By 2 Cents on February 26th, 2010 | Category: Financial Literacy | They must often change, who would be constant in happiness or wisdom.
~ Confucius
I know many of you (along with some members of my family) would probably answer the title question with something like: “It’s not a hot topic unless you’re a nerdy propeller head like you.” Fair enough. But it does seem like personal finance is getting a lot more attention than it used to on the internet and in the mainstream media. Check out the Technorati Top 100 Finance blogs. (There are even a few Canadian representatives there.) That’s just the top 100. There are hundreds more blogs and websites covering personal finance, not to mention books, magazines, newspaper columns, radio and T.V. [...]
Read on and enjoy … Why Is Personal Finance a Hot Topic Now?
By 2 Cents on February 25th, 2010 | Category: Financial Literacy | Instead of complaining that the rosebush is full of thorns, be happy that the thorn bush has roses.
~ Proverb
On February 22, the Task Force on Financial Literacy released a public consultation document called Leveraging Excellence. The task force was established by the Canadian Minister of Finance in 2009 to examine ways to boost the financial literacy of Canadians. I thought that the title of the report was interesting in light of the fact that I (and others) believe that excess leverage is the single greatest personal finance challenge facing us today. But the Task Force wasn’t referring to that kind of leverage. They simply want to look at ways to use existing resources in order to improve financial literacy among Canadians. I’m all for that.
My local newspaper carried an opinion piece by Jay Bryan on the Task Force report. Mr. Bryan is in [...]
Read on and enjoy … Task Force on Financial Literacy: Gold Medal
By 2 Cents on February 23rd, 2010 | Category: Debt | No man’s credit is as good as his money.
~ E.W. Howe
Update: This post is included in the March 1st, 2010 Carnival of Debt Reduction. Thank you!
When we take on debt, we’re essentially borrowing from our future earnings in order to have the things we want right now. There’s a cost for that. It’s called interest and it can exact quite a toll on the balance sheet. I’m always writing about how you need to do the math in order to make good financial decisions, so I thought I would give a few examples here of how much various types of debt can cost over time.
In general, there are 3 main types of personal debt that we tend to incur: mortgage, vehicle, and credit card loans. Each carries with it a unique cost structure that’s worth looking at. The chart [...]
Read on and enjoy … The Cost of Debt: Doing the Math
By 2 Cents on February 22nd, 2010 | Category: Debt | He looks the whole world in the face for he owes not any man.
~ Henry Wadsworth Longfellow
I’ve been writing a lot about sovereign debt and the dangers it poses to the global economy lately. Debt in general is a frequent topic in the personal finance blogosphere and it is often painted as the enemy – a nefarious villain, evil incarnate.
I happen to agree with the contingent that says that there is no such thing as good debt. That doesn’t mean you can’t ever have debt. It just means that you need to control it so that it can’t control you.
Debt, by its very definition, is negative. It means below par, under water, less than zero. On your balance sheet, it’s a liability. Liability is defined as “the state of being legally obliged and responsible” or [...]
Read on and enjoy … The Lexicon of Debt: Is Debt Evil?
By 2 Cents on February 19th, 2010 | Category: Economics | You cannot spend your way out of a fiscal crisis. The current path is simply unsustainable.
~ John Mauldin, Between Dire and Disastrous
Update #1: Thanks to David at Health Business Blog for including this post in the Cavalcade of Risk: Just When You Thought It Was Safe to Go Back in the Water edition.
Update #2: This post was also included in the Carnival of Financial Planning #132 at The Smarter Wallet. Thanks!
When I wrote about 10 Reasons to Be Cautious Right Now, I borrowed liberally from John Mauldin. He is the economic thinker and author whose weekly newsletter Thoughts from the Frontline has been required reading for me for years now. I’m going to quote him quite a bit here as well since I happen to share a lot of his [...]
Read on and enjoy … Cloudy with a Chance of Hurricanes
By 2 Cents on February 18th, 2010 | Category: Economics | Isn’t it interesting that the same people who laugh at science fiction listen to weather forecasts and economists?
~ Kelvin Throop III
Update: This article was included in the Money Hacks Carnival #105 at Live Real Now. Thanks!
Weather forecasters and economists have a lot in common. Both are routinely found in the punch lines of jokes that make fun of their predictive prowess (or lack thereof). How many times have we prepared for storms – meteorological or economic – that were either more or less severe than predicted? Almost every release of economic data is accompanied by some comment that it is either much better or worse than economists had predicted. So what are these folks good for anyway?
I think our expectations may be too high. They may not get the predictions exactly right all the time, but they can [...]
Read on and enjoy … Economics: Your Personal Finance Weather Forecast
By 2 Cents on February 16th, 2010 | Category: Planning | Today, there are three kinds of people: the haves, the have-nots, and the have-not-paid- for-what-they-haves.
~ Earl Wilson
RRSPs work best for the haves. The have-nots might be better off starting with TFSAs, and the have-not-paid-for-what-they-haves should pay down debt first. That would pretty much sum up my general view of using RRSPs. I recently did a telephone interview with LuAnn LaSalle of the Canadian Press on the topic, but I’m so much more coherent in writing.
LuAnn was kind enough to print what I said anyway, and the Canadian Press article did a great job of getting people to question the wisdom of contributing to an RRSP every year no matter what. Even David Chilton, author and retirement savings advocate, feels like debt is the biggest problem in personal finance right now. It seems like this is a question that a lot of [...]
Read on and enjoy … RRSP vs. Paying Down Debt
By 2 Cents on February 15th, 2010 | Category: Taxes |  I don’t know if I can live on my income or not – the government won’t let me try it.
~ Bob Thaves, “Frank & Ernest”
Update#1: This post was the #1 pick in the Best of Money Carnival #39 posted at the Canadian Personal Finance Blog. Thanks Big Cajun Man!
Update #2: Thanks to Kay Bell for including this article in Tax Carnival #66: Tax Olympics posted at Don’t Mess with Taxes.
When I wrote about the 10 Steps to Fiscal Fitness, I may have overlooked one potentially huge factor that can affect your financial health, and that’s taxes. Whether it’s sales taxes, property taxes, provincial or federal income taxes, a pretty big chunk of our income goes to pay all sorts of levies. Strictly speaking, I guess taxes aren’t really a step [...]
Read on and enjoy … Taxes: The Missing Step
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