Tuesday, July 15, 2014

Passion, belief and a little ranting

Do you ever start something with no clear intention of which way you want it to go? I'm struggling with the direction I want to take this blog, hence the lack of posts thus far. Do I want to use it to impart facts and advice about finance? Do I want to make it more personal and relate it to stories from my life? Is it going to be a sounding board for my thoughts or a business platform?

I'm going to take a page out of my oldest and dearest friend, Darren Stoupe, who has just embarked on his life coaching career and let my heart guide me. Maybe today I'll talk about faith and passion.

It's funny. I think, like most of us, we tend to take a lot of things at face value. I just had to take my children to the dentist and left there with estimates equaling over $2000 for work that needed to be done just for one son alone. How does a 7 yr old end up needing that much done? However, I'm not a dentist, and I felt I had to take the information that I was told and make a decision to go ahead with what needed to be done for my children's sake. I sure hope all of it was completely necessary because there is a whole lot of blind faith that just went into that decision.

I used to also have a lot of blind faith in the banking institution. These are people we trust, we listen to, we hope that we are getting the right advice from because, like a dentist, that's their job... to help us make the best decisions, just in this case it's with our money not our teeth.

I would say that I used to be like most average Canadians out there when it came to my financial literacy. I'm pretty sure that anything I knew about investments, retirement, savings, protection... all of it was learned quite literally from tv commercials and a very small portion when I sat across from a banker because the tv told me I needed to start saving for my retirement young. I remember leaving that appointment when I was 25 thinking, "Okay... I guess I'm on track even though I really still have no idea where my money is going."

So I continued to put my faith in the system and 5 years ago felt the need to refinance my mortgage to pay off a small amount of outstanding debt. We made our appointment and left there with an additional $45,000 on our refinanced mortgage. The debt we were trying to pay off was $6000. He told us since we were refinancing anyway, why don't we take a little extra to go on a trip, put some in a GIC and max out our common shares. It all sounded great. He was our banker. We felt like we had a relationship with him and trusted him so we signed on the dotted line.

Fast forward 5 years. I had forgotten all about the "extras" that we'd been advised to do, so I made an appointment to find out exactly what all my money was tied up in. My 5 year GIC earned me 1.16% interest, not even keeping up with inflation, and when I decided to take it out, I had to pay a 15% withholding tax fee right off the top, and now I get to claim it as income next year so in the grand scheme of things I actually lost money on that "guaranteed investment". The common shares earned me less than 1% last year and upon inquiring if I can withdraw them I was told that I have to apply and the application may be denied. If they let me actually have MY MONEY, half of it was put into taxable areas, so now I get to pay tax on that stuff too. Lucky me. The money that we had put into our account 5 years ago to pay for a trip for our family ended up being whittled away by bills or coffee or eating out.

I left that bank furious that I had let myself be manipulated by the system when I didn't have the financial education to make informed decisions on my own behalf.

What I didn't know then was that  if you borrow money to invest, the government allows you to use the interest payments as tax write offs, but only if it's taken as an investment loan. Because all of our money was taken out as a mortgage, I didn't get that little advantage, plus I got the added bonus of having to pay interest on that entire $45,000 for the life of my mortgage. 25 years of paying 6% (at the time) on $39,000 and also a huge chunk of that was put into taxable areas so now I get to pay tax up to three times on the same dollar.

Now you tell me that the banker had my best interest at heart.

And my fear is that there are SO MANY PEOPLE out there who don't know any different that keep putting all of their faith into a system that so very obviously is about their bottom line instead of their customers. It's evident every single year when we see record profits of $19 BILLION DOLLARS being recorded. It's time we use the programs out there to OUR advantage instead of allowing the banks to keep facilitating our demise into debt.

I simply can not sit by and watch people get screwed over by the system any more. We deserve to have options. We deserve to be educated. We deserve to have people actually looking out for OUR best interest instead of their own.

That's why I developed a passion for helping people.
That's why I talk to everyone I meet.
That's why I believe in what I do.

And hopefully, I can stop what happened to me from happening to anyone else in the process.

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