Monday, March 30, 2009

Globe and Mail: Personal bankruptcy: A new start or just a Band-Aid?

Catch Sarah Hampson's article in today's Globe or here

Sarah and I had a great interview on a difficult subject. If you find yourself or someone you love needing help, encourage them to contact a non-profit credit counsellor. If you need to find one in your area, check out my website at for a list.

Sunday, March 29, 2009

Money Make-over & wrap-up - CBC Radioactive series part X

On Friday we wrapped up our two week series on teaching listeners the basics of financial management.

I discussed Laurie's story, our money make-over winner and how with just a few simple tweaks, we can save her thousands of dollars in debt costs and change her future, if she's willing.

Laurie and her husband have been earning over $150,000 per year for a few years now. The problem is their spending is out of control. They've re-mortgaged their house several times to pay off credit cards and are in the same boat yet again. They're 50 years old and if they view this as a wake-up call, they can change their situation for the better, etch out a decent retirement, or, they can keep spiraling into more debt.

Their biggest problem right now is their high interest rate credit card debt. They currently have about $24,800 on various cards and are only paying the minimum payments of about $726 per month.

I calculated how long it will take them to pay these cards off the way they are going (and that's assuming they don't keep running them up) with a handy calculator I found from CNN Money (you can find this on my site at and click the CBC logo).

Paying only the minimum amount, it will take Laurie and her husband a whopping 51 years and 5 months to pay off their credit card balances, costing them a total of $28,427 in interest charges.

My solution is for them to pay just $274 more per month (making their total payments to credit cards $1,000 instead of their current $726) which is only $9 and change more a day. Viewing their excess spending habits, they won't have to make too many sacrifices to find an extra few hundred a month if they get series about paying their debts.

With this option, it will only take 2 years and 7 months to pay off their current credit card debt and will only cost them $5,763 in interest - a savings of $32,664 from their current strategy.

Now, here's the important part. If after that 2 years and 7 months, they then take that $1,000 a month they were paying on old debt and allocate it towards saving for their future, (in an RRSP for 12 years) they will have nearly $250,000 saved for retirement.

This option could be the difference between them running the same negative pattern, or, retiring with a decent amount in the bank. I know it's been an eye opener for Laurie, but only time will tell if she's serious about making some changes, even simply ones for her future and her family.

Stay tuned to this blog for more details on Laurie and her progressing situation.

And I'll return back to CBC Radioactive each Monday afternoon starting April 6th.

You can catch all of our past segments at

Intelligent Frugality - CBC Radioactive series part IX

On Thursday, Peter and I discussed the concept of Intelligent Frugality, or as he called it, Smogul (smart + frugal).

Learning to become more frugal is prudent and does differ from being cheap, especially with oneself. My thoughts are, to become more respectful with money thus saving more for what matters in your life and paying attention to wasted dollars which add up quickly over time.

I cited one of my favourite financial books, Why Smart People Make Big Money Mistakes by Belsky & Gilovich. I highly recommend this book; it's a fun read and will open your eyes to all sorts of "mental accounting" mistakes we all make without realizing it.

Have you ever cheaped out on good ice cream or chocolates thinking you save big time by buying the $4 stuff instead of the premium $8 treat? After all, that's a 50% savings, but with each bite, you'll be reminded of your inferior purchase. Keeping in mind there's only one real reason to eat ice cream or chocolate and that's for the sheer pleasure of it. Why not go for the good stuff?

And when we're off to purchase a new car for say $35,000 and an extra like a premium sound system costs "only" $3,500 more, we say, throw it in! Why that's only 10% of the purchase price.

A dollar is a dollar wasted or saved. It doesn't matter if it makes up 1% or 80% of the purchase, it's still the same dollar. Consider this when testing your own future frugality.

If you missed the segment, it's up on the CBC site at Happy smoguling!

Thursday, March 26, 2009

Chosing a financial professional - CBC Radioactive series part VIII

Yesterday I discussed the many financial professionals out there and for most consumers, their titles can be very confusing. For example, a banker and an independent operator might be called a financial advisor which really doesn't tell you much about the specifics of their advice, expertise or education.

Here's a few things to keep in mind and ask your current or future financial pro:

  • what's your industry eduction (a CFP - Certified Financial Planner is an industry standard)
  • what type of clients do you currently serve (i.e. young couples just starting out, those nearing retirement, etc.)
  • how long have you been in the industry?
  • how long have you been in this particular position?
  • will I work with you specifically or will I mostly work with your assistant or other team members?
  • what licences do you hold (i.e. mutual fund's, individual securities, life insurance)
  • what are your biases (all advisors have some and should be up front with you - for example, if an advisor only holds a mutual fund's licence, they're pretty unlikely to recommend individual stocks and bonds which would need a separate licence - there's nothing wrong with that, but you deserve to know it up front.)
  • what does it cost to work with them and what do the actual investments cost or charge as a hidden fee (i.e. a banker might be salaried and thus charge you nothing to buy a mutual fund, but the fund itself has a hidden fee within it called a MER - management expense ratio).

For more questions that you should ask before you invest, visit my website at, click the "fun resources" link on the left and you'll find it there.

Tune in today for tips on becoming intelligently frugal at 5:10 pm on 93.9 fm.

Wednesday, March 25, 2009

Credit basics part two - CBC Radioactive series part VII

As posted yesterday, you can find my series of credit tips and info in my January 2009 archives.

A new point of interest for those facing mounting debt and the inability to pay that debt over the long-term, please consider talking to a not for profit credit agency. You'll find information on my website at (click on the CBC logo). One agency that I spoke with has a fantastic website filled with tips and advice and told me that the public can call their toll free number any time with any credit/debt question they might have at no charge. Check it out if you need help.

Tune in today as we discuss how to choose the right investment professionals and team players at 5:10 on 93.9fm (Edmonton and northern Alberta).

Tuesday, March 24, 2009

Credit basics part one - CBC Radioactive series part VI

Yesterday we tackled the complex and often shrouded in mystery subject of credit.

As I've blogged about this extensively, I would invite you to view a complete series of my posts back in January. Simply scroll down on the right hand side and check out my past articles, tips and info.

Be sure to tune in today at 5:10 on 93.9 FM in Edmonton and of course, my resources can be found at and click on the CBC logo.

Monday, March 23, 2009

CBC Radioacitve time change

I'll be back on CBC Radioactive all this week discussing financial basics. The time will change to 5:10 pm, so tune in at 93.9 FM or 740 on your AM dial.

And remember to send me your questions and we'll address those at the end of the week - simply email me at

Insurance & estate planning basics - CBC Radioactive series Part V

On Friday, Mark and I discussed insurance and estate planning basics.

There's a plethora of life insurance options on the market, but three main types:

1. Term insurance. This insurance is the least expensive of all, but the payment greatly increases at the end of each term and is usually bought to protect against a short-term need, such as covering the mortgage or other debts in the event of death. The premium rate is protected for a "term" of say 10 or 20 years. At the expiry of that term, the insurance rate jumps substantially, so, if the need for insurance is for life, then one of the other options might be more suitable. Also, many term plans require an individual to re-qualify health-wise, which also makes this plan less attractive for protecting long-term estate needs.

2. T100 - this is a variance of the standard term. Here, the policy fee would cost more than straight Term, but provide a guaranteed rate for life. It's less expensive than a "whole" life insurance policy, but still quite a bit costlier than Term 10 for example.

3. Whole life. These policies used to be the only option on the market many years ago. You might have heard the "buy Term and invest the rest" phrase years ago. However, whole life can be a viable option for the right individual. The premium cost factors in an investment element as well which can be a benefit later in the policy life.

There's no right or wrong insurance option on the market, but whether that product suits your specific needs - such as, how much coverage do you need, what's your age, health, and how long do you need it to be in place?

I've found a number of great insurance calculators that will let you play around with the costs of different types of plans and amounts. Check out my site at and click on the CBC logo for more information.

Friday, March 20, 2009

Understanding debt & lending continued - CBC Radioactive series Part IV

As we continued on the quest to understand credit and lending yesterday, Mark summed up the most important element of the week - the importance of getting your high interest debt paid off.

I ran a little calculation that surprised even me.

If you had a credit card with a balance of $10,000 for example with a rate of 28% (which isn't unusual for a department store or some other credit cards), paying only the minimum payment of $275 per month, it would take you 51 years and 9 months to pay the balance off. Plus, it would cost you $44,565.03 in total interest charges by the time you were done - if you lived that long! If that doesn't shock you as much as it did me, this will hopefully open your eyes further.

If you simply paid just $25 more per month, increasing your payment to $300, you would have that same balance paid off in just 5 years and 2 months and just $8,564.60 in interest (still a whopping amount but more palatable compared to $40K plus!).

I was surprised that if you increased your payment to $50 more per month, relatively speaking, it didn't make as significant of an impact as the $25 more vs. just the minimum payment. However, every dollar does count! If you increased your payment to $325 per month, that balance would be paid in 4 years, 5 months with the total interest cost of $7,039.77.

If you'd like to calculate how quickly you too can become debt free with this very handy CNN Money calculator that I found on the net and used for the above examples, just visit my website at and click on the CBC logo on the left side. You'll find this resource and many others to assist you in your journey to becoming debt free!

Thursday, March 19, 2009

Understanding debt & lending - CBC Radioactive series Part III

Yesterday we addressed the often complex world of lending. Unlike the old days, we all require the bank's help in purchasing a car, home and more. But what's the best option and how do you save, and I might add, significant dollars when you're asking for a lender's support?

When it comes to mortgages, one of the largest savings over the life of your mortgage can be had by simply adjusting "when" you pay your payment. For example, you could save $37,948.49 by simply paying bi-weekly (every other week) as opposed to monthly over the life of your mortgage. The reason? You're making an extra payment each year and that small amount adds up to a huge savings. (I'm assuming a $250,000 mortgage with a 5 year fixed rate at 5.55% using a 25 year amortization.)

The second most significant savings can come from negotiating the rate of your mortgage with your lender. I know, many Canadians fear negotiating, but take a deep breath and simply ask if you can receive a reduction on the posted rate. More than not, your banker will be happy to oblige. Plus, consider that the banker needs your business as well and with the 5 major banks offering generally the same products and rates, they want your business.

Assuming the same numbers as in my example above, over the life of a mortgage (25 years) at 5.55% (today's posted rate for a 5 year fixed) compared to a reduction of say 4.25%, you would save $41,256.00 or $1,650 per year (assuming all remained constant). If someone were offering you over $1,600 per year just for asking, wouldn't it be worth your while to give it a try?

With such a vast topic, we ran out of time yesterday covering the subject of debt. Tune in today for part two and of course, visit the CBC site for past segments if you've missed one at

Wednesday, March 18, 2009

Tax shelters, RSPs, RIFs and more - CBC Radioactive series Part II

Yesterday we addressed the basics of RRSPs, RRIFs and more. All the acronyms can get confusing and I've created a simple visual to help you navigate through the muddle. Check out my extra resources on my site at and click the CBC logo on the page.

For most Albertans, we're feeling the pinch of the recession more and more and wondering where we can find the extra dollars to save. I promise you, that it becomes contagious and you don't need to start large. Just an extra $25 or $50 a month can add up to a large portfolio in the future. Be sure to check with your employer as well as there might be an RSP or stock option matching program - you definitely don't want to leave those dollars on the table!

You'll also find a terrific RRSP savings calculator on my site that will show you exactly how much of an impact starting small can make over time.

If you missed a show, you can catch it on the CBC site at

Tuesday, March 17, 2009

Investment Basics - CBC Radioactive series Part I

Yesterday on CBC radioactive, we covered investment basics. I'm all too often saddened to hear that an individual was scammed by some "too good to be true to pass up" investment only to hear that all their money was then lost. Last week, I received a call from a real estate company offering a new investment (thinking I was still in the financial advising business - pitching me on their product.) They forwarded an email with the offering and I was shocked to see their "guaranteed" return of 12.5% for investors. How is that possible when a 5 year GIC at any Canadian bank is paying 2.2% and the stock and real estate markets are all down? Sure, the 12.5% might be guaranteed, as long as the company stays in business and investors really do get their promised principal investment back. By the way, they were paying investment advisors a whopping 7% commission when mutual funds pay a fraction of that. Hmm, this conflict of interest reeks of a bad deal for investors.

I too learned of a acquaintance last week that, at the advice of her mortgage broker (giving her a mortgage at the time), invested $120,000 of borrowed money a couple of years ago into a "couldn't miss" gold mine stock. Of course it wasn't registered with the securities commissions and was a private deal. She fears that the money is all but absconded by the seller, whom was a friend and colleague of hers at the time. Plus, she trusted this mortgage broker and the "hot tip" she provided. I "googled" the seller's name and within seconds found a plethora of damning information on the net that he had been charged years ago in BC and Alberta with securities fraud. This could have been found by my friend with minimal investigation before invested money that wasn't even hers.

Thus, financial common sense isn't all so common since few Canadians have ever been taught the basics. That's the entire point of this radio series and I hope you'll tune in and send us your questions. We want to educate and more importantly, help protect you in these turbulent times.

If you missed the links and resources from yesterday's segment, check them out at:

We'll be adding more daily, so be sure to check back soon.

Friday, March 13, 2009

Helping you through the recession with CBC Radioactive

As we hear more and more bad news about the economy, it's easy to feel overwhelmed.

But there are steps you can take to help you negotiate these tough times.

Every day for the next two weeks (starting Monday, March 16th), I'll be on CBC radio with advice on a range of subjects: what kind of insurance you should have, understanding your debt, and how making a few simple tweaks can greatly improve your financial well-being.

Tune in at 93.9 FM and 740 AM on your radio dial (Edmonton and northern Alberta).

Check back next week as I'll post my tips, advice and resources for your financial empowerment!

Friday, March 6, 2009

Women & money

In celebration of International Women's day, I, and I hope you, are reflecting on how far we've really come as a gender and yes, how far we still need to go.

In the year 2009, I wonder what is truly possible for women? What is possible for both you and I? Quite frankly, I rarely think of this notion. I suppose, I take it for granted that in today's world, in North America (certainly it's not the same for women in other countries), that I can do almost anything I desire to as a female. Like the freedom of being a Canadian citizen and the many, many brave individuals that had to fight for what I today don't necessarily fully appreciate, many women too braved more than I could ever imagine for me to, today, be able to do, dream of, or achieve pretty much anything I desire without gender holding me back.

This Sunday is International Women's day and I will be reflecting on times of the past that weren't supportive of women's rights. A time when, by being a woman meant that we couldn't vote, work, think and speak for ourselves. A time when we were "property" of a man. A time I will struggle to imagine even existed in the politically correct time of ultimate freedom in our society today. I will read about great and courageous women that were ridiculed, spat on and chased out of schools, courtrooms and more. I will thank them in my own way for the price that they paid for my ultimate independence. Lastly, I will reflect on the many countries that such freedom and equality for women does not yet exist and what we can do to end their suffering.

As this is the Keehn On Money blog, I also reflect to a time when it was ultimately taboo for women to handle money openly, take the position of banker, money manager and more. Yet today, I look at the "financial" glass ceiling that women have shattered and the plethora of successful female financial advisors, economists and money mangers, personally and professionally.

We've come a long way baby but still have some work to do, and I think it starts in appreciating what was done for us by so many in the past.

Women & money challenge: the first person to comment on this post answering the following question, I will send you a copy of my newest book, She Inc.

Question: what significance does the Canadian fifty dollar bill have to the plight of women and our freedom as a gender? Examine the bill closely and you will discover the answer. Post here and email me your address at as well.