I had an interesting conversation with a good friend of mine who is a very successful software developer.I was also his mortgage broker, so for part of our lunch hour we talked about the benefits well thought out programs like the Scotia STEP Plan, The Smith Manoeuvre or the ManuLife One Plan.
His candid response to these types of well-intentioned programs hit a truth.It all boils down to discipline.Some have it, most don’t.The fact that struck me as strange was this budding young software development star should have been the poster child of success in this type of program.We all know ourselves best and while all these proven mortgage strategizing plans can lead us to a comfortable retirement sooner.
He told me that having an available credit line and a young family made for a dangerous combination.Ambition, better lifestyle, wants vs needs were all part of his personal self-realization.Twenty years ago I could have saved myself a huge headache if I would have realized my own lack of disciple.I was offered a term life insurance plan, with massively lower monthly payments.The idea was to use the savings from the payments of the previous Universal life plan and roll them into RRSPs or other investments.Guess what…life happens and that extra money really isn’t extra money.Money set aside for a rainy day disappears quickly into new clothes, vacations, computers, cars.The whole idea was to remove the need for life insurance because you were supposed to have a HOCKEYSOCK FULL of money.Now I’m 20 years older and my term life premiums are outrageous and I have no tax efficient Universal Life plan.
My best intention was to save insurance premium money and invest, but I thought I had time and I thought I had discipline.Thankfully my friend who knows his own weakness regarding his personal lack of discipline and is to be commended.Some of the best theoretical savings programs need more than a plan they need a support system.
Make sure that when you look into your own strategy that you have a definite plan to lock in your investment savings.
My advice...if you know yourself well enough, don't willing do something you know will have dire consequences.
