Category Archives: Money Tips

How Costco Bought Me Back With a Chicken, a Salad and $10

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A few years ago we had a Costco membership. We bought it so we could get snow tires for our Camry at a reasonable price and very quickly. We let it lapse, though, because I wasn’t finding enough cost savings to justify the annual membership fee. Earlier this spring, however, Costco made me a membership offer I couldn’t refuse….

How Did I Get This Membership Offer from Costco?

I’m not quite sure why we received this special offer from Costco. It arrived in the mail and was personally addressed to my husband. They may have pulled his old contact information from their files. Or they may have targeted this type of advertising to every non-member in our neighbourhood. I’m not sure.

What Kind of Deal Did Costco Offer Us to Join?

The mailed out offer included 3 perqs if we applied for a regular $55 membership. If we did so during the time limit set by the ad, we would receive by mail:

  • a coupon for a roasted chicken, worth $7.99
  • a coupon for a family-sized Caesar salad, worth $9.99
  • a coupon worth $10 off a purchase

That’s $27.98 off the $55 membership cost. And I could use all three items.

I gave in.

I re-joined Costco.

Have I Regretted Re-joining Costco?

No. So far, it’s working out ok.

The chicken from our local store was quite good. We’ve bought some on other occasions.

The Caesar salad was a miss. We didn’t actually finish it as the lettuce was tough and dry.

The coupon was spent easily on reasonably-priced groceries.

Do I Like Shopping for Groceries at Costco?

No.

As I mentioned before, I don’t find the prices for most grocery items at Costco save me any money. I also find they don’t have many brands that I prefer which makes it difficult for me to do most of my shopping there. In fact, I often won’t bother to go to Costco unless I know they specifically stock an item I want.

The over-sized packaging also doesn’t suit our family well. For example, only one member of my family likes a certain fairly-nutritious dried cold cereal. If we buy that type at Costco, we are stuck with two huge bags, which last a very long time, and no box that can be used to hold one bag and pour out a bowl of cereal. So we have to put the cereal into another empty box or into a storage container which seems silly.

The larger packaging also causes another behaviour change in our eating habits: If we buy a dried fruit, like Craisins, I’ve noticed everyone eats more each time they add them to a salad or hot cereal because the Costco bag is so large. When we use a smaller bag from Walmart, people use fewer. The perception that we are close to “running out” seems to reduce our serving sizes. Since we don’t need to over-eat high calorie ‘fun’ foods like Craisins, it’s better to get a smaller bag. If we bought chips, I imagine this problem would be even worse, but we don’t regularly buy them so I’m not sure.

Have I Saved Enough at Costco To Fully Refund My Membership Fee?

To my pleased surprise, yes, we have.

We aren’t changing our tires seasonally ourselves right now—we are paying someone else to do it. When I checked the Costco price this spring, I discovered it is very cheap to get the tires changed if they are on rims like ours are. Just doing one seasonal changeover saved us enough to cover the rest of the annual membership fee.

The roasted chickens are also a good deal. Most grocery stores near here charge $11 or more for a comparable-sized chicken. At under $8 Costco is saving us money when we buy from them.

Aren’t Costco Gasoline and Propane Prices Big Cost Savers?

Probably. We don’t have a gas bar at our local Costco so I don’t know what their price is or how much it could save us. And we haven’t used our bbq in several years so we aren’t buying any propane. I think these two items, though, might be a big cost saver for some families.

Would I Recommend Others Join Costco?

I think you would need to compare their prices and products with your usual shopping preferences. I’m sure some families save a lot shopping at Costco. I’m equally sure that some families barely save back their membership costs.

The crazy parking lot and long checkout lines at our local Costco still keep me from visiting very often. Hopefully other locations don’t suffer from the same problems.

We’ll keep our membership for this year but when the renewal comes due, I’ll have to do some math before I decide if it’s still worth it.

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If you belong to Costco, where do you save the most money to payout your membership fee? Or do you belong just so you can browse and nibble your way through a lazy Saturday afternoon? Please share your views with a comment.

My Child Is Now 15 (Or 16) What Should I Do with My Self-Directed Brokerage RESP?

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Managing an RESP is easy for the first dozen years. You have to make some decisions at the beginning. (Family plan? Individual plan? Bank? Brokerage? 100% safe savings accounts and GICs only? Some risk with equity investing in stocks through ETFs or mutual funds or individual blue chip investments?) After a while, though, you fall into an investment pattern and just stick with it. But as your child (or eldest child) nears the age of starting post-secondary school education, you need to make some decisions again.

First: Move the Money for First Year Into Risk-Free Investments

If your child is going to attend a university and live in residence for their first year after high school, you can estimate that they will need at least $20 000. Programs like Engineering will cost more. Living at home might cost less. But $20 000 is a good starting estimate and it’s likely they will actually need more than that for a university program, unless you live in and they want to attend university in Quebec.

You may have that $20 000 invested in equities. It may be in a mirror-the-stock-market ETF, a mutual fund, or shares in specific companies. If, the week before you need to take it out in cash to pay for residence or fees, the stock market has a sharp pull-back you could be in trouble. A 10% drop in the equity market might drop your $20 000 to $18 000.

Many people who have RESPs with over $20 000 in them could probably delay liquidating the equities in the RESP for a while. They could find the money to pay for residence and tuition in other places, like their emergency fund. But that might not be a great idea: it can take a year or more for the market to rebound. And, of course, there is no “stop limit” that guarantees it will only decline 10%. It could crash like it did in 2008-2009 and take years to claw its way back up.

So if you’re risk averse like I am, you will probably want to get that $20 000 for first year into something risk free before it’s needed. When your child reaches the age of 15 or 16, you may want to put that $20 000 into a cash account or a GIC or term deposit of some kind. I’ll be checking the rates offered by various investments at BMO InvestorLine soon.

Next: Consider WHERE You Want to House Your RESP While Your Child Is Making Withdrawals

According to the CRA information for RESP providers (like banks and brokerages) once your child starts making withdrawals from the RESP, you cannot move the RESP to another institution!

So in the year or so before your child graduates from high school, you should evaluate your RESP provider. Are there fees to make withdrawals from the RESP? What type of paperwork will the provider require to make the withdrawals? Would it be easier to move the entire RESP to another provider with lower fees or less paperwork?

Reading about some of the strange requirements for RESP withdrawals that others have experienced in the past makes me nervous. Soon, I will start looking at the rules at BMO InvestorLine and deciding if they are acceptable. If not, I will need a few months to get the investments transferred elsewhere. So I’ll want to make the decision long before my child is in final year at high school.

Finally: Develop a Strategy for the Next Few Years for the RESP

If you have more than one child, you also may need to plan a strategy for the RESP. When will you liquidate any equity holdings? Will you sell them when a certain profit is achieved? Or will you sell them based purely on the time at which the money may be needed? Will you buy a series of GICs with 5, 4 and 3 year terms, or only use 1-year terms?

How will you make the division of the loot equitable? What if you liquidate the equities for your eldest child when the market is high but when you go to do the same for your youngest child the market has been down for years? Do you “owe” each child the same number of dollars for their education? Will you “hold back” some of the money from the eldest child in case you need it to keep things even for the youngest of several children?

It’s better to develop a strategy before the first child starts using the money. Which means my husband and I have some thinking to do!

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How much money do you expect your child to need for their first year of post-secondary school education? Will you try to set that amount aside in cash or fixed income investments a year or two before they finish high school? Please share your views with a comment.