Currently #8: Becoming a CFP(?), Freakonomics Radio, & reclaiming my time

You didn’t ask, I answered.


I’M READING…

Side Hustle by Chris Guillebeau

Despite my deep aversion to the word hustle (especially when preceded by the word side) here I am, reading Side Hustle. I just finished The $100 Startup by him and I’m reading these books not so much for my own projects, but because I’m always interested in what marketing/business/financial advice small business owners are finding useful.

How are we talking about this stuff? What’s resonating? What’s not? That’s what I’m interested in.

I’M watching…

Not much of anything, actually. I canceled my Netflix subscription and I haven’t been watching much on YouTube recently.

Sacrilege, I know. But, *points to image below* I’m reclaiming my time and I’m much happier for it.

I’M listening to…

These Shoes Are Killing Me on Freakonomics Radio

Who the heck knew I’d find genuine joy in listening to a podcast about feet? Not I, that’s for sure.

Around the 10 minute mark they talk about how men are seen as rational and practical and how that’s reflected in their shoes (plain, sensible) and how women are seen as irrational and frivolous and how that’s reflected in theirs (heels, decorative, impractical, etc.)

They talk about how sneakers—which many people think of as casual and cheap—started out as an object of luxury. Tennis shoes represented privilege and wealth because having them meant A) you could afford more than one pair of shoes and B) you had the time to spend on leisurely things like a game of tennis.

And then they get into “how fascism democratized the sneaker”…

I know. So interesting.

The Stupidest Thing You Can Do With Your Money was a great episode, too, if you haven’t heard it yet. They interviewed Barry Ritholtz about investment fees and as you’d imagine, he leaves you with lots to think about.

oh, that’s good…

Reclaiming My Time

A particularly timely (see what I did there!) desk sign I saw at Bulletin when I was in New York City last month.

The last quarter of 2017 I’ve been experimenting with planning and scheduling so that I spend more time on the things that matter to me (see above: canceling Netflix). I want to be more effective with my time. Not productive, effective. 

And so far, so good.

I’m becoming a financial planner… ?

After a weekend spent with some of my favourite humans (who happen to be financial planners) talking about the change we’d like to see in the finance industry, I’m seriously thinking about completing my CFP and working as a planner.

I realized I had some weird and wrong ideas about what it would mean to be a planner and that I was letting fear get the better of me. I don’t see myself working as a financial planner full-time, but I’d like to layer that into the other work I enjoy doing with small businesses and entrepreneurs. (That’s one of the wrong assumptions I had—that if I was a planner I wouldn’t be able to pursue the other work I’m interested in.)

I have my FPSC Level 1 so next up it’s the Capstone, doing some paraplanning work, and a few specialized courses.

More on that as it unfolds… I’m excited about 2018!


What have you come across lately that’s stuck with you? Articles, interviews, a really great ad… Comment or Tweet me!

Budgets, buckets, and home equity according to Thaler

Welp, I’ve officially gone down the rabbit hole that is behavioural economics. Because I’m consumed by this ‘How do people money?’ question.

How do people feel about, think about, and spend their money?

I’m reading Thaler’s Misbehaving thanks to some great Twitter recommendations and I just got through section two on Mental Accounting, which was all kinds of up my street. Acquisition versus transaction utility, sunk costs and payment depreciation… you know, the good stuff.

But oddly enough it was a paragraph on home equity in Chapter 8: Buckets and Budgets that’s stuck with me the most.

He talks about how home equity lines of credit came to be a thing (that’s HELOC for short) and how they completely changed the way Americans do money.

(Yes, I’m fully aware this is old news to most people but you have to remember that I’m a snowflake millennial who’s just coming around to the idea that a) the world existed before 1990 and b) said world might be worth learning about.)

So here’s the deal on HELOCs in the US according to Thaler…

– Until the 1980s home equity was sacred. Like your retirement accounts. You didn’t touch those buckets. That was money for future you, not present day you.

– This meant that in the early 80s people over 60 had very little mortgage debt. Paying off your mortgage—as quick as possible—was what you did.

– Then came Regan. Good ol’ Ronald and his tax reforms. Before 1986 all interest paid (on auto loans, credit cards, etc.) was tax deductible. After 1986 only mortgage interest was tax deductible.

– Hmmm. So now that mortgage interest was the only kind of interest that’s deductible, there was an economic incentive for banks to create something that lets you borrow money in a tax-deductible way. Because people love a deduction, right? Enter the HELOC.

– Want a new car? Finance it using a HELOC, not an auto loan, because you’ll get the deduction. Have credit card debt? Take equity out of your house to pay it off. And so on…

– On top of this interest rates kept getting lower and mortgage brokers became a thing, which encouraged more and more people to refinance.

What did all of this do?

“The change eroded the social norm that home equity was sacrosanct.” 

Home equity was no longer the ‘safe’ mental account it once was. It was no longer a bucket for future you, like your retirement accounts, that you didn’t touch. It was for spending and spending today.

“During the housing boom in the early 2000s, homeowners spent the gain they had accrued on paper in home equity as readily as they would a lottery windfall.”

And then he says this...

“The fall in stock prices did not impact spending as much as the fall in home prices.”

Since people still had retirement accounts as this bucket you didn’t touch, stocks taking a dip in your 401(k) didn’t change how much you were going to spend on furniture that year. Your 401(k) was still mentally filled under ‘money for future you’.

But your home? That was now a bucket of money for present you. And when people could no longer take money out of their homes to finance new cars because house values had fallen so much and/or they were underwater on their mortgage, well, you know what happened. Things went downhill fast.

Enter the 2008 financial crisis.

Here’s what’s so interesting about this to me…

How do we go from, “Here’s a sacred thing we don’t touch” to, “Burn it to the ground.” 

How do these shifts happen?

What’s going on with culture, with education, with how ideas spread… What’s all the stuff circling around a change in behaviour that facilitates it? What’s the narrative around it?

The marketing bit. Because marketing isn’t just advertising, it’s the story we tell others and ourselves.

How did we change the story?

That’s what’s super interesting. That’s what we’ve got to dig into. When we look back and when we look around at what’s happening today…

What’s the story being sold to us and what’s the story we’re selling to ourselves?

Because if there’s one thing we can count on in this world, it’s that history repeats itself.


Oh look, a house. Because home equity. Points for originality, yes? Taken near Yarmouth, Nova Scotia. 

P.S. Read this NY Times article from 2008 on bank advertising leading up to the crash. Ya. History definitely repeats itself.

Currently #7: How Should a Person Be, behavioural economics, and saving for NYC

You didn’t ask, I answered.


I’M READING…

How Should a Person Be? by Shelia Heti

Okay, ~technically~ I’m currently reading Thrive by Arianna Huffington but I finished this one a couple days ago and have to mention it because it was SO GOOD. And because despite being halfway through Thrive I don’t have strong feelings about it yet…

It had been a long time since I’d read anything close to fiction (my Goodreads is pretty solidly marketing/self-development books) and this was such a welcome change of pace for me. Her writing style is intoxicating, I’ve never read anything quite like it. She had me smiling, laughing, and feeling and the feels.

It was a needed reminder to branch out with what I’m reading.

I picked this up at Anansi Press and Groundwood Books in the Junction last week which is the most lovely little book store I’d definitely recommend checking out. The Drake Commissary is nearby, too, should you find yourself in need of sustenance.

I’m studying…

Behavioural Economics

How and why people spend money totally fascinates me. In particular, I’ve been thinking a lot lately about fee-only financial planners… Why do people decide to use them? Or not use them? What can we learn about that to improve financial education in general?

I think this behavioural/psychology bit is key in figuring out successful marketing strategies for fee-only financial planners and more effective financial education. We get caught up on price and think that’s the sticking point for people considering hiring a planner, “It’s too expensive!” But I don’t buy it. Price isn’t the issue, it’s deeper than that. The money is there but people are choosing to spend it on something else. Why?

We need to identify biases and worldviews so we can root the long-term benefit of financial planning/education in the now. Tension! Then we’ll get somewhere good… real good.

If you’re interested in this kind of stuff check out this Cognitive Bias Cheat Sheet and these 8 Marketing Takeaways from Behavioural Economics.

I’m saving for…

New York!

I’m saving for New York *happiest of dances*. I’m going to the Smart Hustle Small Business Conference this November 1st and I’ve tacked on a few extra days before and after the conference so I can, well, be in New York.

I’ve got some USD stashed away from a previous job that’ll be enough to cover the cost of the conference as well as my accommodation and a basic daily food budget, and the travel savings account I contribute to monthly will take care of the flight. I’d like to save up a little more spending money for exploring and shopping though because, well, New York.

oh, that’s good…

PSA

A welcome reminder looking over Dundas West in Toronto.


What have you come across lately that’s stuck with you? A book, a podcast, an article, a really great ad… Comment or Tweet me.

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