- For full survey results, please check out this link - http://www.kelleykeehn.com/documents/PayPalCantBuyMeLoveRelease2009.pdf
- For my Top Tips For Financial Bliss, check out this link - http://www.kelleykeehn.com/documents/PayPalCanadaTipsforFinancialBliss_draft.pdf
- For survey highlights, check out this link - http://www.kelleykeehn.com/documents/PayPalCantBuyMeLoveSurveyHighlights.pdf
Wednesday, January 28, 2009
Jim Flaherty, Minister of Finance, tabled yesterday a comprehensive budget plan to stimulate economic growth, restore confidence and support Canadians and their families during a synchronized global recession.
Canada’s Economic Action Plan will provide almost $30 billion in support to the Canadian economy this year. In total, this is equivalent to 1.9 per cent of our total economy.
The plan will stimulate the economy through:
- Immediate Action to Build Infrastructure
- Action to Reduce Taxes and Freeze EI Rates
- Action to Stimulate Housing Construction
- Action to Improve Access to Financing and Strengthen Canada’s Financial System
- Action to Help Canadians
- Action to Support Businesses and Communities
Source: Department of Finance Canada - see this link for full details - http://www.fin.gc.ca/n08/09-011-eng.asp
Here's some additional links on the budget:
- The Home Renovation Tax Credit - http://www.budget.gc.ca/2009/pamphlet-depliant/pamphlet-depliant3-eng.html
- The Budget In Brief - http://www.budget.gc.ca/2009/glance-apercu/brief-bref-eng.html
- Canadian Budget Highlights - http://www.chrisd.ca/blog/5970/2009-canadian-federal-budget-highlights/
- CBC article - Ignatieff's criticism - http://www.cbc.ca/canada/story/2009/01/27/budget-opposition.html
- The 2009 Federal Budget and Canada's Charities & Nonprofits - http://www.newswire.ca/en/releases/archive/January2009/16/c8094.html
- The entire document (if you have a bunch of free time on your hands and are so inclined) - http://www.scribd.com/doc/11454873/2009-Federal-Budget-Canada
Tuesday, January 27, 2009
I am emailing you to be considered for your Money Makeover segment. Here is why:
My husband and I are now entering our 50's and we are really scared about retirement. We have been bad money managers since we first got married 27 years ago and time is running out for us to get our finances in shape.
We are fortunate to own our own home. Our current mortgage owing is $335.000.00 which is shocking considering we bought the house for $177,000.00 just 8 years ago. We have re-mortgaged twice to pay off debt but I'm sad to say we're right back at square one, currently owing approximately $20.000.00 on our credit cards.
I believe we have both have good jobs - my husband earns approcimately $100,000.00 per year as an account manager with a national food company, and I earn just over $50,000.00 per year working for the provincial government. We both have employee retirement plans but since we started these late they will definitely not be sufficient for us to retire on in 15 years. We have $5000.00 in an RRSP but unfortunately we have been draining this account slowly over the past few months to make ends meet.
Our two daughters (aged 24 and 19) still live with us - the oldest is in her third year of university and the youngest is deciding what she wants to do after recently finishing one semester of college.
I do not believe we have an extravagant lifestyle but yet we find ourselves getting further and further in debt. It is hard for my husband and I to even discuss our finances, let alone come up with a solid financial gameplan that will bring us out of debt and help us prepare for retirement.
We could really use help Kelley - I hope to hear from you soon.
Hello! We would love to be considered for Kelley Keehn's money makeover. I believe we are the typical Albertan couple: living beyond our means and finally realizing it. I am 29, employed full-time in the oilpatch, newly married, we own a house that we payed way too much for, we have a mountain of credit card and loan debts, and I'm (almost guiltily) paying in to RSPs - and I'm freaking out because of this "economic crisis." I have no clue how to curb our spending and start to pay off our debts in way that will have the biggest impact.
Or, read it here:
Be a money wise woman
In trying times, they need to safeguard their financial future
By JOANNE RICHARD
Monday, January 26, 2009
Starting tomorrow, I'll detail Jennine and Laurie's financial situations, keep track of their two week spending log and my solutions for them both.
Friday, January 23, 2009
Q: If I have a credit card with my spouse, I'm building credit, right?
A: Likely not. If your spouse has a credit card and has ordered a supplementary card on their account, no approval for said card is required on your part. Your spouse would be responsible for your spending, paying back the debt and your purchasing would still form part of their overall account limits, credit standing, etc. The basic rule is, if you didn't have to "apply" for the credit, then you're not building credit in your name. Consider if your spouse were to, God forbid, pass away or separate from you, this credit extension and card would disappear as well.
Q: Then how do I build credit?
A: Often, no credit can be as difficult to deal with as a poor credit standing. Using the above question as an example, the spouse with the supplementary card (not their own card or account) could use that to apply for say a department store card. I NEVER recommend this strategy generally, but sometimes it's the simplest path when building credit, if done responsibly. If you have a card of any type, most department store's will automatically approve you for one of their cards with a low limit - say $300. Once you get this card, be diligent in purchasing small items from the store that you need anyway and immediately pay them off, right at the store. Never carry a balance on these cards as their rates are generally very high. Once you've done this for a few months, perhaps as long as six months if you have no credit at all, you'll find they'll generally increase your credit limit. This is a good first step. Today, many department store cards in Canada are also tied to a MasterCard. With one case study of mine, after the individual followed my recommendations with his responsible use of his department store card (a limit of $300), was offered a regular MasterCard with a limit of $3,500 in under one year.
Consider cash secured loans and credit cards as mentioned in my last post as well.
Q: Should I get my child/adult child a credit card to help them build credit?
A: As with the first question, if you choose to get your child, spouse or someone else a supplementary card to then assist them to apply for a department store card (as in my example), please keep in mind that you are still on the hook for the supplementary card. Are they responsible enough to stick to your rules for purchases? If not, consider that you are solely held accountable for covering all purchases made on any card or supplementary cards on your account. If you do totally trust your child, you may wish to have your bank or credit card company give you a low limit (say $500) credit card and get the supplementary card on that account. That way, if you were wrong about your child's spending habits, the worst you'd be out is $500, as opposed to some of the much higher limit products available.
The last time I spoke with VISA and MasterCard, they told me there is no age requirement for a parent wanting to get a supplementary card for their child. While I'm not a proponent of this notion, it might make sense if your child is travelling overseas on a trip, leaving to school for an extended period, etc. Instead of possibly having to wire money to your child, you could get them a supplementary card as an emergency option.
Q: If I get all those credit card offers in the mail telling me I'm pre-approved for $10,000, $50,000 or more, I must have good credit, right?
A: No, not necessarily. Credit card companies, unless you already have an account with them, can NOT access your credit report. That would be an invasion of your privacy if you have not authorized them to do so. These card companies are assuming you have good credit based on your postal code or some other list. Or, perhaps it's simply a numbers game for them - mail out enough of these offers and someone will actually approve for them. Always, always read the fine print. There you'll usually see a magic annual income needed for that approval along with a long list of other disclaimers and approval requirements.
Do you have a credit question of your own? Please drop me a line at firstname.lastname@example.org and I'll address your question anonymously in the future or feel free to leave a post.
Finally, I stumbled upon this fantastic budgeting worksheet - check it out - http://www.nomoredebts.org/MMB_7Steps.pdf (7 Steps that will help you build a budget that works).
Thursday, January 22, 2009
In today's post, I'd like to offer some basic tips to improve your score over time if you've found that it's less than favourable. Remember, your score is fluid. A great or poor score today can change each month and for the better or worse, will change dramatically within a year's time of positive or negative habits.
- Always pay your minimum payments on time. Sounds simple and axiomatic, but many individuals miss their minimum payments periodically, which can drastically pull down your score. Enter your debt payment due dates on your calender as a reminder. Even one day late can register a blemish on your report which stays there for 6 years.
- If you're maxed out on your credit cards, pay more than your minimum payment. You never want to be "over limit" on your cards as this too will significantly pull down your score. For instance, if one of your cards has a credit limit of $3,000 and you're right at the max, paying the minimum payment of let's say $120 requested by your credit card company will not likely cover your interest due at the statement date (this is also the date your company will report to the credit agencies). Let's assume the interest on your card is actually $140, that would put you $20 over limit right at the time they report to the credit agencies. Furthermore, you must budget for your annual fee, insurance protection, etc.
- Keep your balances low. Ideally, you should not have more than 75% used of your card's limit. For example, if you have a credit card with a credit limit of $10,000, keep that balance under $7,500.
- Don't seek new credit. The worst thing you can do if your score is low is to seek new credit (a sign of possible trouble). See my last post on hard and soft hits/inquiries.
- Get rid of high interest credit and department store cards. Not all debt is viewed equally. Two department store cards vs. two traditional VISA or MasterCard accounts would be less favourably viewed and thus impact your score negatively. The thought is that a department store card is easier to approve for than a conventional credit card.
If you find that you have a number of debts with high interest rates, you may wish to speak to your banker about a consolidation loan (a loan that would pay off all your higher rate cards with a low rate, forcing you to pay a set amount and pay down the principle costing much less over time). However, if your score is low, talk to your banker first about the likelihood of them approving such a loan before they pull your credit report.
If you need to rebuild trust with your banker or positive credit habits on your credit report, consider a cash secured loan (you'd provide say $1,000 and the bank would lend you $1,000 - the point to show a positive repayment history and thus build up your score) or a cash secured credit card.
Wednesday, January 21, 2009
I'll be in CTV Edmonton evening news today discussing the impact and whether this rate cut affects you!
For more information on the credit dead-lock, inflationary fears globally and the Canadian banking/lending landscape, check out the following articles:
- Banks provide relief with mortgage cuts (reportonbusiness.com)
- Canada finds itself in a 'credit deadlock' (calgaryherald.com)
- What if deflation threatens Canada? (vancouversun.com)
- Bank of Canada cuts interest rate (calgary.ctv.ca)
- Bank of Canada cuts lending rate to record low of 1% (cbc.ca)
Tuesday, January 20, 2009
What you'll find in your credit report:
- Personal details pertaining to your employment, address, etc. Basically, information that you gave to previous lenders.
- A detailed list of your current credit including loans, credit cards, etc. This information is on your report for 6 years, so even if you've closed accounts, the information will still be seen.
- Each debt will show the maximum limit and the current or last reported balance (most creditors today report monthly).
- If you've been late on your accounts. Reports will show if and how many times you've been 30, 60 or 90 days late. These obviously hurt one's score.
- If you're over limit on your account, if it's in default, paid in full, etc.
- Collections - if you've had an account go in to default and it's been forwarded to a collection agency of the creditor's collections department, this will show in a section of your report.
- Banking information may or may not show on your report.
- Public records and other information such as a bankruptcy or judgment against you.
- An inquiry made by a creditor will automatically purge three years from the date of the inquiry. The system will keep a minimum of five inquiries.
- These inquiries are also referred to as "hits" on your report and can bring down your score temporally. There are "hard" and "soft" hits or inquiries on your report. For example, if you specifically apply for credit of some type, the lender will pull your report and thus a hit/inquiry will be registered on your report. If you do this with several lenders in a short period of time, the reason this can pull your score down is that it appears that you're "seeking" credit which can be a red flag to lenders that you're "in need". I think it was Mark Twain that so accurately and eloquently stated many years ago, "A banker is there to lend you an umbrella when it's sunny and there to take it away when it's raining". Imagine that a lender, of course, doesn't want the risk of lending to anyone who is desperate. They only want strong candidates. You might have innocently been shopping around for a new car or mortgage. However, those "hits" raise more questions for the last lender, such as, why didn't you get approved the first few times? Were you declined with the first few lenders and therefore, they don't want to extend credit? It's only one factor in pulling down your score, but it is notable that one should not seek credit in a short period of time with many lenders. If you are seeking the best rate on a loan or don't know for sure if you'd be approved with a lender, pull your report yourself and bring it in with you. If the lender approves you, they'll still need to pull your report and register a "hit", however, if you weren't going to stand a chance of being approved, they'll generally let you know and you'll save having another inquiry on your report for nothing, possibly pulling down your score further.
- Soft hits or inquiries on your report will show, but do not affect your score. These are hits from you pulling your own report or existing creditors taking a peek at your report to see if they'd like to perhaps increase your limit, etc. If you read in the fine print when you accept a loan or credit card, you'll see that the lender asks permission to periodically check your credit. These are your soft hits/inquiries.
What's not on your report:
- In Canada, generally, your mortgage is not on your credit report. This is shocking to many Americans as it's absolutely on their report and they wonder how we build our credit standing without our largest debt being reported. There may be instances where your mortgage could be reported (I haven't seen them personally) such as a second mortgage with a non Schedule One bank (i.e. the big five) or if it's structured as a secured line of credit, etc. Again, I haven't seen this with any of my case studies, but check your personal report to verify. Generally speaking, if you have a conventional mortgage, it will not show on your report. Therefore, if you've always been diligent in paying your mortgage payments on time but have been a little lax with your credit card minimum's and loan repayments, you might find your score less than favourable without your good mortgage payments to offset it.
- Utilities also, depending on the province and type (cell phone bills might show up), are not on your report. However, if you don't pay your cable bill for example and it goes into collections (for so many people this amount is less than $50), this could show up in the collections section of your report and will dramatically pull down your score.
If you order the full enchilada as I recommended in previous posts from either Equifax Canada or TransUnion Canada, you'll find the reports are quite detailed, well laid out and easy to read.
Plus, if there's something on your report that is wrong or shouldn't be there at all, both agencies have dispute resolution instructions on their site.
If you have any questions about interpreting your report, please feel free to leave me a post.
Monday, January 19, 2009
Back in my old banking days, this score used to be a "R" rating. R1 was the best possible and R9 the worst. Today, the most common standard used by lenders is the FICO score - see this link for a definition - http://en.wikipedia.org/wiki/FICO
Your credit score is a simply a snap shot of your current credit situation and that over the past 6 years. It is an important factor in a lender considering you "credit worthy" for future debt, consolidation, reduction of interest, etc. It's not your total picture. Your report does not factor in your employment status, cash flow, assets, net worth or other important criteria a lender uses when determining to approve or decline your request.
I'm not a lender and times have changed in Canada with borrowing becoming tighter due to the global recession. Thus, there is no magic score one should have but the higher the better. Of course, the other factors I mentioned are paramount as well if you're seeking new credit.
The score range (with Equifax) is 300 - 900. Again, the higher the better. Only 5% of Canadians fall in the 850 or higher range. The highest percentage of individuals (27%) fall within the 750-799 score range. Why does your score matter to a lender? It tells them, based on your past credit, repayment, late payments ,etc., how likely you are to pay your future debts on time, late, file for bankruptcy and so on. For example, scores under 499 have a 78% chance of being delinquent.
You might be asking what score you should have. About six months ago, a score of 640 was considered somewhat average in that a lender would still consider approval based on those other factors I mentioned being strong (job security, assets, net worth, etc.). However, today, with lending tightening, one should aim for a score in the 750 plus range.
If you find your score falling short of the 750 mark, don't worry. Keep in touch this week for tips on how to improve your score or keep it high if you've already taken good care of your credit.
Tomorrow I'll touch on what's on your report and what's not. You might be shocked or pleasantly surprised.
Please leave me a comment if you have a credit question you'd like me to answer.
Friday, January 16, 2009
Q. Where do you get your credit report/score?
A: The two main reporting agencies are Equifax (http://www.equifax.ca/) and TransUnion (http://www.transunion.ca/). There are more and more credit monitoring services popping up, but I'd suggesting starting with going directly to each. You are eligible to receive a free credit report in the mail from both companies as often as you request (see their websites for the request form to fill out). This is a good start but it's somewhat limited as it won't tell you your magic "score". Your free report will tell you what's on your report and give you a snap shot of your current status and your debt/payment history over the past 6 years, a list of open credit, etc.
I am more familiar with Equifax than TransUnion, so I'll make specific references to Equifax. You can order that same report instantly via internet, if you like, for $15.50, but again, it's just a report. For $23.95, you can instantly, online, get the full enchilada which I do recommend you purchase at least once every year; every 6 months is better. This option will give you your full credit report plus you credit score. Without this score, it's difficult to interpret just the report. Plus, this report will give you an explaination of your score, graphs showing where your score rates you according to the average in Canada, how lenders see you and more.
Your score is fluid and can change every month. So a good or bad score today can change in the future. In later posts, I'll detail tips for improving your score.
Check back Monday for interpreting your score and Tuesday I'll detail what's on your credit report and what's not. I'll spend the rest of next week addressing this subject.
Wishing you a great weekend! See you Monday!
Thursday, January 15, 2009
Wednesday, January 14, 2009
The question he begs us to ask is, how do you make it so compelling for someone to buy from you (figuratively or literally), with absolutely no downside on the buyer’s part that they can't help but say "yes" to your request. I'm often mindful of this powerful concept in my own career and personal life, yet the practicality and opportunity is not always obvious to me.
With the start of a new year, market uncertainty continuing in 2009, bailout's, handout's and more, companies are working hard to make buying irresistible to their targeted customer.
Three fantastic risk reversals jumped out at me this week that I thought you might ponder their simplicity and application in your own life:
- I listen to CNBC's business news most mornings. A fellow by the name of "The Video Professor" advertises daily (http://www.videoprofessor.com/). His offer is so compelling that I'm sure his ad's are a huge success. His sales pitch goes something like this: order any of my products on computing lessons for FREE! How can I do this? I know that you'll be so absolutely satisfied that whenever you're ready to learn anything about computers, you'll come back to video professor for all your computer learning needs. It might not be verbatim, but I've heard it so many times I think it's pretty close. Recently, he's tailored his advertising to keeping and getting a job (that those with computer skills are more valuable in today's economy). In this ad, he's so confident that you'll love your purchase, if you do decide to return it, he'll also send you $10! A free CD to try (your choice of over 60) or $10 back if you don't absolutely love your order. Classic risk reversal.
- Unless you've spent the winter hibernating, you know the automotive sector is suffering here in Canada and even more so in the US. Not only are North Americans fearful of the state of the industry overall, but they're scared about their job security. Hyundai USA started advertising recently the most unique selling advantage I've ever heard. Buy our vehicles and if you lose your job in the next year, simply return your car. http://www.hyundaiusa.com/financing/HyundaiAssurance/HyundaiAssurance.aspx Unlike the advertisements of the other car dealerships offering steep discounts, assurances that they'll still be in business, Hyundai has figured out that the average American is fearful that they themselves will have a job or be in business this year. They took that fear right off the table and set the tone for a risk free purchase - lose your job, we'll buy the car back.
- My last recent witness of a well-marketed risk reversal promotion came from the most unlikely of situations. It's sort of a "when hell freezes over" scenario (pardon the upcoming pun). I was in church over the weekend, and as a Christian, that faith encourages its members to tithe (give 10% of all your income to the church or God). However, most church members don't tithe their full 10% if at all. My church is very causal and doesn't even hand out a collection plate at service. They don't want their congregation to feel uncomfortable or forced "to give", so they simply have a modest drop box at the back of the church with the thought that it will ease "giving peer pressure". This last weekend, my pastor's sermon was focused on tithing (I'll spare you the specifics) and added a risk reversal proposition that shocked even me. He and the church were actually guaranteeing to return money. Yes, hard to believe that a church would actually offer to potentially return money - doesn't happen often so I was all ears. His pitch was that if the congregation would try tithing their full 10% for 3 months and didn't fully receive an abundance in return from God (you would have had to be there to hear the presentation), he'd fully refund what you gave at the end of a 3 month time period. I must admit that while sitting in a church pew, I couldn't imagine how the concept of risk reversal could be used even there. How then, might the average person also use this technique in their own business or life?
How can the concept of taking every possible risk off the table work in your life? What if you extended this notion to your customers if you're in business for yourself? If you're employed, has your company thought of this marketing strategy? Perhaps you could be the first one into work this morning to present this idea to your boss? And what if you're currently looking for work? Might you call up your dream company and offer to work for free for say two weeks and if they don't absolutely love the job you've done, you'll leave with no questions asked or risk on their part?
Try it out and I'd love to hear your personal examples, thoughts or successes with this concept. Feel free to leave a comment on this post.
Tuesday, January 13, 2009
Monday, January 12, 2009
Valerie wanted to chat about kids, money and the effects today's economy is and will have on the average family. As you may know, I haven't been blessed with children myself, but do have a financial book out for parents on how to educate their kids on money matters (I guess you have time to write these types of books when you don't have little ones of your own). My passion in getting the information out is thus; with Canadians facing 1.1 trillion dollars in household debt (according to Credit Canada), and discussing money the new taboo, and the fact that most parents don't have a solid grip on money matters, I felt someone needed to come out with a age-by-age guidebook on educating parents on matters of finance that they could then disseminate to their children at their own individual pace.
As that book as been out for a year now (The Prosperity Factor for Kids), I've had lots of feedback from readers and others. Often, I hear from a frustrated parent or media interviewer, wondering why this information is not taught in schools.
Here are my thoughts on the matter:
1. Most teachers are not well versed on finance and it's not part of the curriculum. How can we possibly expect an overtaxed system to add yet another complex element?
2. Do you remember when you were a teenager? How important was it that you balance your chequebook when you didn't even have one yet?
3. Lastly, I would love to see some basic money management taught in schools, however, it's still essential that the lessons, tangible, intangible, observed and otherwise, come from the parents. I think we can parallel the notion of teaching kids about healthy eating in school only to come home to a parent that's serving burgers and deep-fried food for dinner. The learning’s must be reinforced and/or originated from the home. So what to do in this tough economy? I think adversity can equal opportunity and that the downturn and tightening is an eye-opener and bridge to an open, honest conversation within the family unit.
Try these simple steps:
- Determine a monthly family money meeting. Be open and honest with your children about what's happening globally and how mom and dad's job or salary might be squeezed. Ask for them to join in when deciding what expenses can be cut or suspended until the economy picks back up. Meet monthly to discuss feelings, financial definitions that all of you can "google" and define together.
- Ask for your family's creative income producing ideas. Perhaps you could organize a swap meet at your child's school where video games, electronics and more can be dug up out of the toy chest and swapped for other kids treasures. Or, explore a flea market at your child's school where they sell their talents and wares to other students and parents (i.e. artwork, services such as setting up neighbours DVD players, computers or even teaching a mini course to senior centers on computers). Teaching your child that there's always and opportunity to profit in any economy can be a valuable lesson to follow them into adulthood.
- Lastly, if you don't already pay your child an allowance, consider doing so but only for tasks above and beyond what you would already expect them to participate in within the household. By giving them some autonomy for making their own purchases, they may actually surprise you by being more frugal when it's "their" money they're spending as opposed to mom and dads.
For ideas on setting a solid foundation for your teen's on the topic of credit and credit cards, see a current Canadian Family article detailing some of my tips for a mock credit system http://www.canadianliving.com/family/parenting/how_to_teach_your_kids_about_money.php
My interview with Valerie will air on CTV Edmonton sometime in February. Check my website (http://www.kelleykeehn.com/ under the "events and appearances" tab) for the actual date to be announced shortly.
Wednesday, January 7, 2009
It's the start of a new year.And if there was ever a time to get a handle on your finances, 2009 is it.Well, how about a money makeover?I'm Kelley Keehn, Radio Active's personal finance columnist.I'm going to help one Radio Active listener take stock of their spending and figure out how they can save more of that hard-earned cash.If you'd like to be considered for our money makeover, email us at: email@example.com
Monday, January 5, 2009
So few Canadians have any idea what their credit score is or how it affects a huge portion of their financial life - their debt!
In my newest book, She Inc., I dedicate a large section to helping readers understand the importance of their credit score, how to clean up their credit and report if it's less than satisfactory and how to empower themselves with lenders. It's still a mystery to most and a societal taboo. But we need to start talking in order to dig our way out of this mess, especially with the economy on the skids.
Credit Canada reports that we're over 1.1 trillion dollars in household debt - so you're not alone.
Over the coming weeks, I'll dedicate my blog writings to this very important subject, or of course, you can get She Inc. at your local book store or library if you'd like to get a jump start on understanding, protecting and repairing your credit.
Check back soon and be sure to leave a comment if you have a credit question.