2011 APTEI Acupuncture & Dry Needling (ADN) Program

Health Care Financial Group
“My friends make less than me and go on a holiday twice a year. How do they do it?”
By Brian Shumak
We all know examples of someone who
has a shiny new sport utility vehicle, goes
away for a tropical holiday twice a year, has
a surround sound system to die for and
claims they have no debts. In reality, they
are quite likely to have significant amounts
of debt or very wealthy deceased relatives.
Over the last few years, there has been a
number of statistics showing that the average
consumer is spending as much if not more
than they earn in a given year. In the United
States, this was one of the primary causes of
their worst recession in decades.
Most car ads no longer list the actual
price of a vehicle; rather they advertise the
low monthly payments you will have to
make. Most retailers offer financing on purchases
with many allowing the consumer to
“Don’t pay until …” The concern is that so
many people forget to factor taxation into
these lifestyle purchases. For example, the
42 inch flat panel TV on sale at a box store
is not necessarily a bargain at $700. Realize
that if you fall into a 35% tax bracket, the
actual cost to you is $1076.92 of earned
income. Or that new sports utility at $700
per month over four years will cost you
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e) bshumak@bshumak.com
HCFinancing_ninth.indd 1 27/06/11 2:24 PM
$51,692.16 of earnings – likely close to a
year’s worth of work. Using a credit card to
finance a purchase is even worse at interest
rates in excess of 19% for most cards.
In the same way that “The fish was this
big that got away”, most people exaggerate
their debt - just in minimizing it - when
discussing how they are doing. So the next
time you covet thy neighbor’s new vehicle,
think twice.
Does this mean that one must forego
such expenses – absolutely not. It is
important to recognize the ways that one
can make these purchases intelligently.
There are two types of debt; good debt and
bad debt. Good debt supports an asset and
bad debt supports a luxury.
So, what do you need to do – Use the
old Lay-a-way Plan. In the ‘good ole days’,
if you wanted to purchase something that
you could not afford right away, you put a
deposit on the item and then paid a little bit
each pay cheque until you had put enough
money in to have paid for the item. So for
any larger purchases, establish a savings plan
that you put into regularly until you have
enough and then you buy the item. This
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will require two things: (a) discipline – to
put the funds away and not to withdraw
them for another whim; and (b) a budget
– this will afford you the knowledge as to
where the money to save will come from.
Many financial advisors in today’s world
will spend a lot of time discussing the latest
investment vehicle or insurance product or
tax plan and not even address your cash
flow management. The first thing that you
need to do in any solid financial plan is roll
your sleeves up and go through the budget
process.
At Health Care Financial Group, we
address your cash flow management as the
first part of our comprehensive financial
plan.
For more information or to arrange a consultation
regarding investment, insurance,
cash flow or risk management strategies,
contact Brian Shumak, B.Sc., CLU, CFP,
TEP directly at bshumak@bshumak.com.
Healthcare Financial waives our assessment/
recommendation meeting fees for members
of the OPA in good standing.
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