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The magazine Wired has gathered up the best excuses for overspending on smartphones and dispensed with them all in a really smart way. Rather than mocking or shaming people for buying top-of-the-line devices, the author gently points out that lesser phones can do the job almost as well.

Give this article a read then apply it to any of your spending extravagances – home renovations, cars, appliances, clothes and other electronics. We should all be able to handle one or two strategic splurges in our lives, but it’s hard to achieve balance in your finances if you often strive for the shiniest and best in what you buy.

The Wired article is actually headlined: “Should I spend $1,000 on a smartphone?” That’s US$1,000. The particular phone mentioned is the iPhone XS, which on the Apple Canada website sells for as much as $1,999 if you go for the 6.5-inch display and 512 gigabytes of storage capacity. You can get that down to $1,379 if you go for the 5.8-inch display and 64 GB of storage.

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The Wired article cites these justifications for buying top-of-the-line cellphones:

  • “My smartphone is my computer”
  • “I need it for my job”
  • “If you break it down by cost per usage, it’s worth it!”
  • “High-end phone components cost more, and I don’t mind absorbing some of that expense”
  • “I want the best”
  • “I can afford it”

The logic applied against all of these justifications works well on other big purchases. Pick one or two things to splurge on and spend carefully on the rest.

Carrick Talks Money: A new call-in series

The Globe is launching a new monthly call-in series. In the first session, I will be speaking with Roma Luciw, The Globe and Mail’s Personal Finance Editor, about housing. We will cover topics such as budgeting for first time home-buyers, best mortgage rates around, ideal time to downsize, and much more.

Call in on May 14 @ 11 a.m. EST. Register here today.

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Rob’s personal finance reading list…

Money and marriage

An etiquette guide for couples getting married by Lesley-Anne Scorgie, author of The Modern Couple's Money Guide: 7 Smart Steps to Building Wealth Together. The financial niceties of gift registries, destination weddings and stags and stagettes are all covered.

What’s wrong with the housing market?

A good overview of why sales and prices in some cities have fallen in recent months. There’s a lot more to this than just the stress tests being applied to new buyers to make sure they can afford higher rates.

Why he doesn’t invest in Canadian dividend ETFs

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An investing blogger explains why he prefers individual dividend stocks to exchange-traded funds holding these same shares. One of his points really stands out – his stock portfolio produces better dividend growth.

Helping low-income seniors

I wrote a column recently that looked at a possible tweak to tax-free savings accounts that could make them more helpful to low-income people trying to put some money away for retirement. TFSAs might help low-income seniors avoid having to take a job slinging burgers at a fast food restaurant.

Ask Rob

Q: A few of my friends recently attended an information session here in Arizona put on for Canadian snowbirds by a major Canadian bank. They left with the impression that if they own a home in Arizona and eventually sell at a profit, that the gains are not reportable or taxable. As a retired certified financial planner (CFP), I know that Canadians are taxed on their worldwide income and when they sell their Arizona home the resulting gain will be taxable and must be reported on their Canadian return.

A: Our guest expert for this question is Terry Ritchie, director of cross-border wealth services at Cardinal Point Management Inc. He says this reader’s friends got the wrong impression if they think the sale of an Arizona home is not taxable. “The gain – or loss for that matter – is reportable for federal and state income tax purposes,” Mr. Ritchie said by e-mail. “As non-residents of the United States, there are federal withholding tax requirements that would be imposed based on the sales proceeds amount and whether the buyer will be using the property for greater than 50 per cent of the time. Canadian tax filing requirements will obviously exist as well.”

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Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

In case you missed these Globe and Mail personal finance-related stories

  • A primer on keeping your tax records
  • This 72-year-old’s portfolio is 97% in stocks. Is she taking on too much risk as retirement nears?
  • Low-volatility, high-yield Canadian dividend stocks for the income investor (for Globe Unlimited subscribers)

More Carrick and money coverage

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