Gails Blog

Most of the people I work with believe that credit cards, debt, and living in overdraft are the norm. Why? For some it’s because they don’t want to have to change what they are doing. They enjoy buying stuff and having anything they want whenever they want it. The immediate pleasure offsets the future pain. Of course, at some point, the pain surpasses the pleasure, which is when they call me.

Sometimes people keep on the same track because they simply can’t see the mess they are making. They only see what they want to see. The people around them who love them are panicking, but they’re blithely continuing to consume on credit.

I get a lot of letters from sisters, brothers, husbands, wives, mothers, fathers, even children, asking how to help their loved ones wake up and smell the coffee. It’s a tough call. You see how hard I sometimes have to be with people. That’s because they need a real kick in the pants to see what I see, instead of what they want to see. But I don’t have to sustain an on-going relationship with my couples so I am risking nothing; you, on the other hand, have real relationships that could be damaged if you kick too hard.

The other day I found the following and it made me stop and think:

Aoccdrnig to rscheearch at Cmabrigde Uinervtisy, it deosn’t mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be at the rghit pclae. The rset can be a toatl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe.

If, like me, you had no problem reading that paragraph, it’s because your brain only requires the first and last letter of a word to be in the right place to recognize the word correctly. Pretty cool, eh?

We’re wired to fill in the gaps. This helps us read gobbledygook, but it also helps us to justify our actions no matter how stupid they may be. We see what we want to see, looking at a Complete Mess and seeing Normal.

Just as our brain views the paragraph above as normal, we see a life of debt, living on credit, and skipping payments as acceptable as okay, because… (fill in the blank with any lame excuse.)

Often I hear from people that it doesn’t seem all that odd to live on credit because everyone around them is doing it. Really? So, to quote my mom, if everyone around you were playing in traffic, you’d be out there too?

Instead of hanging out with others like you to justify the actions that will eventually bring you to your knees, take a look at those that are different to see what they are they doing. How are they managing to live on what they make? How do they say no to the impulse purchases? How do they save?

I love this definition of INSANITY: Doing the same thing over and over again and expecting a different result.

If you want to get out of debt, continuing to use your credit cards isn’t going to get you there. Transferring balances from one form of credit to another isn’t going to either. And spending more than you earn isn’t going to get you there. There is no magical moment where you’ll wake up and all the debt will be gone.

If you’re looking at your friends, families, neighbours and wondering where they get all the money to go on exotic holidays, drive a new car every two years or buy beautiful clothes, it may be that they earn more than you do. Or they may be doing it on credit. Regardless, if you don’t want to be in debt, you have to stop seeing what you want to see and See the Truth.

Truth #1: Money is an exhaustible resource. When you spend it, it’s gone. So spend it wisely.

Truth #2: Credit is NOT disposable income. If you can’t pay for it in cash today, how will you pay for it on credit, with INTEREST tomorrow?

Truth #3: Spending more money than you have is STUPID!

Truth #4: If you don’t have enough money, you have two choice: Slash your Spending OR Make More Money.

Truth #5: If you don’t Save, you will have Nothing when you most need MONEY.

Truth #6: If you don’t Plan, you’ll get nowhere.

Truth #7: You are the person in charge. You have the power to create the life you want. Stop whining and DO IT!

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Now that the kids are back in school, it seems our attention has turned to dealing with the upcoming holiday season. A lot of people have been writing to me to ask about how to plan for the holiday season without blowing their budgets or their minds. Ha! You needed to have had a plan at the beginning of the year to really do the holidays justice without making a mess of your spending plan. If you’re just starting to think about how you make it through with your sanity, you’ll need to get creative.

I often recommend that people set aside 1/12th of their Holiday Spending Plan starting in January. Since planning is the key to everything, knowing how much you’ll need to spend on everything from gifts to wrapping, food to wine, hostess gifts to decorations, postage to travel, cards to photos, makes the whole thing work.

I always start my holiday shopping well in advance of the rush… I started this weekend, as a matter of fact. I went to a store that was having a moving sale and got almost everything I bought at 30% off. I brought it home and stuck it in the bottom of my closet. I know exactly who will get what, how much it’ll be for each gift, and how much under budget I am.

If you don’t want to blow your brains out on gift-giving, pretend you’re Santa: make a list and check it twice. Who doesn’t need to be on there? To whom can you give a token gift to commemorate the season?  How can you make your gift list fit within your budget? Secret Santa works at work, why not also amount a brood of siblings?

Once you have a list, jot down your gift ideas for each person on your list.

Routinely I ask my kids (I have four plus two spouses and a grand) for a list and then work to fill the list by comparison-shopping online before heading to the store.

Don’t self-gift while you’re shopping. The One-for-me-one-for-you approach to holiday shopping is just an excuse to be self-indulgent. According to an American Express survey, more than three-quarters of us buy something for ourselves while shopping for others.

If you’re a recent convert to the philosophy of only spending what you can afford to pay for, then you may have to take the drastic step of letting your peeps know that the largess of yesteryear simply isn’t possible anymore. You might find relatives and friends hugely relieved.

The very best gifts don’t have cost a penny, or very little. Offer up your time babysitting, cooking meals, house cleaning, massaging, sewing, knitting, transporting, or whatever else you’re good at. Clip a picture of the service you’ll provide and be clear on how often, as in “I’ll babysit one weekend a month from February to June.” Or better yet, make your own coupon book.

Unless you’re very good about paying your credit-card balances off in full every month, shop with cash this holiday season. Why? Because if you take a card, you’ll think you can spend more and then you’ll get stuck paying the minimum. At 18% interest, for example, $500 in holiday spending would take seven years to pay off and cost $365 in interest. Ouch! According to credit counselors, nearly 1/3 of us are still paying off the bills we racked up last year.

Before tossing anything into your shopping cart ask yourself why you are buying it. Are you just fulfilling your duty to give a gift? Are you showing off? Are you trying to keep up? Or are you giving something you can afford that your friend, sister, son or partner will truly enjoy receiving?

Your mom, dad or BFF aren’t going to be happier that you put yourself in financial stress rather than giving them something that might be slightly less and within your means, if they really love you. If they are judging you on your pressie, then they don’t really love you and you shouldn’t be buying them ANYTHING.

Make sure you get gift receipts for anything that may not fit and include them with the present. Routinely people accept gifts gracefully because they are good people, only to be stuck with something they’d never wear, never use, never regift. What a waste. Loads of people say, “if you need the gift receipt, I have one”, but the gift recipient may feel it is rude to ask for it. Avoid the potential yuck and just include it in the present.

I know a lot of people like to use gift cards to make the holiday season easier to manage. I’m not a fan of gift cards since you’re translating real money into retail dollars you can only spend in one place. (Blog to follow.) But if it works for you, just make sure you choose a reputable retailer.

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Everyone is looking for ways to save money. As we become more committed to living debt free, saving, and having a great life too, we all know that the key is to not waste ANYTHING. So people come up with some really creative ways of spending less, making things last longer, or eliminating spending completely.

Websites abound. With the huge increase in gas prices, GasBuddy.com can help you find cheap gas prices in your city. Since prices can vary as much as 20% within only a few blocks, GasBuddy let’s motorists share information about low priced fuel with others. Hulu.com let’s you watch TV shows and movies on the internet for free, as long as you have high-speed access.

PJ, my producer, arrived on set with a refillable water bottle and announced she was out of the plastic-water-bottles-business. I subsequently saw an add on TV with a very clear message about water bottles and the environment, and decided we were getting out of the water bottle business too. (Who says TV is bad for you?) It’s going fine so far, and I find I’m actually drinking more water because I always have it nice and cold in the fridge.

We first started to buy bottled water when we were packing a bag for the kids. It was convenient, a case lasted a whole month, and, hey, it wasn’t an awful environmental thing, just a neat convenience. I’ve never gone in for all that fancy watch stuff because I just couldn’t see the point. But when it came to grabbing a bottle I could shove in a bag for the kids, I did. The next thing I knew we were up to a case a week. Insidious. Unconscious. Wasteful. That ad combined with PJ’s stand really opened my eyes.

I find my consciousness rising generally. When we moved out to the country five years ago, I decided to go with a front-load washer because it used far less water. We NEVER water our grass. And we are conscious about our water usage in generally because we live on a well.

Our home takes advantage of passive solar heating. The back of our house faces south and is full of windows, bringing the light and heat into the house in those cold months. And I’m considering getting my heat from the ground the next time my furnace must be replaced.

I also tend to turn my oven off early, when I’m cooking, and let the food finish cooking in the heat of the closed oven, saving a bit of energy. I started doing this to reduce the amount of heat in my kitchen in the summer and it worked so well I just kept it up. I always turn off the “heated dry” cycle on my dishwasher, and I load my washing machine to the hilt and then split the load in the dryer to save energy and drying time.

A friend of mine just sent me an email with this tip:

Using Swiffer wet replacement towels can get expensive so I decided to try using my old flannel pajamas cut to size and dampened with a cleaning solution of about 2 tbsp. Murphy’s oil soap to 2 litres water.  Works great on my hardwood. Try it.

So I’m gonna. Since the cloths can be washed and reused over and over and the cleaning solution will cost just pennies compared to what I was spending, I’m thinking this could be a keeper.

For years my husband has bought socks all of the same colour and style and I do that with my son’s socks too. That way when one goes missing, it’s no big deal. I never had a problem with Alex’s socks because until she was 12 she purposely wore her socks miss-matched!

Speaking of Alex, she refuses to use anything but rechargeable batteries because she considers it a waste of her money. Funny how when you give a kid her own money, she becomes very careful about what she’s prepared to spend it on, eh?

Okay, it’s your turn. What are your favorite money saving tips?

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I was listening to my make-up artist, Natasha, and DOP, Adam, talking about how to manage their variable incomes. Adam is a freelancer and always has to be sure he’s got a cushion in case the bottom falls out of the camera-guy-world. Tasha is starting her own business – she a terrific clothing designer. They both have to deal with unreliable incomes and all the stress that goes with.

Whether you’re a contract employee, a freelancer, working for yourself, or working on commission, one of the biggest challenges you face is Feast-Today-Fast-Tomorrow Syndrome.  One month you do really well, have enough to plan a holiday, build a deck, buy some new clothes. The next, you’ve barely got enough to make it to the 30th without racking your cards to the max.

Working with a variable income isn’t as hard as people think it is. You can still make a budget and stick to it. You can still have the things you NEED and the things you WANT. You have to have a PLAN.

First, you need to set your salary and live on it. If your work efforts bring in $2,000 one month and $6,000 the next, and you think of all that money as spendable, you’re going to run into trouble, it’s only a matter of time.

Smooth out your cash flow by deciding what your minimum monthly income needs to be to keep body and soul together. This is your Salary. No matter how much money you bring in, you’ll only transfer this amount into your Household Account for spending. The rest stays in your Biz Account. Then, in a month when you haven’t billed as much as normal, you’ll still have a whack of cash in the Biz Account so you can transfer your Salary to your Household Account.

To figure out your Salary, do up a budget that covers all your basic monthly costs: food, housing, transportation, medical, and the like. The we-can-live-without-it items like clothes, toys, and partying don’t make it to this list. However, savings and debt repayment do. And don’t forget taxes. Your second-tier budget needs like home maintenance, clothes, entertainment should also be part of your Salary, but with the proviso that if the going gets tough, these spending categories get going!

Now you could have a big fat monthly total if you’ve weighed yourself down with big fixed expenses - like that $800 a month car payment or a home that’s way too much for your wallet. Ditto if you’re carrying tons of debt. But I’m going to assume for the purposes of this discussion that if you have those things you can pay for them. (If you can’t, this may be the time to reassess your priorities.)

Next, you need to build up your just-in-case fund. The standard recommendation for an emergency fund is to have three months’ income or six months’ worth of essential expenses covered. Aside from the typical reasons to tap into your emergency fund — to pay for a car breakdown, unexpected home repairs or a root canal — you also may need to dip into it in when you’ve gone a few months with no work and have run out of money in your Biz Account.

I use the term “run out of money” advisedly. You should never have NO MONEY in your Biz Account, since the business itself has overheads you must cover: telephone costs, car payments, equipment lease costs, and the like. You should always maintain a minimum of six months’ worth of business expenses -– your Business Buffer — in your Biz Account. When you drop to that amount, you stop pulling your Salary so the business can stay afloat. That’s when your personal emergency fund will really pay off.

Remember you also have to save for the future. Since you’re self-employed, if you’re not socking away retirement savings, you’ll have a pittance when the time comes to stop working. Estimate that you’ll need 70-80% of your current income each year in retirement to set your retirement nest-egg goal.

When business isn’t booming, resist the urge to cut back on savings. Cut back on spending, but keep your savings intact since you will need them later. And stash the amount you’ve decided to save in a retirement account monthly using an automatic deduction.

Make sure you also fill the gaps in your safety net. As a self-employed person, you need to have both disability and (if you have dependents) life insurance. Base the amount of insurance you buy on what it’ll take to cover your basic expenses, keeping in mind that some disability policies replace only up to 60% or 70% of your earnings per year.

Use gravy for other goals. Whatever you have in your Biz Account — your Business Buffer and earnings beyond your Salary – should be invested in a high-yield account.  If you’re doing very well financially, you can now decide what other goals you want to accomplish (like the deck, a vacation, or a shopping spree.) Build or replenish your emergency fund if you’ve dipped in, and pay down your debt.  But you should also have some fun.

Being self-employed brings loads of terrific benefits along with some very interesting challenges. I’ve been self-employed for about 30 years – some lean, some luxurious. And I wouldn’t swap for one minute the flexibility self-employment offers, no matter how hard I had to work when things were busy. There was one period where I worked 17 hours a day, 7 days a week for about six months. I literally rolled out of bed and to my computer, rolling back in to sleep. I had no life. I made a LOT of money. And a good thing too. Because when it came time to have my kids, because I was self-employed I wasn’t entitled to any mat leave benefits. But I had a whack of cash set aside. See what you can do with a plan?

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Every where I go I talk about the importance of making a Will. Yet, even among the financially savvy, a Will is one of the last things people seem to get around to making. It may be a general unwillingness to face life’s darker side. Or it may be that there are things people just can’t seem to decide on, so they procrastinate.

In order to make a Will, one of the first things you must do is choose your executor, and for many people this is a stumbling block. Horror stories about about estates that were mismanaged, beneficiaries who almost came to blows, and the “waste” of having a professional do the job.

So what exactly are the responsibilities of an executor? Most people have no idea how big a job it can be. Yes, a simple estate will wrap-up smoothly; a more complex one can drive you to drink. Your executor will have to complete a number of tasks including gathering and protecting your assets, forecasting your family’s cash needs, handling tax requirements and distributing your estate.

You can name someone to act alone (a sole executor), with others, (a co-executor) or as a backup if the first appointed executor is unable to act (a contingent or alternate appointment). Whomever you name, make sure you get their agreement since that person has the right to turn down the job. While it’s often positioned as an honour, it’s more like a pain in the butt and only someone who is truly fond of you, or someone being well paid, will take the job.

Some people choose to name friends or family members as executors because these people are more familiar with the personal details of their lives. While a spouse or child might seem a natural as executor, having to do the job alone can add more stress to an emotionally stressful period. Executorship can be a time-consuming task. Without financial or investment knowledge, your partner, child or dearest friend could be out of his or her depth. And if your executor is too emotionally involved, that can muck up the process.

So who should you consider? First of all, you have to choose someone of sound mind. To act, the person must have attained the age of majority, so your minor children won’t be able to act until they’ve reached adulthood. Here are some of the most obvious choices.

Your life partner: This can be a good choice if your assets are relatively uncomplicated. An estate made up of bank accounts, term deposits, a house, an RRSP and pension benefits wouldn’t be difficult to administer if it was going outright to a surviving spouse. If the assets are complex, or if there are testamentary trusts involved, then a co-executor with knowledge and expertise in the areas of investments, income tax, trust matters and accounting might be a good idea.

One or more of your children: Mature adult children will likely be familiar with your assets and the ways in which those assets have been managed and can keep costs down. However, unless they have had specific training in a profession such as law or accounting, children may lack the expertise to complete the administration of a complex estate.

Friends and Business Associates: Same-age peers may find themselves acting as executor at a time when they themselves need help in managing their affairs. Choose an older executor and she may die before you. Or he may die during the administration period at which point his executor — someone you may not even know — will have to take on the administration of your estate.

Family Lawyer/Accountants: A logical choice, right? Maybe not. Unless your family lawyer is set up to do estate administration, he may not be equipped. It’s kind of like going to a dentist to have your baby delivered. Lawyers should be considered only if they have a sound knowledge of estate law.

Corporate executors: Trust company employees are experienced, neutral and available 52 weeks of the year so your estate administration won’t be delayed because of illness, vacation, or business commitments. Professionals also tend to have a wealth of experience having handled thousands of estates. And a corporate executor has the facilities to handle the paperwork, tax returns, valuations and so forth, which often can be a mystery to the uninitiated. Of course, you’ll pay… and it could be a lot.

Choosing  your executor is just one step in making  Will. If you have minor children, you will also want to choose a guardian. No matter who you choose for these jobs, the job of actually drawing up the Will should go to someone who is an expert in estate planning. Resist the urge to do it for $29.99. You may feel you’ve covered your bases, you may have inadvertently left a mess that will cost a fortune to untangle. 

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We’re in a pickle. We aren’t saving enough and we’re carrying record levels of debt. Not just mortgage debt, though many of us have more than we can manage in terms of mortgage payments. Noooo. We’re carrying record levels of debt on our lines of credit, our credit cards, and the plain-ol’-boring loans. Why? Simple. We’ve forgotten how to live within our means. We’re ricocheting out of control, spending money we’ve yet to earn. We’re buying STUFF we think we NEED, when all we’re doing, really, is scratching our consumer-itch. I mean to say, do you really NEED a TV? Do you really NEED another pair of pants? Do you really NEED that better-than-ever cell phone, camera or power saw?

The fact that we can’t seem to get to the end of the month before we get to the end of the money should be our first clue. Here’s what I mean:

GA writes:

We have a $50,000 line of credit as well as $45,000 in credit card and personal loans. We have a child starting college in Sept, another following in 2 years and a 2 year old. I have tried to trim our budget but can find no leeway. Grocery seems to be the biggest budget buster. We have cut eating out to once or twice a month but still have to reach for our credit cards by the end of the month. Any ideas where I should look to trim the fat and how do I cut back on the grocery bill? It seems the costs are up every time I go to the store.

Here’s a frustrated soul who can’t figure out how to cope with rising food costs because there is no wiggle room in her monthly spending. With $95,000 in debt, a minimum repayment amount of just 3% would mean a monthly payment of $2,850 a month. OMG! I’m sorry, GA, but FOOD is not your biggest budget buster; debt repayment is.

And that’s exactly the problem so many people are facing. They can’t figure out how to repay the money they have borrowed and have a life at the same time. Not surprising, really. You’ve already spent $95,000 you haven’t yet earned (and that would be after tax dollars, I’d like to point out).

So what other clues might there be that you’re living beyond your means?

Are you saving less than 10% of your net income? Yes. Then you’re living beyond your means. You see, if someone in your family were to have a medical emergency or a blip in their employment, if your roof were to leak or your car give up the ghost, if you should have to cope with a major move, the care of an aging relative, or educational expenses, you’d be up a creek without a paddle. Right GA?  Ideally, you should save as much as you can, with 10% of your income being a guide. If you are a member of a company pension plan, that counts as savings. If you’re having money deducted automatically for bonds, that counts too. 

Are the balances on your credit cards or lines of credit rising? Yes. Then you’re living beyond your means. Paying only the minimum on your credit cards or lines of credit while you continue to increase the balance you owe is a sure sign you’re a dope. When, exactly, are you going to have the money to finally get rid of the debt? Is some magical wand-waving fairy god mother going to pop into your world and woosh away your debt? Or do you figure that a windfall is in your future? Hey, WAKE UP! If you have a $5,000 credit card balance at 18.9% and make a minimum payment of just 2.5% per month, you’ll end up forking over almost $8,000 in interest over the 25 years it takes you to pay off the balance.

GA owes $95,000. Let’s say she’s averaging an interest rate of just 11%. And let’s say she makes a payment of $2850 a month (ouch!) It’ll cost her almost $19,000 in interest and take 40 months to pay off the debt. Over-extended? I guess so.

Are you missing payments on bills? This is a sure way to ruin your credit rating and increase your interest costs. And it’s a sure sign you’re living beyond your means. If you don’t have a handle on what your monthly bills are, and what it’ll take in income to keep current, then it’s time to get with the program. Get out all the bills that have to be paid every month and make a list. Rank the bills in order of priority. You HAVE to pay your electricity bill, but you don’t HAVE to have premium cable (or any cable for that matter.) Okay, now deduct your HAVE TO PAY amounts from your monthly income in order of importance. When you run out of money, cancel everything else.

Are you taking cash advances on your credit cards? Yes. Then you’re living beyond your means. Cash advances, putting your groceries on credit, applying for new cards and transferring balances so you can fool yourself into thinking you’re paying your debt are all signs that you’re in BIG TROUBLE.

I know it’s easy to get credit. I know it’s nice to have what you want when you want it. And I know everyone else is doing it. But just because they’re all walking off the edge of the precipice doesn’t mean you should follow them. And if you’ve been walking in lock-step with a bunch of fools who can’t control their spending to the point that they put themselves and their families at risk, then it’s time to change your pace.

You don’t have to be a follower. You don’t have to continue to do what all the other dopes are doing. You can stop the insanity, take control of your future, and commit to living within your means. I know you can. Do you know you can?

Now that the kids are safely ensconced in school, you have a minute or two extra to do some stuff for YOU. While many people consider January 1 to be the start of the New Year, I’ve always felt that September is my New Year. I guess it’s a hold over from getting new school supplies, new clothes, a fresh start on a new school year.

With the holiday season just around the corner, and 2009 a glimmer on the horizon, this would be a good time to do a Fall Financial Check-up to see how you’re doin’, what needs some attention, and what could use a complete overhaul.

Okay, grab a pencil and a piece of paper and answer me a few questions:

• On a scale of 1 to 10 (10 being “ecstatic”) how do you feel about where you are financially today?
• What’s the biggest financial concern you have right now
• What one thing do you want to accomplish before another year rolls past?

If you’re on target, give yourself a pat on the back. If you’re not, give yourself a Gail Hug and know that you can change anything you want about your life, if you want it badly enough.

Time to take a look at your budget and see how the numbers shake out. Often, as we progress through the year and get comfortable living on a budget, we also get complacent and our costs start to rise. Look at your last month’s spending to see if it is still in line with your planning. Is it time to do some trimming? With food and gas prices having risen significantly, do you have to trim in other areas to rebalance your budget? Are there other changes that have taken place since you did your budget that you need to incorporate officially?

Are you on target to be debt free PDQ? I know some people find that it’s hard to even imagine being debt free, but you can be. It may take another job to earn the extra money to get out of debt, but if that’s what it takes, you can do it.

I just finished working with a lovely couple – wait till you see this show, there’s a big surprise ending. I asked Sean to find a way to make another $400 a month that could be devoted to debt repayment. He changed his job – he was working at a hospital and switched departments – and came up with another $1400 a month. And Amanda found a part-time job, aside from the one she was doing at home, to push the debt away even faster. They had a real CAN DO attitude, and just needed a push in the right direction

Is your emergency fund growing? Again, it takes small steps to get to where you want to be. Having three month’s income or six months’ worth of Essential Expenses isn’t a nice to have, it’s a gotta have. I’m just posting the numbers for a family that got way behind several years ago when their young daughter was diagnosed with cancer and they had to go from two incomes to one. If they had had an emergency fund, the damage to their financial picture would not have been so severe, enabling them to find their feet more quickly when the emergency had passed.

Are you taking advantage of a retirement plan at work (and the savings matching program they may offer), or are you using an individual retirement savings plan? If you answer “no” to this question, give your head a shake. How will you eat when it comes time to stop working? How will you keep a roof over your head? If you think your kids are going to take care of you, how would you do right now if your mom and dad showed up on your doorstep?

How are you putting your money to work for you? In other words, what are you investing in, and are those investments still working for you?  Are you well diversified? Diversification helps you weather investment volatility because all your money isn’t tied up in one sector, type of investment or geographic location. If your advisor hasn’t reviewed your portfolio with you yet this year, get on the horn. This would be a good time to adjust the investments that may have fallen out of whack with your goals and tolerance for risk.

When was the last time you reviewed your insurance coverage: car insurance, property insurance, life and disability insurance. If you think insurance is a waste of money, how would you cope if the worst did happen? How would your family cope? As if a disaster isn’t bad enough, would it be fair to them to be financially wiped out at the same time?

Do you have a will? Powers of attorney for both personal care and money? And have you named a guardian for your children? Have you reviewed this documentation in the last two years, or since your last major life change (marriage, divorce, moving, birth of a child)? If not, time to dig out the paperwork and have a look to see if it still meets your needs.

It’s easy to put off looking at your money. Put it off. Put it off. Put it off. But you’ll get no peace of mind from not knowing where you stand. Better to grab the paperwork and a cuppa, a calculator or your spreadsheet, and do the detail. While you’re at it, create the checklist you’re going to use next year to make sure you’re covering all your bases.

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I’ve been married three times, and I haven’t had two husbands who’ve dealt with money the same way. It seems with every re-union, there are a whole new set of habits and preferences to learn about, and a ton of negotiating to do. It’s not a job for one sitting.

Yours, mine and ours: There’s no one right way to handle money in a re-marriage, but since you can’t escape responsibility for your partner’s decisions, you better talk about it. Some couples maintain separate savings and checking accounts, paying for their own personal and children’s expenses and sharing the costs of running the household. While they may still quibble over shopping habits, keeping some money separate leaves each partner free to indulge.

Who gets to decide: Couples have always struggled with how to save and spend their money. For the newly remarried this can be further complicated by their histories, particularly if spousal and child support are issues. To create a realistic picture of your financial state, keep tabs on where your money comes from and where it goes for about six months. Then you can make some decisions about how much each of you will contribute to the household, and how much discussion is appropriate (and who will prevail) when purchases are made.

Who we are with money: By the time we get to husband number two or three (or four), most of us have clearly defined money personalities that affect our decisions about education, housing, clothing, vacations, medical and dental services, investments, and gift giving. Financial responsibilities are also a big part of this discussion. While many a newly wed may know that her spouse has financial obligations to another family (a previous spouse, a mother, or Great Aunt Lucy), living with the reality is often very different from the intellectual acceptance of that responsibility.

Where credit is due: While each of us may have a different money management style, understanding which styles are no longer appropriate in a new family is critical. If you’ve always chased the blues with a shopping spree, you may have to take up kick-boxing. You’ll also have to get a grip on the impact of past decisions on your new family. One that’s often overlooked is the fact that divorce financial settlements are not binding on creditors. If you and your former spouse continue to have both of your names on a loan or account, you are at risk for each other’s financial behavior. That means the new family is also at risk. So take an inventory of your financial obligations.

Home safe home: Put more kids and more stuff under the same roof and you’ll probably want to take a look at your insurance. From home insurance to car insurance — adding teenage will be expensive so brace yourself — you need to do a full review. And if your divorce agreement assigns your former spouse as the irrevocable beneficiary on your life insurance to cover support responsibilities, it may be time to start shopping for new life insurance too.

Who gets what? You’re also going to have to deal with how your property will be distributed after death according to the law, the needs of your new family and prior agreements. Remarriage makes a will more important than ever. Biological or adopted children of first and remarriages are treated the same. While that may appear fair at first glance, when you consider the fact the first group is through college and the second set are only in elementary school, the picture changes. Most children expect money and property to follow a bloodline, not a wedding band. If you have a good relationship with your adult children, make time to talk over their concerns and expectations. And make sure you’ve clearly identified your position to your new spouse so there’s no misunderstanding about promises made.

Over time, the issues relative to merging your loves and your money will evolve. The issues you have to deal with initially will be very different than those that arise if you start having children together. Some of the things you should talk about may take some time to get to. And you may never be joined at the hip financially. But as long as you keep talking, keep sharing information and keep listening, you should be fine. 

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One of my biggest bugaboos over the years has been the difference in the way men and women deal with money. Some of it boils down to personality (women want more information; men want to score big); some boils down to the differences in our incomes. And while the general consensus is that we’ve pretty much achieved parity, that’s a myth, which is why women MUST start taking better care of themselves financially.

While it may seem as if women are in the workforce as much as men (with breaks for maternity leave), according to Statistics Canada, Women In Canada 5th ed., women have worked for pay for only 75% of their potential years vs. 94% for men. Plus we earned only 71 cents for every dollar a dude earned. Why oh why, in the 21st century would the average salary for female full-time, full-year teachers be just $47,500 while male teachers earned $63,300?

Women also take their roles as caregivers seriously, with almost twice as many women as men are involved in caring for children and elderly relatives. Of course, in order to cope with this caregiving responsibility, we reduce our work hours, refuse promotions and retire early.

While it is true that more women are well-educated – and this should lead to high-paying, professional jobs – the sad reality is that people with a post-secondary education hold 38% cent of Mcjobs, and women hold 2/3 of these jobs. Monica Townson, in New Frontiers of Research on Retirement: New vulnerable groups, says that 40% of jobs held by women are considered to be non-standard (part-time, contract, temporary) with few, if any, benefits.

Most people see our Canada Pension Plan as being a universal benefit, but you might be surprised to learn that the average CPP pension for women in October of 2005 was$334, just 63% of that received by the average male. Since we work for less time and money, our CPP payments, which are based on earnings, are lower. In 2003, the average annual pre-tax income of women age 16 and over was $24,400 — 62% of the figure for men, who had an average income of $39,300 that year.

We hear a lot about the fact that employed women have workplace pension. In 2001, that was true for just under 40% of women, leaving over 60% of women in the workforce without a company pension. And as of 2006, fewer companies are offering pensions.

Sure, but her husband has a pension, so she’ll be fine, right? Give me a break. His pension may be okay while he’s alive but statistically she’s going to outlive him, and have to live on 60% of his benefit. Pension experts suggest this is 10 to 15% less than needed to maintain the same standard of living. And since most workplace pensions are not indexed for inflation, she’s going to lose an additional 2 to 3% in purchasing power per year. Over 15 or 20 years that can really add up.

The government pension at 65 is also woefully inadequate. In 2007, OAS was approximately $492/month. When combined with GIS, given for those with no other income, the amount increased to a whopping $1113. A roof and food? Really? On less than $1200 a month? Women’s average retirement income was approximately $1260/month or $15,120/year. (The After Tax Low Income Cut Off for a single in large urban centers is $17,219, according to the National Council of Welfare.)

Despite the fact that Canada is a country of immigrants, many who have not lived in Canada 40 years between the ages of 18 and 65 are not eligible for full OAS. After 10 years in Canada before 65, they qualify to receive only 1/40th of OAS benefits for each year of residency, even though they are Canadian citizens or Landed Immigrants. Hey, we may be immigrants, but we still have to eat!

The picture is clear: while the government is doing what it can, with more of us retiring, if we don’t take personal responsibility for our futures we’re going to have a crappy last twenty years. I’m not really into dumpster diving, so I’m saving. You should be too.

Every week I work with families who are spending too much money. Too much money on clothes. Too much money on entertainment. Too much money on food. And I regularly get emails from people who what to know how much they should be spending on food. I don’t know. It depends on how much you make, how many people you’re feeding, and what you like to eat. I’m just working with one family right now how are mad for organics. Buying organics means your grocery bill could be 40-50% higher than with conventional foods. And if those organics are being shipped from some far-away far, then the whole “better for the environment” question is moot.

Not that I have anything against organics. Nope. It’s your belly so you get to decide what you put into it. But if you’re going to shop organic, you should at least know when you’re getting your money’s worth; not all foods need to be organic. Bananas don’t have to be organic. Not with that thick peel. Ditto avocados and pineapples. A big surprise for me was when I saw that broccoli doesn’t have to be either. Apparently, regular broccoli doesn’t have a lot of bad gunk attached, so the organic version isn’t putting you much further ahead.

With food prices going through the ceiling, people are looking for ways to keep their budgets in line while still being able to eat well. Probably the best to do this is to meal plan and shop with a list. Over and over I’ve give this as a challenge on the show, and over and over the couples have LOVED it. Since they have to do it for me, their resistance goes down. And once they’ve done it, they’re totally convinced it’s the best thing since sliced bread.

Planning menus a week in advance lets you see just what you’ll need to buy – eliminating overbuying and waste. It’ll also let you “shop the fliers” so you can centre your meals around what’s on special.

One of the ways we drive our food costs way up is by buying too much. Buying in volume only to have to throw out part of it saves no money. If you’re buying in bulk and storing food in a freezer, you should divide your buys into individual servings so you can take out what you need whether you are feeding a brood or just a couple of people.

If you do have leftovers, use them for lunches and save the eating out money for special occasions. And consider bulk cooking so that you have stuff at the ready in the freezer to pull out and warm up when time just gets away from you. That’ll save ordering in when your get to the end of the day and are just too beat to cook.

When I make soup, spaghetti sauce, tomato sauce… or even roast a big piece of beef, I always put at least one serving – usually more – away in the freezer for those days I just can’t face the kitchen. Since I live in the bush, there’s no ordering in. This has also given my kids, particularly Alex, some extra independence. With her favorite home-made roasted garlic/basil/tomato sauce in the freezer, she can make pasta for herself when she doesn’t like what I’ve whipped up.

I’m a big believer in buying in bulk. But not everyone has the extra money or the space to store lots of extra stuff. The solution: get together with family or friends and split whatever you’re buying into thirds, quarters or fifths. You’ll each get a cut of the savings but you want have to manage too much inventory at once.

In my house we keep a running list of what we’ve used up so that we automatically restock our larder. When stuff goes on sale, I buy four or six. Most grocery items are discounted once every three months or so. Seasonal items (think barbecue sauce in summer, soup in winter) have big “sell off” discounts at the end of the season. Of course, if you have stuff in your pantry that you never use, that’s a waste. So, at least once a year, I run the larder down to next to nothing, using up old stock, and saving the money I’m not spending to do a restock.

This year I’m also planning a big party, and the food costs will be significant. I cashed in my Airmiles points for grocery coupons so the big shop won’t throw our budget out of whack. That’s thinking outside the box.

While you’re shopping, watch for shrinking product packages. While manufacturers are sensitive to the increased costs they’re having to deal with, and in response to the recession, instead of putting the price of a package of OJ up, they’re reducing the size of the OJ container. So you’re paying the same amount of money for less product. Don’t assume because the package looks the same, that the amount you’re buying is the same.

Be sure to check your cash register receipt before leaving the store parking lot. Cashiers can make honest mistakes that end up costing you money. If you have been overcharged for an item, you are more likely to return for a refund (and more likely to receive it) if you are still just outside the door.