Weekend Reading: Eric and Ilsa Edition

Meet Eric and Ilsa, the Vancouver couple who broke the internet last week when their Financial Facelift feature in the Globe and Mail went off the rails.

It started with sketchy details – Eric, a physician, made $200,000 working one day a week at a clinic, plus another $100,000 teaching one day a week at a medical school. Despite earning $25,000 per month, and living rent-free in a relative’s home, the couple was running a $5,000 per month deficit.

The advice was obvious: work one more day a week in the clinic and bring in an extra $50,000 to $100,000. Problem solved. But then the story took a bizarre twist. New details emerged claiming the good doctor actually worked 80-100 hours some weeks and so working an extra day was not an option. The Globe also revealed that the doctor spent $6,000 per year on professional fees, not $6,000 per month as originally reported.

These revisions were buried in a footnote at the end of the article with no mention of the fact that the entire narrative and advice were now rendered useless.

Twitter blew up. The internet pointed and laughed. Not at the 1%, as some have suggested, but at the absurdity that financial advice can be boiled down to 800 words without any of the nuance that makes all of our circumstances so unique and personal.

Because Money

We recorded episode 26 of the Because Money video podcast this week and, as you can probably guess, we talked about the Eric and Ilsa debacle. We were joined by Certified Financial Planner Alexandra Macqueen, who has participated in two Financial Facelifts as “the planner”. Read the full transcript here, or watch the 30-minute video below:

This week’s recap:

For our Alberta readers, I’ll be participating in a live launch of ATB Financial’s TrackIt money management tool on January 27th. Think Mint, but without the potential for violating your banking agreement. This tool allows you to pull your account information from over 10,000 banks and retailers, track your spending, and create a budget.

On Monday I reviewed Portfolio IQ, the new online wealth management service from Questrade.

On Wednesday Marie asked if you’d benefit from working with a financial advisor.

On Friday Sandi Martin guided us through hunting season – otherwise known as RRSP season.

Over on Rewards Cards Canada I wrote about this $100 gift card promotion.

Weekend Reading:

Of course, the biggest news of the week was the Bank of Canada’s surprise decision to cut interest rates from 1 percent to 0.75 percent.  Unfortunately the banks, which traditionally move in lock-step with the BoC, have yet to pass on the rate cut to consumers.

Rob Carrick says the message behind this rate cut is for consumers to resist the urge to borrow more.

Morgan Housel from The Motley Fool uses a relatable story to explain why we overpay for financial advice.

These parents were billed $29 for a no-show fee after their five-year-old son missed a birthday party.

Big Cajun Man takes issue with a new RESP provider – Giraffe and Friends – for dumbing down its financial products to the point of being condescending. I checked out this provider to see if I could find a “gotcha” that I could warn readers about. The company appears legit, however, and certainly a better choice than any of those scholarship trusts that use shady tactics to prey on new parents.

Adam Mayers cautions us about market-linked GICs – when a 9% return isn’t quite what it seems.

Ellen Roseman says a natural gas contract won’t save you money.

An 86-year-old woman has spent the last decade living on a cruise ship at a cost of about $164,000 per year.

Jonathan Chevreau’s weakness for CDs got him into credit card trouble in his early days as a freelancer.

Ben Carlson says that doing nothing is often the hardest move to make in the financial markets.

Michael James has a smart take on the notion that index investing means settling for being an average investor.

Canadian Couch Potato Dan Bortolotti learned a valuable lesson about trading ETFs on days when U.S. markets are closed.

Finally, here is how Netflix in Canada stacks up against the U.S. version when it comes to the total number of available titles.

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  1. Boomer on January 24, 2015 at 11:52 am

    Not only did TD decide not to cut its prime rate for now, a couple of days after the BoC announcement I received a letter notifying me that the no-fee checking minimum deposit has been increased from $1500 to $2000!

  2. Michael James on January 24, 2015 at 5:10 pm

    I quite liked CCP’s article about Canadian ETFs holding U.S. stocks when the U.S. market is closed. I might have had to learn that one the hard way otherwise. Thanks for the mention.

  3. Tawcan on January 24, 2015 at 11:02 pm

    This crazy that the parents got a $29 bill for a birthday no show and they are going to court to settle. What’s next? Getting a bill for not showing up to a dinner reservation?

  4. Alan W. (BCM) on January 25, 2015 at 6:28 am

    I didn’t think that they were “shady” (although the disclaimers about losses is a bit off putting), but making out that RESPs are too hard to try to figure out is what drove me mad!

    Thanks for the inclusion this week, should be interesting to see how the world enjoys too much financial stimulation and low gas prices.

    • Echo on January 25, 2015 at 9:31 am

      @Alan – Given your issues with TD over the years you could argue that RESPs could use some dumbing down, not just for the investors but for the institutions as well. 🙂

      • kcowan on January 25, 2015 at 11:22 am

        RESPs are fine on the contribution side. When it comes to withdrawals, it is somewhat complex on the tax-free side. I had to build a spreadsheet for my five grandchildren. How many people can do that?

      • Richard on January 27, 2015 at 10:42 am

        I’ve seen other things that apparently need to be dumbed down for the institutions. I recently transferred two accounts at different institutions to a third broker. This took 9 months and hours on the phone explaining what the form (downloaded from the CRA website) really meant and that even though TD changed an account number when they introduced USD RRSPs in November it was still the same account.

  5. David on January 25, 2015 at 11:30 am

    What does it mean “break the internet?” Mine is working just fine, thank you. Please refrain from jargon.

    • Geoff on January 25, 2015 at 4:01 pm

      David – it means that the article generated a lot of traffic.

      Language is full of such shorthand and has been forever (for example, if I describe someone as “the salt of the earth” I don’t actually mean that person is made of salt.)

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