Categories
Book Review

Book Review: Better

I recently finished Atul Gawande’s “Better” and found it interesting and relevant to the personal finance world.

Dr. Gawande is a practising surgeon and in this book discusses how to improve (get “better”) as an individual, organization and industry.  He uses medicine as the domain of discussion, but manages to generalize his insights to universal ideas and approaches (or at least presents them clearly enough that it’s easy to “translate” them to your own life).

The book is made up of three parts (diligence, doing right and ingenuity) each of which is broken into 3 chapters.  Each chapter explores a different domain in medicine and illustrates where the field could do better and an example of a practitioner who is doing so.

As an example, the first chapter talks about how infections spread WITHIN hospitals, and how often doctors unintentionally spread these infections (going from patient to patient without properly sanitizing in between).  He discusses this from a historical perspective (when the first doctor realized that washing up before surgery was important) and how it’s still a problem today.  He discusses how many times they’ve tried different approaches to get hospital staff to be more diligent about hand washing and how each approach has failed.  The approach that SEEMS to have worked was undertaken at a Pittsburgh veterans hospital.  Inspired by research into malnutrition in developing regions, instead of dictating a new “approach” to sanitation at the hospital, they began organizing groups where they would ASK the hospital staff how they could reduce infections, identify employees who had been most successful at avoiding infections and helped them communicate good ideas to the rest of the staff, published the best and posted the results on a month-to-month basis.  They’ve managed to get the MRSA wound infections (the one responsible for most deaths in hospitals) down to 0.

Extrapolating an idea like this to an organization (or family) that keeps struggling with a well defined problem would be fairly straightforward.  Talk to the people involved and ask them why a problem keeps happening.  Ask them for suggestions on how to improve it.  Publish the results.  Repeat until you hit the desired outcome.

The other 8 chapters are along the same lines, talking about:  fighting infectious diseases, how mobile military surgical units work, patient nudity during examinations, malpractice lawsuits, doctor’s salaries, medical personnel involved with executions, when to let a patient die, the benefits  (and drawbacks) of using a metric to measure your success, where you are on the bell curve of performance (and how to move toward the higher end), and how to not use difficulties as an excuse to not perform (and instead work around them).

I was particularly impressed by the author’s willingness to acknowledge the other side of issues (such patients suing their doctors or participating in executions).  He was able to state his opinion, yet still express the other viewpoints in a respectful manner, admitting which arguments did support the other side.  His suggestions, taking these into account seemed very well thought out and reasonable.

One thing he doesn’t discuss is when it makes sense to focus on improvement.  With medicine as your domain, HOPEFULLY the view is that it’s always good to be better (people’s lives are at stake after all).  If you look at his ideas in the context of your own life, it’s a judgement call when its worth focusing on getting better and when it isn’t.  As an example, Mike is good at what he does for a living, but it isn’t the core of his identity.  If he was going to focus on “improving” his career it’s going to come at the expense of his homelife or his blogging empire.  He has the three balanced in a way that works for him, and most of the ideas from this book would only be relevant if he was trying to shift his focus more heavily to one area (e.g. say he wanted to pull back to part time at work and spend more time blogging).  There is a cost to improvement (which the author acknowledges in passing, but dismisses as the stakes in medicine are so high).

I would certainly recommend this book, both as an interesting read and as something that might give you ideas on how to get better at something that is important to you.  Where Malcom Gladwell’s Outliers focuses on performance from a high level perspective (put 10,000 hours into something and you’ll get good at it), this book focuses on a similar issue but close up to the problems and dealing with immediate concerns.

Categories
Money

TradeKing Deal – Online Brokerage $50 Bonus For New Account

[Edit – Please note that offer is no longer valid]

TradeKing discount brokerage has just announced a new promotional program where they will pay you $50 just for setting up a new brokerage account with them.

TradeKing is one of the lowest-cost online brokerages around with $4.95 trades. You can set up any type of account you want and use your “buy and hold” investment strategy or buy and sell stocks all day long if that’s what you like.  Open a TradeKing account today and get a $50 signing bonus!

How to get the $50

Easy.

  • Click on one of the links in this article or on the banner below.  You can’t get this deal from the TradeKing site – you must go through one of the “deal” links. Open a TradeKing account today and get a $50 signing bonus!
  • Fund your account with at least $2500.
  • Make 1 trade.

That’s it – once you fulfill those criteria then $50 will be deposited into your account.

Categories
Personal Finance

CRA Taxes – Late Filing Penalties – Reader Question

Last week I received an email from a reader (Michael) which was quite unusual for 2 reasons – 1) we rarely get emails from readers and 2) it was a good question.  🙂

A friend of my girlfriend hasn’t filed his taxes in 4 years, and we were just wondering what the repercussions will be when he either starts to pay or gets caught not filing them?

This is interesting – I have one friend who didn’t file taxes for over 10 years. He eventually hired an accountant and got caught up but I’m not sure if he had any penalties or not. I was only late with my taxes once which is how I was able to learn about the penalties and interest charges.

If you thinking about buying tax preparation software then consider software programs such as TurboTax or TurboTax Canada (formerly QuickTax).

Late filing penalty

According to the CRA website, the basic penalty for late filing is 5% of any taxes owing plus 1% for each additional month you are late up to 12 months.

The penalty is 5% of your 2008 balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. If we charged a late-filing penalty on your return for 2005, 2006, or 2007 your late-filing penalty for 2008 will be 10% of your 2008 balance owing, plus 2% of your 2008 balance owing for each full month that your return is late, to a maximum of 20 months.

This may not seem like a lot if you are only a month or 2 late but if you were 7 months late like I was then the penalty ends up being 12%.  The time I was late I think I owed something like $600 so the late filing penalty was $72.  As you can see from the description, the penalties are even more severe if you have previous late charges.

Interest charges

As if the penalties aren’t enough – the government also charges interest.  The rate is usually about 5% annually.  $600 owing on a 2008 return filed 7 months late would be about $17.50 which isn’t too bad.

Add it up

My total penalty for the $600 owing – 7 months late would be $89.50 or 15% of the amount owing.   I remember being quite surprised at how much the penalty was since I didn’t realize it got higher by the month.  I had thought that once you are late, it didn’t matter how late you were.  If nothing else – I never filed late again. 🙂

Penalties are only charged on taxes owing

One key thing to remember is that if you don’t owe anything then there will be no penalty for filing late.  Hopefully the reader’s friend is in this situation.  There is recourse for getting taxpayer relief but after skimming the article it doesn’t look like “not getting around to it” is included in the list of circumstances where the penalties and interest might be waived.

Get it done

My suggestions:

  • Make every effort to file your taxes every year on time.
  • If you are late then get it done as quickly as possible since the penalty and interest charges increase every month.
  • If you have a situation where you are way behind in 1 or more tax returns then make it a priority and get it done.  Hire an accountant or tax preparer if you have to.
  • Hire a good tax attorney if you are really in trouble.

Getting caught?

One part of the reader email I didn’t address was about “getting caught”.  I don’t know if the CRA will send you a letter or arrest you or what.  I would assume they already have some idea if you owe money and if it is a high amount they might be giving you a call.  Does anyone have any experience with that sort of thing?

Categories
Frugal

Extreme Cheap: The Cheapest Family in America

I’ve done a number of posts on extremely cheap individuals (Daniel Suelo, Charles Long, Don Schrader) and groups (Freegans) but have always had a soft spot for stories about the Economides (self-professed to be “America’s Cheapest Family”).

While they certainly aren’t shy about self-promotion, I think they’ve actually built a unique lifestyle that works for their entire family (at least they seem to all be in it together when the TV cameras are rolling).  Basing their philosophy around tips like “Don’t go to the grocery store often”, “Leave the kids at home” and “Slice your own luncheon meat” (for grocery shopping), they’ve raised a family of 7 on $350 / month of groceries.  They also managed to pay off their first house in 9 years (while earning an average income of $35k), so they’re definitely living on the cheap.

I mentioned in a comment on my Charles Long post that I’d worry about putting my children through a lifestyle like this.  By the time your kids have really made up their mind whether this is ok or not (once they’d seen how differently their friends live), they’d probably already feel scarred for life if they were unhappy about it.  In interviews the kids seemed fine and happy with the lifestyle.  Their daughter fielded questions about this in one interview and said that she wears brand named clothes she got at the thrift store and drives a fixed up used truck that she loves.  The one part that bothers me is one of their few splurges is for professional hair styling for the mother.  If I was in their shoes I’d focus on “we’re all in this together” and either everyone in the family who wants a store haircut get one or none of them do (“sorry honey, your mother needs to look as good as possible, but you can go to the prom with a brush cut”).  Who knows though, maybe the mother is the only one able to cut hair and no one else has ever been interested in learning in order to cut hers.

I think it’s really cool that this family has been able to turn their frugal philosophy into a “family business” of spreading the gospel (through their website and newsletter). Much as with Charles Long, I get the feeling that by choosing not to chase the “consumer dream” they’re able to focus on spending time with one another and what they really value (beyond “stuff”).

Videos

[youtube http://www.youtube.com/watch?v=cKJTxuzvkXw&hl=en&fs=1&]

[youtube http://www.youtube.com/watch?v=MdN5jDkH7iA&hl=en&fs=1&]

[youtube http://www.youtube.com/watch?v=p5O8ZzJfro4&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1]

[youtube http://www.youtube.com/watch?v=V2Ixduy9VKc&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1]

Would you want to be a part of a family like this?  How would you handle it if part of the family wanted to live this way and part didn’t?

Categories
Money

Cash For Appliances – List Of Eligible Appliances For Rebate

After the quick success of the Cash for Clunker old car trade-in program, the government is now planning a similar rebate plan for your old appliances.  Simply put – there will be cash rebates ($50 to $200) available which can be applied if you buy new appliances with an Energy Star seal.  The main difference with this program is that unlike the Cash for Clunker program you don’t have to trade in your old appliance to get the rebate.  So if you want to move your grandfather’s old 1950’s fridge out to the garage then this program won’t interfere with those plans.

List of appliances eligible for rebates.

The Cash for Appliances rebates will be awarded for the purchase of appliances which have the Energy Star seal.  Make sure it has the seal!!!

Here is a list of the eligible appliances:

  • Refrigerators
  • Air conditioners
  • Washing machines
  • Freezers
  • Central and window air conditioners
  • Dishwashers
  • Furnaces
  • Water heaters
  • Heat pumps

More information on this program

Read a complete article about the cash for appliances program
[edit Dec 9 – Cash for Caulkers

Categories
Announcements

Return To Questrade Deal, Blog Highlight and Last Linkstuff

A quick reminder that the Four Pillars “Return to Questrade” deal is almost over. Check out my original post for details – if you went to RBC last year for the 1% deal and want to return for the $5 trades then this is the time.
My wife and I have completed moving our accounts back to Questrade and I have to say it is nice to have $5 trades again (not that the $10 trades at RBC were that bad) and the best part is that I can move money in and out of my Questrade accounts from my CIBC chequing account which I couldn’t do at RBC Direct.

I think this is going to be the last linkpost for a while (maybe forever). They are fairly time consuming and I’m not sure that they add much value for anyone.

The rest of the links

Thicken My Wallet questions – do you own too much house? Along with the Money Gardener, he tries to figure out how much house is too much.

Canadian Capitalist asks if fixed-income investors have the same problems as equity investors when it comes to sticking to their investment plan?

ABCs of Investing wrote about tax-free municipal bonds.

Carnivals

1031 Exchange

Carnival of 20 Something Finances

Carnival of Road to Financial Independence

Categories
Money

Bill H3548 – 13 Weeks Unemployment Benefit Extension For High Unemployment States

The past year has been a bad one for the American worker.  Because of the 2008 financial crisis and ensuing recession – millions of Americans have lost their jobs.  The current national unemployment rate is 9.7% as of Sept 4.  While many workers will find new jobs within the time period of existing employment benefits – many more will run out of benefits before finding a new job.

On September 22, the House passed legislation called Bill H3548 which will allow any states with a total unemployment rate (TUR) of 8.5% or higher to be eligible for federal funding which will allow 13 more weeks of extended unemployment benefits for those people who have exhausted all the current benefits.

This move was made as part of the ongoing 2009 stimulus package which is designed to help the economy recover as quickly as possible and for long term unemployed people to be able to keep paying the bills while they look for work.

Which states are eligible for these benefits?

The eligible states are:

ALABAMA, ARIZONA, CALIFORNIA, FLORIDA, GEORGIA, IDAHO, ILLINOIS, INDIANA, KENTUCKY, MAINE, MASSACHUSETTS, MICHIGAN, MISSISSIPPI, MISSOURI, NEVADA, NEW JERSEY, NORTH CAROLINA, NEW YORK, OHIO, OREGON, PENNSYLVANIA, RHODE ISLAND, SOUTH CAROLINA, TENNESSEE, WASHINGTON, AND WEST VIRGINIA. PLUS THE DISTRICT OF COLUMBIA AND PUERTO RICO.

When can I get these extra benefits?

At the moment this bill has not become law (as of Sept 24).  The senate still has to approve the bill and it is unclear how long it will take.  It is anticipated that the bill will pass Senate but it might take a while.

Keep in mind that the previous extension (Extended Benefits) required state law changes since EB is a joint federal and state program. EB required a change in federal law and then required state laws to be amended.  The legislation that recently passed the House (H3548) is an extension of Emergency Unemployment Compensation (EUC). This does not require state law changes so it won’t require the state legislature to change state law.  This means that it should take less time to get this extension than the previous one.

How much unemployment benefits are available now?

Most states have a basic amount of 26 weeks (6 months) of employment benefits plus any extra weeks available because of various unemployment rate triggers.  These are funded by the states and/or the federal government.

Categories
Real Estate

Finding and Selecting a Tenant

I’ve had a draft of this post sitting in the Four Pillars draft queue for over a month, and after a recent question by JN it seemed time to finish it and post it.  While I hope it gives a decent overview of finding, selecting and finalizing a tenancy for a rental property, please keep in mind that I’ve only actually gone through this process once.  The tenants have stayed for 3 years (but I can’t stand on my results), and I put quite a bit of effort into figuring out each stage in the process (reading, talking to other landlords, going through the proper procedures, etc).  A previous post on this topic was part of my “Getting Started With Investment Real Estate” series.

Philosophy on Renting

Before you even start trying to rent out your property you must know yourself and what you’re looking for.  Do you need to get a tenant (any tenant) in the property as soon as possible?  Do you want to focus on finding the best tenant possible, even if it takes longer to fill the unit or leads to a lower rent?  Do you want to maximize the income from the unit?  Do you want to minimize the bother your tenant causes?  Your answers to these questions will affect how you go about the process of finding a tenant.

For the record, my belief (which underlies my suggestions in this post) is that no tenant is better than a bad tenant (and I’d rather minimize bother than maximize income).

Advertising

The first step in getting tenants into an empty unit is to let people know that it’s available.  If you have the time and inclination, I would first try to advertise through every available free channel (e.g. Craigslist, Kijiji, posters in the neighbourhood).  If you aren’t getting a large number of responses (at least 10+) you need to crank up your advertising immediately and maybe consider paying to post in the local newspapers or paid internet postings (such as ViewIt in Toronto).

I provide as much information as possible in the advertisement to help people make their decisions.  I put together a website for the unit (which I referenced in each ad), which had pictures, maps of the area, and lists of local amenities.

Rent

Determining what is market rate for a unit is tough.  If more than half of the people showing up to view the apartment choose not to fill out your application then your rent is too high.  Lower it.  Keep lowering it until you get half the people to fill out your application.  If someone takes an application to fill out at home or says they’ll contact you later, they’re just being polite, they aren’t interested. If everyone is filling out an application than your rent is too low.  I’m not 100% sure the best course of action in that situation (I’d probably pick the best person, and be upfront with them that I know they’re getting a good deal and warn them that the rent will be increased at the end of the lease).

Showings

A large number of people won’t show up for appointments.  If they find another place or something comes up, for whatever reason they don’t bother to let a potential landlord know.  I suspect tenants view it as one situation they’re in control and can safely stick it to a landlord.  When I was renting my unit I’d rush over to show it whenever was convenient for the people who called.  Next time I’m doing it I’m going to plan all the showings at one time (maybe on a Saturday afternoon) and make them 20 minutes apart.  I’ll take the name of anyone who can’t make the showing and offer to contact them if it doesn’t rent.

I walk around and point out the nice features of the apartment and answer questions.  If there’s something that’s a negative about the unit I don’t point it out, but I certainly acknowledge it if the tenant inquires (such as no security guard, no air conditioner, or no dishwasher).

Application

If you do a Google search for rental application or ask any friends who invest in real estate for a copy of their rental application you should be fine.  First and foremost you don’t want any illegal questions on your form.  The purpose of the form isn’t really to get the answers (although they might rule out some applicants).

If someone has a convoluted explanation for why they can’t tell you their current landlord or why they don’t have a current employer I’d probably drop them as an applicant.  There may be good reasons why they are in the situation they’re in, but don’t spend your time trying to assess their unique challenges.

Check out anything they’ve listed and see if you can verify it (I was able to tie a woman’s “current landlord’s” phone number to her father’s consulting firm with Google).  If they’ve lied on the application, reject them.

Contact current and previous landlords.  If they’ve ever had problems collecting rent reject that applicant.

Keep the form.  Sometimes if you run into problems later their “personal references” will be a way to track down a tenant or may help you with other problems.

Credit Check

In Ontario you can do this with Rent Check Credit Bureau.  They’re expensive for only one unit though ($20 per check and a $100 annual membership fee or something like that). You can avoid the membership fee if you join the landlord self-help center for $25.

You want to look for delinquent payments (if they aren’t paying other people on time, why will they pay you in a timely manner?).

If there’s problems with the credit check, reject them and move on to the next applicant.  If you run out of applicants, advertise again and show it to some more people (perhaps lowering the rent if you’re having trouble getting enough applicants to find a good one).

Lease & Keys

At this point you have a tenant, fill out a lease (you can sometimes buy one at a bookstore, get one from a landlord’s association, or ask for one from a friend who rents properties), get first and last months rent (and damage deposit if local laws allow).

Let the other applicants know that you’ve rented to someone else.

I don’t claim this is gospel, and if anyone with more experience disagrees with anything I’ve written, please comment below.  Also comment on any alternative approaches you’ve had success or failure with.