Friday, April 8, 2011

Saving is like a nice

I started off the new year with the goal of saving $1,000 a month to invest for retirement. I won't lie: At first I felt the pinch. February was a little easier and, lo and behold, I found myself with extra money at the end of the month. Once March had passed, I realized I had saved even more cash, going $300 over my goal for that month. In April, I feel I'm poised to save even more than that.

So, what happened? Why is something I once found so challenging getting so much easier?

To begin, I should disclose that it's not all my doing. I'm dating a fellow who is quite generous and insists on feeding me tasty restaurant food at various intervals in the week. In a bit of cosmic irony, he refuses to allow me to pay one cent towards these costs, and I am actually starting to feel a teensy bit guilty. Moral: Be careful what you wish for. The upshot is that I still buy groceries but I am eating at home less often. Instead of $75 a week I am probably spending closer to $50.  That still only accounts for about a third of my "bonus" savings, so where is the other money coming from?

I have a pretty simple theory: Just as spending begets spending, saving does the same. For instance, I stopped spending money on magazines and cable TV, which were always giving me ideas of things to buy - things I don't really need at all. I also think "saving" becomes a habit, just like anything else you do seriously for awhile. It is starting to feel comfy and warm and a beer you crack on your patio after a long week at work, except the beer is, uh, cold. (Yeah, you know where I'll be after 5pm. And yeah, I'll have one for you. Happy weekend.)

Initially, to get my spending under control, I was writing down everything I bought; now I've stopped obsessing over every cent. I don't dither over smaller purchases and I don't feel I'm stingy with myself or my friends. It's like I've cut out the unnecessary items to clear more way
Hey, minimalism can be a beautiful thing.

Monday, April 4, 2011

Credit rating reform: Dreaming in technicolor and seeing red

Past due? Seven years of bad luck for you...
Here's something I'd like to see a political party campaign for: a total overhaul of our incredibly logic-defying credit rating system.

I find it bizarre and arcane that you can be 60 days late on *one* bill, five years ago, and it is still affecting your otherwise spotless credit. Yes, it was my mistake (I moved, my mail wasn't forwarding properly and I believed I had paid off the card. I should have checked. My bad.) I also noticed that my rating dropped a few points recently, despite now having a zero balance on all my credit cards. I can only guess because I applied for and accepted a new credit card with a lower interest rate. This really gets me.

Here are my suggested reforms:

-Free and easily accessible info: Credit scores should be available for free in a timely fashion (aka online). We should not have to mail in forms - and wait weeks - to see where we stood weeks ago. Credit scores are constantly in flux and certain life events require timely access. It's that simple.

-Detailed methodology: Don't just tell us the "kind of things" that will affect our scores. Tell us *exactly* how it is calculated so that we can understand *exactly* how to improve things.

-Be reasonable, please: Isn't seven years a tad draconian? I mean, isn't that also the number of years of bad luck you get when you break a mirror?

-Distinguish between big mistakes and little mistakes: From what I can tell, being 60 days past due on a $50 HBC bill is the same as being 60 days past due on a $5,000 payment. Or your mortgage for that matter.

-Offer some leniency for first-time offences: A person who makes a mistake once and is warned with a lesser sentence might not make it again.

-Quit penalizing us for being "active": When we apply for a more credit or there are "inquiries on our file" that shouldn't automatically be a negative. Judge by our balances and other info. If I have a zero balance on all cards and a healthy bank account, I shouldn't be penalized for getting another card.

-Put more focus on the big picture: True, I was 60 days late on one $50 payment five years ago, but I've been at the same job for six years, have made all my payments on time for the last five years, have savings, and carry a zero balance on my credit cards. Do you think maybe I should have a perfect credit rating at this point? I damn well think so.

-Quit penalizing consumers for having "no credit." It should be a neutral point rather than a hit against us.

Wednesday, March 30, 2011

Mo' Money, mo' problems: Is "free money" for education a fiscal mistake?

According to the Cons, our students are to be trusted
with cash about as much as Fat Joe and Lil Wayne
Yesterday, the Liberals made their first big platform promise for the upcoming federal election, announcing their "Learning Passport," which would provide $4,000 tax-free to every high school student who chooses to go to university, college or CÉGEP. Students from low-income families will qualify for $6,000 or $1,500 for each year of study. 

Reaction from the media outlets not routinely kissing Harper's butt was overwhelmingly positive: See here and here.

Others weren't so jazzed. National Post columnist John Ivison writes,

"All [students] have to do is open an RESP (no need to make any contributions), turn up at college or university and get their $4,000 in free money. For some reason, the words “beer” and “popcorn” immediately spring to mind." 

The Harper camp launched a full-scale attack on the proposal, which I guess is what they're supposed to do and one of the reasons elections can be so dull. Of course, Conservatives are usually pretty hot to trot when it comes to putting money in the hands of individuals (here I think of Harper's clawback of government-funded daycare in favour of cash payments to parents).

So, who is more likely to waste "free money?" Students? Or parents? Or Fat Joe and Lil' Wayne?

Students, you say?

Let's look at it this way. Under this proposal, students must physically go to a bank and open an RESP. They will be able to see the money accumulate. This in itself could instill positive habits, and get them thinking about saving rather than spending

Yes, some students will waste their money. But in the long-run, affordable education for everyone is an investment in our future. Ivison uses the traditional argument that lowering corporate taxes is the way to make Canada attractive to global investors.

Let's be real: Canada would look good drunk at 1pm, in a dayglo tuxedo and fake moustache. Why? Because we have natural resources - aka "stuff the world needs" - the demand for which will only increase. Now if our goverment is stupid, and goes around just giving away our resources and bowing down to the US every time there's a spat (ahem, Harper, ahem, softwood lumber), well, that's a different story altogether...

I say, let's instill some financial literacy and responsibility in our young people. That, coupled with better access to education for everyone could certainly go a long way towards securing our collective financial future.

PS: I often wonder, when rappers throw money on the set of a music video, do they attempt to collect it at the end of the day? Or does a smiling janitor just sweep it into a big, tidy pile?

Monday, March 28, 2011

Federal election: The markets don’t care. Should you?

Do the eye (brow)s  have it? National Post columnist
John Ivison sports the new Ignatieff look.
With a Federal Fun Fest (also known as an election) now slated for May 2, I’m staring down the daunting task of re-evaluating which party’s fiscal policy most floats my boat.

It’s going to be a tough call, because as always I’m torn between voting "for me" and attempting the nobler and more convoluted task of voting for the good of my country. Like many of us, I like to try and go to the polls with a sense of which party could possibly lead us – economically and socially – towards a better version of ourselves. Fiscally, it can be easy to get mired in relatively narrow issues – who will raise taxes for whom being the most obvious. Health care, government spending and social programs all come into play in terms of securing our financial and societal well being.

This article in today’s Globe
says don’t worry about your investments – yet. Indeed. Even in a coalition government, the free-spending spoke in that wheel – the NDP – would have to kowtow to the Liberals. That is, barring any crazy upsets, like a mythical landslide victory by the Green Party that everyone knows is never going to happen so long as people continue to engage in certain activities such as the driving of automobiles...

Ramping up to the election, I’m going to try and provide as much unbiased information as possible on the fiscal policy of the key parties. And, because that alone would be totally boring and unfun, I’m going to throw in some extremely biased and hopefully amusing commentary, as well.

Just so you know where my sympathies lie: Steven Harper is not my friend. Nor is he yours – especially if you’re gay, aboriginal, a feminist, or just really don't like war. In past I have spoiled my ballot rather than vote for the Cons. Will that even be an option this time around? Please note also that I am no fan of Liberal Party leader Michael Ignatieff - a man who still has not fully addressed his latent eyebrow issues. True, there is now an actual separation between the brows. Yet this new effort at grooming seems to have rendered them all the more sinister and Communist-dictator-like. This does not bode well.

In all seriousness,
the real test of the men (and one very determined and intelligent woman) will be precisely what was lacking last time around: Vision. Can Harper or Ignatieff come up with one? If nothing else, it will be fun to watch 'em try.

Wednesday, March 23, 2011

Negotiation 101: Not getting taken to the cleaner

When we think of "negotiation" in financial terms, we may think those stress-inducing, grey-carpet-and-muzac situations: mortgages, loans, car dealerships (I hear this one is particularly bad). But really, financial negotiation happens in a myriad of small ways in our day-to-day lives, whether it's deciding how to split the cheque, or haggling over a cab fare.

Or, in my case, yesterday: Demanding cash compensation after my dry cleaner wrecked not one, but three of my blouses.

Staring at my clothes covered in black ink - ink belonging to a pen that was clearly not mine - I realized that my reaction to the problem would make all the difference in its outcome. Here are my pointers, which I think can be applied to a variety of scenarios:

1. Even if they don't apologize, set the standard for the communication by being calm but firm. Express disappointment, be polite and understanding, but do not be a pushover. My first comment: Oh dear. One of those shirts was my favourite. But, these things happen. Everyone makes mistakes. Then I asked how they planned to make it right.

2.Don't accept less than what you feel you deserve - at least initially. They countered by offering me a dry cleaning credit equivalent to the value of the clothing.

3. Use humour if you can - sometimes it helps set both parties at ease. I replied, with a grin, "I'm not sure a credit will be helpful for me to clean clothes I no longer own." [Blank stare in this case, but I swear it does work sometimes.] I added that I would need cash compensation to replace the items that were ruined.

4. Be honest. No strategic reason, just because it's the right thing to do. I told them what the items were worth - roughly $200.

5. Don't accept less than you feel you deserve - just yet. They offered me $150 in cash. I countered that the items were worth more than that, plus I would have to go to the effort to replace them.

6. If you reach an impasse, put the problem back in the hands of the person who caused it.  When encountered with another blank stare, I said, very nicely, "I'm sure you know what's fair. So what don't you tell me what you think is the correct way to handle this situation." The lady at the counter went into the back and after some tense negotiations with her husband, she offered me $150 cash plus free cleaning for the other items that were not ruined.

7. Be prepared to accept slightly less than you feel you deserve. Yes, I would have preferred a more forthcoming apology and more effort on their part to compensate me for the cost of the clothing and my trouble, but I realized that what they were offering was as good as I'd get - without a time-consuming and potentially Disastrous Duel to the Death with the Dry-Cleaning Duo. They would probably win, too. They are hard-working, wiry, humourless people. These are not things I like in an opponent.

So, I said goodbye to my favourite blouse - and the other two, which honestly weren't that hot to begin with - and left the store *almost* smiling.

The end.