How To Achieve Your Financial Goals In Less Than A Year
In this episode of The Glass Is Half Full, Richard Killen a Licensed Insolvency Trustee interviews Alanna Abramsky who saved $20,000 is less than a year. She will share the secrets on how to achieve your financial goals in just a short time. She is now a Money Coach who is based in Toronto helping people on how to budget, save and invest.
| Richard | Today my guest is Alanna Abramsky.
She has a very, very interesting story because she was able to save in the space of a little over a year, a little under a year, $20,000. And I’m going to ask her to share with us how she did that, and perhaps what motivated her to do it as well. Wow, saving $20,000, Alanna, in under a year on a reasonably good, but not humongous, salary. Pretty amazing stuff. But before I ask you how you did it, tell me what motivated you? |
| Alanna | I’ve been living in Toronto for about five years at this point, and I was working in the production industry in a lot of live events, and I thought I was kind of ready for a change. So I decided to go travelling, and I wanted to do this big trip around the world, and that really was my main motivation to save all of this money because I had heard of people who had travelled before, and they had to come home early from their trip because I had run out of money. And so I had this goal in mind where it was like, I didn’t, I don’t want to be one of those people who had to cut their trip short because ran out of funds. So I had this, you know, I did some research, and I had this idea in mind of where he wanted to go and how much it was going to cost. And that number that $20,000, like that was my end goal. So that really was my motivation. It was time for me to get out of Toronto and see the world while I was still young enough to do so and yeah, I just kind of, |
| Richard | So you had the motivation? |
| Alanna | Yeah. |
| Richard | The desire to travel and see things and all that and you had an actual target. |
| Alanna | Yes. |
| Richard | $20,000 |
| Alanna | That was the big thing. It was that goal. I think everybody has financial goals. Mine in that particular year was to save the $20,000, so I didn’t have to stress out while I was traveling. |
| Richard | And you did it. |
| Alanna | I did it. Yeah. |
| Richard | Many of our viewers, perhaps most of our viewers since they’re tuning into a TV program, put on by an Insolvency Trustee, may not have a heck of a lot of money, so the thought of creating a budget and managing their money the way you had to, they might think that’s beyond their reach. What would you say to people in that position, thinking like that? |
| Alanna | So I’ve been living in Toronto for about five years at this point, and I was working in the production industry in a lot of live events, and I thought I was kind of ready for a change. So I decided to go travelling, and I wanted to do this big trip around the world, and that was my main motivation to save all of this money because I had heard of people who had travelled before, and they had to come home early from their trip because I had run out of money. And so I had this goal in mind where it was like, I didn’t, I don’t want to be one of those people who had to cut their trip short because ran out of funds. So I had this, you know, I did some research, and I had this idea in mind of where he wanted to go and how much it was going to cost. And that number that $20,000, like that, was my end goal. So that was my motivation. It was time for me to get out of Toronto and see the world while I was still young enough to do so and yeah, I just kind of, |
| Richard | So what’s the best way to create that budget? What mechanical logistical way would you go about it? |
| Alanna | Yes. |
| Richard | What did you do? |
| Alanna | This is yeah, this is something that I think everybody should do, it doesn’t matter where you are in life, but the first thing I think you need to do is to get real with what you’re spending right now. I think it’s a really important thing to do. |
| Richard | What do you mean by get real? |
| Alanna | So I always suggest to the clients that I work with to print out the last 2 to 3 months of their debit and credit statements and then go through all of those debit and credit statements and highlight them per category. So let’s say you have RBC MasterCard or something like that, print out the last 2 to 3 months and highlight all of your dining out expenses and then add up all of those dining out expenses over the last three months and then find an average of what you would be spending in that dining out category. I think that’s number one, and you want to do it for every category that you’re spending money in. So you want to figure out what kind of fixed expenses do I have first? So those fixed expenses are the expenses that don’t change monthly, and you want to figure out what kind of variable expenses you’re spending. So these would be, you know, those expenses that fluctuate like our grocery bill. Our grocery bill’s never going to be the same every time we go to the grocery store. Unless, of course, we’re buying the same thing every single time. So, like dining out is typically |
| Richard | That sounds like a boring diet. |
| Alanna | I know, doesn’t it? Yeah, chicken and rice every week. |
| Richard | Good chicken. |
| Alanna | Maybe, I don’t know. So then you want to figure out what your variable expenses are on average, so and that’s where you’re going to figure out, that’s where the credit card and debit statements come into play. |
| Richard | So you’re dealing with facts. |
| Alanna | Facts. You want to analyze your real data because I don’t think enough people do that. And I think you know, I have a lot of clients myself, who every month they have no idea where their money goes, and it’s because they don’t understand what they’re spending. |
| Richard | That’s, I was going to ask you that, when you’re doing this with some of the people, families, what not, how surprising are those initial results? |
| Alanna | It’s crazy. It’s, I’ve had clients before who, you know, they, they’re dealing with a lot of credit card debt. They’re dealing with big lines of credits, and I take them through this activity where I just say, all I want you to do is just go take the last three months and figure out your averages in each category. And I have some clients who are spending $10-$11,000 a month and they’re not making that kind of money. And a lot of it is on these items we don’t necessarily need, but they’re living this lifestyle that they can’t really afford. So I think this is step number one really is to analyze the real data that you have, get real with your numbers because that is going to make you a lot more aware, moving forward of maybe areas you need to cut back on. Maybe there are things in your life that you could do differently to increase cash flow, so that what I say, that’s step number one. And you also want to account also for those irregular expenses that we have. So maybe they’re not monthly expenses, but something like property tax if it’s not included in your mortgage. |
| Richard | Car insurance. |
| Alanna | Car insurance. If you’re paying an annual fee. |
| Richard | You get an annual bill. |
| Alanna | Yeah, an annual bill, and sometimes people pay it monthly. Vacation is typically, you know, the summers are usually a lot more expensive for a lot of us, because whether we go to cottages or hang out with friends or whatever, so you want to incorporate those irregular expenses and be aware that they’re coming. So December, for example, is a really expensive month for everybody, and we all know that December is coming. So if we sit down and we get real with our numbers, you know, what did we spend last year for the holidays? Well, I need to incorporate that into my upcoming expenses, those regular expenses. So when January hits, we’re not all of a sudden freaking out, and we’re in masses amounts of debt like we need to prepare for these expenses in advance. |
| Richard | So getting into the specifics it’s been using what you did, as the template for all of this, how did you manage this? You’re talking about groceries. You’re talking about eating in eating out, your own food preparation. All the money that goes into it, just putting something in your stomach kind of thing, is, it can get complicated, get convoluted a lot. Right? And there’s other things, like travel. You mentioned travel, all kinds. There’s a domestic day to day travel, there’s the, you know, the reason why you did all this in the first place, kind of travel. How did you do it? How did you break it down for yourself? |
| Alanna | So the first thing that I did actually was, I was, you know, I started reading all of these different blogs about, I kind of had an idea of where I wanted to go. So I started reading blogs about, realistically, how much was it going to cost every single day to live in, travel and live in some of these areas, in the way that I wanted to travel? I wasn’t an 18 year old backpacker like I didn’t want to stay in hostels all the time. So, you know I had to incorporate a couple hotel stays and car rentals, that kind of stuff. So that was step number one was actually figuring out how much I was going to spend on a daily basis in some of these places that I was going to. So then I had my number. That’s how I came up the $20,000. That’s what I wanted. Like all flights, that was my target. That was like all my flights, hotels, food, you know, going out, tourism. So from there, what I did was I sat down and I went through that exact activity, looked at exactly what I was spending now. So I went through my credit and debit statements. I looked at everything I got real with my numbers. And then what I did was that I created a budget for moving forward where I could cut back in certain areas. So for me, I loved dining out. I still do, but I was spending way too much money and dining out that I didn’t need to be spending because my priorities had shifted. So now my priority was travelling, so I cut back in dining out. That was a big one. I ended up saving about $200-$300 bucks a month in dining out. I got rid of my cable bill. I just stopped. It was like, I don’t need cable. I went out and I actually bought, the old school bunny ears, those digital analog boxes. And that is like it’s a $15 charge at Best Buy, cut my $60 cable bill, and I could still get, you know, all the big |
| Richard | It’s a $15 one off charge |
| Alanna | That’s what, that’s once, it’s a one thing plug, screw it into the back your TV and you get your, like, Global and CTV and CBC. And now with Netflix, you can pretty much watch anything that you want. |
| Richard | So you’re talking to somebody who grew up with that? |
| Alanna | Yeah, exactly. I can still remember that at our cottage. |
| Richard | Not that I want to talk about age. |
| Alanna | Yeah, and then, I never had a car at the time, but, I stopped taking public transit as much because, you know, $3 every time you ride, $3.25 every time you ride, it really started adding up. So I went out and I invested in a bike. And it wasn’t a nice bike. It was about a bike. I bought a bike and it got me to and from or I would walk everywhere. The biggest thing that I actually found the greatest impact on was grocery shopping. So what I did and I still do it to this day, but I usually grocery shop on Sundays and what I do, usually when I go to the grocery store, there’s typically a 50% off produce cart that they just usually restock. |
| Richard | Make sure you eat it today. |
| Alanna | Yeah, well, yeah, or just like, make sure you prepare it today kind of thing, but even still, like it lasts 3 to 4 days. It’s not the freshest stuff in there, obviously, because they’ve had to make room for the new fresh stuff coming in. But all of the produce I’ve ever had there was perfectly fine. So on Sundays, I would go out, I would spend about $30 in produce for the week, which was more than enough to last me the whole week, and I would just go |
| Richard | Compared to what have you been spending? |
| Alanna | Oh, previous to that? I was probably spending closer to, like, $70 or $80. Yeah. Yeah, and It depends also where you go grocery shopping, I like shopping at No Frills. I think their produce is good, but I find Loblaws to be quite expensive. But all of those grocery stores typically have some kind of 50% off cart. So I started going to that cart, and then I would go home, and I would food prep for the week. And that saved me a ton of money. One of the big things I always |
| Richard | So instead of going out and spending money to pay somebody else, to prepare your food, you were investing in the, what do we call that? |
| Alanna | Investing in myself. |
| Richard | Sweat equity. |
| Alanna | Yeah, exactly. Yeah. And I mean, for me, I like cooking. And I like, you know, I can follow a recipe, and I could basically create anything. Yeah, well, I mean, it takes time, though, right? You have to, like, you have to weigh, like, you know, time value for money. So for me, I like my priority was like I wanted to save this money. So it was okay. |
| Richard | Again, you had your target. |
| Alanna | Yeah. I had my target. And there was nothing. |
| Richard | A goal in your target. |
| Alanna | Yeah, exactly. So the transportation was the big one. The dining out was a big one. I always say to clients like, look at how much you’re spending at your bank. I think there’s a lot of the major financial institutions right now are spending their charging way too much money on bank fees and there’s a lot of no fee banks out there, now. |
| Richard | Did you start investigating all these little nooks and crannies? |
| Alanna | It was like everything, I was like, where can I start to save money? I called my telecom companies like I reduce my cell phone bill by about $40 a month. Like I said, I got rid of my cable. Same thing with my internet. I just switched my internet provider, saved myself about $20 a month, and it doesn’t seem like a lot at first. But when you have, you know, when all of a sudden you’re cutting back by, like, $500 a month and you can put that into, you freed up in cash flow to put into your travel fund, it added up. |
| Richard | To about $1,600 a month or something? |
| Alanna | Yeah, it was, it was like, it was probably, it was probably cut back. |
| Richard | $20,000 a year. |
| Alanna | Yeah, I probably cut back around, I would say, $1,000 bucks a month, and then whatever extra I had and from work, it would throw into savings. |
| Richard | It wasn’t all savings. |
| Alanna | No, but the biggest thing for me, I think was dining out. That was like I was going out. And it’s easy to do in Toronto. It’s expensive. And so easy. There’s six restaurants for every eight buildings or you know, every eight shops or whatever. So |
| Richard | So I got a question for you because I know that people are listening to this and, yeah, fine, it’s all well and good, but did you think you were depriving yourself of anything during all of this, or was your goal so strong that it compensated for and any negative feelings you might have had over these changes? |
| Alanna | Yeah. No, I didn’t. I never felt like I was depriving myself. There were times I would say that some friends, you know, would ask me to go out for drinks or food or whatever. And, you know, I just said no. |
| Richard | Or you said, you buying? |
| Alanna | Yeah, I said, why don’t you guys come over instead and I’ll make something here. |
| Richard | I would have said, you buying? |
| Alanna | Yeah. Yeah. So I didn’t go that far, but, I never really felt like I was depriving myself. There were sometimes in the winter when I was biking to work where I was like, I should just jump on the streetcar. But I was, like, so motivated to just save that money. That, I think that winter actually was a pretty harsh winter, I think I only took the streetcar twice in the whole winter. I was that crazy person, that was outside on my bike, like with my parka on |
| Richard | Yeah, I think I saw you. |
| Alanna | Riding, riding to work. |
| Richard | Alanna, can you explain to me, about this mindset, mindful spending, what do you mean by that? |
| Alanna | So I think now, especially in our day and age, it’s really easy to spend money. And, you know, I blame a lot of the credit card companies for that because they created that tap system where people don’t even have to think twice about the money that they’re spending. And I think that’s a huge issue |
| Richard | Do you know what the big thing about that is, you don’t have to remember your PIN. |
| Alanna | Yeah, like you don’t have to remember anything. You can go to |
| Richard | Just remember where your card is. |
| Alanna | Any store and swipe it on this machine and you’ve made a transaction. So people haven’t been mindful of how much money they’re spending because it’s so easy now to spend money with technology. They’ve made it so simple. I think now, even on your Apple Watch, you can, you know, with Apple pay, which is like, I haven’t even tested that one yet, but I think now the biggest problem that a lot of my clients see when they, when I work with them, is that they just they don’t know where all of their money goes, and it’s because they’re not being mindful of where they’re actually spend spending their money. They kind of have an idea of how much money they have coming in, but they have no idea where it goes. So I think that first, you know, when you, you know, first step is analyze the data. The second step is to be mindful about spending moving forward because, yeah, because I think once you start to, you know, think about like, is this something that I really need or is this something that I really want? And if it is something that I want, do I want to get out of debt more than me wanting this thing that I’m about to purchase. And I think that’s kind of that mindfulness those, you know, creating new habits where you think, is this the absolute priority? |
| Richard | Mindful spending. |
| Alanna | Mindful spending. It’s and it’s hard. It takes time. But, I do think that when you actually start to track your spending, it just kind of naturally starts occurring because then you start to see where all your money starts going. |
| Richard | I firmly believe in that as well. I’ve heard you mention that you equate spending to a gym membership and you’re the personal trainer in that particular gym membership? |
| Alanna | Yeah, so I like to consider myself a personal trainer for your finances. You know, I think financial health and, our everyday health are very similar in a lot of ways. So for me, if I’m not aware of the food I’m putting into my body, I’m not going to feel good, and I have to be mindful to be healthy inside. Same thing goes for your wealth. And so what, when I work, when I work with my clients, you know, all of those all of the people that I work with, they need that accountability. They need somebody to talk to, to be like, well, maybe instead of doing it the way you have been doing, why don’t we try it a different way and the same way that if you went to a gym and got a personal trainer, they could sit down with you and say, look, you have this. We need to change this and do this. We’re going to give you these exercises. Maybe don’t eat this food, Maybe eat this instead. So when I refer to myself as a personal trainer for your bank account, I do a lot of the same things with clients that I feel like personal trainers do with their clients in the gym. Just looking at what you have and say, look, this hasn’t been working for you so far. Maybe we should do this instead, or, you know, maybe try doing this and moving this around. So that’s kind of where that came from. |
| Richard | One of the things important things that goes with being a personal trainer in a gym context and physical context like that is, the relationship that develops between the trainer and the trainee is going to be a sympathy, and if you want, a trust. |
| Alanna | Yeah. And the accountability, to people, need that accountability partner sometimes. Because if there’s nobody there, you know, at the end of it being like, hey, did you do this, this week, then a lot of people just won’t do it. |
| Richard | Do what? |
| Alanna | Anything |
| Richard | And now you’re a money coach, you helped over 300 people. |
| Alanna | I have so far. Yeah, in the last year and 1/2 I would say two years. |
| Richard | Now, this you say, 300 people, does this represent a real cross section of humanity or particular type or age group? |
| Alanna | No, I have a lot of clients. My clients range in age from, I have some clients who are just getting into, like, they just are, you know, finished university and now they’ve got a lot of student debt. I’ve got a lot of clients who have very high net worth. And they have a lot of investments and need help. I have clients who you know, have medium incomes and they just don’t have any money and they’re in debt. So, my clients range from anywhere I’d say, like 25 years, all the way up to 70-72 years old. |
| Richard | That old, eh? |
| Alanna | Yeah, yeah. So I basically as a financial coach, what I do with them is accountability. I look at what they have currently and think about different ways that I can help them and not it’s not doing very, it’s not going out and getting new products necessarily. It’s looking at what they have now. And how can we be |
| Richard | Modify. |
| Alanna | How can we modify what you have now, too, you know, create a really solid foundation, create a really solid budget, look at your cash flow, so moving forward we can, you know, we can help you. If they struggle with that, we can help you get out of debt. I can help you do that. But we need to, first of all, educate you on what you have, how that works, and then from there, you know it’s moving forward and it’s really coaching them through the process and educating them. I think education. I think the lack of financial education in Canada’s it’s really creating a huge issue for most people because I have clients who have a lot of credit card debt and they don’t understand how their credit card debt is calculated or they don’t understand compound interest or they don’t understand, you know, why am I, why is my credit card debt not going down if I’m just paying the minimum amount due. Like they don’t understand how all those things are calculated. So as a financial coach, I help to first look at it and then educate them so they could make better decisions moving forward. And then it’s that accountability to be better moving forward and have those checking points because when they have those that accountability partner, they typically get the work done. |
| Richard | Alanna, it was great having you on the program. You have a savings guide that is available to people, tell us what it is and how to get it? |
| Alanna | Yeah. When I got back from my trip, I created a blog called thebudgetbabes.org and I had a lot of people in my trip who were asking on how I saved all the money? I then started writing blogs about saving money. If you go onto that blog, there is a little e-savings book guide that shows how I saved all that money in there. On top of that, I am the head of financial, the head of a financial coach with a company called Enriched Academy. And we empower Canadians to be better with their finances and educate them with their finances, so you can go to enrichedacademy.com, to check out more. We have a 12-course system on what to do with your finances moving forward. |
| Richard | That’s great. So that’s how people get it? This is the book I wrote, which you’ll find that, talk a lot about much from the same things from a different angle. |
| Alanna | Thanks, Richard. |
| Richard | Thank you for being here, Alanna. |
The Big Secret of Financial Success with Robert Gignac
In this episode of The Glass Is Half Full, Richard Killen a Licensed Insolvency Trustee interviews Robert Gignac, a speaker, writer and author talk about The Big Secret Of Financial Success. He is featured in many publications, including The Globe & Mail, Money Magazine, Private Investor and has his own TV show called “We Talk Money:
| Richard | Hi, I’m Richard Killen. Welcome to a very interesting show we hope we have for you today on The Glass Is Half Full. We’re joined by Robert Gignac, am I getting it right, Robert? |
| Robert | Perfect, Richard. Thank you. |
| Richard | Good. Today we’re going to learn about the big secret of financial success, right Robert? |
| Robert | Yes. Absolutely. |
| Richard | Robert is a very, very highly sought after speaker who combines knowledge, passion and visuals to encourage people to take control of their personal finances and to live what you call a richly imagined future, right? |
| Robert | Absolutely. |
| Richard | Robert delivers keynote speeches and interactive workshop programs to International organizations, financial industry and private clients, right? He also featured in many publications, including the Globe & Mail, Money Magazine, Private Investor and you have your own TV show on, what is it? We TV? |
| Robert | We TV? |
| Richard | What’s it called? |
| Robert | It’s called We Talk Money, |
| Richard | And, one of the more interesting things, if you think anything is more interesting than TV, is that you’ve written a Canadian bestseller called Rich Is a State of Mind. |
| Robert | I did, accidentally by chance. I did. I’d never intended to write a best selling book on personal finance. I was trying to help a friend create a marketing brochure. |
| Richard | Some of the best things come from things like that? |
| Robert | Absolutely. |
| Richard | Well, I’m going to get back to your book in some depth little later on Robert. I personally found it very interesting, but I’d liked to ask you, you spend a great deal of time speaking to Canadians about concepts of personal finance and taking control of their financial future, and I’m sure you’re often asked, what is the big secret to financial success? So what is the big secret? |
| Robert | I get asked that a lot. And people are generally incredibly underwhelmed with the answer, which is that there’s no big secret. There’s no magic pill, there’s no silver bullet. There’s no one thing that if I only knew what that one thing is. What it is, is with many things in life, it’s a series of small, little, incremental things that we do over and over and over that allow us to get better with whatever it is, including managing our personal finances. If I were to pick one thing and I was asked this recently in an event because the person was adamant that there must just be the one thing it would be this, marry the right person and stay married. That would be the one thing, right? If anybody’s ever been through an asset-ectomy, i.e. divorce, and lost half their assets, it’s a huge impediment to being successful financially and the…. |
| Richard | Not to mention being a bit of an emotional letdown. |
| Robert | A huge emotional letdown and lots of other issues to deal with there, but If people are looking for that one thing, they’re going to be really disappointed to find out that there just isn’t that one thing. |
| Richard | So essentially you brought marriage counselling to the table? |
| Robert | No, absolutely not. But at the end of the day, |
| Richard | It’s important. |
| Robert | It’s important and it’s important that we do a number of things better than we’re doing today to have a better future tomorrow. There’s a line I’ve heard that I like that said, If you’re willing to do the things today that other people won’t, then tomorrow you can have the life that other people won’t be able to have. If you’re willing to do those things today. |
| Richard | But it has to be today. |
| Robert | But, if not today, certainly tomorrow or next week because we all believe we have huge, vast amounts of time at our disposal. |
| Richard | Especially when we’re young. |
| Robert | When we’re young, certainly. When you’re 25 the concept of being 50 seems ancient, right? |
| Richard | If you think about it at all. |
| Robert | If you think about it at all. But we think about it because we look at our parents and we look at our grandparents and we go, yeah, I’ll get there, but I’ve got lots of time. And the reality is that time disappears before we know it. |
| Richard | You wrote an article called, It’s Possible, and in that article you talk about giving a speech, I guess it is, to a group in Timmons, I think it is, on the subject of, you call, richly imagined future. I understand that an audience member commented, confronted you if you want, to go with his own thought on the matter, saying, basically that this was all well and good for you, but there’s no way that it’s going to be possible for him. Can you explain what happened next? |
| Robert | So it was during the Q and A portion, and the gentleman came up and he said, “he thoroughly enjoyed the presentation”, he said, “but this concept that you talked about won’t work for me”. And I said, “Okay and tell me more?”, because that’s always my favourite question to someone. Tell me more and he said “well, you don’t understand. I just have a high school education. I never went to university.” That’s great. He said, “why is that great”? I said because too many people confuse education with the ability to do better things with money. You don’t need a university degree to do great things with your personal finances. The fact you didn’t go to university is great If you had gone, sure, that’s nice. But don’t let the fact you didn’t go to university determine your financial future, and I drew his attention to a quote that I had put up during the presentation by a British entrepreneur named Brad Sugars. And the quote, I use it all the time, is the quality of your life is determined by the decisions you make, which is determined by the questions you ask, which is determined by the quality of your education. But don’t confuse that education has to come from a school system. It comes from the books we read, the things we watched, the people we associate with, and as long as we’re willing to learn something new and change your behaviour, then we get educated. When we’re educated, we ask better questions. Those better questions could be to financial professionals, the peers around us, and when we ask better questions, we make better decisions. And that’s what determines how successful we’re going to be. Not whether or not you went to University, college or even graduated high school. |
| Richard | In fact, some people will say that your education only really starts when you leave school. |
| Robert | Oh, absolutely, But, many leave the educational sphere, and I’ve actually heard people say this when they were done with school, it’s like, “Oh, thank God I’m done with that, now I don’t have to read any more books.” No, reading books is excellent. It’s a phenomenal way to gain the education to help you do better things. |
| Richard | You could be describing my father, who had a 7th-grade education, but it was possibly the, certainly the most everyday man I’ve ever known. |
| Robert | That’s great. |
| Richard | But he read a lot, quite a bit. |
| Robert | It’s important. |
| Richard | Can I ask you? People are always looking for, easy or shortcut answers to think about that. I’m gonna see if you can provide one here. What is the biggest single thing that somebody can do to improve their financial situation? |
| Robert | If I were to boil it to one thing, Richard, I’d probably boil it to one word. And the word is no. It’s a word that most people in today’s day and age or incredibly unfamiliar with because they’ve never said no. They’ve never had no said to them. Sometimes as parents we don’t say it enough to our kids. Right? Can I have the new Xbox, XYZ killing video game? No. Do I want to go out and buy a new Lexus GS450? Yes, but no. Because the more often we say no to ourselves, the more successful we will be in the long term. That doesn’t mean I’m against spending money. Spending money is a great thing, right? We work hard. We earn money. We should spend some and enjoy what we’re doing. But the reality is, the more often we say no and delay the gratification, the more successful we can be with our finances. |
| Richard | Yep. I’d like to talk to you a bit about your bestseller, Rich Is A State Of Mind, right? Just a comment I’d like to make about the book, is I found it very interesting that you wrote it is a novel instead of the usual how-to-book, which is almost a manual, right? You have very good writing skills, I’ll tell you that. |
| Robert | Thank you. |
| Richard | When I was reading it, I found that I was, it was a page-turner. |
| Robert | When it comes to books on personal finance, I’m flattered to hear that. |
| Richard | And that’s the thing that impressed me the most on it, is that it is very thorough, but because it had it was a novel, had a plot, storyline, characters, that you get involved in, personalities if you want. But using that as a vehicle, what you did is, you brought in everything that I could think of it as a factor in personal finances, personal finance management, everything from how to save to the effect of inflation on things and what not? And because you wrote it as a novel, it all started to kind of make sense. It was explained and explained in a very, very easy, to, understand way. I think anybody could read that, you don’t have to be an MBA to be able to understand. |
| Robert | Oh, and absolutely. And one of the things I tried to do with the book when I picked this format, is I knew if I created a personal finance book that read like a high school or university textbook, nobody would read it, right? But, if I could craft a story of a slightly dysfunctional Canadian family trying to come to grips with everything related to personal finance, if I was lucky, I could create characters that people would read the book and go, “That’s exactly how I feel.” Or that’s my kid sister. That’s my older brother. And if I could do that, then maybe I could keep them turning the pages in order to actually get from one point to the other. There is an email that I received from a reader of the book that I keep posted in my office, right on my filing cabinet. I can see it every day, and it was a reader, who said “Robert, there’s one thing I needed to tell you about your book. I own many books on personal finance. Yours is the first one I actually finished, and I was so grateful to see that, that it’s in a prime spot where I see it every day. |
| Richard | Well, I’ll send you an email that says the same thing. |
| Robert | Thank you. |
| Richard | I want to ask a few questions about the content of the book, the thing that you discussed, if you don’t mind? In it, you talk about the importance of saving. That should be obvious to anybody that if you want a plan for your financial future, it’s going to incorporate an element of savings, and it has to be released. But for somebody living paycheck to paycheck, it’s really hard to see how you can do this. And I know in the book, you do deal with that eventually and so on. But maybe you could talk a little bit about that now. |
| Robert | One of the things that is difficult for all of us to grasp, is that if we want a better or different tomorrow, then we have to do different things today. And as it relates to money that generally the first basic building block is saving money, spending less money than you earn. Now there are a number of different ways, we can attempt to do that, but at the end of the day, taking that first step saving dollar one or dollars one through five can be a significant challenge in today’s economy, and but at the same time there are some simple things we can do. I think that will help us along that path. So, for example, one of the examples I used in the book if any of us were to go through a salary reduction if our employer came along and said sorry times are tough, we could keep the business open. But we’ve got to reduce everybody’s salary by 5%. Our first reaction generally wouldn’t be, “Hey, I’m out of here, and I’m looking for a new job” it would be like, “Wow, this really sucks. But okay, what do I do now?” And one of the things I encourage people to do is if you’re having problems saving dollar one pretend you just got a 5% reduction in pay. You get to spend all the rest, but that 5% has to be set aside for things that you’re going to do in the future. And while you’re doing that, you may go look for a new job. You may create a side hustle that brings in a few extra dollars. There’s a number of things you can do on that front, but it’s taking that first step, that is the most critical piece, Richard. |
| Richard | And by essentially treating it as a fait accompli, where the thing is done, you just don’t have that 5% anymore, right? |
| Robert | And, put that 5% in a bank account that’s not linked to your debit card, because we all know what it’s like. You’re out on Saturday night, you’re out with some friends, it’s like, I need $50, wait a sec, I’ll take it out now and I’ll put it back in on Tuesday. No, it’s not going, it’s gone. So make sure that it’s in an account that is not easily accessible. |
| Richard | Didn’t Wimpy buy his hamburgers like that? |
| Robert | Sort of like that. So, yeah, I’d gladly pay you next week for a burger I can have today. |
| Richard | That’s right. Mind you, that showing my age, you’re not supposed to have heard of them. You say in the book that people, everybody’s interested in money, I find that fairly easy to believe. But you also say that people are afraid of it. |
| Robert | There’s a lot of emotion around money, and it’s not just a Canadian thing. I think it’s more of a global thing. That money tends to make us feel like we’re not successful. I tell people all the time. Money is a crappy way to keep score in life. But the reality is for many of us, it’s the only way we’ve got to keep score or we think we do because we’re always comparing ourselves to others. We compare ourselves to the people we live next door to. People were related to, the people we work with, and we’re always critical of people who look like they have more money because we wonder, what did they do to get this money? Was it illegal or immoral or some other thing? Or somehow, if I don’t have enough money, however much that is, then somehow I have failed and done something wrong. |
| Richard | Would that be because, like it or not, money is one of the very, very few objective things which we can measure things? |
| Robert | It is. |
| Richard | Hard to measure how much love you are receiving or giving? |
| Robert | Absolutely. When you know it’s numbers, it’s paper. We write it down, we add it up, we divide it and we can see it in black and white. But the emotion that goes along with that is where most of us get pretty messed up as it relates to the money. And it’s where the fear comes in because we always think we’re not good enough. And what if I don’t measure up? |
| Richard | If I can’t do it? |
| Robert | But the thing that I always tried to caution people is when you’re making that comparison, make sure that you’re comparing reality to your reality. So, you know, in the age of social media, I try to convince people all the time. Social media is not real, so when you’re seeing your neighbours or your cousin vacationing in…. |
| Richard | So what President Trump says all the time is not real? |
| Robert | Uh, no, I know. But the reality is when we see people we know vacationing in Mexico or they stand beside a new car or we go like, holy crap, they’ve got it all figured out. They never post the picture of them on social media at 2:45 in the morning, curled up in the fetal position in bed, can’t sleep because their visa bills due Friday and they don’t have the money? No. They post the picture of their meal dining out, or a sporting event or on vacation, and their life looks great. We then feel bad about ourselves going, “Why can’t I do all of that?” Well, we could. We just have a different plan. |
| Richard | So, Robert, you talk about the word rich. It’s in the title of your book, right? |
| Robert | It’s in the title. |
| Richard | But you have a very interesting definition of the meaning of that word. |
| Robert | Well, rich means different things to different people. And if you do look it up in the dictionary and I know the younger viewers watching go, what’s a dictionary? If you look it up, the very first Google, very first definition has to do with depth of colour, and hue has nothing to do with money until you get down to the fifth or sixth definition. I chose the title, Rich Is A State Of Mind, because nobody could tell me what rich is or was to them. They didn’t, they quote me a dollar figure. They didn’t say it’s 2,738 something. But they told me how they would feel, what their life would look like, who they’d spend their time with, if they ever answered the question, yes. Which made me think that it’s really a mental thing. It’s how we feel, not what the balance of a bank statement or mutual fund statement says. And the characters having the discussion in the book about the concept of the word rich, Richard, the mentor in the book, went to the whiteboard. |
| Richard | Very good name. |
| Robert | He wrote down one word. Freedom. Now, it was interesting that he chose that word because the other characters in the book in that discussion were freedom from what? And Richard just kind of smiled and said, “Not freedom from, freedom to. Freedom to create the life you want, spending time with who you want to spend it with, doing things that bring you enjoyment, not freedom from something.” And when we look at money is the ability to provide experiences in our life, then I think we get a much deeper appreciation for it. |
| Richard | In your book, you’re also, by definition, if we’re talking about building a better financial future for ourselves we’re going to be eventually talking about saving money. |
| Robert | Yes. |
| Richard | And in the process of that, discussing that in your book, your characters mentioned that, for most people, perhaps, saving is seen as a form of punishment, where you deprive yourself. |
| Robert | It’s denial. |
| Richard | Spending. Yes, denial. And spending is a form of reward. |
| Robert | Yes. |
| Richard | You don’t agree with that? |
| Robert | I don’t agree entirely, because what happens is sometimes we get things reversed when we need to do better things with our money. Saving is actually the rewards side and think of spending it is a little bit of punishment because we’re destroying the wealth we’re creating by doing so. Now, we all need to spend money, right? We have to pay rent. We have to buy gasoline for a car and a metro pass and some groceries. All of these things. But the end of the day is we’re trying to plan a long-range financial future. The savings aspect is actually the reward that we’re going to get later. But in today’s day and age, the concept of delayed gratification doesn’t exist. Where those who came before us? My parents, my parents before them? You didn’t buy things if you didn’t have cash in order to pay for it, you save money for a rainy day. You waited until you could afford to do something. But in today’s day and age where we have this kind of frictionless spending, you know, he used to be with a credit card used to make that noise, like when they actually ran your card. Now it’s tap and beep, the money’s gone, right? We don’t have any physical relationship to it. And that’s what I think messes us up about money today. |
| Richard | Well, you’re not going to get any argument from me. I’m an Insolvency Trustee, as you know Robert, and the whole concept of credit cards, although it has had a very positive effect on this overall standard of living, the economy in general, the size of the economy and |
| Robert | And there are people who use credit cards very well. |
| Richard | In fact, probably the majority. |
| Robert | I think the majority do. |
| Richard | Because it’s not the majority that to come and see me. But in any case, I have to agree completely with you. What you’re talking about there is essentially the difference between short-range thinking and long-range thinking, right? |
| Robert | Yes. |
| Richard | So the idea of instant gratification is that you can’t see beyond right now. A child thinks that way. He sees that he wants that and so on. Where, as an adult is supposed to come along and say, “So I don’t know. What am I gonna have to give up next week or next month or next year to |
| Robert | Right, and we can do a pro and con list if you want. If I do this today, what can’t I do tomorrow? If I’m willing to forgo this today, what will I be able to do tomorrow? And it’s that kind of decision-making process that hopefully allows us to make better decisions financially. |
| Richard | And it kind of leads into my next question, which is you’re referring to savings as something that is essentially, it has become a habit for it to be effective, basically or if you want. If you can get into the habit of doing it, it will really pay dividends. |
| Robert | And it’s the habit that drives us from a financial perspective. But we get into habits all the time, both good habits and bad habits. But when we’re trying to start that saving money process for somebody who’s always struggled with it, or never, ever saved a dollar, saving dollars, one through five is the beginning of a habit, and we do it this week and we do it next week to do it the week after, and the week after that and the lot more we do that, we ingrained the habit, it becomes second nature, and then we don’t even have to think about it anymore. It just happens. |
| Richard | And in your book, you essentially saying that the way to look to achieve this, when you move into this is to start small. So you use the example, one of my favourites that I think I learned when I was about 13 years old or something, I don’t know why, but I learned it, that little example, we’ll call it that of the value of a penny, double daily? |
| Robert | Yes. |
| Richard | Not one cent double daily? |
| Robert | Right. |
| Richard | The value of a penny double daily. So if it doubles tomorrow, you got two pennies, now double two pennies, you’ll have four. So by the end of the month, how much money do you have? |
| Robert | You have approximately $2.7 million now, realistically, there is no investment out there in the world. |
| Richard | But when you tell me where that was. |
| Robert | That will do that for you. But the reason I used the example in the book is to get the characters understanding the concept of time and compound interest in order to help your savings and investments grow over time. |
| Richard | And compound interest is what you call? |
| Robert | The Seventh Wonder of the world. And I didn’t I guess, seventh or eighth right, depending on your perspective, that you know. But the reality, I didn’t think that it was some guy named Baron de Rothschild’s in this 1800’s who eventually coined that phrase. But if you don’t start saving dollar one today, then 38 late days later or 38 months later or 38 years later it won’t matter. You will have lost that time and compounding opportunity in order to make your personal finances better. |
| Richard | I think you mentioned in your book that if used the example, that if a 20-year-old, give or take, is able to save $2000 a year and does it only for 10 years and stops saving at that point but allows it to compound at whatever rate of interest, whatever rate of compounding. But just to keep things simple, we’ll use 10% which is way higher than what you’re going to get today, probably on average, but for the sake of the example, that 10% how much money is a person had by the time they are 65? |
| Robert | Approximately $1.2 million. |
| Richard | And all they’ve saved his $20,000. |
| Robert | Right. But if their friend, who says I’m not going to do this from the time I’m 20 to 30, I’m going to start when I’m 30 and they save that same $2000 a month for 10 years for all the way to 60 |
| Richard | Oh, all the way. |
| Robert | For the next 30 years, they will still not catch up to their friend, who started earlier and stopped. |
| Richard | It’s pretty graphic. |
| Robert | It’s the value of time. Now to a viewer or listener to the podcast, they may go, I’m 48 years old, I’m screwed because I’ve never saved dollar one. No. Start now. The best time to have planted a tree in your backyard if you want to sit in the shade is 35 years ago. The second best time is today, because if you don’t do it today, 30 years from now, you’re still not going to have any shade to sit under. So it’s the point where, regardless of where you are in that spectrum, if you’re 22 and starting it, great. If you’re 32 and starting it, great. If you’re 42 and starting it, great. The key is you have to start. |
| Richard | And along with that starting, goes the idea of goal setting, isn’t it? |
| Robert | Goal setting is |
| Richard | Start, but start what? You can’t just flail around? |
| Robert | No you |
| Richard | I mean you could, I suppose. |
| Robert | You could. |
| Richard | But it’s not smart. |
| Robert | But goal setting is important because it’s what in many cases drives our behaviour in the decisions we make. Why are we doing this? Because I want to accomplish X Y and Zed. “X” in the next year, “Y” five years from now and Zed 10-15 years from now. But without those mileposts out for us to work towards, we don’t see the reason why we are doing this in the first place? So we need to get very clear about that. |
| Richard | Keeps us on point. And keeps us essentially on target. |
| Robert | And one of the cool things that happens about goals is once you start crossing them off the list, you get incentivized to go, cool, how do we get more of these? Well, then we create more of them, and we keep trying to accomplish them. |
| Richard | I’m going to throw an acronym at you, Robert, you may have heard of it before because it’s in your book. Smart. S M A R T. Tell us what that is? |
| Robert | It stands for specific, measurable, achievable, realistic and time-based. It’s the I’ll say, the backbone of goal setting. Everybody talks about goals, talks about this, and what it is creates a structure for you to set goals. Your goal has to be specific. I’m going to lose 36 pounds. It has to be measurable. Already had measured that when you get on a scale every once in a while, is it achievable? Well, it depends on your time frame if you said by the end of the calendar year, but we’re already in October, 36 pounds in a month and a half, may not be really may not be achievable or realistic? |
| Richard | Give up eating. |
| Robert | Well, exactly. But, then here’s what happens. We give up eating for like, three days, and on day four, we head to Tim Hortons for a couple of you know, sour cream doughnuts and a large double-double because after three days we have, we’ve committed ourselves to fail by not setting a realistic goal. |
| Richard | So that’s what SMART is? |
| Robert | Yes. |
| Richard | Okay, now you also mentioned something else. I’ve heard this before, but missed to see it in your book, nice to be reminded of it, the phrase called, Pay Yourself First. |
| Robert | When we think about the concept of money and saving dollar one, we have to, particularly for those of us who get a regular paycheck from an employer, take the money right off the top. So if you received $500 that week, is your paycheck the first X amount? Whether it’s $5, $10, $50 or $100 goes right off the top. You don’t see it. You don’t get it. You can’t spend it. |
| Richard | You don’t put it into the same account that you’re |
| Robert | Exactly. It goes into that account not linked to any of your debit cards, so that you have no access to it without maybe physically going into a bank branch in order to do it. |
| Richard | So this is a bit of takeoff on something you said earlier about, we’re talking about pretending that you have a 5% pay decrease. |
| Robert | Right. |
| Richard | Basically, you’re paying yourself that 5% first. |
| Robert | Right, and that once you do that the rest of the money you get to spend without ever worrying about it. The problem is, many of us try to do the reverse. How much money do I make? Here’s my bills, add all the bills up, and we draw that big line, say, I’ll save what’s left. |
| Richard | Right. |
| Robert | There’s none left. Because our unexpected expenses and our ability to go and hang out with our friends on the weekend and only eat into all of that residual income and then the amount at the bottom is zero, I don’t have any money to save. No, take it off the top and once it’s gone, the rest of the money, go ahead and spend the rest of the money. And I didn’t invent this phrase. I think it was the guy who wrote the book, The Richest Man In Babylon, in 1904, who actually coined the Pay Yourself First. |
| Richard | Nothing new under the Sun. |
| Robert | There really isn’t. |
| Richard | But, are munificent Government invented a couple of things for us, one is called on RRSP and the other one is called a TFSA, registered retirement savings plan, and the tax-free savings account. |
| Robert | Right |
| Richard | Now, you’ve got some ideas on the benefits and, to some extent, the detriments, of one against the other. |
| Robert | There are, I think there are certainly pros to both. The RRSP is thought of as a much longer-term vehicle for saving money. Because, you put money into the account, you get a tax break today, and then that income will be taxed back to you 10, 15, 20, 25, 30 years out. |
| Richard | Presumably at a lower rate because your overall income, |
| Robert | Presumably at a lower rate, because we make hopefully a decent living while we do that when we’re retired, our income falls. We’re taking money out, it should be taxed less. It grows compounds over all that time. And then we can tap into that later. The tax-free savings account, and I guess it’s a decade old now, so but it’s still relatively new in the grand scheme of things, allows us to put money away, and all of the growth has never taxed, in that account. We don’t get a tax break for contributing the way we do with the RRSP, but all of the growth that occurs in the account comes out of it, none taxed. I think, the one thing I wish they had given it a different name because they called it the tax-free savings account, so we tend to think of it as a savings account, like it’s transactional. We put money in this week, take it out two weeks now. Put money in next month, take it out two months from now. It wasn’t designed to be transactional that way, and you can invest inside it and hold stocks, mutual funds, ETF’s. It shouldn’t just be thought of as a savings account. Why? Because you can’t get compound interest when you’re only using, getting 1% on your money, using it as a savings account. |
| Richard | Yeah, and not surprisingly, and not that many people are terribly converse in with what a TFSA is and how it works, the way you’re describing. A lot of people, maybe most people understand what they’ve been, just a retirement savings plan, because CPP is that there’s always talk about providing for yourself when you’re as you get older. Generally, some concern and anxiety that comes into play for probably most people that, what will they be able to live on? Are they going to be totally dependent upon CPP and OAS? Or will they be able to provide for themselves completely, or maybe supplement themselves? |
| Robert | And, do some Canadians have a pension plan? Some of it’s a defined contribution plan based upon what you contributed through your employer and automatic deductions and what they might match. Others are defined benefit, which is more of an older style, which my father had because he worked for the same company for 35 years. But, all of these things, to me, go along with having a conversation with a financial professional because there’s lots of decisions to make, lots of options to have, and sometimes it helps to have another person help walk you through the process. Here’s the pros and cons. You’ve got 15 options. How do we sort our way through that? Yet, sometimes we try to convince ourselves that, I’m smart enough to figure this out all by myself. And, yes, some people are smart enough, but, going right back to where we started this conversation, how you work with your personal finances, has nothing to do with how smart you are it’s how, |
| Richard | What education is. |
| Robert | Or what education you have. It’s what are you willing to learn through the process to make better decisions? |
| Richard | Well, on that note, Robert, I think that wraps it up pretty good. You don’t have to be a PhD or anything like that to be able to manage your finances well. |
| Robert | Absolutely not. You just have to want to. |
| Richard | And, I know a little bit about how, and I can’t think of a better way for anybody to, for anybody to, find out how and to read your book, Rich Is A State Of Mind. Rich Is A State Of Mind. And highly recommend that anybody pick it up. Where can they get this book? |
| Robert | The best place to get a copy of the book is from my website, which is www.richisastateofmind.com. So it’s the book title, just as one word. If they’re interested in the other work I’m doing, It’s robertgignac.com, and they both link to each other. |
How To Save Money On Credit Cards And Travel With Barry Choi
This episode is about smart ways to use credit cards and consolidation loans to help you pay off your debt. Barry also discusses how to get more bang for your dollar when it comes to vacations.
Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. Richard Killen is a Toronto Licensed Insolvency Trustee and author of the book “The Glass Is Half Full”.
| Richard | Hi, I’m Richard Killen. Welcome to the Glass Is Half Full. The show that tries to get people to get a better bang for their buck, even if they’re kind of short on the bucks. So today we’re joined by Barry Choi. Welcome, Barry. |
| Barry | Thank you for having me. |
| Richard | I have to read this Barry to make sure I get it right. Barry is a Toronto based personal finance and travel expert who frequently appears on City TV, Global, CTV and other TV programs. He is also a regular contributor, to many financial and travel publications, and his blog “Money We Have” is one of Canada’s most trusted sources when it comes to both finance and travel. So once again Barry thanks for joining us. |
| Barry | No problem. |
| Richard | Today I’d like to cover both of the aspects of finance and travel. Okay, so I’d like to start with personal finance, maybe on the basis that if you don’t have any money whatsoever and no credit cards you are not going to travel very far anyway. I think you’ll agree with me when when I say that credit cards are the most ubiquitous, the most common form of personal credit in Canada. |
| Barry | Definitely. |
| Richard | And with everybody 18 or over has at least one. |
| Barry | They should. |
| Richard | If not 12. I don’t agree with 12. |
| Barry | Don’t ask me how many I have. |
| Richard | So I’d like to start off with credit cards. One of the things about credit cards, if you’re in the credit card business, to promote the card, to push your product, use many gimmicks, shall we say? |
| Barry | Sure, yeah. |
| Richard | Special offers. One of the most common ones, certainly that I’ve heard of, is the balance transfer usually based on interest. Can you explain that to us? |
| Barry | Yes, so the thing about balance transfers, it seems like a gimmick, but I think it’s one of the best options out there, especially for people who have run up debt on their previous credit cards. Because usually when you look at an offer you are talking about points, cash back, benefits for airports or whatever, but what the balance transfer options, you’re basically guaranteed a lower interest rate when you sign up by transferring your previous balance to this new card. One good example is, and MBNA tree line gold card. It has a 0% interest rate for nine months. It comes with a $39 fee and 1% bounce transfer fee. But you know, 0% obviously is much lower than, say, the 19.99% that you’re currently paying. |
| Richard | Yes, I know there is a difference. |
| Barry | Yeah, huge, huge difference right? And even then, there’s the nice thing about that. even if you can’t pay off the entire balance right away, the balance or interest rate goes up to 8.99 or 12.99 depending on what you have. Which is still lower than what you’re paying before. The key thing is to understand that if you’re going to do this balance transfer it’s not just to, like constantly balance transfer to avoid paying your bills. The whole goal is to pay down your balance, right? So if you are to continue picking up debt with your new credit card, it doesn’t matter. You’re going to run into a whole eventually. |
| Richard | Now, obviously, this depends how you handle your cards. There’s nothing… |
| Barry | That’s right. |
| Richard | Like if you’re paying your card off the end of every month, you’re getting down to zero of every month. You really don’t have a credit card there, do you? |
| Barry | You have no debt, right? Like that’s a beautiful thing about credit cards when used responsibly. Not only do you build a good credit score, you can reap all the benefits from the points you earn or the cash back that you earn. |
| Richard | So, on whole, it’s good to take advantage of these things, depending on what it is you’re transferring, and how much… |
| Barry | 100% depends on the situation. |
| Richard | We’ve all kind of pretty well, everybody, I hope has heard about the term consolidation loan, but it may not be 100% sure how that works. Can you flush that out for us? |
| Barry | Yeah, generally speaking, is you get one big loan at a lower interest rate, I’m going to make up this number. Let’s just say you get that loan for 7%. Well, then, with that loan, you pay off all your other debts. So if we are talking about those credit cards that have 19.99%. Maybe your car financing is 10%. So you’re getting this loan with a lower interest rate to pay off all your other loans. The key thing to remember this, these loans are kind of open ended, so you can continue to pick up debt if you’re not careful. So you can’t just accept this loan thinking that well, I’m going to do this. You really need to have a plan to pay off your debts. |
| Richard | So, you have seven or eight credit cards, and you owe a grand total of $30,000, will say $40,000, so you would go and you would get a loan from a bank, from finance company or whatever, that is offering you an interest rate, which is going to be better than what the credit cards are. |
| Barry | Presumably. Exactly. You take that amount you get, pay if off. But you also really have to pay attention to the terms of that loan because it may be 7%, but it might be a floating rate where it could change at any time. Or, keep in mind, sometimes they may call that loan back and you don’t have that money handy, you actually end up with more debt. |
| Richard | But in this you’re changing from one type of credit to another. You’re changing from revolving credit to a fixed credit where you’re paying both interest and principal down over a scheduled period of time. |
| Barry | Exactly. So that’s where you had to really read the details. There are all these different types of loans you can get. Sometimes people get an interest only loan, for example, and they don’t realize that they’re making the minimum payments, but in reality, they still haven’t paid back anything. |
| Richard | That’s for sure. If all you’re doing is paying the interest. |
| Barry | Exactly. People just don’t realize that. |
| Richard | Yeah, but one of the things that I’ve found, in my business, is that people get a consolidation loan. But, perhaps the lending institution that gave him the loan didn’t insist on cutting up the credit cards or something like that. Or maybe they did and the credit card company sent him new ones and things like that, and within a couple of years or something, the consolidation loans still has three years to go, but the credit cards have gone back up to perhaps even as much as what they owed when they got the consolidation loan. |
| Barry | I think secretly, that’s the goal of the lenders, right? They want to make money off you. They’re not just… |
| Richard | Well, we shouldn’t be cynical about these things. |
| Barry | You know? Okay, let’s just say that’s right. |
| Richard | It’s unfortunate. |
| Barry | It is definitely unfortunate, that’s why I was saying, you need to have that plan of attack. That right. |
| Richard | That’s what you were talking about. |
| Barry | Exactly. So you take that loan and pay off your highest interest debt first, so you can just reduce the amount of interest you are paying, and maybe right away you lower, or either maybe cut up the card. It’s a good thing to do right away. You can’t spend it if you don’t have access to the card or you lower your limit. If you know you’ve had spending issues and problems or close some cards. Maybe just get down if you had 7 or 8 cards may be going down to one or two of the lower limit. Just get some self-control and educate yourself, and I think even gotten as far as getting this consolidation loan. You’re smart enough to realize that you might have a problem and you want to learn from it. |
| Richard | Hopefully, but the thought process will have started to move in that direction anyway. |
| Barry | Exactly. |
| Richard | Hopefully, yeah. Just to segway a little bit into the travel side of things that we’re going talk about a little bit later, Barry. I understand you’re a bit of a fan of travel rewards. |
| Barry | I like travel rewards, with credit cards, yeah. |
| Richard | I don’t fully understand them, but maybe it’s because I don’t take advantage of them like perhaps I should, I don’t know, educate me on this. |
| Barry | Yeah, it’s pretty straightforward. You know, when you sign up for a new credit card to travel when they offer you a nice generalized sign up bonus. But there’s always conditions you got to spend “x” amount before “x” date, usually three months, right? And, then you earn points on all your purchases, which can then be redeemed for a discount on travel. The key thing is, as we already discussed, is, you have to pay off your balance in full every single month because what good is earning 3% in travel rewards if I’m paying close to 20% in interest, it makes no sense. But quite often people can just fool themselves into thinking that no, I deserve justification. When it’s a good deal, it’s quite often not, right? |
| Richard | Let the emotional side of decision making take over. |
| Barry | There’s no doubt a lot of people suffer from (fomo) fear of missing out. They see on social media what their friends are doing, and they know they can do it, too. But they have to put it on credit. And unfortunately, you know, sometimes you think its people who don’t have any money or low income. They’re taking (wrenches). But you know you could have a good salary and just abuse or credit cards at the same time. |
| Richard | I see that a lot. In fact, that’s one of the reasons people get a lot of credit is because they have a good salary and they’re able to make the payments. |
| Barry | Well, that’s the key thing we’re talking about travel rewards. The higher salary you get, you qualify for better credit cards, which better benefits, better rewards. It’s really easy to get more debt if you don’t pay it off. |
| Richard | That’s for sure. On the subject of all of the travel and that, would it be advisable, and there are credit cards that lend themselves to this to have one or a couple of credit cards that are designed for travel and others for domestic use? |
| Barry | Yeah, for me, it’s like it’s not like a travel credit card that you’re using just for travel. It’s just the type of rewards you’re earning, right? So you can use them domestically or internationally. There again, it’s the type of rewards you want to earn. And so you know, the West Jets got their own credit card, Aeroplan has theirs. But then each bank has their own travel program where you can earn points. That said there are certain credit cards that may are designed specifically for all in one use. Scotiabank released the passport credit card a few years back, which gives you no foreign transaction fee. So it saves you a minimum of 2.5% whenever you make a purchase in a foreign currency. So, yeah, you could argue that that is a great card to be using internationally |
| Richard | Now that you mention foreign currency. I was going to ask you about are there cards that are advantageous in terms of what we call it currency exchanges? |
| Barry | Yeah, definitely. So I mentioned that 2.5% in a lot of people who are watching us right now might be like, what are you talking about? I don’t get charged that fee. What they don’t realize is that it’s baked right into your exchange. So if you’re buying something in U. S. Dollars when you see the Canadian amount, the extra 2.5% is already in there unless you have a credit card that doesn’t charge foreign transaction fees. Fortunately, over the last couple of years in Canada, it’s become a big issue. So there are more and more credit cards available. There’s almost like 10 credit cards now that in Canada has no foreign transaction fees. But if you go back three years, there’s only two, so there are more and more options, and just each card is different so you got to do a little bit of research. |
| Richard | I guess that the whole idea of transaction fees is another question, too, isn’t it? |
| Barry | Yeah, it’s crazy how many fees we pay, right? |
| Richard | How crazy is it? |
| Barry | Well, I guess the foreign transaction fee is just 2.5% right, But it’s on any foreign currency like these days. People are buying things online, US dollars. So why pay a premium when you don’t have to? You just apply for one credit card that doesn’t charge you the fees and you save every single time. So it’s not like a huge amount if you’re buying something small. But over time it definitely adds up. The way I look at it, let’s just say I looked at all my trip expenses. If I was going to Italy, the amount in fees I pay could be the same as one nice meal while I’m there. So I’d rather have that nice meal than pay fees. |
| Richard | Now you mentioned Currency exchange fees on that. But what other kinds of transaction fees should we guard against if we’re thinking of using credit cards? |
| Barry | Well, you know, it depends like a lot of people you know, there are cash advance fees right where you don’t want to get into that because that’s where you’re paying to access money that you don’t have and you pay a higher interest fee, as far as credit cards are concerned…. |
| Richard | When you get a cash advance, usually you start paying interest on that money, right? |
| Barry | Right away. Right? And yet pay a higher interest fee. |
| Richard | And higher interest. |
| Barry | That’s right. |
| Richard | Is there a separate fee on this? |
| Barry | There might be. It just depends on the terms of conditions of your card, every card is different. Generally speaking, most credit cards don’t have a fee when you use them, unless it’s a cash advance and international. But again, it really depends. |
| Richard | So Barry, I said we’d eventually get into the travel side of things, right? Because our audience presumably is looking for some information and let us call them tips, on how to get that better bang for the buck. |
| Barry | Sure. |
| Richard | So, now I’m going to ask you for some tips. |
| Barry | Yeah. |
| Richard | But we’re going over to travel side of things. |
| Barry | Okay. All right. |
| Richard | So most of the people watching are probably are family people, have children and all that. What tips can you give us about getting more from, you know, a single family holiday, we’ll say? |
| Barry | It really depends on your budget. So that’s where I like to start more than anything else. If you want to make travel part of your family life, you got to set money aside for it. You know a good example, and I’m throwing out a random number here, right? If you were able to put aside $500 a month, that would give you $6000 a year. That may seem like a lot of money for some people like, to put aside that amount. But, you know, I’m just throwing out these numbers there, just as an example. You have to remember that you can’t necessarily travel every single year. So if you don’t have that much amount saved, wait for next year, right? I didn’t try every single year when I was younger. But once you’ve got that money set aside, you could do whatever you want with it, right? Because the key thing is, you’re not dipping into your credit cards or any lines of credits to pay off for your traveling, and that’s where I like to start it and then, you know, based on what your budget is, then you start descending where you can go so If you’ve got a lower budget, maybe you take think about closer to home, road trips, right? Or taking advantage of the things that are going on where you live. A lot of events in the summer, you know, we’re based in Toronto. The city of Toronto throws on tons of events. You could spend every single weekend doing something within this city and not pay a penny. |
| Richard | I know of some of those, you know, that’s part of the action, right? The idea that you’re trying to end your vacation with less debt or there’s no more debt than what you started with, right? |
| Barry | You should never go into debt for vacation as far as I’m concerned. |
| Richard | How do you like that straight line, Barry? Are there some things you can tell us about saving money on air travel? |
| Barry | Yeah, well, the easy thing and this is really hard for families are the offseason travels obviously the quickest way to save money. You know, a good example is you to try to fly to Europe from Canada; you’re looking at, probably $1000 right. But if you were to go like, you know, right now, September or October, it may not be September or October when you guys are watching this, but the point is, it’s off season. A flight might cost you anywhere from $600 to $800, so you think about that’s 20% savings right there. On top of that, because you’re traveling during offseason hotels are typically 20 to 25% cheaper, also. Another easier way to save, in my opinion, is to literally sign up for every single newsletter out there, airlines, and tour operators. And the reason I say that is because they let their readers know right away when there’s a sale. So if you know there’s a sale and you can see discount another good example, Air Canada vacations quite often rent promotions where kids stay for free, right? That’s a great deal, but you just got to know about that promotion. |
| Richard | And then they bombard you with this stuff. |
| Barry | They totally do, because they want you to buy, they want you to spend with them, right? You do have a problem with those things is you got to have some self-discipline. There are some people out there who will see these deals and be like, why I got to go because it’s such a good deal. Well it’s not a deal if you got to pay back later and you don’t have the funds available |
| Richard | It never is, is it? Combination bookings? |
| Barry | Yeah, packages could be good. It depends on how you look at it. If you’re doing an all-inclusive resort, quite often, it makes more sense to go through, say, Air Canada vacations, Sun Wing, West Jet vacations. But if you’re also looking to book your flights, hotels and say, a car rental, Expedia.ca is probably one of the best solutions. Yeah, they openly advertise it and I’ve read the numbers in the past and it works. And nice thing about Expedia is you don’t need to book all three things at the same time. So, let’s say, you book your flight and you decide a week later, you know, I’m going to get a hotel, and then another week later, you’re like, oh, I need a car rental. If they give you, like, basically a window where it’s as long as you book everything, eventually, you still get the savings. |
| Richard | So you’re not locked into having planned everything. |
| Barry | That’s right. |
| Richard | Right down to the…. |
| Barry | Exactly. And they remind you, right, they’re like, hey, you know, you have two more weeks to save on X amount. So they want you to book with them, right? |
| Richard | Really? Would they say that? |
| Barry | They do. |
| Richard | How do you feel about cruises and tours? |
| Barry | Tours, I actually think are really good value. People don’t like tours because this is like, I don’t want to get on this big giant bus with, you know, 100 other people. And it’s not fun. Well, it’s an insane way to think about it. There are literally probably 1000 different tour operators out there, so it’s a matter of finding the right tour that makes sense for you, your lifestyle, and the type of adventure you want. I did a tour with Intrepid Travel a couple years back, and there are only eight people on the tour. It’s fantastic, right? And when you break down the cost of everything, meals that are included, which isn’t always included the guide, the accommodations and the transportation, it’s a pretty good value. More importantly, I hadn’t spent any time planning. Cruises are a little bit trickier because each cruise is so different. And what I don’t like about cruises is the fact that you basically pay a base price. You pay for every single upgrade, but you got to pay for gratuities. You got to pay for the nicer restaurants. Obviously, if you’re going to go to casino on the ship, you have to pay there. There’s every day excursions to, right, so you could avoid all that if you wanted, but most people will spend a little bit extra on cruises. |
| Richard | I’ve had a couple of people work for me who very, very, into tours, practically every year, the cruises, much the same thing because the big selling point to them was, they unpack once and they pack once. |
| Barry | That’s right. |
| Richard | It’s like their hotel moves with them. |
| Barry | It’s experience, right? There’s no doubt some cruises like, you know, you think about the cruises that go through Scandinavia or the Mediterranean like, just think about planning that on your own, say, you pack once to take you there. It’s great. So I do actually think cruises can have a lot of good value. People just got to realize that it’s not necessarily just the base price you are paying. There will be extras you’re going to pay because you’re not going to sit on the ship the entire time while docked in some new exotic destination. You’re going to go explore, right? You’re going to go buy. Go shop. |
| Richard | What you’re saying? Basically, is there two types of tours, right? Is the tour that essentially is focused on you just having fun. It’s almost like the casino tour where the casino goes with you and you dock here in there and you want to go off and buy some things at the local market or something? But then, the essence of the tour is what the ship can provide. I’m sorry, the cruise. |
| Barry | Yeah. You’re basically paying for access to the cruise. |
| Richard | The Mediterranean cruise that you mentioned, you’re going from here to there, and then you get off and you visit and you come back to your hotel. Your hotel moves over to the next place. |
| Barry | That’s pretty much it. That’s exactly it. |
| Richard | They’re different tours. |
| Barry | It’s a unique experience. Where cruising it, is great. It can be fun, but not everyone’s into it. |
| Richard | This kind of difference is between a cruise and a tour. |
| Barry | Well, I’m talking about cruise ship versus a bus tour, right? |
| Richard | Yeah. I know what you mean. The one the Mediterranean one that I described. There is more of a tour than a cruise. |
| Barry | Well, no, it’s a cruise. If you’re on a cruise ship it’s a cruise, right? It’s not a tour, it’s a cruise. |
| Richard | One lady I’m thinking about used to always say, I’m going on a trip. |
| Barry | She’s going on a cruise, assuming she’s on a boat. |
| Richard | I used to argue about that, too. Interesting. Is there any particular Garden of Eden out there for us? Is there any particular place that you recommend people to set their eyes on for in terms of this tour, cruise? |
| Barry | Well, every time with destinations, it depends on what you are looking for. It’s so hard. Different budgets, right? Like I said, if you’re flexible, you can get a lot of deals out there as far as I’m concerned. Cruising, again, flexibility. Good examples, I was talking to my mother the other day and she found a cruise coming out of Vancouver about six nights ending in Los Angeles, including airfare. It was $1200. That’s like actually really cheap when you think about it, cause the flight alone was about $600. So, you know, 6 or 7 nights on a ship, some stops. It’s like you said, basically a hotel for a week that travels with you and all the meals. I’m like, that’s a pretty good price, right? That’s because she’s retired and she can just jump on a plane next week and it won’t matter, right? |
| Richard | But for $1200 for a week. Most places you’ll stay will charge you close to that. |
| Barry | Yeah, exactly, right? |
| Richard | And it doesn’t move. |
| Barry | But I also like to look at other destinations. To me, it’s kind of like, what’s trending and what has good value. It sounds a bit crazy, but, 5-6 years back, after Egypt was going through the Middle East crisis and Egypt uprising, as soon as they elected a new president, I was like, I’m going because it’s like they got a new president and everything’s safe. And more importantly, everything was like 50% off still. So sometimes you got to look at the situations around the world. |
| Richard | Did you write about that? |
| Barry | Take advantage. I think I did. I don’t remember. |
| Richard | I think my sister in law must have read it. |
| Barry | I’m not saying, like, you know, put yourself in any danger going. You were crazy, but you could be smart about your travels |
| Richard | With credit cards, since they’ve replaced the traveler’s checks, what can you tell us about, number one is avoiding the devastation of losing all your cards and the inconvenience of things? |
| Barry | Yeah, it’s tricky. You just got to be smart about your surroundings. Just be smart about how you use your credit card. Number one whenever you travel most of the times, you still need to let your credit card provider know that you’re traveling so you don’t get locked out when you make purchases. And being smart, you know, if you’re going to a heavy tourist area that’s known for pickpockets, you know, maybe you’re wearing your wallet in your front pocket or you put your bag in front of you. You can’t make yourself a target, right? I know it’s easy for me to say that, but you don’t need to be aware of your surroundings, and also people forget, is that when you go home, what you should also do is change your pins right away. Because in the event that used terminal that was compromised, they still usually need your pin to actually make a transaction. So even if they cloned your card, you change your PIN, it’s no good to them anymore. |
| Richard | Right. Prepaid cards. How do you think of them in terms of travel? |
| Barry | Depends on how you look at it, right? Like the old traditional prepaid cards that people are probably thinking in their heads right now, is where you could be able to take advantage of an exchange rate early, which is not bad, but prepaid cards, as weird as it sounds, it’s not always accepted everywhere. These days there are better prepaid options in the sense where you just, loadable credit cards like Stack and CoHo, that use a Visa and MasterCard networks that are more internationally recognized. I like them, but, you know how we’re talking about credit cards without foreign transaction fees. I still think that’s the cheapest way. So why would you go with the prepaid when you’ve got a credit card without foreign transaction fees? |
| Richard | So in terms of travel, you’re not a big fan of them? |
| Barry | Prepaid cards, not at all. |
| Richard | For domestic use, so certainly, in my world, that prepaid cards are a very positive thing to have. I won’t explain why. This is about you talking about travel. But speaking of that, I understand that you publish or you have a guide called The Cost Of Travel. And my God, Barry, it’s free |
| Barry | It is free. |
| Richard | How does one get that? |
| Barry | Just go to my website, moneywehave.com and a box will pop up, saying sign up for my newsletter. |
| Richard | Sounds tricky to me. Tell us what the guide covers? |
| Barry | Literally, everything you need to know. A few things we already talked about, setting up your budget, how to save on flights, how to save on hotels, travel insurance, picking your destination. It’s just like a little guide I wrote. I don’t even remember how many pages; I think it’s like, 50 or something. Of all the travel tips I’ve learned over the years that have helped me save money. And funny thing is, once you know these tips, it’s like they’re just in your head. There’s nothing really special. People just don’t know how to take advantage of things that are right in front of them. |
| Richard | And keep your back, back on the front. |
| Barry | I guess technically, that saves you money. |
| Richard | In the crowd. And on subways. |
| Barry | There you go. |
| Richard | So thank you very much for joining us. |
| Barry | Yeah, no problem. |
| Richard | Here’s a little gift. Put it this way, so that folks can see it. It’s a book. This is why we call this, The Glass Is Half Full. It was written to emphasize the value and the importance of attitude in turning whatever negative situation may find yourself in whether it be somebody stole your backpack or something when your Geneva or you just run out of, you’ve overspent on your credit card here in Toronto, doesn’t matter. A negative situation could be turned into a positive opportunity with the right attitude. I’m sure I tried to put that into print. Thanks again for joining us! |
How To Save Money On Recurring Expenses With The Cash Flow Cookbook
In this episode of The Glass Is Half Full, Richard Killen, a Licensed Insolvency Trustee interviews Gordon Stein, author of The Cash Flow Cookbook. Gordon is a keynote speaker and a writer with a passion for helping people build financial wellness.
In this episode, Gordon outlines how to save money on recurring expenses such as car expenses, pet services, alarms, transportation and more. Forget about budgeting and concentrate on building wealth and net worth, even if you are living paycheck to paycheck.
| Richard | So today we’re joined by Gordon Stein Gordon, and I’m going to read this to get it all right because there’s a lot here to talk about. Gordon is a keynote speaker and writer with a passion for helping people build financial success. Canadians are struggling with high levels of personal debt and higher levels of stress over money. In his book The Cash Flow Cookbook, he shares dozens of low effort and low sacrifice ideas that can free up cash for paying down debt, investments, savings. Applying these simple recipes can build millions of dollars worth of incremental wealth over a typical career, which I find pretty impressive. So, Gordon will share some of these strategies with us today. And I understand you should probably grab a pen and paper here so you could make notes. Welcome. |
| Gordon | Good to be here. Thanks so much, Richard. |
| Richard | In your in your book. It’s called Cash Flow Cookbook. I’ve got it right that you have 60 strategies, but like any other good book, you don’t call them strategies. You call them recipes, right? |
| Gordon | Right. |
| Richard | And they’re all designed to save money in one form or another. So I understand this was written after a conversation you had with a friend about a $13 car wash, and I think I’ve run into that same car wash. I’m intrigued to know how this led to your book. |
| Gordon | Well, I had no intention of writing a book until this incident happened. Like many things in life it sends in a very different path. And I was driving a friend home from a barbecue, and he spotted a $13 car wash receipt on the console of my car. And he, you know, berated me for it. So why would you spend $30 on a car wash? I said, Well, you know, I’m not going to wash my car with my suit on. I said you know, what do you recommend? Well, at the time he said why don’t you go get an Esso extra points card? And you put that on the pump before you put in your credit card. And then you track your points online, you fill in a form and you take it in and you get a free car wash. So I thanked him for the idea, dropped him off, and I made sure I was down the road. I thought to myself, This is the silliest idea I’ve ever heard of to go through all this for $13. And in a couple weeks later, someone had one of the little Esso speed past dongles. They touch it to the pump, easier than a credit card, automatically tracks their points and they get the free car wash. That is ok, that’s cool, because it’s actually easier to pay for the gas, so I haven’t actually paid for a car wash in four years. Not a huge thing, you know, $25 a month. I thought well I wanted to get one for my spouse. So now, it’s $50 a month. And then I heard the idea on a radio ad for one of these discounted home alarm monitoring systems. So I compared and it was $25 a month cheaper. So now I’m up $75 which isn’t a huge amount of money, but none of this took any effort. I started to wonder what else is there and, you know, my background in engineering and an MBA. You know, I got focused and made a spreadsheet. Before I knew it I had 120 Ideas. I set a minimum of $25 and in total there’s $13,000 of monthly savings. So that’s really how it got started. |
| Richard | That was an interesting car ride. |
| Gordon | It was for sure. |
| Richard | I have one of those speed passes too. I’ve never been that smart about it yet. I think I’m gonna learn a lot here today. The driving principle behind your book Gordon is that those, even those living paycheck to paycheck haven’t got what they think to be any spare money floating around can reduce their spending, but with minimal sacrifice. And they could use the money. Then, of course, to do like you just described. All of a sudden there’s a $50 free hasn’t gone out. It’s still in your pocket kind of thing, right? Can you give us any other examples and why this is possible? |
| Gordon | Well, I think the thing is really what I learned in the book and doing the research. It’s all about recurring monthly expenses, and these are things that are coming out of your chequing account every month, typically there on pre-authorized payments. You set something up. Maybe it’s a gym membership. It’s a storage locker, and these things just keep coming out. You sort of take that as your new normal. And if you’re in a situation where you’re in debt or you’re headed for insolvency, you need some help. Certainly go see a professional such as yourself, Richard, but what can you do in the meantime, to prune down that monthly spend to get out of this thing where your living paycheck to paycheck and you’re struggling, and most people are in that situation, but they really haven’t taken a good look at their expenses. So you know, some examples would be things like storage lockers. You drive typically in the suburbs, and people have their garage doors open and they’re filled with stuff. And the storage locker business as an example, is booming because people just won’t prune down the stuff that they’ve been saving. Their spending $100, $200 or $300 a month on a storage locker somewhere. So pretty obvious point here is let’s go through Marie Kondo style. Now let’s prune out all that get the stuff back in our houses and save on the storage locker. So whether it’s in the book, the recipes, everything from thoughts on dining out and how do you reduce those costs. Ideas on housing, ideas on transportation. So 60 in total. There’s actually a little anecdote of the beginning, adds another 60. So actually towards 120 ideas that go from about $25 a month to $200 to $400 a month. And the idea is anyone can start today and start to free up that cash and apply it to paying down debt. If debts your issue. Or if you’ve got some savings, you’ve got some net worth. Let’s apply more to investment to build and grow that well. Also, we don’t have to worry about money. |
| Richard | In your book. You very clearly don’t believe in budgeting, as such. Your approach is really, They can do rather can’t do approach. Budgeting tends to be restrictive. Somehow you cut back with budgeting. You have a tendency to think that way? What you’re doing really is talking about spending smarter. We’re getting a lot more for whatever it is that you are spending. So is it psychological? Is this the intent behind this? |
| Gordon | Yeah. Well, first of all, I’m amiss. I didn’t give you cash flow cookbook. So my apologies. |
| Richard | You came armed? |
| Gordon | So yeah, the budgeting is interesting. You know, if you think what you want to do, you’re driving your car. And you don’t want to go too fast, you look at the speedometer, you want to lose weight, you look at the scale. So if you want to build wealth and building wealth includes getting out of debt. You know, even if your goal is to get up to zero or to be less in debt. What are you trying to do? Well, you’re trying to increase your wealth. Maybe it’s been going from negative $200,000 to negative $50,000 maybe going from 0 to $100,000. But what do you want to look at? You want to track your wealth, not your budget. Because if you think about it, you could set a budget. You can follow your budget every month for your entire life and retire. And not have enough money. So far smarter, I think, is the whole core of Cash Flow Cookbook. And let’s get it out of the closet. Let’s dig out the bills. Where you at right now? What is your actual wealth position? Some people call it net worth position, so let’s take everything that we own. Let’s subtract everything that we owe, and let’s say, Hey, how much wealth do we have? And some people say well I can’t do that because it’s negative. I’ve got student loans, so whatever the number is, let’s actually understand that number. And I want to see how we do month after month. I think that is a critical step for people because then they can see. Am I better off in September than I was in August. And am I tracking better in October than I was in September? Are you increasing that wealth by $50. Increasing it by $500 or $5000? Is it moving in the right direction? So you’re building some wealth. I think with budgeting particularly in the case of a couple, It’s gonna lead to arguing. , Oh, you blew you’re a part of the budget. Why’d you spend so much? But then things happen. The kids need new hockey gear. Well, that wasn’t in the budget. I think it’s an artificial approach. When you track your wealth, you start making smarter decisions about everything that you do in your life. |
| Richard | Your way of understanding it is you’re focusing on the positive rather than a negative. Right? Coincidentally, Let’s see your book again? |
| Gordon | Yeah, sure. |
| Richard | I’m going to show you my book too. But I think that in it we talk about a very similar type of thing. I’m talking about an approach, the mindset if you want. In mine, it’s called, The Glass Is Half Full, the positive side of debt relief. And the person could say, Well, what’s the negative side of debt relief? And I’m not sure that anybody knows the answer to that one as such. But what I meant by it was very similar to what you’re talking about. That the people who get into trouble tend to allow the trouble to define them and it tends to constrict them and restrict them. My idea is that they should be taking with the right attitude, they can take that and turn it into that opportunity. Okay, that starts thinking forward. And what you’re describing seems to be all about forward steps rather than looking to see if there are negative steps. |
| Gordon | Well, I think that’s it exactly. I’ll give you a really basic example from the book. One of the simple recipes really makes the point you can start today. So the average Canadian or American they retire with about $200,000 of net worth. That’s the average, not a very big number, $200,000 a lot of money, but not if you have to live on it for 35 or 40 years with inflation. So here is a very simple example. If you went to Home Depot everybody can do this. You buy a 10 pack of led light bulbs. You replace the 10 most used lamps in your house. You’ll save about $20 or $25 a month on electricity. The side benefit of being a little bit more green. Now, over a 30-year career, you’ll end up with $25,000 more net worth. So it’s about 1000 times a monthly amount, compounded over the period of time by the through debt reduction of investment. So there’s $25,000. That’s more than a 10% increase in the Net worth you retire with for the average Canadian or American with a 15 minute trip to Home Depot. So there’s a very simple example.
And, yeah, you know, maybe, let’s say it’s 10 light bulbs, so very simple. But what are all those other things to do? So we literally in a day or two, you know, taking a look at your cell phone bill, you know, taking a look at different things. Clothing expenditures. The book is chock full of these ideas, and would everyone use all $13,000 worth of monthly savings? No, because people don’t typically spend that much. But could you get a handful of ideas to free up? Let’s say, $200 a month. If you could free up $200 a month and put that to good use. I.E. paying down debt or investing it wisely in blue-chip kinds of things. You’re gonna retire with another $200,000. You’re gonna double the average Canadian or American. So, you know, to me, that’s what it’s all about. These are simple, simple steps. |
| Richard | Over what period of time are you seeing this? |
| Gordon | I’m using the example of 30 years. People go for 30 years? Well, you know what, when you think about it. You know, I worked in the corporate world for 35 years. I still have lots of energy to go. Hopefully, statistically, I’ll live another 30 years. So I’ve got the same opportunity in the whole road ahead of me. Sometimes I have people who say, Well, I’m retired I’m 71. How does this help me? Well, it helps because they probably have a fixed amount of money that they’re working with. So now it’s not about producing debt. It’s probably not about building wealth. It’s about lowering that monthly burn rate, still beneficial for them to make them more comfortable about making ends meet. |
| Richard | You mentioned the age factor in all this. In my business, I see more and more I suppose, because my generation, the baby boom generation. There’s not a lot of people out there who have gone through the working period and now of course their in retirement. But things haven’t changed for them in the way they live their lifestyle. If you want and all that. So, if you take what you’re talking about, having these positive approaches is to doing something more efficient with this and more effective with that and so on. When you get into this period here now there, they find themselves in a position where there’s not that much leeway anymore. So they find themselves much more restrictive. What do you tell these people? |
| Gordon | Well, again, I think it’s just about being a little smarter and not giving up anything at all. So, I’ll give you an example. I needed a new pair of glasses, so I went to the optometrist in the neighbourhood and, you know, sized it all out in a few different pairs price range was about $600 to $800. For a pair of glasses. Progressives, you know, coated lense, whatever. It’s kind of a lot of money so, you know, I could have just bought them, not that big of a deal, but it’s a chunk of money. |
| Richard | That would’ve been the easy thing. |
| Gordon | There’s Bob’s optometrist, There just down the mall. I’ve driven by them 100 times. So I did a little bit of online research. How long did I spend? Maybe an hour. So then I looked at some of these online glasses places, so I already had my detailed prescription from my optometrist. So ended up with a great pair of glasses from one of the online providers. $109 I spent and there fabulous. The lenses are great. They’re exactly the prescription that came in the mail. I didn’t have to get leave my house. I didn’t get in the car, they delivered right to my door. So you might not have thought about that. I give you another one. Our dog needed to get spayed. A 15-pound dog. |
| Richard | Did you ask his opinion? |
| Gordon | No, I didn’t, hers. So anyway, you know, we looked at the neighbourhood veterinarian $1500, no problem they can spay the dog. And that’s great. So it’s the dog getting spayed, you know? And so I thought just before we do this for $1500, I called a friend. What did you pay for your dog’s spaying? He said about $800, and a different neighbourhood and in a way, I thought that’s pretty interesting. Half the price to get the dog spayed. Call the second friend. One more phone call, another 10 minutes and he says well, actually had mine, I spent about $800 but a friend of mine had it done at the Humane Society. I thought, Well, that’s interesting. So I called them up. Yep. We do the spaying. How much? $150. So you had to call in on the second Thursday of the month. It’s like a phone lottery. Um, and you know, you burn an hour on the phone call, but who makes $1500 an hour, right? $1350 or whatever. Anyway, the dog gets spayed. So just those two things. Nothing changed in the lifestyle, the dog still got spayed. Dogs perfectly healthy. He’s fine. Got a great pair of glasses, but the total of all that was, you know, $250 versus what would have been, you know, $2300. What was it? Half an hour’s worth of calling around. So just getting a little bit smarter for a retiree getting a little bit smarter on each thing they do. A little bit of calling around a little bit of research. |
| Richard | So when you speak to large groups. I don’t know why this is common to large groups, but when you do speak to large groups, the subject of clothing comes up when you’re talking about managing the household expenses. I’m intrigued by that, why clothing? |
| Gordon | Well, it’s been fascinating. It was one of the things I learned as I did the research on the book. I started with a few ideas of things I saw then really dug in to find out what the other ways of people can free up some cash flow for investing or debt repayment. And the clothing one is fascinating because the research shows over and over again. People only ever wear 20% of the clothing that they buy and when you serve that up to people they go, no no, that’s not the case at all. But I’ll tell you, when you go if you watch Marie Kondo with her tidying up show. And you see her on TV and she’s on Netflix pulling these huge garbage bags of stuff out of people’s homes to give away to charities and what have you. And the bulk of this is clothing. And what happens is, you know, people sort of tend to go shopping and they see a blue sweater. Oh, it’s on sale, and so they quickly grab it. And off they go when they get home and not realizing they have four other blue sweaters because they weren’t, you know, shopping mindfully, there were just shopping. So they found this. Please, let’s say the blue sweater is a little bit baggy, so, you know, you go in the closet when you’re gonna be on an interview, you’re gonna go have an important meeting. You don’t get the ugliest thing out of your closet. You don’t get the baggy sweater, you don’t get the pants that are too short or the one with the sleeves that are too long. You always put on your best stuff. This means the other 80% which we shop for not mindfully, tend to sit in the back of the closet. So if you combine that, you take a look at the average. Canadian expenditure on clothing tends to be around 6% of the gross income. So someone, let’s take someone making, say, $70,000 a year. 6% is $4200. Call it $4000 but they’re only gonna wear $800.
20%, $800 which means $3200 a year of after-tax income |
| Richard | Sits in the closet. |
| Gordon | It sits in the closet, and then it gets sold in the yard sale for about five cents on the dollar. If you’re lucky before the hagglers come. |
| Richard | Or given away to Value Village |
| Gordon | Or given away to Value Village, which is great from a charity perspective. But, you know, maybe you want to get a tax receipt for your $3200 contributions. If you think about that person, so let’s just change that up a little bit. Let’s shop a little bit more mindfully. You know, you’re brown belt buckle breaks. Maybe get it repaired. Maybe you want to go buy a new brown belt to replace the one that you lost. So that’s great. So now you’re shopping much more mindfully, but you could double you’re spending on the clothing that you’re actually gonna wear going from $800 to $1600. That now frees up your going to have $2400 a year freed up now. So twice as much clothes and $2400 freed up. What do you do with it? You pay down debt if you’ve got debt to pay down instead of paying interest on it or maybe getting invested in an exchange traded fund. |
| Richard | You’re not the first person who’s been on our show talking about paying down debt. Truth is, I do a lot of talking about that too with my customers. But, talk about that if you would please. The idea of paying down debt. Maybe you can quantify or make it a little bit more real to people. How much this really helps. What’s the advantage? |
| Gordon | Yeah, I think what happens is again. We’re not mindful. So we tend to just go when we buy and we go to restaurants and actually think about what’s happening. But if you’re in a situation where you owe some debt, I think the first thing is to get it out on the table. How much do you owe? And people tend to have 3, 4, 5 credit cards. They’ve got Banana Republic, Canadian Tire. This one has a discount on that. So they get talked into these things and they might have five of them. And some cards have a couple $1000 balance on each. And then there’s sort of insidious. They just keep creeping upon us. So if he owed that $10,000 that’s about $200 a month in interest. Easily, if not more so that $200 now is pushing us back. So we gotta make our payments on it, and they got this headwind of another $200 a month. It’s no value to you. In fact, it’s pulling you backwards, and so what happens that debt starts to grow? There’s something that you want and your adding more credit cards. So paying it down is the first step to really starting to get the money working for you. So instead of working for the money and you know, I always feel like you’re like this and which bills to pay, if you can just start by getting a little bit smarter? Get that debt paid down. Now, you don’t have this headwind hitting you. You get to a zero point and then you can actually start to build some wealth by building some of these great habits. Minimal effort, minimal sacrifice. But now, once you’ve got some money, that money can start growing for you and you start to get a nice portfolio built. |
| Richard | And you’ve described something that I certainly wouldn’t call it a sacrifice. Paying down debt is not a sacrifice. |
| Gordon | Not at all. |
| Richard | Not in itself yet. Now you may have to forego something else in order to do it this month. But then I suspect that for most people, but they would have to forego would be very, very low on the sacrifice totem pole. |
| Gordon | I think. |
| Richard | You’re not going to sacrifice important stuff, |
| Gordon | Right? I think initially when writing Cash Flow Cookbook, it was really focused on Hey, what’s the minimal effort? Minimal sacrifice, things that people can do. And if you think about that and there is, you know, $13,000 of ideas that I’ve built into the book. People can use some or maybe even all those. But all of the book and cash flow cookbook was written without actually giving up anything. But there’s this whole movement now about frugality and, you know, living with less. And I think what happens is that actually leads to more happiness. So if you saw the movie the Fight Club, they have a great quote in there and they say “the things you own end up owning you”. Which is very true because they think about a car, it needs maintenance and car washes. And you need new mats for it and so on. And you want to get a motorcycle as well. But it has the whole service schedule that goes along with it and a cottage. It needs work. |
| Richard | Or you could just start your own business. It ends up owning you. One example of that we’ve mentioned before off the air about an American fellow that I guess was responding to your blog or something like this, and you showed him how he could save something like $10,000. |
| Gordon | Well, it actually ended up to be a lot more than that. What happened was this gentleman from Kansas. He had sent me an email and it was one of my favourite ones. And he said, you know, I’ve read the book and he says, I’m really excited about all this and, you know, here’s my situation. He is 46 years old and he had zero wealth, was earning six figures a year. All of this hard work, gets to 46 years old, he actually has no wealth because he read about the concept of what your net wealth. And so he sent me a note and that led to a phone call, had a great chat, and so his situation was you know, what he owned, which was pretty modest, was effectively cancelled out, by what he owed on it and he hadn’t put much thought into money. This is not at all unusual with people. And so I said, well, what about your (he in the U. S.) 401k from your company? Which is like a company RRSP in Canada And I said, do you have one of those? He said, well, the company offers one. I said oh, great. What’s the balance? How much do you have in? And he says none. Well, what do you mean none? He says I don’t have any cash. It’s the usual problem he has no cash to invest in there. And I said, well, is the company contribute? He said they will contribute up to $5000, a $5000 a year matching plan. $5000 of free money, no strings attached. And I said, Well, why wouldn’t you put in it? He said because I don’t have the cash. So we did the math it was about $400 a month, which would give him $5000 a year. So if he could free up $400 a month, his company matches that with another roughly $400 a month, so they’d be $10,000 year contribution. And of course, that can grow over time. So we use some of the concepts in Cash Flow Cookbook somewhere in the book, and there’s others available at CashFlowCookbook .com. And we applied that to free up the $400 from simple changes to his lifestyle. He made those changes signed up for the full amount of the 401K, $400 a month. And then we did the math on it. Um, that retirement, I think you would have an incremental of about 350,000 or $400,000 of incremental wealth of retirement. It was things that he didn’t miss any way. So. That, I think, is the beauty of this cash flow cookbook approach. One of these simple things that you can free up. And then get that working for you. In particular, if you have something like a company matching deal, that’s way too good to give up, that’s free money. |
| Richard | And he was satisfied that he wasn’t making any serious sacrifices? |
| Gordon | No, they were simple things. We looked at things like his clothing. There were some things around storage lockers. We had a couple of changes in his transportation. Just generally getting smarter, more mindful about his money. He had the identical lifestyle he had before. But now he was going to retire and take that financial pressure off and stop worrying about living paycheck to paycheck. |
| Richard | Gordon, The question may be, and perhaps I assume it would be on the tip of most people’s tongues after watching this. I hope there’s somebody watching us. Would be, especially the ones who are living paycheck to paycheck and you know, are like you say, just barely nose out of the water. Any little wave that comes along and all of a sudden they have trouble breathing and things like that. But they’re gonna perhaps be skeptical about the whole idea of building wealth for themselves and wealth, whats that. We’re actually looking at from the other end of the telescope? But you disagree with that, and it’s quite obvious to disagree with that. That’s what your book is about. But just to be practical for these people, what would be the first step in changing direction moving that way? |
| Gordon | Yeah, I think it’s a great question. I really think it sounds a bit unusual. I think the first step is to calculate your current wealth, which I mentioned before could be negative. So you know, what do you own? And maybe all you own is a couch in your rented living area. That’s the only asset that you have. You’ve got student debts and credit card and everything else. But there’s still a number there. So what is that number right now and set up, you could do it on a cocktail napkin or a spreadsheet. What’s your net worth? You know, we sit here in September. What’s your net worth in September? You’ve got a couch and you’ve got all these student debts. And then can you free up some cash and start to focus on it? It may be hard to look at that number because it might be negative. And you can say we’ll I’ll never have any wealth because I’m strung into this debt. Well, I’ll disagree. I think there’s an opportunity here. So what can you free up using the ideas in Cash Flow Cookbook or other ideas? So you’re sitting there in this negative number, and then, you know, in October can you just increase that wealth from zero? Moving it up, here is the zero line. Just keep doing that, and I think you’d be surprised how quickly it goes. Because it tends to accelerate. As you get out of that, you don’t have those interests slowing you down. Now it can start to get more rapidly up to zero. Once you get to zero. Now you’ve got some things working for you. Maybe you have investments, paying out dividends, and then it also tends to accelerate. So there was a great piece that I’d read about a janitor, in the Eastern coast of the U. S. And he retired with it was about $5-6 million dollars. He was a janitor, a career janitor. He was just smart about his money. He didn’t even have to live that frugally. But he actually saved something, and then it just kept building and building. He donated the money in his retirement, right, So fabulous story. I think it really proves the point that anyone can get out of these financial handcuffs and enjoy a happier, more comfortable life. Go on the website as well, there are some other goodies. They’re all free, and you can subscribe, blog posts. There’s things called utensils, which are tools to help with your planning. There’s ingredients so ideas, little things that you could buy that actually save you money. And then the blog posts will give you some incremental ideas. The book itself, $25, I think is the first great investment you could make. Because it’s going to show you some ways to really start freeing up the money and its the sort of thing that you can actually start today. |
How to Save on Valentine’s Day in Toronto
How can you save on Valentine’s Day – the most romantic day of the year? It may seem impossible, but really the trick is simple: spend less and get more.
You don’t have to fall prey to the hype and commercialization of Valentine’s Day and be pressured to empty out your wallet for a crazy expensive Valentine’s Day dinner date or a pricey gift to get for your new flame or significant other. Especially just after the holidays and the damage done on your precious savings, you need to bring the focus back on your finances to spend within your means, get back on track and stay in the black.
But you don’t want to be stone-cold hearted, you’ve got to give the day some special attention and do at least something romantic with your partner. So even with very little money, you need to know how to spend it wisely so you can get the most bang for your buck. It’s really all about making the effort to spend quality time together and making sure that both of you have an amazing Valentine day experience that’s impossible to forget.
Here are some ideas to make February 14th a stand-out experience without breaking the bank!
The Flowers
Of course, you’ve gotta give flowers on this special day most especially if this has been the norm since the start of your relationship. However, plunking down $200 for an over-the-top arrangement of long-stem roses is a bit too much when you’re on a tight budget. You can buy flowers for Valentine’s Day on the cheap, here’s how.
- Don’t buy from a florist. Buy from grocery stores, 24-hour gas stations, warehouse stores or at Local Farmers Markets, in particular stores that keep their flowers refrigerated. They can be just as long-lasting as those at a florist and are quite affordable, costing only a fraction of a bouquet from a florist.
- Roses are in very high demand on Valentine’s Day as it’s the symbol for romantic love, especially long-stemmed roses. If you want to save on Valentine’s Day choose romantic floral alternatives, such as red and pink tulips, orchids, lilies or carnations. Carnations in particular are some of the cheapest flowers around and they also last around 11 days.
- If you must buy roses, buy them ahead of time. Prices on roses hike up in the days before February 14, when they can go up double the price or more. Roses usually last
between five and seven days, thus you can buy them four or five days before when they may be a little cheaper compared to Valentine’s Day itself.
- Choose flowers with tight buds.This way they still have a few days to blossom. If the buds are already open, they’ll only last another day or two.
DIY Valentine’s Day Gifts
It’s Valentine tradition to buy gifts for one another, but if you’re strapped for cash and necessity trumps romance, it’s time to roll up your sleeves and get creative. You got it right, make a gift instead of buying a gift. Thoughtful, handmade gifts are just as romantic, and maybe even moreso, than those big-ticket items that come with a triple-digit price tag.
Start with making your own Valentine card. Writing a personal and heartfelt message to say how you feel about your sweetheart in your own words – now that beats signing your name to a canned sentiment on a mass-produced card at any time.
There’s lots of ways you can do this:
- If you’re an artist, you can create a lovely painting. Some good ideas would be, drawing a portrait of your significant other, or even a self-portrait is cool too, but romantic portraits of just the two of you will help you both see how much in love you are with each other.
- If you have craft-making skills, create a custom made card with fancy embellishments such as glitter, beads, stickers, origami or pop-up paper designs, or any other materials you like to work with.
- If you’re a skilled writer or expert wordsmith, express your love with the use of words in a love poem or a romantic love letter.
- If you’re a computer whiz, design a digital card with Photoshop or any image-editing software or create animated gifs with sounds and moving images. You can simply send this by email, and if you have a long distance relationship this will work big time.
Instead of buying extravagant gifts, you can try your hand on making adorable, easy-to-create projects that are made with love. Think something a bit out of the box that’s a little more special and will make them feel so warm and loved inside because of the time it took to create such a piece.
Here are some great Valentine gift ideas for your partner or family and friends :
- Make these Candy Bags or Lemon Drop Mason Jars if you can’t afford to splurge on a box of gourmet chocolates.
- A scrapbook or a mini collage card using memorable photos, favorite quotes or poems and laying them out with cute stickers, laces, ribbons, glitter, metallic paint and decorative paper will keep alive the memory of your love for each other.
- A snow globe with heart motifs is also a sweet gift idea.
- If you’re into sewing, you can stitch up a heart-shaped table runner or a pretty home decor for a perfect gift to a friend to use at a Valentine’s Day party.
- Food gifts will definitely be appreciated by your sweetheart and everyone else that has a sweet tooth! Try baking this Heart-Shaped Cake or a batch of these Mini Rosebud Cupcakes.
Remember, there’s no better gift than something handmade. Make use of your personal skills, whatever those may be, to express your love without having to empty your wallet.
For Affordable Date Ideas
If you’re going out for Valentine’s Day dinner, remember restaurants are packed and no doubt you’ll have to pay more to have special menus for the evening. Why not swap eating out for some less traditional gestures that will make the special meal of the day just as romantic.
Try to cook a meal for your special someone, or if your date is up for it, cook dinner together and then have a romantic Valentine’s dinner in the dining room, or for added romance, maybe do dinner in bed. Wouldn’t it be more lovely to spend the night relaxing over good food and pleasant company, instead of with strangers?
For a more eclectic but affordable date experience, there are more than enough free things to do to celebrate Valentine’s Day around downtown Toronto.
You can go ice skating under the romantic Toronto night sky at various skating trails across GTA for a perfect Valentine’s date. You and your date will have fun trying to decide between going to the classic Nathan Phillips Square or to the brand-new College Park skating trail. Or maybe skating and dancing the night away at DJ Skate Nights at the Harbourfront Centre is more your thing.
It also costs nothing to visit Toronto’s historic Distillery District to enjoy the Toronto Light Festival. You can enjoy a romantic stroll throughout the streets and enjoy live music, sample alcoholic drinks and check out the vibrant exhibits of local and international light artists.
If you’re looking for that not-your-average date idea, why not give away some love on Valentine’s day to celebrate love’s biggest holiday. What can be sweeter than spending the day with someone who doesn’t have a Valentine of their own. Whether you’re single or a couple, you can spread some love around to those who really need it on this special day. Why not visit a sick elderly relative or someone who has recently lost a loved one? You can simply give them a hug and kiss and talk to them for awhile and it will surely brighten up their day. If you’re ready to give more love, take it up a notch and try volunteering for a good cause. Volunteering is great throughout the year, but especially on Valentine’s Day for people who might otherwise feel left out. Check out your local listings or Volunteer Toronto for ideas on where you can lend a helping hand.
With these tips on how to save money on Valentine’s day you won’t have to spend a good chunk of your savings account on lavish bouquets, fancy jewelry, or big boxes of gourmet chocolates. The idea is to at least do something personal and romantic on February 14th, you know, all that wonderful, sappy stuff that comes straight from your heart. It’s okay to change things up a bit. There are many ways to still be able to show your loved ones how much they mean to you, without having to cost too much.
How to Pay Off Holiday Credit Card Debt Quickly
You’re now looking at your bank statements and credit card bills with wide eyes, and the amount of cash you’ve blown this past December is finally starting to sink in. It gets you wondering: What can I do to pay off holiday credit card debt quickly?
It can be very scary to go into the New Year with a hefty credit card debt weighing over your shoulder. For too many of us, the cycle of credit card debt starts in the holiday season and it’s the type of debt that’s difficult to recover from. When you only make the minimum payments and the interest charges continue to increase over time, it will take much, much longer to pay it off and you could end up paying triple what you originally paid for the item that you bought. In fact, it’s not uncommon to hear of people who are still paying down holiday credit card debt two or three years later, says Jeffrey F. Schwartz, executive director of Consolidated Credit Counseling Services of Canada.
It’s all too easy to go overboard during the holidays – just dip into your credit card, enter its numbers at the checkout and you’ve got your purchase done. The ease of credit availability is why Canadians, particularly millennials, love to use credit cards during the holidays.
Over a third of Canadian millennials expect to go into debt this holiday season, according to a survey from Credit Karma. Add to this, 62% of Canadian millennials will rack up more than $500 in debt over the holidays with most of them planning to do this with credit cards, and some by using personal loans.
Those surveyed also said that it would likely take them five months or more to pay the debt off. Only 42% of shoppers said they would pay off that debt in three months or less.
“What we’ve seen in Canada over the last year and a little bit is that Canadians are having a tough time meeting their obligations on their credit card…recent research by financial institutions indicates almost half a million Canadians are behind in their credit card payments by 90 days or more,” says Schwartz.
If you’ve acquired a post-holiday debt problem, what you can do now is make a commitment to pay off holiday credit card debt quickly so you can become financially healthy in the new year.
Here’s how you can do it:
Audit your credit card debt
A crucial first step to do is to add up all your expenses including the interest rates to know the exact total debt you now need to pay off. Thinking it’s “around” a certain number is not going to help you understand how much you spent and make an exact plan to pay it off.
Once you’ve taken a look at the numbers, make sure you take the time to identify the root cause of why you’ve accumulated so much credit card debt over the holiday season. Don’t stress over it, don’t wallow in guilt over it, because there’s no point beating yourself for taking on debt. Accept the fact that debt happened, and you’re handling it and looking for resources to help you move forward.
Make a realistic debt payment plan
If you have a small amount of holiday-related debt you will need to make sure to pay it all off in January. If possible knock all your holiday debt out quickly in a month or two, three months at the most. If it will take any longer than this, it’s time to create a realistic plan to eliminate the debt as quickly as possible. Paying down holiday debt in two or three years isn’t worth the unease and sleepless nights. If you’re going to pay just the minimum monthly payment, you’re never going to get out of debt. And, it’s also not realistic to altogether stop spending for the duration of your debt repayment, especially if it’s going to take longer than a month or two.
A realistic debt payment plan takes into account that in real life you will spend for things like the occasional coffee or takeout order, and so you will need to factor this in on what you expect to spend in a normal month including fixed costs for your housing expenses, food, and bills plus your current savings and debt payments.
The difference between paying your holiday credit card debt off in three to six months and in two years can be huge, and so the aim is to zero out the debt as quickly as possible. Make more than the minimum payment wherever possible. If the minimum amount is all you can afford now, then pay that. Don’t stop paying, or you’ll get into deeper debt trouble. Focus on paying off your most expensive debt first, which is the one with the highest interest rate, and then move on to the one with the next highest interest rate and so forth until your debt has gone down. Consider if a balance transfer credit card might be a good move in helping you curtail holiday credit card debt. A debt consolidation loan can also be an option if it can result in lowering your interest rates.
Ask for help
Don’t be ashamed to discuss your financial situation with your partner and other significant people in your life. In fact, get the whole family involved if possible. You’ll be surprised how resilient kids can be and often they will have some really creative ideas on how to cut back on spending habits. This will take some of the stress and pressure of dealing with debt on your own.
Getting professional help from trusted financial experts like an or a licensed insolvency trustee can also be beneficial in helping to put your total debt picture in perspective. You may think your debt problem is unsolvable, but these debt experts can help you find ways to tackle your debt in payments you can afford.
Your best course of action to pay off holiday credit card debt quickly is to relax, take a deep breath, take an objective look at your situation and then figure out what you need to do to fix it. Don’t avoid the problem as it’s going to catch up on you anyway sooner or later. Face the debt head-on, and do everything you can do to get out of debt quickly so you can enjoy the rest of the year free of debt.
Recover from Holiday Overspending with these Quick Fixes
Holiday overspending is a reality for most Canadians. According to a survey by Manulife Bank of Canada, 68% of Canadians said that they will overspend during the holidays despite the fact that they already have a lot of debts and even knowing that they will likely face negative consequences when doing so.
But, why is it so easy for us to overspend especially during the holidays?
It’s not that we’re reckless and uncaring about the consequences of debt, but more because we feel pressure to buy gifts and impress significant people in our lives. The survey revealed that one in four Canadians feel that social pressure is a contributing factor to why they overspend during the holidays. According to the survey, many of us feel pressure to spend more than we are comfortable to spend on with gifts, travel, social outings or charitable donations during the holiday season.
We want to keep up with the Joneses, or perhaps nowadays it’s more relevant to say we get caught up in social media too much, and want to have the perfect presents to give to our significant others, or buy expensive ornaments to decorate our homes, blow the budget on travel to create the perfect holiday moments, and even overindulge on food shopping to host the most elaborate holiday parties, so we can match the level of holiday shopping, decorating and celebrating that our social media friends do.
This is why financial debt from holiday overspending ranks as the number one cause for increased anxiety and stress than any other time of year. The survey goes on to show that financial stress of the holidays negatively impacts our mental health, creates tension with families and significant others and leads to a loss of productivity at work. Holiday debt sure takes on a heavy toll.
So, is it possible to recover from overspending?
Now that the season is over and the expenses have been made, it’s a bit too late to undo some of the damage. If you tossed your budget aside during the holiday season, you don’t have to spend the New Year regretting it. You can take a few quick and easy steps to recover financially from all that holiday overspending.
No Spending in January
One of the first things you can do is to cut off spending, particularly on the first month of the year when you will need to pay off those mountains of credit card bills. Make the commitment to stick to your monthly budget and not to spend on anything extra other than living expenses. This means no take outs, no clothes shopping, etc. If you’ve got a lot of leftovers from holiday meals, for example, you can eat out of your pantry, fridge, and freezer for the entire month. You can set aside around $20-40 a week to spend on milk, eggs, bread, and other fresh necessities at the grocery store, and this will leave you an extra $300-400 on your budget since you won’t be buying groceries for the month. You can put this to pay off some credit card debt or replenish your savings account. A no-spend month, even if it’s just for one month, is a great step forward. The sacrifice may be hard, but if it means being debt-free for the rest of the year then it’s totally worth it in the long run.
Earn Extra Income
Taking on extra income is one of the best ways to pay down debt plus have some additional savings. A side hustle will act as a cushion and soften the effect of any negative impact a high spending month will have on your budget. There are so many ideas to earn side income. If you have a regular job, the best way to work this out is to ask your employer for overtime opportunities. You can also take on a part-time job – with the holidays just over you can ask your neighbours if you can take down their Christmas lights or other yard ornaments or perhaps you can take on a tutoring job or a small babysitting position. There’s also a good amount of extra income to earn with renting out your home or a room in your home, or even renting out your car.
Earn Money with Unwanted Gifts
You might have received plenty of holiday gifts you don’t want or need, use them to reduce debt you’ve incurred from holiday overspending. If you have the receipts, you can return them and possibly get cash in exchange or probably get store credit which you can use to shop at that store without dipping into your own wallet. You can also sell these stuff on the Internet.
The online marketplace for second-hand or previously owned goods is in high demand. If you have clothing, shoes, accessories, electronics, books, etc that are still in the original packaging (with tags, warranty cards attached) you can easily fetch premium prices for them.
Fashion items sell fast on eBay and Etsy and, more recently, Facebook Marketplace. You can also consign high-end clothes and accessories online in Canadian sites such as Designer Swap, Own The Couture VSP and I Miss You Vintage in Toronto and Turnabout in Vancouver. Use your personal social media channels and post photos of sale items on Instagram Stories, Facebook Groups and WeChat.
Amazon Trade-In, letgo and GoRecell are great online markets to resell electronics.
If you’re nursing a financial hangover, you can feel stressed over it the entire year or you can choose to do something to fix the situation so you can quickly recover from all your holiday overspending. These quick fixes are some easy ways you can do to get back on track to financial growth. Be creative, and challenge yourself to find ways to pay down your debt quickly so you can feel good about going into the New Year free of any debt overload.
Financial Literacy Month: Taking Charge of Your Finances
Canadians celebrate Financial Literacy Month every November. Created and launched in June 2015 by the Financial Consumer Agency of Canada (FCAC), this initiative sets out three basic goals to help Canadians understand their rights and responsibilities to be able to:
- Manage their money and debt wisely,
- Plan and save for their future, and
- Prevent and protect themselves against fraud and financial abuse.
Financial Literacy Week Canada
The overall theme for this year is “Take charge of your finances: It pays to know!” There are weekly sub-themes throughout the month to bring specific focus on basic money management practices that are critical to helping Canadians understand how to manage their money the right way. These weekly sub-topics will include:
- Week 1 (November 3 to 9) – Start with a budget
- Week 2 (November 10 to 16) – Set financial goals
- Week 3 (November 17 to 23) – Be a smart financial consumer
- Week 4 (November 24 to 30) – Borrow money wisely
During the month-long celebration, organizations from the private, public and non-profit sectors across the country share information and resources, in the form of hosting workshops, seminars and other events to promote financial literacy for Canadians of all ages and to help them think more about their financial well-being and how they can improve it.
We at Richard Killen are joining financial organizations all across Canada to help you become smarter about your money.
Why Do We Need to Be Financially Literate?
These statistics based on a survey conducted by Lowestrates.ca and Ipsos Canada, the country’s leading provider of public opinion research, will help you understand why:
- 50% of Canadians have no budget to define their short-term and long-term financial goals.
- 32% of Canadians don’t expect to have enough money to retire comfortably.
- Only 36% of Canadians understand how applying for a credit card can negatively affect credit score.
- 60% of millennials don’t have enough money to cover an emergency expense.
- 85% of Canadians agree that financial literacy in Canada is lacking.
- 87% agree that the lack of knowledge is contributing to Canada’s consumer debt problem.
- 85% wish they personally had the opportunity to learn more about finance and the economy while in school.
- 94% agree that Canada’s schools need to do a better job of teaching financial literacy skills to children.
- Only 16% of Canadians feel that they have strong personal financial literacy skills.
- 39% feel that they have poor financial literacy skills.
- Only 35% agree that Canadians overall have strong financial literacy skills.
Money touches all areas of our life, so it’s extremely important to be financially literate for our own financial well-being in life. If you know this knowledge and skills early on in life you will be able to develop good money-management behaviours in the long term. This will enable you to make wise financial decisions and actions all throughout life, and most importantly, if you do make poor decisions you will know how to fix them and take steps to plan better for the future.
Basic Financial Literacy Skills
Becoming financially literate doesn’t happen overnight. You learn gradually starting with the basics and build fluency over time.
Perhaps the most basic financial skill to start learning is knowing how to budget. Budgeting is the best way to see how money comes in and out of your life. It will require you to go over your income and expenses and analyze your spending habits, and likely make changes where you need to. It may sound too restrictive, but it will help you take control of your money, instead of your money controlling you. And when you have better control of your money, you are able to make sound financial decisions.
Ideally, this is what you want a basic budget plan to have:
- A breakdown of all your needs all of your expenses over the course of a month so you can account for each of them.
- Track every penny you spend weekly or twice a week, depending on how often you deem necessary, and compare your actual spending to the budgeted amount.
- Evaluate ways for lowering your monthly bills as your expenses can’t be more than your income.
- Identify some income left over at the end of each month to build emergency savings or put toward other financial goals.
The only way for budgeting to be effective is for you to be realistic and put together a plan that you can actually follow. The more time and effort you put into developing your household budget, the better understanding you will have of how you’re spending your money and, as a result, the better you will be able to identify where your financial holes are. The sooner you can see the gap between what you can afford to spend and what you actually spend, the closer you can get to stop living paycheck to paycheck.
Knowing how to manage money effectively is a valuable life skill to have and financial literacy equips us with the knowledge and skills we need. We can learn to be financially literate, and it’s never too late to start learning.
If you’re interested to know about your own financial literacy, take this Self-Assessment Quiz to help you find out.
We encourage you to also come and talk to us to get a free checkup of your overall debt and financial health. As Licensed Insolvency Trustees, we are government regulated debt professionals and can help you to improve your overall financial literacy and learn new ways to become savvier with your money. Soon, you will take charge of your financial freedom with a debt-free life. Celebrate Financial Literacy Month with us!
Financial Literacy Month – How to Set Financial Goals
Another focus of this year’s Financial Literacy Month is to help Canadians learn how to set financial goals. It’s just basically figuring out three important things –
- Where your money should go,
- What you want it to do, and
- What you are saving it for.
It’s a critical step to becoming financially literate for these reasons:
- It will help you to set your own priorities for your money.
- It will help you work toward something specific.
- It will help you get into the habit of saving to achieve your goals.
- It will help you decide exactly what you think you should do with your money so you can make the most of it.
If you don’t have solid financial goals, you may tend to lose direction and are likely to spend more than you should and end up in debt, or if you have savings, it might end up floating in limbo when your money could be put to good use. On the other hand, if you have a financial plan, you’re far more likely to pay bills on time, to have an emergency fund, to have savings and investment and are more likely to feel financially stable.
Types of Financial Goals
Some goals are more pressing than others, like down payments, paying credit card debt and setting up emergency savings. Other goals are vital, such as saving for retirement. You can set short-term, mid-term, and long-term financial goals, it doesn’t matter, what matters is to get started right away so you can maximize every penny you have.
Here are some good goals you might want to consider setting for your own financial well-being:
Set a budget plan
Setting a budget is a very common financial goal because, really, it is the most basic step you can take to get control of your financial future. A budget will help you clearly define the amount of income you have and where you are spending your money on. It will then help you see any expense that is stopping you from reaching your goals. If you diligently live by a budget, you can stop spending too much, you can stop going into debt and you can start saving.
Paying off credit card debt
If you have high-interest credit card debt, getting rid of it should be a top priority. You can use the snowball method, the avalanche method, do a transfer balance, try credit consolidation with a reputable company, whatever debt elimination strategy you can afford to do, the main goal should be to pay that debt off first and as soon as possible. Credit card debt can hinder your ability to build wealth and reach your financial goals if you are not proactive. The high-interest rates eat up so much of your cash flow that could be used for other objectives instead of interest payments, so you need to tackle the debt first so you can move forward.
Saving for an emergency fund
Having an emergency fund is like having some financial assurance that you have some cash stash away that you can easily use to help you deal with life’s rainy days easier. Whether it’s an unexpected home or car repair, or an unplanned visit to the doctor or dentist, your emergency fund is essential to help cover costs that you don’t plan to happen.
33% of Canadians feel that they don’t have the financial resources to handle an unforeseen event, so if you’re feeling the same concerns, take some solid steps right away to build an emergency fund that will help you have some peace of mind, knowing you can cope with unforeseen bills and expenses.
The general rule is to have enough funds to cover up to six months of your living expenses. Start building your savings in small steps with what you can actually afford to set aside right now. That’s a good start, and be consistent and in time you will see your funds grow.
Saving for retirement
Saving for retirement is another top-rated financial goal. One of the topmost concerns about retirement is if you will have enough to live on. The key is to plan for an early retirement, this way you’ll still have plenty of time to make it even if you hit a few snags before the legal retirement age of 65.
You need to consider two critical points when you’re planning for retirement:
- Make sure you are able to retire without loads of debt, and
- You have a reasonable income stream that you can live off of.
A long-term approach of disciplined saving and investing can help you attain this goal.
Many of us don’t bother to set financial goals. We choose to rely on luck and, well, come what may. However, setting financial goals can help influence the way we manage money and can greatly increase the likelihood of our financial success. With goals set up, we are able to better meet savings needs, we are able to control our spending, we are able to make wise buying decisions and use credit responsibly and avoid going into debt – all because there is a plan, a clear and solid direction and intention of where our money should go.
Cheap and Free Things to Do in Toronto in November 2019
So many cheap and free things to do in Toronto in November 2019, it’s going to be a busy month. But, if you’re low in budget, and are out to save a few bucks for the gift-giving season, don’t worry about missing out. You can still have so much fun without breaking the bank!
Remembrance Day Ceremonies
Let’s not forget to take the time on November 11 to honour all those served, including the many who gave their lives for our country. There are several Remembrance Day ceremonies and events lined up throughout Toronto. You might want to plan to attend one.
You might also want to check out events and programs planned for Remembrance Day at the Toronto Zoo if you’re anywhere nearby.
Or why not go to Remembrance Day concerts with friends or visit museums for amazing exhibits?
Santa Claus Parade
It’s still on November 17, but you can start getting excited about Santa Claus coming to town! This will be a massive parade with all kinds of festive floats and special characters and of course, we will be waiting to see the star of the show, Santa Claus, make his grand appearance! There’s a new route this year that will begin at Parliament Street and travelling south on University Ave before ending at St. Lawrence Market. Be sure to activate your map and GPS so you can trod along without getting lost.
Toronto Christmas Market
You cannot miss out on the magic of the traditional Christmas Market! It’s the most anticipated holiday event of the year. Get ready to see the Distillery District transform into a magical winter wonderland filled with twinkly lights, Christmas decorations and tasty treats and drinks – there’s so much to see and do! You can shop around for homemade crafts, or visit Santa’s house, maybe explore a giant light tunnel and enjoy festive music and live entertainment. Admission is completely free, and you’ve got plenty of time as the market will run from November 15th until December 23rd this year.
Cavalcade of Lights
A free fireworks show will light up the dark night sky and Toronto’s official Christmas tree will once again be lit up this year. There’s also live music by some of Canada’s best artists and a skating party at Nathan Phillips Square – all for free. It will be on November 23, 2019, so save the date on your calendar now!
Chrysanthemum Show at Centennial Park Conservatory
It will run until November 25, 2019, this year, so you still have a bit of time to see creative displays of over 80 varieties of chrysanthemums. It will be a colourful show for sure! It’s open for the whole family and completely free!
Regent Park Film Festival
The organization is well-known for hosting Under the Stars Movies in the Park, year-round film screenings, school programs and workshops at no cost, and of course, the Annual Film Festival, which will be taking place on November 20-23, 2019 this year.
If you’re a fan of films that break stereotypes, such as those with themes about inner-city issues, immigrant experiences and multicultural relationships, or maybe you would just like to show support to local and international independent artists who are struggling to have their work seen, you need to make sure to add this event in your calendar.
One of a Kind Christmas Show and Sale
From November 21 to December 1, 2019, be sure you plan a visit to the Enercare Centre at Exhibition Place for North America’s largest event supporting crafts of all kinds and its craft makers. It will be a cultural and creative experience altogether. You’ll enjoy exploring the huge selection of unique gifts and decorating ideas created and handmade by local artisans – from chocolates to some very pretty clothing and very beautiful unique art pieces for the home. Oh, maybe you’ll want to get started on some serious holiday shopping there.
High Park Toronto in Fall
High Park is free all year round and you can go any time of the year, but you definitely have to see it during the Fall season. It literally transforms into a pretty magical place to enjoy the fall foliage. Imagine how remarkable it is to see some of the maple trees all ablaze in vivid orange and red colours. November is the remaining days of autumn, so it’s particularly beautiful right now. And while you’re there, stop by at the High Park Zoo and say hi to the animals.
From Christmas tree lighting ceremonies, Christmas markets and a chance to meet Santa Clause at the Santa Clause parade, there’s just a ton of free things to do in Toronto in November that will help bring you some early holiday cheer. The best thing is, you can do most of them for free or as cheap as possible so you won’t be blowing all your money and still be able to join in the fun!
Contact Richard Killen
FREE No Commitment Consultation
Contact us now for a fresh start!
“Serving Toronto & the GTA for over 25 years.”
Recent Blog Posts
- Debt Repayment vs Vacation: How to Balance Fun and Financial Freedom
- Job Loss & Debt in Canada: How a Licensed Insolvency Trustee Can Help You Regain Control
- CRA Debt Canada: Why Waiting Until September Costs You More
- Summer Vacation on Credit? What a Licensed Insolvency Trustee Wants You to Know About Vacation Debt in Canada
- The Canada Groceries and Essentials Benefit 2026: What It Means for Your Budget and Debt