A client of mine told me that her banker suggested that she might be able to reduce her account service charges if she switched to a "senior's account". My client was skeptical and had no intention to make the change.
I asked her what she pays now, and her answer was $25 per month. Now, $300 per year seems like a sizeable amount to me (I pay $60 for unlimited activity) and I suggested that the alternative being suggested may indeed save her a few dollars.
So, why was she skeptical? There are two reasons in my opinion.
1. Baggage - The banks have focused so much of their efforts trying to upsell and cross sell products to their customers, that customers regularly question whose best interest is at heart. This will take a cultural change at the banks, and a lot of time, to overcome.
2. They still don't get it - How did this banker endeavor to convince my client that she would be better off with a different type of account? She handed my client a glossy brochure highlighting the advantages of the "senior's account". This is a not so subtle message to the customer to "figure it out yourself".
Rather than miss out on potential savings, I told my client to go back to the banker and ask for an illustration on how much she would save by switching - using her individual transaction history for the illustration. In my practice that's the approach I take when illustrating why one financial decision is preferable over another. Time consuming? Yes. A better result for clients? Definitely.
Great customer service is more than handing out a brochure. Insist that you get it.
Clients sometimes ask which credit card I use when they are considering the myriad of options.
Ultimate this, infinite that, gold, silver, platinum.....an almost endless list of choices.
One of my life philosophies is simplicity, so the obvious choice for me is PC Financial Mastercard.
There is no annual fee and points on all purchases equate to 1% cash back.
I can redeem my points for a bunch of items from the PC Financial online store, but the best value is using the points to buy groceries at Loblaws. I shop at Loblaws or No Frils (a Loblaws division) weekly, so as soon as I rack up points I can redeem them. Just yesterday I got three large bags of king crab legs for the value of my points!
By being able to redeem for groceries I know that my points will never languish unutilized for months or years and I get real value once a month (everytime I pay my monthly Mastercard bill).
So, my card may not be fancy and may not impress anyone when I flash it, but when my family digs into crab legs with melted butter oohing and aahing, the reward is.........priceless.
If after reading that tip, you are still here, that is a good sign. For many, the idea of cooking most meals at home is simply too overwhelming to consider. Keep reading though, because the returns on this tip are more than just financial.
For working professionals and families, dining out is one of the largest variable expenses.
Dining out sounds fancy, but it includes family meals at Swiss Chalet, ordering in Pizza or Sushi, or having dinner out in a moderately priced local restaurant. And of course it includes those special occasion meals. It can add up to hundreds of dollars each month, thousands each year.
I started cooking for real six years ago at the age of 37. Before that my repetoire consisted of spaghetti, omelets, and the odd stir fry. I regularly heated up prepared, frozen food. Then I moved in with my (now husband) Clifford, two of his children and my daughter. Clifford is traditional. Only nutritional homemade food will do for the nightly family meal. Since he had committed to doing the laundry, yardwork, and general maintenance, I could hardly say no.
The solution? www.recipezaar.com and some planning and discipline. Each Friday night I make a meal plan and grocery list (usually built around the Loblaws flyer). I shop on Saturday and have the recipes set up for the week. If I am out on Friday night I do it on Saturday morning.
I must say, that as a working parent, most days when I get home from work I'm not overflowing with energy, but that's where the discipline part kicks in. And the sous chefs.....I get the kids (and sometimes Clifford) involved chopping, setting the table and cleaning up. We have fun chatting about the day, and doing some general horsing around. It's wonderful together time and they are learning important life skills.
Try it....your health, family dynamic and budget will all benefit.
The weather, the shows, the restaurants and yes....the casinos.
So how do I reconcile my healthy relationship with, and respect for, money with the fun of slot machines?
Well, as with so many other things I set a budget and stick to it. Now by most measures my budget is laughable. I set myself a daily budget of $40. That's $20 during daytime hours and $20 during nighttime hours. It works because of a fabulous invention called the "penny" slot machine. During a visit to Las Vegas about 6 years ago, I discovered that if I bet 9 cents each time I can make $20 last about 2 hours. Sometimes that $20 becomes $25 or even $40 and sometimes I lose it all but I figure that if I lose $20 over 2 hours that is pretty good entertainment value at $10 per hour. (and they serve free drinks to me all the while!!!). When I walk away with more than $20 it is with a skip in my step and the feeling that I "won" by being ahead.
Now when I tell people about my approach, they usually laugh, or roll their eyes. "You can't win much that way" they say. And I tell them that they are absolutely correct, which is fine with me. That's because I know that the odds are stacked against me and that all casino games are designed to separate partipants from their money. I truly don't believe that I can beat those odds and because of that I don't put at stake any more than I am comfortable parting with. Whereas the majority of gamblers cling to the belief that they will be one of the few lucky ones.
The casinos use every psychological trick in the books to encourage visitors to part with more and more cash. It takes a lot of discipline not to get caught up in it all. The same kind of discipline is helpful in all financial endeavors, whether it's saving, investing or spending.
I'm off to Las Vegas tomorrow morning. Wish me luck! ;-)
Some of our clients call us nags and we thank them for the compliment.
Actually, because we believe in complete professional transparency, we tell prospective clients up front that nagging is part of our job.
As a result, 95% of our clients have well crafted Wills and Powers of Attorney. We know how important these documents are for individuals of any age and our value as advisors is diminished if this piece of the financial plan is not completed.
So we nag.
We even draft up instructions and deliver them to the lawyer for review and discussion with the client if that will move things along. Whatever it takes, really. It is just not good enough to think that our responsibility ends when the recommendation to get Wills and Powers of Attorney completed is given. We know that human nature often puts this task at the bottom of the "to do" list.
So what about the 5% who don't have these documents complete yet? Well, we are still nagging them.......!!
We just received our first electricity bill featuring the new Time-of-Use rates.
Since receiving the details of the new rates a few months ago, in our home we have
been trying to shift our energy usage to the off-peak times as much as possible. Why? Well, the cost of energy on peak is more than twice the cost of energy off peak.
So how did we do at our home? I give us a B+
Our overall energy usage in February and March was 34% lower than the same period last year. That's moving in the right direction.
64% of our usage was during off-peak hours
12% of our usage was during mid-peak hours
24% of our usage was during on-peak hours
That is a reasonable mix but not enough to earn an A+
The other reason why there is room for improvement is that the bill was still high at $183.
Granted, if we hadn't shifted some of our energy use to off peak hours, the bill could have
been as high as $250.
If you haven't familiarized yourself with the new rate system, go to
It's always exciting when the government delivers a tax saving mechanism to Canadians and one of the most recent tax reducers is the Tax Free Savings Account (TFSA).
Thousands of Canadians have opened these accounts over the past two years and many of them are making a tactical mistake by doing so. How can saving tax on investment income be a bad thing? It is when the alternative would grow your net worth faster.
The majority of TFSA accounts have been invested in low interest savings account vehicles. Many TFSA investors also still have debt on the books at rates that exceed their TFSA savings rates.
Here is how the math works:
$5,000 TFSA savings account earns 1% ($50).
$5,000 deposited against a mortgage or line of credit at 2.5%. This results in interest savings of $125.
I don't know about you, but at my house $125 beats $50 every time. Unless........and there is always an unless.
Unless you may have a short-term need for that $5,000 and the debt that you pay down with those funds is a conventional mortgage that you cannot then draw from in an emergency. Liquidity needs can trump the math.
So, if you can get a guaranteed rate of return on your TFSA investments that exceeds the interest rate on your debt then you are not losing ground. Unfortunately, these days it is very difficult to find guaranteed investments that exceed line of credit and conventional mortgage rates.
The reality is that many Canadians were not asked about their overall financial circumstances when the TFSA was recommended to them, and that is a mistake. We know this happens because we see it all the time.
Thanks to the government for the TFSA account because it's a wonderful gift. Just be sure that there isn't a better use for the funds each time you make a deposit.
Is it a business or a hobby?
One of the advantages of starting a home based business is that you can write off a variety of expenses related to the business. If the expenses result in a loss for the business, that loss can offset other income on your personal tax return.
Be careful though, after experiencing 3 years of losses, CRA may question whether or not the business is truly capable of making a profit and may deem that it is more of a personal hobby than a business. When they do this, they can deny the losses which will result in an unexpected tax bill for you.