A Money Coach in Canada

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Friends. Friends help us celebrate life.  Friends help us heal when we need healing.  And for me, some dear friends in England have graciously welcomed me into their homes for a whole glorious month to gain perspective and do some visioning about my next steps.  Specifically, I have paid for only 1 night of shelter, and even that was reasonably priced and part of a girls getaway.  Only a very small number of meals have been eat-out — little more than I’d have eaten out at home.  I have done lots of thinking, reading, blogging and work on my business.

But that is not all. That is not all.  For free, I have:

…explored the Tate Gallery in Cambridge; I have attended  Sunday Services and the contemplative mid-week EvenSongs (just what this soul needed) at this Cathedral, which was more rich in art and faith and intellect and history than I had previously thought possible; I have punted the River Cam after a pub lunch (ok those weren’t quite free, but they weren’t much); I have experienced a little life-behind-the-scenes of a chorister (my friend’s son);  I have done my  Couch-2-5K runs along this Sea and this Sea and in fields so pastoral with bunnies and wobbly foals and sweet calfs and birds that it might as well have been Narnia; and spent a day swimming and lazing on this wild beach on the one 30C day so far; and gone for a long walk on the Broads after leisurely lattes and toast served with style in the (English) Garden of my hosts.

And all that in addition to the primary blessing of reconnecting, with plenty of time for leisurely conversation, with treasured friends.

Is it apparent how saturated with blessing I feel right now?

Huh.  There’s frugality.  And then there’s Priceless.

I bet some of you have similarly rich experiences of spending time with friends away from home.  Do!

Greece – that lovely country most of us simply associate with the bluest of seas, the softest of sands and brilliant white domes – may be well and truly cluster-fracked at this point. And if they’re fracked, they may pull down a whole lot of other European countries with them. And if they do take down the Eurozone, the US, itself shaky, will find its head submerging below water.

What happened? Here’s a story which may help:

Max and Eve lived beyond their means for quite some time. Truth be told, they spent nearly 50% more each year than they earned! Their credit cards and lines of credit racked up.

The reasons they were in debt were ones with which anyone could sympathize, such as fighting off the neighbourhod mafia. By the time they got rid of the thugs they were so in-the-hole they had to go to a debt counsellor who helped them consolidate their loans. Things went well for several years then those mafia came back *again* and once again they had to borrow to get them off their back. They mortgaged their home to the hilt.

Max and Eve were living a typical middle-class lifestyle. Their (mortgaged-to-the-max) home was lovely and they welcomed many relatives and friends for weekends. They both worked hard at their jobs. They ensured their children were well dressed and got a good education.

Then Max and Eve discovered that all their aunts and uncles were forming their own investment firm, called All In This Together (AITT for short). Several of their cousins joined as well. Max and Eve wanted in. It was time for them to start getting seriously ahead, and besides, they were part of the family.

Max and Eve did have to convince AITT that they would deal with their debts, which was a bit embarrassing, but whatever. And there was lots they didn’t tell AITT. They didn’t tell AITT that they had borrowed from their neighbours in exchange for agreeing the neighbours could use their garage for the next 10 years. They didn’t tell AITT they had borrowed from their friends who owned a nursery and promised they could use the garden to grow flowers for 15 years, which meant Max and Eve could no longer grow their own vegetables. They also had something going on with PayDay loans which no one knew about. Although some of their cousins suspected Max and Eve weren’t being entirely honest, they were family after all (and besides, they had a few dirty little secrets of their own) and eventually AITT let them in.

At first things went well; they invested together, they covered each other’s backs, and for Max and Eve the best things was those mafia and their henchmen were gone for good; no one would mess with AITT. They family lent one another money, and Max and Eve got repeated loans when their roof needed replacing and their son got into a really good, but expensive, school.

But as things go in all relationships, some of the dirty little secrets began to emerge. Cousin Herschel got wind about the whole garden thing and challenged Max and Eve on it. Thankfully didn’t have to respond as Cousin Sven’s finances got shaky and all attention turned on him. Then Aunt Maureen disclosed she wasn’t as financially secure as she seemed. These were cause for concern but not insurmountable.

And then the unanticipated happened. Their distant cousin overseas, George, had been doing a number of investment deals with AITT and KABOOM, it was all over the news: George was pretty much going down. AITT held several emergency meetings. Things were getting tense. Above all, they needed to present a united front so they did their best to help out Cousin Sven and Aunt Maureen. Oh, and Uncle Steve and Cousin Susan. The firm’s resources, partially gutted by George, further gutted by Cousin Sven, were slimmer by the day. Then, at this worst possible time, it emerged that the PayDay loans people were about to come calling on Max and Eve with clubs. And the bank discovered the deal with the nursery which in fact was against the mortgage conditions and were about to repossess the home.

The family had a Very.Serious.Discussion with Max and Eve. With raised eyebrows and angry looks, they helped Max and Eve out (for the umpteenth time!) and gave them just enough to hold the PayDay loans people and the Bank at bay until Max and Eve could get their act together. There were very, very stern words spoken to Max and Eve and it was unequivocal – pull your kids out of private school, start renting out your garage (they didn’t know about the deal with the neighbour), and sell your house and move into a smaller place, because you’ve got one year and one year only to pay up.

Stressed out, Max tried to negotiate something more bearable, and asked for more money to actually pay off the PayDay loan and ideally get his garden back too, but all AITT felt they could afford was to make the interest payments for a year.

Max and Eve did what they could. It was hard. Harder than expected. The kids went ballistic about leaving their school. The housing market tumbled and they couldn’t get serious buyers interested. They were going without vegetables which would have long term effects on their health.

And when the year was up, Max lost it. Eve was willing to go hardcore and forgo everything that made life nice for them, but Max was seriously pissed. It wasn’t their fault that Sven and George and Maureen had screwed up. So why was AITT being so hardline with Max and Eve? And why had they had to bear all the brunt of paying off the mafia?

Max and Eve’s relationship started to fracture. Seriously fracture.

Eve was resolute that they had to honour their commitment to the family and AITT. She foresaw that if they failed AITT, then AITT would collapse and the whole family would be ruined.

Max thought the life they would be condemned to – cramped apartment dwelling, dashed hopes for their children, working long hours towards nothing but paying off AITT – was not a life worth living. He alternated between rage and utter despair. He couldn’t believe Eve was putting the welfare of AITT ahead of their own.

The kids were scared and confused, and cried every day and had nightmares.

It was awful.

Max told Eve that if she proceeded, he would divorce her.

Eve proceeded.

What happens next? Keep an eye on the news.

** If it’s not obvious: Max and Eve are Greece. AITT is the European Union. Other than that, the events are very loosely correlated.

** A few interesting facts:
Greece twice had to fight to leave the Ottoman Empire which is what put them in debt. They pledged their whole country as collateral on the debts. They didn’t pay off their debts, but they weren’t invaded by whoever lent them the money, either.

Recently, Greece borrowed money in exchange for all their Airport Fees for years to come.

Greece is currently having to offer 20% on its bonds to attract anyone. Contrast that to 0.65% for Canada Savings bonds.


Photo Credit (top image) The Justified Sinner

I spent much of Monday on an English Seaside. The picture speaks for itself. Later, a friend found this poem by Robert Frost which I thought apropos to both the experience, and the act of jumping off the consumption train (this month’s blog theme) in favour of the art of contentment.

Why make so much of fragmentary blue
In here and there a bird, or butterfly,
Or flower, or wearing-stone, or open eye,
When heaven presents in sheets the solid hue?

Since earth is earth, perhaps, not heaven (as yet)—
Though some savants make earth include the sky;
And blue so far above us comes so high,
It only gives our wish for blue a whet.

Hi Nancy!
I love your words of wisdom and the fact that you too have been on the “consumption train” and so I know that somehow you were able to change your thinking. I am so on that train! I sometimes wish that online banking would allow you to organize your money into “files” so that you could actually realize that once it was all allotted, there truly is only so much left for spending on non-necessities.

This is my question to you. (And I ask this question after truly trying to change my thinking… imagining piles of $$$$$$ instead of clothes, etc., and making budget after budget, but to no avail. I still find myself enroute to yet one more store in my moments of boredom.) Question: Is it ever wise to actually cut up your credit cards? Do you ever give that advice to people? I truly do feel as though my spending and justifying it is out of control…however, if I was ever invited out to 30 great parties in a row, I would have some great dresses and shoes to wear to every single one of them! But, I did not make my RRSP contribution this year, and all those dresses won’t do me any good when I am 70!)

Cathy from Ontario

Thanks for your question, Cathy-from-Ontario! It’s a good question and you’re in good company. In fact, according to a recent report by TransUnion, the average Canadian owes $25,597 in addition to their mortgage, of which $3,539 is credit card debt.

Here’s what I recommend:

1. Assume you will never win the fight against short-term satisfaction versus long-term anything . It’s well-established that we humans are hard-wired to choose the lesser-but-immediate gain (hot dress) over the greater-down-the-road gain (healthy RRSPs when you’re old or simply a healthy savings account). Don’t beat yourself up over this – I don’t beat myself up – but acknowledge it’s a component of your humanity that needs to be factored in. But it doesn’t end there…

2. You can set up the game to increase the odds that your rational side – the part of you that does want to opt out of the consumption train in favour of thoughtful budgets and your old age – has a fighting chance to win over your emotional and energizing side – the part of you that “connects” quickly to spending. Here are three ways that work for me:

a. Set up savings accounts precisely how you mentioned, ie., for specific items. Mine include “holidays,” “dog emergencies,” “slush fund”. Each of these have a gut-level attraction to me, so I have an emotional commitment to them. Find the items that resonate for you — a gift for your child? a great outfit for an upcoming event? Then set up saving accounts AND set up regular contributions (even $25/paycheque) into them. (By the way, I use ING – super fun for multiple savings accounts – and if you sign up with them, quote my “orange key” as 14641937S1 and we’ll each get $25 or something like that.) Will this create your retirement plan? No, but it will easily and quickly shift your self-perception into being a Saver and trust me, that will start to play out for you over time. Plus, you’ll have money ready for stuff you value.

b. Give yourself full permission to shop when you are bored With This Caveat: you can only buy the item(s) you find the next day. If you still really want it the next day, go for it. Truly. This little trick is the.single.most.effective habit that turned me around. I can honestly say I basically never impulse buy any more!

c. Create a new pathway. Right now, it sounds like you are in a rut: I’m bored -> I shop -> I buy. Think this through right now: next time you are a little bit bored, what is an alternative action you could take? It’s important to identify just one action. Then, try it out. Next time you are a little bit bored take that action and see how it works. It will take a bit of “muscle” to develop the new pathway, so it’s important to start with the little bit bored times. With repeated practice, a new pathway will be created.

3. And the credit cards? Don’t cut them up. But do lower their limit. I have a $1000 limit on mine. A low limit helps us think of them in a healthy perspective – there when we need them, but not for all our wants and dreams.

Hope that helps Cathy!

And, of course, check out my $25 online program which will help on exactly these sorts of issues!

READERS: If you have a question about your finance (not investment or tax stuff, but day-to-day issues) by all means e-mail me: moneycoachcanada at gmail d0t com.

Photo Credit: consumerist

I can’t believe I did this. But this redefines frugality. For £5 I got 5 minutes of a more … natural… pedicure. These fish are a particular breed of Carp and they gently nibble off people’s dead skin and don’t touch the new skin. It took all my nerve and I yanked my feet out at first, but eventually became OK with the sensation. Kinda. Sorta.