I recently found a fun discussion on social media about controversial personal-finance beliefs. One blogger’s contribution to the debate was three ideas that usually get “the stink eye” from readers: That renting is better than owning for a lot of people, buying Starbucks (or coffee, in general) is perfectly fine, and you should always tip 20 per cent, no matter the service.
Other contributions: Save before paying off debt, index funds are not the ultimate solution for wealth creation and an appreciation of tax refunds, even if they are interest-free loans to governments.
What I like about this discussion is how it suggests that even the most widely held personal-finance beliefs need to be challenged to ensure they’re relevant. There are financial benefits to long-term home ownership (you build equity and can sell a principal residence tax-free), but barking at people that renting is a waste of money is pointless for people who cannot afford a home or who need to stay mobile for job opportunities.
Likewise, a laser focus on small expenses such as a daily visit to a coffee shop can turn personal finance into an ordeal of denial that quickly gets old. A few small indulgences are your reward for getting the big things right in personal finance, mainly living below your means and saving/investing the difference.
Enjoy the list and don’t get worked up if you see something that sounds silly. The point is to get you thinking; you don’t have to change your mind.
The lowdown on credit scores
Listen to a call-in for Globe subscribers that I did on the topic of understanding your credit score. My guest is Laurie Campbell, chief executive of Credit Canada Debt Solutions, a non-profit credit-counselling agency.
Rob’s personal finance reading list…
Looking for a city with a buyer’s market for real estate?
Trick question. According to the Better Dwelling blog, there aren’t any.
The taxman and your home’s rental suite
An answer here to a good question: Can you lose the exemption on capital-gains tax when you sell a primary residence if you have a rental unit in your home?
Start financial resolutions on your birthday
A business professor’s research finds that people save more when they’re reminded to do so on their birthday, rather than at the start of a new year. Apparently, we’re more ambitious around our birthdays because of the feeling of time passing.
Can you save money by going vegan?
A vegan grocery list that could save you almost 30 per cent over you usual supermarket bill. Stewing beef swapped for dried kidney beans, and more.
Q: I wonder if you could explain “negative interest rates” for me. Does this mean there is someone out there who will pay me to take their money?
A: There was a Danish bank that last year launched a negative-rate mortgage, where the interest rate was minus 0.5 per cent. Basically, you would pay back less than you borrowed. For savings, negative rates could theoretically mean paying a fee to a bank to hold your money and not getting any interest. In the bond market, negative rates can mean paying a premium over face value to buy a bond and then getting no interest, or not enough interest to offset the premium price of the bond. Large investors still want these bonds because they offer a stable, liquid place to park money.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
What I’ve been writing about
- The 2020 ETF Buyer’s Guide: Best Canadian equity funds (for Globe Unlimited subscribers)
- Savings account interest-rate war breaks out among feisty upstarts
- Feeling financially stressed? Here’s what you need to do to get over it
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Editor’s note: (Jan. 29, 2020): An earlier version of this article included an incorrect surname for the CEO of Credit Canada.