Monday, May 14, 2018

My story of financial literacy


As I was following a news feed from inside the company I came across a post from one of our Executives who regularly writes very compelling blog posts

This one in particular inspired me to share my own story of financial literacy. Hopefully you will find some inspiration too.

I need to start by acknowledging my privilege. I've been privileged to have the right examples from my parents and the right education to be able to make the right decisions. They worked very hard on their professional jobs to give me and my siblings a good middle class life. 

From my parents, one of the most important lessons I learned was budgeting, spending within your means and to put value above price.

Every month, my parents would sit at the dinner table and take out the budget notebook, my mom would take out all the bills, and would start reading them to my dad, water, electricity, taxes, school, school trip, school uniforms, car payments, etc. My dad would write it down and add things up. Every now and then, expenses would be higher than the income and they would discuss how to borrow from the savings and how to repay it. Rule #1 credit card was paid in full monthly. Open discussion, we would know when money was tight.

There was one "exception" to the budget. My dad would reimburse us ANY money we used for books, ANY kind of books.

When it was time to buy clothes, my mom would always say: Better good quality even if it is more expensive, cheap clothes will look nice one day but soon they will look bad and you'll need to replace them. Good quality will show for longer and you won't need to replace as fast. She learned that from my grand mother.

Every week we would go to the market and every two weeks to the supermarket. We knew the cost of each thing and, bonus, each could choose the food for one of the days of the week (family of 6).

Needless to say, my parents aren't rich but they retired without any money problems.

Now the second part

My adult life didn't exactly start lined up for financial success. By 23 I was married, had two sons and my wife (now ex) didn't work and didn't know the value of money. She would call me stingy even when we never had any money for savings. However, I refused to break rule #1: Pay the credit card in full. I had a great job and made relatively good money, and bought our own apartment, but I worked 16 hours a day and I didn’t have any savings at the end of the month.

The money I put in the apartment was like a savings account when we wanted to move to Canada.

We separated after coming to Canada and the children lived with me. We started going to the groceries and market together, we had a contest to figure out the real cost/value of what we bought: Is the 500 ml can for $2 cheaper than the 1 Lt for $3.50. Is the brand name really better than the no name for 1/2 the price. Sometimes the answer was "no" and we would buy the brand name. We would cook at home and actually price our dinner. It wasn't unusual to have a great dinner for $2 each. They were 6 and 7 at the time. Good practice of math too!

As soon as they were 15 they started working. And at that age, they wanted to dress well. My take was: your work money is yours to do as you please and if you want expensive clothes, you buy them. Now that it was their money, they spent it wisely.

As they started growing up, they started paying for more of their expenses. Gradually, planned.  When they wanted to use the car, they paid for the gas. If they wanted to travel with friends, they would save, and so on.

When it was time for university, they both chose local schools. One of them decided to experience residence life and he paid for it. When he saw how expensive it was, he came back home.

As soon as they were old enough, I advised them to get a credit card and pay it in full every month. It would give them convenience, but most importantly, a clear record about what they spent their money on and a credit history. They haven't missed a payment since.

When they started getting a surplus from their income, I advised them to open a TFSA and do their own risk tolerance assessment. They saw the money go down with the recession and I encouraged them to hold it. Thankfully it bounced back.

When my Amex would give me a 0% interest of 6 months, I would show them the effect of paying my line of credit with the Amex and then after 6 months paying the Amex with the savings throughout those 6 months. Sometimes the difference between doing that and paying down the line of credit right away from the investments, would be hundreds of dollars of "free" money. But I also showed what would be the effect of not paying down the Amex after 6 months: hundreds of wasted dollars.

And it all brings us to today:
The older one finished school and went on a two years specialty, I still paid school but he paid all his other expenses. When he finished, he was able to take an unpaid Internship exactly where he wanted and he was able to survive out of savings (no debt) for 6 months in Toronto! That internship allowed him to eventually get a job he really likes. Now he has a good job, good credit, no debt and some investments. He is 27.

The other one decided to continue working and traveling for a year, after university. But now he is in Sint Maarten, studying medicine. While I am the guarantor of his professional studies loan, he is taking full ownership of the debt and of course, his own credit history helped him get the loan. Not only that, but he has his own financial cushion to cover his own expenses for at least a year if need be.

My life lessons are:
1# Don't acquire debt that won't pay for its own but mainly that you can't pay if things go south. A mortgage: may be good debt (If you don't overextend yourself). Line of credit to finance a good investment opportunity: may be good debt (if you can pay the debt even if the investment fails). Credit card debt to pay for a vacation: Bad debt.
#2 Value and price are not the same thing. Lower price is not always better but also, higher price is not always better value. Evaluate each time.
#3 Your partner should share the same financial values as you. One bad partner can ruin your finances and your future
#4 Children need to hear when money is tight and what sacrifices you need to do to solve it. Eventually, they will need to solve it on their own and they must know that some sacrifices are necessary
#5 Children need to learn to manage their own money gradually. They shouldn't feel there is a safety net even if there is one
#6 Children need to learn to learn how interest works to their advantage or to their disadvantage.

Financial literacy is learned:
If you have the privilege of knowing how to manage your money, don't be selfish and talk to your children about it.
If you didn't have the privilege of a good example at home, reach out to other people or organizations which can show you some of those lessons. Don't leave it to chance.

Wednesday, January 25, 2017

My sad prediction about Trump's presidency

I will risk making a prediction. A sad one by the way. I think I figured out Trump's strategy: He will sign executive orders related to his 4 or 5 campaign talking points. He will then sit back and spend the rest of his term fighting all the challenges to those executive orders and saying "I am doing the right thing and see all those elites fighting me".

He will control the narrative and get the public opinion of the "little guy" on his side. He does not need to demonstrate or achieve anything substantial on the economic front. Just saying that there is no progress because he is being blocked will rally the troupes to give him another 4 years.

What he will achieve is increase the anti-minorities sentiment and that will be his true legacy.

Wednesday, October 21, 2015

What is your worth?

The other day my nephew twitted the following thought:
"I have the potential to be one of those great professors that complain that their peers earn much more"
That made me think that, if at his age I knew what I know now I'd be making at least twice what I'm making now and if I didn't know what I know now, I'd be making at most half.
This post is for Diego.
First some definitions (maybe not the academic ones)
  • Value: The intrinsic value
  • Worth: The economic value
  • Price/Earnings: The actual amount of money received in exchange.
Your value
One of the things I know now (or believe) is that, in human terms we are all equivalent and what we earn or what we are worth does not change that value. 
Your worth
We are "economic products" with an economic worth. How much you know, contribute, produce, help, etc. With your talent and intelligence you have the potential to have a high worth. Keep cultivating it.
Your earnings
Your earnings will rarely reflect your worth.  But who sets the price? Look at examples around you and you'll see the answer: Some people let others establish their price, some set their own. That's how two to products (people) with the same worth (knowledge and ability) can have very different prices.
An extreme example: A pet rock was $4 while the same rock from a quarry was a fraction of a cent. The difference? The presentation (packaging and marketing)
Look around again and you'll see many "pet rock" people. 
I am not advocating for you to be a "pet rock" as people eventually realizes what your actual worth is. It is really up to you to decide if you want someone to undervalue your worth, to fight to have earnings commensurate to your worth Or to increase your perceived worth and increase your earnings. This same worth, same effort, very different results.
Your potential
Regarding that last point: It seems to be human nature to desire things with a higher perceived worth. An expensive restaurant won't necessarily be more nutritious than a small restaurant run out of someone's garage, however expensive restaurants are always packed. They package themselves in style, presentation, service, popularity, etc.
This is, if you project a high worth, people will perceive you have a higher worth and will pay accordingly!! Crazy, right? The more your charge the more desirable you become.

Bottom line: It all comes down to confidence, self esteem and your ability to project that worth. I started working on that late in life. You have a chance to start working on it right now, if that's what you want.

Monday, June 16, 2014

Canadian democracy works

Every time there is an election or there are news about an elected representative you can just expect the bickering and name calling.

"Harper is a $@%& and ruined Canada", "The Liberals are corrupt and have ruined Ontario", etc.
Well, Harper hasn't ruined Canada, the Liberals didn't ruined Canada and haven't ruined Ontario and the NDP hasn't either.

 I may dislike some policies but I think politicians are trying to do the right thing, even though we may differ on the means. I hope the federal election comes soon and we can have a change, but let's stop the partisanship bickering. We all want a better Canada, calling people names won't make it better.

Representatives get elected. I may disagree with the lack of proportional representation but even that was put to a ballot and it didn't pass. Which means that even the fact that you can have a majority without a majority of popular vote was a democratic decision.

 A democracy is resilient. People may make mistakes and things may go bad some times; but we have the power to have alternation . If you think Canada is ruined, then do something to fix it or go somewhere else. When I thought the country I came from was ruined, I left, and came to a place where I feel I can do something about it.

Tuesday, May 20, 2014

Google glass potential

Back in 2006 I wrote a post titled The next revolution. I got reminded of it while reading WIRED's critique of Google Glass pointing out that it is not useful enough (yet)

In summary : Not cool enough for non geeks and not good enough for geeks.

While I concur with that assessment, I still see huge potential. Like the Apple "Newton", the Google Glass is probably ahead of the curve, both the technological and social

The more I think of it, the more I see it integrated with the car controls. With product location and pricing at stores. meta content on movies and TV programs.

I don't know how long it will take to be a reality but as I pointed out on my original post, 20 years does not seem to be that far these days.


Saturday, November 23, 2013

Does Linux have too many versions?

Today I was reading a response to a SuSE 3.1 review. The responder commented on how "Linux" has too many versions that work differently and that they should all amalgamate.

That made me reflect on one of the main difficulties of explaining GNU/Linux based operating systems: We (Free software advocates) haven't been able to properly explain that "Linux" is not an operating system, It is the kernel that drives many operating systems, most based on the GNU operating system.

When people say "Linux has many versions" it shows that even people that use one of them don't fully understand that they are talking about many different operating systems. Some more experimental, some more free (as in freedom), some more stable, some more mass market appealing.
  • SuSE falls in the later categories, stable and mass market appealing as it includes many proprietary extensions
  • Debian is more experimental and more free (as in freedom) 
  • Mint is in between both.
  •  gNewSense is mean to be totally free or proprietary extensions.

"Development teams" for the different operating systems are mainly responsible for the packaging and polishing the configuration. That's why the packaging and configuration tools tend to be different. But for the most part they all follow the same standards and moving from one to the other is not a difficult task.

If you are new to Free software, just try a few of them. Stick to one you like. After a while, you will be able to do things in any of them with little difficulty.

If you are a seasoned Free software user, I ask that, when speaking to other people, you to use the name of the operating system (Distribution) you are using and maybe "which is a GNU/linux based operating system".

This may help new users understand how they don't have fragmentation, they have options.

Tuesday, June 21, 2011

LulzSec, Hacking and other crimes

If you don't know it by now, LulzSec is a group that took unto themselves to uncover security flaws at several companies and organizations.

http://en.wikipedia.org/wiki/LulzSec

Hacking into other peoples data/property is illegal whether they misuse that data or not. But so is the negligence shown by the companies caught with their guard down.

Nobody but me should care if I leave my home unlocked but even if I do it is still illegal for someone to enter without permission. That's my home and my risk.

That's not the same if someone entrusts me with their property. In that case I become responsible for that property and I must make sure it is well secured. If something happens to that property I am on the hook.

In the LulzSec case, it seems that the authorities are only interested in the people that hacked the data, not on the people that didn't secure it properly.

If in fact LulzSec did not misuse the information, I'd say that the companies that didn't secure it properly are even guiltier as they are exposing OUR data to someone else that may misuse it.

Both are wrong, Both should be held accountable but it seems that authorities think that the real problem was the messenger, not the message.