There are No Dumb Financial Questions

However there are some incredibly wrong financial answers out there.

I must admit I stole the title from another blogger, however, it does lend itself to yet another happy rant about some of the horrific financial advice given to folks these days. What kind of answers?

“It’s a great deal only paying $20 for a $200 pay day loan” 
Indeed, what a wonderful piece of advice to the question, “Is it a good idea to get a pay day loan?” (which while a naive question, still a good question).

“Yes, a sound retirement plan is buying lottery tickets and hoping for a big win”
I do know a lot of folks that are actually following this advice, well, they have so much debt they feel this is their only  option.

Dumb Questions

Plenty of Dumb Questions

 “Debt is inevitable, so don’t worry about it too much”
This answer to the is debt bad question, is standard these days, they have even created the concept of Good Debt,  to make you worry less about it.  Debt is not inevitable, it is a choice, and you should never stop worrying about it (or hating it).

“An MER of 3.5% for this Mutual Fund is essential, after all we have the best minds working on this”
I believe I may have heard a certain CBC financial pundit who may have made this comment about his own funds, but I may be mistaken. If you are paying 3.5% MER, good luck with that Mutual Fund, is all I can say. The question asked could have been, “Why am I paying such a high MER for a fund that is not performing?”

These are only a few really bad financial answers, any others you care to add, oh financially astute reader?

 

{ 6 comments }

{ 6 comments… add one }

  • Financial Independence November 1, 2012, 1:54 AM

    I think for a lot of people sound retirement plan is a lottery – so much scam and uncertainty with the financial industry…one would learn to be causious.

    Couple of examples:
    – Only 202 of the 500 biggest companies in the United States in 1980 were still in existence 20 years later.
    – On December 29, 1989, Tokyo’s Nikkei stock average reached its all-time peak of 38,915.87. Twenty years later, the Nikkei has never again reached that level — and, in 2009, reached a new low of 7,054.98.

    What I do agree with is that folks are left with no choice. There is simply limited options available how to build your nest egg – you will keep coming to the same companies, regardless what they have done to their customers in the past…

    Reply
  • Neil C October 31, 2012, 10:18 AM

    You’re right. My comment was intended for your previous post: http://www.canajunfinances.com/2012/10/29/resp-the-end-game/

    Sorry about that. If possible, feel free to move it.

    I do like your blog and intend to follow it.

    Thanks

    Reply
    • bigcajunman October 31, 2012, 10:28 AM

      No worries, I’ll leave it here for now (figuring out how to move it is a little beyond my sorceror’s skills for my blogging software).

      Glad to have you reading along, and PLEASE feel free to comment often, I enjoy hearing folks opinions, and better still understand what folks take from my scribblings too. I hope I wasn’t sounding like I was bragging about loans, the grants my daughter received were only because she had a learning disability (they threw a pittance loans with it as well, which is what I am attempting to alleviate).

      Reply
      • bigcajunman October 31, 2012, 10:29 AM

        That should have read HAS a learning disability (it is not cured).

        Reply
  • Neil C October 31, 2012, 9:25 AM

    Interesting problem. When my daughter applied for loans, it was explained to me that the system is designed so that grants are only given where there is a demonstrated need for a loan, and the loan amounts approved take into account the grant. So the loan would be higher were it not for the grant. Essentially, the grant is a forgivable portion of the loan that the student needs based on the application information. The application requires students to make a strong case that they do not have sufficient resources, including the support from their parents, to pay their projected costs for their education. They also factor in the parents income levels too so you can be ineligible even if there is a need based on this analysis. This is why it is so surprising to the government that she can repay the loan and in fact apparently never needed it. This isn’t supposed to happen and I suspect this is why you are having trouble repaying in one shot.

    I suspect I’m like many parents reading this – I cant help but wonder how the loan was approved in the first place and then each year as I think you have to update the government each year on the projected costs and resources available in order to continue to qualify. If she had set aside the amounts loaned to her in the first years I think she would have had to disclose those savings in the later years. If I understand the system, (and while I know a lot about it, I admit I’m not an expert), it just seems very unlikely that she would have continued to qualify each year if she disclosed that she had access to the savings generated from earlier loan amounts she didn’t spend. Otherwise, what you’re really exposing here is the unfairness and waste in the system that allowed your daughter to repeatedly receive a grant and loan. Maybe I’ve got this all wrong though. If so, it would be helpful to your readers if you could clarify further.

    (As you can tell, my comment is tinged with envy because even though my kids cetainly could have used the loan and grant they couldn’t get them because I was making $80,000 a year and they had saved some money from part time jobs while in high school. They were forced to work part time jobs throughout university to make ends meet.)

    Thank you.

    Neil

    Reply
    • bigcajunman October 31, 2012, 9:58 AM

      First, I can’t help but wonder if this voluminous response was meant for a different post, but be that as it may.

      So the post you speak of was actually a rant about how the system itself on how paying back a loan is not simple or even understandable. If your child has been loaned a small amount of money over the 4 years (which is the case here), and her family is willing to help her pay off that loan quicker (which is the case as well), the system is not really set up to make that easy to do.

      If you are making $80,000 a year, I have to wonder why you didn’t get loans? Every case is different (thus I am not making assumptions here as others might), but if you have other children, that is taken into consideration (especially if those children are also attending post secondary institutions, or have special needs). At the time my daughter started at school, I was unemployed as well.

      The system as a whole seems quite good at figuring out who gets funds, it is just quite cumbersome (in my opinion).

      Reply

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