Friday, August 31, 2018

Short Takes: Predictions of Doom, Zero Fees, and more

I found my blog in a searchable list of over 2000 personal finance blogs. Apparently, I’m number 112 in Canada. I assume this is for several reasons. I don’t know how to set the blog up properly for viewing on phones. I’m not on Facebook. I use too many numbers and charts. The writing level is too high. Sometimes I take unpopular positions if I think the common wisdom is wrong. I don’t know much about SEO. I don’t fix broken links often enough. I have no idea why my Google PageRank got dropped to zero. I’m unwilling to pay anyone to fix some of these things. No doubt others could add to this list. I appreciate all my readers who fight through these problems and give me a reason to keep blogging.

I managed only one post in the past two weeks:

Seniors Staying in their Homes

I was pickier than usual recently. Here are a couple of articles worth reading this weekend:

Shawn Langlois has a funny chart overlaying predictions of economic doom on top of a steadily rising S&P 500 chart.

Dan Bortolotti points out that while zero-fee investing will save you a few bucks, it won’t make you a better investor.

Thursday, August 30, 2018

Seniors Staying in Their Homes

Rob Carrick says realtors and family members should stop pushing seniors to sell their homes. He portrays both groups as greedily seeking money. No doubt there are family members out there looking to get access to an early inheritance, but there’s no shortage of delusional seniors who won’t move but haven’t been able to properly maintain their homes in years and whose ability to care for themselves is in doubt.

As it happens, my wife and I have been living through a period where four seniors in the family are having difficulty managing in their homes. In one case there was no sign of dementia, but she wouldn’t leave a rural home even after requiring 24-hour nursing care at a cost that would have drained her savings in a couple of months.

In two other cases, dementia is an issue, but they insist on staying in a home they can’t maintain without constant help from overworked family. In a fourth case, she is already in an apartment, but often can’t even open her front door. We found another apartment that offers more indoor activities and varying levels of help, but, you guessed it, she won’t go.

It’s not that all seniors refuse to accept an obvious reality. My grandmother comes to mind. She made a decision in her young life that she and her husband couldn’t manage a farm any more. Later she decided the two of them had to leave their home for an apartment. She voluntarily gave up driving, and finally moved in with her daughter when they couldn’t handle being alone any more.

The internet rewards writers who offer strong opinions like “stop pushing seniors to sell their homes.” But how many times can you call 911 for a senior who was injured in yet another fall before you feel you must try to convince them to move to somewhere more suitable?

Elder financial abuse is a big problem, but seniors staying in homes they can no longer maintain or even get around safely in is also a problem. Each case is different, and no one answer works everywhere.

Friday, August 17, 2018

Short Takes: Asset Location, Adulting, and more

Here are my posts for the past two weeks:

Powerless Employees

The Year of Less

Here are some short takes and some weekend reading:

Justin Bender pulls his asset location rules together in an excellent post where he goes through an example of allocating your money across a TFSA, RRSP, and a taxable account. The calculations may seem complex, but I use a spreadsheet that does them automatically for me. That way, I only have to figure it all out once. Justin is right that DIY investors may do well to just keep the same allocation within each account for simplicity, but if you’re paying someone else to manage your money, you should expect them to get post-tax asset location decisions right.

Potato says that doing what you think adults are supposed to do is “cargo cult adulting.” It’s better to decide for yourself what being an adult means. I liked his example of some young people thinking they have to own a house before having kids. It’s true that I owned a house before having my kids, but my parents didn’t. In some decades, real estate is expensive, and in others it’s cheap. There’s nothing wrong with renting if you’re socking away some of the money you’re saving not having to pay for house repairs, property taxes, and other costs.

Big Cajun Man looks back at how a layoff from a decade ago hurt at the time but worked out well in the end.

Boomer and Echo describe the differences between group RESPs and self-directed RESPs. The better choice is obvious, but only after you understand how these plans work.

Thursday, August 16, 2018

The Year of Less

I don’t have to look far into my circle of family and friends to find compulsive shopping. This isn’t a problem I understand very well myself; I don’t like shopping and have many excuses for why I haven’t replaced old clothing. In her book The Year of Less, Cait Flanders gives us insight into shopping addiction as well as addictions to alcohol, other drugs, food, and television. Fortunately, she also describes her path away from the pain that drives these addictions.

The centerpiece of Flanders’ solution to her addictions was a self-imposed yearlong shopping ban. Her rules were quite strict. For example, she banned herself from shopping for take-out coffee, clothes, shoes, accessories, books, magazines, candles, furniture, and electronics. She did allow herself to replace things that she needed but had worn out.

During this yearlong shopping ban, she also got rid of most of her stuff. Her goal was to reduce her belongings to just the things she really used. This is one aspect of her journey that I can identify with—having too much stuff. I don’t buy much, but I keep too many old things.

“There were really only two categories I could see: the stuff I used, and the stuff I wanted the ideal version of myself to use.” This “aspirational” category of buying includes things like intellectual books and skinny clothes.

Her shopping ban included eating better and eliminating alcohol, other drugs, and cable TV. So the hard work she did to stick to these rules took care of her other addictions.

One particularly interesting aspect of this shopping ban was that Flanders didn’t restrict her travel. Although she did save significant amounts of money, that wasn’t her main goal. She wanted to make her life better. Her path to a better life included thoughtful purchasing, eliminating bingeing, and enjoying the benefits of travel.

“The toughest part of not being allowed to buy anything new wasn’t that I couldn’t buy anything new—it was having to physically confront my triggers and change my reaction to them.” It seems that Flanders’ self-destructive behaviour was an attempt to alleviate pain rather than a desire to consume.

The author’s friends tried to draw her back into her old life of consumption. “They told me I ‘deserved’ it. ‘You work so hard!’ they said. ‘And you live only once!’ I hated the acronym for that truism: YOLO. I’d watched too many friends swipe their credit cards and go deep into debt on that rationale.”

The book closes with some advice for anyone considering their own shopping ban. However, she doesn’t advise readers to follow her path too closely. Spend some time thinking about “the reason you want to take on a challenge such as this in the first place.”

This book is a much more interesting read than your typical book about finances. Flanders tells a compelling personal story in a way that keeps the pages turning. It gave me some insight into the reasons behind the otherwise baffling self-destructive behaviour I see in people I care about.

Tuesday, August 14, 2018

Powerless Employees

I’m used to bank branch employees having almost no power to overrule procedures enforced by their computer systems. Even branch managers can do little to override computer rules other than send requests to centralized bank departments. A recent stay at a Comfort Inn in Laval showed me that this way of running a business has made it to at least some of the hotel industry.

We wanted to stay at the same hotel as others who were attending the same event as we were. We booked online and chose to pay extra to get a king-sized bed instead of a queen-sized bed. When we arrived, they said they had no rooms available with a king-sized bed. This isn’t too surprising. I’ve encountered this at even some high-end hotels when they juggle reservations trying to keep as many rooms booked as possible.

What happened next surprised me. I accepted their apology for not having the room we booked, and I asked that they reduce our room rate to the queen-sized bed rate we were offered online. But the desk attendant said she couldn’t. She said the best she could do was leave a note for a more senior employee to look at it the next day.

The next day we spoke to the more senior employee who said she couldn’t reduce the room rate either; the system just wouldn’t let her. Her tone of finality was designed to make us slink away and accept the fact that we’d pay an inflated price for an inferior room.

Not being the meek sort in such circumstances, I insisted that if she couldn’t fix this, she should call someone who could. She said she couldn’t call because this wasn’t an emergency. After the exchange became a little tenser, she insisted the best she could do was send someone an email, but promised she’d fix it.

Taking the events to this point at face value, the employees were powerless to make any meaningful decisions themselves. It could have been just an elaborate show put on to get us to go away, but I’m inclined to think they really couldn’t do anything on their own.

Within a couple of hours, I got a call offering a 25% discount as compensation for not getting the king-sized bed we booked. I accepted this without further complaint. The morning we left, our bill showed a 25% reduction for only one of the two nights. Nice.

The final price after the partial 25% discount roughly matched what we would have paid if we had booked a room with a queen-sized bed. I chose not to complain any further, but I found the whole affair pointlessly unpleasant. The desk attendant should have been able to adjust the room rate in a case where it was so obviously justified. I won’t be in a hurry to stay at a Comfort Inn again.

Update: My wife received an email from Comfort Inn inviting her to fill out a survey, so she did.  She included a description of our experience.  She got a response with an apology and a promise to extend the 25% discount to the second night's stay.  That takes the edge off our unhappiness somewhat, but reaffirms my sense that front-line staff have too little power to handle routine situations sensibly.

Friday, August 3, 2018

Short Takes: Asset Location, Border Seizure, and more

I managed only one post in the past two weeks:

Serving as an executor

Here are some short takes and some weekend reading:

Justin Bender analyzes asset location decisions between a TFSA and taxable accounts. These types of decisions are very easy to get wrong. Justin approaches these analyses in the right way.

CBC tells a cautionary story about trying to send money to someone in the U.S. and having it seized at the border. The few times I’ve sent large amounts to another country, I did it by wire transfer rather than sending bank drafts.

Canadian Couch Potato explains that short- and long-term interest rates don’t always move together. This is why bond funds haven’t been hurt much so far by rising short-term interest rates.

A Wealth of Common Sense has interesting definitions of 3 levels of wealth based on your attitudes about spending. I’d say I’m just shy of level 2.

Robb Engen at Boomer and Echo makes some excellent points about why you can’t count on today’s strongest-looking stocks to perform well in the future. He then plays the stock-picking game anyway and picks a stock he thinks will be good for 25 years. He’s careful to say he’ll stick to indexing, but I suspect most of the commenters who weighed in with their own picks are betting their money on those guesses. My own pick for best stocks to own for the next 25 years is all of them.

Potato reviews the book Worry-Free Money. I reviewed this book as well.

Thursday, August 2, 2018

Serving as an Executor

I haven’t been writing much lately because I’m serving as executor for an estate. If you’re considering serving as an executor, try to be realistic about how much work is involved. So far, I’ve found that everything is at least 5 times more work and takes 10 times longer than I expected.

Even with the advantages of no longer working full time and having had a year or so to prepare, I’ve felt overwhelmed at times. The seemingly simple task of finding contact information for the beneficiaries took me a week and several calls to wrong numbers in Europe.

I also have the advantage that the biggest beneficiaries get along well. But even so, we don’t see eye-to-eye on the best way to sell the largest asset, a home. Lesser assets like furniture, crystal, silver, and art cause more work than strife. It takes time to figure out how to sell these items for more than just pennies on the dollar in an estate sale.

This experience has made me more determined than ever to do what I can to make this process easier for my sons. I give away or throw away things I don’t need. When original copies aren’t needed, I scan records instead of keeping paper copies. What records I keep are well organized. As I age and I become more concerned with passing on certain prized possessions than keeping them, I intend to find worthy recipients myself and give them away while I’m still alive. If my financial assets grow far out of proportion to what I need, I’ll give away some money while I’m still alive.

Being an executor for a family member’s estate is an honour. But know that you’ll have a lot of work to do, and you’ll be in the middle of some difficult conflicts.