Author: Mr. Cheap

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Announcements

Under Promise, Over Deliver

I really liked the business principle “under promise and over deliver” from the first time I heard it.  It made total sense to me:  follow through on your commitments and exceed what you said you’d do.  I think this is a good approach to all facets of life, not just running a business.  Your boss asks when you can get a project finished by, you give a date and manage to turn it in 2 days early, perhaps with enough time for some feedback and to create another version.  Your wife wants you to help out more around the house and you commit to walking the dog every morning (and end up putting on coffee and taking out the trash at the same time).

I have, on a  number of occasions, interacted with people who wanted to make me happy while we were talking, so they promise me something that it later turns out there was no chance of them delivering.  The end result was I become MUCH less happy after they’d failed to do what they said they would.  I did some proof reading of an academic paper years ago, and when I showed up for a scheduled editing session, the author would say it wasn’t ready, but to come back in 3 hours or the next day and each time I came back, he needed more time (it happened 4 or 5 times).  I was livid by the end of it.  It would have been absolutely fine if, in the first place, he’d just told me to come back in a week.

Rogers and Bell like to deliberately do the same thing.  They offer a good deal to get you as a customer, then spring a bunch of “hidden” fees and changes to the deal to make it more profitable to them.  I think this is a large part of why people hate both companies.  The deal sounds great when they are trying to get you to sign up, then it stinks when you’re a customer.  They over promise and under deliver and it drives people nuts.

In my opinion, the best way to make a commitment to someone, is to honestly appraise (to yourself) what you’re willing to do for them, then pull back a bit to give yourself a “fudge factor” (quote a slightly longer delivery time, slightly higher cost, slightly lower quality, etc).  If the project takes longer (or is more expensive), you’ll still be able to fit within your original estimate.  If you’re able to complete it on the original estimate, you look like a hero.

On Star Trek, the original series, the chief engineer Montgomery “Scotty” Scott (“Beam me up Scotty!“) had a reputation as being a miracle worker. As time passes in the series, it comes out that as well as being brilliant, he routinely pads his estimates.

There are other opinions on this.  Basically the counter argument is that it undermines people’s trust if you quote them something then exceed it (they’ll wonder why you didn’t commit to delivering that initially).  There’s also the fear that people will “compensate” if you consistently over deliver and start expecting it.  I don’t find either of these convincing arguments against taking this approach to interactions.  This happened to poor Scotty as Captain Kirk would cut the time allowed for repairs.

What do you think of “under promise, over deliver” as a mantra for “customer” interactions?

Categories
Book Review

Book Review: Your Money or Your Life

There are a few books that are beloved and can be a bit dangerous to review.  YMOYL is the bible to a number of people, so I’ll start with saying that I think there’s a lot of good stuff in there, it’s a solid book and just about everyone should read it.  In spite of this, I think there are some major weaknesses in it.

Overview

Joe Dominguez was a Wall Street Analyst who developed a program to retire at age 30, then started teaching a course (and eventually wrote this book) to help others do the same.  Since he passed away in 1997, his co-author Vicki Robin and a new collaborator Monique Tilford have continued updating the book and “spreading the gospel”.

The core of the book is the idea that their is a point of “enough” where your needs and reasonable desires are met and the law of diminishing returns kicks in:  you enjoy each little bit extra less.  They present a plan to identify this point of fulfillment, bring your spending and earning in line with it, and eventually retire early with investment income providing what you need while you devote your life to what you really want to do (instead of whatever you feel forced to do right now).

Apparently “The Complete Tightwad Gazette” author Amy Dacyczyn took their course and it was part of the lifestyle change she followed which led to her excellent newsletter (I actually recognized her from an example in the book where she was just identified as “Amy D.”, then later they made reference to her full name and newsletter.

Specific Strategies

How they recommend getting to this point is the core of the book, and in my opinion what REALLY shines.  Basically they suggest figuring how much you’ve earned in your lifetime (more on this later), your networth, and tracking your income and spending.  From here, they get you to figure out what your REAL hourly pay rate is after you’ve accounted for all the associated costs with your job such as work wardrobe, commuting or buying beers at the pub to decompress.  Combining these two, you see what your spending is on various items in terms of your time (e.g. you might be spending 30 hours of “life energy” every month on rent).  For all your spending, they advocated deciding if your spending is in-line with your values or not, and suggest making changes in areas where it is not.  They advocate maintaining a wall chart where you track this from month-to-month, as well as your investment income, and as a trend line becomes clear, estimate when you can quit your job and do what you really want with your life.

Mixed Philosophies

I think the strategies they present are EXCELLENT, but mixed in with them are some extra world views such as sustainable living, environmentalism, anti-consumerism and anti-capitalism.  I don’t particularly have a huge problem with any of these (I have friends in each of these camps), but they’re all tangential to the core of the book and I would have preferred if the authors had stayed a bit more focused.

Much like Dave Ramsey forces you to take Christianity with your debt-reduction advice, I think the authors are using readers’ interest in getting control of their money to force these other views on them.  Again, it’s fine to be a member of a specific faith or to be an environmentalist, but there are a large number of secular people who are interested in reducing their debt and there are a large number of people with other world views who are interested in getting control of their spending.

It seemed like all of their examples were people who followed this program then went on to get into hippie stuff.

Dogmatic

I found in a number of places it was their way or the highway.  You don’t get an explanation:  just do as you’re told.  The first step in their program is to determine ALL the money you’ve made in your entire life.  EVERYTHING.  They expect you to try to account for that 5 dollars you got for Christmas when you were 5 years old and that quarter you found on the street when you were 15.

When you do this step set your sights on impeccability – have you really searched your files and your memory banks for all your income?  Yes, you could settle for a “close enough” answer – but we suggest you go for the former, since the power of this program increases with every ounce of honesty and integrity you invest in.  Rounding to the $100 is looser, but over a lifetime that might be plenty.  Rounding to the $1,000….  well, people who do a halfheated job often get a life to match!

I almost stopped reading at that point.  I’ve worked most of my life (delivering flyers then newspapers then flipping burgers as I got older) and trying to estimate my lifetime earning to the nearest $100 would be an insane amount of work.  The only point to this exercise seems to be to develop a realization of how much money has gone through your hands.  For people who view $100,000 as unimaginable wealth, it makes it more concrete if they realize they’ve earned, and spent, this amount many times over in their life.

I disagree with them about the level of detail needed:  I think someone could complete this part of their program with a FAR, FAR rougher estimate then they insist on.

Focus on Your Strengths

They spend a whole chapter echoing the investment advice some friends have told them about, which seemed like another waste of space to me.  In the original version Joe Dominguez suggested buying treasury bonds exclusively.  In this version, they try to present a larger picture of investing and fail miserably.  I think they would have been far better off to suggest Joe’s approach as a start, and encourage readers to learn themselves about investing once they got to that point.

Final Words

Again, I REALLY love this book and think its focus on making specific measurements about your finances and using these measurement to enact change in your life is first rate.  The accounts of people’s lives who have followed the program are interesting and drive the points home.  I think there are some parts that could be streamlined to make it a better book, but in spite of this I heartily recommend it.

Categories
Personal Finance

Profiting from Failing Businesses

This post is part of our scam category. With scams the best defense is often to discuss them and let people who haven’t run into them know how they work. Unfortunately, talking about scams can seem like a “how to” for scam artists, which IS NOT my intention here. I always love reading about scams and cons, in part to protect myself, and in part out of amazement at how devious people can be when they’re trying to part us from our cash.

I’ve often wondered if there’s a way to profit from a business destined for failure.  While I haven’t come up with any legitimate way to do so, there are well explored way to do so if you’re willing to defraud investors.  I’ve heard about this in fictional settings, but have never personally encountered it in the real world.

The core idea is you set up a business destine for failure (guaranteed to lose money), but in some way sounds good.  You go around looking for investors, the same way you usually do, but instead of selling some portion of the business to one person, you massively oversell it.  For example, you could started up a restaurants, and sell 49% repeatedly to 10 people (so, collectively, they’d own 490% of the restaurant).  You don’t tell any of the investors about the others (you pretend it’s just the two of you), and you show them the books every month as you lose “their” money.  In reality, you’re only losing a portion of the money you raised (when the restaurant goes bankrupt, you lose 100% of the value of the restaurant, and keep the remaining 390%).

For example: Say I’m opening a restaurant with $100,000 of seed money.  I collect $49,000 from you and 9 other people.  Each month we lose money (which I show to each investor), and once $100,000 is lost I shut the place down.  Since I raised $490,000, losing $100,000 leaves me with $390,000.

It’s obviously key that each of the investors not find out about the others.  Forged paperwork probably won’t be looked at too closely (since people are more eager to assert ownership over something of value, not a bankrupt company).  The biggest weakness would probably be taxes (if all the investors claimed a lose on the same venture it might raise red flags at the CRA).  The investors would have to be kept quiet, perhaps with some story why it’s important that you present yourself as the full owner of the restaurant.  The worst case would be if two investors got talking to each other and both bragged about being half owners!

This was the scam at the heart of “The Producers“.  Basically a terrible Broadway producer (who made one flop after another) and an accountant cook up this scheme and it blows up in their face when the production is a surprise hit.  This was also a small side-plot in Ayn Rand’s “The Fountainhead“:  a group of investors hire Howard Roark to design a resort, Monadnock Valley, when they think his idea sounds crazy, but it also blows up in their face when it turns out to be a good design.  Some real world variants on this are detailed at Crimes of Persuasion.

Part of the beauty of this scam is that the perpetrator doesn’t even have to leave town.  Investors may be upset with him, but if they accept that business entails risk, they might even be willing to invest in future projects.  A truly morally-bankrupt promoter could offer a number of investment opportunities, some profitable, some deliberately sabotaged and perhaps stay a respected member of the community while repeatedly defrauding investors.

If the scammer is prepared to leave town…

If you’re not worried about keeping your good name, it’s even easier to execute this sort of scam.  It’s possible to sell investments in a business that doesn’t, or won’t, exist.

When I taught English in Taiwan a man I met claimed that many locals started up computer companies, sucked up a bunch of investments by making the company look like it was doing well, then drained the company bank accounts and fled the country.

Even promoters selling rotten investment “opportunities” like timeshares or condo hotels could be considered performing a variant on this.

Protecting Yourself

This is a high pay off type of scam targeting wealthy individuals, so avoiding it is very different from some of the small scale scams we’ve posted about.  First and foremost, this will target people with money, so being poor (and not able to invest) is the easiest defense.  Being cautious around any investment that requires secrecy is probably another good policy.  I’d avoid these generally, unless there is a VERY good reason for the secrecy.  I talked to a man once about doing a rent-to-own deal with him on my condo, and he told me about 5 times that he didn’t trust lawyers and wanted to work the agreement out between the two of us without involving one.  Definitely creeped me out and I’m sure he was up to something (obviously I didn’t do business with him).

By the time the venture has failed, I’m not sure how much good it would be digging into the paperwork and finding out you’d be scammed.  It would be worthwhile to try to prove the scammer’s wrongdoing, but the chances of recovering money at that point would probably be pretty slim…

Have you heard of anyone being taken in by a scam like this (local investors, friends or family)? Do you think this is happening often in the real world, or is this a scam that sounds better on paper rather than something that would be common?

Categories
Business Ideas

Salespeople, not Advisors

I’m often struck at the stark difference between salespeople and advisors, how oblivious some people seem to be to the difference and the lengths some salespeople will go to present themselves as advisors.

It’s a spectrum, and the differences can be a little fuzzy, but if we think of a benevolent family doctor / general practitioner on the advisor end, and a stereotypically sleazy used car salesmen on the other I think there’s some worthwhile thoughts that can be had. The doctor has an ethical code, a standard of behaviour, and a legal duty to her patients. The car salesmen learns techniques from his manager for overcoming objections and convincing customers to buy something they didn’t plan to.

Obviously (although maybe not SO obvious since this seems to be what every comment we get from real estate agents boils down to), I’m not saying ALL car salesmen are bad or ALL doctors are good. I don’t think I’m even saying one is “good” and the other is “bad”. They’re just different, and it’s important to keep the difference in mind when dealing with salespeople or advisors.

Some salespeople will claim that they’re the “good guys” because they follow a “problem solving” sales approach: they sell customers solutions to their problem. This is fine for what it is, but I went to the doctor a while back to get a wart burned off, and the first thing she did was offer me other solutions (leave it alone and it will eventually go away or use over-the-counter wart patches). Finally, she said, she could burn it off but would have to charge me $30 (and didn’t push this option at all, if anything she seemed to be encouraging me to go with the patches). How many “problem solving” salesmen would suggest a free solution or a competitor’s product?

Again, there’s nothing wrong with salespeople. When I go into a clothing store, I understand the salesperson is there to sell clothes: I’m not expecting an honest style consultation. When I eat at a burger joint or a hot dog stand, I don’t expect the vendor to warn me the food is bad for me. I don’t expect a mortgage broker to talk me out of home ownership.

Fiduciary Duty

For some relationships (such as parents, teachers, doctors or lawyers) there is an explicit legal requirement that extreme loyalty is required. This is enshrined in law, and when this loyalty is lacking, the fiduciary risks getting in big trouble. This is probably the best indication of someone who will act in your best interest: have you heard well publicized cases of fiduciaries who didn’t live up to their obligations being severely punished? I’ve heard of parents, doctors, lawyers, priests and teachers all getting into serious trouble when they haven’t lived up to their obligations. I’ve heard stories from many unhappy customers of real estate agents, bank employees, and financial planners, but have rarely heard about these salespeople getting into any trouble until it gets to the scale of Bernie Madoff.

Why the Confusion?

One question might be, if they aren’t proper fiduciaries (with real consequences if they fail in their duty), WHY do some salespeople try to present themselves as such? Clearly, it’s a lot easier to sell to people who trust you. A large number of real estate agents have suggested that if you don’t trust your agent, go find one you do trust. I don’t understand why I need to “trust” an agent I work with. Can’t I just hear their recommendations and decide whether or not to follow them? There’s a range of services they provide, MUST I turn off my brain and blindly follow their every recommendation in order to work with them? Even medical doctors don’t expect that…

As an aside, often real estate agents come up as an example in our posts just because we have a history of posts on the topic. I’m not claiming that real estate agents are worse (or better) then any of the other quasi-professionals who are desperate to call themselves professionals.

To further muddy the waters, some positions have flexibility about whether to operating as a salesperson OR advisor. Financial planners are probably the best example of this. When they work on commission they’re usually salespeople. When they’re fee only they’re usually advisors. Some enterprising individuals call themselves “fee based” hoping to ride the goodwill generated by fee-only advisors, but instead collect a commission ON TOP OF the fees they charge.

Limits of Advisors

Even when there is a legally protected relationship, there are limits. For example, although legal guidelines dictate how they go about it, a psychologist, lawyer or other professional can usually terminate a client relationship for non-payment of fees.

As well, obviously they can only advise on their area of expertise (my dentist gives lousy asset allocation tips and my optometrist is shockingly ignorant on the history of programming languages). John T. Reed has an excellent article where he discuss the “team of advisors” recommended by many get-rich-quick-gurus. One of the more interesting comments he makes is that there will be times when advisors recommend different paths forward, based on their areas of expertise. What makes sense from a legal perspective, might not from a tax perspective.

People need to know enough about the areas they’re being advised on both to resolve these conflicts and to identify whether someone actually IS an advisor (or if they’re just a salesperson).

Categories
Business Ideas

How to Network

Mr Cheap is out of town and may (or may not) be responding to comments.  Rest assured, he’ll read each carefully once he’s back.

This post, obviously, isn’t meant to be a comprehensive overview of networking. Entire courses, books and seminars have been devoted to that.  This is simply intended as a primer for people who know they should be networking, but have no idea how to start.  This is intended to be the sort of light networking where you send feelers out for something concrete, such as:  a job lead, a specific piece of information, advice or a small favour.  I don’t have any special training, or even particular aptitude, for this sort of thing, but I’ve usually been successful asking people for small things and this post is how I go about it.

I’ve run into people who clearly have the appetite to do some serious networking, and will happily put the work in, but seem to have no idea how to go about it.  Obviously I’m talking about career networking here (not computer networking, social networking or business networking).

People Want to Help You

In “The Alchemist“, Paulo Coelho claims that “when you want something, all the universe conspires in helping you to achieve it.” I’m not sure if I buy that literally, but in spite of popular wisdom, I believe most people want to help other people.  We all consider ourselves “good people”, and when someone asks for help (particularly if it’s something easy to do), people are usually happy to oblige.

Recently I needed the answers to some real estate questions and I e-mailed Alexandra (a frequent commenter here) and Rachelle.  I wrote a reasonably short e-mail, was specific in what I needed to know, and within 24 hours both had responded to me and provided excellent advice (and, happily, also answered follow-up questions).  This was the first time I had e-mailed either woman (I haven’t met either of them), and neither had any particular reason to help me, but both did.

Example

I’ve commented on his blog, he’s commented here and we’ve exchanged a couple of e-mails but I’ve never met Larry MacDonald in person.  Say I was interested in working at Nortel (which would be difficult since they’ve declared bankruptcy).  I might think of Larry immediately, since he wrote a book about Nortel.  I might write an e-mail to him that would be something like:

Hi Larry!

Hope everything is going well.  I enjoyed your recent post on your BCE shares (I think you should hang on to them) and searching for yield (I haven’t gotten my head around investing in preferred shares yet – Tom Connolly is firmly opposed to them).  I’m currently job hunting and am thinking about applying at Nortel, ideally in a developer or testing role.  If you know anyone who might be a good contact within the company (I’m trying my best to avoid HR 🙂 ), or if you hear about anything in the next few months, I’d appreciate it if you kept me in mind!

All the best,

Mr Cheap

Now a few things to point out.  I don’t write an angst filled diatribe against the modern economy and why it’s unfair that I’m job hunting (why should Larry care?), I keep it brief (he’s a busy man) and easy to help me (I’m just asking him to put me in touch with someone – 5 minutes of his time).

One tip an uncle gave me once is not to ask people for immediate help, but to ask them to keep you in mind.  That way, even if something isn’t immediately available, they might think of you when something comes up.

Don’t Harass People!

If the person doesn’t respond for a few days, it’s ok to send 1 more follow up, but after that leave them alone!  It’s great if someone is willing to help you out, but usually they don’t owe you anything, so don’t bug them.  Similarly, once they’ve helped you out, don’t immediately ask for more help.  Some people seem to find someone helpful, then proceed to be a nuisance and suck that person dry.  I think this is quite short-sighted.  If they decline to help you, or offer something that isn’t helpful, don’t get angry at them!  (I feel weird even writing this, but I’ve known people who do this so maybe it isn’t as obvious to everyone as it is to me).  Thank them for their time and keep looking for someone who might be more helpful.

It should go without saying, but obviously if you’re asking people you only know casually for help, you should be open to helping other people who ask YOU for help (and should DEFINITELY jump to it to help someone who has helped you in the past).  Rachelle seems to be thinking about getting into blogging, so I hope she contacts me if I can help her with any blogging or technical issues.

What are you best networking tips?  Have you found that people you know casually have been willing or unwilling to help you in the past?  What sorts of things have you asked for help with?

Categories
Real Estate

Motivated and Unmotivated Buyers and Sellers

In a recent real estate post, frequent commenter Ryan Martin made a suggestion, in reaction to a statement at the end of my post:

Mr. Cheap:  “I’d certainly be willing to sell if the right opportunity presented itself, but I’m not in any rush either”

Ryan Martin:  “Mr. Cheap, judging by your last paragraph, it sounds like you want to sell. I suggest you be proactive instead of waiting for the opportunity to present itself.  Real Estate can be stressful if you let a decision like that drag on.”

Which made me thoughtful for a while.  Should a decision to buy or sell be an either/or choice?  Either you want to sell, and will take the best price you can get, or you don’t want to sell and won’t even listen to offers.

My gut feeling is emphatically NO! The best prices will be obtained by buyers and sellers who are willing to walk away from a bad deal (or even hold out for a beter-than-average deal).  Anything we own has an intrinsic value to us, and if market rate is below this, there’s no reason to sell (hang on to it and continue to enjoy it).  Heck, I regularly see people who demand a great deal or they won’t do business.  They may have a hard time finding someone to do business with, but if they do they’ll get a great deal.

In “get rich quick through real estate circles”, finding “motivated sellers” is scheme #1 (a Google search on “motivated sellers real estate” turns up almost 4 million hits).  The idea goes, find people who need to sell urgently, such as people going through a divorce, and demand an insanely low price from them.  I could be wrong, but I’m sceptical that there are many people, even those going through a contentious divorce, who are looking to give away their house (except maybe for this property Mike saw).  In fact, I suspect the opposite situation, where people expect an unrealistically high price for their property, is more common.

I’ve been in situations where I’ve been willing to buy something, but only if I get a great deal.  Often I get that great deal.  Without being obnoxious, sellers realize when a buyer is on the fence about whether or not they are going to buy and a smart seller will bring out their best price.  When I’ve shopped in marketplaces in developing countries, thanking the seller for their time and starting to walk away often resulted in a dramatic reduction in the price:  they realized that the negotiation was going to come to an end without a sale, which made them very motivated to find a price I’d accept.  Alexandra has commented that her husband has used the same strategy to good effect buying triplexes in Toronto.

Comparably, I think being willing to sell something, but only if I get a great deal is an EXCELLENT way to think about something you’re happy to keep.  Years ago I saw a property in Toronto that was a condo being rented to 4 students that had been TRASHED!  The carpet was buckled, they had taken out a lot of the light bulbs and wrapped aluminium foil around the sockets, and there were massive numbers of ants crawling all over the kitchen.  Their asking price was about market rate for the building, which seemed pretty optimistic to me given the state it was in.  I made an offer that was significantly lower (to compensate for the repairs) and they counter-offered $1,500 off their asking price.  Their agent wanted me to make another offer, but at that point I told him we were all wasting out time and I’d let it go (and told him to contact me if they were willing to be more realistic about the condition of their unit).  They never contacted me, and my hat is off to the sellers.  They had tenants in place and were making money, and had managed to find an agent who would actually show the place and try to push their crazy price.  It was no skin off their back to keep waiting and either get the rent checks, or possibly make a sale at an incredibly good price.

That’s smart.

For a personal residence, obviously you wouldn’t want to keep the property in open house condition for month-after-month while you execute this strategy.  Likewise, I’m not going to run off to Toronto to show my property a few times a week and ask a price no one is going to pay.  HOWEVER, if a tenant or someone in the building mentioned wanting to buy, I’d *CERTAINLY* talk to them, and if they were willing to pay a premium I would be happy to sell.

To be fair, I don’t think what I’ve detailed above is EXACTLY what Ryan was saying in his comment.  What I took from his comment was that he suggests, if I decide I’m ready to sell, I should go all out and put a lot of effort into selling it, not just wait around hoping for a buyer.  As far as that goes, I agree with him.  However, I haven’t decided that I want to sell.

Categories
Announcements

Review: Saving Penny

Over the last year I’ve started to get into a number of “web television” productions.  These are short (ranging from 3 or 4 minutes to 15 minutes per episode) videos, made for release on the internet.  The Guild (especially their music video, Do You Wanna Date My Avatar?), The Legend of Neil and the utterly brilliant Dr. Horrible’s Sing-Along Blog are examples of some of the best of this new entertainment medium.

I was intrigued when Quietrose recently e-mailed me a link to “Saving Penny“, a web-based video series on Bell Sympatico’s finance site yourmoney.ca.  Created by Stitch Media, starring Sarah McCarthy, directed by Mark Mullane and written by Emily Amos this series was “written in the style of Sex & the City and targeting 20- and 30-something women, these videos provide useful and non-threatening financial tips and information.”

Each short episode targets a specific financial concept that Penny runs into a problem with, such as budgeting, whether to buy or lease a new car, stock investing or insurance.  Her boyfriend Doug (or friend Allison) smugly and condescendingly sets her straight and then there’s an animation with voice-over explaining the concept.

The first thing viewers will probably notice is the remarkably bad acting.  For some reason this seems to be pretty standard with Canadian television (we can grow comedians and divas in this country, but acting seems to be beyond us).  A particular low point is the “drunk slut” in episode 3 (I’m pretty sure *I* could be a more convincing drunk slut – heck, I *am* a better drunk slut after I’ve had a couple of beers!).  It might not be fair to blame this entirely on the actors, as the dialogue is pretty cheesy and was probably tough to work with.  I’d never heard the intro song “Don’t Let Your Feet Touch Ground” by Ash Koley, but it’s catchy and a lot of fun. The animations are very well done.

I think the financial information is pretty solid (nothing jumped out as bad advice to me).  I think in some places they went a bit too “middle of the road” in their advice. I would say most people shouldn’t lease a car, should use a fee-only advisers and should avoid pet insurance like the plague, but each of these is presented as a debatable issue.  I can understand that they’re trying to convey the fundamentals of money management, not advocating for a specific perspective, so I suppose this can be forgiven.

Overall, I found the series to be fairly sexist.  In the animations, Penny always wants to buy shoes, and her boyfriend always wants to buy a big screen TV.  The men (Penny’s boyfriend and her friend’s unseen husband) were consistently presented as knowing more about financial topics.  This seems like a strange choice, given that the series was created for 20 and 30 year old women.  If any women watch the series, please comment on whether you find it sexist or not.

The production values were quite good, and I think they did a reasonably good job blending entertainment and financial information (which can be tough).  I watched all 10 episodes the same day I found out about the series, so it was good enough to keep me watching!

Check out the Squawkfox review on 5 Money lessons learned from Saving Penny.

Episode 1:

More episodes here.

Thanks for the link Quietrose!  Anyone who watches it, please comment with what you think.


Categories
Personal Finance

Tracking Finances

Reader Jazzmin26 recently e-mailed me after reading my Mint review and shared my security concerns.  She asked for suggestions to “make my financial life simpler and not spent my weekends logging and tracking“.  I’ve repeatedly wrote about how valuable I find measurement to be, but I agree with Jazzmin26 that it can sometimes be tough to determine the best way to go about it.

Not as Hard as it Seems

In life we often make things seem harder than they really are.  Every year I agonize about my taxes, then they end up only taking me an hour or two and I’m happy to have a snapshot of my finances from the year before.  Similarly, logging and tracking isn’t something that will take up entire weekends.  I usually do a financial overview once a month (around the 1st) and I can capture all the info I need in 10 or 15 minutes.

Pen and Paper

I’m currently reading “Your Money or Your Life” and will post a review when I’ve finished it.  A large part of the book is spent detailing how to record your spending.  The authors suggest that the exact format isn’t as important as finding something that works for you.  Come up with a sheet with the numbers you find important, then printing it out (or make photocopies) and fill it in once a month.

I’ve recorded my spending this way, but carrying a small notepad and a pen in my pocket.  Every time I make a purchase, I pull it out and record it (on page per day).  If filling in the amount wasn’t convenient, I’d just get a receipt and put it into the notepad at the proper place (like a bookmark) and transcribe them at the end of the day.

Spreadsheet

I like to use spreadsheets (Excel or OpenOffice Calc) to keep permanent financial records.  I tend to agree with “Your Money or Your Life” that developing your own categories and measurements is probably the best way to go.  My spending tracking looks something like:

Food Travel Entertainment Necessities Gifts Total
May 4th $12.43 $2 $0 $0 $0 $14.43
May 5th $7.28 $0 $12 $6 $0 $25.28
May 6th
May 7th

How to categorize things (is alcohol food or entertainment?  if you buy a round of beers, is that a gift?) is entirely flexible.  If you eat out regularly, perhaps it is worthwhile to separate food into groceries and meals out.  I keep my fixed, constant expenses (like rent, internet charges, etc) separate and just track my variable spending with this.

When I was tracking my spending, I’d also maintain an average of each category (typically for the last 30 days) as well as the total and could view where my money was going and whether my spending was increasing or decreasing.

In terms of my finances overall, I also use a spreadsheet and track the various accounts like so:

Mortgage iTrade Checking account TFSA Cash Assets Networth
May 1st, 2010 -$87,012 $23,732 $1,201 $2,022 $3,223 $159,000 $98,943
April 1st, 2010 -$87,203 $21,157 $1,257 $2,014 $3,271 $159,000 $96,225
March 1st, 2010 -$87,345 $20,121 $1,072 $2,007 $3,079 $159,000 $94,855
February 1st, 2010 -$87,501 $21,353 $1,413 $2,000 $3,413 $159,000 $96,265

The Cash and Networth columns are calculated by summing the other columns (the checking account and the TFSA is the case of cash, all the columns in the case of the networth).  Again, this only takes me 10 or 15 minutes to figure out each month (spreadsheets can easily do all the calculations for you – you just look up each account and enter the numbers) and I can see immediately a snapshot of my financial health.

I don’t bother tracking credit cards, since I always pay them off in full, anything I owe to the credit card companies will be reflected in the amount of money in my checking account the next month so I don’t think it’s worth the time to do the extra look ups.  If I was carrying a balance on a credit card or a line of credit, I’d certainly track it monthly.

Networth IQ

A number of bloggers, including Meg at World of Wealth, track their finances on Networth IQ.  Much like a spreadsheet, it’s very fast and easy to update entries (just look up the account online and fill in the number).  The site automatically creates a graph showing your networth over time, and shows how each category has changed (as a percent) since the last month.

As much as this does contain a lot of your financial info, I don’t think it has the same security concerns as Mint, since you’re manually transcribing information to it (not giving the site your usernames and passwords to look things up).

How do you track your finances?