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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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COVID-19 Are we F*cked ?

This is being written during March 2020 the COVID-19 Pandemic. At the time of publishing things were quite confused and unsure, but this is my simple opinion of where we in Canada may stand financially.

We are f*cked.

Is this me being overly alarmist? I hope so, but there are countless areas that are not likely to ever recover from the Pandemic.

Travel and Vacation Industry

Dead.

  • The Air BnB industry and that side dodge is done. People will not be travelling much, for the next year or two. What happens to all those condos in Toronto that were bought with that in mind?
  • Cruises and Cruiselines? Good night, they are now synonymous with the Pandemic, if they recover it will be not in the near future.
  • Travel bloggers? Freebies are not going to be given out much, I think this gig is going to curtail or die off too. At this moment, Las Vegas is closed. This is not the W.C. Fields joke about visiting Philadelphia, this is Vegas, which never closes.
  • Airlines? These may recover if business travel returns, but they are going to take a beating, and will ask for a bail out.

Real Estate

F*cked

  • Construction sites are shutting down, thus screwing up the whole system.
    • People who are buying the new properties need to sell, but will have nowhere to go.
    • No one is buying a house right now, and when will they start?
  • Mortgages are being called and payments are being missed, renters are not being given reprieves either. What happens next? People being kicked out on the street? I doubt it, but you really don’t know right now.
    • Big wave of homelessness? I hope not, but the economic models aren’t there for this.
  • Over priced real estate may soon be worth less than their financing (i.e. mortgage), will we seeing folks walking away from their expensive high-rise downtown condo?

The Stock Market

F*cked currently having daily circuit-breaker calls.

  • Advisors are telling their customers to sell now, thus locking in their losses. They are following the buy high, sell low credo, that is not synonymous with getting rich.
  • FIRE and the entire early retirement craze should be forgotten for now. The markets have eviscerated those lofty goals for now.
  • The markets may rebound completely as it did in 2008, but surprisingly not as many folks got rich on that rebound as you might think.

Employment

F*cked, we had a weird job dynamic already, (the side gig world) but now it is F*cked.

  • My kids’ generation has had to have 3 part-time jobs to add up to a full time job, but none of those jobs exist right now. Restaurant jobs, are gone mostly due to the restaurants being closed. Retail jobs are gone, stores are closed.
  • The growth industries are:
    • Delivery, that is about it. Everything is being delivered now, but does anyone make any money doing this?
    • Government, because there is going to need to be a big government to deal with a broken country. Is this a good thing? I don’t think so, but I am a small L libertarian.
    • Debt, the world of debt is going to explode in terms of big money. Payday Loans, alternate loans and Bankruptcy Trustees are going to make big money in the short and mid term.
  • Will industries other than Travel go in the crapper? Lots of potential there
    • Retail, when folks don’t have a job, they aren’t going to be buying a lot of stuff.
    • Cars? If interest rates stay low, they may be OK, but if interest rates go up, this could make folks keep their old cars.
    • Oil and Gas already is in the crapper, with gas at 70 cents a litre, which makes it not worth working on the Oil Sands in Alberta.

Inflation

Coming, much like the four horsemen.

  • Governments are injecting Infinite money into the economy to try to prop it back up. I am not an economist, but even I know this is the recipe for Inflation (ever hyper-inflation). If money loses value, prices go up. Most folks don’t remember the 1970’s but this could be where we are heading (if not worse).
  • If we end up in an Inflationary spiral Interest Rates will have to be used to control things, and that is a world many folks have not lived in. I have seen 19% CSB’s in my lifetime, will I see them again?
  • Predatory loan companies making money on this? Absolutely.
  • Bankruptcy trustees may not be able to keep up with the tsunami coming at them.

Alarmist Clap Trap?

I really hope so. I hate to think we are financially f*cked as badly as I am guessing we are, but these are uncharted financial waters. I am not an economist, but I have lived for 60 years, and seen a lot of financial changes, and this one has me scared.

I hope we all come out of this with our health, and if we have that, all this other stuff can be dealt with, in some fashion or another.

Remember when we said, Get Out of Debt, it gives you options? This is what we meant.

What to Do?

First thing, take this article as simply a warning of what could happen. Next, make a plan for your financial world for:

  • The next week, what are you going to spend on? Why? Can you afford it?
  • The next month, assuming this stays the way it will.
  • Six Months, where hopefully around Autumn things start to turn around in terms of normalcy.
  • An overall recovery plan.
    • How are you going to recover your savings?
    • What is your retirement plan, given what has happened?
    • How do you plan around something like this happening again?
      • Hint: GET OUT OF DEBT !

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5 Mistakes Rich Folks Make

I read with great amusement an article in Business Insider Rich people make the same 5 mistakes over and over. I found it amusing, because it attempts to fool you into thinking that if you act like rich folk, you’ll become one. Unfortunately, Lies travel faster than truth.

Maybe the article is attempting to convince you that Rich Folk and you are similar, since you make the same mistakes? This is hardly the case.

Rich People Can Make Financial Mistakes

That is what you should take from this story. Rich folk have the luxury of being able to make financial mistakes, they can recover from them. Most of us don’t have the wiggle room to escape financial blunders.

Rich folks can become like the rest of us, if they make mistakes, that is true. The story the great Investment Monolith wants you to believe is that the reverse is possible too. I think it is possible but the former is much more likely than the latter.

Mistakes are easily made, we all do them, every day. To succeed financially takes dedication, discipline and damn hard work. The mistakes mentioned in this article are bad:

  1. Assuming they can out-earn bad spending habits. That is not a mistake reserved to the rich, in fact this is how we all dig the big hole called debt.
  2. Not automating their savings. Another spin on pay yourself first, which is something you can do as long as you are not spending more than you make.
  3. Not speaking with a professional for tax-planning or estate-planning purposes. This seems like sound advice, if you take it as, making sure you do your taxes well, and you have your Will and Power of Attorney up to date.
  4. Assuming they don’t need a financial adviser because they’re successful. This is the heart of the article, as it seems to have been written by a financial professional. I have a great mistrust of the financial industry in general and in advisors in specific, but if you use this type of service, you had better trust them (and you had better watch them closely). In the end, it is your money.
  5. Not having any idea how much they spend, again not a mistake reserved to the rich. I had no idea I was that far in debt ? We’ve talked about that before.

What Should You Do ?

Don’t make financial mistakes? Easier said than done, but you must be careful with your money. Don’t make rich folk financial mistakes? Absolutely, because you don’t have the luxury of making them.

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Who Green-Lit this Tom-Foolery ?

This is a homogenized version of an expression I have picked up from Letterkenny Problems, and I feel it is something that you can use in your financial life as well. So many times folks try to explain to you about financial things that you know are wrong, and this turn of phrase works for me.

Letterkenny
Wayne is curious who Green Lit this Financial Tom-F**kery ?

Who Green-lit this financial Tom-F**kery ?

  1. Selling an 85 year old woman a leverage hedge fund? Who Green-lit this Tom-F**kery? Most likely the investment sales-douche who needed to make their commissions for that quarter, is my guess. “Give your head a shake“.
  2. You bought a Corolla and signed up for 7 year financing. Who Green-lit that Tom-F**kery ? The car is a good one, but you really want to amortize a $22,000 car over 7 years? If you can’t afford it in 4 years, you shouldn’t be buying it at all. “That’s a Hard No!“, on that contract.
  3. An acquaintance claims they have made a fortune on a pyramid-sales scheme, and wants you to join in and be rich like them. “You want to blow smoke, go have a dart“, don’t include me in your pyramidal sales stupidity. I buy my soap at the Wal-Mart.
  4. You plan on getting married so you ask the invitees for cash only as gifts to pay for the wedding, or worse you set up a GoFundMe page so that you can pay for it.  “Oh I’m stomping the brakes, put that idea right through the f**king windshield.”
  5. The government allowing various firms to claw away more than 20% of someone’s disability tax credit? If they did it themselves it would have cost nothing, so what services do they offer that can add up to over $10K in fees? “What’s the nature of that, David Suzuki?”

Still Have Issues Squirrely Dan?

As you can see this turn of phrase is quite useful in your day-to-day financial dealings. I encourage folks to use it, if not just to see the reactions of the folks your saying it to. If you still have a problem, go have a Puppers.

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The Seduction of Spending

I like that title, in fact that could be the entire post, I like that title that much, but I will elaborate on this provocative statement, about the seduction of spending.

Today’s consumers (myself included) love of things and what money can buy has turned into a full-blown obsession with money and it’s trappings.

Are you a victim of the seduction of spending ? Ask yourself these question:

  1. Does anyone really need to spend $8.00 on a cup of coffee? In my mind if the beans were picked my Marilyn Munro in the nude (and she delivered it to me in that same state), then I might think that coffee is worth the money I spent. Starbucks has seduced you to spend that money with its cache and marketing.
  2. Can you hear the difference of $10,000.00 speakers for your stereo over a cheaper set of speakers? I can’t, but I am also fairly deaf from younger days in printing plants and rock concerts. If you feel it is really important and you can tell the difference, you have been seduced into hearing something that may well not be there (except for your dog).
  3. Why would you pay $16,000.00 for a Toyota Corolla when you could pay $80,000 for a BMW or Mercedes-Benz? Do you live in your car? For that price, in some places you could get part of a house for the Benz. If you think people will be impressed by the Mercedes name you have been seduced into thinking people care what car you drive (I might care if you drove me to work).
the seduction of spending

Must You Spend This ?

These are pretty crass examples of the seduction of spending that we all fall for (I am not portraying myself as being lily white in this, I have bought things that afterward I have asked, “Why did I do that?”), but this is one of the hardest things to control, the urge to spend money.

We can stop ourselves from walking up to an attractive member of the opposite sex and introducing ourselves, simply by rationalizing the embarrassment we might feel and the fear of rejection in that situation, yet we can’t stop ourselves from spending money when we know we shouldn’t (and worse we know we can’t afford the thing we want to buy).

Should we all be taking Prozac or some other psychotropic drug to curb our spending urges? I don’t know, I don’t think they would stop us (they might make us so stoned that we might not do much of anything), so how can we stop ourselves?

No Credit Therefore No Buy

The idea I have is so simple but also very hard to do, for most of us, since we feel naked without a wallet full of credit.

If you go out with no credit cards and no money, you are going to be hard pressed to buy something, aren’t you? Yes, I know with instant credit it’s not impossible, but it will slow you down a fair amount. If you are going out to look at a high priced item or even just going “shopping” with friends, don’t take your credit cards, and maybe bring enough cash to buy a coffee (not a $6.00 one either).

If you are someone who can control your impulses to spend, I applaud you, and strongly suggest you should write a book about it, I’d buy it on the spot (anyone see the dichotomy of me impulse buying a book that is to stop me from impulse buying).

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