I am grateful and amazed at the community that has formed here at Million Dollar Journey over the years.  The encouragement and enthusiasm that you display via the comments and emails is the fuel that keeps this site running.

Million Dollar Journey started in Dec of 2006 with 0 readers… well 1 reader if you count my wife.  Today, we have grown to over 7700 RSS subscribers and have received millions of hits over the years.  As personal finance is still fairly taboo in society, it’s refreshing and humbling to see the number of people who regularly follow my million dollar journey.

As a token of my appreciation, we have some great giveaways this year.  As per the last couple years, the prizes are sponsored by generous companies that I support.  This time around, the prizes are bigger than ever!

Without further delay, here are the prizes for our 3 year anniversary celebration:

1. PlayStation 3 Slim 120GB

Derek, the entrepreneur behind RedFlagDeals, has once again generously offered to sponsor a great prize.  What is RFD?  It’s Canada’s most popular “deal/bargain” portal with millions of visitors per month. If you enjoy finding deals (like I do), then you’ll find great value in RFD, it’s one of the sites that I visit daily.

If you need ideas for Christmas, make sure to check out their holiday gift guide.

Now, back to what you’ve all been waiting for, the prize.  As most of you already know, the PlayStation 3 is not only a top notch video gaming console, it’s also a media center.  It can play your Blu-Ray movies along with the ability to wirelessly connect to your PC  and stream audio/video.

Here are the specs:

• 120GB HDD for storing games, music, videos and photos
• High-Definition Blu-ray player for the best movie experience
• Internet ready with built-in Wi-Fi
• Two USB ports
• HDMI output for 1080p resolution
• Plays DVDs and CDs
• Cell Broadband Engine advanced microprocessor
• DUALSHOCK®3 wireless controller
• Free PlayStation®Network membership

The PS3 slim is actually the media center I’m considering purchasing for my own family room so I’m excited about giving it away to one lucky reader.

2. $100 Shopping Gift Card

Great Canadian Rebates has also generously offered a prize for Million Dollar Journey Readers.  For those of you who don’t know about Great Canadian Rebates, it’s a free portal for online shopping that will allow you to receive cash back on your online purchases.  If you use this portal in conjunction with a cash back credit card, you can end up with a significant discount on your purchases.  Check out my Great Canadian Rebates review to learn more about them.

So what exactly are they offering as a prize?  They are giving away a $100 gift card for this birthday giveaway.  The gift card is redeemable at various popular online stores: Sears, Chapters, Canadian Tire and Home Depot.

How to Enter:

To be eligible for the prizes above, simply:

1. Sign up for the new MDJ Money Tips Newsletter (free).  If you are reading through a feed reader or email and don’t see the signup form, click here.

Sign up for the Million Dollar Journey Money Tips Newsletter absolutely free. We respect your privacy – your information will never be given or sold to third parties. As well, you can unsubscribe at any time.
Name:
Email:

What is the Money Tips Newsletter?

I should have written about this before, but the MDJ Money Tips Newsletter is a free email newsletter that I will send out once or twice a month.

The content will include highlighted articles on Million Dollar Journey over the past couple weeks, exclusive offers for Million Dollar Journey readers, and original content that doesn’t make it to the front page of this blog.

As mentioned above, your privacy is important to us. We will never sell your information to third parties, as well, you can unsubscribe from the newsletter at any time.

The Giveaway Rules:

Lets go over some of the rules. All contestant entries will be shoved into an electronic hat and drawn at random.

1. Only confirmed (new and existing) newsletter subscribers on the date of draw are eligible.
2. To be fair to all contestants, each winner can only win once.
3. Only those with a North American mailing address may enter.
4. Contest will end Sat 5pm EST Dec 19, 2009 and the winners announced shortly after!

Many thanks again to RedFlagDeals and Great Canadian Rebates for sponsoring prizes.

Stay tuned..  there may be more surprises to come!

Good luck!

1. Sales tax on used items

When someone buys a new car they pay sales tax on it. It often works out to thousands of dollars. If that same car is sold a year or two later, the next buyer also has to pay sales tax. In fact every time that car is sold, the person buying it has to pay sales tax even though the tax was paid in full at the time of the first purchase.

One of the reasons I like shopping on Kijiji or Craigslist is so I can avoid paying sales tax. It doesn’t work when it comes to car buying but it’s a great way to buy other things without having to pay tax. The government shouldn’t be double dipping. Used items, including cars, clothing, furniture and other items should be free from sales tax.

Don’t even get me started on the proposed HST for Ontarians. Lets just say, if we ever do get a dog we’re seriously considering the names Dalton or McGuinty.

2. Bank fees

People should not have to pay to keep their money in a bank. Having an account should be free. Basic cheques shouldn’t cost you anything. By placing your money with a bank, you are letting them borrow your money and lend it out to others for a profit. Most banks charge a fee between $9.95-$13.95 per month for an unlimited chequing account. You do not have to pay this fee. Many of the banks have a minimum balance, often as high as $3000 where they will waive the fee. Other banks have a mulit-product rebate where you can get reimbursed on your bank fees by having a certain number of products with the bank.

If you pay bank fees, ask your bank how you can get them removed. If they won’t, there is always PC Financial. I’ve been banking with them for 10 years and I’ve never paid a bank fee, my cheques are free to order and I have unlimited chequing and debits.

At $13.95 a month for unlimited transactions, it may not seem like much but that’s $167.40 a year and $1674.00 over ten years. All for just keeping your money in the bank.

3. Items as ‘investments’

Have you noticed recently there is a trend that people are calling things ‘investments’ that clearly aren’t? I heard someone say the other day, “I couldn’t decide between the two sweaters so I decided to invest in the more expensive one.” A sweater is not an investment! You may have chosen to pay more for a quality item but it’s not about to start increasing in value. I hear this all the time. A car is not an investment unless it’s an antique that’s going up in value. Some items are questionable. I had a friend who collected comic books and swore they were a huge investment. They were probably worth thousands of dollars if he ever sold them. They are technically going up in value. Yet, they still sit in boxes in his basement. I once asked him if he had any insurance on his investment. He didn’t.

We all have pet peeves that drive us crazy. What are some of your financial pet peeves?

Kathryn works in public relations and training for a non profit. In her off hours, she volunteers as a financial coach helping ordinary Canadians with the basics of money management. Her passions include personal finance and adult education. Kathryn, along with her husband and two children live in Ontario.

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Copyright 2009 MillionDollarJourney – All Rights Reserved

My parents are thinking of selling their home and building a new one. They are both in they’re mid 60s and would live in the new house for the next 15+ years. I’m trying to crunch the numbers to see if it makes sense for me to build it for them and rent to them. They would lend me the money from the sale of thier home at whatever interest rate makes the most sense for this plan. I could potentially lose money on the house every year (rent coming up short of the costs) and take a tax write down. At  anytime in the future I could sell them the house at cost so as to not incur capital gains. There is more to it but I’m just getting started. Have you ever thought out a senario like this?

• The current house would sell for about $235k with $180k of that being free and clear.
• The new build is estimated at $215k.
• Market rent would be about $1200-$1300. $1500 would not be out of the question for a brand new place.
• I can get money from our banker at prime.
• The rate my parents would charge would be whatever is best for both of us.

The purpose of this would be to try and set up a mutually beneficial situation where we both are better off. The keys would be tax efficiency and cash flow (might be others I have not figured out yet).

There a few key points to think about, that is monthly cash flow, inheritance, and overall cost to the parents.

Let go through each scenario.

Parents Build Themselves

If the parents build a $215k home, they would be left with a $35k mortgage providing they use the equity from the old home (assume no realtor fees).  With today’s 5 year rates being around 4.19%, the payments would be about $189/mo over 25 years or $262/month over 15 years.  Depending on the financial situation of the parents, paying $262/month +tax/insurance/maintenance is much less than market rent.

Mark Builds and Rents House to his Parents

If Mark were to build the house for $215k and borrow $180k from his parents, he would be left with $35k to either borrow from the bank or cover himself providing he has the cash.   Assuming the same rates as above, the bank payments would be the same.  That is $189/mo over 25 years or $262/month over 15 years.  However, he needs to account for paying back his parents as well.  If his parents were extremely generous and offered the $180k interest free with monthly principal payments only, it would be $600/month over 25 years or $1,000/month over 15 years.  Assuming that market rent is $1,300/month, the property would be barely cash flow positive over  a 15 year amortization (my number one rule).  If Mark is determined to make this work, he would need to contribute a large down payment.

Alternative

An alternative idea not discussed is simply putting Mark on title.  Although this would sound like an ideal scenario, it can get a little complicated as there are tax and legal implications.  More on this topic on another day as it deserves a dedicated post.

Final Thoughts

I believe the primary benefit of this arrangement is that Mark would own the house without having to worry about probate fees when his parents pass away (there is no other tax when gifting a principal residence upon death).  However, there are many drawbacks.  First, the parents would have to pay much more in rent than owning themselves.  In addition, even if the parents paid market rent, the investment property is not cash flow positive after taking into account property maintenance, taxes and insurance.

In my opinion,  it might be best to simply let the parents build their own house and gift the house to the chlid after passing (via a will).  They may face a relatively small probate fee, but no other taxes would be owed *.

* Note that capital gains tax would be payable on the property sale if the house is sold later at a value greater than the value assigned on the date of passing.

Disclaimer:  I’m not a financial advisor, anything written in this post should be used for informational purposes only.

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Copyright 2009 MillionDollarJourney – All Rights Reserved

As I’m not a tax expert, I contacted Tax Guy to help me out with that question.  Here is what he came back with.

If you own shares of a company that are worthless because the company is bankrupt (under the Bankruptcy & Insolvency Act) or is being wound up (under the Winding-Up and Restructuring Act), you can elect to have a deemed disposition and re-acquisition at nil value (essentially you are considered to have sold the shares for $0 and then re-purchased them again for $0).

Even if the company has not officially declared bankruptcy you can still make the election if:

• The company is insolvent (i.e. it has defaulted on its loans and cannot pay it’s debts);
• It has ceased operating (this is different than de-listing or ceased trading);
• The shares have a nil market value (in this case it’s shares, traded on a stock exchange or not are worthless); or
• It is reasonable to expect that the corporation will be dissolved or wound up and will not carry on business in the future

Any of these conditions allow you to claim a capital loss. If the shares ever regain value again, the adjusted cost base (ACB) is $0 and you will have a capital gain when you actually sell them.

A note about de-listing: Just because a stock has ceased trading or has been de-listed from a stock exchange does not itself mean that a deemed disposition can be claimed. It is possible to de-list or cease trading and continue operations.

The Process Of Claiming The Loss

It is important to remember that if you have worthless shares in an RRSP, RRIF or TFSA (registered accounts), then you cannot claim a loss at all.

If the shares were held outside a registered account, then you report the capital loss using Schedule 3 of the Federal Income Tax return. You must also file an election in the form of a written letter indicating that you are claiming a deemed disposition under subsection 50(1) of the Income Tax Act.

There you have it, for all those investors still holding Nortel stock in a non-registered investment account, you can claim the capital loss (assume sold at $0) by using Schedule 3 of the Federal Income Tax Return.

Thanks again to Tax Guy for taking the time to help me out.

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Copyright 2009 MillionDollarJourney – All Rights Reserved

It’s almost the end of 2009 and my net worth growth (along with many others) has been on a steady climb over the months.  Most of the gains this year has been from rapidly appreciating equity markets since March 2009, strong income and, most importantly, savings.  Providing that the markets stay the course through December, our family net worth will be within striking distance of the $400k threshold.  Still a ways to go until the $1 million milestone but movement in the right direction none the less.

Looking at the most recent net worth update below, this past month was especially strong for savings.  This increase was due to my wife receiving a bonus along with a change in my tax liability calculations (behind the scenes).  We had another large drop in my non-registered account due to a volatile penny stock that I own.  Although most of my equity is invested for the long term, I like to set aside some “play” money to take a few chances.

On to the numbers:

Assets: $ 474,550 (+0.86%)

• Cash: $4,500 (+0.00%)
• Savings: $21,500.00 (+30.30%)
• Registered/Retirement Investment Account: $74,000.00 (+0.27%)
• Pension: $27,850.00 (+0.54%)
• Non-Registered Investment Account: $15,700.00 (-4.85%)
• Smith Manoeuvre Investment Account: $52,000.00 (+0.97%)
• Principal Residence: $275,000 (+0.00%) (purchase price)
• Vehicles: $4,000 (2 vehicles) (-20.00%)

Liabilities: $83,200.00 (-2.69%)

• Tax Liability: $3,000 (-0.00%)
• Principal Residence Mortgage (readvanceable): $26,800.00 (-8.22%)
• HELOC balance: $53,400 (+0.19%)

Total Net Worth: ~$391,350.00(+1.65%)

• Started 2009 with Net Worth: $309,950.00
• Year to Date Gain/Loss: +26.26%

Some quick notes and explanations to net worth questions I get often:

The Cash

The $4,500 cash are held in chequing accounts to meet the minimum balance so that we pay no fees (accounting for regular bill payments). Yes, we do hold no fee accounts also, but I find value in having an account with a full service bank as the relationship with a banker can prove useful.

Savings

Our savings accounts are held with PC Financial and ING Direct. We usually hold a fair bit of cash in case “something” comes up. The “something” can be anything that requires cash such as an investment opportunity that requires quick cash or maybe an emergency car/home repair.  We also need cash to cover any future tax liabilities.

Real Estate

Our real estate holdings consist of a primary residence plus a rental property. The value of the principal residence remains valued at the purchase price despite significant appreciation in the real estate market that we’re in.  I will most likely be adjusting the value of the home come the new year.

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Copyright 2009 MillionDollarJourney – All Rights Reserved

Carnival of Personal Finance Thanksgiving Survival Edition @ Fiscal Geek

Making a 6 Figure Income By Working Less than 50 hours a week Part 1: a Look at Your Job @ Financial Blogger

5 Reasons Why You Will Retire Broke and Unhappy @ Generation X Finance

Why Gold could be a Bubble @ Canadian Capitalist

Black Friday Inspired Shopping Strategies @ Digerati Life

7 Tips To Help You Stop Fighting Over Money @ Financial Highway

When Is It Time to Hire a Financial Planner? @ The Sun’s Financial Diary

Be Prepared With An Emergency Kit For Your Car @ Canadian Finance Blog

Why I Don’t Buy Digital Media @ Lazy Man and Money

Why You’re Wrong If You Think Gold at $2000/oz Is Unlikely… or Worse, Just a Bubble @ Money Energy

How to Fix Up Your Resume (guest post) @ Brip Blap

Is my severance tax deductible? @ Thicken My Wallet

5 Four-Letter Words You Should Be Using in Personal Finance @ Frugal Dad

I’m Ashamed of Being Wealthy @ Canadian Dream

Real Estate Short Sales Explained @ Money Smart Life

The Problem With Property Management @ Four Pillars

Plan and Budget for Holiday Spending @ My Dollar Plan

Tax Advantages of Segregated Funds versus Mutual Funds @ Where Does All My Money Go

Are Financial Advisors Worth 1% of Your Savings Each Year? @ Michael James on Money

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Copyright 2009 MillionDollarJourney – All Rights Reserved

I was surprised to see that CIBC is the only bank without any option to waive their fees. I even called their customer service line inquiring about this specific account. I asked if there was any way to have to fee waived, any multi-product discount or a minimum balance required. The representative apologized and said that no, it wasn’t possible to have the fee waived under any conditions with their unlimited chequing account.

What is even more surprising is that President’s Choice Financial is a division of CIBC. I bank with PC Financial and regularly use CIBC machines at no cost. When I put my card in, the screen on the ATM at CIBC welcomes me to President’s Choice Financial. I even deposit cheques and withdraw money at no charge from CIBC ATMs. Why is it then, that they can’t offer their own customers free banking?

I was also surprised to see how complicated eligibility is for the RBC No Limit Banking Account. I understand the idea of a multi-product rebate and agree that it encourages loyalty. I have our children’s RESP accounts at RBC and have a RBC Visa card. It makes me eligible for a multi-product rebate on their Day to Day Banking Account which would give me 15 transactions a month. In order to receive unlimited free transactions I would also have to hold a mortgage or equity line. Fifteen transactions a month is not enough for my daily banking needs.

There is so much information available easily online. I’m surprised with so many other options out there, banks can continue to charge such high fees when their competitors have other alternatives. I understand that some people like having a brick and mortar bank. Internet banking isn’t for everyone. I’ve always been happy with it but I know for the first few months using it, I was a little bit uncomfortable with the idea of virtual banking. It’s been over 10 years now, and I’ve never had an issue. I’ve even ordered bank drafts, deposited US cheques and used my debit card internationally, all without any issues.

If I were to choose a brick and mortar bank today, I would choose one where, for a minimum balance, I could have my monthly fee waived.

The types of people who read personal finance blogs are probably already pretty careful with their money. It wouldn’t surprise me if most Million Dollar Journey readers pay no fees for unlimited banking in Canada. What continues to surprise me is that hundreds of thousands if not millions of Canadians continue to pay these fees when there are other options.

If you are looking for banking options in Canada, you have a choice. If you’re unhappy with your current bank, it’s easy to switch.

Are there other Canadian banks you want to tell us about? Feel free to share in the comments.

Kathryn works in public relations and training for a non profit. In her off hours, she volunteers as a financial coach helping ordinary Canadians with the basics of money management. Her passions include personal finance and adult education. Kathryn, along with her husband and two children live in Ontario.

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Copyright 2009 MillionDollarJourney – All Rights Reserved

• RRSP Portfolio Value: $6,000
• RRSP Contribution: $110/month
• Gross Income: $67,000 (after tax ~$3,220/month) increasing 2.25% per year
• Mortgage Payment: $504 bi-weekly ($50 to property tax) @ 5.4%
• Mortgage Balance: $84,000, 10 years remaining.
• Car Loan: $14,000 @ 5.25% (~$265/month for 5 years)
• Pension can start at age 55 with annual pension income of approximately: $42,000 per year (after tax ~$2600 /month)
• Monthly Expenses (not including debt servicing): $1,400
• Total Expenses: $2,757/month (without RRSP contribution)

With retirement on it’s way, Kayla will have to make a few changes.  I’m of the belief that all debt should be eliminated by the time that retirement starts.  For many, retirement income is fixed, who wants a portion of that income still servicing debt?

Another point I’d like to make is regards to RRSP contributions in addition to pension contributions.  In my opinion, if someone is fortunate enough to have a lucrative defined benefit pension plan, then debt servicing should come before any RRSP contributions.  Once debt is eliminated, I would personally move to maxing out the TFSA, then to the RRSP.  I would go that route because RRSP withdrawals are taxed as income which would be on top of any pension income received during retirement.

Having said that, looking at the financial specs above it seems apparent to me that she should focus on paying down her mortgage.  Even without looking at anything else, paying off the mortgage represents a 5.4% guaranteed after tax return which would be challenging to find anywhere else.  Once Kayla eliminates her mortgage, she will free up about $1,000 /month in cash flow (she’ll still have to pay property tax).  Should Kayla take her $110/month RRSP contribution and put it directly on her mortgage payment, her mortgage amortization would reduce to 8 years. If she really want to retire in 5 years mortgage free, she would need add $300 to her bi-weekly payment.

If Kayla turned 55 today, her car payment would be gone but a mortgage payment would remain.  Her total monthly expenses would be about $2,500 with a monthly income of approximately $2600.  Too close for comfort especially if inflation is added to the expenses over 5 years.  However, when the mortgage is paid off, the monthly expenses would reduce to $1,500/month leaving a healthy cash cushion.  To add to the picture, when Kayla turns 65 and assuming she qualifies, she’ll be eligible for Old Age Security which would give her another$516 /month (in today’s dollars).

In conclusion, it may be in Kayla’s best financial interest to pay off all debts before calling it quits.  It will give her a more comfortable retirement and perhaps peace of mind.  If Kayla were to simply redirect her RRSP contribution to her mortgage, then she could join the retired club in as little as 8 years.  Not exactly freedom 55, but freedom 58 has a nice ring to it too.

Back to you, how would you advise Kayla about her financial situation?

Disclaimer:  I’m not a financial advisor, anything written in this post should be used for informational purposes only.

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Copyright 2009 MillionDollarJourney – All Rights Reserved

1. Faith

The single most important characteristic of successful investors is faith. This includes faith in the markets, in the future, in our free enterprise system, in the ability of good companies to grow their profits, and in humanity.

Successful investors tend to have this confidence and optimism. They see how much humanity has progressed in recent history and tend to see their optimism as realism. They don’t know how things will turn out all right – they just know that they will turn out all right…

2. Patience

The most successful investor, Warren Buffett, often says: “The stock market is a highly efficient mechanism for the transfer of wealth from the impatient to the patient.”

Successful investors tend to focus on having high quality investments and/or advice, and tend to stick with them long term. Part of their belief system is that they don’t know when it’s going to turn out all right – they just know that it’s going to turn out all right.

Struggling investors tend to change their strategy/investments/advice often based on their outlook. For this reason, we consider them to have “STD” – selection and timing disease – the delusion that anxiously searching for the best investment/sector/strategy and timing it right is the key to successful investing.

Studies, such as the Dalbar study, consistently show that the average investor makes only about 1/3 of the return of the investments they own. In other words, 60-67% of lifetime returns are lost by performance chasing, speculative euphoria at peaks, panic capitulation at market bottoms, market timing, buying investments because of recent returns and other similar investing mistakes. These mistakes result from “short term-ism” (short term viewpoint) and cost on average 600 basis points per year (6%/year).

Struggling investors, or as we call them: “investors with STD”, often focus on the cost of investments (fees and taxes), but don’t see the huge cost of their investment disease.

A great example of the problem with “short term-ism” was the markets early in 2009. Did that look like a screaming buying opportunity to you at the time? For patient investors, that was as obvious as King Kong smashing buildings in New York. In our opinion, it was definitely one of the most obvious buying opportunities of the last 70 years and likely the most obvious one during our lifetime. We did publish an article on MDJ in March about “Irrational Pessimism”.

Yet many people that somehow think they are able to time markets (obviously they can’t) missed the early 2009 screaming buying opportunity. By simply having faith, being patient and investing more whenever the market declines, you could not possibly have missed such an obvious buying opportunity.

This was the largest market decline in the last 70 years, which is why it was the best buying opportunity of the last 70 years. Period. If you just have faith and patience that the markets go up long term, you would have had no hesitation in buying more while it is low.

In contrast, investors with STD focus on short term, random market movements, news, chart formations and market timing. They were trying to predict where the market would move next (which is never obvious), so they probably missed the best buying opportunity of our lifetime.

When you compare any 2 investment strategies, you will find that nearly always, the one that results in fewer transactions is the superior strategy. We have been surprised at how often we have noticed this effect over the years.

Fewer transactions are more effective.

This is why, for example, studies consistently show that women are significantly better investors than men.

If studies are ever done, we believe they will show that investors in broad market indexes generally do well, but investors in ETFs will do poorly over time. The ETFs themselves will do fine, but because they are made for market timing and have an average hold of only 12 days, the investors in ETFs will do poorly, in our opinion.

A rather humorous example of this phenomenon happens in families where one person (usually the guy) handles all the investments for both spouses. The portfolio of the spouse (usually the wife) tends to have a higher return than the investing spouse’s portfolio. This happens because he tends to trade more actively with his own portfolio. This tendency applies to investment advisors as well, where their spouse’s account usually has a higher return than their own.

Just like amateur golf, successful investing is more about avoiding mistakes than about making that great shot. As one advisor put it, “My wife and I have almost always had the same investments, except that I’ve done more stupid things in my account.”

The key point is that successful investors are patient with their investments, choose them well and have a long term view.

3. Discipline

Discipline is the decision to keep doing the right things. It is the decision not to do something wrong.

Struggling, STD investors tend to ask: “What’s working now?”, while successful investors care about what’s always worked over time.

Discipline is part of why it is so important to have a long term financial plan and why we don’t take on clients without a financial plan. Successful investors are goal oriented, and therefore planning driven. Struggling, STD investors are market-oriented, and therefore performance driven.

When you know your “number” – the nest egg you will need to have the retirement you want – you tend to be focused on long term financial freedom. This makes you far less likely to be thrown off course by a bear market or market bubble, or the myriad of financial events that happen in the world or in your life. Fundamentally changing the portfolio when your goals have not changed is virtually always wrong, and will depress returns.

If struggling, STD investors have an advisor, they tend to think their advisor’s main job is advice on the selection and timing of investments. Successful investors, however, usually realize that the #1 job of their advisor is not investment A vs. investment B, but to modify the natural tendency of the investor to behave inappropriately.

Behavioural Finance books list many irrational behaviours that result from the logical shortcomings of the human mind. Successful investing requires the discipline to prevent these mistakes.

In short, the behaviour and the belief system of the investor are the key factors in superior lifetime investment returns. Struggling investors are usually afflicted with “Selection and timing disease” (STD), while successful investors tend to have faith, patience and discipline.

* This article is based on our personal observations over the years and the writings of Nick Murray, a retired advisor that I consider to be a mentor. Much of our investment philosophy is based on his principles.

Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching.  If you would like to contact Ed, you can leave a comment in this post, or visit his website EdRempel.com.  You can read his other articles here.

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Copyright 2009 MillionDollarJourney – All Rights Reserved

One thing that caught my eye on the lease payment calculator was that the monthly payment was higher than I had expected. As a lease is basically paying for the depreciation of a vehicle, I assumed that the interest rate quoted is applied to the purchase price minus the end value. However, using a simple loan calculator, the numbers don’t match.

So after some digging, I figured out why my calculations were off. The lease payments are calculated a bit different where the deprecation AND lease fee must be paid for.

What is a lease fee?  Basically, the formula is:

Lease Fee = (Purchase price + Residual Value) * Money Factor
Money Factor = Interest rate on the lease payment divided by 2400.

Lets do an example on the Honda CRV and pretend for a moment that I pay full price for the vehicle.

• MSRP + freight/PDI: $29,880
• Residual Value: $15,276.60 (after 3 years)
• Depreciation over 3 years: $14,603.40 ($405.65/month)
• Annual Lease Rate: 4.9%
• Money Factor = 4.9/2400 = 0.00204
• Lease Fee = ($29,880+15,276.60) * 0.00204 = $92.12/month
• Lease Payment = $405.65 + $92.12 = $497.77/month * sales tax

As you can see, before sales tax, the payment is approximately $498/month which is higher than having a loan (@4.9%) for the depreciation only which would work out to be around $437/month.  In fact, paying $498/month is basically paying 4.9% on $16,640 instead of the stated deprecation $14,603.

In other words, the $498/month payment represents a 14.2% interest rate on the depreciation over 3 years.

When it comes down to it the important thing is to look at the big picture when comparing purchasing and leasing.  Ask yourself, what is the total cost of the vehicle after accounting for the payments, sales tax and other fees?

In this example, assuming that the leased CRV is bought out after the 3 years, the total cost of the vehicle would be around $37,740  However, if this vehicle is financed over 3 years at the same 4.9%, the total cost would be $36,488 (with $0 down, but double the monthly payments).  A difference of around $1,250 with both at the same interest rate.

The benefit of a lease is obvious, lower monthly payments and the “benefit” of returning the vehicle after the term.  However, the lower payments usually result in a higher overall cost in the end.

If you’re interested, here is a previous article on how to reduce your car lease payments.

Are you one of those investors for whom things just seem to always work out well? Getting superior long term returns seems to take little effort. Whatever strategy you use seems to eventually work. You don’t spend much time or effort, yet most of the time you are feeling quite confident about your investments.

Or are you the type of investor who always seems to struggle? It seems everything you buy goes down right after you buy. When you finally sell, they take off. And the investments you hold long term mostly underperform.

We have often encountered both these types of investors. Struggling investors are far more common. They usually have trouble believing that many investors outperform with little effort. Those that find investing effortless just shake their heads at the frantic activity of struggling investors. This applies to both professional and amateur investors.

Why is it that investing is so easy for some and for others it is always a struggle?

We have found that the biggest reason for this difference is an underlying belief system of successful investors. This belief system tends to result in effective behaviour. The success of the investor tends to result more from their behaviour than from the specific investments they own.

From our years of experience, we can usually get a good idea of how successful an investor is just from talking with them and identifying their belief system, even if we know nothing about their investments.

There are 3 main principles that tend to make up the belief system of successful investors:

1. Faith

The single most important characteristic of successful investors is faith. This includes faith in the markets, in the future, in our free enterprise system, in the ability of good companies to grow their profits, and in humanity.

Successful investors tend to have this confidence and optimism. They see how much humanity has progressed in recent history and tend to see their optimism as realism. They don’t know how things will turn out all right – they just know that they will turn out all right.

This faith tends to give them a long term focus. They don’t need to keep searching for some great investment, do all kinds of transactions or get into the latest fads, because they are confident that their investments and the markets will perform well over time. Whenever their investments are down, this same confidence allows them to just see it as an opportunity to buy more. They tend to get good advice or choose their investments carefully, but then hold them a long time.

How can they outperform so easily? All you need to do to outperform is to own high quality investments for the long term and generally buy more whenever they are down. That’s all! The markets produce a good return over time and so should your investments if they are high quality. At least twice each decade, there will be a significant down market, which is your opportunity to invest more at lower prices. This alone means your return will be higher than the investment itself.

This is usually done with high quality mutual funds, broad index funds, or a well-chosen, diversified portfolio of stocks. We do it with “All-Star Fund Managers” that have all beaten their indexes long term and that we believe are the world’s smartest investors available to us.

Whichever specific investments they have, successful investors tend to have a calm confidence in their investments. The reason this is so important is that one of the single most important factors in investing is to stay invested and keep investing at market lows.

Many investors will make decent returns during a bull market, but then make the #1 mistake in investing by selling after the market tanks and losing years of growth. By selling, they miss the inevitable recovery. This #1 investing mistake is a direct result of not having faith.

Confident investors know that market declines happen, but since the markets have historically risen about 70% of years, declines are never probable. They are never focused on avoiding the next 20% down tick; but rather on being invested during the next 100% up tick.

Meanwhile, struggling investors tend to have a general anxiety about investing, a fear of losing money and a general pessimism resulting from their lack of faith.

They are constantly searching for the right investment, the right time to buy and sell, and use charts to try to market time effectively. They tend to believe that recent trends will continue and tend to “follow their gut”. Most of their information is free information from the news, internet, or other investors. They are always concerned about the “apocalypse du jour” (next crash, Peak Oil, deflation, inflation, etc.), anxious about missing opportunities, scared of losing money, and usually have a grossly exaggerated view of how risky the markets are. They are often “performance maniacs”.

Their lack of faith leads them to many behaviours that tend to reduce investment returns, such as frequent trading, market timing, performance chasing, trend following, lack of diversification, and most significantly, getting caught up in bubbles or selling after a crash.

The key point is that because successful investors have faith in the markets and their investments long term, they focus on participating effectively in the long term market growth. Struggling investors, with all their activity, end up trying to outguess random stock movements.

* This article is based on our personal observations over the years and the writings of Nick Murray, a retired advisor that I consider to be a mentor. Much of our investment philosophy is based on his principles.

Ed Rempel is a Certified Financial Planner (CFP) and Certified Management Accountant (CMA) who built his practice by providing his clients solid, comprehensive financial plans and personal coaching.  If you would like to contact Ed, you can leave a comment in this post, or visit his website EdRempel.com.  You can read his other articles here.

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Dividend investing can mean a couple things. It could include investing for yield or dividend growth. Investing for yield is simply basing purchase decisions on the dividend yield of the stock. The higher the percentage yield, the better. The Dogs of the Dow strategy comes to mind for this one. In my opinion, basing investment decisions on yield alone is a dangerous game. More times than not, an abnormally high yield simply means an unsustainable dividend. When the dividend payouts become too much for the company to carry, dividends are typically cut dragging the stock price with it.

Investing for dividend growth is making purchase decisions based on the history of growing dividend payments over the years.  Although the initial purchase yield may be lower, it’s a great strategy for buy and hold investors as it gives raises to loyal shareholders over time.  Buying and holding dividend growth stocks is more in alignment with my beliefs and is one of the key components in my dividend investing strategy.

Having explained the two strategies, I use a combination of the two when making purchase decisions.  I narrow down the list of strong dividend companies based on a history of dividend growth, but only make my purchase when that particular stock reaches a yield threshold.

How do I determine the yield threshold?  By going back through the history of dividend payments and figuring out the average yield over the years.  Once that is determined, I usually pick a yield that is above average which then can be converted into a target stock price.  From there, I can watch the market (or use alerts) to indicate that it’s time to pick up a new position.

The Process of Finding Dividend Stocks to Buy

1. Pick your stocks. Find strong dividend stocks with a history of increasing their dividends over the long term.  A great place to start is the dividend achievers list.
2. Calculate the average yield. Do your research and figure out the average stock yield over the past 5 or more years.  One tool for this is Yahoo Finance historic prices tool.  You can select “dividends only” which will list dividend distributions over the past several years (depending on the stock).  Another way, which may be easier, is to use BigCharts.com and select “Lower Indicator” to be “Yield”.  It will graphically show you what the yield has been in recent history.
3. Pick your buy point. Select the yield at which you would be comfortable purchasing and convert that into a stock price.  For example, if Royal Bank’s average yield over the past several years has been around 3.5%, I may pick a buy point of 5% yield.  The current dividend is around $2/share which would equate to a target buy price of $40 ($2/0.05).
4. Use stock alerts. As we are all busy people, it’s a challenging task to keep your eye on the market which is why I use stock alerts.  There are various ways you can do this such as MSN money alerts, an Excel spreadsheet (with stock addin), or even a Google Spreadsheets (built in stock price functionality).  MSN Alerts are prehaps the most convenient if you are a MSN messenger user.  The spreadsheet option can provide more details, but requires that you check the spreadsheet periodically for buy signals which may or may not be convenient.

Although not overly detailed, that’s a fairly comprehensive overview on my dividend picking process.  For those of you who are fairly new to the blog, here my most recent dividend portfolio update.

I know there are a good few hardcore dividend investors reading this, do you have anything to add?

In a future post, I will put more details into how I use spreadsheets for stock alerts.

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Making a Dinner List

This might seem simple, but a dinner list is a key step in organizing the food you eat. We keep our list on the fridge and it normally goes two or three weeks into the future. The advantages of making such a list are:

• Organizes grocery shopping, less trips to the store and less food waste.
• More varied menu as you can ensure you don’t fall back on old staples, and can try a new recipe every week or two.
• By putting healthy choices on the list you are more likely to eat them.

Example: Writing a dinner list for the next two weeks. Take stock of what you have in the fridge, freezer and pantry, make a note of any eating out arrangements and then fill in the blanks making sure you make use of what you have in stock. Now write your grocery list based around what you’ve decided to eat.

If you are not big on cooking at home and are thinking this doesn’t apply to you, then think again. Eating out is not only costly, it is generally not good for your health. Fast food, obviously, is bad for you, but even food in decent restaurants is not the best. Ever wonder why restaurant food tastes so good? It is because it isn’t good for you; you are certainly eating more sodium and fat than you would be with a home cooked meal. The key to eating well is to eat food that is tasty and relatively healthy. If you are interested in money then presumably you want to be around to spend it in the future, so think about the quality of the food that you feed your family.

If you throw in a few healthy choices then don’t feel guilty about your less healthy choices. Aware that we eat too much meat, we try and make one day a week vegetarian; similarly, we try and alternate fish and meat throughout the rest of each week.

For most people, dinner is the main meal of the day, but you can, of course, make lists of breakfasts and lunches depending on your lifestyle.

Setting a Grocery Budget

Setting a budget for groceries is a very effective way of saving money, and you won’t even notice a difference in what you eat.

If you don’t already have a grocery budget then spend at least two months tracking every penny spent on food for your household – if you’re really into it you can break it down into different categories; set up a spreadsheet and go wild. Once that is done you can decide upon a suitable figure for your monthly budget.

Combined with a dinner list, a budget is a powerful tool. No more last minute decisions about what you are going to have for dinner, decisions that involve a quick $40 run to the store.

Armed with your dinner list you can do a “big shop”, knowing that what you will buy is going to be eaten, thus eliminating waste. You also won’t mind when you see the total at the checkout because it is covered by your budget.

As you get towards the end of the month you might find that you’re running out of budget money. This is when you can get creative with the food you have left, or “eat the freezer” (see next item). Once you’ve got the hang of budgeting, you will make sure you save enough for perishables needed at the end of each month.

Some months are more expensive than others, and you can fine tune your budget to cater to this. We buy fruit in the summer which we freeze, so we try and save $10 a month from September to June to cover this expense. December is a big month for food so you might want to bump up the grocery budget a little for that month. Any leftover money can be carried forward to the next month, and if you build up a big surplus then you can give yourself an extravagant treat.

Use your Freezer

Most people use their freezer to store food that, more often than not, will end up getting thrown out; this is a really expensive way of wasting food and energy. Do not be one of these people; keep your freezer full and organized, and make it earn its keep.

Whether you have a separate freezer or one as part of your fridge, here are some tips on making it work for you.

• Make an inventory of what’s in your freezer before making a dinner list.
• Make sure you eat foods before they get old by adding them to your dinner list.
• Do not let items get buried and forgotten.
• Label and date items which aren’t obvious.
• “Eat the Freezer” towards the end of the month when the budget is running low or the freezer is full of goodies.

Other Tips

• Scan the flyers in your local paper, and if you’ve room then bulk buy items on sale. Only buy items that you need and you know will keep.
• Use coupons wherever you can for items you regularly buy; coupons are free money.
• Comparison shop for items you buy regularly. The prices of meat, fish and dry goods, for example, can vary wildly.
• Buy in bulk and wrap items in meal-sized packs for freezing. This works well for meat and fish.

Combining a dinner list, a budget and efficient use of your freezer can simplify your life. You’ll know every morning what you’re having for dinner so take out what is necessary from the freezer and it will be thawed by the time you get home. A friend of mine found himself on the phone to his wife every day as he drove home, arguing about what they were to have for dinner. Each conversation inevitably led to a trip to the store; and such shopping trips are rarely money savers. My friend is now a little more organized, and finds the few minutes his family takes to prepare a dinner list is saving him time and money, and cutting down on arguments with his wife!

Remember not to be too hard on yourself. The aim of the above is to save a little money and time, and to eat a little better. Be flexible and change items on your dinner list according to your mood or what’s in the fridge. If you go over your budget don’t sweat it.

Being better organized with the way you eat and shop will mean less time spent grocery shopping, some light relief for your pocketbook, and maybe even a healthier lifestyle for you and your family. You’ll also be doing the planet a favour by driving less, wasting less, and making better use of your freezer. Remember that in North America we waste more food than anywhere else on the planet. Not only is this shameful, it is also a huge waste of money and resources.

Happily married and childless by choice, Rigbee lives in the Okanagan in BC. He enjoys gardening, cooking and learning about retirement and estate planning. When not thinking of ways to retire before 55, Rigbee works as a web site designer and can be found at Seahorse Solutions.

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This has recently changed however with a new bill introduced for employment insurance for the self employed.  This bill extends to maternity, parental, sickness and compassionate care leave for the self employed.

According to The Telegram, here are some of the details:

..entitled the Fairness for the Self-Employed Act, would provide the following:

Maternity benefits of up to 15 weeks for mothers, beginning up to eight weeks before the expected birth date.

Parental benefits of up to 35 weeks for biological or adoptive parents while they are caring for a newborn or newly adopted child; they may be taken by either parent or shared between them.

Sickness benefits of up to 15 weeks for those unable to work because of sickness, injury or quarantine.

Compassionate-care benefits of up to six weeks for those who have to be away from work temporarily to provide care or support to a family member who is gravely ill with a significant risk of death.

The article goes on to state that the self employed individual would have to pay the same premium as a salaried worker.  However, I assume that the business would have to cover the employer portion of the EI premium.

For example, the maximum insurable earnings for 2010 is $42,300.  The employee rate is 1.73% ($731.79) with the employer rate being 2.422% ($1024.51).  If a self employed person were to opt into the employment insurance program, I would suspect that they would have to pay the full 4.152% or $1756.50 per year.

Another important point is that self employed individuals can also opt in or out of the program at the end of any tax year unless they have claimed benefits.  If they have claimed benefits, they must continue to pay EI premiums as long as they are self employed. Depending on how long term the business is expected to last, paying the premiums can get expensive.

I may be 100% self employed someday and it’s always comforting to know that there is a safety net out there.

What are your thoughts on employment insurance for the self employed??

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Is my hand-drafted will valid? @ Thicken My Wallet

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Consumer Protection @ Four Pillars

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What is a Dividend Reinvestment Plan? @ My Dollar Plan

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I asked myself recently, “What do I really believe about money that may be keeping me from living my life to the fullest?”

Things I know for sure:

1. Time plus growth equals wealth. The miracle of compound interest makes mathematical sense. Saving 10-15% of your income invested for long term growth slowing and incrementally over your working years may be the boring path to financial success but it works.
2. Spend less than you make. Live below your means.
3. Paying yourself first and automatically makes saving nearly effortless.
4. Debt hinders cash flow. Save up for what you want. Pay cash when possible.

My limiting beliefs about money:

1. Money equals security and security brings happiness and contentment.

Studies have been done to show that as long as needs are met and people have a little bit more to do with as they wish, happiness does not exponentially increase with wealth. In fact studies of lottery winners seems to suggest the opposite might actually be true. The key to being secure is having enough money and a little bit more for financial margin.

2. Thinking and talking about money is wrong. It should remain personal and private.

I’m a fairly frugal person but most people in my life wouldn’t know. They might be surprised to learn how frugal I really am. Most of our frugal choices affect only us. We live in a small house, drive one car, rarely eat out, make food from scratch and buy and sell on Kijiji. Yet I almost never tell people about our financial choices except to say we choose to live simply because it gives us the freedom to a live a more balanced life.

I still find it difficult to talk about money without fearing that others will think I’m cheap, shallow and without class. Yet, as I open up more with more people about financial issues, people are beginning to open up to me. Just recently I was at a conference and began a conversation with someone about the some of the struggles of living on a variable income. At the end of the conversation, she said, “I’m so relieved you talked so openly about this. Money is such a taboo subject for so many people. I really needed to talk about this but I didn’t want to be the one to bring it up.” I know that talking about money isn’t wrong but every time I still feel a bit vulnerable and exposed.

3. There are a limited amount of resources in the world. The more I have, the less someone else has.

I’m stuck on this one. I know somehow it isn’t true but I can’t seem to talk myself out of it. I can tell myself that if I had more I could give more and do more, but I confess it’s this limiting belief that holds me back the most.

Money is more than coin and paper currency. It carries with it themes of power, prestige, security, value, net worth and self worth. There are things about money you may believe that aren’t true and could hinder your financial success.

Have you asked yourself the same question: What do you believe about money that may not be true and could be holding you back in life?

Kathryn works in public relations and training for a non profit. In her off hours, she volunteers as a financial coach helping ordinary Canadians with the basics of money management. Her passions include personal finance and adult education. Kathryn, along with her husband and two children live in Ontario.

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I’ve been a do-it-yourself DRIP investor for almost a decade.  I started as an undergrad and over the years have refined my DRIP investment systems and strategies.  If I were starting now, I would begin my research with the following ranking of Canadian DRIP programs.  For information on enrolling in a DRIP, see my step-by-step guide on commission-free investing.

I have given the most weight to discounts, followed by history of dividend growth, the size of the minimum amount optional cash purchase and finally yield.  Why these criteria?  First, getting a discount to purchase stock that already costs you nothing in commissions is just like getting free money, and since it’s reinvested, all the better.  Second, Since most DRIP’ers are long-term buy-and-hold investors, dividend growth is going to be one of the surest factors in the success of your investment.  Finally, yield is informative regarding today’s purchase of the stock, but is also the least reliable indicator since it is merely an effect of the stock’s current price and in itself may not signify anything long-term.

I have also specifically chosen to limit the list to DRIPs that have no, or very low, minimum amounts for optional stock purchases.  That means this list does not include any DRIPs that require $250 or more for a minimum stock purchase.  This is my own judgment call, since most regular DRIP investors have been known to invest smaller amounts more regularly through dollar-cost-averaging rather than large lump-sums.

Top 12 100% No Fee, No- (Or Low) Minimum OCP Canadian DRIPs

With Discounts

1. Bank of Montreal (TSX: BMO) – up to a 5% discount on reinvested dividends; excellent, regular dividend growth. No minimum amount for optional cash purchases.
2. Enbridge (TSX: ENB) – 2% discount on reinvested dividends, excellent dividend growth with yearly increases; NO MINIMUM.
3. TransCanada (TSX: TRP) – 3% discount; consistently and reliably raise their dividend yearly; $50 minimum.
4. CIBC (TSX: CM) – 3% discount; usually increases dividend twice a year, except throughout this last financial crisis; $100 minimum.
5. Bank of Nova Scotia (TSX: BNS) – 2% discount, excellent dividend growth, which has seen twice yearly increases for the last three years; $100 MIN.

No Discounts

1. TransAlta (TSX: TA) – TransAlta used to maintain the same dividend for years with no increase, but that appears to be changing, with an increase in 2008 and again in 2009, surprisingly, despite the credit crisis.  No minimum.
2. Emera (TSX: EMA) – This electricity generation company consistently raises its dividend and there are modest growth prospects for the company, as well. $25 minimum.
3. BCE (TSX: BCE) – These days analysts seem to buy BCE not for its growth prospects, but just for the yield. The stock shows some growth of dividends; these were not increased yearly between 2001-2006, but have been since then (save the period during which the Ontario Teacher’s Pension Plan was in the process of taking them over).  The dividend was last increased August, 2009. No minimum.
4. Telus (TSX: T) – Between 2002 and 2005, Telus did not increase its dividend, but since 2006 there has been yearly dividend growth. $100 MIN.
5. Suncor (TSX: SU) – Suncor is another top-notch Canadian company, but the stock has a low yield.  Because of its potentially greater growth prospects right now, I’d rank this one slightly above IMO, despite the higher minimum.  Dividends are increased somewhat regularly, with the most recent increase being September 2009. $100 minimum.
6. Imperial Oil (TSX: IMO) – Imperial Oil is an excellently run company with great assets, but like Suncor, has a low yield.  Dividends have been raised somewhat consistently over the years, with it looking a bit better in the last five or so. $50 minimum.
7. Bell Aliant (TSX: BA.UN) – Similar to BCE, little growth is expected in this stock itself, but investors like it for the distribution.  After 2011, it will convert back to a corporation and might see a small dividend cut.  There has been modest distribution growth, but no more is expected before 2011.  $25 MIN.

This list is by no means a complete list of all Canadian DRIPs, but these are undoubtedly some of both the biggest and most popular plans.  These stocks are frequently discussed in programs on BNN and also comprise some of Canada’s largest companies and employers.  You can invest in U.S. DRIPs, too, but the process is a bit more complicated and requires you to have an American bank account or a chequing account drawn on U.S. dollars in Canada.

If a company you like isn’t on the list, it is probably because it does not have a DRIP (in the full sense of both free direct purchase and dividend reinvestment), or, as with many of the income trusts, the minimum monthly or quarterly required amount for purchase is high, such as $500 or even $1000 in some cases.  I have tried to make the list as up to date as possible, but if you notice an error, please let me know.

Best DRIPs For Your Money

The best bets for DRIPs, assuming you like the companies as long-term investments, are the top 5 that also have discounts on the reinvestment of their dividends.  Why pass up “free money”?  That being said, companies change their discount offerings based on the market, so it is not uncommon to see reductions, increases, or even suspensions of the discount.

If you’re new to DRIPs, start your research with this list.  You might also want to check out the guide I wrote on how to get started in commission-free, fee-free investing for more specifics on how to enroll.

This article is a guest post from Clare, a self-taught DIY investor and founder of MoneyEnergy, a Canadian personal finance and investing blog.  Clare also writes for Personal Dividends.  You can subscribe to her RSS feed here and follow her on Twitter.

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So it’s Friday afternoon and I’m lined up (with my family) to get the H1N1 vaccine for the toddler. After the 5.5 hour wait (yes hours), I decided to drop my family off at home and run a few banking errands at the nearest BMO branch. After making the various bank transactions, I headed home to settle away for the night.

The next morning, I decide to do some online banking so I instinctively head to the counter top where I always leave my wallet upon entering the house. However this time, it’s no where to be seen.

“No worries, it’s around the house somewhere” I said to myself.

With that, I went to the possible wallet locations such as my jacket, office, laundry and even searched through the kids toys. Still no where to be found. As I knew that I used my wallet the evening before, there were very few options as to where it could be.

I’d like to say that I’m a positive person, but a feeling of panic started to well up in the pit of my stomach. I started to assume the worse. What did I have in the wallet? Who do I need to call to cancel all my credit and debit cards? Which bills use automatic payment via credit card? What about my prepaid mastercard? ID’s, MCP and cash!

While in the midst of my melt down, the phone rings and it’s the police! Luckily, an honest person found my wallet on the ground outside the BMO branch and brought it to the police station after they couldn’t get in touch with me via phone. When I went to pick it up, I was thankfully given the contact information of the samaritan which I used to offer a small reward as a token of my appreciation.

Although my missing wallet situation worked out, what if I wasn’t so lucky? Here are some ways you can mitigate the catastrophe in the case of losing your wallet/purse:

1. Keep non essential cards out of the wallet/purse – For example, if there are credit cards or bank cards that you don’t use often, or even store cards that are seldom used, keep them at home.  I am an air miles collector, but I keep my air miles number in my cell phone but the physical card at home.
2. Record all essential information – Credit/bank card numbers, expiry dates and customer support numbers. Keep it all recorded and in a safe place.
3. Use a Service – There are services out there that keep all your card numbers in once place and make the cancellation/renewal phone calls for you.  However, this service can be replaced by simply keeping track of all your information yourself.

Back to the original question, have you lost your wallet or purse before?

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Copyright 2009 MillionDollarJourney – All Rights Reserved

Seems that there was quite a bit of interest in the book “Super Trader” as there were numerous entries.  Out of all the entries, 3 were randomly chosen as winners of a free copy.  Here are the winners:

1. Linda
2. Jeff W.
3. Desmond C.

Top 5 Posts of October 2009

1. How Alternative Minimum Tax (AMT) Works - With the big hype about the tax efficiency of dividend income, the AMT makes sure that the government gets their share.
2. Prepaid Credit Card Comparison - After receiving a generous prepaid credit card as a gift, I wrote a review discussing the merits and pitfalls.
3. Tips for buying and selling on Kijiji - Staff writer Kathryn discusses some tips when doing business on Kijiji.
4. Why Don’t Financial Planners Plan Finances -  This article lists various reasons why financial planners don’t create basic financial plans for their clients.  What do you think?
5. Creating a Frugal Halloween – Even though Halloween has just passed, here are some great tips for Halloween in future years.

Top Referrers

1. Canadian Capitalist
2. Canadian Money Forum
3. The Globe and Mail
4. Four Pillars
5. Frugal Dad

Top Comment Contributors

• cannon_fodder
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Copyright 2009 MillionDollarJourney – All Rights Reserved

Canadian consumers that did redeem coupons saved over $134 million dollars.

This sounds like a lot of coupons redeemed, but when you calculate the amount of unredeemed coupons it is astounding.

With an average face value of $2.02, the amount of unredeemed coupons is approximately $7 billion dollars.

Some reasons why Canadians do not redeem coupons?

Coupons are not for all consumers. There are several reasons why consumers do not use them.

Cutting them from magazines or newspapers, printing them from various websites like, Grocery Alerts , or sorting them from the mail is time-consuming. It takes time and effort to clip coupons and organize them. Having to carry them to the store is too much of a hassle for many shoppers, whether they save a few dollars or not. Most consumers could not be bothered.

Another possible reason why some Canadians might not redeem coupons is that they might spend more money. A coupon’s purpose is to entice shoppers to try a new product. Some consumers are brand loyal and do not wish to switch brands to save some money. The discipline required to not spend additional money may be lacking from some shoppers.

Coupons are typically for name brand products for items such as Tide and Sunlight. If a family on a budget and needs to choose between Tide when using a coupon and the store’s private label brand, the final price could show that the private label brand is cheaper even if the coupon is redeemed. Therefore, using a coupon would not be beneficial

When I was a teenager and went grocery shopping with my mother, I always saw the people that redeemed coupons and I perceived them as being “cheap.” The possible embarrassment or being labeled as “poor” or “cheap” is why some people don’t use coupons. The stigma attaching to using coupons probably still remains, especially at long lines at the grocery store when someone is trying to redeem double coupons.

Some Canadians still redeem coupons

However, the recent recession has changed the general public’s mind when it comes to redeeming coupons. In tough economic conditions, families are forced to stretch their budgets further. This includes redeeming coupons on everything from oil changes to clothing stores to laundry detergent.

Thanks to the Internet, several grocery stores (Real Canadian Superstore, Save-on-Foods, Safeway Canada) have added coupons to their websites and new websites have propped up to aid in gathering more coupons.

The fact that more and more merchants are offering coupons shows the demand for them.

Final Thoughts

Personally, I carry a grocery coupon binder (just a simple tupperware container), that organizes all my coupons into different categories for easy redemption.

I have had terrible experiences at stores explaining that they do not accept photocopied coupons and when you inform the cashier that they came from a retailer’s website or from our website, it does not make a difference. Speaking with the manager at the local Save-On-Foods if the coupon came from the retailer and that it has a valid bar code, a valid expiration date, and a valid Canadian redemption address they typically redeem the coupon. This is something to look out for if a cashier or merchant ever refuses to take your coupon. Just explain that the printed coupon has everything they need to redeem.

It is not a lot of money saved typically, but I do find the coupons add up when you combine them when an item is on sale.

Here is a recent transaction.

This copy of the receipt shows that I saved 75 cents off the Glad Wrap. This does not sound like much money, however, since the item was on sale at $2.99 using the coupon saved me an additional 25% off the sale price.

How do you tend to use coupons? Do you find them more hassle then the savings?

* – http://www.couponscanada.org/index.html

Author’s Bio: The author is Steven Zussino, Founder of Grocery Alerts Canada (http://www.groceryalerts.ca/) – Home of grocery deals and money saving coupons. He enjoys personal finance and saving money in beautiful Victoria, BC.

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Copyright 2009 MillionDollarJourney – All Rights Reserved