Gail Vaz-Oxlade's Blog, page 10

Changes A Single Year Bring

The world is a vastly different place in 2015. It’s amazing, really, what change a single year can bring. America has health care and the right for anyone in love to marry. And over in Belgium, the people are making their government do what they want them to do, instead of the other way around.

A court in The Hague has ordered the Dutch government to cut its emissions by at least 25% over the next five years. This is the first a time a court has said government has an legal obligation to its citizens.

It is the the first climate liability suit brought under human rights and tort law. The legal campaign that took two and a half years to get to its first hearing in April. 886 plaintiffs accused the Dutch government of negligence for “knowingly contributing” to a breach of the 2C maximum target for global warming.

The Dutch government has not decided whether to appeal the court’s decision yet.

“There are moments in history when only courts can address overwhelming problems. In the past it has been issues like discrimination. Climate change is our overwhelming problem and this court has addressed it. The Dutch court’s ruling should encourage courts around the world to tackle climate change now.”

“This gives us a lot of hope as it sets an incredible precedent” said Serge de Gheldere, the president of Klimaat Zaak, which is pursuing a similar case to the one in Belgium. “This could be the first stone that sets an avalanche in motion.”

Professor Pier Vellinga, Urgenda’s chairman and the originator of the 2C target in 1989 said that the breakthrough judgement would have a massive impact. “The ruling is of enormous significance, and beyond our expectations,” he said. The court also ordered the government to pay all the court costs associated with the action.

Lest you think this is socialist Europe at work, another case recently decided supports the idea that people can make government do what’s right for the good of the people.

A judge in Washington State has ruled in favor of a group of young people who filed a lawsuit last year asking that the state be required to develop a science-based plan for limiting carbon emissions in order to protect the climate for future generations. It’s an unprecedented decision.

The lawsuit, Zoe & Stella Frazier v. Washington Department of Ecology, was brought last year by eight teens and preteens. First they filed a petition with the Department of Ecology, requesting that it develop a rule “to recommend to the legislature an effective emissions reduction trajectory that is based on best available climate science and will achieve safe atmospheric concentrations of carbon dioxide by 2100.”

The Department of Ecology denied the petition. So the young’uns filed an appeal, arguing that they had a right to grow up in a healthy environment. King County Superior Court Judge Hollis Hill agreed. So, for the first time in the U.S., a court of law has ordered a state agency to consider the most current and best available climate science when deciding to regulate carbon dioxide emissions all at the behest of its citizens. Children who won’t be denied have done what others thought was impossible.

Health care, right to love, the environment, these are all things that were on the back burner just a few years ago. And even last year, nobody thought things would be this different in 2015. That’s what happens when people don’t just sit back and suck it up. Lessons for us all, babies, lessons for us all.

 

Chocolate Love

I loves me my chocolate and I rejoice in every new research paper or article that says it’s good for my health.

Apparently there’s a specific stomach bacteria that breaks down chocolate and ferments it into anti-inflammatory compounds. Yeah! More reason to nibble.

According to Maria Moore, an undergraduate student and study researcher at Louisiana State University, “We found that there are two kinds of microbes in the gut: the ‘good’ ones and the ‘bad’ ones. The good microbes, such as Bifidobacterium and lactic acid bacteria, feast on chocolate. When you eat dark chocolate, they grow and ferment it, producing compounds that are anti-inflammatory.”

The lead researcher on the project, Dr. John Finley, says, “When these compounds are absorbed by the body, they lessen the inflammation of cardiovascular tissue, reducing the long-term risk of stroke.”

Three types of cocoa powders were analyzed using a model digestive tract designed to simulate normal digestion. Cocoa powder is one of the main ingredients in chocolate and it contains a number of antioxidants, some of which are difficult for the body to digest and absorb until they get to the gut. There the fiber is fermented and the large polyphenolic polymers are metabolized to smaller molecules, which are more easily absorbed.

The research also found that combining cocoa’s fiber content with prebiotics can help change antioxidants in the stomach into anti-inflammatory compounds. And combining dark chocolate with fruits such as pomegranates is even more beneficial.

Other studies on chocolate’s health benefits have found that eating it in moderation can reduce the risk of atherosclerosis, or the thickening and hardening of the arteries, by restoring arterial flexibility and preventing white blood cells from sticking to blood vessel walls.

Okay, so I need to find a way to mix garlic (prebiotic) with dark chocolate and pomegranates to get the full hit. I’ll let you know when I’ve mastered the recipe!

Financial Ignorance

An article in The Atlantic caught my eye last summer. Written by Moises Naim, the article was entitled “Most People in the World Have no Idea Ho to Manage their Money.” It’s a pretty big claim. Okay, let’s see how you do.

Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow?

A) more than $102;

B) exactly $102;

C) less than $102;
Imagine that the interest rate on your savings account is 1 percent per year and inflation is 2 percent per year. After one year, would you be able to buy

A) more than,

B) exactly the same as, or

C) less than today with the money in this account?;
Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”

A) true;

B) false;

The correct answers are 1-A; 2-C; and 3-B.

How did you do? Did you respond correctly to all three questions? If you did, then you belong to a surprisingly small global minority.

The Germans did best: (53 percent got a perfect score) and then the Swiss (50 percent)

In Russia, 96 percent of those surveyed could not answer the three questions correctly. Nor could 79 percent of Swedes, 75 percent of Italians, 73 percent of Japanese, and 69 percent of French.

Only 30 percent of Americans aced the quiz.

Asked to rank their financial knowledge on a scale of 1 (very low) to 7 (very high), 70 percent of Americans surveyed ranked themselves at level 4 or higher.

Much of this financial ignorance is avoidable since there are scads and scads of info available. There is NO reason for us to do poorly on these simple questions. Nor is there any reason for us to misunderstand basic money-management.

Do you really need anyone to tell you not to spend more money than you make. If you’re carrying a balance on your credit cards or line of credit it seems you do.

Do you really need anyone to tell to save so you’ll have some $$ in the future? Or to have a little set aside for an emergency? Or to protect yourself and your family with enough and the right kind of insurance?

Do you really need anyone to tell you that you are going to die… it’s gonna happen. So you best make some plans so your family isn’t dealing with the heart-break of your departure and a financial mish-mash at the same time.

Do you really need anyone to tell you using a bank machine at $3 a pop is stupid, that spending money on interest is a waste or that you can’t have it all at the same time? Really? Because you don’t have the good sense god gave a goose?

Your Sense of Purpose

If you were lucky enough to find purpose early in life, you’re blessed. If you’re still looking, you’re not alone. Living a life of purpose – living fully in focus instead of living to achieve outcomes – is the path to a joyful heart.

I remember as a young girl thinking that I was meant to do something important. I didn’t know what it was and it drove me nuts. Each time I considered what I would do for a career, this thought of my ‘important’ thing would pop up and I’d thing, “No, that’s not it.”

I didn’t find out what “it” was until I stopped focusing on me and started focusing on other people. When I turned from looking for a career to helping people understand something they struggled desperately with, everything changed.

You can’t find purpose if you’re solely focused on YOU. To find purpose you must turn outwards, you must look for ways in which you can service a larger good. And then you must do.

While so many people measure success by performance and achievement, it’s a shallow outcome. Living every minute fully – enjoying your breathing, your seeing, your smelling, and your doing – is success. Stuff, which often dominates the lives of people who haven’t yet found purpose, comes to mean very little when your life has purpose.

My first step-daughter was over for lunch. Daughter to my Husband #2, we hadn’t seen each other in a while and she hadn’t yet been to visit My Little House. She looked around at my very simple life said, “You really believe in all this don’t you.” You betcha I do.

Mostly my simplicity springs from the fact that I know my purpose and I’m determined to live it fully. I am a teacher. I’ve taught a lot about money, but I’m not done yet. I also want to help people understand that life is as beautiful as they want to make it. I want to help them come to terms with the powerful force within them that will help them overcome their challenges and embrace their greatness. (No, we’re not all meant to be rocket scientists, but we all have something we can be great at.)

I’ve always believed that I can do anything that I make up my mind to do. And that’s what I want people to learn from me: Whatever you truly desire, picture it, work hard and you can make it real.

If you then take your knowledge and skills and use them to serve, you’ll have found purpose.

 

This & That: All Kinds of Stuff Edition

A Wrote: Gail, this is both a success post, and a question post. I grew up in a single-parent household financed by a below poverty income. I have a healthy respect for the power and pitfalls of money, and more importantly, what it feels like to not have enough of it. I had a loving parent, and the best home she could provide and that was enough to give me the resilience for what lay ahead.

My success story:  When I left for University I did it with meager savings and, not-surprisingly, no financial support. I financed, concurrently, a BA and a B.Ed. to the tune of $40,450 is OSAP debt, despite working summers and minimizing my expenses. When I graduated I made a promise to myself that I would pay off that debt in

I accomplished a $100,000 education with only $50,000 of non-credit card debt (costing me $2100 in interest) which I paid off in a combined 5 years. I was fortunate to have never experienced the hell of credit card debt. I did all of this while saving an almost equal amount. No job was ever too menial; if it paid, I’d do it. Have you ever worked on a sewage truck? #funnotfun. I don’t live a life of excess or flash (case in point: I drive a low km 2006 white Toyota Corolla that I paid cash for). I’ve been both lucky in my jobs and tenacious in my goals and it has worked for me. Mostly…

Question: Gail, money scares me. It is a genuine source of anxiety as a result of my childhood and teenage experiences. That anxiety has proven useful. It helped me control my spending. Respect the consequences of debt and motivated me to eliminate it. But, now what? I really would love to buy a house one day, but I’m single and in the Toronto market where I live I feel like I will never, EVER be able to afford a home. With my debt gone I’m now saving $2000/month (on top of the maxed out $700/month in employer matched pension I contribute to.) I look around at my friends who all have brand-new things (cars, TV’s, clothes, furniture, homes etc.) and here I am renting a room in someone else’s house with a 10 year-old car, a 6 year-old laptop and not much else. I feel like I’ll never be able to afford a home in this market despite being a money earning, debt eliminating, saving-smart machine. Also, frankly, I don’t know how other people are able to buy homes and cars and stuff like they do. I know other people have their own stories, and they have no bearing on my own but what good is debt-free, financial restraint when it doesn’t seem to get me anywhere, or anything?

Eliminating debt was, for me, relatively easy, though plenty painful; though my anxiety worked in my favor. Now, all I feel is anxiety that my attitude, towards minimizing-debt and maximizing savings, is just keeping me from being able to set the post-debt goal and being able to start living a life that actually feels good, instead of a constant financial slog.

So, with those feelings in mind, how do I set a ‘spending’ goal without feeling totally discouraged at my prospects of achieving it? Especially when my money-spending anxiety says ‘don’t take on financial risks or debt’. Help?

Gail Says: Darling, how great is it that you’ve achieved what you’ve achieved. Well done. As for your future, you get to live somewhere in the middle of the two worlds you’ve described. You don’t have to take on the responsibility of home ownership right now in a market that is over-heated and very, very expensive. Nor do you have to live in a room on someone’s house. You can make your own home. Yes, you’ll have to spend some more money on rent, and you’ll have to make it cozy and ‘yours’, but that’s totally manageable if you’re able to sock away $2,000 a month right now. So you should ask yourself, what do I want my life to look like?

Take some time to think about it. Where would you like to live? What would you like your living space to look like? What would you like to be able to do? Then set about creating the life you want.

Often when we get into “debt repayment” mode, it’s hard to loosen the purse strings. But if you’re debt free, it’s time to start thinking about what you want your money to do for you.

 

R Wrote: I am a recent college graduate with a ton of school loans and credit card debit. I live with my parents and I can never seem to make ends meet even with a full time job. I have been watching a lot of Til Debit Do Us Part and Prince$$ hoping all the tips you give will be able to help me out. I have finally decided to grow up, get proactive and be accountable. I was wondering if one or more of your books would be helpful to me and if all the worksheets I would need (interactive budget, budget binder etc.) were included.

Gail Says: Debt-Free Forever will show you how to make a debt repayment plan, create a budget and set some goals. I think it’s probably the one to start with. I have an interactive budget worksheet and a spending analysis worksheet on my website under resources. 

 

J Wrote: My paycheque has a number of extra deductions coming off regularly (gym membership, monthly transit pass, pension contribution etc). How should I fill in the Spending Analysis Sheet? For the income, should I put in what I actually got paid as it shows on the Net spot or should I take out the individual items, put them in the appropriate categories, and figure out what my Net income is without all those extra deductions?

Gail Says: Figure it out before the deductions and then put the deductions in your budget as expenses. Your pension would go under savings, for example. 

 

M Wrote: You and I had a nice conversation on Twitter and I have followed you for quite some time. I truly miss your ‘Till Debt Us Part’ show. It really helped my husband and me – mostly me – get out of debt. I was a ‘Hostess/House Party Addict’. Thank you soooo much. —- This time I have a question. My Mother passed 1 week ago. (I miss her terribly). We just received her Death Certificates. Mom had some outstanding bills that the Nursing Home said not to pay, that their letter from Hospice (end of life care) would cancel all debts. Well, it didn’t. My Dad is feeling overwhelmed, thinking he now must take on these debts. I told him that he should just be able to send them her death certificate – since his name is nowhere on the accounts – and they will then write off the account. Is this true? Or is there new rules regarding the deceased and the debts they leave behind? Also, I was told I should get an insurance policy on my Dad to pay for any Funeral or end of life care he may need. How do I go about doing that and what is the best coverage and/or policy type? We live in Volusia County, Florida, USA.

Gail Says: I have some good news and some bad news…in the U.S. the estate of the deceased person owes the debt. If there isn’t enough money in the estate to cover the debt, it typically goes unpaid. But there are exceptions to this rule. You may be responsible for the debt if you:

co-signed the obligation;
live in a community property state, 
are the deceased person’s spouse and your state law requires you to pay a particular type of debt, like some health care expenses; or
were legally responsible for resolving the estate and didn’t comply with certain state probate laws.

So you’re going to have to do some homework to see if your state holds your father responsible for your mother’s expenses. 

 

 

M wrote: If I donate and get tax receipts how will this reduce my annual income tax? I would rather give that money to a charity that I believe in than to the government.

Gail Says: The federal tax credit is 15% on the first $200 of donations, and 29% on any amount over $200. Then there’s the provincial tax savings on top of that.   Since you live in Ontario, if you donated $10,000 to charity,

Your federal tax credit rate is 15% on the first $200 and 29% on the remaining $9,800. So your federal tax credit would be (15% × 200=30) + (29% × 9800= 2842) = $2872.
The provincial tax credit rates for Ontario for 2015 are 5.05% on the first $200 and 11.16% on the remaining $9800. Therefore your provincial tax credit is (5.05% × 200= 10.10) + (11.16% × 9800= 1094) = $1104.
So your combined charitable tax credit would be ($2872 + $1104) = $3976. 

If you haven’t made any charitable donations (or claimed them) in the last five years, you’d qualify for the First-Time Donor’s Super Credit, which gives first-time donors an additional 25% federal tax credit on up to $1,000 in donations. This is only in play until 2017.

Giving to charity isn’t something you do for the tax benefits. It’s something you do from the heart. We pay taxes for good reason. I know it’s all the rage to minimize taxes, and you should where you can. But remember that your tax money helps provide a lot of great services.

Books, Books & More Books

The Signature of All Things by Elizabeth Gilbert is absolutely charming. Written by the author of Eat, Pray, Love, this is fiction that spans the 18th and 19th centuries. It’s all about the Whittaker family. Henry was born poor but made good and is a cantankerous patriarch. Alma, Henry’s daughter is brilliant if spoiled. Her husband Ambrose is an artist who doesn’t hang around long, but I’m not going to tell you why. The book is good. Well written with great characters and a good tale, it was a treat.

Calling me Home by Julie Kibler is a road-trip story staring two unusual characters: Isabelle McAllister, an 89 year old who wants to attend an important funeral and Dorrie, her hairdresser, who Isabelle wants to drive her. But Dorrie has her own problems as a single mom. But, hey, maybe a roadtrip is just the break she needs. And, as the miles and Isabelle’s story unfold – Dorrie wonders at the stubbornness of a white woman who fell in love with a black man in 1930 Kentucy.

This Will Make You Smarter: John Brockman. Yes I bought it because of the title. I love brain books. John Brokman is publisher of Edge.org and asked some of the worlds biggest thinkers what scientific concept would help everyone get smarter. People like Kaniel Kahnerman, Richard Dawkins, Martin Seligman, Steven Pinker – I have a crush on Steven Pinker – and Daniel Goleman, offered up their suggestions. Aubrey De Grey talks about conquering our fear of the unknown. Clay Shirky talks about the “80/20 rule” and Richard Thaler talks about rooting out false concepts. Yes I’m smarter now.

Splintered by A. G. Howard is a creative reworking of the Alice in Wonderland story. Alyssa Gardener finds herself in Underland, a world where the fiction of her childhood is a reality that hard to get a grip on. Now she’s beginning to understand the family curse and why her mother has been locked up in a mental hospital for so many years. If she’s going to save her mom, and the boy of her dreams, she’s doing to have figure out who she can trust and who is trying to kills her.

The Thirteenth Tale by Diane Setterfield made me immediately check to see if there was another of her books that I could order lickety-split. Sadly this is her first book, so I await with bated breath her next. It was sooooo gooood. It’s all about Vida Winter’s life. Vida is a famous author and the 13th tale is the one she hasn’t yet told. She chooses Margaret Lea to tell it to. It’s a gothic tale of feral twins, a ghost, a governess and a devastating fire. It’s a story of a woman haunted by the self she can’t remember. The story moves back and forth in time as Margaret seeks information to verify the story Vida is telling her. And it takes to the very end to unwind fact from fiction.

The Silkworm Robert Galbraith writes about a private investigator who isn’t the dapper, suave, sophisticated fellow most authors like to build. Cormoran Strike’s got a leg missing, he’s overweight, but he has a mind like a steel trap. When Owen Quine, a mediocre author and not so nice a guy goes missing, his wife asks Cormoran to find him. This is the first of Robert Galbraith’s Cormoran Strike novels that I’ve read, but I’ve ready many other books by this author including Harry Potter! Yup, Robert Galbraith is a pen name J K Rowling uses for this series. There are plenty of twists and I’m ready for the next one.

Big Little Lies by Liane Moriarty was a delight. I read The Husband’s Secret and immediately went and got this novel. I was not disappointed. Liane Moriarty is smart and funny. I love books that make me laugh out loud. This book is all about the reality of parenting including the ridiculous lengths to which helicoptering parents will go to protect their wee ones, without giving any thought to the crappy example they’re setting for their children. When the annual school Trivia Night ends in a riot, one parent is dead and the remaining parents are being investigated by police. Was it murder? Playground politics at its worst!

The Spellman Files by Lisa Lutz is a part detective novel, part family saga. Izzy Spellman may have made some romantic mistakes, and does drink too much but she’s a great P.I. She works for her mom and dad at Spellman Investigations, invading people’s privacy. When Izzy decides to get out of the family business because she wants a normal life she ends up taking on the most important case of her life.

Emily & Einstein by Linda Francis Lee was charming, if a little contrived. Sandy Portman, a man of means, is killed in an auto accident and comes back as a stray dog. His wife, Emily, fights to save this dog’s life eventually taking the mutt home to live with her. Emily had no idea that Sandy was on his way home to dump her. With her home on the line – her mother-in-law wants to evict her from a family condo in a chi-chi building – she starts to learn things about Sandy that leave her hurt and angry. Will Einstein, the dog, be able to make up for the jackass Sandy was when he was alive?

In Calling Me Home by Julie Dibler, 89-year-old Isabelle McAllister has a big favour to ask her hairdresser and friend, Dorrie. She wants Dorrie to drive her from Texas, where they live, to Ohio, so she can attend a funeral. Along the way she tells Dorrie the story of falling in love in the 1930s with a black man in a time when black men weren’t allowed out and about after dark. Dorrie has some questions of her own about her relationship and the time she shares with Isabelle helps her come to terms with her own priorities.

 

Lovely Language: Portmanteaux

I love words. As a child I would sit and read my thesaurus, underlining the words that tickled my tongue or made my ears happy. One of my fav words: portmanteaux (pronounced port-man-toe).

Do you know what a portmanteaux is? It’s a word created through the combination of two other words. Words like Motel, brunch, and sitcom are obvious. And of course there’s Brangelina and TomKat. But here are some portmanteaux that are less well known.

Chortle comes to us care of Lewis Carroll who combined chuckle and snort in his book Through the Looking-Glass.

Bodacious combines bold and audacious and can be traced all the way back to the 1830s long before it was used by the Teenage Mutant Ninja Turtles.

According to the Oxford English Dictionary, meld likely came from a combination of melt and weld in the 1930s. Vulcan mind-melding came along some 30 years later.

Some computer geek-speak is older than we think: bit, a shortened “binary digit”, has been around since the late 1940s.

There are even company names are portmanteaux. Groupon is obviously “group and coupon”.

In 1975, the term endorphin was created from the French word endogène and morphine to describe those opiate-like peptides that kick in just when you’re about to give up jogging altogether.

Polish biochemist combined the Latin word for life, vita, and amine to coin vitamine in 1912.  When it became apparent that these substances weren’t actually amines, the e came off.

When the east African states Tanganyika and Zanzibar joined in 1964, the result was Tanzania.

Who’s Stealing Your Money?

Ever look at your bank account balance, or in your wallet, and think to yourself, “Damn, where’d the money go?” You was robbed! Want to know who the primary culprits are? Here’s a list of the usual suspects:

Gym memberships: Remember that New Year’s Resolution you made six months ago to get fit. You bought the outfit. You bought the shoes. You bought the gym membership. Six months later, they’re still taking that money out of your bank account every month but you haven’t seen the inside of the gym in weeks. Hey, you don’t have to spend that money to get healthy. Find a way to workout for free and get your bank balance healthy too.

Cable: It’s not unusual for folks to drop $100 a month or more on cable every month. Cut back or cut off your TV habit completely and watch the money pile up in your emergency fund instead. (BTW, I don’t have cable, it’s not worth the money or my time!)

Small indulgences: The cup of coffee on the way into work, the magazine you pick up randomly, a lip balm here, and screwdriver there… it all adds up. For the next week, make a list of all the indulgences you buy as you move about your life. From the pack of gum to the movie rental, it goes on the list. Add it up. As long as you know where your money is going, you won’t feel robbed. If you don’t’ like where your money is going, change something.

ATM fees: Are you still hitting up the ATM every time you need $20? Give your head a shake. If you’re pit-stopping to get cash, and paying a pretty penny for the privilege, you need to stop wasting money. Banks are happy to take your money if you walk into their stores and empty your pockets! Figure out a budget and with each paycheque you deposit take enough cash to last you ‘til your next pay. If you run out in between, too bad! Search your couch cushions for change. If you HAVE to lay your hands on cash, do it at the grocery store as a cash-back so you won’t pay a fee.

Brand name anything: Are you such a fancy-pants that you’re willing to pay heaps of money so you can show off a brand? From scotch to shoes, people love their brands. But if your brand name shopping is getting in the way of your goals (debt-freedom, an emergency fund, retirement savings, or whatever else you’re working towards), it’s time to re-evaluate those brands’ importance to your life. Sure, some brands come with a sense of value attached. But there are a lot of times when the less expensive generic option will do just fine.

Bad habits: Are you still smoking? Seriously? ‘Cos you don’t know it’s bad for you? Or because you’ve got so much money its fine to send some up in smoke? See those lottery tickets you buy religiously each week, do you know you are more likely to be struck by lightening TWICE than win a lottery? Or how about that beer, wine or vodka habit you’ve built up. I know a woman who was spending $600 a month on Gray Goose even as she complained about how little money she had. If you’re missing money, your bad habit may be the major culprit.

Your car: Have you added up what you’re paying for insurance, maintenance, gas and car payments? If it adds up to more than 15% of your take home pay, your car is your highway robber. If you must have a car for work, then you’ll have to cut back elsewhere so your budget balances. But if your car is an indulgence, time to buy a bike.

Your cell phone plan: Behind on your cell phone bill? Shocked when you open the envelope and look at your balance? Cell phones – particularly smart ones – can steel your money faster than just about anyone else. If you’re not on a plan, get on one, be it a pay as you go, so you’re very aware of what you’re spending, or a plan that covers “everything” that you work into your budget. Stick to the plan.

Your home: Housing costs may not seem to be something that’s in your control, but that’s perception. Unless you’re prepared to be home-poor, don’t spend more than 35% of your take home pay for the roof over your head. And watch for all those other costs that creep in: those beautiful towels you just have to have; new dishes, candles, and whatever else you buy in the name of making a comfy home.

If you’re determined to make your money work as hard as you do, it’s time to become aware of the thieves who rustle your bank account and wallet. How many of these suspects are on your most wanted list?

 

 

Self Doubt

So I was hanging out with a beautiful young woman the other day, chatting up a storm, serving up my famous crab cakes, talking about life. This woman seemingly has it all: a loving mate, a beautiful daughter, a very successful career. You know what else she has in spades? Self-doubt.

I used to be like this beautiful girl, riddled with self-doubt and suffering from a wicked case of imposter syndrome. I thought my self-doubt came from my lack of formal education; there I was with no credentials dealing with some of the most credentialed people in business. But this chick has credentials up the whazoo; that was clearly just my hang-up. So what was hers?

Maybe it was fear of the unknown outcome. Some of us struggle with self-doubt because we just can’t control what happens next and we’re sure whatever we’ve built will evaporate. We’re convinced that whatever good has happened has been an accident and that we will be uncovered. We even say those things out loud. And you know what? What our ears hear, our brains believe. So we end up sabotaging ourselves by constantly questioning our success. Sure, there might have been some luck involved, but luck doesn’t get you all the way; smarts were involved too. So were vision, determination, and sweat.

Maybe your self-doubt springs from the fact that you are trying to force fit yourself into something that just isn’t your size. You keep thinking about it and thinking about it, but can’t make the leap. Maybe you shouldn’t.

When I first left TV I thought I’d start a vlog. I planned it carefully but just couldn’t commitment to taking the next step. You know why? Because it was something I thought I should do, not something I really wanted to do. Once I accepted that my heart wasn’t in it and let it go, the self-doubt that had been plaguing me vanished. Make sure you ask yourself why you’re doing what seems to be creating the doubt. An honest answer may be that you just don’t want to.

Perhaps your self-doubt springs from the fact that you’re a scaredy-cat and have been unwilling to commit. It’s tough to leave the safe and secure for undiscovered territory. And taking a new path sometimes feels like walking out on to a shaky bridge. But if you’ve answered the why question in positive terms, then commit you must!

Almost all smart people suffer self-doubt from time to time. Unlike our foolhardy cousins, we weigh the consequences of whatever it is we may be doing carefully and therein lies the rub. You have to distance yourself from the emotion even as you watch your thoughts put your plan through its paces. Don’t let fear win. Put it aside and let your rationale self ask and answer the questions that are feeding the fear.

For most of my life I’ve watched as I’ve approached major changes in my life. Now I do it with one part trepidation and two parts excitement. The formula was the other way around in earlier days. But I’ve learned to trust myself, to know that I will make good decisions. And that’s how I’ve flipped the formula.

If you find your thoughts getting stuck in an endless cycle of what-ifs, then write it down to get it out of your head. For each negative you write, reframe to a positive if you can. (If you can’t, it may simply be that your self-doubt is valid.) Be honest about your strengths and abilities. Then slowly and purposefully rip up those negatives and start focusing your attention on the positives.

 

This & That: Do The Math Edition

L Wrote: I need your help because I feel so overwhelmed with my finances since I bought my house last year. This is the first time in my life that I have found myself in a financial mess and don’t know how to handle it. I am earning a net $1400.00 twice a month. I am currently paying a bi-weekly mortgage of $563.00 and a monthly maintenance fee of $417.00. I have a life insurance of $200,000 with a monthly premium of $120.00. When I bought the house I made a lot of renovations to house because it was sort of outdated. The house cost me $195.000 with renovations of about $20,000. Now after going through the renovations and the moving process, I have ended up with the amount of $6,000 in credit card debt from Home Depot, about $7,000 worth of credit card debt on my Mastercard and about $2,000 on my Line of Credit. I am really struggling to pay my debt. My variable expenses tend to fluctuate a lot and I am really having a hard time seeing the possibilities of paying my debt because most of the time I can barley make it to the end of the month. Before buying my house, I was paying rent of about $970.00 monthly without utilities that I did pay separately, but yet still I was able to put aside an amount of $350.00 every month in my savings account. Presently, I find it very difficult to save 10 cents.

I am a single mom with a little child so the possibility of me finding another job right now is so slim because I have to be with my daughter in the evening. I also thought of renting one of my rooms to help me pay off my debt faster but on several occasions renters don’t want to rent because it’s about an hour from downtown Toronto. I spoke to one yesterday who was interested when she saw the ad on Kijiji but then cancelled the appointed to see the room because it is far from downtown (about 55 minutes by public transport). I have a 3 bedroom apartment.

Is there any advice you can give me to help me out of this debt? Do you have any idea how I can raise some more money in order to get rid of those debts on my card because they are making me sick. Do you know of any online part time jobs that I could do at home in the evening in order to get some extra cash to help me out?. There is so much I have to say but it’s going to be too long for you to go through it all.

Gail Says: Have you taken the time to add up the numbers? A mortgage of $563 x 2 = $1126. Add maintenance of $417 and it comes to $1,543. That’s more than half your monthly income. And that doesn’t include things like utilities and home insurance. If we add on another $150 for those, you’re looking at $1693 a month, which is 60% of your income. As if that’s not bad enough, you decided to renovate using credit, so you add another crush to your alright tight budget. It’s no wonder you’re finding it hard to make ends meet.

You say you were paying $970 for rent and could save $350 a month. Add them together: $1,320… that’s still less than your current housing is costing you.

Sell the house. Go back to renting and saving. Hopefully you’ll get enough from the sale to also get rid of that debt you’ve accumulated.

 

A Wrote: I have a 7k student loan. How much do I have to pay every month in order for me to get out debt in 1 year?

Gail Says: First you figure out the principal repayment: $7,000 ÷ 12 (months) = $583.33. Then you add the interest; you haven’t given me your interest rate so I’m going to show you how here assuming an interest rate of 6%: 7000 x 6 (percent) ÷ 100 ÷ 12 (per month) = $35.

Add them together: $583.33 + $35 = $618.33 per month.

 

J Wrote: My girlfriend is reading one of your books and keeps talking about her PSR. What is it exactly, how do I calculate, and what should it be?

Gail Says: Your PSR is your Personal Savings Rate. It’s the money you’re not spending every month. And it’s a good way to determine if you are saving enough because it helps to put your income and your expenses into perspective.

You calculate your PSR by taking your net monthly income (what’s going into the bank) and subtracting your monthly spending. Notice I didn’t say, “monthly expenses” since very often our spending exceeds the “expenses” on our budget. So this means you actually have to track your spending to see how much is going out. If you have $1453 a month going into the bank, and you spend $1371, you’d have a difference of $82.

Now take the amount you are NOT spending – that’s the $82 – and divide it by your monthly income and multiply by 100. So 82 ÷ 1453 x 100 = 5.6%. So that’s your PSR: 5.6%.

As for what your PSR should be, well, that depends. It depends on how old you are and how long you have until retirement. It depends on how much you have already saved. And it depends on what you want to have accumulated when it comes time to hang up your spurs. It’s all covered in my latest book, Never Too Late, which you should borrow from your girlfriend!

 

M Wrote: We are trying to save for down payment for a house. When speaking to mortgage broker she advised to contribute more a month to RRSP and also when tax time comes around to get RRSP loan, buy RRSP when get refund to pay the loan back right away and put the rest of refund back to RRSP. My concerns are the numbers she used. She basically said for ex get loan of $3000, we will get refund of $6000, pay off $3000 loan and then deposit the remaining $3000 back to RRSP. Does this sound correct or accurate?

Gail Says: This is a “general” calculation; it is very much based on the specifics of your circumstances. I would need to know what your income is since the refund is based on your marginal tax rate. What are the exact numbers you’re working with? Your before tax (gross) income. How much you’ve each contributed to RSP or company pension plans this year? If you haven’t yet made any contribution, how much you’ve saved to contribute for this year? How much you plan to borrow, for how long, at what interest rate? Any unused RSP contribution room you might each have?

 

M Wrote: I will give you last year’s numbers. ON my 2014 taxes. Gross income was $48,805. RRSP contribution was $2,017.17 from March 2014-December 2014 then $391.99 from January 2015-March 2015.  I want to borrow enough to maximize my contribution. I am trying to use my RRSP for my down payment on a house as a first time home buyer. The broker advised to basically double my refund so that I can pay back the loan as soon as I get my refund then put other half back to RRSP.

Gail Says: With last year’s income at $48,800, you’re eligible to make a contribution of $8784 in 2015. If you do so, and claim the full contribution, if you live in Ontario you’ll lower your taxes from $8,199 to $5,827, saving yourself $2,362 in taxes. If you take those tax savings and apply them to your RSP loan, you’ll reduce it to $6422, which will cost you about $560 a month is loan payments, assuming interest at 5% and you pay it off in about one year. So the question you have to answer is this: do you want to be making $560 monthly payments to repay that loan? Since you couldn’t save $560 a month for your RSP (right now you’re averaging a little over $100 a month in savings), where will you find the money in your cash flow to make this work? I’m not sure why your advisor told you you’d get a refund of $6,000, because that’s not true based on the numbers you’ve given me.