SMS 187 – The Problem with Warranties


Introduction: A warranty is a legally binding commitment forming part of the sales contract which assures the buyer that the product or service is free from defects. A warranty often provides for a specific remedy such as repair or replacement in the event the article or service fails to meet the warranty.

– The difference between insurance and warranties

– Apple Care

– Why avoid warranties

– The concept of being self insured

– The pricing model for warranties

– How to reason you way out of a warranty with basic math skills

How are warranties marketed?

  1. Basic manufacturing  warranty – Supposed to be company standing behind a product that a company believes in but in reality they are just protecting their brand
  2. Limited warranty (seen with everything) – generally cover nothing, usually just manufacturing defects which shouldn’t exist anyway, you think you’re getting something 
  3. 30-day money back guarantee – this is the best warranty you can ever be offered (protects the seller/retailers and protects them against the buyer) 
  4. Extended warranty – worst warranty, something you actually have to pay for
  5. Imposed warranties – Ontario New Home Warranty Program, administered by Tarion 

Buying extended warranties

  1. Warranty economics
    • If a consumer was always winning the warranty company would go out of business 
  2. Valuing the warranty instead of the product
  3. Extended warranty statistics
    • Warranties statistically cover the period of time with the least amount of risk or the most reliable time period of the product you’re buying

What do warranties actually represent?

  1. You potentially buying something you can’t afford to replace or repair
  2. Something you hope to never use – Don’t buy things you can’t afford to replace – own things don’t let things own you
  3. Artificial sense of security
  4. When you buy a warranty you are just moving problems into other buckets
  5. In the case of purchase extended warranty, prepaid repairs

If you bought a car and purchased the 3 year $2,800 extended warranty.

  • If you needed $1,000 of repairs over the 3 years would the warranty have been a good idea? No you would be down $1,500.
  • If you needed $2,800 of repairs over the 3 years would the warranty have been worth it? No you risked $2,500 over 3 years to save $300.
  • If you needed $3,000 of repairs over the 3 years would the warranty have been worth it? No, you bough a car that need $3,000 worth of repairs that is a very bad car

Problem: Do warranties really fill this need or are they marketed as something else. Warranties move buckets of worry from what if this thing fails can I afford to fix it to I hope what ever goes wrong with this thing it is covered under the warranty which is really just the prepayment of future repairs.

Problem: The economics of warranties. If a warranty company sold 100 people a $1,500 warranty which covered a bumper to bumper defects for 2 years on their car the warranty company would have collected $150,000. If half of the car owners claimed $1,500 worth of repairs

SMS 186 – Hobbies


Hobbies are more important than you think, this can often fill the gaps left between our life responsibilities and job responsibilities.

Hobby risk – chasing a new hobby every couple of months, when investigating a hobby try to identify the challenges of the hobby and try to determine if those are challenges or problems you enjoy solving.

You should have a minimum of three hobbies

  1. A hobby that exercises your body
  2. A hobby that exercises your mind
  3. A hobby that exercises your soul

Hobby perspectives:

  1. Beware of the hobby inside the hobby – sometimes you think you have a hobby that is an activity but you actually have a hobby of accumulating the equipment and supplies of a hobby.
  2. Hobbies 10 feet deep rather than 10 feet wide.
  3. Hobbies that are intertwined, pursue a hobby that leads to another hobby.

Hobby Considerations:

  1. Most hobbies can be test driven without much expense
  2. The more equipment/supplies you add to a hobby the more complexity you introduce
  3. You need to be realistic given your time constraints
  4. The more specific your interest the more engaged you will be
  5. A hobby should involve challenge, this is what will sustain interest

SMS 185 – Accepting the lifestyle your income delivers

Accepting the lifestyle your income delivers 

Life is full of choices, where you live, how you live, where you work, how you work 

You can choose a lifestyle and then try to acquire an income level to support it or you can choose a career and then discover a lifestyle that that career will support. 

Life stress vs job stress 

If you had to guess which is more stressful — choosing a lifestyle then acquiring an income or choosing a career and then discover a lifestyle — the reality is that both have their own stressors.  

Choosing a lifestyle first: 

(Lifestyle can be defined as an expensive truck, boat, cottage, and yearly trips or cash flowing your children through post secondary and reaching early financial independence) 

  1. Prioritize where you live over what you do 
  2. You limit your career options 
  3. Most likely unfulfilling working life 
  4. May experience more job stress 
  5. Income replacement may become more challenging  

Choosing a career first: 

  1. Prioritize what you do over where you live 
  2. Flexibility in employment opportunities  
  3. Most likely very fulfilling working life 
  4. May experience more life stress 
  5. Sometimes a lower earning potential  

Can you have both? 

Neither of these are wrong, just don’t try to do both you will be chasing a solution for most of your life.  

  • Common thread among both:  
    • The requirement to make concessions or sacrifices, be okay with that 
    • Accept the lifestyle that the income delivers  

Why may one appear more stressful? 

  1. One is notably more important to you — prioritize family etc.  
  2. Society and relational influences  
  3. You might not have considered the nuances of prioritizing one over the other  

What if you want to choose lifestyle first (and want the perks that come along with that) but are having a challenging time digesting the type of career, job, or industry that is required in order to finance prioritizing lifestyle over career? Does that mean you simply don’t want it badly enough? Tips.  

SMS 183 – Avoid Lifestyle Inflation…….Until When?

Avoid Lifestyle Inflation…….Until When? 

What is lifestyle inflation? 

The Problem with lifestyle inflation: 

  1. It happens gradually 
  2. It can impact your future goals 
  3. The new normal will become normal 
  4. Undoing lifestyle inflation is painful 

How to Avoid Lifestyle inflation: 

  1. Avoid comparisons – you have different goals 
  2. Have a documented plan – this will remind you why you are doing this 
  3. Associate with like-minded people – people can drag you down or pull you up 
  4. Focus on percentages not absolute dollars 
  5. Embrace the process……of building wealth 

Avoid Lifestyle Inflation…….Until When? 

  1. When you have a positive net worth you can start 
  2. When the math says you can 
  3. Do you really need to… every aspect of your life 

SMS 181 – Do Tough Times Make Tough People?

Do Tough Times Make Tough People?

Any physical growth will be lost when the comforts of life return, so most of this growth will be temporary.

Physical toughness would really only be useful if it is required in your future life. Maybe you were an accountant and because of these tough times you have become a farmer, then yes, you will have grown physically tougher because of tough times and the gains will be somewhat permanent.

As humans we got to the top of the food chain not by being Tough but by being smart. If we are going to grow from tough times then it will have to be from intellectual growth not physical growth.

Adversity does not build character it reveals character

Nine Ways to grow from tough times:

  1. Nothing worth having is easy – you learn what is important (wants/needs)
  2. You discover coping strategies 
  3. You develop compassion for others – there is something comforting about knowing you are not suffering alone
  4. You learn to ask for help – this becomes hard as you get older
  5. You discover who you can count on – one positive is you will learn you really cares about you
  6. Pain is part of life – leverage it
  7. Your biggest fears have just become your reality
  8. You are growing and learning from real life not theory
  9. The present is all you have to deal with

SMS 180 – Financially Sound During a Crisis

Financially Sound During a Crisis

Don’t count on government support to be there until this thing is over.

The societal transition from government supported to self supported will be a very uncomfortable period for many people.

Government Programs:

  • Employment insurance 45 weeks
  • Canada Emergency Response Benefit $2,000 for 4 months
  • Canada Emergency Student Benefit $1,250 for 4 months
  • OAS subsidy one-time payment of $300
  • Wage subsidy 75% of your earnings up to $58k equals $847/wk for 24 weeks

Will there be a “V” shaped economic recovery or will this be a long painful recovery, and what does “back” really mean.

  • Do we want everything to go back to the way it was?
  • Are there things that should not return?

5 ways to make yourself financially sound during a crisis:

  1. Make sure the work you do is invaluable and you’re indispensable — work from home or work for an essential service; make sure your role job is invaluable and you’re indispensable to your company
  2. Make sure to have alternative forms of incomes, don’t put all your eggs in one basket — side hustles 
  3. Keep an adequate and reasonable amount of food storage, don’t overdo it just enough to last you a month, that includes hygiene products, this is also valuable in case you lose your job
  4. Limit all expenses to the bare minimum, any excess that you do not need, cut it 
  5. The hardest to do, but have an emergency fund — two months rent/mortgage, two months car, two months bills etc

SMS 179 – Making a Case for Audiobooks

Making a Case for Audiobooks

If you enjoy podcasts you will probably enjoy audiobooks? – it depends on the kind of podcast you listen to.

Does listening to an audiobook count as reading? – if information consumption or entertainment was your goal then the answer is yes.

Do you get the same retention value with listening vs reading? – when you were learning to read, in the traditional sense, you had to develop reading comprehension skills.

Is there a learning curve to consuming audiobooks? – start with a book you have already read

Fiction vs non-fiction

  • Fiction is more like a theater for you mind
  • Non-fiction feels more like a podcast experience

Example: Malcolm Gladwell Talking to Strangers – when he referenced a news story or interview in his book he actually played the news or interview clip in the audiobook.

The benefits of audiobooks:

  1. Reading when you can’t read
  2. Two stage entertainment value – author/narrator
  3. Gain perspectives you might miss otherwise – narrator emphases
  4. You will take on subject matters you otherwise would not
  5. If you sign up for an audiobook service it will force you to consume
  6. You can listen with someone else

Audiobook challenges:

  1. The wondering mind – increase listening speed
  2. You don’t get the retention value – were you actually going to read it?
  3. You need equipment to access the audio – low cost to entry
  4. Some books just don’t work for audio

Audio File magazine is a great resource

  • Print subscription 6 issues $19.95 1 year, $26.95 2 year
  • Digital subscription 6 issues $14.95 or $2.95/issue

Reddit is a great resource

  • Sub-Reddit: Audiobooks
  • Sub-Reddit: Audible

Where to get audiobooks:

  • The library with Overdrive or Libby
  • $14.95 CAD
  • $12.99 CAD
  • The Great Courses $19.99 CAD 50% off a quarterly subscription

SMS 178 – Breaking Down Boredom

Breaking Down Boredom

What is boredom?

Bored | Adjective | feeling weary because one is unoccupied or lacks interest in one’s current activity

Boredom is often viewed negatively, however is boredom inherently bad or something to be avoided?

The global shift of acceptance

Boredom was once a frowned upon feeling or experience and not readily embraced before this current crisis; productivity has long been championed

We are existing within a time where society embraces and normalizes boredom — (we’ve reached new heights on digital consumption, influx of digital streaming services, social media trends)

Polarizing views from those who are at home vs. working during this pandemic?

Bored vs. content? What if we overcompensate and move from boredom  to overloaded?  (the overcompensation approach)

Why we experience boredom:

  1. It’s comfortable, easy, habitual 
  2. We don’t have strong enough goals and values 
  3. We don’t have passions 
  4. We don’t know how avoid or combat boredom 

Boredom’s negative impact:

  1. Online, mindless spending 
  2. Mindless consumption 
  3. Reduction in self-growth and learning 
  4. We can jeopardize achieving our goals and upholding our values — life will just happen if we let it
  5. It’s more challenging to start back up 

How to avoid or get out of the boredom rut?

When the looming temptation to give into the idea of boredom:

  1. Reframe the boredom — what does your current circumstance present you with? Ex. Time, energy, focus etc.
  2. Embrace the boredom — what projects, tasks, undertakings etc. does your current circumstance allow you to take on? 
  3. Act on it and stay committed to keeping the boredom at bay 

SMS 177 – Is Misery is better than Mediocrity?

Is Misery is better than Mediocrity?

What is misery?

• A strong feeling or sense of being unfulfilled, hopeless, discontent, or unhappy due to perceived or real circumstances

• Strong doesn’t mean negative or bad however we perceive it as bad because it is a strong, extreme emotion that makes us uncomfortable

If you let it, life will happen to you, not for you

Without goals or a value system you are wandering aimlessly with no direction or end in sight, which can retrospectively result in misery

Where does misery come from?

Misery stems from circumstances that are either:

  1. Perceived inequity 
  2. Real inequity 

Why we should embrace misery?

  1. A force for change
  2. A realization and identification of what you do want (opposite of what you currently have) – strong emotions of any kind need to be listened to

How to embrace misery?

  1. Recognize – the associated feelings/thought patterns and the situation, environment, or circumstance you’re in
  2. Realize – and understand why you’re feeling such unpleasant, strong emotions in relation to any external/internal circumstances may be an influencing factor 
  3. Respond – harness your unpleasant, strong  emotions to evoke change; it’s okay to feel misery, it’s what you do with that feeling that matters

SMS 175 – Life As We Know It

Life As We Know It

How to assess our current situation?

When the health crisis is over and the financial crisis becomes more in focus we are going to offer some gravity to the situation to help you view things in a constructive light rather than a destructive manner.

When accessing your current financial situation it is important to not look at is in a silo:

  • Wealth is a relative measurement
  • Job security is a relative measurement

There’s a theory that if you take all the money and divide it up between all the people it would end up in the same hands. 

If you have been winning at personal finance up until now rest assured when this thing is over you won’t forget:

  • How to spend less than you earn
  • How to be resourceful
  • The discipline to save money and not spend it

Try to imagine you situation if you had not been deliberate with your finances

Should we be concerned about our employment?

Look at how the economy is doing within the town/city you live in, look at how your industry is doing, look at your employment situation through your companies eyes

If you reach out to inquire with your company about coming back ask “how is business” not “when am I coming back”

Given the circumstances it might be time to change your goals (your previous dream and aspirations). Pivot

Re-training — pursue the career path of your dreams 

Stigma – laid off, travel

We have a new high water mark — when ever new disaster hits that is below this new high water mark society will expect you to be prepared in every aspect of life

This is a time to figure out what sources of information you can trust in the future

Should we wait for things to get back to normal?

Don’t wait for things to get back to normal because I believe there will be a new normal. There will be i industries and business that will not survive this event. Every business that was operating cove to the financial edge will be exposed and recovery should not be assumed.

Jobs will change, some for the good and some for the bad

For many people in our society they entered this disaster where they highly valued comfort and convinced. When this thing is over they will value safety and security.

Society will not be too judgmental to those who were not prepared for this global pandemic but you will be judged harshly if you are not prepared for the next one.