Life Throws Curve Balls

The lights of the MRI machine were shining brightly in my face as I quietly lay there getting my brain scanned for the second time in the past few months. I had a moment to reflect on the unbelievable events of this year.

When I last posted on here I was alluding to the fact that I was making some significant life changes, and I was. I had changed careers completely and I was quite excited about that and was planning to share it on here.

The Career Change: Its slowly moving forward.

Back in November of last year, I decided to change directions and become a Real Estate agent. I had gotten a package at the company I was with and the career I had for about 15 years was eating at me and there was nothing about it I enjoyed anymore. Too often I was pushing projects and people forward without any real meaning or purpose and work was overflowing into my time outside the office, including vacations. The timing was right to try something new. Over the last 10 or so years I have completed multiple major renos, house and cottage projects, and every time it felt really good to work on. The logical choice was to tie it to that while still using some of my previous skills; becoming a realtor seemed to fit all of the criteria.

After some research and a few months of classes and exams, I did it! At the end of March I officially had my Realtors license. In April I started slowly and the learning curve was huge!

Little did I know there was much more in store for me than that. As we know life has a tendency to throw us curve balls when we least expect them, and I was just about to get real doozy.

Life lined me up and threw me one hell of a curveball.

Mid morning on mother’s day, my life changed, I had a stroke! At the age of 37! I knew something wasn’t right when I couldn’t talk clearly and water wasn’t staying in my mouth and dribbling down my chin. Off to emerge stat! I ended up being a statistical rarity and I had a stroke at a young age with relatively minor effects. Thankfully the affects were limited and with time the doctors expect I’ll have 100% recovery (or close to it). I was in relatively good health I thought; I did smoke but nothing else seemed out of whack.

Though I hadn’t gone to the doctor in 10 years, which is never a good thing.

Well everything wasn’t fine, I had runaway hypertension, and my smoking and general lifestyle weren’t helping. Working all the time with no time for taking care of my self and exercise was merely a half formed idea. After so many years of abuse something gave out but I’m still here. That’s the good news and it truly is good news; now its time to realize what’s important in life and treat this curveball seriously and make changes.

At the end of the day all of the stuff in the world doesn’t really matter; driving yourself extremely hard to collect more and barely being able to keep up with the payments isn’t a healthy way to live. Life is short and fleeting don’t get stuck doing what you don’t want. Never ever forget to live your life.

So I’m back and still getting better week by week and month by month.   The real estate career is slowly moving forward and we’ll see where it goes. My health is getting to a much better place and with diligence and care hopefully it will be for decades to come. I have a new perspective on a lot of things and the value of things; material things do not have nearly the same pull and relationships with family and friends mean a whole lot more. Above all if you do not have your health you have nothing.

Buying Quality

When you think about a quality item, inevitably you’ll think it will be more expensive and for the most part this is true. The reality is there are times when it makes sense to pay extra and buy the quality item. When it comes down to it; it’s about finding what the best balance is for you, between quality and price. Not paying excessively for quality you don’t need and not necessarily buying luxury for the expected quality.

Quality items and buying a quality item doesn’t have to mean that you’re buying a luxury item. Luxury items, while they might be associated with quality, doesn’t always mean that quality is there. Luxury items are often defined by the brand rather than the quality. I recently read a post (sorry can’t find the link) where the author was talking about someone buying a luxury purse, that luxury purse was probably well built but that wasn’t what drove the cost, it was the brand. You could probably buy a similar quality purse for 1/10th the cost. What we’re looking at here is paying extra for quality not necessarily buying a luxury item.

Finding the balance between quality and luxury can be a challenge; buying an item that is high quality can seem like a luxury. But at the same time it can also be a challenge if you’re trying to justify the cost of the extra quality. The perfect example in this would be when buying a car, you can get a good quality car for a reasonable price where the luxury equivalent is a lot more expensive. You might get something nicer when it comes to the luxury car but essentially most of those become nice to have items. Conversely this contrasts with the beater you can buy from the used car lot which might serve a purpose but come with its own headaches.

It comes down to finding the balance of quality for price. If you’re extremely frugal then the lowest cost is always the driver for any purchase but I would argue that there are times when you do want to spend a bit more money to get a quality item. So when does it make sense to buy quality?

  • if the item is used often and the quality difference is noticeable
  • when the added quality gives you added benefits
  • when the quality means less breakage and maintenance
  • When it saves you time (money and aggravation inevitably fall into this)

There are financial and psychological benefits that kick in when you start to increase the quality of an item. For example quality items are likely to not break down as often (thus reducing replacement costs) and won’t cause you aggravation in upkeep. Using our car example you might save a lot by buying the beater from the used car dealership versus a good low mileage used car. But one will break down on you a lot more often and probably at the wrong time. The headache you save yourself not to mention money to keep the beater running is really worth the quality used car even if its more expensive. For those curious I didn’t compare the beater to a new Lexus to keep them remotely close.

Now for me I try to price things out based on a balance of quality and price. I don’t need my day-to-day running shoes to be the best on the market. I’m not a runner and the main reason I like wearing running shoes is comfort so the ultra-high quality runners would be a complete waste. I buy them for the comfort so I balance the price for the quality I want.  On the flip side we renovated our kitchen when we got our new house. When we did this we needed to buy a dishwasher (I know this by itself is a luxury for many); our previous house had one and we had bought it as cheap as we could. When that dishwasher was running you would think a freight train was trying to come through the kitchen it was so loud. When buying a new dishwasher we went for the added quality of a very quiet dishwasher and paid for it. Now our kitchen doesn’t sound like a train station and while we spent more money for the quality the mental peace of not having to deal with the noise is worth it.  

It’s important to note that buying cheap, normal, quality or even luxury really comes down to what you can afford. We bought a dishwasher for our new house but if we couldn’t afford one then we simply wouldn’t have, or found a better deal if our budget was limited. It’s all about finding the balance; finding the best quality for your needs at a reasonable cost. We shopped around and found what was the best in our situation. It was a trade-off of quality and features for the price and my mental state has benefited.

Buying a quality item has a place even if you’re on a budget. The dishwasher that doesn’t rattle your teeth was really worth it for me even if we could have used the extra money elsewhere. Every person will have items where paying for the extra quality is worth it. Finding the balance between quality and price is the key and it’s totally different from buying a luxury item for the sake of the luxury.

5 Personal Finance Lessons can you learn from the Olympics?

On the eve of the Winter Olympics I think it’s good to take a moment and look at what they can teach us.  The best of the best in the world will be competing in Sochi, Russia in a couple days and the stories that are going to be told will be both inspiring and at times heart breaking. We can definitely learn from them and these lessons can apply to aspects of our lives especially when it comes to our finances.

Athletes spend years practicing, training and competing; they experience huge successes and suffer gut-wrenching setbacks along the way. Failing and picking up the pieces; the perseverance and passion is just amazing. When the Olympics are on TV stop for a moment and just watch the sheer determination that each and every athlete has. The Olympic Athletes and competition can show us 5 personal finance lessons that are worth looking at:

  • Perseverance
  • Determination
  • The power of coaching and getting help
  • Always aim for the your best
  • Learn from your mistakes

Perseverance

There are times when you won’t succeed, something inevitably causes you to fail. When this happens, each one of the athletes in the games, picks up the pieces and continues on despite the failure. A single failure doesn’t stop these athletes*, they persevere regardless of what happens. All the setbacks and stumbles on the way are just part of the journey.

When it comes to personal finance, as you’re learning and assessing your own situation you’ll make mistakes and you’ll have to adjust and keep going. There will be things that come up are simply beyond your control, but you can’t let them stop you. The perseverance comes in that you pick up the pieces and keep going, learn from the mistakes and setbacks and do better. With perseverance you will achieve your goals.

Determination

The fight not to give up; the mental fortitude to just keep at it and to keep pushing. You need the determination to try new things, seeing what works and what doesn’t. The athletes at the Olympics have a single minded determination with their sports. They know what they are aiming for and they just keep at it.

This is exactly what needs to be done with your finances, you know what your goals are and you have to be single minded about your approach to them. Yes, you will have setbacks but you can pick up the pieces and keep moving forward. If you fail once, see what you did wrong and move forward.

The power of coaching and getting help

Every athlete has a slew of coaches and trainers with them at every step of their competitive careers. They provide the athletes with feedback, motivation, experience and most importantly coaching. They drive the athletes to do better than they could possibly do by themselves. The coaches and trainers are extremely important, the athletes know this and truly rely on them.

Most of us try to go it alone, fumbling and struggling along the way.  You might succeed in the end but the journey is hard with many potential pitfalls. If you do succeed it will take you longer than it would otherwise. When you bring in others to help you, you can rely on their expertise and experience to help you achieve what you want. When it comes to your finances, you can use experts like financial advisors who know what they’re doing and have experience with situations like yours or bankers who can help you with arranging financing (just to name a couple). Finding the right experts or coaches and trainers for your finances can easily add to your financial successes.

Learn from your mistakes

Everyone makes mistakes but it’s what you do with them is that matters; you can learn from them and gain valuable experience or you can let them haunt you and bring you down. Every athlete analyzes their performance and looks for the mistakes they made. They look at how they can fix the mistakes for their next performance. For them the mistakes can be the tiniest wobble of their feet; but they still look at this as an opportunity to learn.

This really isn’t any different in everyday life; except maybe the mistakes aren’t as small as the athletes. You can take a look at what happened, see what you did, and more importantly how you can make adjustments to correct the problems. If you set a budget but it didn’t work out, instead of getting upset look at what happened and what you can do for next month’s budget.

Aim for the best

When athletes are competing they are aiming for the best, they’re trying to win, and they aren’t there just to put in a performance. They do this every time they’re in a competition and often when they’re just practicing. They do everything they can to win.

You can use this approach in everything you do, you can aim for the best every day. You won’t be first or at your best every day but you can aim for the best each time. From a personal finance point of view this approach of aiming for the best can easily be translated into action. You do everything you can to get to your goals. Even if it’s as simple as staying on budget or stretching yourself to save a little more than last month.

Inspiration for what we do every day doesn’t have to be an internal item only, you can derive inspiration from all sorts of sources. The athletes competing over the next few weeks are a spectacular source, they are driven, they compete and do the best they can possibly do every time they go out. But they also fail, they struggle and have setbacks but they pick up the pieces, learn from their mistakes and persevere. Every one struggles at times but it’s a matter of what we do when have them that determines what we can achieve. We can learn from what we see and do every day.

*Before anyone gets technical on me yes there are times a single injury can end an athletes career, I’m just illustrating a point.

Out of Balance

There comes a time in most people’s life where they’re going to find themselves out of work. Be it a layoff, a move, or something completely different. This might not be as horrible as it seems, it’s likely not going to be permanent and it gives you time to evaluate your situation.  I still remember when I was just starting high school my father was without work for close to a year. He had started a business that failed and then he just got stuck without work for a while, if you think about it, it happens to most of us at some point. But this isn’t a post behind the psychology of being out of work.  It’s about those situations where you end up finding yourself out of balance financially.

Currently we’re out of balance because I’m out of work, instead of finding the first possible job I took the time to evaluate my options. So what does this actually mean? Simply put our financial situation is currently relying on my wife’s income and our savings; essentially our cash flow is out of kilter because there just isn’t as much money coming in.

What it means is we need to do a few things to manage being out of balance, so things don’t get out of control. There are a few steps that we’ve taken in order to help the situation until things right themselves. Most of these are similar to what you need to do when you’re starting to get out of debt and they’re all important in their own way.

Know your cash flow.

From what I’ve seen, most people don’t really know where there money is going. They’re happy with the status quo and it works for them. We don’t have that luxury, we need to know where our money goes so we don’t waste it unnecessarily. I’ve written in the past about tracking your spending and how there’s any number of ways to track it. Ultimately if your cash flow is positive (you’re making more than you’re spending) then it’s not as critical to track every detail because you’re already covering everything.

When you’re out of balance you need to clearly know what’s coming in and going out. The accuracy helps you plan what to spend your money on, make sure none of your bills get missed and to make sure you’re not spending frivolously.

(Note: this is an important step, in my opinion, if you’re trying to get a hold of your finances)

Limit your spending.

I would like to think that most people are like me and my wife. We don’t always spend our money perfectly and we buy things we just don’t need. It doesn’t have to be overspending; our money is spent on things we just don’t really need (but want). We’re in a situation where expensive fancy cheese’s and nice wine are luxuries we can’t afford. Now that we’ve got a good idea about our cash flow we can reduce spending where we can to limit the financial bleeding.

What we’ve done so far is to cut back on things we know we don’t need, I mentioned a few food items because this is the first place I started to look. Cut back on fancy foods, eating out and alcohol, you don’t need them to survive (or even eat well for that matter). There are alternatives to a lot of spending that a typical household does that can help stretch that almighty dollar further. We’ve done this and will continue to do so.

Make a plan

Now that you know where your money is going and cut out some of the spending fat that existed it’s time to create a plan. You have to come with a plan for your money or before you know it it’ll vanish and the situation will get worse. Initially it doesn’t have to be extreme but to start things off you need to keep bills paid so your credit score doesn’t get damaged. Next you need to know how long you can last before things get dire.

From what I’ve found this has to be ongoing and adjusted as you’re moving forward in time. Be honest with yourself about your spending and how much savings you’re using. You want to prevent a nasty surprise that will leave you scrambling. In our consumer society spending money is almost an expected behaviour and if you’re not careful about it can easily get the best of you.

Find sources of income

You might have a couple years of savings and credit you can lean on till you figure things out, most people don’t. Eventually the money will start to run out. What do you do before then? Well you need to find sources of income, hopefully the reason for being out of balance has been solved before then but that’s not always the case.

Finding sources of income can come in so many different ways that I would be writing for a year and still would only scratch the surface. You have to go through and check for the obvious sources, are you taking advantage of your benefits, are you submitting claims? Are there programs that the government offers that can help?  I’m on our version of jobless benefits, this is a source of income to help keep money coming in. You need to look around and take stock, remember you might have large collection of stuff you can get rid of for money too.

For me the term out of balance means our cash flow is negative and this is a situation that a lot of people find themselves in at some point. Like it or not that’s how you get into debt in the first place and you can use these steps to right the financial ship.

Realistically the situation for us isn’t dire and I am working on a longer term solution but that’s another post entirely which I’ll write about soon. I’ve chosen to remain out of balance in order to change things around and I’m glad I have been able to. In the short term we’re going to remain out of balance and we’re going to do what we can to make sure we can last as long as possible.

Bell Let’s Talk day – raising awareness for mental health

Today is Bell’s Let’s Talk day for raising awareness for in Canada, while it’s a sponsored event it’s also a very worthwhile cause. I wanted to write about it because mental health is something that wasn’t mentioned or talked about when I was growing up. Now thankfully events like this one have brought some light to mental health and the stigma around it aren’t as profound but they’re still there.

Being healthy isn’t only about being physically healthy but also mentally healthy, it’s hard to admit there might be a problem even to yourself let alone others and get help. Unfortunately that leaves you battling the demons by yourself which rarely ends well.

If you’re not sure if there’s a problem, mention it to your loved ones and if you’re worried they won’t understand go see your doctor, they might be able to point you in the right direction. It’s an important topic one that should all be aware of, even if mental illness doesn’t impact you.

#BellLetsTalk

Small Stuff – is it important?

The devil is in the details, most of us have heard this statement before or some variant of it. What it means that small things can make a huge difference. Now you’ll notice I said could make a huge difference. Sometimes they mean less than nothing.

The reality is choosing the small things and how they apply. For example I’ve used the latte effect as an example before. What is the latte effect you ask? Well it was coined for the small purchases in our lives that can add up to huge amounts in the long run. The latte was used because so many people like to get one every day. Really this could be any small purchase but it’s become coined as the latte effect.

Now you’re reading a personal finance blog you would think that my take on the latte effect would be to use it to your advantage and save that money. But the reality is that isn’t always the case and the devil is in the details (and how they apply). Let’s just say you go to your local coffee shop and get a latte ($5 for arguments sake) and work, and you do this every day. But by working in this coffee shop for an hour each day you’re incredibly productive, and by being productive you get a raise (or work on your side business). All of a sudden this latte a day is an important one that is worth $5/day.

It’s important to look at these small things in the context of the bigger picture. Small changes will undoubtable make a huge different but is it the right difference. Saving on that daily can cost you thousands in potential productive time, or it can save you about $1,250 a year.

A while back in the life of this blog I advocated tracking all of my spending to the penny and I think that this is a great tool. But whenever I did it I had trouble staying on top of it and it inevitably fell to the wayside. It was causing me stress because I wasn’t able to stay on top if it or the results were not what I wanted. I saw I wasn’t getting the right benefits even if it was logically the best choice; I gave it up for a less specific system and stuck to that. Now that tools such as Mint exist the problem is solved for me and I can go back to getting the benefits.

I adjusted my system of tracking my money without losing my mind and feeling guilty. Tracking your money is an important thing but the daily act, for me was unproductive and causing me stress. This small activity was having the opposite effect.  I knew tracking my expenses to the penny was beneficial but I also knew I couldn’t keep it up for long, I changed my view until I could track it more accurately. I found the right solution by looking at the bigger picture and making small adjustments to until I got something that worked. I also kept refining the system which is now using Mint.com to track most of my spending. Small changes were all that was required.

Small stuff can be incredibly important but only the small stuff that matters. Remember to look at it in the grander scale, if getting that latte and working at a coffee shop every day means that you’re productive then it really might be worth keeping it. Conversely it might just be something you can get rid of and save yourself a ton of money. If you apply this carefully you can save yourself money and still keep the things that are important to you in place.

New Years a time of change.

While there is no right time for change or new beginnings; the time around the New Year is as good as any, many people are thinking about resolutions and changes and that line of thinking is pervasive in our society. To top that off Christmas is done and the craziness around the holidays are hopefully finished; so it’s probably a better time than most because you don’t have as many additional factors causing your plans to go awry.

It’s a new calendar year and you can use that time to assess where things went right or wrong in the past year (or more) and to pick up the pieces where they stand. The key to this is to not be judgemental and simple to learn from the past rights and wrongs. Instead of beating yourself up because you overspent and in debt, see what caused you to get there, what habits were causing you to stay in debt and what spending habits need to change.

If you use the famous 80/20 rule you get 80% of your results from 20% of the actions. To put that into perspective you can make a significant change by only changing 20% of your actions which is high impact and can make a lasting change, while not being as daunting.

I’m taking the time around the new year to assess were we stand financially, knowing that there are some challenges with me being out of work. Knowing where stand financially and then figuring out what our goals are for the New Year is key. Something that is measurable and will likely make the most impact for the least amount of effort.

What I’m referring to is the big impact items, so if you like to get your Starbucks every morning this likely your biggest point of impact. To continue on that thread if you get a coffee every day and cutting it out would be both a challenge and only save 2$/day then it’s not as effective as trimming your grocery budget down by $25 or even $50/week or getting rid of cable which can be $100/month and paying down debt.

Goal setting is next; if your goal is to set aside $5000 in savings then you might feel daunted any try finding money everywhere starting with the small amounts, for example that cup of coffee at Starbucks. Breaking the task down will make it more manageable and achievable. Using our example of $5000 translates to $416/month or $96/week which is feasible for many people and can be done fairly simply (Note if your budget is tight be sure to set yourself realistic goals).

Finding and tackling a few more impactful items will achieve your goals quicker and with much less headache. It’s challenging to find the few things that will make the most impact but if you do it you’ll find it easier to tackle the changes and set realistic and achievable goals.

Bitcoin loses half its value overnight!

Yesterday an interesting thing occurred in the world of business: the value of the Bitcoin dropped by close to 50%. Essentially one of the largest Bitcoin exchanges in China decided to no longer take deposits in the Yuan (This Guardian article has details). To put this into context the Bitcoin was valued at about $1000 USD; so this drop erased $500 of value for each Bitcoin, which is an enormous drop.

This development and the whole topic of Bitcoins are fascinating because what it could mean in the future. But what are Bitcoins? Well in a nutshell it’s an electronic currency that is not tied to any existing world currency or country. It is fully distributed and people can get bitcoins by using their personal computers to help validate and confirm transitions (other than exchanging other currencies for it). I’m still learning the details of this but at its core it is a form of currency.

Now what’s really fascinating is that this currency isn’t tied to a single country, region, or even bank like most money but some institutions that will allow you to trade in them. The idea is really intriguing since it’s the first potential global currency and shows us an example of what currencies might look like in the future.

Unfortunately Bitcoins are risk inherent for the same reasons as we saw yesterday and many investors lost a lot of money since they expected the value to keep increasing (similar to how people invest in forex). With the dramatic valuation drop their investments were cut in half. Though this is something that can occur with a regular currency.

Does the bitcoin have merit? Personally I’m not sure; a lot of investors and people definitely think so. I believe the idea behind the Bitcoin has merit and kind of like self-driving cars – some variant of the electronic currency is here to stay.

Some Bitcoin references for the curious: