Bridging The Gaap

As you may have inferred from my last post, November has been a little rough for me. I caught the cold from hell, and along the way I lost one of my best pals: the family pet, our little white dumbo rat, Roo.

My pain is your gain though, because it got me thinking about three very important subjects that go hand in hand: life, death, and money. When you’re recovering, sick, dying, or when you’ve just lost a family member, the last thing anybody wants to think about is money. In times of crisis you want to have less financial stress, not more.

There are three things you absolutely must have in order to give you and your family financial peace of mind in times of crisis:

1. A proper emergency fund
2. A living will
3. A legal will

1) A Proper Emergency Fund

A well-stocked emergency fund can be a great help in times of crisis. Having little money set aside for times when you may not be able to work will help alleviate a great amount of stress on your family. Many people during their lifetimes will need to take a break from work due to illness or other stressful factors, and planning to have a well-stocked emergency fund may allow you to take the time off that you need to get better. If you or a member of your family needs take time off from work your emergency fund will be there to help alleviate some financial burdens. You can also add your emergency fund with a little bit more money to help cover unexpected funeral or medical costs in the future.

Conventional thinking says to have 3 to 6 months total living expenses in an easily accessible bank account at all times, but as you’ll see in BTG Explains: What Is An Emergency Fund? I advocate adding a little bit more money just in case, after all in times of crisis you can never have too much money!

2) A Living Will

As I mentioned before, we recently lost our much beloved pet rat Roo. As happens to many rats as they reach old age (they live for two years, and Roo was two years and four months…) they can suffer from degenerative illnesses, and in poor Roo’s case this meant a degenerative neuralgia, which robbed him of the use of his limbs. The question of whether or not to mercifully euthanized him came up several times in the past few months, and though I believe that we made the right decision at the right time, when we thought he was ready to go, one of the hardest things to deal with was the fact that we could never know for certain what his wishes were.

Would your family know what your wishes were, if something were to happen to you and you couldn’t communicate? One of the best ways to make sure that your wishes are known and that they legally will be carried out is to make sure that you have a living will.

A living will is different from a regular will. Wills deals with how your estate will be taken care of after you die, a living will deals with how you will be taken care of before you die, if you are unable to make those decisions for yourself. Living wills are something that everybody should be thinking at all stages of life. For example, in my case, I am young and have no dependents, and I decided not to create a will just yet (though this will change as my life’s situation does).

But being young and having no dependents doesn’t stop me from being hit by a bus tomorrow, or having a stroke, or having some sort of freak accident that would leave me incapacitated and incapable of making decisions about my own care. A living will is a legal document that makes all of you wishes known, and designates someone to make see that your wishes are granted.

This is a topic that I feel is so important that it will be dedicating an entire article to living wills. Stay tuned for BTG Explains: What Is A Living Will? / How Do I Get A Living Will? appearing Wednesday Npvember 19th, in which I’ll discuss the definition of a living will, what kind of information and personal wishes they include, and, most importantly, how to make one.

3) A Legal Will

As stated above, wills differ from legal wills: a legal will deals with personal care decisions before you die, while wills deal with personal financial and estate decisions after you die.

The death of a loved one is hard enough without throwing money and inheritance into the mix, and having your financial and estate wishes known and legally documented by your will can help your loved ones of what a lot of extra stress in an already stressful time for them.

Wills can help alleviate stress by detailing exactly who gets what and when. Wills are complex topic on their own so for now it’s just enough to know that you should have one if your life situation calls for it, and most probably, it does. I’ll be discussing wills and further details in next Wednesday November 26th’s,  BTG Explains: What is a will? / How Do I Make A Legal Will?

Now It’s Your Turn!

Have you ever experienced a time of crisis in which one of these three things has helped alleviate some of the stress? What advice would you give to others in a stressful life/death/illness situation?

Two of the four horsemen have come visiting my household as of late, so I’m taking a few personal days, and returning with updates on the 17th of November, 2008.

In the meantime, why not check out some of these excellent and popular BTG articles? 

• Check out our extremely popular “Where’s My Money” free Excel Budget Template!
• BTG Explains: What Is A Debit Card is a must read, and will explain how to keep your money safe and out of the hands of scammers!
• What Is The Credit Crisis? is a succinct four part overview of our current economic woes. 
• Can you afford to have children? Compare The Cost Of Birth Control Versus The Cost Of Raising A Child!
• Do you routinely buy things to make yourself feel better? You may suffer from an I Deserve Mentality: Learn How To Recognize And Modify Harmful Spending Behaviours!

Well, it’s been an interesting week here at BTG, with the continuance of some of our popular “BTG Explains” articles, two of which have been featured in the carnivals below:

• BTG Explains: What Is A Credit Card Cash Advance?  can be found under “Credit And Debt” at the  Carnival of Personal Finance hosted by Sound Money Matters
• BTG Explains: The Compound Interest Formula can be found under the “Income” section of the Carnival of Financial Planning, hosted by The Skilled Investor.

www.slice.ca

Youtube Video Tutorial Coming Soon!

What’s it all about?

Slice.ca is the online home of Slice, a Canadian television network, which offers full episodes of some of their more popular programs. Of these “Til Debt Do Us Part”, hosted by personable yet no nonsense Gaily Vaz-Oxlade, is the most useful for our purposes. A self-proclaimed “money maven”, Gail has written extensively on the subject of finance and debt (you can find out more about here on her official website) and maintains a helpful blog.

Every episode sees Gail attend to a different couple or family, some of whom are worse off than others, all of whom are in crisis due to their mounting debt problems. The episode details how each couple became so indebted, and how they can get out of their current situation. Through a variety of challenges (it is a reality show after all) Gail gives them the chance to win up to 5000$ to go towards paying down their debt.

What attracted me to the site

I like the show for a number of reasons, but here are two that stand out:

1) Anything debt related can serve as a cautionary tale to the viewer; I see the families that participate in the show as performing a valuable service by detailing exactly how NOT to comport one’s self financially. Sometimes the best way to know what to do is to be given examples of what not to do.

2) The show appeals to the viewer’s voyeuristic nature, as these families are literally exposed for the entire world to see. I don’t think that’s a bad thing: in the westernized Canadian culture, money is still a very taboo subject. We simply do not talk frankly and openly enough about it, which leads to unfortunate and troublesome gaps in people’s knowledge and handling of their own day to day financial affairs. A great deal of what I have learned comes simply from this exposure - I now know what an average salary is, how damaging Payday loans can be, the psychology of debt and spending, and so on.

Lessons to be taken from the site:

Along the way, both participants in and viewers of the show learn some pretty incredible (and sometimes frightening) things. For example: some common recurring themes in the analysis of how the family became so deeply indebted include unnecessary bank fees (perhaps the most surprising to the uninitiated), horrendous and unaccounted spending, and the terror of Payday loans.

The Final Word:

My recommendation is to watch every single episode available, though you should probably try to spread your viewing out if you are finding it repetitive. These are however, exactly the kinds of warnings and lessons that should be repeated until they become second nature to the viewer.

It is worth mentioning that this show inspired me to create the BTG’s “Where’s My Money?” Excel Budget Template to more easily help people track their monthly expenditures.

www.dollarbuydollar.com

What’s it all about?

Through his blog, Dollar Buy Dollar, “Fellows” depicts much of his day to day life trying to pay back his not insignificant debts. As most of his debt is credit card debt, the majority of interactions in attempting to repay are with with credit card companies and their associated legal departments. Though not intended as professional advice, such information is extremely helpful to both those in debt and those who are not.

For those who are currently in debt, the information in many of Fellows’ posts may help you work with the credit companies to help you pay back your debt (yes, they WILL work with you…sometimes). For those not currently in debt, it never hurts to know a little bit more about how these companies work, and how you can avoid trouble with them.

What attracted me to the site

This was the first blog I ever saw about debt repayment, after having seen a report on it on CNN.

Reading Dollar Buy Dollar also has a more therapeutic edge to it; if you are in debt, or at risk of becoming in debt, and feel alone in your experiences, reading Dollar Buy Dollar may help give the sense that one is not alone, as Fellows is reporting literally from the frontlines of debt repayment. For a good example, check out this post.

Lessons to be taken from the site:

As with any debt blog, Dollar Buy Dollar also serves as a cautionary tale. One of the most pertinent lessons I have taken away from the site is the story of HOW Fellows became so deeply indebted.

Turns out, it’s practically all credit card debt, one of the worst kind you can have (second only to payday loans, likely). Fellows’ credit card woes began in college, and continued into his twenties where “credit started to become a ‘lifestyle’”. For more information read this post on Dollar Buy Dollar.

An expensive marriage and a return to school without a return to the student lifestyle also contributed to a total of about 70,000$ of debt before fellows began paying it off.

The Final Word:

I like Dollar Buy Dollar, I like Fellows, and better yet, I like that he has learned form his mistakes, and in so learning, is helping people learn about their finances in his own way.

www.debtkid.com

What’s it all about?

You know how when you’re down on your finances, you can always put it into perspective by reminding yourself that out there, somewhere, someone else is probably worse off than you are?

Debtkid is that person.

Here’s the lowdown, straight form Debtkid himself:

“I’m 300K in debt. Gulp. I’m 24 and day traded away a fortune. Now I’m trying to crawl back to zero.”

And that’s AFTER the bankruptcy!

There are several pages on his blog describing his story and they each detail a different aspect of his story. This page is probably the most useful one in terms of offering a complete picture of Debtkid’s situation.

What attracted me to the site

There are actually two reasons I like and continue to read debtkid.com:

1) Debtkid’s is a great story, and very well told. I like his story because the astute reader will very quickly learn from Debtkid’s mistakes and hopefully avoid some mistakes of their own. In addition to his personal chronicles, DebtKid.com also offers some information about short selling homes, credit reports, and bankruptcy, pretty much from the author’s own experiences (they therefore should not be taken as professional advice). DebtKid is also usually a good read to boot, and pretty entertaining at times.

2) The second reason I like this blog is that I simply like DebtKid. Here’s a guy who has made a monumental mistake, and has paid dearly for it but darn it if he’s not going to make it right. I find this admirable: how many times over the years have there been reports of absolutely callous business entities which have complete disregard for their investors/shareholders/employees/people in general?

Lessons to be taken from the site:

Debtkid.com serves as a great cautionary tale for us young up and coming investors out there (albeit an extreme one, though one wonders how rare this kind of occurrence really is…). I firmly believe that every young investor should keep DebtKid and his harrowing investment tale in mind, if only to remind themselves that it is ok to stop and ask for help BEFORE you get in over your head (and certainly after).

Another lesson we can take from Debtkid is that even if you make a mistake, do everything in your power to make things right. For Debtkid, this means living what is a very uncomfortable existence, both emotionally and financially. Living in his office, eating for as little as you can, and having to seriously debate with yourself and others whether or not replacing your old, groady mattress is an investment (yes, I have left a comment on that one!).

The Final Word:

Say what you want about Debtkid; yes he made a mistake, and a bad one at that, but at the very least this debt kid is trying to be a man. And that’s a chronicle I think we can all agree is worth following.

I was checking my google analytics account yesterday, checking my traffic sources from specific keywords, when I found this:

Man that makes me smile! I don’t know who this Sarah Leblanc is that goes to Harvard (though I’m sure she’s awesome), but thank you to whomever clicked on my humble blog link when it popped up.

Maybe I’ll get there one day, but for now I am very happy where I am. Also, I’m pretty much already reading everything the Harvard Business Press puts out, so one wonders if I’m not inadvertently getting a Harvard education after all…

BTG will be getting a facelift shortly: a whole new website layout!

Watch for it coming late June 2008!

WooHoo!

Well, it’s been 5 weeks in the making, but after a ton of sweat and perseverance, BTGNOW.NET is now LIVE!

You can, of course, check it out here!

We’ve got tons of stuff up there already. Might I suggest starting with a book review? I made sure to upload reviews of some of the major books in the field for the launch. You should definately check out our review of The Wealthy Barber and The Automatic Millionaire. I recently purchased new copies of these as a gift for a recent graduate.

Or, maybe you’d like to know a little bit more about the site. Why not read our Statement of Core Values?

As always, remember that in order to succeed in our goal of spreading high quality financial information and education, WE NEED YOUR HELP!

Specifically, we need your comments, your thoughts, your opinions on our articles and reviews. Otherwise, how do we know if we’re acheiving our goal?

This post is a response to debtkid.com’s blog post: “What I’d Tell My 18-Year Old Self”

I have always tried to live my life such that I was ashamed of, and regretted nothing.

It’s gone very well thus far.

But because this is a blog about finance, aimed at this particular demographic, I will admit something.

Between the ages of, I think 16 and 18, I made $14.16 an hour working at the best summer camp EVER. For six weeks of camp, that’s a little over $3000 a summer.

And I blew it all.

Actually, I gave away a lot of it via christmas presents and charitable donations.

My only regret is that I didn’t invest some (or ALL) of it for the long term. It’s another couple of years of compounding that I could have used, not to mention I’d be almost $6000 dollars richer.

So my advice to all after their first real job: save some of your money. Live life for today, but plan for tomorrow as well. There are tons of ways to make saving and investing easy, even automatic. There are some really great books on the subject that I’ve reviewed over at BridgingTheGaap.net

As as the post below states, the more responsible you are with your money, the more irresponsible you can be with what’s left.

What would you tell your younger self? Post a comment here or head on over to debtkid.com