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The Smart Canadian's Guide to Saving Money: Pat Foran Is on Your Side, Helping You to Stop Wasting Money, Start Saving It, and Build Your Wealth PDF

317 Pages·2009·1.1 MB·English
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The Smart Canadian’s Guide to Saving Money The Smart Canadian’s Guide to Saving Money Pat Foran Is On Your Side, Helping You to Stop Wasting Money, Start Saving It, and Build Your Wealth Second Edition Pat Foran John Wiley & Sons Canada, Ltd. Copyright © 2009 by Pat Foran All rights reserved. No part of this work covered by the copyright herein may be repro- duced or used in any form or by any means—graphic, electronic or mechanical without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to The Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright licence, visit www.accesscopyright.ca or call toll free 1-800- 893-5777. Care has been taken to trace ownership of copyright material contained in this book. The publisher will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions. Library and Archives Canada Cataloguing in Publication Data Foran, Pat The smart Canadian’s guide to saving money : Pat Foran is on your side, helping you to stop wasting money, start saving it, and build your wealth / Pat Foran. — 2nd ed. Includes index. Previously published under title: Smart Canadian’s guide to building wealth. ISBN 978-0-470-15977-4 1. Finance, Personal—Canada. 2. Saving and investment—Canada. I. Title. HG179.F67 2009 332.024’010971 C2008-905762-7 Production Credits Cover design: Ian Koo Cover photo credit: Lorella Zanetti Photography Typesetter: Joanna Vieira Printer: Tri-Graphic Printing Ltd. John Wiley & Sons Canada, Ltd. 6045 Freemont Blvd. Mississauga, Ontario ENVIRONMENTAL BENEFITS STATEMENT L5R 4J3 Using 15,414 lb. of Rolland Enviro100 Print instead of virgin fibres paper reduces John Wiley & Sons Canada, Ltd. ecological footprint by: Printed in Canada SUSPENDED PARTICLES AIR NATURAL TREES SOLID WASTE WATER IN THE WATER EMISSIONS GAS 1 2 3 4 5 TRI 13 12 11 10 09 131 3,776 357,235 23.9 8,293 539 FULLY GROWN KILOGRAMS LITRE KILOGRAMS KILOGRAMS CUBIC METRES It’s the equivalent of : Tree(s) : 2.7 american football field(s) Water : a shower of 16.5 day(s) Air emissions : emissions of 1.7 car(s) per year This book is dedicated to my older brother James Joseph Foran who died in a tragic farming accident when he was 16 years old. We all miss you terribly Jim and wish you were here to share our lives. table of contents Acknowledgements xi 1 Confronting the Debt Challenge 1 2 Taking Wisdom from Successful Canadians 6 3 Checking In with the Wealthy Barber 22 4 Living Next Door to a Millionaire 26 5 Finding Out What Makes Canadian Millionaires Tick 32 6 Asking Experts What the Economic Future Holds 43 7 What We Learned from Black October 2008 49 8 Keeping Calm During Troubled Times 53 9 Calculating Your Financial Worth 58 10 Monitoring Your Expenses 62 11 Seeing Marriage as a Partnership 65 12 Should you sign a Prenup? 67 13 Setting Goals 71 Part 1: Reducing Debt 73 14 Attending Credit Counselling 75 15 Consolidating Debt 80 16 Curbing Bad Spending Habits 83 17 Differentiating Good Debt from Bad Debt 87 The Smart Canadian’s Guide to Saving Money 18 Establishing an Emergency Fund 90 19 Hopping from Credit Card to Credit Card 93 20 Bidding Farewell to Your Credit Cards 98 21 Obtaining Your Credit Score and Credit Report 100 22 Dealing with Collection Agencies 107 23 Steering Clear of Payday Loan Services 109 24 Declaring Bankruptcy 112 25 Avoiding Credit Repair Agencies 118 Part 2: Saving Money 120 26 Tax Savings: New Rules Can Save You Money 122 27 The Tax-Free Savings Account 124 28 Understanding Interest Rates 128 29 Choosing the Right Credit Card 132 30 Getting the Best Car Insurance 135 31 Buying Life and Disability Insurance 144 32 Doing Your Income Taxes 149 33 Hitting the Sweet Spot 152 34 Trimming the Grocery Bill 154 35 Click, Click, Save, Save: Using the Internet to Save Money 159 36 Renting to Own 161 37 Keeping Cash Register Scanners Honest 163 38 Refusing Extended Warranties 166 39 Unearthing Unclaimed Balances 169 Part 3: Planning for Wealth 171 40 Partnering with Financial Advisers 173 41 Choosing a Lawyer 178 42 Preparing a Will 181 Part 4: Investing Wisely and Building Wealth 185 43 Investing à la Andrew Cook 187 44 Taking Part in Day Trading 192 45 Minimizing Pricey Fees for Funds 193 viii Table of Contents 46 Benefiting from RRSPs 195 47 Debunking Financial Myths 198 48 Setting Up RESPs 205 49 Participating in Company Stock Purchase Plans 210 50 Owning (Not Renting) Your Home 213 51 The 35-Year Mortgage—Why You Should Avoid It 215 52 Managing Your Mortgage 218 53 Breaking Your Mortgage 224 54 Considering Reverse Mortgages 228 55 Using the Equity in Your Home to Buy Real Estate 230 56 Purchasing a Cottage or Chalet 236 57 Taking Steps Toward Effective Home and Tenant Insurance 240 58 Renovating Your Home 244 59 Dodging Home Renovation Rip-Offs 249 60 Selling Your Home 252 61 Earning Money at Home 257 62 Thinking Seriously About Cars 263 63 Buying a Car in the U.S. 265 64 Buying a New Car 268 65 Financing at 0% 272 66 Leasing a Vehicle 276 67 Buying a Used Car—“Nearly New” 281 68 Buying a Used Car—Four Years Old or Older 284 69 Looking Out for Scams When Car Buying 288 70 Asking for a Raise 291 71 Changing Careers 296 72 Giving to Charity 299 Index 301 ix Acknowledgements I’m very pleased this book has been such a success that it warrants a revised edition. I’ve heard from countless Canadians who say it has been an inspiration to help them save for the future or better man- age the money they already have. Consumers like Micky Multani, of Fort McMurray, Alberta, who wrote: “I just purchased this book and feel it is one of the best investments I have ever made. It covers almost every aspect of financial planning and I think it’s an excel- lent book to build a strong base for the future!” This book is dedi- cated to you, Micky, and to everyone who wants to improve his or her financial situation. This book is also dedicated to investors who had to hang on for the wild ride of Black October 2008, one of the most difficult stock market periods we have experienced since the Great Depression. I truly believe when it comes to finances, it has to be about balance. The right balance to enjoy everything life has to offer and to still have enough set aside to feel secure and comfort- able about the future. Thanks to my loving wife, Carole, for all her support, and to our cherished daughters, Lisa, Vanessa, and Sarah. Thanks also to my parents, Gordon and Helen Foran, especially my mother for her spiritual guidance and my in-laws, Hector and Anita Blanchard, for pitching in when I was working on this book and our busy household needed a hand. I also want to thank the CTV Tele- vision Network for employing me in a position that I sincerely enjoy and that allows me to help others. Thanks to the experts who have gratuitously contributed to this book and the consumers who have passed on their stories to educate us. I wish you all the best! I hope you achieve your financial dreams. xi CHAPTER 1 confronting the debt challenge A lot has changed in the last three years since I wrote this book. First titled The Smart Canadian’s Guide to Building Wealth, the publisher asked if we could change the title to The Smart Canadian’s Guide to Saving Money. Since both essentially mean the same thing, I said sure, but make no mistake—this is a revised edition of that book. It does have new information, statistics, and strategies to build wealth and save money, but I think after the severe toll the stock markets have taken on the savings and investments of many Canadi- ans over the past few years, specifi cally the major downturn in Sep- tember and October of 2008, have many consumers as interested in saving money and balancing the family books as they are in trying to build an investment portfolio, hence the publisher’s wish to tweak the title. Also, in my daily role with CTV television, I’m always do- ing my best to help consumers save money. This book contains solid information from many experts that can help you do both. After all, if you can save money, you can build wealth too. Whether you call it a recession, a downturn, or an economic slowdown, the global market corrections, infl ation, and job losses that came during 2007–2008 had many Canadians worried, jittery and even angry about their investment portfolios. After enjoying double-digit growth and low interest rates, now many homeowners are seeing their houses, condos, and cottages decreasing in value. 1

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