Blessed by the Potato

This is a surprisingly hard post to write (I’m also clearly out of practice on the blogging front), so let’s resort to the Q&A format:

Hey Potato, what’s up?

In The Big C 2: Revenge of the C I let you know that my dad’s cancer is back. Now I’m going to take some time off work (planning for 1 year) to spend time with him while I can, and also to take care of Blueberry and give her other grandparents a bit of a break. Today was my last day at work!

This is mostly a personal finance blog — how did you swing a year off work?

I have money saved, so I’m not worried about feeding myself or paying the rent during the year itself. It will mean pushing off retirement by a few years for one year being out of the workforce (lost compounding, spending more than saving, etc., will mean roughly pushing things back by ~3-4 years for taking a year now) but I actually haven’t done a huge, detailed projection. Indeed, I made the decision without really doing much of anything in the way of formal planning — it just felt right (after several weeks of hemming and hawing and sleeping on it), and I knew I could swing it, which I suppose is the point of all the previous planning and saving and investing. In the end, I wrote up a little one-page summary of the plan and implications, and that was that. My emergency fund will cover a year off, especially if I can pick up a few freelance gigs along the way.

So are you available for projects? Can I hire you?

Possibly! I know it’s not going to take 24-7 to take care of my family, so I will be looking to do some work, but only part-time (not being able to swing full-time with a commute is the reason I had to step back from the day job in the first place). However, I don’t know how cool the ol’ HR department will be cutting a cheque to an independent contractor who’s on leave, which means no grant-writing or other consulting for co-workers. Personal finance projects/writing/doing DIY investment workshops/lunch’n’learns, editing (it’s been a while since I’ve had a novel to edit, NaNoWriMo authors…), or science writing for others should be fine. Hit me up here if you’re interested.

What else will you do with your time?

Some have suggested using that time to learn something new or get a certification — pick up my CFP (which has a practical requirement, so it would require some commitment to switching jobs or picking up a more robust side gig), or get a MD or RN ’cause I spend so much of my time taking care of sick people anyway. I am getting dangerously close to having spent more time in the real world than grad school, so maybe it’s time to go back to learning and test-writing just to make sure I’ll never have a normal work-study balance in my lifetime.

I might also use my non-caregiving time to write another PF book — I’ve had an idea poking around for over a year now, but I’m getting more negative on the idea as I go along, and may have to just let it die. But hey, it is NaNoWriMo, so maybe some fiction…

However, other than a few random thoughts I absolutely have no plan. I figured all that could wait until I was actually off work to figure it out.

Isn’t it scary just leaving the workforce for a while with no plan of what you’ll do and no income stream coming in?

Well it is now. But that’s also why I managed to actually make a decision with no real analysis/spreadsheets/pro-con lists/waffling blog posts — I was just too burned out to go through my usual over-thinking routine. So at the moment I’m too tired to be scared.

There’s a common internet question: would you rather fight 100 duck-sized horses, or one horse-sized duck? I’m currently just being destroyed by a bunch of small tasks/projects. A single big grant can be a lot of work to put together, with many lost hours of sleep (and potential pounds of weight gained) in the process of getting it done. But though it’s a grind, I don’t feel so completely overwhelmed in the process. Conversely, the cluster of small tasks is draining: there’s always another little bugger ready to sneak up and poke you in the back, and there’s definitely high task-switching costs.

So put me in the horse-sized duck camp. If project A is only 10% the work of project B, 10 project As together end up being way more draining effort (for me) than project B alone.
Blueberry is watching Star Wars now, and it looks like Luke Skywalker is also a horse-sized duck guy: the point where he really starts to falter and look really scared in the fight against Vader in Empire is not in the straight-up lightsaber duel (where Vader is legendary, but admittedly not trying to kill him), but when Vader starts hitting him with Force-thrown objects coming from all sides. And then the rancor is no sweat.

Conversely, my man Obi-wan seems to prefer having a bunch of smaller problems. Battle droids pose no problem for him, and he’s fearless walking alone into the heart of the Death Star, crawling with Stormtroopers. But he has real trouble with one-on-one fights with Jango Fett and Grievous, and Count Dooku WTFpwns him. Twice.

I’ve long lamented the use of so-called “clean” offers common in GTA bidding wars, where people bid massive amounts on a property with no conditions to protect themselves. It felt like the boy who cried wolf — for so long I’ve been warning people not to do that because in in the unlikely event something goes wrong, it can blow up very badly — damages in the hundreds of thousands can break a regular family’s finances. Yet for so long the market just kept going up and lending just kept staying loose and people ignored that advice.

Of course, at the end of the story there really is a wolf. And as the white-hot spring 2017 market cooled a bit, we got a few deals that couldn’t close and some court cases making the news. There’s a Reddit thread with hundreds of comments on this story, and at a quick glance most of them seem to be about the fact that there was no financing condition.

“But all the other offers are without conditions.”

Look, this is as close as you can possibly come to that cliche mom advice: if everyone else jumped off a cliff, would you do it too? If you actually need financing to close the deal, then you need a financing clause. If a rich person who doesn’t need financing or a foolish moister with a realtor whispering in their ear is bidding against you with a naked offer, then accept defeat (and subsequent teasing about being a forever-renter basement-dweller) gracefully, rather than jumping off the cliff with the rest of the lemmings.

I can understand that realtors are in a conflicted position, and are more interested in closing a deal than protecting their clients, so they collectively pushed the herd to this madness of unprotected naked offers becoming the standard, something you “had” to do when making an offer. But hopefully people will heed the warning of the judge in this case and stop that nonsense (though a cooling market may stop it naturally as bidding wars die down and people go back to negotiations with one prospect at a time). A part of me hopes the would-be buyers sue their realtor for pushing them to put in a naked offer when the deal was truly contingent on financing, but I suspect in reality it’s more likely the realtor will sue them for the commission lost when the deal fell apart, adding insult to injury.

And as long as I’m ranting and reminding people that there is risk in real estate: financing of a preconstruction is not guaranteed. If you’re not rich enough to have a substantial cushion to close even if the market value at completion is a fair bit below the price you contracted for (which you still have to pay), you’re not rich enough to play in pre-con.

I haven’t really blogged much about the real estate market: the core rent-vs-buy lesson hasn’t changed, and there isn’t much that happens in real-time to talk about. The 30% year-over-year gains of Spring 2017 have cooled, which not many were surprised at, and it will take years to see how it plays out from here. However, while I know that life is hard (very, very hard) to predict and forecast, there are a number of things that have surprised me:

1. How fast the turn was, especially in parts of the 905. The market was totally coked-up-banana-pants-insane last spring. Then it wasn’t, and prices started to drop. The Stouffville case at the top of the post is an extreme example, but 10-20% decline in under a year is unheard of. For years when people tried to brush off the US housing bubble experience, one of my main points was that the subprime crisis was mostly an accelerant — even without subprime, we were still vulnerable to a crash, but that it would just happen slower. Instead, Markham is on track to out-crash Pheonix, Miami, and Vegas. Surprise! (Though this one comes with a bit of an asterisk as there was a government intervention in the form of the foreign buyer’s tax).

2. That condos are holding up while detached prices tank. This one can likely be blamed partly on AirBnB, partly on people buying what they can afford after being priced out of detached houses in the frenzy. But that’s a complete surprise from what many who joked about Toronto’s official bird would have expected to see when the market started to turn.

3. How many AirBnB units there are. I mean, Toronto wasn’t exactly lacking in hotel space for tourists from what I know. And the model of renting out a condo as a luxury hotel was, by all reports I’ve seen, a rather famous flop at the buildings designed for it (esp. Trump). Yet there are thousands of units in the city, despite being of questionable legality even before additional rules came out.

I’m sure there will be lots more surprises in the years to come.

Jason Heath pulled out a version of a quote I hate in this Ask MoneySense article on OAS clawbacks:

“Few people would think to Google how to perform a root canal, let alone try it themselves. But lots of people try DIY tax and financial advice.”

Now, it’s hyperbole, and I’m going to rant about it, but I don’t disagree with the main thrust of the article or the next part of that quote: “If you don’t have an accountant, contact one and buy an hour of their time. Bring a list of questions or send them beforehand, so you can get an income tax “check-up.” It may be well worth it even if you only do it once in your life or at least once in a while…” The last half of that paragraph, getting a check-up to have some common questions answered, is entirely reasonable and a good suggestion.

There is definitely a place for professional advice — both planners and accountants. But there’s also a place for DIY-ing things.

The tired root canal analogy makes it sound like you have to be crazy to approach your taxes on your own. But just like with dentistry or medicine, there are lots of things that are totally reasonable to DIY (or Google-then-DIY). You would not go to your dentist every time you had to brush your teeth or floss, and you shouldn’t clog up your doctor’s office with every minor cold or papercut you get, even if you would go for a root canal or surgery. If you have a canker sore it’s totally reasonable to hit Google and gargle some warm salt water. Not everything is a root canal, not everything needs a professional to manage. And especially when it comes to taxes, there are too many people in the world who shrug and say “get an accountant” rather than helping people learn to DIY (which may be related to regulations and the fear of being sued).

This particular article also really highlights an important aspect of the issue: when we’re talking about mouths, people generally have enough background information to know what is at the totally-DIY-able level (like daily brushing) and what is at the I-need-a-professional level (like fixing a cavity or getting a root canal). When it comes to finances, lots of people don’t have the basic literacy to find the answers they need or use them appropriately. Here, finding the OAS clawback threshold is pretty easy, and planning around that is a decent edge case where it’s not unreasonable to do some DIY around it, but also not exploitative to suggest it’s worth getting a professional’s input. However, the person asking the question doesn’t seem to know that the threshold is about clawbacks, not reporting — you have to report everything. So they couldn’t find the answer because they didn’t know how to ask the question (or interpret the answers they likely did turn up). There’s some essential background knowledge missing that’s going to make DIY a challenge here — indeed, to know what can be done on your own.

What then is the answer? I really don’t like a blanket “this is like a root canal and you shouldn’t do it yourself” type approach — as someone who makes tools to help people DIY stuff, that is anathema. People shouldn’t be dependent on professionals; DIYing many things shouldn’t be construed as an impossible, whack-a-doodle notion. But at the same time, there is a financial literacy gap that makes it easy to point out the challenges in implementing DIY approaches. And people shouldn’t be afraid to get some help and pay appropriately.

“Adulting” help is becoming more important and more available. Indeed, the suggestion Jason makes after the hyperbole that I took so much issue with is good — I really like the suggestion to get a few hours of a pro’s time to get questions answered well. Not “get an accountant to manage all your money stuff because you’re hopeless” but “get a block of time and ask some questions to figure this out properly.”

Of course, the analogy to medicine or dentistry really breaks down in personal finance, because our own gaps in knowledge and ability vary. It’s not as clear-cut as this thing is only for professionals, while you’re out of luck if you need help with this basic everyday thing. Especially as paying by the hour for advice is a model that’s becoming more available: no longer is it that investing is the thing you need a pro for, in part because selling an investing product is the only way for them to get paid. Now money coaches and people like Chris are there to help with things like understanding your money and building a budget, while rarefied applications like investing are completely accessible to DIY-ers.

The new $10 bill was just announced, and it’s vertical. I’m getting dizzy just looking at it, and my wallet OCD doesn’t know what to do. This doesn’t fit with the design of any of the other bills (will we be getting new $5/20/50 bills soon to match?), and it’s a problem. I am exactly the sort of person (to no one’s surprise) who always puts my bills in my wallet facing the same direction, in ascending order. When I worked at the theatre, my till was similarly rigid. Having a bill that doesn’t face the right way is going to be uncomfortable.

Some people are pointing out that while wallets universally hold bills horizontally, tills hold bills vertically, so this may make some sense to someone.

To that I say, ok, you have a point, but we didn’t have to screw up the whole bill, we could have part of the bill satisfy each method — see illustration below. And I don’t really care that much about which way the art and design elements face — a top-right number for the value aligned for horizontal placement would fit with other bills (or top left for the back side), and then the bottom of the vertical layout could have a vertically oriented number for better use in those settings (particularly tills).