The following excerpt is from Chapter 1 of Bruce Sellery's new book Moolala.
Have you ever noticed that smart, capable people sometimes do dumb things when it comes to their money?
Smart people can file their own taxes, brew their own beer, teach high school, write a marketing plan, fix the blinking clock on the DVD player, navigate the Métro in Paris, and even raise teenagers. And yet, these smart, capable people often do dumb things when it comes to their money.
I like to think I’m pretty smart. Not Mensa smart. But surely smart enough to have avoided the Nortel Networks debacle.
What was I smoking? . . . .
Like millions of other smart, capable people, I have bought shares in companies that imploded spectacularly. I have faithfully held on to mutual funds that underperformed year after year after year, never stopping to compare their performance with those of other funds. I once bought a “tax shelter” that lost half its value in the time it took for me to walk from my financial adviser’s office back to my car. I spent years in a warm, comfortable daze, blindly putting money away into my investment account but absolving myself of any personal accountability for how my investments performed once the money got there. And perhaps most damaging of all, I failed to make the connection between getting a handle on my money and achieving my goals in life.
Perhaps you know someone like me. A friend, a family member, a colleague, a spouse? Or perhaps that someone is you.
If so, you’re in good company. There are lots of people like you and me who have an education, a stable job, and reasonably good spending habits, but who are not doing all they could be doing with their money. As smart and capable as you are, you’ve probably done a few dumb things with money in your time. Trust me, you’re not alone.
Here are a few examples from the Moolala Community:
“When my mom died I received $30,000 from her insurance company. I paid off some debt, gave to a few charities, and then lived off the money for a year. But I really should have had a plan for the money, investing some of it or using it for a down payment on a house, because now I have nothing to show for it.”
–Skye, 33, entrepreneur. Single.
“I have spent ten years with a company that has a matching program for RRSP contributions. I didn’t enrol in the program until recently so I missed out on having the company match contributions worth 5% of my salary each year. That works out to about $3,000 a year or $30,000 over the last ten years, not including the increase in the value of the investments themselves. I missed out on a huge amount of money simply because I didn’t fill out the @#$#@%^* form.”
–Naheed, 42, project manager. Married, with two children.
“I was crazy stressed about my credit card debt, but then I saw a huge sale on hot tubs. I had never really dreamed about owning a hot tub, but I bought it anyway because it was just too good a deal to pass up.”
–Colleen, 32, stay-at-home mom. Married, with three children.
“Back in university they were giving credit cards away like Hallowe’en candy. That was great . . . until the bills arrived. I now live under this cloud of debt, just as I’m trying to get established in my career.”
–Derek, 24, engineer. Single.
“We have a great house and a cute little cottage but very little else in terms of retirement savings. We’d like to retire in the next fifteen years, but we really don’t have a plan and fear that the only way to afford it will be to sell our homes.”
–Jacques, 48, IT professional. Married.
