Month: February 2025

No One Said It Would Be Easy.

Getting what you really, really want is hardly every easy. It can be a grind. There are going to be days when you don’t want to work for it. Chances are you shed a tear or two along the way. It might take you much longer than you’d anticipated, and there are no guarantees the path will be a smooth one.

So what!

Accept the fact that the life you really want and that the dreams that you want to see come true are not going to fall into your hands like snow on a winter’s day. The reality is that you are going to have to put in some serious effort then reap the rewards later. If it’s worth having, then it’s worth fighting for. Never forget that!

Since this is a personal finance blog, I can help you with the money part of building the life you honestly and truly desire. There are some very basic guidelines that will get you 97% of the way there. If you follow these, then you’re set. The other 3% won’t make or break you either way. The more of these rules you fail to follow, the harder you’ll make it on yourself.

Choose wisely.

First things first… commit to living below your means.

There’s no way around this fact. If you spend every nickel you earn, then you will not have money leftover to put towards your dreams and the life you really want.

You need to save some of the money you earn. I used to think that 10% was enough. Now, I’ve matured and I see that 20% should be the bare minimum.

Maybe you can’t start at 20% right now. Fine – 20% is out of the question for right now. I refuse to be persuaded that you can’t work your way up to 20% over time. Start where you are right now, then increase your savings rate by 1% every single year. If you can increase your savings rate at a faster pace, then so much the better.

People get raises, start side hustles, create content, teach skills, etc… There are many ways to earn additional money. Find one that works for your life and do it. Whatever money you earn can be applied to building the life you want and to turning your dreams into your reality.

Next, work on getting out of debt.

This might take a minute. Getting into debt is usually fun, but getting out is a tedious task. Unless you come into a windfall, it’s going to take you some time to pay off your creditors. If you can, make extra payments to pay off your debt faster.

And for the love of all that you hold holy, stay out of debt. If you want something, set up a sinking fund then use cash to buy it. As a matter of fact, set up a sinking fund even if there’s nothing in particular that you want. Set up an automatic transfer in the amount all of your former debt payments and send that money to your sinking fund. You’re already accustomed to making those payments, but this time they’ll be going into your pocket instead of someone else’s.

When you finally decide what you want, the money will be there waiting for you. No debt needed!

Invest for your long-term future.

While paying down your debt, cinch your belt a little tighter and set some money aside for Future You.

Debt payments are about paying for past decisions. Investing for your future is about self-care. You’re going to need food, shelter, transportation, heat, and a few other basic necessities every single day until the day you die. This is why you absolutely must set aside some of today’s money for tomorrow’s expenses. You won’t always be physically and mentally capable of going to work. There’s also a decent chance that you simply won’t want to leave the comfort of your home to do tasks for someone else. Or maybe you’ll no longer love running your own business.

Whatever the case, you don’t want to be forced to keep working when you’d rather stop.

When that time comes, you’ll be very happy to have cashflow from investments to replace the cashflow from your salary. Start today. Invest for the long-term. Re-invest all your dividends and capital gains. Set up an automatic transfer to invest a portion of every dollar that crosses your palm. When you stop sending your body out to work, there will be a pot of gold waiting for you. Future You will be very glad that Today You made good choices.

Build your emergency fund.

Much like paying off debt, it’s going to take a minute or two to build up atleast six months’ worth of expenses. I’m not adverse to seeing people with one year’s worth of expenses set aside, but I appreciate that six months’ worth will do in a pinch. Emergencies always have a financial component, so kindly make hay while the sun shines. Believe me when I say that an emergency is never made better by the addition of debt.

The last thing you want is the burden of paying for an emergency for months, if not years, after it’s happened. To avoid this depressing situation, make sure that you’re adding to your emergency fund on a regular basis. Every time you’re paid, send some money to your emergency fund and leave it alone.

No one has ever complained about having too much money during an emergency.

And if you have to use your emergency fund at some point, make sure that you re-build it as fast as possible. There is no way of knowing when your next emergency is going to land so it’s best to be prepared as soon as possible.

Finally, stop getting in your own way.

By this, I mean do not take on financial burdens unless absolutely necessary. More monthly subscriptions won’t get your closer to your dream life unless you’re the one selling to subscribers. Any dollar that is spent on something other than what you want most is a dollar that is not bringing you closer to your dreams.

Remember that there is always someone out there who is goading you to spend your money in ways that aren’t getting you closer to the life you want. You’re the best person to know what your heart really desires. And you need not sacrifice your priorities just because the AdMan and the Creditor request that of you. They’re your dreams so it’s your responsibility to protect them, to nurture them, and to pay for them.

Again… No one said it would be easy. I’m here to tell you that it will be worth it.

Truth be told, no one aspires to poverty.

I’ve been part of the personal finance blogging world for a few years now and I’ve realized a few hard truths. One of them is that there is no one answer to the problem of poverty. In the personal finance sphere, it’s a truth barely ever acknowledged that not everyone has enough.

We bloggers love to talk about our successes and we will happily share our “pathways to success”. What we’re not so good at is realizing that those pathways don’t always exist for everyone else. The sad truth is that there is a growing subset of people who are stuck in poverty with few, if any, ways out of it. No one aspires to poverty yet that’s where many are headed.

The Globe and Mail

Every Saturday, the Globe and Mail posts a review of a household’s finance on their website. (FYI – it’s behind a paywall.) The review includes a snapshot of the household’s assets, liabilities, monthly income, and monthly expenses. An advisor provides a professional opinion of whether the household has enough to generate a desire income in retirement. Readers are free to leave comments and, more often than not, readers complain that the household being profiled is too affluent. Readers clamor for households whose profiles are more relatable, i.e. those of someone earning a $50K-$60K per year while sending children to daycare, handling credit card debt, and paying a mortgage.

I’m always very confused by those reader comments. What are readers expecting the financial advisor to say? When a person is making a five-figure salary and all of their money is going towards mortgage debt, student loans, daycare, utilities, food, and transportation, then there really isn’t any wiggle room. The average person who isn’t making six-figures and who is raising a family is always under intense financial pressure to make sure everyone eats and that all the bills get paid. A severe illness or a job loss would be tragic, if not catastrophic.

There is no financial advisor alive who can help someone to build wealth when the entire paycheque is going out the door as fast as it comes in. There has to be some money to work with in order for a financial plan to have any hope of being useful!

What I’ve learned from reading many, many reviews of household profiles is that people who have excess money are the only ones who can reasonably benefit from a financial advisor’s review and advice. Having excess money means being positioned to implement a recommended investment strategy, to consider tax shelters, and to maximize contributions to the myriad of registered accounts that are available. When there’s no excess money, none of these options are really available.

Popular advice isn’t for those in poverty.

Most of the popular advice that you see shared online is for people with excess money. It can be an extra $5 per day, or it can exceed an extra $100,000 per year. The amount of excess money is not the point. What I want you to realize is that having excess money is the cornerstone to building savings and to investing for the future. If there’s nothing extra to save, then investing is essentially out of reach.

And to be very clear, I’m not talking about people who can cut back if necessary. Many people spend every penny on both necessities and luxuries, while deluding themselves that those luxuries are truly necessary for their well-being. No one needs a $300/mth cable package for their survival. I’d be tempted to argue that cutting the cord is a great way to cut down on the marketing that encourages the needless spending in the first place. But I digress…

If you don’t have excess money, you’re essentially a human conduit between your employer and your creditors. You work very, very hard and then disperse your paycheque to everyone else. To add insult to injury, you might also have to use credit cards to pay for food or utilities or some other basic necessity. However, if you’re using credit cards to survive, then please do not delude yourself into thinking that you’re keeping the wolves from the door. They’re circling and they will eventually be on your doorstep. Debt is rarely the solution to poverty. More often than not, debt simply entrenches you in poverty because the interest owed on your debt never stops growing until the debt is paid in full.

When you’re working super hard yet have no extra money to keep for yourself, then you’re the very definition of the working poor. From what I’ve learned, the only solution to poverty is to get more money. With more money in hand, the options for growing your money become viable options for you to consider. Until then, those options are eternally out of reach and may as well not exist.

And if you’re in this situation already, then I’m not telling you anything that you don’t already know. I’m sorry. I don’t have any quick fixes for your particular circumstances if you find yourself in this situation.

Living Below Your Means

One of the fundamental tenets of personal finance is to live below your means. I know that I’ve suggested that everyone do this. The reality that I’m coming to accept is that not every one can do this. It is a privilege to be able to live below your means, because it means that you have more than enough to pay for your daily living costs and there’s still money left over. There’s disposable income that need not be spent to keep food in the fridge and a roof overhead.

People who have already cut back yet are facing increasing costs simply cannot survive without spending every penny. They don’t have the luxury of an extra $5 to squirrel away in a paycheque. Doing so means going without food for 2 or 3 days in a row. No one ever develops a taste for poverty.

There are too many people who simply don’t earn enough. That’s the bottom line. If there is way to escape poverty’s clutches without increasing your income, please share that solution with the class.

For a good number of people, hard work is no longer the solution. However hard they work, there’s never enough to pay themselves first. If they do pay themselves first, then someone doesn’t eat or an eviction is in their future or the electricity is turned off. The rational solution is to solve today’s problems today and to hope for a better future tomorrow. When there’s only enough money to pay for today or to pay for tomorrow, which choice would you make?

What’s the answer?

If I had the perfect answer to solve the poverty problem, I would shout it from the rooftops. Sadly, that level of wisdom has escaped me.

My only suggestion is this. If you’re one of the people who has enough with a bit to spare, then consider making charitable donations to homeless shelters and food banks. People will always need a place to stay and food to eat. You can still invest for Future You. I will always urge you to build the life you want for yourself while helping others along the way. It does you no harm to help someone in need.

Never take your good fortune for granted. Believe me when I say that no one who is in poverty wants to be there. I would venture to say that more than a few of those folks were one day very financially similar to you. Something happened to wipe out their financial foundation and they simply were unable to rebuild.

Again, no one aspires to poverty yet that’s where they’ve landed. Be thankful if you’ve managed not to fall into poverty’s nearly inescapable grasp.