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Financial Echo Chamber

Many of us seem to be living in a financial Echo Chamber. We have friends, and family who we agree with, and we read financial articles the reinforce our financial plans.

What do I mean by Echo Chamber?

“an environment in which the same opinions are repeatedly voiced and promoted, so that people are not exposed to opposing views…”

Dictionary.com definition (2nd)
Amazon Link to Book

Michael James pointed me at a very good book by Annie Duke, “Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts“, which is quite an eye opener. Ms. Dukes is known as a world class Poker Player but she was a Doctoral Candidate in Psychology before that, and she writes in a very entertaining way.

If all you do is listen to people who agree with your perspective, how can you be sure you are on the right path? Without exposure to differing perspectives and ideas, how can you be sure you are that correct?

As I get older, I seem to be slowly turning to Ms. Dukes perspective on seeing differing points of view. I have never enjoyed hearing arguments that disagree with my inner beliefs, but I have learned it is important to hear them. There is a need to empathize in some fashion with opposing viewpoints to at least understand where they came from.

Empathy does not imply agreement, it is simply understanding it.

For a long time I had a perspective on folks who got into financial troubles, was usually of their own making, but I now think that is a flawed perspective. After living through my own lay off I started questioning my theories, but after talking with Doug Hoyes and reading his book, “Straight Talk on Your Money: The Biggest Financial Myths and Mistakes . . . and How to Avoid Them” (Amazon Link) I really realized how incorrect my perspective was.

Understanding our own biases is an important part of growth.

Examples

If you’d like a few examples where you could benefit from listening to opposing money viewpoints?

  • If you are an Index Fund investor, read some of the active trading newsletters out there, to at least understand their perspectives on the markets.
  • If you believe your house is your biggest investment, maybe read some of the interesting studies on the perspectives of lifetime renters. Their perspectives on the freedom of not owning a home are quite thought provoking.
  • If you live in one of the large cities of Canada and are of the perspective that Real Estate can only go up in price, there are contrary writers to that perspective as well.

Everyones Opinion Matters?

I am not saying you should immerse yourself in contrarian perspectives, but it is important to at least read some different perspectives on things. Understanding their perspectives will help you have a better view on the entire story.

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Doomsday Finances

I found this one in my archives, and I started writing it two years ago, having no idea what 2020 was going to bring. Read it with that in mind, it is about Personal Financial Doomsday.

One of my favourite Star Trek episodes is The Doomsday Machine , where a robot is let loose to destroy both sides in a long past war. There was much overacting and emoting by both William Shatner and William Windom but I liked it.

We are not in a Doomsday scenario right now (COVID19 Pandemic), but we might be in a big mess in the financial world (on the Macro Economic side of things).

I think 2008 showed that things can go off the rails badly, but now we live in completely uncharted waters. I worry, this is going to be a very long mess, so we shall see.

I think the financial apocalypse I was thinking of is was at a personal level. As we have learned from a few financial books, personal finance apocalypse can happen much more easily than we think.

  • Your health failing suddenly is more likely than you hope, as I learned in my Movember story. There are other more catastrophic health issues that can arise, and that can easily trigger a personal finance failure.
  • Simply losing control of your debt load, or maybe a sudden increase in interest rates, is the most likely financial doomsday. The interest rate sudden jump is not out of the question, but I suspect governments are fighting against this, knowing the impact it might cause, financially.
  • The ultimate doomsday of course is our own demise, but then again, your financial concerns are over then as well.
  • Losing your job can be another financial apocalypse, that many folks have a hard time recovering from.

The best way to avoid a Financial Doomsday, is be ready with a financial plan that takes into consideration the Risks possible. Is there a financial apocalypse likely globally? We shall see is all I can say.

I do know that a personal financial doomsday is more likely than most of us wish to admit.

The Big Financial Snit ?

“… and I thought YOU, wanted to play, SCRABBLE!”

One of my favorite apocalyptic shorts from the NFB, the Big Snit.

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Reflections on 15 Years

So I started writing this Blog 15 years ago (March 17, 2005). It has been interesting and thanks to it, I have met many wonderful writers and personalities. I have also had many kind comments and queries, and for that, I thank my readers as well. It is an auspicious day to be celebrating given the current Pandemic conditions and it being St. Patty’s day.

I think I have learned a great deal about SEO (mostly what not to do), a fair amount about money and investing (mostly I don’t know what I am doing, and need help) and mostly about life. I have written through:

Reflections 15 years
That’s a lot of writing

It has been an interesting 15 years, and I don’t think I am going anywhere, I will keep writing. I am meaning to write more, but we shall see whether I ever return to writing 5 articles a week.

Thank you all for reading along, and all my best.

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Marriage Preparation

These are actual questions from a very good marriage preparation course my daughter is taking (offered by the United Church of Canada). There is a section on Finances, which I applaud, since that subject can cause more relationships to fail than many other topics.

My daughter sent me the topics, and I have taken the liberty of commenting on the topics in this section of the course. Overall I think there are some good questions, however, there needs to be more frankness between the couple about money.

Here are some of the questions and topics discussed in the money section of the marriage prep course.

How was money managed in your family? How was it discussed, or was it?

I like that question, since most folks learn about money management from what they saw their parents do. If neither partner has any understanding of what their parents did with money, this is an incredible disadvantage. Learning about money on the fly is a scary way to learn about finances.

What is the biggest surprise you’ve learned about each other when it comes to spending and saving?

A really good one. This means you have actually talked about this, you’d be amazed how many married couples didn’t discuss this one before the ceremony.

You cannot enter into this kind of commitment if you know nothing about your partners financial situation.

Think of a picture or symbol that helps you say something about what you value in your marriage.

If the symbol is a big house, that is important. How will this house come about? With no plan going into the marriage, how will this symbol come into being?

Will you have one joint account to cover all expenses, with both spouses putting all their earnings into it or will you have three accounts (one each, with a common one for household expenses). List some reasons for choosing one model over another.

I think either model can work, and I have seen successes doing it either way. The best thing to do is decide this important financial strategy before the rings go on the fingers.

When you are married, you assume each other’s assets as well as debts. Do you know how much your partner owes?

Bingo! This can be an entire day of discussions, and so much needs to be brought forward by both members of the couple.

A healthy marriage is sustained by generosity toward others. How much will you give to charities, the community or other organizations. You may not have much money to begin with, but setting aside an amount for this purpose enriches you both.

Finding out your partner’s ideas on charity and giving is important. If they have a huge family and they like buying presents for everyone, that can really add up. If they like buying dinner for friends, is the other partner OK with that (and can you afford to do that in the first place)?

I have heard more than one young couple complain they are going in debt having to attend friends weddings, does that make sense? Best talk about that one quickly.

How indebted are you as a couple? If you find, after doing your budget, that your level of indebtedness worries you, many provinces and states have governmental organizations that can help protect you from creditors through a financial proposal process that allows you to repay your debts in an orderly fashion. Do an internet search to find these numbers.

WOW! I read this and was very pleased to see it. This is what this section is all about. If you do not have the number that is how much you owe (after the wedding and associated expenses are paid), or are above water, you are ensuring future failure.

Not to cast a shadow on things, but remember also, that should you get divorced and you are indebted as a couple, the debt is split between the two of you. This includes debts that either partner brought into the marriage (unless excluded by a legal statement of some sort).

Name a financial milestone that you have reached together. How did you celebrate?

Did you blow a big wad of money to celebrate? Do you celebrate these types of things, or simply smile and move onto the next challenge?

Other Financial Marriage Preparation Topics

I think this section of the course was good, however it is missing important details. I would love to see some kind of discussion on the following financial topics.

  1. Where are you going to live? Rent? Live with parents? Buy a house? All are all huge financial topics. A course on how to buy a house, how to pay for a house and how to pay for the upkeep on a house would be really important for new couples.
  2. Investing and how this might work. If the couple is lucky enough to have money to invest, teaching them about how to invest is very important. Simply calling your bank and talking to them, will simply lock them into high MER, badly paying Mutual Funds. Maybe their family has a “person”, but is that the right person for them?
  3. Spending habits, do you know how your partner spends money? Are they savers, or do they like to spoil themselves? Does one of you like eating out a lot, and wants to have the latest in stylish clothing? Will you want to have two cars, or only one? Can you afford the planned lifestyle? Lifestyle creep is a dangerous part of a relationship.
  4. Are you going to have one partner stay home if there are children and how will that work? Are you planning on having kids? Not only a financial question, but a big financial decision.
  5. Will one of the partners be in charge of the money? Will this be a shared burden between the two? This had better be decided before you move in together, or this will be a source of many arguments.
  6. How are the finances and investments going to be tracked? Are you going to use Quicken, Mint, Excel, or Pen and Paper? All are quite good, but you need to track it somehow, so that both partners can know where things stand.
  7. How will financial disagreements be resolved? I realize this is a hard one, but discuss this beforehand.
  8. Are either of you planning on going back to school ? Taking a sabbatical from work? These kind of large life changes maybe should be discussed early on in a relationship.
  9. Have you gone grocery shopping together? That is a surprising “adulting” exercise to go through together. Is one of you a list person and the other an impulse buyer? This will teach you both a lot.
  10. Do either of you (or both) have pensions? How is that going to work in terms of your retirement planning? Yes, retirement planning better be an early discussion for a couple, or it will be a big sore point later on.
  11. Emergencies, yes they will happen. Once you have your financial plan, will it work with only 1 of your incomes? What if there is a single income planned, what happens if that disappears? Kind of important things to talk about, because if you haven’t and something goes wrong, you don’t want to start a plan at that moment.
  12. A mention of the available resources to learn about your finances would be good too, like: Financial Basics with Ellen Roseman (very good)..

Any other topics I have missed that folks think should be included in terms of Finances for a Marriage Preparation course?

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Financial Predictions for 2018

My ability to see the future is unreliable, but I am willing to guess about the future. I supply these financial predictions for 2018 as an example, and anyone who uses them to make financial decisions, does it at their own peril.

Financial Predictions


BCM Financial Predictions

  1. Interest rates will continue going up. Inflation is in the air and the economy is starting to overheat. By the end of this year, the overnight rate will be at least 2.5%. This is a 150% increase, so be aware, and lower debt.
  2. The Canadian Dollar will be above 85 cents by the end of 2018. The American economy is going well for now, but the Canadian economy will do better. The Tax relief in the USA will cause their economy to overheat for a while as well (i.e. Inflation).
  3. One of the 3 following bubbles will burst:
    1. Bitcoin, someone will finally point out the Emperor is naked and it will plummet.
    2. Marijuana, the only people making money on this are going to be the Governments (and they will find ways to blow that money).
    3. Property Bubbles, things seem to be cooling down in some areas, but in Ottawa and Montreal things continue to heat up.
  4. The Old Bull in the Stock Market, will continue to rise, for the first half of the year, however one of those bubbles bursting (see 3) will stress things and the markets may end the year at the same levels. Remember to take your profits and rebalance your portfolios.
  5. Maybe not this year, but soon a prominent investing firm will be found out to be a front for an AI trading system, with few human employees. My guess is this is already going on, but the disclosure of this should cause upheaval in the trading world (but it won’t).
  6. The Phoenix pay system will be scrapped, but the new system will work no better. The cancellation will cause a larger Federal Budget deficit.
  7. There will be a bigger data breach than the Equifax catastrophe, that will be disclosed. It most likely happened in 2017.

Official Disclaimer

Please remember, these are SWAG from the BCM (simple wild ass guess from the Big Cajun Man), and you should never use these financial predictions for your financial planning.

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