“Everybody’s Got Plans…”

The real quote is from Mike Tyson,

‘Everybody got plans … until they get hit.”

Mike Tyson Manteresting

Mike Tyson Speaks the Truth

This is true in all walks of life, not just pugilism. What is wild is I already wrote about this topic 8 years ago.

If I could find a Financial Planner who would help put together the original plan, but have as part of that plan a “Plan B” and/or “Plan C” as part of that original plan, or gave an outline of a “Plan B” as part of Financial Planning, I think I might hire them. I have spoken to folks who were told what the risks were when they started to invest like:

  • The Stock Market is Volatile, if your risk aversion is high, then maybe you should be in Bonds
  • Bonds may not pay as high a rate as you wish
  • Things may go wrong
  • etc., etc., etc.,

However, do planners have other interesting ideas like:

  • If there is a market correction along the way, we will not be getting out of stocks, but we may rebalance things at some point during the adjustment, to make sure there is even distribution, in the portfolio.
  • If you suddenly have a large bill for your house, we can take money from the more liquid areas in your portfolio to pay for it, and then plan on how to pay it all back.

Planning is fine, but all plans change, due to unforeseen circumstances or just “life in general” (i.e. “… until you get hit”), your plan must either be flexible enough to deal with this, or you must be flexible enough in you financial planning to reconsider things, and change your plans.

Photo courtesy of Manteresting (NSFW)


Adapt Your Financial Goals

When I started working at BNR and then Nortel there was always a “goal” for the company, and one of the most interesting goals was Vision 2000. This goal was that Nortel was going to be the #1 Telephone equipment sales company in the world, and (I think) Nortel achieved that Goal, however, by the time that 2000 rolled around, the Goal no Longer mattered. The business of selling phone switches was circumvented by the Internet and Wireless phones and how all this worked together.

This is why it is very important that you set your Financial Goals, but you also every once in a while do a “sanity check” on the Goals themselves to measure whether they are still relevant.

Changing Plans

Always have a Plan B

Say you had children and you had a plan with RESPs and such, but then your child was diagnosed with a disability? Suddenly your goals may no longer be relevant, however, you can change them and react to the change in life that has happened to your child and to your financial plan. This happened to me, although I am not quite sure what my financial plan was then, it now includes an RDSP and saving for my child’s future as a disabled Canadian.

If you suddenly got a windfall of money from an inheritance or a bonus, it is obvious that your plans are no longer up to snuff (unless you planned for that, in which case, good planning!). When you end up “in the money”, don’t just squander it and then have to make up other plans (like what to do when you are out of bankruptcy), rethink and re-jig your plans or expand your goals.

If one of your goals was to have $2 Million saved for your retirement by age 55 (a good goal, in my opinion), however, over time you have also built up a substantial amount of discretionary debt, which will not be paid off by the time you reach age 55, your retirement savings Goal is now irrelevant. If you reach your goal of having $2 Million in savings, yet you are carrying $300,000 in mortgage and debt by that age, your goal has not really been achieved has it? Stop saving, kill the debt and then get back to your plan.

All plans need to be tended often to ensure you are chasing the right brass ring, or ensuring that the brass ring is still there and that you still want to have it.


Honest New Year Resolutions

Yes, a new year is upon us and like the rest of the heard, I am sure you have made some resolutions about how you will be a better person this coming year. I applaud your originality, OK, that ruins my “no sarcasm” resolution, and I am writing this on New Year’s Eve.

Last year I wrote some Sarcastic New Year’s Resolutions, so why break with an old tradition let us see if I can hit a few more of the more trendy resolutions for 2014.

My Personal Opinion On Resolutions

My Personal Opinion On Resolutions

Financial Resolutions for 2014

As I pointed out the “not write any more sarcastic posts” one is already shredded, so we shall forget that one completely.

  1. Control impulse spending better than last year, but those boxing quarter sales are just so enticing, I am not sure how I can stop myself from not buying that 110 inch TV for $150K. Seriously, I am only human, how can anyone resist that?
  2. So the automatic saving thing didn’t work too well this past year, so what I should do is put the money in my TFSA, that way I know I can’t easily take money out every month. That may cause a problem around March when all the Christmas bills show up, so I might have to then get another line of credit to pay for all of this, so I had better not have a resolution about not adding any more credit lines to my financial world.
  3. Don’t join a gym this year, since I haven’t figured out how to cancel last year’s gym membership, so maybe I’ll buy some exercise equipment. I figure a tread-mill, stationary bike and an elliptical trainer (and maybe some free weights) should be sufficient, and the fitness supplier has a buy now, pay at the end of the year deal, so that will work out well (if I can figure out how to cancel my old gym membership).
  4. I should really get a new car, because my current one is a bit tatty, and with a lease it is dead simple and so cheap. Another bi-weekly payment won’t hurt me (that much), and I get to raise my self-worth by getting a new car (and not that crappy old thing I am currently driving). Cars are a valuable asset, so it will actually make me worth more.
  5. Eat out less than we did last year, of course we ate out 4 out of 7 nights last year, so I only need to go out 3 out of 7 nights and we are ahead, so that should be easy (except when you get home and you really don’t feel like cooking, but you are hungry, then that doesn’t really count).
  6. To save money on coffee and lunch at work, I am just going to steal other folks’ lunches out of the fridge, and drink coffee from the coffee fund, and just not pay for it. This means this is basically free, and a huge saving, except for those days where I really need a latte, then screw it, I am going to get my $7.50 coffee!
  7. Get rid of cable, because it is too expensive, but then I can sit at home and complain about nothing to watch on TV and be generally miserable. I could get an antenna, but it would make me happier just to bitch and complain, and it would help me feel more pious as well.

Any other useful resolutions that I have missed?




Simple Financial Ideas

So while researching another post (yes I do actually do research on occasion (feel free to mock me in the comments section)) and came across a wonderful pair of sentences in The Atlantic that has awesome clarity for me in terms of personal finances.

With savings we pass today’s earnings to the future.
With credit, we pull expected future earnings into today.
-Derek Thompson

I read those sentences and had to put the print out down I was so dumb-founded by the clarity of it all.

Money, Coins, Pennies

Yes, it is a simple statement, and it is blindingly obvious once you read it, but the awesome clarity of it I just love.

The article it appears in was actually the topic I was going to write about, but that is for another day, this simple lightning bolt statement must be the first paragraph of any personal finance FAQ or rules to live by.

If I ever do a public speaking engagement on money I think this would be the opening statement or slide for me, it is a perfect explanation of what many people do not understand about saving and credit, and in many cases some people over complicate the concepts as well, but this one simple statement sums it all up very nicely.

The two sentences bring up two very important points to consider:

  1. What is the Future Value of the money you are sending into the future? It all depends is the simple answer, but remember if you put your savings in something risky, you may not be passing this money into the future (it might just disappear with time).
  2. What is your Future Earnings that you are spending right now? In my case I am actually making less than  I did 10 years ago (gross), so are you sure you are going to be making more in your future, because you are using that to pay for the stuff you are buying right now.

I really do like it when something I read resonates with me.


The Most Important Financial Decision You Will Make

Is the next one (OK, I am paraphrasing and mis-quoting Ben Hogan), but what is true for Golf is always true for Money as well. The actual quote is:

“The most important shot in golf is your next one.” -Ben Hogan

You can’t undo what you have decided before, so it is fairly obvious that the most important decision(s) are the ones you have not made yet. You can try to learn from your previous mistakes but the only decisions you should be ruminating on are the ones you have not made.

For those purists, I am not saying that your previous decisions are unimportant or less important, just that they are already made, so work on your next decision, don’t dwell on the ones you already have made. If you have made bad decisions in the past, maybe the next financial decision will be a better one?

Now I have said before that Investing is Like Golf (in that you need to go back in time and get good at it then), but I must listen closer to the Golf Announcers as this one from “The Open” this past weekend was a true gem.

Make your next financial decision count.