For those of you who haven’t had as many financial plans and projects fail as I have, I’d like to share with you the most important variable in all of your plans, and that is Time (no not the magazine, the passing of moments). Time is the most important financial variable , unfortunately.
Time will fix many things, but assuming you can do things quickly is usually the problem that trips up most plans and projects.
Typically a repayment plan will be quite simple:
Payment per Period = Debt / # of periods
However, there are two things wrong with this plan. First is you aren’t taking into consideration that your debt will grow with an interest rate, look up Future Value of Money on-line or look up the PMT() function in Excel to figure out what the debt is going to grow. The other major variable here is the # of periods, and that is where most plans fall over.
People are always optimistic when they start debt pay back schemes (this is my opinion, but based on observation of many friends) and think it will be easy to pay things off quickly, without taking into consideration that Life, Karma, or Sh*t, happens (depending on your religious point of view). If you are overly optimistic with any plan (speaking as a Project Manager now), you will fail, or you will spend all of your time attempting to catch up.
If you are much more conservative in your planning, time can be your friend. This is not to say that you should amortize your car over 10 years, or your house over 50 (if you could), however, don’t get too aggressive in your plans.
Rules of Thumb
A good rule of thumb is to make up a plan initially, and then walk away from it for a day. The day later look at it and ask yourself
Can I live with this payment plan? Is this going to hurt a little or be agonizingly painful and will make me miserable?
What other sh*t is going to happen? (the realistic answer is “I don’t know”) Plan for bad things, give yourself a little slack (I didn’t say let it fall on the ground, but a little slack)
Have I tried this before and succeeded? The answer is most likely Yes and No, since you are doing it again (if you are really good at building up debt and then just as good at paying it off, good on you, but why are you living on a roller coaster?).
Time, it passes very quickly plan accordingly. Time is the most important financial variable , plan accordingly.
I wrote this about 10 years ago, and I can assure you, Time is an ever dwindling resource in your financial plan.
In previous years I have written over 200 articles in a year. In 2020, I wrote a great deal less than 200 articles. I continue to have a huge backlog of unfinished titles, but 2020 was an interesting year. Here is the entire list, missing my #MoneyTalk compilation posts.
Estimated reading time: 5 minutes
CPP and EI Maximums for 2020, was my most read and searched article all year. I have done these every year for a while, so not sure why it was so popular, but here it is. I have in fact already published CPP and EI for 2021 to see if it is as popular.
My CRA Account another highly searched article, outlining how to set up your on-line CRA account. You really should set that up.
When to Put Money in RRSP I created a step by step reasoning, and naturally someone complained it wasn’t a waterfall. Seems there is no pleasing some folks.
RESP Only For the Rich ? There is an argument that this is how it ends up. The poor, don’t open accounts, even though they can earn money without deposit. Banks don’t market them to those with low incomes, thus, RESP’s are for the rich.
As I have said, don’t count on 2021 being a complete turn around year. I can be better, but it could even be worse. If anything 2020 has taught us is, you can never guess what might be coming next. If you want try some New Years Resolutions, but don’t look too far ahead, you might trip on something in front of you.
I have written many times about if you don’t ask the answer is always no, but the title of this post is also a good turn of phrase. Too many times folks feel they have no one to ask for help, so they just give up. Most of the time that is exactly what service companies want you to do.
Many times return procedures are convoluted, complex or just downright silly, but it is to stop you from returning things. If you keep it, but don’t want it, they have won.
A good example is, if you want to use TD E-series mutual funds, inside your TD Mutual Fund account, it is not an easy procedure. You must apply via a written form, and wait for the “OK” from them to be able to buy them. Once you are granted permission, you then must figure out which funds are the E-series funds. If you wish to cash the E-series Funds out of the account, you must first go on-line, transfer them to a Money Market account, and then go into a TD Branch, to do the cash out?
This is the question. If you do not ask for what you want, you will rarely get what you want. You may sound like a pest, you may upset whoever you are dealing with, so be polite, but ask for what you want. The worst they can say is, No.
Haven’t done this for a while, but I do have a little more free time as well. So let’s start with the best joke about this year so far.
I’d like to return this year (2020), I don’t like it and it isn’t doing what I want. It is within 90 days and I expect a full refund, or at least store credit.
The 2020 Dad Joke
How are you all doing? I hope you are doing well, and if you are still working, I say Thank You, for that.
If you are not essential, STAY HOME! This is what you can do for your loved ones and yourself, STAY HOME! I cannot visit my Mother or my Brother because I could kill them, I don’t know if I have been exposed or am a carrier, so I STAY AWAY. I want to go see them, but I know I could kill them, so I stay away.
So the one thing I will remember about this vividly will be the folks who have hoarded Toilet Paper. I hope that they have to use all that toilet paper in a very short time. Remember COVID-19 attacks your lungs, it is not a stomach flu. On this date (March 27th) I continue to look for another pack of TP, but Costco was out.
I also have heard from every place that ever asked for my email address (it is a HOTMAIL address which I usually ignore). Everyone is telling me how they are trying to help me be safe during these times. Thanks?
So it has been a long while since I have written one of these, so we have a long list to wander through.
COVID-19 Are we F*cked ? OK, so the title was a little click-baity but I had to write this down. Sometimes these thoughts need to be put in print to see where we stand. Apologies for the rant and salty tones.
RDSP Statement of Grant Entitlement 2020 yes another year has passed and the government has told me how little they will match in terms of my son’s RDSP. It’s free money, but it will increase over time.
Reflections on 15 Years means I have actually been doing this for more than 15 years. I am attempting to rewrite, edit and delete many of my older posts.
There are more, but you can go check them out on the site. As you can see my writing rhythm may be returning (for good or bad). Hopefully more from me in the coming weeks.
Financial Reads for Troubled Times
I give you an excellent reading list of articles to help you get through these troubled and worrying times.
Many “Experts” are Wrong about Risk written by Michael James, points out that oh so many experts have been wrong about money things. He is not arguing with Scientists, he is arguing with Financial Folk.
For those that have not noticed, Squawkfox has not been around much, and that is because she has been battling with Cancer. She is a friend, and I hope you all send her good thoughts and love. She is one of the reasons you should stay home!
I guess this is topical for these days (written during the COVID-19 pandemic), but let’s do a quick wander through what your Financial Disaster Plan might need to include.
Will and Power of Attorney
Doesn’t matter if you think this will not affect you, you need to have these documents in place. If you are single, OK it isn’t urgent, but if you have a spouse or more, do this first. Plenty of easy on line sites to do it with, or call a lawyer or notary.
For the Power of Attorney, different provinces have different rules, so make sure you set that up correctly too. I have learned too much about Quebec’s rules lately, thanks to a loved one still living there (and their POA).
If you have a family you should have life insurance. It should at least pay out to leave your family debt free should you die. It would be better to leave them more money to help out given the loss of your income. No, not full life or any stuff like that, TERM life insurance (5 or 10 year terms) is fine.
Disability insurance should be considered as well, especially if you are the sole income earner for your family.
A certain amount of actual cash available to you would not hurt. No I am not saying have $10,000 in cash hidden in your house, but a couple of hundred couldn’t hurt having around. Maybe a little US Cash too? If you live near the border, never a bad idea
Dear Lord, why do people hoard toilet paper during a crisis? You are assuming there will be toilets (or something like that) during this crisis? Maybe some canned food, and some water would make sense, but bum wad? Really? COVID-19 is a respiratory sickness (i.e. your lungs not your bum).
List of Critical Information
What if you become incapacitated, how will your designated helper do things without the hundreds of passwords needed to do your banking, or anything else? Who will scrub clean your Google and Search logs?
Somewhere, somehow but securely you will need to have that information available to the people you trust, to act for you. A list inside a safety deposit box? An encrypted Word document somewhere?
What about all of your insurance policy numbers, your pension information, and anything else loved ones might need should you find your untimely demise? How do they get at the “safety blanket” you left for them?