November 30, 2013


‘Tis the season to shop. Retailers always find reasons for us to spend our money. Since when did Santa mean shopping? He symbolizes giving. Rather than give something we bought, we can give something more precious: ourselves.

If you must shop, here are 12 timeless tips. For examples, we’ll use gadgets rather than items like clothing.

1. Know What You Want

If you’re prone to saying “I’ll know it when I see it”, you risk spending lots of time shopping. You also risk overspending. Think about what you want first. You can still browse, but now you have a Plan A. If you like wandering around, you could go for a walk.

2. Watch Price Trends

If you don’t have a sense for the normal prices, you can’t tell if you’re really getting a deal. Sales may be based on prices that few would pay.

Items may be cheaper when major sales aren’t taking place. Over the years, I’ve noticed (and this is unscientific) that highend computers tend to be cheaper in late November and early December than just after Christmas. There are sales every week, but the deals vary.
Would you buy this hard drive?
You might notice patterns too. If you’re patient, you can win.

3. EXAMINE The Offers

The screenshot shows a Black Friday deal from Dell. On the surface, the deal looks good: a $90 hard drive for $50. I was tempted but looked closer. Does Dell even make hard drives? My Dell computer has disk drives from WD and Samsung. Since no one else sells Dell hard drives, they can set any price they want. The $90 is a “market price”, which is a fictitious. Even so, the offer looks good. However, the product page doesn’t show the warranty.

Instead, you’re told “For copy of Ltd Hardware Warranty, write to Dell USA LP, Attn: Warranties, One Dell Way, Round Rock, TX 78682 or see”
Dell-branded hardware products purchased in the U.S. or Canada may come with a 90-day, 1-year, 2-year, 3-year, 4-year or 5-year, or other limited hardware warranty.If you click through, you’re told something 100% useless: “Dell-branded hardware products purchased in the U.S. or Canada may come with a 90-day, 1-year, 2-year, 3-year, 4-year or 5-year, or other limited hardware warranty.”

In contrast, Costco sells a WD My Passport Ultra hard drive with a three year warranty and carrying case for $90 (1 TB) or $129 (2 TB). Maybe that’s a better deal for peace of mind?

Sorny and Panaphonics (click to visit source site)4. BEWARE OF Substitutes

The Simpsons were once looking for a new TV and kept driving further away to get the best deals. They saw brands like Sorny, Panaphonics and Magnetbox. Some buyers might get fooled by these seemingly familiar brands.

Comparing features and specifications isn’t enough either. What matches or wins on paper may not be a good choice. For instance, the tablet may have short battery life or an unresponsive touch screen.

click for product page on Staples5. Accept Substitutes

I’m looking for a webcam. My preference is Logitech but there are great choices from companies like Microsoft too. (In this case, I got the top-rated Logitech c920 at Staples today. Lower prices seem unlikely and I’ve lightened Santa’s load.)

Flexibility makes shopping easier. There will likely be something on sale when you’re ready to buy.

Kaspersky Internet Security on Boxing Day6. Watch Sales Cycles

Some items go on sale at specific times of year. For instance, anti-virus software is always on sale on Boxing Day. I don’t know why. A three-user Kaspersky Internet Security suite drops from $80 to $20 at Best Buy. Since the licence lasts a year, this is an annual must-buy item.

7. Wait After Buying

You might buy on impulse. That’s fine. We’re human. You don’t have to open the product immediately.

Wait a day or more. Do you still feel compelled to keep it? If not, return your purchase. This happens to us at Costco where the products keep changing and the return policies are fair.

Dell's friendly return policy8. Know The Return Policy

Shop where you can return purchases easily, without paying for shipping/restocking. I’m reluctant to buy online unless the retailer has physical stores for returns. Sorry Amazon. Especially sorry to smaller retailers (even with physical stores).

Suppose you bought the hard drive from Dell and decided you didn’t like it. You can return it without cost or penalty.

9. GET Quality

If you’re comfortable buying fewer items, you’ll have less clutter. The environment will thank you too. Quality costs more but what you get is often more enjoyable. I’m still using my iPad 1, which is still working fine.

10. Latest or Greatest?

Is last year’s model that bad? Everything becomes old. You might save more by getting last year’s proven model. With gadgets, it’s tempting to get the latest because newer is often better. That’s not true for products like toaster ovens where the changes may be cosmetic.

Another option is to get a refurbished model with a full manufacturer’s warranty.

Multiple colours but your only choice is black11. Reduce Choice

Shopping consumes mental energy. Less choice can be better. For instance, Costco has a limited selection, which is fine. As an example, you can get hard drives in multiple colours but Costco only stocks black. Does that really matter?

12. Ignore THe Hype

We live in the world of buyer beware. We also live in a world where we don’t have to buy. Our basic needs are limited.

As George Carlin said, “If you didn’t have so much stuff, you wouldn’t need a house. You could just walk around all the time … your house is a place to keep your stuff while you go out and get … more stuff! Sometimes you gotta move, gotta get a bigger house. Why? No room for your stuff anymore.”


Podcast 248

direct download | Internet Archive page | iTunes

PS Just because you have money to spend doesn’t mean you have to spend the money.

November 24, 2013


Let’s dream. Imagine retiring early with nary a financial worry. What's the magic age? We’ll explore 35, 55 and 75.

Freedom 35: from The Trailer Park Boys (click for vendor's website)Freedom 35

Julian: I’ve got a plan, all right. It’s called a Freedom 35.

Bubbles: What’s a Freedom 35?

Ricky: You’re not going to believe. This is perfect. Julian’s got these guards on the inside that are going to smuggle in a bunch of dope that we grow, sell it for big money in there and then we can retire and never have to break the law again.

This early retirement plan is from the Trailer Park Boys (Season 2, Episode 1). Not recommended.

Very few can afford to retire at 35. Suppose you could. What would you do with the rest of your life even if you live outside a trailer park?

imageFreedom 55

I never quite understood the Freedom 55 ad campaign by London Life in the 1980s. The idea seems to be buying their products (perhaps whole life insurance) would magically to build up enough savings to let you retire at age 55.

To paraphrase Bruce Springsteen, a dream that doesn’t come true is a lie … or something worse. Was early retirement possible for typical buyers?

Who really retired? Probably the advisors --- on money they made from selling the products.

I grew up in London, Ontario where London Life was headquartered. At Western University, I was taught by actuaries from there and received The London Life Continuing Actuarial Scholarship.

I wanted to believe the dream. When you're in your 20s and 30s, age 55 seems so far away. Being able to retire at 55 had appeal and might have been achievable with a good job and a defined benefit pension plan.

Now people in their 50s plan to keep working after they retire in their 60s, often to supplement their income (Huffington Post, Aug 2012).

Freedom 75

Retirement ages look like they’re getting closer to 75 than 55. We're living longer than ever. That means our money must last longer. Even if we're saving enough based on rosy projections, the investment returns may not materialize. Well-paying jobs aren’t secure. Also, we face unpredictable expenses such as health costs. We don't know what the government can afford to provide for us or for how long.

Consider the case of Tom Palone, who was a VP at Oral-B earning over $100,000 a year. Now 77, he works two physically-demanding part-time jobs paying $10/hour or less. He says, “I earn in a week what I used to earn in an hour” (Daily Mail, Sep 2013).

Where does that leave us? We might have children but there's no assurance they'll care for us physically or financially even if they can. Maybe you can keep working part-time if you’re healthy. Besides earning money, you'll have things to do. Decades of retirement can feel like a job too.

Your Situation

You can get financial projections that show how much you need to save to achieve a particular level of savings by a target age. Unfortunately, higher risk accompanies higher projected returns.

Life insurance is sometimes proposed as a savings vehicle since growth is tax sheltered as in an RRSP. Withdrawals are taxable but you can access the savings via tax-free loans. This assumes that you're comfortable carrying debt when you're retired. Even if you think you are, you may find that you really aren't. If you're borrowing against the collateral in your policy, the interest rates aren't predictable.

Insurers provide guaranteed lifetime income via life annuities. The payments are determined at the time you buy, based on your projected remaining lifetime and projected interest rates. Since we're living longer and investment returns are currently low, the annuity income looks less attractive.

Step One

To get a better understanding of your financial situation, get an independent review by a fee-only financial planner who doesn’t sell any products or get any referral fees from product sellers. Fee-only planners vary in what they charge, ranging from hundreds to thousands. They may save you much more than that through lower cost investments and higher peace of mind.

You can get "free" advice from several advisors who sell investments or insurance, or claim to do real financial planning. You may have trouble figuring out the advisor's biases but don't be surprised if they recommend you buy more of something they sell. The investigation process is time consuming and the proposals may not be clear. A fee-only planner can help with the  review and inform you of the options left out.

Whatever your target age, make sure you’re planning financial freedom for you, not your advisor.


Podcast 247

direct download | Internet Archive page | iTunes

PS Financial freedom means little without health.

November 17, 2013


Sick in bed with a thermometer
Why did I get sick?

Sometimes the cause and lesson are clear. Other times we make shaky connections. Either way, what steps do we take to avoid getting sick again?

We visited the only Corvette factory (worth seeing)  and ended up in a Kentucky hospital (worth skipping). We probably got food poisoning from a local restaurant.
  • Suspected cause: bad salad (and likely cause)
  • Lesson: avoid raw food in strange places
  • Status: learned and still followed
In school, I got strep throat as often as once a year. I thought that was punishment for eating candy.
  • Suspected cause: candy (likely cause: a contagion caught at school)
  • Lesson: avoid candy
  • Status: learned (easy since we rarely got or get candy)

The Latest

Recently, I had a painful tummy. After eating, I felt gassy and bloated. My stomach hurt while digesting the food. I thought the cause was eating at a restaurant but no one else in my family got sick. The only difference in our meals was that I had hot soup.
  • Suspected cause: bad food while eating out (likely cause: unknown)
  • Lesson: eat better and at home
  • Status: learned (at least for now)

And You?

Does this sound familiar? You're busy. You're not eating well, exercising or sleeping enough. You've got deadlines! You've got no time. You've certainly got no time to get sick.

Your body doesn't care and forces you to bed. Now you have time. Your priorities changed. The world continues functioning without you. That's humbling.

While sick, we're often forced to listen and change the way we behave --- at least temporarily. Afterwards, what happens? Do we continue to apply the lessons or do we go back to our old ways? There's little value in failing and getting forced to learn the same lesson again. And maybe again.

During my tummy troubles, I ate smaller portions more frequently. The food was healthier, fresher and more alkaline. More salad. More vegetables. Less wheat. Some nuts like almonds. Fewer ingredients and condiments. Almost no processed food like cereals or protein bars. Very little added sugar. More walking (almost daily). More rest. I also got Ki Therapy from Julian Hirabiyashi (who I highly recommend). I've recovered and don't want to get sick again. I’ve continued behaving well for weeks. Maybe that will last.

We may be wrong about why we got sick but we can use the experience as a nudge to change the way we behave. Learning from sickness is healthy.


Podcast 246

direct download | Internet Archive page | iTunes

PS The time we need a break is when we don't have time for a break. Enjoy the weekend!

November 9, 2013


Walter White receiving chemotherapy
Diagnosed with cancer and given only two years to live, high school chemistry teacher Walter White attempts to secure his family's financial future by teaming with his former student, Jesse Pinkman, to produce and distribute crystal meth.  — Netflix summary for Season 1

Would Walter have turned to crime if he had the right insurance in place?

Bad Breaks

Good  people get bad breaks. Walter never smoked but he got lung cancer anyway. By the time of detection, the cancer was considered untreatable. Were there no signs earlier?
Usually symptoms of lung cancer do not appear until the disease is already in an advanced, non-curable stage. —
Most lung cancers are first diagnosed based on symptoms. Symptoms of lung cancer are not very specific and generally reflect damage to the lungs’ ability to function normally. The most common symptoms are a worsening cough that will not go away, and chest discomfort. Other symptoms include shortness of breath, spitting up small amounts of blood, unexplained weight loss, back pain, loss of appetite, and a general fatigue. —
Walter shows many of the symptoms. There are precautions to offset the financial costs of disease.

Health Insurance

"All the incentives are toward less medical care, because the less care they give them, the more money they make." — John Ehrlichman on HMOs
Walter was covered by an HMO (Health Maintenance Organization). That's a US-style of cost containment with unfortunate side effects. The premise is good: treating conditions early is simpler, faster and cheaper than waiting until later. The HMO get fixed revenue per subscriber, which provides an incentive to tame costs. Members have financial incentives to stay healthy too. Their out-of-pocket expenses (if any) are lower for basic preventative care than for specialized care.

The HMO (which could be run for-profit) makes more by providing less. That's not the same as keeping people healthy. For instance, having too few doctors means a greater workload and an incentive to spend less time with each patient.

Episode 205: hospital stay not coveredWalter experiences the drawbacks. His pricey chemotherapy isn't covered. In Season 2, a $13,000 hospital stay isn’t either. There’s a difference between an MRI which is diagnostic vs exploratory --- even when ordered by a doctor. Walter got the one that was excluded. Does that seem fair?

Another cost is waiting time. Perhaps the best doctors don’t want to work in an HMO where they’re often on salary.
Doesn't the Canadian healthcare system feel similar? We also have waiting times, limited choice and limited coverage.

A friend who is currently undergoing cancer treatment is getting injections which cost $3,000 each. Private health insurance covers 75%, which means an out-of-pocket expense of $750 each time.

Disability Insurance

Income replacement insurance helps replace your income if you're unable to work after a waiting period. The definitions and benefits vary. You might not be able to work during treatment or be able to return to work afterwards. The bills keep coming in even if the income doesn’t.

Employers might provide income during short absences. Perhaps full pay for X days and then a reduction until the long term disability benefits start. The self-employed may not even have that cushion.

Critical Illness Insurance

This coverage typically pays a lump sum a month after the diagnosis of a covered life threatening condition like cancer, heart attack or a stroke. The money can be used any way you want.

Walter could have used the benefits to replace income until the disability insurance benefits start, pay off debt and/or get the hot water heater fixed. A hot bath can be therapeutic.

Life Insurance

"… good state college … adjusting for inflation, say $45,000 a year, two kids, four years of college...$360,000. Remaining mortgage on the home, $107,000. Home equity line, $30,000, that's $137,000. Cost of living, food, clothing, utilities, say two grand a month? I mean, that should put a dent in it, anyway. 24K a year provides for, say, ten years. That's $240,000, plus 360 plus 137...737. $737,000, that's what I need." — Walter (Episode 201)
Walter wanted to leave his family enough to
  • payoff debt: mortgage and line of credit
  • fund university: for two children (one age 15 with cerebral palsy and a baby to be born)
  • cover living expenses: for 10 years
Do you see the flaws in the planning?

There's no provision for unexpected expenses. There’s a bigger problem. What happens after 10 years? Walter’s wife Skyler is then 50. Is she to go to work then? She isn’t trained in Walt’s lucrative side business. Maybe Walter expects Skyler to find other sources of income such as from her writing or selling items on eBay.

What To Do?

Walter has been seriously underemployed. While teaching, he worked part time at a car wash. Also, teachers get two months of summer vacation. Given his intelligence and resourcefulness, what was holding him back? More money would have provided a better standard of living and covered the insurance premiums. His impending death brought him to life but that was too late.

Insurance looks like an expense but provides peace of mind. Insurance could be the best investment ever when purchased through the right advisor and insurers. The underwriting process may have detected the cancer early enough for treatment. That would have been a good break (though boring TV).


Podcast 245

direct download | Internet Archive page | iTunes

PS If you rent your hot water heater, you avoid a capital outlay and have your repairs covered. That’s insurance too.

November 2, 2013


door screen: what gets through?Before gobbling the bounty from your trick-or-treating, don't you first check the loot and throw out questionable items like apples?

Financial information is even scarier than Halloween. You might get the wrong information and be worse off. Your sources could be in costume, hiding their true identities.

Screening For You

November is Financial Literacy Month and anyone can create an event. That doesn’t make them worth your time.

Journalists and credible bloggers pre-screen events which are worth your attention. The Financial Consumer Agency of Canada (FCAC) lists events across the country. The calendar is worth a peek because of their screening process.
The Requirements
The FCAC requirements for event organizers include
  • the information is:
    • Accurate and up to date
    • Not tied to the advertising or sale of any product or service
    • Accessible to the general public
    • Free or on a cost-recovery basis (e.g., room rental, facilitator fee)
  • FCAC deems the activity or event contributes to financial literacy:
    • acceptable
      • Budgeting tool launch
      • Workshop on how to get debt-free, budget or protect yourself against fraud
      • Activity to create awareness on the importance of Financial Literacy/Financial Education.
    • unacceptable (rejected)
      • Any quiz or tool that point to branded financial products and/or services
      • Any seminar that favours certain financial products and/or services over others
These criteria are sound and well-considered. The events listed generally look safe.
Worth Your Time
In Toronto, check out these FCAC-listed events
  • Financial Basics: a workshop for young adults featuring Ellen Roseman
  • Money 50/50 Toronto 1: insights from carefully-selected writers like bloggers (think TEDx with Q&A) [disclaimer: I’m the organizer]

Screening By You

You can also screen events on your own. Here are three warning signs:

Avoid events with commercial sponsorship. What are they expecting in return? The money might influence the content delivered or the speakers selected. You’re less likely to hear independent voices.

Be wary of free events. Space and refreshments cost money. What’s the catch? You’re safest when the sponsorship comes from noncommercial sources (though they have less money available). For instance, you needn’t worry about Ellen’s workshop, which is supported by the FCAC, the Investor Education Fund and Ryerson University.

Avoid celebrities who don't blog or publish content regularly. They might keep reusing content which is becoming increasingly stale. I saw one author six times. The world changed over the years but the presentation didn’t --- not even the jokes. Yet there was no time for a blog. Content creators often have fresh things to say (and rarely mind getting recorded).

Silence Speaks

To which groups and associations do you belong? Which financial institutions have your money? Which advisors do you heed? They already have relationships with you. Where are their financial literacy events? How good are they?

The general lack of financial literacy is scary. So too is skewed or incomplete information. If you're not getting solid, objective advice in a form you understand, find other sources. After careful screening.


Podcast 244

direct download | Internet Archive page | iTunes

PS Choose multiple sources for different perspectives.