Rewards Credit Card: Get One!

Everyone runs their budget differently. Some people use a cash-only strategy, some use a mix of cash/credit/debit, others use only debit, etc. All of these are excellent choices, but if you have the will power and don’t mind crunching the numbers every month, putting all your spending on a rewards credit card is the way to go.

When you spend cash at a business, unless they offer a cash discount, you’re paying full price with no rewards. Maybe they offer a points program, so you’re paying full price with some reward. If you pay with a rewards card, you double down on the rewards!

Whatever your choice of reward, don’t spend money just to gain rewards; that’s backwards. Anything you NEED to purchase, should be done on your card. Free is free. These cards often come with other perks as well. Travel cards come with travel insurance, lounge access, companion tickets, and more.

Currently, I have a Cashback card that I only use at No Frills (they don’t accept visa). I also have an Amazon Visa, which I use for daily spending and while travelling. I am in the market for a new travel rewards card for daily spending after dropping my Amex Gold.

If, like me, you’re looking for a new card, check out the following card aggregators:

Both of those sites are perfect for picking a card that gives you the most free stuff! Don’t be scared of yearly fees, as long as the benefit for you is there, and you will come out ahead.

-Mike

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Canada’s Debt Problem

Well, the numbers are out and it doesn’t look good. Canada’s debt to GDP ratio recently reached 354.5% due to a long period of low-interest borrowing. I’m fortunate in the fact that I’ve never been in debt but it’s hard to watch my fellow Canadians and my government go so far into it.

I’m fortunate in the fact that I’ve never been in debt. I worked 40 hours week and did freelance work during college to pay for my education. My education has been the best investment I’ve ever made, as it’s paid me back a huge dividend over the last 4 years. Going into debt for an education is considered good debt, as long as there is a career waiting for you as a result.

If we as Canadians can make an effort to get out of debt sooner than later, we’ll be a more prosperous society because of it. In the last 4 years I’ve slowly taken more and more control of my money and that is what spurred me to write this blog.

I hope I can provide you all with a philosophy that will teach you take control of your money, and provide you some strategies to help you do so.

-Mike

 

Get More Value From Your Bank

If you have a job, salaried or otherwise, you probably get paid via cheque or direct deposit. You need somewhere to keep this money because filling your mattress with cash is a terrible idea for so many reasons.

Since the creation of currency, people have needed a place to keep their money safe, and thus, the banking industry was born. I think in general people have lost sight of what a bank should be and how they work, so most people continue to pay for services they don’t use.

My advice? Move to a no-fee bank. EQ Bank, PC Financial, and Tangerine are all great choices. Most credit unions also have excellent offerings, as well. I think paying a bank is a bit absurd, because they already make money by lending your savings out. In fact, they can lend out every $1 you deposit, for almost 10 times that amount all the while they charge interest to the borrower.

Free banks still charge interest on your money, but most of them give you interest in their savings accounts. Keeping your money in a savings account with Tangerine for instance, gives you 0.8% interest which helps you fight back against inflation while you find somewhere you want to invest that money.

So here are your options:

  • You could hold it in physical cash, but you lose value to inflation.
  • You could pay for an account, but you’re losing money every month to inflation, not getting interest, AND you’re paying to lose money in the form of a fee.
  • You can hold $3000 to $6000 in an account to avoid the fees. Again, you’re losing out on inflation and interest on that money (regardless how small, it adds up).
  • You go with a no-fee bank, and get paid to park your money there. You lose only a small amount to inflation. If you have TFSA room, and keep your money in a 2% HISA, you’re making money by doing your business with that bank. THIS IS HOW IT SHOULD BE!

I’m with Tangerine and I have zero complaints after moving from a full service bank. If you decide to go with Tangerine, use my Orange Key (43631608S1) on sign-up to buy me a beer. Thanks!

– Mike

Inflation: What is it exactly?

Inflation: a general increase in prices and fall in the purchasing value of money.

Oh, so THAT’S what inflation is? Thanks for clearing that up, Mike. We can all go home now.

Sarcasm aside, the definition certainly doesn’t clearly explain what effect is has on your money. When the cost of goods and services becomes inflated, it means money you have already earned becomes less valuable. Inflation is one of the main reasons you NEED to invest your money. Nobody likes throwing away money, why let inflation eat away at your hard earned cash?

Canada has enjoyed relatively low rates of inflation over the past 5-year period (about 1.24% to 1.61%). In the 1989, however, that number was 5.26%. Let’s break it down:

  • A $1 candy bar in 1989, would be $1.05 in 1990
  • A $10 pack of beer in 1989, would be $10.50 in 1990
  • A $100 grocery bill in 1989, would be $105 in 1990

I like to imagine inflation as the following: I walk to the grocery store, buy my groceries for the month (Yes, I only spend $100/mo for groceries), and on the way out I toss a $5 bill in the garbage. Nobody in their right mind would do this voluntarily, so, why would you let this happen to your money when it’s sitting in a bank account somewhere?

Mike, How can I stop throwing away money? Get a no-fee bank account, open a high-interest savings account (HISA) or even better, a tax fee savings account (TFSA) and put your money in there and your money will immediately start working for you. Tangerine, EQ Bank, and PC Financial are all good choices.

I’m with Tangerine and I have zero complaints after moving from a full service bank. If you decide to go with Tangerine, use my Orange Key (43631608S1) on sign-up to buy me a beer. Thanks!

– Mike