Mastering personal finance isn’t something that can be done overnight.
It’s a journey. One filled with a lot of little steps before you can wake up one morning, confident that your money is under control.
That confidence is our goal.
That’s why sites like Boomer and Echo and HowToSaveMoney were created. In fact, Robb and I launched both sites at almost exactly the same time in 2010 to help Canadians on their journey to becoming good with money.
Now almost 10 years later, HowToSaveMoney is re-launching as a journey through eight core areas where money-saving advice is often needed on your pathway through life.
Let’s start your money-saving journey together:
1) Get your needs under control
Wouldn’t it be nice if you could choose to just…not spend money?
Though that would certainly help your savings grow, this sort of lifestyle isn’t possible for the majority of Canadians. We’re all spending money on something, no matter how much we wish we didn’t have to.
The trick is to spend less on what we need in order to get more of what we want.
Here are 2 great (and simple) ways to cut some unnecessary fees from your necessary spending.
Take advantage of no-fee banking
If you’re still paying fees for a bank account, you’re missing out.
The rise of virtual banks seems to be threatening the very foundation of Canada’s Big 5 banks – even though some of these online banks are subsidiaries of the big guys (they’ll always find a way into your wallet).
How? They’ve cut some costs themselves, mainly the massive ones associated with having brick-and-mortar locations.
With this new room in their budgets, virtual banks pass the savings onto their customers by offering no-fee chequing and savings accounts that are actually better than the paid alternative. The chequing accounts often have no transaction limits, and the savings accounts offer interest rates that are often double or triple their out-dated competitors.
Seriously, check it out for yourselves. Tangerine, EQ Bank, Motusbank, Alterna Bank…these are all big players in the future of banking. And the future is virtual.
Cut back on cable and phone payments
Cancel your phone and cable services. Seriously. All you need is high-speed internet and the world is at your fingertips.
The wealth of entertainment that’s available online, according to your own schedule and without 3-minute long commercial intervals…this should be more than enough to satisfy your cable desires.
Many Canadian networks offer full-episode videos online, not to mention Youtube is entirely free and offers way more content than you could ever hope to watch. And there’s Netflix, which may not be free, but it’s much cheaper than your cable bill.
And what about your phone line? Well, for one thing, you’re essentially doubling your phone bill if you also pay for a cell phone plan. Why pay twice when your cell phone can do both?
But if you like having a separate landline, consider investing in a VOIP service. Essentially this puts your phone line through your internet – I pay roughly $3.25 a month with magicJack. Take a look at your phone bill…what a difference, eh?
2) Shop without breaking the bank
So what about the spending you actually want to do?
The main skill you’ll want to cultivate are repeatable strategies to save money on shopping. Know what’s available to you and use it to your advantage. A little research and planning before you leave your house or before you click can save you hundreds.
Always price check before you buy
Make a habit of price checking a couple of stores before you settle on a product. This is especially important for things you know are sold at more than one place.
The majority of big name stores have their entire inventory online. Take a minute to think which stores near you could be selling your desired item, then go online and search for it on each of them. Then simply go with the one with the lowest price. If you don’t mind doing a little legwork, you could check in-store as well (hey, it’ll get your step count up!).
Want to be a little more efficient with your time? Check out some of Canada’s top price-checking websites like Shopbot or Pricebat. You could also fire up Flipp or Rebee on your phone and search for the item you’re looking in all the flyers from your area in seconds.
Pro tip: Don’t limit yourself to just one price-checking website or app. They each only list the specific stores that allow them access to their inventory, so searching as many as you can find will ensure you’re covering a whole lot more ground.
Be aware of your price-matching opportunities
Many of the biggest (and even some of the smallest) stores have price-matching policies.
This basically means that if you can provide proof that another local store is selling the same item for less, they’ll match the price so they get your business instead. Sometimes they’ll even beat it by 10% of the difference in price, or more.
Those price checking apps and sites above are just what you need to get the proof you need with minimal time and effort.
Take the time to get familiar with the price-matching policies of your favourite stores. It could save you a lot of money in the end.
3) Gotta make money to spend money
Let’s be honest. No matter how much money you’re making, you could always use a little more.
That’s why an important step in your money journey is increasing your earning power. You don’t have to go out and get a second job – simply use the skills and money you already have to get some extra cash on the side.
Invest in a high-interest savings account
Set aside a little room in your budget to put some money in a no-fee high-interest savings account.
Seriously. You don’t need to be thinking as far ahead as retirement yet (though that certainly wouldn’t hurt) – just think of that trip you want to go on or the new toy you want…or just the security of having a little nest egg that’s growing a little bit more everyday.
Some of Canada’s best savings accounts will you give you up to 2.60% daily interest – all for no fee to you.
Pro tip: Automate your deposits into your savings account so you don’t even have to think about it. That way you won’t even miss the money. It’ll be a pleasant surprise when you go check the balance a couple months or years later and see how much it has grown.
Easy side hustles everyone can do
Having a side hustle has been an increasingly popular topic these days, with some people concerned for the health of these people who give up their time off from one job, just to work on another…
But who said your side hustle has to be elaborate?
Did you know you can make money just by selling your blood? And I know you have some of that kicking around inside you. And what better way to make money than by helping someone in need? Check out Canadian Plasma Resource’s compensation plan here.
Scared of needles? Can’t blame you. Something else you could do is become a conversational language tutor on italki.com. As long as you speak a language fluently, you’re qualified to be an instructor for newcomers to your language who want to become fluent themselves.
Rather talk to pets than people? You could become a dog or cat sitter, or even a dog walker on Rover.com. What could be better than being paid to hang out with some cute furry friends?
4) Master your use of credit
Credit cards and credit tend to get a bad rep in our media. Though it’s important to keep the dangers of misuse in mind – they can do a lot of good too.
From giving you a better idea of your spending, providing you with complimentary insurance, or helping you jumpstart your business, credit can give you options you wouldn’t otherwise have.
But the best part?
Responsible use of credit will help you reap the rewards while avoiding its pitfalls.
Using credit card rewards to your advantage
Imagine a world where you get a little something back every time you make a purchase. And I’m not talking about whatever item you bought – I mean getting reward points or straight up cash right back in your pocket.
That’s exactly what a really good credit card can give you. Maximizing these reward programs can get you flying off to your dream vacation in no time. Something you may never do if you had to pay for it out of pocket.
Robb is a bit of an expert on this too. The whole reason you’re reading this article is because he travel hacked his way to Europe.
How about an example?
Take our favourite card in Canada – the American Express Cobalt Card. For every $1 you spend on eligible food purchases (at the bar, restaurant, cafe, grocery store…), you’ll get 5 Amex Reward points. And even when you’re not buying food, you’ll be getting either 2 or 1 points back on every $1 you spend.
Maximizing Amex’s Fixed Point Travel Program gives you a value of 1.75 cents per point, or more. For those doing the math, that works out to an 8.75% return on spending on food and a minimum of 1.75% back on all purchases.
This means every time you pay with your Cobalt card you’re one step closer to seeing that loved one you miss, or that breathtaking view you dream about…
What’s not to love?
5) Who said saving money isn’t fun?
But there’s something that’s often missed along the way when you’re focusing so hard on saving money.
No matter how tight you want your budget to be or how hard you’re saving, it’s important to always make room for what makes you happy.
Your library has so much more to offer you than books
And what better way to have fun than doing it for free?
Your public library is a bastion of free entertainment, just waiting for you to sink your teeth into it.
Music, movies, video games, magazines, and of course books (print and digital)…They’re all there for the taking (well, borrowing). And it’s completely free.
Not to mention they often offer free gathering locations for different interest groups, like book clubs, quilting clubs, and photography workshops.
Now that I have kids who love reading and the occasional Disney movie, this saves me a literal fortune buying books and entertainment for them.
Heck, my local library even gives out free passes to fun summer attractions and historic sites just for visiting.
Seriously, check out what your local library has to offer you. I guarantee it’s a lot more than you think.
6) Eat well for less
There are some things you can’t really afford to cheap out on. Eating healthy is one of them.
That’s because the foundation of every journey is having the energy to make smart, logical decisions that maximize your spending. That doesn’t mean you can’t save money on food and still take advantage of healthy nourishing options.
Let’s look at some simple ways you can save while buying food at the supermarket.
Avoiding supermarket tricks
Like everything else, supermarkets are a business and their end goal is to sell you something – often more than you need.
Keeping a level-head about you is an easy way to make sure you’re not overspending every time you pick up groceries.
One common trick you should look out for is what products the store puts at eye-level on the shelf. These will naturally be the first kind you see, so if you’re in a hurry you’ll want to buy them first.
Take your time and look at everything else that’s offered on the shelf. Check out the price per unit/kilogram/etc listed in super small print (or calculate it if the store doesn’t list it for you), and make sure you’re actually getting what you need for the best price possible.
Another simple tip? Make a list first. It seems obvious, but it could really save you hundreds every time you shop.
Marketers are masters at selling you what you don’t actually need. If you go in with a game plan, it’s a lot harder to be swayed by their tactics. Oh and don’t forget to eat before you shop. Food can seem a lot more irresistible on an empty stomach.
7) You can still travel while on a budget
Though travelling can seem like splurging – something that’s considered a huge no-no when on a financial diet – it’s actually really important for your mental health to invest in experiences.
We all need something to look forward to, whether it be our next day off with the kids, or a week in the Bahamas.
If you plan ahead, you can actually travel really well on a budget.
Easy ways to find cheap flights
If you want to get as far away as possible, booking a flight will be your best bet. So what are some tips that can save you money on one of the biggest portions of your trip?
There’s one major tip: book ahead. Booking anywhere from 2 to 5 months before your trip will often give you the biggest savings. Also book on Sundays since less people tend to be using booking sites on these days.
When it comes to the actual ticket, don’t be scared to book on “weird days” like a Tuesday. The most expensive flights are often on the weekends, so booking midweek on “less desirable” flights is exactly what you need to save a couple hundred bucks.
Another major tip: be flexible. Though this isn’t always possible, postponing your vacation to the week after to get a better deal on flights is an easy way to save hundreds. Booking late in the evening or early in the morning can also save you lots, since most people book midday.
8) Start with a good education
Setting yourself up for success on your personal money journey often requires some kind of education or training.
…And chances are this will all be happening at a time in your life where you have little means to pay for that education (say hello to student loans!).
That’s why learning to save money on student life is so important.
Make a plan to pay off your student loans fast
First thing you need to do is figure out exactly what you owe and to whom. For example, is the majority of your money tied up in loans, lines of credit, credit card debt, or something else?
Once you know how much you owe to which type of loan, figure out the different interest rates and devote yourself to paying off the highest rate first.
Play around with a loan calculator and determine how much you can afford to pay per month, that also won’t cost you an arm and a leg in interest…This balance is very important to achieve.
The best course of action is to start paying it off as soon as you can. You don’t need to wait until you graduate, and you especially don’t need to wait until your 6-month grace period is up. In fact, these 6 months accumulate interest regardless if you pay it or not, so might as well start paying.
And finally, don’t be afraid to make large lump sum payments whenever you can. If you have some money left over at the end of the year’s budget, it could go a long way in getting you closer to being student loan free.
We’re here when you need us
So are you ready to start your money saving journey?
Getting a hold on your finances can seem terrifying, but once you get some momentum going, it can be smooth sailing most of the time.
Checking in regularly with your favourite personal finance sites is a great way to stay in the conversation and know the hottest tips around. And you can always share tips of your own to help out other smart savers who are just starting out.
So, what did you do to save money today?
Stephen Weyman is the co-founder of HowToSaveMoney and creditcardGenius ‒ a Canadian resource dedicated to helping consumers save and spend smarter since 2010.
I’ve always been a bit of an odd guy.
While the rest of my friends were off having fun immediately after high school and going off to higher education, I intentionally took a job working overnights at a local grocery store because it would kill my social life. If I didn’t have distractions then I could save more money, which was 18-year-old Nelson’s ultimate goal. I also lived in my parents’ basement much further into adulthood than any person should admit.
Surprisingly, this was not a hit with the ladies.
My weirdness also spread over to my investments. When I got serious about the stock market back in 2004 or 2005, I embraced a deep value contrarian approach, buying stakes in the cheapest stocks I could find. Sometimes it worked, and I had some huge winners. But it often didn’t, and some of those winners were negated by serious losses. Fortunately I saw the light and now embrace a portfolio stuffed with solid blue chips, real estate, and owning the mortgages on close to a dozen local homes.
Okay, maybe I haven’t eschewed the odd investing choices completely. But unlike my deep value portfolio, being a private mortgage lender has been a lucrative investment choice since I started in 2005.
Let me run you though the process of what I look for in a loan, red flags to avoid, and what kinds of returns a private lender can expect in today’s market.
The process
I first entered the private mortgage sector with my dad and another business partner back in 2005, which was a fantastic time to get into the business. We were the only lenders offering that type of financing in our small town (population: 8,000 people), which made it pretty easy to get business.
We started working exclusively with the local mortgage broker, who had become the go-to person for folks with home ownership dreams and credit issues. Most of the deals we did then (and now, actually) follow a similar pattern:
- Borrower buys a house and gets a conventional mortgage
- Borrower then runs into money problems and starts to rely on high-interest, unsecured credit
- The proverbial light bulb goes off when that unsecured credit starts to impact their ability to pay the mortgage
- Traditional financiers reject a new, larger mortgage
- Borrower then seeks out alternate financing (e.g. us)
When we first started in the business, getting 18% on a second mortgage was common. You can see why I was attracted to this.
Unfortunately, not every borrower is created equal. So one of the first things we did was create underwriting standards. But since our market was much different than a bank’s, our rules came out a whole lot different. We looked for the following:
- Someone with a large amount of equity in the property. Our maximum loan-to-value ratio was 75% with that ratio ideally closer to 50%
- Borrowers with a long history in our community. We wanted “local yokels” as my dad puts it, folks who are less likely to leave town
- An ability to afford both the first and second mortgage, but we weren’t as strict with income verification as the banks
- A fair credit report. Being behind on payments is fine, but we don’t like to see accounts the lender has written off or forwarded to collections
The good news about doing this in a small town is between the three of us we were familiar with 80% of our borrowers before they came through the door. This helped the underwriting process greatly.
A typical private mortgage deal
Let me walk you through a common private mortgage deal these days. I also did this on my blog a few years ago, in greater detail.
We no longer work with a mortgage broker. In fact, we don’t even advertise. These people find us, not the other way around.
Take, for instance, the local business owner who needed capital to do some improvements to his building. He was looking for $30,000. Since it was a business loan, the banks wanted a huge amount of paperwork before they’d even consider the deal. He wasn’t willing to go through the process, so he came to us.
For collateral we were offered a building worth approximately $150,000 with $60,000 owing on it. After our second mortgage was applied we’d have a property with a loan-to-value ratio of 60%, well within our parameters. A quick look at the business’s books made it obvious the payments wouldn’t be that big of a deal, either. We charged him 8%, which is on the low end of our rates these days. We’re usually somewhere in the 8-10% range, sometimes higher.
Once the deal is agreed to, the file goes off to the lawyer. They prepare the official legal documents for the client to sign and assist us in putting our interest on the title of the property. We pay for these legal expenses but charge the client a fee to enter the loan. We just slap that fee onto the mortgage balance and let the customer pay it off over time.
Many private lenders make their borrowers re-qualify on an annual basis, collecting a fee each time. We don’t. We’re happy to make a long-term investment in these folks. A typical loan these days comes with an 8-10% annual interest rate with a generous payout provision. Our borrowers can make extra payments or even pay the whole loan off whenever they want, without penalty. We want to reward good financial behavior.
Most folks don’t bother. They pay their minimum payment and that’s it.
What about losses?
We’ve been lucky. In close to 15 years as private lenders, our total loss on principal has been $0. Yes, that’s right. Our private mortgage portfolio hasn’t suffered a nickel in capital losses.
We do, at times, discount interest rates for folks who are struggling. It becomes more important to get the principal back than maximizing our return on investment. We’ll also waive late fees and other extra charges built into the mortgage contract. See? I’m not totally heartless.
We’ve never had to foreclose on anyone, but we have had borrowers who have walked away from their property. We lend in Alberta, which means there’s no recourse except to sell the property.
This is when having a low loan-to-value ratio comes in handy. Both times this happened we were able to sell the property and get all of our money back with accrued interest, along with enough to pay the Realtor a generous commission to sell the place.
How can you get in?
Chances are the typical person reading this resides in a major city. If that’s you, I don’t like your chances of getting into the private mortgage game. There’s just too much competition already. Lots of competition means you’ll be left chasing the worst deals, which is how you lose.
But there are certain things you can do to stand out. Perhaps you join a local house flippers group and create relationships with these folks. Or you just do this type of lending for your group of friends. It’s smart to start small, too, while you get the experience needed.
If you do work with a mortgage broker, like we did, offer a compelling value proposition. We were able to make decisions on loans within an hour, for instance. Most other lenders take 48-72 hours. Our broker partner loved that.
And that’s about it. I’ll hang around in the comment section and answer any questions you might have, including “why are there so many typos in this” and “God, you’re ugly”, even though the latter isn’t really a question.
Nelson Smith normally writes at Financial Uproar, which is mostly a place for him to make 37 bad jokes into a serious point about finance. He lives in rural Alberta with his wife and loud cat. His hobbies include being perpetually disappointed in the Toronto Blue Jays, shaking his head at the antics of young people, and falling asleep on the couch.
We leave for Edinburgh this week, the first stop in our epic 32-day summer break in Scotland and Ireland. As we get closer to departure I’m starting to realize that I don’t know what I don’t know.
For instance, I forgot to select our seats until recently (long story!) and now the flight is close to full. To get four seats together we’ll be relegated to the very back of the plane. Oops! That’s a far cry from the business class seats I’d envisioned when we first booked.
The United flight connects in Chicago for a long layover. No problem, I thought. I’ve got a Priority Pass membership and the American Express Platinum card with access to more than 1,200 airport lounges. Welp, all of the accessible lounges are located in terminal 5. We fly in and out of the United Airlines hub in terminal 1. Hopefully we can find something to do at O’Hare for six hours. Another oops!
Next up we’ll try for a hotel upgrade. We have gold elite status with Marriott, which includes an upgrade if available. Apparently the time to do this is when you’re invited to check-in via the Bonvoy mobile app. Frequent guests say to message the hotel directly through the app to inquire about an upgrade so that’s what I’ll do. Maybe we’ll get lucky.
I’m loathe to pay $300+ for long-term parking at the Calgary airport but the alternatives seem just as expensive, inconvenient, or sketchy (like parking in a gravel lot off site).
We’re not renting a car in Scotland so we need to have a good grasp on the transit system, including how to get from the airport to our hotel. Museums tend to be free but castles and other attractions are not. We bought a castle pass for the family that’s good throughout Scotland, but will we get value from it if we only visit a handful of castles?
I’m mostly a go-with-the-flow kind of guy but what I’ve learned is there’s some things you simply need to know inside-and-out to avoid paying extra or being extremely inconvenienced. Travel days can be long and intense. Good seats, lounge access, and hotel upgrades can help maximize comfort, but accessing the perks isn’t always guaranteed.
We’ll learn from our experience this time around and be even more prepared for when we travel to Italy next April!
This Week’s Recap:
My post about taking CPP at age 70 was very popular but came with a few caveats so this week I tried to address those with three reasons to take CPP at 60.
Over on Rewards Cards Canada I looked at the retooled Scotiabank American Express Gold Rewards card – the new earn rates put this card squarely in the top travel rewards card conversation.
Summer Break posting schedule:
This will be my last post here for about a month as we prepare to travel and take our summer break overseas. But fear not! We have a bunch of terrific guest authors lined-up for you while we’re away, including:
- Nelson Smith from Financial Uproar
- Stephen Weyman from How To Save Money and Credit Card Genius
- Barry Choi from Money We Have
- PWL Capital’s Benjamin Felix
- Frugal Trader from Million Dollar Journey
- Dale Roberts from Cut the Crap Investing
- Jonathan Chevreau from the Findependence Hub
You’ll learn about private mortgages, the Smith Manoeuvre, selling stocks in retirement, maximizing your credit card rewards and loyalty programs, what one retiree has learned so far in retirement, and much more.
I may check-in here with a trip recap once we get to our home-base in Kilkenny – but no promises! I will be sharing more on Instagram so make sure to follow my personal account as well as the Boomer & Echo account to see more about our trip while it’s happening.
Weekend Reading:
The Globe and Mail’s John Heinzl answers more of your RRSP and RRIF questions in this column.
Can your portfolio ever get too big for a Couch Potato strategy? Dan Bortolotti explains why this passive approach isn’t just for newbies.
Preet Banerjee is back with a new video, this one explaining the ins-and-outs of deferred sales charge mutual funds:
Here’s Million Dollar Journey with five useful retirement calculators to help determine how much you need to retire.
Lesley-Anne Scorgie explains to parents how to use the Canada Child Benefit increase wisely.
My Own Advisor Mark Seed interviews 35-year old Jordan Mass who is on a great path to building wealth.
Why not all wealth advisors are worried about the rise of the robo-advisor:
“The best case for all involved is to have an individual with a financial need that fits well with their provider, whether that is a computer, a bank branch, or a highly specialized wealth advisor.”
Why over 30 years as an investor taught Dale Roberts that nobody knows nothing.
Retirees and young families are fighting for the right to summer in cottage country, and that has recreational home prices sizzling.
An amazing post by Rick Ferri on his experience attending his first “free dinner and retirement discussion” since moving into an over 55 community:
“Let me sum up what I heard this adviser say: Be very afraid. Advisers manage money badly, Social Security people lie to you, the stock market is risky, inflation is around the corner, healthcare costs will kill you, and taxes are going up. Last, if you’re a grandma, you had better schedule an appointment now or you may never see your grandchildren again.”
PWL Capital’s Ben Felix explains what low volatility – low Beta ETFs are all about:
Michael James on Money reviews Annie Dukes’ book, Thinking in Bets.
Finally, here’s a fun one – Warren Buffett and Bill Gates pick up a shift at Dairy Queen.
Enjoy the rest of the weekend, and I’ll be back in a month!