With so many Canadians taking a hard look at their finances and trying to understand how to be fiscally responsible through uncertain times without causing damage to the economy, we jumped at the chance to chat with Talk Shop co-founder and award-winning personal finance expert Katie Dunsworth-Reiach and get her top tips when it comes to personal finances at this time. —Vita Daily
Hi Katie! Please tell us a bit about yourself to start.
Hi! I am an entrepreneur and money expert. During the last financial crisis I started a money group with a few of my friends (we call ourselves the Smart Cookies). We taught ourselves effective money management principles, found ways to make more money and focused on spending smarter. This got us out of $80,000 in collective debt in under a year and we’ve gone on to own property, start businesses and not have to worry about money. The Smart Cookies were featured on Oprah, wrote a series of books with Random House and hosted a TV series on the W network for a few years. Today I run an agency called Talk Shop. We employ 40-plus (mostly women) in Vancouver, Calgary and Toronto and we bring creative and effective marketing and PR strategies to businesses in a number of sectors. I’m really passionate about talking to women about money—whether it’s in a business context and understanding income statements and profit and loss, or in a personal context and about having a plan for your money. Making conversation about money accessible and even enjoyable is really what I love.
What do you think makes you unique to other types of financial experts?
Unlike a lot of certified financial or investment advisers, I share lessons learned. Where I made mistakes, what I learned and what to avoid. My money advice is nothing that I haven’t tried and focuses less on investing and more on how to change your relationship and patterns with money and how to get ahead.
Now is a scary time for a lot of people; what are your top tips for staying calm in the face of financial fear/uncertainty?
I am extremely concerned about the period we are entering. Job insecurity is the biggest issue we are seeing. And the number of Canadian’s that are just a paycheque away from financial ruin is really scary. While I want people to keep calm, what is going to make you feel better is if you take action and start to protect yourself and buffer for hard times. I would advise taking some or all of the following measures, beginning with getting started on making more money ANYWHERE you can. We have seen years of a good economy, which has meant many of us didn’t have to try that hard to make a comfortable living. Now is the time to look at getting as many income streams working for you as possible. Whether that’s selling things you aren’t using, picking up additional shifts at essential services that are operating (liquor stores are hiring!) or getting plans together on a side hustle. Work at seeing this money as your buffer if you are laid off or lose income. Next, examine and renegotiate everything you owe. Got debt? You will feel better if you are being proactive and can look at your options. For example, consolidate credit cards and other outstanding debts into one amount that is as low interest as you can pay. The Government of Canada is also offering a six-month interest-free freeze on the repayment of student loans. This means for the next six months if you owe on student loans you should talk to your bank as you will not be required to pay and interest will not accrue during this time. You should also look to maximize on the market downturn. A looming recession means stocks and equities that were priced at all time highs will be dropping in price. Look at what you can invest in tax-free vehicles like a TFSA and consider options like Wealthsimple that make investing or even saving at a higher interest rate user friendly. You can also start a spending plan. One of the upsides of social isolation is your bills for expensive coffees, gas and meals out are way down. This is a great time to make a spending plan (not a budget) because this will allow you to focus on things you can control and places you can save. Work to compare that to your previous months spending with where you are at today. You will likely see a dramatic savings already. Finally, think of starting a virtual money club! If you have regular Facetime and Zoom calls with friends, the format is easy and can be found from the original money clubbers at smartcookies.com. You can follow a simple and easy format and follow along on the five-day spending edit challenge.
For those looking to decrease some of their daily spending, what are some top-level things (goods, services) that are easy to cut out or swap for less-pricey or free alternatives?
Great question, and some of these are the silver lining of this pandemic:
hair colour and root touch-ups. Extending your hair colour to eight weeks instead of every six can save you hundreds every year. Connect with your hairdresser while in isolation ask about what touch-up products might work best for you. Then, once isolation is over, change your colour to a lower-maintenance style. Also consider working with a junior stylist or having your hair done through programs like Blanche MacDonald.
embrace flexitarian meals. One of the biggest costs on your grocery bill (which is probably a bit higher right now) is meat. While a plant-based diet is all the rage, even cutting out meat three meals a week can save you $50 on your weekly grocery bill.
shut out online temptation. With all this time on screens you are likely being targeted through email and social with more sales than ever. With nowhere to go, now is a great time to make a goal to cut out as much online shopping as possible. Do an aggressive unsubscribe to retailers and influencers currently tempting you to spend.
consider your car. Owning a vehicle has all kinds of hidden costs from repairs to parking. Trading in your car for car sharing, public transportation, biking and walking will also add a big bump to your monthly bottom line.
What about digging into long-term savings or opening a line of credit right now? Good idea or bad?
I am asked this a lot and here is what I would consider: on the positive side of dipping into long-term savings, do use this if you’ve lost income and are struggling to meet monthly obligations. Talk to your bank, landlord and anyone else you owe money to get on a payment plan to avoid blowing through your savings too quickly. Create a spending plan and repayment plan to determine how much you need for how long and how you can get back on track when work resumes. On the down side, don't dip into savings before exhausting all options on what you owe. You may even need to consider a move. Lowering your household expenses first is priority number 1. As for lines of credit, do consider a line of credit as a last resort if your income is impacted and you have lowered your expenses as much as possible. Speak with your bank and continue to shop around to find a bank that supports you. Realistically they will want to see a decent credit score, any assets you own (property, car, etc.). Do push for the lowest possible interest rate (interest rates are dropping but banks will also likely tighten up their lending policies) and do look at moving all credit card and higher interest obligations over to your line, then freeze your credit cards for a few months. On the flip side, don't run up a line of credit unless you have absolutely no other options. Rather, use the line of credit in addition to credit cards.
OK, so, gotta ask ... what WAS it like to meet Oprah?!
Meeting Oprah may have been one of the greatest highlights of my life. She is not only gracious, welcoming and kind, but she is so darn funny! One of the things I thought was amazing about Oprah during her time on her show is that she taped her entire show basically live. She had next to no background on her guests, so asks such genuine and in the moment questions. She said to us, she likes to experience guests the same way her audience does and she tries to ask the questions that the person in the middle of the country might ask. Meeting Oprah did not disappoint.