The Costs of Carelessness

During a recent morning commute to work, I was struck by the number of people distracted while driving.  On my 18-km drive into work, I noticed more than a few drivers failing to pay attention to fellow drivers, people blatantly not following the rules of the road, and fidgeting with their smartphones.   I suspect this happens in many more cities than Ottawa.  Regarding my last point, surely people universally accept the notion that texting while driving is dangerous but many drivers do it anyway.

Careless driving got me thinking about other habits in our lives, especially things on the financial front, what we knowingly do that is potentially disastrous to our financial well-being.

Taking on too much mortgage debt

Taking on a fat mortgage is risky.  What happens if you lose your job or some of your human capital is compromised?  Are you self-employed and heavily reliant on your self-employment income to pay for expenses?  Having a mortgage you can afford* and can consistently pay down just makes sense.

Personal note:  we are currently trying to kill our fat 6-figure mortgage in another 8 years.


Over extending yourself can put you into a mess of constraints.  Financial independence comes with growing assets not growing liabilities. Can’t pay off your credit cards every month?  This might be a sign you have too much debt.

Personal note:  we try to avoid running any balance on our credit cards and we avoid using lines of credit as much as possible.

Lack of investment diversification

Did you take a stock tip and put lots of money into the “next big thing”?  Think real estate prices will climb by leaps and bounds forever?  Only invested in Canadian stocks?  These are signs you might not be looking at the bigger picture.   Consider taking a hard look at your investment portfolio to ensure you are diversified enough to match your risk tolerance.  Get financial help from a qualified fee-only professional to make some changes as needed.

Personal note:  using a basket of 30+ dividend paying stocks and broad market ETFs from Canada, the U.S. and the world, I’m becoming more diversified than before.

Life is full of risk but it’s not a sin to make some calculated gambles now and then.  Repeatedly doing something over and over that’s dangerous and expecting no consequences in return however is just plain foolish.

10 Responses to "The Costs of Carelessness"

  1. Another thing that could be horribly expensive if you’re careless about it is your marriage. It takes time and effort to keep a marriage great for both partners: too often people neglect their partner because of the constant “busy-ness” of work and raising children. Yet a failed marriage is a very, very expensive problem. I vote everyone take some time today to spend with their partner.

    1. Wow, excellent point. I’ve read and heard about many couples calling it quits because of “busy-ness”.

      Then again, some couples call it quits early in the relationship because they are simply not as compatible as they thought they were. Better to find out early in life, than too late.

      Thanks for your comment Bet Crooks.

  2. @My Own Advisor

    that’s still a work in progress, two stocks I have are RioCan and Aberdeen Asia Pacific and a few odds and ends, but I need to think about adding some US stocks or ETFs. I was hesitant because of the withholding tax but next year I have to change my address to Germany where I live, then I’ll lose 25% up front, once that happens than I might as well have some US stocks. I’ve debated doing the Dogs of the Dow but not sure I have enough for that.


  3. I think in BC they have a new law that prevents people from texting and driving. Probably for the better anyway because Vancouver is full of poor drivers as is lol. I do something similar as you on the spending and diversification side. I think with real estate in particular it’s very important to diversify the location. Over the last several years house prices in Ottawa have been trending upwards 😀 but just outside of Ontario in Detroit, prices have been going down. The median house price there now is just $9,000. Lots of Canadians are thinking about buying investment properties in Florida. I don’t think it’s a bad idea, as long as they remember to diversify and perhaps buy another property in another city.

    1. We have laws here in Ontario, whether people follow them like other things is a different story.

      The bankruptcy issue in Detroit is horrible, downright sad. Actually, I just wrote a post about that.

      Can’t stress enough, how diversification and lack of debt can save one’s ass.

  4. While it is good to have a positive attitude and expect great things it is also very important to manage financial risk. I think many of us get trapped in large mortgages because our cultures push us to believe that we need a nice house to be happy. Also many people will encourage you to take on a big mortgage because “Everything will be fine.” They often say that from experience because that has been true for themselves or most people they know.

    Great post. I think its extremely important to fight the temptation to get over extended. And nothing is worse than credit card debt.

  5. @Rob can’t edit my comment but the other problem I’m struggling with is that I live in Germany but have all my investments in Canada and this year I have to make a decision on tax residency and withholding taxes.

  6. texting while driving, I have to admit I’m guilty of that as well, mostly just sitting at lights and not paying attention till people start honking.

    Anyways lack of diversification is what I’m struggling with right now, I mean I have my 10 BTSX stocks and it’s tempting to dump all my money into that, but I know from experience that you what’s current today will be out tomorrow. But for me the big one is US stocks, I’m leaning towards a couple of ETFs rather than individual stocks.

    1. I’ve texted a red lights as well. Still not a good practice I know, and I run the risk of getting rear-ended by not paying attention.

      Do you index invest outside of your BTSX?

      I do a blend of both, that way, I don’t have to second guess what strategy is working or not. 🙂


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