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- Five Lessons to Financial Survival
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It seems to be an elusive goal. I just got off the treadmill after listening to an investing podcast. I often listen to this one, not because it gives me good advice or anything, but because it gives me information on what young, dumb advisors may be recommending.
The latest advice is to buy cash-flowing real estate in America. Just agree to do this and hand over your money to the experts, and they will take care of it. Does this guy think we are insane? I’d love to interview the founder of The Truth About Real Estate Investing because most of the information is the opposite of the truth. He’s never been through 22% interest rates, the destruction by inflation, and the housing crisis experiences of the 1980’s.
Not too long ago, the expert advised people to trade option contracts on stocks. I'm not hearing much about that anymore, and I wonder why. Options trading is very risky and dangerous, and it is rarely a way to make money.
Lesson one to financial survival is to keep your money and assets close to you. Once you hand them off to someone else, you lose control. If people tell you to buy a particular investment, what is in it for them? Ask them if it is a Mitzvah or a good deed for religious reasons that provides them with nothing in return.
Here are the other four lessons to help you survive.
2. Little bits become big bits. What interest are you earning if you have any cash in your bank accounts? If you add up your cash and say you have $2,000, putting that into a government 30-day bond will net you $86 over the year. It doesn’t sound like much, but if you keep doing that for ten years with your excess cash, you will have $3,256. Do that for 20 years, and you will have $5,207. The government will take about half of your gains if you do that outside of a tax-free account. If you can, putting your cash into a TFSA, if you don’t need it for a year might also work to avoid taxes. You can take it out tax-free when required but can’t return it to the TFSA until next year.
3. Never buy a car with borrowed money. I am amazed at the number of people who will think nothing of paying $50,000 or more for a car and borrowing money. Never do this. Buy what you can afford to pay cash for. I drove beaters for many years. Once, I bought a car on a lease, and my accountant told me it was a great deduction. Dumb advice. You must pay for it with cash before you get any deduction. I currently drive a purchased used, VW Jetta. I bought it about four years ago. I will never buy a new car again.
4. Go on a Money Fast. You have likely heard of food fasts where you aren’t supposed to eat anything for a day or more to help your health. There is mixed research on this, so I never do it but think of a day or two of Money Fast. You don’t spend one cent for at least 24 hours. You leave your cards at home. You take no money with you. You quickly learn where your pain points are and where you are spending money on dumb things. It may motivate you to spend less. It will improve your financial health.
5. Buy food from local farmers. It’s not just about a more economical price; it's about getting a better value for your dollar. I go to the local farm markets when they are open. I can buy a basket of vegetables, fruits and other staples for a fraction of what is in a store. I have also recently been buying dried mushrooms from the forests of Western Canada from Untamed Feast. I love their products, and they have a mushroom burger that makes 4 delicious servings for just $10.95. Healthy food is sustainably created from the forests. (I’ve talked to the founders to give feedback on some things, but I have no financial interest in or gain from the company. It’s a Mitzvah.)
Financial Survival is about developing habits to improve one's financial health. The lessons from the honeybees continue to be my guiding principles. Maybe you should look?
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