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Anybody going to watch "Un-Broke" on ABC tonight? If you are not aware, it is a one-hour special on ABC that airs FRIDAY, MAY 29 (9:00-10:00 p.m., ET) and features celebrities trying to make money fun. Who would have thunk that personal finance would suddenly become so sexy?

http://abc.go.com/specials/unbroke/index
 

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Interesting... I'll set the DVR just for Seth Green and the E-trade babies... I wonder how much actual information there will be though based on the shorts on the site... the "speed dating" skit was a lot to sit through if the only point was to have an emergency fund.
 

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Well, having now watched it, I am both encouraged and discouraged. On the one hand, I'm encouraged that personal finance is becoming a mainstream issue, not only so that people who haven't been doing things well will change, but because then they in turn will demand their politicians do things well.

I'm discouraged because the message seems to be "you guys are such tools that we can barely get the message to sink in if we use famous celebrities", and they ended with the message that because everyone watched this, they are now "unbroke".

C'mon. The point is that none of these things are EASY or everyone would have done them long ago... people are not going to be out of debt with a six month emergency fund tomorrow because they watched this show, they need to make a plan that includes savings and spend less than they make, and the show didn't, in my opinion, recognize that, which means that as soon as all these people are faced with some difficulty in saving, they'll stop.

From a pure entertainment perspective, Seth Green was hilarious, the Etrade babies stole the show, and Cedric the Entertainer did the best job of talking directly to the audience without talking down to them.
 

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I simply don't buy the premise that "if money were taught in school, we'd all be golden" either. The fact of the matter is that most people know the basics. I mean, I'm pretty sure most people's parents told them to eat their vegetables and save a portion of their income. It is actually doing it that takes discipline and hard work. And it is the discipline and hard work part that trips up most people; not a lack of knowledge.

My vote for the best segment is the E*Trade babies. Just classic.
 

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I simply don't buy the premise that "if money were taught in school, we'd all be golden" either. The fact of the matter is that most people know the basics. I mean, I'm pretty sure most people's parents told them to eat their vegetables and save a portion of their income. It is actually doing it that takes discipline and hard work. And it is the discipline and hard work part that trips up most people; not a lack of knowledge.
Probably somewhere in the middle lies the truth.

I am an advocate of financial education in schools, but not so naive as to think this alone would save humanity from financial ruin. Some good must come from this however.

Most do know they should spend less than they earn, and of those who know this, many fail to practice it. What is lacking is an understanding of the consequences of going into debt, knowing that it's more than just a number on a paper and the day of reckoning can be pushed off only so far. It seems to me that this apparent irresponsibility is partly borne of financial ignorance, but is largely a symptom of an underlying root cause, generations unwilling to be held personally accountable for failings. They point to others, or turn to the government, or perhaps the government turns to them - we see this in recent discussions on whether to augment retirement savings programs. From this perspective, a new national savings program could have the effect of self-reinforcing behaviour: consumer gets into trouble, government bails out, consumer says "Hey, this isn't so bad", and financial behaviour becomes worst than ever.
 

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Let's imagine that every Canadian had, or had access to, a computer and the skill to use it.

Every so often (once a year, say) they pulled up a program which asked a few simple questions...
-current salary (if still working)
-retirement age target
-pension parameters (DC or DB)
-what is the balance inside your RRSP
-ditto LIF/LIRA
-ditto taxable (nonreg)
-ditto TFSA
-best / most conservative estimate of rates and cpi going forward
-details of outstanding loan(s)
-size and timing of any future capital gain (selling cottage, inheritance...)
-province of residence
-estate target... do you want to leave an estate, or simply 'die-broke'?

(This is not the most onerous data entry exercise one could encounter, IMHO)

After the calculation, the program displayed what your net spending (food, gas, entertainment, travel, clothing, utilities) should be, and you now have a budget to work with... both how much you should be living on, and how much you should be saving. Or, if you are retired, how much you should be 'de-saving'.

Run this program (every year say), adjusting for changes which might have occurred in the interim (rates, balances...)

The thing about this exercise is that... all the information you need to feed this calculation comes from your own knowledge base.... YOU DO NOT NEED A FINANCIAL PLANNER TO DO THIS FOR YOU!

If you are in a HNW category, with a business, several trusts and some esoteric financial products, fine, use an accountant, but for the average Joe, the above scenario is sufficient.

I am on a mission, in case you haven't figured this out.:)
 

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Let's imagine that every Canadian had, or had access to, a computer and the skill to use it.
Run this program (every year say), adjusting for changes which might have occurred in the interim (rates, balances...)
I am on a mission, in case you haven't figured this out.:)
The missing ingredient is the will of every Canadian to hand over money for such a program. If such program were made available free of charge, then perhaps the masses could be saved.

I personally prefer to save as much as I can until the day arrives that I can retire. The risk of overshooting savings and ending up with too much too soon is more palatable than the risk of undershooting, and having not enough to retire.
 

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Compare the cost ($99) one time, and $49 annual renewal with the cost of going to a 'fee-only' financial planner, and you don't have to be a financial genius to figure out the better course. This is, after all, the most important calculation you should be making. (next to tracking a weekly household budget, that is)

Compare that to the alternative... a once a year appointment with your broker who doesn't begin to get into this type of analysis. Plus you get to visit it at your leisure, fine-tuning and what-iffing it whenever things change. Do you imagine your broker or 'fee-only' planner pays that amount of attention to you specifically?

The best your broker will come up with is a lame '4% withdrawal rule' or 'ratio of savings to salary'.
 
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