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Practical tips on getting your financial life in order

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Cents and sensibility go hand-in-hand in Robb Engen's world. This co-author of the popular Boomer and Echo blog – co-written with his mother, Marie Engen – dispenses wisdom to help his readers get their financial house in order.

Mr. Engen speaks from experience. His own financial house has been a work-in-progress over the last decade – a period that saw him turn 30, change jobs, become a homeowner and father of two, and then switch from being a double-income family to being supported by a single breadwinner. Through all this, Mr. Engen and his wife have managed to pay off more than $60,000 in student loans and credit card debt while building a savings and investment portfolio.

He talks about his journey to financial order and blogging bliss, and shares insights on how others can move forward on a similar path of personal choice, budgeting and being fiscally responsible. He also shares practical tips on preparing for the holidays; looking at savings plans, how to leverage your Credit Card to manage costs and new programs and options to help you manage expenses over time.

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You worked for more than eight years as director of sales and marketing in the hospitality industry. How did you end up as a financial advisor and blogger?

My mother worked for one of the big banks for 20-plus years. At some point, she felt that her goals and her employer's goals were no longer aligned, and she started doing a few things on her own. We partnered up in 2010 and started a blog.

You've paid off your student loans, bought a house and started a family. What financial planning rules did you apply as you worked to accomplish all this?

It always starts with reflecting on your goals and assessing what your reality looks like. Let's say you've bought a house and started a family. What will your spending look like with this new reality, and how much money will be left at the end of each month? At the end of the day, you need to save. And the fact is, even making a small contribution and making it automatic before you get a chance to spend it can add up significantly over time. Build the habit of saving – make it a conscious choice and prioritize it.

The holiday season is just around the corner. Any tips for how to plan financially for this time of year?

With the holiday season coming up, you know you have to buy presents, maybe decorations, and you'll probably need to increase your spending for groceries and alcohol. Instead of waiting until November or December to start planning for this, make it a year-long activity. Maybe in the beginning of the year, start putting aside $50 to $75 a month knowing that December is going to be irregular in terms of spending.

Where do credit cards fit into a financial plan?

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I put all my expenses on a credit card, and this makes it easier for me to track my expenses and also makes it unnecessary to save my receipts. But an important question is: Can you use your credit card as a forward planning and budgeting tool? There's a new program I recently learnt about from American Express; "American Express Installments". It's Canada's first ever Installments plan to be built into an existing Credit Card.  I was skeptical at first, but when I reviewed it more closely, I saw that it actually made sense, particularly for big-ticket purchases of $250 or more. It's a great plan that allows you to, say, buy a plane ticket today to go visit your relatives this Christmas and then pay off that purchase over a certain term to help free up your cash flow.

The key is the interest rate, and American Express Installments does not charge interest, only a low installment fee along with a concrete repayment plan. Rather than incurring month-over-month interest, you're charged a fee of 2%, 3% or 5% - based on the length of your repayment period.

For example: when you enrol, you choose a minimum purchase amount and your preferred payment term - say a minimum purchase amount of $500 and a repayment term of three months. This means that any purchase you make that is more than $500 will automatically be setup as an installment payment to be paid off over three months. The fee for this would be 2% of the purchase cost. If you then purchase a new piece of furniture for $600 (which is more than your minimum purchase amount) it will automatically be setup as a three month installment with a 2% fee, which in this case is $12 ($600 * 2%). You'd then pay the total off at $204 per month for three months, for a total cost of $612 ($600 purchase + $12 installment fee/3 months).  The average Credit Card interest rate is 19.99% on any balance carried over so this is a more affordable way for Canadians to manage large or unexpected expenses.

Finally, your blog addresses a large community of Canadians looking to be financially responsible – all year round, not just throughout the holiday season. What is the biggest mistake people make when planning for upcoming expenses and how can they overcome this?

A lot of people don't know how to budget and track their expenses. But once they do this, it is an eye-opening experience. People also often fail to talk about their goals and look at how their spending and saving habits match these goals. For example, if you're looking to upgrade your car in two years, how do you do that? Are you spending less and saving more, so you'll have the money you need in two years, or are you just waiting for a windfall to happen?

Mr. Engen is based in Lethbridge, Alta. Today, alongside his job at the University of Lethbridge as marketing and development manager of sports and recreation services, Mr. Engen works as a fee-only financial advisor.

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To learn more about the American Express Installments Program

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