There’s unlimited information available today on the importance of minimizing debt, saving money and investing for the future. Why are so many people not following this advice?
Sometimes, the answer is that life gets in the way. As an example, consider the story of Brianna Bell, who I interviewed for a column back in May 2015. Ms. Bell, her husband and their two young daughters had recently moved from a townhouse into a basement apartment as part of a plan to cut expenses and better live within their means. Ms. Bell’s goal was to become a personal finance writer based on her experiences.
She did just that, but then hit a rough patch. By Christmas 2018, she and her husband owed nearly $10,000 on their line of credit. “With not enough money coming in, and way too much money going out every month, I wondered if we would need to declare bankruptcy,” Ms. Bell says in a nicely written piece that was recently published on the website Narratively. The headline: “Secret Life of a Broke Personal Finance Guru.”
It turns out that Ms. Bell’s brother died suddenly (she found out just before I interviewed her) and the trauma was long lasting. It wasn’t until she sought help from a psychiatrist that she was able to resume her writing career and attack her debt.
The personal finance difficulties we find ourselves in are sometimes self-inflicted via overspending and a weak commitment to saving and investing. Ms. Bell’s story reminds us to consider the many other reasons why people run into financial problems.
Ms. Bell writes in her narrative that her plan was to be debt-free by the end of last year. If she didn’t make it, you’ll understand.
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Rob’s personal finance reading list…
Ten lessons for a happy retirement
A retired money manager who has pivoted into investor education came up with this list. A good mix of financial and psychological and emotional insights.
‘Healing from trauma is very expensive’
All about the high cost of recovering from a traumatic event – not just costs like psychotherapy or physiotherapy, but also parking, gas or public transportation for appointments, child care if required and lost wages and more.
How to save a mildewy shower curtain
Cheap cleaning solutions for your bathroom, reusable water bottle and more.
The 2020 Canadian Dividend Aristocrats list
Good material here for people researching dividend stocks. There’s a mix of familiar and unfamiliar names, along with lots of data on things like payout ratio and actual dividend growth rates.
Tweet of the week
Housing blogger Stephen Punwasi has some fun with the announcement that Prince Harry and Meghan Markle will try to become financially independent as they distance themselves from the Royal Family.
So... they're typical millennials, but their bank of mom and dad is just Prince Charles?— Stephen Punwasi (@StephenPunwasi) January 9, 2020
Can't wait for the articles: "how this millennial couple makes it work, on just a few million per year" https://t.co/Mi4bG84FRS
Q: Is it best to lease or buy a car if you trade it every three years?
A: What you want to avoid is buying a vehicle and trading it in after three years with money still owning on a loan. You’ll be taking the unpaid loan principal and adding it to the amount you borrow on the next vehicle. That’s a big, honking financial drain. Leasing would be preferable because you’d be paying for the use of one vehicle, dumping it after three years and starting again. From a personal finance vantage point, it’s best to finance a vehicle over five years or less, pay off the loan and then drive payment-free for a while.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
What I’ve been writing about
- An update to a simple stock-picking strategy that has left the TSX in the dust over the past decade (for Globe Unlimited subscribers)
- Sorry snowbirds, provincial health plans should not help Canadians cover their out-of-country medical costs
- Three shrewd investing trends hidden in all the hype about surging ETF sales (for Globe Unlimited subscribers)
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