Books, Books, Books!

With lots of time on my hands, I find that I spend a lot of time reading. It feels like a luxury that I haven’t had since I spent my ‘youth’ studying for exams, so I must indulge now! Although it would be great to hit 100 books this year, I’ll just continue reading as much as I can. As I’m sure I’ve mentioned countless times before, my library card is the best $12 I spend every year!

I have had a couple people ask about what personal finance books I would recommend (honest, there have been people who have asked!). As I scroll through my excel list of the books I have read during my ‘retirement’ (I TOLD you I ❤ excel!), it was hard to narrow down the list as I really do enjoy reading finance books. But the following are books that I would read over and over again, and, more often than not, have inspired blog posts.

–          The Wealthy Barber and The Wealthy Barber Returns by David Chilton. The tone is conversational and he is very entertaining! I picked up The Wealthy Barber Returns a couple weeks ago and I have gone through it twice. AND I gave it to a friend who, with a huge sigh, reluctantly started reading, and was chuckling by the second page. He finished it off, learned some things, and actually ENJOYED it.

–          The Elements of Investing by Charles D. Ellis. He was a managing partner of Greenwich Associates, a past trustee at Yale University and chair of their investment committee, and director of Vanguard (I ❤ Vanguard!) He has written 14 books, but I believe this one would be great for beginners. It’s simple and sweet (AND SHORT!) and can be read in an hour or two. If you want more, I would also recommend Winning the Loser’s Game.

–          The New Coffeehouse Investor by Bill Schultheis. Another GREAT book for beginners. Conversational tone. Lots of basic, easy-to-read information.

–          The Lazy Person’s Guide to Investing by Paul Farrell. The title says it all.

–          Your Money or Your Life by Vicki Robin & Joe Dominguez. Easily one of the most influential books I have read on my life. This one requires a bit of work (calculating your net worth and budgeting) but things I believe everyone should be doing to become more financially responsible. The exercise where you calculate all the money that has come into your hands and what you have to show for it was eye opening for me, and it is largely responsible for leading me to where I am today.

–          Stop Acting Rich and Start Living Like a Millionaire by Thomas Stanley. Pretty bold title. This is more about the psychology behind personal finance and society’s (warped) perceptions on being successful. Consumerism is big business in our society, but at what cost?

–          Four Pillars of Investing by William Bernstein. Definitely a more intermediate read that covers the theory, history, psychology and business of investing.

–          Common Sense on Mutual Funds and The Little Book of Common Sense Investing by John C. Bogle. The founder of Vanguard. Need I say more?

–          Paths to Wealth through Common Stocks by Philip A. Fisher. For those who are interested in choosing their own stocks. But I highly recommend reading the above books before checking this one out.

Like I said, it was HARD to choose just a couple to recommend. But I think if you go through the ones above, you’ll have a pretty good foundation to take care of your personal finances. I highly recommend putting them on hold at the library and check them out! Let me know what you think!

The following are the books I currently have on my night stand:

–          101 Tax Secrets for Canadians by Tim Cestnick

–          The 50 biggest estate planning mistakes by Jean Blacklock and Sarah Kruger

–          The Food Revolution by John Robbins

–          Atlas Shrugged by Ayn Rand

–          The Wealthy Barber Returns by David Chilton (of course! I have to return it and I’m a little sad to let it go.)

Have you read any of the above books? What did you think about it? Do you have any books (personal finance or ANYTHING) that you would recommend to me?

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I <3 MBNA Smart Cash Platinum Plus MasterCard

It’s been awhile since I’ve posted a favourite product of mine. I’ve hesitated to do a post about my favourite credit card as I believe a lot of people treat these as an additional cash source, and not just a financial tool to earn rewards. I’ve worked with people who believe that they are okay financially if they have cash in the bank earning 1% or so, and use their credit cards to finance their everyday life at 20% interest.  So this post is for those who are beyond Step 2 of my Financial Well-being game.

There are A LOT of credit cards out there, with endless promotions and rewards arriving in your mailbox every month. Credit card companies are making a killing, and are eager for your business. I mentioned in a previous post that my credit card pays me for the honour of using it, and I’m currently anticipating another $50 cheque as we speak.

The MBNA Smart Cash Platinum Plus MasterCard carries no annual fee. (Of course!) What I ❤ about it is the cash rewards that is provided:

  • Get 5% cash back on net gas and grocery purchases for the first 6 months (up to spending $600 per month, 1% thereafter)
  • Get 3% cash back on net gas and grocery purchases thereafter (up to spending $600 per month, 1% thereafter)
  • Get 1% cash back for all other net retail purchases
  • 1.99% introductory annual interest rate on balance transfers and cheque cash advances for 10 months

The 1.99% should not be an issue if you’re past Level 2 of the Financial Well-being game, but it is something to keep in mind.

I currently also carry Presidents Choice Financial MasterCard. They pay out 1% on all purchases, and you can use the rewards at Superstore or in their online store. I keep this one around as it is my oldest card (good for credit history!), but MBNA is definitely my main card. The best thing about this card is that once you accumulate 5,000 points, they issue you a cheque for $50. This money will be sent right to your house, and you can spend it on whatever you want. Depending on your spending habits, the cheques can come pretty frequently; I have clients who receive cheques every 6-8 weeks!

One tip that I use requires a bit of planning. If you are planning to make bigger purchases at, for example, Future Shop or Best Buy, you would earn 1%. If you know how much the item will end up costing, I would head over to Superstore to purchase as many gift cards as required to purchase the item, and then head over to Future Shop to buy the item with your gift cards. You end up earning at 3% (or 5% within the first 6 months) on the purchase instead of the 1%! Easy way to rack up your points more quickly! This also works if you plan on heading out to The Keg or other restaurants for dinner. Superstore offers a decent selection on gift cards, so you can head over there to check it out. This also works at Safeway and Co-op. Even though most of the Walmarts in Calgary are now Supercentres, I’m not sure if they count as groceries with the MBNA credit card.

Another tip is to make sure you go through your transactions to see which ones are earning the 3% vs. the 1%. I have noticed that if you fill up at the Petro-Canada gas stations that are attached to the 7/11s, you will only receive the 1%. Pretty easy to just cross the street to get your 3% instead of the 1%.

I know there are those who swear by their travel rewards cards; I’m unable to recommend them at this time as I personally would not accrue enough points to make up the annual fee as well as how much the free trips would have otherwise cost me. It would require a bit more analysis to see if these cards are actually worth it; any volunteers? 🙂 I’d be up for calculating it if you’re willing to supply the data!

Which cards are in your pocket? Are you loyal to the company? Does your card carry annual fees and/or rewards that are comparable to my favourite credit card?

Note: TD has actually bought MBNA Canada back in November 2011, so it will be interesting to see if they continue to offer this card as is. I will definitely update if new information arises.

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50% return, 100% Risk-Free Investment!

Ever wonder what you would tell your 18-year old self if you had the chance? I would tell my younger self to always pay myself first. Well, that and stock tips like buy Apple and winning lottery ticket numbers, but that’s just wishful thinking! Even though I have sufficient savings to enjoy the lifestyle I have today, I could be truly financially independent if I just had some foresight. Sure, I saved as much as I could, but I always paid myself last. Rent, restaurants, vacations, cars, education; I paid everything and everyone else first. Whatever was left over, I put into savings. Sometimes, there wasn’t enough left over for savings. But that was never a priority. If I decided when I was 18 to always put 20% of my gross income aside, I could only imagine where I would be right now.

So, my cheat for Level 3: PAY YOURSELF FIRST! Commit to paying yourself first by setting up an ASP (automatic savings plan). Technically, the government already takes their cut before you even see your paycheque, but you should be next in line. I recommend having it automatically come out of your chequing account every time you get paid so you don’t even notice (hopefully) that it is gone. Then you allocate the remaining money to whatever other priorities you have in your life.

You can set up your savings account to automatically withdraw money whenever you have a paycheque coming in. This can be done with PCF, but if you find that the easy access you have to the savings account is too tempting, I recommend using ING Direct.

ING Direct. Another online bank that I use solely for saving purposes. All their chequing banking services are free (of course!), but I continue to use PCF for this purpose as their network (CIBC) is much easier to find around the city than ING Direct’s network. One quick note: if you ever use email fund transfers (EFT), ING Direct allows you to send these for FREE while PCF charges a $1.50 service charge. So I have used ING Direct to send EFTs, and they’re a great way to get money to someone without actually having to meet up.

Anyways, what I like about ING Direct is that the savings rate is comparable to PCF (1.50%), and you can set up different savings account for different categories. You can set up individual accounts for emergencies, retirement and vacation for example. The interface allows you to set up individual goals for all the accounts as well as tracks how close you are to hitting your target as well as calculates the amount of time it would take. Also, it will require a few days to get the funds out of ING Direct to your chequing account, so hopefully this helps to deter you from sabotaging yourself!

So start today! If you can’t afford to put 20% away every paycheque, start with something. Anything. $100. $50. Even $20 helps. Once this becomes a habit and you realize that you don’t miss this amount, slowly increase the dollar value. Just set it, and forget it! (Bonus points for anyone who can tell me what infomercial that is from!)

To hopefully entice you to start paying yourself first, ING Direct is currently offering a Christmas promotion; set up an account with them before December 31, 2011 and deposit a minimum of $100, and they will give you $50. (That’s a 50% return!)

https://secure.ingdirect.ca/InitialINGDirect.html?command=displayLogin&device=web&locale=en_CA

Use the Sign me up! Tab on the far right and choose the Savings Accounts link, and finally the Investment Savings Accounts.

Even if you don’t set up an ASP, it’s still $50 someone is throwing at you for the 5 minutes of time it would take you to sign up. Easy work if you can get it! Also, if you do sign up, you can use my Orange Key (35864006S1), and I’ll get $50 too! Every little bit helps, right? 🙂

How do you save each month? Do you currently pay yourself first? Do you think having the savings coming out automatically without any extra effort from you each month will help you save more?

As it is a pretty new addition, please use the “leave a comment” link above for public comments, and the form below for private comments.

I <3 PC Financial

I used to hate banks. You put your hard earned money into a chequing account at a bank and they pay you next to nothing. If you want to take your OWN money out, they’ll charge you a fee for using your debit card, when you withdraw money at an ATM, or if you write a cheque. Even if you do absolutely NOTHING, they will still charge you the monthly fee for holding your money for you. In turn, they take your money, and lend it to someone else and charge them a great interest rate. I hated them, but boy, I wish I could be them! And the service! Don’t get me started on the service; I seldom go to the bank for anything these days. I seriously considered investing in a safe and just holding my cash at home.

Along came PC Financial. It was like a dream come true. Free. Everything. Could anything be more glorious? Sign up at your friendly local superstore, and you can get set up with a chequing account and savings account. They’ll start you off with a 100 free cheques, and you can order more if you run out. I prefer banking online, so I am able to see my bank accounts online whenever I want, and transfer money effortlessly between my accounts. And the interest rate on their Interest Plus savings account is one of the highest in the market right now at 1.50% (I regularly check this to ensure my money is doing the best it can do). You can use your debit card as much as you want, for FREE of course, and as long as you withdraw cash from a CIBC ATM, this is also FREE.

Sounds too good to be true? There’s got to be a catch, right? As it is an online-based bank, they don’t actually have branches for you to go line up in. Some may feel more comfortable with a “real” bank, which I do have as well, but only as a way to fund my investment accounts. No monthly fee, and no additional charges are required if I deposit only once a month. Everything else, I use my PC.

A lot of people will ask “it’s only a couple bucks a month, what’s the big deal?” Everything adds up, whether you realize it or not. How often do you go through your bank statements to make sure everything adds up? To see the amount of bank charges you incur each month? This might be an interesting exercise for you to do (now that you have all your bank statements all organized and easily accessible!) How much are you paying in bank fees? According to PC’s website, you can save up to $200 a year. Is there ANYTHING else you would rather spend this money on? I don’t advocate spending NO money at all; I just like spending money on things I actually WANT to spend money on.

Let’s say we have $10K stashed away for our emergency fund. Some may choose to keep this in a chequing account to maintain a minimum balance so that their monthly fees will be waived. Let’s assume this money is untouched for a whole year. At the end of the year, if you had the money in a chequing account, you will have around $10K (assuming they don’t charge you money for not having any activity during the year) as most chequing accounts don’t earn interest. My money would sit in PC Financial’s Interest Plus Savings account, and I would have an extra $150 in my balance.

But wait! You’re comparing chequing accounts to savings accounts; that’s not fair! Yes, but if you don’t keep the minimum balance in your chequing account, you may end up paying up to $200 a year in fees which would barely be offset by the dismal interest rates you will receive in the main bank’s normal savings accounts.

Check out their website for more information: http://www.banking.pcfinancial.ca/a/products/chequingAccount.page?region=AB&language=en&signinop=

The handy link also allows you to sign up for their accounts as well.

So how much are you paying in monthly banking fees? How much money are you losing each month by not allocating it properly?