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.

SMS 174 – Open Ended Debt Solution

The Open Ended Debt Solution

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:

  1. You spend your time solving your past rather than focusing on your future
  2. You become okay with debt 
  3. You have no sense of urgency

SMS 173 – Budgeting Q&A

Budgeting Q&A

  • Is there one best way for everyone?
  • 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 | Paula Pant

2. Predictable vs. Unpredictable –  Shannon Lee Simmons

3. Mandatory vs. Discretionary – the method Trevor uses 


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
  • Don’t: Think budgeting is temporary 

SMS 172 – Debt is the Symptom not the Problem

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:

  1. Why is my credit card maxed out – we had no money to fix the furnace
  2. Why did we have not money to fix the furnace – we had no savings
  3. Why did we have no savings – all of our income is needed for our monthly expenses
  4. Why is all of our income need for our monthly expenses – car payments are 40% of total expenses
  5. 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:

  1. Debt symptoms happen gradually
  2. You are in denial that anything has gone wrong
  3. You believe your situation is temporary
  4. You never had a disaster plan
  5. Your ego becomes your enemy

Problems that look like symptoms (these require lifestyle changes):

  1. Lifestyle inflation
  2. Car poor
  3. House poor
  4. Job loss
  5. Divorce
  6. Illness
  7. Death

The problem with solving symptoms:

  1. All solutions are temporary
  2. You never get to the root cause
  3. You never get ahead financially – you keep trying to solving the same problem
  4. Symptoms don’t have solutions – you can’t fix wanting a car you can’t afford