Liquid Independence

Liquid is the main editor of the Freedom 35 Blog.

May 012015
 
cooking steak with Liquid

The history of cheese is full of holes, but it’s interesting in its own whey. And a grate way to use cheese is of course on pizza. :) Welcome to this edition of cooking with Liquid. ūüėÄ

DIY pizza is always fun, especially when you have guests over. So today I’d like to share how to create your own 12 inch pizza in about 15 minutes, for only¬†$4. The secret¬†is to buy a pizza kit that comes with a crust and tomato paste¬†so we don’t have to make our own dough and sauce from scratch. :) If you don’t know where to buy a pizza kit I’ll leave some details about that later in the post.

Easy Pizza Recipe 🍕¬†(serves 2 people)

Ingredients:

  • 1 pizza crust and tomato sauce¬†package
  • cheese
  • mushrooms
  • pepperoni/sausage

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Cooking Instructions:

  1. Spread tomato sauce evenly on the pizza crust
  2. Slice toppings and place onto the pizza (you could also grate the cheese instead)
  3. Bake for 10 minutes in a preheated oven at¬†400¬įF.

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Eh Voila! It’s done. The¬†medium size pizza is¬†ready to eat. Just slice and serve.¬†🍕

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The best part is you can control the toppings and put anything you want on it. Have fun. :)

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Apr 282015
 

Across the United States, tens of thousands of low income workers have lobbied to raise the minimum wage to $15/hr. This is one of the largest wage protest in American history, and it appears to be working. :) Seattle, WA is the first to begin a multi-year transition to $15/hr minimum wage starting this month. The people of San Francisco, CA have voted to raise its minimum wage to $15 by 2018.

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In the state of Connecticut the government¬†is¬†trying something a little different to implement a higher wage standard.¬†The current minimum wage there is $9.15/hr, but a new proposed bill seeks to fine large¬†companies that underpay their employees. If the bill passes¬†it would fine businesses $1/hr per employee who doesn’t earn the $15 minimum.

Some people believe this legislation would reduce income inequality and make low-wage workers better off. :) But others retort that this is just a tax grab for the government, dressed up to look like a bill that would help the lower class. The reality is that if a company is currently paying $10/hr to a worker, then simply coughing¬†up an extra $1 to the government is more economical for itself¬†than raising the wage of that worker by $5/hr.¬†In fact, that worker may actually see his/her real wage and purchasing power reduced. The extra $1/hr is an expense for businesses making them more costly to run, which often trickles down to higher prices for consumers.¬†It’s kind of ironic that a bill that’s designed to help the most vulnerable working class would actually make life harder for them. Employees who are already making over $15/hr would not be affected. So this new bill would only benefit workers¬†who earn between $14/hr to $15/hr.

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Apr 272015
 

The following post is contributed by a staff writer.

There are two ways to save money: One is where we compile a stash of money for later use. The other is where we refrain from spending more of it than we have to. We think of both types as a form of delayed gratification. We have to find a way to change that narrative if we ever hope to do either.

One of the ways we can change the narrative is to stop thinking of saving money as a form of depriving ourselves of the things that really matter to us. It may be possible to deprive yourself of nothing that matters and still save significant amounts of money. The key is to discover, and stop the flow of wasted money that falls through the cracks of the best laid budgetary plans.

Here are some of those proverbial couch cushions under which you might just find gold:

TV Service

How many channels of television do you actually need for maximum enjoyment? How fast does your Internet connection have to be? There is a good chance you are spending a lot of money on excess that you will never appreciate. Time reports that regardless of the number of channels in your package, you are only taking advantage of just over 17 of them. Out of that 500 channel package, you are paying for 482 channels you never watch.

The same type of scenario happens with Internet speed. Not everyone needs fiber to the home. Facebook and Netflix do not require business-level connectivity. Paying for speed you don’t need does not enhance your surfing pleasure. Loyalty to your cable provider buys you nothing but a higher payment after the introductory period is over.

These satellite deals at satellitetv-deals.com provide an example of the type of savings you can expect by doing a little shopping around. This is just one way you can save a lot of money while losing nothing that matters.

Stop Heating and Cooling Empty Rooms

Heating and cooling your house accounts for more than half of your energy budget. It is the largest energy expense you have. But cooling a room that you’re not in does you no favors at all. Products like the Nest thermostat attempt to counter that wasteful behavior by automatically monitoring when you leave and enter rooms, as well as adjusting to your patterns of coming and going. It gives you climate control when and where you need it, saving you money in the process. When done right, you will never notice you are using your HVAC system any less.

Green-Light Your Savings Plan

Green (as in, environmentally friendly) lighting solutions abound. By far, the most energy inefficient light bulb is the traditional incandescent. Almost anything is better than that. Compact fluorescents are a much better choice. And LEDs are better still. While the better bulbs cost more, what you save in money and environmental footprint over the long term is more than worth it.

Stop Pouring Money down the Drain

The US Department of Energy suggests you can reduce your water bill by 25-60% just by switching to a low-flow shower head. Your shower output will be less than half of that of older shower heads. The best news is that even with the reduction of wasted water, you will still be just as clean.

You are losing money in your proverbial couch cushions every day. By changing a few wasteful habits, you can easily satisfy both definitions of saving money.

 

Apr 252015
 

I recently read a study suggesting that there is a correlation between the cost of engagement rings and the duration of marriages. Researchers looked at 3,000 U.S. adults who had been married at some point in their lives, and found that subjects were more likely to end up divorced if they had spent large sums of money on engagement rings and weddings.

For example, male participants who spent $2,000 To $4,000 on engagement rings were 30% more likely to end up divorced than guys who only spent between $500 to $2,000.

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Similarly, people who spent $20,000 or more on their weddings were 3.5 times more likely to end up divorced than people who spent $5,000 to $10,000.

The authors of the study believe the correlation between high wedding and engagement ring costs and high divorce rates is probably due to the financial stress placed on couples who are overly determined to have the “perfect day,” regardless of their actually ability to afford it. ūüėē

The diamond and wedding industry has done an excellent job promoting their businesses¬†over time. Before the second world war, only 10% of engagement rings contained¬†a diamond. But by the year 2000, about 80% of rings did. In 2012 alone, Americans collectively spent roughly $7 billion on diamond rings. ūüėĮ

Here’s my analysis¬†on¬†all this. People who want expensive rings and fancy weddings are generally more materialistically demanding in the first place. Later on in the marriage they’re more likely¬†to live in expensive neighbourhoods, drive fancier cars than their friends, and shop at high end stores. These kinds of behaviours usually lead to debt and other money problems, and we all know how financial stress is often the primary¬†contributor for divorce.

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Apr 222015
 

Finance Minister, Joe Oliver¬†introduced the government’s 2015 Federal Budget yesterday. The big takeaway is that there will be tax breaks for everyone. Yay! ūüėÄ The proposed budget is expected to get passed as the Tories hold a majority government.

It’s nice to finally see some welcomed changes in fiscal policy to address the economy rather than rely on monetary policy alone. :) Federal budgets are important because it shapes¬†the way we plan our personal finances.

Increased TFSA Contribution Room

The annual contribution limit for the Tax Free Savings Account rises to $10,000 effective immediately. This means Canadians who have already maxed out their TFSA for 2015 will now have another $4,500 of contribution room to use. The TFSA is a holding account where we can buy investments and not pay taxes on the gains.

Some people believe this change will only benefit the upper class who are already wealthy. Here’s my poor attempt at humour on Twitter from yesterday.

However, Ottawa says that individuals with annual incomes of less than $80,000 accounted for more than 80% of all TFSA holders at the end of 2013. And about half of TFSA holders had annual incomes less than $42,000, meaning the TFSA is mostly being used by the middle class. Personally I think the new TFSA policy benefits serious savers, not necessarily the wealthy.

RRSP delays taxation to a future date when we’ll likely be in a lower income tax bracket than today. Gains in a TFSA are made from after tax contributions and are not taxed, for the most part. So¬†between the RRSP and TFSA average Canadians now have a lot more freedom and room to save and invest with preferential tax treatments.

Here’s a table showing how much someone would need to save to max out both accounts.¬†The maximum RRSP contribution limit assumes the person earned the same income in the previous year.

Combined Tax Sheltered Savings Table 2015

Annual Gross Income Max TFSA Room Max RRSP Room Combined TFSA/RRSP Limit % of Income
$20,000 $10,000 $3,600 $13,600 68%
$30,000 $10,000 $5,400 $15,400 51%
$40,000 $10,000 $7,200 $17,200 43%
$50,000 $10,000 $9,000 $19,000 38%
$60,000 $10,000 $10,800 $20,800 35%
$70,000 $10,000 $12,600 $22,600 32%
$80,000 $10,000 $14,400 $24,400 31%
$90,000 $10,000 $16,200 $26,200 29%
$100,000 $10,000 $18,000 $28,000 28%

 

As we can see people¬†who make $50,000 a year will have to save more than 38% of their incomes before running out of space in tax advantaged accounts. There is no point in buying GICs, bonds, stocks, mutual funds, and other investments in a regular cash account anymore, unless you’re like me and trade derivatives or buy securities on margin. ūüėČ

Decreased Minimum RIF Withdrawal Rate

The new federal budget also gives seniors more options. When an RRSP is converted into a Registered Retirement Income Fund (RRIF) retirees will be able to leave more money in their tax sheltered account each year to help their savings last longer and can also lower their overall tax burden. The proposed new RIF minimum withdrawal rate will decrease from the current 7.38% at the age of 71, to 5.28% starting at the age of 71, and gradually increase to 20% by age 95. 😄

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In general lower income, and younger folks should prioritize saving in a TFSA before considering RRSP, and vice-versa for high income earners. I like to put bonds in my RRSP, and the more volatile, higher potential investments in my TFSA. For most Canadians I believe the TFSA has a more important role in our financial lives than the RRSP. However, both are important as the RRSP can save us money today by delaying the tax liability to future years, while the TFSA can save us money in the future. Holding the right amount of each can minimize the overall taxes we pay over time.

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