Summer Vacations in Canada… Because it Rocks and our Dollar Sucks

Let’s face it, our dollar really sucks right now. I, like most other Canadians, will not be making a trip across the border any time soon (and I probably won’t be jetting off to Europe, either). With the Canadian dollar at a low that hasn’t been seen for more than a decade, it’s time to consider the benefits of a local holiday.

There are so many beautiful places to visit in this country. I am ashamed to say that I haven’t been to very many of the gorgeous areas usually recommended by travel shows or news articles. I hope to change that this year by exploring more of Canada. I’m looking forward to taking advantage of holidaying in our own backyard.

For my American friends, this is a fantastic time to explore the Great White North. It’s like getting everything on your trip at 30% off!

national-park-856316_1280Whether you are looking for mountains, oceans, prairies, or lakes, Canada has it covered. Rough Guides has a comprehensive list of places you might want to visit, including suggested itineraries. Frommer’s also has a list that includes some places and activities that may not have been on your radar for a summer vacation (iceberg hunt, anyone?). One of the best ways to find the hidden gems in Canada is to speak to family and friends. Personally, I am looking forward to a trip to the East Coast in the next few years to visit all the little towns a friend that grew up there has described to me.

You don’t have to go far for a fantastic vacation. Staying in Canada can allow you to appreciate the wealth of beautiful places our country has to offer, and also help you save money and even travel time (depending on where you go… it’s a pretty big country!). If you have a week or so to spend in your destination, utilizing services like Airbnb or booking a cabin or hotel room with a kitchenette can also cut down on expenses. You’ll also avoid paying fees to change currencies. That’s always really annoyed me!

For those of you that just can’t give up the big, traditional summer vacation, the Globe and Mail has some suggestions for cost-effective destinations for Canadian travellers, including Asia and Eastern Europe.

Are you going on vacation in your home country this summer? What are you most excited to see?

 

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5 Ideas to Help You Save $100 This Week

Life gets in the way sometimes, and this can mean unexpected expenses – a surprise lunch out with a friend, an extra stop at the grocery store because you have nothing for dinner, filling up on gas because you didn’t realize that you don’t have enough gas to last the week… It happens to the best of us.penny-164543_1280

I am trying to be a bit more mindful of my weekly spending lately. I’ve figured I can shave about $100 per week off my usual habits by making a few small changes. This doesn’t mean I’m not going out, or that I won’t buy a coffee – it means that I will plan ahead and figure out easy alternatives to my plans that still let me enjoy the company of my friends or my hobbies, all while spending less money.

  1. Bring lunch instead of buying it.
    I work in the middle of the city, and there are so. many. options. for lunch that it is very easy to avoid putting in the effort of preparing something the night before. My usual habit right now is purchasing lunch (or breakfast…) 2-3 times per week.
    Savings: Approximately $10 per day x 3 days = $30
  2. Suggest a walking date instead of a coffee date.
    I go on 2-3 coffee dates with friends each week. This week I am going to suggest that we go for a walk instead, and I’ll leave my wallet in my office too. Alternatively, bring your own tea or coffee in a travel mug and meet somewhere like the park to catch up without spending money.
    Savings: $5 per coffee (I like Starbucks, okay?) x 3 dates = $15
  3. Go out for Happy Hour instead of a meal.
    In an upcoming post, I’ll share my favourite local places to go for Happy Hour. You’ll still get to go out with your friends, but you’ll cut your bill in half by taking advantage of Happy Hour specials.
    Savings: $35 for a full meal vs. $15 for 1 small dish, a drink, GST, and tip = $20
  4. Stay in.
    If you like to go out with your significant other for a night at the movies, consider having an “at home” date night this week. Pop a bowl of popcorn, watch a movie or a TV show on DVD, and have a cuddle on the couch.
    Savings: $13.25 x 2 = $26.50
  5. Have a “clean out the pantry” meal.
    Instead of picking up something on the way home from work, shop from your own pantry. There are so many things you can make with a few simple ingredients – I like taco bowls the best when we are doing this (leftover meat – or leave it out for a vegetarian meal, black beans, corn, rice, peppers, and avocado). An added bonus of shopping in your own kitchen is that you aren’t tempted to pick up other things at the store – things you don’t necessarily need. You can use the Ingredient Chef for ideas for dinners that use what you have on hand!
    Savings: $10+ or whatever you’d spend at the grocery store on dinner

It may not sound like much – in fact, now that I have written out my plan for the week, I think it sounds very achievable – but you can save you over $100 per week just by making a few simple changes to your habits.

Of course, not every week will present you with the same opportunities to save money. You’ll have to get creative. Don’t lose sight of the fact that it all counts… skipping a coffee here and there may not seem like much, but added to the rest of your savings that week, it can make a difference!

What other ideas do you have for saving $100 this week?

Avoiding the “House Poor” Trap When Buying Your First House

Congratulations! You’re ready to move out of your rental property (or your parents’ basement) and purchase your first house. I bet you’re really excited, and you should be – buying our first house was one of the most exciting, stressful, and rewarding things we’ve ever done.

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It is easy to get caught up in this excitement, though. With Canadian interest rates being so low at the moment, and down payments as low as 5%, why wouldn’t you take advantage of this great opportunity to get on the property ladder with a big, beautiful house?

I’ll give you one good reason: so you can avoid being “house poor” for the next twenty-five years.

Statistics Canada defines being “house poor” as spending more than 30% of your income on housing costs (e.g., mortgage, property taxes, and utilities). The surprising thing about this figure is that it is calculated pre-tax. As this article by the Financial Post points out, this can be confusing due to our graduated tax system: one earner with a large salary will have a smaller take-home pay than two earners with average salaries.

My housing costs are approximately 27% of my gross pay. Our bank offered us over $100,000 more than we spent on our house – if we had taken it, I’d have been “house poor” faster than I could sign the paperwork. Even now I’m pretty close to that threshold. I would be spending more each month than I would be comfortable with, and my husband and I would not have had the extra funds to put towards a renovation on the house we bought, as well as a wedding, all in the same year.

I am seeing the increase in the “house poor” population everywhere. I’ve reached the age where friends are getting married, having kids, and buying houses – big, fancy, brand new houses. And while these people might not realize it yet, the squeeze they feel on their finances will still hurt after the next pay raise, and the raise after that. Property taxes will increase, bills will increase, and mortgage rates may also increase. And there’s only one reason for this pain: they bought more house than they could afford.

My advice to you, as someone who figured out what they could afford recently and is living with that decision, is to ignore Statistics Canada’s figure of 30% of your gross pay – this percentage really means nothing if you have a bunch of other expenses that also need to be paid in the short term (e.g., a car loan or student loans). Additionally, it seems stupid to me that people should be figuring out what they can afford based on gross pay. Use your net (i.e., after tax) pay to figure out what you are comfortable spending on housing costs. These numbers are not about annual averages or percentage points or spending the same as everyone else – it’s about your financial well being and the life you want to be able to afford to live once all of your mandatory bills are covered.

Figure out, first, how much of your income you are willing to spend on your home minus the mortgage, each month. If you have other, more pressing loans with higher interest rates, take the payments you wish to make on those each month out of your net pay figure. Then determine what you think maintaining your home might cost. Consider electricity, water, property taxes, Internet… ask your friends and family what they pay in the area you are looking to buy.

Great, you say, I still have plenty left to throw at a mortgage payment. I can afford one kick-ass house with all this money!

But you haven’t taken into account the fact that you also have to live on this amount. What about food? Transporation? Even if you already own your car, you’ll still have to pay for gas and insurance. Dinners out with friends? Cell phone bills? All of these things need to be considered too.

Give yourself a reasonably generous living allowance based on your current spending habits. Maybe you think you will cut down on meals out once you buy a house, but even if the money you set aside isn’t used for that, it will still probably be used for something. Owning a house always comes with sudden financial surprises – you’ll need to be prepared.

Each financial situation is different. If you currently have a $200-a-month Starbucks habit and buy a new pair of shoes every time you go to the mall, it is not reasonable to expect that you will give this up just because you have a mortgage. What is most likely to happen is that you fall further into debt, using a credit card to finance the shoes, and end up living far beyond your means. This is an awful position to be in, and makes you poor poor, not just house poor.

Okay, so now you’ve given yourself a living allowance, and also set aside some money for other (e.g., RRSP/TFSA) contributions. You are a responsible adult – savings of some kind should be a mandatory chunk of each paycheque.

What’s left?

That’s what you can afford to spend on a bi-weekly or monthly mortgage payment.

Why do I recommend doing the calculation this way? Because your mortgage payment is based on the amount you borrow from the bank and your interest rate. Figuring out all of your other expenses first means you can be pretty confident that the money you’re willing to spend on a mortgage isn’t going to put you in the red. Mortgage calculators produce a number based on your monthly or annual salary and don’t take into account other necessary expenses like loan repayments and how much managing a home in your area actually costs.

Too many people jump into a mortgage with little to no idea how they are going to make the payments work with their income. “The bank seems to think we can afford it, so obviously we can,” they say. “Renting is just throwing money away – we should buy instead. It will work itself out.” And sure, I see the point about buying vs. renting, but sometimes comfortably renting can be a better choice if the numbers just don’t add up in favour of buying.

We crunched numbers like crazy before we purchased our house. We figured out that we could quite comfortably handle a mortgage of a certain size, regardless of what the bank actually offered. And that is the biggest lesson I learned throughout this entire process – just because it is offered to you, doesn’t mean you have to use the full amount the bank is willing to hand over. Sure, I dreamed of a beautiful house overlooking the river with quartz countertops and a hot tub like anyone else, but when you can’t make ends meet each month, you can’t eat a hot tub (or quartz countertops, for that matter).

Buying a house is a very fun and rewarding experience, and there is nothing quite like looking around at your four walls and knowing that you are no longer padding your landlord’s pockets. A house should be treated as an asset in your portfolio – an affordable asset, that will hopefully appreciate over time, and that you can enjoy living in while you have it. If you buy an affordable house now, you’ll be setting yourself up to buy the bigger, beautiful house of your dreams – if that’s what you want – in the future… when you can actually afford it.

Enjoy Summer Festivities Without Going Broke

It’s no secret between my family and friends that I love the Calgary Stampede. Most people think it’s just the same thing every year and too expensive to keep going back. Not me! My favourite part of Stampede is how into it the city gets. The decorations are already up all over downtown and I am adding Stampede breakfasts and BBQs to my calendar on a daily basis.

So how do you partake in festivities like Stampede without going completely broke?

I’ve compiled a few tips to hopefully help you (and me!) keep our money in our wallets and a smile on our faces this summer!

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Photo by festivalseekers.com

1. Buy tickets/passes in advance for discounts.
Costco and Safeway are two places that sell Stampede Bucks or Ride & Play cards, respectively. They do sell out though, so it is important to get in early. The Costco Stampede Bucks will save you $10 ($40 for $50 in Bucks) and the Ride & Play cards can save you $20 on rides and games if that’s your thing. Look around at your local grocery stores for discounts for events near you!

2. Take advantage of discounted/free entry on Value Days.
The Stampede website has a list of Value Days that include discounted or free entry. This is definitely worth taking advantage of if you have kids! You may find that your local festivals or events offer discounted entry if you go late in the evening or early in the morning. Be sure to do some research!

3. Take Public Transit.
Parking at festivals is ridiculous. Don’t do it. Transit is cheap and can be convenient (especially if you decide to spend some of your saved money on a few beers…but you didn’t hear that from me). Some cities will offer discounted fares with your festival ticket. Calgary Transit is offering reduced day fares for adults and youths during Stampede.

4. Check out the free displays and shows instead of the pricey ones.
Going for a walk through the barns to pet the horses and check out the goats is free at Stampede. So is the SuperDogs show and everything on the Coke stage. While you may pay to get in, there’s plenty to do that doesn’t cost extra once you get through the gate. If your local events offer free entertainment that is included in your entrance fee, take advantage!

5. Buy last minute event tickets.
You may risk losing out, but often event tickets purchased at the last minute can be cheaper than those bought far in advance. Rodeo tickets, for example, can be had for about $20 on the day if you go to the box office on the Stampede grounds.

6. Don’t party with your rich friends.
One of the main reasons Stampede can be expensive is the cover charge to places like Cowboys and the cost of drinks (and the inevitable tub of mini donuts that follows). Prices are inflated during events like Stampede and if you are trying to keep up with the Joneses, you’ll be dealing with a financial hangover. If you must party with your friends, have your own backyard Stampede BBQ. Wear your hats, flip some burgers, and have a few drinks before taking transit to the grounds to catch a free concert on the Coke stage.

7. Eat lots of pancakes.
Okay, this one may only really be related to Stampede, but there is free breakfast everywhere during our ten days of western festivities. I am not too proud to stuff my face with free food at every available opportunity. Here is a website listing all of the Stampede breakfasts happening in Calgary. See you in the pancake line!

8. Rent out a spare room in your house.
If you have ever wanted to try offering your hospitality on Air B&B, doing so during festival season is a great opportunity to cash in on a temporary visitor boom in your city. You can rent out a room or your whole house if you decide to get out of town yourself!

9. Volunteer or get a temporary job for great perks.
Often event volunteers will get free entry to their events and could get additional perks like discounts on merchandise, food, and so on. A lot of places will also be looking to hire temporary staff to help with the rush brought on by events like Stampede. Check out opportunities in your city to volunteer your time (or get paid for it) and enjoy being a part of the action instead of just a spectator!

10. Don’t go.
Of course, another option is to just avoid the big, expensive events altogether. If you really don’t want to be lured into spending a bunch of money at an event like the Calgary Stampede, consider partaking in the free celebrations around your city instead. Whether it’s a local music festival instead of one in another province or a string of pancake breakfasts instead of going to the Stampede grounds, you can have a ton of fun this summer without parting with your hard-earned dough.

You can also save a few bucks by bringing your own snacks and a reusable water bottle to any big events. I’d rather save my pennies for mini donuts (yum!) than an overpriced bottle of water! Be aware that some festivals don’t allow outside food, so make sure you know what’s allowed before your bag of snacks gets chucked at the gate!

Have a great summer!

Are Financial Advisors Worth It?

I met with a financial advisor a few years ago at the bank I had my student loan with (not RBC). It was not a pleasant experience. The advisor wasn’t really listening to me as a fresh-out-of-university kid with goals: pay off the loan, save up for a house. He had goals too: sell me bank products I didn’t need.

Understandably, I was a little bit hesitant to meet with another financial advisor. Then, the company I work for offered a free consultation with an independent group (i.e., not affiliated with a particular bank) so I decided to go for it.

What a difference!

It was a pleasant meeting and it was about me and my goals and my circumstances. I came prepared with budgets, printouts on my mortgage and my loan, my (small) investment portfolio, and other relevant information. And we spent an hour going over it, looking at interest rates, discussing how I should best allocate the funds from each paycheque, and what my priorities should be.

Sometimes we are too close to our own finances and our own ways of doing things. An outsider’s perspective can be really helpful. I learned a few things, but most of all, I also received validation that I am on the right track with my money. The biggest surprise to me was his thoughts on the double-up contributions that I make to my mortgage. “I am doing great things here!” I thought. “I am cutting 4 years off my mortgage by putting more money towards it every month, even though the interest rate is really low.” I thought for sure he’d suggest that I put this money towards my loan instead, but no: he thought I should invest it, and then use the returns to pay off the mortgage a few years down the road – something I had not even considered, but that makes a lot of sense.

Good advice is only good advice if it fits your situation. My previous experience with a financial advisor had been more about getting me to sign up for stuff than about helping me reach my goals. This time, I received an impartial view of my finances that made me consider options I hadn’t considered before. They seem obvious now that they have been pointed out to me. That alone was worth my time (especially since I wasn’t the one paying for the session).

HSBC did a study in 2011 that showed that people with solid financial plans saved over 250% more towards their retirement than those that didn’t. 250%! A financial advisor can help you shape this plan and make it work for you so you’re not flailing around helplessly wondering what to do with your money. You can read books, blogs, and news articles until the cows come home, but one hour with a financial advisor could help you nail down the best options for your savings and investments.

Financial advisors are not just for lottery winners and millionaires. They can be helpful for anyone with a financial goal by offering an outside view of your finances to help you to make sure you aren’t missing any opportunities for investment or savings. If Googling answers to your questions is making your head spin, a good financial advisor can answer your questions as they relate to your specific situation.

If your company is like mine and offers an hour with a financial advisor as a perk of being their desk-slave, then you would be silly not to jump on the opportunity to get some advice on your finances. Even without someone else paying for it, using a financial advisor seems to be well worth the investment if you can find the right one. Here is a good article with some tips on finding someone that suits your goals and risk tolerance, as well as red flags to watch out for when interviewing a financial advisor. It is important to make sure you are dealing with someone you are comfortable with, especially if you decide to invest through them, and not to feel pressured to purchase their services just because they answered your questions. Get all the information you need and make smart, informed decisions based on your money and your needs.

 

*I am not a financial advisor and I don’t play one on TV (even a financial calculator can’t help this mathematical bonehead with numbers). I had a good experience and received what I consider to be good advice from the financial advisor I met with this year. That is all. Carry on.

Why I Almost Switched Banks… and Then Didn’t

I have been an RBC customer since I was 12 years old. That’s more than half my life! I had one of those Leo Young Savers accounts, and in my little transaction book, I wrote that I was saving up for a horse.

Recently, RBC announced a lot of changes to their fee structure, despite a record profit in the last quarter. I was one of those raging customers that complained about their new pay-to-pay charges (e.g., for paying your mortgage). I don’t even know how those charges got approved in the first place as they are absolutely ridiculous, but that’s beside the point.

I had a meeting with another bank, gung-ho and fully prepared to do whatever it took to leave RBC. I had all the paperwork. I had gathered the necessary information. I was ready.

And then I cancelled the second meeting with the new bank and decided to stay with RBC.

I made this decision for a few reasons:

  1. RBC backtracked on their initial, stupid pay-to-pay charges, which were one of the things I took the most issue with.
  2. The information I had about my business banking account, from the mouth of an RBC rep over the phone, turned out to be incorrect. Based on the small amount of transactions I use per month for my business, the $6 small business account is actually my cheapest option at the moment. It’s even cheaper than the new bank’s $12 all-in account since I don’t need as many transactions as they offered each month.
  3. Their branches are more convenient for me than the new bank that was I going to switch to. I didn’t think this would be a big deal but the more I thought about it, the more I disliked the fact that there was not a local branch of the new bank near my house.
  4. The new bank (which is actually a credit union) does not offer no-fee money back credit cards or rewards cards.
  5. In most of my dealings with RBC, their customer service has been far better than other banks I have dealt with.

To make myself happy with what RBC now offers – and to avoid as many of their charges as possible – I had to change the way I spent and saved money.

  1. I downgraded both of our savings accounts (mine and a joint one with my husband). They are now Day to Day Savings accounts instead of High Interest e-Savings accounts. The e-Savings accounts now have a $5 fee each time money is moved out of them, including through online banking. No teller required, but that will still be $5 please. This may have been removed as part of RBC’s backtracking, but the last pamphlet I got included this fee. The Day to Day Savings allows one free transaction each month, and unlimited online access. We weren’t saving enough in these accounts to make use of the higher interest rate anyway – certainly not more than $5 a month!
  2. I am now spending on my credit card only. It is a free rewards card, so hopefully even the small purchases will add up to something decent by the end of the year. This year we used my points to book a rental car for an upcoming trip. The credit card gets paid off every month.
  3. Because of #2, I am going to downgrade my regular No Limit Banking account ($10.95 a month) to the lower use, 12-transactions-a-month Day to Day Banking ($4.00 a month). Credit card payments and online transactions to move money to other accounts are not counted in the 12 transactions.

It’s annoying to have to try to find ways around increasing fees, but in the end I decided that these are manageable changes for me and allow me to stay with a bank I have a good history with. I have always been pleased with RBC’s customer service and their branch locations are convenient.

It can seem like an easy choice to move banks based on charges. It is important, though, to weigh up more than just the money aspect when choosing – or staying with – a bank. My new credit union, though their fees were significantly lower, would have been least a 10 minute drive from my house. I would probably spend more on gas to get there each month than I would save. That’s not even accounting for my time, and that’s worth more than the minuscule savings.

If you are thinking of bailing on your bank because of increasing fees, consider how you may be able to make their services work for you instead. You may be able to modify your habits to avoid coughing up for access to your cash, and in doing so, staying with your current bank could save you more than moving. With a little bit of effort, I am actually coming out ahead in this situation. By downgrading my account level from No Limit Banking to Day to Day Banking, I will get the full amount of the monthly fee back as a rebate instead of just half ($4.00 on $4.00 instead of $5.00 on $10.95).

(I’m still on the fence about being an RBC customer because of the TFW issue, but that’s a story for another day.)

What changes can you make to to your accounts or spending habits to avoid banking fees?

My Two Cents

My interest in paying down debt, saving, investing, and other money-related topics has really taken off recently. Effectively managing money is something I’ve always been interested in. I was debt-free, minus a mortgage, until the middle of last year when I decided to expand my “side hustle”. Going back into the red was not a pleasant experience. I want that debt gone as fast as possible, so I have upped my saving and debt-abolishing game.

That’s where this blog comes in. I will share my research, interesting finds, my struggles and hopefully my victories, in an effort to keep myself accountable to my plan and pass on some inspiration and information.

Many fantastic money-managing blogs exist out there on the Internet. Most of my favourites are American, making their advice great but not always directly applicable to those of us in the Great White North. I want to start a blog for people like myself – specifically, young, entrepreneurial Canadians that need some help figuring out all of these “adult” things they don’t teach you in school (though they damn well should).

You and me – we can do this. Let’s get a head start on managing our money before we’re staring down 65 and wondering why we didn’t start this process sooner.