April 30, 2010, 4:39 am

Do You Have To Be Good at Everything?

by: The Financial Blogger    Category: Career,Personal Finance

In this Friday, I wanted to be more philosophic. If you have been reading The Financial Blogger for a while, you have surely pictured me as someone who aims for top results in everything that he does. For someone who might even be obsessed by success, the usual cliché of the young careerist. You’d be surprised that I am not. I will ask myself a simple question and include a lengthy answer:

“Do I have to be good at everything I do?”

Most people will say “no”. They will tell you right away that you can’t possibly be good at everything you do. That it is humanly impossible to achieve such ridiculous goals. They will also tell you that individuals who try to achieve this will end-up burned out or all alone in the marble palace. My answer is different:

“Yes, I do have to be good at everything I do!”

Call me a “perfectionist”, call me “burned-down-fallen-dad-to-be”, call me “stupid”; I still have a point to make. For the past 10 years, I have concentrated in being good, damn good at what I do. I have focused my efforts to reach a higher level of competence in what I do and I have used all my energy towards what I do.

So far, I can tell that I have succeeded in being good at almost everything I do. What is my secret? I don’t try to be perfect; I just don’t do everything I should 😉

Outsourcing is my secret. “Letting go” is my moto. In fact, there are a tons of things where I will suck  during my entire life. I don’t get along with hammers, screwdrivers or a piece of wood. I am also not good when it comes down to minute details and I am definitely not good at staying quiet.

For all those things I am not good at, I am trying to outsource them or simply let go and not focus on them. I prefer concentrating on my strengths and improve them instead on trying to cope for my weaknesses.

I am going to shock a few people now, but I found that there are too many “average” individuals. Too many people try to be good or average at everything. Most of the time, they waste valuable time working on a skill they will never do well just to feel better. They aspire to rise about mediocrity to reach an average or “fair” level. But who really wants to be “average at something”? Who really needs your help at something you are “decent” at? The cold hard truth? No one. When we do something, we want to feel that we are good. And when we are looking for help or services, we want to deal with someone who is pretty good at it. Not the average Joe!

So when I am good at something, I am very good. But when I suck… man it’s ugly ;-). What about you? Do you prefer to improve your weaknesses or work on your strengths to become a master in your field?

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April 29, 2010, 4:34 am

Perfect Time To Leverage

by: The Financial Blogger    Category: Leveraging Strategies,Smith Manoeuvre

Here we go again! As I am packing my stuff to move in mid-June, I am also preparing my next leveraging plan. Last year, I had to stop my smith manoeuvre strategy not because I was scared by the markets but because I felt that my financial situation was too shaky (my wife had just quit her job) to leverage everything that I could (especially since I was borrowing money to invest in my online company).

I am pretty convinced that the “easy money” has been made in 2009. However, there are several great investment opportunities in the upcoming years. Remember back in 2008, the TSX was at 15,000 points before it melted faster than a GI Joe in the microwave. We are now around 12,000 points and there is still a lot of room to reach our previous peak.

In addition to that, the Canadian economy is strong, the most productive country on earth (USA) will benefit from a weak dollar to boost its internal production and the emerging markets are as thirsty as vampires for resources to support their growth.

What about Canadian interest rate forecasts?

Sure variable rates will start going up. We hear 50 to 100 basis points this year. This is also why our Canadian Loonie is so strong. However, it’s not 1% that will make a big difference when you can find amazing companies (such as Canadian banks, Telus, BCE and oil companies) yielding dividends over 4%.

What about the loan from my parents?

Funny enough, I am not really concerned about the investment market or the interest rate forecasts. I am most concerned about reimbursing my parents! As of today, I still owe them about $21,0000 payable in full in a few months (November 2010). The good news is that with the sale of my house, I’ll be able to give them a good lump sum payment in June and probably end it up this summer (as I am expecting a nice tax return and a part of my job bonus in June as well).

Changing my investment strategy

I’ve been thinking about leveraging for a few months already. I didn’t want to move my stuff around too much as I really wanted to pay back my parents and sell my house first. Now that I know more numbers in my situation, I’ll be able to start thinking about my leveraging strategy.

I am not quite sure which route I will take first. I’m very tempted to build my own stock portfolio but I don’t have enough money to start this. My investment strategy will remain to invest about $400 to $500 in the market on a monthly basis. Therefore, buying ETFs or stock is impossible.

I think I will go with a mix of Altamira index mutual funds (Cdn and US) with an emerging market fund to complete my investment strategy. I might take a dividend fund in order to have distribution to pay off my interest… I am still wondering about this part.

One thing is for sure is that I will give more weight to the Canadian market at first. We have one of the strongest banking system and there is not much chance of having a surprise blow up in our face (I don’t believe there is a housing bubble in Canada).

So my first thought would be to invest (on a monthly basis):

$200 in the Altamira Canadian Index Fund

$100 in the Altamira US Index Fund (currency neutral)

$100 in the National Bank Omega Emerging Market Fund

$100 in the National Bank Omega Dividend fund (100% dividend stocks)

It might change as I won’t implement my investing strategy until July or August. I really want to make sure that I have enough money to pay for everything first, then, I’ll start having some fun investing again 😉

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April 28, 2010, 5:21 am

How to Get a Bridge Loan?

by: The Financial Blogger    Category: Banks and You,Properties

Can banking get any more complicated? Hey man, you have no clue ;-).  But in fact, clients can make banking and the loan industry complicated:

At first, somebody wants to buy a house but doesn’t have any cash available for a down payment. So, banks create mutual funds to help him save.

Then, this same individual can’t manage his budget so he can’t really save. And, banks come up with RRSP loans.

Now that he has a 5-10% cash deposit saved, he now wants to buy his house right away. Therefore banks offer him a mortgage.

But the guy wants more flexibility as he wants to make home renovations and buy a new car. So the banks create the home equity line of credit.

And guess what? The same guy doesn’t want to manage notary/lawyer’s dates while buying and selling properties. This is why banks created a bridge loan.

What is a bridge loan?

A bridge loan is a very interesting product for individuals who don’t want to bother about dates when selling/buying their properties. A bridge loan is a short term loan that advances the amount of your cash down temporarily between the sale of your current house and the purchase of the new one.

Why do you need a bridge loan?

Picture this: you have a house selling on June 13th (the moment you will receive your check) and you give the keys to the new owner on June 17th. You finally find the home of your dreams and you are getting the keys on June 12th. Therefore, you will have to give the seller your check before that date. Let’s say that you have to pay him on June 9th. The bank will disburse your mortgage on June 9th, but where will you find your cash down if you are getting the money from the sale of your house on June 13th? This is why you have 2 options:

#1 You ask your buyer to accelerate the process and go to the notary on June 6th so you can get your money ready for June 9th. However, if the buyer pays upfront,  he will want to possess the house faster. If he only gets the keys on June 17th, he will request compensation for the 11 days that you live in “his” house for “free” (since your mortgage will be paid off on June 6th at the time of the sale.

#2 You keep the dates as is and ask for a bridge loan from your bank! The bridge loan will be disbursed on June 9th (the date you are buying) and the bank will also disburse your new mortgage so you have the whole amount to buy your new property. Therefore, on June 9th, you will be responsible for the 2 mortgages (since you haven’t sold your house yet) and a bridge loan (which is the equity lying in your previous property that is not sold yet).

On June 13th, you will receive the check from the sale of your house but the bank will demand from the notary/lawyer to be paid first for #1 the outstanding mortgage and #2 for the bridge loan.

What is the cost of a Bridge Loan?

They used to have a basic fee for a bridge loan since it is a temporary loan where banks don’t make much money on it (imagine the interest rate of 5% on $50,000 for 5 days… you don’t get much from it!). However, since competition is pretty rough, banks tend to wave bridge loan setup fees in order to make sure they get the mortgage!

What is the interest rate on a Bridge Loan?

It is usually comparable to the interest rate on unsecured personal loan. In fact, bridge loans are unsecured loans (but they are set on a very short amortization).

What is the maximum amortization for a Bridge Loan?

There are no specific rules about bridge loan in terms of amortization. Since the bank is still taking a risk, they usually don’t extend bridge loan for more than 90 days. Otherwise, your bank will require that you renegotiate your possession dates instead of asking for the bridge loan.

What do you need to get a bridge loan?

Basically, the bank will require that the 2 transactions are almost certain. Therefore, they will need your purchase and sale contracts with financing approval for all parties involved. The bridge loan will be disbursed at the same time as your new mortgage and you don’t have to do anything to manage it. The repayment date of the bridge loan will be set according to your sale date at the notary/lawyer. The bank’s main requirement in order to grant the bridge loan is obviously to get the final mortgage (we don’t work for nothing after all 😉 ).

After giving some thoughts about it, I will be going for the bridge loan instead of managing date with buyers and sellers. The bridge loan won’t cost me much and it is definitely an easy way to get everything done without headaches!

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April 27, 2010, 4:54 am

Home Security System Deal: Shopping for the Best Home Security System Reliance Protectron

by: The Financial Blogger    Category: Properties

Now that I have sold my house, I will be moving into my new home in about 7 weeks. When big changes happen in your life, you should always look closer at your situation to make sure everything is fine. This is when I realized that I didn’t have a home security system at my current house and that having an alarm system could be a great advantage. On top of that, the house we are buying already has the wiring for a home security system installed!

2 major reasons to have a home security system:

I never thought of having a home security system until recently. However, as I am buying a bigger house with nicer furniture (and ton of electronics inside!), I am thinking that securing my house with an alarm system may not be a bad idea.

Another point is that I am leaving the classic suburbs to live on 35,000 square feet land. Therefore, you have less neighbours (that was the point!) but you also have less witnesses if someone tries to break in. So in order to secure my house and protect my goods, I have decided to consider a home security system. It actually doesn’t do much when burglars break in but they may think twice before picking my house (and should target an “easier” house to attack).

The second reason why I am considering a security system is to save money on my home insurance. Having an alarm system will help drop my insurance bill. So it is like an additional rebate on the actual price of the alarm system.

Speaking of rebate, I  found a great offer on Reliance Protectron home security system:

Reliance Protectron $100 rebate limited offer

For a limited time, Protectron, the largest home security provider in Canada, is offering a rebate of $100 on the purchase of a home security system.

I have made my research and Reliance Protectron Security System offer a tons a benefits:

#1 Protectron is a leader in the home security system industry. Therefore, you benefit from great expertise and a professional service.

#2 They offer several ancillary services such as Reliance Protectron renowned remote monitoring service, unparalleled service and after-sales support anywhere in Canada.

#3 If you are looking for other forms of protection, Reliance Protectron Homes Services offer protection against home invasion, fire, intrusion as long with other additional protections (water damage, dangerous gases, etc.).

#4 Reliance Protectron offer a $100 if you sign today

So this is what I did. The first step is to complete a small form with name and phone number so a representative can call you and offer you a quick, free evaluation. I really like when companies offer such service so you can keep shopping around for your home security systems and get free quotes while sitting in your home.

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April 26, 2010, 4:30 am

Required Steps When Selling Your House

by: The Financial Blogger    Category: Properties

As you may know already, I  sold my house within 2 weeks. While this was pretty fast, there are still a lot of steps to complete before I can officially cash the check ;-).

When you decide to sell you house on your own, there are a lot of steps to be aware of in the process. A realtor can take care of a few of them and guide you through the rest of the steps. And while selling a house may be a lengthy process, it is not rocket science. This is why I have decided to outline the main steps to selling your house to help ensure you don’t forget anything:

#1 Prepare your house

I’ve already written about home staging tips in a previous post. I think that investing about 1 to 2% of the price of your house is a very good idea if you want to sell faster and get a decent price. Clean up, paint with light, neutral colors and make it trendy.

The second step to preparing your house for sale is all the required documents. You will need to make sure you have up-to-date documentation concerning warranties, current land surveys and titles and any required tests in your area. Make sure you can track down all renovation bills and improvements you made to the house. Know your dates and approximate amounts.

They also now have a “seller’s declaration” that is used to give the buyer additional protection on the fact that the seller of the house didn’t have problems with water, heating, bugs, windows, etc. This is obviously to avoid any hidden vice.

#2 Set a price for sale

You must first calculate how much you need for your budget. Then, you have to look at what is on the market. Don’t look at furniture or design. Think square feet, equipment (A/C, pool, flooring, heating, etc.) and location. Make a sheet with facts, not opinions while looking at comparables.

#3 Put your house for sale

At this time, you can go with an agent or by yourself. Bytheowner.com offers a very nice alternative in Canada. They are very professional and it doesn’t cost much ($800 in my case). I have ignored newspapers and traditional media since they are expensive and “useless” as 85% of potential buyers search their next house on the internet.

#4 You get an offer, what to do next?

You can always counter offer and negotiate other points. The main consideration here will be the price and the occupation date. You can negotiate items to be included or excluded (make sure to put everything in writing and make it clear on the contract).

#5 The offer is accepted, you are done… Dont quit yet!

You wish it was over at this point but there is a very important step to achieve before selling your house: the inspection! The buyer has the right to have an inspector look over your property to make sure everthing is in order. While this is a normal requirement before buying a house, this step can be stressful.

Inspectors usually point out little minor defects of your property. While each house is far from being perfect, it is never fun to have people “criticize” your property.

#6 Finalizing the sale of your property

Besides the inspection, there is another very important part included in the offer to purchase; the proof of financing from the buyers. They usually have 10 days to provide such documents (a letter from the bank). Don’t forget to ask for it to make sure your buyers are strong enough financially to buy your property.

#7 Closing date at the lawyer/notary and the date for Possession

There are usually 2 dates to take into consideration when selling your property: when you will sign for the amount to be received by check (at the lawyer/notary) and when you will giving away the keys. Those 2 dates are usually pretty close (within the same week). However, it is important to understand when you will actually receive your cash as you will probably be buying another property and you need to know when your cash down on the other property will be available. If there is a discrepancy in the dates, you can always go for a bridge loan (which will be explained in another article).

That’s it! You are done selling your house and you can move in to the other one!

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