By Sheryl Smolkin

Earlier this year we interviewed Kerry K. Taylor aka Squawkfox as part of our Personal Finance Bloggers series. Although Squawkfox has been blogging infrequently over the last few months, her blog continues to be a hilarious and invaluable resource for money saving tips.

So when I was looking for books with great cost containment ideas to review for savewithspp.com readers I was delighted to come across Kerry’s book “397 ways to save money” published in 2009. As I flipped through the book, it became apparent that the vast majority of her suggestions have stood the test of time.

This 275 page book is divided up into four parts with several chapters in each part:

• Big Decisions: (renting, home ownership, financial choices, shopping)
• Home Management: (home maintenance, energy, cleaning)
• Room by Room: (kitchen, living room dining room, kids room, garage etc.)
• More ways to save: (vacation, pets, cheap family dinners, monthly maintenance checklists)

Here are 10 of my favourite tips in the book:

1. Change your ATM habits: Use only your bank’s ATM machines to make withdrawals. Know how many free ATM withdrawals you can make each month from your account. Some banks offer free accounts including ATM withdrawals for seniors.
2. Don’t insure your kids: The purpose of life insurance is to serve as income replacement for the insured’s dependants. Pass on agents who try to sell you on the investment aspects of a cash value policy. Instead, save for your child in a registered educational savings plan (RESP).
3. Barter to save money: Generally bartering is the trading of goods and services without the use of money. Check out the website U-exchange.com to find like-minded people to swap services such as website building for a haircut.
4. Pass on extended warranties: Don’t buy extended warranties on inexpensive product like cameras and kitchen appliances. The only time a warranty makes sense is if a repair will devastate your budget.
5. Don’t pay for shipping: Look for a free shipping option when you order from an online store. Many online retailers offer free shipping when you buy up to a specified dollar amount in merchandise.
6. Turn off all electronic devices: Turning off your unused electronic devices like gaming consoles and computers is an easy way to save electricity. By turning on your computer only when needed for three hours each day rather than running it continuously can save you $75/year.
7. Watch the price scanner: Mistakes on electronic price scans are common at the grocery store. Watch as your items are scanned at the checkout and you could save many dollars per month and even score free food. The Retail Council of Canada has a Code of Practice and a list of participating stores you can read here.
8. Open the dishwasher to air dry dishes: Skip your dishwasher’s heat dry cycle by opening the dishwasher door to air dry dishes after the final rinse. I do this frequently because the full cycle is ridiculously long. Its mice to know it also saves me money.
9. Skip the sofa bed: A sofa that can be used as a bed may seem like a good idea if you have frequent guests, but they can be much more expensive that a regular couch. They take a lot of room you may not have to open and even top of the line models may be uncomfortable. A blow up bed is easy to inflate and move and a queen size costs around $100.
10. Buy clothing at the end of the season: Winter in Canada is interminable and most things are on sale by December 26^th at the latest. If you can make it through the fall with last year’s wardrobe you can refurbish it with quality items at half the cost or less late in the year.

I really like the Hardware Store Shopping List for all of the do-it-yourself energy-saving projects so you save money on gas. However, by the time you fill your cart with items like caulking, weather stripping, attic insulation, low flow showerheads, programmable thermostats, dimmer switches for lights and compact fluorescent light bulbs to replace incandescent, you will definitely have a big upfront bill.

This is a great book to read once, go back to and help you set achievable goals for saving money. You can browse several chapters here and order the book online from Amazon or Indigo for about $11.00.

In October best-selling author and self-proclaimed “idiot millionaire”, Derek Foster, toured Saskatchewan talking to people about how to invest in their future.   He spoke to groups in Regina, Saskatoon, North Battleford and Kindersley about his straightforward approach to investing and why he thinks SPP is a “no brainer” for people looking for a retirement savings plan.

If you missed hearing Derek’s presentation, we’ve captured several media interviews from his visit to Saskatchewan:

Global Morning News Regina on October 23, 2014:  http://goo.gl/19f8gU;

Global Morning News Saskatoon on October 28, 2014:  http://goo.gl/6q8kUO;

CBC Radio’s Saskatoon Morning on October 30, 2014:  http://goo.gl/0OZGjh.

Do you have any money saving tips that you use to help build your retirement fund? Share your ideas with us, http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Do you typically buy a fistful of gift cards for holiday gifts? Just in time to save you a bundle, Boomer & Echo’s Rob Engen writes about How To Hack Gift Cards For Big Discounts. He suggests buying gift cards with your cash back credit card, the RedFlagDeals forum dedicated to buying and selling gift cards and purchasing discounted gift cards at Costco. Who knew?

On Retire Happy, government benefits expert Doug Runchey explains that Receiving a partial OAS pension affects the amount of GIS a pensioner will receive in two ways:

1. A pensioner receiving partial OAS will receive more GIS than someone receiving a full OAS pension, to make up for their lesser amount of OAS.
2. A pensioner receiving partial OAS will receive GIS up to a higher income, compared to someone receiving a full OAS pension.

Jonathan Chevreau on Findependence Day Hub profiles a 28 year old Winnipeg-based investor named Saxon Funk who has a firm plan for achieving financial independence through various passive streams of income. But his real play for findependence comes through real estate. He was attracted to real estate when he discovered he could buy properties at 10% down, and he caught the Winnipeg real estate cycle at just the right time.

Do you know How Your Daily Commute Affects Your Finances? Dan Wesley from Our Big Fat Wallet reports that the average time Torontonians spend commuting is 80 minutes – the longest time in the world. In contrast, Saskatchewan Jobs says the average commute time in the province’s two largest cities is only 20 minutes. Another reason to count your blessings!

And if unexpected, frequent required changes to eyeglasses for family members is putting stress on your budget, you may be interested in How I saved over 50% buying eye glasses online, my recent blog on Retirement Redux.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

More working Canadians and Saskatchewan residents are living pay cheque to pay cheque, As a result they are saving less and falling further behind in meeting their retirement goals according to the sixth annual National Payroll Week Research Survey, conducted by the Canadian Payroll Association (CPA). 

Nationally, more than half of employees (51%) report that it would be difficult to meet their financial obligations if their pay cheque was delayed by a single week. In Saskatchewan, the percentage is even higher – 56% say they are living pay cheque to pay cheque, up from an average of 52% over the previous three years.

Another finding confirms that more than a quarter of those surveyed are living very close to the edge. A total of 26% say they probably could not pull together $2,000 over the next month if an emergency expense arose. In Saskatchewan, 28% would be hard pressed to come up with the funds.

The low savings rate has become even more prevalent this year. Half of all employees nationally (57% in Saskatchewan) are putting away just 5% or less of their pay, up from an average of 47% of employees over the past three years (41% in Saskatchewan). Financial planning experts generally recommend a retirement savings rate of 10% of net pay.

Part of the reason for low savings is that 44% of employees nationally, and 54% of employees in Saskatchewan, are spending all, or more than, their net pay. Among the top reasons for increased spending, the survey identifies: children, home renovations and education.

“Those who are trying to save but finding it hard to succeed should consider directing a portion of net pay into a separate savings account and/or a retirement savings program,” says CPA President and CEO, Patrick Culhane. “They can speak to their organization’s payroll practitioner to arrange this.” 

Retiring older and needing more retirement savings 

Fully 79% of Canadian employees and 75% of Saskatchewan employees expect to delay retirement until age 60 or older – up from 70% and 57% respectively over the past three years. The number one reason cited for retiring later in life is that employees are not able to save enough money.

Employees continue to raise the bar in terms of what they think they will need to retire comfortably:

• Fewer now feel that savings under $500,000 will be sufficient (10% in Saskatchewan, down from an average of 11% over the past three years; 18% nationally, down from an average of 21% over the past three years).
• Many think between $500,000 and $2 million will be required (71% in Saskatchewan, down 1 % from an average of 72% over the past three years; 68% nationally, up from an average of 60% over the past three years).

Yet despite upward adjustments in perceptions of what constitutes an adequate nest-egg, the vast majority of employees are nowhere near reaching their goals – 75% nationally and 74% in Saskatchewan say they have put aside less than a quarter of what they will need in retirement (up from an average of 73% and 70% respectively over the past three years). And even among employees closer to retirement (50 and older), a disturbing 47% of employees nationally (and 43% of employees provincially) are still less than a quarter of the way there, indicating a significant retirement savings gap, according to Culhane.

Debt overwhelms many

Over one-third of employees (39% nationally and 34% in Saskatchewan) say they feel overwhelmed by their level of debt (up from an average of 32% and 29% respectively over the past two years). Nationally, 1 % of respondents this year indicate they do not think they will ever be debt free, and one-third say their debt has increased from last year.

The number one step that employees believe they can take to improve their financial situation is to earn more (27%), while spending less dropped to second place from last year and decreasing debt remained flat. “Earning more is not always feasible,” says Culhane. The CPA suggests that automatic savings through payroll is the best strategy for financial well-being.

The Saskatchewan Pension Plan allows members to contribute up to $2,500/year to their SPP account using a credit card online, through online banking, automatic debit from their bank account or credit card or by sending a cheque. Up to $10,000/year can also be transferred to SPP from a personal RRSP.

Companies can also set up SPP in the workplace and employee contributions can be made by payroll deduction.

 

 

 

 

By Sheryl Smolkin

This week we are delighted to bring you a new blog from Squawkfox Kerry K. Taylor who has been on a blogging sabbatical for the last several months.

Are you frugal or cheap?  includes a great graphic that answers the question. Kerry’s flow chart reveals that you are definitely frugal and not just cheap if saving a buck is not your ultimate objective; you would spend a little more for higher quality; you think long-term when making purchases; and, you do not prioritize money over relationships.

On the Canadian Personal Finance Blog, Big Cajun Man (Allan Whitton) gives Key Financial Rules for borrowing money. According to Alan, buying a house is the only good reason to borrow money. “Borrowing money to invest just strikes me as asking for a swift kick in the lower abdomen,” he says. 

Guest blogger Stephen Weyman on Million Dollar Journey compares gas reward programs. Surprisingly, he notes that some Grocery Store Gas Bars offering Grocery Store Discount Coupons are top of the list. They typically return 2.7% but select locations in Alberta offer a maximum return of up to 8.1% when paired with other bonus coupons.

When life gives you lemons, add vodka is an irreverent look at how to change your financial behaviour. This week Sarah writes about How to Fail at Your Big, Hairy, Audacious Goal (And How to Set A Goal That You’ll Reach).

When she and her husband decided to save $80,000 for a down payment on a house over three years, they gave up after two months. She says what went wrong is that there were no small steps or changes in their habits to build up to this goal. Therefore, they were unable to go from saving nothing to saving over $1,000 each and every month.

On StupidCents, blogger Tom Drake writes about The Best Careers for the Future. He concludes that some of the best job prospects will be in the health care professions. With Baby Boomers retiring and aging in the next 20 years, those who are involved in their care are likely to see job growth and security.

And finally, Jonathan Chevreau, author of Findependence Day who is well known to readers of the Natiomal Post and MoneySense has just launched the Financial Independence Hub. We look forward to bringing you lots of great content from that site it the coming weeks and an update of this savewithspp.con interview in the new year.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

If you haven’t factored health care costs into your retirement budget, it may be time to take another look. Saskatchewan Health Care covers provincial residents for a whole host of services including all medically necessary doctors’ visits and hospital care. But other services such as drugs (until age 65), dental care and physiotherapy outside an approved institution are typically not covered.

Members of employer-sponsored group health care plans have some or all of these expenses reimbursed. But according to a new survey from benefits consulting firm Aon Hewitt, nearly half of Canadian employers do not offer any post-retirement health benefits.

Aon Hewitt’s survey of 225 Canadian employers reveals that 44 per cent of the respondents do not offer any retiree benefits at all, while another 10 per cent have closed their existing programs to future retirees.

Of those employers not offering retiree benefits, the most often-stated reason (76 per cent) was “high costs compared to perceived benefit to employees,” while 66 per cent specifically blame rising healthcare costs.

However, about 20 per cent of respondents say that they would consider offering retiree health benefits such as drug, hospital and dental benefits if the costs were fully or partially-paid by retirees.

Even if your employer does offer some form of retiree coverage, it may not be the same as the coverage you are eligible for as an active employee. For example, your employer may offer you:

• A lump sum at retirement in lieu of future health care premiums or benefits.
• A defined annual contribution to health care premiums leaving you responsible for paying the balance which may increase each year.
• An annual contribution to a health care spending account you can use to by individual health care or to pay for actual expenses for services (i.e. physiotherapy, glasses).
• A retiree benefit plan that is 100 per cent self-funded.

When your workplace health and dental benefits end at retirement, you have three basic options:

• “Follow Me” products offered by all of the major insurance companies are available to former members of employer-sponsored group benefit plans within 60 days after retirement.
• Groups like university alumni associations, professional groups, the Canadian Automobile Association and the Canadian Association of Retired People (CARP) have “affinity plans” for members.
• Insurers like Saskatchewan Blue Cross sell individual plans.

All three types of programs offer basic health and dental plans plus different levels of enhanced plans. Your premiums will be based on the features in the plan you select, how old you are and your health status when your plan kicks in. Dental plans cannot be purchased on a “stand alone” basis.

So how do you figure out what’s best for you?

First, make sure you have plenty of coffee. Set up a spread sheet and try to do an “apples to apples” cost/benefit analysis of the health and dental plan features that are most important to you.

Insurance carriers offering Follow Me programs, affinity groups such as CARP and carriers with individual products like Saskatchewan Blue Cross have websites with detailed information and you can quotes. They also have information lines you can call for assistance. Websites like Kaneix.ca allow you to compare a series of online quotes from different carriers.

Depending on your health status, one reason to opt for a Follow Me Program if you are eligible is that acceptance is guaranteed with no medical questionnaire at the time of application, and no waiting period for coverage. Unlike some other plans, you can also move from a basic plan to plans providing higher levels of coverage at a later date without medical evidence of insurability.

Of course the real problem is that once you are no longer covered by an employer plan you will pay more for less. Coverage is extremely limited as compared to more robust workplace health and dental plans you may have been covered by in the past.

If you are contributing the maximum annual amount to tax-free savings accounts, that may be one source of funds for unexpected medical costs in years when you exceed private insurance plan benefit coverage.

By Sheryl Smolkin

Just before Halloween, Prime Minister Stephen Harper announced a limited income- splitting proposal, based on a contentious election promise from the 2011 campaign. The new measure which will be effective for the 2014 tax year allows a parent with children under 18 to transfer $50,000 of taxable income to a spouse in a lower income tax bracket. The maximum benefit is capped at $2,000.

Whether you think this was “a trick” or “a treat” will depend on your tax bracket and whether or not only one of two parents in your family is earning income. Here are what some financial bloggers and columnists have to say about the new provisions.

In How Income Splitting Works, Dan Wesley at “Our Big Fat Wallet” explains existing permissible methods of income-splitting like paying your spouse to work in your business or spousal RRSP contributions. He then concludes by discussing the recently announced new income splitting measures for families.

In The truth about income splitting: We take what we can get, Globe and Mail columnist Rob Carrick writes, “It’s a niche benefit that discriminates against single parents, favours families with one big earner and applies to no more than 15% of households, according to estimates from various think tanks.

Law Professor Katherine Lahey blogs at “Canadians for Tax Fairness.” She writes that income splitting and other announcements to family benefits announced at the same time amount to Huge Tax Cuts for Rich Families

The Canadian Council for Policy Alternatives links to a blog David MacDonald wrote in 2011 when the Harper government first floated the idea of income splitting for families. He sheds light on the The Real Numbers Behind Income Splitting and like Lahey said the impact could be “Robin Hood in reverse,” i.e. taking from the poor to give to the rich.

Richard Welland suggests on his blog Your Estate Matters that The “Family Tax Cut” is not income splitting in spite of media reports. He’s reviewed the amendments and thinks that at most it is “simulated income splitting.” He goes on to explain how the program will work.

And finally, in several earlier blogs, on Retire Happy, the ever popular Jim Yih posted   Income Splitting Strategies in Retirement and Income Splitting Strategies for Families, while acknowledging that opportunities for income splitting in Canada are few and far between.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

 

Hi, today we continue our series of savewithspp.com interviews with personal finance bloggers. I’m very pleased to be talking to Sydney Lagier, known as Retired Syd to readers of her blog, Retirement: A Full-Time Job.

Syd retired in 2008 at age 44, four years after her husband. Both of them are U.S. certified public accountants. She initially worked for four years in the tax division of a large accounting firm. Then she accepted a position as the comptroller in a Silicon Valley venture capital firm.

Ten years later, she tried to nab a better work/life balance by working part-time. However, her husband’s employer went bankrupt, so she accepted a promotion to full-time CFO. Nevertheless, several years later she decided to pack it in for good.

Thanks for talking to me today, Syd.

Thank you for having me.

Q: Why did you decide to retire so early?
A: That is a really good question. Why wouldn’t someone want to retire? I just assumed everyone wanted to retire, and the only thing keeping them from retiring is not having enough money yet.

Q: So, have you worked at a paying job at all since you retired?
A: I have. About three years into my retirement, a former colleague contacted me and asked if I would be interested in doing a part-time CFO gig, on a contract basis. So I did and it was really fun. But I was a little bit stressed after about a year and I remembered why I wanted to retire. I wanted to own my own time, and not have to worry about somebody else’s stuff.

Q: If I’m counting correctly, you’ve been retired for about six years, is that right?
A: Yes.

Q: How have your budget and income projections held up?
A: Well, I retired in March of 2008, and the stock market was tanking. Fast forward to six years later, and it’s fine. Everything came back. It was a rocky ride, but in terms of the expense side of the equation, that turned out a lot better than I thought it would be.

My original budget for retirement turned out to be overly generous, and part of that is probably because I was so nervous watching the stock market go down. I was kind of careful the first few years. And now we’re spending still less than my original retirement budget.

Q: You can conceivably be retired for fifty years. How do you know you won’t run out of money?
A: Obviously I don’t, but it’s all about odds, and what we do every year, actually what we do every month, is my husband puts together a budget to actual, and we look at it live. If things are getting out of hand we make adjustments. If we’re ahead of schedule, we feel a little bit better, and might loosen the purse strings, so it’s kind of an ongoing process.

At the end of every year I sit down and do the next year’s budget, and see if the current assets are still projected to take us through the next fifty years, until we turn one hundred. So it’s as if I’m retiring again every year, doing the calculations again every year. So far, we’re good.

Q: Can you give me some examples of some ways you make your money go farther? How do you stay on budget?
A: I’d say almost half of our budget is discretionary items. So that’s where we make the changes when we need to. And travel is probably the biggest discretionary item, and the easiest one to pull back on. But ongoing, we do things to make travel cheaper.

We’ve been using home exchanges since I retired to do a lot of our vacations. So, we’re not paying for lodging. We also don’t pay for things that we can do ourselves anymore like house cleaning, yard work, or painting.

Q: When and why did you decide to start blogging?
A: Right when I retired — it’s a silly answer — but I wanted to seem cool. I thought it would be a hip thing to do. I just heard about it, and didn’t know much about it and I started doing it, and it was so much fun that I just stuck with it. However, it did not make me cool….

Q: It did not make you cool?
A: No, but it was very fun, so I got hooked.

Q: What topics do you write about?
A: Mostly I write about lifestyle issues. I don’t cover a lot of the financial planning aspects of retirement, although I do a few of them. I mostly talk about what it’s like to transition, what are the roadblocks, what do people have hang-ups about. And my community of blog readers chimes in and helps each other and helps me, and that’s part of the appeal.

Q: So how many hits do you typically get in a week or a month?
A: I don’t have a very large blog. I have a couple thousand subscribers, and in a month that I write a lot — it’s very sporadic — I get maybe twenty-five thousand hits. But in month where I’m hardly doing anything, it’s more like fifteen or twenty thousand.

Q: Sounds pretty good to me. What have some of your most popular blogs been about?
A: That’s one measurement that I don’t really look at. But I used to write weekly for U.S. News and World Report Blog. And the article that just took off was, “If You Want to Retire Young, Don’t Have Kids.” That one was all over the place, and I got a lot of hate mail as a result.

Q: So, what kinds of things do you do now, that you weren’t able to do before you were retired? 
A: Blogging, for one thing, and writing. And just last year I picked up piano again after a thirty-year hiatus. We do a lot more travel than when we were working. And I’ve been able to do some volunteer work.

Q: Excellent. So what do you think are some of the potential pitfalls of early retirement, or very early retirement?
A: I’m not going to be able to help you out on that one. I just can’t think of any.

Q: Then it’s going well for you.
A: Yes.

Q: Is the fact that most of your contemporaries are still working a problem?
A: No. We see our working friends when it’s convenient for them. We do a lot of things for them that make their lives easier like bringing dinner over. My husband also does a lot of fix-it projects for people when they’re at work, so it works out great for them, and it’s our way of going the extra mile to keep those friendships up.

Q: How did you save enough money to retire so early?
A: I had a great job. I was working for a venture capital firm, so I was very fortunate. I guess that’s not a great answer because some people who have great jobs don’t save enough for retirement. It’s just a personality thing. I knew really early that I wanted to try as hard as I could to retire before the age of fifty-five.

Q: If someone is contemplating early retirement, is there any rule of thumb as to how much money they need? 
A: There are a couple that I don’t like. I don’t like those rules of thumb that say, “Oh, you need seventy to eighty percent of your prior budget,” that kind of thing. Because I think that you really have to do the homework on that, to see what you do think you’re going to spend. But William Bengen’s four percent rule, is a good target.

Bengen says if you’re going to retire at the normal age of sixty-five, you need twenty-five times your spend rate. Then you look at it every year, like I do, and you can see if you’re on target. Some years you don’t pull out that much, some years you do. But it’s a great number to aim for, in my opinion.

Q: Do you have any advice for people trying to make the adjustment or transition to retirement?
A: I’d say just let it evolve naturally. A lot of people think they have to have it all worked out before they retire, and know everything they’re going to be doing. What I’ve learned is that you don’t even really know who you’re going to be after you quit your job. It’s defined you for all those years. Just relax into it and see where it takes you and I think you’ll be a lot better off.

Q: Excellent!. Thank you very much for talking to me today, Syd. 
A: Thank you.

—–

This is an edited transcript of an August 2014 interview with Syd Lagier. You can check out her blog Retirement: A Full-Time Job.

By Sheryl Smolkin

November is Financial Literacy Month (FLM) in Canada, and the Financial Consumer Agency of Canada is playing a role in raising awareness and mobilizing organizations across Canada to take part. Here are some blogs and other commentary on financial literacy.

Financial literacy means having the knowledge, skills and confidence to make responsible financial decisions. The FCAC recently released its “National Strategy For Financial Literacy Phase 1: Strengthening Seniors’ Financial Literacy.”

The Toronto Star’s Ellen Roseman writes that, “Financial literacy for seniors is crucially important, but it’s not a panacea. Let’s put money into enforcing consumer laws and protecting the vulnerable from tricksters.”

Redux: Real World Example: Kids Allowances is one of Big Cajun Man’s (Alan Whitton) first bits of writing where he commented on how a simple idea about making his childrens’ allowances easier to administer taught him more about money.

Savewithspp.com also previously dealt with financial literacy for children in Your kid’s allowance: Financial literacy 101 and Back to school shopping: A teachable moment.

Back in November 11, 2011 in Financial Literacy Week teaches us about financial success Jim Yih shared 26 simple ideas to grow, manage and protect your wealth. Some of my favourites are:

1. Know yourself first.
2. It all starts with planning.
3. Pay down and manage your debt.
4. Save money automatically and regularly
5. Understand how your money is taxed.

And last but not least, the Government of Saskatchewan’s Financial and Consumer Affairs Authority has a website with links and tools supporting financial literacy for young people/parents/educators, adults and seniors.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.