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Just because you may have a pension, doesn’t mean you shouldn’t have an RRSP. You also should have a TFSA and your only financial goal should be to be out of debt by the time you retire.

If you have an emergency fund, do you have a plan on when you might use it? Simply having money sitting somewhere with no plan on when it should be used, is really just a savings account.

An RRSP is simply a tax deferral savings program. It works best if you use it for your retirement, but that is the main goal of it. You can’t use it like a TFSA, but it is not solely for your retirement either.

The TFSA is a badly named program. It is Tax Free, and you can save in it, but it is not only a savings account. Many banks are fooling you into thinking the program is a 1 savings account. It is not. Open a TFSA with a trading firm like Questrade, Directline or others.

Debt is simply borrowing money from your future self. I know it is not in vogue to say debt is a bad thing, but it is. Your first goal, should be to deaden your debt load, the rest of the financial plan is gravy.

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What to do with Found Money (update)

What do you do when you get money that you did not expect to receive? I have written a great deal about this (note bibliography), but here is a specific perspective.

Let’s assume, you do not have debts to pay off. If you do, stop here, put the money on the debt. It is as simple as that. It is not exciting, fun and can be frustrating, but paying off debt is your first job.

If you don’t have a debt-load to deal with, but you don’t know what to do with it, then what? Waiting and thinking about any problem will make for a better resolution. Decisions made rashly or quickly, rarely work out as you hoped they will.

Don’t put this money in a Savings account. It will pay a very small amount (currently about 2.5% if you find a nice bank). That interest will also be taxed.

Do you have room in your Tax Free Savings Account? You find that out by going on-line with your MyCRA account and checking. If you don’t have a TFSA, why not? Stop reading, and go open a TFSA that allows you to trade ETFs, Index Funds or simply buy bonds (i.e. not a Bank TFSA which is just a savings account).

Found Money Roadmap
A Simple Found Money Map

Now that you have a TFSA, and you know your deposit limit, it becomes a simple roadmap for your Found Money

  • If your TFSA limit is larger than your Found Money amount?
    • Put money in TFSA, and buy a Bond Fund, Money Market Fund or whatever you full safe in buying.
  • If your TFSA limit is not large enough to deal with this amount of money?
    • Good For you!
      Put whatever moneys you can into the TFSA and invest or put it in whatever investment vehicle you wish.
    • Put the rest of the money in something else:
      • A HISA (High Interest Savings Account) if you want to be conservative
      • A trading account and again buy whatever securities, Index Fund or ETF that you like
      • An emergency account, if you think you don’t have more than pay cheques put away.
      • Your sock drawer (given interest rates might go negative, that might not be that bad an idea).

There you have it, pretty simple. Leave the money there and think about how best to use this Found Money. Some folks say wait 6 months before acting, but that would depend on the amount of the found money.

Bibliography

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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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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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