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:
Nothing worth having is easy – you learn what is important (wants/needs)
You discover coping strategies
You develop compassion for others – there is something comforting about knowing you are not suffering alone
You learn to ask for help – this becomes hard as you get older
You discover who you can count on – one positive is you will learn you really cares about you
Pain is part of life – leverage it
Your biggest fears have just become your reality
You are growing and learning from real life not theory
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:
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
Make sure to have alternative forms of incomes, don’t put all your eggs in one basket — side hustles
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
Limit all expenses to the bare minimum, any excess that you do not need, cut it
The hardest to do, but have an emergency fund — two months rent/mortgage, two months car, two months bills etc
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:
Reading when you can’t read
Two stage entertainment value – author/narrator
Gain perspectives you might miss otherwise – narrator emphases
You will take on subject matters you otherwise would not
If you sign up for an audiobook service it will force you to consume
You can listen with someone else
Audiobook challenges:
The wondering mind – increase listening speed
You don’t get the retention value – were you actually going to read it?
You need equipment to access the audio – low cost to entry
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
Audibile.ca $14.95 CAD
Kobo.com $12.99 CAD
The Great Courses $19.99 CAD 50% off a quarterly subscription
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:
It’s comfortable, easy, habitual
We don’t have strong enough goals and values
We don’t have passions
We don’t know how avoid or combat boredom
Boredom’s negative impact:
Online, mindless spending
Mindless consumption
Reduction in self-growth and learning
We can jeopardize achieving our goals and upholding our values — life will just happen if we let it
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:
Reframe the boredom — what does your current circumstance present you with? Ex. Time, energy, focus etc.
Embrace the boredom — what projects, tasks, undertakings etc. does your current circumstance allow you to take on?
Act on it and stay committed to keeping the boredom at bay
• 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:
Perceived inequity
Real inequity
Why we should embrace misery?
A force for change
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?
Recognize – the associated feelings/thought patterns and the situation, environment, or circumstance you’re in
Realize – and understand why you’re feeling such unpleasant, strong emotions in relation to any external/internal circumstances may be an influencing factor
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
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.
We should avoid debt at all cost, but in life things don’t always go as planned and debt becomes unavoidable. Also for things like buying a house and sometimes getting an education require debt based on the timing in life and the natures of their significant cost.
Whenever you enter and agreement to borrow money and repay it you need to be strategic
Borrowing money for education:
This one is hard as you don’t know how much you will make so it becomes hard to access how long it will take to repay. The terms of the loan state when interest will be charged and when you need to begin repayment, but for the average person this is an open ended debt that you hope to repay some day in the future.
Borrowing money for a car:
When you borrow money for a car at first glance it appears to have an end date, but in the big picture of owning cars for most it is not. Once you own a car there is generally no going back to not owning a car, you become a car owner for life.
How car buying usually happens:
You buy a car based on the monthly payments you can afford and this is based on interest rate and term
Assume this car payment was the most you could afford and the term was over 8 years
Assume this dramatically reduced your savings rate to which you were only able to save the down payment for your next car at the end of 8 years
How car buying should happen:
You buy a car based on your ability to repay the loan over 3 years
You drive the car for 8 years
At the end of 3 years you continue to save your car payment the 5 yeas you don’t have a payment
At the end of 8 years you buy a better car that will last 10 years but still repay over 3 years
At the end of 3 years you continue to save your car payment for 8 years
At the end of 10 years you pay cash for your next car
Borrowing money for a house:
Based on the significant cost of a house borrowing money is a reality for most, if we saved up and paid cash two things would happen. First we would be chancing the housing market in that for most people the house would increase in cost faster than your savings rate and you would never reach your goal. Second, by the time you saved up enough for a house your hosing need would have changed.
The open nature of a mortgage is kind of sneaky:
Approved based on monthly carrying costs, assume 25 year amortization
Agree on a term for interest rate, assume 5 years
At the end of the 5 years you can renew your interest rate and amortization
Based on interest rates people generally adjust the amortization to get the monthly payment that they are comfortable with, this could be another 25 years.
How a mortgage should be repaid:
You should be approved based on your ability to repay the mortgage in the year you plan to be mortgage free
The year you plan to be mortgage free should be based on all of the other life events such as educating your children and when you plan to retire.
The problem with open ended debt:
You spend your time solving your past rather than focusing on your future
How has budgeting changed and evolved for you as you’ve progressed through your life stages?
When did you first start using a budgeting tool and was it out of necessity or desire or because you “thought you should”?
Can you speak to bringing a partner in on your budgeting process?
How budgeting practically look like for you and your wife? What roles do you both play in the process?
Did you get your children involved in the budgeting process as a family and as their own individuals with their personal budgets?
Has your background as a CPA or working within corporate finance benefited you in terms of budgeting at the personal finance level?
Methods of Budgeting
1. 50/30/20 Budget
Break down your expenses into three categories: needs, wants, and savings – 50 percent of your take-home pay should go towards needs, 30 percent should be devoted to wants, and 20 percent should get put into savings) – the balance.com | Paula Pant
2. Predictable vs. Unpredictable – Shannon Lee Simmons
3. Mandatory vs. Discretionary – the method Trevor uses
Tools
App vs. Spreadsheet
Setting up Your Budgeting Tool – what does it actually look like?
Expense tracking vs. Budgeting
Describe the layers and categorization rationale
How do you build in or account for savings?
How to maintain the diligence or self-discipline to maintain your budget (i.e. day-to-day expense tracking) and what does your process look like?
**Moving from expense tracking to budgeting
When to move from expense tracking to budgeting
How to actually set realistic budgeting figures
How to stick with your budgeting figures or when to make adjustments
How do you go about setting that goal for savings and how do you stay motivated to keep that momentum going?
How to use your budget as a tool (i.e. ramp up your savings or repay debt versus simply using it to maintain a balanced budget where you ensure you are spending less then you earn)
Do’s and Don’ts
Do: Updating your budget close to when you spend the money for a cause and effect
Do: Collaborate – it has to be a partnership in any relationship, not one person’s responsibility
Do: realize that budget planning is not math its actions
Don’t: Get too granular
Don’t: Think you get a pass – no amount of wealth/lack of wealth determines if you do or don’t need a budget
In life
debt can be either a temporary situation or a permanent situation, and how you
view debt will determine your perspective. If debt is the problem you will
spend your lifetime trying to solve it, if you treat it as a symptom you will
peel back the layers and find the cause.
You have
to be willing to accept the lifestyle your income delivers, everything else is
just a hobby. The real challenge is when income and lifestyle are not aligned
is to access the temporary vs permeance of the situation. The risk of getting
this wrong can be the difference between success and failure.
When you
focus on debt as the problem your solution always appears to be deprivation
which we all know is unsustainable.
The five
why method is a very effective tool in getting past the symptoms and find the
cause:
Why is my credit card maxed out – we had no money to fix the furnace
Why did we have not money to fix the furnace – we had no savings
Why did we have no savings – all of our income is needed for our monthly expenses
Why is all of our income need for our monthly expenses – car payments are 40% of total expenses
Why are our car payments 40% of our total expenses – because I need to drive a $65k truck
Side note: the car you can afford can be paid
for in 3 years or less and does not exceed 50% of your household income.
The
transition of not seeing the symptoms:
Debt symptoms happen gradually
You are in denial that anything has gone wrong
You believe your situation is temporary
You never had a disaster plan
Your ego becomes your enemy
Problems
that look like symptoms (these require lifestyle changes):
Lifestyle inflation
Car poor
House poor
Job loss
Divorce
Illness
Death
The
problem with solving symptoms:
All solutions are temporary
You never get to the root cause
You never get ahead financially – you keep trying to solving the same problem
Symptoms don’t have solutions – you can’t fix wanting a car you can’t afford