Each year, I identify personal goals that I’m going to work on throughout the year. I’m back with my “2014 edition”.
But first, let’s take a look at my 2013 goals and see how it went…
It’s the first time since I can remember that I didn’t do too well with my goals throughout the year. In fact, if I look at 2013, I feel somewhat like a big failure…
Surprise! Surprise! This didn’t happen. I worked really hard on reducing my expenses but this wasn’t enough. Then, my wife opened her daycare at home to earn more money. Finally, I sold my RX-8 (which I surprisingly don’t miss that much right now!)
While I made great efforts to both increase income and reduce spending, other factors came into play. Google had hit our online business severely over the past two years and making money online is harder than ever before. We shifted our focus to pay our corporate debts and significantly reduced any dividend or revenues paid to shareholders. This is why the daycare only served to replace this income temporarily lost in my budget. The problem is that the daycare started only in September whereas we stopped our revenues back in May of the same year.
I’m still waiting for a few numbers to update assets and my current net worth and debt levels but I should finish in a better position compared to the beginning of the year. And the most important part: I’ve definitely increased my income and reduced my spending budget for 2014.
The reason why I wanted to open a TFSA in 2013 was to start a fund to pay for private school. I have three young kids and I want all of them to go to private high school. I’ve already looked at the different options in our city and the best schools with the best sports/art/international programs are… private.
I’m happy to check this item off my list as my TFSA is not only opened but my account shows almost $900 at the end of the year. At this pace, I will have the first year completely covered once my oldest kid reaches high school. My goal is to increase my contribution each year so I have over $10,000 in this fund in four years. This would give me more than 2 years in advance (assuming the cost is about $4,000 per year). Over the next four years, I need to increase my bi-monthly contribution from $50 to $150 to be able to generate $4,000 each year to pay for this expense. The fund (the $10,000 or so) will cover for the years where two of my kids will be at private school at the same time. So far, the plan seems to be on the right track.
With my sites not generating any income I can withdraw, you probably figured that I failed to earn over 150K. My bonus wasn’t as high as expected for my second year at my new job but I’m still happy overall. I almost reached my objective as I made around $130K this year. I guess the good news with this story is that my personal income didn’t move, but my wife is now generating additional income for our household.
Next year, our household income will definitely break the 150K as I expect to make 150K myself. Therefore, our family revenues will probably be around 175K. Now we are talking about making some serious money!
And due to my most recent online projects, I will be able to withdraw some dividends out of it!
I don’t know if I can say this but I achieved this goal and then failed later on. I dropped from 193lbs to 182lbs during the summer. Then, for an unknown reason, I completely slacked on my training program and went back to… 198lbs as at December 31st!
Part of my plan to lose weight included running 500 miles over the year. The reason why I picked 500 miles was because I can track them on my treadmill ;-). Running on average 10 miles per week and giving 2 weeks of buffer seemed like a challenge but feasible at the same time. I did run 501 miles in my year and I’m quite proud of it. But I noticed that this wasn’t enough to maintain the key point in losing weight: being consistent. The goal was “too easy” and this is why I was 30 miles in advance in September and slacked off.
2013 was frustrating and a year of adjustments. I didn’t feel like I accomplished much and sometimes it felt like I was losing an entire year to turn round and around like a dog running after its tail. But life is like a big ship; sometimes it takes time to make it turn 180 degrees.
I now feel that I’ve set the table for a great year in 2014. But the main difference between 2013 and 2014 will have to be consistency. If I work on a continuous basis instead of raising peaks here and there, I will be able to accomplish all of my goals.
On January 1st, 2015, I want to be able to declare that I’ve completely paid off my credit cards, personal and pool loans. This represents about 15K in debt. Once these are paid off, I will have over $400/month in free cash flow. This should be enough to accomplish my second goal.
If I want to fund my children’s education correctly, I need to increase my savings ability to $150 bi-weekly. In 2013, I started my journey with $50 bi-weekly. I want to double this amount towards the end of 2014. I will probably use my next salary increase in June to make it happen.
Hey! It’s the beginning of the year! So why not push ourselves out of the comfort zone??? By the end of 2014, I want to weigh under 180 lbs. The first thing I will do is to increase my running challenge from 500 miles to 550 miles. This will leave me no room for breaks as I will need to run 3 times a week consistently to make it happen.
If I can keep up with this pace over the year, I should be ready to run my first half marathon towards the end of the year; most likely in September or October. The most I ran in 2013 was 16.5km, a half marathon is 21km.
My oldest kid is a very good soccer player. This year, I hope he will make the competitive team in his first try. I’m also applying for the “coach position”. I’m not a soccer player, but I just love coaching kids while watching how they can progress and learn over a short period of time. The tryouts start in January for both my son and I. The goal is for both of us to make the team and have a wonderful summer!
This is more like a qualitative goal and it is very hard to determine what it truly means. I just noticed that I’ve been comfortably installed in my comfort zone for the past two years. Since I had my third child, I’ve put pretty much everything in my life on cruise control. I can say the results weren’t self-fulfilling and that I want and expect a lot more from life. Getting out of my comfort zone means acquiring clients in non-conventional ways (e.g. not through references, but becoming the king of cold calls and networking), becoming fit (the goal being not only to lose weight but being able to take my shirt off during the summer ;-)), doing things I have never done before (like running a half marathon, coaching a competitive sport), etc. The idea here is to burst my bubble and do something that matters. I want to feel the fire burning inside of me…again.
Life is nothing if it’s not burning inside you.
Comments: 11 Read More
Ever since I wrote about my day job and told you the difference between a CFP vs a CFA, I receive emails on a continuous basis from readers about becoming a financial planner. Today, I’ll try to answer most of these questions with some kind of “reference” for all students who love personal finance as well for all those thinking of a career change… that will pay the bills big time!
A while ago (back in 2008!), I wrote a quick piece about how to become a financial planner. The article was short and sweet and today I think there is more to add now that I’ve been one for the past 6 years.
I’m pretty sure school requirements differ from one country to another but generally, you need a bachelor’s degree. If you have one in finance or at least a certificate in financial planning, that would be ideal! If not, I think the certificate in financial planning is enough to pass the CFP exam in most places.
A financial planner usually deals with wealthy clients; therefore, it’s kind of stupid to think you will be able to impress your clients with a simple certificate in financial planning. This is why I strongly suggest getting a bachelor’s degree. I personally decided to complete an MBA to add more letters to my business card but that’s a choice ;-). If you are going for a master’s degree and you are not afraid of working, a master in taxation could be even better (most people hate paying taxes and they would love someone who can manage to save a few bucks through tax optimization).
Once you have your certificate in financial planning, you are not done yet. You need a professional title called the CFP (Certified Financial Planner). You can read more about the certification process at the CFP Board (US), Canadian Securities Institute (Canadian, duh!) and IQPF (Quebec). This certification make sure you know the basics in all the financial planning fields:
1. Estate Planning
2. Personal Finance
5. Legal Aspects
6. Retirement Planning
You don’t need to be a pro in all fields. Your role as a financial planner is like a family doctor; you look at your clients’ financial situation and deliver a diagnostic on all 7 fields. Then, if there is a need for a professional to step in (like a lawyer, accountant, insurance rep, etc), you can refer your client to the specialist.
It is good that you have your own specialization. If you are very strong in one or two aspects of financial planning, this will give you an edge against your competitors and will also help you with sales. On my side, I’ve decided to focus on investments, credit (personal finance) as well as retirement planning. I also have good knowledge of taxation and insurance. But my USP (Unique Selling Proposition) is based on Honesty, Efficiency and Proactivity.
Now that you have a certificate in financial planning and your CFP title, there is another big decision to make: Investments or Insurance?
Ideally, you will need an investment license or life insurance license. If you want to be self-employed, you can even get both! But to start, I suggest you get one or the other and start with one specialization. This is a lot of stuff to learn and doing everything at the same time is not always a good option. If you plan to start your career in a bank, you will need the investment license and won’t be able to use a life insurance license (this is the case in Canada, I’m not sure about the US).
In addition to the following, I suggest:
#1 a Bachelor’s degree
#2 a Specialization in at least 2 fields
#3 a Master’s degree
If you have read everything above and are still with me, that’s a good sign. Advising people about their personal finance should not be taken lightly and this is why it is important to study hard and acquire as much financial knowledge as possible. Now…. Is a Financial Planner a used car salesman or a professional advisor?
Like it or not, sales is a part of the job when you are a financial planner. But you are not selling what you think. The point is not to sell a financial product. The point is to sell your vision, your knowledge, your trustworthiness. If you can sell yourself as a professional advisor, your clients will want to do business with you.
It has nothing to do with products, nothing to do with your best rate. It’s all about trust.
If you are capable of selling yourself, the sales part will be done. So if you hate selling stuff, don’t worry, good financial planners are not salesmen.
That’s a tricky question in this field since you can be self-employed or work for a firm. And you can be 100% commissions, 50/50 (or any other kind of mix between commission and base salary), base salary only or fee based (independent financial planner specialized in writing financial plans where you pay for the plan only).
According to the US Bureau of Labor Statistic, a CFP makes anywhere between $100,000 and $168,000, bonuses and commissions included (I got the stats here).
From my own experience, a CFP can start with a base salary of roughly $50,000 to $60,000 depending on his background (and level of commissions). If you have a high commission payout, your base salary will be lower (duh!). At the end of our first year, you should bring in around $60,000 to $80,000 if you are good at your job. Here’s how much I made from this job per year:
2008: $64,000 (worked 9 months as financial planner)
2013 (estimated): $100,000
*if you have followed my blog for a while, you probably remember the article about the chronology of my income. The amounts differ since the previous article included my employee benefits along with my online income.
As you can see, I had built my portfolio from 2008 to 2011 then I moved to another job closer to where I live. I had to start a new book of clients and this is why my income in 2012 and 2013 has decreased to roughly $100K. Still, it’s a pretty good income as you can see and it is fairly stable over time. I expect to see the numbers growing in the upcoming years. Since I work with a base income structure, I don’t expect to make more than $150K per year.
If you go the self-employed route, you can go anywhere from $20,000 to $1,000,000 per year and even more. This is not BS or a sales pitch, I’ve seen notices of assessment (Gov’t verified revenue) showing over $1M from a top adviser. But the guy was bringing in between $25M and $50M per year in his book.
As I’ve mentioned before, this is up to you to become a car salesman or not. Some people like more money than their clients and this is obviously an easy job to make tons of money if you keep on selling. I’ve met true salesmen during my career and they are making a lot of money. While compliance has become very important in this field, it doesn’t mean that some people prefer to push highly paid financial products down their clients’ throats while following the rules.
The good news is that you don’t need to be like that to make a good living. If you advise your clients and truly work for them, the money will come. The only difference is that you may not be a shooting star the first year, but income will gradually increase year after year. The best part is that the job becomes a lot easier once your portfolio is established and your clients trust you. Even better, at one point, they will refer their friends and family to you and the cold call sessions will become history!
Therefore, I suggest you become a personal finance superhero for your clients instead of another car salesman. It will pay over time!
If you want to have an idea of my day at work, I’ve already covered what a financial planner does, but it goes beyond that. I’m not ready to tell you that it’s one of the toughest jobs on earth (far from it) but it’s not as easy and glamorous as you think.
#1 There are tons of paperwork
#2 You will be told “no” by prospects almost everyday
#3 You will have fight to get new clients, and fight again to keep them away from competition
#4 You will have to comfort your clients during market volatility
#5 You will have to face angry people when it doesn’t go well and there is nothing you can do about it
#6 You will face the pressure of “selling” while you need to advise clients
Going to the latest point, the pressure of selling will come regardless if you are self-employed or if you work for a firm. For self-employed financial planners, the pressure comes from their commission statement. As self-employed, you will probably be 100% commission base. Therefore, no sales means no pay check. If you are not sitting on a comfy emergency fund, you might find this situation uncomfortable.
If you work for a firm, you will get monthly (I’ve even seen weekly) performance reports of everybody on your team. You don’t want to fall into the last spots. Your boss may ask you how many calls, meetings, plans you have done in your week. What is coming next and how your “pipeline” (list of potential deals to be closed shortly) looks.
Overall, the financial industry is not made for the faint of heart. If you bring the numbers in, you are a superstar. If you don’t, well, maybe it’s time for you to look for another job.
Some places are more edgy than others, I can only advise you to meet with a few branch manager so you can gauge which one prefers to serve their clients well vs the one who prefers to see the money first. You can usually tell which one is which after your 1hr interview.
As a final note on this exhaustive article, I thought of sharing a few CFP fast track tips. I believe I’ve accomplished some serious achievements during my career as a CFP and I should share them with you.
If you are not ready to make the big jump towards a 100% commission job, I suggest you start out working for a bank. You will get a great base income, employee benefits and additional commissions if you are a good financial planner. I’ve learned a lot by working for a bank. The best part is that you have the time to learn even if you don’t bring in the money the first month, you still receive a pay check!
Regardless if you are going self-employed or for a bank, it is important to choose a reputable firm. Clients are more likely to trust you if you work for a known institution then if you work for John Doe investing Inc. It makes your first approach easier (remember my Primerica reviews)….
I’ll be honest; there are tons of competitors out there. What makes you a better CFP than the guy with the same suit and the same tie next door? Your USP will make the difference. Find out what you are truly good at, prepare your speech and be interesting. This is why it is so important to be strong in a few fields of financial planning where your clients will see you as an expert. You have to become #1 on their list for anything related to money.
Asking for references from your clients is never easy. But when you do something awesome and truly help your clients, it’s easy to only suggest: “Do you like what I’ve done for you? Don’t you think you can let your friends benefit from it too?”. People tend to hang around with the other individuals in the same social demographic situation. Therefore, if you hit someone with $500,000 to invest, chances are that this guy has a few friends in a similar situation. Don’t ask for referrals, ask your client how you can help his friends as you helped him.
I remember when I started my career; my assistant was complaining that I was doing too much for my clients. That it was up to them to do this or that and not me or… her! But this is exactly the point: going the extra mile will make you a superhero for your client. People refer their contacts to someone who provided a wow experience, not to someone who did an okay or a good experience. If you can flabbergast your client, you will have more money coming in!
Don’t think you do too much for your clients, you can always do more!
All right! I’m pretty much done with all I have to share with you about becoming a financial planner. I can tell you that it’s the perfect job for me and that I truly like it. If you have any questions, it’s the time to share them with your commentsComments: 9 Read More
Will today be another Groundhog Day?
Lately, I have been inspired by several success stories. I didn’t read about another dotcom mogul on the internet that I barely knew existed. I heard stories from a close relative who succeeded by taking the evil way of entrepreneurship. I’m using the world “evil” as in: if you start your business; you automatically leave the herd and stop being a sheep. If you are not part of the group, it must be because it’s evil, right?
A friend of mine recently started his own business and bought a new house.
A friend of my partner just sold a part of his business for $500K.
My sister-in-law’s neighbor sold his online company for a hefty pile of money.
Guys from my Mastermind group are simply amazing me with their plans.
It all happened at the same time, I heard about these stories one after the other and still, I’m sitting on the sidelines, watching the parade. I guess I’m just waiting to see if my conditions will hurt or not to move. I’ve given some thought about what is good or bad about my day job and the fundamental reasons why I can’t quit. I think I’ve finally found the answer!
Many times in my life I encounter people who invest in certificates of deposit. I once heard in a conference that investment risk wasn’t in the stock market but it was with certificates of deposit. The biggest risk was the fact that you can’t get enough return to sustain your lifestyle at retirement. Since certificates of deposit are fixed, there is no way for you to get a better return.
This is exactly what happens with my guaranteed paycheck. No matter what I do, I have the assurance that I will be receiving my bi-weekly paycheck deposited directly into my account. I don’t really have to worry about how my employer is doing as I know there is a lot of money in the bank account. Therefore, there is no stress to produce enough income to be able to pay myself from my own company’s bank account.
As with the CD investor, I know I’m limited by my potential return, but I’m happy with the meager raise I get each year. The security has a huge cost, but still, you are secured.
When you think about it; is it that bad to have a pension plan? To get a high paycheck every two weeks? To get plenty of side benefits such as insurance, employers stocks, etc? And, most importantly, is it that bad to be paid for a job that you like? What’s wrong with my cubicle? What is wrong with me?
I guess it’s not the end of the world. In fact, it’s a pretty good world by itself! However, the cubicle is still filled with things that suck:
- Corporate BS (you have to drink the Koolaid)
- You are set with a fixed schedule (not much flexibility)
- You are set with fixed vacation
- There are always some stupid annoying rules you can’t deal with
I know from the start that I’m not good with the corporate environment. I enjoy working with my colleagues but the lack of flexibility has always been an issue. It’s not surprising that I had to fight so hard to get my 4 day workweek schedule and that I try by all means to have a flexible schedule. So far, I can’t complain, my employer has been fairly open-minded with this part.
Still… there is something itching in the back of my mind… but as much as I want to work on my own, I am also terrified by the idea of generating my own income. The money won’t be coming from some kind of automated payment system; the money will be coming from my company bank account to my personal bank account. The fear of not producing enough income is terrible. What if I could not sustain my lifestyle? What would happen? These are the fears preventing me from jumping right now.
Have you ever had these fears? How did you deal with them?Comments: 9 Read More
[Quick note from Martin: I have just launched a brand new course on dominating life after college, for those of you that are feeling lost. Check it ou!]
So, is college worth it?
Last week I shared my biggest issues with the college system.
“It is the mark of an educated mind to be able to entertain a thought without accepting it.” — Aristotle
With all of those issues, there’s no denying the many benefits of attending college. You can’t make a blanket statement about college and say that it’s not right for everyone. Despite the many issues, there will always be tons of positives.
Let’s look at the research on top of my thoughts. Then you guys can jump in with your opinion on this whole debate.
I found this study at CNN Money recently. I wanted to highlight a few key points.
According to the aforementioned article:
“A bachelor’s degree promises higher returns than stocks, bonds, housing and gold. At 22, the average college grad earns about 70% more than the average person with only a high school diploma.”
Okay, that’s pretty impressive. In your early-2os you’re guaranteed to make more money than most of your friends. You don’t have to stress about paying the bills or finding work. IT also beats doing nothing in your 20s.
Then I found another article where 86% of graduates considered college a good investment (Time magazine).
So far, it looks like college is a pretty decent investment to make.
The CNN article goes on to mention:
“During the past eight years alone, tuition and fees have increased 34% at four-year public institutions and 18% at four-year private colleges.”
USA Today mentioned the following scary stat:
“About $110 billion in federal student loans were distributed in 2011.”
According to Yahoo News:
“The average amount of college loan debt from the class of 2013 was $35,200.”
While the whole idea of college is solid. Is the money spent on it worth it? Should you allocate thousands of dollars towards this expense? Does it make sense?
My theory on the cost of college is simple.
It all comes down to the following question:
What will you get out of the degree/experience? Is that cost worth it to you?
There are many case studies out there. There are folks who study a program of their choice, excel at school, find a great job, make lots of money, and live happily ever after.
Then there are those that drop out of college and start a billion dollar company.
The third group is where most of us fit.
The third group — You either didn’t attend college or went just because it felt right. You can’t find your dream job and you owe money for student loans.
If you’re in the first group, college is the best investment. You dedicated four years and X amount of dollars to earn a job that would pay you well for life. You don’t have to worry about job security. It might take you some time to pay off the loans, but at least you have the income to justify it
If you’re in the middle group, you’re happy that you saved money by dropping out because you started your own business.
In the third group, you’re likely jaded and frustrated with the system. You can’t get ahead and you can’t find a job you’re happy with. You hate your work. You hate the fact that you have to pay off your student loans with a job that frustrates you to no end.
College is a great investment and a great idea under two strict scenarios:
I don’t believe in bashing specific degrees because we all have our own unique interests. I also don’t want to say that law school is worth it if you end up with huge debt and hate your job.
School is a great idea if you know what you want to do and can guarantee work. It also makes sense when you won’t get into huge debt.
Those are my thoughts on the investment that is college. Please jump in with yours.
Comments: 8 Read More
“The beautiful thing about learning is that no one can take it away from you.” — B.B. King
“If you want to get laid, go to college. If you want an education, go to the library.” — Frank Zappa
I’ve been thinking a lot about college lately. I’ve been living with my cousin, a bit outside of Toronto and we have lots of friends that are still students. Some of them are in graduate school and some are still undergraduate.
The idea of college has popped up a lot lately and has been a hot discussion. I have friends that swear by school and will likely be in school for the next 10 years. Then I have other friends who got out as soon as possible and never looked back.
In all of this discussion, I’ve come to realize that I have a few huge problems with college in general. And luckily I have a place to voice my opinions where we can have a mature discussion.
What are my biggest issues with college right now?
You just have to accept everything. You can’t challenge anything. You can’t deviate at all. You either take it or leave it.
There’s no flexibility at all.
When I was in school, I always tried to work full-time hours. As a result, I took summer courses often. This was never easy. Courses wouldn’t be offered at certain times or I couldn’t take over a certain amount of courses.
There was just no flexibility in terms of courses. You have to take the courses they want you to take, when they want you to take them. I was a huge fan of taking the difficult courses in the summer to get them out of the way. For some reason, my college always made this so difficult for me.
Another point on flexibility — school takes up a lot of time, energy, and focus. This is time or energy that you could be directing at so many other projects. You could do so much more with your time and energy.
And it takes four years just to earn a basic undergraduate degree. Specialization? Another few years.
It’s scary how one person is in charge of your future. You get one bad grade on an assignment or a professor doesn’t agree with your thesis, and you could get a grade that brings your average down.
Isn’t it scary how one person determines everything? I think it’s pretty damn freaky.
Even worse is your thesis. It gets graded by a panel and only a few people will ever read it. Every blog post you can write online will be guaranteed to be read by more people.
“Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will live its whole life believing that it is stupid.” — Albert Einstein
We all learn differently. We all react differently. So why is everything so standardized?
I saw friends receive horrible grades (by their standards) in classes because they messed up a presentation. Guess what? Not everyone is charismatic. Why should the introvert suffer because they got nervous during a presentation?
I have a friend who is only in school because his parents are forcing him to be. The problem is that he honestly doesn’t have the skill-set to be in school. He’s very handy and could build anything. Instead of getting into trades, his parents forced him to attend a big university. He doesn’t like his program and has no interest in any of his classes. Yet, his parents won’t let him drop out because they want him to get that degree. He wants nothing to do with the degree. He has failed a whole year. His parents have lectured him. Still, he spends his summers making good money in his trade. Then suddenly when the fall rolls around he’s forced back to college where he hates it.
My point here is that college isn’t for everyone. We can’t assume that every single person needs to go to college. Some folks are more skilled in other fields.
You need to stop avoiding life and hiding behind college.
Real life isn’t that scary. It’s actually pretty fun.
I see far too many of my friends hiding behind the whole college system. They stick around in school because they don’t want to look for a job. They love the student status.
The school loves it because the means more revenue. It’s far too easy to hide in college until you’re 30.
Oh and worst of all…
I know, I know. Money isn’t everything. Knowledge is power. I agree with that. That’s cool.
But who’s to say that you can’t acquire knowledge while working or doing something else? You don’t have to be a formal classroom to learn a thing or two.
Learning is great. Being flat broke in your late-20s sucks.
Those are my issues with college right now. Did I come off too strong? Do you agree or disagree with any of them?Comments: 9 Read More
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