Money and You

(chapters 5 - end)

(this page updated: April 3, 2011)

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Chapter 5. Income Tax and R.R.S.P.s for Canadians:

Note to friends in the USA: the Canadian "RRSP" is almost identical to the US "Regular IRA."

This chapter could be long. Very long. So long that you would not be brave enough to tackle it.

Income tax deserves some careful consideration. The Fraser Institute reports how long a Canadian has to work into a year to pay all his taxes and arrive at "Tax Freedom Day." See the latest at their website at

Income Tax is one of the largest drains on your money that you are likely to encounter in your lifetime. You can, with a little common sense and care, do a lot to minimize this burden.

In my many years as an income tax accountant, I've put together a long list of Income Tax tips, ideas, suggestions for you. Now that I am retired that website is no longer up-to-date but much of it will, in all probability, remain valid for years to come. I strongly suggest that you go over the list and make notes of all the point which might apply to you and then ask your tax accountant for his or her comments.

There are a lot of tips in the list which people just do not know about. The two pages of that website start at:

One other subject which is closely related to Income Tax (in Canada) is the subject of R.R.S.P.s or "Registered Retirement Savings Plans." For our friends in the USA, the equivalent would the their IRA or "Individual Retirement Account."

PLEASE, whatever you do, do NOT LISTEN to those who tell you that RRSPs are no good. Often I have heard that said by people who have only a very little knowledge about RRSPs and as you know, "a little knowledge can be a dangerous thing." RRSPs are the best thing since sliced bread BUT you have to understand how they work. About all I can tell you is listed on my page at

Pay particular attention to the fact that money invested in your RRSP is sheltered from Income Tax during all the years that it is invested there; you do not pay tax on it until you take it out; typically when you are retired and your income is lower, and you are in a lower income tax bracket.

In spite of the misconception some people have, you do NOT pay tax on your RRSPs twice. NO!!

Please do yourself a huge favor and study that page too. You will never regret it. Trust me on this one.

Because this book will, hopefully, be read by our friends to the south (and others?) I won't burden them with a lot of Canadian content. Canadians, please study those 3 websites about RRSPs and Income Tax. YOU OWE that to your financial well-being.

In Chapter 4 you saw a couple of links to websites to learn about interest rates. The Canadian link will take you to some excellent income tax tips as well; specifically at

And please remember, Tax Planning is a year-round matter. It is not something to leave until you get to the time to prepare your annual income tax forms; by then some things will be too late to change. Plan for taxes as you go, all year long.

Chapter 6. Paying Interest on your Debts:

You know, it is a whole lot more fun to have others pay you interest than it is to have to pay interest to others. Honest! You should be aware of the simple little formula you learned in grade school:

Interest Calculation:

The "interest" formula is "I = P x R x T." This means:

Interest = Principal x (interest) Rate x Time

Interest will be expressed in dollars and cents.

Principal refers to the amount of money borrowed/loaned.

Rate refers to the interest rate on a ANNUAL basis.

Time refers to the portion of a year over which the interest is to be calculated.

An example may clarify this.

Suppose you will borrow $ 5,000 from someone for 4 months. It is agreed that interest will be at 13%. Unless specified differently, such a rate specification will be taken to mean that interest will be calculated at 13% on an ANNUAL basis.

You now want to calculate how much you will have to pay back at the end of the 4 months. Using the I=PRT formula, plug in the values and you get:

Interest amount = 5000 x .13 x 4/12

Interest = (5000 x .13 x 4) / 12 = 2600 / 12 = 216.67

Thus, after 4 months you will have to pay $5,216.67.

The beauty of this simple formula is that you can change it around to calculate any of the 4 values, if you have the other 3. If you have I, P and T, but don't know what R, the interest RATE is, you can restate the formula to put R on one side, by itself, and then calculate it. This can help a lot if you are considering assuming some kind of debt, but need to know whether or not you are going to get a good deal or get ripped off! For example, suppose you know the terms of the debt but do not know what sort of interest rate you will be forced to pay; you need a formula to calculate the "R" or "Rate" and you do it like this:

Take the formula ( I = P x R x T) and divide each side by P x T, leaving only R on the right:

I / (P x T) = R

Then, plug in the numeric values from the foregoing example, to see if we arrive back at the 13% rate: (note that 4/12 = .333333) in other words, 4 months = .333333 of a year or 33.3333% of a year.

216.67 (5000 x .333333) = .13000 or 13%

The Interest Rate, When you Buy on Time:

If you are buying something "on time," making monthly payments, you may be paying a "loan shark" rate of interest. Stop and figure it out sometime; you may decide to save for it, and then pay cash, instead. Assume the following about a proposed purchase:

cash selling price: $ 1,200

down payment: 200

payments: 18 monthly, @ $81

principal amount financed will be $ 1,200 - $ 200 = $ 1,000

What interest rate will you be paying, if you buy it "on time?" Use the formula:

R = (2 x P x C) / (A x ( N + 1 ))


R = Rate of interest = ?

P = Payments per YEAR = 12

C = finance Charges = (18 x 81) - $1,000 = $458

A = principal Amount = $1,000

N = Number of payments = 18

Now, plugging the values into the formula:

R = 2 x ( 12 x 458 ) / (1000 x ( 18 + 1 ))

R = 2 x 5496 / 1000 x 19

R = 10992 / 19000

R = 58% (!!!) Not too likely will you be able to earn that kind of rate, anywhere, anytime, ever.

At this point you might well decide to forget the idea of buying this item; at least, not to buy it on time. If this does not convince you, read on.

Another way to figure out what your debt (on "personal goods") is costing you follows. Assume the annual interest rate on your credit card account is 29% and assume that your "marginal tax rate" (the rate of income tax you would pay on one additional dollar of income over and above the tax you have paid) is 26%.

29 / (1 - .26) = 29 / .74 = 39%

This is for loans of "personal" items rather than tax-deductable "business" items.

If your guaranteed investments are not earning 39%, you are losing and should cash in those investments and pay off the debt.

If you plan to borrow at a financial institution such as a bank or finance company, you would be well advised to find out exactly what the effective interest rate is that you will be paying, and then to request a print-out showing the amortization of the loan, payment by payment, interest charge by interest charge, from the date you get the loan to the date of the final payment. Financial institutions have been known to deliberately mislead customers and overcharge them by "tricky" methods of calculating the interest.

IF YOU find yourself paying only a part of your monthly bills, rather than paying off each bill in FULL as it comes due, then you are on that slippery slope toward certain trouble. Wake up! Smell the smoke! As I read in the paper: "Canadians going broke by living off their credit cards." That "buy now; pay later" idea is very, very bad for your financial future. Another headline I read went like this: "Bankruptcies soar, credit cards blamed." I would not blame the credit cards but the dummies who over-use them.

Note this scam: If your credit card bill was, say, $1,000 and you paid only $900 of it, leaving only $100 overdue, you may be charged interest on the full $1,000 instead of the $100. If you feel that you have been scammed by a creditor, discuss it with them. Don't "fly off the handle" but speak with them in a mature manner. Don't get mad and yell; remember, maybe, just maybe, YOU are yourself to blame for the problem. You don't want to wind up with egg all over your face, do you?

Some of us have found that we were scammed on installment loans. Take this example: you borrowed $1,000 for one year and make equal instalment payments every month for the year. Suppose that you were told that your interest would be "only 6% or $60." This might fool some people but, of course, not you. You would quickly reply that the rate they are charging you is much, much higher because you did not have the full $1,000 for the full year; on average, you had only $500. You would quickly do your math and discover that you were being charged more than 11%. (You would, wouldn't you!?)

Here is the formula that you, of course, used:

2 x annual number of payments x interest

(total number of payments + 1) x principal

and with the numbers:

2 x 12 x $60

13 x $1,000



$13,000 = 11.08% and not 6%.

I hope this was not too "technical" but it is not as bad as it looks. The bottom line is to, as much as humanly possible, STAY OUT OF DEBT! On one of her excellent TV shows, I noted Oprah Winfrey say, and I quote: "American families are being eaten alive......... by debt." How true! How pathetic.

The Government of Canada is concerned that consumers are being taken advantage of by credit card companies so have put together a website that gives consumers all the advice they NEED if they will take the time to check it out. Have a look at the site:

Chapter 7. The Magic of Compound Interest:

Perhaps the best way to convince anyone that interest compounds almost "magically," particularly when it does so "tax-free" (in your RRSP) is by showing them some examples. Analyze these 2 examples. The results speak for themselves. An arbitrary interest rate of 9% was used in each of the 4. Yes, 9% is impossible to find these days unless you are earning dividends instead of interest.

I am using, in this example, money invested in a Canadian RRSP to keep the example easy to understand. Of course if the money was invested in a taxable investment, tax would reduce the growth significantly. But the basic idea is valid.

Note how Albert and Bonnie EACH have put $15,600 into their RRSPs, yet Albert has $613,000 at retirement and Bonnie has only $218,000, a difference of $395,000, simply because Albert started at age 18 and Bonnie waited until she was 30. The "magical" ingredient of compounding is: "TIME." The longer you put it off, the less TIME you have; EVERY year makes a big difference. DO NOT WAIT!

R.R.S.P. accumulation for:     Albert

Annual contribution    $ 1,200
Age at first contribution    18
Age at final contribution              30
Age to which the money will be left    65
Interest rate, compounded annually         9%

    age      ann.cont.      yr.end bal.
    18          $ 1,200            $ 1,308
    19             1,200               2,734
    20             1,200               4,288
    21             1,200               5,982
    22             1,200               7,828
    23             1,200               9,841
    24             1,200             12,034
    25             1,200             14,425
    26             1,200             17,032
    27             1,200             19,872
    28             1,200             22,969
    29             1,200             26,344
    30             1,200             30,023
    31                   0              32,725
    32                   0              35,670
    33                   0              38,881
    34                   0              42,380
    35                   0              46,194
    36                   0              50,352
    37                   0              54,883
    38                   0              59,823
    39                   0              65,207
    40                   0              71,075
    41                   0              77,472
    42                   0              84,445
    43                   0              92,045
    44                   0            100,329
    45                   0            109,358
    46                   0            119,201
    47                   0            129,929
    48                   0            141,622
    49                   0            154,368
    50                   0            168,261
    51                   0            183,405
    52                   0            199,911
    53                   0            217,903
    54                   0            237,515
    55                   0            258,891
    56                   0            282,191
    57                   0            307,588
    58                   0            335,271
    59                   0            365,446
    60                   0            398,336
    61                   0            434,186
    62                   0            473,263
    63                   0            515,857
    64                   0            562,284
    65                   0            612,889

INVESTED: $ 15,600
VALUE AT AGE 65: $612,889 (39.3 TIMES)

R.R.S.P. accumulation for:     Bonnie

Annual contribution              $ 1,200
Age at first contribution                 30
Age at final contribution                   42
Age to which the money will be left    65
Interest rate, compounded annually         9%

    age      ann.cont.      yr.end bal.
    30           $ 1,200            $ 1,308
    31              1,200               2,734
    32              1,200               4,288
    33              1,200               5,982
    34              1,200               7,828
    35              1,200               9,841
    36              1,200             12,034
    37              1,200             14,425
    38              1,200             17,032
    39              1,200             19,872
    40              1,200             22,969
    41              1,200             26,344
    42              1,200             30,023
    43                     0             32,725
    44                     0             35,670
    45                     0             38,881
    46                     0             42,380
    47                     0             46,194
    48                     0             50,352
    49                     0             54,883
    50                     0             59,823
    51                     0             65,207
    52                     0             71,075
    53                     0             77,472
    54                     0             84,445
    55                     0             92,045
    56                     0           100,329
    57                     0           109,358
    58                     0           119,201
    59                     0           129,929
    60                     0           141,622
    61                     0           154,368
    62                     0           168,261
    63                     0           183,405
    64                     0           199,911
    65                     0           217,903

VALUE AT AGE 65: $217,903 (14 TIMES)

Chapter 8. Starting your own business:

Here again, much of the content of this chapter is aimed at Canadians; others might use this as a rough guide and look into the rules in their location.

Every situation, person, need and opportunity is different, so no one set of suggestions will help every reader. Following is a generic list of points, many of which may be relevant to your own situation.

Some people have the idea that "you should have a business on the side as a tax dodge." Not so. The idea of and reason for a (small) business is to make money. If you do, you will pay tax on that profit. Sure, CCRA ("Canada Customs and Revenue Agency"), formerly called Revenue Canada will take some of your profit, but you will still come out ahead. If you expect to show year after year of losses, you may have a problem. It is not abnormal for a new business to show a few losses until it gets established. Losses should shrink and within a "few" years a profit is to be expected. If you were to show a long series of losses on your tax return, causing tax refunds each year, you should expect to get audited. If you do, and if the auditor feels that there is no "reasonable expectation of profit", you could be re-assessed. This means that all the losses you have claimed in past years could be disallowed and you would owe not only the back - taxes, but also interest (at a high rate) on those taxes. Don't start a business thinking of it as a "tax break." Losses are normally allowed as a deduction against income from other sources if there is a "reasonable expectation of profit."

What sort of thing can you do to "Make a Little Extra Money?" Well, you have to keep your eyes and ears open and be very careful of scams. Try to find something that agrees with your hobbies, your likes, your lifestyle. I did; I like searching in the woods for Diamond Willow sticks here in northern Canada and I am selling them all over.

Some have found a niche in, for example, mowing laws for others, shoveling snow, building fences, trimming hedges, digging gardens, making websites, making resumes for job-hunters, washing cars, even raising snails ("escargots") to sell to restaurants. Others build or make various things to sell. If you are "into" some craft and hope to sell "craft" items, be careful though, and check it out first; so often, craft items are cute but few people will pay for them. Do your homework first. I have found that people will, for example, be very happy to pay $125 to take a full day's workshop and make a willow chair, but they will rarely pay half that amount for such a chair already built. People prefer to DO/MAKE rather than BUY craft-type items.

In my humble opinion, almost any business that you decide to go into, will benefit from having a website.


- Decide on a name for the business, with several alternatives. It may be wise to pick a name which will tell the public what it is that you do or sell. For example, "Johnson Enterprises" may sound good to you but tells others absolutely nothing. A name like "Johnson Computer Cleaning Service" tells all.

- Register the name to protect it (small fee).

- whether or not you decide to start with a website, consider a name for it in case you want one later and then find that the name you would have wanted is no longer available. This is called your "Domain Name" and the annual cost to register is is very low. For example, I sell Diamond Willow sticks for hiking etc. both finished and unfinished sticks. For that purpose I registered two names: and You can check on name availability at or at

- Decide if you will operate as proprietorship, partnership or corporation. If you are quite sure to make a good profit, and if you have a good steady income, and your spouse does not, it may be wise to have your spouse run this business, with you occasionally helping him/her. If you are already paying income tax at a good rate, you may wish to take advantage of your spouse's lower tax rate. If you decide to treat your spouse as an employee, you will be required to deduct Income Tax, Canada Pension and Unemployment Insurance from his/her wages.

For an example of a Partnership Agreement, see Exhibit 1 at the end of this page. Periodic meetings of partners is advised, with minutes kept of the meetings, indicating very clearly all decisions made by the partners. Each partner should sign such minutes and then get a copy for his/her own files.

- If a partnership, draw up a detailed agreement. Even if this will be a partnership between husband and wife.

- For literature, books, see Federal Business Development Bank, Bank, Tourism and Small Business, Chamber of Commerce, insurance agent

- Take courses at College for marketing, accounting.


- Make a list of all necessities, e.g. Leasehold Improvements, partitions, flooring, cabinets, painting, shelves, lighting, plumbing, decorating, signs, computers etc.

- List all the equipment needed, e.g. cash register, burglar alarm, office machines, filing cabinet etc.


- Decide where to bank.

- Decide who is to sign cheques.

- Set up an account

- Arrange for Line of Credit if needed. (if you will be borrowing, shop around for the best interest rate)


- See City Hall.

- Enquire about the various licenses or permits you might need before you start.


- Where? Address?

- Rent premises?

- If rented:

- get lease agreement to study

- rental cost?

- heat, power, water included in rent?

- any extra costs, e.g. for extra high sales volume?

- damage deposit?

- restrictions on hours of operation?


- Get a list of (prospective) suppliers.

- Find out from each their terms.

- Who pays freight?

- Will they accept returns?

- Place order


- Get one experienced person for (say) "3 months only" with the possibility of extension.

- If any person will be hired, advise the Workers' Compensation Board. (CANADIANS only)

- Set up an "employer account" with Income Tax people.

- Get some expert advice on setting up a payroll system which will be easy, economical and save you headaches later on.

- See Labor Standards Branch for regulations.

- If 5 or more employees will be hired, contact Alberta Health Care. (CANADIANS; ALBERTA specifically, ONLY)


- Study your market.

- Look into danger of present and impending competition.


- List all needs, such as cash for:

- for assets

- for deposits

- for stock

- to cover probable losses for the first few months

- to provide a safety cushion.


- Supplies

- Forms: these will take time to design and get printed.


- Cash flow forecast (may be required by your banker)

- Profit forecast

- Be sure that you can back up all expenses you claim, with valid invoices showing what you bought, when you bought it, where you bought it, what it cost etc. If you are audited, the onus is on you to satisfy the auditor.

- Simple, economical accounting system. Unless you are thoroughly familiar with Debts vs Credits, Balance Sheet vs Income Statement etc, a computerized system may not be a good idea. Maybe a basic accounting course would help.

- Decide on a "fiscal year end", i.e. your "financial year", or "business year." Accountants, typically, are extremely busy in the months of January through April, so a year end of December may be a poor choice. November is not a lot better. Consider May 31, June 30 etc. Then your accountant could prepare your financial statement in the following month. In your first fiscal year, you can decide when to have your year end. It can be up to but not later than 12 months from the time you started. Whatever date you pick is then your year end from that time on. If, in the year you start, you have little or no other income, you might want to pick a date to assure yourself of enough income to "use up" your personal exemptions in that year. It seems a shame to waste your exemptions by reporting an income so low that your exemptions are far higher than your income. CHECK TO MAKE SURE YOU ARE ALLOWED A YEAR-END OTHER THAN DECEMBER 31!


- Set out, on paper, all policies to govern operations.

- Who does the hiring, firing?


- Yellow pages ad/listing

- Business cards

- Letter/flyer in mail, card taped on. Your Post Office may give you a good deal on delivering one-page "flyers." You might want to tape (not staple) one of your business cards to the flyer, then fold it twice for easy delivering.

- Local paper news article re opening, also on Cable TV


- Arrange power, heat, water and phone hookups.

- Note that expenses for promotion of your business, such as taking prospective clients to dinner, are deductible, but only 80%. The remaining 20% are considered "personal." If you have such expenses, keep the bill and mark on it who your client was.

- Plan the advertising for the opening.


You must register if total gross (i.e. before deducting expenses) revenues from sales of Goods or Services will reach $30,000 per year. In the year you start your business, you will not know whether or not you will reach this limit. You may register if you wish, but do not have to until your gross reaches $30,000. You may want to register because once you do, all the GST you pay out when buying goods, merchandise, supplies or services for your business can be recovered. These amounts are referred to as "Input Tax Credits." On the downside, once you are registered, you must make periodic "GST Tax Returns" to remit the GST collected from your clients or customers, MINUS your "input tax credits."

"WORK SPACE IN HOME EXPENSES:" see my Income Tax pages at:

NOTE also a WARNING on my page at

Using the Internet:

These days the internet has made it very easy for anyone to set up some kind of business. Not every one will be a success but with some careful thinking, anyone can set up a website and sell "something" even if they don't have any products of their own to sell. My pages at provide a wealth of information for setting up a successful website. I use my site to sell Diamond Willow sticks and it has been a great success. If you have no product to sell and don't have any hobby which you can turn into a business, you can still do this. For example, my little granddaughter set up her own website and that got me thinking. As a result, I made a start on a website that anyone can use as a starter. YOU are welcome to it; I'd like to hear back from you if you use it.

You can check domain names here:;jsessionid=327A2ABA2DAE4D8F8718E6A9FA75E444.TCpfix140a?__frame=_top&__lf=Static&linkOrigin=Home&linkId=hd.nav.domainSearch

I checked for “” and it is available; is also available as are: and; is available but .com is not and is available. Of course this may change at any time.

If you Google “images” for “Free pigs clipart” you get tons of good images.

Kim Komando wrote about selling stuff like this:

The sample page lives at

The idea here is that you set up an "Affiliate Account" with some business such as Amazon, and sell THEIR products and whenever somebody visits your website, and winds up buying the product from (Amazon) then YOU get a commission. You should read 'the fine print' of the Affiliate Program or you will wonder, down the road, why you did not get a commission on something which a person did buy via your website. There are rules which not everyone is aware of.

Chapter 9. Other ways to save money:

1. This first one concerns your heating bill. Chances are that every spring you get a notice from your heating-fuel supplier urging you to join their "budget plan' whereby you "even out" your heating bills over the year so that you don't have huge bills in winter and very low bills in summer. Think about it. This may be a good idea........... for THEM, not for you. Typically, they want to sign you up in spring just when the bills are going down. Join their plan and your summer's heating bills will shoot UP. Sure, in winter they will be lower but they will have been using YOUR money all summer. You are paying now for a benefit to be received later. Who really wins here?

Do all you can to reduce your fuel energy bill; this site may help: and more at

2. If you rent videos, consider checking out the library; you might be able to borrow them for zero cost.

3. If you need anything, don't rush out and buy it. Watch the garage sales, the second-hand "Thrift" stores and also sign up for "FreeCycle." Freecyle is at and you won't believe what you can get from other folks who simply want to get rid of things. If there is no "Freecyle" in your community, you can set one up; there is no cost. It is only for FREE stuff. NO money involved, ever. This is a terrific resource both for those who need to get rid of stuff and those who are looking for stuff. As I write (OK..... "type") this, I see people are giving away a lamp, 2 wing-back chairs, 2 plastic lawn chairs in great shape as well as a washer and dryer in working order.

4. Your cellphone is very expensive and may even be harmful to your health (the jury is still out on that one but the Telcoms are fighting it; I wonder why). Ask yourself if you REALLY need that thing. You managed fine before they were invented. Is it simply that being seen with a cellphone gives you the idea that you "look important?" If you have one simply in case you need it to call 911 in an emergency, maybe you can simply get an old one from somebody else, with no plan. The cost will be zero and most likely the phone will still call 911 if you need it. Mine does.

5. Change your incandescent light bulbs to the more efficient fluorescent bulbs.

6. BEFORE you get a pet such as a dog or cat, figure out what the costs are likely to be. Once you have that pet, you are responsible for its welfare and health no matter what the cost. Don't forget the possible costs of a lawsuit if your pet perpetrates some horrible crime on a neighbor. It happens. Besides the cost to buy the animal, the license, shots, neutering, collars, leash, kennel, scratching post, veterinarian bills, damage to furniture etc it can add up in a hurry. When the economy took a nose-dive, it amazed me to see how many people were trying to give away their pets on FreeCycle. They learned the hard way that pets are a poor investment. And while we're at it, let's not forget that DOGS are the greatest cause of PROBLEMS between neighbors in a community. Sorry, Rover, but I have to tell it like it is. In March 2011, I heard of a family whose dog broke its leg. The cost to fix it? $3,800.00!

7. Live below your means.

8. Never, ever, co-sign for a loan that somebody else is taking out, not even for relatives.

9. If you need to get a medical prescription filled, shop around between different pharmacies; the price differences can be significant.

10. Be very suspicious of charitable organizations. I've seen so many that turned out, much later, to be complete scams that I rarely now support any of them.

11. If, in your community, beverage containers can be turned in for a cash deposit, take advantage of that. Don't be too proud to pick up an empty soft-drink bottle when you park at the store. Toss them into a box at home and once a year or so, turn them in for some very easy, tax-free cash! You're cleaning up the environment as you go. A win-win situation.

12. Bonus tip for Canadians: Do all your grocery-shopping at Canadian Superstore and get their President's Choice Mastercard. Then use that card for EVERYTHING you buy, at Superstore and everywhere else as well. Every time you use it, you earn "credit points." You can then apply these points to your groceries. It has made a huge dent in my grocery-shopping. An additional advantage: when you are there, fill up your car's gas tank. You get 7 1/2 cents credit for every liter of gas; this credit can be used after you fill up and go get your num-nums. AND, if you pay all your bills online, from your bank account with President's Choice Financial, you get even more "points" toward free groceries.

13. Cut out those ridiculous $5 cups of coffee!

14. Never, ever, read all those SPAM e-mails which we all get. You might be weak and fall for their scams.

15. Pay your bills as late as possible (leaving your money in savings as long as you can) but pay all bills just in time to take advantage of any cash discounts and avoid all late-paying penalties.

16. Force yourself to avoid impulse buying.

17. Never, EVER, get a "payday loan." If you feel the need to get one, you have a very serious problem in understanding the basics of money management.

18. Cook more of your own meals and eat out a little less often.

19. Keep a record of your cash outflows for a year and analyze the summary. Maybe a FREE computer program would help you here; try TurboCASH from SourceForge, as recommended by Kim Komando:
It may help you to keep good financial records with a FREE program such as the one from HomeBank at

20. Stop smoking. If you smoke 3/4 pack per day, and if you are 22 now, and a pack costs $6.00, and if you quit now, and if you put the same amount of money into your R.R.S.P. (i.e. tax-free investment), and if that R.R.S.P. earns 7% per annum for 40 years, you will have, in that R.R.S.P., $352,496! PLUS, you would have had a tax saving in each year, of, perhaps $657.20. If you had invested this $657.20 each year into the R.R.S.P. as well, you would have a further $131,160 or so, for a total of some $483,000; close to a half-million dollars!! (and that ignores all the other benefits of NOT smoking!) The American Cancer Society estimated 162,460 men and women will die in the USA in 2006 due to lung cancer. You really don't want to be one of them; that is a terrible way to die.

21. Keep a record of your vehicle expenses and kilometer readings, by year. Then calculate the cost to operate your vehicle, per kilometer. You may find that the cost per km is getting higher each year, suggesting a change of vehicles may be worth considering.

22. See what interest rates you are paying on debts.

23. If you are tempted to "sell" your income tax return, don't. If you do, and then calculate the ("annual") interest rate you paid on that short term loan, you would be shocked. The rate may well be in excess of 80%!

24. Have a garage sale and take the leftovers to an auction.

25. Stop drinking booze (beer & hard liquor)

26. "Use less", and then "re-use." (and, of course, "recycle what is left")

27. Government cheques can be deposited directly into your bank account. Arranging to have this done may save you the loss and inconvenience resulting from a cheque gone missing. This goes for your pay-cheque also.

28. Before you buy that lottery ticket, consider your chances of winning; probably you have ONE chance in TEN MILLION or so!!

29. This may not save YOU any money, but may help your kin; have an UPDATED will, make sure your next of kin know where it is, and pre-plan your funeral. You could save the survivors thousands by leaving your remains to medical research, an organ donor clinic or a teaching university. Also, cremation versus burial will save a great deal of money.

30. Wait for a "sale" to buy what you need.

31. Use coupons, particularly in "double coupon" week.

32. Use both sides of your paper.

33. Call long-distance less frequently. And when you do phone, call when rates are lower; check your phone directory for rate tables. Maybe it is acceptable to call "collect" more often....... AND, better yet, use FREE long-distance communication such as e-mail and VoIP programs such as Skype. I have much more on that, with some warnings, at this website: I have found, with my poor hearing, that using the free Skype, with dual headphones, I can understand callers much better than I can with a telephone AND, with Skype and some of the other VoIP software, you can have video as well. All totally free and very easy to use. Invest $20 or so in some headphones and maybe a few more bucks for a webcam, and you're ready to fly.

34. Make a personal "Balance Sheet." (more on this in Chapter 3)

35. Consolidate your debts, IF that will lower the effective interest RATE.

36. Grow a (small?) vegetable garden.

37. Next time your car, house, etc. insurance is due for renewal, shop around for a lower rate. Consider raising your deductible to reduce the premium. Some insurance companies give lower rates for people over a certain age, for those who do not smoke, for those who do not drink, or to those who have not made any claims for losses for a specified period of years. Study the policy, ask what each item means, and make sure that for each component of the premium you pay, you are getting your money's worth. Compare your premium with that being paid by neighbors, friends or relatives. Shop around. Consider this actual true example: "K" was paying $292 per year for home insurance and "M" was paying $411 for less protection. "K" emailed a photocopy of "M's" insurance to "K's" agent asking if the agent could offer "M" a better deal. "M" moved to that agent and started saving $100 per year. Ask your insurance agent to shop around for a better price for you.

38. Get rid of "consumer debt", i.e. debt with non-tax deductible interest. In other words, "Personal Loans" and "Charge Accounts."

39. Before buying something "on time", get a print - out showing all the payments, the interest charges, the month-end balances, and totals for the whole period, showing the total you will have paid, and the total interest you will have paid. You may find that interest would have been calculated very differently from what you had expected, with the result that you would have paid much more in interest than you thought.

40. A word about your "Stuff." Here is a plan and it works well for me. When you purchase some "thing" that you plan to have around for "quite awhile" then take a picture of it and on the picture, put a note of all the details such as serial number, where you got it, a copy of the invoice, price, when you bought it etc etc etc. Now take a file folder, a paper one, and put on the cover "ASSET CHANGES - 2011" with one of these for each year. File your paperwork in the folder and keep all the folders in a box labeled "ASSETS." Now, if you need to make a warranty claim, or order parts or something to do with an asset, you can find the info fairly easily. You could even put an index sheet in each year's folder. This tip goes hand in hand with the idea of preparing an annual "Balance Sheet" presented in Chapter 3.

41. Be prepared for the unexpected. Accidents, illnesses, job losses and all the other hazards of life just HAPPEN. Keep some money available for when it happens.

42. Don't have bank accounts all over the place, each with a little bit of money in it. Generally, it is best to have TWO accounts: one for paying the bills out of, and the other for saving.

43. Use a shredder to destroy any and all documents which have your name and address or any other sensitive information on them.

44. When you go on vacation, bills may arrive. Plan ahead so that you do not incur fees for late payments.

45. Don't have "charge accounts" all over town; use one card, e.g. VISA or MASTERCARD or similar, and use it for all your purchases. This way you might earn credits for using the card. Just make absolutely certain that you pay the FULL balance when due. DO NOT be late!

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.......... Appendices ..........$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$


(a brief example; legal help might be worthwhile)

I must warn you here. In my experience, "partnership" is a four-letter word; that is, a dirty word. I have seen very many partnerships start 100% successfully and then deteriorate. And when the fighting starts......... look out! A written agreement should spell out very clearly what is to happen in the event of disagreements. Also covered should be details of what is to happen if one of the partners should become disabled or if (s)he should die. Don't put it off; I know of a situation where two brothers were in a partnership with no written agreements. One got married and died a year later. The widow was put into a terrible situation with regards to the other brother and distributon of assets. The unexpected does happen.

The name of this partnership is:

The date on which this partnership began was: .......................... , 2....

The partners are:

(name, address and profession of each partner)

The purpose(s) of this partnership are:


The address of the main office of this partnership is:

(mailing address)

This partnership is to last until (or for a period of..., or "indefinitely")

Restrictions on each partner, as to what sort of activity he/she is allowed to become involved in, outside of the partnership:


Capital (Cash or other) contributed or to be contributed by each partner are:

(listed, showing the agreed value of each contribution)

(I suggest photos of the assets should be taken and kept)

Duties and responsibilities of the partners:

(listed for each partner)

Interest to be paid to partners on their investments:

(listed, if applicable)

Profits or losses shall be divided between the partners as follows:

(percentage for each listed)

It is understood and agreed that each partner will pay his/her own income tax on his/her share of the profits.

It is understood and agreed that neither partner is to become surety or bondsman for anyone without the prior written consent of the other partner.

Details of cash (or other assets) withdrawals allowed:

(amount, frequency and dates allowed, for each partner)

It is understood and agreed that these withdrawals are not tax-deductible expenses of the partnership, but rather, "draws" toward each partner's share of the profits.

It is understood and agreed that no partner shall withdraw any assets from the partnership in excess of the amounts allowed as stated above, unless specifically agreed to in writing by the other partner(s).

Signed and dated by each partner:

Appendix 2: Your Resume

(a brief idea of a very simple one; a fancy one might get more action)




1989 - present: mechanic at XYZ Co., Vernon, B.C.

1978 - 1988 mechanic helper at ABC Company, Vernon, B.C.

1970 - 1977: front end man at CDE Ltd., Vernon, B.C.

1966 - 1969: Trade school for mechanics

prior to 1966: high school


High School Sr. Matriculation in 1966

Mechanic Class 1 certificate, 1969


d.o.b. July 29, 1954

Canadian citizen

married, with two sons

own home in Vernon, B.C. (small mortgage left)

lived in same house from 1978 to date

lived in Vernon, B.C. from 1970 to date

address: 1111 - 11 Avenue, Vernon, B.C. xxx xxx

phone: (604)555-1111


Mr. Mike Kablishe, XYZ Corporation, Vernon, B.C.

Mr. Bill Reescher, ABC Company, Vernon, B.C.

Mr. Donald Black, Vernon Trade School


have worked..... etc. etc.

served as School Board member, 2 years, at Vernon.


favorite activities: repairing vehicles, fishing, camping, golf

Appendix 3: Some other resources that will interest you: Money-Saver Magazine; lots of good info available on the website Credit Counselling Services of Alberta (CCSA) helps Albertans learn how to budget, get out of debt, use credit wisely, and get the most from their money. Note that at this site you can download, in PDF format, all kinds of excellent brochures. It is meant for people in Alberta but I am an Albertan too and I am assuming they won't mind others helping themselves to the goodies on their site.

You might find "Buddi" useful; Kim Komando recommended it. The owner writes: "Buddi is a personal finance and budgeting program, aimed at those who have little or no financial background. In making this software, I have attempted to make things as simple as possible, while still retaining enough functions to satisfy most home users." You can download this freeware at: This is a realy simple, versatile and easy-to-use Mortgage calculator. The only problem with it is that once you start running it, you cannot exit or stop it. You have to click "Continue" to the final screen. Not a big problem. (also at Government of Canada site which has a huge amount of excellent information and online tools.


"The Wealthy Barber", by David Chilton, a "Best Seller" on all types of financial matters, very easy reading. and / or

For Money - Managing Software and help, these might help: and search for "Money Plus Sunset."

That's it, folks; I hope it is helpful to you, your friends and family.

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