Canadian Personal Finance Blog

Interesting turn of phrase I have seen used to mean a few different ideas in the software development world and in a few other places as well.

The Interpretation I got for this phrase from the person who sent me was:

Eating your own dog food

1. Coined by a Microsoft manager, to use the products you develop in your office as your customers would (with the same software quality), to ensure you understand your product and understand your customers needs as well.

It seems to be an extension on the concept of “Practicing what your preech” or “Walk to the walk, don’t just talk the talk…”, but finding a company that actually uses their own product can be a good thing, I have found in my travels in the world of high tech.

Financially Eating Your Own Dog Food

Investing and Financial Institutions are a little harder to figure out if they “Eat their own dog food“, I think it would be amusing to find out that the CEO of my bank didn’t use the bank for his finances (if not very disconcerting).

I would be very interested to see if the following might be happening:

• The President of the insurance company that espouses “Freedom 55″ actually uses that program him or herself? I kind of doubt that one, but I’ll gladly retract that statement if it is not true.
• Does the CEO of BMO  use their “Mortgage Insurance” facility, or does he or she simply buy term insurance as others do? My guess is No, they don’t use that either (they may not have a Mortgage mind you either).
• All those insurance sales folk who want to sell me “Whole Life” insurance, do they buy the product? My guess is some do, but maybe at a much cheaper rate than we do.
• Does the President of TD use their Stepper GIC product? I think no is the answer on that one too.
• Do the CEO’s of the Mutual Fund companies that have MER’s of 4 and 5%, buy their own mutual funds? My guess would be not likely.
• Did Mr. Madoff buy into his own Ponzi scheme? Don’t answer that, it’s rhetorical, by the by, he got 150 years, given he is 72, he’ll be spending the rest of his life in prison (is that enough).

Any other examples of “Eating their dog food” in the financial world I have missed, please chime in the Comments section.

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.

I have written previously about if it’s not written down, how do you know it happened (a phrase I stole from Tom Clancy), and last week I wrote about financial plans (and revisiting them mid-year), and that is another good example of something you should write down somewhere. Simply thinking up a financial plan but not writing it down, or building a spreadsheet to monitor it (or some tool like that), how can you tell if you are succeeding or not?

Without writing down your goals and your plans, your mind can play tricks on you, or worse you can forget important goals that you need to achieve to reach Financial Nirvana (as it were)? You don’t need to be journaling or anything like that but simply creating a simple document with your goals written down may be enough for you to keep those goals in mind over the year. It’s not very hard, and a very useful way to keep yourself focused and also a way to keep yourself motivated.

Examples of things you should write down:

• Your financial plan, and goals for the year and maybe for your life
• Every cheque you write, as well as every monthly withdrawal from your bank account
• If you don’t know where all your money goes, write down for a week every time you spend money and then at the end of the week look and see where you spend your money.
• Use a calendar to remind you about when bills are due, monthly payments, birthdays, and anniversaries too (maybe reminders before those last two about when to buy presents)
• Many, many other things, that you think you might forget financially!

Nortel Sells The Ca$h Cow

Nortel announced the sale of their wireless division on the weekend for $650M which is a good thing for the folks left at Nortel, a good thing for Nokia/Siemens but not sure if it is good for Nortel creditors or pensioners (remains to be seen).  For the longest time the wireless group was the engine that drove Nortel sales and revenues, so to see it sold for such a discount, it is sad, but hopefully it means the remaining survivors at Nortel can keep their jobs.

Good Luck Toronto

As I write this the City of Toronto is poised to be crippled by a Garbage strike, I can’t recall any garbage strikes I have lived through, although I have seen video of the garbage strike in London England in the mid-70’s, and I was very impressed by how much garbage a big city can accumulate in a very short period of time (and the mess it can create). Striking during an economic apocalypse is a gutsy play, but then again Refuse Collection is one of those jobs that not many folks would do either, so we shall see. Might be time for Torontonians to look into cholera shots?

Belated Happy Father’s Day

For the Fathers out there hope you enjoyed your day, traditionally the day when the most collect phone calls are made, sort of sums up being a Dad, doesn’t it?

Best Personal Financial Planning and Personal Investment Articles this Week from Personal Finance Blogs

Publisher’s Note: To my regular readers I give you the Carnival of Financial Planning which I am priviledged to host this week, Video of the weekend will return next week, enjoy these interesting articles. -C8j

Carnival of Financial Planning – Edition #94 – June 20, 2009

Welcome to the June 20, 2009 Edition #94 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

This edition is arranged by subject heading, so that you can browse efficiently.

Enjoy!

The Skilled Investor, Editor

Budgeting

FMF presents Simplicity Can Streamline Your Budget posted at Free Money Finance, saying, “A good budget is a simple budget.”

Susan Saverton presents Living Expense Tracking Methods posted at Family Financial Planner, saying, “If you do not understand how much you spend and how much you are saving and investing, you simply do not have a financial plan. This situation dramatically increases your family’s long-term financial risk.”

Economics

Dorian Wales presents On Causality and Correlation in Economics posted at The Personal Financier, saying, “Causality is perhaps the most fundamental element of empirical evidence available to economists. However, it is also the source of many misconceptions due to its elusive nature.”

Britannica Blog presents Dayton, Ohio: Final Fortune 500 Company Abandons City posted at Britannica Blog, saying, “At the turn of the last century, Dayton, Ohio, was something akin to the Silicon Valley of its day. It was the home to the Wright brothers, of course, as well as Charles Kettering, the automotive genius who would develop so many innovations that allowed General Motors to become the dominant player in a new industry. And the backbone of all this was the National Cash Register Co. (NCR), founded by John Henry Patterson.”

Estate Planning

Tushar Mathur presents Getting finances in order posted at Everything Finance, saying, “Keeping organized records is a gift to your family and to yourself. It helps ensure that your wishes are followed, that your assets are accounted for, and that your money is available to meet your family’s needs in a timely fashion.”

Financial Planning

Patrick @ Cash Money Life presents Do You Need Long Term Care Insurance? posted at Cash Money Life, saying, “Do you need long term care insurance? When should you but it and how much should you get?”

Susan Saverton presents Efficiency of Personal Investing Strategies posted at Family Financial Planning, saying, “When pursuing optimal financial planning and investing strategies and controlling your costs and capital gains taxes, you also need to establish a time-efficient system to monitor, adjust, and adhere to your financial plan. You need to control and limit the time that you spend on your financial planning, and you need to focus your planning efforts on the most effective activities.”

jim presents Ally Bank Review posted at Blueprint for Financial Prosperity.

KCLau presents Why Robert T. Kiyosaki is a best-selling author? posted at KCLau’s Money Tips, saying, “Robert T. Kiyosaki is the best personal finance author I follow. I started reading his books back in 1999. Although some reviews you found written by readers on Amazon say that he keeps repeating most of the points, I still find them interesting every time. It works as a revision whenever he repeats.”

Jeff Rose presents Cash Your Social Security Check Now Not Later posted at Jeff Rose.

Silicon Valley Blogger presents myFICO Score Watch: Equifax Credit Score Monitoring posted at The Digerati Life, saying, “Here’s one option to monitor your credit score. It’s a popular credit score monitoring service that keeps track of your FICO score and credit report on a regular basis. This is for those people who don’t want to order reports and scores on their own.”

Financing a Home

Alex Fotopoulos presents When is it Smart to Refinance a Mortgage? posted at My Trader’s Journal, saying, “Some key points to consider when refinancing your home.”

Brian Brady presents What If The Real Estate Industry Didn’t Control The Real Estate Market? posted at BloodhoundBlog.

Brian McKay presents Today’s Mortgage Rates Zap Mortgage Refinancing posted at MonitorBankRates.com, saying, “Rising interest rates are causing a drop in mortgage refinancing, reversing a an upward trend started earlier this year.”

Financing Education

Patrick @ Military Money presents Tax Advantages of 529 Plans posted at Military Finance Network, saying, “Tax advantages for the 529 College Savings plan.”

Income

FMF presents The Most Useful Thing Students Can Do to Prepare for the Job Market posted at Free Money Finance, saying, “The one things students should do to prepare themselves for the job market.”

Praveen presents Easy Ways to Generate Cash posted at My Simple Trading System, saying, “Easy ways to generate extra cash”

Khan Ben presents From Classroom to Corporation posted at Higher Education and Career Blog, saying, “Tips for professors who want to make big time moolah.”

Investing

Darwin presents Study:Google Earnings Stock Manipulation EVERY Time? posted at Darwin’s Finance, saying, “This article highlights a damning study demonstrating the manipulation of Google’s share price around earnings and option expiry virtually EVERY quarter and what you should know about investing in Google shares.”

Frank Vertin presents Just Buy Index Funds Directly posted at Best Index Funds, saying, “Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds.”.

ABC presents Investment Time Horizons for Retirees posted at ABCs of Investing, saying, “Discussing investment asset allocations and time horizons for retirees.”

MoneyNing presents Turbocharge Your Savings with Certificate of Deposits (CDs) posted at Money Ning, saying, “Certificate of Deposits are boring but it’s a guaranteed way of capital preservation!”

Alex Fotopoulos presents Sold Allstate (ALL) Naked Puts posted at My Trader’s Journal, saying, “FINBLOGGER – Alex added Allstate to his list of stocks to buy. He is playing it with naked puts to play a horizontal or upward move in the stock.”

The Smarter Wallet presents Use Candlestick Charts, Trading Signals To Evaluate The Stock Market posted at The Smarter Wallet, saying, “We look into how to use candlestick charts to analyze the stock market.”

Larry Russell presents 7 Ways to Pick the Best Noload Mutual Funds and ETFs posted at NoLoad Mutual Funds, saying, “Taken as a whole, the vast body of investment research studies show that there really are better approaches to buying and owning mutual funds and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work.”

Four Pillars presents Asset Allocation – Include Future Contributions? posted at Quest For Four Pillars, saying, “Can a small investor ignore asset allocation?”

Mike presents Beware of the Double Dip posted at Great Depression Version 2: Bear Market and Economic Depression, saying, “The stock market may be up, but that does not mean the end of the recession is necessarily near.”

Michael Cohen presents Don’t Bet On A Soft Landing Into The New Normal posted at Debt, Economics, Boom and Bust, saying, “There are those predicting a new normal of 1-2% economic growth. We will likely not ease our way into that sort of situation.”

KCLau presents What is the best investment? posted at KCLau’s Money Tips, saying, “The best investment comes in many forms. I was frequently asked this same question over and over again. Let’s see how some successful people answer the same question”

Puneet Kapoor presents Hedge: Not a Four Letter Word posted at KuberKhana -Indian Stock Fundamental Analysis, saying, “A broadside view of what hedging is all about.”

Zach Scheidt presents Potash May Fertilize Economy’s Green Shoots posted at ZachStocks, saying, “Potash Corp. (POT) offers an inflation hedge and also participates in a growing economic picture. The stock should rise based on the value of potash reserves in the ground.”

Dividends4Life presents Wal-Mart Has Gone Shopping posted at Dividends Value, saying, “What do you do when the economy tanks and the stock market follows suit, but you are still generating a lot of cash? Many people would look for bargains in the market. Wal-Mart (WMT) has done just that.”

Zach Scheidt presents S&P 500 Correction, Gold Update, and Inflation vs. Deflation posted at ZachStocks, saying, “Is the S&P 500 experiencing a brief correction or major turn? What is next for the price of gold? And how can you predict whether the coming months will feature inflation or deflation?”

Four Pillars presents Transfer In Kind posted at ABCs of Investing, saying, “An explanation of transfering your investments “in kind”.”

Praveen presents Sometimes You Bend Your Trading Rules… posted at My Simple Trading System, saying, “Taking an early profit to ease your comfort during a volatile market.”

Investing School presents The Rule of 72 posted at Investing School, saying, “A neat mathematical trick to calculate when your investment will double!”

Tom Escent presents Introduction to Nerds on Wall Street posted at Quantitative Finance, saying, “Think of this book as sort of a Hitchhiker’s Guide to Wired Markets. There are no robots parking cars for six million years, but there are robots trading millions of shares in six milliseconds, so maybe that’s close enough.”

Super Saver presents My Plans for the Stock Market Pullback posted at My Wealth Builder, saying, “At this point, I don’t expect a correction to take out the March 9, 2009 lows. However, I will hold back at least 25% of my funds, in the case the market does dip lower”

Praveen presents Successful Trading is About More than Generating A Buy Signal.. posted at Stock Trading Riches, saying, “When buying stocks, your initial purchase is the least important part of successful investing. Your return is determined by how well you manage the trade – i.e. knowing when to add to your position and when to take profits.”

jim presents Smart Money 2009 Best Online Brokers posted at Blueprint for Financial Prosperity.

Managing Debt

Super Saver presents We’ve Achieved Zero Debt posted at My Wealth Builder, saying, “We paid off our mortgage and became 100% debt free.”

Tushar Mathur presents When It Pays To Use Cash For Purchases posted at Everything Finance, saying, “For years there have been many consumers who have charged through life (pun intended) putting any and all expenses on their trusty credit card. Roughly half of those consumers managed their accounts responsibly and benefited from the many perks associated with using their credit card and paying the balance in full each month. The other half….well many of those people are dealing with the fall out from the economy and struggling with high levels of debt.”

Patrick @ Cash Money Life presents Best Zero Percent Balance Transfer Credit Cards posted at Cash Money Life, saying, “Make or save money with a 0% balance transfer credit card offer.”

The Dough Roller presents Best 0% Balance Transfer Credit Card posted at The Dough Roller, saying, “0% balance transfer offers are becoming harder and harder to find. There still is a 12-month offer, however, and this article describes how to get it.”

nickel presents How to Pay Off Your Mortgage Early posted at fivecentnickel.com, saying, “Should you payoff your mortgage early? I tackled that question a couple of weeks ago, and the majority of respondents said “yes.” With that in mind, I thought I’d put together a list of strategies for doing just that…”

Mr Credit Card presents Struggling with business debt posted at Ask Mr Credit Card.

Manshu presents Will I be sued for credit card default? posted at OneMint.

Raj Patel presents Credit card delinquencies rise posted at DebtGoal, saying, “Recent data show the credit card delinquency rate is rising. Here’s some remedies for debt problems related to credit card delinquency.”

Four Pillars presents Dave Ramsey Debt Snowball Method Of Debt Repayment posted at Quest For Four Pillars, saying, “An indepth look at the Dave Ramsey snowball debt method.”

Abigail Perry presents Is getting deeper into debt ever justifiable? posted at i pick up pennies, saying, “Are there times when extenuating circumstances make more debt worthwhile? What if it were to improve your circumstances and, ultimately, increase your income?”

Miscellaneous

Credit Shout presents 8 Benefits of the Credit Card Act of 2009 posted at CreditShout.

Fitz Villafuerte presents A Guide To Choosing The Right Business Structure posted at Ready To Be Rich, saying, “A guide on how to choose the right business structure. Having the right type of business entity is always important for business success”

Tyler Tervooren presents Are You More Frugal or Green?: Balancing Multiple Goals posted at Frugally Green, saying, “It can be hard trying to balance all your goals. If you don’t look for opportunities to reach them together, you may find yourself excelling toward one while hindering another.”

Noload Bonds presents Bond Mutual Fund Fees posted at Bond Index Funds, saying, “Simply put, if you pay higher bond mutual fund fees, then these bond management expenses tend just to be a deadweight loss to you. The best bond fund buying strategy is to pick only very low-cost no load bond funds.”

Retirement Planning

Super Saver presents Planning to Retire Later also has Risks posted at My Wealth Builder, saying, “The option to continue working is no longer easily controlled by the employee.”

Jeff Rose presents What’s in a Number? Choosing a Withdrawal Rate for Your Retirement Assets posted at Jeff Rose, saying, “Learn how much you can withdraw from your investment portfolio in retirement safely.”

Top 10 Index Funds presents Top 10 S&P 500 Index Funds posted at Top 10 Index Funds, saying, “Buy these top 10 very low cost no load S&P 500 index mutual funds directly. You do not have to pay the heavy added expenses of buying through a stock broker, financial adviser, investment adviser, or investment counselor.”

Jeff Rose presents Company Is Going Bankrupt. What About My Pension? posted at Jeff Rose.

Risk Management and Insurance

Rajeev Kumar Singh presents Child Insurance Plans – Parents Being Taken for a Ride posted at Investment and Personal Finance, saying, “When parents invest their hard earned money in child insurance plans so prevalent these days, they do not know that they are being ripped off by the insurance companies … Read on..”

Silicon Valley Blogger presents Lower Your Car Insurance Rates! How To Cut Insurance Premiums In Half posted at The Digerati Life, saying, “I offer some suggestions and tips for lowering your car insurance and keeping your car related costs (and budget) to a minimum.”

Savings

The Skilled Investor presents Most Individual Investors Are Poor Personal Portfolio Managers | Personal Investment Management posted at Personal Investment Manager, saying, “Investors more easily understand investment costs that are directly measurable, such as fees deducted on investment statements. However, many investors ignore or are unaware of the opportunity costs of their sub-optimal investment behaviors. Opportunity costs are usually much more difficult to measure directly, but these investment costs can be even higher than more visible investment fees.”

MoneyNing presents How to Save Money Every Month posted at Money Ning, saying, “Recurring expenses really add up. Here are a whole bunch of ways to save money, month after month after month.”

Taxes

Robert D Flach presents What Happens in and IRA Stays in an IRA posted at The Wandering Tax Pro, saying, “Just like in Vegas, what happens in an IRA stays in the IRA!”

MoneyNing presents Let Businesses Deal with Sales Tax – Government Improvement Series posted at Money Ning, saying, “Government really needs to improve on somethigs and I say to let businesses deal with sales taxes!”

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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