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End of Year Is Almost Here

Yup, the real end of year is almost here, given the last real business day is December 29th, 2011 (you know, Friday), have you got all of the things done you needed to get done for the End of 2011?

What kind of things do I mean?

  • Taxes if you pay quarterly or monthly for one thing, pay them first. If you haven’t sent in your taxes for 2010, maybe it’s time to start thinking about doing that soon as well?
  • RESP contribution, they bursaries tend to be paid quarterly, but it is still important to get as much out of this system as you can. Tuition fees are not going to be dropping any time soon!
  • RRSP contribution, yes, I know you can wait until February 29th, but you could make one now too, and you’d have two months of growth?
  • Charitable donation, better get those in right now, for it to count for your taxes. Having worked on the collection at my Church there is a significant amount of money that appears this last week of December, but get it in soon.
  • RDSP contribution, yes this has an over all maximum, but then again, the sooner the money is in place, the longer it has to grow.
  • Tax loss selling? Too darn late for that one, the deadline for that was December 24th.
Any others that I may have missed? You have 2 days left!!

 

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Financial Planning a Flowchart


For those of us who really do try hard to create financial plans but then end up not following them (or worse abandon them without giving them a chance to succeed), I have created the following graphic.

For those of you who do not remember your basics of flow charting (yes I am that old), remember to follow the arrows (and the comments in bold on the arrows are the reasons you are going in that direction).

The best part of this is I have completely minimized the hardest parts of this process, which is creating the actual plan and implementing it (and sticking to it). I am pretty sure I have seen this flow chart at a few free financial planning sessions for folks that I have been roped into attending.

Remember stick with your plan, even after you think you have succeeded, it has to be a life change, not just short term pain (it’s long term pain!).

How Financial Planning in Families REALLY works

 

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One Line of Financial Advice?

I borrowed this from a Reddit Post about one line of advice, but I think it is pertinent to the current generation. My favorite one line of advice is from the The Princess Bride :

Never go against a Sicilian when death is on the line

Vizzini (the Princess Bride)
Become a Tangerine client today

This seems obvious to me (and Vizzini), but be that as it may here are some great one line pieces of financial advice:

  • A fool and his money are soon parted, is a true one line piece of advice, so why don’t fools listen?
  • Never select your credit card solely on how cool the graphics are on the card, which says that the KISS Visa card may not be your best selection.
  • Always pay with cash, useful advice, but also remember to know where your wallet is, especially if you are carrying a lot of cash
  • Neither a borrower nor a lender be, Shakespeare was right on that one.
  • Pay day loans are the devil’s own work, not sure if I can be any clearer on that one.
  • Debt is a four letter word, again a standard message here, but a good one liner
  • If you don’t understand it, don’t invest in it, again seems obvious, and if it is good enough for the Wizard of Omaha, it is good enough for you.
  • Following the herd only gets your shoes covered in poop, think about that one.


There are many others, and I now challenge my readers to add more of these useful one liners (for finance please, or at least a finance theme) in the comments.

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How do You Steer an Elephant?

I must admit that I stole the title from the Penguins of Madagascar (King Julien coined the phrase), but it is an interesting question in the financial world as well, how do you steer an elephant ?

When we are younger, and if we have managed to graduate from school or started our careers relatively Debt Free, our financial world is quite nimble and easy to control and make sudden changes if we wish, but as time passes the nimble mouse that is our Financial World becomes an overweight pachyderm (if we are not careful), hence you end up with the financial question, How Do You Steer an Elephant?

Don’t Feed the Mouse so it can’t grow to an Elephant

The easiest way to figure out how to steer an elephant, is don’t let your finances turn into an Elephant (yes, it is a trick answer, but it is the right answer).

What can make your financial world an Elephant?

Financial Elephant

Financial Elephant? No an African Elephant

  • Large Debt Load: this first and foremost is what is going to turn your mouse into an elephant. If you must pay down a debt, you have many less options if a financial opportunity arises. A big mortgage is your elephant, and you will need to pay it down before you think about trying to turn it.
  • Reliance on fixed income options: if you have lots of long-term GICs or fixed term bonds, your ability to quickly change directions is hindered. If you have chosen this type of investing strategy, you like the direction the elephant is going, so turning it isn’t really going to matter much.
  • Creating a figurative elephant: you may  over invested in your employer (i.e. you have a pension, stock options, a stock purchase plan, a bonus plan and your salary), and you may not know you even own an elephant, but you do (financially). Diversify away from your employer (unless you are sure you are working for the next Google (I thought I was when I worked for Nortel, so be careful)) and your elephant can become more nimble.

Financial Poachers?

Also remember that Financial Elephants can be victims of Financial Ivory Poachers (now there is an expression you don’t see every day). There are folks who would try to convince you to steal your financial Elephant:

  • Folks that will “buy” your structured settlement or set income vehicles.
  • Companies that will loan you money on the basis of your fixed income vehicle
  • Reverse mortgages for paid off homes.

Don’t let the financial poachers steal your financial elephant (or it’s tusks), just slim it down a little.

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Here Comes the Summer (Big Spending List)

Summer of our Discontented Spending

Yes, Mrs. C8j suggested that I do a post about the upcoming summer and ask, “Are you ready for the summer?”, and when I ask it of course is asking, “Have you figured out how not to bankrupt yourself this coming summer?” ( Yes I realize it is supposed to be the Winter of our Discontent, I am taking poetic license)

What could be so expensive for the summer? If you don’t have kids, not as much, but some of this list still might fit into things that you might want to start thinking about now:

  1. How are you going to pay for camp this summer? If your kids are in Daycare then you are already half way there, but what if your kid wants to go to a sleepover camp? We are talking some large amounts of cash, for your kid to have an all expenses paid trip to the woods. I checked and one camp my kids went to, it’s about $700 per week at the camp. Not cheap, is it?
  2. What about around the house? Does your deck look like it’s about to fall over, or you are about to fall through that? How is that going to get paid for? How about the roof? If it’s older than 10 years old, better go check it, because you don’t want to wait too long for that. A roof could cost between $3000 and $12000 depending on your house size and who you hire (and whether you want it to last more than 2 years). Those windows that are allowing snow to blow into rooms might need replacing too.
  3. Hey, don’t just send the kids on vacation, let’s do a family vacation. How much is that all going to cost? Depends, but given that gas is now $1.20 a liter in Ottawa, don’t think driving somewhere is going to be that cheap. I have no guess on this one, any commenters wishing to chime in, feel free.
  4. How about the family car? Does it need new tires? How about a new transmission? Maybe a head gasket job? Maybe it’s time to retire the money pit and get a new one? Yes, that one is not going to be cheap.
  5. Maybe your kids are returning from University, and will descend upon you like a swarm of locusts, treating your house like a bed and breakfast (and complaining there is not enough food in it) (pure conjecture on my part). That is going to start costing you in food, electricity, Internet Fees, water and gas in your car.
  6. Planning on running your Air Conditioning this summer? Can you afford it now, especially in Ontario where rates vary by time of day (so running a power hog like your a/c during the day might be even more expensive than last year).
  7. You will need some more summer clothing for the kids (because most municipalities frown on your kids walking around in the nude), and maybe after packing on 15 pounds this winter, you might need some new clothes too?
  8. You know a good place to get out of the heat in the summer is the mall, whoops, impulse shopping trips sound expen$ive!
  9. You know there is nothing better than a bunch of cold beverages on the deck (hopefully after I fix it), but that stuff isn’t cheap either. Adding more beverages to your grocery bill can kick up your spending a surprising amount.

As you can see by no means is this an exhaustive list of the expenses that may come up this summer, however, if you don’t plan for them now, it could make for a nasty fall (paying off your summer).

Are there any Summer Expenses I have missed? This list is by no means any kind of reflection of where I might be spending money this summer (yeh… right!).

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