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Money Makes us All Crazy

I was part of the Lottery Pool Too!

It seems that thanks to the Lotto Max $50 Million pay out being shared by a group at Bell Canada in Toronto, more and more folks are now claiming to be part of the winning group. Due to this, the Lottery Commision is now going to hold onto the money a little longer to investigate each and every claim brought forward. It is already being shared by 18 or so people, but now these new winners want a cut in the action as well.

Is this surprising? Not really, money is the root of so many disagreements, altercations, fisticuffs and wars these kind of shenanigans are hardly surprising. It is amusing to see the alleged group members all complaining that the lottery commision should just give them the money, but the OLG must protect their own interests, so they are holding onto the money (bet this one takes a while to resolve, if the group didn’t have scrupulous accounting).

The Root of Evil

This is another example of why it is important to have all of your financial paperwork in order, because you never know what is going to happen.

If your Will is out of date, what happens? Nothing good, would be my bet. If you are like me and you have a Will that mentions 3 out of my 4 kids, that might not mean it is of much value. Who is your executor of your Will? Are they still alive? Do you still get along with them? Remember the thematic premise today money makes people crazy, and if there is any disagreements on who gets what, it can make for some ugly situations to arise.

Who are the beneficiaries of your life insurance policies, and RRSPs (if you pass away)? Should be just fine, but what if you got divorced and forgot to take your ex-spouse off these policies or investments? Suddenly they receive the settlement, leaving a new family out in the cold?

Write it Down and Keep Track of it

This sad incident drives home the important point that in finances, and in life if it is not written down you cannot assume it is going to happen the way you want. Make sure your finances are well documented and that this documentation is truly up to date, or you might end up with a nasty surprise.

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Random Thoughts on Advice

This week seems to have been a week where I figured advice was a good theme, not sure where it all came from, but it was an interesting bit of writing to cover some of the “rules” and ideas that have shaped myself. Good advice should never be discounted in value, and bad advice cannot be blamed more for bad choices. This means you should be careful giving out advice, because sometimes you can’t tell whether you are giving good or bad advice.

Advice and Best of The Week

Watch for the videos this weekend, went back to Financial and enlisted a great Canadian satirist to help out. Unless I win the lottery, see you on Monday.

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The Most Hideous Financial Image Ever

I opened my Ottawa Citizen a few years ago and I saw this picture and I was hit by a combination of revulsion, anger, and lurid curiosity.

Revulsion and Anger

Why am I repulsed? You haven’t really read much of my posts, but I think the Cheque Cashing and Pay Day Loan industry is the worst financial service out there, and shouldn’t just be heavily regulated (which it is not) it should be shut down. Anger because the surcharges and interest rates taken by these modern-day Loan Sharks is obscene even at the Loan Shark level.

Lurid Curiosity

This is the most amazing entrepreneurial set up I can see. Whoever runs this particular business has nailed their clientage exactly and are pandering to their every whim and need.

  • Cheques cashed at a fee
  • Lottery tickets sold (and given away as incentives to good customers)
  • Cigarettes sold
  • Foreign Exchange
  • Money Transfers
  • Income Tax “Refunds Now!”
  • Payday Loans

What other services could they offer?

Modern Day Loan Sharks
Modern Day Loan Sharks (from the Ottawa Citizen)

It’s staggering that the government allows this kind of “financial pornography” to go on. I must admit I didn’t think there was places like this around my house, but I noticed a  “Modern Day Money Lender” has opened in my neighbourhood, why? I have no idea.

My guess is over the next year or two, this may be one of the growth industries along with repossession and bill collection, and that is a very sad statement about life in general.

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Buying Lottery Tickets and Going to the Casino?

My wife told me about a new episode of “‘Til Debt Do Us Part” which Gail Vaz-Oxlade hosts, where one of the spouse’s financial tactic to paying off their debt was to go to the Casino and try to make some extra cash (no she wasn’t working there, she was gambling). Other folks I know buy lottery tickets or are part of “groups” buying lottery tickets weekly, hoping to hit it big so that they can retire.

Allow me to be clear on this one, neither of these “Financial Plans” are effective, nor are they prudent.  My opinion is that if you have reached a point in your life where you feel you must gamble to catch up on your financial obligations, you are in dire need of serious help from some kind of professional.

The Gambling Recovery Plan

If the Canadian Government came up with a plan to take $2B and go to one of the larger Casinos in Las Vegas and attempt to double it using a “gambling system”, there would be an armed Coup D’Etat that night, however, if we hear of friends or family going to the Casino, how many of us stop them? Gambling your money on a hot stock tip, a game of no limit Texas Hold’em or a pyramid scheme is not the way to recover from a financial set back.

It usually takes time to get yourself into a financial bind, and thus it is going to take time to get yourself out of the financial bind you are in. There are no quick fixes to financial problems, and if there are, usually you’ll be back in the same financial bind quickly, if there was a quick fix (i.e. windfall money appears which helps you out, but you don’t fix the cause of the problem).

The only Gambling Recovery Plan I could think that might be a success is if, you are a gambler and you have been blowing your money at the Casino and you decide not to go to the Casino any more, that plan will succeed (as long as you don’t find somewhere else to squander your moneys).



The Lottery Retirement Plan

Having worked in the lottery business many years ago, there are three groups of people who make money on the lottery:

  1. The person that runs the lottery makes the most money, hands down. Governments, however, have made it illegal to run your own lottery, so you can’t make money on lotteries this way.
  2. Printing and distributing lottery tickets is a fairly profitable business (look at Canadian Bank Note, or British American Bank note’s financials in this area), but it is a very small percentage compared to how much the lottery commission makes on a Lottery.
  3. Selling lottery tickets makes stores money, and they get to share in winnings of their customers too, but the sellers don’t make as much as the printers do

Note there is no mention on that list of BUYING lottery tickets as being a way to make money on lotteries.

I realize that most likely every reader of this article knows someone (a friend of a friend, or something like that), that Won the Big One in the lottery. That is what the Lottery Commission wants you to remember. What you don’t realize is most likely you know of someone who was bitten by a shark or hit by lightning (both more likely occurrences than lottery winning).

If you are spending money on Lottery tickets, figure out how much you are spending yearly, then multiply that by 20, and that is the money you’d have in hand (plus interest) if you didn’t buy the lottery tickets (or the Cigarettes, or the Coffee, etc., etc.,), keep that in mind the next time you want to buy an “Early Retirement” lottery ticket.

You want a winning bet? Put that money in an RRSP or an RESP, or give it to a Charity.

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Teach Your Children Well

Twice in the past two weeks I have seen something that really made me scratch my head, and made me wonder exactly what parents think they are teaching their kids in terms of how money works and financial planning.

Two weeks ago I was at WalMart and saw that they had set up a Lottery Ticket booth (where the kids coin operated games had been), and I thought , at least they don’t have them at the check out, where it slows everything down. Then I noticed a family there (Mom, Dad and two kids younger than 10 years old), and the kids were asking their parents, “Can we scratch the card this time?”. Frankly my first that was WTF? What are these parents teaching these kids?

Fast forward to my trip to San Francisco and on the plane the family in front of me was another family (Mom, Dad, three kids under age of 10) and they were doing the same thing, and the kids were asking, “Can I play, can I scratch the tickets?”, again my gut reaction was WTF?

What exactly are these parents thinking getting their kids interested in playing lotteries for? To kids this is just a fun game to play, they don’t really understand how much money gets wasted on lotteries, they just think it is fun to scratch off tickets and how much fun their parents seem to be having with these games.

Why start teaching kids about this so young?

  • If you really want to teach kids a lesson about lottery tickets, teach them about the chances of winning and play games with the numbers.
  • Have them understand what the chances are at winning this “game of chance.”
  • Explain to them where the money goes, but also explain that while the money does go to good things, it is your money, and you can give to charities directly instead.

Am I missing something here? It is illegal for kids under the age of 18 to BUY lottery tickets, so why would you teach them to play them?

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