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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.

Time
If you invested this dollar in 1967 what is it worth now? Time heals all wounds.

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.

Microsoft Canada

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.

Redux

I wrote this about 10 years ago, and I can assure you, Time is an ever dwindling resource in your financial plan.

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Advice for New Grads?

I got called by Insight Magazine to give some advice to new grads on what they should be doing about their finances, many years ago. It was so long ago, the magazine no longer exists. I gave some answers to the interviewer, but as usual, I was not sure I was very clear or eloquent, so now I will attempt to be more clear to those that might have read the article.

Get The Heck Out of Debt

You have just graduated from University, and you might be carrying upwards of $70K in debt (hopefully in student loans only). You most likely won’t be paying that debt off in your first year of working (should you find a job right away). If you can pay it off, good for you! However, you should put together a plan on how you are going to pay off that debt and WHEN it will be retired.

Carrying debt is a drag on your finances, and the sooner the debt is retired, the easier your financial life will be. You should not aspire to “get used to living in debt”, this is the one thing my generation does NOT want to hand down to you.

Don’t Fall In Love With Having Money

Just because you have graduated from University and you no longer have to eat Kraft Dinner with Hot Dogs for dinner, does not mean you must go out every night to eat. You have lived a frugal lifestyle as a student (I am assuming), but if you continued that frugal lifestyle for a while longer, you may be able to pay down your debt faster and then be on a much stronger footing financially.

Yes, you deserve to enjoy life, but it is very easy to get used to the “Let’s go out to dinner tonight we deserve it” lifestyle, and once you are in that lifestyle the habit is very hard to break (speaking as a 49 year old, I can attest to that issue).

You cannot live your parents’ lifestyle (yet) so don’t try. It took them 30 years to get where they are, don’t rush your spending habits to mimic their spending habits.

If your parents paid for you to have a Samsung or an iPhone or paid for your Cell phone bill, maybe it’s time to get rid of this expensive toy? You don’t need $120 a month cell phone bills. Discretionary spending (i.e. money haemorrhage) is a bad thing which you must watch diligently. Middle age mens’ wastes spread, but their spending spreads like that as well, don’t let it happen to you.

Have a Savings Plan

The sooner you start saving, the better it will be for you when you reach my age, however, saving while still carrying discretionary debt (i.e. non-mortgage debt) is paying Peter to feed Paul. Lowering your debt is first and foremost, if you have left over moneys from your year, yes, starting an RRSP early is a good thing to do, but pay your debts first.

Savings is good, getting out of debt is better.

Get the Heck out of Debt

Did I mention this yet?

Banks Can be Negotiated With

As I have pointed out before Free Banking is possible, but it is more likely for old farts like me, who have a good track record with the bank already.  Paying $12-$25 a month in bank service charges you should try to avoid, since you most likely don’t use enough services with the bank to justify this charge. Go with as cheap banking as you can.

The Three Worst Ideas After Graduation

  1. I deserve a new car! -or- I deserve a vacation in Las Vegas!
  2. I’m a little short until my next pay cheque, I’ll get a pay day loan
  3. I am only carrying a few hundred dollars on my credit card balance this month

Keep this in mind, did I mention Get the Heck Out of Debt?

Last Pieces of Advice for New Grads

Originally published in 2010

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Tangible Financial New Years Resolutions

If you are planning on making financial New Years resolutions do yourself a favour and make them measurable. When they are measurable they are attainable.

My Personal Opinion On Resolutions

Here is a good example of some noble resolutions

  • I will save more this year
  • Pay down my mortgage
  • Lose weight

I applaud you if these are your goals, however, how are you going to know whether you have succeeded or not? Without a tangible financial goal you are doomed to failure.

More tangible versions of the same goals might be:

  • The balance in my TFSA on Dec 31 2019 will be 10% larger than on January 1 2019. This is very specific, you can even put actual values in there, which makes things easier for you to monitor your goal.
    • Remember if you are saving for your kids’ educations an RESP goal of $2500 added to the account would be good.
    • RDSP contributions for your child need to be there as well.
  • My mortgage principal will be $10,000 lower at the end of this year. The important thing is to set a tangible financial goal. How you do it is left open, but what the goal is, is concrete.
    • You can automate this goal, and make it easier. Setting up automatic over payments on your on-line banking of $400 per pay (if you are paid bi-weekly) makes this resolution real.
  • I will lose 60 pounds this year by going to the gym at least 150 times. Ideally I will try to lose 5 pounds a month. Again, this is very concrete, and easily monitored.
    • In my case I am lucky as my office has a gym I can use for free.

Resolutions are wonderful things (although you can set goals any day of the year), but they must be specific. Saying, “I will be a better person” is admirable sentiment, but what does it mean and how are you going to do this?

  • Give more to charities?
  • Being more positive in your life outlook? (again really hard to monitor this, unless you tell someone who can say, “You really are being a sour puss these days”).

Make your goals and resolutions tangible and measurable and you are more likely to succeed. Also, remember to put your resolutions somewhere where you can be reminded about them.

  1. Set the background of your computer or tablet with them?
  2. Put them on your refrigerator?
  3. Tell your spouse, they will remind you.

All Those Happy New Years

Yes, for about 15 years I have wished you a Happy New Year

  • A happy new year for 2021 ? Well it started pretty grotty, but it might get better.
  • I must have had an inkling about 2020, as I didn’t wish you a Happy New Year to start things. Hopefully with this post I have helped make the year better?
  • In 2019 I was too practical with Tangible Financial New Years Resolutions but still worthwhile thinking about it, eh?
  • For Happy New Year 2018 I had a great photo of being stuck on the 401 during a snowstorm, and links to previous New Year Messages.
  • 2017 I pointed out that you start paying CPP and EI again, so your net pay is going to be lower.
  • 2016 Happy New Year, just didn’t happen, not sure why, must have been having a grinchy holiday?
  • 2015 Happy New Year and I included a really bad joke about it being the year of the RAM in the Chinese Calendar.
  • 2014 Happy New Year again I pointed out that CPP and EI rates were increasing as well, I really am a kill joy.
  • 2013 was a Happy New Year, a celebratory Sunday was the photo to start the year.
  • 2012 I used to post best of Twitter posts, and it seems to have fallen on a Sunday as well.
  • Merry New Year! It All Starts again…  was how 2011 started, and I included a bunch of resolutions in that article.
  • 2010 New Year began with me in a new job, which was very nice, given I had been unemployed for a while.
  • 2009 started a little bleak, in that I was unemployed, and was looking for a job, during a major economic crisis.
  • Belated Happy and Prosperous New Year was how 2008 started, the economy was booming, employment was high, but there were hints of the systemic failure that was coming soon.
  • A New Year Brings Tax Breaks? The tax breaks appeared in 2007 but later disappeared, unfortunately.
  • 2006 I was still figuring out what this whole thing was going to be, but I did show some signs of a ranting good time.

Yes, I really did start in 2005.

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Financial Predictions for 2018

My ability to see the future is unreliable, but I am willing to guess about the future. I supply these financial predictions for 2018 as an example, and anyone who uses them to make financial decisions, does it at their own peril.

Financial Predictions


BCM Financial Predictions

  1. Interest rates will continue going up. Inflation is in the air and the economy is starting to overheat. By the end of this year, the overnight rate will be at least 2.5%. This is a 150% increase, so be aware, and lower debt.
  2. The Canadian Dollar will be above 85 cents by the end of 2018. The American economy is going well for now, but the Canadian economy will do better. The Tax relief in the USA will cause their economy to overheat for a while as well (i.e. Inflation).
  3. One of the 3 following bubbles will burst:
    1. Bitcoin, someone will finally point out the Emperor is naked and it will plummet.
    2. Marijuana, the only people making money on this are going to be the Governments (and they will find ways to blow that money).
    3. Property Bubbles, things seem to be cooling down in some areas, but in Ottawa and Montreal things continue to heat up.
  4. The Old Bull in the Stock Market, will continue to rise, for the first half of the year, however one of those bubbles bursting (see 3) will stress things and the markets may end the year at the same levels. Remember to take your profits and rebalance your portfolios.
  5. Maybe not this year, but soon a prominent investing firm will be found out to be a front for an AI trading system, with few human employees. My guess is this is already going on, but the disclosure of this should cause upheaval in the trading world (but it won’t).
  6. The Phoenix pay system will be scrapped, but the new system will work no better. The cancellation will cause a larger Federal Budget deficit.
  7. There will be a bigger data breach than the Equifax catastrophe, that will be disclosed. It most likely happened in 2017.

Official Disclaimer

Please remember, these are SWAG from the BCM (simple wild ass guess from the Big Cajun Man), and you should never use these financial predictions for your financial planning.

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Happy New Year 2018

It has become a tradition that every new year I wish you all a Happy New Year 2018. A Happy Financial New Year is also my wish for you and your loved ones. The New Year will start cold and snowy in Ottawa, so here is my New Year Wish.

All Those Happy New Years

Yes, for about 15 years I have wished you a Happy New Year

  • A happy new year for 2021 ? Well it started pretty grotty, but it might get better.
  • I must have had an inkling about 2020, as I didn’t wish you a Happy New Year to start things. Hopefully with this post I have helped make the year better?
  • In 2019 I was too practical with Tangible Financial New Years Resolutions but still worthwhile thinking about it, eh?
  • For Happy New Year 2018 I had a great photo of being stuck on the 401 during a snowstorm, and links to previous New Year Messages.
  • 2017 I pointed out that you start paying CPP and EI again, so your net pay is going to be lower.
  • 2016 Happy New Year, just didn’t happen, not sure why, must have been having a grinchy holiday?
  • 2015 Happy New Year and I included a really bad joke about it being the year of the RAM in the Chinese Calendar.
  • 2014 Happy New Year again I pointed out that CPP and EI rates were increasing as well, I really am a kill joy.
  • 2013 was a Happy New Year, a celebratory Sunday was the photo to start the year.
  • 2012 I used to post best of Twitter posts, and it seems to have fallen on a Sunday as well.
  • Merry New Year! It All Starts again…  was how 2011 started, and I included a bunch of resolutions in that article.
  • 2010 New Year began with me in a new job, which was very nice, given I had been unemployed for a while.
  • 2009 started a little bleak, in that I was unemployed, and was looking for a job, during a major economic crisis.
  • Belated Happy and Prosperous New Year was how 2008 started, the economy was booming, employment was high, but there were hints of the systemic failure that was coming soon.
  • A New Year Brings Tax Breaks? The tax breaks appeared in 2007 but later disappeared, unfortunately.
  • 2006 I was still figuring out what this whole thing was going to be, but I did show some signs of a ranting good time.

Yes, I really did start in 2005.

All Those Happy New Years

Yes, for about 15 years I have wished you a Happy New Year

  • A happy new year for 2021 ? Well it started pretty grotty, but it might get better.
  • I must have had an inkling about 2020, as I didn’t wish you a Happy New Year to start things. Hopefully with this post I have helped make the year better?
  • In 2019 I was too practical with Tangible Financial New Years Resolutions but still worthwhile thinking about it, eh?
  • For Happy New Year 2018 I had a great photo of being stuck on the 401 during a snowstorm, and links to previous New Year Messages.
  • 2017 I pointed out that you start paying CPP and EI again, so your net pay is going to be lower.
  • 2016 Happy New Year, just didn’t happen, not sure why, must have been having a grinchy holiday?
  • 2015 Happy New Year and I included a really bad joke about it being the year of the RAM in the Chinese Calendar.
  • 2014 Happy New Year again I pointed out that CPP and EI rates were increasing as well, I really am a kill joy.
  • 2013 was a Happy New Year, a celebratory Sunday was the photo to start the year.
  • 2012 I used to post best of Twitter posts, and it seems to have fallen on a Sunday as well.
  • Merry New Year! It All Starts again…  was how 2011 started, and I included a bunch of resolutions in that article.
  • 2010 New Year began with me in a new job, which was very nice, given I had been unemployed for a while.
  • 2009 started a little bleak, in that I was unemployed, and was looking for a job, during a major economic crisis.
  • Belated Happy and Prosperous New Year was how 2008 started, the economy was booming, employment was high, but there were hints of the systemic failure that was coming soon.
  • A New Year Brings Tax Breaks? The tax breaks appeared in 2007 but later disappeared, unfortunately.
  • 2006 I was still figuring out what this whole thing was going to be, but I did show some signs of a ranting good time.

Yes, I really did start in 2005.

New Year’s Resolutions

I have written about financial resolutions and resolutions in general a great deal as well.

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