Lunch with Mary

Date of lunch:
Tuesday, February 2, 2010

The company:
Patricia Lovett-Reid is a well known expert on personal finance. She is a regular speaker on the topic of retirement savings, investing and other personal finance issues, hosts Money Talk on BNN as well as several radio shows, is often quoted and interviewed by media across the country, has been named to the list of Canada’s Top 100 Most Powerful Women and, on top of all of this, she’s also a senior vice-president at TD Waterhouse. It’s a pretty amazing list and I can’t believe she found time in her calendar to lunch with me. But I am glad she did.

The food:
We ate at Four at Bay and Wellington. You may have heard of this place, all of the dishes are under 650 calories. And seriously, if I could cook meals like this, I would never eat more than 650 calories. I had a chicken burger with salad and Patricia had a salmon salad. Four then graciously offered us a free dessert in these double shot glasses. I had tiramisu. It was 200 calories and amazing. I don’t understand how they do it. Patricia kindly picked up the tab and said that this can be my first lesson in personal finance – accept when someone offers to pick up the tab, enjoy it and say thank you. Then she told me to take the money I have now saved and put it into my savings. A very generous lesson from Patricia!

The lunch lesson:
By the end of the lunch, Patricia had equipped me with a plan of action. This plan is definitely my lunch lesson. First of all she said I need to determine my financial goals – short term (2 years), medium term (5 years) and long term. She told me to take my time to do this. I haven’t nailed it down yet, but I do know short term I would like to purchase a place to live and stop renting. Now I need to sit down over the next week or so and figure out the rest of my goals. Once I finish that, the next step is to outline my budget – what are my monthly expenses (rent, car payment, phone bill, food, etc) and also be sure to add everything including entertainment, taxis, clothing and so on. Once that is done, I will need to take a good, hard look at it and see where I can shave some spending. And then the final step is to determine my net worth. This will factor in my income, my possessions and subtract my expenses. Once that is determined, I will be ready to look into what size of mortgage I will be able to afford and be approved for. Patricia also said she is going to check in on me so I better get cracking.

The lunch:
Patricia started the lunch by asking me what I wanted to know. I told her how I wasn’t sure if I was putting enough away in savings, whether I was saving in the right places and I also let her know I was looking to purchase property. As everyone is well aware, because I won’t shut up about it, I am about to turn 30 so it’s about time I get my stuff together! Patricia then asked me a series of questions – what is my salary, how much do I have invested in RRSPs, TFSAs, etc. It’s weird to say this stuff out loud to someone you just met. But I figure it’s the same as talking to a doctor, she’s a professional and needs the info to help me.

My extreme risk aversion became obvious pretty quickly – my love affair with GICs and total fear of pretty much every other kind of investment. I even explained to her that when I wanted to cut my hair short, I had to do it in two separate haircuts. The first was shorter, but not as short as I wanted. That cut gave me the nerve to go all the way the next time. We talked through how there are options for a conservative investor such as myself, but what I am doing now is not going to help in the long run.

For the time being, since I plan to take money out of my RRSPs for my mortgage, having a GIC is fine. But for long term investments, I should take a bit more risk. And as the market fluctuates, it may go down but it will (likely) come back and in the long term will be much more profitable. I can picture the sandy beaches of my retirement now. Ahhh, bliss.

As I already mentioned, Patricia emphasized the importance of creating a personal budget. I have long avoided doing this because I know I will cringe at how much I spend on going out – dinners, drinks, taxis, movies, concerts. You might think as my 30^th birthday is approaching that the party is over – but I’m not quite ready to throw in the towel. However, I can be smart about it and monitor how much I spend on going out, as well as shopping, TTC, food, shoes. Patricia even gave a great tip that she used to do when she was starting out. She would cancel out all spending during the day, stuff like coffees and take-out lunches. Then at the end of the week, she would calculate what she saved, take that money and invest it.

Much like after my lunch with April Williams, I feel like I am much better equipped to take that big step forward. Patricia said I am in a very common place. I am doing something but I have no clear plan or strategy. I am stuck in one place and need to take a leap. This is where Patricia’s plan of action comes into play, which I now will implement starting with getting my goals down on paper over the next week.

I am nervous but ready and so grateful to Patricia for meeting with me, being a huge help and giving me that push I needed.

Tags: Banking, Bonds, Budget, Budgeting, Finance, Financial, GIC, Investing, Personal Finance, Retirement, RRSP, Saving