I have invested a lot of my lifetime learning, living, teaching and writing about healthy practises around money. When a young friend recently asked for some guidance on making peace with money, I wanted to fall back on those well learned strategies.
There are many practises that will bring some ease into your financial life. Living within your means, paying yourself first, getting your financial house in order: but you must lean into your own wisdom to bring peace. It’s an evolutionary, lifelong journey for all of us and I am moved by the struggles we all have with money and the false powers we grant it.
What we buy, what we invest in, what we purchase for others and what we choose to finance or contribute to can bring us peace or its polar opposite. What if we had a change of heart or a shift in worldview? A change of heart brings about a change of circumstance: that’s transformation. Changing our worldview means changing what you believe is true – do big houses, fancy cars, expensive wardrobes and larger paycheques really spell success, acceptance, power or freedom? Ask your authentic self that question.
The Heart test
We are all vulnerable to ambitions that disregard the balance and wisdom of our intuitive hearts. What if every spending decision had to pass through your heart before you pulled out your wallet? Would you spend differently?
When we use our resources in ways that truly meet our authentic and universal needs for connection, integrity, joy, inspiration, physical well-being, meaning and choice, we find a path to peace. That’s when money is in service to us and not the other way around. Money is an admirable servant but a terrible boss.
Lining up money’s flow with our authentic self and using it as a direct expression of our values and our vision is simple but it’s not easy. It requires daily discipline to follow the practises that are the gateway to peace. Continue Reading…
I was really tuckered out after a month-long stay visiting my family in California and was looking forward to an easy flight home to Guatemala. Billy (that angel of mine!) was waiting for me in Antigua and had arranged for our private driver to meet me at the Guatemala City airport about an hour away and bring me to our hotel.
Traffic was smooth riding over Highway 17 from Santa Cruz to San Jose Airport this Tuesday morning and I arrived in plenty of time to go through TSA pre-check security and catch my flight.
Everything was going as I expected, and once I boarded the plane and settled into my seat, I ate one of the sandwiches I had packed to get me through the long day of travel ahead.
Just a moment please
I didn’t even blink twice when the airline pilot said we would be having some repairs done to the fuel gauge before we left the hanger. I figured he’d pick up any extra time we needed while in flight. I had a tight 40 minute connection in Dallas that would take me to my next flight to Guatemala City, but I tried not to stress about it.
The captain again came on the intercom to tell us that the fuel gauge had been repaired and that we’d be on our way …
I’ve been investing since 1996 and during this time, my investment DNA has evolved from a primarily spreadsheet, number-crunching quant jockey to today where I still play a spreadsheet geek role, but now my decision factors many other variables, behaviours and observational queues .
I think it has made me a better investor. Over the years my investing ideology has evolved to focus on identifying companies that have competent stewards that have demonstrated a competency to manage their entrusted capital efficiently so that they can generate tangible wealth and to invest in those companies that are selling at a discount to their perceived value. This has been my guide through many a bull market, bear market, asset bubbles and financial crises and it has served me well.
One day I looked at this description of my investment ideology and it dawned on me that this ideology that I practice day-in and day-out could be summed up better and then it hit me. My investment ideology can be best summarized in one word:
Quality
They say in real estate that the key mantra or ideology that reflects quality is location, location, and location. In investing, I’ve come to realize that out of the many ideologies, strategies, and analytical techniques available to us, successful investing comes down to putting our money to work in high quality investments.
Credit cards can be a saving grace in time of financial need, but if abused can ruin your financial health. Most Americans have a love-hate relationship with their credit cards and the stats seem to agree.
Total US credit card debt is over $830 Billion.
Of the more than $1 Trillion of revolving debts, Americans are carrying the vast majority of debt in 2018.
Let’s break down these troubling credit card debt statistics by category:
Studies have found an average of 39% of credit cardholders pay their credit balances in full. And only 29% make low or minimum payments. This is an alarming finding because cardholders who make the minimum payments 20% of the time are the ones with a credit score of 800 and above. While cardholders with credit score of 700 and above are more likely to make full payments towards their credit-card balance. However, there are other factors that contribute to the credit card payment pattern:
1.) Income and Employment
It is quite surprising that high income doesn’t guarantee freedom from debt. Ironically, the debt seems to be increasing with increase in annual income. And the highest credit card balances are seen with people with the highest income.
2.) Age and Gender
Studies reveal that older customers are more likely to pay their credit-card balance in full whereas middle-aged consumers may pay in full or pay the minimum amount due. Middle-aged consumers have high home expenses as they have dependents to take care of. Gender of the consumer is also a contributing factor of credit card debt. Data shows that men and women have a revolving debt of 29.9% with women having 3.7% less than their male counterparts.
3.) Region
Location has proved to be an interesting influence on credit-card debt. The Midwest and the Great Lakes regions seem to have responsible credit cardholders. They have the highest average credit score and lowest average credit card debts: while Alaska seems to have the highest credit card debt and average credit score stuck somewhere in between the high and the low.
6 smart ways to clear credit-card debt ASAP
1.) Have a plan and stick with it
It is essential that you take a stock of the situation. Continue Reading…
A guide from the Canadian Life and Health Insurance Association highlights the increasing cost of long-term care and reasons for buying long term care insurance. However the high cost and restrictive provisions of long-term care coverage may make it inaccessible for those who need it most.
Long-term care is described in the guide as ongoing around-the-clock care in either a specialized residential care facility or by a professional or family member in your own home. In general, long-term care homes offer higher levels of personal care and support than those typically offered by retirement homes or supportive housing.
The CLHIA reports that in-home care including meal preparation, personal care and skilled nursing could add up to $35,000 to $65,000 a year, depending on the level of services required. Local Community Care Access Centres administer the limited provincial subsidies available for at-home care.
However, all residential long term care is subsidized by the Ontario Ministry of Health with most Ontario residents currently required to pay only about 35 per cent of the actual cost. For example, based on the type of accommodation, in 2013 residents paid the following amounts:
Basic or standard accommodation: $1,707.59 /month
Semi-private: $2,011,76 /month
Private: $2,361.55
Residents who cannot afford the full amount for basic accommodation can apply for a rate reduction. A more detailed fee schedule including rate reductions can be found here.
“One reason the industry is focusing on a need for long-term care insurance is the concern that with the aging workforce, Ontario will no longer be able to maintain the government subsidies at this level,” says Caring for Clients financial planner Rona Birenbaum.
But underwriting rules for long-term care insurance are very rigorous. For example, any person who is using an assistive device (e.g. wheelchair, walker or motorized scooter) is not eligible for coverage. Applicants with a variety of pre-existing conditions (e.g. dementia, metastatic cancer and stroke) are also ineligible.
Furthermore, premiums for long term care insurance can be very expensive for limited coverage.
I asked Birenbaum to get a hypothetical quote from Manulife Financial for a 50 year old couple (John and Mary) for a maximum of $300,000 shared coverage that would pay $3,000/month to a residential facility or $1,500/month for non-facility care with a waiting period of 90 days.
This means that in total John and Mary will have 100 months (8.33 years) of residential care benefits of $3,000/month they can draw on. If one predeceases the other, the balance of the protection will be passed on to the second spouse and the premium reduced to single life.
Activities of Daily Living
To qualify for benefits under the policy, John or Mary will have to show that at least two of the following cannot be performed without substantial help:
Bathing
• Dressing
• Toileting
• Transferring (e.g., moving from a chair or out of bed)
• Maintaining continence
• Eating
The basic monthly premium is $210.40.* With the addition of inflation protection and a return of premium at death, the premium increases to $375.38/month*, with the premium level guaranteed only for five years.
“Because John and Mary may never need the service or qualify for it, I would prefer that they have the money to use for other things,” says Birenbaum. She suggests that money they spend on travel and other lifestyle enhancements in the first 10 years of retirement can be re-allocated to health care in later years.
She also advises clients to use their liquid resources such as RRSPs, pensions and other savings to fund retirement to age 90, leaving real estate as a hedge to sell later in life when they may need long term care.
Renters and people without paid up properties do not have this option to fall back on, but she says it’s also likely people of modest means will not be able to afford premiums for long-term care insurance in addition to other ongoing expenses.
“In long-term planning for my clients I prefer to focus on life, disability and critical illness insurance plus helping them to accumulate sufficient assets to self-insure for long-term care,” says Birenbaum.
Where there is a real need for long-term protection, she suggests critical illness insurance that can be converted to long-term care insurance. For example Sun Life offers a critical illness policy that can be converted to long-term care insurance starting on the policy anniversary nearest a policy-holder’s 60th birthday until the policy anniversary nearest the individual’s 65th birthday. When the policy is converted, insured clients do not have to answer questions about their health.
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By Heather Compton
