Canadian Personal Finance News | July 2015

I love a good story. In fact, I used to tell myself at least one new story every time I opened my credit card statement. “Oh,” I’d say to myself, “I was so busy last month, it makes perfect sense that I ate out a dozen times. I’ll just eat out less next month.”

These stories might be considered harmless, except for one, not-so-small problem: They’re not true. And with every story we tell, we slip into a never-ending cycle that increases the gap between our actions and our values.

"We’ve been led into a culture that has been engineered to leave us tired, hungry for indulgence, willing to pay a lot for convenience and entertainment, and most importantly, vaguely dissatisfied with our lives so that we continue wanting things we don’t have. We buy so much because it always seems like something is still missing."

"More isn’t always better. Behavioural studies note that adding investment options may simply paralyze decision-making. In any event, more is better only if it actually translates into a new and broader range of alternatives that benefit the chooser. But in a world where rules and realities limit investors’ choices – and particularly where those choices get shaped to the contours of advisors’ interests – we need something more than just more choices in order to make things better."

"There was no thought given to building their savings account balance or keeping a budget. Why should they? They had a healthy stream of income and expected they could just deal with any situation life could unexpectedly cast their way with a credit card if it was absolutely necessary.

"They realized that they had never spelled out in detail what “making it” looked like for them, but they both agreed that making partner wasn’t worth the hours and sacrifice needed to get there. As they continued to talk, it became clear that, in some way, the nucleus of their dream was independence."

I’ve received a number of enquiries recently from people asking me if they need to apply in order to receive your CPP Post Retirement Benefit (PRB.)

The short answer is “No”—there is no application required for a PRB. The slightly longer answer though, is that the timing for Service Canada to process PRBs appears to be uncertain, and it sometimes appears necessary to call them before they’ll issue a PRB.

"A well-diversified, low-cost portfolio executed with discipline offers your best chance of enjoying market returns with moderate volatility. But there’s no secret recipe, no optimal asset allocation, and no reward without risk. Be skeptical of anyone who suggests otherwise."

The bottom line, though, is simply to recognize that even market scenarios like the tech crash in 2000 or the financial crisis of 2008 are not ones that will likely breach the 4% safe withdrawal rate, but merely examples of bad market declines for which the 4% rule was created. In turn, this is an implicit acknowledgement of just how conservative the 4% rule actually is, and how horrible the historical market returns really were that created it. In the end, this doesn’t necessarily mean that the 4% rule is ‘sacred’ and that some future market disaster couldn’t be bad enough to undermine it.

If you've ever tried and failed at budgeting, or if you've never tried at all because it sounds so hard and boring, this post is for you. Those of you with a budgeting system that works and that you possibly even love and want to have babies with are excused for the day.

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