Thursday, September 21, 2017

Permission to Catch Your Breath


Pressure to perform better, accomplish more, work harder, pushes us to the point where we need a time-out.  The time-out allows us to catch our breath.  We are driving ourselves crazy to please others, meet our goals, and fulfill our dreams.  When we run at break-neck pace, we lose sight of “why we’re doing what we’re doing.”  Taking a serious moment to revisit our life choices is both important and necessary.  
Here’s the catch. I look at my blog website and see a wealth of information written for your benefit. Then I realize there’s too much information and too little encouragement.  You need to know you are doing a great job. 
The fact that you are interested in improving your financial circumstances is commendable.  You are reading and at the very least are attempting to understand and implement better money practices into your day-to-day life so you are prepared for retirement, emergencies, and accomplishing your heart’s desires.


Too much information weighs us down.  When we’re advised to do this, that, and the other thing, our heads spin. Examining what is best for us and meets our needs guarantees a successful outcome.  Too much information will spill out of our minds like  an over-filled hopper of barley will spill onto the ground. When we determine our purpose, reason, and desire for wanting to do “things” then we go in search of the information.  Knowing what you want helps you accomplish what you want.  This advice applies to a number of possibilities:  reducing your spending, saving money for your retirement, or effectively transitioning the family business to your children.


Maria Robinson so wisely said, “Nobody can go back and start a new beginning, but anyone can start today and make a new ending.”

What may have been devised as the best plan in the past might no longer be the best plan going forward into the future.  When we take a time-out to breathe, we have an opportunity to reflect and ask whether our goals and dreams will serve our needs going forward.  Your family dynamics may have changes; your health may have declined; or your job may be different.  Any alterations in your life are reasons to reflect on whether your present financial plan needs to be altered.


Reflection also serves as an opportunity to recharge your enthusiasm for pursuing your commitments to your goals and dreams.  When you recognize and celebrate your accomplishments to-date, you are fueling your motivation for the future.

Charles Duhigg, in his book Smarter, Faster, Better, offers two ground-breaking facts about motivation.

q Motivation becomes easier when we transform a chore into a choice.  Doing so gives us a sense of control. 

q Self-motivation becomes easier when we see our choices as affirmations of our deeper values and goals.

Charles’ fact-finding discovery came from his research of General Charles Krulak’s Marine Corp. Charles applied this new found knowledge to motivate him to write his book.  He simply said, “Motivation is triggered by making choices that demonstrate (to ourselves) that we are in control – and that we are moving toward goals that are meaningful.  It’s that feeling of self-determination that gets us going.”

So if you are the slightest bit demotivated about accomplishing your goals and dreams, ask yourself, “Why are you doing what you are doing?”  The Marine Corps recruits did just that.

“Why are you climbing this mountain?”  “Why are you missing the birth of your daughter?” “Why are you cleaning a mess hall, or doing push-ups, or running onto a battlefield when there are safe easier ways to live?” Forcing ourselves to explain why we are doing some thing helps us remember that this chore is a step along a longer path, and that by choosing to take that journey, we are getting closer to more meaningful objectives.


When you walk through the steps: Rest, Review, Reflect and Recharge, you will feel Refreshed.  A short-lived time-out can be amazing without be extravagant. 
Simple things like playing your favorite song, making a list of the important people/things in your life, having a telephone conversation with a friend, setting aside prayer time, or relaxing with a cup of coffee in your favorite chair can rejuvenate you.  These mini-holidays clear your mind of clutter to help you think more clearly about your life choices.  Make that appointment with yourself the first chance you have.  You have permission to catch your breath.

Thursday, September 7, 2017

There’s No Easy Answer

When your vehicle’s odometer sneaks closer to the “No Warranty” number, how do you feel?    For me, this is a race I don’t like winning.  I know when the number changes to 100,000 kilometers (or 60,000 miles), time’s up.  Any repair costs will now be at our expense unless we have opted for extended warranty.

When I think the repairs are about to happen, they generally do.  Not minor repairs, but costly ones. One month it’s $1,000; the following month $500. Even though regular oil changes and service checks have been done, breakdowns are destined to occur.  

Purchasing, maintaining, and repairing vehicles are major expenses for owners.  In addition there are the registration fees, insurance, fuel and oil costs. To get from Point A to Point B, when there are no other options for transportation, our vehicles become a necessity, not a luxury item.   Our challenge is to ensure we budget for the costs associated with driving and replacing them.  This is literally where the rubber meets the road. 

The basic questions are:

  • What can we afford to drive? 
  • What is a practical vehicle to drive for our needs?   

Many conversations have been had with family and friends about the search for “the one” that answers our basic questions.  The concern which always surfaces is “Are we making the right decision?” Taking our time is better than rushing through the buying process. There’s nothing worse than a wrong choice. You can’t turn back the clock expecting the dealership to refund your money when you return the vehicle.  I know someone who tried.  The mistake was costly. Doing your homework is important.   Sleep on your decision more than one night.  Take as long as you like until you are comfortable with your pending purchase. 

Here’s a “Are-You-Sure-This-Is-The-Right-One” checklist:
q Whether your vehicle is driven for personal or business purposes, consider how many kilometers (or miles) you drive each year.  This information provides a clear indication of the length of time the warranty will cover major repairs. This is also key in determining the number of years you will own this vehicle before it will be replaced.  Kilometers are more speedily accumulated when you live in rural areas.  Medical appointments, entertainment events, and shopping trips to the city can rack up kilometres quickly in a year.  Knowing your annual mileage will provide information for the following points. 

q When a vehicle is used to earn business income, Canada Revenue Agency (CRA) allows any related expenses to be deducted as an eligible business expense.  Maintenance expenses, tire replacement, registration, insurance costs, loan interest, and depreciation reduce your taxable business income.  In turn, these costs can reduce your overall tax bill.  When a vehicle is used for both business and personal purposes, the expenses are pro-rated based on the number of kilometers driven only for business.

q Be cautious about believing that a loan financed at 0% is great deal.  For your benefit, ask for two comparisons:  one if you were financing the vehicle at 0% and the other, if you were financing at a low interest rate.   You might be forfeiting a price discount on the purchase when you choose 0%.  Investigating and evaluating your options is the best way to be certain you’re getting the best deal.

q When financing is required, always work the new payment into your budget before leaping into a vehicle purchase. Without crunching the numbers, you are only assuming you can afford the bi-weekly payments. Knowing for certain is better than assuming.  Then take the next step. Include the cost of the registration and insurance so you are not surprised by these expenses. A severe change in any costs can be a disaster to your spending plan.

q If you are looking for a different vehicle but are hesitant to pay the “new price”, you might consider an upgrade to a newer model with reduced miles and remaining warranty.  A slightly-used “new vehicle” rather than a “brand-new” one has a trimmed-down price.  Another option may be to snatch up a new vehicle at a reduced price late in the year when the next year’s models are available and the dealers want to get rid of their existing inventory. 

q “Own a newer vehicle” may be only one thing on your long list of goals and dreams. Before you determine the make and model of your new purchase, pre-plan the amount you are willing to spend.  In Suze Orman’s book, The Courage to Be Rich, she makes a valid point, “…it’s certainly a component of our collective consumer machismo: You are what you drive, for as long as your drive it.  Cars are our ultimate symbol of success, and they display the level of success we’ve achieved ~~ or the level of success we want others to think we’ve achieved:  This is who I am, because this is the make and model I drive…I am asking you here not to let what you drive today drive your destiny tomorrow.”  I believe her point is well-made.  Look at your dream list and do the math. Putting all your money into the new purchase at the expense of your other dreams might be less than ideal.     
q Where we live certainly plays a part in deciding what we drive. Living in rural areas, you may factor your road conditions for all the seasons.  Are the roads and highways passable if you need to travel in the winter months?  A SUV (Sport Utility Vehicle) may not be seen as a luxury but rather a necessity. Health and mobility reasons may factor into your decision. It’s essential that you find a vehicle to meet both your needs and budget.

q There’s a fine line between a dealership wanting your trade and not caring whether you trade.  Simply said, your vehicle might not be worth as much as you think it is because it is either too old, has too many kilometers, or both.  An older vehicle with more mileage equals less trade value. Certain makes and models depreciate more rapidly than others.  Being conscious of the fine line is worth noting on your next purchase.  If you are not sure, you may ask a salesperson who knows.    

q To trade (or not trade) your present vehicle towards the new purchase should be examined.   The value of the trade reduces the amount of GST (Goods and Services Tax) and PST (Provincial Sales Taxes) added into the final sale price.  When you have an opportunity to sell yours privately and receive a higher value than the dealership is offering for a trade, then this is a better option, especially if you can also recoup the taxes from the sale.
q If you are financing your purchase and are looking for ways to reduce your payments, consider putting some cash into the deal. Doing so will keep your loan payments in line with your budget.  If the extra cash means stripping your emergency savings, then this is not advisable.  Ensure all the pieces of the puzzle fit your purchase.
q When choosing the amortization period for your loan, pick a term equal to the length of time you plan to own the vehicle.   The plan is to ensure when you are ready to sell or trade that the loan is paid in full.  By doing so, you avoid consolidating the remaining loan balance with a new one.  Continually trading and purchasing vehicles over a period time will compound into a problem whereby the loan balance will be higher than its value.

q If you are certain you will purchase another vehicle in your lifetime, the best strategy is to save for it.  For most people, this request seems impossible because their budget may be tight already. However, when you know the purchase is likely to occur, being realistic and planning is better than doing nothing.  Saving some money while financing the balance is an appropriate strategy. Loan payments are usually looked upon as “forced savings”.  People are more committed to making a loan payment than actually setting money aside in advance towards their purchase.  However, extreme caution will need to be implemented as one approaches retirement.  Managing loan payments on a fixed retirement income may be challenging. 

q Make time for comparison shopping.  Whether you conduct your shopping online, in person, or by phone, you are collecting information to help with the final decision.  Because you are investing a large sum of money into a vehicle, you should look at this as an investment.  Falling in love with the first one you see and leaping ahead with the purchase could be a potential mistake. You don’t want any regrets.      
Above is my Baker’s Dozen, thirteen points to help answer the “Are-You-Sure” question.  I personally am not a fan of vehicle shopping because the analysis seems to take the fun out of the experience.  However, the analysis is the important stuff which ensures you have made the right decision.  You will appreciate your purchase more if you don’t have to live with any regrets. The secret is to strike a balance between the analysis and the experience. Create an adventure for yourself. You are hunting for a treasure you’ll appreciate.  Be patient with the search. Sooner than you realize, your hands will on the steering wheel of your ideal dream.