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.


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.

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

4888 Boul. St-Charles
Pierrefonds, QC

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

Random Useless Fact:


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.

14-03-savings, savings are future income

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.

14-03-expensive-food, savings are future income

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. :)

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 ;)

Jan 242014

According to a new study by BMO, it appears that men are better savers, on average, than women. Last year each Canadian men saved $10.5K on average, while the ladies saved about $7K each. That’s a difference of 50%. 8O These results are interesting because last year another study showed that young men are more likely to stay at home with their parents, but young women move out sooner and are more independent. Maybe guys can save more money because we tend to mooch off our parents more. :P But on a more serious note I believe the income gender gap has something to do with this. Women are still making less than men in many professions and the less you make the less you have to save. :(

The good news is both genders in the BMO study say they plan to save more this year in 2014. :) $11.2K for the men and $8K says the women. Good luck everyone. :D The report also revealed saving differences across different regions in Canada. :)

14-01-bmosavingscanada, men are better savers

Some what we can learn from this information.

  1. It’s easier to reach our goals if we are around like minded people, so if you are young and looking for work consider moving to Alberta or B.C. if you aren’t already here. :) We have low unemployment, financially responsible government, and high wages – what’s not to like? :)
  2. Try to save at least the 2014 amount for the province that you live in. This is because money is relative and in order to get ahead we must be better than average. :D Even if we managed to save $100,000 this year, it still wouldn’t feel very much if everyone else managed to save $1,000,000 during the same time. I happen to live in B.C. so I will personally aim to save at least $15,117 this year to make sure I don’t get left behind. :) For benchmarking purpose, last year I managed to save about $18K.
  3. Invest our savings with tax efficiency in mind. For most people this means maxing out the contribution room for our TFSAs and RRSPs, etc. before investing in a non-registered account.

Random useless fact: The RCMP was formed in 1920 but it wasn’t until 1974 that women were allowed to become members.

14-01-police brutality, men are better savers


Nov 152013

The following is a guest post by Jacob, a PhD student in financial planning.

crazy dudHave you ever noticed that the way you “should” do things, according to societal norms, is often the most screwed up backwards way to find success at anything?

Consumerism is especially bad in our first world environment. Society encourages you to buy things you can’t afford. It’s cool to buy the latest, the greatest, and everything in between. The media outlets all promise eternal happiness if you’ll just keep up with the Joneses.

Here is some common financial advice that blows my mind:

  • A new car is a good investment to avoid repair costs. Financing one at 0% interest every 2-4 years actually saves money in the long run.
  • Clothing prices are representative of quality. If you pay more, you’ll look better and they clothes will last longer!
  • You have to buy nice things to get ahead in a career, and generally in life. If you don’t spend money, you’ll fail to impress potential employers, clients, and everyone else who is constantly scrutinizing your lifestyle choices.
  • Eating out is a way of life. Everyone does it. The whole experience is worth more on a dollar per hour basis than the required cleanup/cooking time of a home cooked meal.
  • The stock market is a complete mystery. The individual investor has no way of competing with those big hedge funds and money managers. Consequently, the individual is far better off leaving his money with a mutual fund manager.
  • The stock market is wildly inefficient and professionals who pick stocks often do far better than the individual. The PhDs running the research and stats have a huge advantage.

Is anyone else blown away by the madness of these ideas? Follow them and you’ll be a poor slave your whole life. A slave to credit cards and paychecks and stress.

You’ll be one of the 95% who just can’t seem to get ahead in life. Retirement at 65 might even seem difficult, despite a huge paycheck in a country with unlimited amounts of waste that can be leveraged by the savvy individual to spend even less.

What I’m trying to say is this. Blaze your own path in this life. Learn to be resourceful. Embrace all of the opportunities available that enable you to live much more of life on far less money.

To begin with, make it your life’s mission to avoid popular media folk tales and the INSANE financial habits that consume most Americans. Forget about the Joneses. Forget about name brand nonsense. Forget about instant gratification. Forget about your pride and just starting doing life in a way that makes financial SENSE.

It’s not a one size fits all sort of proposition. But the common denominator is always related to spending less. Once you realize the power of saving first and consuming second, life starts to get a little easier.

First, the debt disappears, then the opportunities start rising. We knocked out $19,000 of debt in our first 9 months of marriage and still found a way to sock away enough to max our Roth IRAs and the required amount for a 401k employer match.

Now, we’re swimming in the positive cash flow of our middle America jobs, and trying to figure out the next steps of our plan.

If you’d like to know our secrets, start with this list of ways to avoid winding up broke and miserable:

  1. Never purchase anything that can’t be paid for in full (except a house)
    • Use cash back credit cards and pay them in full each month
  2. Never buy new items if they can be found in good condition on Craigslist
    • Sell the crap you don’t use on Craigslist
  3. Never pay retail for clothes
    • Look at thrift stores and garage sales
  4. Cook homemade meals with ingredients that you purchased on sale
    • Learn the art of price matching each week
  5. Never eat out to fit in or because “you deserve it”
    • Eat out to celebrate (very occasionally)
  6. Never allow peer pressure to influence a financial decision
    • Always try to influence peers to become better savers
  7. Never buy something out of compulsion
    • Always buy out of necessity
  8. Never buy something without doing research on the price of viable alternatives
    • Spend the time and find the deals
  9. Never buy something to impress someone else
    • You’re the one who has to pay for it
  10. Never buy an item that won’t be used
    • Always sell what you haven’t used in the last year
  11. Never buy a new car or take out a loan for a car
    • Cash, always. Let someone else eat the bulk of the depreciation
  12. Never buy Cable TV
    • Cut the Cable Cord and watch shows online for free
  13. Avoid financing an undergraduate or graduate degree with student loans (Yes, some professional degrees are exempt from this rule)
    • Work hard in high school and undergrad,  find scholarships, and live at home if you can
  14. Never take financial advice from someone who makes a living selling loaded mutual funds
  15. Never stop tracking your financial situation, portfolio, and spending habits
    1. Get a free account at Personal Capital

Now keep in mind, this is my list. I could go on and on, but I would rather you make your own set of financial rules! Please let me know what you come up with in the comments section!

Author Bio: I’m Jacob, one half of the Cash Cow Couple. My wife and I enjoy teaching others how to live an abundant life on a very modest salary. We are attempting to spend less than $12,000 in our first year of marriage because we enjoy a good challenge!