Churned: CIBC Tim Hortons Visa

So lets talk about my first sub-par churn.

For anyone not familiar with churning, in the personal finance world, it is the act of signing up for a credit card, just to get the (usually) juicy sign up bonus such as cash back, Air Miles, bonus points..etc…and then cancelling the card your reward has been credited and spent.  Is this legal? Certainly.  Is this taking advantage of the credit card company?   Probably, however, these companies are making an offer, and you are accepting their terms and conditions, following those terms and conditions.  Nothing wrong with that. I compare this to the act of accepting a dinner invitation from someone who you don’t intend to become friends with.  You go have your nice dinner, say thank you, and do you best to never see the dinner host again in a social situation.  Again, is this ethical?  I would argue on a personal level no, on a business level yes.  These credit card companies know not everyone is going to stick around using this credit card forever.

Back to this particular churn.  So there was a sign I noticed in a Tim Hortons advertising their new (this was about 2 years ago)”Tim Hortons Visa” card.  This card was special because with this card you could simply redeem your points right at Tim Horton’s for your morning double-double (that’s a coffee with 2 creams and 2 sugars for all you non Canadians).  That wasn’t a big appeal to me because I don’t frequent Timmy’s much, but the initial $25 free at Tim’s was ok, and the thing that really caught my eye was the coupon that attached to the sign that offered an EXTRA $50 at Tim Horton’s if you simply took this coupon to a CIBC branch.  So $75 of cash at Tim’s would probably cover me for about 2 years, I only get an occasional coffee there, and personally I don’t enjoy much of their food offerings, however a free bagel is a nice option if I happen to forget my lunch or don’t have time to make one for work in the morning.  So I went for it.  I applied, brought the coupon to the branch as instructed; and here is where things went a bit sideways.  The clerk said the coupon was not needed, and she took no action with it.  I should have spoken up to get more into but I let it be.  A week or two later I get a call to say that I was approved for the card, and I just had to bring ID to a branch.  No problem.  I bring my ID to the branch, and again show the coupon to the clerk, she says she had never seen one, and asks someone else about it and says she doesn’t need to do anything with it.  Fine, I’m doubting this, but I don’t push it.  I get my card in the mail a few weeks later, and make a purchase, which I believe was the only requirement to get the bonus money.  I wait another month or so for the statement to show up with my purchase, and it has my bonus money as well, $25. hmmmm  So I call the credit card and ask about the extra $50.  They say they never received the code to give me the extra $50, so the $25 is all I get.  Boooourns!!!

So there you have it.  I will fully admit that I could have been a bit more aggressive in pursuing the bonus $50, but I wasn’t; and I did do everything that was asked of me in order to get the $50, so that was disappointing.  I will also add that this is the first churn where I felt it wasn’t worth my time for the end result.  You can read about my other churns here.

Anyone else churing out there?  How are your experiences?  Great?  Bad?  I would like to know.  Please leave a like if you found this post at least minimally useful or slightly entertaining!

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Updated About Page

I’ve updated my About page as you can probably guess from the post title.  However I wanted to make the update a bit more visible to everyone, especially my regulars, the 4 people who check out my blog on a semi annual basis.

Let me be clear, the last thing I want to do is tell you what to do with your money.  What I want everyone to understand is the basics of how money works. I also want people to  know that there are options for things to do with your money besides spending it, and how those other things work, and what the results of not spending your money look like.  From there, if you want to continue spending your hard earned money, so be it.  My site will not go into great specifics on how to save money on groceries, or complex investment strategies.  There are plenty of other website that already do this.  This blog will mostly be my take on personal finance in general, maybe with a few rants thrown in here and there.  I like to keep my life simple, so my advice will be simple.  If I’m given the option of doing a,b,c,d,e and f to save $100 a year, or the option of doing a,b, and c to save $55 dollars a year, I’m probably going to stick with the easier option most often.  I will admit I’m lazy.  Which reminds me I heard someone say the other day that lazy people always find efficient ways to do things, so yes, I am lazy efficient.  Sometimes being efficient means saving less (maybe even spending more) money on occasion, but that is ok, with the very general assumption that I find value in spending money on this thing.

I stated this blog out to mostly focus on early retirement, and while that is still a goal of mine, I guess it’s not a goal for everyone, and that is alight (although highly disappointing).  After initially hearing about early retirement, mainly from Mr Money Mustache, I thought it was one of the greatest things I’d ever discovered. However when I started sharing this new found information with friends, co-workers, and family there was (and still is) much ridicule and skepticism, so they clearly did get the same level of enthusiasm as I.   Even my wife isn’t on board with the idea (which is extremely disappointing to say the least), however I will continue to press on to the best of my ability.  It may also make for some interesting posts as we disagree with finances going forward.

Finally, I just want to be clear about my wife and I’s income.  We have a combined of approximately $110,000 (I don’t share the actual amount since I blog anonymously), which seems to be an upper middle class income (very hard to find a source to pin down middle class income these days it seems).  I want to be clear about this for two reasons.  First, a lot of blogs out there seem to originate from individuals or families with high incomes, and I mean high incomes right off the bat out of college.  Some of these same blogs also generate a fair amount of income on their own (via adds or referrals).  There is nothing wrong with that, and I’m not saying this blog will never do this, but this blog currently generates $0 (shocking!) However, I don’t think it’s really appropriate to humble brag how you paid off your $40K student debt in less than a year when you were making $100K per year, and your wife was “only” making $40K per year, since those types of income don’t apply to most people.  Second, there is a blog out there (more than one I’m sure) where the writer(s) claim (or claimed) to be “middle class” with typical income, and it was recently discovered that their “typical” income was over $200K, not to mention their blog income.  So I think it’s fair to say that this particular blog was being a bit disingenuous, to say the least. I also want to be clear that we have never won any significant lottery prize, received any large inheritance, we did however each pay for all (me) or most (her) of our university educations….. via student loans!

Please leave a like on a post if you enjoyed it, or even better leave a comment telling me so, or leave a question, you can even email me a topic you would like me to discuss.  Thanks for checking out The Fake Cheap!

Churned: Scotiabank Scene Visa

Welcome back to The Fake Cheap.  It feels good to get back into the blog, I think I last posted in February, but who is counting?  I thought I would add another cc (that’s credit card for anyone not fluent in personal finance) churn, especially since my first churn article seems to also be my most popular post ‘round here. Hopefully someone got that Counting Crowns reference?

Anyway, yes I churned the Scotiabank Scence Visa as the title says, and it did take a while for the plastic to melt down and turn to a delicious fatty tasting butter…ok, so what I actually did for this churn was to sign up for the card, strictly for the sign up bonus, which was enough scene points for 5 free movies!!!  I know, I couldn’t believe it either.  These 5 free movies have a value of about what, $60-$70, I think it’s about $12-$13 per movie ticket these days, well for a “normal” ticket without the shaking seat and the smells,or whatever else they have added now.  Some of you might be thinking who would waste all this time for about $60 bucks?  (Especially any Americans reading, and out of the thousands reading, I’m sure someone is American, our sign up bonuses here in Canada are really just a fraction of what is offered to you)  First I would say, it really took very little time, (less time than writing this article) and second I would say it took me about 30 minutes, so $60 tax free, for 30 minutes of work?  Yes please.  Maybe some of you are underwhelmed at this, because there are better offers out there, and there are, but I felt like hitting this one, plus some offers are better at other times, so you have to time it right because some of the sign up bonuses you can only get once, like the a fore mentioned TD Aeroplan visa I do believe.

So this churn went pretty well, I signed up for the card, it arrived, I believe the scene points were awarded on my first statement, after my first purchase, no dollar amount attached, so that was nice.  Normally you have to spend like $500 over 3 months or something like that, but this was like, nope, buy something..anything, and slap it on this card and BAM!! 5 free movies…on the next statement.  So that was a piece of cake.  Another nice thing about the reward being scene points, is that you could probably cancel the card immediately after you get awarded the points, and since scene points are separate from the cc, you probably wouldn’t have any issue.  What I did was actually held on to the card for a bit, and then cancel it, which was also no real hassle, I just called the number on the back of the card, and said I would like to cancel, and they were like “ok”, I don’t even think they tried to get me to stick around.  And that was it, a quick application for the card, a call activate the card, and a call to cancel the card, maybe 30 minutes work.

How do you get to qualify for these credit cards?   Well you need decent, credit, not even  good credit.  How do you get decent credit?  By following my blog! Pay your bills on time, don’t rack up debt, put something on a credit card once in a while, pay it ALL off  each month so you don’t pay any interest, and you WILL qualify for most of these offers.  Credit isn’t something I’ve spoken much about, but I assure you, there are many other great PF blogs around, maybe check out my blog roll up there on the right, that do discuss credit, and I hope to touch on it more in the future.  You can also get your credit report via Equifax or TransUnion, for free once per year I believe, but ask them, not me.  It should also be noted that if you tend to max out credit cards quickly, then churning likely isn’t for you.  If you end up paying interest on a thousand dollars or two you’ve racked up on the card, any sign up bonus “profit” will be eaten up by the interest quite quickly.

Remember, always be ready to churn, or else let that cash burn!

Net Worth Update: January 2017

Welcome back to The Fake Cheap, your 4th favorite (at least, I hope) personal finance blog and my first post of 2017.

What is Net Worth? It is simply your assets minus your liabilities, find our more here.

It is that time once again, my semi annual net worth update, I’m going to try to update my NW each January and July.

First, lets reflect back and have a look at my Jan 2016 net worth, which was $115,000.  This is the most recent figure I have provided, although I have still been calculating my NW every two months on my own.

If you are new to recording your net worth, just one net worth statement isn’t super helpful.  It will show you where you are at presently, but for tracking your own, I suggest calculating it quarterly, since this will help keep you motivated by seeing an increase (hopefully) over each  quarter.  If you find that too tedious, you calculate it semi-annually instead.  Or if you really enjoy crunching the numbers, you can also add it up hourly!  I kid, I kid.

Back my own story:  January 2017: net worth $142,000 .

Change from Jan 2016: + 23%  or + $27,000 Amazing!  Pretty darn good, if I were to toot my own horn, and of course I did this while only making small “sacrifices” to my lifestyle, I am The Fake Cheap, remember.

Note that this number is much more than just investment returns (which I estimate at about 8% for us for the year, as per my annual statements that have started to trickle in).  this includes the amount of debt we paid off, the money we put into RRSPs and TFSAs, and other things like our tax refund (which largely went to pay off debt), increase in home value (as per our tax assessment).  Find out more here if you want to know more about how to calculate your net worth.  There isn’t one right way to calculate your net worth, but there sure are some wrong ways!

 

Questions you may have (I’ve left these questions from a previous posting, they aren’t directly related to the above post, but you may find them interesting):

You are off by 2K from your quick calculation from your actual amount, what could cause this?

I would say much of this would be accounted for by 2 main factors: cash we happened to have on hand at the time I calculated my net worth and the remainder would be due to increases in investments.  Even though the Canadian markets are down, other areas are not, also dividends are still being paid by my investments, and mutual fund disbursements also normally occur at calendar year end.  I bought more investments/mutual funds this year, that generally means more disbursement at year end.

Why are you paying off debt and withdrawing from your line of credit at the same time, that don’t make no sense?!

Good question, but work on your grammar.  I could have just as easily made minimum only payments to my low interest rate credit card, and invested the rest for likely a better return.  However, I went the route I did because I will still have this debt at the end of the low rate offer (over a year from now) and yes, there could be more of these offers before this one expires, but there is no guarantee of this.  So yes, I would agree I could likely be doing even better with my money, but I’m The Fake Cheap, remember?

Please leave a comment, a question or a cookie below.  And if you found this post at least half interesting, a like would be nice.  Likewise if you found it a huge waste of your time, I want to know about that too.

Stay tuned, another super fun post is coming in just a few days!  Shocking!!!

Do you want to play a game? How long would your money last?

You said that using the voice of that clown doll from Saw, right?  If not, try again, it is mandatory.

This is a fun game to play, well it is if you like personal finance, and we know you like personal finance, since you are here, right?  So let’s play.

So what you do is first of all add up any savings/investments you have, which is quite easy to do since this information is found in your net worth.

Then you have a look at all your monthly expenses/bills.  For this game I like to calculate any loan payments as the minimum amount, and I would also remove our daycare expense, also no more aside from fancy restaurant meals (which we don’t have many of anyway.)

Then you imagine that you (and your spouse/partner, if applicable) immediately stop receiving any sort of income, and just live off your existing savings and investments.  For simplicity, I don’t bother trying to factor in returns on investments or employment benefits, etc…just straight up how long until we need more money once what we have, or roughly have, runs out.   With that being said…lets play!

So my (our) current savings/investments is about 68K

Our monthly expenses for the use of this game I put at $2,400.  I got to this figure by using the lowest payments for lines of credit, credit cards, etc and day care is no longer an expense, the only other change I would make to my expenses is no more restaurant or fast food meals and no more buying coffee out, also much less gas needed for cars, and we would also stop RRSP and TFSA contributions.  The bulk of the $2,400 comes from my fixed bills like the mortgage payment, and also largely from the monthly grocery bill, the reminder is other fixed expenses like the utility bill, and maybe a sliver of spending money

So we can see that if both my wife and I had no income starting immediately* we would be A-ok for about 28 months.  (68K/2.4= 28).   I thought it might be a bit longer than that, but it is what it is.

Maybe you think this is a stupid game, and you want to make your own rules.  Well go ahead!  Either way send a comment my way with your thoughts and results, maybe you could stay afloat longer than The Fake Cheap.

 
* Yes, I realize this is an extremely unlikely scenario due to severance from our employers and likely payments from Canada’s Employment Insurance program, and also likely increased government child benefit payments, but it’s just a game, remember?

The Way Everyone SHOULD Be Saving for Retirement

So as you may know, I am a huge supporter of not only saving for retirement, but saving for early retirement.  Not only does the saving have all sorts of benefits for the individual saving, such as having money for emergencies, health problems, lay offs; it also teaches just a bit of discipline which can come in handy in a financial pinch if it is ever needed.  It also makes us buy less crap, and the world needs less crap.

I was thinking the other day what if instead trying to get everyone on board to do the usual, and start putting money away at 40 or 50 or whatever you want to call a typical age to start saving for retirement (probably closer to 50); well what if the reverse was the case?   That is, we DID actually all start saving at a nice young age, we would all have a uuuuuggge nest egg by the time we reached 50.  Let me explain further.

Let’s say we use age 23 at a starting point, since most people have graduated or are starting their working career by then.  And let’s use a monthly amount of $375 per month, certainly not a small amount of money, but not really a huge amount either.  Now here comes the best part: this is how EVERYONE STARTS out in life, and if you want to opt out of this, or lower your amount you can, but you need to take that ACTION, and let’s face it, people are generally lazy, actions are not taken.  So basically what we’ve done is instead of trying to attempt to get people to voluntarily save money for retirement (which is working about at about a “meh” level); we have moved to a model where everything is set up for you and steps are needed to AVIOD saving for retirement.  Lets also add in the further deterrent that if you opt out of savings for a calendar year, then you loose the ability to contribute the amount later.  You know wile we are at it, lets make this an “ULTRA TAX FREE ACCOUNT” so you get the best of the RRSP and TFSA all in one shot.  For anyone not familiar, you would get a tax deduction for the amount contributed, and the amount would grow tax free, AND the amount would not be taxable on withdraw. What’s not to like???

 

Let’s run the numbers and see where this gets us.

So at a kind of whimpy 4% annual retrun, here is how much money we would ALL have at age 40 ,50 and 60:

40 –  $108,580           50 –   $215,735        60 –   $374,352

And at a 7% return:

40 – $143,179.     50 – $345,799.   60 – $744,348

And buckle your seat belts if we really knock things out of the park* and reap a 10% return:

40 – $190,669.  50 -$569,496.  60 – $1,550,000 (ok even I wasn’t expecting that)

*The average 30 year return of the S&P 500 is actually 10.98%, as per awealthofcommonsense.com.  For those of you who do math at the the speed of a sloth, 30 years isn’t too far from 27 years, the time from age 23 to age 50, so these numbers are not unpossible.

So looking at those numbers, yeah I think everyone would be fairly set, unless you CHOOSE not to be, instead of having to take the initiative to choose to be.

Some final thoughts and questions:

Don’t forget that under the “ULTRA TAX FEE ACCOUNT” you pay no taxes on any of these funds!

I hope you take away the power of compounding interest.  The biggest one is probably the 10% return has over QUADRUPLE the returning power of the 4% return over the 27 year period, even though 10% is only 2.5 times  4%.

$375 a month, that’s a lot of money I can’t afford that!   

Look at those results, you can’t afford NOT to afford the $375. But seriously go and read a few of my other posts on saving money or any of the other great personal finance sites about saving money, it’s much easier than you think.

What if someone wanted to take their money out or stop paying into this?

Well they can.  But it would be unwise if you stop early…again look at those numbers.  And you would also loose the ability to contribute more in the future to catch up.

This isn’t fair…what if I got a 4% return on mine, and my friend got 10% on theirs, they would have more money!

Yes, life is not fair.  I don’t get into actual investing much on my site, but take on some risk and reap the rewards.  Again search around for investment originated sights.

I wish this was in place now so I can do it!

YOU CAN do it now, call your bank, seriously, like right now, and talk to them about putting away $375 per month. Of course this won’t be the ULTRA TAX FREE ACCOUNT, but it will be the next best thing.

How could the government afford to not collect taxes on all that money?

Well the government would SAVE money in the form of lower OAS and GIS payments they make now.  I will fully admit that I’ve not done any research on this, so maybe it would be a loss..maybe it would be a gain?  Please feel free to conduct your own research.

Thanks for tuning into The Fake Cheap and taking a few minutes to listen to a little of my outside the box thinking.  I think the world needs more outside the box thinking.

What do you think?  Could a system like this ever work?  Are there more ways this could be improved?  Please share your thoughts or comments below.

Jan 2016 Net Worth Update…in September?

I had no idea that I never posted this so here you go about 9 months late, my bad!  I am going to start getting posts up again, maybe as soon as tomorrow so run, don’t walk to my blog next time!

It is that time once again, my semi annual net worth update (yes, it is 2 months late, thank you)

Jan 2016 net worth: $115,000
Change from July 2015 + 0%. (Actually a small increase, but not large enough to worry about)

Change from Jan 2015 + 12% Sweet..I’ll take a yearly return of 12% everyday of the week!

So we are up about 12K year over year.  I’m happy with that especially with the downturn in the Canadian market over the last few months, where we have a good chunk of our investments.  Yes,  we are diversified internationally, but still the majority of our investments are based in Canada.

Does the number make sense for us?  Let see, nice tax refund of $4,000 last year, house went up about $3,ooo in value as per our tax assessment.  We invested about $6,000 in RRSP and TFSAs, and also paid off about $5,000 in debt.   We also actually withdrew about $4,000 from our line of credit* for home renos.  Quickly adding up the assets I just named 3+6+5 = 14 and  subtracting the 4 = 10K, that is reasonably close to the 12K increase I found, so yes those numbers seem to jive.  Remember when I’m doing my net worth calcs, I don’t sweat the small stuff, and I recommend you don’t either.   This isn’t an income tax audit, just some numbers to show you are (or are not) on the right track.

*The balance of this was immediately transferred to a low interest rate offer on a credit card.  And by low rate I mean less than 2%.

Questions you may have from the paragraphs above:

You are off by 2K from your quick calculation from your actual amount, what could cause this?

I would say much of this would be accounted for by 2 main factors: cash we happened to have on hand at the time I calculated my net worth and the remainder would be due to increases in investments.  Even though the Canadian markets are down, other areas are not, also dividends are still being paid by my investments, and mutual fund disbursement also normally occur at calendar year end.  I bought more investments/mutual funds this year, that generally means more disbursement at year end.

Why are you paying off debt and withdrawing from your line of credit at the same time, that don’t make no sense?!

Good question, but work on your grammar.  I could have just as easily made minimum only payments to my low interest rate credit card, and invested the rest for likely a better return.  However, I went the route I did because I will still have this debt at the end of the low rate offer (over a year from now) and yes, there could be more of these offers before this one expires, but there is no guarantee of this.  So yes, I would agree I could likely be doing even better with my money, but I’m The Fake Cheap, remember?