Debt Is A Risk

The reason why business owners keep the profit is because they shoulder the risk of the company. If the company fails the owner has much more to loose than what an employee would loose (his job).

We could argue, however, that employees take on additional risk, without any potential profit, via personal debt. When they loose a job they also can loose much as they won't be able to repay their loans.

As an employee, it's important to be mindful of the sort of debt you decide to take on as it will need to be repaid. If you're not a business owner then don't take on the risk of owning one.

Pay Yourself First?

The origin of "Pay yourself first" is perhaps the most important lesson from the "The Richest Man in Babylon" book by George S. Clason.  The novel, with lessons on finances, takes place in Babylon where working class individuals are inquiring to their wealthy friends on how to become wealthy. One said advice was to "pay yourself first".

What does it mean?

It doesn't mean spending money on yourself but to save it for your future self. According to the book, we ought to put aside 10% of money earned on our future self. Once we've accumulated enough, then we can use some of that money for investing - only investing the money we can afford to loose.

A friend of mine spends all her money because "she doesn't know how long she has to live" and was using that as an excuse. Her philosophy isn't wrong but it's not uncommon for people today to live well into their 80s.

"You can be young without money, but you can't be old without it" 

-Tennessee Williams

Today, not only are people not saving (sometimes they can't) they borrow from their future selves instead - putting themselves in a situation they can't get out of. 

How you live is up to you but I would encourage you to find ways to save money. You'll sleep better at night with a nest egg than without one.

Savings Could Be The Plan

“Why should God bring an opportunity your way if you are not in a position to take advantage of it? If you were God, to whom would you give opportunities? Wishful thinkers? Dreamers? Or planners?”
-Andy Stanley

If you don't have a plan for your life then being able to save money may open opportunities you otherwise wouldn't of had.

Years ago, I moved to a new city and the word on the street was that the local I.T. company had been sold. Before signing the papers, the owner had given his employees the opportunity to buy shares of the company - many became overnight millionaires in the deal.
I always wondered what happened to those that weren't able to take advantage of the opportunity... 

While life is short, and we only have the one, we ought to save part of what we earn. If an opportunity ever present itself then we'll be ready.

How Much Is Working Costing You

One of the great annoyances of careers is that we often have to move to where the work is and work isn't always in areas where we want to live in. In Canada, those living on the East coast would either work for some time, or move, "out West". While there's nothing wrong with Canada's West Coast, those that move are leaving behind family and friends.

Additionally, a career requires expenses such as:

• Training
• Nourishment
• Transportation
• Child care
• ...

Some cost aren't monetary: 

• Mental/Physical Health
• Relationships
• Life
• ...

The cost of employment can be quite high. One has to wonder whether there's a purpose to it other than to fund a retirement? It's been said that if you "love what you do you'll never work a day of your life" but even if you love what you do there's still a cost to it. Is the quote suggesting that love makes the cost worth it?

Why The Secrecy?

"I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of congress are ineligible for reelection."

-Warren Buffet

When it comes to personal finances, the government has taken steps to dirty the waters. While we do have access to all the information we need, it's not easily understood nor focused on by the general population. Some areas of concerns are:

• Income tax used to be taken from people's paycheque AFTER the employee had received them. This allowed the person to see first hand how much the government was removing but it created an uproar which is why now income taxes are taken BEFORE the employee receives his paycheque - many don't even notice it.
• Inflation, at 2%/year on average, is a hidden tax on citizens' savings. While it's shared, the impact of it isn't clearly understood.
• While we know our country is in debt how we got there isn't that clear. Repaying the debt doesn't seem to be a priority.
• Currencies not based on the gold standard. What is the currency even based on now if not on something as tangible as the amount of Gold a country as?

While we haven't actually seen a tax raise in years all the above items are negatively impacting our finances in ways that are not easily understood. The information is available but the responsibility of connecting the dots has been given to the citizens knowing full well that most won't bother which allows the government to do as they please.

How many people could retire if half of their paycheque wasn't going to the Government? What's the point of saving money if it looses value every year at a rate of 2%? These are some of the frustrations from learning about these hidden, not so hidden, concepts impacting our finances.

You've Got To Find Ways To Save Money

"You've got to be old with money because to be old without it is just too awful... you can't be old and without it."

-Tennessee Williams

While its been said that if you do something that you love you'll never work a day of your life you can't do what you love if what you love doesn't generate enough money. You either need to find a way to make your passion profitable or find something else to do that will pay your bills. 

There's nothing wrong with doing something that you don't necessarily love, to pay the bills, and then make a side business of your passion until such time it becomes profitable. 

Working without the ability to save part of the income earned means that you're surrendering your life to production. Those that have enough income, and don't save, are not better off than those that can't save.

We also need to keep in mind that life is unpredictable and can get in the way of the best financial plans just as much as the worse ones. There are no full proof plans but you'll always be better off with some savings as money will give you options that you wouldn't otherwise have.

The Invisible Economic Influence

The Star Wars prequels were about the pointlessness of the Clone Wars as both side were being controlled by the same entity. Sheev Palpatine had place himself at the head of both sides of the conflict for the purpose of gaining more power... 

A decade before the release of the Star Wars prequels, the Americans were still fighting a war against the Soviet Unions. The Cold War was funded, on both sides, by a web of financial institutions. Those institutions ended up being the true winner of the war as they benefitted regardless of how the war ended.

During his military career (1898-1931), Major General Smedley Darlington Butler said "I wouldn't go to war again as I have done to protect some lousy investment of the bankers. There are only two things we should fight for. One is the defense of our homes, and the other is the Bill of Rights. War for any other reason is simply a racket."

We're within a financial system that, while invisible, is influencing our lives... The below are books that helped me understand this system:

• "1913" book by Oliver DeMille explains what happened in 1913 that helped give more power to the financial system.
• "The Financial Matrix" book by Orrin Woodward gives the name "Financial Matrix" to this financial entity that is all around us. The book explains what "it" is as well as how to navigate within it.
• "Insidious: The Rise of the Financial Matrix and the fall of Economic Freedom" book by Orrin Woodward is a follow-up to his earlier work above and exposes the entirety of the scheme and proposes a solution.

Finance is too important of a subject to be ignored. The better the information we have, the better the decision we can make.

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold."

-Alan Greenspan

Wars are Costly

"who wishes to fight must first count the cost."

-Sun Tzu

If WW3 were to start tomorrow, the U.S. would start the war with a 96 TRILLION dollar debt. While they certainly would stop the payments of that debt and freeze everyone's assets, for the duration of the war, sooner rather than later the debt will become a problem for their economy.

"There is no instance of a country having benefited from a prolonged warfare."

-Sun Tzu

America's biggest weakness, and most exploitable by a possible enemy, is its economy. They can't afford to partake in prolonged wars. Whether they win or loose doesn't really change the fact that they're unlikely to recover, financially, from it. Maybe there's solace in thinking that every country is also facing similar situations.

My dad used to tell me how, after WW2, people were using government provided tickets to "purchase" food. You couldn't buy more and it was usually not enough to feed the entire family on its own (luckily they had a farm).
Following the next major war, it's very likely that a similar system will be implemented and I suspect it will be increasingly difficult for Countries to get back onto the same monetary system considering the sheer amount of debt tied to it.

The 45 Year Plan - Work Until You Die

The employee career path isn't designed to make anyone wealthy - it's designed to get us to work until we die. If we succumb to the marketing pressures, it's even less likely that we'll reach retirement with significant savings.

To break free of this "rat race" cycle, one must first take notice of it and then have the financial discipline necessary to, eventually, not require to actively partake in it. Sometimes, this means that we must forgo buying things in the immediate moment for future gains. Things, such as, streaming services, gaming services, internet, excessive hobbies, cars... could be destroying our future financial situation. It's important to identify the things that are holding us back and removing them from our lives.

We need to find ways to be less of a consumer and more of a producer keeping in mind that in a society based on consumerism, it's easier to be a consumer than a producer.

"Comfort is the worse addiction."

-Marcus Aurelius

The 45 year plan...

If you have no plans for your life then you're on, what is commonly referred to as, the 45 year plan. You start working in your early 20s, get a few pay increases until you're in your 30s where you plateau until you reach the retirement age of 65 (that may change) where you'll retire with a third of the money you barely could live off of while you were working. 

If that doesn't sound like a good plan then to you spend some time thinking about how you want your life to unfold and act accordingly, Keep in mind the following:

• You need a goal and to follow-through on them.
• Be mindful of the sort of debt you decide to take on. Getting a loan for a 4wheeler isn't the same as getting a loan for a house. 
• Have a budget that include contributions to saving/investment accounts.
• You partner must also be on board with the change. If you start saving, and your partner is spending... then it's not going to work.
• To earn more, you have to become more. Invest in yourself through self-education. Spend some time reading, watching documentaries, listen to podcast... on a wide range of self-improvement subjects. 
• Exercise and eat good food. Be mindful of your body - if it's under too much stress then you won't be able to think clearly. A healthy mind/body is more productive.
• Expand your social circle to include people that have the results that you want in life. Your life is roughly the average of your 5 closets friends. If you want a better life then hangout with people with better results. Good associations can expose you to better opportunities.

The 45 year plan doesn't have to be the plan for your life. Make the decision to move away from it.

"You don't pick your destiny. You pick your habits that in turn pick your destiny." 

-Claude Hamilton

Profiting from Education & Housing is Weird

40 years ago, it was possible to land a good job with nothing but a high school education. Nowadays, a high school diploma gives you a minimum wage job. Even without considering inflation, the current educational system is a bad deal.

40 years ago, many companies offered on the job training. Now the responsibility falls on the individual to fund his own education. Sometimes, that education doesn't amount to anything.

Houses are simply no longer affordable...

I'm not going to say that education/housing are a human rights but making money off of someone's need for education/housing is odd. The only way for someone to make progress in the society that we've built is through proper education and housing yet we've locked that down behind a paywall constantly adjusted to an ever increasing inflation.

Can society really thrive in a situation like this? How many would be great doctors have chosen a more affordable path?

Should there be a cost to Education/Housing? Of course! Someone has to put that together and they deserve to be compensated for it. The problem isn't that there's a cost associated to education/housing - it's that the cost is too high and there's a need to profit from it.

Some people buy houses for the purpose of renting them out at a profit. What is the landlord adding in value to the renter or society as a whole? Is the landlord mowing the lawn really worth the 2x monthly fee paid for the house?

Owning renting properties is a legitimate step that many can take to reach financial freedom. The frustrating part is that not everyone can partake in this endeavor. The renter is, more often than not, forever stuck into the system - not able to get out of it because a chunk of his paycheck is going towards his house or to repay his education.

Act Poor – Be Rich

Associating objects with status is a sentiment most commonly associated with a society based on consumerism. We buy fancy jewelry, cars, clothes (...) as a way to show our wealth. 

Some brands appear fancy, as a way to appeal to the masses, without actually being that superior in any meaningful ways other than brand image. Many would consider Apple phones, for example, to be “premium/fancy” when in reality, from a technological stand point, it’s just an overpriced piece of technology. 

People buy into the status more so than the phone itself.

I will always remember when I first started working in my career. I was living in a new town, near a low income street, and could barely afford it. I had an old phone and kept meeting people, from those low income houses, that had the latest/greatest versions of these devices. The desire to appear financially successful is very much alive regardless of one’s income.

The issue with this mindset is that, by acting rich, we remain poor. The only way to be rich is to act poor. We need to live below, not beyond, our means – always.

Is Cryptocurrency the Information Age's Ponzi Scheme?

(Image created by A.I. DALL-E/Bing)

There's been people trying to get money off of other people for as long as money exist. In the industrial age, "Ponzi Scheme" came about to do just that and today it seems to have taken a new form namely: Cryptocurrency.

Is Cryptocurrency the information age's version of a Ponzi Scheme?

It's important note that not all door to door salesman are part of a Ponzi Scheme. It's very likely that not all cryptocurrencies are frauds however it does look like it's easy for it to be a fraud as people don't understand them enough. 

With FTX, one of the biggest cryptocurrencies exchange platform, going bankrupt after being found to be a fraud ... it's difficult to trust any of them. If one of the biggest one turned out to be a fraud then how likely are we to find other ones to be frauds?

The idea behind cryptocurrency is relatively simple: scarcity creates value. The value of these coins comes from them being limited. The key here, however, is that people must buy into it - if there's no trust there's no value. For Cryptocurrency NOT to be a fraud, it must exist for the right reason and not for the purpose of defrauding someone.

Is Cryptocurrency the information age's version of a Ponzi Scheme?

Ponzi Scheme was created in the industrial age for the purpose of defrauding people. Cryptocurrency was created in the information age but the purpose depends on the creator. Some turn out to be FTX while others are Bitcoins... some salesmen represent Ponzi Schemes while others don't.

Debt Should be Illegal

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It's illegal in Canada to own slaves but it's not illegal for financial institutions to own someone else's finances. The difference between a slave and someone in debt is that the person in debt has a "choice". However what choice is there really for someone making 30k a year when a decent house cost 3-5 times more? What choice does someone have when the average car is also 30k? What choice does someone have when the average college/university degree is 100k?

Debt is no longer a choice...

Maybe at one point debt was a choice but we it can't really be considered as one anymore. We don't realize how bad the economy is because part of it is covered up by debt and makes it look better on the surface than it actually is. As long as we can maintain the illusion then all is good right?

No - all is not good... When my dad was in his 20s, he bought a brand new car for 3k and a bag of chips was 5cents. He built a family home for roughly 45k...

Folks there's a problem here and the solution isn't to "raise minimum wage". Every middle class employee in the world needs to make payments on their government's debt. Can the Canadian Government really offer "free" Ambulance service when each Canadian ow roughly 60k towards the Government's debt?

We need cutbacks, we need a government that says "no", we need debt to be restricted or downright illegal... we'll never see something like this because political parties want to buy votes and you can't "buy" votes by removing something. 

Debt will never be made illegal because some people are making money off of it. Nobody owns slaves but who ever owns someone's debt can still exercise a degree of control over them.

What Would Be the Point of Money?

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Governments are discussing ways to provide basic income. They understand that they’ll eventually be a need for this as all things productive will be handed over to various automated technologies.
When that day comes, what will even be the point of holding onto a monetary system? If money serves as a way to determine the value someone brings to society then what would be the purpose of it when the responsibility for production, or value, is handed over to automation?

We based our entire civilization on a system designed to encourage people to produce. If people are no longer required to produce then there’s no point to the system.

Intellectually speaking, we’re not ready for a system that would provide us with an excessive amount of leisure as we need goals in order to thrive. Money has provided us with a sense of purpose to the point that we can’t even imagine a world that wouldn’t require it to purchase something. How can we possibly “own” something without first exchanging dollars for it? 

We would need to learn how to live in this new world which isn’t something easy to do when you consider that we’re creatures of habits and we’ve carried this habit for millennias. Eventually, however, the new system would become the new normal.

Future Contribution for Something Today

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There’s a need for everyone to contribute to society. This isn’t a choice as much as a responsibility placed upon ourselves at birth. The concept of money is rooted in this ideology but we’ve pushed things too far with the introduction of debt – paying later for something now.

While some debt may be necessary, we’ve made it too accessible to the point that it’s a problem both from the perspective of the individual as well as a nation. 

This can only get worse with time as debt is a lucrative business for banks. They created “credit scores” to determined how “risky” someone is with debt as well as debt packages that can be bought to make money off of.

If there’s money to be made with someone else’ debt then why wouldn’t they want more of it?

The “There’s good and bad debt” is wrong – all debts are bad. However, some debts are less bad than others. If you put yourself in debt to start your own business then we could argue that this isn’t as bad of a debt as buying a four-wheeler. If you buy yourself a house, we could argue that its better than to finance a vacation.

Ironically, the worse people to get in debt are those that don’t have money to begin with because if they fail to pay off that debt they may be loosing more than they bargained for. While banks are also not as willing to lend money to these people, for fear of not being able to get the money back, I would argue that they’ve been lending them money regardless as I know some people that have gone through a few bankruptcies and still seems to be able to get into debt. Perhaps those are the people that banks want to do business with most as they have an excuse to charge excessive fees and interests rates on these debts.

Debt is a form of slavery – avoid it as much as you can.

Why Aren't People Using RRSPs?

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RRSP is a type of saving accounts available to Canadians with the ability to gain tax break or money back, for each dollars put in it. The catch here, is you need to give that tax break money back depending on how much money you're making when you take it - the idea here is that you should only take that money out once you retire and have little other sources of income.

While few people save, a lot less seems to be putting money towards their RRSPs and that's a shame considering how much money you can get back from doing so. Why isn't there more people putting money towards their RRSPs?

• They may not have enough money to put towards RRSPs.
• Some are afraid that they may need the money prior to retirement and not have enough money to pay the tax break back.
• There's a lack of understanding of what an RRSP is.
• They file their own taxes and are afraid that RRSP would make things more complicated and they would make mistakes.
• They may be putting their money towards other endeavors for their retirement.

Whatever the case may be, you should put forth some effort in understanding RRSP in order to take advantage of the benefits it may bring to you. The strategy a friend of mine like to use is take whatever tax break money he gets from RRSP and put it towards next year's RRSP contribution. 

The sooner you start the better it is.

We're Overdue for a Recession

Historically, we've seen market correction every 10 years (2008, 2000, 1989...) We don't need to be looking at any graphs to know that we're overdue for a recession. Add to this the fact that we're in a pandemic mixed with a war in Ukraine and you have the recipe for an economical disaster.

Every time we're heading towards a recession, we're told that it's best to put money in such things as gold, specific stocks, land... things that wouldn't loose value as much as money might. It certainly sound like a good strategy the issue with that is by the time we learn about this it's already too late. Have you look at the price of gold recently? You need buy these things when the cost is low to sell when its high. If you were to buy gold now, hold on to it during the recession, only to sell it afterwards you would be buying it when the value is at its highest only to sell it when the value is going back down. 

The common folk can't win with these strategies because we're not paying attention to these things as much as experts are.

What can be done?

We will see another recession, and another one after that, as it's just how our imperfect economy works. The first thing that we need to do is insure that our personal finances are in order. Get rid of debt, have a few months worth of savings and be prepare to downsize if necessary.

There's some good that comes out of recession as it's often a perfect opportunity to buy stocks (as most people are trying to get rid of them out of fear) therefor be on the lookout for these opportunities. These market corrections offers buying opportunities that aren't accessible at any other time.

Humanity will get through this recession as its done so many times before. My hope is that every time we go through this that we learn about our mistakes and move on in a better direction afterwards.

How Nations Gain/Loose Power Today

My dad has often said that the main reason why we don't have as many wars today is because of he nuclear bomb. While its certainly true that nobody wants to wage war out of fear of it going nuclear; wars of a different kind have still been fought for decades.

Why are wars fought?

A nation will declare war because it wants more power for itself.

Having a global economy has allowed these power hungry nations to gain more power without the need of acquiring more lands or more people. One thing we can learn from Putin's invasion of Ukraine, or "liberation of Ukraine" (as Putin so eloquently put it), is that it had an immediate negative impact on the nation's economy that will last generations regardless of whether or not Ukraine falls. Putin would of been better off leaving Ukraine alone and, instead, developing a better economic development strategy for his country.

In the information age, a nation will rise/fall based on its internal economy in relation to the global economy. A Country has a greater chance at gaining power by building relationships with other countries than by attempting to invade them. 

Save Money to Retire Early

A few years back, a manager of mine, who had saved millions up to that point, said to me that I should enjoy myself with the money that I have rather than save it all like he had done. 

Recently, an older woman admitted to me that she had no savings for retirement as her philosophy was to, in-fact, enjoy her money in her youth while she still could and not wait until retirement to do so.

My questions to these people are the following:

• To the manager - Why were you still working at the time you told me this? If you have millions saved, and you're sharing with me that you're regretting not having enjoyed yourself more in your youth, why didn't you just quit your job and enjoy the money you had acquired up to that point while you still could?
• To the older woman - Why aren't you saving money in order to retire earlier to enjoy yourself without the constraints of work?

I save money not because I plan on spending it when I'm retired but because I want to retire earlier. While I love what I do, I increasingly want it to become a choice the older that I get. I would find it stressful to not have anything saved up for my future.

We live in a society that's all about "buying now and pay later" but that's such a bad way to live. Why would you sacrifice future time for something now? Isn't that how people get stressed out? 

No.

Don't sell your future. Save money now in order to buy future time.

"Wealth consists not in having great possessions but in having few wants."

-Epictetus

I Forgot About Investing

I recently had a meeting with my financial advisor where we discussed my current financial situation and where I eventually wanted to be. I'm always a bit frustrated when speaking with a financial advisor as it exposes me to a world I don't know as well as I think I do. While I understand the benefits in knowing the rules of the game the complexity involve is daunting at times.

In the past, I've tried to fill the gaps by reading on the subject of finance. While it did helped me greatly, because I don't constantly use that knowledge, I forgot most of what I read. Perhaps it's time for me to pick these books up again. Two books that comes to mind right now are:

• Money Master The Game by Tony Robbins
• Financial Fitness by the Life Leadership Company

The most annoying part about all of this is that you pretty much don't have a choice about understanding finances because life is easier when you understand it more so than when you don't. Time for me to pick these books up again!