A Money Coach in Canada

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This week isn’t so much a specific case study, as a topic I encounter regularly. We receive a lot of messages in our culture to ‘find and follow your passion’. There’s even a book titled, “Do what you love, and the money will follow”. I, like many, find the title tremendously appealing.

Here’s the other side of the coin. I’ve met with numerous individuals who are pursuing their passion, but have nothing, or extremely little, in any kind of nest egg (and we’re talking 40-50 age demographic here, not 20-something kids), and who are not particularly moving forward financially.wallet

At what point do you think it’s worth pulling back from your passion, in order to bulk up your bank account and fatten your wallet?

John entered his second marriage at 38, with a painful secret. He was $25,000 in credit card debt. He always meant to tell Susan, but could never find the courage. John was deeply ashamed both of the $25,000 debt itself (it was consumer debt) and even more that he hadn’t told Susan.

Five years into the marriage, he was pretty sure Susan suspected (after all, a few hundred dollars a month didn’t make it off his paycheque into the family budget, but mysteriously ‘disappeared’ each month), but still didn’t feel ready to discuss it.

John came to me wanting to get really organized with his spending, and make a plan to shed the debt. How would you suggest he deal with his secret?255723_6162.jpg

It’s the Saturday case study post of my clients past and present.  As always, the characters have been altered to protect privacy, but the underlying issue remains the same.  Rick was as twenty-something who had a lot going for him:  attractive, smart and a real go-getter who was enjoying a successful business he’d started in his late teens.  Rick also had a gorgeous girlfriend who had a lot of struggles.  And didn’t have a job.  She’d moved in with him a few months previously, and it wasn’t going so well.  She had nothing to contribute to the rent, and hadn’t been able to keep any of the original financial arrangements such as contributing to groceries.  She was on E.I., but even that income seemed to be all spoken for, and none of it went to Rick.  They’d separated briefly, but both found that too hard, and she moved back with Rick within a week.  Rick cared about her, but was also growing tired of the situation, felt she wasn’t looking hard enough for a job (he would often come home and discover she’d spent the whole day at English Bay), and he was beginning to feel used.  At the same time, Rick felt he overspent on a number of luxury items for himself – lunch out every day (and he wasn’t eating at McDonald’s), a great car, and a lot of gadgets.  He didn’t feel right about pushing his girlfriend too hard on the financial front.What suggestions would you offer Rick?  Click the comments link below, complete the form (totally private, unless you’d like to publish your website in the field for it) and give your opinion!   

Money Diva, a Cdn on Vancouver Island who blogs about her own financial life, had a really cool post: she asked people how they make sure they’re never caught short on their automatic payments. I’ve done it. You’ve done it (c’mon, admit it). We’ve all done it – forgotten one month and badaboom, badabing, ching-ching a service charge here or there.

Money Diva’s synopsis of peoples’ responses yielded several good methods:

Some of them were using a cheque register, or spreadsheet, or just keeping track, but I wanted ways that were more dummy-proof than that. So here are seven ways that my readers keep track of automatic payments and make sure they have enough money for them:

  1. Schedule the payments in your Outlook Calendar
  2. Use alerts in Microsoft Money or Quicken
  3. Link your bank account to your line of credit or set up overdraft protection
  4. Use a product such as Manulife One (bank account, line of credit and mortgage all rolled up together)
  5. Have the payments come off a Visa with a large enough limit (and get points)
  6. Deduct all payments at the beginning of the month in your tracking system
  7. Keep a minimum balance in your account

I think that if you use any one of these methods consistently, you should be able to say goodbye to bounced payments forever. So choose the one that works for you, and then sit back and let the rest be automatic!

My own method is to have two bank accounts:

One is at VanCity, and my income goes into that one. I know what my monthly payments will be, so I simply ensure enough income is left there to cover the expenses. Then I take money above the monthly requirements, and transfer the funds to Citizens Bank of Canada. That money is available for my discretionary spending – movies, groceries, dog treats at Bow Wow Haus, taxis, dog treats, starbucks and dog treats.

 

Saturday Case Studies are just that: case studies, dilemmas, issues that I have encountered with my clients (Your Money by Design)past and present. For obvious reasons, the individuals are thoroughly disguised, but the issue remains the same. Your suggestions on the issue are very welcome. The following Saturday I will describe what I suggested to the client.Case Study #1:Jack and Maria come from different backgrounds. Jack immigrated here to create a better life for himself, and he has generally succeeded at this. He enjoys a solid middle-class background. He also supports his family back in his former country. Maria is a stay-at-home-mom for now, looking after their young kids. Eventually she intends to resume her career.The issue is this.In Jack’s culture, looking out for your extended family is a high priority. He has family members who are hovering around a serious poverty line. Every time a member loses a job, or has a medical issue come up, Jack fills in the financial void. It’s just what you do, in his mind.Maria, however, is increasingly concerned that this is jeopardizing their own finances. They haven’t had a holiday with the kids since they were born. Their RRSPs are minimal. They still rent, and she wants them to own a home. While initially supportive of the extended-family needs, she is increasingly resentful, yet feels uncomfortable raising the concerns since she is not the bread-earner at the moment. Plus, she doesn’t want to be selfish.I offered one solution that worked for them (to be posted next week) but if you have ideas, please click on the “comment” link below, and write your idea!_____________________________________________________________Money Coach’s Suggestion:The advantage they both had going for them is that each ‘bought into’ the their respective values.  Maria had sincere compassion for Jack’s family.  Jack ‘got’ that their family also needed and deserved things like holidays, savings etc.Here’s what they did.  The decided upon a certain amount which would be the yearly slush-fund for Jack’s family.  Each month, Jack would set aside an amount to build up the slush fund.  Once the agreed-upon amount was reached, that was all that would be available for helping out his family for that year.  If it got depleted, it would get replenished, but not used, until the following year.In this way, Maria’s anxiety about the ongoing nature of the need was alleviated:  they would not be, at all time and in every case, diverting money aware from their own nest.  Jack also was able to feel like he was still looking out for his family, and fairly generously, but in this plan, would also be able to have funds available to build cushion for his new family. 

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