Blog Posts - Page 12 - Avraham Byers

A good income doesn’t always lead to a good outcome

A lot of us have the pre-conceived notion that the more money we make, the better off we will be. This is so engrained in us, we assume this cause and effect will be automatic and guaranteed. In reality, this is an illusion, albeit a very powerful one, that people fall into. Let’s look at it honestly: When we get a significant raise in our income, consciously or not, we inevitably think “now that I am making more, I can finally afford that __________ (larger home, renovation, new car, new gadget, new clothes, or long awaited vacation).” Ten years down the road, however, we look back and wonder how we are still not ahead financially. Despite receiving many raises and opportunities, we still feel like a hamster in a wheel. Truth be told, our expenses rise with our income because we’re in the habit of spending, and we justify living beyond our means. This is not a new problem; even Charles Dickens (1812 – 1870) made note of the phenomenon in the pages of David Copperfield when he wrote: “Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and […]

Consolidation and the Never Ending Mortgage

In this time of historically low interest rates, you would think people must be paying off their mortgages at lightning speed. Why? When interest rates are low, less money from each payment goes towards paying interest and more money is applied against the principal of the loan. This means homes can be paid off months, maybe even years earlier. The reality, unfortunately, couldn’t be further from this ideal. Many homeowners are actually increasing their mortgages with debt consolidation because of our low interest rate environment. Average interest rates for secured debt like a mortgage, range around the six to eight per cent mark. With mortgage rates being much lower than that, instead of paying things off more quickly, people see this as an opportunity to consolidate their other loans and credit debt. The prospect of consolidation doesn’t bother them as much as it might normally, because the debt is relatively cheap to carry. Consolidating debt is a band-aid solution. It might save you money or relieve pressure for a time, but it won’t solve the underlying problem. Let me explain: Oftentimes, debt is a symptom, not the root cause of your money troubles. There are many reasons why indebtedness occurs […]

Adult Children and Money: Not Too Old to Learn New Tricks

It feels rewarding to help your children. When your adult children ask for help, they can, no doubt, be difficult to refuse. It might seem natural that you would or should help them reach certain financial goals, but when they approach you for money, you need to be careful. Obviously, every child and every situation is different: When your normally responsible child comes to you for help, if you are in the right financial position and you and your spouse are in agreement, it can turn out to be a very positive thing. When a not-yet-responsible child comes asking for money to get them out of a tight spot though, you might want to take some time to decide if it’s a good idea. To illustrate this point, I have a client story that I would like to share. A while ago we were approached by a mother and father who were concerned about their adult child, Carolina. They were mystified about her spending, and thought the smartest thing to do was to seek professional help. Carolina was in her 20’s. She was a mature student with a spending habit that, all told, was costing her parents over $45,000 a […]

This Thing Called Normal

I was told recently about a successful lawyer who wanted to write a book called Broke on Any Budget. He selected this title because, he was broke as a law student; broke as a junior lawyer, and even after he made partner in his law firm, he was still broke. As our careers advance, so does our income. Sadly, we often don’t see the same ‘advancement’ in our savings. There are many different reasons for this, but I would like to focus on one you might not have heard of before: It’s called Entitlement Spending. We all feel entitled to a normal standard of living. Many of us feel that normal clothes, a normal house, and a normal mode of transportation is our right. The question to ask, though, is what does normal mean to you? A normal lifestyle for someone who has just entered the workforce, earning $40,000 a year, isn’t the same normal lifestyle an established person earning $175,000 a year would expect, and vice versa. Their views and expectations will be different whether we talk about housing, vacations or even just dining out. As our income increases, we inevitably spend more money in order to match our […]

Blame Someone Else Day

According to Yahoo News, the first Friday the 13th of each year is officially “Blame Someone Else Day.” First started by Anne Moeller of Clio, Michigan in 1982, it’s said that Anne’s alarm clock did not go off, and she overslept. As a result, she was late for appointments all day long and spent the day spreading blame and making excuses for being late. A lot of people have the same attitude about money. It might be tempting to blame circumstances or other people, but passing the buck never fixed anyone’s problems, especially when it comes to money troubles or personal finance. When many clients first see us, they are initially quick to blame others for their own financial quandaries: They blame the banks, the credit card companies, sales people, shopping malls and often say “not having enough time to be on top of it,” is why they have financial difficulties. Worse, blame distracts us from finding the real cause of our problems. In order to get to the bottom of financial anxiety, we need to point the finger at ourselves and take full responsibility for our actions. Only by doing this can you begin to fix your own financial […]

The “Shopaholic” Spouse

Money may not be the root of all evil, but overspending can cause a whole lot of disagreement in a marriage. It’s assumed and fair to say that the less money a couple makes, the more arguments there are likely to be. If there is shopaholic in the relationship though, even top earning couples will fight about money.

Exercises for financial discipline

There are a lot of commercials out there which attempt to position certain products and services as a substitute for discipline. Offering “fast and easy” solutions, companies will wrap your debt into a line of credit, negotiate a lower balance on your credit cards for you and help to reduce your payments.

Put off procrastinating (You’ll be glad you did)

We all know that procrastination makes us feel guilty, stressed out, and frustrated. The vast majority of us also believe that having enough to live comfortably during retirement is of paramount importance. So why do we torture ourselves and put off the important things that will help us achieve financial freedom?

Be Decisive or Beware!

It’s one thing to save for your retirement. Saving the right amount is another thing altogether. There isn’t a worse feeling than getting to retirement and knowing that you don’t have enough.

What’s in a Goal?

We are taught that goal-setting is a prerequisite for achievement. But how do you know that you will be happy once you achieve your the goals you have set for yourself and your family?