Feb 242015
 

In self defence class we learn to fight… so that we won’t have to. Personal finance is very much the same way. :) The best thing that money can give us, is the freedom to not worry about money anymore. Sometimes we can become so focused on our finances that we can easily forget about actually living a life. To me financial wealth is not simply about having money. It’s more about having better options in life. A lack of money is a great disadvantage. Poor people have a greater affinity to stay poor. Their lack of resources keeps them from having access to better opportunities and choices that many middle class and rich people take for granted. Having a limited amount of choices can lead to further unsatisfactory circumstances, so it becomes a self-reinforcing cycle.

We spend a lot of time planning our budgets, building up our savings, and looking for profitable investments, but in the end we should realize that doing all this work is not about the money. It’s about the freedom and the awesome choices we’ll be rewarded with! :D We do not want to become obsessed about “money,” in and of itself. We don’t want to turn into those kinds of people who think that the best thing about wealth is that it allows them to buy material things. :| If that’s what they really want to believe then I wish them good luck in life. :P

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There’s a popular story that demonstrates the silly nature of materialism in the world today:

A successful businessman bought a brand new BMW M6 convertable. He parked it right in front of his office so that he could show it off to his fellow co-workers. As he got out his vehicle a passing garbage truck lost control and side-swiped his car, ripping off the door on the driver’s side. The police quickly arrived and the businessman began ranting hysterically that his new BMW was now ruined.  :-x After 10 minutes of profuse shouting and cursing, the businessman was finally able to calm down. The police officer then said to him, “You are so focused on your car that you don’t notice anything else. I can’t believe how materialistic you are.” The businessman looked confused. “What do you mean?” he asked. The police officer explained; “Haven’t you noticed that your left arm is missing? It must have been torn off in the accident.” The businessman’s face went white. “OH NO!” he screamed. “My Rolex!!”

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Dec 272014
 

Steve Zussino, the author of Travel Hacking for Canadians, kindly gave me a copy of the book so I could review it. Along with his book, Steve also launched a website to help Canadian travelers save money on the road, called Canadian Travel Hacking. Steve also happens to be the founder of Grocery Alerts Canada, which is a website that posts the latest deals and coupons.

The book is broken down into easy to understand categories like air travel, accommodation, land transportation, and cruises. There are a lot of helpful pictures and graphs to help illustrate how various programs work, such as the Aeroplan program. A ton of information is provided about the Canadian Frequent Flyer Programs and which credit cards should be used to achieve the most points.

I like how at the end of each chapter there is a “Tools” section with references and websites that are relevant and might be useful to the reader. :)

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My favorite section in the book is about price matching for hotels. For example, Steve explains how to use an aggregator site like kayak.com to check if the current Expedia hotel booking you have is the lowest price. Of course the book also suggests alternative accommodations like AirBnB and hostels.

Some of the money saving strategies in the book like using Priceline and Hotwire may not be helpful to everyone, such as myself since I don’t really use those companies to travel. But I’m sure those tips will be useful to others who are already using those services.

The book goes into which credit cards allow one to accumulate miles the quickest, and provide the most value. It also suggests ways to reduce or even completely waive the annual fee on credit cards. Steve also mentions the spending traps that so many travelers get lured into like casinos, spas, and alcoholic beverages on cruise ships. By avoiding these traps travelers can still enjoy the fundamental experience of a cruise, without spending money on overpriced luxuries. For those who like to rent vehicles there’s a section about avoiding unnecessary upsells at the rental counter.

There’s something in this book for every traveler. I learned a few things from it that I wasn’t previously aware of, which I’m sure will be of use in my future travels. If you’re interested to purchase this book you can find more information about it here. The digital version is $10, and the paperback version is $20.  If this book can save people hundreds of dollars on their next vacation then that sounds like a pretty good value.

Dec 022014
 

We often become what we repeatedly do because we are creatures of habit, and usually the best way to form a habit is to start early. :)

In a book I once read, Secrets of the Millionaire Mind, there’s a story about a successful professional who makes a six-figure salary and lives in a nice house with expensive cars. But for some reason he never has any savings. Despite his high income he’s always in debt. His net worth is negative, his investments tend to under perform, and he’s living paycheque to paycheque. The root of his financial struggle lies in his childhood. When he was growing up his parents were poor. They resented rich people, and blamed economic inequality and other social problems on money. Growing up in a household where money was considered bad and corrupt gave him the notion that having a money is bad. As an adult being wealthy would give him a sense of guilt. So whenever he makes money he would subconsciously try to spend it all. Many people lack the skills to take care of their own money because they were either never given the proper management tools to begin with, or were simply misinformed. By not forming good financial habits at an early age consumers might have a hard time getting out of debt when they become adults.

A recent survey by Consolidated Credit, a non-profit credit counselling service, shows that roughly a third of consumers had to turn to family or friends for financial help at one point.

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Not surprisingly the biggest challenge for many when facing financial hardship is being unable to pay for housing.

Becoming financially literate.

The way to tackle financial literacy can be done on two fronts. At home parents need to make financial education a priority in their household. At school there should be a full length course for basic personal finance. Children have to learn to work with money instead of being afraid of it or being told that money will lead to problems. The lack of knowledge is usually what leads to economic problems later on in life. It’s important to instill in children responsible spending habits and budgeting skills from an early age. :) As Aristotle once said, “Good habits formed at youth make all the difference.

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Random Useless Fact:
Some 40% of Canadian families carry an outstanding balance on their credit cards, with a median amount of roughly $3,000.

 

Jul 202014
 

I often gain financial knowledge by attending local events and seminars. It doesn’t mean every event I go to will directly lead me to make an investment decision, but they all help to improve my understanding of how money works in general. So here are some upcoming free events in major Canadian cities that might interest some people. Note: some of these seminars are meant to sell a service or product, but I encourage people to go for educational purposes only.

Toronto ON
RBC Direct Investing Seminar
Introduction to RBC’s stock trading platform and self-directed investing. Learn how to manage your own portfolio and use research and other resources to make better investment choices.

Wednesday, August 13, 2014. 12:15 – 1:15 pm.

RBC Direct Investing Centre
200 Bay St. — Royal Bank Plaza
Upper Concourse level
Toronto, ON M5J 2J5

Call 416-974-7493 to reserve your spot

Ottawa ON
Introduction to Fixed Income
Fixed income are investments like pensions and bonds. Its return is set at a particular figure and does not vary. Learn how it’s different from stocks and real estate equity.

Thursday Aug 7th, 2014. 12:00 – 1:00 pm

TD Direct Investing
45 O’Connor Street. 2nd Floor
Ottawa-Downtown, ON K1P 1A4

RSVP 613-783-6379 or use link above to register.

Montreal QC
Plan your Financial Future
Geared more towards young adults. Learn to set financial goals to build, protect, and enjoy your upcoming future.

Saturday, Aug 9, 2014. 1:00 – 4:00 pm

Wintax
4888 Boul. St-Charles
Pierrefonds, QC

Follow link above and RSVP to attend. You will need a meetup.com account.

Calgary AB
Credit Rating IQ
Learn the essential knowledge on your credit reports and credit score. Understand how it works, what’s reported, who uses it and how it impacts you. Discover how you can maintain or improve your rating.

Wednesday, September 10, 2014. 6:30 – 7:30 pm

616 Macleod Trail SE
Calgary, AB. T2G 2M2

It’s a drop-in so you can just show up.

Edmonton AB
Building Your Retirement Pay Cheque
The presenter will answer the following: What is retirement planning? Where do I begin? Where will my money come from?

Wednesday, July 30th, 2014. 12:00 – 1:00 pm

TD Direct Investing
10205 101st Street. Suite 148
Edmonton-Downtown, AB T5J 2Y8

RSVP 780-448-8082 to reserve your spot or register online using link above.

Vancouver BC
Meet-up with Blonde on a Budget
Get-together with Cait Flanders, a personal finance celebrity here in Vancouver. Discussions will be about debt, budgeting, and money in general. Free treats will be provided. I’ve met Cait before in real life and I think she knows more about personal finance than me.

Thursday, July 24, 2014. 6:00 – 8:00 pm

Tangerine Café
466 Howe St
Vancouver, BC V6C 3L5

Register using link above. Limited seats remaining.

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Random Useless Fact:
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Mar 102014
 

Many people look at their savings as money they can spend in the future. But I like to think of my savings as a perpetual steam of income. When I save $1,000 today, I don’t deem that money “spendable” anymore. Instead that $1,000 of savings have been changed into $40/year of passive income (or 4% of the saved amount) for the rest of my life. :D

Many actuaries and financial experts like to use the 4% rule because it represents a sustainable draw down rate over a long period of time. On a similar note, when I occasionally sell my investments to pay for large purchases, I also think of that as stealing income away from my future self.

If one manages to save $1,000 a month and make an investment return of 4% above inflation every year, then after 32 years of working, he or she will have about $750,000 of investable assets, which that person can draw down from at 4% a year, or $30,000 of spending money forever.

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With $30,000 of income every year coming from our nest egg, plus maybe $20,000 from government assistance/private pensions, we can expect to live quite comfortably on a $50,000 annual income. Not everyone is able to save $1,000 a month, but statistics show that men who live on the west coast like myself plan to save on average about $15,000 this year. So for most people, $1000/month of savings, if not more, is to be expected. One way I like to save is to cook my own meals most of the time because eating out can be quite costly.

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Personally my savings rate is about $1,500 to $2,000 a month thanks to my side hustles. So I plan to retire quite a bit earlier than 55. :D In fact, according to my latest net worth details which I publish every month, I already have over $750,000 of financial assets today. ;)

However that’s not the entire story. The reality is that I only have about $175,000 of investable, liquid assets. The remaining $575,000 is locked up in long term, capital appreciating resources such as my home and my farmland. Nevertheless building up $175,000 of stocks and bonds over a 5 year period still sounds pretty far-fetched given my average salary. Luckily there’s a wonderful tool called leverage that has made all this possible! Instead of buying stocks in a regular trading account, I have a margin account which allows me to invest with borrowed money and I was able to double the performance of the S&P 500 stock market index over the last few years!

Our age and risk tolerance will influence our asset allocation but generally speaking we should be able to sustain a 4% withdrawal rate by investing 60% of our money in equities, and 40% in fixed income. In terms of geographical allocation we can go with a 50/50 North American and international split to stay diversified. We then rebalance our portfolios to meet these ratios once a year. :)

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Random Useless Fact: What is a 4 letter word, yet is made up of 3. Rarely consists 6 letters, and never is written with 5.

Hint for the riddle above: Think about why it’s under the Random Useless Fact section ;)