Scared Straight: For Finances?

One of my favorite shows on A&E is Beyond Scared Straight, where problem teenagers are brought inside of a prison and shown how life is on the inside and the kids get a chance to get a feel for what real prisoners are like.

Scared Straight

The Movie That Started It All
At Amazon.ca

The show is quite raw, and unapologetic about things (and usually says that most of the kids in the end don’t really take advantage of this chance, and end up in prison), but it is a show about redemption (or the hope of redemption), and I think that is why I am fond of it.

This got me thinking about the Financial Redemption shows that are on TV, shows like:

  • Gail Vaz-Oxlade and her various shows where she attempts to pound home financial common sense to Troubled Financial Adults, who seem to not understand that there is no fairy god mother who is going to pay their bills (but then Gail gives them $5000 so maybe that is the wrong message).
  • Our friend Preet sounds like he might be cooking up a similar type of show, we shall see (he is looking for folks to be on his show, I hear).

There are other shows like this out there, trying to get people to understand what their Financial Misdeeds will do to their lives and to their family if this behavior continues. Many of these shows seem to show that in the end even the worst of us can learn from their mistakes, but I suspect this may really not be the case.

That got me thinking if I was producing a show about Financial Redemption, I think I’d want it to be a lot more raw and maybe show that this kind of change is not as simple as most folks think.

What Would This Look Like?

If the show had some of the following it might be a little more believable (and maybe more educational for the viewers):

  • Have an actual collection agency show up and repossess something from the debtors house, even if it is paid for, to understand how it feels to have something repossessed. Point out that this will happen if they don’t clean up their act. Get the guys from Operation Repo to show up, they are a very scary bunch.
  • Have them live in a shelter for a few days or public housing? This could easily scare many folks straight, I am stealing this from the BBC show Secret Millionaire, but it would be good for folks who don’t realize where they are heading.
  • Make people live for 6 months without their cars, and no cabs either, only a bus pass. This would be an interesting way to show folks where their bad habits could lead them (i.e. without a car, or an ability to come and go whenever they wish).

I really wonder whether these folks who claim they have repented (financially) are really going to stay on the straight and narrow financially?

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Video: Blood Diamonds

Last night on my regular Friday Night Movie night we tripped across a movie we normally wouldn’t have watched, but ended up enjoying a great deal. The movie was Blood Diamond and it is a dramatization about a family, a huge diamond, the Diamond Cartel and the violent world that the Bling on your Ring can come from.

Diamonds have no intrinsic value, other than as an industrial abrasive and a few other industrial roles (being the hardest substance on earth), yet we are supposed to spend at least 3 months (gross) salary to buy one, to show someone we love, just how much we love them. A very interesting personal finance issue.

Anybody thinking of buying a diamond, I would suggest watching Blood Diamond (I rented it from the Ottawa Public Library) and this interesting documentary too.

I must warn you gentle reader both the Dramatization and this very graphic video does have scenes and photos that are very disturbing, and should not be viewed by younger folks.

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Charity as a Holiday Present

As eyes turn towards the juggernaut coming at us called the Christmas spending orgy (I am thinking of trademarking that phrase), let me reflect on the idea of using Charity as a holiday present.

Let me first point out that I feel that I do a fair amount of charitable work, and I do give to charities as well, so as a rule and as a concept I completely support charities and feel their good works are a wonderful thing. I strongly suggest to you, good reader, that you give at this time of the year (and all year round). Remember that giving is not just a monetary thing, many charities would love your skills and time as well, so please remember that as part of your charitable works.

What a Crock of Beans!

Now, for those of you who plan on sending me a card that says something like:

“We thought of you this holiday season and have made a donation to the Human Fund in your name”

let me be very succinct: BULLSHIT (note the Seinfeldian reference).

If you wish to give to Charity, wonderful, I applaud your giving, however, do not believe that your “giving” in any way, shape or form makes me feel more festive because of it. You giving to Charity is not a gift to me. If you don’t want to give me anything this year, that is cool, and you don’t even need a card, just drop me an e-mail something like:

“Dear Scrooge, we didn’t feel like sending you jack this year, enjoy the Holidays you unlikeable so and so”

No, I have not completely gone off my nut, but I am really kind of tired of Pious folks showing me how Good they are by “giving for me”, I give as much as I can, and that is as good as it can be.

If you want to give, please do, but don’t masquerade that it has anything to do with me, thanks. Oh and if you send out a card like that and DO NOT give, Karma and or the wrath of whichever God you worship will get you eventually (isn’t that a Happy Holiday thought as well)

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Risks in Life (Finale)

For a while we have been talking about where Risk fits in our day to day financial decision points, and I have been adding in examples of Risky Business in my life, today (finally) we wrap this whole thing up.

Previous Posts: Risks in Life I and Risks in Life II

When to Sell?

Yup this one is the big risky one that, I can assure you, I have no idea of when the best time to sell a security is, blind luck has been my best method. Most of my “great” financial decisions have been forced upon me (i.e. I needed to sell to get the money in question), so deciding that a security should be sold is something I am not very good at prognosticating.

I have read many books who state unequivocally that if your investment decisions are made emotionally, you will lose in the long run. Going with your “gut” is a dangerous game to play in poker and also in investing, the danger is that if your “gut” is right once, you may rely on it far too much in the future.

Take your profits is the best way I have heard (e.g. re-balance your portfolio) in the world of investing. If your portfolio has one area that is doing great, maybe it is time to take your profits and lock them in, instead of “letting it ride”? Maybe you are very risk averse like me (i.e. burned so many times, I have very little nerve left), if that is the case taking your profits, when you see them might be your best decision point.

Am I espousing a specific investment method? No, my regular readers know me better than that, you need to find a method that fits your needs and I am NOT in any way shape or form advising you on what to buy, what to sell and when to do either, I am simply pointing out in my case, “Take the Money” has worked. I’ll let the REAL investment blogs talk about that kind of stuff.

The risks in this scenario is obvious, take your money now, or will you have more later?

RRSP or Mortgage?

Is this a risk area? That’s a good question, I don’t think it is a high risk area, unless you are doing something wacky like the Smith Manoeuvre or something like that, if you do either of these (pay down mortgage or build up RRSP), you are doing OK.

I have seen a few different models done about the ideal model for paying down debt/mortgage and RRSP contributions, but I am very debt averse right now, and also am in a relatively stable pension situation, so my decision has been to attack debt as much as possible (with a little success).

The risk again comes down to present money value vs. possible future gains. Get a plan for how you want to deal with it and then stick to it.

So What About Risk?

As we have seen the past few days, risk comes into most major (and a lot of minor) financial decisions but you need to weigh risk against the benefits and make your decision in a calm and rational manner.

Analyze the risks, weigh them in your decision, and you should do just fine.

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Risks in Life (Part I)

Do you take into consideration all the risks that are part of your financial decisions? Do you look before you leap, or do you just roll the dice and let the fates take care of things for you? How do you deal with risks in life ?

Risk is  part of all decisions, and you can paralyze yourself worrying about risks, especially in personal finance, but with larger financial decisions it is imperative to think about what you are about to do, and what risks are part of the decision.

Let me run through a few personal experiences with major decisions and risk.

Example 1: Lock In or Float?

With folks buying their first home, the question always arises, should you lock in your interest rate, or should you go with a lower but floating interest rate? Back when I was looking at houses for the first time, I locked in at 11% thinking I was getting a great deal (given interest rates had been at 18% previously), so I locked in for 5 years. The decision was made because we could afford the payments at that rate and didn’t want any surprise increases in our budget.

The decision was wrong in hindsight because interest rates dropped quickly, but I don’t view that as a wrong decision, more a conservative decision.

I now live on a floating interest rate loan vehicle, because I can withstand a sudden sharp interest rate increase.

The risk here is, can I withstand catastrophic interest rate increases?

Tomorrow: More examples…

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