December 22, 2012


freshly-baked chocolate chip cookies
Success comes from self-control. If you're not getting done what you want to get done, your willpower may be the problem.

Obstacles like freshly-baked chocolate chip cookies have no sympathy.

One of the best uses of self-control is to build habits. Once you establish a habit, you reduce the decisions you need to make. [Getting married does too, but getting told what to do brings stress.]

Routinize The Routine

"You'll see I wear only gray or blue suits. I'm trying to pare down decisions. I don't want to make decisions about what I'm eating or wearing. Because I have too many other decisions to make." — Barack Obama
Think about that. President Obama preserves his willpower by letting others make smaller decisions for him. That lets him focus on more important decisions. (see boring is productive, Harvard Business Review).

Steve Jobs kept inventing and updating products but not his clothing (Gizmodo). He bought 100 black turtlenecks (Gawker), which even removed the step of reordering.The evolution of Steve Jobs' clothing (click to read on Gizmodo)
I had more trouble dressing on Casual Fridays. The other days, I'd wear a suit with a white shirt.
"I got sick and tired of having to decide what kind of dessert I was going to have at the restaurant, so I decided it would always be chocolate ice cream, and never worried about it again." — Richard Feynman
Barack became President and Richard won a Nobel Prize. Your mileage may vary.

Little habits help too. I always put my keys in the same place, which eliminates the last moment panic of finding them. Caution: You don't want to become eccentric.

The Radish Experiment

Willpower is also essential for change. Dan Heath explains in this video.

Recent research shows that our willpower is limited and gets exhausted easily. You replenish willpower with glucose. Willpower is like a muscle that you can strengthen without sugary drinks. Building habits is one way.

Learn More

To get better results, get and give these books: (Amazon, non-affiliate links)
This is the final post of 2012 — just in time for your New Years Resolutions.

Best wishes to you and yours during the holidays.
May 2013 be the best year you've seen!


Podcast 200

direct download | Internet Archive page | iTunes

PS Mind those calories!

December 15, 2012


the fork in the roadWe often get misled even if we pay for the advice. Whose fault is that?


Sometimes we can't tell if advice is bad until much later. If your advisor tells you to buy or sell an investment, you'll eventually know if that advice is sound … when you can’t do anything about it.

If the advice is more general, say to accept/reject a job offer. You’ll never know what was better because you can only take one path. Computers are powerful but can't accurately simulate the path not taken. This type of you-never-know-if-it's-right advice is easy to get (and give). If something goes wrong, you might get blamed for not following the advice properly.

There's also "obvious" advice. We often know what we're doing wrong. Perhaps we need to eat better, upgrade skills or exercise more. Knowing isn't doing. One more reminder may be just what we need to act.


“Too bad that all the people who know how to run the country are busy driving taxicabs and cutting hair.” — George Burns
It's easy to give black/white advice without understanding the nuances. If only the player or mayor did fill in the blank. It's easy to give advice to people who'll never hear or heed it.

You might be getting advice outside of the giver’s expertise or experience. The advice might still be right by coincidence.

The Intent

You may have difficulty figuring out the motivation behind the advice. Maybe you're getting a disguised sales pitch that brings your advisor a big gain while causing you (and others like you) a minor pain.

You may sense that you're getting bad advice but refuse to admit you chose the wrong advisor. We're great at fooling ourselves.

Conflicting Advice

Ask around and you're bound to get conflicting advice --- even from the same person at different times. Every decision has pros and cons. You benefit from differences in opinion even though consensus feels nicer. Blockbuster and Kodak had plans but became extinct. Not taking action can lead to the same outcome as taking the wrong action.

Ignoring advice simplifies your decisions but doesn't make them better.

Shooting The Messenger

Know to listen, and you will profit even from those who talk badly.
— Plutarch
Even if you get bad advice you develop your cognitive skills by wading through the murky options. You might find good excellent advice in the process.

You also get insights into the giver. Stephen King said there's a little of us in everyone. That means there's a little of everyone in us. Understand others a bit better and you understand yourself better too.
Neo: Morpheus. The Oracle, she told me I'm...
Morpheus: She told you exactly what you needed to hear, that's all.
— The Matrix
The advice may be just enough to get you moving on the right path, even if you don’t realize this at the time.

When you show you're open to advice, you'll get more advice. Better advice. Better advisors. There's little point helping people who don't change. Show you have the courage and you'll get more help. Thus ends my advice.


Podcast 199

direct download | Internet Archive page | iTunes

PS Do you take advice as well as you give it?

December 8, 2012


broken pencil blueprint 500x345 Photoxpress_612402
If you miss a premium payment, getting your insurance coverage reinstated takes more than money.

Even with pre-authorized payments, you might miss a premium. Maybe you change banks or your account runs low. You might not notice because you’re on an extended trip. You could be in the hospital for an extended stay.

On Purpose

If you're short of money, you may decide to stop paying your insurance premiums temporarily. That’s gambling. You never know when you need coverage.

In 2012, we lost Sage Stallone (36, heart attack), Rodney King (47, accidental drowning), Whitney Houston (48, accidental drowning), Michael Clarke Duncan (54, heart attack), Sally Ride (61, pancreatic cancer), Donna Summer (63, lung cancer) and Tony Scott (68, suicide).

Your health could change. This week, Malcolm in the Middle's Frankie Muniz got a mini-stroke for his 27th birthday (see ABC interview). He’s recovering but has affected his chances of getting insurance in the future.

The Process

A reinstatement is not automatic. You've broken the contract, which means you're not entitled to any special treatment. If you want your coverage back, the insurer is naturally suspicious. Maybe you've got a reason to think you're likely to make a claim. What do you know that they don't know?

Here’s what usually happens (your policy contract will have the specifics for you). When you miss a premium payment, the insurer mails you a notice. You get a grace period of a month to pay.

However, you may not get the letter if you've moved and your mail isn't getting redirected properly. Maybe you forgot to provide a change of address or the redirection period expired. The letter could also go astray. The letter might arrive but you could be away.
Key Dates
You can only request reinstatement within 24 months (say) of the lapse.

If your coverage is reinstated, the two year contestability period restarts. The suicide exclusion clause restarts too. This means there’s extra scrutiny since early claims are not expected. Maybe you know something you didn't disclose.
The Cost
You're often asked to repay the premiums you missed plus interest. Wait, you say. Why should you pay for the months you weren't covered? If a claim had occurred then, you wouldn't have been paid.

True. But you wouldn't qualify for coverage now either.

Consider payment of back premiums as a penalty. The insurer spends money on the re-underwriting and might not pass the costs on to you. There's also a deterrent element to stop you from stopping/restarting your coverage whenever you want.

If you think a reinstatement is like buying a new policy, you're right.

Why Bother?

Why wouldn't you buy a shiny new policy instead of reinstating the old one? Say you bought the original policy when you were 41 and now you're 44. If you reinstate, you pay the premiums of a 41 year old. If you buy new, you the premiums of a 44 year old. That's because you're older. 

Your old policy could be an excellent deal because newer policies have been increasing in price for reasons unrelated to your age and health (see three reasons life insurance premiums are shooting up).

The Winners

The insurer wins if you can cancel your coverage after a few years. You've been paying them money and they've paid nothing to you. That’s profitable. If you buy a new policy, the rates are higher since you’re older. The guarantees may be reduced too.

Some policies like Term 100 have been priced to be "lapse-supported", which means the insurer makes money when you cancel than when you stay. Don't expect an insurer to make exceptions to help you restore your coverage.

Your advisor also wins. If you cancel coverage in the first 24-36 months, your advisor may be forced to pay back part of the compensation. After this chargeback period, the advisor earns more by selling you a shiny new policy.

Protecting Yourself

Your advisor may not be informed if you skip a premium but only after coverage has  lapsed. It's then too late to get the insurance back without going through the reinstatement process.

To make sure your insurance stays in effect, pay the premiums. The onus is on you. Examine your bank statements to ensure the premiums are getting deducted. If you use, you'll get notified of deviations from your normal spending patterns.If you’re spending less than usual on insurance, investigate why.
Term Insurance
You can’t prepay your term insurance (life or health). If you pay monthly, you’ve got 12 chances to miss a premium each year. If you pay annually, you can only make one mistake a year. You also get a discount.
Permanent Insurance
Universal life insurance has a savings component. If you pay more than the minimum, you build up tax-sheltered savings. You can then skip premiums as long as the savings remain. Whole life insurance (wiki) doesn't let you skip premiums but may allow an Automatic Premium Loan against the savings to keep coverage going.


If you think you no longer need insurance, do talk to an advisor you trust. You might be making a decision that’s expensive and not reversible.


Podcast 198

direct download | Internet Archive page | iTunes

PS You’ll find lots about insurance on the Riscario wiki  at

December 1, 2012


advisor or you?Who decided that November is the right time for Financial Literacy Month? We need skill with numbers all year round.

Besides, financial literacy is boring  compared to Black Friday and the latest Apple iDevice. Maybe that’s why we need a special month.

You Already Pay

You pay for advice for financial decisions relating to banking, financial planning, investments, insurance and tax. Thirty days hath November.  How did your advisors specifically help you improve your financial literacy?

Maybe you received generic information from them or the financial institutions they represent. That doesn’t count. Maybe you received sales pitches disguised as advice. That doesn’t count either.

Financial Literacy Month You are paying — directly or indirectly — for advice. What are you getting? Do you get emails from advisors telling you that instead of sending you a holiday card, they’re donating an undisclosed amount to a worthy charity? That’s fine but how charitable are they being to you? Information is free. Emails are free. Videos are free.

Your advisors don’t even need to create fresh, original content, They can send you links for free. What did they send you?

Too High A Price

As you become more educated, you become more discerning and demanding. Will that make your advisor more money? If not, don’t expect much help. We saw how a pizza flyer deceives. Financial offerings are far more complex.

You pay a higher price when you don’t take the initiative to learn on your own. If you’re passive, you might get advice which is better for the giver than for you. How would you know? By improving your skills, you can ask better questions, evaluate the answers, and spot what’s left out.

Your Advocates

When you’re ready to learn, you’ll find help. Here are three excellent free sources:
  1. Your Financial Toolkit on the Financial Consumer Agency of Canada  website
  2. Get Smarter About Money from the nonprofit Investor Education Fund
  3. Canadian Money Forum from bloggers Million Dollar Journey and Canadian Capitalist
You can also visit the Riscario wiki which started in 2006 and accompanies this blog.


imageThere are other sources of information with potential conflicts of interest. For instance, VISA offers  Practical Money Skills. You won’t find standard debt-fighting advice like
  • pay off your credit card balance every month
  • borrow from less expensive sources (if you must borrow)
  • cut up your credit card
Instead, there’s an example of paying 18% interest on a $3,000 loan. If you pay the monthly minimum of $60, you pay an astounding $2,870 in interest. If you pay $110 monthly, you pay “only” $1,070 in interest —  a “saving” of $1,800. Wow, let’s borrow $6,000 to “save” $3,600.

Similarly, there’s a cost to getting advice from your banker.

Noble Intentions

We get in the way of our own plans. You might need outside help or discipline. If you have a spouse, friend or colleague with the same goals, support each other. A 12-week Pick Four goals program may be ideal: each member has their objectives (may not be financial).

Your paid skilled advisors can certainly help you improve your financial literacy. That doesn’t mean they will. You can also improve without their help. That doesn’t mean you will. Will you?


Podcast 197

direct download | Internet Archive page | iTunes

PS How do you learn?