a line of credit, ideally linked to your mortgage to reduce your interest costs. The idea here is that any interest you might pay on a short term loan as a result of an unexpected lack of income or is more than made up for by the long term investment gains you’ve made while your money is sitting in your TFSA or RRSP. This strategy only works if you don’t use your available credit unnecessarily. In order to remove the temptation, ensure that your loan isn’t available from your debit card. In this way, you’ll have to make the conscious decision to go to your lender and physically ask for access to your loan.

This strategy works best if you have access to credit at a reasonable interest rate, for example, prime plus .5%, which most people should be able to secure on a HELOC when they negotiate their mortgage. If you can’t get, or don’t want to have a loan available to you, then at least use your TFSA to getting your money working for you while keeping it sheltered from the tax man. If you are using a TFSA, make sure to watch out for contribution limits, and be aware that if you are lucky enough to have a fuller TFSA, if you withdraw money this year, the contribution room is not available again until next year.

As a final point, I want to be clear on what the purpose of having access to funds in an emergency. You should be using this money to pay your mortgage, rent, and other necessary household expenses. That’s really it. Buying new clothes, eating out, entertainment, etc, should get saved until your financial crisis is over. Tough times require that you really watch every penny to ensure that you spend responsibly in order to ensure that you get back on track as quickly as possible. We all keep our fingers crossed that we never need access to these funds, but it would be unreasonable to assume that it won’t happen to us. This is the same reason we have insurance, to protect ourselves from the unknown and unexpected.

Budgeting 101

I'd like to think that by the time you're reading my blog, you're already well aware of what a budget is. If not, well we're all in trouble! Assuming you know what a budget is, let's talk about how to budget. This a pretty well covered topic, but you may be surprised to hear my take on budgeting.

I'll start by relaying a discussion I had with some friends about budgeting a few years ago. My friends were a relatively newly married couple in their 30s. One is a coworker of mine, and the other is a registered nurse. My coworker was trying to prove his wife wrong by asking me if I budgeted to the penny, or if I just put a buffer on the actual costs in case I went over. He wasn't very happy when I told him that I budgeted to the penny, (for fixed costs). In my opinion, if you know what something costs, and it's always does, or should, cost the same, you budget for that cost in order to avoid leaving money unaccounted for.

I'll start by saying that budgeting is easy, if you already know where you're money is going. If you've been avoiding some of that information, for one reason or another, it's going to take a little more effort. Your first step is pretty simple for most people, figure out how much money you make. This can be a challenge for those self-employed, or those who work short term, temporary, or contract jobs. But the idea here is to figure out what you can reasonably expect to have available in your bank account each month. Make sure to include all income sources.

Once you've figured out how much money is coming in, and you've put it on the top of your new budgeting spreadsheet, it's time to figure out what's going out. Most people will tell you to start gathering up your paper bills and stack them up, going through them one by one. As someone who's grown up with technology, let me suggest an alternative. Login to your online banking and credit card accounts and go item by item to find those recurring payments. Things like TV, internet, rent or mortgage, property taxes, etc. Start making a new line for each of your monthly expenses. If some of these expenses are variable, for example overages on your cell phone, maybe start by taking a look at my recommendations HERE.

Now that your "fixed expenses" are accounted for, here comes the hard part. You need to analyze your own life, and figure out where the rest of your money goes in a given month. How much do you spend on food, clothes, entertainment, etc. These costs are considered variable expenses as they can vary somewhat from month to month. It's important to be realistic, and skimming through your online banking can give you a better idea of where your money is going. This is assuming of course that you're following my advice on using your credit cards, which you can find HERE. You'll find that these numbers may not be accurate right away, but keep an eye on your spending, and you'll get it in the right ball park very quickly.

For those excel experts out there, set up your spreadsheet to add together all of your sources of income, subtract all of your fixed and variable expenses, and leave the total about 10 lines lower than your last expense, (you'll see why in a minute). Now, is the number positive or negative? If the number is negative, it's time to take a look at what your priorities are, like I did HERE. Your choices are pretty simple in the case of a negative number, earn more, or spend less. If you're number is positive, which it should be at this point, you now get to decide how to best "spend" that excess money every month.

You may think that using quotation marks on the word "spend" seemed a bit odd, and you're right, but I did it for a very specific reason. When I say spend, I don't mean on coffee or clothes, etc. I mean what big ticket items are important to you and how are you going to accomplish them. The first item you should consider is your retirement savings. I'm hoping that isn't going to be the first time you've considered this line item. Regardless, you'll need to closely examine your retirement goals, timeline, etc before you can adequately assess how much you need to be saving for retirement. Your next step should be to allocate the remaining money to the things that will make you happy. What are your goals? Which are short, medium, and long term? Which are the most important to you? Your ultimate goal should be to get that remaining amount of money to near zero.

Now this is where I expect to get some flack. Unlike most people, this is the end of my formal budgeting exercise. I don't maintain a separate spreadsheet with all of my expenses to carefully watch where my money actually goes in reality. Instead, I regularly review my bank account balance and my budget to ensure that my spending is in line with my budget. If it's not, then I try and find ways to bring the two into agreement again. This continual review is the biggest part of my regular financial checkup, which I'll be writing about a little later.

Let me know how your budget turned out. Was the process as simple and painless as I hope? Is there anything I missed? What was the biggest surprise for you? Comment below.

What's Important to YOU? - Your Financial Priorities

I moved to my current city in the fall of 2013 and bought the house that I currently live in. I had saved aggressively for more than 6 years for my down payment, and the feeling of owning, (a portion of), my own home was everything I had hoped. For the next 2 years or so I found myself spending a fair bit of money doing upgrades, despite having bought a brand new house. I paved the driveway within days of moving in, spent thousands on having good quality blinds put up on the windows, upgraded the heating system in the main living area from electric baseboard to heat pumps within the first year, and I recently added another heat pump system to keep the basement comfortable and dry year round. These costs added up quickly, and once my savings were deducted and locked away in my TFSA and RRSP, there wasn't a significant amount of money left over at the end of the month.

As time passed, I became eligible for extra pay at work, and received raises each year as I gained more seniority in my department. These pay increases lead to increases to my savings, and allowed me the freedom to spend more on myself, travelling, and spending on my hobbies, family and friends. As my house became more and more what I had dreamed of over the years, the list of things to do around the house diminished. As I write this, I have only 1 major project left to complete, and the money for it is already set aside safely in a Tangerine Savings Account as I discussed HERE. This left me with a budget where a significant amount of money was being set aside for projects around the house, and the realization that my list was gone. It was time for me to re-evaluate what it was I wanted for the future.

For the next few weeks I opened up my budget almost daily and considered how to best make use of my newly freed up cash flow. I considered spending money on just about anything you can imagine, and spent may hours online searching the internet for suggestions on how to get the most happiness out of my disposable income. What I eventually realized was I needed to look at what my priorities are in life, instead of looking for individual line items, or specific "toys" I could buy at the store. This realization lead me to where I am now. My budget has been rejigged, and there is now significantly more money going into my travel budget. What I've also come to realize is I have pretty lofty goals for travel, and if I plan on achieving them, I'd better have a plan for my vacation days! I've also redirected some of these extra funds towards paying off my mortgage. This will reduce the interest I will pay on the duration of the mortgage, and let me pay off the mortgage prior to my first chance at retirement in about 14.5 years. By splitting my money, and working towards both a short term goal, and my adding more to my long term retirement goal, I feel like I've struck the right balance between living now and saving for the future.

 Although I've talked a lot in this post about the "extra" money I ended up, this is a useful exercise for everyone, regardless of your current financial situation. In the next few days I'll be publishing a post entitled "Financial Checkups", where I'll be discussing an exercise we all should carry out on a regular basis. I'll go into more detail on what types of questions to ask yourself, when you should re-evaluate your budget and your goals, and what the final product should look like.

How to Save Money on Cable, Internet and your Cell Phone

Every month we spend hundreds or thousands of dollars of disposable income on monthly expenses like cable, internet, cell phones, insurance, and gym memberships. This money barely makes it into our bank accounts before it's taken away.

Most people will sign up for these services or memberships and never think about it again. What's worse, is we often sign up for these services at introductory rates without knowing if our budgets can sustain the cost once our promotionall period ends.

If you had to guess how much money you're spending on these iterms on a monthly basis do you think you'd be close to the actual number? I'd bet that most people wouldn't have a clue what they're spending.

I told you that you could save hundreds of dollars, and here's how. Gather up your monthly bills for all of your optional services, and compare what you're using of those services to what you're paying for. Could you afford to cut back on your TV subscription? What about that lightning fast internet speed you only use to surf the news and check know Facebook? Do you actually go to the gym on a regular basis, or could you save money by dropping into the local recreation center instead? How about that cell phone bill? Do you use all of the minutes and data you pay for on a regular basis? How often do you go over your plan's limits? You might save money by paying for a more expensive plan instead of paying overages every month. Take a look, you may be surprised what you see. Adding this check into your financial reviews will ensure that you're always getting the most value out of your spending.

Now that you know what you need for all of your services, it's time to get your providers fighting for your business. In order to do this, you'll need to research competitors in your area that can provide you with the services you want and note their prices. Once you've done this, call your current providers, and talk to them about what you've learned. Ask nicely if they can match or beat any competitors offers, and even if your current provider is the lowest cost company, ask them if there's anything they can do to lower your bill. You'd be amazed how often they'll find a way to save you money without reducing your service. If you're not happy with the answers you're getting, politely ask to escalate the call to a supervisor, or the loyalty department. If you ultimately think you can get a better deal elsewhere, ask about your current providers cancellation policy and then explore your other options before making your decision.

Repeat this process with all of your providers and you'll be amazed what you can save. Companies spend a lot of money trying to convince you to use their services so they're invested in trying to keep you as a customer. Being nice, and knowing what's available will make you're life easier in your quest to save.

Rent or Buy?

In many cities across the country young people are struggling to get into affordable housing like never before. The challenges presented by today's housing markets can only compound the challenging decision of whether to rent or buy.

Apart from the purely mathematical examples you'll find all over the web discussing the dollars and cents reasons to rent or buy in a given market, or at given rates, there is also a purely personality based discussion that every person needs to consider. People need to really sit down and examine their habits to determine if Renting or Buying is a better option for them once the math has been done.

The supporters of renting often show that in many markets it is cheaper to rent than it is to buy. When you add up the costs associated to home ownership, like one time fees associated to buying and selling your home, like moving costs, real estate commissions and lawyer fees, plus the recurring costs such as property taxes, home insurance, and maintenance, it is easy to see how renting MAY allow you to come out ahead monthly. But the discussion can't simply end there. It doesn't matter if you save a few dollars, or a few hundred dollars every month if you spend it in areas that you aren't budgeting for. This is where discipline and self control come into the equation. If you were to find a way to save some money every month, what are you most likely to do with it?

If you're the type of person who will take that money and save it, ideally to supplement your retirement, but at a minimum towards a short or medium term goal that is important to you, then saving that money on renting is an option for you. However, if you don't have the discipline to save that money, then perhaps you should consider buying in order to force yourself to save. At the end of the day, if your rent vs buy calculations come out near equal, having to pay that mortgage every month may be the motivation you need to start building your retirement nest egg. This is where we all need to take a close look at our past, and our future to determine what option is best for each of us. You might also consider what I wrote HERE about setting goals to give yourself the incentive to avoid making financial mistakes in your everyday life.

The question of whether you should rent or buy is ultimately a very personal decision, and one that you should discuss openly with your family and friends. Ideally, if you talk to the right people, they may be able to give you an unbiased view on your past spending habits, and help you reflect on this important decision. I've tried to communicate that this is far more complicated than just dollars and cents. In addition to what we discussed regarding how you might choose to use any cost savings, you must also consider the length of time you'll stay in a rental or purchased home. Will you NEED to upgrade your house to accommodate a larger family in a few years, or move cities altogether for a new job? Your long term goals also heavily impact your decision to rent or buy.

What do you think? Rent or Buy? What's your Goal?

Save Time, Money, and Stress on Christmas Gifts

It's hard to believe, but Thanksgiving is over, and before we know it, Christmas will be here. It's a dangerous time of year for your waistline, but perhaps the longest lasting effects are on your finances.

The costs associated to Christmas are huge, and I don't pretend that they are all related to one issue. Having said that, most people likely won't cut back on their travel budgets as visiting with family and friends is perhaps the most important part of the holiday season. Food is also an unlikely place to cut as it is so enshrined in our holiday culture. So how can we make Christmas more affordable without negatively impacting ourselves or our family?

This is going to seem like it goes against what I just said, but the easiest way to cut your budget is to cut your giving. Now by giving I don't mean charitable donations. Those gifts are crucial to the well being of those struggling in this economy, and there's always the tax rebate to encourage you to give the same or more this year. No, I want you to take a close look at what you're buying your extended family, your adult children, parents, etc. Are you really making their lives better with an expensive box of chocolates, or a knick-knack that's unlikely to do anything more than gather dust? I'd suggest that the answer is no. So why not consider one of the following alternatives?

Secret Santa - I'm sure that most, if not all people, are at least somewhat familiar with this. Assign everyone someone to buy for and set a spending limit. You'll be buying one gift and with a slightly larger budget you'll have the opportunity to personalize your gift to your recipients particular tastes and interests.

Yankee Swap Version 1 - Each person brings a wrapped gift that is under the set budget limit. A name is drawn out of a hat and the first person selects any of the gifts. They open it up, and show it to the rest of the group. The next name is drawn, and this person can either take the gift from person 1, or choose a new gift to unwrap. If you have an unwrapped gift taken from you, you select a new gift to unwrap before the next name is drawn. The next person can choose a new gift, or take any of the opened gifts. This game is more entertaining for your family or friends as there will always be a few items that everyone is fighting over.

Yankee Swap Version 2 - In this version, we follow the same general rules, but we leave the gifts wrapped. There will still be items that your family and friends will be fighting over, but in this version, you may be fighting over a well disguised pair of socks, while the highly sought after gifts go unnoticed in simple packaging.

All 3 of these games allow you to spend precious time with your family and friends, recognizing how important they are to you, while also helping you, and them, avoid spending beyond your means. The average family could easily save hundreds of dollars a year in this fashion, which can be reprioritized to meet your financial goals.

Could this be in reach? 

Maximizing Returns - Credit Cards

In a previous post I talked about how applying for credit cards can provide you with great sign up incentives. What we didn't talk about was how responsible credit card use can increase your spending power.

I'll start by saying that I'm always amazed when friends of mine consistently make purchases big and small with cash or debit cards. This is a commonly prescribed strategy for those who haven't shown the greatest financial restraint in the past. I understand that for many, having instant access to credit is a bad idea, but for those with proven self-restraint spending on your credit card provides a great rate of return.

The most obvious reason to use your credit card whenever possible is to increase the rewards you receive for spending. This may be in the form of Cashback, Travel Rewards, or a branded rewards program. In all cases, you have spend money to make money. To be clear, I'm not advocating spending more than is necessary, or you've budgeted for. I am advocating that if you're going to spend money, you may as well be rewarded for it.

In addition to incentives for spending, many credit cards also provide a number of included insurances when you use them to make purchases. The obvious examples are extended warranties, protection from theft and damage for electronics, and rental car insurance. When you add up the cost of securing similar coverages through the store or rental company, using your credit card is the best option. In addition, some cards provide price protection for some purchases. Keep in mind that if you don't know what your coverages are, you can't take advantage of your card benefits.

These benefits all sound great, and they combine to add significant value to your planned purchases. However, the advantages of using your credit cards are quickly wiped out if you carry a balance. The high interest rates that credit card companies charge pay for all of the incentives to card users, but that doesn't mean that you have to be the one that is paying for them.

Save Money - RedFlagDeals

Fair warning, this post is either going to save you a lot of money, or cost you a lot of money.

Redflagdeals is a one stop shop for everyone looking to save, spend, or invest money. A lot of the greatest deals I've seen started out on Redflagdeals forums and there were many more deals I missed out on for one reason or another that other RFDers were able to take full advantage of. 

The Redflagdeals site starts out as a great place to view your local flyers as you prepare your weekly shopping list. The flyers generally go up a day or so in advance and many are now interactive.

The next section you'll want to check out are the forums, where you'll find something of interest guaranteed. The first section to check out is Hot Deals where RFDers post their great finds from across the country. RFDers could be considered cheap, but in most cases all that means is better deals for you. Be warned, you will see deals on products you didn't even know you needed(wanted). For that reason, only those with proven self-control should frequent the Hot Deals section.

The next section you'll want to check out is the Coupon section. In this section you'll find printable coupons, and mail in and online rebates for great products you're probably already using. Combine these coupons with the deals you spotted in the Flyers and Hot Deals sections and you'll be amazed at the savings. Add in programs like PC Plus and Checkout 51, and you can be paid to buy some items. I'll talk more about PC Plus and Checkout 51 in a later post.

Next, take a look at the Personal Finance section, and the embedded Investing subsection. These sections contain a lot of great advice, and are a great place to build your financial knowledge. Here you'll often find some great welcome bonuses for banking and credit cards. Having said all of that, take what you read with a grain of salt. I've never seen anyone intentionally given bad advice, but the advice you read many not apply in your particular situation.

I hope you find some great deals, but don't get carried away and always stay within your budget! Happy Hunting.

Check out Redflagdeals HERE.

Setting Financial Goals

Everyday we face temptation that can derail our financial situation relatively quickly.  The benefits of pinching pennies for months or years can easily be wiped out by a series of poor financial decisions, or one big one; a new car, a new house, a vacation, etc.

Avoiding these temptations isn't practical in today's world of modern marketing and keeping up with the Jones'. So how do we ensure that these temptations don't get to be too much?

Which direction will you go?

The answer, goals. Having short, medium, and long term goals provides the necessary incentive to stay on your chosen financial path. Goals need to be Specific, Measurable, Achievable, Realistic, and Timely. If you can set goals in this way, you'll have given yourself a reason to stick to your financial plan.

Unlike some more abstract the goals, like eating better, or getting more sleep, financial goals are easily measurable using everyday free tools. Your bank probably already has tools on their website which can help you track you record spending and saving, for example. However, I prefer the excel spreadsheet method as it gives me more flexibility to see the data that's important to me in the way I want to see it.

Many of us say every January that we're going to do better: but why wait? If you want to be in a better financial situation, start now. You can do it!

Getting value from YOUR money - Spending on Yourself

Despite creating what I think is a pretty balanced budget, which both sets me up to be comfortable in the future while also enjoying myself today, in the past I haven't spent much on things will make me happy. On the other end of the spectrum, a friend of mine has consistently complained that he doesn't know where his money goes, and that he feels guilty spending money on himself, although that feeling hasn't stopped him in the past.

I've started using a strategy that I think will help both of us, and hopefully many of you as well. The goal is to remove the guilt we often feel spending money, even on things we really enjoy, while also ensuring that we don't use the money we've budgeted for ourselves on other things. So here it is, take that money, and set it aside. It's that simple. I use a series of Tangerine savings accounts to separate the money I dedicate for myself from the money I use for my obligations. I have accounts setup for travel, entertainment, and major goals, into which I deposit a specific amount of money monthly. In this way, that money is set aside, meaning it won't be spent frivolously, and I don't feel bad when I spend dedicated money on myself.

Although most of the discussion on Personal Finance is dedicated to helping people save money, it's almost as important to ensure that we spend what's leftover at the end of the month. Personal Finance, as in life, is all about balance. The type of people who might read and follow this are more likely to take that leftover money and save or invest it. There's nothing with that, on occasion, and with significant thought. If you have extra money month after month, perhaps you need to take another look at your budget.

If you decide to try out this strategy, use my Orange Key, 34755860S1, when you sign up and we'll both be rewarded with better bonuses from tangerine.

Happy Thanksgiving

Most of us are here because we're looking to make our lives better through financial literacy. Today, let's take a moment to be thankful for what we have.

I wish you all a great thanksgiving, and I hope you have the opportunity to spend it with your family and friends!

The True Financial Cost of Coffee

I'm taking a huge risk here covering this topic early on, but I think it's more important than people realize. The cost of a cup of coffee from food chains across the country vary significantly, but they're not cheap. Factor in the specialty coffee shops that have become so popular these days, and the average cup of coffee is likely in the $3 range. That means that on the lowest end, people are spending more than $500 a year on coffee outside of the house. On the high end, well I don't even want to think about it.

Realistically, the cost of coffee is relatively insignificant compared to other major money mistakes we tend to make. However, I'll be talking a lot about priorities on this blog, and I think most people would agree that if I gave you $500 right now, very few people would choose to spend it on coffee. Yet, everyday across the country we see the drive thru at our local fast food restaurants backed up onto the street as our co-workers stop for their first cup of the day. For most people this won't be their only coffee outside of the house on any given day, and most have no idea what the financial cost really is.

Now $500 a year really isn't that significant for most people. But when you choose to waste $500 on coffee, what are the chances that you're not wasting more in the rest of your financial life. Counting the pennies, (how much longer will we be able to say that), is unlikely to help anyone in the long run, but paying attention to the details will help you to avoid making more and greater financial mistakes. We will all make mistakes, intentional or otherwise with our money, but the goal should always be to limit those mistakes and their effect by learning from them  and growing for the future. If we can focus on the small stuff, the big stuff will follow and that $500 in spending on junk will net savings in the tens of thousands.

Portfolio Management

I'm really looking forward to sharing with you my views on a wide range of Personal Finance in the future. I'm going to share some specifics about my portfolio and my chosen strategies, but for now, let's talk in general terms.

Most people already know that there is inherent risk in any investment, and this risk needs to be mitigated, particularly when your investing horizon is short. For this reason, the advice you see online most often will recommend a portfolio of bonds and ETFs based on your timeline. This works well for most people, but I think this advice ignores what is often a major portion of the average persons portfolio: Real Estate.

Because a significant amount of money, (I'll share the specifics a little later), goes towards my mortgage, I like to consider that a part of my portfolio. In fact, I consider my mortgage to be my only fixed income investment, despite having a relatively short, (15 year), time horizon. This is in part because if the market drops significantly between now and my first chance at retirement, I can easily delay leaving my Federal Service job, delay drawing down my savings, pick up another job, or a combination of the 3. This allows me to feel comfortable investing 100% of my savings into Equities and Equity ETFs without taking an unnecessary risk. Ideally, this also means that I should be able to maximize my rate of return over the next 15 years. The question of what specifically to invest in is another, more challenging topic that I'll try and cover in detail in another post.

Get Paid - Great Canadian Rebates

Credit cards are a fact of life in modern society for almost everyone. In fact, for the financially literate, credit cards provide great incentives for use. Travel rewards, cash back, and insurance coverage are just some of the advantages credit cards have, and that’s before mentioning delaying the cost of your purchases for 21 days in most cases. However, a lot of people haven’t recognized how valuable credit cards are to the credit card companies and the major banks. Many of our friends, neighbour’s,  and coworkers are carrying balances on their credit cards, and paying huge fees for cash advances and balance transfers. This makes credit cards a lucrative business, and gives the credit card companies a significant incentive to get their cards in our wallets and purses. For this reason, you can get PAID to get a credit card, on top of the welcome bonuses you commonly see advertised online. For example, I recently applied for a TD Aeroplan Visa Infinite card. TD was offering up to 30000 Aeroplan points after $1000 in spending and adding a supplementary cardholder. That’s not a bad deal, but after the $120 annual fee, and a $50 fee for a supplementary card, the deal isn’t quite as sweet. However, multiple sites were offering the same card through referral links for either first year free, or with cashback of up to $60 and a 50% rebate of the first year annual fee, effectively giving you the first year free. Some credit card companies are willing to go so far as to give you hundreds of dollars in rewards, cash, travel, or a combination. I’d highly recommend taking a look at the link below which will have a rotating list of offers that you can take advantage of the next time you’re looking for a credit card. I have personally used each this site, and I’ve received all of the advertised incentives and cash payments as described.

https://www.greatcanadianrebates.ca/register/180046/

Young Money

I grew up in a single income household with parents who’ve told me many times over the years that they weren’t smart with their money early in life. My sister and I grew up with all of the basics, and my parents watched the pennies in order to give us the chance to experience a lot of great opportunities growing up. I never felt like I was deprived of anything, but myself sister will gladly disagree with me on that point.

My first real memory of money came about when I was about 10 years old. My sister and I had begged my parents to start giving us an allowance and we were required to save half for our future education. The other half was ours to spend as we saw fit. My sister never had any of her disposable money left at the end of the week, but I often didn’t find anything of value to spend my money on. This was a huge help to me when my Dad proposed that my sister and I each buy a camera. At the time, digital cameras were a far off dream, and we had our eyes on $80 35mm cameras. The deal was simple, if my sister and I could each save half of the cost of a camera, my parents would pay for the other half. Despite our different opinions on money, my sister and I saved diligently. That was the first time that I had the feeling of having “earned” something. I had to forgo some wants, but in the end I had something of value to hold in my hands. In the future, I would set many more goals, saving to achieve them in the short, medium, and long term. This basic lesson, one that entire generations seem to have forgotten or choose to ignore, has served me well ever since. At its core, we all need to decide what is important to us, and what we’re willing to do to achieve these goals. Often this means giving up something, or working more or harder to earn the money we need. Occasionally,  this might even mean borrowing money today in order to accomplish our goals, and paying for it later. All of these decisions have consequences, and must be carefully weighed.