By Sheryl Smolkin

As I write this on March 31st, it is for the second time because I closed the completed document the first time without saving it. I can only attribute this oversight to an early April Fools’ Day joke from cyber space!

Here are some interesting blogs I read this week:

For those of you who prefer cash back credit cards over travel cards, Tom Drake on the Canadian Finance blog rates the Best Cash Back Credit Cards of 2015. Top of the list is the Scotiabank Momentum VISA Infinite Card which offers a full 4% cash back on gas station and grocery store purchases. You also receive 2% cash back on your recurring payments and on drug store purchases. All other purchases earn a 1% cash rebate. 

The Big Cajun Man aka Alan Whitton writes on the Canadian Personal Finance blog about his daughter’s experience trying to find a student line of credit to attend Chiropractic College. The only financial institution willing to fork over enough money was the National Bank of Canada. However, by mistake they set up the loan as a personal line of credit. As a result, the very next month there was a demand for payment. Although the error was fixed, Whitton had to co-sign on the loan.

Five unconventional ways to get your financial act together from Kerry K. Taylor aka Squawkfox resonates with me. She suggests we can save money by throwing out fewer grocery products and curbing our collecting. We just renovated our kitchen cabinets and I couldn’t believe the number of stale-dated packages we pitched and how many marginally useful kitchen gadgets we have collected. Did we ever really need  six sets of barbecue skewers?

Why “Healthspan” trumps “Lifespan” by Dan Richards is a guest blog on the Financial Independence Hub. Financial advisors spend a great deal of their time with clients who ask, “Will I run out of money?” But Richards says according to new research, an equally pressing question is “How can I enjoy life in my 60s before health issues creep in.?

RRIFs 101: Using your nest egg by Preet Banerjee on Tangerine’s Forward Thinking blog fills in the blanks for readers who understand how RRSPs work but were not aware that they must be converted into RRIFs at age 71 and that beginning the year after, minimum fully taxable amounts must be withdrawn.

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, as part of the SavewithSPP.com continuing series of podcast interviews with personal finance bloggers, today, I’m talking to Tom Drake, author of the personal finance blogs Canadian Finance and Balance Junkie. He also partners on three other sites and writes guest posts on several others.

Tom lives with his wife and two boys in Edmonton. He’s a financial analyst for all of the Sobeys stores west of Ontario. He’s always looking for ways to reduce any expenses, while continuing to save money, in part because his wife is a full-time homemaker.

Welcome Tom.

Hi Sheryl, thanks for having me here.

Q. When did you start blogging Tom?
A. I started in early 2009. I hadn’t really thought about my personal finances too much prior to that. I was never totally terrible with money, but in about a six month span, we got married, and soon after that, we were expecting our first child, and we were also looking to buy a house when the market dipped in early 2009. So those three things kind of put personal finance right at the forefront in my mind.

Q. What were your goals for the blog when you started blogging, and have they changed over time?
A. Well, they have a little. When I first started, it was certainly more about the three major events that I’ve already mentioned. Nowadays, I try to cover as many personal finance topics as possible because through Google searches and even people emailing me directly I discover a lot of topics that I can kind of help them with their own personal finances, even if it’s not something that I’ve had to deal with myself.

Q. How frequently do you blog?
A. Lately it’s been about two or three times a week on the “Canadian Finance” blog. I have multiple blogs, so I’m probably doing something every day. I also post one to two times a month on “Balance Junkie,” and soon I’ll be writing on “Retire Happy” as well.

Q. What other blogs do you have?
A. Well, within Canada, it’s the Canadian Finance blog and Balance Junkie and I’m also a partner with Jim Yih on Retire Happy.

Q. To what extent is there an overlap between the topics that you would feature or write about on your own blog and that, for example, you or Jim or his other bloggers would post on his blog?
A. Well, Jim Yih is very dedicated to the retirement niche, which I honestly haven’t thought about it much. I save money in my RRSP and have savings in my TFSA as well, but I don’t have a huge retirement planning goal right now. So I don’t cover those topics as much. So I’d say my blog is about more general personal finance issues and his is very targeted on retirement issues.

Q. So what will you be writing about on Retire Happy?
A. On Canadian Finance, I cover a lot of tips on how to save money, reduce your utility bills and such. Most of the people who read Retire Happy are beyond that, and they’re looking for ways to use their money better. So I’ll probably be covering things like making sure that your credit card has a decent rewards plan and products like TurboTax. Just about anything that can help people use products that are out there and add something a little more than just retirement to that blog.

Q. Now, you say that retirement hasn’t been your focus as yet. May I ask how old you are?
A. Just about to turn 37 this week.

Q. I see, well, you know what, you’re getting closer to that break point. I think 40 is when the light goes on.
A. Yeah, exactly. I do save a decent amount. I just don’t have a full retirement plan. I don’t know if I’m going to retire at 50 or 70 at this point.

Q. Unlike Tim Stobbs who says he’s retiring at 45.
A. Oh, that would be nice, but I’ll say 50 at the earliest.

Q. There’s probably over a dozen well-known personal finance bloggers or more in Canada. What’s different about your blog? Why do you think it’s a must read?
A. Well, I think with any personal finance blog, readers are going to gravitate to someone that kind of fits their situation. So as a family man in my mid-30s, I get a lot of readers that sort of fit that same mold. Also, archived articles from other staff writers I have had from time to time add a different dimension.

Q. How many hits do you typically get for each blog?
A. I don’t really look at it per post. So much of it is search traffic. I get a few thousand in a day. But as a total network of all the sites that I own, or am in partner with, we get over 500,000 page views in a month.

Q. Wow. You said all the sites that you own or partner with. You’ve told me about two and about working with Jim. Are there others?
A. Yes, Jim Yih gets all the credit for this model, which is basically taking a 50/50 partnership where we focus on our strengths. I like writing personal finance posts, but I’m not as efficient at it as a lot of these other writers. So the people I partner with are really good writers.

Jim’s been writing for over a decade in newspapers and on his own site, even before we turned it into Retire Happy. I’ve also partnered up with Miranda Marquit down in the States. She can be found pretty much in any personal finance blog that you look at. She’s a big freelancer.

These people don’t want to deal with creating a site, working on things like search engine optimization, how to monetize the site, so they actually make some money from it. Those are more of my strengths actually than the actual writing. So it’s been a good partnership with both of them.

And the third person I’m partnering with is Kevin at Out of Your Rut which is another American blog. Again, he’s more of a freelancer. But he has a site and we work to make sure that site makes money as well and gets the traffic.

Q. One of the more popular blogs you’ve posted related to the Smith Maneuver, which allows you to deduct mortgage interest as an investment expense. Can you tell me how that works?
A. Basically what you need is a re-advanceable mortgage. And what that means is as you pay down your principle, you have a home equity line of credit that will increase. So if you pay $500 down on your principle, your L.O.C. increases by that amount. You can use that line of credit to invest in dividend bank stocks.

The goal is that the stocks you pick have a higher dividend percentage than the interest rate you’re paying on your mortgage. Then you can use those dividends to accelerate your mortgage pay down. So ultimately your debt level stays the same.

A lot of people don’t like that, because you’re not really reducing your debt, and you’re leveraging it for investing. But I’m comfortable with it. The dividends I have are certainly making a higher percentage than what I’m paying on a mortgage currently. Obviously, the risks are the way that the mortgage rates go in the future. But dividends have some preferential tax treatment as well, which also helps.

Q. So when did you implement a Smith Maneuver personally?
A. Probably about 2010. Buying my house in 2009, I got the Scotia STEP mortgage which includes a line of credit. But since I had exactly a 20% down payment, I couldn’t actually borrow anything yet because I hadn’t paid down any additional principle. So after about a year of that mortgage, I started out with the Smith Maneuver, and using that extra equity on the house to invest in stock.

Q. So you’ve got a day job. You’ve got two kids. You’ve got your work with your own blog and others. What advice would you give to busy people to fit it all in?
A. I don’t get a lot of sleep. So if you can do a 19-hour day, you can fit a lot. But otherwise, certainly prioritize family first. Obviously, I’ve got my day job. But as soon as I come home, I spend time with my family. Once the boys are in bed, then I go into business mode and write a blog post or deal with various technical issues and such, up until 1:00am or later.

Q. That’s amazing. I’m one of those people who needs my sleep. So you’ve mentioned a number of people you’ve worked with, but who are your favourite personal finance bloggers?
A. Well, some of the ones that originally got me into personal finances haven’t been blogging as much, like Mike at Money Smarts or Preet at Where does all my money go?

Million Dollar Journey is certainly the reason I started blogging. It’s what got me into the Smith Maneuver too actually, and so I still read that one quite a bit. And I read Jim Yih’s stuff a lot. But Robb at “Boomer & Echo” is certainly a great writer.

Q. So if you had to look at all the time you’re spending on this, are you doing it for love or are you doing it for money?
A. I do make a full-time income with my online business, but my wife is staying at home with our kids. So it’s her full time income basically. It’s worth it to juggle sort of both jobs right now, to allow her that time with the kids.

Q. If you had only one piece of advice to people who want to save money and optimize their savings, what would it be?
A. I think the biggest advice for me is basically to have a positive cash flow. I’m not a big fan of budgeting myself. It’s something I don’t think people always stick to. But the cash flow is just simple calculation to make sure that you’re bringing in more than you’re spending. So you want to make sure you’re saving and covering all your bills. And you certainly want to make sure that you’re not going into a negative cash flow. It’s the simplest way to improve your finances.

Thanks very much Tom. It was a pleasure to talk to you.

Thank you. It was great conversation.

—

This is an edited transcript of the podcast you can listen to by clicking on the graphic under the picture above. If you don’t already follow Tom’s blogs “Canadian Finance and Balance Junkie” you can find them here and here. Subscribe to receive blog posts by email as soon as they’re available.

 

By Sheryl Smolkin

The depths of winter (and this has been one of the worst I can remember) seems to be the time when we all wish we could retire somewhere warm but figure we will never be able to afford it. After all, post- Christmas credit card bills have to be paid and finding the money for SPP and RRSP contributions may not be at the top of your “to do” list.

But now is the time to set up an automatic withdrawal plan for next year’s retirement savings plan contributions so in February 2015 you won’t be faced with the same dilemma.

It is also important to make retirement savings a part of an overall financial plan that you review often to make sure it still works for you, says Dave Dineen at Brighter Life. When you make your financial plan, Robb Engen on Boomer & Echo says there are 4 Big Rip-Offs To Watch Out For including mortgage life insurance.

Kerry K. Taylor (aka squawkfox) has been saving in an RRSP for about 17 years or half of her life. She recently blogged about how a can of cat food scared her into saving for retirement.

“I always thought seniors eating cat food to afford food was a myth. I wanted to be sure. [So I asked a woman in the grocery store line who was buying 25 cans about her cats.],” says Taylor. “She threw me a side-eye and said nothing. Whether she ate the cat food or not didn’t matter. [Since then], my fear of eating Fancy Feast in retirement [has been] very real.”

And once you have contributed to an RRSP, don’t forget that you will completely defeat the purpose if you treat it like a normal bank account and make withdrawals for reasons such as paying down debt. In an excellent Financial Post column Should you raid your RRSP to pay debt? Melissa Leong does the math.

She reminds us that if you need $8,000 for credit card debt, you’ll have to withdraw $10,000 to have enough to pay the full bill. Furthermore, once the money is withdrawn the contribution room is lost forever.

One case where it may make sense to take a loan from your RRSP is to Help Pay for Your Education with the Lifelong Learning Plan (LLP). However, as Tom Drake explains on the Canadian Finance blog, you are borrowing from yourself, but it is still a loan. You have to repay your RRSP, or face the tax consequences which can be quite hefty if you aren’t careful.

There is also a lost opportunity cost that comes with withdrawing money from your RRSP. While you can use the money for your LLP and education, you won’t be earning a return on it until you pay it back. You’ll have to decide if this approach is worth it for you.

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

This week we have random posts from some of our favourite bloggers that consider how you can save for retirement, invest your savings and spend your money after retirement.

Robb Engen on Boomer & Echo thinks that many media money makeovers are unrealistic, and that we really need to prioritize our financial goals. He shares his portrait of the ideal saver.

When it comes to spending and saving money, for many of us monthly mortgage payments take the biggest chunk out of our earnings. From the archives of the Canadian Finance blog, Nelson Smith offers 6 ways to save thousands on your next mortgage.

Saving is not enough. You have to invest your money in a way that both minimizes risk and maximizes growth of your account. A Young and Thrift blogger explains how he finally overcame his inertia and invested the $100,000 cash he had in his accounts. Spoiler alert: He topped up his TFSA and RRSP and then invested in ETFs.

But the Canadian Capitalist says we can learn a thing or two on how to invest our own money from the manner in which the CPPIB invests our surplus Canada Pension Plan contributions.

And finally, however much you save and whatever your plans are, Kevin Press tells us how you choose to spend your retirement will be a compromise. That’s because recent Sun Life research revealed seven ways men and women disagree about retirement.

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.