We read all the time about “active” and “passive” management of investments. While it sounds like one type is for those that jog and work out, and the other is for people comfy on their couches, the actual meaning is a little different. Save with SPP had a look around to find a good explainer or two.

Writing for Bankrate via AOL, Dr. James Royal writes that “active investing is what you often see in films and TV shows. It involves an analyst or trader identifying an undervalued stock, purchasing it and riding it to wealth.”

“It’s true – there’s a lot of glamour in finding the undervalued needles in a haystack of stocks. But it involves analysis and insight, knowledge of the market and a lot of work, especially if you’re a short-term trader,” he continues.

On the other hand, he notes, “passive investing is all about taking a long-term buy-and-hold approach, typically by buying an index fund. Passive investing using an index fund avoids the analysis of individual stocks and trading in and out of the market. The goal of these passive investors is to get the index’s return, rather than trying to outpace the index.”

So the Coles Notes on this are as follows – an active management approach involves you (or an advisor) actually picking investments that you think will beat the market’s returns. Passive means you aim to duplicate the market’s returns, usually by buying index funds that consist (unsurprisingly) of all the funds on the various index.

So, is one approach better than the other?

A recent New York Times article suggests that over time, the passive approach tends to work out the best.

“Over the last 20 years, stock pickers have had a dismal record. Most haven’t come close to beating the overall stock market,” writes Jeff Sommer.

“But occasionally, there are exceptions. In some periods, stock pickers rule, and the start of this year was one of those times. In fact, it was the best January for actively managed stock mutual funds since Bank of America began compiling data in 1991. It wasn’t just that they turned in handsome returns for investors. The entire stock market did that. The S&P 500 and other stock indexes set records during the month,” he notes.

The article goes on to say that stock pickers seem to do best when markets are doing the worst – such as the 2008/9 credit crisis. Passive investing does well at most other times, he points out.

A Forbes article on the topic makes the point that active investing requires much more of an effort.

“You can do active investing yourself, or you can outsource it to professionals through actively managed mutual funds and exchanged traded funds (ETFs),” the article notes. However, the article notes, you need to be watching your holdings all the time.

“Without that constant attention, it’s easy for even the most meticulously designed actively managed portfolio to fall prey to volatile market fluctuations and rack up short-term losses that may impact long-term goals,” Forbes reports. “This is why active investing is not recommended to most investors, particularly when it comes to their long-term retirement savings.”

On the contrary, “because it’s a set-it-and-forget-it approach that only aims to match market performance, passive investing doesn’t require daily attention. Especially where funds are concerned, this leads to fewer transactions and drastically lower fees. That’s why it’s a favorite of financial advisors for retirement savings and other investment goals.”

No one likes to talk about investments unless they are winning. It’s like bingo – you hear when your friends win the big jackpot, but otherwise, you don’t. We have heard horror stories from friends who went for the home run with things like Bre-X, or Nortel, or cannabis stocks, and of late, bitcoin.

Whatever approach you personally choose for your own investments, we recommend that you seek the advice of a professional investor. The portfolio you construct on your own may be fine, but will almost always benefit from the oversight of a pro.

If you’re a member of the Saskatchewan Pension Plan, you are already benefitting from professional investment advice. The SPP balanced fund returned 7.73 per cent, on average, since its inception more than 35 years ago. While past returns are of course no guarantee of future rates of return – no one can predict the future – it’s nice knowing that SPP’s investing history has been so positive. Check out SPP today!

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Not everyone is comfortable talking about money with family members – spouses, kids, and so on.

In fact, Kelley Keehn, writing for FP Canada notes that she has always found it interesting that “people naturally retreat when the topic of finances comes up.”

“While it’s perhaps not the most engaging dinner table discussion or a conversation-starter on a date, money is an important subject to be comfortable talking about,” she writes. “No matter our age, salary, social or relationship status, money is an essential part of our lives,” Keehn continues.

She cites a recent national survey by FP Canada, The Discomfort Index, as finding that the topics that make Canadians squirm the most are politics (26 per cent), relationships/sex (24 per cent) and then money – tied with religion – in third place at 23 per cent. By comparison, notes Keehn, only 12 per cent of respondents found talking about their health to be a “taboo” subject.

Strangely, notes Keehn, at a time when women’s earnings now account for 47 per cent of family income, women are “more likely to avoid the topic of money than men,” by a margin of 27 per cent to 18 per cent.

While most Canadians confide in their partners about money, there’s a whopping 40 per cent who won’t, Keehn reports. Only three per cent would talk about money with strangers, two per cent with “hairstylists and estheticians,” and one per cent won’t talk about it to anyone, Keehn adds.

Save with SPP did an interview with Kelley Keehn last year.

So, what can be done to get people talking?

Writing for the Sun Life blog, Sylvie Tremblay suggests that one barrier to money talk might be our level of financial knowledge. “All too often, resistance to talking about money in a real, substantive way stems from a lack of confidence,” she writes. Consulting a financial advisor – a view shared by Keehn – is a great way to educate yourself about the topic.

Another money talk ice-breaker could be picking a financial goal you both are interested and excited about – a major vacation, putting together a down payment, or setting up a registered education savings plan (RESP) for the kids.

Other ideas from Tremblay include making an annual “money talk” appointment with your partner, setting rules about “who is handling what” when it comes to money and bills, and finally, to get started on talking right away.

An article from the Desjardins Financial Security network gives some great ideas about talking money with your adult kids.

The article points out, citing research results reported upon by the New York Times, that 83 per cent of respondents (folks making more than $100,000 per year) said they would NOT disclose their income to their adult kids. Only 17 per cent said they would, the article notes, with the main reason given for a “no” being the belief that the parents’ finances are “none of their (the kids’) business.”

However, the article says, that’s not really the case.  First off, your money may be theirs one day – and data suggests that one-third of inheritors “squander their inheritance shortly after receiving it.” Talking about money with them now, and discussing how to make it last, the article suggests, is helpful.

If you support charities, this is a nice idea to discuss with the kids – perhaps you can help grow their giving values too, the article adds. A money discussion plays a huge part in boosting the financial literacy of your children, the Desjardins article states.

“Parents with a certain degree of wealth have an opportunity to gradually expose their adult children to complex financial concepts such as investments, business ownership or overall financial planning,” the article adds.

Finally, the article suggests, it’s never a bad idea to involve a financial advisor in matters relating to inheritances or “in-life” transfers of wealth to kids, to game plan for any tax issues in advance.

The bottom line here seems to be quite simple – if you aren’t talking money with your spouse, it’s probably time to start. If everyone knows where the money is going and why, you avoid surprises, which people really only like on birthdays and other key holidays. If you are on the same page with spending, you can get on the same page with saving.

Thinking about saving for retirement, for couples and also for individuals, is a key financial consideration. If you have a retirement plan at work, be sure to join it and learn about what features it offers, particularly when it comes to benefits for your survivors. This is a good idea for both partners.

If you are saving on your own, take a look at the Saskatchewan Pension Plan, marking its 35^th year of operations in 2021. The SPP offers you a “do it yourself” pension plan that not only invests your savings, but provides the possibility of a lifetime pension with benefits for your surviving spouse. Check them out today.

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We all know what we’re not doing thanks to the pandemic – but what sorts of things will we all be doing once that first blessed day of COVID-free living begins?

According to the New York Times, the very first thing for many will be getting back in touch with family and friends.

“Oh, to be able to shake hands again. We have lost the simple way we show respect for one another, to say thank you, to signal agreement. Our elbows will never be up to the job,” Audrey Jessen of Florida tells the Times. In the same vein, the newspaper reports, hugging grandma, hugging your brother, going out on date and kissing, and the joy of hanging out in groups are all atop people’s post-COVID to-do lists.

Ditto for “getting out of the house,” the Times adds.

At The Conversation blog, there’s optimism that the pre-COVID decline in cooking at home will continue to be reversed after the pandemic.

“Our survey showed a rise in home cooking from scratch during lockdown. Both home cooking and confidence in cooking have been linked to better diet quality, and practising cooking increases confidence,” the blog says. The folks at The Conversation believe this COVID-induced trend won’t fade away when the pandemic does.

Neither, reports Forbes , will “virtual collaboration” in the workplace, a.k.a. teamwork via the Interweb. It should also continue to be a way to stay in touch with people post-pandemic, the magazine contends.

“Millions of Americans stayed home for Thanksgiving, and their virtual parties weren’t terrible,” says online collaboration expert Adam Riggs in the Forbes piece. “With millions of remote workers connecting virtually, Americans have seen how video conferencing technology has improved over time, which has also impacted how we virtually network,” he states in the article.

Riggs predicts that since the pandemic will continue for quite a while, the use of videoconferencing and networking apps will continue and will ultimately remain a tool in the communications arsenal when the COVID all-clear signal is finally given.

Many are counting the days until outdoor events, like musical festivals or sporting events, will again be able to be held in front of massive crowds.

The Independent quotes U.K. festival organizer Sacha Lord as saying “if we have another year like 2020, we’ve got serious problems.” The music festival industry had its worst year ever last year, the article notes.

Let’s see if we can hear the common theme in all of this. Yes, we want to go back to how things were, but also, some of the new ways we were forced to do things may survive into the When It’s Over era. For instance, it’s said that thanks to more handwashing, sanitizer use, and mask-wearing than ever before, our flu season was one of the mildest on record.

So let’s conclude that the light at the end of the pandemic tunnel will be a brighter, different one than the dark days of the current winter. Better days ahead, as they say.

Many of us have little bits of retirement savings here and there, scattered in different pockets from our time at different jobs. If you’re a member of the Saskatchewan Pension Plan, did you know that you can often transfer your benefits from other registered or unlocked plans to SPP? Up to $10,000 a year can currently be moved into your SPP account from other plans – that way, you can have all your retirement income coming from one source! Check out this and other SPP features in the SPP Membership Guide.

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There’s mounting evidence that shows Canadians have to work longer than they planned, due to the combination of high personal debt and low retirement savings.

Save with SPP took a look around to see if this “new normal” is a good or bad thing, health wise.

Interviewed in Forbes magazine, Heller Sahlgren, author of Work Longer, Live Healthier, sees working longer as a positive, health-wise.

His book makes the point that healthy people in their 60s should have no problem working, and that the work is good for them. “Continuing some form of paid work in old age is one way to ensure a healthier population,” he states in the article.

How is working healthy? The article notes that “studies have found that the mental demands of a job can be a force for staving off cognitive decline, an insight summarized by the catchphrase `use it or lose it.’”

An article in the New York Times makes a similar argument. “What is the benefit of work? Activation of the brain and activation of social networks may be critical,” states Nicole Maestas, associate professor of healthcare policy at Harvard, in a Times interview.

There is a potential downside to working later in life, reports the Money Ning blog. If you’re “not passionate” about your work, or “are working in a job that is physically demanding or extremely stressful,” the idea of keeping your job “may not be a pleasant one,” the blog states.

A paper by the Canadian Centre for Policy Alternatives, Working After Age 65: What is at Stake provides a great overview of this issue. One section deals with the health of older workers, and notes that “more than 50 per cent of retired workers over 65 have three or more chronic health conditions (such as high blood pressure, diabetes, or arthritis.”

As well, the paper notes, “one in four fully retired workers over 55 list poor health as their reason for retirement,” adding that “many older workers will have difficulty remaining in the workforce due to poor health, even if they are not financially ready to retire.”

To recap, then, working past 65 can be good for your mind – keeping it in gear, so to speak – and the social connections from work are helpful, preventing isolation. But these benefits assume your health is good, and that seems to be the delineator – older folks do tend to have more health issues than younger ones, and if your job wore you out emotionally and physically, keeping at it may not be a great idea. So you’ll need to weigh all these factors should you consider working for the longer term.

A hedge against becoming a long-serving worker is retirement savings. Those savings give you options, such as scaling back on the amount of time you put in at work, or even moving to something that’s more fun but pays less. Be sure to make retirement savings a priority, and consider the Saskatchewan Pension Plan as part of your savings toolkit. They offer an end-to-end retirement plan for you, investing your savings and turning it into a lifetime stream of income.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock. He and his wife live with their Shelties, Duncan and Phoebe, and cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

 

We were chatting about retirement with a salesman at the local car dealership when he rolled out a bombshell – in his early 70s, he had no plans for retirement. He loved what he does and wants to keep on doing it for as long as he can. Maybe in his mid- to late 80s he might get a cottage, he says.

That made Save with SPP wonder if others aren’t retiring – and why.

The Wise Bread blog says there are five types of people who don’t retire – the “broke non-retiree, the workaholic, the successful investor, the life re-inventor and the mega-successful lifers.”

The article notes that “a startling 47 per cent” of Americans “now plan to retire “at a later age than they expected when they were 40.” The reason why – 24 per cent of Americans 50 and older have saved less than $10,000 for retirement.

For workaholics, the article notes, “it can be devastating to face retirement,” with many fighting it “tooth and nail.” Successful investors, the article notes, may have bought real estate, gold, or stocks early and now have enough money that they don’t need to work. Life re-inventors retire from one job and take on a new, totally different one, and the “mega-successful” tend to be CEOs, actors, star athletes, folks who have sufficient wealth to not worry about a formal retirement.

The New York Times reports that there are 1.5 million Americans over the age of 75 who are still working. Judge Jack Weinstein, age 96, still gets up for work every day at 5:30 a.m., the newspaper reports. “I’ve never thought of retiring,” he tells the newspaper. “If you are doing interesting work, you want to continue.” The paper says that those who are employed in jobs “in which skill and brainpower matter more than brawn and endurance” often keep going past usual retirement age, as do the self-employed and industry stars, like Warren Buffett.

An article in Market Watch picks up on another point – there are many people who don’t like the sound of retirement. “The idea of a retirement where a person has little responsibility, and, worst of all, interacts with very few people, just isn’t appealing to the current crop of pre-retirees,” the article notes.

A more Canuck-friendly view comes from Canadian Living, which lists the main reasons for not retiring as “you need the money, you like working, you hate retirement,” and significantly, “you’ll collect bigger benefits” and “you’ll lose your RRSP later.”

“If you collect your CPP at age 70,” the article points out, “you’ll get 42 per cent more than if you retired at 65.” Similarly, if you collect CPP at 60, you get 36 per cent less than if you collected at 65, the article states.

On the RRSP front, since you must convert your RRSP to a RRIF (or buy an annuity) by age 71, delaying retirement means you will have more money in retirement, the magazine notes.

These are all good points. Save with SPP notes that there are many folks who simply live in the now and won’t think about retirement until they must. The idea that we can all keep working forever is a nice one but tends to be an exception, rather than a rule.

We may not want to retire, but the vast majority of us probably will. Even if you’re in the group that has saved very little up until age 50, there is still time to augment your life after work with some retirement savings. The Saskatchewan Pension Plan is quite unique in that it is open to all Canadians and provides an end-to-end retirement vehicle – your savings are invested and turned into a lifetime pension at retirement time. It’s a wise choice, even for those who don’t want to retire.

 

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Retirement is a sort of grey area for most of us – a destination that we’d like to arrive at one day, but one we know very little about.  But research shows that life after work may have the hidden benefits of extending your life and boosting your health.

A Dutch study, published in the journal Health Economics, found that a group of male retirees who retired at age 55 were 2.6 per cent less likely to die within the next five years than those who didn’t retire early. The study, authored by economists Hans Bloemen, Stefan Hochguertel and Jochem Zweerink, is reviewed in this New York Times article.

Why is retirement seen as good for health?
The Dutch study found that those who were retired had fewer signs of digestive and cardiac trouble – less stress, less “road” eating, and less sitting in traffic.

The Times article also cites US research that concluded retirement is, for health purposes, like finding out you are 20 per cent less likely to develop a serious illness, such as diabetes or a heart condition.

A similar study in Australia found that “retirement was associated significantly with reduced odds of smoking, physical inactivity, excessive sitting and at-risk sleep patterns.” You can have a look at the Australian study, called Retirement: A Transition to a Healthier Lifestyle.

A lot of times we are sort of trapped in our thinking on the topic of retirement. We wonder (and worry) how we will manage to live on less money than we made at work. But the research points to a nice new way to frame our thinking. Retirement may be the time of life when we can really focus on our health and well-being. We’ll be liberated from the stress and strain of the workplace, and able to take the time to look after ourselves.

So as you plan your retirement, SPP can help you with the financial side. What you make of the other side – the opportunity to look after yourself – is up to you.

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. After a 35-year career as a reporter, editor and pension communicator, Martin is enjoying life as a freelance writer. He’s a mediocre golfer, hopeful darts player and beginner line dancer who enjoys classic rock and sports, especially football. He and his wife Laura live with their Sheltie, Duncan, and their cat, Toobins. You can follow him on Twitter – his handle is @AveryKerr22

Tim  Stobbs from CanadianDreamFree at 45 who met his FIRE (financial independence retire early) goal several months ago recently wrote:

“One particular lesson that has really hit home for me since I early retired is this: FIRE doesn’t change your core personality.  You see I had this lovely fantasy in my head that I would be more active and perhaps start exercising regularly when I left work. I would run or do yoga like every other day.  Of course, I’ve never made working out a priority earlier in life so this really hasn’t changed that much since I retired.” 

That must be why over 12 years since I left my corporate job and a year into semi-retirement my closets could still use a good cleaning and I struggle to make it to the gym three times a week.

That also may explain Why being rich makes people anxious. Kerry Hannon from the New York Times reports in The Toronto Star that multi-millionaire Thomas Gallagher who is retired from his position as vice chairman of Canadian Imperial Bank of Commerce World Markets says, “Emotionally, I don’t come from money; I got very lucky on Wall Street. I have more money than I had ever imagined, but I still worry — do I have enough, if I live longer than I thought?”

And financial anxiety among Canadians is not only surprisingly pervasive and but not limited to the very rich or the very poor.  Rob Carrick in the Globe and Mail discusses a survey by Seymour Management Consulting which reveals that One in two Canadians is a bundle of nerves about money. Low-income people are most stressed, but one in three people with incomes of $100,000 or more are on the list of worriers.

So How do you know when it is the right time to retire? Retire Happy’s Jim Yih says retirement readiness is not tangible. He notes that one of the most significant trends is that more and more people want to work in retirement, plan to work in retirement and/or are being pulled into work in retirement.

“There are more opportunities than ever to work in retirement.  In fact the new terminology that is not so new anymore is the idea of planning a PHASED RETIREMENT or a TRANSITIONAL RETIREMENT. Personally, I think it’s great and I think a lot of people are finding success with this idea,” he comments.

Retired actuary Anna Rappaport identifies the same trend in an opinion piece Moving To The Next Step: Reboot, Rewire, Or Retire? for Forbes. She suggests that while many people may seek to continue working at traditional jobs into their 70s or 80s, others may wish to leave their career positions to build new career paths. People who held senior roles during their careers often find rewarding a period of professional activity with less responsibility, before totally leaving the labor force. Some seek memberships on corporate and/or nonprofit boards. Other people seek volunteer or not-for-profit roles, working in areas that are meaningful to them.

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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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

By Sheryl Smolkin

This week we have a pot pourri of stories from some of our favourite bloggers who have continued to write compelling copy through the now waning, long hot days of summer.

Are you a techno-phobe or an early adopter? Alan Whitton aka Bigcajunman writes about how old financial technology habits die hard on the Canadian Personal Finance Blog. Despite some lingering security paranoia, he now deposits cheques by photographing them with his cell phone.

One of the primary changes personal finance advisors suggest that clients make to save money is to put away their credit cards and start spending cash. On Money We Have, Barry Choi explores what happens if you decide to use cash and debit more. He says that depending on your personal situation, this may affect your credit score, you will forgo travel reward points and you also can lose out on other standard benefits like travel insurance and auto insurance covering car rentals.

Mark Seed on My Own Advisor answers a reader’s question, How would you manage a $1 million portfolio? His bias is to own stocks indirectly via passively managed Exchange Traded Funds for the foreseeable future to get exposure to U.S. and international equity markets.  However, he says his selection of investments will likely differ after age 65 and in future he might hire a fee-only financial advisor or use a robo-advisor to manage his portfolio.

I recently helped my son find an apartment in Toronto so I thought Kendra Mangione’s article From a house to a bedroom: What $1,000 a month can rent across Canada was particularly interesting. She says you will pay $950 for a single bedroom with an ensuite bathroom in a Vancouver suburb but $950 will get you a two-bedroom, 864 sq. ft. townhouse close to downtown Regina and the university.

And whether you have children who are new graduates or you are only beginning to help pay for your kids’ post-secondary education, check out Parents Deserve a College Graduation Present, Too in the New York Times. This piece explores a Korean-American tradition for former students to give parents sometimes lavish gifts, once they have their diplomas in hand.

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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 on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Selecting a career is one of the most important challenges all of us have to deal with, and it doesn’t only happen once when we graduate from high school. I went to law school and embarked on an initial career as a family lawyer. However, nine years later I moved into pension and benefits law, and as a retiree I have a new career as a journalist. My husband has degrees in electrical, biomedical and software engineering, but spent most of his career in software design.

That’s why I think Bridget Eastgaard’s blog The future you are saving for does not exist on Money After Graduation is a “must read” for you and your kids. She says, “One of the most dangerous things you can do for your finances (and your happiness) is to plan your life under the assumption that everything will remain as it is. It won’t. I think we intuitively understand this, but you don’t know what you don’t know, and that makes imagining anything different extremely challenging. But these perspectives and biases can hinder us by limiting our flexibility to adapt to an ever-changing world. ”

So if you or your child are picking college or university courses or even if you are graduating from high school or with an undergraduate degree, how do you know what skills are in demand now and will still be highly sought four or more years from now?

The truth is none of us has a crystal ball. But you can check out Canada’s Best Jobs 2016: The Top 100 for a start. I’ll bet you’d never guess that the top three jobs on the list are: mining or forestry manager; urban planner and pharmacist. And construction managers, police officers and nurse practitioners are also highly ranked.

Heidi Grant Halvorson in the Harvard Business Review writes that The key to choosing the right career is to find a career that fits well with both your skills and values. She characterizes people in two ways. Those who primarily see work and life goals as opportunities for advancement, achievement and rewards have “a promotion focus.” The rest of us are mainly prevention-focused. We see our objectives as avoiding danger, fulfilling responsibility and being someone people can count on. Halverson believes that understanding our dominant focus can help with career selection.

In How to choose a career that you’ll love, New York Times bestselling author and founder of iwillteachyoutoberich.com, Ramit Sethi says, “The smart approach is to explore ALL the careers you’re interested in, test each to see if you’d really enjoy doing them, and move on to other jobs if they’re not a good fit. It’s kind of like window shopping at a mall. A shirt or pair of jeans may catch your attention. You might even try them on, but you wouldn’t just pick any random thing off the rack and say ‘I guess I’ll wear this for the next 10 years,’” he says.

Getting the chance to try different careers and work environments on for size is one reason why co-op co-op programs including one or more paid work terms are so valuable. An interesting blog on myuniversitymoney.com explores the pros and cons of co-op programs. Author Mr. Harvey is a former co-op student and he says the job hunt seemed to be an endless cycle of applying and interviewing for jobs which was a lot of work and stress on top of his studies. However he agrees that co-op students get lots of experience and many students are offered permanent jobs.

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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

 

Today we are continuing with the 2014 savewithspp.com series of podcast interviews with personal finance bloggers. I’m talking to Cait Flanders, who blogs at Blondeonabudget.ca.

In 2011, Cait had $28,000 worth of debt. To stay accountable throughout her debt repayment journey, she decided to start this blog. She paid off the last dollar just under two years later and today she’s going to tell us how she did it.

Cait lives in the Vancouver area, works full time from home as the managing editor of Ratehub.ca and is a contributor to Gale Vaz-Oxlade’s blog, The Globe & Mail, The Huffington Post Canada and Tangerine Bank’s blog.

Hi Cait, and thanks for joining me today.

Oh, thank you so much for having me.

Q: Cait, before you started this blog you had $28,000 in debt. How did that happen? Was it as a result of accumulated student loans?
A: No, I actually never had a lot of student loan debt. To be perfectly honest a lot of it was consumer debt. For years and years I was just swiping my credit card for anything that I wanted to do or see.

Q: You paid off your debt in just under two years, how did you manage that?
A: I literally had $100 in my bank account and it had to last me for six weeks. So I moved home for six months and from that moment forward just lived what I jokingly called “a very boring life,” saying “no” to everything. The only fun thing I let myself do was go for coffee with a friend which was $4 or $5 instead of $50.

Q: So, you wrote about your journey to solvency on your blog and you still post your monthly budget and goals. How have your family and friends reacted to this high level of disclosure about your financial affairs?
A: That’s actually a really good question. I grew up in a house where my family talked about money very openly, probably every day, so I think my parents love it in the sense that, it’s cool to see that I’m continuing that now and just taking those conversations online.

No one has ever said anything about me posting the numbers but I’ve recently made the decision that I’m going to stop posting them because I’m finally starting to realize that it could actually be pretty dangerous. It could lead to issues like identity fraud or theft. So I’m going to do budgeting a little bit differently going forward.

Q: Since you’ve paid off this significant debt, how has your life changed?
A: I’d say the biggest change is I’m no longer stressed all the time. Not having debt gives me much more freedom. I probably let my lifestyle get inflated a little bit since then because when I was paying off my debt I was sometimes putting up to 50-55% of my monthly income toward debt repayment. That’s not a sustainable budget. After two years of realizing that I don’t need all kinds of fancy things or outings to make me happy, life changes.

Q: In addition to blogs about reducing your personal debt, what other subjects do you write about?
A: On my own blog I’ve written about everything from moving, living in other cities, some travels, and sobriety. I write for the education section of the Globe and Mail about every eight weeks and more recently I’ve been talking about minimalism on my blog.

Q: How many hits do you get on your blog each month?
A: Right now I’m probably averaging between 80,000 and 110,000 page views a month.

Q: Wow. That’s incredible.
A: Yeah. It’s crazy. Fifty per cent of that is usually from Canada and maybe 35 per cent is from the U.S. The rest is divided between the UK, Australia and I even have readers in South East Asia which I think is really cool.

Q: So what have you done to promote your blog? Why do you think your readership is so high?
A: Personally, nothing that I can think of. I love talking to people on Twitter. I reply to every single comment that goes up on my site. There has also been press along the way like stories that The Globe or The Toronto Star have picked up. That obviously brings in more people. But no, I haven’t personally done anything.

Q: How long have you been writing the blog?
A: Technically, in October, it would be 4 years.

Q: What have some of the spin offs been?
A: Everything has changed in my career. When I first started the blog, I found a New York personal finance site for women looking for an editorial intern, I asked if someone from Canada could apply and they said that they’d love to have me. That taught me everything I needed to know about being an editor of a website.

Then my current boss Alyssa, at Ratehub.ca who is a blonde on a budget reader offered me a job in Toronto with the company. There have also been other freelance jobs and my relationship with Gale Vaz-Oxlade. She’s just the most incredible mentor and I write for her site. But her friendship, has been one of the greatest and most unbelievable spin offs from my blog and other writing.

Q: Do you actually have to go to an office for Ratehub.ca or do you work from home?
A: Originally I moved to Toronto for 8 or 9 months, just to really get to know the team and build up my position in the company. Then I moved back to Vancouver where I work from home.

Q: In early July you announced you’re embarking on a one-year shopping ban. Why?
A: There are a few reasons. One day I had this epiphany. Even though I’ve always felt like I was a minimalist, I had this moment where I was trying to open my can opener drawer and I couldn’t find anything in there. I just had this freak out that I actually have way more stuff than I probably need.

Then I started thinking that I wasn’t getting anywhere with my current savings and financial goals I realized that that was because I was spending a lot of money on things that probably didn’t really matter. Although I’ve been really good with my money for the last few years I do think that there is always room for improvement.

I think the ban is going to be difficult at times but I just want to challenge myself and learn and grow from that exercise.

Q: So tell me what the rules are of the shopping ban. Obviously you have to pay your rent and buy food and go out occasionally.
A: I have to pay the bills and get groceries. I’m keeping my car so I have to get gas and pay insurance, and I’m giving myself a small recreation budget. It’s no clothes, no shoes, no electronics – things that not all girls buy but some do. I was always bad for picking up nail polish. I don’t need any more decor items in my home. It’s just that kind of stuff.

Q: So, if the one year ban is successful, what comes next? Are you thinking about a book or is there a major purchase you’re saving up for?
A: I think a book is something that all writers want to accomplish in their career but that has absolutely nothing to do with the ban. I haven’t really announced this but when it’s over my goal is that I’ll have money saved so I can take an extended trip to the UK.

Q: If you had one piece of advice for someone who is deeply in debt and wants to turn things around, what would it be?
A: I don’t think everyone needs to put 55% of their income toward debt repayment like I did, but I think just facing up to the numbers is key and then making a plan so debt repayment is a priority.

Q: Thank you very much for talking with me today, Cait.
A: Oh, thank you so much for having me.

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This is an edited transcript you can listen to by clicking on the link above. You can find the blog Blonde on a Budget here