More Money Podcast - 137 Being Smart with Your Debt & Credit - Lisa Zamparo, CPA & Financial Strategist (Millennial Money Meetup #4 Live Recording)

Episode Date: December 8, 2017

For my 4th Millennial Money Meetup (and my last one for 2017), I hosted the event once again in downtown Toronto selling out tickets in only a few weeks to 50 attendees. This event was sponsored by Manulife Bank (thank you for making this event possible during Financial Literacy Month) and featured the special guest Lisa Zamparo, a CPA and financial strategist. The theme for this event was debt and responsible credit card use, just in time for the holidays. This is the live recording of Lisa and I's discussion on the subject as well as audience Q&A. For full episode show notes visit: https://jessicamoorhouse.com/137 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome to this special bonus episode of the Mo Money Podcast. This is the live recording of the most recent Millennial Money Meetup I did this past November. It's actually the fourth Millennial Money Meetup I did. And in case you're new to this, quick recap, I founded the Millennial Money Meetup in September of 2016. I've done four so far, three in Toronto, one in Vancouver. Hope to do a ton more in 2018 and hopefully even some different cities as well. But this one was really fun because not only was I joined by Lisa Zamparo, who is a financial strategist and lifestyle optimist. She helps individuals and companies manage their money and she is awesome. She's also a CPA.

And I brought her on for this specific event because not only did I really want to do this event because it is Financial Literacy Month in Canada in November, but also it's right before the holidays when this is when people spend a ton of money, especially on their credit cards, maybe get into the red a little bit and regret it when it comes to January and they have to pay their credit card bills. So I thought this would be the perfect opportunity to talk about debt and credit, talk about some of our personal money mistakes, and answer questions live from our audience. But of course, this event wouldn't have been possible without the support of Manulife Bank. They sponsored this event for Financial Literacy Month. And it was great because it was a great, I'd say, union because I really want to talk about debt and

credit. And they also just came out with a survey with some really interesting stats about Canadians and debt to help kind of get the conversation flowing so people are more informed about debt and credit so they can be better money managers. So I'm actually going to include a bunch more info about the event, about the survey that they just released in a blog post on my blog. So you can just go jessicamorehouse.com slash blog, try to find it. Or a quick link is jessicamorehouse.com slash MMM4. So that's triple M and the number four. It'll take you right there. And you can also watch the video that I'll embed in there if you want to watch the conversation that I had with Lisa in video form. But if not, if you'd rather just listen to what we talk about, well, I'm going to

get to that right now. Enjoy. All right. Looks like everyone's got a place. Well, welcome to the Millennial Money Meetup. My name is Jessica Mora. So if I haven't said hello yet, I'll try my best to find you, or you can find me, after our presentation. But this is the fourth Millennial Money Meetup that I have put on, the third one I've done in Toronto, and actually the second one I have done in this format. So I founded the Millennial Money Meetup in September 2016

as a way to kind of bring the conversation of money, personal finance, offline. I am a blogger. I have a podcast, a YouTube channel. I'm online all day long, but I love being able to talk to people in real life about all these things and talking to new people. So there's lots of cool people who have no idea who I am, who are here, and that is the best thing ever. I love that.

So I'm so, so happy that you all decided to take your Tuesday night off to be with me and hopefully mix and mingle with some really cool people. But first, before I kind of get to the main event and introduce my special guest for this meetup. There's a few special words I know our sponsor, Manulife Bank, would like to share. And a big thank you to Manulife for sponsoring this Millennial Money Meetup. I'll keep it short. So I just wanted to thank everyone for coming out. I hope everyone enjoyed all the food. Thank you, Jessica, for organizing this. And really, this is all about just getting the conversation started about debt management and not being so embarrassed. We had a really cool, I don't know if it's really cool, but I think it's really cool, a debt survey recently from

Manulife Bank. And really, we And really, we want Canadians to really start talking and don't be embarrassed to talk about debt. So looking forward for the chat between Lisa and Jessica, and I'll let you guys get started. Thank you. All right. It's not easy getting into these seats and heels and a dress. Okay, so I want to introduce my lovely guest, special guest for this evening, Lisa Zamparo. So she's a chartered professional accountant, a financial strategist. She's the founder of the Wealth Company, spelled W-E-L-L-T-H. And her mission is to help others reach their financial goals

by aligning their spending with their priorities. And you can find out more information about her at lisazamparo.com. Thank you so much for being my guest for the evening. Thank you so much for inviting me here. I'm really excited to have this conversation with the group. You are, I'm just, I'm super stoked. So I, backstory, how I know Lisa. How did we meet, actually? That's a good question. I feel like

did I find you or did you find me? I found you. Oh, you did? Oh. We met just over a year ago at FinCon. We were the two Canadians who were there. Two Canadians found each other in San Diego of all places. That's right. And I recognized you from your blog and I thought

there's another Canadian. I must talk to her. Yeah, we need to be friends because we can't right. Yeah. And I recognized you from your blog and I thought there's another Canadian. I must talk to her. Yeah. We need to be friends because we need to stick together. And we just ended up at the right place at the right time. And totally today. Yeah. And when she told me she is in Toronto, she's a financial strategist and a lifestyle optimist,

which I love. I want to be that. That sounds lovely. That's my made up job title. Yeah. I love it. I want to be a lifestyle optimist. I'm like, oh yeah, we're going to be fast friends.

And, yeah, I've been following her ever since, and I knew she would be the perfect guest to talk about today's theme, which is about debt and credit, how to use it responsibly, and how to also just not be embarrassed to talk about it because we've all dealt with it in one way or another. And also it just seemed fitting for a couple of reasons. November, if you don't know, is Financial Literacy Month in Canada. And it is also, well, the holiday season.

So this is kind of the time where people spend a lot on their credit cards and then regret it in January when they have to pay them. So this is kind of a good time to talk about debt and credit so we don't make some mistakes in December. So before I kind of we kind of jump into our conversation and of course we will have a Q&A at the end so if you have some specific questions we will be here to answer them. I wanted to actually kind of talk about Manulife Bank's you know fall 2017 fall debt survey so I thought it was actually really interesting so they did this really cool survey yeah I, I know I'm probably the only other person that thinks this survey is cool,

but whatever. It really had some really interesting stats in it. So I just want to share some with you so to kind of get your mind thinking about debt in Canada. So they found that less than one-third of debt holders have achieved their debt reduction goals in one year. Canadians who work with financial advisors are 60% more likely to be satisfied with their financial health, which makes a lot of sense. So nearly one-third of debt holders are embarrassed or don't know who to talk to about debt management. 71% of those debt holders would like to be more confident about financial decisions. 55% said they seldom discuss their debt situation with friends or family.

Only 10% say creating a financial plan is a priority in the next five years. So some crazy stats there. Just so I know where I'm at. Oh, I've got a few more. 62% of Canadians are not satisfied with their overall financial health or access to money for emergencies. That's really high and scary. 53% of Canadians believe financial challenges take a toll on their mental or emotional health, and 34% say that of their physical health. So that's kind of disconcerting. And okay, and before I go on, I just had this quote that I actually kind of really liked.

It's from Rick Lunney. He's the president and CEO of Manulife. So he says, there's a very strong connection between health and wealth, which I think is also a real connection between us, because we're all about financial health, physical health, mental health. They all kind of play a part together. People should feel confident they have allies when it comes to managing and reducing their debt. Beginning to talk about debt, especially with a financial advisor, is a very important first step.

Canadians who do not have a financial advisor are encouraged to seek out somebody they can trust. So just the idea that people have debt and you shouldn't be ashamed of it. You shouldn't feel like you can't talk about it and you shouldn't feel like you can't reach out for help. Because if you're in this situation, it doesn't mean that you have to figure out how to get yourself out of it. There's nothing wrong with asking for some help to figure out how to get out of it. All right. So with that being said, I thought actually we could start talking about, I thought this would be a good conversation starter.

Hopefully so you agree. Uh-oh. Uh-oh. Because when we were kind of talking about what are we going to talk about at this event, and we started kind of spitballing and wrote notes. I thought it would be fun to kind of kick this off by proving that we're also not perfect. And we also make money mistakes.

I think I know where this is going. Yeah, you know where this is going. And we've all dealt with debt and credit in our own ways. We've made mistakes, but we've, of course, learned from them. So, Lisa, what would you say would be kind of one of your biggest mistakes when it comes to debt and credit use? Well, my biggest, most embarrassing one happened right out of university. So I went to McMaster to study accounting, and I took a gap year between university and joining Ernst & Young to become a CPA. In my gap year, I decided to travel. So I went over to the UK.

And while I was there, I had a student loan, right, from my student days. But it wasn't an OSAP loan. It was a student line of credit with TD Bank. And while I was at school, I didn't have to make any payments on it. But what I didn't know was that when you graduate, you have to start paying it back. So I was out of the country for almost a year, and I didn't realize that the bank had been trying to get a hold of me all of that time to find out why I hadn't made a payment on my student line of credit. And the way I found out was I was about to get on a flight to meet my girlfriend in Greece for a little trip, and my bank account was frozen, and I couldn't access my money, and I called my mom in a panic.

As you do. And she told me the truth about what I should be doing. So I think it's, I've never actually shared that story publicly before. Jessica was the first person. She's the first person I told. I don't even know if I told my husband that story. He knows now. Now the whole world knows. But I'm not ashamed to say it because I think it's important as a CPA to acknowledge that we're not taught this stuff. We don't know it inherently. So if I can make that

mistake and go on to become a financial planner. You guys are going to be fine. There's hope for us all. Okay, well, I guess since you shared, I have to share. Okay, so I've made some mistakes. I've actually made one recently. So this is like real talk for you guys. I recently, I've been traveling a lot recently. And I'm always pretty good with paying off my credit cards right on time. But sometimes when you're traveling a lot,

you kind of lose track of time and you lose track of, wait, when is that date that credit card bill is due? And so two of my credit cards, oh, this is so embarrassing. Two of my credit cards, I actually, it was a week late in paying down what I owed. And yeah, I got dinged a lot. Well, not a lot, but in my mind, I'm like, oh my gosh, what an idiot move for forgetting to pay my credit cards. I just forgot what week it was. And so there you go. There you go, guys. I'm not perfect.

Jessica, did you call the bank to apologize? Can you do that? Because I actually have done it before. I have also been late on my credit card bill. And if you have a really good history of pay, I've had them reverse the interest charges for me. Now, I've also asked... I just like that.

I deserve that. I deserve that. Yeah, but call in. Oh my God, I'm going to call them tomorrow. Like, hey, hey, so here's the thing. For sure, for sure. I mean mean it'll probably only work once or twice i don't think well i didn't know there was a thing so i don't think i've ever called them i mean maybe i have once but that was probably like a while ago okay i'm gonna try that and

i'm gonna get back to you all on what they what they say there might just be like tough luck kid but there might be tough times now compared to when i was asking this question but you never know it doesn't hurt to ask It doesn't hurt to ask. It doesn't hurt to ask. Oh, my gosh. I'm learning. I'm learning. So I thought maybe we can talk about credit cards a little bit more in depth.

That sounds good. I feel like when I talk to people, credit cards can be good because it gives you access to things. It makes buying things online really easy. And you also can get rewards and points, and those are lovely. But there's also kind of a bad side to them if you don't use them responsibly. So I guess I'd like to know, from your point of view, what are some things that people really need to focus on

in terms of using credit cards responsibly? What does that mean in general? I have a mantra, which is, need to focus on in terms of like using credit cards responsibly? What does that mean in general? I have a mantra, which is don't, it's not just like spend less than you earn, but it's really spend what you have, right? And I think the danger with credit cards is that you can very easily spend more than the money you actually have in your bank account. So a nice rule of thumb or a way to sort of keep a guideline or keep your credit spending in check is to make sure that you never put more on your credit card

than you have in cash in the bank. And I think that's kind of a nice safety net that can help you make sure that you're not going to get into trouble with your credit cards. So one of the things that I actually had in some of those buckets, and I'm not sure if all of you knew that those buckets were, they had some money questions in there because I want to get the money conversation started so I'm gonna challenge you at the end of this to do that and get into a group and just do one they're not scary but one of the questions was how many credit cards do you have very simple

question but again how many people have you asked that question to and answered how many people the audience yeah let's pull how many credit cards do you have oh answered? Can we poll the audience? Yeah. Let's poll. How many credit cards do we have? Oh, yeah. Oh, should we poll the audience? That's a great idea. Okay.

Okay, so I'm going to start with one. Raise your hand. Two, three, four. I don't know. I might be five, actually. Amazing. I know. Okay, and I'll tell you, actually. Amazing. I know. Okay.

And I'll tell you what my credit card situation looks like. So I've got one credit card I've had for like 12 years. It was the first credit card I ever got. And as you kind of know, it's very important to keep your oldest credit card. It has your longest credit card history or credit history on there. So very important, especially if you've been very good at paying down longest credit card history or credit history on there. So very important, especially if you've been very good at paying down your credit card regularly and all that kind of stuff. So I'm going to keep that probably until the day I die because I'm afraid to kill it.

And then I have one that is for my individual personal use. One that is a joint credit card with my husband and one that I just dedicate for business expenses. Is there another one? No, I think I just have four. So that's me. What do yours look like? I hesitated because I have one for personal, one for business,

and then at three I was like, wait, do I? Because I have the original credit card that I got as a student that my parents helped me sign up for before I went to school, but I actually cut up that credit card so I don't have the physical card. Does it still exist? Did you just cut it up? Yeah, I cut it up, but it still shows up in my online banking. And I got a $10

credit for switching to e-statements. So I now have a $10 negative balance on that credit card. And I don't know how to get that money. You should ask them for a new card. That's what you should do. I guess, but you know, I've got my two and they're working for me personal. So I'm happy. So it actually is a great segue. Oh, well, not really segue, just a fun fact. Uh, some people get confused. They think that, you know, like in the movies, people are like, ah, I'm done with this credit card, chop, chop, chop. That does nothing. That just means that just means you don't have a credit card in your wallet. It still exists. If you want to cancel your credit card, you actually have to call the credit card company to cancel it. Just so you know, if you didn't already, and that's okay if you didn't, that's

okay. But I think maybe we should talk about the merits of canceling or not canceling a credit card because I have a lot of clients who don't know how a credit score works. And one of the factors is how much credit are you using of your total available credit. So if you cancel a credit card, you're actually lowering the total amount of credit you have access to and therefore increasing your usage rate. And it can actually have a negative effect. Yes. So I think, yeah, that's a really great thing. I think a lot of people don't know.

Lots of misconceptions. We'll into like credit scores and what the heck that means. Sorry, I jumped the gun. Yeah, no, no, no. I'm so excited to talk about credit scores. I love that. Um, but yeah, so in case you don't know, so, uh, say you have like two credit cards, they both have like $5,000 as their limit. Uh, that means you have access to $10,000 in credit. If you, uh. If you want to basically only use 30% of your overall limit, that is good. If you use more, it kind of indicates to those credit bureaus that you might be kind of overextending yourself. So if you close one of those accounts, then it'll raise the percentage of, you're going to be over that 30%. So just kind of keep that in mind, which is why I think a lot of people probably have

one or more credit cards. Yeah. That's why I still have mine. Yeah. One with no actual card. Yeah, exactly. Quick question too. How do you now look for credit cards? So for me, I usually just would go to the bank and like, yeah, okay, that sounds good. But there's so many out there. Do you do like research or like, do you have a game plan? I know there's so many people out there. I did a podcast episode recently about, you know, points, reward systems, things to look at. Is this something that like, are you one of those people that like are all about the points

and stuff? I am all about the points, but I haven't done a crazy amount of research. I kind of fell into a pretty good deal. Okay. That's always good. Yeah. I mean, if it's good, it's good. I have one credit card that gives cash back and it's a small amount, but I kind of like seeing like, yeah, you're like getting the cash back. Yeah. I like seeing, you know, 50 bucks taken off my bill. Uh, that feels really good. But I also have a travel reward one because I love to travel and actually getting a new credit card for my business, I got access to a whole bunch of points as like a signing bonus and that paid for my flight to FinCon where

I met you. Oh, cool. Here's another question. Do you share a credit card with your husband? I do. Our personal credit card is joint. My business credit card is just for me. So do you ever get an any, I mean, that's the kind of thing, you know, when you share a credit card with somebody, you get to see what they spend, get to have a conversation about that. Have you, like, how do you deal with that? I have a few rules or guidelines that we like operate our relationship on. And one of them is that we can both spend a hundred dollars without having to tell the other person that that's sort of the petty cash limit of on your like joint credit card yeah so it's like you see it but you don't have to yeah have an explanation exactly if he spends under 100 bucks it's like

you know what you're an adult go for it or not a transaction that's under 100 now if i mean like if he was what if he does like 10 yeah what if he does a lot of those but like in general, I haven't noticed him doing that. Um, if we're going to spend more than a hundred, we'll usually like run it by the other person or say, Hey, you know, I'm planning to go do the shopping just so you know that you're going to see it there. Um, but I think, I don't know, I guess I feel lucky that him and I just have really similar values in terms of what we want to spend on and how we want to spend. Um spend. Our habits, they're just very much aligned. So it's really never been a problem for us. And I kind of feel like a jerk saying that.

Because I know it can be such a sticking point in a lot of relationships. Fair enough. Yeah. No, I think that's kind of what me and Josh, my husband's over there. He doesn't like me pointing out, but he's over there. He's checking your credit card statement online.

Yeah, I know. He's like, oh shoot, what did I just spend the money on? I always feel like, well, you know what? We're pretty, you know, similar, like we're pretty transparent where they're spending. And I always advocate for that. If you are in a relationship, if you share a credit card or even if you don't, very important just to talk about it. Got kind of financially naked with your partner a little bit because you get on the same

page and it's just easier, believe me. We rarely talk about, or not rarely talk about, sorry, we rarely argue about money because we talk about it so much. Though I'm sure I'm the one that loves doing that. He's just there because I'm telling him to. But it's all good. Yeah, I remember that first getting financially naked conversation that was really uncomfortable scary it is it's like so scary and you're like please don't leave me um okay let's shift gears a little bit because I know a big uh thing with a lot of us in the room is probably dealing with student debt student loans how many have had a student loan or currently has one that are paying off it's a lot oh there's a lot of people I'd say a good like 80 percent of the room almost um have you and you mentioned that you did have did you

have a student loan or just that student line of credit so you never had a student loan no okay that's awesome good for you yeah good for you thanks you. Yeah, good for you. Thanks, Mom and Dad. Yeah. Good for you. I had a student loan, though it was very small. So it was like $5,000, and I only got it my last year of school. So lucky I got to live at home with my parents, and I got to work, so I had money to spend on tuition. But still, I had no idea what I was getting myself into with the student loan. I did know inherently just from my parents

that debt was bad. I knew that, so I just kind of, okay, I'm going to remember that. And so when I applied for a student loan, I think they did offer me way more than $5,000, but I'm like, no, I think I only need $5,000. That's all I need for my last year. And that I was good. But after that, I actually had no idea. I'm like, wait, how do I like

pay it back? And like, when do they need it? I had no idea. So I kind of want to talk about, since a lot of people do have student debt, and it's become kind of normal. A lot of people have it. They think everyone else has it. So what's the point of like trying to aggressively pay it down? Like what are your kind of thoughts on, you know, I guess, you know, making that your kind of first priority when you finish school? Yeah. We talked about this before about the idea of good debt and bad debt, right? And typically bad debt is debt that's like really high interest or that was because it's consumer debt, right? So you might think of student loans potentially could be good debt because it's a debt that you've taken on to further your education and hopefully you're going to earn more money in the future because of

that debt. So it's going to end up paying you back. But that being said, if having debt makes you feel bad, then that's bad debt to me. So I think I would base my decision on how aggressively to pay down the debt, partly by the interest rate and the math, but more than that, understanding how it makes me feel. Because if you're doing something that's going to make you feel good, right? Like if paying down debt really fast is going to motivate you, then absolutely you should go for that. But on the flip side, if paying more than you have to

when it's super low interest, if that's going to make you feel like you're not out there living your life and you're miserable because of it, well, I don't think that's worth it either. So there's no right or wrong answer. But I do think it's really important to know the numbers of it

and know exactly how much interest it's costing you. And it's not enough to just say, well, it's 2%, because what does that really mean? Calculate it at the dollar level and understand how much in dollar terms is this going to cost me with my different payoff decision or my payoff dates. And from there, you can make the decision

about what feels right. And I think the math can feel complicated, but there's a lot of online calculators that you can use. And I think with a little determination and maybe a study group to get a group of friends together to figure out your own debt-free date. Yeah, that's what I would say. Absolutely. Yeah, I think that's really key is you mentioned a couple of great things. So first, really knowing how much you owe.

I think a lot of us are like, oh, I have an idea. No, like regularly check your, you know, whatever, student loan, government account, or whatever to see how much you owe. And also it will give you, you know, this is how much time it'll take you to pay off at your current,

you know, payment schedule. Take a look at that and see like, huh, that's going to take me 20 years. And also calculate how much interest on top of what I'm paying back, because it could be a lot of money. So definitely, huh, that's going to take me 20 years. And also calculate how much interest on top of what I'm paying back because it could be a lot of money. So definitely, yeah, highly recommend looking at some calculators to see if I add just $50 extra per month, will that take a year off or two years off?

So I actually wanted to, this is actually a really good segue because one of the things I had on my cards I really wanted to talk about was there's two kind of, there's lots of different debt payoff strategies, but there's two pretty common ones. And I remember you and me when we're discussing, oh, what should we talk about? There's two that I definitely wanted to talk about. So one's called the debt snowball. Does anyone know when that one's, I heard a couple people. So if you don't know, that's okay. It's called, it's basically called that because you start with the smallest debt first, and then you kill that one, and then you go to the next biggest, the next

biggest, so kind of like a big snowball. The next one's called debt avalanche or debt stacking, and that's where you pay off the highest interest debt first, and then you kind of go from there. So the second highest and so on and so forth. Usually in lots of financial books then you kind of go from there. So the second lowest, second highest, and so and so forth. Usually in lots of financial books, they kind of, I think, preface like debt avalanche. That's a good strategy because you will overall be paying, you know, quite a bit of money if you don't focus on that high, high interest. But there's something to be said for kind of both methods. And you kind of touched on that a little bit. It's how you feel and the emotion. I've talked to a lot of people who've paid off debt in different ways.

And sometimes it's just about like, what's the one that really bugs you the most? I'm going to attack that one because I just can't stand it. And sometimes it is your credit card or sometimes it's just like a, it could just be like an IOU from your parents and you said you'd pay it back

and they're like, I just want 1% interest. So it could be like your smallest debt. So I would love to know your thoughts on both of those strategies. I feel like you've covered it. I know, I know. But do you, like in your, I guess, opinion, like, do you think one works better than the other? Well, again, it comes back to like logical brain math-centered answer of what's working and then the more heart-based, emotional, behavioral one of what's working. So I think the avalanche from a financial perspective probably gets you in the best place because you're going to pay the least amount of interest.

But if that strategy is not going to be motivating for you and you're not going to tackle the debt as aggressively, maybe your debt-free date ends up being later on. Yeah. Right. And so that might not actually be the best strategy. So I think, I think it's important to start with crunching the numbers with the avalanche to understand like, okay, this is the best case scenario. And then flipping to the snowball to say, okay, if I the best case scenario, and then flipping to the snowball to say, okay, if I did it with the smallest one, or instead of the smallest,

maybe the most annoying one first, what would that look like? And then you can understand the opportunity cost of one strategy versus the other, and sometimes that dollar amount of interest, additional interest from using one strategy might be so much that you'd say, like, no way, but maybe it's not as much as you think, And then you realize that this isn't as big a decision as

you're making it out to be and just pick one and go with it. Yeah, totally. Totally. Maybe we should, maybe this is probably a good opportunity actually to open this up to a Q and A. Sure. I know it's kind of awkward talking about money, especially debt. But we just told our most embarrassing stories. Yeah, I just told you that I was laying on my credit card. So does anyone have anything? It doesn't have to be a personal question. It could be a general question that they would like to. Yes.

Sure. So the question was, what do you think about, say, you were to go to the brick and they have some sort of a payment plan on if you wanted to buy furniture. Is this good or is this bad? What are your instincts on this? My instinct is to say don't do it because if you can't afford it today, you likely will not be in a financial position to afford it later. And especially when it comes to furniture and electronics,

are you really going to want to have to pay the bill for a couch that you've already been using for a year in that time in the future, right? Like that's going to be so unmotivating. So I think, like, okay, again, the example of the financial versus the heart-centered answer, that might make sense because it's zero interest. And so some people say, you know, like, put off any payments as far into the future as possible

because of compounding interest. You could invest that and blah, blah, blah. Sure, maybe you could get yourself better off, but it's probably not going to feel good. Um, cause from a, like a behavioral perspective, we feel happier. Studies have shown us that we feel happier when we prepay for things, right? So, and we feel less happy and satisfied with our purchase when we wait to pay after, right? So think about like going on vacation, even using the credit card. It's the same kind of example where you swipe the card, you get the thing, then the buyers, like that excitement of buying kind of disappears. And then at the end of the month, you have to pay the bill and you feel

stressed. Imagine if you prepaid for it and then just got to enjoy it free and clear, then it feels like your furniture, your trip is free. So in general, I'm going to say don't do it because you're probably not going to be happy about it even if you're financially better off for it. Also, we're talking furniture here. Craigslist and Kijiji are awesome. I just feel like that is one thing. Those assets depreciate in value the minute you buy them.

That's that consumer debt. Exactly. You want to avoid that. Yeah, avoid them. That's that consumer debt. Exactly. You want to avoid that. Yeah, avoid that at all costs if you can. Yes. Okay, so the question was, what do you find is the biggest mistake millennials are making with their money?

Do you want to start on that one? Oh my gosh. I know where to begin. Okay. Yeah. I see a lot of people carrying balances on credit cards. And that just freaks me out because the interest rate is so high. So I've had some clients when looking at their balance sheet or what they own and what they owe

and seeing that they have a balance on a credit card, but they have a few thousand dollars in cash that's sitting away in a savings account. And I'll say, you know, what's that money for? Oh, well, you know, my grandmother gave it to me and I just, I feel really bad using it to pay off my credit card. It's like, well, let's do the math to see how much carrying this balance is going to cost you. And I feel like your grandmother would actually really like if you didn't throw that money away in interest. Right. So sometimes we do this mental accounting of like leaving something here, but we still have a debt there. So I think that's a really big mistake. But also if I back it up, even bigger mistake than that is not asking questions,

not seeking out advice and thinking, I don't earn enough money to go get advice and I'll wait till I'm earning more money and then all of these problems will go away. Because that's really not the case. Our money is an amplifier for our habits, right? So if you don't have those good habits right now, having more money will just amplify the bad habits that you're developing right now. Exactly. And it doesn't really, like, I understand that. When I was in my early 20s, yeah, I thought I couldn't afford to do a lot of things. Like, I don't think I could afford a financial advisor. I don't think I can afford to start investing. I'll wait until I'm, you know,

have a little bit more money in the bank. But really, I mean, there's a lot of things you could just do on your own. You can start, I mean, coming to events like this and educating yourself, start reading books, blogs, lots of these things are free. And that's a good way to start a good foundation. And then as you do, you know, get raises and start saving more money and have more money. Then you'll realize, oh, wow, I'm so glad that I started when I thought I couldn't afford it, just like you said. Exactly. Yeah, exactly. Any more questions? Yeah. Okay, so the question is, what do you think about managing your, like, a low-interest debt and also saving for retirement? This is a question I think I get a lot, too, is, yeah, what do I do? Should I just focus on debt or, but I also want to start investing

because I know it's important to start as early as possible? What do I do? Define low interest. Like prime. Prime? Yeah. I think it's important to start saving as soon as possible. So, yeah, we weren't really going to get into this idea,

but I think it's an interesting concept to perhaps just present to people. And thinking about, again, it comes back to, there's the logical brain one, and then there's the heart-centered one. But from a math perspective, if you can invest money and have it accumulate interest or income at a higher rate than your debt is costing you, then financially that makes sense to do it, right? So I would say if you're paying something at prime and you have the opportunity to invest, you know, save and invest for the future, I would say if you're paying something at prime and you have the opportunity to invest, you know, save and invest for the future, I would balance those two things. But I would do it in the context of knowing very specifically what your long-term goal is and how that interest that

you're paying is going to affect your progress towards that goal, right? So you really do need to have a long-term plan to balance those decisions against each other. But then again, if that's a low interest debt, that's causing you a lot of anxiety because some, some folks I think just really want to be debt free, no matter what the interest rate is, even if it's a loan, you know, from our parents at zero interest, if that bugs you, then I think you should prioritize getting rid of that because having bad feelings around money in general is going to hold you back from real financial success. Yeah. And I think the thing that kind of sometimes irritates me is when I'm like, you know, reading a financial book or a blog, there's lots of kind of, you know,

oh, this is general rule of thumb, blah, blah, blah. And yeah, you know, for instance, like I kind of mentioned, you know, general rule of thumb for debt repayment is, you know, the one that's charging you the most interest. But that sometimes that just literally may not work for you. And I feel like we need to kind of get rid of the idea that there's a one size fits all. Like you need to just see what are the different methods of debt repayment or saving or investing or whatever, what makes sense most to me and how I feel. And that's why I loved having you because you do talk a lot about like, we need to talk more about like the mental aspect of money and the emotional side because money is very emotional it's not dollars and cents like we have these emotional attachments to them and sometimes we can't even explain where they came from yeah 100 yeah yes

yeah oh yeah we didn't even touch credit scores yeah credit. Credit scores. Where should we start? Okay. Here's, I mean, okay. Okay. Yeah. Where should we start with the credit scores? What's the, I guess my question to you is what should people like, should people really care about them? Why are they important? The thing with me is I think a lot of people think, oh yeah, credit scores is super important. The important thing for credit scores, you really only need to care about is if you do want to borrow. If you have no plans in the future to ever borrow money, then your credit score isn't that important. But let's be honest, most of us probably will borrow money for maybe a car loan or a mortgage. So that is why it is really important. So I guess, what are some strategies for people to make sure that they have a good credit score, a healthy one?

Well, I think first you need to know what it is. Yes, what's a credit score? Should we talk about what a credit score is? Yeah, well, I mean like actually know what your number is. Because I've had some clients call me and they'll say, I'm really worried about my credit score. It's awful. And I'll say, okay, well, what is it?

I don't know. I haven't checked because I'm so horrified. Just this guy at the bank told me it was bad and that's why I couldn't get a loan. Say, well, the first step to solving this problem is knowledge. And let's go look at what that scary number is. And maybe it's not as bad as you think. But there's also a difference between a credit score and a credit report. So a credit score is just a number and it puts you on a scale of how credit worthy you are, how likely you are to pay back your debt.

And like you said, if you have a good credit score, it gives you access to debt, access to credit, possibly at a better interest rate than somebody with a low credit score. But just knowing the number in and of itself isn't enough to help you make it better. You also need a copy of your credit report. And the report is what lists out all of the things

that are driving your credit score. So what are the credit accounts that you have? And if there are any problems, maybe any missed payments or delinquent accounts, they're going to show up on that report. And I have heard of cases where there's mistakes on the credit report. So you have a bad score, not because of anything you've done, but because of something like that can be fixed with a simple phone call. So I think those are the first really two, the first very important two steps that you need to take is look at the score. The score you can get for free.

The report you'll need to pay somewhere from $20 to $30 to get a copy of it. But I think that's really... The report you can get for free, the score sometimes you have to pay. You can get the report for free through Equifax or TransUnion. There's kind of an old school way of doing it. You have to mail them something.

I did mine online. Huh? I did mine online. Oh, you did? Oh, maybe they changed things. Maybe it's been a while since I checked mine. You can mail it, but apparently you can do it online, which is awesome. Your credit score, you can pay to get it for, I think it was $30 or $40 through Equifax or TransUnion.

Those are the two credit bureaus in Canada. But I know there's also a few financial companies that have paired with one of the credit bureaus. And so I think you just sign up to their mailing list and then you can get your credit score for free. But then you're on their mailing list. So just so you know, they're going to promote whatever they want to promote to you.

Yeah. So you want to start there if you're looking to improve it. And then you want to make sure that on whatever debts you have, you're making regular payments. The worst thing to do is to miss a payment. So even if you can't make the full one, like pay whatever you can or call ahead to let the company know and make alternate arrangements. Because looking like you don't care or like you've like flaked on on it like I did after university. And that's the worst thing that you can do. Absolutely.

Did you have a specific question about that? I know, we never got to it and I forgot. I was so excited too. All right. Any other questions? Yeah. What are the benefits of having a financial advisor? That's such a good question. Yeah.

I think first we have to define what is a financial advisor because there's a lot of different kinds of financial advisors. So in Canada, outside of Quebec, the term financial planner is not regulated. So anyone can call themselves a financial planner. And that can be really confusing because there are some people who provide financial plans, which would be looking at your cash flow and helping you crunch the numbers to say, if you have this goal for retirement or for buying a house, how do we turn that goal into a dollar amount and then back into how much you need to be saving? There's that very tactical kind of planning that you can get. There are other advisors who sell products, who are selling investment products,

for example. So they might help you put together a retirement plan. I don't know if the plan would specifically include how much you would need to be putting into it every month or how you're going to afford that payment, but they'll show you your money can grow by this much over this amount of time and recommend investment products for you. So first it's understanding the kind of help that you need. Are you in a position where you need like really hands-on sort of coaching? That's the kind of work that I do as a financial planner. I sometimes call myself a coach. I don't know if I love that word, but like, I think it better describes what I do. Because that's more about like educating and helping them through those foundational things that you mentioned. Exactly.

But investment advisors are great as well because they can help you make really smart investing decisions. And in fact, I think even more than that, they can help you avoid making really stupid ones. Because investing can be a real emotional rollercoaster, right? We can see the stock market go up and down

and our instinct when things are crashing is to take our money out of our investments because cash feels safer. And then when we see things are moving back up, okay, now it's a safe time to invest. That's actually the worst thing you can do and could be the thing that holds you back from reaching your eventual retirement goals. And a financial advisor will be there, or an investment advisor will be there holding your hand saying, now is not the time to sell. Or now is the time to buy. So I think there's an educational benefit of teaching you the basic principles of managing money and explaining it to you in a way that's approachable. And then there's also helping guide

your decisions and your behaviors to make sure that you're not making those decisions based on your emotions. And so one kind of tip I always, or something that I learned early on when I was discovering personal finance was, if you're not sure if it's a financial planner or advisor or who this person is, just ask what their credentials are. It's like, are you a certified financial planner? Are you a CPA? What does that stand for? Are you just a financial planner? Are you a fiduciary? Asking these questions, also asking, how are you compensated? Are you paid a salary? Are you on commission? Are you trying to sell me products and you get a commission on that? I just want to kind of

understand how you're compensated so I can understand where you're coming from. And I want to throw out a book recommendation here. I never thought that I would love the Tony Robbins book, Unshakeable. Oh, forget love, Tony. I avoided reading it for years because I thought I love Tony as like a motivational speaker and talking about behavior,

but what the heck does he know about finance? Yeah. And then I bought his audio book and he blew my mind. Yeah, he does that, doesn't he? For anyone who wants to know about, it's based on information in the States, which isn't exactly the same as Canada,

but a lot of the principles are the same. And he said in his book, it's not him just giving advice, he talks to experts in his book. Yeah, he spent seven years researching this book by talking to all of the top, like the most successful investment advisors, the people in the financial industry,

and he distilled all of their knowledge into this book. So I bought the audio version of it. I listened to it over a weekend. I just could not stop. I thought it was amazing. And I think I've listened to or read almost all of the personal finance books out there, and I still found his to be really compelling. So in particular, if you're interested in investing and understanding the stock market, understanding how the financial industry operates, I highly recommend reading that book. I just, I loved it. Yeah. Awesome.

Cool. Any other questions? All right. In the front row. Yeah. So the kind of question is, you know, when you see your friends, you're like spending their money, YOLOing it up, experiencing life, spending their money on their credit card, but you want to be a little bit more financially savvy

because you have some financial goals you want to reach, how do you balance that? How do you not be a hermit and maintain a social life, but also not spend all of your money or get into debt? I mean, I'll be honest, I think I was a hermit for lots of my 20s. Though I also had a lot of friends, I mean, I have a film school background, so lots of my 20s. Though I also had a lot of friends. I mean, I have a film school background,

so lots of my friends were starving artists. So we were like, hey, do you want to bring a six-pack over? Like, that's kind of what we did. But for me, a lot of tough conversations of saying, I can't afford it right now, or I'm sorry, I won't be able to join you this time, but maybe next time. How about yourself? Yeah, I actually was not very good at that. When I first started working my first job was on Bay Street and I had a pretty decent salary and I lived at home and I had very minimal student

debt but after like a year and a half or two years of working I had made like very small dents in that debt and I had no savings because I spent everything that I earned because I was living it up. I mean, part of it was I was working really long hours, so I also felt like I was justified. Yeah, you're like, I deserve this. I deserve these fancy clothes because I have fancy clients, and I'm on this and that.

So I feel like I'm not the best person to advise on that because when I was living it, I was making those mistakes. But what I've learned being older is that a lot of people are in the same boat as you, or even if they look like they can afford it, they can't really. And being the person that has the courage to start that conversation, um, they can be really grateful for that, for you also giving them permission to not have to, I don't want to say lie, but, you know, maybe pretend like things are better for them than they are. So I found, for me, travel is really important.

I love traveling, but going out to, like, going out on the town is not as important. So I tend to not join in so much on, like, restaurant nights. I prefer to have, we call it friends night where we get together for dinner at somebody's house. Um, so I think, I think suggesting alternatives to, uh, is really helpful of not just saying like, no, I'm not going to go, but like, Hey, why don't we do this instead? Totally. Cause yeah, if it is experiences is, you know, you can put the focus back. It's like, I want to spend time with you, but I can't afford to do that activity. So can we do, yeah, and just think of a list of different free activities. I mean, a prime example

is I had a friend in town and I'm like, so can we just go to the bakery, get a bunch of baked goods and watch Great British Bake Off? And she's like, yeah, we can. And it was awesome because we spent quality time together. And that cost us like $10, $15 at the bakery. I think it's important too, though, to save up for a few special occasions. Of course, yeah. Not say no always.

Yeah, of course. Balance. It's all about balance. Money, life, balance. So, any other questions? Yeah. Okay, so how do you... Cash flow planning. Yeah, so... Cash flow planning. The question questions? Yeah. Cash flow planning.

Cash flow planning. The question was, sorry, just in case no one heard that, is how do you manage your credit card debt and also save? Yeah, it's so important to understand and to be able to project your cash flow or your cash needs in the next few months because I see a lot of people running into this problem of trying to pay off their debt so quickly, then running out of money and needing to put it back on their credit card to fund their life. And so the best way that I've discovered to do this is, I see there's an app you can use called You Need a Budget, which helps you budget using the money

that you have. So you know I said earlier, like, spend what you have? That's what this app is all about. It says, how much money do you have in your bank right now? And give it a job. So what does this money have to do for you? So that you're not tempted to spend it because you've already allocated it. So that app is really helpful.

I've also personally designed a spreadsheet for my clients. I work with a lot of freelancers that are in a similar position. And this spreadsheet, I think, is pretty magical because it projects your bank balance and your credit card balance for an entire year. So you fill out how much you're earning and what your spending needs are. And so you can see when you're going to run out of money. And having a really clear understanding of the flows, the ins and outs, and when you're going to run into the negative, I think is just critical to being able to manage balancing those two priorities. All right. We'll take one more question. Yes.

Yeah. All right. So question is, if you're a freelancer, how do you kind of do the same thing, manage saving and paying down debt? It's kind of the same answer. Like, try You Need a Budget. I think it's a fabulous application. Or call me and you can get my spreadsheet and I can show you how to use it. Trying to manage those two. I think also something that I like to do with my income is using percentages. So instead of setting a savings goal that this month I'm going to save $100, I say for every payment that I receive from a client, a certain percent goes into my savings account,

a certain percent goes into my business expense account, and another percent goes into my personal spending account. So that way, no matter how big or small the payment, I'm always allocating a portion to the different needs in my life. And it just makes that decision, it eliminates the need to make a decision. So it makes it much easier to make sure that there's money in each of those pots.

So I actually do it by having one account where all the payments go in. And then twice a month, I allocate it out across those different accounts based on those percentages. And there's a book, it's called Profit First by Michael Michalowicz. I read that book and I decided to,

instead of just reading it, to actually implement it. And I could say it's really been a game changer for me. So I'm starting to help my clients implement it too. So I would say check that out. Two good book recommendations. All right, last call for questions is 8. Two good book recommendations. All right. Last call for questions is 830. Damn, we can talk.

All right. If you still have any questions, we're going to wrap this up, and you can grab us one-on-one to ask your questions privately. There's also a money question box right near that gift bag over there, so if you really don't want to even talk to us but still have a question, you can fill out your question, put it in there, and I'm definitely going to compile them, and maybe me and Lisa can do a follow-up

or something. That would be really fun. That would be so fun. Let's do it. So please, put some questions in there. Like I mentioned, the challenge for you now, we've got another hour to just hang out, mix and mingle. You don't have to run away if you want to grab another drink and have some

fun with us. But there's also some of those money question buckets and I'm going to be walking around and starting some money conversations with you, which is the whole point of all of this. A big thank you for all of you for showing up today. A big, big thank you for all of you for showing up today. A big, big thank you for Manulife Bank

for sponsoring this Millennial Money Meetup for Financial Literacy Month. I really appreciate it. And thank you again. And I will catch this on the fly. I don't know. Anyways, there's also some gift bags. So if you do have to head out,

make sure to grab some. There's some really great goodies in there that I want to get you bags. So if you do have to head out, make sure to grab some, there's some really great goodies in there that I want to get you in. So thank you then. Also, thank you, Lisa, for being our awesome special guest. Aw, thank you, Jessica. And that was the special bonus episode, the live recording of my most recent Millennial Money Meetup.

It is Millennial Money Meetup. It is Millennial Money Meetup number four. And I can't wait to do more meetups in 2018, hopefully more in Toronto, in Vancouver, and hopefully some other cities around Canada. That would be my dream. So I certainly hope so. If you want to, of course, know when the next event will happen, well, just go to jessicamorehouse.com slash subscribe. Get on my mailing list.

I always let those people know first when I'm doing something. Of course, you can also find out more info about past events and you can watch those past recordings and videos at millennialmoneymeetup.com. Special thanks again to this event's sponsor, Manulife Bank.

If you want to learn more about them and the survey that they released, you can go to manulife.ca or check out my special blog post that will have more information about what we talked about at the event and also some stats that they put out in their survey, which I thought were super, super interesting.

So again, you can go to jessicamorehouse.com slash blog, check it out, or a quick link to that specific blog post, jessicamorehouse.com slash MMM4. So that's triple M and the number four. Thanks again for listening. I wish you a very merry, happy holiday season. And I will be back here with another episode, as always, January 17th. And on that note, thanks again for listening. I'll see you in a new year. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.