Canadian Personal Finance Blog

Archive for the ‘Have not’ Category

Michael James (nominated by the Globe and Mail as one of Canada’s top Financial Bloggers) and I were having a discussion on Friday night about an interesting article written by Jon Chevreau at the National Post: Even Young Millionaires Need to Worry About Financial Planning.

The article outlines how young athletes who suddenly come into large amounts of money tend to expand their lifestyle and spending to reflect their new riches and many times don’t learn the importance of Personal Financial Planning until much too late in their lives. I quote:

Within two years of retirement, 78% of former NFL players have gone bankrupt or are under financial stress, while an estimated 60%  of former NBA players are broke within five years of retirement, according to the March 23, 2009 issue of Sports Illustrated magazine.

Michael James did not believe the number and questioned whether it was as bad as all that (he agreed that there is a problem, he just couldn’t believe it was as bad as all that). My view is this is very possible and I would not be surprised if it was worse than the numbers quoted by Sports Illustrated or by Mr. Chevreau.

The allure of a “rich” lifestyle and the fact that you have worked very hard to receive this monetary level does tend to throw off a lot of people’s Financial Gyroscopes (as it were). I have seen this at a smaller scale with folks that have got University degrees have lived a frugal lifestyle to get through the studies and when they graduate and get a good paying job, at first they remain frugal but then some folks just decide, “Heck, I deserve it!”, and start to lose their financial minds (I will plead guilty to this once or twice as well).

My guess is this is what happens with Professional Athletes, but they have the added problem of an entire species (for lack of a better term) of humans that seem to exist to prey on them, the hangers on (much like lampreys or other parasites). These people raison d’etre seems to be to leech off these walking banks, and this does not help these young people who suddenly get more money than they could ever dream of having. They get very odd financial advise from alleged professionals, and maybe trust people they shouldn’t trust (or worse trust people who then betray that trust). The players unions are trying to fix this, we shall see how well they might do (see the Sports Illustrated article for an eye opening statement by Raghib Ismail).

I remember when I was growing up and pro athletes did not make a lot of money (they made more than most working folks), but I remember a scout leader I had telling us about Dick Duff, because he played for the Canadiens (and the Leafs), but he had gone back to school to become a teacher, so he had a job after he finished with hockey. Do today’s athletes need to do this? Depends on the sport, and their pay level, but if they don’t plan their finances and plan for their ENTIRE life they are doomed to fall into the Rich Lifestyle trap.

Would I fall prey to this trap? We’ll never know, since my athletic talents were never a danger of putting me in this predicament.

This coming week could be quite interesting for many different reasons but here are just a few.

Labour Numbers

Stats Canada will be publishing a new Labour Survey this week and we shall see if the drain of jobs continues in Canada. From what I saw last week at a job fair I attended, I would suggest the unemployed numbers will be higher. Remember the February unemployment rate was 7.7%, but that may roll higher, in my opinion.

Earnings

Many firms are announcing their earnings this week, which could either crush the mini Bull market that started last week or it could help things keep going, with nice surprises (like RIM’s announcement last week). The upswing in the market may keep going, but how big it will be (or whether it is a sucker’s rally) remains to be seen.

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Lent is almost over

How goes your Lenten financial project? Mine is doing ok, but remember that Easter is the New Beginning you might be looking for as well. In Christianity, Easter is really the “big thing” (not Christmas), and it is an excellent time to start something new as well, so keep that in mind this week as well. Setting goals and keeping your focus on them is how you will succeed in your Financial Journey.

Tax Deadlines

Remember either in Canada or the U.S. your income tax filing deadlines loom. This long weekend coming up might be an excellent time to finish that off, and tick off another box on your list of things to do (or you can go out and rake leaves, either one needs to get done).

Pity the Billionaires

Forbes announced their list of billionaires and the number of alleged Billionaires is down sharply from last year’s number from 1,125 to 793.  How many “billionaires” are now collecting Unemployment Premiums? What do you do with a Billion dollars? Would any of them like to adopt me or my kids? These are all good questions to ponder on a Monday.

The NFB has a very Canadian perspective on the Great Depression and how things were in Canada at the time.

The talk of riots and how many people were unemployed is a very sobering story to hear, given the current situation the world is in. Seventy two hour work weeks? Profiteering? The Capitalist system must get it’s house in order?

Hmmm, maybe this sounds a little TOO familiar.

In recent memory the major get rich scheme that helped sculpt the Canadian frontier was the Klondike Gold Rush, and the National Film Board again comes through with an excellent movie outlining this event, called the City of Gold.

For my American readers this is similar to the California gold rush, however it is in the North of Canada in Dawson City, and this film outlines the problems endured to try to “Get Rich Quick!”.

In today’s Get Rich Quick schemes, at least you don’t have to trek through snow and fight Grizzly bears, but are they as likely to make us money?

I opened my Ottawa Citizen on Saturday and I saw this picture and I was hit by a combination of revulsion, anger, and lurid curiosity.

Revulsion and Anger

Why am I repulsed? You haven’t really read much of my posts, but I think the Cheque Cashing and Pay Day Loan industry is the worst financial service out there, and shouldn’t just be heavily regulated (which it is not) it should be shut down. Anger because the surcharges and interest rates taken by these modern day Loan Sharks is obscene even at the Loan Shark level. 

Lurid Curiosity

This is the most amazing entrepreneurial set up I can see. Whoever runs this particular business has nailed their clientele exactly and are pandering to their every whim and need.

• Cheques cashed at a fee
• Lottery tickets sold (and given away as incentives to good customers)
• Cigarettes sold
• Foreign Exchange
• Money Transfers
• Income Tax “Refunds Now!”

What other services could they offer?

Modern Day Loan Sharks

It’s staggering that the government allows this kind of “financial pornography” to go on. I must admit I didn’t think there was places like this around my house, but I noticed a  ”Modern Day Money Lender” has opened in my neighbourhood, why? I have no idea.

My guess is over the next year or two, this may be one of the growth industries along with repossession and bill collection, and that is a very sad statement about life in general.