This & That: Mish-Mash Edition
Posted by Gail | Filed under This & That
B Wrote: My husband and I are saving up to buy our first home. We have a 15 month old and would like for him to have some space to run around. We have no debt at this point but don’t have a lot of money saved to use as a down payment. If we were to follow your advice of putting at least 20% down, we would need to have a $70,000 down payment to buy a $350,000 home. I have $25,000 in RRSP’s that I can use according to the First Time Home Buyer’s plan. My husband is from South Africa and has no RRSP’s at this time. My question to you is this: Would it be better for us if we put all our spare money into buying RRSP’s for my husband (to be used as a down payment) or to put it in a TSFA?
Gail Says: If you can benefit from the tax deduction that comes with an RRSP, by all means use the RRSP and then use the taxes you save (don’t pay or get back) to boost your home savings account inside a TFSA.
D Wrote: I will just start by saying I was NEVER a financial Guru fan. Dave Ramsey and Suzy Orman have never appealed or inspired me. Then you came into my life with “Til Debt Do us Part”. You have really turned me upside down. My husband and I started our married life out in HUGE debt. Then we had two kids, assessed multiple medical bills (my oldest son and I both have extensive medical issues), confusion on the inheritance of some land lead to unpaid taxes, and we ended up with some serious unpaid credit card account’s. We tried hard to dig ourselves out of debt, but couldn’t. In 2003, we felt we had no choice… we filed for bankruptcy. We swore then that we would NEVER return there. My husband Greg began his obsession with finance gurus and I became the ultimate coupon/sale/repurpose queen. We have kept our nose clean and our only revolving debt is our house, our two cars and two credit cards that we don’t carry a balance on. However, we still found ourselves blowing through whatever savings we could put together and having overdrawn account’s a couple of times a month. My husband had taken over the bills and was handling all the money without me. It was always “my fault” when the account went overdrawn even though I only spent on the items we needed. It wasn’t until earlier this year when Greg DVR’d one of your programs and watched it while I was in the room that I became hooked on you! You just make more sense and don’t make getting out of debt more confusing then the Long Form for taxes! Six weeks ago, Greg and I began attempting your system. I took the last 12 months of expenses and reconciled them. We were both amazed at the amount of money that is unaccounted for or wasted and how much he has to share in the blame (winning moment for me!). We also realized we were grossly underestimating our budget line items. He thought that $75 a week was enough to feed a family of four, three of which are males! We then made a spread sheet of expenses per pay period and per month, took our income and budgeted it out based on the facts. We got out our jars and money was taken out of the bank every other Friday and divided into jars for their intended uses. Every transaction must have a receipt and we reconcile the receipt each pay period. This is the first time in 17 years we have done our money together! For the most part, it is working. However, we made an agreement to live on $250 less a pay period as that would go directly to the savings and remain untouched. This would give us $6500 a year into the savings plus the additional amounts we receive in gain share checks and tax reimbursements. We have a son starting college in a year and a half and we have nothing put away for him, so we feel the need to be more aggressive with savings right now to account for lost time. This is where my questions/issues come in. The first budget was lacking on the list of what to include and so the following pay period, I had to add additional line items. Now the list is complete, but we still seem to run into issues. An example would be a calculator my eldest needed. In taking his PSAT, they were only allowed to take in a specific type of calculator (graphing). We had chosen not to buy one at the beginning of the school year due to cost and have him use the ones provided by the school. The school failed to tell us that due to their limited quantity, that in order to bring the graphing calculators into the PSAT you would have to bring your own from home. This sent us scurrying to purchase a $104 calculator that was not budgeted. Another example is that both my boys play soccer. We received a message on Friday from the organization that due to the drought, they boys would have to wear turf shoes and would not be allowed on the fields with cleats. There was another $75 spent on getting the shoes for them by Monday. This pay period has been more of the same… we have to shell out an additional $50 for a tournament that we were told last week we were not participating in (no opt out… pay even if not attending), a broken computer (We both work from home at times and the boys do homework on it as well so it must be fixed), and a broken sprinkler head that had to be replaced. None of this is earth shattering, but each week we seem to fail at working only out of the jars! I just found out I am going to have to put my oldest cat down, I have to go into a gift with the ladies in my office for a baby shower and that we have to add a few more “random” expenses on for this following pay period. We each have a credit card, but we don’t want to use them unless it is really necessary. We are just now building up our savings and only have a couple of thousand dollars in it. We don’t want to use the credit card we each have as the intention of those is to rebuild our credit and not charge up like we did 10 years ago. I am just trying to find a better way to move forward and take the speed bumps in stride. Our current budget is very stretched to add anything else in it without taking out of the money going into savings. Should we just rebudget where $150 go to savings and $100 goes to an emergency account that dumps into the savings if not used? We have only a small amount in it for entertainment ($20 a week), personal spending ($20 a week), nothing for clothes or gifts unless we know something is coming up and the majority of the spending is all on utilities, gas and groceries. Please help me figure this out…. Thanks!!
Gail Says: Hey doll, thanks for your letter and congrats on taking control of your money and your life. Well done! Now what you need to do is set up (yes, yet one more account) a curveball account for those things that pop up and try to throw you off track. All the things you described in your note are perfect examples of what would be paid from your curveball account. This is not your emergency fund, which you need for major disasters. This is just a slush fund from which you can draw when unexpected expenses come whizzing at you at 60 miles an hour and you don’t want to end up using credit. Whether you deposit a little or a lot into this account every month, it can be a real budget-saver. And if you move all the money you “save” by shopping smartly into this account right after you haven’t spent it, it’ll grow even faster. So the next time you save 50¢ on a coupon, go home and drop that 50¢ into an I’m-a-smart-shopper Jar and then deposit all those savings to your Curveball Account at the end of the month. To give your curveball an initial kick, skip one month’s worth of serious savings to fund the curveball account. Next month you’ll be back on track and you’ll have a slush fund to take care of unforeseen expenses that crop up.
D Wrote: I am a 43-year-old woman rising from the financial ashes of a divorce. I make $60K / year (thank the Lord for a decent job!). I recently bought a 100-year old house. My mortgage payment is $251.15 every two weeks (2.41%, variable), and I am already paying an extra $100 on it with every payment. I dug myself a nice $40,000 hole on a LOC (6% interest) I used to make renovations on the house and furnish it. Should I cash in my RRSPs to pay off the LOC? Or add it to my mortgage? Or should I just pay it down over a period of time? Other than the LOC, I don’t have any debt, besides the mortgage. However, I don’t have much left in my savings either. I am saving $300/month, and putting $100/month away in a TFSA which is to rebuild my emergency fund. BTW: your show and book helped get me through my divorce more than you’ll ever know. I am grateful.
Gail Says: Do not cash in your RRSPs. You could add the LOC to the mortgage, or you could put every extra penny (including the $100 a month on the mortgage) to the LOC until it is gone. You’re paying about $200 a month in interest on that line, so you’ll need to make payments of about $1,300 a month if you want it gone in 3 years or less. Over 5 years your payments would have to be about $900 a month. I suggest you get a part-time job and put all your extra money to the debt. Pick something you can have some fun doing or will meet some interesting people at so you’re not slogging your way through that debt.
C Wrote: I LOVE you and your show!!! You’re tough as nails and I love it. Any time I get the urge to spend, I see if your show’s on, that way it scares me into not spending any money because I don’t want to end up like the folks on your show. Although, I will admit I am no financial saint. Which brings me to my question: I have $6,000 of credit card debt and right now it’s at a promotional interest rate of 1.99% until May 2012. But I also have $17,385.00 left in student loans at an interest rate of 5.5% (paid down from $52,000). So, should I be putting the bulk of my debt repayment focus on my credit card or my student loans?
I usually have around $700 at the end of the month to either put on student loans or my credit card. However, I always pay my minimum on my student loans which is $250/month, but still leaves me with $700 at the end of the month to either put on my credit card or my student loan….what should I do?
In March, I get 3 pay cheques so I have $2,000 to put towards a debt and in April with my tax return I usually get $1,300 back on taxes and I sling that on my debt as well, not including the $700 I would normally have at the end of the month in April as well, so in April I am also able to sling $2,000 total onto a debt.
I guess I just need your expert opinion on deciding which debt to pay off first. And since I am scared of you I will do whatever you say 
Gail Says: Pay off the CC before the promo rate ends and your interest rate skyrockets. Once the CC debt is gone, snowball those payments against your student loans.
K Wrote: I am 43 and my wife is 38 and have been in touch with Equifax about our credit rating. They have informed us that there was two delinquents but that it has been paid off with a zero balance and we absolutely owe nobody except normal utilities and groceries. We always get denied for credit and Equifax suggested a secured Visa or Mastercard to establish a history and good credit rating but my father disagrees. My dad is a very smart man and says the interest is crazy and we shouldn’t do it, yet in my mind, if we use it for normal purchases like groceries and gas but pay it off within 21 days it would be a good thing for us. I want credit established for a future home and to ensure kids can go to college/university. We presently own our home outright, so we have equity but don’t understand why we get denied so often?
Gail Says: Your smart dad’s comments about the high interest rate are valid if you carry a balance on the secured credit card. However, if you promise to do as you say and pay your balance off in full before the due date every month; you won’t be paying any interest so the rate won’t matter. You cannot mess up. You must set aside the money you spend on your card each time you spend it so you don’t slip up. Do you currently use a spending journal? All you need is a notebook and pen. Put your balance at the top of the first page and then track every cent you spend manually so you always know exactly how much money is in your account. Whether you use a debit card or a credit card, deduct the amount you’ve spent from your balance so you’re feeling the “pain” of having spent the money and you’re not tempted to spend the same money twice. When your credit card bill comes in, check off all the transactions that have come through and pay the bill as soon as you get it.
D Wrote: I would like to consolidate my debt however I don’t know which debt company I should go with. These debt companies are popping everywhere a lot of them privately owned, and because they seem to be commissioned based I don’t trust them. Could you be please recommend a trustworthy firm? My debt is $20,000 I live in Canada and I’m interested in companies such as: creditcanada.com inchargecanada.ca iamdebtfree.com Canadian debt relief ccdr.ca. HELP ME PLEASE!!!
Gail Says: No debt company, that’s who you should go with! Do it yourself. Figure out a debt repayment plan, do the hard work yourself and you’ll be sure it’s done right. The next version of Debt-Free Forever has a debt settlement chapter in it. Or do some research on the internet. But don’t hand your problem to someone else to fix for you. It never works out the way you think it will.
J Wrote: I’ve been a fan since ‘forever’, and thank you so much for what I’ve learned from watching your shows and accessing the website. Here is the reason I am contacting you now:
Please see this web page (long url), from Suze Orman’s web site:
Once there, please click on ‘watch videos’ then watch ‘Overview’ … and others if you want
Finally, here is my QUESTION TO YOU …Would you please seriously consider putting together the Canadian equivalent?
I sincerely believe the response would be phenomenal! Were I an American, I would have purchased one on the spot because of who is offering it – she seems to be your American counterpart – and the comprehensive nature of the kit. FYI – I’m not much of a shopper and never do ‘on the spot’ purchases be it online or in an actual shop.
As it regards the CD updates she talks about, I do recognize that with a market 10 times smaller, it might be necessary for you to offer this aspect as an upgrade/membership-fee-required scenario. I would accept that and assume others would also – also assuming a reasonable fee .
Well, I’ll leave it with you. Thank you for taking time to consider my comments.
Gail Says: I’m sorry m’love, I’m not going to take your money and give you something that is less than you should have. No “package” can do the job an estate professional needs to do to make sure you’re protected properly. You know what they say, “You get what you pay for.” If you think Suze or I would settle for an off-the-shelf package to protect our families, you’d be very wrong. I don’t care who drew up those “forms”, they can’t take into account your unique needs.
And as for the box that turns into a desk, really?
People have been trying to convince me to create a Magic Jars & Budget Binder kit for years. Y’know what I tell them: rinse out your pickle and jam jars and buy yourself a notebook at the dollar store. I just can’t take your money.
September 13, 2012 at 9:48 am
I had a good chuckle at the response to J at the end. I think that’s why we all find the advice so helpful. Not even the advice giver is willing to waste money on what doesn’t need to be bought.
September 13, 2012 at 10:11 am
Gail, not taking people’s money gives you credibility.
D check out moneymentors.ca for a little more help. It’s an Alberta based group but if you’re not in Alberta there might still be more information from the site you can use. It’s non-profit.
September 13, 2012 at 11:04 am
As usual, I love your This & That posts.
Regarding the last question, I had always heard so much about Dave Ramsey and Suze Orman, so a few weeks ago, I checked them out. I was shocked to find out that they wanted to charge so much money when the people that need help are in this mess because they spend money on things like that! Talk about a bad start! I’m glad so many people are finding guidance from them, but it sounds like a bad infomercial to me.
Gail, I definitely hold you in high respect because you are not trying to profit of these people who are so desperate for your help. Like Natalie said, it gives you much more credibility.
September 13, 2012 at 11:33 am
When does Gail’s new show come out? Does anyone know?
Thanks.
September 13, 2012 at 11:50 am
You are so awesome, Gail! And it’s so righteous that someone who advises people on how to save money and get rid of debt isn’t pushing to sell them stuff. (Like many of the personal finance gurus out there.) “I’ll teach you how to save and get rich!! Only $59.95 and you get my complete financial workout plan!!”
Err.. Is it just me or what, but I think both B & D can’t afford homes? B has to save *a lot* more and D… Well, didn’t she know how much she was making *before* she bought something? Wait, no–renovations come before being able to pay for them, I guess.
September 13, 2012 at 12:42 pm
I am a big believer in the “slush fund” and it has come in handy! I have a fund for my boys’ activities (swimming, soccer), one for my annual girls’ getaways, one for our future family trip to Disney, one for Emergencies, one for house renos, one to save up for new tires for our van, one for Christmas, one for the hubby’s yearly hobby show trip… I have them all set up as savings accounts with ING with weekly automatic withdrawals. I have those amounts in my budget and know they’re coming out each week. And it’s awesome when I go to pay for a swimming lesson or buy a Christmas present and know that it’s already paid for!!
September 13, 2012 at 6:32 pm
I used to like Suze Orman until I looked her up on her website. If you want her advice, you have to pay for it. I feel as though if she were really, really committed to getting people out of debt, she would not charge for everything. I understand she is her own businesswoman but it’s totally counterproductive. Also I think Suze’s briefcase is gimmick-ey. Sorry, Suz.
One small thing that I would like to mention is that on many occasions, you have advised your readers to go to the library and borrow one of your books. This of course comes along with the (priceless) advice that you give. I totally respect that. You are committed to following your passion, which is getting people out of debt and managing their money and their lives. Period.
One last thing…someone mentioned the “I’ll teach you how to get rich! Buy my book for $60!” (or whatever the claim may be). Guaranteed, the first and only chapter in the book will tell you that in order to get rich, all you have to do is write a book on how to “get rich” and sell it for a ridiculous price. Those authors are getting rich off the poor schmucks who literally buy into that crap.
Thanks Gail for all you do!!! =)
September 13, 2012 at 6:33 pm
OM Gosh! Literally every time I read a blog it has been something I have been thinking about the night before! I would have started each post with that sentence, but feared y’all would never have believed me!
What “D” wrote is right up my alley! 20+ years ago when my husband and I bought our 1st home, I asked everyone i knew “how much” – for utilities, taxes etc. I was scared silly about not having enough $ for all the bills I knew would be forthcoming. In part, because I worked beside someone who was always complaining about not having enough money for her Visa (which mommy paid off many times and STILL does), taxes, gas bill or whatever. I could not figure out how such a smart girl could be this way. I mean – you KNOW what your taxes are and when they are due, so why don’t you have the $? Just set the amount aside each month! Couldn’t figure her out, but glad she bemoaned to me in the end, as it probably helped me out
When we purchased our home I bought a 18 column ledger and accrued for everything that wasn’t a monthly bill – from water to xmas, savings to vacation to new vehicle. We didn’t use jars, but rather envelopes at 1st. Then online banking came and I guess I got a wee bit lazy…. So 20 + years later and after watching Gail’s shows, I decided to get the ol’ ledger going again. Not that we didn’t have enough $, but to really see where it all was going.
So a month into it and every cent accounted for, opps, there was a death – so flowers and donation; wheelchair repair (twice – not an expense I’ve ever had with the exception of new batteries), etc…. So where was this money to come from?? I know Gail says to not have something like “pocket $” and that each dollar needs to be accounted for. But how to budget for the plain unexpected?!? One never knows how much any unexpected bill might be…
So I guess tonight I will be redoing the budget and finding a hundred bucks or so for a slush fund – now that I know it’s ok’d by Gail
To the “Gail” above my post – I think your “slush” fund might actually be “planned spending”; but call it whatever you like, as long as it’s working for ya!
September 13, 2012 at 6:35 pm
One amendment to my last comment about those “poor schmucks”- maybe the people who buy into those claims are in desperate financial situations and don’t know what else to do. Hopefully they discover your shows/website and are able to empower and educate themselves.
September 13, 2012 at 7:15 pm
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September 13, 2012 at 7:35 pm
Gail, I love the “This & That” blog posts. Please keep them coming because I learn so much from others’ situations and your advice to them. You’re a genuine voice whose advice comes from the heart. You’re a rare gem – thank you and please keep up the great work!
September 14, 2012 at 9:58 am
re: Suze Orman
I was watching her quite frequently, she constantly gives those kits and books away for free with links…. she is not all about the money, as people here have suggested.
She truly cares about people…
I think she understands human nature a bit as well…. while Gail doesn’t want to sell buget jars, and binders… I probably would have bought a set and used them. And yet I still haven’t managed to hit the dollar store and make my own…. and no, it’s not just laziness… there’s a mental hang up there.
It doesn’t mean that Suze is a saint by any stretch… but she’s not all about money.
September 14, 2012 at 3:14 pm
I love the idea of a “curveball fund” that’s not an emergency fund but helps you cover those unexpected expenses that always pop up regularly. I just set one up on ING and plan to build up $300 in there over the next 6 months. I’ve budgeted for all the expenses I can foresee and I’m (very) slowly building up an emergency fund of $10K for true emergencies – a job loss, illness in the family that I have to travel unexpextedly and/or take unpaid time off work for, roof caving in, etc. But here’s a good curveball example. Our cat got very sick this week and we had to rush him to the vet. A few x-rays, urinalysis, emergency hydration and a few other services later we found out he had a serious bladder infection. He’ll be fine but the total vet bill was $700 – so my half was $350. I’m slowly saving a target $2000 for vet bills (I love my 2 cats and I KNOW the vet bills are only going to become bigger and more frequent) but had only gotten to $200, so I had to pull $150 out of my emergency fund to cover the rest. In future, a curveball fund will give me that extra bit of cushion to handle these kinds of unexpected things. The trick, I think, will be to commit to putting back in what you take out so as to be prepared for the next curveball!
September 15, 2012 at 9:15 am
The main difference between Suze and Gail is that Suze is somewhat married to the FICO credit scoring system used in the USA. Gail in the other hand, and followers of her like us, could not care less what our credit scores are. Gail followers follow the 3 simple rules of, PLANNING your spending, SAVING for goals, and PAYING on time. If you follow those 3 simple rules, and you actually use a credit card to handle most of your purchases, then your credit score will be “normal” and that’s what we want. Do we care that we can’t get the best interest rate on a credit card? I DON’T… why? Because I don’t need a credit card to carry a balance and pay interest on it !!!
Don’t get me wrong, Suze’s advise and shows are very entertaining. I think we always learn from each and everyone of the Money Guru’s. The more we learn, the more WE take control of OUR FREAKING money!!!
I alway’s wished Gail would sell the Jars, and maybe APPs, but her rationale is true: SHE IS NOT GOING TO GO THE ROUTE OF QUICK CASH, why? Because she does not need it. She is a reputable individual, a great author of books that help others, and she is definitely not in for the money.
September 19, 2012 at 7:03 pm
I second Kat and Emiliano:
Suze also offers great advice, often for free! I think it’s fabulous that, in the US, Suze and Gail are paired up on Saturday nights, back to back, giving us a double dose of good financial direction.