Starting July 2nd, you can now catch me weekly on CBC radio nationwide! Tune in Thursday's and please check your local station for air times. Cities included are: Whitehorse, Winnipeg, Victoria, Toronto, Quebec City, Regina, Vancouver, New Brunswick, Ottawa, Calgary, Thunder Bay, Edmonton, Montreal, Windsor, Charlottetown, Halifax, Cape Breton, and St. John's.
I'll still be in studio with the fabulous Peter Brown for Edmonton's Radio Active every Thursday at 4:10 MST. Over the summer, Peter and I will be answering YOUR financial questions. Please email me at wealth@kelleykeehn.com if you have a money problem on your mind.
Monday, July 6, 2009
Tuesday, June 23, 2009
Intelligent frugality tip #3 - go out for dinner but drink at home
Even the recession won't force me give up my summer cocktails! And when did prices skyrocket for a glass of wine at a restaurant?
This summer, consider enjoying the outdoor patios of your city, having a meal out now and then, but enjoying your beverages (when possible) at home. For the price of one glass of wine at a restaurant, you can purchase nearly an entire bottle to enjoy with your friends or loved ones in your own back yard.
And it goes without saying, please enjoy responsibly!
This summer, consider enjoying the outdoor patios of your city, having a meal out now and then, but enjoying your beverages (when possible) at home. For the price of one glass of wine at a restaurant, you can purchase nearly an entire bottle to enjoy with your friends or loved ones in your own back yard.
And it goes without saying, please enjoy responsibly!
Friday, June 19, 2009
Intelligent frugality tip #2 - valuing your time.
Do you know what your time is worth? I see so many thrifty individuals proudly wearing their deal seeking badges, but some times I shake my head at their efforts when they forget to factor in the tangible value of their time.
I had a friend the other year, who's annual income is over $100,000, brow beat a consignment store for 30 minutes on a dress that cost $20 down to $10. As she told me the story, she was quite proud of herself until I pointed out that she's paid roughly $50 an hour, so that 30 minutes cost her $25 to save $10. Not intelligent frugality as far as I'm concerned.
What's the real cost of that deal? A family member of mine drives all over town and miles to get the "best" price on gas. He too wears his barging finding skills as a badge. As a very successful business owner, I calculated that his hourly wage is about $98 an hour and he'll often use up 40 minutes in traffic to save a few dollars at the pump.
Watch for discounts even after you buy! One case of intelligent frugality that impressed me was that of a friend's son. He was a student and had some extra time on his hands. He saved up for a big screen TV to the tune of about $2,000. When he bought it, he asked if it went on sale, would he then get the sale price? The manager told him that yes, if it dropped down within 30 days after he purchased it, they'd refund him the difference. It only took a little time to pay attention to the flyer that came in the mail and this fellow found a sale price twice in the month and the cumulative refund was over $150 which he then used for a lovely dinner out with his girlfriend. Even if he had been earning a sizable hourly wage, the few minutes it took to keep an eye on the flyers which came in the mail anyway and the relatively small hassle of revisiting the store for the refund is well worth a sizeable savings.
Hire it out! A smart spending decision, even in a recession, is to consider that you can hire out. You might think hiring a cleaning company for your home is extravagant, but consider all you could do if you had a couple of extra hours a week? If you're earning say $30 an hour and a cleaner is $20 an hour, this could be a wise spending decision. You could use the free time to upgrade your education, have more time with your children or take a much needed break. If you're not earning enough to justify the cost, start a networking group with your friends and see if you can swap services that the other despises. You might love cooking and making a little extra each week to prepare frozen meals for one friend that would enjoy returning the service by painting your deck could be a winning proposition.
Remember to know your worth and value your time - it's just as precious as money!
I had a friend the other year, who's annual income is over $100,000, brow beat a consignment store for 30 minutes on a dress that cost $20 down to $10. As she told me the story, she was quite proud of herself until I pointed out that she's paid roughly $50 an hour, so that 30 minutes cost her $25 to save $10. Not intelligent frugality as far as I'm concerned.
What's the real cost of that deal? A family member of mine drives all over town and miles to get the "best" price on gas. He too wears his barging finding skills as a badge. As a very successful business owner, I calculated that his hourly wage is about $98 an hour and he'll often use up 40 minutes in traffic to save a few dollars at the pump.
Watch for discounts even after you buy! One case of intelligent frugality that impressed me was that of a friend's son. He was a student and had some extra time on his hands. He saved up for a big screen TV to the tune of about $2,000. When he bought it, he asked if it went on sale, would he then get the sale price? The manager told him that yes, if it dropped down within 30 days after he purchased it, they'd refund him the difference. It only took a little time to pay attention to the flyer that came in the mail and this fellow found a sale price twice in the month and the cumulative refund was over $150 which he then used for a lovely dinner out with his girlfriend. Even if he had been earning a sizable hourly wage, the few minutes it took to keep an eye on the flyers which came in the mail anyway and the relatively small hassle of revisiting the store for the refund is well worth a sizeable savings.
Hire it out! A smart spending decision, even in a recession, is to consider that you can hire out. You might think hiring a cleaning company for your home is extravagant, but consider all you could do if you had a couple of extra hours a week? If you're earning say $30 an hour and a cleaner is $20 an hour, this could be a wise spending decision. You could use the free time to upgrade your education, have more time with your children or take a much needed break. If you're not earning enough to justify the cost, start a networking group with your friends and see if you can swap services that the other despises. You might love cooking and making a little extra each week to prepare frozen meals for one friend that would enjoy returning the service by painting your deck could be a winning proposition.
Remember to know your worth and value your time - it's just as precious as money!
Wednesday, June 17, 2009
Intelligent frugality tip #1 - is buying organic worth the extra cost? Part one.
Last week, I had the honour to be a co-panellist with Dr. Ruth Collins-Nakai for the WXN Network. Dr. Ruth as she's affectionately referred to by her patients is not only one of Canada's premier wellness experts, she's also the past president of the Canadian Medical Association with a resume as impressive as she is delightful.
As Dr. Ruth shared her wisdom and nutritional insights, she vented her frustration with the food industry likening them to the stunts of the tobacco companies. She told us that if you were to locate a cereal box from 20 years ago, you'd see that most did not add salt or sugar to their products. Today, she lamented that you'd be hard pressed to find one that didn't add salt and sugar.
Her reasoning for this deceptive behaviour is that most cereal makers also sell beverages such as juice and pop. She explained, and I won't even try, how a person's insulin spikes from excess sugar which then make us hungry (we then eat foods with excess sodium) and of course, salt makes us thirsty. Thus, these food manufacturers have their products covered. Sugar to make us hungry, salt in the food to make us thristy, more sugar, etc. and the spiral of obesity continues.
She implored attendees to never eat processed food.
I beamed, sat up with a smirk on my face and nearly patting myself on the back for the fact that I rarely eat processed, fried or fatty foods and mostly made the healthiest of choices - or so I thought. Why I also read the label in supermarkets and take the experts advice to avoid the middle isles (focusing on veggies, fruit and not the packaged junk in the centre.)
I've had a break recentsly from work travel and have been in Edmonton enjoying the very warm weather we've had over the past few weeks and with a busy as ever schedule, have switched to my summer menu. After hearing Dr. Ruth's sage advice that morning, I further gloated to myself how healthy my dinner was that evening, even though it was prepared on the fly.
I had a vine ripened tomato and lettuce sandwich on whole wheat bread, a whole (but small) jar of salsa (lots of cayenne pepper for the metabolism and other health benefits), a quasi guacamole, a very small amount of sour cream and copious amounts of multi grain chips. Scrumptious, low in bad fats and what I thought was a perfectly healthy summer meal.
As someone who's always read the label for saturated fats and high calories, I thought I'd better have a look at the other label items from my meal.
From my viewpoint, it was as fresh and healthy as one could hope for. Oops, I forgot about the prepared salsa and yep, the chips. As I investigated further (and I'm not counting the other items as they were fresh other than the sour cream), here's what I found:
As Dr. Ruth shared her wisdom and nutritional insights, she vented her frustration with the food industry likening them to the stunts of the tobacco companies. She told us that if you were to locate a cereal box from 20 years ago, you'd see that most did not add salt or sugar to their products. Today, she lamented that you'd be hard pressed to find one that didn't add salt and sugar.
Her reasoning for this deceptive behaviour is that most cereal makers also sell beverages such as juice and pop. She explained, and I won't even try, how a person's insulin spikes from excess sugar which then make us hungry (we then eat foods with excess sodium) and of course, salt makes us thirsty. Thus, these food manufacturers have their products covered. Sugar to make us hungry, salt in the food to make us thristy, more sugar, etc. and the spiral of obesity continues.
She implored attendees to never eat processed food.
I beamed, sat up with a smirk on my face and nearly patting myself on the back for the fact that I rarely eat processed, fried or fatty foods and mostly made the healthiest of choices - or so I thought. Why I also read the label in supermarkets and take the experts advice to avoid the middle isles (focusing on veggies, fruit and not the packaged junk in the centre.)
I've had a break recentsly from work travel and have been in Edmonton enjoying the very warm weather we've had over the past few weeks and with a busy as ever schedule, have switched to my summer menu. After hearing Dr. Ruth's sage advice that morning, I further gloated to myself how healthy my dinner was that evening, even though it was prepared on the fly.
I had a vine ripened tomato and lettuce sandwich on whole wheat bread, a whole (but small) jar of salsa (lots of cayenne pepper for the metabolism and other health benefits), a quasi guacamole, a very small amount of sour cream and copious amounts of multi grain chips. Scrumptious, low in bad fats and what I thought was a perfectly healthy summer meal.
As someone who's always read the label for saturated fats and high calories, I thought I'd better have a look at the other label items from my meal.
From my viewpoint, it was as fresh and healthy as one could hope for. Oops, I forgot about the prepared salsa and yep, the chips. As I investigated further (and I'm not counting the other items as they were fresh other than the sour cream), here's what I found:
- One full jar of Western Family fire roasted salsa contained only 126 calories, 0 fat, 0 cholesterol but a whopping 2,386.80 mg of sodium - that's 94.5% of my daily allowable limit according to the label - yikes!
- The chips - and I figure I ate about 40 chips - that accounted for 540 calories, 26 grams of fat (but only 2 grams of saturated fat), 10 grams of fiber (they were the multi grain chips) or 40% of my daily recommended amount and 0 cholesterol. So again, I though I was doing pretty well. As for the sodium, again, it was higher than expected at 300 mg or 12% of my daily limit.
Even though I rarely purchase boxed cereal, frozen meals or eat at fast food restaurants, I figured I was eating better than most. Apparently, what we think is healthy can be deceiving.
The point of this missive is that your health is the most imporant investment on the market. Without it or life itself, money is literally worthless! To cheap out on our health and what we ingest would be the silliest of frugality stances.
I'll be heading out to the market in the coming week or so and will report back whether or not organic is really worth the extra cost (based on my menu of chips and salsa and a few other items), the health factor and what the actual cost will be.
Stay tuned for part two shortly.
Intelligent frugality - the new chic or just cheap?
With the recession continuing to loom in the news (although, I'm not sure how real it is in provinces like Alberta where everyone continues with the busyness plague and packed restaurants), I've been testing ideas for over a year now on ways to save money while still having fun.
The funny thing about focusing on cutting spending, getting a better deal or being more efficient with what you have actually becomes contagious.
There was a time, OK, pretty much my entire life (until a couple of years ago), that I recoiled at the word "frugal". I equated it with cheapness, lack, too much work and basically, just something that wasn't for me.
Boom, now bust, our economy and my consumer advocacy role in the media recently has forced me to economize to teach my readers, viewers and listeners how to save money.
However, over the past year or so of living what I preach, I've discovered that there's an enormous difference between being frugal (or use whatever adjective you'd like for the down right thrifty), and being smart about saving money - what I call Intelligent Frugality.
So, over the summer months, I'm going to share with you my tips and insights for saving money and time but with a more educated & playful spin.
Stay tuned!
The funny thing about focusing on cutting spending, getting a better deal or being more efficient with what you have actually becomes contagious.
There was a time, OK, pretty much my entire life (until a couple of years ago), that I recoiled at the word "frugal". I equated it with cheapness, lack, too much work and basically, just something that wasn't for me.
Boom, now bust, our economy and my consumer advocacy role in the media recently has forced me to economize to teach my readers, viewers and listeners how to save money.
However, over the past year or so of living what I preach, I've discovered that there's an enormous difference between being frugal (or use whatever adjective you'd like for the down right thrifty), and being smart about saving money - what I call Intelligent Frugality.
So, over the summer months, I'm going to share with you my tips and insights for saving money and time but with a more educated & playful spin.
Stay tuned!
Thursday, May 21, 2009
CBC Money Makeover #2 - Solutions for Jeannine
Here's my letter to Jeannine with some solutions that could save her thousands of dollars and most importantly, save her and her husband over ten years on paying their credit cards. They're a young couple and if they make these changes now, it will significantly change their financial future.
My letter to Jeannine:
Preliminary Numbers/Calculations for Jeannine
April 17, 2009
The mortgage
If you have a good relationship with your lender, now might be the time to look at refinancing your mortgage only with respect to your rate. However, I’m not familiar with Wells Fargo and any hidden charges they might have. Since rates have dropped substantially, you can’t actually break your mortgage without fees if the term hasn’t expired (i.e. if you locked in to a 5 year term at 5.75% and let’s say you’re in year 2, if you broke that mortgage and went to another lender, you’d have to pay a huge fee). However, what most banks will do is give you a blended rate (an in-between the posted current rate and your existing rate without fees). Again though, I don’t know if/what Wells would charge and their policy…but it’s worth a try.
Here’s my assumption – with current 5 year terms at 4.5% (some even lower if you negotiate the rate down) and your current rate of 5.75%, you theoretically could get a blended rate of say 5.00%. Here’s my numbers on that assumption:
Current mortgage payment - $1,928.50 *
Total interest paid in the 40 year life - $560,456.66 **
New blended rate payment - $1,747.63
Total interest paid in the 40 year life - $473,868.28 **
Monthly savings of: $180.87
Yearly savings of: $2,170.44
Total mortgage life savings: $86,588.38 **
*You’re likely paying by-weekly, but I’m using monthly for ease of this example.
**This is assuming everything stayed the same for 40 years which of course it wouldn’t…but just for the sake of this example.
The Credit Cards
Assuming a minimum payment of 3% per month of the outstanding balance of all the credit cards/lines of credit combined would equal $1,296 per month in minimum payments.
If you only made this minimum payment, it would take 13 years and 5 months to pay the entire $43,191 in current outstanding balances. This would cost you $10,926.21 in interest payments.
If we could change your mortgage to the new blended rate and take that $181 per month in savings and allocate it to paying down the credit card debt, making your total monthly payments $1,477, it would only take you 2 years and 8 months to pay off all the credit card balances with interest charges only equaling $3,253.16 (a savings of $7,673.05 by paying just the minimum.)
Saving for Retirement
I just did a quick calculation … if you now took that just about $1,500 per month that is being used to pay off credit card debt and allocated it to RRSP savings, assuming a 6% rate of return and a 3% inflation rate for 35 years (till retirement), you’d have $3,002,881.
Disclaimer: Kelley Keehn is not a registered investment advisor and the information provided in this document should be considered educational in nature, but it is not a substitute for legal or professional financial advice. If you believe you need the help of a Certified Financial Planner or other investment counselor, please seek a qualified professional.
My letter to Jeannine:
Preliminary Numbers/Calculations for Jeannine
April 17, 2009
The mortgage
If you have a good relationship with your lender, now might be the time to look at refinancing your mortgage only with respect to your rate. However, I’m not familiar with Wells Fargo and any hidden charges they might have. Since rates have dropped substantially, you can’t actually break your mortgage without fees if the term hasn’t expired (i.e. if you locked in to a 5 year term at 5.75% and let’s say you’re in year 2, if you broke that mortgage and went to another lender, you’d have to pay a huge fee). However, what most banks will do is give you a blended rate (an in-between the posted current rate and your existing rate without fees). Again though, I don’t know if/what Wells would charge and their policy…but it’s worth a try.
Here’s my assumption – with current 5 year terms at 4.5% (some even lower if you negotiate the rate down) and your current rate of 5.75%, you theoretically could get a blended rate of say 5.00%. Here’s my numbers on that assumption:
Current mortgage payment - $1,928.50 *
Total interest paid in the 40 year life - $560,456.66 **
New blended rate payment - $1,747.63
Total interest paid in the 40 year life - $473,868.28 **
Monthly savings of: $180.87
Yearly savings of: $2,170.44
Total mortgage life savings: $86,588.38 **
*You’re likely paying by-weekly, but I’m using monthly for ease of this example.
**This is assuming everything stayed the same for 40 years which of course it wouldn’t…but just for the sake of this example.
The Credit Cards
Assuming a minimum payment of 3% per month of the outstanding balance of all the credit cards/lines of credit combined would equal $1,296 per month in minimum payments.
If you only made this minimum payment, it would take 13 years and 5 months to pay the entire $43,191 in current outstanding balances. This would cost you $10,926.21 in interest payments.
If we could change your mortgage to the new blended rate and take that $181 per month in savings and allocate it to paying down the credit card debt, making your total monthly payments $1,477, it would only take you 2 years and 8 months to pay off all the credit card balances with interest charges only equaling $3,253.16 (a savings of $7,673.05 by paying just the minimum.)
Saving for Retirement
I just did a quick calculation … if you now took that just about $1,500 per month that is being used to pay off credit card debt and allocated it to RRSP savings, assuming a 6% rate of return and a 3% inflation rate for 35 years (till retirement), you’d have $3,002,881.
Disclaimer: Kelley Keehn is not a registered investment advisor and the information provided in this document should be considered educational in nature, but it is not a substitute for legal or professional financial advice. If you believe you need the help of a Certified Financial Planner or other investment counselor, please seek a qualified professional.
Wednesday, May 20, 2009
Answering your credit questions - #4 - Suze Orman said to pay yourself before you pay your credit card payment - is this a wise thing to do?
Question #4:
I heard Suze Orman (American Financial Guru) say on her show that viewers in financial trouble should pay themselves first before they even pay their credit card payments, even if it means their score will dramatically decline. Is this a wise thing to do?
Answer:
First, Suze is an American Financial Guru. One must realize that the Canadian and American banking and financial system is almost night and day in most respects. They've been hit much harder in the US with their banking system and since they have very little regulation down there, many financial institutions operate like the wild west.
According to a statistic I heard on CNBC's On The Money, a few months ago, over 62% of American credit card holders had their credit card limits reduced (forced upon them) or closed entirely by the issuer. Thus, I can see where Suze would make such a recommendation. If someone was facing financial difficulties and paid their credit card diligently but had no savings for themselves, and then the issuer, out of the blue, cancelled their credit card (demanding full payment), it might be prudent to have some emergency cash savings. After all, survival at that point would be more important than worrying about a credit score that could later be fixed.
However, in Canada, we're not facing the same dilemma as our neighbours to the south. Sure, credit's a bit tighter here as it is globally, but we're on solid footing. Actually, the IMF (International Monetary Fund) has ranked Canada as the strongest banking system in the world. I've also spoken to the Canadian Banker's Association and the banks and credit card companies and they tell me it's business as usual - that they haven't suspended or closed credit card accounts due to the recession.
But a point of interest that one must be aware of, is that even if the credit card companies in Canada are not following what the US counterparts are doing, they are legally allowed to, should they choose to do so. A credit card works like a demand loan - the operative word being "demand" and demanded by your bank or the issuer. If you read the fine print when you signed up for your card, the company technically can demand payment in full at any time.
So having a solid slush fund of 3 -6 months savings is always a prudent suggestion. However, in our country, I would not recommend missing any credit card payments to throw it into a savings account as our system is pretty solid. Furthermore, one missed credit card payment can haunt your credit report for years and pulls your score down dramatically. Plus, if you're paying double digit interest rates on your card, it wouldn't make sense to throw it into a savings account paying a dismal rate of return.
If you'd like to read Suze's fully story on the issue, visit this link http://www.suzeorman.com/igsbase/igstemplate.cfm?SRC=SP&SRCN=suzescoop&GnavID=1&SnavID=134&NewsID=183
Be cautious when listening to media reports about the economy, banking and finance as the US system is dramatically different from ours.
I heard Suze Orman (American Financial Guru) say on her show that viewers in financial trouble should pay themselves first before they even pay their credit card payments, even if it means their score will dramatically decline. Is this a wise thing to do?
Answer:
First, Suze is an American Financial Guru. One must realize that the Canadian and American banking and financial system is almost night and day in most respects. They've been hit much harder in the US with their banking system and since they have very little regulation down there, many financial institutions operate like the wild west.
According to a statistic I heard on CNBC's On The Money, a few months ago, over 62% of American credit card holders had their credit card limits reduced (forced upon them) or closed entirely by the issuer. Thus, I can see where Suze would make such a recommendation. If someone was facing financial difficulties and paid their credit card diligently but had no savings for themselves, and then the issuer, out of the blue, cancelled their credit card (demanding full payment), it might be prudent to have some emergency cash savings. After all, survival at that point would be more important than worrying about a credit score that could later be fixed.
However, in Canada, we're not facing the same dilemma as our neighbours to the south. Sure, credit's a bit tighter here as it is globally, but we're on solid footing. Actually, the IMF (International Monetary Fund) has ranked Canada as the strongest banking system in the world. I've also spoken to the Canadian Banker's Association and the banks and credit card companies and they tell me it's business as usual - that they haven't suspended or closed credit card accounts due to the recession.
But a point of interest that one must be aware of, is that even if the credit card companies in Canada are not following what the US counterparts are doing, they are legally allowed to, should they choose to do so. A credit card works like a demand loan - the operative word being "demand" and demanded by your bank or the issuer. If you read the fine print when you signed up for your card, the company technically can demand payment in full at any time.
So having a solid slush fund of 3 -6 months savings is always a prudent suggestion. However, in our country, I would not recommend missing any credit card payments to throw it into a savings account as our system is pretty solid. Furthermore, one missed credit card payment can haunt your credit report for years and pulls your score down dramatically. Plus, if you're paying double digit interest rates on your card, it wouldn't make sense to throw it into a savings account paying a dismal rate of return.
If you'd like to read Suze's fully story on the issue, visit this link http://www.suzeorman.com/igsbase/igstemplate.cfm?SRC=SP&SRCN=suzescoop&GnavID=1&SnavID=134&NewsID=183
Be cautious when listening to media reports about the economy, banking and finance as the US system is dramatically different from ours.
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