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. 😕

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. 😯

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 192015
 

If money didn’t exist, we’d all be rich. However the reality is that society needs a simple and effective medium of exchange so the economy can run efficiently. Since money is so ubiquitous, yet also finite, 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. 😀

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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.

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Mar 132015
 

Sometimes knowing what NOT to do is just as important as deciding what to do. Staying away from drugs and excess alcohol consumption are common examples. But what about the more subtle habits that we should avoid, especially if we want to retire early? I recently read this article which discusses what financially successful people are known to avoid. I’ll summarize the important parts in 5 points below.

5 things successful people do not do.

1. Let others limit their joy.

Don’t rely on other people for personal satisfaction. People might be critical of our success but we have to take their criticism with a grain of salt because they could simply be jealous of our accomplishments. Our success shouldn’t depend on other people’s failures. If we feel good about something we’ve done, we shouldn’t let anyone else’s opinions or accomplishments take that way from us.

2. Hold a grudge.

We should be quick to forgive, but not to forget. Forgiveness requires letting go of what’s happened so we can move on with our lives, but we must also be assertive in protecting ourselves from similar harm in the future. Holding a grudge also induces stress which contributes to high blood pressure and heart disease. 😐

3. Prioritize perfection.

Don’t be a perfectionist. Human beings are fallible by nature. When we make perfection our goal we’re inevitably going to be disappointed with our results sooner or later. We should try to spend our time enjoying what we’ve achieved :) rather than lament how imperfect we are. Trying to be perfect is just too much pressure.

4. Dwell on the past.

Anything worth achieving will require some effort and risk. We can’t allow our failures from the past to stop us from believing in our abilities to succeed in the future. Our emotional state depends on what our minds are focused on. If we fixate on problems and mistakes, we create negative emotions and unnecessary stress which thwarts our creativity and potential. But if we prioritize on actions and solutions to improve our circumstances then we can produce positive emotions, and an improved outlook. Instead of dwelling on problems we can become more effective when we focus on solutions.

 5. Say yes all the time.

Don’t be a “yes” person or a people pleaser. Learn to wield the power of the word “no.” Saying no can be a challenge for some people, but learning to do so can honour our existing commitments and give us the opportunity to successfully fulfill them.

Avoid these 5 practices and we can all become rich some day. :)

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Random Useless Fact

The Dalai Lama is fascinated by science and technology. He has claimed that if he had not become a monk, he would have become an engineer.

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Mar 102015
 

Some say the real test of success is whether or not a man can earn more money than his sister-in-law’s husband, LOL. 😀 It’s funny because there’s some truth to that statement. It’s human nature to be jealous of others.

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But at the end of the day envy has no upside. Being resentful of someone else is a waste of time. If we can learn to curb our jealousy then our lives will become so much better. :) We will become more happy, less stressed out, and can make better decisions. Famous investor Warren Buffett once said, “As an investor, you get something out of all the deadly sins—except for envy. Being envious of someone else is pretty stupid. Wishing them badly…- All it does is ruin your day. Doesn’t hurt them at all, and there’s zero upside to it. If you’re going to pick a sin, go with something like lust or gluttony. That way at least you’ll have something to remember the weekend for.

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Feb 032015
 

Nobody likes to pay banking fees. But most monthly service charges can be waived if we sign up for additional accounts/services, or keep the minimum monthly balance in the account. (eg: maintain at least $1,500 in a Bank of Montreal chequing account to waive the $4 fee.)

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My personal account is with TD Canada Trust, which charges $3.95/month unless a minimum balance of $1,500 is held in the account at all times. But sitting on unused money can be a waste of capital. 😕 So 3 years ago I introduced an alternative solution to deal with those pesky bank fees. Rather than pay the bank to hold my money, I made the bank pay me instead! 😉

Hedge Bank Fees with Bank Stocks

Here’s what I did in a nutshell.

  1. Transfer the $1,500 from my chequing acct to my brokerage acct and use it all to buy TD shares (38 in today’s shares)
  2. Receive dividend payments every quarter as a TD Bank shareholder
  3. Use said dividends to pay for the $3.95 monthly service fee associated with my chequing account

(see my original post from February 2012 for more details.)

Since it’s been a few years I thought I’d post an update to show how my strategy has turned out so far.

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