May 18, 2017

Right time, wrong questions

MAY 18, 2017

Since starting The Cardinal's Nest in 2010, pretty much every conversation I have or overhear (yes, I'm listening!) can inspire me to write a blog....I type in my head while you talk, people. Today's story (a combination of characters, rolled into one couple) is no exception.

A lunch date with my self-employed artist friend, Bella, revolved around the question of whether she and her husband Bo should buy a house. She really wants to take the next step; her family is growing and so is the business that she runs out of her apartment. Life is increasingly getting crowded and, last time I checked, kids don't take up less space as they get older. #fact

The real estate conversations between Bella and Bo, however, were going nowhere. After a few questions of my own, the reason why became infinitely clear: 


They were asking the wrong questions.


While your financial preparation toward buying a home is crucial (save, pay off debt, and repeat) there are a few things that need to be sorted out first.




TIMING: In this story, it turns out Bella has less than a year to give birth to her 2nd baby...her PHD. But with life getting in the way, the expense of school, a brief, and unexpected health emergency (everyone is fine) Bella needed to ask the question of whether or not she wanted to continue on the last arduous stretch if her studies, and how long, exactly, that would take. Buying a new home at this moment might not be as practical as she had hoped - all energy and funds need to go toward getting that crisp piece of paper with PHD at the end of her name....and then, a job.

LOCATION: Bo, on the other hand, has a secure, flexible job. It's not, however, in a city where Bella can be employed to her maximum earning potential, or where they can afford a house, quite frankly. (I'll let you guess which city they might have to leave). Bo can work anywhere in the country at a high level, Bella can't, so location is the second question they need to consider, along with: How long will it take for Bo to secure a position in a city that also has employment potential for Bella? Right now, we're looking at a minimum of 9 -10 months before we start their real estate journey. We can prepare, get our ducks in line, but we need to wait to act.

EMOTIONS: Bella is comfortable with the idea of taking the next financial step to homeownership, as well as furthering her career. They are a win/win combo in her eyes. Bo, however, is not fond of risk, especially when the added element of moving away from his family is a part of the equation.

SACRIFICE: Something has to give, it always does. If they don't choose a new location, Bella may not be able to live out her full career potential. If she fulfils her dream, he may have to move away from his parents and siblings. This, understandably, is the hardest question to face, and is often the one that keeps people on hold the longest. Once answered, however, it's full speed ahead.

I certainly have my opinions on the situation but, the only opinions that matter are those of Bella and Bo. Their friends and family will not be paying their mortgage, mowing their lawn, or building their careers. The answers must come from the heart, not just their wallet, or the peanut gallery. 

We can certainly look at their current numbers and point them in the right direction, but until they figure out the timing, location, emotions, and ultimately, who will have to sacrifice what, their file will be put on pause.


What questions do YOU need to ask yourself? 


• Do I want/need to go back to school/training?
• How long will that take?
• How will that affect me financially? 
• Am I in the right city?
• Do I need to re-locate?
• Can I afford to buy/work in that location?
• Can I still live in a rental, but buy a small rental property to get the real estate ball rolling?
• How will my spouse/partner contribute/influence my decisions/location/schooling?
• What can I give up? 
• What can't I do without?
• Do I want to have a family?
• When do I want to start a family? 
• Do I have debt?
• Do I have savings?
• Has my income been steady for two years in a row, on paper?
• Do I have any unaddressed financial issues that need to be eliminated?
• Do I have any unaddressed emotional roadblocks that might interfere with the questions listed above?
• Am I basing my decisions on facts or assumptions?

There are no right or wrong answers, and there are certainly moatre questions to add to this list, but before you talk money (I know some peeps) you need to clean up your emotional house before you get the keys to the one that you will eventually buy. You'll thank yourself (and ME!!) in the end. 


Bella and Bo, let's get to work! 

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March 24, 2017

It's not about numbers, it's about habits


MARCH 24, 2017

After my first, "Hey, can you sing two songs for $100?" gigs in University, my accompanist and I headed straight to the bank to cash our HUUUUUUUGE paycheques. At the ATM I heard him whispering to himself, 

"10%....and....done."

Sitting at earls, eating away a RIDICULOUS portion of our riches, I asked him what he was whispering at the bank machine.


"Oh, that. 10%. My dad always has me put 10% of anything I earn intosavings account. It's just a habit. Don't you?


I think we all know the answer to that question. No, I was not in the habit of saving 10% of everything I earned. Clearly, he didn't know how much the beautiful shoes I was wearing for the gig had cost. I needed that entire $100. If I put 10% away, I would have less to use....


Oh man, what a slippery slope. I believed that lie. I really did. It never occurred to me that that saving was not a method of deprivation, it was a way to provide comfort and security for the future...especially not while I was sitting at earls eating a $14 hamburger and fries. And that was the 90s, people!

In a recent article, Ontario launched its plan to teach High School kids Financial Skills. 

*blink*



Applause for waking up to the obvious, gang. I think they're on the right track, of course, if only because the education system finally realized that if kids are going to grow up and make money, they should know how to use it.


My beef? They're introducing it in MATH CLASS.


While yes, financial skills involve numbers, duh, the bigger issue that I see with my adult clients, now wanting to buy a home, is HABITS. Their spending and saving habits which reveal, glaringly, what makes them comfortable and secure. And that, my friends, is a SOCIAL SKILL


On a weekly basis, I have at least one of my teenage music students go into a meltdown over an upcoming math test (during their singing lesson). They're preaching to the choir, of course. I understand where they're coming from. Math isn't their strong suit (male or female), and they are convinced that they are terrible at math. 


My concern is that these bright kids, who associate 
MATH CLASS with FAILURE
will also associate 
SAVING and SPENDING HABITS 
with how well they do in math class. 
Full. Circle. Moment.


If you teach these saving and spending skills in tangible ways that incorporate the social consequences of their actions, I think you're going to get a much more balanced generation of savers. That way, the kids who are great in English, History, Music, and Drama class don't assume that, because saving skills are taught only in math class, they'll be a failure before they start. 


Seriously, the way kids spend money is almost ENTIRELY SOCIAL, or it was for me. Nice shoes. Eating out. Fancy gadgets. Down Jackets for goodness' sake! (As a Winnipeger, that last one is hysterically funny. Being warm is "cool"...bah ha ha ha ha!) And the list goes on.


THESE are the habits that turn them into over spenders in their adult lives: Keeping up with their friends' appearances because no one will ever see their beautiful savings account. 


And, not to put too fine a point on it, but GIRLS need to learn the habit of saving MORE than BOYS. Yep. If women continue to make less than men and also live increasingly longer lives, in this economy, they will remain vulnerable for generations to come.


Not to mention the fact that often (and I have seen this now a handful of times while preparing mortgages for my hard working clients) the income statements of the female in a couple is always LESS for 2 years at a time when there is a new baby in the family. The catch 22? THAT'S when we need to prove the most income, OR MORE SAVINGS FOR THE DOWN PAYMENT, to allow this growing family (who now needs more space) to qualify for a mortgage. 


(*aside: I mention the topic of women having children and what it does to their provable income on paper NOT to blame, but solely to empower these same women and families to be prepared for ALL future financial decisions, children or not. Knowledge is power. We're good? Good.)


So, great, Ontario, you're teaching finances in the schools. Just don't fuck it up like Ottawa did by not discussing mortgage changes with, you know, the MORTGAGE INDUSTRY (???)....during a HOUSING CRISIS (!!!)....Ok. I'll stop now.


Thanks for reading and sharing!