If it weren’t for the existence of money, we’d all be rich. However the reality is that society needs a simple and effective medium of exchange so we can produce and receive useful goods and services. Since money is so important in our lives we should try to maximize its utility by controlling and spreading our spending over time. Sometimes this means delaying a purchase until a future date or just not buy it altogether.
Chronic shoppers often have to overcome a sense of deprivation when they pass up an opportunity to spend. But changing the way we think about delayed gratification can help. Instead of dwelling on what we will potentially miss out on we can think in terms of what we will gain instead.
Next time we decide to not buy something, we can tell ourselves that since we’re not spending $X on that, we can add this $X to our emergency fund, or build up a larger down payment for a future home to raise a family in. Or we can use this $X to pay down our debts. Once our debts are completely gone we can work less, travel more, and take up new hobbies like pottery making.
Everyone’s reasons will be different. But the basic idea is use our goals, aspirations, and dreams to convince our brains to not feel deprived because of our decision, by replacing the temptation for an immediate reward with a larger, or more enduring reward. Rather than wallow in self pity we should feel proud and anticipative of a better life tomorrow.
Okay, it’s that time of year again when the national agency, Farm Credit Canada, release its farmland value report about the previous year’s farming landscape. As it turns out in 2014 the average Canadian farmland price increased14.3%.
Meanwhile residential real estate prices increased only 5.2%, according to the Canadian Real Estate Association. Of course the most strategic way to invest in a portfolio of properties is to be exposed to both residential, and agricultural real estate. Farmland prices are assessed using recent comparable sales. These sales must be arm’s-length transactions. The highest price increase was an incredible 18.7% in Saskatchewan, the land of living skies. The full report is on FCC’s site.
As luck would have it I decided to buy some Sask farmland a few years ago. Back then I had blogged about why land in Saskatchewan was the bee’s knees because of how undervalued it was compared to other provinces and neighboring States.
The Greatest Advantage of Real Estate Over Stocks: LEVERAGE
I leveraged 8:1 to secure my position as a farm owner. This meant I borrowed $7 of the bank’s money for every $1 of my own money to invest. So an increase in Saskatchewan’s farmland value of 18.7% last year actually means a redonkulous 150% rate of return on my capital. Not too shabby.
My farmland was worth about $1210/acre last year, so after this year’s adjustment it should be worth $226/acre more now. Awesome sauce! $226 doesn’t sound like a lot of money to get excited about, but since I own 310 acres it all adds up pretty quick.
Investing in farmland isn’t for everyone but hay, maybe I have it in my jeans.
As much as I like to feel wealthy on paper, when one particular asset class consistently outperforms all the other ones I’m faced with an asset allocation problem. Farmland now represents about two-thirds of my financial investments (all assets except primary residence.) This means I am not very diversified anymore. Although I realize this must be the ultimate first world problem, lol.
North Americans pay a lot of money for high speed internet access. One way to get around this costly expense is to own the means that produce the service. This means buying shares of the internet service providers that we use. Telecommunication companies are usually very generous to their shareholders as many pay out up to 40% of annual profits to their owners. Over time this gives one the opportunity to have a reoccurring internet bill pay for itself.
Step 1: Figure out your current internet service fee.
Step 2: Save an equal amount of money earmarked to buy shares of your internet provider.
Step 3: Continue buying shares every year for 20 years.
Step 4: Now use the dividend income you receive from your ISP to pay your internet bill.
Example: If we currently pay $50 a month for one of Bell’s internet plans, we can simply set aside another $50 a month to buy Bell stocks (BCE) on the TSX. This gives us $600 a year to invest in BCE. To save on trading fees we can buy the shares once a year, not every month.
The average price of BCE last year was around $50 so every year our $600 savings can buy us 12 shares of BCE. After 20 years we’ll have 240 shares total. Bell currently pays its shareholders $2.6 per share every year. With 240 shares, we would get $624, or about $600 after tax, with the dividend tax credit, for most people.
At that point we can essentially use Bell’s dividends ($600/year) to pay for the cost of our internet usage ($600/year.)
I’ve been blogging for awhile now and it’s been a pretty fun experience for me so far. This hobby has allowed me to meet interesting people online which have continued into real friendships offline and encourage me to research all kinds of interesting financial topics that I would have otherwise not learn about. It also helps me flush out my ideas and shower-thoughts further by spelling them out into words. Some people have asked me how to go about creating their own piece of real estate on the internet so today I thought I’d share how to start a blog.
Reasons you may want to start a blog:
To keep yourself accountable
To write and learn about something you feel passionate about because you enjoy it
To keep a record of your goals and accomplishment
To compliment your career or other aspects of life
To earn some side income
To express yourself online using words, pictures, or video (ie: vlog)
My reasons for blogging today are the same as when I started 5 years ago; to track my progress to become financially independent and share my journey for anyone who wants to read it. So far it’s been a pretty enjoyable experience.
There are many ways to start a blog. If you just want to blog about your cat for your family and friends to see then you can use a service such as tumblr.com, weebly.com, blogspot.com, or wordpress.com. You’ve probably seen some of these sites around online. These kinds of blogs take a few minutes to set up and are pretty straight forward. But if you want your blog to have a wider appeal, own your domain name, and have more customization options then you probably want to create a self hosted blog. This means it won’t be free, but you get to have complete control and ownership of the files on your blog, and instead of having a website like www.YourBlogName.blogspot.com, you will actually have www.YourBlogName.com, or whatever name you choose. This can be a little tricky to set up so let’s go over some key details.
Creating a Self Hosted Blog
Step 1: Register your domain name. There are many registrars out there, but hosting companies like bluehost.com will allow you to register a website as well as host all your site’s contents with them. I’m going to use Bluehost as an example. My blog is being hosted on their servers. There are a few different pricing options but it appears they currently have a deal going on right now.
After signing up for an account at Bluehost it’s time to register a domain name, which is your website’s url. You can either choose a new domain name, or transfer over an existing one if you already have one registered elsewhere. When creating your domain name I would try to keep it easy to remember, and not too long, and don’t add dashes “-” or other weird symbols. Also try to keep the name relevant to your blog’s purpose. For example if you enjoy blogging about vegan recipes or writing restaurant reviews you could try to register the domain: myveganfoodblog.com. After this step you will be taken to your site’s cpanel page.
I recently read an article called “Perfection Anxiety” from an old copy of Vanity Fair magazine. In it 25 year old Petra Ecclestone, the daughter of Formula One mogul Bernie, and her recently married husband, bought an $85,000,000 mansion in Los Angeles. Wow, and I thought Vancouver real estate was expensive. Before moving in to their new home they also spent $19,000,000 on their wedding. To put that into context the average wedding in the United States only costs about $25,000. But of course most weddings don’t serve bottles of $6,000 Chateau Petrus, nor does the bride wear a $130,000 Vera Wang dress.
If that wasn’t enough excitement for the couple they later bought a 17th century self-portrait by Van Dyck for $20,000,000.