Why Waiting 6 Months to Update Your Financial World is a Bad Thing

Thanks to an illness, I let my financial world slide a little (not just this web site).  This all started around November (right after I went to a financial blogging conference). The whole episode has caused a lot of agitation in my life, but I am hoping things are back on track.

I continually harp on the need for a Plan B, and Emergency Plans, yet I really didn’t have one. Luckily, I didn’t have to take too much time off work, but illnesses mess up more than just your job. My home life has suffered but my wife has been very patient with me.

emergency plan

The one thing I really let slide was the day-to-day financial aspects in my life. I hadn’t updated Quicken or any other aspects of my financial tracking system since November, which was a very bad thing. Trying to catch up on 6 months of financial tracking is very frustrating, and painful.

I ran into a few specific issues:

  1. Although I managed to pay most of my bills on time, I did find two credit cards where I had missed a payment and I was paying interest on the balances. I fixed that problem first.
  2. Going back six months to find your financial statements on-line can be a royal pain in the rear. Most on-line sites are OK for this, but you have to dig around to find them.
  3. Trying to catch up using Quicken (Canadian version, not the new version) is an even bigger pain in the arse.

Let me pass on a few conclusions that I have come up with in terms of illnesses and having Plan B’s and emergency plans.

  1. Having an emergency plan for your employment is important.
    • If you have a short-term disability plan at work, are you a member? When does it kick in? Can you top it up, and how much does it pay (rarely does it pay 100% of your salary). This is really important.
    • How about long-term disability? I was lucky my issue was only a short-term problem, but it could have put me out for longer. Long term disability is usually expensive, and will not pay your full salary, but is still a necessary evil.
    • How does your work deal with sick leave? You need to understand this before you need to use the system. Will there be gaps where you don’t get paid if you have a serious illness where you are absent for an extended period of time?
  2. Having an emergency account (most likely in your TFSA) is a very good idea. Do not assume you will have credit available in the situations. You will not be able to live on your credit cards or short-term credit for long, and the mess this may create could be lethal to your finances (in the short and long-term).
  3. Does your spouse or significant other know enough to be able to take over the financial world you have created? At my Church there are countless cases where the spouse was unaware of how the money worked because they just were never told. Ignorance is not a good thing when it comes to your financial life. How will your finances work when you are ill, or worse?
  4. Do you have a Will, and power of attorneys set up? If not, why not? Yes it is a morbid topic, but if you don’t do this, you are giving the government a gold opportunity to make a money grab from your estate. In my case I have a disabled son, so I really need to have specific instructions in place for financial stuff.
    • If we are going to be morbid, does your family or spouse know what you want done should you die? I have been clear that it is up the chimney with me (cremation) after all bits someone could use are gone. As I age I suspect my bits are a lot less useful for other folks. Next, have a lot of drinks afterwards, tell plenty of stories about what an idiot that I was, and then spread my ashes somewhere nice. I have sworn that if any money is wasted on a lavish funeral, I will come back and haunt anybody involved (possibly writing a ghostly blog from the hereafter).
    • What about all of those logins for all those financial sites? Does your spouse know what they are? I am talking about a list in a very safe place, that is kept up to date.
    • What about your on-line persona? How will the Big Cajun Man live on after my death? What about the passwords to the 70 different accounts I use on-line? Interesting thing to think about too. What will happen to this hallowed site?

I am only scratching the surface folks, and remember this is an ongoing process. Keep all of this up to date. Yes, I can be a little obtuse, but this is a short list in terms of things to think about if you get ill.

And Now For Something Completely Different

Sometimes Monty Python sums it up best:

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Spring Financial Cleaning (revisited)

Today is the first day of Spring in the Northern Hemisphere. Spring is a time of renewal and new beginnings, for your finances as well. The first financial quarter of the year is almost over. Time to assess, review and study your plans for this year. Time for some spring financial cleaning.

Spring Financial Cleaning

Saw this in My Backyard, I think I agree

Spring Financial Cleaning

So what kind of financial spring cleaning can you do? Here are some very simple examples:

  • If you are a Couch Potato investor, have a look at your portfolio. Is it time to rebalance? Given the markets, might be a good time to rebalance.
  • Clean out those extra accounts
    • If you have old bank accounts, combine them. Do you have more than 1 “savings” account? Why? Find the one bank that you can stand, and centralize!
    • How many credit cards do you have? Do you really need 6 different Mastercards? Visa? No, you don’t. Close those extra accounts, they are dangerous to keep.
    • You only need 1 checking account, seriously.
  • How is your financial plan for the year going? Time to rethink things? Did you get a raise? Are you falling into lifestyle creep ?
  • Maybe you don’t have a TFSA set up yet? Why not, it is not just a tax free banking account, time to add this account to your arsenal. Use it as your Emergency account?
  • Is your mortgage about to be renewed? Time to go shopping for a better rate.
  • Your insurances coming due? Time to go shopping, and don’t fall for the “insurance saving device” trick either.
  • Planning on some big spring projects? How are you going to pay for it? Plan now how you will pay for them, or start saving for them.

Get out your financial broom, and sweep it clean. Always try to have a clean financial house.

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Smart Financial Goals for 2017

Actually I borrowed the idea from our friends at LSM, who had a great article in their Facebook page about Lorne King, talking about Smart Goals, however, his SMART is an FLA (Five Letter Acronym), S.M.A.R.T. goals: Specific, Measurable, Attainable, Realistic goals, that have a Time frame so let’s set some S.M.A.R.T. or Smart Financial Goals for 2016.

Smart financial goals

Always be smart with your financial goals

What are S.M.A.R.T. Financial Goals ?

S.M.A.R.T. for financial goals (and health or fitness goals) are exactly what you need:

  • Specific , vague goals never get attained or worse are far to easy to tick off the list. Specificity like, pay of $5000 worth of debt, is a much better goal.
  • Measurable, I have said before if you don’t write it down, how did you know it happened, and being able to measure your goal is in that genre.
  • Attainable, saying you want to retire this year (and you are 25) is a lovely goal, but not likely, but, “Put $5000 in my TFSA this year”, is much more possible
  • Realistic, if you are carrying huge debt, then a realistic plan is to deal with debt before you start looking at saving.
  • Time Frame, set a couple of short-term goals, and then a year-long one, and maybe set up some long-term goals (retiring at 55 for a 25 year old would be a good goal). Don’t create too many, three is usually a good number in these situations.

What Should Your Goals Be?

The important thing to do, is make whatever smart financial goals you might be setting for the new year, that you are comfortable with them, but they challenge you as well. Setting a goal of

“… I don’t want to screw up as bad as last year…”

is not really a smart financial goal, it’s more of a declaration of incompetence. If you are afraid this is your smart financial goal for the year, maybe you need some help.

 

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Bimodal Financial Planning

The importance of Bimodal Financial Planning strategies cannot be discounted for any person or family wanting to succeed in the current economic environment. Ensuring you are taking care of your day-to-day financial life and planning for your future, ensures a strong Bimodal Financial Plan.

Doesn’t that sound exciting and fun? What do I mean by a Bimodal Financial Plan ? If you asked that question, give yourself a gold star🌟, as the first time I heard it, I thought they were talking about Bipolar psychological problems, but no, folks meant Bimodal.

In mathematical terms Bimodal is simply:

Adjective: having or involving two modes, in particular (of a statistical distribution) having two maxima.

What the heck does that have to do with financial planning? Well, right now, I am making this stuff up, however the term Bimodal is the new Buzzword where I work in terms of IT (computer stuff) quoted by Gartner (the folks who create these lovely concepts). For them the definition of Bimodal becomes more literal:

Having two modes of operation (typically in computers: (1) Day to Day Support (2) Long-term evolution and planning.

Doesn’t that fit into financial planning like a hand in glove? Everyone is always taking care of the day-to-day bill paying and making sure they stay out of debt, and most of us also are planning for our Long-Term financial self, hence the most excellent new financial term Bimodal Financial Planning.

Bimodal Financial Planning

Bimodal Financial Planning Graphics

Stripping away the jargon part of this, it is actually a sound idea for planning your financial life:

  1. Take care of today’s problems financially, in terms of paying off bills and debts.
  2. Plan for your future including: Emergency Funds, Vacation Funds and ultimately Retirement Planning

If any folks are dealing with financial advisors or planners, ask them about what their Bimodal Financial Planning Solutions to plan your financial future, see how they react to that catch-phrase. See if they start using it themselves without asking for an explanation about it (that is a bad sign, they should ask for what you mean by that, before they start using it in conversation).

Never let anyone use a term (especially a financial term) that you don’t understand without asking for an explanation. If they can’t explain it to your satisfaction, it is either (1) too complicated and shouldn’t be used or (2) the person you are talking to is bluffing their way through things (and that is very bad as well).

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What Twits are Talking About Money ?

Plenty of news on the twitter wire on the election front, but another fun week of interesting money related tweets on the Twitter Machine (remember I am there as @bigcajunman ) and maybe some other social media as well!

With the new economy how will the tax system deal with these new digital currencies? BDO has some advice for you.

This makes me sad, I thought my money loved me, and like the saying says, if you love something set it free (and I do).

You never thought I’d be quoting the CIA eh? Well this one is very true about your local library, and specifically it is great for financial resources too (magazines, books and articles), go to your library and support it (or you will have to answer to the CIA).

I did mention the election, and how the Bank of Canada will work if there is a change of leadership would be a very interesting question. Has anyone asked any of the leaders how they might change the Bank of Canada’s mandate?

Roger Wohlner writes about the worst Mutual fund yields, and I wish more folks would check to see what their Mutual Funds yielded they might be horribly surprised.

Now there is three words I wouldn’t think would go in a sentence “designer luxury consignment“? Does Jaguar have a crash and dent section?

For those of you who don’t follow TVO, you are missing out, and here is your deep thought for today.

A quick look at Facebook and I see that the TFSA is good for single income families? That is not what all the Financial Chicken Little Crowd is saying?

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