General Thoughts - Millionaire on the Prairie

You Need Not Spend It All – Leftover Money

The third wave of personal finance is about living your best life. New books and blogs are coming out that encourage people to figure out how they want to spend their time once they have achieved financial independence. The personal finance realm is no longer solely about working super-hard for a fixed number of years in order to retire as soon as possible. This new era is focused on determining how you want to live your life once your time is your own.

Recently, a new perspective has emerged. It’s about spending your money, all of it, in order to live your best life. There’s a book called Die With Zero that encourages people to spend all their money before they shuffle off the collective mortal coil. I’ve read the book. I’ve thought about the book. My conclusion is that it’s not for me.

I fully expect that this blog post will appeal to a very slim margin of people who read it. And that’s fine. I’m okay with the fact that I’m not everyone’s cup of tea. I’m sharing my thoughts because I can’t be the only one who believes that you need not spend it all to be happy.

Am I an advocate of saving every nickel? Squirreling away every dime for an uncertain future? Hoarding currency with the sole goal of acquiring “more”?

The answer is “No”. Life is meant to be enjoyed. So many people don’t have any option other than living paycheque-to-paycheque, or by depending on charity. Not everyone has the disposable income to live life the way they would prefer. However, there are many others who do have the funds to craft the life that they truly desire. I’ve always encouraged those people to prioritize their spending in a fashion that allows them to achieve their heart’s desire and fulfill their lifelong dreams. We each only get one life, so we should do what we can to make that life as good as it can possibly be.

My position is that I don’t believe that spending all of your money is always necessary. Let’s say you’re fortunate enough to earn enough money to pay for all your needs, you’ve paid off your debts, and you can easily purchase all of your wants too. After you’re done paying for that, you’ve still got money leftover at the end of the month.

Leftover Money

Do you really need to spend the leftover money in order to acquire more happiness & joy? After all, you’re already acquiring everything you need and want. Your creditors are distant memories. You’re already living the life you want. Will spending even more money bring your more joy and happiness?

What are you supposed to do with the “leftover” money? According to DWZ, you’re supposed to just spend it on something. The premise of the book is that dying with leftover money means that you did not maximize your joy when you were alive.

That’s where I take issue with the book. In my view, you shouldn’t spend your money simply because you can. That’s wasteful. I’m also not convinced that spending money just because it’s there will bring you any greater amount of joy. There are many awesome and incredible experiences in the world. You should only pursue those that appeal to you, and you’re already smart enough to figure out what those are. Once you’ve done everything you want to do, then I’m certainly not going to tell you how to spend your remaining money.

If you’re already spending your money = on everything that you need and want, and you’re out of debt, then why do you need to spend more? Once you’ve reached the very desirable goal of living your life as you wish, then what will you achieve by spending more?

Money buys options. Of this, there is no doubt. With money, you can pay for your food, shelter, clothing, transportation, communication, entertainment, medical care, travel and various other miscellaneous things. There is no doubt that having money can make your life much, much easier. Yet, I’m still not convinced that spending money when you don’t particularly want to is a good thing.

You’re allowed to keep it.

One of the lesser-discussed aspects of money is that you don’t have to spend it. It’s true. You can have it and just keep it wherever you want – in a savings account, an investment portfolio, or in your sock drawer. Allow me to repeat it more loudly for the people at the back. You don’t have to spend your money if you don’t want to!

This is where I take issue with DWZ’s premise. I don’t think that people need to spend every penny before they die in order to have lived a great life. Once you’re out of debt, and you can spend freely on both your needs and your wants, then anything that’s leftover shouldn’t be viewed as a problem to be solved. Your fortunate financial position will still have allowed you to spend money during your lifetime pursuing your dreams and having the life you wanted. So what if there’s some money leftover?

Bottom line is this. You need not spend it all. You shouldn’t be pressured into spending money if you’re already living your dream life. It’s okay to not spend even if you have the money to do so. Live your best life and spend your money doing so in the way that makes you happiest. If you decide to increase your spending, that’s fine. And if you decide not to increase your spending, that’s fine too. The ultimate decision lies with you.

It’s Time to Start Thinking about 2023 Goals

Wow! The first week of October 2022 is in the history books. That happened quickly, didn’t it? This is a good time to start thinking about what you’d like to achieve in 2023, which will be here in two shakes of a lamb’s tail.

For us Canadians, this weekend is Thanksgiving. If you can, find a few minutes to start thinking about what you want from 2023. Have your priorities changed? Are you on track to meet the goals you’d set for 2022? What do you need to make your goals a reality? Do you have new goals for 2023? \

You need not hammer out a complete financial outline for 2023, but you should definitely start thinking about it. The Talking Heads predict that central banks will continue to raise interest rates in order to stifle inflation. The fact remains that rates will not go up forever. At some point they will level out and then start to drop. Central banks might stop raising rates in late 2023, or early 2024. Who knows? They certainly don’t.

Bottom line – you still have to plan your spending so that you can obtain the life you really want, so that your heart’s truest desires are achieved, so that you can maximize the joy you experience in your life. Start thinking about it now.

For my part, I’d like to start travelling some more. Those of you who’ve been around for a while know that I’ve visited Italy, Spain & Ireland. I’d like to make a few more trips to Europe, then get to Africa and Asia at some point too. If time permits, I’ll also go to Australia & New Zealand. While the travel deals flung my way via email are certainly tempting, I haven’t yet saved the money for my next big trip.

I’m still a save-now-buy-later kind of person. There’s not a chance in hell that I will ever start to love debt. It’s simply not part of my DNA. But for a few unexpected large expenses during the pandemic, I would’ve had the money in the bank to take advantage of the travel deals I’m receiving. Sadly, those unexpected expenses involved the CRA and my house. My travel-priority plummeted down the list of priorities. I’d rather stay home a little bit longer than have to replace the foundation of my house, or to have the CRA take an excessive interest in me.

One of my financial goals for next year is to re-build my travel account. I’m vaccinated and I’m ready to head back to the airport. While I love my home, it’s time to see a bit more of the world while I have the health to do so. And since I haven’t yet won a lottery jackpot, I have to save up some money before I can indulge my wanderlust.

Another goal for next year is to upgrade my wardrobe. I’ve been fortunate enough to work from home since April 2020. My employer has changed its mind about my work location. Accordingly, I am hearing into the office for part of the week. Thankfully, my pre-pandemic clothes still fit. However, I think it would be wise to add a few new pieces to my wardrobe for those days when I’m working with others.

Not every financial goal for the upcoming year is going to be a fun one. In my case, some of my goals for next year are most decidedly not-fun.

I’ve also had to start thinking about replacing expensive things in my house when the time comes. I’ve nicknamed those things “Household Appliances”, “Furnace” and “Hot Water Tank”. They won’t last forever. I’m happy with what I’ve got right now so I won’t be replacing them before they give up the ghost. Instead, I’m going to start squirreling away money into a sinking fund for their replacement.

Remember what I said about not having debt?

Well, even I know it’s not always possible to avoid it. Where I live, a furnace isn’t optional. If mine should happen to die in the middle of winter, then I will be forced to take on some debt. However, if I start building that sinking fund now, then I’ll have a big down payment on that furnace loan. A bigger down payment always minimizes the amount borrowed. And if the Furnace Gods smile on me, mine will last until I’ve completely funded its replacement. Fingers crossed!

Obviously, you know your own goals better than I do. Since you’re on this website, you care about learning how to achieve as many of them as possible. At the time of this post, there are 12 weeks left in 2022. Find the time to review your priorities and goals. Confirm that they haven’t changed due to other changes in your life. Then take a look at your money. Ideally, you’re spending your money in ways that get you closer to the life you really and truly want rather than further away from it. Should you discover that tweaks need to be made, then make them now. Get yourself on track to entering 2023 with a firm plan in place so that you can create the life that you truly want.

Happy Thanksgiving!

You Need to Know About Trigger Rates

As I understand things, people with variable-rate mortgages should be very worried about their minimum mortgage payments increasing. They are facing trigger rates on their mortgages. These rates force people to make higher minimum mortgage payments.

A variable rate mortgage (VRM) payment covers interest and principal. However, when the mortgage rates increase on VRMs, the portion of each payment going to interest increases too. This leaves a smaller portion of the payment going to the principal on the mortgage loan. Let’s say your payment is $500 at X-interest rate, and $300 goes to interest while $200 goes to principal. When the interest rates goes to X+Y%, then your payment stays at $500 but now $375 goes to interest and only $125 goes to principal. If Y is high enough, then you’re in deep doo-doo because all of your $500 payment will be going to interest.

I’ll say it louder for the people at the back. If the mortgage rate on a VRM gets high enough, then the entire mortgage payment is going towards interest on the debt. None of the payment is going towards mortgage principle. This is a very bad situation because it means that the mortgage balance is not being paid down at all.

Enter trigger rates. These are the mortgage rates on VRMs which trigger an increase in the mortgage payment on a VRM. The increased mortgage payment ensures that atleast some of the new, higher mortgage payment goes towards the principal. In other words, the borrower will be paying down the mortgage balance instead of seeing their entire payment going to interest. Once the trigger rate has taken effect, borrowers are now legally required to pay the higher mortgage rate. If borrowers fail to pay the new, higher mortgage payment, they face the prospect of foreclosure.

If you have a variable rate mortgagee, talk to your lender about trigger rates. Find out if you’re close to yours. The lower your variable-rate mortgage is, the more likely you are to see an increase in your minimum required mortgage payment. You need to do two things at this point. First, find out from your lender what you new mortgage payment will likely be. Second, ensure that your budget can handle the increased payment.

Should your mortgage payment be on track to increase, then there are a few things you can do to stave off foreclosure. The first one is to start making extra payments on your mortgage to bring down the principal balance. Do not deplete your emergency fund to do this! Instead, pick up a part-time job or start a side hustle. Put all of that money towards your mortgage. If you earn a promotion at work, apply your additional take-home pay to your mortgage balance. Should you receive a lump sum of money, put it against your mortgage balance.

A second good option is to cut the extra fat from your budget. Eating at home more often will reduce costs since the food you make for yourself is generally less expensive than restaurant & take-out. Maybe you give up some monthly subscriptions. Perhaps you start hosting more potlucks. If possible, perhaps you switch to transit for your commute to work if working from home is no longer an option. Assuming that keeping your home is a priority, the money to pay the higher mortgage payment has to come from somewhere.

Your third option is to get a roommate & apply their rent to your mortgage. When it’s time to renew your mortgage, carefully consider the option of a fixed rate mortgage. (In the interest of transparency, I will tell you that I’ve always had fixed rate mortgages on my properties. I paid a little more in interest but the peace of mind was worth it to me. You may make a different choice.)

Fourthly, get rid of your mortgage completely. Pay off your mortgage, if you can.

Finally, sell your house before you’re underwater on your mortgage. If you don’t think you can pay the new, higher mortgage payment, then you can always sell your home before the bank does. A foreclosure will do significant damage to your credit rating. It stays on your credit report for seven years. If you sell your home, then there’s no foreclosure and you can preserve your credit. I’m not suggesting that you do this if you don’t want to but I want you to know that it’s an option.

The impact of trigger rates are just slowly seeping into the collective consciousness of those with mortgages. For the past 20 years, mortgage rates have simply been falling. No one has had to worry about their minimum mortgage payment increasing if they held a variable rate mortgage. Trigger rates were a theoretical idea – they simply didn’t impact anyone.

Today, the mortgage landscape is much difference. Those of you with VRMs are likely facing trigger rates. You need to start calculating how your budget is going to accommodate the higher minimum mortgage payment that is likely in your future. Be proactive and gather the knowledge you need to make an informed decision about your next steps.

Time to Take a Breath

Welcome back! How are you doing? What’s been troubling you financially? Maybe it’s time to take a breath?

It’s been kind of a crazy time for the past few months, hasn’t it? All the headlines and media platforms are screaming about inflation and debt and financial turmoil. No fun for anyone, right? They’ve amped up the financial fear to the next level, and it’s normal to be troubled by that.

I want you to take a breath, maybe even take two breaths. Turn off the media and news reports for 24 hours. Trust me. The bad news will still be there tomorrow. If you miss one day of it, you’ll be helping yourself and no harm will come to the one delivering the bad news to you. Take a breath – relax.

Get Back to Basics

You cannot change the interest rates, and you’re not going to single-handedly bring down the rate of inflation. Those things are out of your control. However, you do hold the power to pay attention to your own financial situation. Focus on your sphere of influence.

Start by ensuring that you’re still living below your means. If you’re not tracking your expenses, start. And if you’re already tracking them, keep doing so. It’s the only way to know where your money is going. Make sure that you’re not spending every nickel. Whatever you don’t spend should split between your emergency fund, debt repayment, and investing for long-term growth.

Inflation is problematic for all of us. What can you do to limit its impact on your life? If you have the space, try bulk buying of staples. Switch to a cheaper grocery store. Try the generic products and see if they’ll do. Cut back on the number of streaming services.

One of the best ways I’ve found to save money is to stay at home. And I know this one might be tough, considering that we’ve just emerged from 2-years of pandemic-related lockdowns and limitations. However, the reality is that staying at home helps me to not spend money. I’ve got the entire library available to me on my tablet, so I can read to my heart’s content. I watch movies on my streaming services. My neighbours are friendly so I get a chance to chat with them while tending my garden. And my garden is a delight since everything is in bloom.

Obviously, I don’t know where you live or what your circumstances are. However, I’m still going to suggest that you consider staying home a tiny bit more than you already do and assess whether this step will keep a touch more money in your wallet. And if doing so doesn’t work for you, then go out. (Please wear a mask though – as of today’s post, the pandemic isn’t over!)

Get Out of Debt

Like I said above, you can’t control the interest rates. Banks are quick to raise rates in line with increases from the central bank. This means that you’re paying more for your variable rate loans – things like your line of credit and variable rate mortgages. I haven’t yet heard of credit card companies jacking their interest rates, but it wouldn’t surprise me if they did.

Again, take a breath. Relax.

Go back to what I said about tracking your expenses. Find the extra money, and apply a portion of it to your debts. You’ll have to make your minimum monthly payments, just like you were doing previously. The extra money will become an extra debt payment.

Very importantly, don’t take on any new debt. This might not always be possible, but you’d be doing yourself a very huge favor if you moved Heaven and Earth to avoid acquiring any new debt.

Whether you use the debt snowball or the debt avalanche is up to you. Both of them will get you out of debt. Once you’re out, stay out.

Build Your Emergency Fund

Your emergency fund probably needs to be bigger.

Relax – take a breath. You can do this too. It won’t happen overnight but it will happen in less time than you think.

Take a portion of that extra money and automatically send it to your emergency fund. I really don’t care how much you contribute. I’d suggest $50 per week, but start with what you can and work your way up. There is an emergency in your future and the odds are very, very good that it will have some kind of financial component.

The time to prepare for it is now. So take a breath. Review your automatic transfer to your emergency fund. Can you increase that amount? Even by $1? The more you can save today, the more grateful you will be tomorrow when you need the money.

As your debts are paid off, use a quarter of those former debt payments to fund your emergency fund. (The other three quarters will be re-directed towards the other outstanding debts, as per the debt snowball or debt avalanche method.) Your debts will eventually disappear, and your emergency fund will be growing at the same time. This is a very good thing.

Invest for Long-Term Growth

The third part of that extra money you found is going to be invested in the stock market for long-term growth.

You’re going to ignore the media. Over the long term, the stock market goes up. Full stop.

You’re investing for decades, not for weeks or months. What happens in the short-term is almost irrelevant. Again, you’re investing for decades. So set up your automatic contribution to your investment portfolio, re-balance it every year, and go on about the rest of your life. Compound interest works best with a long time horizon and steady, consistent monetary contributions.

In the interests of transparency, I can say that I started to focus on my investment portfolio in 2011. I chose to invest in dividend-paying exchange-traded funds. I’m happy to share that I’m on track to earn $30,000 in dividends this year, barring dividend cuts. I’ve learned to ignore the Talking Heads of the Media and to focus on ensuring that I did my part, i.e. using automatic contributions to fund my investment portfolio. Had I known then what I know now, I would’ve invested in well-diversified equity-based ETFs and I would’ve benefitted from even higher returns.

I’m strongly urging you to set up your investment portfolio. If you’ve already done so, then continue to make consistent contributions. So long as you don’t add new ones, your debts will go away. There will come a point when your emergency fund holds 6-12 months’ worth of expenses. At the point, you can use re-direct two-thirds of the former debt payment & emergency fund contributions to investing. The other one third can be used to pay for the nice-to-have’s.

Take a Breath.

Step back from the news for a day, maybe two. The chin-wag of the media isn’t tailored to your personal finances, so you ought not give it too, too much attention. You have a plan for surviving today’s turbulent times. Focus on what’s within your power to control.

Relax.

The Other Side of BRRRR.

There’s a subset of FIRE adherents who religiously follow the BRRRR method that has been made famous by the good folks at Bigger Pockets. BRRRR is an acronym which stands for Buy Renovate Rent Refinance Repeat. Essentially, an investor buys a property, renovates it, and puts a renter in it. Renovations increase the value of the property. The investor withdraw the new equity by refinancing the property with the bank then goes on to find another property in order to repeat this process.

When the BRRRR method works, real estate investors make very good money. The investor only undertakes renovations in the belief that they will increase the value of the property and extract equity. If they don’t believe they can do that, then they have no motivation to buy the property in the first place. New tenants are generally found to pay the new, higher monthly rental and that should be enough to pay off the mortgage over time. Good cash flow also puts profits into the investor’s pocket. Refinancing the property at the higher assessed value means the investor can withdraw money to fund the purchase of the next property and start this process all over again.

Great plan for the investor! Great plan for the bank!

Not so great a plan for the people who lived in the property before it was renovated. The previous tenants may not be able to afford the new rental prices. It stands to reason that the investor would not have bought the property and poured money into renovations if she didn’t believe that higher rents could be charged to offset the costs. In other words, the goal is to acquire higher-paying tenants in each unit.

What happens to the renters who cannot pay the new, higher rents?

This is the other side of BRRRR… and proponents of this method never discuss the issue of what happens to the poor people. Some people in society simply cannot afford to pay more for their accommodation. What happens to them?

Again, under the BRRRR method, rents increase after the renovations are done. Existing tenants are always welcome to stay in their units if they can afford the new, higher rental rates. Even those who moved out during the renovations are welcome to return… if they can afford the new, higher rental rates.

Adherents to the BRRRR method don’t talk about what happens to the poor people, or those who have otherwise lost access to a rental unit within their budget. (Maybe the adherents do talk about this privately, but never publicly?) When implemented as designed, the BRRRR method necessarily pushes the poorest renters to the margins. They lose their homes because they don’t have enough money to pay the higher rents. Perhaps it’s naive of me to wish that proponents of the BRRRR method acknowledged this, and maybe consider taking slightly less profit by letting a few of the poor tenants live in the renovated units at their former rental rates.

I don’t have any easy answers for the people profiled in the attached CBC article. The bottom line is that the renters profiled in that story need money to pay higher rents. Hopefully, they get it from someone. Rents are not going down any time soon. It’s difficult to build a nest egg when every penny of income has to be spent on the daily costs of living.

And the solution is…

Presently, I do not have any solutions for people who are already caught in poverty’s trap. Most of my suggestions are aimed at people who have some disposable income, aka: fat to cut from their current spending habits. It’s trite but true – you need money to make money. You might not need a lot to get started, but you do need a little something. You cannot invest $0 because $0 is not enough to buy anything.

For my part, I encourage people to have emergency funds and passive income so that they have a buffer of sorts. Passive income bolsters any money earned through the sweat of your own brow. And if you have enough passive income, then it’s the equivalent of a second salary. Should you choose to rent your accommodation, having passive income increases your odds of always being able to pay for the inevitable rental increases.

Ideally, your regular job pays for your all of your expenses before retirement, while your passive income builds a cushion for you. To be extremely clear, you should also view investing for Future You as an expense to be paid from current income. If your investments do very, very well, then your passive income will continue to grow while also paying for the expenses of your retirement. This will allow you to absorb the increased costs of living after your working years are over. Inflation won’t stop just because your employment income has.

For myself, I love receiving income from dividends and capital gains. Money from my day-job buys me shares in dividend-producing companies. Every month, a little bit of dividend money is automatically re-invested to buy more shares in dividend-producing companies. At the end of the year, I receive capital gains. I’ve been doing this for a very long time. So far, my passive income is almost equivalent to a full-time job at minimum income in my province. It’s not enough to live on, but it’s certainly a good amount to re-invest every year.

The past cannot be changed.

I was fortunate enough to read the book, The Wealthy Barber by David Chilton, when I was a newly-minted adult. That book set me on the path of learning about personal finance. (I think you can still get this book from the library.)

Unfortunately, no one can go back in time and make different choices with their money. The renters in the article need help today. Regretting past decisions won’t help them with their current problems. The impact of the BRRRR method is forcing them to seek new shelter now. The limitations of their funds are preventing them from acquiring a new home that they will like as much as the one they had to vacate. Wondering what could have been done 20 or 30 years ago does not help them today. They are facing the very real risk of losing their homes as a result of the BRRRR method.

My question to you is this. Do the investors following the BRRRR method owe anything to the people that they displace?

Is it Better to Invest or Pay Off Debt?

One of the perennial questions in the sphere of personal finance is whether it is better to invest or pay off debt. The answer is nuanced and there is no one right answer for anyone.

Money has to be invested in the stock market for as long as possible. Time is required so that capital gains and dividends can be accrued and re-invested on a consistent, long-term basis. In other words, compound growth works best when given a long time horizon. These facts favour paying the absolute minimum on your debts while investing money into the market.

On the other hand, paying debt for longer than necessary means that you’re sending interest payments to creditors. Consumer debt can have double-digit interest rates. Unless you’re paying 0% interest on your debt, you can be guaranteed that you’re paying interest to someone for the privilege of having borrowed their money. Debts have a way sticking around much longer than we’d like. From that perspective, it makes sense to pay off debt as fast as possible and to delay investing.

Both good options. Which one is best?

This is where nuance must be applied. Each person’s situations is different. Yet, the following remains true. Dollars spent to repay money owed to creditors cannot be invested in the stock market for long-term growth. If you devote 5 years to pay off non-mortgage debt, aka: consumer debt, then that means you’ve lost 5 years of compound growth for your investment portfolio. It might take longer than 5 years to eradicate your debts. The bottom line is that your money needs to be invested today, preferably yesterday, so that it can grow as quickly as possible.

Why not do both simultaneously?

As I’ve matured and gained wisdom, I’ve started to ask myself why the choice has to be so stark. Is there a really good reason why a person cannot do both? Why not invest and pay down debt at the same time?

Presumably, you are not living paycheque-to-paycheque. This means that there’s some extra money in your budget. If there wasn’t, then this question wouldn’t even come up in the first place. The reason you’re asking the question is because you want to make best use that extra money.

Let’s say you have an extra $250 per month. Why not send half to your investment portfolio and send the other half to your debts? I call this the Half-and-Half Method.

If you invest on no-commission platform, then you’ll be investing $125 each month for the Care and Feeding of Future You. This is a respectable start. (As you earn more money and pay off your debt, this amount should be increased.)

The other $125 can be put towards your debt as an extra payment. Some people apply extra money to the lowest balance, in order to get rid of it faster – the Debt Snowball Method. Other people choose to direct extra money to the debt with the highest interest rate, in order to pay as little interest as possible – the Debt Avalanche Method. Personally, I like the snowball method because it delivers a sense of accomplishment sooner rather than later.

Remember that nuance I was mentioning earlier? Well, there are two factors that I look at in any situations. There are probably more, but I’ve yet to ponder them sufficiently to discuss them with you in this post.

Age

The younger you are, the longer the time horizon. For this reason, I think you can devote slightly more to your debt repayment than your investments. If you’re under 30, then I’m okay if 60% of your $250 goes to debt repayment while 35% goes to investments.

Every compound growth chart out there shows that younger people can invest much less money each month to achieve the same final amount as someone who starts investing at later ages.

That said, I don’t want you to think that investing $0 is acceptable. It is not. You should be aiming for atleast $100 per month when you’re in your 20s. Again, as you pay off debt and/or increase your income, you’ll need to increase this amount.

If you’re 30 and older, definitely use the Half-and-Half method. You don’t want debt payments in retirement, especially if you’ll be living on a fixed income. However, you’ll also want to build a nice cash cushion for your retirement. The Half-and-Half method allows you to do both.

Length of Time To Pay Off Debt

This one appears to contradict my Half-and-Half method. Still, I do like the sense of accomplishment that it provides. If you can knock out a debt in 90 days or less, then commit the entire $250 to doing so and forego contributing to your investments for 3 months.

The caveat here is that this is a one-time option. I don’t want you to delay investing for 90 days, then delay investing for another 90 days to knock out another debt, and then delay investing again. Serially focusing on paying off one debt at a time is simply focusing on paying off debt. If you pay off a 90-day debt only to incur another debt that can be paid off in 90 days, then you’re better off using the Half-and-Half method. Clearly, debt is going to be a structural feature of your life so you need to be investing atleast some of your money for the Care and Feeding of Future You.

Too Long, Didn’t Read!

Is it better to invest or pay off debt?

The answer is to do both at the same time. The need to provide for Future You does not diminish just because you’re paying off debt. Contribute to your investment portfolio while you’re paying off your debts. Eventually, your debts will go away and there will be a nice cash cushion waiting for you later on down the line. It’s the best of both worlds.

Money well-spent is never wasted!

I am an amateur gardener. Essentially, this means that I don’t know what I’m doing but I do it with enthusiasm. Each year, I pick my tried and true favourite annual – petunias – and then I buy new plants that I want to try. My winters are spent watching various gardening channels on YouTube and making lists of what I think will grow well for me.

Last year, I tried coleus for the first time… and I completely fell in love with this gorgeous, vigorous plant. It’s the only thing I’ve ever paired with petunias that could match the petunias’ growth habit. Take a look at this container. There are only 3 coleus plants, and three petunia plants. Those little splotches of pink and orange near the edges are flower from two of the four begonias that I planted with the coleus and the petunias. A little tip from me to you – begonias cannot keep up with petunias and coleus.

Coleus side vs. Petunia side of same planter!

This year, the “new” annual is verbena. So far, I’m very happy with my 2 verbena plants. If they can handle the hot, hot summer sun that’s due to arrive in July and August, then I will be adding verbena to my yearly list of favorites. Take a peek at these little beauties.

In addition to coleus, petunias, and verbena, I also selected geraniums, marigolds, sweet potato vine and begonias to fill up my planters. It’s been a week and, so far, everything is still a live. My goal is to keep it that way!

And while I’m not an expert, I’ve learned a few things over the years. Firstly, it’s much cheaper to plant perennials in the ground and save the annuals for my containers. While they might cost more at the front end, a healthy perennial will come back year after year. They’ll flower beautifully, though for a shorter period of time. I enjoy feeling accomplished when they come back each year. It means that I managed to properly care for them – not too much fertilizer the year before, the right amount of water, a perfectly selected spot with light they found most pleasing.

Perennials make for good investments. I’ve learned this with my hostas. I transplanted three last year, but only two came back. I’m not sure what I did wrong with third one but something clearly went awry. No matter – I’ve already replaced the dead one. Next year, I expect all three of them to come back and fill in a very awkward little spot I have near my garage door.

This year, my shed came down. There’s now a 6′ x 6′ patch of dirt in my yard that’s in desperate need of something green. As I already have a very large yard, I refuse to plant anymore grass. I have too much as it is. Again, this nearly cleared patch of land is in a strange spot. The shed was nestled under two healthy, large lilac trees. As a result, this spot sits in shade except for roughly 3-4 hours in the afternoon. So I think it will be a shade garden… once I figure out what can live in the shade and survive the hottest sun of the day.

Ahem… Blue Lobster, this isn’t a gardening blog. Yes, Gentle Reader, you’re right – it’s not. This is a place where I share my thoughts about money and encourage you to spend yours in a way that will make your dreams come true.

I’m talking about plants today because they take my mind off of my money. Yes – I said it. Sometimes, it’s good to not think about money. Obviously, I need money to buy my plants. I needed money to buy the worm castings and potting soil. Money definitely facilitated the purchase of my new containers this spring. There’s a good chance I’ll need money to pay for the water that’s used between rainfalls to keep my plants alive and happy.

Coleus, sweet potato vine, begonias, geraniums… love them all!

Yet, when I look at my wee little plants, I don’t see money. Instead, I see pretty flowers. One of my annuals was planted as a Hail Mary. I don’t know what happened but this little petunia was lying on its side, unlike the other plants in the six-pack, and refused to remain upright. It wasn’t dead though, and the roots were still attached to the crown. I had a small spot in my self-watering container so I dug a hole, carefully inserted Little Floppy, and watered gently. That was a week ago. Today, I discovered that Little Floppy has doubled in size and is already pushing buds. I expect to see a flower by this time next week.

My plants calm me. There’s nothing I can do about inflation. Volatility in the stock market will rock the value of my portfolio. More often than not, world events make me sad. So I turn to my plants. They offer me respite from an irrational amount of worry about things that are out of my control. Every day, I can step outside for some fresh air and watch the magic of nature up close.

And since this is a blog about money, here are some numbers. So far, I’ve spent about $250 on my plants this year. Most of it went to annuals, but some of it went to perennials too. Specifically, this year I’ve purchased a new hydrangea bush, my replacement hosta, and a second hosta for a different location. The shed-spot needs more plants, so I expect to be spending another $100-$200 to get sufficient plants to create the shade garden I want.

The few hundred dollars that I’ve spent, and will spend shortly, on my plants will make me happy for a very long time. All things considered, I view it as money well-spent.

Like I’ve said before, not every expenditure is going to put a smile on your face. I don’t know anyone who’s excited to pay for parking tickets or property taxes. Nonetheless, you should be spending atleast some of your money in ways that make your heart sing. For me, it’s plants. What is it for you?

Spend Your Money on What You Love!

Today, I’m encouraging you to spend your money on what you love. The beauty of personal finance is that it is uniquely specific to what each individual needs and wants. There are general, overarching financial needs that everyone has – think emergency funds, retirement accounts, and just-for-fun money. Everyone who is alive needs to have these in one form or another.

However, my just-for-fun money will be spent very differently than how my family & friends spend their just-for-fun money. This is why I want you to pay very close to attention to what makes you happiest, and then I want you to spend your money on what you love.

Not so fun fact – inflation in Canada is up 6.7% from where it was last year. Boo!!!

A very fun fact – spring has sprung in my corner of the world. Yay!!!! In a few short weeks, I’ll be shopping at a number of greenhouses, picking up various annuals and containers and fertilizers and stakes and nozzles and potting soil… You get the idea. I’m an amateur gardener, and I love the anticipation that comes with the start of the gardening season. One of my favourite ways to spend my money is on flowers. As a matter of fact, I’m taking a container gardening course tomorrow at a local greenhouse.

When I’m feeling a little blue, I visit another greenhouse and tour their gardens and stroll their aisles. Of all the greenhouses I’ve visited, this is the one where I’m most like to find all of the plants I want in one place. One of my favourite greenhouses isn’t particularly large but they have the most spectacular geranium selection I have ever seen in my life. And it was the only place where I found sweet potato vine when I needed it. It is one of my happy places!

My garden is a work in progress.

For me, it is very easy to spend my money on my flowers. I’m trying my hand at planting perennials, since that’s the frugal way of doing things. Last year’s tulips are emerging and I hope to see some blooms very soon. It took some doing but I finally found some hollyhocks for the south wall along my garage. My fingers are crossed that they come back this year. Due to some landscaping work, I had to transplant several established perennials – hostas, balloon flowers, peonies – last year. I’m holding my breath that I didn’t kill them in the process!

Perennials are a frugal gardener’s friend. A one-time investment can yield years of enjoyment. There are spots in my garden where I dislike trying to plant new annuals every year. If I can get my perennials well-established in those spots, my knees and lower back will thank me…. and I’ll have something beautiful to look at instead of just dirt.

However, I’m becoming a huge fan of container gardening too. Elevated planters have been a game-changer for me. Waist-high and arm-length wide, these wonderful creations allow me to comfortably plant, fertilize and water my wee baby plants while standing. I’m in a zone 3, so I can only plant annuals in these planters but that’s okay by me. While I’m a big fan of perennials, I’m an even bigger fan of annuals – petunias, coleus, begonias, geraniums, zinnias! These are my darlings. They’re so colourful! If I don’t particularly enjoy a colour one year, then I simply don’t buy it the next year. Annuals flower for the whole season, while perennials only flower once. They’re all beautiful but there is nothing more satisfying to me than to watch my annuals bloom continuously all summer.

Indulge me for a moment…

These are my beloved ballon flowers. I started with 2 blue plants, and the white ones came up a few years later. Fingers crossed that they survived my transplanting efforts!

Back to spending your money on what you love

So I’ve been in my current home for 18 years… wow! That seems like a long time, but I swear I just moved in a few days ago. Anyway, ever since my first summer here, I’ve been tinkering with a few new flowers each season. Though I still don’t have a formal gardening plan, I’ve enjoyed the show each year. There are so many beautiful and varied things to try. I’m like a kid in the candy store when I visit my greenhouses!

Today, I’m at the point of seriously considering the benefits of hiring a landscape designer and a crew to build some flowerbeds for even more perennials and some raised beds for my annuals. The only drawback I see to this option is the cost. It won’t be cheap. Yet… the fact remains that I likely won’t regret spending my money on this particular want. I have a great big backyard, that’s currently just grass. Gardening is a great hobby, one I can enjoy for the next 20+ years barring any physical limitations. It’s a way for me to get outside and enjoy all the spots of my property. I’m thrilled to see things bloom, and I like the idea of helping pollinators get what they need to stay alive.

One of the reasons that I sacrificed a few experiences when I was younger was so that I could fully fund my RRSP and my TFSA. I’d also wanted to have my non-registered account well-funded long before retirement. My financial dream had been to create a cash flow that I could live on when I stopped working. Lately, I’ve been crunching my numbers with a fee-only financial planner, and various internet calculators. They’re all telling me the same thing – that I will be okay. I’m starting to believe them!

So now it’s time for me to loosen the purse strings a little bit. I’ve enjoyed the journey up to now, but it’s okay for me to enjoy it a little bit more. So kindly wish me the best as I head to the greenhouses with the hordes of other gardeners. There are wee baby plants in my future and it’s almost time for me to get my hands back in the dirt.

So this is my non-professional and completely non-binding advice to you. Do what you need to do to ruthlessly cut out all spending that doesn’t bring you joy. Get out of debt. Fund your emergency, retirement, and investment accounts to the best of your ability. Spend some fun-money along the way, but not too much! When you’ve identified what brings you the most joy, spend your money freely. Do so with a smile on your face and joy in your heart as you spend your money on what you love!

F.I.R.E. – A Refreshing New Perspective

For those who don’t know, F.I.R.E. is the acronym for Financial Independence, Retire Early. It’s a financial point of view that has gained traction in the past 10-15 years. People live significantly below their means in order to grow their money as fast as possible until they no longer need to work. Once they hit that point, they are considered financially independent. If they wish, they can choose to retire early at that point. There are a multitude of websites and blogs devoted to the F.I.R.E. way of life. I will admit that my personal finance coming-of-age was heavily influenced by the initial hardcore tenets of FIRE.

For a long time, I easily adopted the face-punching viewpoint of Pete who runs Mr. Money Mustache even though I was not going to give up some of things that he clearly eschewed. For a little while, I was also enamored with the draconian thriftiness espoused by Jacob’s on his website, Early Retirement Extreme, even though I would never choose to live that way. I was constantly searching for stories of people who lived well-below their means because I wanted to see how far I was willing to go to have money for my investments. When I found a poster on YouTube who only ate once a day in order to save money for investing, I realized that I had limits. Starving when you don’t have enough money is one thing. Purposely starving yourself in order to invest money is offensive to me. I decided to stop seeking the extremes.

Lately, a refreshingly new perspective has emerged. In my view, it is healthier and more welcoming than what I learned. The concept is an homage to living your best life while investing your money. Your money should be used to make your life as good as possible. This doesn’t mean going into debt. It doesn’t mean working forever. It does mean being laser-focused on that which is most important to you. Debts eventually get paid. Salaries increase, one way or another. Consistent contributions to investments will churn out capital gains and dividends. At some point, the gap between the cost of your monthly necessities and the cash flow coming to you will widen to an appreciable amount. This is called your disposable income. The new perspective is about figuring out how to spend that disposable income in a way to brings the most joy and happiness into your life.

I find the new perspective more persuasive than I would have even 5 years ago. One of my biggest challenges is finding balance between living today to the fullest while saving and investing just enough for tomorrow. Two authors come to mind. They’ve articulated ideas about living each day to the fullest, without ignoring the onus to take care of Future You. Specifically, I’m thinking about Ramit Sethi of I Will Teach You To Be Rich and his exhortation to live your rich life now. The other author is Bill Perkins, who has encapsulated the essence of the new perspective in his book book, Die With Zero.

What I like most about the new perspective is that it offers a sense of balance. It gives people permission to enjoy the present, and to enjoy spending a little bit of money today. The new perspective recognizes that time is fungible – once gone, it can never be reclaimed. Accordingly, everyone should figure out what is most important to them and spend their money accordingly in order to maximize the utility of their money while securing their financial future.

Ramit Sethi encourages people to pursue their rich life today. As I understand his message, he doesn’t want you to wait 10-15-20 years to start living well. He wants you to determine what you want and to figure out if you can incorporate it into your life today. Mr. Sethi advises people to ruthlessly cut out the stuff that doesn’t matter so that they can focus their money on the things that do.

I love this idea! For my part, cable TV is unimportant. I cut it out of my life 8 years ago, and I don’t really miss it too much. I can’t host Grey Cup or Super Bowl parties, but that’s the extent of the drawbacks to not have cable in my home. What I do love is traveling to new countries. Before the pandemic, I was able to fund 3 trips to Europe in the space of 4 years. For me, that was a huge accomplishment. My rich life definitely includes travel!

In Die With Zero, the author’s position is that dying with too much money means that you have deprived yourself of experiences that could have enriched your life. This book really challenged my views about spending, saving, and investing my money. Truth be told, my mind was blown! First of all, how could a person die with too much money? Was that even a thing? I really had to slow down and contemplate what the author was saying.

Speaking only for myself, this book forced me to consider whether I was spending money in ways that made me happiest. I’ve been saving consistently since age 21. I’d finally visited a fee-only financial planner to get an objective opinion on whether I could hit my financial goals. (The answer was a resounding “Yes!”) By the time I read Die With Zero, I was comfortably past the Coast F.I.R.E. point in my money journey. I was ready to contemplate the idea that I might not have been using my money in the best way possible. After reading this book, dying with un-spent millions no longer seemed like the wisest choice.

It’s truly not my intention to be the richest person in the graveyard. There are experiences that I’d like to have which will require me to open my wallet. Though I’m not entirely convinced that I should die just as my net worth hits $5.47, I appreciate the ridiculousness of dying with millions of dollars to my name. That money will only benefit my heirs. The opportunity for me to benefit from the money dies the moment that I do. While I intend to leave something to my heirs, I want to help and not hinder. There is an intrinsic value in attaining your own personal goals. I won’t deprive them of the chance to experience the pride of accomplishment.

Right now, I’m still searching for the sweet spot. In my humble opinion, the new perspective is going to gain traction. There are those who hate their jobs and want to leave as soon as humanly possible. To those unfortunate masses, I encourage you to change jobs or find a new career. Life is too short to be miserable at work. If changing jobs isn’t an option, then know that I completely understand why you’re willing to sacrifice time today and gamble that you’ll have the time tomorrow to enjoy your money when you eventually do quit.

There will always be hardcore adherents to the “sacrifice everything in the short-term to retire ASAP” view of F.I.R.E. However, that path to financial independence and early retirement is not palatable to everyone. As with most lessons to be learned in life, it is up to each of us to take what we need and to leave the rest. We alone are the ones who know best what we truly desire from our precious time here on Earth. We owe it to ourselves to learn new ideas, try them out, see if they work, keep them if they do, discard them if they don’t, and to do it all over again.

Meal Planning is Your Secret Weapon Against Food Inflation

If you’ve been paying attention at all, then there’s no way that you’ve missed the impact of inflation at the grocery store. Food has gotten more expensive! One of the few ways to combat the increase in prices is to make each grocery dollar stretch a little bit further. Enter meal-planning.

One of my friends has a large family. She’s been meal-planning for as long as I’ve known her. Each week, she scours the flyers and plans her meals around whatever’s on sale. I’ve always admired her commitment to keeping her grocery expenditures as low as possible while still feeding herself (and her family) very well.

Yesterday, I failed to heed my mother’s wisdom and spent $36.31 on takeout. I let myself get too hungry and the result was that I made a bad choice with my food dollars. Had I been a little more thoughtful earlier in the week, I would have taken that same $36.31 to the grocery store and bought the fixings for a good meal that would have generated some leftovers.

My mother has been a widow for nearly 20 years. Her “trick” to keeping her food costs down is to always have food cooked in her house. Yes – that’s it. That’s the trick. My mother cooks every few days and she makes enough to last. After raising her family, she no longer wants to cook every single day. At the same time, my Wise Mother knows that she’ll make better food choices if her fridge is well-stocked with tasty leftovers. She lives and breathes the benefits of meal planning.

Why am I not as smart as my own mother? Very good question. I know better!

Two things are true.

One, you know best what you like to eat. Two, you will be hungry later. These are irrefutable facts. You have the power to use these two bits of knowledge in ways that will maximize the utility of your money.

The internet is rife with recipes! If there’s a recipe that you like, rest assured that someone somewhere has written about it online or has created a video for you to watch on your desktop, your tablet, or your phone. Here are a few of my favourite spots to find new recipes, or to be inspired by someone else’s culinary wizardry at filling their freezers.

When you plan your meals in advance, you aren’t forever asking yourself what you want to eat. If you’re anything like me, you are tired of wondering what’s for dinner every night! It would be nice to have a couple of nights in a row where I didn’t have to ask myself that question.

I used to believe that cooking for one was harder than cooking for a family. If you believe that too, then please stop. It’s time to start thinking differently. There are always ways to scale a recipe down for one or two people.

You need not cook the whole turkey if that’s what you’re craving. You can buy turkey parts at the grocery store. One turkey thigh can last 2-3 days, depending on how your use it.

Maybe you’re craving a lasagna? Cut the ingredient list in half and make it in a smaller dish. Or make the full-sized recipe and freeze the leftovers. The beauty of most pasta recipes is that they freeze and thaw beautifully, which means that much less work the next time you want to eat that particular meal.

Perhaps you’re craving homemade bread? I love it too, but it’s a lot to eat in 2 days. Homemade bread goes stale fast. You know what takes as much time but doesn’t go stale as fast? Homemade buns! Make a pan – eat what you want – freeze the rest. When you want another bun, just take it from the freezer.

Impediments are in your mind.

Meal planning is a skill that will take time to master. My mother has it down to a science. She’s retired so she has more flexibility with her time and can grocery shop as needed. For those of us who still work, a teensy bit more effort is required. We have to find the time to grocery shop. Not a problem. If you can’t get to the grocery store, then go online, order your food, and pick it up at a time you’ve scheduled. You can even have it delivered to you at your convenience. The time it takes to grocery shop is not an impediment if you truly want to maximize your money.

In the same vein, there has to be time to prepare your food before it gets cooked. Again, this is not an insurmountable problem. Read the recipe before you start cooking. Then read it again. Personally, I enjoy prep work – the slicing, the dicing, creating little piles of food that have to be combined in a particular order. I find it both relaxing and satisfying to get ingredients ready before I start my recipe.

If you don’t find prep work satisfying, that’s not a problem. You can buy pre-shredded cheese, minced garlic, pre-cut onions, pre-sliced carrots, etc… You can even use a meal prep service if that’s your fancy! The bottom line is that someone, somewhere has already done the prep-work for you, but you still need to get the ingredients into your kitchen so you can cook them.

Step #3 is the follow-thru. In other words, you actually have to cook the food that’s in your kitchen. I know, I know – this might be a radical idea to some of you. My advice is to buck up and get it done. Remember what I said about the internet? It’s everywhere! You can be commuting to work while watching cooking videos on YouTube, Instagram, TikTok, and websites. There is nothing holding you back from meal planning and cooking your own food.

Meal planning is not hard. It takes practice and patience, and a willingness to try something new. It’s a skill that gets better over time. The more meals that you prepare and/or eat at home, the more money you will save for the other parts of your life.