Canadian Personal Finance Blog

Archive for the ‘Financial Dreams’ Category

Did you hastily make some New Year’s resolutions this past December 31st, determined that 2010 will be the year that you “get it done” (to paraphrase Larry the Cable Guy). Are you confident that you have chosen something that you can achieve and is it something you really want to do? If the answer is yes, I wish you luck and hope you have the “self control” to keep to the resolution, as I have rarely (if ever) been able to stick with my “promises to myself” in the New Year.

Financial Resolutions

Not sure what the New Year does to folks, I think it might have to do with the fact that they mortgaged their homes to pay for Christmas, but New Year Financial Resolutions seem to be particularly difficult to live up to (especially if you have already put yourself in the hole, with Christmas).

Some examples of financial resolutions might be the following:

• I resolve to not spend as much next Christmas: this one sounds great and wonderful, however, how can you decide if you have succeeded? First, you need to figure out how much you spent on the past Christmas, which is not as easy as you might think, but it’s not impossible (especially if you kept your receipts). Then you need to figure out how much you still owe, and figure out how you are paying that off (say pay off all of it by April?). Then you need to make a plan on how to save enough money to pay for your cheaper Christmas this coming year and how you might do it. This is a very complicated resolution, maybe you should resolve to Pay off Christmas by March?
• I resolve to pay down my Credit Cards: Wow, this one is a really good one at face value, but then again, maybe a STRETCH resolution for many. The folks that have Credit Card debt, usually don’t live the correct lifestyle to be able to pay down this debt (sort of a cyclical problem), so maybe you should change the resolution to: I resolve to get no further into Credit Card Debt?
• I resolve to save more this year: Again, a noble resolution financially, however, can you afford to save? Are you carrying a staggering debt load, in which case, why are you saving, you should be paying off debt! Maybe a better version of this would be, I resolve to increase my Net Value, and you can then either lower your debt or increase your savings.
• I resolve to spend less this year: an excellent resolution but a little vague and kind of hard to measure of succeed with. Maybe be more specific in your goal and you might be a little more successful? I resolve to buy 1 less coffee a day is a great one, I resolve to pay less for my banking, is another very good one,I resolve to not shred $20 bills or light my cigars with them might be the best one (if you are doing that).
• I resolve to get my financial life back in shape: wow, that is a huge one, again, maybe look at this and break it down to something simpler like, I resolve to make or update my Will is a very good thing, I resolve to cancel 2 credit cards is an interesting one as well. You may as well be resolving to solve World Hunger on this one, way too general and way too hard!
• I resolve to read more financial blogs and especially Canadian Personal Finance Blog: that is an excellent resolution, which I hope you all add to your list.

Remember the great movie “What About Bob”, and the Dr. Leo Marvin method of “Baby Steps”, make your resolutions achievable and you will succeed. If you are burning or mutilating money, please remember that is against the law as well.

After switching off the Grey Cup (I stopped watching after the Alouettes vaunted defense gave up their 27th point), it dawned on me that no matter how it stacks up, in football, as in life, there is just no sure things. Every pundit that talks about the CFL (admittedly not a huge subset of sports writers) had the Alouettes victory parade already planned, and when I sat down to watch the game, I expected to see an annihilation of biblical proportions.

Evidently no one told the Roughriders from Saskatchewan (not to be confused with the hopefully soon to be resurrected Rough Riders from Ottawa) that they were supposed to roll over and die, and they decided to make it an exciting and close game (which luckily the Alouettes did finally win).

Football and Financial Planning?

What does this have to do with Financial Planning? First thing is, I didn’t have anything to write about before the game started, and you almost had a “Sorry, no post today, busy watching the Grey Cup”, but thanks to the closeness of the game, I had a story idea watching the game.

Second point is, no matter what assurances any financial planner, financial pundit or financial blogger makes about any financial plan, investment idea, or stock tip, they could very well be wrong (like the 90% of writers who picked the Alouettes annihilating the Roughriders). Be skeptical about any advice you get, and look in depth into what you are being told, and remember that no matter what decision you make, there will be risks involved in your decision. There are no sure things, keep that in mind.

Yes, the Alouettes did manage to pull the game out on the last play of the game, but the contest itself was much closer than expected, and it took a lot of luck for the Als to finally succeed (when they were supposed to win easily).

Yes, I also had to rewrite this post, because I had it all done with 4:00 left in the game and I was sure the Als were going to lose, which also shows that even when you are sure something is going to happen, sometimes things change drastically very quickly (like the Als comeback).

Remember, my only advice is, there are no sure things in life.

Oh and Congrats Alouettes, I never doubted you for one minute (where did that bandwagon go?).

Bring back the Ottawa Rough Riders too!

The N.C.F.B.A. met on Monday night (OK we sat and watched Preet eat dinner), and as usual the discussions and commentaries were entertaining, enlightening and fun (for me at least), and one of the topics that came up was about Advice and what people do with the advice you might give them (Michael James has in fact written an excellent post on how Investment Advice Usually Reaches the Wrong People).

I remembered one of my worst pieces of “advice” I ever gave to a dear friend, so here again, I reprise an “oldie but goodie” for you, dear reader. This post goes back four years ago, but is still as painful to read today as it was to write back then.

A parable about advice… (not just financial)

A few years ago I car pooled with a wonderful guy we’ll call Jack for this story.

One day after my wife and I came back from a great vacation in Florida, I told Jack about how to get free tickets to Paramount Studios in Orlando, by attending a “Time Share Condominium Sales Pitch” (my father-in-law told me about it), I told Jack that it was a hoot and also kind of sad seeing the “poor souls” (my opinion) who ended up buying these things.

The Sales guy was relentless, he was going to take Canadian money at par, he was going to let us pay with our credit cards, we could stay there right now if we wanted, etc., but we stuck to our guns, got our free tickets and left (with a lot of chuckling and many stories that I still tell to friends).

Jack thought it sounded like a good idea because he and his wife were going on vacation to Florida in a couple of weeks, so he said they would go as well.

Fast forward to the day after Jack and his wife came back from their Floridian vacation. The conversation was mostly about how much fun Jack and his wife had while in Orlando, so then I said, “How about that Time Share sales pitch, what kind of a schmuck would buy those things?”, and after a long pause Jack said, “Well, me, I bought one…”, I think my jaw dropped to the floor, and I might have said two words for the rest of the trip to the office. I never mentioned time shares ever again.

As an epilogue Jack never really did get to enjoy the time share and lost a fair amount of money on the  deal.

Moral to this parable? Advice is a dangerous thing to hand out, and you had better be ready to take the heat when the advice goes wrong, even when your advice was completely misconstrued.

No not another Sunday post, just a post about the perils of Temptation.

As I gaze upon the basket of candy a co-worker brought in (so she didn’t have candy at home to tempt her), I really think the root of most problems with life is temptation and an inability to say NO to the things we know we should say NO to.

The candy basket is an excellent example of temptation to me, since it is full of sugary treats (luckily no potato chips) that are so enjoyable for a very short period of time, but then cause my brain to scramble due to a sugar rush, my mood to crash (after the sugar rush wears off) and the guilt that comes from the aftermath of eating this sugary temptation. Can I eat the candy? Sure, I can, but SHOULD I eat the candy, the simple answers are:

1. Yes, but only in moderation
2. No, if you feel that one candy will simply lead to another

Financial Temptations

Every day most of us are availed of many different financial temptations that may be much like the candy, in that it may cause a short term rush, but at the end of it, all it leaves you with is guilt and displeasure. Some examples might be:

• Do I drive this month or do I buy a bus pass. I must admit I succumb to this temptation, but luckily the Ottawa transit system is so expensive I can rationalize this temptation by pointing out I am not saving that much money taking the bus.
• Should I make my lunch or buy it at the cafeteria (or worse go out to a restaurant). The money you save by making your own lunch can be a significant chunk of change, and you are more likely to make a more healthy lunch at home, than you might find at your local fast food establishment.
• How about a $7.50 Latte to start my day off. This one I easily avoid, because I can’t understand why anyone would pay that much for a “… lousy stinking cup of coffee …” (to quote Denis Leary). Coffee tastes like coffee to me, paying that much doesn’t make it taste that much better than the cheap stuff I get at work. This temptation I can put on a pious tone with.
• Shall we make dinner or simply pick something up at the fast food place? Some nights it is all anyone can do to even decide what is for dinner, let alone cook it (if the food exists in the house), and the only way to fight this is to make sure you either have a well stocked freezer with stuff you have cooked previously (my mother’s tactic), or you figure out how to motivate yourself to cook (what you have in the house). Any ideas here would be appreciated.
• Let’s go out for a beer at the bar after some social gathering or sport event. No it is not a sin to go for a beer after your pick up hockey game, but how much do you spend on this, and how many times you do it is the question. I have friends who have “beer pools” for their after game drinking, where someone brings a cooler to a ball diamond and cheap(er) beer is enjoyed that way (is this legal? depends on where you live I guess).

All these temptations are not Mortal Sins against your finances by themselves, but if you keep tripping up on them, they can add up to a fair amount of money that maybe should be use to pay your debt down instead?

Temptation and how to deal with it, is all a matter of self-control, do you have that kind of self-control?

At Least They Didn’t Throw the Shredder

Seems in their zeal to celebrate the Yankees victory some of the smarter folks in the Financial District (you remember the ones they gave HUGE bail outs to) decided to start throwing unshredded financial documentation when they ran out of confetti (onto the Yankees below). Luckily someone found most of them later?

Given I am starting to pack pounds back on (slowly, but I am now about 30 lbs. above my ideal weight and it is rising), I read over one of my favorite posts from the past Debt is Like Fat. I am doing better with my debt, but now not as well with my fat.

Debt is Like Fat

I was telling my daughter that comment and she looked at me like I had five heads. I tried to explain that building up debt rarely happens overnight, just like building up your body mass is not done overnight, and I think it is very true.

When I had my weight gain it happened over about a 14 year period, and it was slow, but by the time I finally did something about it, it was significant. It was a compounding of eating the wrong things, in the wrong quantities at the wrong time, and a complete lack of physical exertion, luckily I have taken the weight off and am keeping it off (mostly).

Debt build up is the same way, usually (unless you make some gruesome investments, an incredible blunder or you are a victim of a fraud), slowly without you noticing you are doing it. Buying your lunch every day isn’t going to put you into debt, neither is leasing your car, vacationing in Las Vegas, or buying lottery tickets either, however, start adding these together with spending more than you make and suddenly you are building up debt, instead of equity. Keep doing this over a long period of time, and suddenly you have a debt load that you cannot afford and you are just not sure how the heck you did it. It was done one small step at a time.

Unfortunately, or fortunately, debt reduction is accomplished in the same way. Unless it rains money, getting out of debt is done slowly and one month at a time, using a plan and self-control and a wililngness to change your lifestyle (because losing weight and debt reduction are BOTH lifestyle changes, not just a quick fix that allows you to go back to your old habits).

Losing the financial bad habits is the key to debt reduction, keep that in mind.

Carnivals

My posting about Jesus is Watching You! was mentioned at the Personal Power and Self-Help Carnival.