Creating a GIC money mill in my Emergency Fund

I’ve developed a somewhat bizarre, somewhat creative, I think effective savings strategy for my Emergency Fund.

When I finally managed to find a summer MBA internship, the full-time income let me catch up on my finances. Combined with income from freelance writing and this blog, I started to inch ever closer to the income I enjoyed before returning to school to pursue my MBA. When the summer ended, my employer extended my contract for another month, and now as September closes, it’s been renewed again for October (I’ve asked not to continue past October though, so this gravy train is slowing down… but only so another one can get on its tracks, more on that later).

One of the first things I did with the extra cash was dump it into my TFSA, where I normally keep my emergency fund. Once the balanced tipped over $5,000 (my goal for this year), I started to wonder what the heck I was doing keeping that much cash on hand.

I hate leaving the $5,000 in cash of my emergency fund just sitting there earning 1.3% interest BUT I don’t want to invest money I might need to access immediately. I wondered:

is there a better place to save this money that leaves it accessible while earning a higher interest rate?

Sure is, kids. There sure is. I masterly contrived a bizarre and elaborate strategy I submitted to Mikhaila for approval (always good to have best friends that are also personal finance nerds) before implementing on September 1. Here’s what I’m doing:

1. Maintaining a “float” of $2,000 of cash in a tax-free savings account


2. Staggering a series of $1,000 3-year term GICs to mature quarterly beginning in 2017.

Why GICs? GIC stands for Guaranteed Investment Certificate which is an investment vehicle that traditionally pays higher interest than a savings account, but only if you don’t withdraw the money before the end of the term. The terms vary — anywhere from months to years — and the interest rates very with the term, with higher interests typically being offered for longer terms.

Tangerine offers some of the best interest rates on GICs available. You can sign up for an account using my Orange Key 32251507S1 and receive a $50 referral bonus. 

The GIC I bought pays an interest rate of 1.9%, which over its 3 year term, pays more interest than the same amount of money would earn in a savings account:

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comparison of how much interest $1,000 will earn in a 1.9% GIC vs. a 1.3% savings account over a period of 3 years

I plan to purchase my next $1,000 3-year GIC on December 1st, and then another on March 1, 2015, and so on every 3 months for 2 years. The first one will mature on September 1, 2017 and the rest will come to term on a quarterly schedule after that for the following two years.

What’s the point of this nonsense?

Well, first of all, 32 year old me will probably not be vehemently opposed to getting $1,000 + interest deposited into her TFSA every quarter.

I already have more than 3/4’s of my financial assets invested in stocks and ETFs, which means I’m not locking up any significant portion of my savings. If you’re trying to aggressively grow wealth, I would not recommend GICs, but if you already have a good chunk of change working hard for you in the stock market, a super secure investment might be just the balance you’re looking for.

Breaking a GIC and forfeiting the interest is just painful enough to deter someone like me who loves to raid her TFSA for this, that, and whatever. Money in GICs is less accessible, which means I can’t borrow from myself to cover an expense or a splurge then pay it back later. The money is locked up, and it’s gotta stay there!

The 3-year term is short enough that if interest rates do go up (they’ll go up someday right?), I’ll be investing regularly enough to catch it. If interest rates drop even further, I’ll have caught rates where they are now with some of my funds, ensuring a higher return than what the rest of my money is earning.

The $2,000 cash float in the savings account is a decent amount for quick fixes: a plane ticket to Salt Lake City to see my parents, a replacement phone if I smash mine or lose it, or almost 2 months of essential expenses (as you know, I contribute $1,250 per month to the joint chequing account I share with my boyfriend to cover my half of our shared expenses).

If I need more than $2,000 to cover an emergency, I can break one of the GICs. Because the GICs will be split in $1,000 increments, I can opt to break one (or two, as needed) of the GICs. This is a better option than had I dumped all my funds into a single GIC — if I only need $700 it’s a real shame to break a $5,000+ GIC for it!

*Note: When you break a GIC, you get back your money but you lose the higher interest rate. Sometimes you get zero interest, or you get interest at an even lower rate than a typical savings account.

Interested in trying this yourself? You only need to save $83 per week

Simply transfer $83 every Friday to a savings account and let it build up. Every 3 months, use the money (which has been earning interest too!) to buy a GIC. 

It will take two full years of quarterly investing to tie $8,000 up in $1,000 GICs — which means the first one will mature only 12 months after I put the last one away. I bought the first one at an interest rate of 1.9%, which means it will pay out $58 in interest at its maturity, but Tangerine updates your interest every day so you can see its current value anytime you log on:

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snapshot from September 26th

The Result In Tabular Form

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click to embiggen

The best perk of this strategy? I can change my mind! Because I’m buying GICs every 3 months, I can stop anytime and switch gears.

Lastly, the money doesn’t have to be for emergencies. I like to think that 3 years from now, I’ll be riding on 3 more years of improving my finances and I’ll need $1,000 (or $8,000) even less than I do now, but you never know. In any case, I’ll be able to keep the money as emergency savings OR use it towards…

If there’s anything I’ve learned from being a personal finance blogger, it’s that there will be no shortage of things I want to do with my money.

If you looked closely at the table, you may have noticed this savings strategy will save me nearly $750 above my $10,000 EF goal. This number could change depending how interest rates change over the next 2 years, but in any case it looks like I’m over-saving. If I’m adamant of sticking as close to $10,000 as possibly, I can simply opt to only deposit $320 in my last GIC.

$9,000 + $320 = $10,000 

No, really. Here’s how:

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I don’t think I will buy a $320 GIC, but I might opt for two $700 GICs in March and June 2015. After my convoluted internship hunt, I know finding a job after graduation might take some time, so I might want to tone down aggressive savings plans at this time:

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Having some flexibility in any plan makes it easier to stick to, and saving strategies are no different.

Thoughts on my bizarre EF money mill strategy? How do you maximize the interest you earn on liquid cash? What are your emergency fund goals?

The Calgary Real Estate Market

The Calgary housing market is one of the hottest in Canada, struggling to keep up with the city’s economy. The vacancy rate is less than 2% and rents are raised at every opportunity. Housing prices are high, with the average price for a single-family detached home at $556,402. What follows is a brief overview of what you can buy with how much.

It must be strange for American personal finance bloggers to see what the house prices are in Canada (bloggers that don’t live in expensive American cities, that is) because in the US PF world, home ownership is one of the single best shortcuts to wealth building. Up north, it’s a much bigger pain in the ass, and if not approached with caution and executed correctly, the damage to your net worth might take decades to fix.


cheery advertisement in a local Calgary magazine. 2 bedrooms for less than $400,000?? WHAT A STEAL

When I searched Calgary on the website, it returned 4,679 listings. At first glance, that might seem like a decent number, but for a city with population of 1.2 million and ever-growing, it’s insufficient — especially when you consider what the first few listings are:

$0 to $250,000

Cheapest: $10,000. 

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No, seriously. For $10K you can buy a delightful little home & garage.. but you have to remove it from the lot (at your own cost). This is a mobile home you need to pick up & move, because you can’t have the land its on.

The first non-trailer is priced at $119,000 for a one-bedroom apartment in the middle of nowhere. It’s a little bit shady,

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FYI: I had to click through to $160,000+ just to get out of the trailers and mobile homes.

Top of the price range $249,900 will get you a 1 bedroom condo near the centre of the city or a 2 bedroom townhouse in suburbia, your choice.

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623 sq ft for 1 bedroom, 1 bath NOT on the ground floor in Sunnyside, a nice neighbourhood accessible by train and where you’re unlikely to be murdered. Not too shabby. And you only pay $387/mo in condo fees. Woohoo!

$500,000 – $750,000

$500,000 will buy you this gorgeous 990 sq ft 19th floor condo in Calgary’s downtown

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…or this terribly boring 1,477 sq ft beige outfit in suburbia:

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For $750,000 you can buy a 1.5 storey 1,600 sq ft “character home” in Sunalta

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While I love what they’ve done with the kitchen you’ll probably have to replace those front steps!


For a cool million you can get this uber modern house of glass inside the city:

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1,824 sq ft four bedroom and 4 bathrooms. Spacious and gorgeous, but a little too pristine for my tastes.

While the Calgary housing market isn’t as terrifying as that of Toronto or Vancouver, it’s not exactly welcoming. Finding an affordable home that isn’t in total disrepair and still reasonably within city limits is a challenge. However, while we all balk at the high housing prices here, most people earn enough money to make purchasing houses at these high prices a reality.

The median household income in Calgary is the highest in the country at $98,300this means essentially half of the city’s households gross six-figures.

This is almost $25,000 higher than the national average and $40,000 higher than the median household income in the USA

Calgarians are rich.

I didn’t find any surprises in my real estate search, except maybe that trailer parks are a real thing…





Canadian Personal Finance Celebrity Series: Rob Carrick

Rob Carrick is a Canadian Personal Finance columnist for the Globe & Mail and best-selling author. He recently launched an online personal finance magazine directed at helping millennials with their money and regularly tweets about millennial money issues under the hashtag #GenYMoney. You can read more of Rob’s work on his website

Screen Shot 2014-09-24 at 5.52.31 PM1. Most Millennials can’t afford to support themselves until their 30’s. What’s the biggest thing holding them back from independence? 

It’s weakness in the job market. What strikes me when I talk to millennials and their parents is the number of people not so much unemployed as under-employed in jobs that don’t fully utilize their education and training. This includes both unpaid internships and semi-paid internships, where young workers receive a non-competitive wage. A related issue is what millennials are studying. I’m hearing a lot about people who study subjects that don’t have great job prospects. Often, they’re going back to university or college for additional degrees or certificates to help their job prospects.

2. The biggest complaint from new grads is crippling student loan debt. What’s the secret to paying it off before gray hairs come in? 

Make debt repayment your Number One financial goal when you start working. Find out the minimum required monthly debt repayment and see if you can manage even more. If you have a limited income, consider moving back in with your parents so your paycheque isn’t used up by rent and living costs. Don’t worry about investing or saving for a house until the student debt is paid off. Killing your student loan is like getting an extra several hundred dollars a month in extra money.

3. 20-somethings tell me the stock market is scary — what investing tip would you give them to overcome their fears? 

Get over your fears. Average stock market returns should be about 7-8 per cent annually if you can hold for 10 years or more. Millennials actually have at least 40 years until they retire, which means they have more than enough time to ride through the stock market’s ups and downs. Worried about a big crash? We had one in 2008-09 and the market came back. Note: We’re talking about retirement investing here. If you’re putting money away for a house down payment, forget the stock market and use a high-interest savings account.

4. There’s lots of articles about what millennials are doing wrong with their money, but is there anything they are doing right with their money that we’re not giving them enough credit for?

What are millennials doing wrong with their money? Frankly, I think this generation’s financial problems have much more to do with the economy than their money skills. Millennials seem to be very strategic about how they spend money. I’ve seen reports saying they’re big spenders on eating at restaurants and drinking at bars, but they spend less than previous generations on clothes. There may also be a move away from car ownership in favour of cheaper alternatives like car sharing. The bottom line is that they’re spending money differently, not irresponsibly.

Like what you’re reading? Check out my other Canadian Personal Finance Celebrity post by Gail Vaz Oxlade.

The #1 Reason I Will Never Join An MLM is Because I Am Good At Math

I’m a big advocate of developing multiple sources of income. I’ve never worked only one job or relied on one source to generate money for me to spend. Whether working multiple hourly jobs or investing in dividend-paying stocks, my focus is always getting more money into my bank account each month.

Naturally my entrepreneurial nature has made me an attractive target for multi-level marketing (MLM) schemes.


source: Is Network Marketing a business opportunity or a scam?

But on the other hand, the strategy of MLMs is “ask everybody” so I’m actually not that special.

I’ve written before about how Amway is the ultimate cult when it comes to pyramid schemes (the post still gets new comments on a regular basis, much to my amusement). Most others I come across have been less threatening. For example, I get invited to Passion Parties to celebrate stagettes or birthday parties at least once per year (I even hosted one for my own 27th birthday party). It’s hilarious that sex toy sales are the least naughty of all the MLMs — passion parties are fun, low-pressure environments where everyone is drinking and thus more likely to spend, and the products are high priced. I don’t know what the payout is, but there are worse ways to spend 2hrs of your time than pushing dildos over cocktails. (/sentences I never thought I’d write)

In the past week I’ve been approached by Mary Kay (twice!) and Arbonne representatives. In the past I’ve also been invited to Scentsy parties, though I haven’t attended (more because of scheduling conflicts, because I’m certainly open to going and receptive to buying!). It was only because I was pushed again to review the “potential” as an Arbonne consultant after previously declining that I took a look at the numbers. This is what I found:

You get a 35% profit on all the sales you make.

If your first thought was “wow over 1/3 profit for every sale! That’s not bad!” (I was told this is one of the “highest for MLMs”) you better check your math:

You’d need to sell $100,000 of makeup to scratch out $35,000.

I’ll tell you what kids, I know about 35,000 easier ways to net $35,000 than hawking mascara and blush. Don’t get me wrong, I have purchased and used Mary Kay and Arbonne products in the past and they are lovely. It is legitimately very nice cosmetics and body products. You are NOT being scammed by being sold or selling a cheap or bad product, but that doesn’t make this a good idea. However, there are some major downsides here:

When you join MLMs, you often need to pay out of pocket for things like…

  • Your annual consultant registration fees
  • Attending business conferences
  • Transportation costs to get you to and from parties or sales
  • Your unsold product

Maybe the goal isn’t $35,000 but less like $5,000 or $10,000 which would only require you to sell $15,000 to $30,000 of make up. Still, I feel like asking me to sell over $1,000/mo of makeup is asking a lot. Where am I going to find people willing to buy over $200 of products from me every week? As someone who’s pared her daily makeup down to mascara-only, this number strikes me as absurd.

But this is because joining an MLM is NOT about selling a product,

it’s about getting more people on your “team”.

The more friends and acquaintances you convince to take part in your “business opportunity”, the higher your monthly income goes. You profit by their membership fees and from their sales. The only real way to succeed in an MLM is to immediately recruit a powerhouse team of ambitious sales rockstars that can both push product and get others on board. If you only manage to recruit a handful or less of lukewarm friends, you’re never going to make money.

 You should devote your entrepreneurial efforts to basically anything else. 

Because pretty much anything else will be infinitely more profitable.

Unsure of how to bring in extra income with less work than being part of an MLM? Look for endeavours that utilize unique skills and have low startup costs such as:

  • Tutoring an academic subject
  • Teaching a language or instrument
  • Making a product and selling it on Etsy
  • Monetizing a hobby, like photography or blogging
  • Purchasing and reselling collectors items
  • Completing odd jobs

In short, there’s no real easy way to make tons of extra money, but there are easier ways than MLMs.

The $5 Task To Boost Your Professional Network

Sorry I don’t have a $0 weekend post for you (I’ve had one in drafts for 3 weeks now, just having a hard time finishing it up.. maybe next week!) but I recently thought of an idea that might be a benefit for those of you in school and looking for ways to build a professional network.

I’ve talked about how to maximize your LinkedIn profile before, but recently a new site has been on my radar called Ten Thousand Coffees. The mission of Ten Thousand Coffees is to “unlock opportunity” by providing the starting point to begin a conversation. While I love LinkedIn for connecting with professionals I already know offline, there’s no way to really get to know someone outside your network without stretching yourself through an awkward introduction.

What if you could know which professionals were open to meeting with you, even if you weren’t connected to them on LinkedIn?

Ten Thousand Coffees provides exactly that platform.

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While I was browsing experts a cool idea came to mind…

Starbucks is currently running a “tweet a coffee” promotion, where you can tweet a $5 Starbucks gift card at a person. If you’re one of the first 5,000 to do so (it’s already been on for a week or two), you will get a $5 gift card for yourself — essentially providing coffee for you & a friend for $5.

Why not tweet a coffee to the professional you’re interested in meeting with for an informational interview?

Using Ten Thousand Coffees you could find out who is willing to meet up with you, and then tweeting them a coffee with a link to your Ten Thousand Coffees profile would be a cool way to invite them to chat (and treat them at the same time!).

At worst they’d decline and get a free coffee, and you’d only be out $5 (or possibly nothing, as your Starbucks account would be credited $5 if you’re one of the first 5,000 to tweet a coffee) — but it’s such a creative hilarious way to invite them to talk, I’m doubtful anyone would say no. I know I wouldn’t!

Even if you’re not bold enough to tweet a perfect stranger a Starbucks card, Ten Thousand Coffees might be a worthy site to utilize to start building your professional network.