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Carrick on Money

Rob Carrick pulls together the best personal finance ideas of the week

Entry archive:

The man she loves is a financial train wreck

She’s a saver, he’s a spender. OK, he’s a “financial disaster.” Can they make it work after moving in together? Welcome to dating and relationships in 2017. When looking at compatibility, money plays a huge part.

Dr. Marina Adshade, an economics professor at the University of British Columbia and author of the book Dollars & Sex, says people bring all kinds of things to the table in a relationship. It might be attractiveness, and it might be money.

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The upside of renting is having more money to travel

The 30-something blogger Kristy Shen may be familiar to you thanks to her views on how millennials should rent homes, not buy. She and her partner were able to build a seven-figure investment portfolio doing this, and now they’re retired and travelling the world.

The cost of one year’s travels was $40,143 including travel insurance. Costs were averaged down by spending time in both expensive places like Europe and Japan and inexpensive countries like Vietnam, Cambodia and Thailand. Ms. Shen estimates she and her partner saved at least $10,000 by using Airbnb instead of staying in expensive hotels in Europe.

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What you need to know to get your finances right in 2017

Rob Carrick

You can decide to take control of your finances at any time, but people seem to be more open to changing their ways at the beginning of a new year. So let’s dive right into a briefing designed to help you manage your money better and prepare you for what might be ahead in 2017.

To start, here are some encouraging words about managing your finances – you don’t have to be perfect with money to get good results. Here’s a list of 31 quick and dirty tips to get your finances in shape for 2017 and a list of five tips from Pattie Lovett-Reid, chief financial commentator at CTV. I really like the first one, which is about getting the big purchases in life right (houses, cars) and not worrying so much about small transactions like buying a coffee.

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What will the future look like? Well, you'll own less stuff

Rob Carrick

This is the last edition of the Carrick Talks Money newsletter in 2016. It will resume on Jan. 4th, 2017. Happy holidays. 

The World Economic Forum has been looking ahead to urban life in 2030, and it sees people owning a lot less stuff. The underlying idea is that products will become services. You don’t buy a car, you use a car-sharing service. You don’t own tools, cameras and tents – you rent them.

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Should I dump my investment adviser to save on fees?

Rob Carrick

I’ve been getting this question a lot lately, maybe because the stock markets have been strong. People tend to think managing money is pretty simple when the markets are hot, and this leads them to all kinds of potentially wrong conclusions about investing. One I’d add to the list is that they should dump their adviser to save on fees.

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Done with Air Miles? Here are some alternatives

Rob Carrick

The personal finance story of the year is how Air Miles remodeled itself as a customer disloyalty program. The past year began with media coverage of how Air Miles points older than five years were going to start expiring at the end of the year. A backlash quickly developed against both this policy and the way Air Miles handled the rush of customers trying to use points before they expired.

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Don’t let a fear of spending ruin your retirement

Here’s a retirement issue you don’t read much about – “spendaphobia,” or the reluctance to spend. Some U.S. research has found that, aside from households of modest means, seniors were spending less on average than they had available to them from their own savings and government programs.

One of the explanations for this pattern is that seniors have formed a lifetime habit of thrift and don’t feel comfortable increasing their spending in retirement. If that’s the case, then the so-called retirement consumption gap – spending less than you have – may not be a long-lasting trend. The baby boomers now heading into retirement certainly know how to spend.

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How not to slaughter your personal finances this holiday season

For reasons I’ll discuss in an upcoming column, I see 2017 as an expensive year for Canadian households. One way to prepare is to go easy on your spending this holiday season. This edition of the newsletter is devoted to the idea of combining fun and frugal. First off, we should acknowledge that Canadians are world leaders in binge shopping in December.

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The domino effect: What happens if millennials never buy houses

The debate over whether we have a healthy housing market has lately begun to look beyond the question of whether a correction is coming. There’s a new emphasis now on the implications of continued rising prices, particularly on first-time buyers.

Vice Canada recently posed the question of what would happen if young people stopped buying homes to two experts: Paul Kershaw, a policy professor at the UBC School of Population and Moshe Milevsky, a professor of finance at the Schulich School of Business at York University. Prof. Kershaw says fewer purchases by young buyers could have a negative effect on home prices in general.

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Real life examples of when to take CPP early

If you’re looking ahead to retirement, one of the top questions you’ll want to answer is when to start receiving your Canada Pension Plan benefits. Age 65 is when a full CPP benefit is available, but you can also receive a reduced benefit at 60 and an increase benefit if you delay until as late as age 70.

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40 things you can stop doing right now to save money

Rob Carrick

One of the most popular of these newsletters so far made a case for wearing the same thing to work every day. I get it. People are looking for ways to simplify their lives to save time and money.

That might help you understand where I’m coming from in including this article from The Guardian. It’s a somewhat snarky list of 40 things you can stop doing now because they’re not worth it. Flossing is on the list, after a study issued this summer suggested it’s not the no-brainer dental hygiene habit it’s sometimes made out to be. Think of the money you’ll save on dental floss purchases.

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The stealth way to save on U.S.-dollar purchases

In the Nov. 9 edition of this newsletter, I asked readers to offer their suggestions on how to save money when buying U.S. dollars. Here’s an idea that came up a lot and appeals to me because it’s so simple: Use a credit card that doesn’t charge the usual foreign currency conversion fee of 2.5 to 3 per cent. If you use these cards, you simply pay a competitive wholesale foreign exchange rate on your purchases.

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Parents shamed for living in a tiny home

A sensible response to expensive housing is to scale back on the size of your home. For some, that will mean living in a condo instead of a house. Prepare for some pushback if you do that, however.

A couple living with two kids in a two-bedroom condo recently received an anonymous note shaming them for being too “selfish” to buy a house for their kids to live in. Clearly, this family has an obnoxious neighbor who needs to mind his or her own business. But there’s something else going on here – the assumption held by many people that owning a big home is the proper way to raise a family.

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Is your food bill eating you alive?

Rob Carrick

Remember the $7 cauliflower? Food prices have fallen back since the price shock that began the year, but a lot of people are still worried about how to pay for groceries. In the B.C. town of Saanich, a survey found that a substantial number of people spend between one-quarter and half their household income on food.

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Decade by decade, these are our worst money mistakes

Rob Carrick

Now, this is useful. A writer for the Wall Street Journal looks at the money mistakes people make in every decade from their twenties to their sixties and beyond. It’s a great reminder that personal finance isn’t an absolute thing. Sure, there are broad, universally applicable principles like living below your means. But the concerns of a millennial are a lot different than those of 40-year-olds juggling a mortgage and daycare.

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How snowbirds can buy U.S. dollars on the cheap

Rob Carrick

The Canadian dollar is pretty much where it was a year ago, which is not great news for snowbirds. Our currency is worth about 75 cents U.S. on the wholesale market, which means you might pay $135 or more to buy $100 U.S. dollars. Ouch.

Buying U.S. dollars at your bank is convenient, but expensive. Foreign exchange is one of retail banking’s reliable profit centres. A few options for cheaper rates:

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The last thing people need is more financial advice

Rob Carrick

This is one of the smarter things I’ve read on personal finance lately. It’s a short blurb on a website called Lifehacker that argues people don’t need any more financial advice. What they need is to take a step – virtually, any step – to improve their finances.

This message is particularly relevant right now because November is Financial Literacy Month. The underlying philosophy of this and similar events is that if we keep talking about financial literacy, people will absorb key messages likes cutting debt and saving more. Count economist Frances Woolley among those who think this strategy is ineffective.

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Why you should wear the same thing to work every day. Seriously.

Rob Carrick

Smart people are wearing the same thing to work every day. The rationale: Simplifying your wardrobe choices improves your productivity and costs you less in the long run. Facebook CEO Mark Zuckerberg does it – he wears the same grey t-shirt every day. Barack Obama does it – he wears the same suit. Here are eight celebrities who do it, including Angelina Jolie.

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The new alcoholics: Retired, wealthy and bored

Rob Carrick

Musician Phil Collins retired a few years back and found he had a lot of time on his hands. He filled it by drinking. According to this story, he’s part of a trend. “Retired, wealthy and bored after their children have long left home, many over-fifties can relate to the same curse that afflicted Phil Collins.”

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Is your mortgage killing you? Here’s how to find out if you’re house poor

Rob Carrick

I wonder how well Canadians are doing in handling their mortgages. I’m not too worried about defaults – only soaring unemployment or rising rates would increase the number of people who can’t pay what they owe on their homes. What concerns me are more subtle issues: Whether hefty mortgages are preventing people from saving enough and causing them to take on further debts.

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Millennials, stop wasting money on smashed avocadoes

Rob Carrick

Australia’s a lot like Canada in that real estate is expensive and young people are struggling to afford houses. An Australian newspaper columnist has found a solution. Millennials should stop spending money on eating out, particular on expensive brunches featuring items like smashed avocadoes on toast (kind of like guacamole – I think.) “I have seen young people order smashed avocado with crumbled feta on five-grain toasted bread at $22 (AUS) a pop and more,” Bernard Salt writes. “Twenty-two dollars several times a week could go towards a deposit on a house.”

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Are you getting nervous about the housing market?

Rob Carrick

The federal government’s new housing rules started to kick in on Monday, and that means growing speculation about what’s ahead for the residential real estate market. A few cities – Ottawa and St. John’s are examples – saw price declines last month, but Toronto, Hamilton, Calgary, Victoria, Montreal and Halifax were all up solidly. Meanwhile, Canada Mortgage and Housing Corp. is signaling that it will increase the risk rating on the country’s residential real estate market.

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Why Canadians should open their minds to renting

Rob Carrick

I had an e-mail from a 30-something reader in Edmonton the other day in which she talked about selling a house and renting instead. “Phew. Relief,” was her comment on the financial flexibility she and her partner gained.

A Halifax retiree I wrote about a couple of weeks ago said his wife felt the same way about selling their house and moving to a rental apartment. “She finds the simplicity of living in the apartment so much more gratifying than the constant worry of maintaining the house, a good part of which we weren’t living in.”

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Where can I find a low-risk dividend fund? You can't

Rob Carrick

I’m starting this edition of the newsletter with a reader question. “We are approaching retirement and want to downscale our exposure to equities,” a couple from Mississauga, Ont., writes. “What are good low-risk funds to replace equity ETFs that can generate a stream of dividends that you could withdraw from your RRSP annually?”

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What’s your ideal retirement location?

Rob Carrick

My wife and I are starting to look ahead to selling the family home and moving to something smaller. But the question now is what type of housing and, just as importantly, where? We’ll certainly be retiring while living in our next home and that means we’ll need to do some advance planning to make sure we’re in the right city and neighborhood.

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Buy a first home now, or wait for a correction?

Rob Carrick

Real estate people are saying that one of the mortgage changes announced by the federal government earlier this week is going to hit first-time home buyers hard. First-timers who don’t have a down payment of 20 per cent or more are going to have to take a stress test to see if they can handle interest rates at roughly double today’s levels. This stress test is already in place for variable-rate mortgages and loans with a term of less than five years. Now, it’s being expanded to the very popular five-year term as well.

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Bury Canada Savings Bonds? Pass me a shovel

Rob Carrick

What could possibly be holding the federal government back from killing Canada Savings Bonds? Is it sentimentality over a 70-year-old program that has turned utterly irrelevant? Fear of alienating people who won’t adapt to the better options now available? Whatever the reason, it’s insufficient. CSBs today are a waste of time.

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Why are so many university students anxious to buy houses?

Rob Carrick

I’m just back from a trip to five East Coast universities with my colleague Roma Luciw, the Globe’s personal finance editor. We talked with students about money – how to minimize debt, budget, save, invest and avoid fees as much as possible. It’s the fourth year we’ve done these sessions, and we now have a pretty good idea of the financial literacy level of Canadian college and university students. Here are some observations:

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How not to waste time and money at the supermarket

Rob Carrick

Editor's note: We apologize as the previous issue of the newsletter distributed earlier Friday was sent in error. Here is today's newsletter. Enjoy!
 

If you’re like me and believe that time is money, you’ll want to hear all about how to pick the fastest lane at the supermarket checkout. One rule is to never go into the line I’m in. I put a lot of thought into line selection, but I’m pretty much always wrong. Any thoughts on which stores have the slowest checkout lines? E-mail me at rcarrick@globeandmail.com, and I’ll put together a list in a future newsletter if I get enough responses.

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Will Air Miles step up and do the right thing?

Rob Carrick

Personal finance blogger Robb Engen has written an open letter to Air Miles and, wow, is it ever meticulous in how it documents the takeaways that members have experienced over the years. What prompted his letter is the plan at Air Miles to have points older than five years start expiring at the end of this year. “By allowing reward miles to expire, you’re potentially alienating millions of Air Miles collectors…,” Mr. Engen writes.

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Why the steady buzz of complaints about condo living?

Rob Carrick

Several people my wife and I know live happily in high-rise condos. But in my job, I hear a steady buzz of complaints about condos. That’s why this blog post caught my eye. It’s a diatribe about how crummy condos can be. Their tininess, their weird layouts, their unsuitability for families. In summary, condos are described as glorified hotel rooms.

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Buying a home? Prepare to be judged

Rob Carrick

Personal finance blogger Barry Choi and his wife recently bought a condo in Toronto and, as far as I call tell, they made a sound financial decision. But, wow, have they ever been judged by the people they know.

When you buy a home, everyone’s a critic. Mr. Choi reports being told that he’d have saved money if he rented, that the condo is too small, that he paid too much and that the condo won’t appreciate as much as a house. He says he bought a home that fits his lifestyle and his budget. In a live-and-let-live world, that would be good enough for all the critics.

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Inside the bedrooms of twentysomethings living at home

Rob Carrick

Get over your stereotypes of millennials living at home as basement-dwelling video game addicts. Here’s a profile of five 20-somethings who are living at home, each pictured in their bedroom. What I like about this article is the way it captures how normal these kids are.

Trevor, 23, is volunteering at a startup and has been told by his parents to stay at home as long as he can because of the money he’ll save. Shanella, 21, explains that young adults don’t typically move out in her culture unless they’re taking a job far away or getting married. It’s all very matter of fact and free of judgement.

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Buy your kids a postsecondary education, not a house

Rob Carrick

Presenting one of my all-time favourite commercials as a lesson on how much more complicated and expensive it is for kids to head back to school these days. It’s a Staples spot in which a giddy dad buys school supplies with two dejected kids in tow. The soundtrack is the Christmas song, It’s the Most Wonderful Time of the Year.

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How to stay in great shape without spending a lot

Rob Carrick

I reject all budget-related excuses for not staying fit. You don’t need a lot of money.

Confession: I pay full freight for a YMCA membership every year. But you don’t have to spend nearly that much. There’s a lot of cheap exercise equipment you can buy to use at home, including balance balls, jump ropes and something called a Bulgarian bag. You can also try making your own weights (full water bottles and juice jugs) and scooping up equipment at garage sales.

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The worst reason ever to borrow money is…

Rob Carrick

I will not keep you in suspense. It’s for a wedding. I felt this needed to be said after reading a blog post that mentioned something called a wedding loan. Lenders don’t market anything called a wedding loan, but it’s certainly possible to borrow money through a loan or credit line to pay for a wedding.

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How to figure out the best age to start getting CPP and OAS

Rob Carrick

There’s been some talk lately about the cost of the Liberal government’s decision to shelve plans to gradually increase the age of eligibility for Old Age Security to 67 from the current age of 65. The previous Conservative government announced that change in the 2012 budget, along with another measure that is still in effect. You can delay receiving OAS benefits for up to five years past age 65 and receive a higher monthly payment.

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In this hot housing market, should you rent?

Rob Carrick

High home prices mean a lot of young adults are going to have to accept the idea of either buying in the distant suburbs, moving to a more affordable city or choosing a condo instead of a house. Oh, right – there’s also renting.

The idea of being a long-term renter makes a lot of people squirrely. I know that from my many columns about the benefits of renting. Some people just won’t buy the argument that you save a lot of money by renting instead of owning and, if you invest it diligently, you can generate comparable wealth to home owners.

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‘The housing market is the bad guy’

Rob Carrick

Hot housing rewards some people and crushes others like Trevor Wilkie, a single father of two who is renting a Surrey, B.C., townhouse that is being sold. He’s worried he’ll have to pay $600 or more per month to find a comparable place to rent.

Mr. Wilkie’s landlord is limited in how much he can raise rents. But if he sells in today’s hot market, he can make a significant profit. And so, the house is up for sale. The landlords who continue to rent in markets like Vancouver and Toronto have a lot of power these days because there’s so much demand from people who can’t afford to buy.

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Reader-tested ideas for using your Air Miles before they expire

Rob Carrick

A few weeks ago, I asked for your help in figuring out what to do with my Air Miles points before they start to expire at year’s end. The response was tremendous – more than 100 people e-mailed to suggest ideas for using my points, and to vent a little at Air Miles for not letting them keep their points indefinitely.

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Have you embraced the 20 per cent restaurant tip yet?

Rob Carrick

For a good meal well served, 20 per cent is becoming the standard tip. That’s my sense after doing a lot of reading online about tipping expectations in larger Canadian and U.S. cities, and it’s a guideline my wife and I use. But what’s the custom across the country? Data from a recent Angus Reid Institute poll offers some answers.

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New Canada Child Benefit payments start this week — how much will you get?

Rob Carrick

The first payment under the federal government’s new Canada Child Benefit will be made on Wednesday. For families with kids under 18 years of age, this is a big deal. In the election campaign last fall, the Liberals promised that 90 per cent of families would be better off under this program. The average amount of extra money over previous programs was estimated at $2,300 per year.

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Here’s the home reno that really adds value

Rob Carrick

July has been especially hot and dry here in Ottawa, where I live, and our neighbours are getting a lot of use out of their swimming pools. Pools can be a blast from a lifestyle point of view, especially if you have young kids. The problem with pools? Not everyone likes them, or wants to put in the work to maintain them. For these reasons, pools top this list of renovations that don’t add value to homes.

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Millennials might never retire, but that's not necessarily a bad thing

Rob Carrick

Is living to 100 years old a good thing? The co-author of a new book called The 100-Year Life has a reassuring answer. “It’s not that you’re old for longer; it’s that you’re young for longer,” Lynda Gratton, a management professor at the London Business School, said in a recent interview.

The negative take on long lives can be seen in this headline: “Retirement is making people more miserable than ever before.” The 100-Year Life argues that we should think of our extra years as additional time spread throughout our lifetimes, and not just a 35-year retirement. You might, for example, go back to school in your 50s and work well into your 70s. In fact, some Nordic countries are debating the idea of sending senior citizens back to school to keep up with the times.

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What are you doing to enjoy your Air Miles before they expire?

Rob Carrick

The friendly folks at Air Miles sent me an anniversary note this week by e-mail. It was 23 years ago that I joined up for this popular customer loyalty program. How time flies when you’re earning air miles at a rate of, wait for it, 174.2 per year.

Yup, my personal total after all this time is 4,007. It’s not much, so I’m keen to maximize the full benefit before my points start expiring at year’s end. I’ve played around with flight options, but struck out. Couldn’t get where I wanted to go without making unappealing connections or stopovers. What do you suggest as an alternative – gas, groceries hotel rooms? E-mail me your thoughts at rcarrick@globeandmail.com.

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Can we finally bury the image of the lazy, entitled millennial?

Rob Carrick

I began looking at the financial challenges faced by millennials in a column on how young adults have it harder than I did when I was their age. Four years after that column was written, we finally seem to be making some headway in recognizing the troubles that people in their 20s and 30s are having in achieving financial independence.

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Fix your savings habits, not the CPP

Rob Carrick

I’m 100 per cent in favour of enhancing the Canada Pension Plan, and I believe the higher benefits that will be paid out in the future are a win for future retirees. But there are others who believe it’s unfair to have everyone pay more in CPP premiums to help certain groups save more for retirement.

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The haters are all over this young dynamo of a saver

By Rob Carrick

I’ve seen this before. A young person is profiled for working hard to earn and save money and then savaged by critics. That’s the deal with Anthony Molinaro, a 20-year-old full-time student and full-time employee earning $50,000 per year.

Molinaro’s drive is stunning. But instead of acknowledging this, a lot of people are criticizing. Some dismiss his achievements because he lives at home and doesn’t have to pay his own expenses. Others say he’s depriving himself of a full life, or killing himself to get ahead. I’m reminded of the story of Sean Cooper, a 30-year-old who got the hate treatment after he paid off the mortgage on his Toronto house in three years.

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The new grandparenting: 'All I open is my wallet'

Rob Carrick

One of my jobs in producing this newsletter is to be a trend spotter. This Maclean’s article about the changing role of grandparents is right on the money. It explains how grandparents are increasingly being called upon to provide childcare and financial assistance to their adult children, even while their wisdom about child rearing is being discounted. In one conversation mentioned here, a grandmother says, “I almost never open my mouth to criticize. All I open is my wallet.” Why ask your parents how to handle your child’s behaviour when Dr. Google is there to consult?

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Why are you paying so much for your phone plan?

By Rob Carrick

I hate bargaining for stuff, but it works. In fact, it’s almost negligence to buy certain products and services without asking for a better deal. Which ones, specifically? Check out this blog post, where various personal finance writers describe the most memorable deals they received just by asking.

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