Worry-Free Money Review

July 31st, 2018 by Potato

Worry-Free Money by Shannon Lee Simmons describes how you can set up your finances to make sure your major goals are met and your money is working to help make you happy. Once the big things are taken care of, the method she describes lets you spend the rest worry-free. It’s a fantastic message, lots of people (including me, despite nitpicks) love the book for this, and it’s easy to recommend.

The chapter on dinner out with friends was great. To steal a quick summary: everyone felt pressured to attend an $80/plate dinner and didn’t want to miss out, but the price tag didn’t really fit anyone’s budget. By talking openly about it, the group was able to figure out the trap they were in and find a way to still hang out and have fun without breaking the collective bank.

“Is it safe, is it happy?” This isn’t a quote from Gandalf, but a framework for deciding when spending is good spending. And it’s a framework that I think is driving a lot of the positive reviews — it’s a good, simple way to frame your spending problems.

The “F*ck it moment” was a good way of framing that moment of weakness when we overspend, but I hated the orthography. Yes, the asterisk is in the book. The book for grown-ups that she wrote herself. I know it’s nitpicky, even for me, but for fuck’s sake if you want to swear then just swear — the asterisk isn’t fooling anyone. Those who are prickly about such things will still be prickly (I can tell you from experience — three obscured letters appears to be the prudish sweet spot), and it’s not like you had a network or regulator censoring your book. And if you don’t want to swear, then just call it something else in the first place: a screw-it moment, whatever moment, cowabunga moment, a Scarborough subway moment — there are lots of euphemisms.

Nitpicks

I got an advanced review copy, so I’m not sure how many of the errors were caught before final publication, but there were some funny ones, such as including costs in multiple categories in the highly detailed budget examples (am I the only one not spending hundreds of dollars a month at the gym as both a fixed and variable cost?). One appeared to be an issue of incomplete adjusting of a real case to an anonymized example, where a family with a 5-year-old has been struggling with daycare payments for 8 years (that or it’s a case of an unspeakable — and unspoken — tragedy).

One that I’m pretty sure is not an error is the description of how to figure out how much to save for an emergency fund. While I agree with a lot about the need for emergency funds and how she describes it in general, I have a hard disagree with this:

“The only way to set a savings target for an emergency account is to work out an average based on your spending history.”

Not only are there other ways, that’s a pretty bad one — if I had used that method, I would have $0 in my car repair emergency fund, and been left completely unprepared for the $1700 in damage a mouse did last winter. Similarly, she suggests reducing your emergency fund by anticipated EI payments. I can say from multiple experiences that EI is not a replacement for an emergency fund: it will eventually come through to help backfill your emergency fund, but delays in getting your EI are fairly common and you can’t rely on it in lieu of emergency savings.

That last point may be because she puts a lot of focus on accepting that people are people and to not stress people out with unrealistic goals, that it’s better to aim for something small and achievable than for where you really want them to be — though in that case I would have helped provide a method to better estimate emergency fund needs, and then tell readers to start with a month and work up to 3-6 months’ of expenses saved later.

The Problem with Dylan

I loved the “opting out of life’s checklist” part. You can’t compare yourself to other people, you don’t know how they maintain the tiny sliver of their lifestyle that you can see, and sometimes your life’s checklist (buy a detached house at age X, for example) don’t work for your life as it is and you have to change those plans.

We can’t all be robots (yet… the assimilation technologies are advancing though), so I suppose it’s good that she tackles head-on the difference between what you can do and what you will do. That mixing and balancing between the emotional/irrational part of personal finance with the finance part is always a bit difficult for my spreadsheet-based operating system. I mean brain. That organ above my neck that is totally made of wet gooey gross stuff just like yours. Anyway, it’s great that so much of this book goes right into that terrain and a big reason for all the love it’s getting.

But I didn’t get a good sense of when financial exigencies led to a “lemonade” awakening, where someone should adjust their life checklist, or when the rules of thumb could go out the window in the name of mental health. The story of Dylan was the biggest thing that stuck out here, and I think there were many problems with the case study.

To recap: Dylan’s just barely out of the lowest tax bracket, trying to live in one of the most expensive cities in the world. He was living with a SO who made more than twice as much as him, so it’s not a surprise that he’s in for a big lifestyle adjustment when the relationship falls apart and he’s out on his own.

But he wants a 1-bedroom above-ground apartment in a good location — no basements, no commuting — which will be something north of 70% of his income on housing and fixed costs. That violates the earlier rule to not commit more than 55% of after-tax income to fixed expenses. Oh, and he has a bunch of credit card debt. Shannon does a good job talking about how to make it work temporarily, the value of saving even $100/mo in fixed costs, and finding even a small amount of extra income… but this is a major violation of “the rules”.

Usually, you break the rules in an example to prove a point, and I do not see why Dylan breaks all the rules here — because he doesn’t want to live in a basement apartment or leave a city he can’t afford where his higher-earning ex just threw him out? The only justification was that it was “Not good for my emotional well-being.” So do none of the rules apply if it’s for emotional well-being? Or, given a similar thing happens in Burn Your Mortgage, is the general principle simply that financial rules of thumb don’t apply to Toronto and Vancouver?

“No matter which way we sliced it, the breakup meant that Dylan would be forced to live beyond his means for the next five years. Welcome to real life.”

That “welcome to real life” could just as well have been said to Dylan and his preference for a 1-bedroom apartment in an expensive area — instead of being forced to live beyond his means, he could just as easily been forced to live in a smaller space or (gasp!) with roommates. Now, he’s young (though that point is not reinforced), so letting his goals slip for a few years was something he could (and did) recover from, but I think there’s a danger the average reader takes another message entirely away from the case.

There’s another big problem with Dylan: that credit card debt. While he’s paying interest at 19% for nearly 4 years, Dylan is sitting on more than enough assets in his RRSP to wipe it out in a stroke. Shannon says not to tap them for a completely screwy reason — as Michael James puts it:

“…Taking money from his retirement account didn’t make sense because much of it would be taxed at a higher rate than the interest he was paying on his credit card.” There are good reasons not to touch retirement savings, but comparing a tax percentage to a credit card interest percentage makes no sense at all. You might as well decide to buy a car instead of a house because the car has more tires than the house has bedrooms.

This could likely be a blog post in its own right. But briefly, she’s comparing an annual rate of interest to a one-time tax, and furthermore, that tax is something that will apply at some point no matter what — indeed, he’ll likely never get that money out at a lower rate than he could right now (and then he should prioritize his TFSA once he starts saving again). While there are behavioural issues associated with tapping retirement savings to pay off a credit card (which she does get around to later, such as “putting him into scarcity mode by emptying all his accounts” and making long-term savings short-term ones), that only comes later, and is in reference to his emergency fund rather than his retirement savings. In terms of money sense he absolutely should have pulled the money out of his RRSP to attack the credit card debt. Moreover, that would have freed up $300/mo in his budget (when the rest of the story was about a song & dance to eek out $200/mo).

The Dylan story has a happy ending, but only because he ended up getting more income than the plan called for, and didn’t face a big increase (indeed, any increase) in his rent and other fixed costs. It could have just as easily ended as the next story does, where he builds his plan around being tight for a few years, but banking on raises/more income in the future to offset it… which never come or get eaten up by increases in lifestyle spending. Then instead of facing a big lifestyle adjustment once, he’d be in for two rounds.

Conclusion

Worry-Free Money is a great book, particularly for beginners. It goes into a lot of detail on managing cashflow, with a spend-the-rest/hard limit method that may work better than traditional budgeting for many people who are made of meat and feelings. It acknowledges that emotions exist, and those emotions may compete with financial goals, and takes a holistic view where finances are part of that.

I loved the encouragement to talk honestly about finances, and how many people may be feeling the same financial pressures as you. There are nitpicks (and again, if you’re new here, that’s just how I read and likely why I work as an editor), and it’s left kind of fuzzy when preferences have to give way to the harsh truths of the real world, but I liked it enough that it’s in the reading guide in the back of the 2nd edition of the Value of Simple, and whenever I get around to updating my graphical reading guide I’ll probably include it there, too.

The Value of Simple is a Success!

April 10th, 2018 by Potato

Way back when I was getting ready to launch The Value of Simple, I set some definitions for success. I hit “not-failure” pretty quickly, but have only just reached “success”: I’ve made minimum wage (at least, a rounded-down amount that approximates what minimum wage was back in 2014 and ignoring all post-publication effort) on the time taken to write it!

Now, it’s felt like a success for far longer than that. Seeing that it’s actually helped people invest, is getting good reviews, and seeing people wholeheartedly recommend it to their friends made the whole endeavour feel worthwhile. But I still had that first monetary definition in the back of my mind… so hitting it still feels like an added accomplishment.

I had also said that that was about the point at which I might consider doing the whole grind again. As it happens, I do actually have an idea for another book that I might do next…

…But I don’t think I will go anywhere with it, at least not in the near term.

Getting VoS done was a personal triumph in working hard/side hustling/project management/etc., and a personal best for productivity. But burnout is a thing. These days my inbox and to-do lists are filled with small side projects that I can’t get around to completing on time (that tax video doesn’t look like it’s going to happen before taxes are due, for example) — I’m not in a hurry to dive into a major one.

Anyway, a big thanks to everyone that helped make this a success: people who bought copies, recommended it to their friends, took the time to write reviews, read beta versions, and more that I’m sure I’m forgetting!

July Course Update

August 1st, 2016 by Potato

July has just ended and the Practical Index Investing for Canadians course is progressing well. Roughly 70% of the content is done and online, everything that had been projected for June and July, with a few bonus items as well (though two of the videos are still rendering here, they have been shot and will be up soon). I’ve updated the syllabus here.

The towel-day pre-order price is on its way out. You have until Friday to get the course at the incredible rate of $49 (no coupon code needed — that’s the price that’s set on the course platform site). After that it will go up to the next pre-order level before release, and to the final price in the fall.

The updates will be coming slower now, though. You’ll notice in the syllabus that though most of the course is there, there are only a few things scheduled to be completed in August, and nothing for September. That’s because I know I’ll be too busy at the day job to get any material up through then, so it won’t be until October that the final bits of the course are up and done.

If you have any suggestions (or prefer that I prioritize one section for August) send me an email and let me know!

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First time hearing about this? The Practical Index Investing for Canadians course is an online course to help you learn how to become a do-it-yourself investor. It builds on the material in the Value of Simple as well as the Money 201 and other lectures I’ve done since to help you get started as DIY investor.

June Course Update

June 26th, 2016 by Potato

June is nearly over and the course development is progressing well. There are a few parts near the beginning that I had flagged for completion in June. With just a week left, a few may slip into July. However, section 8 (Taxes and Tax Shelters) is complete, including parts that were not expected for several months yet — overall the progress is going well.

I think prioritizing that section was a good move, as it was of interest to some of the students who had signed up for the early access, and it creates one complete section to better show what the course is and what it adds above and beyond the walk-through in the book.

I’ve updated the syllabus here. [Edit: here is the latest syllabus for July] The Towel Day/pre-order price of $49 will continue until mid-July, when it will ratchet up as the full release gets closer. If you’re interested in learning more about how to become a do-it-yourself investor, be sure to sign up soon!

Things have been quite busy at work lately, but I’ll be taking some time off over the summer (and I’ll have fewer all-nighters) which will also help keep the course development on track (and I may even be able to catch up on the timeline).

In other news, Brexit Brexit CPP.

Towel Day and Course Pre-Order

May 25th, 2016 by Potato

Happy Towel Day!

As you know, I’m a fan of Douglas Adams, borrowing the “Don’t Panic” message and putting it in large, friendly letters at the beginning of my book. So it’s only fitting that I do something special for Towel Day.

First off the predictable move: you can get a big Towel Day discount on The Value of Simple by buying through my e-commerce site and using the code TowelDay. Now until Friday only!

But let’s get to something better and more thrilling than that, something more keeping with the spirit of Towel Day. First, a blockquote to remind you of what that spirit is:

“A towel, it says, is about the most massively useful thing an interstellar hitchhiker can have. Partly it has great practical value. You can wrap it around you for warmth as you bound across the cold moons of Jaglan Beta; you can lie on it on the brilliant marble-sanded beaches of Santraginus V, inhaling the heady sea vapours; you can sleep under it beneath the stars which shine so redly on the desert world of Kakrafoon; use it to sail a miniraft down the slow heavy River Moth; wet it for use in hand-to-hand-combat; wrap it round your head to ward off noxious fumes or avoid the gaze of the Ravenous Bugblatter Beast of Traal (a mind-bogglingly stupid animal, it assumes that if you can’t see it, it can’t see you — daft as a brush, but very very ravenous); you can wave your towel in emergencies as a distress signal, and of course dry yourself off with it if it still seems to be clean enough.

More importantly, a towel has immense psychological value. For some reason, if a strag (strag: non-hitch hiker) discovers that a hitch hiker has his towel with him, he will automatically assume that he is also in possession of a toothbrush, face flannel, soap, tin of biscuits, flask, compass, map, ball of string, gnat spray, wet weather gear, space suit etc., etc. Furthermore, the strag will then happily lend the hitch hiker any of these or a dozen other items that the hitch hiker might accidentally have ‘lost’. What the strag will think is that any man who can hitch the length and breadth of the galaxy, rough it, slum it, struggle against terrible odds, win through, and still knows where his towel is is clearly a man to be reckoned with.”
–Douglas Adams, The Hitch Hiker’s Guide to the Galaxy.

It has not been a secret that over the past several months I have been working on an online course to complement The Value of Simple and help people get set up as successful do-it-yourself investors. It was almost a year ago that I posted the first draft of the course outline. Since then I’ve given more library talks, a guest lecture for Ellen Roseman’s UofT course, and had more conversations with experts and potential students on how to better refine the course. Most importantly, I’ve done a lot of reading on delivering an online course effectively, and changed my approach to it.

However what I have not done is finished the bloody thing.

So here is my towel: I have the structure, I have a few modules done and uploaded, I have a history of building and delivering courses and workshops in science and personal finance. If you believe that I have just mislaid the rest of the course you can buy it right now at a huge discount, and help test it and shape its evolution as it comes together.

How big a discount? You can get it for just $49 right now as a Towel Day/pre-order special, roughly1 80% off! Why just $49? In part as a tribute: that’s the age Douglas Adams was at his untimely death. And in part because this is early, early access — so early it’s better called a pre-order. However, it will be finished, it will be polished, and if you plan on signing up eventually then doing so now is a great deal. (Note: no coupon code needed, I’ve simply set the price at that level and will raise it for new subscribers as material is added and the course is fleshed out)

Click here to go to the course page and enroll!

1. Roughly because though the final price will likely be $279, I’m very tempted to make the final price $246 because you can even!