Offseason Summary

Tri-Goals for the 2020 Season

I’ve been meaning to write this post for a few weeks now.  I started ramping up my training schedule for 2020 back on February 23rd with a goal of being ready to compete by mid-June but with the end of the big RRSP Investment deadline looming here in Canada and my desire to finish my thoughts on a few other business topics I never found the time.

Day jobs do have a way of taking precedence, don’t they?

My original plan for this post was to give a little summary of what I did in the offseason and lay out some goals and plans for this coming season.  Now that health officials all over the world are asking everyone to “self-isolate” and help stop the spread of COVID19 my original plans and goals are probably going to have to evolve.  I received notice this morning that my gym is closed for the foreseeable future.  I was planning on moving most my training, except for swimming and strength work outside around April 1 anyway so the run and bike work shouldn’t be too affected, but I don’t own a wetsuit and the river is still frozen so swimming is definitely out and it’s kind of hard to practice deadlifts without a barbell.

Such is life, I guess.  We must always remember that people are suffering with this illness all over the world.  We all need to do our part to help flatten the curve.

But back to the offseason summary.  I completed my first Olympic Tri (indoors) on January 20th in a time of 3:24:13.  I definitely didn’t break any land speed records but as a first attempt I established a pretty solid baseline for myself moving forward.  I had planned to take just two days off and return to the gym ready to work on some offseason maintenance beginning January 23rd but instead, likely as a result of over taxing myself and living in a cold climate, I got a bad cold and ended up in bed for the better part of three days.  I didn’t return to the gym until January 27th.

From January 27th to February 22nd I worked on a low intensity offseason plan.  Most offseason plans are built to run 8 to 12 weeks. In my case I shortened that to just four so that I could be ready to compete for most of the 2020 season.  If you are coming off a regular season that ends sometime in late fall, 8 to 12 weeks is still the preferred time frame.  As a new triathlete my body hasn’t been as stressed as much as someone who has just completed a full season so for me four weeks was just fine.

The goal of the plan was to keep my body moving while not over stressing the aerobic system and to slowing begin adding in strength workouts designed to promote flexibility and build lean muscle.  Up to this point I had not done much strength work and I recognized that if I want to get faster and lose weight it’s time to drop my aversion to pumping iron and work on overall strength at least twice a week.

On Mondays I swam.  Just an easy pace in the pool for no more than 35 minutes.  I didn’t worry about any specific drills as the goal was simply to keep my body moving and maintain decent form in the water.  The most I completed in that time was 1000m.

Tuesdays and Thursdays were strength days.  I completed a circuit of 8 exercises, 4 upper body, arms, chest and shoulders and 4 lower body, legs, hips and buttocks.  Since the goal is flexibility and lean muscle, not bulk, I stuck to a relatively low weight that I could push for 15 reps in less than 30 seconds.  It took a little trial and error but by the second week I had a pretty good system down for that.

Wednesday was bike day.   Every week was the same, 45 minutes with a goal to average 150 watts and 24 km/h.  My goal on race day is to maintain a better than 30 km/h pace so this was a more reasonable and easy goal.  Weeks three and four I travelled the exact same distance, 18.8 km.

Friday was run day.  Again, every week was the same, 35 minutes with a goal of 10 km/h.  I was never able to run the whole way but with a bit of intervalling down to 6 km/h and back up once my heart rate was under control, I was able to travel as far as 5.41 km on the last day.

I didn’t really have that many goals for my short offseason other than keeping moving, adding in some strength training and not gaining any weight.  I did gain about a pound, but I can chalk that up to variance in clothing and maybe a bit more muscle mass more than anything else.

Presently I am 3 weeks into a 16-week program to be ready for my next Olympic Tri.  The original plan was to be competition ready by Jun 14.  I was then going to repeat the last 4 weeks of the plan 5 more times thus completing 6 Olympic Tri’s by Nov 1.  With COVID19 closing my gym indefinitely and forcing me outside a month early that plan seems to be in serious jeopardy now.  I might be able to make up a week or two but if I’m out of the pool for more than 2 weeks I’m afraid I’ll have to push everything back accordingly.  Hopefully these things can be resolved quickly and life can get back to normal soon but if the price I have to pay for global health is one or two fewer tri’s this year, I’ll gladly pay.

I hope everyone in your circle is safe, healthy and able to continue earning an income.  Keep positive, stay moving and don’t forget to wash your hands.

Holy Moses, What a Week!

Covid19, Oil Price Shocks and a general stock market meltdown. The NBA and NHL are shutting down for the foreseeable future, no air travel from Europe, schools are closing across Ontario for 2 weeks. And the shelves at Costco are eerily devoid of toilet paper.

The world is in facing a crisis like nothing we’ve seen in my lifetime.

Here is my rif on how stay sane and not become too isolated while the world figures out how to deal with a virus no one understands.


The People Behind The Numbers

Keeping Customers Front and Centre in All You Do

It’s happened to all of us.

You call your bank, internet service provider, electric company or any number of companies you do business with.  You have a simple request, maybe something a bit out of the ordinary but nothing that should require executive level approval.  Maybe you have a question about your bill or would like to make a minor change to your account settings.

You are greeted by a pre-recorded message, press one for English, two for French, three of Spanish, four for Pig Latin.  Please enter your account number, if you are calling about X,Y or Z press 1,2 or 3, etc.  This can go on for several minutes.  Eventually you get placed in a queue to speak with a representative.

The Muzak starts.

5-10-15-20 minutes pass.  Finally, when you start to think that if you hear one more saxophone rendition of Van Halen’s “Jump” you will literally vomit, someone picks up the phone.

There ensues a game of 20 questions, most of which you have already entered in the automated system; name, address, account number, dog’s name, what you ate for breakfast last Tuesday.  Then the operative question; “How can I help you today?”

You make your request.  There is a pause.  You think you hear some clicking noises as the representative types away and points their mouse at things.  Another pause.  “I’m sorry Mr. So and So (pronounced wrong, even though you’ve told them your name at least three times) it appears as though I’m not authorized to make that change today.”

Confused you make your request again, “But I just need you to…”  “Yes, I understand but for that I need to transfer you to another department, please hold.”

More Muzak.

That damn saxophone again!  You begin to feel queasy and hang up.

Sound familiar?

At various points throughout my adult life I have been on both sides of that call.  To be fair, call center workers are among the lowest wage, least appreciated and powerless employees at any organization.  This is a shame as they tend also to be the only people who interact directly with customers.  They are the literal face, or voice, of the company and yet they have no power.  If the company could replace all their call center people with automated systems they would, that’s what the “press 1 for X” labyrinth that precedes the call is all about.  It’s there to weed out the simplest requests and save their expensive people for the hard stuff, that they usually aren’t authorized to do anyway, so they take notes and kick your request up the chain to a higher paid representative for a decision.

Good customer service costs money.  First and foremost, it requires training and a level of trust and empowerment at the call center level that few companies are willing to give.  Instead they put in policies and procedures that take decision making power away from people and service the lowest common denominator.  Try to go outside the lines and you get shut down.

But when dealing with the public there is no common denominator.  Every customer is unique, and every situation requires good judgement and finesse. Training staff for these things isn’t easy but it is worth it.

People are not account numbers.  They are a complicated set of needs, emotions, histories, plans and goals.  Treat people as such and you engender good vibes, loyalty and respect that will pay dividends for years.  Shunt them into endless queues and sort them into ever smaller boxes of set parameters and watch them run for the nearest exit.

Next time you get caught in call center hell remember two things.  First, if you get a person at all, they probably can’t help you, just let them take their notes and have them push your request up the chain.  Second, remember that as much as you want to be treated like a real person, so do they, don’t be a dick about it.

Lay off the Dope

Dopamine that is…

Dopamine is a hormone produced in the brain.  It acts as a neurotransmitter which flows through your nervous system carrying messages between cells.  It also plays a big part in how we feel pleasure and helps us to focus and find things interesting.

Psychologically, because it is so closely linked to pleasure, dopamine has been linked to addiction and other destructive behaviors.  That pleasure you feel when you find something you really enjoy, isn’t always the thing itself, it’s the dopamine your brain releases in response.  And that good feeling dopamine is what leads to addictions of all types.  Couple that with the relaxation the comes from a hit of THC or the surge of adrenalin that comes from snorting cocaine and you have a potentially lethal combination.

In recent years, psychologist have also linked dopamine to other pleasurable behaviors.  One study showed a marked increase in dopamine every time young people received a new email, text message or social media notification.  No wonder our phones have become like appendages.

Because dopamine is so closely linked to anti-social smart phone addiction and destructive hedonistic behavior there has been a trend in recent years for some to experiment with a dopamine fast.  By cutting down on anything that brings pleasure, (food, sex, alcohol, social media) it is believed that you can reset your brain to better appreciate the little things.

This isn’t just trendy pseudo-science that millennials have adopted to help cut down on smart phone usage, its roots are a longstanding practice in addiction psychology.  Psychologist have been using dopamine fasting as treatment for drug and alcohol addiction for decades.  The mere anticipation of pleasure releases dopamine and creates a wanting in people, which then leads to compulsive behavior.  By removing the circumstances that trigger this wanting you can gradually bring down the desire and eventually reset the brain to find pleasure in other ways.  That’s why alcoholics stay out of bars, it’s the physical location itself that triggers the wanting and breaks the willpower to stay clean.

Why am I telling you this?

We live in a world where dopamine releasing behaviors are everywhere.  It’s not just drug addicts who are addicted to dopamine.  Smart phone and video game addiction are just as pervasive, if not more so.

In a report published in the American Economic Review, the journal of the American Economic Association, researchers found that deactivating social media accounts four weeks prior to the 2018 midterm elections resulted in subjects increase in socialization with friends and family, decrease in political polarization and an increase in overall subjective well-being.  But it wasn’t without difficulties, subjects reported classic symptoms of withdrawal in the first week, including depression and anxiety.  Even certain sounds, like the random chime of a bell or a vibration, triggered intense desire to go check their phones.

I began to notice some of these symptoms in myself about a year ago.  That’s when I imposed my own version of a dopamine fast.  I call it, taking a smart phone sabbath.  Once a week, for a month, I turned off my phone for 24 hours from sundown on Friday to sundown on Saturday to mirror the Jewish day of rest.  The results, though far from scientific, were remarkable.  The first few hours were the hardest but after I got over my initial urge to check my phone every few minutes, I found myself able to truly relax and unplug for the first time in years.  After that first month I stopped physically turning the phone off but now I am able to ignore it for several hours with no ill effects.

I am rarely on my phone after about 7:00 pm on weekdays or from Friday night to Monday morning.  When I start to feel the phone is controlling me, instead of the other way around, I turn it off altogether and go about my life.

These devices were originally designed to help us, not control us.  Lay off the dop(amine), and life your life.


The Three Question Fact Find for Business Owners

Part 3 of 3

Welcome to the final installment of my series on the three question, fact finding process.  If you’re just joining us take a few minutes to catch up by going back and looking at the first five instalments and accompanying videos here:

Question One – Do you have any Debt?  Blog and video.

Question Two – Do you have a plan to sustainably protect and grow your assets?  Blog and video

Question Three – Where do you want your money to go after you die?  Blog and video

Question One for Business Owners – What would happen to you, your business and the people you care about if you didn’t show up to work tomorrow?  Blog and video

Question Two for Business Owners – Do you have a plan to protect and reward your most loyal employees?  Blog and video

Now the final question, where we start to think about life after business.


Question Three – Do you have a plan to one day exit the business?


Retirement for a business owner looks a lot different than it does for most regularly employed individuals.  Most small business owners don’t have any kind of employer sponsored RRSP or pension plan, their assets tend to be tied up in the business itself and their accountants, for the most part,  have done everything they can to reduce reported income on a yearly basis to avoid income taxes.  The result, as an individual approaches retirement, is that they are looking at a lower CPP entitlement and significant illiquidity making it challenging to fund a retirement income.

As a business grows you may not be thinking about your exit plan.  Many business owners joke that they will never retire, either because they love the work too much or they recognize that these issues will hold them back.  Regardless there will come a day when you simply can’t go to work anymore.  A good exit plan will provide you with some choice as to when that day comes and prevent you, or your family from having to sell the business quickly, at a huge discount, just to survive.

Two things to consider when developing your exit plan.

First, make sure you have a fully funded partnership buy/sell agreement containing Life, Disability and Critical Illness Insurance.  This will prevent the need to quickly sell assets at a time that may not bring the best price in order to fund an unplanned retirement, due to illness, injury or death.  If you are a sole proprietor or single shareholder corporation the need for these insurance products is by no means reduced.  Business owned insurance products could be the difference between a long and happy retirement and bankruptcy, it’s that simple.

Second, consider setting up an Individual Pension Plan (IPP).  This is a supercharged RRSP program, owned by the business for the benefit of a key executive or owner.  Many business owners have an income that is too high for the RRSP limits and relying solely on RRSP investments to fund retirement is unrealistic.  By setting up an IPP you can keep a lot of the money inside the company and pay it out over time as a pension without maxing out on RRSP contribution and RRIF income in the same way.  When you sell the business the IPP may either stay within the company, as in a case where a second generation takes over, or it may be exported into a personally owned retirement income plan/ annuity, that pays you a regular (tax advantaged) income for the rest of your life.

Regardless of how you approach retirement one thing is certain, whether you want to or not, you will stop running the business one day.  Either as a result of a formal plan to sell or transfer to family or as a result of a health emergency, or death.  Without a plan of how to manage this transition the cost, in taxes and legal fees could quickly erode the value of your life’s work and leave you and your family with only a fraction of the value you’ve put into it.

For more information or help with your financial plan contact: or simply leave a comment below.

The Three Question Fact Find for Business Owners (Part Two)

Part 2 of 3

Last week was a crazy one for me.  Seven client appointments in 3 days, plus a morning away from the office and a holiday Monday had me playing catch up all week.  As a result, I wasn’t able to post to the Vlog until Saturday and didn’t get a new post written here at all.  Hopefully this week I can get back into a regular rhythm of things.  Not that I’m complaining, if I don’t post for a few days it usually means I’m working directly with clients, and that’s what it’s all about right?

For the past couple of weeks, I’ve been working through a series focused on my standard The Three Question Fact Find.  Every new client relationship starts with the same three questions.  If you’re just finding this you should probably take a minute to catch up by walking through those questions and the accompanying videos here:

Question One – Do you have any Debt?  Blog and video.

Question Two – Do you have a plan to sustainably protect and grow your assets?  Blog and video

Question Three – Where do you want your money to go after you die?  Blog and video

Question One for Business Owners – What would happen to you, your business and the people you care about if you didn’t show up to work tomorrow?  Blog and video

Now we turn the focus off the individual business owner and shine the spotlight on your second greatest asset, the people who work for you.

Question Two – Do you have a plan to protect and reward your most loyal employees? 


As a small business owner your greatest asset is your own ability to work and earn an income.  We dealt with that last time.  Your second greatest asset is that ability to work and be productive coming from your team.

According to Stats Canada, sick days cost the Canadian economy $16.6B per year in 2013.  Companies that offer a comprehensive health plan including prescription drugs, dental, and disability insurance can expect the cost of illness to be significantly offset.

However, the greatest advantage of offering a health plan isn’t from the costs directly associated with illnesses.  It is in the goodwill and loyalty felt by employees.  According to 3 out of 5 employees say that the quality of a benefits package figured significantly in their decision to accept a job offer and their ongoing loyalty to the company.  And 92% of employees reported that, all other thing being equal, they would switch employers for a better benefits package.

Clearly benefits are important to employees.  But the financial incentive to employers doesn’t end there.  The cost of the average benefits package is 3-6% of payroll but since premiums paid are fully tax deductible, the actual out of pocket expense for a company is approximately 15% less than giving employees a comparable raise.

And that’s just a health plan.  Couple that with a retirement planning package like a Group RRSP or pension program and the loyal factor increases again.  Coming from an employer nothing says, “I appreciate you and the work you do,” more than comprehensive group health, disability and retirement plan.

So, if I could show you a way to significantly increase employee loyalty and engagement without incurring an unmanageable expense, would that be a conversation worth having?

For more information or help with your financial plan contact: or simply leave a comment below.

The Three Question Fact Find for Business Owners (Part One)

Part 1 of 3

For the past couple of weeks, I’ve been working on a series focusing on what I call The Three Question Fact Find.  For me every new client relationship starts with the same three questions.  If you’re just joining the conversation you might want to catch up by walking through those questions and the accompanying videos here:

Question One – Do you have any Debt?  Blog and video.

Question Two – Do you have a plan to sustainably protect and grow your assets?  Blog and video

Question Three – Where do you want your money to go after you die?  Blog and video

Since I tend to work with a lot of business owners and their employees, I have found that these individuals come to the table with a unique set of circumstances. As a result, I have developed a second Three Question Fact Find for Business Owners.  Depending on the nature of my relationship with the business I may start with the original three questions and then move on to these additional questions or I may start here and circle back to the first set of questions later.  Regardless of how I get there, the ultimate result is the same, for business owners the Three Question Fact Find is six.

Question One – What happens to you, your business and the people you care most about if you or a key employee don’t make it to work tomorrow?

We aren’t talking about something minor keeping you away from work for a few days, or even a couple of weeks, like the flu or a broken finger.  We’re talking about a major, life altering event that keeps you home, or heaven forbid in hospital and unable to see to day to day operations, for several weeks or even months.  Who runs the business then?  How do you get paid?

Statistics Canada reports that people under the age of 65 are three times more likely to be off work for 90 days or more at some point in their career than they are to die.  What’s more, business owners tend to push the envelope and come back to work before they are physically ready often ending up re-injuring themselves or re-aggravating whatever ailment it was that sidelined them in the first place.

Most business owners understand the value of life insurance to protect their families and provide a way for business partners to buy out their shares.  Very few however have considered the consequences of living through a long-term illness only to watch their only source of income fizzle away.  Long Term Disability Insurance structured as either income replacement or overhead expense coverage can go a long way to keeping your business viable while you are concentrating on recovery.  Coupled with Critical Illness Insurance to offset one-time expenses associated with specified illnesses, like a heart-attack or cancer, and you can have most of your bases covered in terms of long-term health related concerns.

Each of these options can also be extended to key employees should there be people within the organization whose services can’t be easily duplicated.  What if your top salesperson for instance had a car accident on the way home tonight, heaven forbid, and needed six months of rehab to learn how to walk again?

In most cases once we’ve dealt with the personal needs of the business owner and their family the next most important question for any owner must turn the focus to the long-term viability of their business.  So, the question remains, what would happen if you or a key employee didn’t show up to work tomorrow?

For more information or help with your financial plan contact: or simply leave a comment below.

The Three Question Fact Find (Part Three)

Part 3 of 3 (For Families)

The third and final question for the family market turns the focus off yourself and on to the people that will be left behind when you die.  If you haven’t been tracking through the first two posts in this series take a minute now to review where we’ve come from.

Question One – Do you have any Debt?  Blog and video.

Question Two – Do you have a plan to sustainably protect and grow your assets?  Blog and video.


Question Three – Where do you want your money to go after you die?


This one seems obvious.  The answers I receive most often focus around some version of “my family”, occasionally people will name a favourite charity.  That’s all well and good and I never take issue with any answer people might give, it’s your money after all and whatever legacy you choose to leave is up to you.  The answer I have never received however is; “I want to leave a large percentage of my life savings to the government.”  The sad fact is that without proper planning that’s exactly what’s going to happen.

When it comes to your final estate your money will essentially be in one of four buckets.  Registered Investments (RRSP/ RRIF), Non-Registered Investments, Real Estate and Cash.  If you are married or in a common law relationship all your assets can transfer to the surviving spouse relatively smoothly and tax free.  If however, you are unmarried, your spouse has predeceased you or you wish to transfer a portion of your assets to anyone other than your spouse on your passing, the government has stipulated some rules in terms of who can get what and whether or not there will be any taxes to pay first.

Quick disclaimer:  I am neither an accountant, nor a lawyer so be sure to consult an expert in those fields first before you make any final decisions.

For the sake of argument let’s assume you have limited cash and your real estate is your primary residence.  Let’s also assume that your non-registered investments are in the form of common stocks and your registered investments are in the form of mutual funds.

So, what happens when you die?

First, the executor of your estate will want to sell your house.  No problem, the proceeds of that sale transfer to your heirs tax-free.  It’s been said that your home is the only tax shelter you can live in.  If there is any additional property, like a cottage or a rental home then those would generate a capital gains inclusion but that is beyond the scope of this article.

Next, the executor will want to liquidate the rest of your assets and transfer the resulting cash to your heirs.  This is where it can get sticky and the government can really mess with what ultimately ends up in the hands of your heirs.

Your stocks will be sold at whatever the market rate is on that day.  This will result in either a capital loss or a capital gain.  Either way 50% will be considered income (or loss) on your final tax return.  Depending on how long you’ve held the stock this could result in a significant increase to your annual income in your final year of life.  Consider what a few shares of Amazon were worth even just 5 years ago vs today?  The mutual funds in the RRSP/RRIF will also be sold but because you received a tax credit when you originally bought those investments 100% of the value of those assets will be added to your income regardless of whether they have gone up or down.

Now consider this, as of this writing income over approximately $215,000 in any given year is taxed in Ontario at 46.16%.  It doesn’t take long for an individual with a $75,000 annual income and $150,000 in assets when they die to end up paying in excess of $100,000 or more in income tax on their final estate.

Have you picked your jaw up off the floor yet?

Now, there is a way we can fix that, or at least make somebody else pay the government so your heirs receive more of your estate.  By using life insurance to create a fifth bucket of money you can transfer a portion of your assets to a participating, (tax advantaged) life insurance policy while you are living.  Thereby reducing the taxable value of your estate and generating a payout to your heirs that is completely tax-free.  In most cases we can offset a large portion, if not all, of the income tax that will come due on your final estate and preserve your wealth for the next generation.

This tactic works best when your assets are evenly distributed between registered and non-registered money so that the act of transferring funds to life insurance does not attract income tax while you are living.  If that is not possible and you have to pull money from an RRSP to fund the life insurance policy, it’s still better to pay the tax gradually, while you are living, than to generate a massive tax bill on your final estate.  This tactic also works well in the situation of a blended family when you are trying to make sure assets accumulated prior to the second marriage remain with the children of the first marriage.

Of course, this is just one possible scenario, there are many others.  The bottom line is, where do you want your money to go after you die?

For more information or help with your financial plan contact: or simply leave a comment below.

The Three Question Fact Find (Part Two)

Part 2 of 3 (For Families)

Continuing where we left off the other day.  The second question for the family market starts to focus in on your hopes and dreams for the future while still living your best life now.  Before we go any further though you might want to review where we came from and read the first post in this series.  Question One – Do you have any debt and watch the video on the same topic here.  Da L-Dawg Show – Episode 5 – Do you have any debt?

Now, let’s move on.

Question Two – Do you have a plan to sustainably protect and grow your assets?

I believe it was Charles Schwab who said that the only thing that matters to investors is yield.  While yield (or percentage growth) is important the key concept in my question for families isn’t how fast we grow your assets, it’s how we sustain that growth over the long haul through market cycles and the overall eb and flow of life.  Growing assets is easy, protecting them from market volatility and personal setbacks takes discipline, planning and a little grace.

Just about anyone can help you save for retirement.  Banks, Credit Unions and Investment Advisors can all provide you with investment vehicles designed to help you grow your assets but a financial plan is more that just an investment plan and making a mad rush to beat the RRSP income tax deadline every February isn’t sustainable.  A good financial plan answers two additional questions; “How much is enough?” and “What happens if I die too soon, live too long or my plans get interrupted?”

Answering the how much question is the easy part.  By looking at your current lifestyle, discussing your goals, and taking into consideration your life expectancy we can make a reasonable assessment of how much money you’re going to need, when, and for how long.  At that point it’s just a matter of reverse engineering where you are now, versus where you need to get to and determining how much money to set aside, for how long and at what yield.

Presto!  You now have an investment plan.  But that is still not a complete financial plan.

The tricky part comes in answering the second question.  If you die too soon your family could be put in a difficult situation, forced to make drastic changes just to survive.  The loss of your income due to death, disability or other economic pressures could present challenges keeping debts paid, funding children’s education or just keeping the lights turned on.  Not to mention the very real possibility of our medical system figuring out ways to keep you alive longer than your money can reasonably last.  This is were old school investment planning, the how much and now long discussion, meets insurance planning and becomes a full-fledged financial plan.  The effective use of life, disability and critical illness insurance, along with certain principle protected investment funds are an often-overlooked part of the planning process no matter your stage of life.

So, do you have a plan to sustainably protect and grow your assets?

Stay tuned for question three – Where do you want your money to go after you die?

For more information or help with your financial plan contact: or simply leave a comment below.

The Three Question Fact Find (Part One)

Part 1 of 3 (For Families)

I work in two very distinct markets.  The Family market and the Business Owner market.

Both have some similarities and many challenges that are unique to their specific situations.  And because most business owners also have families there can be a significant overlap.  However, I have found that both markets primary concerns can be boiled down to three questions each.  Over the next few weeks I would like to expand upon those questions with a series of posts.  First up, the family market.

Question One – Do you have any debt?


I’ve gotten a little bit of flack over the years from other financial advisors for being so up front and in your face about debt.  Some of my colleagues have tried to tell me that it is not a financial planner’s job to worry about our client’s debts and if a someone comes to us laden with debt, they aren’t going to be a good prospect for our services.  I couldn’t disagree more.

Regardless of where you are now, at one time or another throughout our lives, just about all of us have carried debt.  From credit cards, student loans, vehicles and of course mortgages, debt is how the middle class drives the economy.  Without debt most people would never achieve higher education, home ownership or even be able to get to work everyday.  The danger comes when we forget what debt is.  It’s a hedge against our future earning power that if we aren’t careful becomes an anchor holding us back from achieving our goals.  The person in debt is saying that they are willing to sacrifice their freedom in the future, for comfort today.  And that is just bad planning.

In my opinion there are three kinds of debt.  Good Debt, Bad Debt, and Really Bad Debt.

Good debt is debt on anything that is going to increase in value faster than the interest rate charged to carry it.  Mortgages, home equity lines of credit, and some (not all) student loans could be considered good debt.  But no matter how good the debt, there is still no excuse to ignore it and forget that debt is still debt and eventually must be repaid with interest.  Understanding the terms of your mortgage and looking for ways to reduce the amount of interest paid is a great place to start when it comes to financial planning.  So is understanding what happens when a wage earner dies before the debt is repaid.

A reduction in the interest rate of just 0.01% on a $500,000 mortgage could result in a savings of $500 per year.  On a 20-year amortization schedule, that’s $10,000!  Even good debt, can be made better with a little planning.

Bad Debt is debt on anything that loses value or grows more slowly than the interest rate charged.  Car loans, and large purchases made using credit cards tend be bad debt.  If you own your home, or at least have some equity in it, we can usually refinance your mortgage and include some of these bad debts.  If we can exchange a credit card debt of $10,000 at 18% for a home equity line of credit at 4.95% we’ve just traded $1800 in interest for $495 and saved you $1305 per year.  Without equity in your home your options are limited but there are still lots of ways to trade bad debt for better debt, liquidate some unproductive assets or simply make some better lifestyle choices to pay things off faster.  Remember, every dollar paid toward a bad debt means more money later in investable cash.  Cashflow will be the key to the rest of the questions we’ll be looking at later.

Really Bad Debt is debt on anything that is consumed and used up before the statements arrive in the mail.  Financing your lifestyle, or just living day to day on credit cards for things like groceries and gas for your car without the ability to pay it off before interest charges kick in is a recipe for disaster.  Quite frankly, if you can’t afford to pay cash to live your life you need to make some drastic changes.  There is nothing worse than paying interest on a meal you ate two months ago.

When you are in this situation chances are you don’t have much equity in your home, if you own one at all, and you don’t have a lot of other assets to work with.  Your only chance to start living your best life is to perform what we call plastic surgery, cut up the cards and live on cash for a while.  It’s scary, I know but the key here is to stop the hemorrhaging and to do that you need to feel the tangibility of real paper money leaving your possession.  It’s too easy to forget that money is a physical thing when all you see are numbers on a screen linked to a plastic card in your wallet.  Once you start to feel money again it’s easier to equate that $3.00 latte to 6 times the cost of a K-Cup or half the cost of a package of ground beef.

The key, regardless of whether you have Good Debt, Bad Debt, or Really Bad Debt is to do something.  No other action you can take will have a more immediate and lasting impact on your bottom line than debt repayment.

Stay tuned for question two – Do You Have a Plan to Sustainably Grow Your Assets?

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