The Smart Canadian's Guide to Saving Money E-Book

Pat Foran

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 457

Veröffentlichungsjahr: 2015

Beschreibung

Canada's top consumer advocate returns with more financial advice. Canadian consumers are focused on spending and managing what money they do have wisely, but have more questions than answers on most financial topics. Television personality and consumer advocate Pat Foran shares tips and strategies about the questions and issues he sees most often, and explains how some little things can soon add up to a lot of money. Some of the topics covered include: * Credit and loyalty cards, and what kind of deal they really are * How much insurance is enough - and what kinds do most people need? * How to shop for a vehicle, and if it's worth it to import from the US * Mortgages, tax breaks, and other complicated financial decisions * Getting the most bang for your buck, whether while shopping or travelling Packed with money-saving advice, this title will also include the latest information on marketplace trends, the investment climate, housing prices, interest rates, and other techniques for savings. As an added bonus, Pat has included quotes and comments from prominent Canadian businesspeople and celebrities about the best financial advice they've received in their lifetimes. Pat Foran is seen by millions of Canadians each week as the Consumer Reporter for CFTO News, and Consumer Expert on CTV's Canada AM. His "Consumer Alert" segment is currently on CFTO's noon, six o'clock and eleven-thirty newscasts, five days a week with an audience of 700,000 viewers, and he appears on Canada AM, Canada's number-one national morning show every week, dispensing financial and consumer advice.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Acknowledgements

CHAPTER 1 - confronting the debt challenge

CHAPTER 2 - taking wisdom from successful Canadians

CHAPTER 3 - checking in with the wealthy barber

CHAPTER 4 - living next door to a millionaire

CHAPTER 5 - finding out what makes Canadian millionaires tick

CHAPTER 6 - asking experts what the economic future holds

CHAPTER 7 - what we learned from black october 2008

CHAPTER 8 - keeping calm during troubled times

CHAPTER 9 - calculating your financial worth

CHAPTER 10 - monitoring your expenses

CHAPTER 11 - seeing marriage as a partnership

CHAPTER 12 - should you sign a prenup?

CHAPTER 13 - setting goals

PART 1 - REDUCING DEBT

CHAPTER 14 - attending credit counselling

CHAPTER 15 - consolidating debt

CHAPTER 16 - curbing bad spending habits

CHAPTER 17 - differentiating good debt from bad debt

CHAPTER 18 - establishing an emergency fund

CHAPTER 19 - hopping from credit card to credit card

CHAPTER 20 - bidding farewell to your credit cards

CHAPTER 21 - obtaining your credit score and credit report

Your Credit Report

Obtaining Your Score and Report

CHAPTER 22 - dealing with collection agencies

CHAPTER 23 - steering clear of payday loan services

CHAPTER 24 - declaring bankruptcy

When Bankruptcy Is the Only Way Out

Life after Bankruptcy

CHAPTER 25 - avoiding credit repair agencies

PART 2 - SAVING MONEY

CHAPTER 26 - tax savings: new rules can save you money

CHAPTER 27 - the tax-free savings account

CHAPTER 28 - understanding interest rates

CHAPTER 29 - choosing the right credit card

CHAPTER 30 - getting the best car insurance

Minimizing Your Car Insurance Costs

Keep a Clean Driving Record

Always Keep Your Insurance Active

Renew Your Licence on Time

Take Part in Group Insurance

Choose the Best Insurance Company for You

Make Yourself a Desired Insurance Risk

Make Only Necessary Claims

Take Only Necessary Coverage

Fight Every Ticket

Avoid Being Labelled “at Fault” in an Accident

Consider How New Drivers Affect Your Policy Rates

Obtaining Gap Insurance

Leasing Insurance

CHAPTER 31 - buying life and disability insurance

Life Insurance

Disability Insurance

CHAPTER 32 - doing your income taxes

CHAPTER 33 - hitting the sweet spot

CHAPTER 34 - trimming the grocery bill

CHAPTER 35 - click, click, save, save: using the Internet to save money

CHAPTER 36 - renting to own

CHAPTER 37 - keeping cash register scanners honest

CHAPTER 38 - refusing extended warranties

CHAPTER 39 - unearthing unclaimed balances

PART 3 - PLANNING FOR WEALTH

CHAPTER 40 - partnering with financial advisers

Protecting Yourself

CHAPTER 41 - choosing a lawyer

CHAPTER 42 - preparing a will

Preventing a Family Fight

PART 4 - INVESTING WISELY AND BUILDING WEALTH

CHAPTER 43 - investing à la Andrew Cook

Do Diversify

Don’t Chase Returns

Do Know Yourself

Don’t Make Emotional Decisions

Do Dollar-Cost Average

Do Pay Attention to Trends

CHAPTER 44 - taking part in day trading

CHAPTER 45 - minimizing pricey fees for funds

CHAPTER 46 - benefiting from RRSPs

CHAPTER 47 - debunking financial myths

The RRSP Trap

CHAPTER 48 - setting up RESPs

CHAPTER 49 - participating in company stock purchase plans

CHAPTER 50 - owning (not renting) your home

CHAPTER 51 - the 35-year mortgage why you should avoid it

CHAPTER 52 - managing your mortgage

Interest Rates

Shorter Amortization

Accelerated Biweekly Payments

Lump-Sum Payments

Mortgage Term

CHAPTER 53 - breaking your mortgage

CHAPTER 54 - considering reverse mortgages

CHAPTER 55 - using the equity in your home to buy real estate

Buying Investment Property When a Child Attends College or University

Choosing a Property

CHAPTER 56 - purchasing a cottage or chalet

CHAPTER 57 - taking steps toward effective home and tenant insurance

Home Insurance

Tenant Insurance

Home Inventory

Additional Coverage

CHAPTER 58 - renovating your home

Painting

The Kitchen

Bathrooms

Fireplaces

Flooring

Finished Basement

Landscaping

Pools

CHAPTER 59 - dodging home renovation rip-offs

CHAPTER 60 - selling your home

CHAPTER 61 - earning money at home

Tax Advantages of a Home Business

CHAPTER 62 - thinking seriously about cars

CHAPTER 63 - buying a car in the U.S.

CHAPTER 64 - buying a new car

CHAPTER 65 - financing at 0%

CHAPTER 66 - leasing a vehicle

Repairs

Excessive Wear and Tear

Travel Limitations

A Lease Is a Binding Agreement

Types of Leases

Lease Length

CHAPTER 67 - buying a used car “nearly new”

CHAPTER 68 - buying a used car four years old or older

CHAPTER 69 - looking out for scams when car buying

Curbsiding

Odometer Fraud

So Your New Car Is a Lemon!

CHAPTER 70 - asking for a raise

CHAPTER 71 - changing careers

CHAPTER 72 - giving to charity

Index

Copyright © 2009 by Pat Foran

All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to The Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright licence, visit www.accesscopyright.ca or call toll free 1-800- 893-5777.

Care has been taken to trace ownership of copyright material contained in this book. The publisher will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions.

Library and Archives Canada Cataloguing in Publication Data

Foran, Pat

Includes index.

Previously published under title: Smart Canadian’s guide to building wealth.

eISBN : 978-0-470-73874-0

1. Finance, Personal—Canada. 2. Saving and investment—Canada.

I. Title.

HG179.F.024’010971 C2008-905762-7

Production CreditsCover design: Ian Koo Cover photo credit: Lorella Zanetti Photography Typesetter: Joanna Vieira Printer: Tri-Graphic Printing Ltd.

John Wiley & Sons Canada, Ltd. 6045 Freemont Blvd. Mississauga, Ontario L5R 4J3

TR

This book is dedicated to my older brother James Joseph Foran who died in a tragic farming accident when he was 16 years old. We all miss you terribly Jim and wish you were here to share our lives.

Acknowledgements

I’m very pleased this book has been such a success that it warrants a revised edition. I’ve heard from countless Canadians who say it has been an inspiration to help them save for the future or better manage the money they already have. Consumers like Micky Multani, of Fort McMurray, Alberta, who wrote: “I just purchased this book and feel it is one of the best investments I have ever made. It covers almost every aspect of financial planning and I think it’s an excellent book to build a strong base for the future!” This book is dedicated to you, Micky, and to everyone who wants to improve his or her financial situation. This book is also dedicated to investors who had to hang on for the wild ride of Black October 2008, one of the most difficult stock market periods we have experienced since the Great Depression. I truly believe when it comes to finances, it has to be about balance. The right balance to enjoy everything life has to offer and to still have enough set aside to feel secure and comfortable about the future. Thanks to my loving wife, Carole, for all her support, and to our cherished daughters, Lisa, Vanessa, and Sarah. Thanks also to my parents, Gordon and Helen Foran, especially my mother for her spiritual guidance and my in-laws, Hector and Anita Blanchard, for pitching in when I was working on this book and our busy household needed a hand. I also want to thank the CTV Television Network for employing me in a position that I sincerely enjoy and that allows me to help others. Thanks to the experts who have gratuitously contributed to this book and the consumers who have passed on their stories to educate us. I wish you all the best! I hope you achieve your financial dreams.

CHAPTER 1

confronting the debt challenge

A lot has changed in the last three years since I wrote this book. First titled The Smart Canadian’s Guide to Building Wealth, the publisher asked if we could change the title to The Smart Canadian’s Guide to Saving Money. Since both essentially mean the same thing, I said sure, but make no mistake—this is a revised edition of that book. It does have new information, statistics, and strategies to build wealth and save money, but I think after the severe toll the stock markets have taken on the savings and investments of many Canadians over the past few years, specifically the major downturn in September and October of 2008, have many consumers as interested in saving money and balancing the family books as they are in trying to build an investment portfolio, hence the publisher’s wish to tweak the title. Also, in my daily role with CTV television, I’m always doing my best to help consumers save money. This book contains solid information from many experts that can help you do both. After all, if you can save money, you can build wealth too.

Whether you call it a recession, a downturn, or an economic slowdown, the global market corrections, inflation, and job losses that came during 2007-2008 had many Canadians worried, jittery and even angry about their investment portfolios. After enjoying double-digit growth and low interest rates, now many homeowners are seeing their houses, condos, and cottages decreasing in value. Investment portfolios have been hammered by falling stock prices and many people have seen their investments decline 30 percent to 50 percent depending on how aggressive their holdings were. Aside from people lucky or prudent enough to be holding safe securities such as government bonds, GICs, and cash no sector was untouched as the problems in the United States with its mortgage meltdown, imploding hedge funds and credit crisis affected the rest of the world including us here in Canada. Rising prices for wheat, corn, rice, and other staples have led to “foodflation,” a new reality that we will now have to pay more than ever for groceries. Rising gas prices are costing Canadians hundreds to thousands of dollars a year more in fuel costs. In 2008 as oil hit $150 a barrel General Motors had to consider to stop making its gas-guzzling Hummer. But along with the crash of the markets, oil tumbled back down to $70 a barrel. Where it will be in the future is anyone’s guess. Interest rates which had to be slashed following Black October to help bring some stability to the market eventually will have nowhere to go but up, and many Canadians are loaded with mortgage debt, credit line debt, credit card debt, car loans and leases, and other expenses, and they are not sure how they will get them paid off. Of course, taxes in all forms—property tax, income tax, and the PST and GST—aren’t going anywhere either. It can get a little depressing and has many people wondering if the good times have come to an end.

Well, don’t panic! There is much to be positive about. Gas prices have fallen from highs of $1.50 a litre, and vehicle prices are down. The stock market has declined, but it means there are some great buying opportunities. Some foods cost more, but some actually cost less. A slowing housing market can create opportunities to invest and new tax changes will help you save money this year. To get ahead in 2009, 2010, and 2011, the most important thing, which is at the core of this book, is to control your spending. My concern has always been that we have become a consumption-driven society, buying things we don’t need with money we don’t have. While there was a time you would never buy something on credit, now drowning in debt is the new normal. We buy cars we can’t afford, big-screen TVs on credit cards, and do expensive home renovations on lines of credit. We’re not about keeping up with the Joneses but surpassing them. Well, I’ve got news for you—the Joneses are broke!

Forty years ago, debt loads were much lower in Canada, and guess what? Forty years ago, credit cards were just being introduced. That little piece of plastic is responsible for changing attitudes about debt and is one of the main reasons Canadians are in such rough financial shape today. Building wealth is possible for all of us, and it is never too late to start. To do so, though, we must take charge of our finances, reduce debt, save money, and invest wisely. As the consumer reporter for CTV, I get to see the most cutting-edge products and services in the marketplace whether it’s solar-powered lawn mowers or hotels designed for dogs and cats. How about a TV built into a bathroom mirror—for $5,000. Putting greens for your backyard—$10,000. A fridge with an Internet-accessing computer screen in the door—$7,000. Would I buy any of this stuff? No way! I do find it fascinating to see the kinds of new products on the market, consumer trends, and what may eventually be mass-produced so that one day I can afford to buy them.

Not long ago I was at someone’s house and he had recently renovated the home, spending over $100,000 dollars. It looked great and even though he was finished, he still wasn’t happy with the outcome and planned to spend tens of thousands more. I said, “You know it looks fine and it doesn’t have to be perfect,” at which point he looked at me incredulously and said, “Well, of course it does!” It is this quest for perfection—this keeping up with the Joneses—that keeps many Canadians trapped in a cycle of debt. I recall a time when I did a story on the best family van on the market. This particular year it was the Toyota Sienna. I later heard from a couple who took out a $45,000 loan against their home to buy one because they wanted the “best” van there was. Did they really need it, or would a three-year-old domestic van at one-third of the price have been good enough to shuttle their kids to hockey and make runs to the grocery store? Do we always need the best of everything? Of course we don’t.

While there are many of us who have our finances in order and are prudent with the way we shop and save, about half of us are lurching from paycheque to paycheque, spending all of it as we go. There is no plan for retirement, no emergency fund for a rainy day, and no savings in the savings account. This group of people has tens of thousands of dollars in what I call junk debt. Junk debt is all of the bills that have been consolidated so many times we can’t even remember what the original debt was for. Too many of us are secretly hoping our numbers will come up and we’ll win the lottery or inherit wealth so we can coast into our retirement with a nice big bank account. Some plan. The truth is that in our lifetimes, most of us will have more than a $1 million pass through our hands. Many of us will have several million dollars channelled through our bank accounts. What are you doing with your money? Can you find the power to harness that money and make it work for you? Or will you simply trudge along, spending it week in and week out, living from one paycheque to the next? If you think you won’t get ahead, you won’t. It’s a self-fulfilling prophecy.

Earning more is not always the answer, either. Some people will work long hours, be away from their children, and stress their marriage for an extra $5,000-$10,000 a year in overtime. The government is going to take one-half to one-third of it, depending on your tax bracket, so you may be left with only $3,000-$5,000 in after-tax dollars. Imagine if you just tried to cut back your personal spending by that amount in a year and still spend time with your kids and spouse. Spending less on a family vacation, a barbecue, or a home renovation can easily save you that amount. For a family with a combined income of $100,000, saving $5,000 after tax is as good as earning $10,000 of salary or income.

I should stress that I don’t believe people should become misers who nickel and dime friends and businesses to try to get ahead. Someone once told me how she had devised a plan to buy things at a major department store and then return used goods by switching receipts. She was proud of this scheme while all I saw was fraud. What good is it to wind up wealthy later in life if we are like Ebenezer Scrooge, huddled in a room all alone, counting our money? If the ghosts of past, present, and future come to visit me, I hope I like what I see. This book is to help you make wise decisions that will enable you to keep more of your hard-earned money instead of giving it to large corporations. Think about it. When you are loaded with debt, you are giving away thousands of dollars every year to banks and creditors. Once you have amassed wealth and are free of debt, you will be in a position to sponsor a child in a Third World country; give money to a charity; buy a round of drinks; or spoil your kids, nephews, and nieces rotten with a vacation. Wouldn’t that be a lot more satisfying than handing over your money to some large, faceless corporation?

If you’ve had enough and want to get a handle on your finances, then this book is for you. It’s not easy to become debt-free and make the wise decisions we should be making. It’s about sacrifice and discipline; it’s about having a plan and sticking to it, and making sure everyone else in your household does, too. Becoming financially self-sufficient isn’t easy, but it is possible for every one of us. In this book I will look at some of the most important steps necessary to build wealth and become free from the shackles of debt. We will start off with insight from Canadians who have shown it is possible to get ahead and become financially secure (and some of them downright rich). We will look at getting your finances in order, speak with experts to see if your investing strategies are on track, make sure your expenses related to shelter and transportation are not excessive, and provide you with general information to help you deal with life’s unexpected curveballs. I’m not just talking the talk, either. I’m walking the walk. I want to be debt-free, too, so I can be financially secure in my retirement, travel the world, help my children, and be charitable to worthy causes. I hope you enjoy this book and that it helps you and your family on your journey to financial peace.

CHAPTER 2

taking wisdom from successful Canadians

Quotations have always fascinated me. Those short nuggets of wisdom express and illuminate life, love, money, and thoughts on any number of topics. I was pleased to include excellent advice from many wealthy and successful Canadians in the first edition of my book and I am fortunate enough to have many more great quotes from Canadian business executives, artists, authors, and politicians. Living in Durham region east of Toronto, I am actually only a block away from one of our country’s most powerful and influential politicians when it comes to money—Canadian Finance Minister Jim Flaherty. I occasionally see him on Canada Day at ceremonies when I help out with the swearing-in of new Canadian citizens, something I enjoy doing. Flaherty has his hands on Canada’s purse strings and controls billions of Canadian tax dollars. I asked him what financial advice he could pass on to the average Canadian, and he gave me this quote:

Creating budgets and savings, paying off debt, investing wisely—all welcome and essential advice for Canadian families. The Smart Canadian’s Guide to Saving Moneyencourages financial literacy, a worthwhile goal for every Canadian.