Tag Archives: Finances

My Have the Rules Changed

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money-finances3Last week in the Globe and Mail there was a great article on the old rules and new norms for personal finance.  The old go to school, get a good education, get a job, get married, have kids and buy a house as quickly as possible is not cutting it in today’s society.  I’m starting to see it now that I’m into my 30’s and hearing about people’s finances and where they are in life and how it’s not living up to what they expected.

The article talks about a few different rules that have been passed down by the generation before us.  The older generation that used to think the following:

 

1. Finish school, get a job, get married, have children, and buy a house as quickly as possible. Delay saving for retirement until your 50s.

2. Buy the biggest house you can afford. Have a big family and pay of your mortgage fast.

3. Find a steady job with a good pension and don’t worry about investing for retirement. Stay there for 35 years and retire with a guaranteed monthly income.

 

I love all of these because I see so many people doing exactly that.  While some people are starting to save earlier, most are spending it and their credit like they are drunken sailors.  The second one is so especially true because it also ties in with status and buying that huge house, although nobody is paying it off fast. They get the largest mortgage they can with the lowest payments, only to find themselves in deep doo doo when they renew and the interest rates have gone up. Say bye bye house.  Lastly the third one, there is no such thing as a steady job, job security is dead.  I’ve seen it first hand where I work and if anyone actually pays attention to the news or where they work they’d understand that as well.  Gone are the days where people work 20-30-40 years at one job.

So what are the new rules according to this news article?

 

1. Recognize that life unfolds differently now. If you have no home or family and spend your way through your 20s, saving for retirement will take longer.

2. Consider whether – and  when – home ownership makes financial sense. Think about buying a smaller house or renting until you have a big down-payment.

3. Recognize that you are in the driver’s seat. If you don’t have a job with a secure pension, you have to make sure you plan and save for your retirement.

 

A lot of these make simple sense yet sometimes people cannot wrap their heads around it or they are counselling with their parents on the old style rules which is only causing people to fail in life.  Now this doesn’t apply to everyone however if you’ve been keeping up with the news you’ll see that debt to income ratio is at an all time high of 153%.  One positive note is credit debt is finally slowing down, but its taken a very long time for that to happen. 

The key to this story is right here “recognize you are in the driver’s seat”. That is why so many people are looking for other opportunities outside of their full time job.  That is why so many people are looking at an opportunity like Amway or other Network Marketing Opportunities.  That’s why when I talk to some people they are already involved in something else part time outside of their job be it another job, Network Marketing, Home Business, or starting their own traditional business.  Amway North America and Network Marketing is growing and that trend isn’t stopping despite what you may read elsewhere.  It’s growing so much they are actually teaching it in College now.

So get in the drivers seat and take control of your finances, stop relying on the government or your job to take care of you because they won’t.

Just a Little Debt Update

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Well more news today on the debt front.  To no surprise many Canadians are going to find themselves in debt many years longer than expected.  CIBC held a survey which found Canadians holding some form of debt feel they will be deb-free by age 55.  However, only 35 % in the 55 to 64 age group are actually debt-free.  Is anyone actually surprised by this?  With the many debt related news articles that have come out over the last year I don’t know why this is new news.  I think it could be coming out now as we are on the brink of another recession, the double dip recession.

Jim Yih some financial expert says “the older you are the more you’re going to deal with the necessity of debt”.  That is such a load of BS.  Who says that debt has to be a necessity?  It doesn’t HAVE to be and the more that people keep saying it’s OK to have debt the more society is just going to keep accepting that.  Okay so a house is your “necessity”, I’ll *maybe* buy into that, but even still you don’t HAVE to have a mortgage.  There are many ways to go about not having a mortgage, and no I’m not saying you have to do what we do to make that possible.

The moral of all these stories and news related items is focus on your debt repayment, and focus on staying out of debt.  At the very least focus on your consumer credit and remove it.  People who are 10’s of thousands in consumer debt are that way most likely because they are instant gratification people who have no self control on their spending.  It’s the now mentality, I MUST have that new pair of jeans that I cannot afford, or I MUST have that new XBox, or whatever.  How about have some restraint and delayed gratification and SAVE for it.  Now there’s a novel idea!

Lastly towards the end of the article they say how getting out of debt is a slow and steady approach, it doesn’t have to be.  Depending on where you are at, what you can streamline, what you can cut out, you can actually hit your debt hard and repay a lot faster than you think.  It all depends on how serious you are.  We paid off over $100K in consumer debt in less then 2 years, it doesn’t need to be a 10 year journey.  We got serious about it and streamlined and cut back, we did it because we had huge goals and being debt free by the time we had kids was one of them.  Kids are expensive enough let alone having a huge debt load on top of that.  Sometimes you need that motivation to change and that was ours.

Interest rates are not going to last this low for long, once they go up that’s when you’ll be in a world of hurt.  You’ll have nobody to blame but yourself.  So what are you doing today to get out of debt?  What did you do to get out of debt?  Feel free to share.

CTV News Article – http://www.ctv.ca/CTVNews/TopStories/20110829/debt-poll-cibc-110829/

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“Buried Treasure”

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treasureI caught the last 1/2 hour of “Buried Treasure” where Leigh and Leslie Keno are what they call “modern day treasure hunters”.  The premise of the show is people around the US have all this treasure and they have no idea is worth something.  The Keno brothers go in an assess what the people have and let them know if they have treasure or if they have junk that’s not worth anything.

What I find really sad is a show like this is a prime example of just how desperate some people are to make a quick buck.  People are willing to sell collectables and part ways with family heirlooms just so they can have a few thousand dollars.  These are items that should continue to be passed down or treasured within a family but because people are so strapped for cash they reach out to shows like this to hawk off their stuff and hope to get out of their financial woes.  Yet they will only realize their quick buck will never fix the real problem, its just a band-aid.  The real problem is still there, lack of mentorship, poor association, poor financial planning, and the list goes on.  It’s no different than lottery winners typically ending up broker than when they started.  If you don’t know how to steward money in the first place, coming into money won’t change that, it just makes it worse and extra money highlights that.

Obviously this is my take on why this show is on however its pretty coincidental this is happening now when the US is facing even worse financial crisis that is going to put Canada back into a recession.  TD even released a news article based on the fact we could be going back into a recession again.  Yet some people think we are doing okay… give your head a shake, its going to take more than a few years to climb out of where we are and where the US is.

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Doom and Gloom? Nope Just More Household Debt!

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DebtSurprise surprise, yet another article on household debt at an all time high. $1.5 Trillion to be exact. Just more evidence that people are still not getting the hint.  Why are people not getting the hint? The allure of cheap interest rates (Which will not last), uneducated people along with that instant gratification are what I think to blame. 

I won’t go into the full details of the article as it’s pretty much the same if not worse as I’ve blogged about before.  Go check out the article over at CTV News.  I also read Gath’s blog which I read all the time where he talks about how home prices in the US just passed the Great Depression in terms of collapsing values. Don’t think that will at least affect Canada? Give your head a shake.  There may be pockets in Canada where housing “may” be looking good, but that won’t last and you really REALLY need to get educated on where things are going.  That doesn’t mean listening to your real estate agent.  You need to check out blogs like Garth’s or people like Harry S Dent who are actually in tune with the markets and in a lot of cases are in agreement with many economists around the world with how we are in a Global Recession.  But again do your own research.

Anyway I’m curious how long people will expect to live with huge debt loads, huge mortgages they can barley afford (just watch when the interest rates go up and how many people ditch), and feeling of entitlement to having what they want when they want.  People need to shift their mentality to long term thinking and figure out where they will be when they retire at that special age of 65. Oh wait, that’s IF you can even retire at 65.  So many people carry debt loads right into their retirement, so much for that pile of cash at the end of the rainbow you were hoping for.

I’m not saying you need to build an Amway business, I don’t need to convince people to do what we do and never will, but you better have a good plan B and start making it your plan A.  Your job at the old factory or wherever you work isn’t going to give you the retirement bliss your hoping for, and neither will that tiny tiny pension plan you have “building up”.  You need to take your retirement (whatever that looks like for you) into your hands now and start making chances so you go into retirement without debt, heck start living today without debt.  Just get smart about it.

I’m sure next month or the month after we will see yet another news article on debt and how it’s higher or something like that, you need to ask yourself what are you going to do today to provide for the future?

householddebt

Time Broke

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The-Time-ExcuseI’ve spoken and posted articles like this http://www.ctv.ca/CTVNews/TopStories/20110420/canadians-financial-status-survey-110420/ many times however what’s missing is that while people may be financially broke, to the point they cannot even save money, they are also time broke.

What do I mean by time broke? I mean just that, people are constantly saying I don’t have enough time in the day, I don’t have time to work out, I don’t have time for another activity, I don’t have time for this or that.  The funny thing about being time broke is that unlike being broke financially, you can fix time broke very quickly.  I think people use time as an excuse all the time instead of actually understanding where they spend their time.  I did a post in October about time and how much time people actually have and it was quite shocking.  We have more than we think we do.

Time as an excuse is the weakest excuse in the book not to do something.  For example it’s an excuse I hear a lot when I talk about my recent gym training.  People mention all the time I wish I could work out, I just don’t have time for anything else in my life. That’s such horse crap!  I thought the same thing as well.  Lindsay and I are obviously busy with our business in the evenings (by removing our t.v. watching time) and I thought we would not have the time for me to go to the gym.  We sat down one weekend and actually went through our schedule and was able to find at minimum 3 evenings of 1 1/2 hours to spend at the gym as well as any time on the weekend.  Now how hard was it to find that time?  It wasn’t, it was removing the excuse, looking at our calendar, making it a priority, and putting it into action.  Something so many of us are to lazy to do I find.

So what if people really are legitimately busy with say a job that demands more than the 40 hours, typically around 50-60 at a minimum if you include driving time (not including OT which most of us all work freely), and then a second job and maybe a few other hobbies or other life events and they really don’t have time to add say something like the gym in, but they really want to.  Well wouldn’t you want to explore another option to help you recover that time back into your life?  Or would you rather just continue complaining about how you have little time in your life and keep doing the same thing over and over and over and over and over and over and over and over again?  See the definition of insanity is doing the same thing expecting different results, so maybe most of us are insane? :) Something to think about.

Anyway we were tired of wasting our time and not getting something back for it which is why we are building this business so that we can gain our time back.  We’ve already created time in Lindsay’s life to become a stay at home mom WITH options.  Our kids will NEVER know what a daycare looks like and I’m proud of that.  Now we are working on freeing up my time so we can spend it together as a family and not have that time excuse ever again.

What are you doing in your life to remove the time excuse you’ve been saying to your friends and family?