Currently #9: Books to change your relationship with money, introducing yourself, and my favourite productivity app

You didn’t ask, I answered.


I’M READING…

Worry Free Money by Shannon Lee Simmons

SO GOOD.

I recently finished Worry Free Money, and yes, it’s just as good as everyone’s saying it is. It’s got me thinking about changes I want to make to my cash flow and how (or more importantly, why) I spend money.

I also love Shannon’s approach to financial planning, and found reading this inspiring for my own work.

“It’s never about what I think people can do, it’s about what they can do, And more importantly, what they will do.”

Yes! Thank you, Shannon.

The Year of Less by Cait Flanders

You guys. This is such a powerful read.

You know when someone puts words to something you’ve been wrestling with for years, and then all of a sudden you feel free? That’s this book for me. It’s the solidarity I’ve been searching for.

And, of course, it’s left me rethinking my own consumption and spending.

“Who are you buying this for: the person you are, or the person you want to be?”

Yup. It’s good.

I’M watching…

The Perfect Intro, a talk by Clay Hebert

I can’t think a worse nightmare than walking into a room full of people ready to ask, “So, what do you do?”

Kidding. (Sort of…)

I’ve always been terrible at explaining what I do. Even amongst my own family it’s a question I dread. When you’re a freelancer with multiple projects and types of work on the go, how do you explain it all without sounding scattered? How do you wrap it all up neatly in a bow?

Well, my problem probably lied in the fact that I felt like I had to explain it all. You don’t. Clay has some awesome tips on this.

I’M listening to…

Um, did you know that The Wall Street Journal produces seriously good podcasts?

I’ve been listening to Secrets of Wealthy Women and The Future of Everything. My favourite episodes have been Dottie Herman: The Secret to Real Estate Risk-Taking and The Rise of Experiential Retail.

I love how each episode of The Future of Everything podcast will tackle one topic but interview multiple people on it (similar in style to Freakonomics Radio), providing multiple different contexts. That retail episode is really, seriously interesting.

I’M loving…

Dynalist! Oh my goodness, Dynalist.

The last 3 months or so has been a serious experiment in planning, scheduling, and timing. I’ve been testing out routines and systems to figure out what helps me be most effective and present, and this little app has been a game changer.

It’s everything I’ve ever wanted in a list making, to-do type app. Clean, simple, easy. It’s replaced Todoist and now between Dynalist, Google Calendar, and Evernote I’ve got a system I’m in love with.

Yes, it’s love.

oh, that’s good…

Learning is Never Cumulative

The head coach at my crossfit gym has been covering the walls in quotes and man, I love this one.

Also, try slacking off on a WOD when Bruce Lee is staring back at you ;).


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

SaveSaveSaveSaveSaveSave

SaveSave

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.

When did we decide being “good at money” meant not spending it?

Here’s a question…

When did we decide being “good at money” meant not spending it?

When did that become the goal. The badge of honour. The sign you’ve made it. Congratulations, you’ve arrived at your destination, please exit to your left, the end.

I can’t seem to get far into a personal finance blog without reading the words, “I’m going to lose my personal finance card this, but…” or, “bad personal finance expert, but…” because they’d just spent money on something they—or perhaps more accurately they worry others—deem expensive.

They ate out when they could have eaten at home. They got the pricier hotel room. They bought a new purse. A fancy one, with a label and everything.

Sometimes it’s said as a joke. But often it reflects a sincere guilt that frankly, I find concerning.

Where did this narrative come from? Why is that our conditioned response? Why is the personal finance community feeding this culture of judgment we’re trying so hard to get away from?

If there’s one thing personal finance doesn’t need, it’s more shame.

Being good at money doesn’t mean you don’t spend it.

And not spending it doesn’t make you good at money.

Frugality isn’t some virtuous badge. It can just as easily be a crutch, a vice, a way to hide. A box to tick without actually tackling the underlying habits, emotions, and fears that drive you.

Being good at money has very little to do with tangible indicators like budgets and account balances. It’s a mindset. An internal process. And it’s constant.

There’s no endpoint. No definitive, Aha! Look everyone, I’ve made it.

People don’t like that. Because it can’t be measured. It can’t be boiled down to visible, laddered achievements. It’s not fun to talk about. It doesn’t fit neatly in a box.

It’s a lot like being happy. You’re the only one who knows if you are.

Though we try our damnest—with happiness, money, and anything else in life worth pursuing—there’s no external yard stick we can point to and know we’ve made it. No formula, metric, or app can tell you where you are on that journey. You and you alone have the answer.

Which is why self-awareness is so important. Why it’s important to teach people to cultivate that, not just teach them hard and fast rules like “keep your spending under x percent of your income”. To do that we need to look far beyond the boundaries of what we think personal finance is.

We need to empower people, not rules.

We need to teach people how to think, not what to do.

We need to teach people what questions to ask, not what answers to look for.

Ya. It’s uncomfortable.

It means you can’t just throw a template over it and bam *dusts hands together* you’re sorted. Disagree? That’s fair. But with all the readily available resources and budgets and frameworks… why isn’t everyone getting this stuff? Why isn’t everyone saving and investing and feeling good about their money? If the content’s all there, why aren’t people implementing it?

Obviously, it’s not that simple. There’s more to it.

So even if we don’t have answers, can we acknowledge there’s room in this industry for better questions and start asking them?

We need to lean into this discomfort. Because ignoring it isn’t serving anyone.


Oh look, a winding muddy path to a beach which could be delightful or entirely disappointing and we won’t know until we’re there. Fitting, yes? Taken at the Scarborough Bluffs in, well, Scarborough, this summer. 

Nobody cares about budgets

Welcome to my Saturday morning stream of consciousness.  Excited? You should be.

Why don’t more people care about their money? Specifically millennials. With so many personal finance blogs and books and other content out there (with gifs! there are so many great articles with gifs) why aren’t more people taking action? Why don’t they see what an impact this would have on their lives, their futures! *passionately shakes fist*

(…Right?)

Well, maybe it’s got something to do with the fact that so many ‘intro to personal finance’ books and articles open with Budget! BUDGET! Thou shall not proceed without a Budget!

Uhhh….

Newsflash—not a selling point. Like, no I don’t want to sit down and put numbers into boxes why do you think I’m avoiding my bank statements in the first place?

And I know (I know!) budgeting doesn’t have to suck. There’s a template for seemingly everyone’s taste and it can be as simple as you like and oh goodness did you know how life changing it is?!

None of that matters.

It doesn’t matter because people aren’t going to get that far. They’re going to shut off as soon as they skim the word ‘budget’, they’re not going to stick around to hear you defend it.

If we’re trying to get peoples attention—to sell them on the magic of caring about their money—maybe we should stop leading with budgets.

Not because budgets are bad, or useless, or unimportant (they’re none of those things) but because nobody cares.

Not at first, anyways.

I mean think about it. That person you know (friend, colleague, family member) that’s ‘bad with money’, do you honestly think all they’ve been waiting for is someone to tell them to get a budget and open a retirement account? If that were the case, wouldn’t they have done it already?

Now before you petition to have me kicked off the interwebs, let me be clear, I’m not against budgeting. I have a budget! I just don’t think they’re the starting point, and I certainly don’t think they’re the be-all-end-all.

If we want to get (and keep!) peoples attention, maybe we should try opening with some different material. Let people get through the door, take their coats off, offer them a drink, before we hit them with the hard stuff.

So where should we start, Kate?

If budgets are out—and retirement, but that’s for another post—how should we get people interested in money? Talking like this I must have the all answers, right?

Nope! (You hate me don’t you?) I think our relationship with money is a good kicking off point, but I don’t exactly know what that looks like.

But this is important. Really, really important. And I want to talk about.

I believe the sticking point with financial advice right now isn’t so much the content, but how it’s being presented.

Rethinking the delivery… That’s the key.

What do you think?


P.S. In lieu of a somewhat-passably-relevant stock photo… Please enjoy this snap I took of pretty red stuff growing on the side of a building in Huntsville, Ontario this fall.

Are you a moderator or an abstainer?

I’ve been thinking about the whole Moderator vs. Abstainer thing. Is it just another label, or is knowing which side you fall on useful? Could recognizing it help you become more productive? Happier?

I always thought I was a moderator because I can do things like eat 2 squares of a chocolate bar and save the rest (Crazy, I know).

However, if I’m honest with myself I approach most of my life with an all or nothing mindset. I’m in or out. Full steam ahead or… no steam. But I act like I’m great at moderation, and that’s what gets me into trouble.

I should be able to watch a couple YouTube videos while eating dinner then get back to studying. I should be able to text back Sarah without checking Instagram. 

Guess what? Doesn’t happen. Like, ever. If I open YouTube I will still be there two hours later, probably watching a grooming tutorial for the dog I don’t own. And I can’t even tell you how often I find myself 48 weeks deep in some meme account on Instagram… Sigh.

I keep doing the exact same thing, genuinely expecting a different outcome. Because, “You should be able to do this Kate!”

What if I stopped trying to fight it? Instead of putting all this energy towards finding a balance I’m not wired for, what if I set up my life to take advantage of my all or nothingness?

I mean, it seems kind of obvious now that I’m thinking about it…

Consider how this might apply to different areas of your life—diet, work, fitness habits, or even the way you spend money. For example, maybe you think you should be able to go to the mall without buying anything because Jane can do that so Hey! You can too right? You keep going to the mall every Friday after work, because “this time will be different!”, and every Friday you buy stuff you don’t need.

Hmmm… Maybe instead of trying so hard to change your reaction to the environment, you should just change your environment altogether. You’re not Jane, accept and move on AKA stop going to the mall every Friday.

Do you see where I’m going with this? Instead of trying to fix our weaknesses, what if we put that energy towards leveraging our strengths? 


P.S. In lieu of a somewhat-passably-relevant stock photo… Please enjoy this snap I took of cream puffs my Mum made last Christmas. I know, I’m sorry.