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carrick on money

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.

Ask Rob

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

The CPP and OAS Optimizer on the MoneyPages website has been updated to show the effect of enhancements to the Canada Pension Plan that began a phase-in period last year.

What I’ve been writing about

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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.