Canadian Personal Finance Blog

Archive for the ‘Plan’ Category

For those who don’t realize it, today is Shrove Tuesday (aka Pancake Tuesday). This day means Lent starts tomorrow, and in New Orleans we have Mardi Gras festival as well (although I am not sure they have stopped partying since they won the Super Bowl).

The word Shrove, is the past tense of the English verb shrive which means to obtain absolution for one’s sins by way of Confession and doing penance. Doesn’t sound like it is much to do with pancakes, now does it? Evidently we are also supposed to make merry and enjoy ourselves before we go to Lenten confessions (I like the first part, the second is not as likely).

Financial Shrove Tuesday

NO! I am not saying you should go out and blow your finances up before you start your Lenten Financial Journey, far from it. You can have some fun, but all in moderation. If you plan on giving up your daily Latte, then have 1 last one on Tuesday, and savour it. If you plan on brown bagging your lunch for Lent, then maybe a lunch out is OK, however, don’t splurge! If you plan on using cash, maybe it’s time to find a really good hiding spot for your credit cards (or maybe you should visit your bank and put them all away in your safety deposit box). If you are planning on reading some books on Personal Finance, today might be the day to get them out of the Library.

Make sure you have some pancakes too.

Random Acts of Kindness Week?

Forgot to mention that it is Random Acts of Kindness week (I would not kid about this topic), so if you were thinking about doing a Random Act of Kindness, this would be the week to try them out.

A few ideas:

• When in line at a Drive Thru (preferably a coffee shop), offer to pay for the next car’s coffee as well
• Clear your neighbour’s driveway if it is covered in snow (especially if you have a snowblower).
• Give the toll booth attendant a $20 bill and tell her to pay for as many cars that follow as possible.
• Phone up a local kids sports team and ask if they have a fund to help pay for less fortunate kids to play, and give them some money.

These are only a few trite examples, you know how you can help out, so do so. Anybody care to comment on what they may have done so far this week?

For my Buddhist readers, a belated Happy Parinirvana Day. May we all reach that level of enlightenment in our lives (some day).

Video: Madoff Saga

It seems PBS is being quite liberal with their video library so here is a very interesting clip about the Madoff Affair, an interesting view from one of Bernie’s “partners”, sounding very disingenuous (IMHO). Any time someone claims, “As God is my witness…”, I start getting figity:

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.

I have found two new guilty pleasure shows on TV, one is 16 and Pregnant on MTV (that one I can’t even talk about right now, I’ll save that for a separate rant) the other is “I Didn’t Know I was Pregnant” where women explain how they can go 9 months carry a child and then claim they never knew they were pregnant. The stories are quite “far fetched” in my books, but I am willing to give the benefit of the doubt that some of them may actually be true.

What does this have to do with Personal Finance, you may ask? Do you know someone who told you, “I didn’t know I was that far in debt?”, I know a few (and I am pretty sure I have met others who just wouldn’t admit to it).

How Did I get This Far Into Debt?

That is the second question after someone asks once they figure out they are “going under” from their debt load, and the question in this case is the answer. If you are asking that question, but you know  you are in deep financial debt, your question answers itself since you had no idea what was going on in your finances.

Finances need to be watched and monitored (at least read my articles on Quarterly Personal Finance Statements), or you are asking for trouble. If any of the following statements resonate with you, it’s time to look at your personal finance story:

1. I don’t know how much I spend on:
   1. Entertaining and Vacations
   2. Eating out
   3. My car
2. I never read my monthly statements on my bank accounts or my investments
3. I don’t know what day my credit card (or any other bill) is due
4. I eat out a lot because I don’t have time to cook at home
5. I use my credit card to pay for everything

There are about 300 more statements like this I can make but let’s keep this list short, if you are not keeping track of your finances or you don’t care, you are going to be asking, “How did I get this far in debt?“, very soon (if not right now). It does not take long to figure out where you stand if you are honest and you have all the pertinent information, if you don’t have it, go get it.

Can someone get pregnant and not know it until the deliver, I am skeptical about that. Can someone get into debt and not realize how bad it is, until it is too late? That I am sure happens more often than anyone would want to admit.

Maybe I have stumbled across the next great TV Show Concept? Don’t think so, Gail Vaz-Oxlade and others already have this topic covered.

Looking at your mid-year personal finance review, you can ask the all important question, “Now what?”, and as usual my mealy mouthed answer is, “That depends!”.

If you have met all of your financial goals for the year and it is mid-year, you set your goals too low (or you sand bagged to make yourself feel good), or you got really lucky. No matter what reason, you can celebrate a little bit for achieving your goals, but now is the time to make some “stretch” goals for the end of the year, and prove that your success at the start of the year was not just a fluke and that you can work hard the whole year. Simply sitting on your financial laurels is just not the thing to do, build from your success and show that you can finish strong for the year.

If none of your goals are met, and you think you will be unable to hit any of your goals this year, maybe it is time to re-vamp, or re-think your plan (or scrap it completely). Not to worry, look at where you had problems with your plan and figure out whether you were:

1. Too aggressive in your planning, and set unattainable goals
2. Very unlucky and the world conspired against your plan
3. You never really planned to follow this plan

If the answer is (3) don’t kid yourself, you need to plan, this is going to hurt you some time soon. If the answer is you were too aggressive then maybe go back to your original goals or plan, and maybe scale them back so that they might be attainable by the end of the year (but still make them challenging).

If things are going OK, and you think you can succeed with your plan, good for you, you have made a good plan, and you are following it. You can celebrate a little in your success, but get back to your plan, enjoy your success and keep up the good work.

Yup, it’s half way through 2009 and how goes your financial plan for this year?

For me my plan of having a job by now, has not come to fruition, but I am still working hard at making this happen.

This week’s posts will discuss what areas and ideas you maybe should be thinking about for your personal finance plan and what you might need to tweak, change, add or forget about in your Yearly Personal Finance plan.

Do You Have a Plan?

You are now saying, “Wait a minute, I don’t even have a financial plan for this year?”, that’s a problem, but not insurmountable that is for sure.

So many people a yearly financial plan has to be complicated, over-thought or grandiose, but that is really not the case (if you don’t want it to be).  A personal finance plan can be as simple as you want it to be, and is simply based on the goals you want to hit this year (financially), no more, no less.

Simple Plan

A simple plan for a year might be:

• Cut your credit card debt by 30% (if you have credit card debt, if you don’t then you have achieved this goal, give yourself a pat on the back). If 30% is way too much for you, then either:
  • You have one hell of a credit card debt and you need to see someone about this.
  • You need to adjust your lifestyle, because this is do-able if your credit card debt is less than $10,000
• Pay off 15% of your University loans (adjust as you see fit).
• Open an RRSP account and put in at least $1000 for the half year. Make sure it is with an investment firm and not with an Insurance Company or a Mutual Fund firm.
• Create an emergency account that you will deposit $100 a month into (open a TFSA if possible for this as well).
• See how much you pay in bank fees monthly and lowering them or cut them to Zero, if possible (see PC Financial or talk to your bank about lowering the fees). My regular readers know how I hate bank service fees.
• Buy 1 less coffee or latte a day and put that money in your top desk drawer (and then put it monthly in your emergency or RRSP account ).

Simple as that, no fuss, no muss, and less worry, if you hit those goals.

Tomorrow

What to look for in your Personal Finance Plan and how to deal with success and with failures.