Spring (the blog) Archive

The Because Money Podcast, Episode 11: Home Buyer's Plan

The feeling of not worrying about your next credit card statement, or the sense that things really, truly are going to be fine and it’s not just blind hope or dumb luck that will make it so? It’s fantastic, and it’s worth the work. Trust me. But the work itself is tedious - painful, even. Sometimes it’s downright embarrassing. Pretending that’s not just makes it harder.

What you’re trying to do for your kids, for your house, your planet, your sanity, and even for the wallets of the gift givers is admirable, but if your example and (possibly) polite request aren’t enough to change the behaviour of the people who love you and/or love your kids, and you continue to make it an ongoing issue, you’re the problem.

There’s no Grand Unified Theory of Finance. There’s no formula you can plug your paycheque and net worth into that will spit out whether you should increase the deductible on your car insurance or switch banks. There’s only you, your behaviour, and the systems you set up to optimize your strengths and bypass your weaknesses.

Imagine how happy your clients would be, if they came to the branch to find out what happened to a payment they made on a competitor’s credit card and weren’t asked why that credit card even existed in the first place, and if they were met with employees whose only job was to make sure that their concern was addressed, their transaction was completed correctly, and their needs were met in the most cost-effective, efficient, and appropriate way possible.

When you buy mutual funds, you're buying something with both an up-front cost and an ongoing cost. It's like buying chicken that you not only pay for up front, but keep paying for as long as you have it in your fridge (now there's a way to combat food waste).

Management expenses: just because it's not a litre of milk, or a sheet of stickers, or a car, you're not excused from the responsibility to evaluate the utility of your spending when you buy mutual funds.

scoff if you like, but we have a public pension system in Canada that will likely make up a good portion of your retirement income, and its existence should be factored into your plans.

Learning to live within your means is discipline you have to practice. Financial catastrophe always strikes, and having the necessary skills already mastered will mean the difference between dealing with it and moving on or being overwhelmed and giving up.

If you don't take a long, hard look at how you got into debt in the first place, and - from minute one of your newly consolidated life - take measured, calculated steps to not do it again, those credit card balances are going to creep back up again. You'll find yourself in the same office, maybe even in front of the same banker, signing a new set of loan papers for a new consolidation loan three years down the road.

The financial plan you're getting for free from the personal banker and the investment advisor isn't really a financial plan tailored to you at all, and it's free because the full priced products - through up front and annual trailing commissions - are huge profit engines for the people and companies who sell them.

New entrepreneurs almost always make this mistake, but you don't have to. Have a plan for the money you earn within your business, and be ruthless about it. Otherwise, you'll only succeed through sheer luck.

If you're starting out as an index investor, and are going to be regularly contributing in a self-directed brokerage account, the best discount brokerage for you is TD Direct Investing, but not for any of the reasons most reviewers list.

Mutual funds are profoundly boring, although their ETF cousins have been known to be a little saucy. But if you're looking for excitement in your investment strategy, you're looking in the wrong place.

Trusting the government to tell you what you need to give them and when is like asking your three-year-old to make supper: remarkably inefficient. This post ends with an appeal to write your MP begging for a change in the way small businesses are notified of their HST responsibilities, so be warned: it's impassioned.

I stand to benefit if embedded commissions in mutual funds are banned, and if a fiduciary standard for advisors is enacted. I don't think it invalidates my argument, but - unlike some of the voices clamouring against the increased safety for investors - at least you know why I'm arguing for it.

Planning for your retirement isn't just about your investments, although you can be forgiven for thinking it is. It involves exactly the same activities as planning for tomorrow, next week, and next month: active budgeting, debt elimination, robust savings, and - above all - flexibility.

Retirement calculators are only as good as the information you put in them and the underlying assumptions of the calculator itself, and are useful only to model the future, not predict it.

There are two things you can do if there's going to be a housing market crash, and worrying isn't one of them.

How to calculate your CPP, OAS, and private pension entitlements.

Being frugal just for the sake of being frugal isn't being virtuous. It's being cheap.

You can't plan where you're going until you know where you want to go and where you're starting from.

A realistic retirement plan doesn't start with a number and work backwards; it starts with the question "why?"

Buying an RRSP sometime between January and March doesn't mean you have a retirement plan

Financial advisors who are compensated based on how much money you have invested with them have less time for the equally complex needs of less affluent clients.