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 2 E

317 Pages·2009·1.1 MB·English

by  Foran

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