Adulting and Money Management (3.1): The Money that I Owed by guest blogger Edward Hillyer

Foreword by Colorfulifesite admin:

The sub-series presented in this third part of the “Adulting and Money Management” series aim to share real-life experiences of 2 guest bloggers. One of them is a retired international ballet dancer from Canada, and the other one is a managing partner at a couple of startups in the Philippines.

I thought it would be worthwhile to expose two very different types of people from two very different contexts, bound by a single objective to effectively manage debt. The final part of this sub-series will contain Colorfulifesite’s own perspective on the topic.

The first of the guest bloggers is a Ballet Master who have had his share of rags-to-riches-to-rags story. In between those events, he has experienced fame, prosperity, bankruptcy, hunger and resurgence. His account on debt management is but a tiny piece of precious advice within the beautiful mural that is his life.

(Minor edits have been made with respect to the original written piece.)

***

I am greatly humbled by being asked to contribute to Colorfulifesite Blog. I in no way can replace Karessa, but I can offer my insights on how we fall into debt, how to manage debt and how to make the positive changes to stay out of debt.

How do we fall into debt?

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Image courtesy of: https://clipartfest.com

If you are in debt, you have bought things you did not have money to pay for at that time.  I do not know anyone who has never experienced debt in one way or another. It might be a personal debt to a friend, a car loan from the bank or a credit card debt.

If you are in debt or sever debt, some perceptions and habits must change.

Not having money for what you need is a serious problem. However, not having money for what you want should not be viewed equally to what sustains your life. In short, you will not develop malnutrition or be put out on the street if you do not buy those new shoes.  They in no way sustain your life.  You will however, develop malnutrition if you have no money for groceries and could be put out of your home if the rent is not paid.  Recognition of this brings about a change in perception. We begin to see food and shelter as necessary and the latest smartphone as nonessential.

Remember that money in the bank or any other investment vehicle pays periodical interest, making your money grow. But if you have a debt on credit card or on a department store, YOU are the one making the periodical pay offs and making your money shrink.

A recent MasterCard bill contained the information that if I made the minimum payment each month, my debt would be cleared in June 2060. For most people, this idea might seem interesting. Yet for me, this is a sobering thought considering I will be long gone from this world by that time. Suffice to say I did not take the 43 years to pay the debt. I paid it in 5 minutes at the bank. If I took 43 years to pay the $1000.00 debt, I would have paid over $3,000 in interest charges.

Conclusion: it is very expensive to be in debt.

How to manage debt?

One thing that worked wonderfully for me is debt consolidation. If you have multiple debts to different companies, it is best to consolidate them at a better rate of interest. Ask a financial adviser how you could do this as it allows you to have only one single creditor to pay for all of your different debts.

With a line of credit, you could pay debts that have a monthly interest charge of 23%, and the reduced interest rate to 3%. The larger your debt is, the more practical this becomes.

Investopedia explains the concept of Debt Consolidation in a few words:

… multiple debts are combined into a single, larger piece of debt, usually with more favorable pay-off terms: a lower interest rate, lower monthly payment or both. Consumers can use debt consolidation as a tool to deal with student loan debt, credit card debt and other types of debt.

Furthermore,

… any use of one form of financing to pay off other debts is practicing debt consolidation.  However, there are specific instruments called debt consolidation loans, offered by creditors as part of a plan to borrowers who have difficulty managing the number or size of their outstanding debts. Creditors are willing to do this for several reasons – one of them being that it maximizes the likelihood of collecting from a debtor. These loans are usually offered by financial institutions, such as banks and credit unions; there are also specialized debt-consolidation service companies.

My best advice for getting out of debt is to delay satisfaction or gratification. This means that if you delay the satisfaction you get from buying a new product, it is appreciated all the more because you have saved the money for it. The new product comes with no guilt, no debt and no interest charges.

Another very practical way to manage debt is to make debt payment a part of your budget. Treat your debt payment the same as your rent, your phone bill or your electric bill. This would allow you to look at your debt realistically and honestly evaluate your capacity to pay: could you do it in 6 months, in one year or maybe in 5 years?

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Image courtesy of: https://www.theodysseyonline.com/

What positive changes could you make to stay out of debt?

Getting out of debt could be likened to dieting: neither of the two is easy for many.  In the case of dieting, people must do without eating what they crave in order to attain their desired weight. When paying off a debt, we must also learn to do without the unnecessary things if we want to achieve our goal. In my case, I had to quit smoking. This nearly “killed” me as I had to learn to live without the single thing I craved the most. I had to do this in order to greatly reduce my expenses and pay my debts off a bit easier (and of course, to reach the state of health I felt was rightfully mine). Likewise, you would also need to give up your whims in order to achieve your goal of financial stability which you correctly feel is rightfully yours.

I can confidently share that in time we develop a pride in paying our bills in full each month, in saving for what we want and living without the burden of guilt, stress and the interest charges that accompany debt.

Experience has taught me how there are endless ways of saving money so you may buy what you want. For instance, I still cut all the store coupons and have not bought anything that is not on a special sale (I started doing this during the time I was living in hunger). I still plan my weekly menu by looking at the flyers of the store specials.  I get to save more than 60% on my groceries, pharmacy and paper products.

I love the smell of Speed Stick Original. One costs $4.00. When they come down to two for $5.00, I buy 6. Total savings = $9.00. These are nine dollars I may apply to my phone bill, my rent or add to my bank account. Instead, I use this $9.00 to buy paper products on special sale. (I shall not reach a time in this life when I no longer need toilet paper, paper towels or Kleenex.) With my $9.00 saving, I bought 72 rolls of toilet paper and have not bought any for two years now.  When possible, I buy in bulk.

Trust me when I say: focus on the debt like a laser beam. Most importantly, get excited about reducing it, take pride in watching the debt go down and celebrate your success and financial responsibility.

Resultado de imagen de clear off debt

Image courtesy of: http://www.bankrate.com/

– The End –

As I mentioned at the start, I can never replace my friend Karessa. My thoughts do not appear in a logical order and I tend to ramble without a strong focus. However, I welcome your thoughts and questions (click here to access Edward’s Facebook page).  I may be contacted by private message if you have questions about your debt that you do not feel comfortable discussing in a public form.

Colorfulifesite’s note: Edward Hillyer used to tour around the world as a professional ballet dancer and instructor. He carries the title of Ballet Master. A former Principal Dancer of Les Grands Ballets Canadiens, he is currently living a quiet but active life in Montreal. Take my word for it, Edward means it when he offers to attend to any questions you might have. Thank you very much, Edward, for taking the time to share your insight and useful advice on debt management.

Sources:

  1. Debt Consolidation definition, Investopedia, available at: http://www.investopedia.com/terms/d/debtconsolidation.asp

“One cannot and must not try to erase the past merely because it does not fit the present”- Golda Meir

Two things came to my mind upon reading Meir’s words:

  1. The past as we know it, has been documented and told by those who were “left standing” long enough. Others would simply say that “history is written by winners”.
  2. The only permanent thing in this world is change, so why shouldn’t we expect history to change as well? I’m not saying that it’s right, I’m saying it’s how things are.

On February 1944, George Orwell wrote a piece on how history is written by the winners. In it he stated that should his side win the war, they would tell fewer lies than their adversaries. Because the reality, as a TV show protagonist once said is that, “Truth is a battle of perceptions.”

Orwell further added that he would choose the most verifiable among the millions of instances which must be available. But wouldn’t the process of verification also be subject to the particular point of view of those participating in it?

The problem with the past as we know it is that no matter how many “facts” and “objective” measurements we are presented with (eg: the fact that a country had been under martial law, and the number of people who disappeared during the same period), they will always be laced with human perception. Such perspective will always try to slip past our critical and analytical minds, to reach our hearts and stir equally human feelings of either affinity or disdain to the initial observation.

The humanity in us easily makes us forget about the numbers, the facts, the objectivity of the past as we know it. And that is how we end up fighting and sometimes even insulting others- not to establish a fact, but to prove that we are right: that what we feel is THE legitimate and correct feeling, that what we believe is THE thing to believe in… within the uncontrolled realm of social media*, the famous “keyboard warriors” make it seem that suggestion outside of what others perceive is a lie, an idea forced through bribery or worse, a mere invention of creative minds.

Isn’t it sad? that instead of enriching ourselves in debate and trying to learn from an opposing perspective, our discussions on socio-econo-politic and especially in historic topics end up tallying who’s right and who’s wrong?

However, going back to erasing the past to fit the present…

On the one hand, I don’t agree it cannot be done. As a matter of fact, even if what already occurred can’t be undone, those living in the present can still modify data and information bit by bit until the desired effect is achieved. Even in those cases when data can be maintained intact, the interpretation of the said information can still be subject to the analyst’s own thinking (or agenda). So yes, this CAN be done.

On the other hand, no matter how improper it is to erase or alter the past as we know it, well, who doesn’t do it? the human mind is feeble and highly suggestive, while the soul can harbor various motives as well. And so no matter how many registered facts there are, no matter how many recorded events are available, people will always choose to believe what is convenient for them. So, even if it MUST NOT be done, human beings will always serve their best interest at the end of the day and overlook this little misdeed. (In fact, who’s to say that Meir was not guilty of this type of act?)

Dear reader, you might not notice it now but allow me to save you time: everything boils down to resource allocation. 

The “winners” who will proceed to write the story– ultimately turning into history- possess the power to influence which portions of the society get what percentage of resources. These could be time, money, attention, alliances, exposure, etc…

A very good example of this is the passing of the Spanish “Historical Memory Act”. Without embarking on a discussion of its relevance or utility, suffice it to say that this law was able to channel Spain’s limited resources into sectors which would otherwise be left in a state of disremembrance. (Some examples are: the identification and eventual exhumation of common graveyards, granting the Spanish nationality to families of the exiled and the removal of any symbol commemorating the military uprising.)

Due to the very nature of history (or the past as we know it), different interest groups will always resort to revisionism to establish their own version of truth.

This is what’s currently happening in the Philippines, where young Filipinos are being taught that the Marcos regime of dictatorship was the most glorious period of the country. Once again, it simply boils down to resource allocation; this time the resource being a seat in the political arena. For why else would these parties bother to convince a whole generation about the goodness of the former dictator, if not to reinstall his family and allies back to the Philippine politics?

The lesson I gather from this reflection is that we must be very vigilant of the kind of past being insisted as “what really happened”. We cannot and must not change the past what about the rest? we don’t hold anybody’s deeds and desires but our own. Yet, we can exert a small leverage in our communities even as we are neither historians nor big influencers.

Starting with ourselves, we should never lose sight of our past: the past as we were told, and the past as it is currently being recounted. Let us be indefatigable seekers of information, and let us be annoyingly non-conformists with the kind of facts lain before us.

More importantly, let us take ownership of that history. Let’s make it ours: just as we find ourselves to be part of a family, let us also make ourselves part of a town, a country, a global community.

With the knowledge that we have, we can then proceed to inquire, debate and refute any efforts of revisionism that we feel is not right.

Finally, let us exert a massive effort as a community, to reach out to the children- our future. Not only must we pass on to them the gathered knowledge that we have. We must also teach them how to collect the necessary information, where to get it, what questions to ask, to whom they should ask, how they should ask and to never be afraid to politely discuss anything that doesn’t satisfy them.

Golda Meir was a diplomat, politician and the fifth Prime Minister of Israel. Not wanting to question neither her sincerity nor her intentions for uttering those words, it is obvious that she has every interest in wanting to preserve the historical memory from her ancestors. But she was not alone in this task. Ever since the post-war period, every awareness creation effort has been made so that this dark chapter in human history will never be forgotten. And it must be said that this kind of tenacity is admirable, considering how many generations have passed and nobody has ever questioned the integrity of records about the violent pursuit of the Jewish community.

The past of her people, as well as her very own, made her understand the importance of preserving history: to learn from the past as we know it, allowing for hope in the achievement of a greater future.

 

* Social media is a fantastic platform for knowledge-distribution and idea-sharing initiatives.

Sources:

  1. The Economist quotes, available at: https://goo.gl/vWzDx3
  2. “History is Written by the Winners”, by George Orwell, available at: http://alexpeak.com/twr/hiwbtw/
  3. “All People are Living Histories- which is why History matters”, by Penelope J. Corfield, available at: http://www.history.ac.uk/makinghistory/resources/articles/why_history_matters.html
  4. “The Face that Launched a Thousand MiGs”, The Guardian, available at: https://www.theguardian.com/books/2008/aug/16/biography.politics

 

Colorfulifesite responds: Is money really the root of all evil*?

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Image courtesy of: https://tvaraj.com

As simple as the concept of money is, humans always find a way to make it more problematic. Even if money is nothing but a medium of exchange in this society, I’ve observed what complex relationships people have with it.

On the one hand, there are some who love it so much with an obsessive kind of love: acquiring all the money that they could, in many different currencies, not letting go of even one cent and acting as if they could bring it to the afterlife. For others, they love acquiring money because of its utility: because later on they could use it to avail themselves of the goods and services they wish.

On the other hand, there are those who seem to hate it because they spend as much as they could the very moment they receive it. And lastly, I know of people who don’t seem to care about money- they lose some, earn some, save some, share some… they don’t seem worried at all about it.

These are only some of the most common ways people relate with money- and all of them seem normal once you stop to think about it.

However many, if not most people think that money is bad.

They are the ones who stick to the words “Money is the root of all evil”, without considering that the more accurate version of this quote is:

For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.

… according to the Biblical passage 1 Timothy 6:10

Notice how it refers to love of money as the root of all kinds of evil, not money itself. A similar but ridiculous example would be be like saying that the sun causes skin cancer when in fact, it is irresponsible sunbathing that is the originator of the malady.

What if we turn the tables around and say that likewise, it is “the lack of money that is the root of all kinds of evil”? (Quotation from Mark Twain) I’m afraid this is also questionable, because not everyone who lacks money is poor and is deficient of resources for survival (money is merely a representation of liquidity; a person may lack cash at a certain point of time, but may still live in a mansion, possess gold bars and hectares of land). Just as well, not all who lack money get evil ideas about how to acquire some.

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Image courtesy of: Google images

Also, as the late A. Graziani pointed out, there is a difference between a monetary economy and one in which trade occurs by barter. Are we then to conclude that evil is more rampant in the monetary economy? I would guess not. During the hyperinflation in Russia in the early 90’s, people scoured for food and would exchange gold jewelries for any kind of nourishment… they weren’t really after money. Yet during that period, offenses against the law have been undoubtedly committed just to be able to procure supplies for the household.

The way I see it, money has been pinpointed as the root of evil because as Investopedia said,

… money is the way we get the things we need and want.

… and so many people have indulged into poor, even immoral and illegal actions just to be able to acquire some of it. Many people have also used it for questionable aims.

But going back to a situation where money “doesn’t mean a thing”, what could be the root of evil in those cases? Imagine a Chinese trader cheating or being cheated by a Malay counterpart in a silk and spices exchange. In that antiquated but real economy, there was room for evil, even if money was still inexistent.

To answer this question, I consulted Adam Smith because the man’s words are timeless and likewise truly applicable to this topic. He talked mostly about money but if you looked deeper in his words, you’d realize there is a more profound source of corruption:

(1) Goods can serve many other purposes besides purchasing money, but money can serve no other purpose besides purchasing goods. It is not for its own sake that men desire money, but for the sake of what they can purchase with it.

(2) A great stock, though with small profits, generally increases faster than a small stock with great profits. Money, says the proverb, makes money. When you have a little, it is often easier to get more. The great difficulty is to get that little.

(3) The natural effort of every individual to better his own condition is so powerful, that it is alone, and without any assistance, not only capable of carrying on the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions with which the folly of human laws too often encumbers its operations.

(4) With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches, which in their eye is never so complete as when they appear to possess those decisive marks of opulence which nobody can possess but themselves.

(5) No society can surely be flourishing and happy, of which the greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.

(6) Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.

-Excerpts from “The Wealth of the Nations”

Did you see how Adam Smith had made a compelling appeal to humans’ sentiments? This was how he unknowingly built the foundation of economics. And such a genius foundation at that! for what is economics but the distribution of limited resources according to a human being’s criteria- where the said criteria is highly influenced by his sentiments?

It might already go without saying that what I believe to be the truest root of all evil is the sentiment behind anybody’s actions. This becomes the motivation that would fuel a person to take a step in one direction or another. This direction might lead to cheating someone out of a business trade or towards exchanging one’s golden wedding band for a loaf of bread.

What is the intention behind those actions**?

When we pinpoint money as the root of all evil, we push our responsibilities as thinking and feeling humans away from us towards an inanimate item that wouldn’t complain when greatly blamed. When we deny our accountability in contributing to this world’s evil, we will never find the solution to lessen it, let alone to eradicate it. When we transfer the burden of bringing evil towards something as ephemeral as money, we will only forget what troubles it gave us once it ran out. In fact, we risk continuing to indulge in the same (if not worse) immoralities to keep on acquiring it.

There is evil connected to money in our society because those who already have a lot of it, can’t get enough of it; because those who lack it are struggling to have a little bit more of it; because the people behind the real value represented by the money (the workers and entrepreneurs within the agricultural, industrial and service sectors) usually end up with less money than they deserve; because there are many civil governments who have promised to redistribute money to attain a more equitable society, but end up keeping the stash for themselves.

Money is not evil. What could be evil are the motives behind wanting to have more (of it), the type of deeds carried out in order to receive some and the objectives for wanting to spend it.

*Evil in this case is understood as arising from bad conduct, resulting into committing an illegal act.

**One could argue that a man who commits evil to feed his family could be “excused”. It is not within the scope of this post to transmit any value judgement, but only to expose the existence of evil and argue that money is not its root cause.

-The End-

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Image courtesy of: http://www.ceylonguidance.com/

Sources:

  1. http://biblehub.com/1_timothy/6-10.htm
  2. “What is Money?”, by Investopedia staff, available at: http://www.investopedia.com/articles/basics/03/061303.asp
  3. “What is Money and How is it Created?”, by Steve Keen, Investing section, Forbes Magazine online, available at: https://www.forbes.com/sites/stevekeen/2015/02/28/what-is-money-and-how-is-it-created/#7dec264c7df4
  4. “15 Smart things Adam Smith said About Money”, by Elizabeth Bogner, Business Insider website, available at: http://www.businessinsider.com/adam-smith-wealth-of-nations-money-2011-11#

Some thoughts on the International Women’s Day

Today, 8th of March, I received numerous greetings for the International Women’s Day. I spent the day trying to resist the temptation to read all sorts of articles about pro-feminism, anti-feminism, quotations and anecdotes from women reformists, etc… But out of the few materials I was able to enjoy, a quotation from the academic Irene Tinker* made THE impact in my head:

As long as man is the measure, women will always be second-class.

If the main reason we celebrate International Women’s Day is to attain equal rights, privileges and consideration as men- then why do we still insist on using men’s stature as the scale with which to design a more equitative society?

One example would be the wage gap in certain job posts, where men earn more than women. One simple and common explanation to this would be the fact that people who work more hours would earn more money. Most men work more hours than women and it could be because of many varied reasons; but the most logical reason is because they can, because they are allowed to (by the society as a whole, the governments, our respective cultures, etc…). Why can’t the rules be changed in a way that workers be paid according to their output?

Another example would be the widespread blame-game where women are considered mostly responsible for the disgraces that befall them: when one is sexually assaulted, it might be “most probably because of what she was wearing”; if she is a victim of domestic violence, it’s because she’s too weak to speak up or to take action; if she suffered gender discrimination, it’s because women as a collective are not supportive enough to eradicate this phenomenon, etc… Now think: who among the society spreads these ideas?

Surely, it is not enough to change how we view ourselves, women, with regards to men. Everybody should also make a big, collective effort to ignore the superiority issues and reconsider the topic of equality. Unfortunately for those who support these ideas, I personally think that neither gender is superior than the other. However, I also do not think that men and women are created equally. They are simply different from each other. They have different roles, needs, pressures and sources of pleasures. It is in the application of social and legal norms where equality must be implemented. Not in the individual consideration of persons.

Try to think of the concept of an “employee”. Most characteristics connected to this idea, ranging from the job interview up to the actual hiring, are usually fitted for the male candidate. I may be just another embittered unemployed woman. Yet if this were not true, then how come there are still so many mothers of children below 7 years old without paid employment? How come young men of “marrying age” are hired more oftentimes than a woman within a similar age range?**

I believe that if we truly aim for a society that would (at least) offer the same options to its citizens regardless of their gender, then we should start by polishing up little things in our daily lives to pave the way.

It’s the things we do, which usually correlates to the things we say, which ultimately reflects the way we think- these are the greatest and most impactful factors in our environment.

For instance, if starting at a young age, boys are already discouraged to play with dolls and girls are taught to stay away from toy cars and trucks, then what message are we sending them?

In another scenario: if young boys are not taught to do household chores and young girls are not trained in the basics of carpentry, then how do we expect them to think when they grow up?

I say this because usually, these kinds of behavior from adults are accompanied with ideas and opinions pointing out towards the same direction: that of gender bias.

We should be more mindful about what type of message we are sending when we celebrate the International Women’s Day. Is this message a way to make others want to build a more egalitarian society? Are our thoughts, words and actions consistent to this ideal?

Thank you, dear reader! I look forward to the day when there will be no special date assigned to remember working women around the world. Because by that time, women being considered to have the same rights, opportunities, privileges and consideration  as men would be the norm and not the exception.

*From The Economist, taken from a Facebook post.

**Conclusions based on personal experience, group discussions and past notes from articles.

-The End-

 

 

 

 

 

 

 

 

 

What’s on a reader’s mind (2)

A very dear reader from Canada wishes to share his experience in “adulting” and money management.

However, before I move on to divulge his wise words, let me first mention how I have never met anybody online as kind and as frank as Mr. Edward Hillyer. We met in Facebook. We have a common friend who used to actively publish politically-flavored posts in his wall. It was in the comments’ section where we started out politely arguing about the different topics we enjoy. Now I believe that I may proudly say that we are friends… friends in the sense that I would seek his advice, and he would generously give it; friends in the sense that he would tell me nice stories about his childhood and his family, and I would ask him for more similar anecdotes.

I used to be reluctant in having a social media life but with a great discovery like Edward, I believe it’s worth all the trouble of meeting the weird and creepy people that roam around the internet.

I thank this dear friend for supporting my blog through actively participating in its Facebook page, as well as in my personal page.

I truly hope that you can learn as much from him as I do.

Thank you, Edward!

(The following comment originally appeared in the Colorfulifesite Blog’s Facebook page, dating 6th of February, 2017.)

My first comment on adulating [sic]* and money: If you have ever had a credit card, you will have noticed how a little here and a little there, (ten dollars for a pair on sunglasses, 20 dollars for a new top) will cause your receive your credit card bill with shock. How could just a few dollars here and a few dollars there add up to such a large bill? On the door to my father’s office was a quote ‘It all adds up’. You see this in your credit card bill that shocks you each month. This is the reality, it all (even small amounts) add up. With this knowledge as a given, why not be smart? It 2 +4 = 6, then 4 + 2 also = 6. This information is reversible. If you save a few dollars here, and a few dollars there, IT ALL ADDS UP, just as spending does on your credit card. This is a given. If you save money in your daily life, it will add up.

This was my reply, dating 8th February 2017:

Thank you for this simple yet monstrous truth, Edward. My personal experience with credit cards is quite nil because having been raised in a frugal household; we have always tried to avoid expenses (present and future). We only borrowed money if we didn’t have any other option at all. But I had a similar experience with my day to day life before my husband and I got married. We had good jobs and were living in the city center. So the temptation to get a beer here, have a bite there, etc… was always near. And we would usually give in to the “little” ones, until we realized that the 3x a week trips to have tapas at 2 EUR a glass of beer (we would end up having 3-4 glasses each) would sum up to 192 EUR a month! Imagine how much that would be in a year! So we started to save small coins and also stopped eating out too much. This was one of the ways we were able to save for our wedding (for my part, I was able to save for my dress, shoes, earrings and head accessory). Yes, we’re proud to say that we financed that marvelous celebration of our lives!

In a reply to one of my posts, (this time, in my personal Facebook page dating 22nd February 2017), Edward recounted an advice given to him by his father. Honestly speaking, I wasn’t prepared to be blinded by the light.

I joined Les Grands Ballets Canadiens at 17 years old as an apprentice. I was paid half the salary of a corps de ballet dancer ($75.00 a week). I managed on that fine. It was tight, but I did it. However, after three months with the company, they tore up my old apprentice contract and gave me a corps de ballets contract. I wrote to my father with excitement. ‘My salary has more than doubled. I now earn $155.00 a week!’ My father expressed his pleasure but mentioned… ‘If you got by on $75.00 a week, this means you could now save one whole salary each week.’ What a brilliant observation. However I did not follow his advice. I adjusted my standard of living to my larger salary. I had not ‘adulted’ yet. In youth, there is a tendency to spend all the money we have before our next pay day. It really does not matter what the salary is, we will be out of money by pay day. I was poor, then rich, then poor, then rich, then very, very poor, and now I am financially independent. Like others, I have been through it all. And, I learned from it all. When the endless value of money is recognized, we will prefer the money (security) to the fancy shirt, the latest shoes, the newest gadget and the expensive restaurant. I used to live in a three story house on two acres of land with a swimming pool and three cars for two people. Clearly I had far more than I needed. What do two people do with an acre of land each? Why would two people need three cars? Why would two people need three stories? I was working two jobs and was sick with the work. I felt I needed to reward myself for working myself to the bone. How very stupid of me. I earned $90,000 a year and was always broke before pay day! Now, I have no car, no smart phone, no cell phone, no television, no house, no iPad, no IPod, no MP3 player and no cell phone. What do I have? financial security and peace of mind. The value of this is far greater to me than any material thing.

*Edward’s computer would automatically and stubbornly replace the term “adulting” with “adulating”, and so he spent the whole time with the latter word. Colorfulifesite edited the rest of the typos.

-The End-

Don’t hesitate to comment on Edward’s ideas, or share your own experiences in “adulting” and money management!

Remember that you can write to: colorfulife@outlook.es, or use the Comments’ Section below, or you could also use this blogsite’s Contact Page to tell us your stories. Thank you!

Colorfulifesite Blog is looking for a guest blogger

Hello dear reader!

Colorfulifesite Blog would like to give you the chance to be guest blogger of the week. (You don’t really have to be a blogger per se. You just need to want to do it!)

The only condition is that you talk about your own experience in owing money.

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Does that sound cool?

Please comment below, or send an email to colorfulife@outlook.es, or contact me through the Contact Page in case you’re interested.

THANK YOU!

Adulting and Money Management 2.1: The Importance of Research

Author’s note: Please excuse last week’s absence of post. I was not able to better organize my schedule between researching about this article, managing side projects and settling in to our new home. Thank you for understanding. I do hope that the practicality of this post outweighs the lack of publishing several days ago.

This post complements the previous one (Adulting and Money Management 2: “Hooray, I have money! now what?”) that encourages channeling one’s savings into investment.

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Introduction: “Adulting” and Research

The term “adulting” was coined to describe a group of people transitioning from youths to adults, associating the latter with a sense of responsibility, commitment, maturity and trustworthiness.

The Urban Dictionary online defines adulting (v) as:

“To do grown up things and hold responsibilities such as, a 9-5 job, a mortgage/rent, a car payment, or anything else that makes one think of grown ups.”

Research (n) has several analogous definitions, but the one I like most is from Dictionary.com:

“diligent and systematic inquiry or investigation into a subject in order to discover or revise facts, theories, applications, etc.”

I identified adulting with research because being responsible usually entails being aware the effect of certain factors, or what elements would be affected once a decision is made. It requires to be informed of the risks, costs and benefits of each resolution or judgement. As you might have guessed, the best way to achieve this is to gather as much information as possible; and if that can be done in a systematic and efficient manner, all the better.

I never really gave much thought about researching until I bumped my thick head to wall after wall of reality. After the 256th bump, I had to admit that INFORMATION IS VITAL (some say it’s power, others say it’s equivalent to money…); but to be more precise, ACCESSING THE RIGHT INFORMATION MARKS THE DIFFERENCE. Unfortunately, there is no short cut to knowing what the right information exactly is. Even if helpful peers point it out, what’s “right” for them might not be right for you. So really, the only way to do this correctly is to start making inquiries yourself.

Nobody ever told me about this- not even my teachers in college. You’d think that people in charge of molding future economically-oriented minds would consider relaying this message…

(Later on when I reviewed some of my notes, I realized how this message was indeed passed on in the form of riddles.)

Research related to investing

Anybody who wishes to get the most out of what he has to offer will not hesitate to gather the necessary data to choose the best option. They  will not stop at believing hearsay, although they will certainly consider that type of information.

Still, there are others who are too trusting, too optimistic, or simply too lazy. Just like me, they won’t be encouraged to be more diligent in researching until they’ve paid the price… because there are several steep prices for overlooking the process of research, and more so when it comes to (first-time) investing. In my case, these are:

  1. Money-wise: (the price to pay will be) the very amount of capital invested
  2. Emotionally: pride that got too bruised, discouraging any discussion about this experience with people who might actually help
  3. Psychologically: being  too traumatized to “trust” any financially-profitable opportunity for quite some time
  4. Opportunity cost-wise: having less less money, lower spirits and inferior resolve to invest once again. This could likely make one miss the chance to make money grow

What to research? How to research?

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Performing an investigative task could be exhausting, especially when not used to it. Although I dare say that having one’s future at stake is surely an excellent incentive to do so.

From my point of view, I see two main aspects of research: the theoretical side (or the understanding) and the empirical side (the practical, “realistic” side). They require a lot of time and effort to be taken on, so you could be tempted to just focus your energy on one of them. But the truth is, both are too important for any of them to be ignored.

Suppose you’ve already decided how much you want to set aside to make your money grow; also suppose that you’re already sure of which type of investment you want to make; let’s also say that you’re currently convinced by a financial manager about the product/s he offers and that you’re very happy with what you’ve heard.

That’s fantastic because it means you won’t have to search for much more. Be that as it may, IT IS NOT THE SAME as not having to research anymore.

Theoretical research

In our proposed scenario, the main question to ask would be: What is the general understanding regarding the investment vehicle of your choice?

Even if you’re already content and convinced about the product that was offered to you, still it’s a good habit to read and re-read the brochure or any related document.

(Depending on the country where they operate) Most financial management companies are obliged to distribute a written communication, stating the product’s fundamental information to potential investors. This is very important because usually this is where the fine print lies.

To make a long story short: you might be interested to find out about the profitability of your venture, the different kinds of fees and commissions you’d be subjected to, how much tax you’d have to pay once you withdraw your capital earnings, what kinds of risks your investment is exposed to, etc… that is to say: by how much would your money potentially grow? How much would necessarily be deducted to your money once you’ve invested it? Is there any way to prevent it, or at least lessen the deductions to your future earnings? 

The second set of questions I suggest to be asked will surely empower those who are afraid of investing what savings they have acquired. It refers to one’s legal rights and obligations: Is there something in your country’s Constitution that would back you up, should you get into trouble (in the case of scams or bankruptcy)? What are your rights (ie: to invest and make your money grow) and obligations (ie: to pay taxes) according to the law? As for the financial services company, what are their rights (ie: to profit from rendering a service) and obligations (ie: transparency, honesty)?

In anything that you do, KNOW YOUR RIGHTS. ALWAYS KNOW YOUR RIGHTS. Consult a lawyer if you have to.

Empirical research

The most effective way to conduct empirical research would be to actually invest the money in your vehicle of choice. Just like a scientist observing a laboratory rat, you could closely monitor your investment with the help of your adviser.

Well, too bad for us- we can’t all have the luxury of “gambling” with our life savings. So for this type of research, I would mainly ask: What has been the experience of other (usually, older) people in this field?

Even if you’re already content and convinced about the product that was offered to you, talking to those who have already invested in the same product or a similar one could help. Most financial managers will hesitate to recount the negative experiences of some of their clients. So consider this: if you ask different kinds of investors (young, old, experts, newbies), they could only be too willing to warn you about not repeating the same mistakes they made. They may not share the secrets of their trade, but you could surely get some useful tips.

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Another important question to ask would be: What are other alternatives available in the market?

This question will most probably be answered by your fellow investors. But it’s always better to do your very own research. Remember that you want the best value for your hard-earned money. It’s not being greedy, it’s being wise. You’re not trying to outsmart anyone, you’re trying to educate yourself so you won’t be fooled.

Try informing yourself of the one or two better alternatives mentioned by other investors. Visit a financial service company’s office and ask all the questions you might have.

Benefits of research

Having done your research does not in any way reduce the risk of losing part (or all!) of your investment. It wouldn’t help you evade taxes either; but the results of your research will allow you to make decisions with more and better information. As a matter of fact, in the case where your decision turned out to be unfavorable, your research would’ve already provided you with enough knowledge that would orient you towards the most fitting solution.

Some might be wary of spending time to do research, even if it just meant comparing the profitability of different investment tools. Others might even think that they would do better investing their money already, instead of spending time talking to fellow investors. As respectable as this stance is, it is not advisable. Especially not to first time investors.

Undoubtedly, as you acquire more knowledge and experience about investment, you would spend less time and energy doing the basic research. By then, you would be informing yourself of different factors concerning other opportunities. You would know better who to talk to about one option or another. The task itself will not disappear, it will just take on a different turn.

Conclusions

People in the phase of “adulting” are automatically more prudent of their resources. Especially when it comes to their hard-earned savings. After all, that is the very essence of adulting: taking on more responsibilities and being more consistent with the decisions that were made.

One way to make adulting go a bit smoother is by taking time to research before going after one option or the other.

Whenever there is money involved, there is higher incentive to gather the right information. This becomes more evident when, along with the chance to make money grow, there is also a risk to lose part or all of it.

In general, there are two important aspects of research: the theoretical and the empirical. Both are equally important because they complement each other. That is to say, one cannot only mainly rely on hearsay when making an investment decision. And articles that are written in books, journals or magazines do not always play out the way they are supposed to. So one’s best bet would be to do both.

For the theoretical aspect, it would be wise to consult the documentation available in any financial services company. It is also highly advisable to be aware of the legal obligations and rights of both the investor and the investment company before establishing a financial relationship.

As for the empirical aspect, potential investors (especially the first-timers) would do good to talk to other investors. The latter group may not share their secret formula for success but they could warn about common mistakes and how to look out for scams. Lastly, it wouldn’t hurt to know what are the different alternatives that could fit an investor’s profile (those that adapt well to his current situation and future needs).

Researching wouldn’t make the risks go away. It wouldn’t lower the fees and commissions to be paid. Additionally, it doesn’t only take time and effort: some would also say it will make them miss the chance to invest immediately, thus losing money in the process. This type of opinion is respectable, but in the long run it will always prove to be worthwhile to exercise patience and diligence. Most people realize this too late along the way.

-The End-

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