Canadian Personal Finance Blog

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.

During a week where the federal government disclosed just how enormous the federal budget deficit will be, there were other topics written about by the Financial Blogging world, but this topic alone is a pretty hot topic. 

What could that kind of “money printing” cause in the economy? Jon Chevreau points out in the U.S. it could mean Hyperinflation on the Zimbabwean scale (at least in Dr. Doom’s estimation at least). 

Random Thoughts: Pensions?

• Michael James points out that not only is Nortel not paying severance and cutting their pension pay outs, they are reneging on work already done in Nortel Pensions and Paying in Advance.
• The Canadian Capitalist writes about the Major Changes in the Canada Pension Plan, which in some ways may be good, but are they?
• Preet at Where Does All My Money Go, points out there are hidden fees everywhere in Hard to Borrow Fees. 
• Canadian Financial DIY writes about our aging population and points out that 80 is the new 65 , yikes!
• The Four Pillars celebrated their 2nd blog Birthday, good for them, keep up the good work.
• Larry MacDonald asks about Falling House Prices and Banks, another interesting topic.
• Riscario Insider points out even Billionaires Need Government support.
• Gail Vaz Oxlade points out that spending Cash may cut spending in Cash versus Credit . 

Have a great weekend folks, hopefully the rain will stop, but maybe my grass needs it?

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!

On occasion some kind publishers send me books for me to review and read. So far most of these books have been a little out of my league, or a little obtuse (financially) for me, however, I got a call a while back from the Penguin Group and they asked if I’d like to have a copy of  The Complete Idiot’s Guide to Getting Out of Debt (by Ken Clark CFP) and I said I would love to read this.

I am a big fan of The Complete Idiot series of books, because they are usually an excellent introduction to the topic at hand and covered a large area of the topic so you had a good grounding on the topic (I have read a bunch of the books on High Tech topics), so I was curious to see what a Complete Idiot’s Guide financial book might be like.

Overall Review: Good Read

The book is what I expected a good general view on the topic of how to get out of debt (for my Canadian readers, it has a more  yankee angle on some specific topics, but most of the topics are very good no matter which side of the border you live on).

The author takes the time to try to put his reader at ease about being in debt, since that is one of the biggest problem with debt, a lot of people think it is impossible to get out of it, so they don’t even try, but Ken Clark CFP wants you to try, and he gives you some very helpful ideas.

In Part 1 Mr. Clark talks about how debt works, which is a good introduction or refresher for folks who may need some helpful hints about how they got where they are.  An important review of the author’s opinion of what Good and Bad debt is, while a little general, is informative.  Mr. Clark does point out that Pay Day Loans are, “… a ridiculously bad idea…”, which I concur and resonate with. After reviewing the math of compound interest (and how debt grows quickly), Mr Clark talks about Debt Denial and the steps to fight against it (de-nial is not just a river in Egypt), and the sooner you accept your debt and plan on how to get out of it, the happier you will be.

The book runs through the important steps of getting out of debt:

• Creating a debt reduction plan ( a realistic one that you can stick with)
• Controlling your cash flow (not spending more than you make, in fact spending much less so you have funds to pay back your debt).
• How to make and stick to a budget (the B-word scares a lot of people, but remember a budget is just a plan).
• How your budget can fail, and how to get back on track, if you have a bump in the road.

Mr. Clark also covers some debt reduction ideas that can backfire if you  are not careful. I think it’s important to point these areas out, so that folks don’t simply latch onto any and all ideas thinking there may be risks involved.

There is a section about the other B-Word (Bankruptcy) that is very American explaining how this procedure works in the U.S., but still interesting to read about how the process works down south.

The book ends with an optimistic and important section about how to live after you get out of debt. There is a real danger to go back to old habits once you have succeeded getting out of debty (much like weight loss plans), so staying out of debt is an important skill to develop as well.  I really like the section about the importance of teaching your children good financial skills, so they don’t make the same mistakes we made.

My Opinion

All in all a very fun read for me, and an excellent refresher on the tools and tactics for debt reduction.  It is well written and the topics flow in a good order and I enjoyed Mr. Clark’s attempts at personalizing the issue of debt (with his own experiences and other folks). I would strongly suggest folks read this book if they are in debt, and feel like there is nothing they can do about it, this book will help get them moving forward.

Thanks to Penguin publishing for sending me this informative and helpful book.