Your Money Book

Sometime last summer I shared with you that there are a number of psychic web sites claiming to predict your financial future – yea right. But let me try to predict one or two things that most of us will go through tonight: We will drink too much, eat too much, stay up way too late, get depressed about things from 2009, or the coming year, or make some wild New Years resolutions that don’t have a chance of surviving for more than a week or so.

It’s something that diet plans and fitness clubs count on. We get excited, sign a one or two-year contract, and show up for a month – tops. We’re still paying payments on the contract, but haven’t seen the place in months. When it comes to our finances, I want you to make this year’s resolutions different. I want you to be smart about it, and give yourself a fighting chance of achieving your dreams and goals.

For your financial resolutions, and I hope you make some, they need to include a few things:

They must be YOUR goals. In other words, they cannot be handed down to you by your spouse, or someone else. You cannot make a goal of getting your car or credit cards paid off without agreeing to it with your partner. You’re not Moses. You don’t get to hand a list of things to someone else. It won’t work.

They must be specific. Just a goal of getting your credit cards paid doesn’t work, and you’ll never do it. A specific goal would be to pay off these particular cards, in this order, not charging on them anymore, and cutting them up. THAT is a resolution you’re way more likely to keep.

You need a time-frame: Sometime next year, in the future, down the road – those words don’t get it done. Set a day and a month to make it happen.

Goals must be in writing and tell the world: Achieving your goals is 5 or 10 times more likely if you write them down. And I suggest posting them on the fridge so that they’re in your face every day. You’ll also massively increase your odds if you tell a bunch of people. They’ll hold you accountable, if they care about you, and you’re more likely to be disciplined if you feel that others are watching.

But the big one is that you have to want to want it in the first place. There is no feeling in the world like being debt free. Most of us have never been there, so we really have no idea. But it’s worth it and you’re worth it.

Start by sitting down with your spouse, if you’re married, and agreeing to some financial goals for 2010. And take 10 minutes to do a budget and a list of your debts. No TV, no kids – just you and a piece of paper. That’ll be more than 99% of the world will accomplish.

I wish you a great New Year and may all your financial goals come true for 2010!

It only seems appropriate at this time of the year to focus on some good news in the world of finances and credit. So, in no particular order, here are eleven positives that are worth sharing or repeating:

Credit & debit cards: This was the year that our volume on debit cards exceeded that of credit cards. And according to a study just released, our raw charge volume on credit cards is also down 12% to the end of September. It’s always great news when we spend money we have, instead of borrowing it!

Mortgage rates: If you refinanced, you already know that you got some of the lowest rates in a generation – even more if you negotiated properly. And it looks like those low rates may stay for another three or six months. We’ll talk about that in January with some critical things you need to know and get ready for.

Just released is a Harris poll: In the current slowdown, or tail-end of the recession, two-thirds of us still intend to decrease our already reduced restaurant and entertainment spending. Put that together with this morning’s Bank of Canada release that our savings rate is 4.7%, and I’m very happy that we’re saving more and spending less.

In that same vein, using the slogan of one of the big no-service banks, you’re richer than you think, our net worth increased by $141 billion in the second quarter of the year. It is also expected to be the same or more for the third quarter, as our retirement savings and investments bounced back big-time, and home values started to creep up again. Don’t make that out to be permission to spend stupid again, but it’s great news when our savings, homes, and investments grow.

Let’s face it, gas prices are a big dent in our wallets each month. Last week, the government owned Mexican oil monopoly paid $1 billion to hedge prices for 2010 at a $57 a barrel level. They didn’t buy oil, they bough insurance contracts that they’d get at least $57 a barrel. Since it’s in the $70 range right now, it looks like some very smart producers think there’s about a 20% drop coming next year.

Some potential good news is that the federal government is looking into the huge fees that merchants, and ultimately you and me, pay on credit and debit card transactions. IF they have the guts to act, it’ll help us all, as merchants will more than likely pass on the fee savings in a prteey competitive climate.

If you remember, in October we talked about almost two-thirds of us living paycheque to paycheque, and that being broke is a choice. At that time I offered to work with anyone who is sick and tired of being broke. So right now, there are three families in Kelowna who are on the way to becoming debt free and a special shout-out to them.

The recession appears to be over, at least on paper, in the U.S. and here in Canada. The great news is that we dodged a big bullet and didn’t have nearly the collapse the U.S. had, and continues to have. Even better news is if, and that’s a big if, we learned the painful lessons of millions of Americans, and a ton of business that went under: Debt doesn’t pay, you cannot borrow your way to wealth, and too many payments will collapse your finances sooner or later.

One financial obligation most of us have is our cell phone. The great news is that three new second-tier cell phone companies are starting up in the New Year. Guaranteed, that’ll result in a big drop in our cell contracts. If your contract is up, or about to expire, do NOT sign another three year contract and get trapped. Leave it month by month until these three are in the market. In Canada, we are way overcharged on our cell bills. In the U.S. right now, it’s $40 a month for unlimited long distance, unlimited calling minutes, and texting! Compare that to your bill. Now, if you have an I-phone, I can’t help you – you can afford a phone that’s ten times more than my monthly bill, and you’re not going to get a break.

Can it be good news that some people are going to jail? You bet. There were a number of late-night infomercial people that finally got charged. They’re off the air and no longer conning people. I’ll share some of the details with you in January.

Cash-back from your banking: Last week, millions of us received our profit sharing from the credit unions we deal with. Great news all around: Great service, you’re a member/owner, better rates, AND profit sharing. Mine was just under $400 out of $42 million from Servus Credit Union. In the Okanagan, Interior Credit union shared $4 million with 30,000 members.

I wish you a very merry Christmas, focused on the real spirit and meaning of Christmas!

George Boelcke, CCP

Ah, the week before Christmas. That means a lot of people should just about be at the stage where any logic, budgeting, or living within our means, goes out the window. It’s normally right about now that lots of us go nuts with our spending. Don’t do it – slow down, go to the bank and get some cash. Paying with $20 bills has a real money feeling, instead of just swiping away with plastic! And your wallet will thank you for it in January.

Presents are not what Christmas is all about, at least for us adults. If you think back, some of the most memorable gifts weren’t the expensive ones. Better yet, can you remember exactly what you got for gifts last year? And it’s certainly not a contest to see who can be the most irresponsible and spend the largest amount of money.

Gift cards: Remember what we talked about last month. Be careful. You’re parting with cash and getting an I.O.U. That merchant has to be in business when the person goes to use the I.O.U. It’s perfectly fine to give cash. There’s no expiry date, no fees, and no limitations. Just put a note in there that your financial advisor (that’d be me you can blame) suggested you care enough not to send a risky gift card.

We talked a couple of times this past year about internet security and hackers getting into people’s bank accounts and on-line transactions. Are you, or do you know, a high net-worth individual that does on-line banking or accesses their brokerage accounts? If so, one of the best presents is a small notebook computer that ONLY gets used for on-line banking. That way, there’s no chance for anyone to hack into it, as it doesn’t get used for anything else on the internet!

Did you know that the Salvation Army just announced that their annual Kettle Drive is now credit card ready? You can just swipe and donate. I’m pretty ambivalent about that. I love people donating to charities and helping others, but I’m not sure it needs to be on 20% credit cards.