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March 3, 2010
Scott’s latest video demonstrates the difficulty in selling potential value. Sellers occasionally attempt to list their home for more than market value because of a perceived notion of potential value. Unfortunately it is often difficult to convince a buyer of this potential value.
December 2, 2009
Have you ever noticed the longer a relationship is, the more likely those in the relationship will take advantage of each other? Often true in dating, marriage, and even banking.
Yes banks, like them or not, they have been known to take advantage of long-time loyal customers. Banks are keenly aware that a long-time loyal customer is less likely to shop around and get a second opinion. Yet shopping around is a simple way to ensure you are always getting a good deal.
Now I am not suggesting all banks are bad, but I have seen many loyal customers who have had the wool pulled over their eyes because their bank has become too comfortable with the relationship.
When you have been married for a long time, the indiscretions are usually minor and amount to dirty socks being left on the bedroom floor, or failing to put the lid back on the toothpaste. Incidentally, both are criminal offences in my home. However, in your case, when your bank begins to treat you like Zsa Zsa Gabor treated her 8th husband, you know you have a problem.
Mortgage renewals are a perfect example. When a client has an existing mortgage they are typically mailed a notice with various rate options. The idea is for the borrower to choose an option, sign it, and send it back in. However, the rates quoted on the renewal notices are typically 0.50% -1.00% higher than the best available rates at any given time!
If you have a 30 year $200,000 mortgage, an increase of 0.50% over the life of the mortgage amounts to over $21,000 in interest! Not a small sum of money.
The crazy thing is that new customers who have no pre-existing relationship will typically be offered lower, more attractive rates in order to convince them to become a customer. Then, unfortunately, once you are a customer, the onus is on you to make sure you always get a good deal.
My suggestion is as follows – begin dating your bank, but do not get married. Commitment is sound advice for most relationships, but it can be very costly when it comes to your finances. The best way to ensure your bank treats you like a first date instead of a 3rd marriage is to get educated. Understand your options and for heaven sakes, always shop around before you sign on the dotted line. Make a few calls to make sure you and your business are courted, not taken advantage of!
Scott Peckford is the owner of Mortgage Architects in Kelowna check out his videos and other rants at www.scottpeckford.com
November 23, 2009
Do you know who is on the twenty dollar bill? If you are like most Canadian you probably would have to guess. A quick survey of my officemates and a full 80% had no idea whose portrait graced the twenty dollar bill. (For the record it is the Queen)
Managing money in our paperless, wireless and cashless society is like trying to bottle fog –no matter how hard you try you cannot seem to get a grip on it. It raises an important question: How do you manage money if you never actually see it?
Cash has become all but absent from most daily transactions. A Vanier Study indicated the retail use of credit card transactions has increased 60% from 2002 to 2007 alone! The same study indicated 76% of the value of all retail transactions, excluding autos, were put on a plastic.
It is no surprise people are quick to flash plastic when paying. Many offer rewards, travel points and purchase protection. Credit cards have certainly made shopping simpler and safer.
What is the catch?
This reliance on plastic instead of paper does have a cost. According to Dunn and Bradstreet Americans spend 12-18% more on credit compared to using cash. The reality is it is difficult to manage money when we never actually see it.
The problem is when consumers use credit cards they tend to spend more and run the risk of going into debt. It is difficult to spend more than you make if you are using cash. With credit however, you can pile on debt gradually until it becomes unmanageable. In fact, debt has increased 6 times faster than income since 1990.
What is the solution?
A simple way to get a handle on your money is to go on a temporary, “Crash Cash Diet.” Six weeks will usually work and allow you to get in touch with your money again.
There is a very real sense of loss when you hand someone a twenty dollar bill and get back a meagre handful of coins. You will also notice your cash stuffed purse or wallet begin to shrink as the week progresses. This alone is enough to jostle most people into paying more attention to their spending.
I would not suggest ditching your credit card completely, credit is too important and besides I like the points. However, a temporary hiatus could be good for your relationship with your money.
