Norma Walton, Kid-Size Money Sense

“Mommy, I’d like a fitbit for my birthday.”Fitbit
“What is a fitbit?”
“Mommy!!  You know.  They track your steps and how much exercise you do each day.”
“Oh, how much do they cost?”
“I don’t know, mommy.  But if it is too expensive you don’t need to buy it for me.  Depending on the price maybe I can buy it for myself.”

My eldest son is almost 10 years old.  He is an athlete and very health conscious.  I have no doubt that he would use a fitbit and it is a great birthday present idea.  He is aware, though, that our family of six has a limited budget.  He and his siblings know that often we cannot afford the things they want us to buy.

Yesterday morning the kids and I purchased five pairs of used roller blades for $40.  The kids help me shop on kijiji and they usually come with me to view and purchase the items.  They also help me grocery shop and they know to look for items that are on sale as opposed to full price.

The kids are starting to learn how to analyze the value of the things they want.  They don’t yet have part-time jobs so they don’t yet calculate how many hours of work would be required to purchase the item, but hopefully that will come in future.  Their money sense is slowly, but surely developing.

I worked part-time from the time I was 13 years old.  My first job was at the Byron Public Library.  I loved that job and earned $3.75 per hour.  I would come home each night with at least four new books I wanted to read.  That job taught me how many hours I needed to work to pay for the things I wanted.  That job also made me appreciate that other jobs might make me more money and thus take a shorter amount of time to accumulate cash.  I subsequently waitressed and also worked on the line at Ford Motor Company, two jobs that made me far more money than the library although neither was as much fun.

Math photoLearning basic math was the first step to help our kids develop a sense of money.  Giving each of them wallets to keep their money was a second step.  Helping them understand the monetary gifts they receive and the money they earn from garage sales came next and gave them some responsibility and independence around money.  Permitting them to spend their money on items they want is also valuable as it helps them associate the cost versus the benefit of purchases.

I also find that the more involved the children are in the families’ financial decisions the more quickly they become able to analyze the choices that are being made.  My children play hockey and it costs a lot of money.  Their cousins travel to Aruba, Las Vegas and New York and get to do fun things in the sun during the winter that our family cannot afford.  Our children would love to do both but they were an integral part of the decision to allocate the money to their hockey instead of travel.  Hence they are content with that choice and don’t complain (much) about what they cannot do.

It is enjoyable to watch our children become good at understanding and managing money.  Hopefully that knowledge will help them make intelligent financial choices as they grow older.  In my view, financial prudence is similar to maintaining a healthy weight.  It is both a daily struggle and a lifelong journey.

What is the worth of life and limb?

While this is a financial blog, I am going to take some editorial licence here and move to us – each of us – and the death wishes that many people exhibit daily – and no, I am not talking about smoking yourself to death. I’m talking about the rush to cross streets against “Do Not Walk” signs or playing dangerous games of chicken crossing in the middle of blocks dodging traffic – and all for what? And drivers and cyclists (and skateboarders) who are so self-important they run reddish-orange and red lights? And all for what?

Sixty seconds.

I travel into and out of downtown Vancouver a few times each week – sometimes in the calm of mid-day and sometimes in the unorganised confusion of rush hour – actually hours! Once off the highway into town, I enter the “psycho-zone” of pedestrians and other drivers who chose not to think – not to think about themselves or everyone else around them.

I don’t know about your city, but most traffic and pedestrian lights around the Greater Vancouver area are traffic activated or respond to cross-walk controls on the sidewalks. And interestingly, I have found very few that have a cycle longer than 1 minute – 60 seconds – 20 breathes. What in our lives makes us think for even 1 moment that our lives will not survive waiting 60 seconds?

Sure, for some drivers it is just missing the light or waiting for some other hesitant driver who is unsure of themselves or their vehicle. Perhaps getting caught behind a large transport vehicle or bus is the proximate cause of our momentary anger. For the walkers of the world – even if it is raining, we are all drip-dry – we won’t dissolve like sugar. The skateboarders and cyclists weave around anything and everything – vehicular and pedestrian – all to gain previous seconds – why? We aren’t in the Olympics in a controlled environment – we are at the mercy of everyone and everything around us.

Please think – is my life and my body worth more than 60 seconds in time? I hope so!

Internet and E-mail Safety (and security)

In this blog, let’s look more closely at internet and e-mail scams and security.

Internet
Knowledge is power – and never truer than when surfing the net. The most common risks are viruses, key-stroke recordings, miscellaneous malware and Trojan horses.

Viruses do the same thing to your computer as they do to us – they make it sick; they can even kill it. Key-stroke recording software is installed by hackers and allows them to record all of your keystrokes with particular attention to usernames and passwords – they love banking, credit card and email access the most. Malware is also malicious as it can take many forms: from tracking your internet use patterns to copying files to a remote computer to erasing key pieces of software. Trojan horses get uploaded and then sit in wait – silently for a triggering date or event and then allow the hackers to take control of your computer and use it for attacking other computers.

The only 100% protection against these threats is don’t surf the net! Now let’s get into reality – hardware and/or software firewalls together with anti-virus and anti-malware software.

Hardware firewalls are called routers and they act as a first line of defence between the internet and your computer and are relatively inexpensive to acquire and are not very complicated to install. Software firewalls are generally a second layer of protection after the hardware firewall. Most reputable commercial ISPs (Internet Service Providers) provide this as part of their customer offering and may reside either on their servers or on your computer.

Anti-virus and anti-malware software is sold by several companies (Norton, AVG, Kasperski, F-secure and MalwareBytes to name but a few). Most suppliers offer free versions of their protection suites but remember if it is free, there is a reason! They are in business to make money and the free versions are teasers only. They do help of course, but don’t provide complete protection, so beware of freebies! Running “in the background” on your computer, they analyse every attempt at both inbound and outbound communication over the internet for suspicious software code and either block or delete access to outsiders. You can control all of these functions through a “control panel” that is installed with this software.

Be very selective on the websites that you visit. Some categories are higher risk for spreading these problems than others – dating sites, erotic picture and video sites together social media are the greatest sources of problems – avoid them!

E-mail
Rule No. 1 – if you don’t know the sender or you didn’t sign up for any e-mail notifications from stores or websites, DON’T OPEN IT! The “Nigeria” scams and grandchild scams are run constantly on e-mail as are Lottery scams of various types.
Rule No. 2 – see Rule No. 1.
Rule No. 3 – ensure you have a full-version of both anti-virus and anti-malware software installed on your computer that gets automatic signature updates – preferably daily – to stop evolving threats. If you follow these 3 rules, you are going to be safe 98% of the time.

The final 2% is chain-mail – the electronic version of old chain-letters – if you get one, regardless of the identity of the sender, do not forward it – even if it is from a close relative or friend – don’t!

General
A great reference book on scams is from the Competition Bureau of Canada – The Little Black Book of Scams – click here to get there immediately. The Canadian Anti-Fraud Centre has a website that is all about various scams and identity theft. Click here – Canadian Anti-Fraud Centre Home Page.

Providing For Disabled Children

Having a disabled child is a both a blessing and a burden and about which most of us have no real idea.  One of the concerns parent share is how to assure enough money for the child beyond their own death.

In Canada, a recent (2007) initiative is the Registered Disability Savings Plan (RDSP)  This is a program that permits capital to accumulated for a disabled person on  a tax preferred basis and with government grants connected to funding.  It is theoretically possible to acquire $70,000 in grants over a lifetime.  Not shabby!

When the RDSP is added to the maze of programs and trusts and other arrangements that are in vogue, it is possible that a disabled person could enjoy an adequate lifestyle despite the passing of their parents.

Ottawa lawyer, Ken Pope, specializes in estate and other planning for people in this situation.  He recently published an article that points out a frailty in the RDSP sytem.  There is no clear way to recover the funds deposited if the child dies before the parents.  You can see more here.

Caring financially for a disabled child is a complex field of study.  There are many approaches and not all are compatible.  A skilled professional practitioner can provide an efficient approach and that efficiency means you child lives a little better or maybe you can get the answer for a smaller capital input.  Do not overlook second-to-die life insurance.

This kind of planning is not a do-it-yourself project, it has to work.

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

Would You Accept a Bar Code Implant?

In a perfect world, universal implantation of the implantable microchip radio frequency identification device (RFID) is activated by a chip reader.

It is tamper-proof, practically undetectable and indestructible, and is implanted under the skin. 

This device as claimed would be used only for legitimate, legal and noble purpose, could make life better for all of us, provide better security and peace of mind for us and our loved ones, and even save lives, and tremendously benefit mankind as a whole. 
However, this is not a perfect world. 

Bar codes for human beings?

But no one wants to be treated like a human bar code by the authorities.
The most serious threat to liberty could be an all-inclusive database mandated by government–a national identification card with biometric identifiers. Such an ID will increase unsolicited surveillance, will blur the distinction between public and private databases, and will undercut a presumptive right to maintain anonymity. The ID would devolve into a general law enforcement tool having nothing to do with response to terrorism.

The resulting level of intrusion necessitated by implantation would impinge on our many legal rights. It is plausible that, since the technology has not yet been perfected, we as a society would believe there is no need to address the incipient legal problems until devices are used. Justice Rehnquist adopted this view in a U.S. Supreme Court decision concerning beeper surveillance where the respondent had indicated that if beeper surveillance were constitutional, “twenty-four hour surveillance of any citizen of this country will be possible, without judicial knowledge or supervision. 

However, because of the very sweeping reductions in personal liberty and privacy that such implantation represents, the legal ramifications need to be explored now. Although the Canadian Charter of Rights and Freedoms and the U.S. Fourth Amendment protects individuals from unreasonable searches and seizures, a national identification system via microchip implants could be achieved in two stages. 

A system using the technology, although introduced as a voluntary procedure, may be difficult to dislodge despite limitations of individual freedoms because its advantages will be extremely attractive. The positive applications may be said to outweigh the detrimental legal consequences at that time. Therefore, it is not too soon to consider the repercussions that mandatory microchip implantation would have, as a pre-emptive measure. Upon introduction as a voluntary system, the microchip implantation will appear to be palatable. 

The U.S. Fourth Amendment has been invoked with reference to internal intrusions upon individuals to obtain evidence, which could be used against them. Examples include the withdrawal of blood and bodily searches, which require surgical procedures or other means to extract substances from the body. 

English Common Law and the U.S. Fifth Amendment provides in principle that no citizen shall be compelled in any criminal case to be a witness against himself, an U.S. Supreme Court justice once noted that “[A] person is compelled to be a witness against himself not only when he is compelled to testify, but also when… incriminating evidence is forcibly taken from him by a contrivance of modern science.”

To avoid a governmental mandate, citizens may advocate for an outright ban. This drastic measure may also be necessary in a system that is initially voluntary, for it may well be the precursor to a mandate. Short of that, the best way of preventing incipient problems is to protect rights before desensitization.

Although use of such a device at first appears farfetched, examination of the existing technology and the potential utility proves that microchip implantation is both possible and, for some purposes, desirable. Beginning with voluntary introduction, Americans and Canadians may be lulled into accepting them. This article thus sounds a warning bell. The time to prevent grievous intrusion into personal privacy by enacting appropriate legislative safeguards is now, rather than when it is too late.

By: Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. Mark can be reached at www.mercantilemergersacquisitions.com

Dying isn’t free (no good deed goes unpunished!)

I know this sounds a bit irreverent or flippant however it is meant to stimulate some hard thinking about the real costs of dying. Sure, there are lots of lists around, but I haven’t found 1 yet that covers everything I have seen in nearly 43-years in this industry. Is this list perfect? Absolutely not – but it will get you thinking about your own and your family’s situation. Remember, not all of these will apply to you – but some will – and the costs range widely.

* Probate Fees * Legal Fees * Copying and certifying fees * Paid searches for titles, etc. * Legal notifications to family * Legal notifications to creditors * Asset Transfer fees * Estate Accounting Fees * Terminal Tax Return Fees * Estate Tax Return Fees * Rights and Things Tax Return Fees * Ongoing Tax Return Fees if estate not settled within 12 months * Testamentary Trust Tax Return Fees *Preparing and filing tax election fees (estate and personal) * Executor and Trustee Fees (annually until Estate and all trusts closed) * Executor and Trustee disbursements – copying, telephone, faxing, certifications, mileage, parking, travel expenses * Valuation fees – real estate, listed personal property, personal property, real estate and other capital and/or depreciable property * Transfer costs for title transfer to Executor and/or Trustee and eventually to residual beneficiaries * Commissions paid for asset sales – real estate, estate sales, sale of listed personal assets, if necessary * Commissions paid to investment advisors for selling stocks and bonds not held in managed-money accounts *Income taxes payable – terminal tax return, estate tax return(s), Rights and Things tax return, Trust tax return(s) * Tax due on transfer of pensions and registered assets to other than spouse * Shrinkage of realisable asset value due to urgency of sale – tax paid on FMV not $ received – must replace lost $ * Account closing fees on nominee accounts and self-directed investment accounts
* Court fees – Probate and other as necessary if Will contested * Court costs if you die intestate * Banking Fees – estate bank accounts, trust bank accounts * Rental Fees – safety deposit box or other secure location *Funeral, memorial and related costs – cultural, faith-based, community or family expectations. Wake or similar * Costs of collecting promissory notes owed to deceased – loans to family members and businesses * Terminal care costs not covered by Government, group or personal plans * Legal costs to defend Will from challenges * Payment of all legally enforceable debts – including ones you guaranteed or co-signed * Perpetual pet care * Costs of care for children and other dependents (maybe your parents!) * Cost to close your social media accounts * Payment for ongoing business management until it is sold * Short-term emergency funds for survivors * Ongoing income for survivors including education costs * Cash Bequests * Murphy is alive and well – expect a visit along with family discord! * Your guess: ______________________________

I can promise a few things about this list: a) your estate will have at least one cost not included here; b) you will be very unpleasantly surprised at the total amount of money (and time) involved; c) your estate will be cash-poor – not enough cash in the bank to pay these costs which means that; d) the net value of your estate, without proper planning and a source of replacement tax-free cash, could even be bankrupt which means your family and heirs would get zero. Do you and your family need assistance?

When does not spending $150.00 cost you more than $6,000.00?

Six years ago, Al went to see his lawyer. A widower in his late 70s, Al had been advised to update his Will after his wife Gloria had passed away. He thought this made sense and off he went. The lawyer did his job properly and professionally and the new Will has duly prepared and signed.

Al and Gloria had 3 children – 2 daughters and a son. The eldest daughter (a single parent) Tracey had a daughter named Cheryl. Tracey sadly had passed away shortly after her mother from cancer and Cheryl was left on her own, is now living on the fringes of society and is rarely in touch with other members of the family. Al’s other daughter is Tess and she ended up leading a very challenging life filled with drugs, alcohol, one abusive husband and a series of less-than-ideal boyfriends and live-in partners. She also has had to deal with significant emotional and intellectual challenges and her only source of legitimate income is a tax-free disability pension from the government. She currently lives (rent free) in Al’s residence because Al is no longer legally competent and is in an extended care facility. She says she stays there so she can be close to Al but the reality is she is sponging off Al since he can’t do anything about it and Tess, challenges aside, knows a good deal when she finds one. Her boyfriend-du-jour spends his time dealing soft-drugs and working part-time as a mechanic.

The son, Bruce, got involved off-the-grid very early in life and now in his mid-50s, is a hard-drug addict, has AIDS and lives and feeds his own habits by stealing (including from Al) and selling drugs. He disappeared in mid-2013 and hasn’t been seen or heard from since that time but he did take Al’s debit card and emptied Al’s account to the tune of over $8,000 over 4 weeks. He was living with Al before he went into care for the onset of dementia and Al trusted him with his card – and unsurprisingly, this trust was betrayed.

And NO, I am not making up his situation – just the names – the circumstances are exactly as described – unfortunately.

When Al had his Will re-done, the lawyer and Al’s financial advisor told him he needed to establish an Enduring Power of Attorney for personal care, property management and healthcare. Al agreed, but he never took this step because he didn’t feel he could name either of his surviving children – Tess and Bruce – or his grand-daughter Cheryl, and with good reason. But now…

Since Al is no longer legally competent the problem rises. Who makes his decisions and manages his property? What about his investments, his pension income, his personal assets, the level of care that can be afforded? Bruce can’t be found, Tess is not capable and the Office of the Public Guardian and Trustee would fight any attempt by her to be named a guardian. Cheryl is not appropriate either, even if we could locate her. So now what? Fortunately Al’s financial advisor is also a friend and stepped up to apply to be appointed as his Committee in court, with Al’s and Tess’ agreement and the support of the OPGT.

Once the Committee process started, a cousin of Al’s (named Jeff) was located and has joined the application as a co-Committee to act jointly with the advisor. Al is very lucky to have two people willing to take on this task of managing his personal, financial and health care affairs – but the cost of applying for Committeeship has now exceeded $6,000.00 and is not finalised yet – and this cost will come from Al’s assets as part of standard Court rulings in cases such as this.

Al knew his advisor and friend and cousin Jeff would have agreed to be joint-attorneys and guardians if he had only asked and redone the rest of the documents. But Al didn’t want to impose and didn’t want to burden them with the unique circumstances of his family. Admirable thoughts of course, but now the reality of avoiding that decision has hit home, all for the sake of about $150.00 six-years ago.

Are your plans for personal, financial and healthcare up-to-date AND properly documented?

Garage Sales are Your Friend

Spring cleaning time is here and I love it! With even the hint of warmer weather and sunshine I get a major itch to simplify my life and clean my spaces from unwanted clutter. Freeing yourself from the over accumulation of “stuff” in your life serves so many positive purposes.

The first advantage of a good spring clean is you take time to sort through everything. Find what works; what needs fixing; what has been outgrown; what you don’t need, want, use, or have space for anymore; and forgotten, yet still loved items. You can then make a plan to deal with it. Get it fixed. Throw it out. Recycle it. Clean it and put it where you can find it and use it. Put it into your “have a garage sale pile.”

The second advantage is you get the opportunity to better organize your life. Put things in their place. Get rid of the things you’ve been storing for who knows how long or for what reason. How much time do we lose and how much stress do we cause ourselves because we cannot find the thing we want buried amongst all the things you don’t want.

The third advantage is it gives you an opportunity to make some money. Garage sale season is approaching and it is the perfect opportunity to clear your space of your no longer loved items while making some cash. If you don’t think you have enough for your own garage sale, get together with a group of friends that also want to free their lives of a few things. You can then take the money you earn and put it into something you actually want like your vacation fund.

The fourth advantage is getting a good look at all the things you have spent your hard earned money on. Do they bring you joy? Do you use them regularly? Or do they just collect dust, take up space, and add to the debt on your credit card? Facing our consumption head on gives us the opportunity to choose to be more conscious in our lives going forward.

The fifth advantage is seeing what you need to replace or figure out what you want to get before garage sale season. If your kids need to get new skates or sporting equipment because they have outgrown it you can keep your eyes open to replace it at garage sales. If you are wanting to try out a new sport or replace worn out equipment this is also a great opportunity for you.

The fifth advantage to a good spring clean is how much lighter and more energized you feel after completing it. You know where your stuff is, you’ve dealt with the clutter, and you made some new, and hopefully healthier, decisions.

I challenge you to tackle the closets, drawers, corners, garages, and storage areas in your home. Find your treasures and find future treasures for others. You’ll be glad you did it.

“I had more clothes than I had closets, more cars than garage space, but no money.”
Sammy Davis Jr.

Shopping is NOT a Sport

Everywhere we go the world is set up to part us with our money. It may only be a few dollars, maybe a few more, but it’s okay. You want this gadget, article of clothing, candy, tool, whatever. We put it in our cart, we add it to the till, we pull out our wallet. Next thing we know our bank account is smaller than we were expecting and our wallet is thinner while our credit card statement is thicker.

We have all been bitten by the impulse purchase. All of us. If you think you are immune, let me ask you one question: “If I were to go to your home and open up your closets, your cupboards, go into your garage, your tool shed would I find anything that you spent your hard earned money on that you used once or NEVER?” If you can honestly say no, then my hat is off to you. If you are like the vast majority of people (myself included) you would find an item or two.

So the million dollar question is how do we minimize our useless spending. And yes, I did call it useless spending. The fact is if it really was something we wanted or needed it would have been used more than once or never. The reality of life is that we will have some pointless spending. It isn’t a bad thing as long as we keep it in check, but it is a big problem if it gets out of control.

Conquering the frivolous shopping problem breaks down into a few steps or options. The first step is to stop looking at shopping as a sport. Unfortunately too many people resort to “Retail Therapy” to deal with emotional issues. This works as well as alcohol, drugs, or junk food for a lot of people. It doesn’t fix the problem it makes it worse because the high wears of quickly and now we are out money. If going on a shopping spree is your way if dealing with the stresses of life find another outlet. Preferably a healthy one like exercising, going for a walk with a friend, or meditation just as some examples.

The second step / option is to put yourself on a cash budget and allow yourself some play money. That way you can still enjoy a little frivolous spending without breaking your budget. In fact if you plan for it, it isn’t wasted money, just a part of your overall plan for financial success.

The third, and most important, step is to ask yourself this questions every time before you spend money on anything, “Do I really want this?” By slowing down and asking yourself this very simple, but extremely powerful, question you put into motion your biggest ally, your brain. Most of our spending is unconscious. We are creatures of habit that operate on auto pilot. By taking the moment to ask ourselves this all important question we move from unconscious to conscious. A lot of the time we will look at the item and decide no, this isn’t going to give me what I really want. I’d rather save for my Hawaii vacation, or pay off my credit card faster, or stick with my diet (candy and coffee are regular “wasted” purchases) or whatever may be a bigger want for you. If you can honestly say, “yes, I do want this” then go for it without guilt.

No one is taking away your right to choose how you spend your money. But we all make much better long term and short term decisions when the best part of us is fully engaged in making our decisions. Now go out and wake up when it comes to how you are investing your hard earned dollars and cents.

“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”
Will Smith

Squashing the Biggest Mosquito

Now that we have figured out a lot of our spending patterns and started putting together a working budget you may have discovered a few areas where you might want to be cutting back on your spending. For the vast majority of Canadians the biggest budget killing mosquito is eating out.

For families living in urban centres it is not uncommon for their eating out spending to be as much as or even more than the mortgage. Yes, I know the little voice in your head is screaming “That can’t be true!” but in way more cases than you can imagine it is. When you add up all the coffees, the doughnuts, the quick deli or fast food lunches, grabbing take out or eat in the car food on the way from work to activities, and the actual sit down meals in a restaurant the numbers are sobering.

This is not to say that all eating out is bad. It can be a nice break from routine, a reward or celebration, and sometimes it is the easiest and best option on the super busy days that have us running all over the place. The main problem is that most people are completely unconscious when it comes to the money they are spending on the various forms of eating out because it goes out the wallet in small, but very regular, chunks.

In order to make your budget work AND improve your health and diet (restaurant food isn’t only expensive it is usually loaded in fat, sodium, and extra calories) is to cook more at home. With a little bit of advance planning you can easily cut your eating out expenditures in half.

I personally like to do my big grocery shopping trips early on a Saturday or Sunday morning. The stores are quiet, they are well stocked, and I can go home and do a lot of meal prep for the week in minimal time. I cut up my veggies, cook a few dishes (it takes almost no extra time to cook 3 – 4 meals rather than just 1), and save myself a lot of time and grief during my busy week. Also, whenever I cook I try to make a large meal for my small family of three and break up the leftovers into TV dinners for my husband and I to have for lunches or quick, busy night dinners.

Having a ‘fancy’ coffee machine at home allows me to have my chai tea latte treat for a fraction of the cost of buying one. Having healthy, grab from home snacks for the kids (and yourself) that you can keep in the vehicle can save you a lot while holding every one over until you can get home to dinner.

Unfortunately the art of cooking is quickly dying. It blows my mind that we have college kids that don’t have any skills in the kitchen. Spending quality time with our kids teaching them how to prepare healthy food is a great way to build relationship while teaching them valuable life skills. If you don’t know where to start visit your local library and check out a few cookbooks and find some that you like. Sign up for a cooking class. Ask a skilled in the kitchen friend or family member to give you a few lessons.

With a little bit of forethought and a tiny bit of preparation time you can easily squash this huge mosquito.

“Business is good for the restaurant industry. Americans now spend roughly half their food budget dining out.”
Christine Bokelman