Archive for the ‘Parable’ Category

Best of: Don’t Pass it to the Other Team!

The CIS championships return to Ottawa for the last time this weekend (they go back to Halifax for a while after that), and with that in mind we go back in time to one of my favorite old postings Don’t pass it to the other team sound advice from an excellent (if not hard-edged) coach (Dave Smart of Carleton). You can find this post and several other of my favorites at My Favorites page (well worth a read).

As a note, I still dabble in helping out with basketball (although I suspect I am a much better assistant coach/team manager than I am head coach), and hopefully will get to 1 or 2 games this weekend (will be attending a coaching clinic on Saturday morning, hopefully there will be other useful messages that I can translate into the world of personal finance). Also Carleton’s string of 5 championships in a row was broken, however they are defending champions again this year, so we shall see how this weekend goes. (I am a Carleton fan, but a Waterloo Alumni, luckily my Alma Mater is not playing this year).

Don’t Pass it to the Other Team!

So one of my sidelights is coaching basketball, and I love going to clinics from coaches who talk about coaching and plays and stuff (I’m an old gym rat at heart). Last Saturday I was lucky enough to hear from Dave Smart who is the head coach at Carleton University (the Ravens have been Canadian Champions the last 3 years running), and he was fascinating to listen to. Coach Smart admits to being a perfectionist and telling it like it is, and one of the expressions he tells all of his players is “Don’t Pass the ball to the other team“.

The first time you hear this expression it sounds obvious, of course, who would do that, but what Coach Smart was trying to say (I think) is most basketball players watch their own players, but rarely see the other team’s players. If you watch the defensive players, you won’t pass it to them! Simple, right? No! You know where the offensive player is going to go, you don’t know where the defender is going, and you need to watch them!

What does this have to do about finances? (Darn good question, get ready for a stretch here) Don’t take your eye off things that you can’t control, the stuff you can control, your savings, your retirement, your investments, your debt reduction plan, if they are under control that is good.

You have to plan for the things you don’t control, and that means:

• Reduce DEBT! You can’t control interest rates, you can’t move forward with your car in reverse. Debt reduction is first and foremost. Everything else can be dealt with much more easily if you are carrying little or no DEBT!!!
• Have contingency funds in place for:
  • Car repair. I am guilty of that one, car repair bills always throw me off kilter
  • House repair. I am going to get a major bill to replace the roof and furnace on my house, but they had to be done. If your house is new, you’ll need to replace these things in 15 years, but in 15 years, if you haven’t saved any money for it, it’s going to HURT!
  • Catastrophic illness. I have long term disability insurance with my company just in case. If I had a stroke tomorrow, my family would at least have an income of some kind.
  • Loss of employment. If you lose your job, how long will you last? A priest once told me everyone is 12 weeks away from living on the streets, make sure you are not one of those folks
  • Death! Term insurance to protect your family, and a will to protect them even more (thanks Dividend Guy, for pointing out I missed that).

These are SOME of the unknowns, that you need to watch for, and not pass the ball to them!

Hope for the best, and plan for the worst!

Yes folks, here I got again, extolling the virtues of Lent and how you can use it to your advantage for your Personal Finances.

Easter is the time for new beginnings or restarting something you need to start doing again, and most people view Lent as a time to “find something to give up”, but that is dull and shows little flare, so another way is to look for something to Enrich your life for the 40 days of Lent (leading up to Good Friday and Easter).

Think about your spiritual journey, yes please do, however, also take advantage of this journey to work on your home finances as well!

Your Financial Lenten Journey

What areas of your personal finances could use either Enrichment or Better still a sacrifice that might help your financial well being? There are some very simple ones that I think about every year (and have done a few of them):

• The Latte withdrawal penance. Cut out buying coffee for the 40 days of Lent and put that money aside, to either save, give to charity or pay down your debt. Keep track of this and see how much money you might be saving here, it’s worthwhile finding out where this discretionary money is going.
• Read 4 Personal Finance books over the 40 days to enrich your understanding of your personal finances or your investing adventures. Building up your expertise over Lent is a good thing.
• Brown bag it for 40 days, give up buying lunch at work, and bring your lunch instead. Another way to find out where your discretionary spending is going.
• Take the bus to work for Lent, leave the car at home, buy a bus pass and take the Bus to work. Yes gas is cheaper right now, but not driving might have other benefits for you (less stress, more exercise, etc.,).
• Read financial blogs every day: another way to build up your understanding of finance is reading and learning.
• Open a TFSA and put found money there: OK, not really a Lent thing per say, but still somewhere to put your new found moneys.
• Live on cash for 40 days and get rid of your credit cards. Freeze them in your freezer, lock them in your safety deposit box, or cut them up, but live on CASH only (no debit either) and see if you can do it, does it change your spending habits? This one is one heck of a heavy one, and anyone who does try it keep me posted and I will encourage you as best I can!

Think about these or suggest others, I am open to suggestions myself. Shrove Tuesday is coming and then Ash Wednesday means Lent begins and your journey begins that day.

I’m giving you a weeks head start to start thinking about this stuff folks!

From my viewpoint most of the “self help” shows on TV these days consist of an expert telling a dupe (or dupe couple) that they are wrong,

The array of shows seem to follow the following formulas:

You Aren’t Wearing That!!!

Two people treat you like the “cool” kids did in High School (i.e. they berate you for your taste in clothing and ridicule you until you agree with them). While this is entertaining, I suspect I could well be one of their victims, as I am not a “victim of fashion” (to quote Rough Trade) I wear what is comfortable to me mostly (I have suits that I wear when I need to show I can dress like an adult).

You are FAT!

There are a bunch of these shows that either take morbidly obese folks and attempt to get them to lose weight by making them exercise a lot and change their lifestyles or something similar to this. These shows typically are like the jocks in high school making fun of the “geeks and fatties”, except the hosts then attempt to help them lose the weight. I applaud the attempts, but they all seem superficial and I would be very interested to see follow up shows 1, 2 and 5 years after to see if folks keep off the weight.

I’d fit into one of the “hey you need to lose those last 30 lbs” shows right now (under full disclosure).

You can’t Drive or Fix Your House!

There aren’t that many shows about this, but they are quite funny to watch, but in a very  mean way. You watch folks who just don’t understand how to drive or how to do any kind of “home fixit” things and you watch the hosts laugh at them about it, and attempt to fix this issue.  I must admit I do watch these shows and laugh, but I also feel guilty for doing it. I am also not a “fix it” kind of guy unless it is a computer, then I am ok with that.

You Spend How Much Money?!?

This last type of show is more in my neck of the woods, but again it is painful to watch them. The hosts usually try hard to show the couple or person the folly of their way (I like Gail Vaz Oxlade’s show, but can’t watch it because the stories of how the people got into debt drive me insane).  It is important to help these people, but it is important that these people realize that all of this is a lifestyle change, not just a quick fix. Again, follow up with these folks after a while might be very interesting.

I am astounded at some of the folks who go on this show and let their financial misfortunes be put on TV for all their friends and family to see. I think I would sooner see naked pictures of me on the net, than publish all of my financial failings (fear not, I suspect there are no naked pictures of me out there, and if there are, nobody really cares).

Congrats Preet!

Why am I writing about this? Preet over at WhereDoesAllMyMoneyGo won the W Network Expert challenge so he will be doing his own personal finance show pilot and we wish him the best of luck on that.

As I will be traveling on the weekend, I have written this Best of post for my readers. It is one of my favorite stories about how my Father taught me about money.

You can find this story and other Favorites of mine on the Favorites tab at the top of this page.

Best Financial Advice Ever

My parents have been very helpful in my life, both financially, but also with very wise advice, and with that in mind, I’d like to share you a story my father told me (kind of a parable):

There once was a court jester who enjoyed a good joke, usually at the expense of the King, which got the Jester into deep trouble. One day the Jester was having a particularly “devilish” day and insulted the Queen in a large public forum. The King was OUTRAGED by this and ordered the Jester executed for his insolence and the guards dragged the Jester off to the dungeons.

Hours passed and the Jester (who was a quick thinking man) thought how can I get myself out of this mess? Finally the door to his dungeon opened and the guards dragged him back to the King. The King said, “I have enjoyed your buffooneries over the years, so I will give you one wish before I put you to death for your crimes.”.

The Jester thought what could he wish? Then he came up with a plan, he knew that the King adored his horses so he came up with the following, “Sire, all I ask is that you give me a year’s reprieve, and during that time, I will teach your horses to Sing! This will make you the envy of all other monarchs. If at the end of this year I am unable to get your horses to Sing you can execute me in any gruesome fashion you wish.”. The King looked perplexed and then confused, but finally he thought that he had nothing to lose, he would either be the envy of Europe or the Jester would be executed, either way was fine by him.

The guards then took the Jester towards the Royal stable, when one of the Guards asked the Jester, “Why would you make such an obviously impossible deal, surely you know no one can get a horse to sing?”

The Jester smiled and whispered to the guard, “Many things can transpire in a year my friend, I could die and thus I have cheated the executioner… the King could die and I might get a reprieve… or the horses could sing!”

My Dad told me this story after we discussed payments schemes for money he was loaning me to buy my first house. What was he telling me? I’ll leave that to you gentle reader, as usual with a story from my Dad, you get from it, what you think, not necessarily what he thinks you should.

Snow Tires -> Brakes

Remember when you take your car to get it’s snow tires off, be prepared to have your brakes checked out too. I forgot and had an unexpected bill on Friday. My brakes did need fixing (I am not commenting about my mechanic) but I wasn’t expecting the extra expense! Be prepared for unexpected bills as well. Better still have a car emergency fund for just this kind of expense!

I got called by Insight Magazine to give some advice to new grads on what they should be doing about their finances, and I gave some answers to the interviewer, but as usual, I am not sure I was very clear or eloquent, so now I will attempt to be more clear to those that might read the article coming up.

Get The Heck Out of Debt

You have just graduated from University, and you might be carrying upwards of $40K in debt (hopefully in student loans only), you most likely won’t be paying that debt off in your first year of working (should you find a job right away) (if you can pay it off, good for you!), however, you should put together a plan on how you are going to pay off that debt and WHEN it will be retired. 

Carrying debt is a drag on your finances, and the sooner the debt is retired, the easier your financial life will be. You should not aspire to “get used to living in debt”, this is the one thing my generation does NOT want to hand down to you.

Don’t Fall In Love With Having Money

Just because you have graduated from University and you no longer have to eat Kraft Dinner with Hot Dogs for dinner, does not mean you must go out every night to eat. You have lived a frugal lifestyle as a student (I am assuming), but if you continued that frugal lifestyle for a while longer, you may be able to pay down your debt faster and then be on a much stronger footing financially.

Yes, you deserve to enjoy life, but it is very easy to get used to the “Let’s go out to dinner tonight we deserve it” lifestyle, and once you are in that lifestyle the habit is very hard to break (speaking as a 49 year old, I can attest to that issue).

You cannot live your parents’ lifestyle (yet) so don’t try. It took them 30 years to get where they are, don’t rush your spending habits to mimic their spending habits.

If your parents paid for you to have a Blackberry or an iPhone or paid for your Cell phone bill, maybe it’s time to get rid of this expensive toy? You don’t need $120 a month cell phone bills. Discretionary spending (i.e. money haemorhage) is a bad thing which you must watch diligently. Middle age men’s wastes spread, but their spending spreads like that as well, don’t let it happen to you.

Have a Savings Plan

The sooner you start saving, the better it will be for you when you reach my age, however, saving while still carrying discretionary debt (i.e. non-mortgage debt) is paying Peter to feed Paul. Lowering your debt is first and foremost, if you have left over moneys from your year, yes, starting an RRSP early is a good thing to do, but pay your debts first.

Savings is good, getting out of debt is better.

Get the Heck out of Debt

Did I mention this yet?

Banks Can be Negotiated With

As I have pointed out before Free Banking is possible, but it is more likely for old farts like me, who have a good track record with the bank already.  Paying $12-$25 a month in bank service charges you should try to avoid, since you most likely don’t use enough services with the bank to justify this charge. Go with as cheap banking as you can.

The Three Worst Ideas After Graduation

1. I deserve a new car! -or- I deserve a vacation in Las Vegas!
2. I’m a little short until my next pay cheque, I’ll get a pay day loan
3. I am only carrying a few hundred dollars on my credit card balance this month

Keep this in mind, did I mention Get the Heck Out of Debt?