Investing Philosophy

Growing up, I was quite cynical. I had an unhealthy outlook and lifestyle that reflected that attitude. This led to a lot of bad situations, poor health, and many regrets. Reversing an attitude means addressing the patterns that support it. This process can take a while. I’m coming to believe it’s a lifelong journey.

I think of good money management as just one aspect of life. It’s just as important as eating healthy, having an active, balanced lifestyle, and fostering positive relationships personally and professionally. I think most of us want to live a long happy, healthy, and financially comfortable life. To me, personal wealth and success exist because of a good balance among the following:

  • Having goals
  • Supporting these goals with well-thought out plans
  • Hard work, perseverance, and discipline
  • Living and thinking positively
  • Being kind and respectful
  • Pursuing health
  • Respecting your hard work through thoughtful spending
  • Constant self-improvement
  • Avoiding stressful choices

Managing to do these things all the time might be asking too much of yourself. However, it’s possible to make decent progress as we set bigger long-term goals and work towards them via smaller, short-term goals. Practice makes progress. The perfection we might be looking for actually exists in each moment along the way. Perfection is not a final, absolute state that appears at the finish line. All those small victories–whether or not they’re exactly what you expected–are what build you and your life.

The StickK Challenge to Lose Weight

Having said all that, I’m going to talk about the results of my StickK Challenge which I just completed this week. It was a two-month long challenge where I was to lose a certain amount of weight. Health is a form of wealth, and for a bit, I had lost my way. Last summer I pigged out on way too much ice cream for two months and found myself in an unhappy place physically, emotionally, and mentally. I wanted to work off last summer’s indulgence to get back to my healthy weight. I needed the motivation of losing money to make it happen. And it worked! Kinda… 

So this is how it works. You sign up with StickK and set your goal and the time frame you’d like to accomplish it in. You also put money on the line, so if you don’t meet your goals, you have to pay whatever amount you can’t bear to lose. You decide what amount is enough to motivate you to hit your goal. The challenge is not effective until you submit your credit card.

The challenge is broken up into increments. If you want to lose 10 lbs in 10 weeks, then you have to lose 1 pound per week. If you decided to put $1000 on the line, then you stand to lose $100 for each week you don’t hit your target. The money can go to someone you designate or to a charity of StickK’s choice. (Apparently, the people most successful with their StickK challenges were those who decided to pay someone they disliked.) If you meet the weekly requirement, you get to keep your money that week.

So let’s say on Week 5 you reported your weight, but you didn’t hit your target for that week, you only lost half a pound. You’re charged $100 that week. The following week, you’re expected to lose 1 pound — you’re not expected to lose 1.5 lbs to catch up. StickK adjusts the end goal but you’re still expected to lose weight at the same rate.  

I was unsuccessful for two periods, so I had to pay up twice. I found when I was unsuccessful, I got more motivated to get more consistent with my level of activity, sleep, and healthy eating (helpful tip: garlic helps you shed weight!). The end result: I missed my final goal by a small amount but I’m now back in my ideal weight range; I also lost a bit of money in the process. Had I not done the challenge, that same amount of money might have been spent on the same not-so-great food I was eating.

The challenge was totally worth it. I’ve got a better awareness of how much more active I should be and how much more I could improve my diet. For a while, I thought I was already doing all the right things and that nothing was working anymore because something broke in the metabolism department. But as my workout guru, Jillian Michaels, says, “There’s always an ‘UP’ button.” I hit that button by using the fear of losing money to motivate me and that motivation took me to a happier, healthier, and stronger place.

Thanks StickK! You took my money, but it was worth it!

 

 

Basic Guidelines to Debt Reduction

debt

Whether you’re trying to aggressively pay off your debts or saving for some big goal (like buying a home), the principles of money management are very similar. In many ways, the way you live your life may seem the same because the key to long-term success is more about establishing good ongoing habits and making them a part of your regular decision-making process. In other words, all goals involve a plan, some structure, discipline in practice, the determination to stay on track, and faith in the process.

If you have debts, you can’t successfully pay them down without accepting and following these fundamental guidelines:

Get rid of the high-interest debts first and avoid incurring this kind of debt ever again. 

When you make a loan payment, a big part of it goes to interest and rest goes to the principal amount that you borrowed. The higher the interest, the harder it is to pay off the borrowed amount. Paying off the high-interest debts first will mean paying less interest overall. Credit cards are typically the high-interest culprits. Once you pay off your credit cards, be sure to pay off the full balance each month going forward.

Consolidate your debts wisely.

You could reduce the high-interest debts by consolidating them into a low-interest loan such as a credit line with the bank. If you have student loans from the Canadian government, then you could be getting a tax credit back from the interest  portion of your repayment — you may want to hold off on consolidating them with your other debts and pay these off separately.

If you’re not able to get a low-interest credit line, then proceed to pay off the debt with the smallest balance first (of course, while paying the minimums on your other debts). Once that’s paid off, then pay off the next smallest balance and keep going until you slay the rest of them. Some credit cards offer very low to zero percent interest for a limited amount of time (usually a year). If it’s realistic to pay the full balance off within those time constraints, you could consider transferring your other debt balances to such credit cards for a service charge. But please remember…

Do not increase your debts.

Just because you transferred your credit card balances to lower-interest options doesn’t mean it’s time to go shopping again. If you can’t take your own debt takedown seriously, then you can’t expect others to take your goals seriously. If the temptation is too much to handle, cancel those cards. 

Cut your costs and spending every which way. 

You must be ruthless when it comes to reducing your bills and expenses. There are endless ways to cut costs, and the internet is full of budgeting tips. Paying off debts doesn’t mean enduring years of suffering. You can still have fun and reward yourself from time to time—you just have to spend wisely and get creative with low-budget options. I’ve created ‘Fun’ancial Tidbits to inspire wise spending and mindful money management. Additionally, it’s essential that you address any emotional spending habits that weaken your will (like gambling or a shopping addiction) because caving into these habits even just once will sabotage your efforts. 

Have a good, solid budget that you can work with.

Some periods will be tougher than others as you tackle your debt. “Loan Payments” is going to be a major part of your budget for a while. If your budget is complicated, overly ambitious, and not realistic, you could be setting yourself up for possible failure. You should overestimate your expenses as it’s easier to end up with a surplus than it is to get blindsided by an unexpected deficit. It’s also a good idea to forecast your budget ahead by a few months to factor in upcoming events, birthdays, holidays, annual expenses, etc. That way, you can get more strategic ahead of time by reducing your spending further or picking up extra work to make up the difference or to catch up faster.

Get professional assistance from reputable financial institutions. 

You might feel like your debt situation offers no hope. The folks at your bank are pros and have seen it all. If you’re shy about going in to talk to someone in person, you can call them for advice, and they often can provide service over the phone. They can advise you on your loan payment options and various strategies. These advisors can surprise you with helpful things you maybe never thought of. If you give them a chance to support you, you increase your chances of succeeding in paying off your debts.

Share your goals with your loved ones.

It’s understandable if you want to keep your financial woes a private matter; you either don’t want to stress others out or be judged by your problems. You might feel alone and get stressed out as you work hard to unburden yourself of debts. It’s nice to get emotional support from people who really care about you. With team support, you can share your stuff, exchange money-saving ideas, and have low-budget gatherings. Heck, you’ll probably find out who your real friends are!

The journey towards financial freedom can seem long and arduous. You have to know that there are many folks out there, just like you, who have worked through seemingly impossible situations to pay off their debts. They put their minds to it, created a plan, and learned a new set of money management skills that set them up for financial success later on. Overcoming a hurdle like this will give you the confidence and good habits to successfully tackle your future goals. 

YOU GOT THIS!   

Couch Money

When I was a kid, my parents regularly threw house parties. My dad was a natural entertainer, always equipped with his guitar, electric keyboard, bongos, a healthy supply of drinking songs, and outrageous stories from his wild past. These weekend parties would go on until three or four in the morning.

At our parties, whenever things started to wind down, my younger brothers and I routinely helped to clean up so that our folks so could keep entertaining the guests who stuck around. ‘Clean-up’ typically involved putting away glasses and leftover food, collecting garbage, and doing dishes. When unmonitored, we fished out of ashtrays any cigarettes that were still burning and we smoked the rest to the filter. We used to pour unfinished whiskey and scotch into half-finished beer bottles to create wicked cocktails and dare each other to take sips. When our mixes became undrinkable, we poured in the cigarette ashes and switched out our dad’s beer while he was mid-song or mid-story. Suppressing giggles, we eagerly waited for him to pick up the wrong bottle and take a swig. That always got our dad’s attention, and it was usually bedtime for us after that.

As fun as our parties were, the day after was our favourite part. We’d sit on the couch while watching TV with our little arms jammed down the sides of the cushions to fish for money. Our dad’s drinking buddies never failed us with their loose pockets full of change. We always took off to the store with our found coins to buy candy. I fondly recall these hilarious times, and I realize that I regard money differently based on how I got it. I have a different emotional connection to found money, prize money, given money, earned money, and invested money–I believe it’s this way for everyone.

My loving, liberal, supportive parents were financially stressed people. Not because they didn’t earn much, but because they had a complicated relationship with money–one I never got close to understanding. I believe each person’s relationship with money varies from healthy, neutral, stressful, troubled, to toxic. This relationship isn’t entirely based on the numbers in your account. When I started earning my own money, I realized–with some unexpected guidance–that money management could be simple and uncomplicated.

Work

Fun at my first job! Me (left), my boss, Joelle (middle), and my co-worker, Akiko (right)

I remember how at my first full-time job, getting paid was like finding couch money. As soon as the money was in my account, I ran to the store and bought candy (hey, I was still in my teens) and other frivolous things. After months of working I still had no savings and I actually thought this was normal because that’s how I grew up. My caring boss at work noticed my spending habits and urged me to think about saving up for university and retirement. As I resisted with excuses, she insisted with simple solutions. From that point, my attitude toward my earned money shifted and it became a regular practice for me to divide my pay to cover my bills, future goals, and having fun.

Life has gotten much more expensive since I was young and starting out. Even if you’re already sensible with your money and have some stashed away, you need more money than ever in order to pay for university, buy a house, and save for retirement. The focus is now turning to investing because the good habits and the simple solutions we used to rely on just won’t cut it alone. Despite these mounting financial pressures, I still experience a thrill very similar to finding couch money, but an even better and more satisfying one: it’s when I see the growing returns of the hard-earned money I’d set aside and invested. I only hope it’s a similar experience for anyone who invests.

 

Investors Need Goals & Goals Need Plans

About four years ago, my friend Monica posted on FB a quote by Antione de Saint-Exupéry:

“A goal without a plan is just a wish.”

This quote has guided me since. I had many wishes that never came true because I did nothing about them. Some I actually followed through with because I came up with a plan: I determined what steps I needed to take, the possible costs involved, the amount of time needed, and whom to seek advice and support from. I didn’t always end up with exactly what I was initially going for, but because I always got something out of shooting for the stars, I found I enjoyed taking chances on new opportunities.

Yes, you need money to invest, but not as much as you might think in order to start. Another thing: Money isn’t the only thing you need for investing. Successfully managing your money involves the following actions:

  • Setting goals
  • Seeking professional advice
  • Making a plan
  • Regularly setting money aside for your goals 
  • Educating yourself
  • Staying on track 

This seems like a lot of steps but it doesn’t have to be a very in-depth process. The most important step is to set your goals. You need to know what you want and why you want it. Of course, everyone wants to invest to simply have more money for all the things we want in life. However, having specific goals helps you focus your intent and direct your money. Without goals, it’s very easy to go off track and neglect your efforts–you’ll remain in a state of wishing for longer than you want.

Over the years, my man and I have put together a decent home gym with a library of workout DVDs which I follow (or else for an entire hour, I’ll end up curling 1s while walking zoned out on the treadmill). I have a lot of Jillian Michaels workout DVDs because her tough-love yelling motivates me while I whimper and sweat it out. She shares my disdain for hauling ass to the gym (though my gym is just downstairs), but she works out not just for the numerous benefits of exercise, but in order to live a long healthy life. Regularly, she loosely quotes Nietzsche: “If you have a WHY, you can tolerate any HOW!!!”

I’m a reluctant exerciser. However, as of the last decade, it’s become my standard practice to workout two to four times a week. Arthritis runs in my family, so I’m motivated to exercise and eat healthily to reduce its severity in case I ever get it. Without this reason, I’d succumb to laziness and eating chips (my fave!) all day.

On a personal level, I tend to draw a lot of comparisons between exercising and investing. When I put in the time to exercise, I’m investing in my current well-being and in my future health. Today’s pain-in-the-butt efforts lead to short-term and long-term benefits. Investing is another form of exercise. You part with some of your money today to make it grow in the meantime, so you that can use it for a bigger goal in the future. When you invest, you’re making a statement with your money — you’re saying that your goals and life in the future are important to you.  

Set your sights on your goals and get focussed. Want that house. Give your kids a good education so they can build great careers for themselves. Enjoy a well-deserved vacation. Have a comfortable, rocking retirement. Know what you want out of your life and realize why it’s all worth it.

After you decide on your goals, get help from experts and don’t be afraid to ask them all kinds of questions. They’re there to help you create a plan to tackle your goals. Your plan is there to support your ambitions and to guide you. Make your plan realistic so that you can actually work with it and still live a balanced life. Work your goals into your budget. Dividing your income into bills, your goals, and leisure will be a no-brainer after a while. Picking up a book with investment tips and following your favourite financial blog will be a fun and interesting pursuit, even a passion. As you check-in on your investments from time to time, watching them grow will inspire you to do even more for your long-term plans. This will all become part of your standard practice. And hopefully, you’re exercising regularly too. Health is a form of wealth after all!

 

Jillian

Me at a Jillian Michaels talk in 2013