This & That: The Mish-Mash Edition
Posted by Gail | Filed under This & That
Sometimes I theme these. Not today. Here are a bunch that roam all over the place. Enjoy!
Monique wrote: Hi Gail, Thanks for all the wisdom you share…we so need you!
I want to do the jar thing, but as some jars accumulate lots of money month to month, it concerns me to have that cash in the house! If it goes into a separate account in the bank, I don’t know from which category it came. See, I like to pay my house/car insurance in one fell swoop–so to save that part of my transportation cost to the tune of $2500, is way too much cash to have around the house! What do you suggest? Thanks!
I’ll tell you what I do Monique. I have an ING Direct savings account set up into which I transfer the money I’m accumulating for a particular category or a special purchase. So, for example, I have a “house maintenance” account along with a “vacation” account. Each month, I move the money to that account and watch it grow there. You could also have a single account that covers a bunch of different “planned spending” things. For example, I have an “overflow account” into which I put my “home insurance, clothing and gifts, and property taxes” amounts. I have a little book where I track these on paper. When I need to spend the money, say to pay my property taxes, I simply transfer the money back to my regular account.
Janice wrote: What savings suggestions do you have for a teenager starting their first part-time job? I have a soon to be 15 yr old daughter who would like to start working to have some ‘mad money’ of her own. I’ve spoken to her about saving for university in 3 yrs time and I’ve shown her how money can compound with interest to make her a very comfortable adult. I’m thinking that some money should go into her RESP along with my contributions. But is it realistic to have her saving for retirement (even a small amount) at this age? And can she even contribute to an RRSP at 15?. thanks a bunch!!!!!!
Janice, to answer the technical part of the question first, anyone who has earned income in Canada can contribute to an RRSP. If she decides to put money into the RRSP, she should not claim the deduction, but wait until she’s in a higher tax bracket so it does the most good. But she can accumulate money there.
My daughter got a job specifically with a view to saving for university since she has to come up with 1/3 of the full costs (scholarships count) before I’ll pony up the money I’ve set aside in an RESP. Alex continued to get her allowance even when she was working since to remove it would be a disincentive to work… punishment isn’t my thing. We had a conversation about what was reasonable for her to spend versus put aside for school. Since she had a goal of how much she needs to have saved for year one that drove the percentage to a large extent. She saved 75% for school and spend just 25%.
We also talked about the long term savings, which she does from her allowance… 10%. We haven’t started using RRSPs yet since she has had any earned income to speak of. Even a small amount put away consistently will grow nicely. More important, it is the habit of saving that I wanted to establish early.
The setting aside money for school isn’t really “saving” since the money is going to be spent shortly… so it’s planned spending. Just as we would accumulate money to buy a car or pay for a vacation, they are accumulating money for school. Saving is what you do it make sure you have a pool of money for the long-term future.
Hetty wrote: I’ve been helping my youngest daughter and family financially and started by finding out they had no hot water. Long story short, I caught them up, had my son in law put most of his income into my account so I could get them on a budget, made him get a 2nd job on weekends. Bless their hearts, they’re terrific parents to their 2 little ones. My question is, where can I find help to help me to help them. I’m 72 years old and if it wasn’t for my job, I could not subsidize them monthly over and above the 2 low paying jobs he has. My daughter is a stay at home mom and has her hands full with their little mentally delayed son. She and her husband are good people, but not smart. I need someone I can talk to.
Hetty, my heart goes out to you. I know how it feels to want your children to be safe and comfortable, and I applaud you for stepping in and taking charge. But you won’t be here forever m’love and you’ve got to move the responsibility back to the “children” so they can do what needs to be done. It’s fine to set them up on a budget, using the jars to help them visualize the money and when it’s coming to an end, but you can’t keep control of the money since they need to learn to do this for themselves.
Since your grandson is mentally delayed, they should make sure they’re getting all the benefits they can from the federal and provincial governments. There’s a disability tax credit, for example, that may be very useful in lowering their taxes.
It sounds like income (or a lack of it) is the major issue. And it sounds like even with the extra job you’re still having to help out. They need to find a way to sustain themselves. Your daughter could help bring in some money, perhaps, by caring for kids before and after school (depending on where she lives). Or she could find a part-time job for the hours when your son-in-law is at home. It would get her out of the house for a bit and bring in some money. They may not be brilliant, but they have to learn to take care of themselves and their wee ones.
As for where to go for help, I’d start at my local bank or credit union (I like credit unions better because they are more about community). Don’t let anyone talk you into doing anything that puts you at risk, but ask lots of questions. Failing that, send me a post telling your story and I’ll put it up on my site and we’ll see what the community has to say. You can use a pseudonym if you’d like to protect your identity.
P wrote: I have the ultimate challenge for you. I am in dire need of your assistance. My brother (50 years old) sold his computer business 13 years ago. My brother is married with two high school aged children one of which will be attending university next year. His wife does not work. You probably can see where I’m going with this but please read on.
My brother had approx 1 million dollars that he invested and lived on the proceeds until the last few years. The market destroyed the bulk of his investments. I own a business and had given him a salary but I can no longer afford to do so. I continue to pay his gas bill by giving him a company credit card. Currently he is living on a line of credit that is drawn close to $200,000. I ask him about his retirement and children school funds and the answer is “I have money earmarked for that”. He will not get a job. In his calculation of wealth he does not include his debt. The house is paid for but remains unfinished and is cluttered and messy. He pretends to work each day going to an office (paid for by my other brother) but collects NO INCOME for his efforts. Just a way of getting out of the house each day.
He is a very likable fellow and is always first to buy the round of drinks for his friends and is generous with his money. The children have expensive hobbies (horse riding and motorcycling etc.). He continues to have a membership at the local golf and country club.
My fear is he will loose his house and family if he does not change his spending habits and recognize he must spend less, budget and earn an income. He is on the edge of disaster. I have tried several times to talk to him about his situation but with no success. I have found him job opportunities that he refuses to pursue.
I propose you meet with him as your were to do a TV show. I will provide the customary $5000 reward to you so there is no cost to you. I will also pay for your expenses so there will be a zero cost to you. I need someone like yourself with a strong, intelligent review and plan to correct his situation and most of all to realize the mess he is in.
I’m very flattered, however, I’m afraid I’m not as sure as you are that he’d be willing to listen to me. Usually people have to first acknowledge their messes before they’re prepared to clean them up. I understand that your brother has had a tough go and that you want to help, but you can’t. He has to want to be helped.
The first thing you all need to do is stop pretending everything is as it was. You must stop helping financially… clearly it is doing nothing more than stopping him from facing his reality. Your brother, too, must remove the pretense that he is working. Work is what you do to earn an income. If you are spinning your wheels for fun, it’s a hobby. If you’re doing it to pretend nothing is different, you’re delusional. And that requires serious intervention.
Have you spoken to your SIL? Or is she as afraid and unwilling to face the reality as your brother? Continuing to spend as if there continues to be an income is a recipe for future bankruptcy, which they may well face if you can’t wake him up.
As for using the TV format, I’m afraid the costs involved would be far higher than you anticipate, and ruse would be pointless since the show has gone out of production.
I receive between 20-40 appeals like this every week from people who are desperate and have no idea what to do next. That’s the reason I created my website and the tools… I can’t possibly do a house call for everyone who need one.
I wish you the very best of luck. You have a tough job ahead. Whether you work at breaking his illusion or you must simply stand by and watch, what you have to do is hard and I’m sorry it will be so tough. Caught early enough, this problem may still be fixable. By reassessing his financial situation, battening down the hatches, and doing whatever it takes to make the situation balance your brother can take control of this. The longer he waits, the deeper the hole. How you make him see that is the really tough next step.
L wrote: I am a recovering gambler. I have taken a treatment course and am working hard at getting my life back. Financially we are in trouble and I need help getting out. I have been watching your show for months and am trying to implement your rules. We make about $120000.00 a year and presently about $160000.00 in debt (that is all consumer debt).I am trying to work out paying it back in three years but even with all the shortcuts that seems impossible. I am looking at doing a proposal but I would feel better if I could pay back all the money that I borrowed. I know it may take more time but it is the right thing to do. Can you give me any tips on getting out of this mess. Thanks for your show it has given me hope.
While the three-year rule is one I believe in quite strongly, clearly there are some debts that simply cannot be paid off in three years or less. You have to make a budget and come up with the amount that you can repay every month. Figure out what your interest costs will be a month and subtract that from your debt repayment amount. The difference is how much you’ll actually be paying down your debt by each month. Divide that into the principal you owe. That’s how many months it will take. I will say that if it looks like it’ll take more than seven years, I would definitely discuss it with a bankruptcy trustee.
Natasha wrote: Hi Gail I love your show and valuable tips, I have been in debt through no fault of my own I leant money and because it came back in dribs and drabs I spent it rather than paying off the loan and it took me and extra 2 years to get out of the hole, I had a car loan £4800 and an overdraft £3,200 that I fortunately had a family member paid off for me interest free, & I am repaying £250 per month towards the capital only no interest which is perfect. However I feel like a fat person who has lost the weight and is now struggling to keep it off, I only just totaled up my income and it is very low, and my outgoings seem to have monthly emergencies like two new tires for the car, and a drive shaft in 1 month. Please I have tried the jars and spent every penny in two days. Is there any help for me, I am in a very fortunate position and do not want to Fail this I am 32 years old and want to have a good night sleep please help.
M’love, it sounds as if your spending is completely out of control. You need to grab hold of yourself and give yourself a good shake. There is no magic solution for what ails you. You need to develop some discipline and PDQ if you’re also responsible for a child. One reason why you may be blowing through the jar money so fast is that your budget may be unrealistic. If you budget too little for food or transportation the money will disappear very quickly. The amounts you set aside have to be amounts you can live with. As for “I only just totaled up my income and it is very low” this is probably at the heart of your problem. Time to Make More Money girl. Whether it’s cleaning bathrooms or scrubbing floors, if you need to make more money to give your daughter a safe and solid foundation for her life, that’s your job as a mother. You’ll do whatever it takes.
August 25, 2010 at 8:13 am
Gail,
Sorry to be picky but is this not the same post as July 14, 2010?
I look forward to your post every morning. It’s how I start my day.
Thanks for all your hard work.
Thanks.
August 25, 2010 at 8:37 am
Yes, I do believe this is a double post.
: )
August 25, 2010 at 8:40 am
Oh good, I was thinking those sounded familiar, glad I’m not crazy!
August 25, 2010 at 8:49 am
Our beloved Gail must be overworked & tired because she has indeed posted the majority of these previously.
However, I do love the fact that she is willing to provide advice to those in need, as well as using the concept in a clever fashion so that others of us can learn from their very same examples.
Take Care.
August 25, 2010 at 8:59 am
Okay — I’m going to post a sticky situation so that we all have something to do today (instead of that pesky work thing….)
You have two older siblings, and one is in a business owner, and the other, his sole employee. The business is less than thriving, and the business owner makes financial mistake after financial mistake. The employee is a saver, but complains constantly about the business owner/brother. The business owner/brother also is less than an ideal boss.
How do you respond when the same song and dance story is related?
August 25, 2010 at 9:35 am
It’s very hard work coming up with a brand new article every single day on a blog. This one is one of the very few that has something new to look at the majority of the time.. so take a well deservd break now and then, Gail. You deserve it and we’re richer for it.
August 25, 2010 at 9:44 am
@Kat…you need to spell out for them what their options are for making things better…(obviously they can’t figure it out for themselves)…offer to help them put their actions into place to make things better…if they aren’t willing to do anything different to change their situation then let them both know your will NOT listen to nor discuss this subject again…then stick to it!
August 25, 2010 at 9:46 am
Kat – I would say that the employee needs to find a new job and let the employer sink or swim on his own. It’s difficult when it involves family, but the employee must watch out for himself, because obviously the employer isn’t going to be able to.
August 25, 2010 at 9:54 am
@ Kat : your employee brother doesn’t like his “boss” or feel secure since the business he works for is potentially “going under”, he needs to consider getting a different job. All other issues will work themselves out.
August 25, 2010 at 9:55 am
Just thought i’d add to the letter from Janice regarding her 15 yr old daughter saving. My son (17yrs) and I worked out a savings plan where he saves 75%-80% of his cheques. He doesn’t pay rent (unless he’s not working) he buys his own food if he wants something different then what I buy. He only uses his ‘mad money’ on lunches, video games etc. He has saved for 2 yrs and has bought himself a new t.v (cash) drivers ed (cash) and goes away for 2 weeks to visit family every summer, yes he bough his train ticket himself
He LOVES to be able to tell me what he has saved, he used to spend $$ like crazy! Cheque in, money gone was how this all started.
I guess it helps that his mother is a credit counsellor LOL.
The amount he will save per cheque will change when he moves out but i’m glad to see he will have an emergency fund in place.
August 25, 2010 at 10:55 am
lol @ the last person in Gail’s post — “I’m in debt through no fault of my own”.
Really??
August 25, 2010 at 12:02 pm
I guess it is always the same complaints
Kat:
The employee could take a leave of absence for a while if he feels a family obligation (look at that term and a recent post of Gail’s about other people’s expectations…). The boss is the boss unless a change to the business structure is possible.
August 25, 2010 at 12:21 pm
I really like Gail’s deal with her daughter where the daughter pays a set portion of her education (1/3 in her case) in order to “receive” the RESP money. Great plan. I guess I am a little bit of a control freak at heart because this approach would have appealed to me as a teen and young adult. It allows her daughter then to make decisions on her own: ie: how much to work, what kind of job to work at, and how to structure things in order to meet her goal, rather than necessarily requiring her daughter to save a set percentage. As a young adult, my parents did not ever tell me how much to save (but then I was a saver at heart), but I DID know that if I was going to get what I wanted (living on campus and keeping my beater car), I would have to work really hard and SAVE.
I don’t think that I would have been willing to work 2 summer jobs if there wasn’t a goal that I desperately wanted to achieve.
Every child is different, so I imagine that for some kids they will need a little bit more guidance and structure from their parents.
August 25, 2010 at 12:30 pm
Hey — maybe it’s not my two older stupid brothers….
Thanks all! Good suggestions….
Anyone else got a sticky situation?
August 26, 2010 at 12:41 am
i like this blog the 2nd time around; it may just me but i found plenty of good info when i re-read it. and i had a good laugh at the final post too; “through no fault of my own”. that’s the kind of thinking that had me deep in debt – how could i, intelligent & clever (not to mention beautiful lol!!!!) find myself in this mess???
thankfully i ran across gail’s show, purchased her book, established my jars & budget, and got with it. and the blog, with all the daily responses & wisdom therein, have helped me stick with it when i feel my resolve waivering.
thanks gail. i agree 100% with the response that said something along the lines of “you too need a day off; enjoy!”. this blog was well worth the re-run, just like tddup…every single episode gives me more ammunition for my arsenal against debt!
August 26, 2010 at 5:36 pm
Kat, when they bring it up, I would ask them, “do you want some help to make a plan to change” or something to that effect. If all they do is complain, I wouldn’t be interested in getting too involved and would probably just let them know that you’ve heard enough about the situation, and it’s in their hands now to do things differently. If they genuinely want your advice, then you can help them.
August 27, 2010 at 12:23 am
To Monique…what we do is use monopoly money in jars. This way we can use debit and such at the stores and when we get home, we take the equivalent amount of monopoly money out of the jar. This way we never worry about having all that money in the house but when a jar gets “empty” we can’t spend from it!