Categories
Personal Finance

How Do You Mail Letters That You Need To Arrive?

I recently had an unsettling experience. My landlord seems like a bit of a scatterbrain (I sent my rent check the first month, and she CLAIMED she didn’t receive it until 2 weeks later). Not wanting to have a repeat of this situation, I sent my next letter registered. It was recorded at Canada Post that they attempted to deliver it and she wasn’t home they left a notice. On the 3rd of the next month, she sends me a nasty e-mail claiming my rent is late.

After I sent her the information to track the parcel (and walked her through how to look it up), she calls me back and says that she never got the notice and the post office is telling her they lost the package.

I called Canada Post up myself, they said that the local office shouldn’t have said that, that they need to launch an investigation to try to track down the package before they declare it lost and would call me back within 5 business days. The woman assured me that if they lost it they’d refund my postage and refund what it cost me to cancel the check (I told her the package contained a check and a lease). I was a little put out that that’s the only compensation they were offering.

They never called back.

I called, talked to an unpleasant man who says they declared the package missing the day after I called and that their records showed they had called and left a message (they hadn’t). He said a check had been sent to refund my postage and that they wouldn’t refund my canceled check fee ($12.50). He didn’t even apologize for Canada Post losing the letter.

TD Canada Trust, my main bank for checking, happily charged me the $12.50, but warned me that they don’t guarantee that it will actually be canceled (huh?). Instead, they’ll try their best, but if someone cashes the canceled check, I’m on the hook for it. Nice business idea, charge people money and tell them that they MAY get what they paid for. I’m glad to be a bank owner so I benefit from some of their crookedness!

I find it shocking that Canada Post is losing REGISTERED mail, and couldn’t care less. This is the first time its happened to me, but from their attitude it seems like this is a regular occurance and they don’t really care.

To pay my rent I e-mailed my landlord money and scanned and e-mailed the lease document. My landlord wanted post dated checks for the remainder of the lease, but I’m hesitant to lose a bunch of checks (and have to pay $12.50 each to MAYBE cancel them).

How do you ship important things that you need to get to their destination? Has Canada Post / US Postal Service lost your mail? Has FedEx or any of the other commercial carriers lost mail on you? How did they handle it when the mail was lost?

Categories
Investing

Is the Current Market Drop Bad, Good or Irrelevant?

There’s a lot of fear about the stock market right now.  As Mike wrote recently, we’re in a bear market.  You read about people who are upset, people who are excited, and people who don’t seem to care.

What is the right reaction?

I think all three are the right reaction.  Which one is right for you depends on who you are and where you are in life.

The sky is falling, panic!

I think this might be a reasonable reaction for someone who just retired, or was expecting to retire soon.  If your finances are RIGHT at the border of maintaining an acceptable lifestyle, this downturn has hit at the worst possible time for you.

Since you’re still fairly young, it might be reasonable to consider coming out of retirement or delaying retirement (yeah, I know it sucks – desperate times and all that).  If you can leave your portfolio alone (and maybe keep adding to it) for a couple of years, you’ll probably be in a much better place to start / continue your retirement with a bit more of a cushion.

Its too late to sell (the market has already dropped), but if the drop has made it that you can’t live off of a 4% withdrawal from your savings, it’d be better to reassess your situation sooner than later.

Start Spending Like a Drunken Sailor

The Warren Buffett approach views now as a great time to build or add to a portfolio at discounted prices.  If you aren’t currently investing in stocks, now might be a great time to consider setting up something like the couch potato portfolio, or the Vanguard Global Stock Index Fund.  My brother has been making weekly contributions to the TD International Index (diversified international index fund with a reasonably low MER – 0.5%).  Its down 41% YTD, but I think he’s going to come through this smelling like roses.  Some people (like Buffett) have been stockpiling cash, looking to try to find (and buy) the bottom, but I think regular, consistent buying through this will look like a pretty savvy strategy in hindsight.  Some might argue that increasing your contributions right now amounts to market timing, but I think this would be a reasonably good idea (if you have any extra cash).

This might be the ideal outlook for someone who is putting away money they won’t need for at least a decade (such as retirement funds).

What Market Downturn?

If your not willing to invest in the stock market (or you don’t have any money to add to your position, like some grubby grad students we all know), the whole situation is pretty irrelevant to you (feel free to ignore the headlines and carry on with your life).  They’re talking about recession, but chances are if you have a stable job that you’re good at, it won’t make much of a difference in your life.

This would also probably be the case for someone who is well into retirement.  The downturn sucks (a 40% drop could really hurt), but HOPEFULLY you’ve got the necessities of life covered by fixed-income or annuities.  If it’s your heirs that will be hurt by the downturn, let them deal with it and get back to enjoying Matlock.

Wrong Response for You

I was talking to a friend recently and she was worried about the market, and thinking she should stop her bi-weekly retirement contributions (she’s about 30 years away from retirement).  Panicking (and getting out of the market) would be totally the wrong decision for her.  She has time on her side to see a recovery (and probably multiple more bull and bear markets) until her retirement.

Similarly, if someone was recently retired and decided to try and take advantage of the market downturn, I think they might be behaving a bit foolishly.  Things might still get worse, or might not improve for an extended period, and if you’re not working you definitely want to protect the lifestyle you have.  A friend of my father’s mortgaged his paid off house to buy Nortel stocks during the dot-com boom and had to come out of retirement after the crash.  Not fun.

Categories
Personal Finance

Customer Service

Miss Manners once wrote that there’s a fundamental conflict in customer service in Western countries. We like the maxim “The Customer is Always Right” (at least when we’re the customer), but our society is built on the idea that all citizens are equal. How can one person always be in the wrong if they’re equal to everyone else?

Like most of us, I’ve been on both sides of the issue (receiving and providing customer service). Probably like most other people, I’ve been the irate customer, and I’ve dealt with irate customers. Of course, I was always in the right (I was justified in being angry, but none of my customers were).

I have never lived or done business under the motto “the customer is always right”. The brother of a friend of mine had a funny saying to unreasonable customers: “this isn’t Burger King: your way all the way!” I don’t think that’s even Burger King’s motto but it made me laugh.

There’s been a backlash in recent years where people have started “firing their clients”, meaning they stop doing business with customers who are more trouble then they’re worth. I’ve definitely done this. The more rational (and business-savvy) approach is to just charge difficult customers more until they leave on their own, or pay you enough to make it worth dealing with them. There’s a dangerous element to this in that if you get too much on your high horse and become a prima donna to do business with, you may drive away customers (and drive yourself out of business).

I found what I’m fairly sure is Violent Acresold blog, and she used to work at Taco Bell (which it’s interesting how she got from there to the independently wealthy woman she claims to be now). She makes the comment in one post that she couldn’t care less when people got angry at her and said they were never going to eat at Taco Bell again (why would she care? She didn’t get paid on a per-customer basis, and if that store went under she’d be able to get a similar job pretty easily).

I definitely think all people providing services at any business deserve to be treated with dignity and respect. That being said, its quite frustrating when you’re the customer and they’re rude to you just because they’re having a bad day (and there’s not much you can do about it).

In some ways, rather than a “customer is always right” environment, I think this is a healthier way to do business (when both sides stand up for themselves and either can refuse to do business with the other). Unreasonable people are rejected, whether they’re the customer or the provider. In most situations (other than fast food), after they’ve lost enough businesses partners, they’ll eventually realize that its worthwhile being civil to people they want to do business with.

Categories
Personal Finance

Did My Dad Get Scammed?

While visiting the parental units for Thanksgiving, my dad told an intersting story about what happened to their van when he went to get an oil change.

There was a young man (my dad said he looked about 16) who was driving the vehicles into the bay for the oil change.  My dad thought he was acting kind of nervous when he took the keys.  After the oil change, my dad went to start the van and the key wouldn’t turn in the ignition.  After trying for a minute or two, he got out of the van and the young guy ran over and asked what the problem was.  After my dad said the key wasn’t turning in the ignition, the guy said “I’ve seen that before!”, ran off and got a can of WD-40, sprayed some in the ignition and it started.

My dad said he was doing everything but holding his hand out, clearly expecting some sort of reward for getting the car started.  My dad was suspicious about the whole situation (he hadn’t been having any problems with the ignition before this, found the guy’s behaviour quite odd, and was skeptical that the guy would have known EXACTLY what the problem was, and been able to fix it immediately).  Since then ignition has locked up again repeatedly, and each time it requires WD-40 to get it to turn (and start).

My dad’s theory is that the young guy sprayed something in the ignition to make it seize up (and WD-40 fixes the problem temporarily).  He figured the guy hits a few people each day, and tries to make a bit of money getting a “reward” when he gets their vehicle going again.

I’ve done a Google search and haven’t come across a scam like this.  For anyone who knows much about cars, do you think the guy did something to my dad’s van, or do you think he’s being needlessly suspicious (and maybe should have given the guy $20 for fixing the problem on the spot and saving him from having to call a tow truck)?

Categories
Announcements

Wacky Business Idea #13: Talk Bars

There’s a joke, which can be disturbingly true in tech circles, that the best way to start an innovative company is to do things that were cutting edge in Japan 5 years ago.  I’ve always had great admiration for the Japanese ability to take things from other cultures, improve it until its barely recognizable, then sell it back to the point of origin.  Obvious examples include Japan’s automotive industry and Manga / Anime.  Heck, even the much vaunted “Kaizen” is an evolution of work from two Americans.

Widespread in Japan is something they call “Hostess Bars“.  The general idea is that you (you being a Japanese salary-man) come in either alone or with friends.  You’re greeted warmly, taken to a private area of the establishment, then an attractive woman joins you.  She finds everything you say witty and fascinating and encourages you to drink the night away (drinking with you and receiving a commission on the bar bill).

This is the “Big Mac” version of Geisha.

My idea for how to introduce this to the West is have a bar in a big city and maybe just do it one night a week at an existing bar to test out the idea.  Hire a bunch of attractive men and women, and get them to dress and act as a caricature of themselves (so if a woman liked hockey, she’d come dressed in a Leafs jersey, if a man was training to be a firefighter, he’d come decked out in rubber pants and suspenders).  The hosts and hostesses could choose if they’d just sit with singles or groups, and men or women (whatever they’re comfortable with).

The expectation is that the host / hostesses focus on the patrons enjoying themselves, be nice to them and talk to them as long as they want to stay.  Patrons are expected to buy the hosts / hostesses drinks (which would be over-priced, low/no alcohol drinks). When they first come in, the greeter would point out the options of who they can have join them, the patron would pick, then that person would be brought over to their table.

When I’ve pitched this idea to gay men, they think its great until I get to the point of no sex, then they lose all interest (thus proving, once again, that all men are pigs).  That’s been the biggest criticism people (men and women) have made when I’ve talked about this idea, that Westerners wouldn’t be satisfied paying for conversation.

I think this is actually incorrect.  I think many Westerners are desperately lonely and looking to connect with other people, not necessarily in a physical manner.  That would be my biggest ethical objection to starting a business like this:  You’re selling people a fantasy (friendship in this case).  That being said, many businesses sell fantasies, so you’d at least have lots of company…

Categories
Investing

Companies Changing Over Time

I’ve had this post bouncing around in my head for a while. It would have been far more valuable to post it before Oct 7th: some of the ideas may be obvious in hindsight now.

Dividend investors love seeing a long history of uninterrupted dividend payments (ideally growing steadily as well). Often we’ll trot out the idea that “Bank of America (BAC) has been paying dividends steadily since 1903” or “Bank of Montreal (BMO) is the longest-running dividend-paying company in Canada, having been paying a dividend since 1829”.

The reasoning goes, if BMO has paid a dividend for 179 years, through the great depression and 2 world wars, why would it stop today? In answer to that question, Bank of America cut its dividend in half yesterday (back in June MoneyGardener asserted that BAC was priced for a dividend cut, my hat’s off to him for his prediction).

What does 105 or 179 years of dividends really tell us? Clearly no one who was involved with the company when they started paying a dividend is still there. Without a doubt, the companies have changed in major ways over the years. What does their history really tell us?

From one perspective, Bank of America disappeared as a company in 1997 when it was acquired by NationsBank.  NationsBank decided to use the BAC name, but it was really the stronger company.  Perhaps we should view Bank of America as a re-branding of NationsBank, and from that perspective its recent acquisitions of Countrywide Financial and Merrill Lynch make sense.  Perhaps BAC (née NationsBank) is now good at acquiring companies, not at paying a regular and increasing dividend?

The counter-argument is that investors value stability and predictability with companies, and NationsBank adopted the BAC identity to offer that.  By undermining it now, they’re undermining a big part of what they bought from BAC.  There have been cases where stock prices GO UP after bad news is announced, as investors are reassured to know what the problem actually is instead of the rumors that have been floating around.  For any company that is a long term dividend payer, maintaining that reputation has value.  Yesterday BAC kicked itself off of the dividend aristocrats AND the dividend achievers (and, worse, greatly annoyed Mr. Cheap).  I suspect in years to come, they’ll be the cautionary tale to anyone focusing on a blue-chip dividend strategy (Mike and the Canadian Capitalist have always been good at warning that no dividend is guaranteed).  What is the cost to the company of ending its incredible dividend payment history?

BAC made some interesting decisions recently, which we’ll only be able to evaluate from a historical perspective.  They picked up a couple of great companies dirt cheap, but did so by snatching money out of their shareholders’ pockets.  In addition to cutting our dividend, they’ve also diluted our ownership in the company by issuing $10 billion dollars of new common shares (much as GE has also done with Warren Buffett’s recent sweetheart deal – where can I get a deal like he did?).

Only time will tell if the acquisitions were worth kicking shareholders between the legs.

For any BAC shareholders, what are your plans with your stock?  Have you already sold?  Planning to?  My intention is to wait 6 months, let BAC shake off some of the stigma of their dividend cut, then sell it (it doesn’t fit the type of company I want to own anymore).  If it gets some good news and surges close to my average cost, $35.90, before 6 months is up, I’ll take it as an opportunity to dump it).

Categories
Frugal

3 Ways to Monitor Your Spending

I wrote last week about the value, as I see it, of keeping track of things in order to make changes in your life. While a common refrain in personal finance is to spend less than you earn, its obviously quite difficult for people to do so. I think part of the reason is that people have trouble actually seeing what they’re spending every month and where its going. On shows like Gail Vaz-Oxlade’s “Til Debt Do Us Part“, it often starts with the host telling the participants how much they spend each month, and the person being shocked when they find out.

Three ways that I see for keeping track of your spending are:

1. Write down everything you spend

Keep a notebook with you, and every time you spend money on something, write it down. At the end of the day, put each of the purchases in an Excel spreadsheet (categorized however you want). Each day you’ll get more data and be able to better estimate what your average spending is, broken down to as many categories as you track.

Something like:

Does the job reasonably well. If you get sick of carrying a notebook around with you (or are embarrassed to be writing down every cent you spend), just start asking for receipts, put them together in the back of your wallet (or in a section of your purse) and enter them all in your spreadsheet at the end of the day. Another way is to use your credit card for EVERYTHING you can, then at the end of the month you’ll have a listing of what you spent and where (and you can add in any cash withdrawals from the ATM as “miscellaneous”).

Make sure that you record things that are automatically paid for (such as monthly reoccurring charges), or interest on debts.

2. Record Your Accounts Each Month

If its too much work to record everything you spend money on every day, an alternative can be done once a month. This is easiest if you use one checking account for everything (including on-line payments), and don’t carry a balance on your credit cards.

Each month look at the balance in your checking account, compare it to the balance last month on the same day. Add all the deposits, and that’s how much you’ve spent. If you withdrew money to pay down debt, or to move into an investment account, add that money back in (its not an expense).

Say on October 1st I had a balance of $1,794.56 in my checking account and on September 1st I had a balance of $1,385.80. During September $1453.47 was deposited in the account. This means $1,044.71 (1385.60 – 1794.56 + 1453.47) was spent over the course of the month. If I had $25 / month automatically moved to an ING direct savings account, then I actually only spent $1,019.71.

Alternatively you can just add up all the withdrawals and payments and you should get the same number.

This is less accurate than the first method (and doesn’t break down your spending by category), but its easier to do.

3. Record Your Accounts Every Few Months

If you mostly get paid from one source (say a paycheck), you can also make an estimate of your spending by subtracting the current balance in your account from the balance at some point in the past, dividing by the number of months and adding in your monthly pay. Say my account is currently worth $1,794.56, it was worth $2,585.23 6 months ago, and I get paid $1,453.47 / month (after taxes). I’m spending $131.78 ((2585.23-1794.56)/6) per month MORE than my paycheck, for a total monthly spending of $1,585.25.

This is even less accurate and easier to do than the second method.

If you have credit cards or a line of credit and carry a balance each month, you should do the same thing for them that you did for your checking account in order to get a complete picture.

How do you track your monthly spending?

Categories
Personal Finance

Logging

I often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.
-Lord Kelvin

One of the most important first step before making any change in your life is to figure out how to measure it. Its so easy to delude ourselves. I’ve found coming up with an objective measure, then referring to it in order to gauge progress, is the right way to move forward with most goals in life. Logging, measuring something regularly and recording it, is an excellent way to do this.

When I was first losing weight, I would weigh myself every day. Some weight-loss approaches caution against this, as your weight will fluctuate because of things like how much water is in your system, when in the day you weigh yourself or how recently you’ve eaten. In The Hacker’s Diet, John Walker acknowledges this difficulty, but instead of giving up on measurement, he proposes a useful correction, namely to use a 10 day moving average. This is a known approach for removing the jitter (small erratic movements in mostly random directions) from data and seeing what the trend is (some people use a similar technique for “predicting” if the stock market or an individual stock is moving up or down).

Calorie count does the math for you and lets you enter your weight every day. Then they’ll provide the trend line (I used it before it was bought by about.com, no idea if its still good or not).

I credit my daily weighings and being able to constantly evaluate whether I was losing weight (and how quickly I was losing it) as being key to my weight loss. I tried the same approach when I wanted to reduce my living expenses, and was able to drop them from about $2,300 / month to around $1,300 / month.

I’m currently tracking my networth, and every month I can see how I’m doing at general wealth accumulation. I also track my passive income every month, and am looking forward to the day when it matches my living expenses.

I sometimes wonder if I’d had more metrics when I was starting my company if I might have done better. If I’d committed to trying to connect with X new customers each week, or grow billable revenue by Y% each month, it might have kept me focused on the more important aspects of the business.

Any changes in your life that you can’t think of how to log (I’m happy to make suggestions)? Have you ever used logging to enact change in your life?