Category: Single Money

Doing Your Best Is the Best You Can Do

This year, I will have been engaged in DIY-investing for 3 full decades. Wow! It sounds like a long time, doesn’t it? Believe me when I say it went by quicker than two shakes of a lamb’s tail.

Have I made mistakes? Plenty! Did I have too much hubris along the way? Probably. Could I have made better choices if I’d had more information earlier? Absolutely.

Lesson learned – downturns are a fantastic time to be investing in the stock market.

Looking back, I see now that I could’ve made better choices. During the 2008 financial crisis, I stopped contributing to my investment accounts for 6 months. The stock market was extremely volatile, and the value of my investments was decreasing on a weekly basis. I hit “pause” on my bi-weekly contributions to my non-registered investment account. Doing so was a huge mistake!!! This was the best time to be investing my money since the stock market was on sale.

As the pandemic took hold in 2020, my investments plunged. I stopped myself from checking my balances every day once my losses hit a quarter million. To this day, I still have no idea how low my investment portfolio sank because it was too stressful for me check the number. That said, I never stopped investing. Thankfully, my employment was secure so I continued to divert money from every paycheque to my investment account.

And I stuck to my investment plan in 2022, despite the market dropping and dropping and dropping some more. Last year was definitely not an easy ride in the stock market. All the gains I’d earned in 2021 were essentially erased!!! No matter – I did not repeat the mistake of Younger Blue Lobster. I did not “hit pause” on investing this time around. This is what I’ve learned: regardless of whether the market is up or down, investing in well-diversified, equity based ETFs for long-term growth is a good thing, .

Lesson learned – start today. Procrastination simply means that your money isn’t working for you.

Procrastination hurt my financial goals. After paying off my mortgage, I waited roughly 5 years before I started to invest in my non-registered investment account. I’d been very diligent about putting money away in my RRSP every single year, so I can pat myself on the back for that choice. However, I spent too many years thinking about starting an investment portfolio instead of just starting it.

In other words, I knew what to do… but I just didn’t do it.

Please do not make this mistake. Open the account today. Set up the automatic transfer today. The sooner your money is invested, the sooner it will start producing returns for you. Believe me when I say that 30 years goes by way faster than you think it will. You don’t want Future You to live with the regret that you didn’t start as soon as possible.

Lesson learned – invest in equities while you’re young.

When I started my non-registered investment account, I chose to invest in dividend-paying mutual funds. Eventually, I switched to dividend-paying exchange traded funds because ETFs are cheaper than mutual funds. Even today, it makes no sense to me to pay more money for essentially the same product.

I was quite proud of myself! Turns out, I should have been investing in equity-based ETFs like VCN or VXC or VUN. (Yes – I’m a fan of Vanguard Canada. No – I’m not being paid for mentioning them in this post.) Investing in equities means investing for long-term growth. And long-term means 10 years or longer. Hindsight is 20/20 as my father used to say. The stock market experienced very good returns 2009 and 2020. Had I invested for growth instead of for dividend income, I would be so much closer to my financial goals by now.

In the interests of transparency, I have since adjusted my investment plan. Since October 2020, I’ve been investing in VXC. I didn’t sell my dividend ETFs – they throw off a nice annual stream of income. I allow my dividends to compound via the magic of the DRIP, aka: a dividend re-investment plan. New money goes into my equity-based ETF. God-willing, I have atleast another 10+ years to live so I’m expecting to see good returns from my equity investment.

Lesson learned – get help as soon as you can afford it.

Remember when I said that I started my investing journey 30 years ago?

Well, I didn’t see a financial planner until 2020. First of all, I wanted to see someone who wasn’t paid by the investment industry. As far as I’m concerned, there’s a conflict of interest if the person giving me advice is paid by the people whose products are being sold to me. That person’s paycheque is dependent on selling products, and is not dependent on giving me the best advice for my particular circumstances. I wanted a someone who adhered to the fee-for-service model of delivering financial planning advice. Others may feel differently, and that’s their prerogative. I would only be satisfied if I could find someone who I knew was working for me alone.

In 2019, I obtained the name of an independent financial planner. His time and advice cost me a four-figure amount, so not exactly cheap but still a very good use of my hard-earned money. The financial planner did a full review of my finances and investments. He prepared a detailed binder filled with information and projections of how long my money would last. He told me that I could retire 2-3 years earlier than I’d planned. And he didn’t try to sell me anything. In short, he didn’t have any conflict of interest because he was working for me – not for an investment company.

Should I have hired a financial planner earlier in my investing journey? Yes – probably. If I’d had the same information at the 10-year or 15-year point in my journey, then I could have course-corrected earlier.

Had I met with him at the start of my investing journey, I probably would’ve gone off-course at some point. Remember that hubris I was talking about? Well, I had it in spades! I’ve still got quite a bit but I’ve also gained the wisdom to know that there’s still a vast amount of knowledge for me to acquire. Independent financial advice at the very start of my journey might have been wasted.

Lesson learned – I need not make every mistake myself.

Mistakes are learning opportunities. No one likes to make them. For many of use, mistakes have meant that we’ve been chastised, mocked, or otherwise bullied by others for making them. As a result, we’ve learned to shy away from these teachable moments.

The possibility of making a money mistake paralyzes a lot people. As a result, they don’t ever start saving or investing. It looks like procrastination, but it’s really just good, old eternal fear. Here’s a little tip from me to you. Not every mistake has to be mine in order for me to learn from it. I’m perfectly capable of learning from other people’s mistakes… and so are you.

Look around and ask yourself if you want to make the same mistakes that you see other people making. If the answer is “No”, then make the changes you need to make so you can do better. No one can guarantee that making those changes will be easy. As a matter of fact, I’m quite certain that it will be somewhat challenging depending on how much change you decide to make. Do it in bite-size chunks. Break the task down into manageable pieces, and do one task every time you get paid or on whatever schedule you choose.

The level of difficulty associated with change you want to make should never be a reason to deter you from making it. Do not continue to make mistakes simply because it’s the easier path. That route leads to disappointment and regret. You have one life so prioritize what you want out of it. Your dreams are important to you, so you should be doing what needs to be done in order to bring them to life.

Rage Applying – New Name for an Old Idea

I just learned about “rage applying“. Apparently, it takes place under the following conditions. When you don’t like your current work environment, you apply for a new job.

Trust me when I tell you that this is a new name for an old idea. No one has invented anything new by slapping a new moniker on this behaviour. (If anything, this new name is a fine example of re-branding at its finest!) Here’s the big, open secret just in case you haven’t learned this particular lesson yet. Most people look for new jobs when they no longer like their working conditions. This is a normal, rational response to a situation that has become unbearable and unpalatable. That this behaviour has earned itself a trendy hashtag says more about the merging of entertainment and news than it does about employee behaviour.

Sometimes, people find themselves in situations that they want to leave. Maybe it’s work, or maybe it’s a relationship. Whatever it is, people want a way out. They will look for an escape. Should you happen to find yourself in this position, might I suggest that you have a little bit of a cash cushion to tide you over? There should always be a little bit of money in the kitty for endings, especially when you initiate them. Endings can be painful, disruptive, and disagreeable. People rarely speak about the fact that endings are rarely, if ever, free.

Leaving your job for another one might entail a delay in receiving your first paycheque from your new employer. Take that into account before you leave your current position. Ask yourself if you have enough money set aside to continue paying your bills until you get that first paycheque? If you need to move cities for your new job, do you have enough to cover all the associated bills? Have you considered keeping a little cushion of cash set aside just in case the new job doesn’t live up to your expectations and you need to find another one?

Rage applying might assist you to get away from an intolerable situation, yet you should always be working towards making your dreams come true. If you’re going to look for a new job, ask yourself if it gets you closer to the life you really want to build for yourself. Is it a strategic move? Does the new job challenge and intrigue you? Will you be able to shed those tasks and responsibilities that you hate at your current job? Is there going to be a pay increase such that you can direct more of your hard-earned money towards the elements of your life that make you happiest?

Think about what you want to accomplish in 2023. Will rage applying help you attain your goals?

For the record, I’m not suggesting that you stay in unhappy situations. That’s not in your best interests, it’s detrimental to your mental health, and it won’t maximize your joy. I want to see that you’re moving towards the dreams that you have for your life. If you truly believe that applying for a new job will bring you joy, then start sending out those applications. Just make make sure that you’re smart about it. Establish what you’re looking for in your next position. Better promotional opportunities? A chance to work with someone you admire? Experience that will develop & strengthen areas where your skills are weak?

Take some time to determine what it is that you want. Don’t forget to consider the financial impacts too. It’s a no-brainer to leave for more money. A better work environment and a boatload more cash is what everyone wants. The challenge lies in figuring out what you’ll do if the next position pays you less than what you’re making right now, but will get you closer to your heart’s desire. Is a potential paycut justified if you truly believe that you’ll be happier? Can you take a pay decrease and still meet your financial goals?

Rage applying is a new name for an old trick. Life is too short to be utterly unhappy at work. Change your job, if you must. Moving to a situation that brings more joy into your life, or atleast eliminates a significant chunk of unhappiness from your life, is a good thing. Just do it in a smart way. Spend some time on the front-end to determine what you want, what you don’t want, and apply for positions accordingly.

Good luck!

Depending on the Kindness of Strangers is Risky

Have you seen the article about the 82-year old Walmart employee who received over $100,000 from strangers so that he could retire?

This story makes me very, very sad.

I’m not sad because people reached out to help this senior citizen , nor am I sad that he retired. No, I feel despondent and a little discouraged because he’s also in a system where working to death is the only option for so many. Had he not been “lucky” enough to be cashiering for a TikTok influencer, then it’s doubtful he would’ve benefitted from the kindness of strangers. He would still be working, just like countless other elderly people whose personal stories go untold online.

Truth be told, I’m not convinced that he was working because that’s what he wanted to be doing at age 82. If that had been the case, then I doubt that he would’ve retired upon receiving the six-figure cheque. He would’ve banked the money and gone back to work – just like all those other people who work because they love their jobs! He wasn’t the CEO of a successful company that he had built from scratch. There was nothing in the story to suggest that working as a cashier fulfilled his most cherished dreams and desires. None of the details of this story indicate that his employment brought him a sense of fulfillment or a belief that he was pursuing his life’s purpose.

Instead, the story was about a senior citizen who was toiling away with no end in sight. I can only assume that he earned just enough to not starve to death but nowhere near enough to ever stop working.

Think about your own circumstances. When will work become optional for you? Do you want to be forced by your personal finances to work at age 82? Or would you prefer that working at that age be a choice based on your passion for what you do?

If it’s the latter, then make sure that you’re building your financial cushion today. The sooner you start, the better. Invested money needs time in the stock market to grow. I’m not in any way suggesting that you sacrifice every single joy that you have in order to save for the future. That’s an awful way to live!

Sixty of seventy years ago, the internet didn’t exist. I cannot blame that 82-year old Walmart employee for not knowing about mutual funds, exchange-traded funds, and other investment products. The information wasn’t as readily available at one fingertips, not like it is today. The search engines, online classes, blogs, robo-advisors, self-directed brokerages, and podcasts from which to learn were not there for him until well into his late 50s and 60s.

The same isn’t true for you. If you can find this blog, then you can find anything you need to know about investing. The information is there. You need only go and find it. Do yourself a huge favour! Make the effort to maximize the odds that working in your dotage is a choice and not a requirement.

Invest some of your disposable income for long-term growth. Spend the rest of your money however you want. Just make sure that you never touch your long-term-growth money. A slice of every paycheque should be invested every time you’re paid. The capital gains and dividends should be automatically re-invested. It won’t happen overnight, and it will likely take years, but you’ll eventually have a stream of cashflow from your investments that can be used to replace your paycheque. Once that happens, then you will truly be working because you want to and not because you have to.

Take steps today so you’re not in the same position as this 82-year old cashier. Depending on the kindness of strangers to fund your retirement is risky. While this man was “fortunate” enough to be helped by a group of online strangers, there are countless others who need the same help but will not get it. This is how our system is designed. There is no onus on anyone to give you the retirement that you prefer. Our legislation provides you a financial floor. You can rest assured that it will not be enough for you to live the way you want in your dotage. Thankfully, there are steps that you can take to minimize the odds of an impoverished old age. It’s up to you whether to follow them.

Buy and Hold – This Strategy Works Exceedingly Well

***** First off, I am not a licensed financial advisor. I don’t hold any of the designations and I’m not an expert in telling people which investments are best for their particular situations. This post is about what has worked for me. It is in no way a guarantee, warranty, or promise that my chosen investment products will work just as well for you.

Now, with that out of the way, let’s get to it…

I’ve used the buy and hold strategy for my entire investing life. This strategy is far less risky than trying to time the market. Market timing as an investing strategy is too intense for my tastes, so I don’t do it. I have little faith in my ability to buy the perfect stock at the perfect time and to also sell it at the optimum moment. In hindsight, I can confidently state that the buy and hold strategy has worked exceedingly well for me. This is most likely due to the fact that I’m something of a passive investor and this method required very few decisions from me. These were the 4 main questions that I asked myself when I started oh-so-many-moons ago.

  1. How much would I commit to investing from every paycheque?
  2. When would I set up my automatic savings plan?
  3. Which exchange traded funds did I want to buy with my automatic savings?
  4. Would I be willing to increase the savings amount each time I paid off a debt or got a raise?

That’s it. Those were the questions that helped me to put my buy and hold investing strategy into action.

Question 1 – How much?

I started my investment journey with $50 from each paycheque. It was easy at the time. I was living at home, so my parents paid for the majority of my life. I had to cover my entertainment with money earned at a part-time job. Everything else was paid for by my folks. That $50 was roughly a third of my bi-weekly paycheque, but I’ve never been a big spender so it wasn’t a hardship.

As I finished school and moved into my career, that savings amount went up. Since I’m a person who drives my vehicles for a very long time, I have years and years between car loans. I kept my Oldsmobile Alero for 8 years, and the loan lasted for 5 of those years. The Alero was eventually replaced by an SUV, whose loan was paid off in 6 months. I kept my SUV for 14 years, and would still be driving it but for knee problems that make it kind of unsafe for me to be working a clutch in traffic. (I still love my SUV and made sure that it went to a good home when I sold it.) Last fall, I purchased my current vehicle in cash. It was a big sum and I didn’t particularly enjoy handing it over, but I really, really, really hate car payments.

Once they were eliminated, former car payments were directed towards my investment accounts. They became RRSP and TFSA contributions. Within a few years of ridding myself of car payments, I was able to make the maximum annual contributions to both my RRSP and my TFSA. No more big rollover balances for this Blue Lobster!

The same thing happened after I paid off my mortgage – my savings amount shot up again! Think about how much you pay for your mortgage or rent. If you didn’t have to pay that every month, don’t you think it would be easier to find the money to invest?

Today, I’m at a very comfortable bi-weekly savings rate, many times higher than the one I started with so long ago.

Question 2 – when to start the automatic savings program?

“Right now.”

In my case, that’s not exactly true. When I was saving my $50 every two weeks, I would actually go to a bank machine and to the transfer myself. (Yes – I’m older than online banking.) I would punch in my numbers and manually transfer the money from my chequing account to my savings account. At the time, I was in high school so I didn’t know about exchange traded funds or mutual funds, or other kinds of investment products. All I knew about were savings account so that’s where my money went.

When online banking became a reality in my life, one of the first things I did was set up an automatic transfer. The money from each paycheque was sent where it needed to go. I’ve had the benefit of using automatic transfers for more than half my life. This means that I don’t have to face the choice of whether to save & invest my money every time I get paid. That question was asked and answered decades ago. No need to ask it again.

As the years passed and I learned more, I put more automatic transfers in place so that each of my priorities and goals could be funded. My RRSP and TFSA contributions were invested in the securities I had chosen. My buy and hold strategy went into action, and I didn’t look back.

Question 3 – What did I buy?

Ah… now we come to one of my biggest investing mistakes. I invested in dividend-paying mutual funds… then, later on, I switched to dividend-paying exchange traded funds (ETFs). The switch occurred because ETFs have management expense ratios that are so much lower than those that come with mutual funds. The management expense ratio (MER) is the on-going cost paid for owning mutual funds and ETFs.

Words to the wise – the MERs on mutual funds are almost always higher than the MERs on ETFs.

I thought of my dividend-paying securities like anything else. Why pay more for the same thing? If I can buy the same 2L carton of milk for two different prices, then I’m going to buy the one that costs less. The same logic applied to my investment products. When I learned about ETFs, I made the switch and didn’t look back.

For decades, I invested my money each month into dividend-payers. My thought was to ensure that I had a steady stream of income in retirements. Dividends receive favourable tax-treatment, i.e. they’re taxed must lower than interest earned on GICs or employment income. Secondly, I could participate in dividend re-investment programs (DRIPs). This meant that all of my dividends were automatically re-invested into buying even more dividend-payers. Compound growth for the win!

Sounds like a great plan, right? Well, I should have been investing into straight equity products. The stock market’s return outpaced what I earned from my dividend-payers. Even with the volatility of a regular stock market, and the crashes that happened in 2001, 2008 and 2020, I would have been so much farther ahead if I had just invested in straight equity ETFs.

Ah well… coulda, woulda, shoulda…

My saving grace lies in the fact that I was using the buy and hold strategy.

  • Was I buying the wrong thing? In hindsight, yes.
  • Did I hang onto my investments once purchased, and thereby benefit from compound growth? Again, also yes.
  • Has the buy and hold strategy worked wonders for me despite my big mistake? Yes!

Question 4 – did I increase my savings amount over time?

You bet your sweet patootie I did!

When I was younger, I had a lot more debt. I graduated with student loans, and I’ve taken out 2 car loans in my life. On top of that, I had a mortgage. My employer has given me raises over the years, but none of those matched inflation.

The “extra” money for my buy and hold strategy always came from not replacing one debt with new debt. Once my student loans were gone, that money was available to be invested. As my car loans and my mortgage were paid off, that money was also re-directed towards my investments.

Now, I’m going to admit that I used part of each former payment to bolster my day-to-day living too. I think I was paying $650 or $750 every two weeks for my mortgage way back in 2006. (And I realize that those numbers are downright paltry compared to the mortgage payments some people are paying today.) However, at the time, they were a big chunk of my paycheque so I was glad to see them go.

At the time, I chose to send $500 of each former payment to my investments and the remainder – whether $150 or $250 – stayed in my chequing account for the little extras. In short, each time I paid off a debt, I re-directed the majority of that former payment to my wants while the bulk of the payment went to my investments. No one is promised tomorrow, but that’s no excuse not to save for it.

The buy and hold strategy has worked exceedingly well for me. I have no reason to believe that it won’t work for you so long as you have a little bit of money to invest. You need not be an expert to start investing. It’s okay if you learn along the way. I did. I had to make tweaks here and there, as I grew more knowledgeable. They key was to start and to never stop. If you have a few bucks to invest each month, you should do so.

Money Wisdom – Words From My Mother

When I think about where I am financially, I also think about the choices that got me here. Some of them were smart ones. Sadly, many of them were not. Most of the time, I dwell on the money mistakes. Recently however, I got to thinking about the money wisdom that helped me tremendously. Truth be told, it came came from various sources. Unsurprisingly, the advice that came from those closest to me made the biggest impact. Words from my mother, uttered over 20+ years ago, set me down a very good path.

A long time ago, I had a job at a local banking institution. One day, I called my mom in tears. There had been talk about job cuts and I was very worried that I’d lose my job. I had just moved out of the house and wasn’t making a whole lot of money. Rather that offering words of comfort or solace, my mother laid down the hard, pragmatic truth.

“So long as you work for someone else, you’ll always have to worry about losing your job.”

Damn…

Like I said, my mother laid it down. Thankfully, I had the brains to pick it up and to govern myself accordingly. My mother didn’t tell me what to do. She bluntly told me how the real world works. My view of the term “job security” was forever altered by her words. I can’t thank her enough for that!

My mother’s words came back to me as I was listening to a Youtube video while washing the dishes. It was one of those personal finance shows. The guest was explaining how she’d paid off 15 credit cards! She’d been furloughed for 35 days right after being hired. She swore that she would never again allow anyone else to control whether she had enough money in her bank account to pay for her basic necessities. The furlough ended and she got down to the business of paying off her debt and building her emergency fund.

Both myself and the YouTube guest had to make some sacrifices to solidify our financial foundation. We learned from our experiences of having our paycheques threatened. Here is a fact that none of us can escape. We live in a society were money means access to food, shelter, medical care, transportation, clothing, and options. Losing the ability to earn enough money to buy what we need is traumatic, unless you have a sufficient emergency fund to tide you over until the next source of income.

My mother had been completely honest with me. Thankfully, I realized that it was up to me to figure out to build a buffer for myself just in case. You’d best believe that a slice of every at-the-time-meagre paycheque found its way into my emergency fund. When I graduated school and started my career, I continued to divert money into my emergency fund.

I also made it a priority to maximize my RRSP contributions, and then later my TFSA contributions. Even in my 20s, I knew that I would stop working one day. I also knew that I would still need to eat and shelter myself as a retired person. Getting old doesn’t vitiate the need for money. Money for my golden years would have to come from somewhere, and it was up to me to figure out where.

On top of my RRSP and TFSA contributions, I directed a good chunk of money to my non-registered investment account. The words from my mother spurred me into taking action. As a result, I’m in a comfortable position today. If I were to lose my job now, I could survive on the cash flow from my investments. It wouldn’t be a luxurious lifestyle and I’d have to cut some fat from my budget. However, I’d be able to pay my bills without going into debt before finding my next job.

Let’s be real. Just because someone gives you wisdom doesn’t mean that you’re going to follow it. I could’ve ignored my mother’s words and chosen not to fund my emergency account. Had I done so, I would’ve been ignoring the truth and leaving things up to chance. There are so many things over which we have no control in life! Whether to build a financial buffer need not be one of them. Luckily for me, I had a bit of disposable income so I had the ability and opportunity to start saving.

My advice to you is make hay while the sun shines. The words from my mother are just as true today as they were 20+ years ago. Do you have enough money to survive for 35 days without a paycheque? Your next paycheque isn’t guaranteed. You need to be ready in case it doesn’t show up. Building a decent-sized emergency fund is going to take some time so start today. Whatever you can spare after paying your debt and paying for life should be sent to your emergency fund. And if you already have an emergency fund, great! Fill up your TFSA, then fill up your RRSP. If you’ve already crossed those tasks off your to-do list, awesome! Time to start funding your non-registered investment account. In short, you should always be saving a little something from every paycheque.

It’s not easy, believe me. And it takes a few years to get a few thousand dollars set aside. We all know that life isn’t getting cheaper. And paycheques do not grow quickly, atleast not in my experience. On top of that, there’s always someone who’s trying to get their hand in your pocket! We live in a society where we are encouraged, exhorted, and expected to spend every penny that comes our way.

Be that as it may, you owe it to yourself to prepare for the day when you might be the one losing a job or getting furloughed. Should that unfortunate day come, you need to be ready. The bills won’t disappear simply because your paycheque’s gone bye-bye. You need to build an emergency fund and keep it healthy. There’s no time like the present. Start today!

Your Dreams Deserve to be Protected!

Welcome back! How have you been? We’re three weeks into 2023. It went by in a flash, didn’t it? How much closer are you to making your dreams a reality?

Hey! If you haven’t been able to do what you want, then cut yourself some slack. I know it’s not always easy to do what you want when you need to take care of the day-to-day of living. There’s laundry to be done. A commute to work is probably part of your day. Groceries need to be purchased and put away. Dishes needs to be cleaned, whether by hand or machine. Your body needs some exercise, lest it fall into disrepair sooner than necessary. And of course, we’re all supposed to get some 6-8 hours of solid sleep every night. It’s so very easy to forget about our dreams.

Well, I’m here to remind you that your dreams won’t make themselves come true. It’s up to you to see that they do!

Hear me now! Your dreams deserve to be protected from all those little things meant to drive them down your to-do list. Since this is a personal finance blog, I’m going to try and stick to the financial side of things. Temptation to spend money on everything but your dreams is everywhere and it’s very easy to succumb. After all, it’s “only” $10 or $25 or $50, so what can it hurt to spend a few bucks for a momentary pleasure? Well, those little expenditures add up quickly. This is why I encourage you to track your spending for atleast a few weeks. That way, if you ever find yourself asking “Where does all my money go?”, then the answer will be at your fingertips. Information is power, and you should definitely have power over your money.

You’ve heard me talk about the AdMan and his trusty sidekick, the Creditor. These two entities work tirelessly to separate you from your money. Sometimes, spending money gets you closer to your dreams. If you dream of a birthday lunch at the Eiffel Tower, you will have to spend your money to get there. Other times, spending money gets you further and further from your dreams. Paying for streaming services and food delivery immediately spring to mind. Indulging in these two things can add up to hundreds of dollars per year, spent on stuff that doesn’t last and is easily forgotten. I’m all in favour of binge-watching a few times a year, but I know that doing so won’t get me any closer to my big dreams.

Yup – AdMan and the Creditor are crafty buggers. It’s up to you to protect your dreams from temptations, and there are many. I’m a huge proponent of saving money. You’ve heard me talk about automatic transfers, investing for the future, and using sinking funds for short-term & medium-term goals. It may seem like I want you to save all of your money and never spend in the day-to-day.

That’s not quite true. I’d like to see you only spend money on things that really matter to you. After all, each dollar can only be spent once so maximize your enjoyment each time you spend. Most of us aren’t so flush that we can squander money on the meaningless things in our lives while also saving and investing enough for the things that we really want. And if you are that flush, then more power to you. The rest of us have to choose. I’m just encouraging you to choose that which matters most to you personally. If art classes make your heart sing, then that’s where your money should be going. Do not waste your hard-earned money on any of the million-and-one-bright-and-shiny things that the AdMan dangles in front of our faces and the Creditor is willing to finance.

Now, if you need to be frivolous with some portion of your money, then don’t let me stop you. Just keep that portion to 10% or less of your income. Unless you work really, really hard to make bad choices , wasteful spending of 10% of your money should not be enough to destroy the hard work being done by the other 90%.

No one else is going to care about your dreams as much as you do. Each of us has their own vision of a great life and no two visions are identical. All I can do is offer words of encouragement and maybe design a strategy for you to follow, but that’s it. At the end of the day, you’re the one who has to do the daily tasks that move you from where you are to where you want to be. I cannot promise that it will be easy. From what I’ve learned personally and observed from others, nothing worth having comes easy. Part of what makes success so sweet is the tangible recognition of dedicated, hard work paying off. Your dreams are no different. Imagine how it would feel to be living your dream life right now.

Think about your dreams every day. Nurture them by adding details and flourishes, until you can see them as vivid portraits in my your mind’s eye. Consider any possible impediments and craft plans to remove them from your path. Protect your dreams by cherishing them on a daily basis!

I promise that the more you think your dream, the more your mind will work towards making it happen. It’s like planting a seed in your subconscious. Even while you’re sleeping, your mind will be figuring out ways to make your dreams a reality. Tell yourself that you will make your dreams come true. Each day, remind yourself of you what it is that you truly want. Set a deadline for when you want to see your dreams come true and work backwards. What do you need to do today, next week, next month to meet your dream deadline?

Don’t let anyone else tear down your dreams. It’s a truly awful realization but you should know this. As you try to build the life you want, there will be occasions where those you love best will be a hindrance on the path to your dreams. Identify these people and acknowledge that they won’t help you make your dreams a reality. Cry about this, if you must. Yet do not under any circumstances allow them to prevent you from pursuing your dreams. Their derision about your life should never be enough for you to dissuade you from achieving the life you really want to live. Protect your dreams, no matter what!

You May Hate Your Job

You need an emergency fund because, one day, you may hate your job. When the day comes that you simply can’t take it anymore, you’ll need money. After all, most of us work for money. Our paycheques let us buy food, shelter, and other little things to keep body and soul together. Quitting a job doesn’t eliminate the need for money.

People have told me that I need to be more positive. Okay – here goes. I’m positive that you need an Escape Fund. If you’re very lucky, then you love your job. Each morning, you spring out of bed with a ferocious eagerness to get back to your paid employment. Accomplishing your employer’s tasks put a smile on your face and a song in your heart. If that’s the case, fantastic! You are living a great life and you probably can’t understand how the rest of us aren’t as happy at work at you are.

If you’re not one of the Fortunate Few, then you should building your Escape Fund. This is the money that will tide you over between jobs. If you’ve ever thought that you may hate your job, then you should have an Escape Fund. This is the money that will pay for your life between your last paycheque and your next one. Let’s say you need to move across country for your next opportunity. That’s unlikely to be a cheap trip. Maybe you’ve found a new job but it doesn’t start for another 3 weeks. If you have money tucked away in an Escape Fund, then you can quit your job today. You don’t have to prolong the agony of working at a job you hate for any longer than you have to. Your Escape Fund can allow you to have a 3 week break before you start your next job.

Burnout is real. Given the capitalist structure we live in, there’s no real incentive for anyone to talk about it. If you’re a super-stellar employee, there’s a good chance that your employer will want you to recover and continue to be a profit-center stellar employee for the company. And if you’re not valuable, then it’s far more likely that your employer will wish you the best of luck and get down to the business of finding someone else to do your job.

Today is when you should start preparing for the possibility of burnout. Maybe it will never happen to you. And if it doesn’t, then great! However, hope is not a plan. If you do get burnt out, then you may need to make some serious choices about your future employment options. Having an Escape Fund will buy you some breathing space to make well-considered decisions. You need not do anything super-drastic so long as you know that your basic needs will be met. Having the funds to buy yourself some time and space to think clearly is imperative. You do not want to ever feel like you don’t have options.

You may hate your job years from now, even if you love/like/tolerate it today. Maybe your work-bestie leaves. Perhaps the management style changes or your responsibilities increase to an unsustainable level. There’s always the possibility that harassment in the work place is left unaddressed or increases. Maybe the monotony of your role becomes too much to bear and you just want a change. There are any number of reasons why you may hate your job at some point in your working life.

My suggestion to you is that you start preparing for the possibility. After all, thinking about the possibility will also get your thinking about solutions to the problem. Who knows? One of the solutions for you just may lead you to something that you do love. Wouldn’t that be great? A job that you love and a nicely pot of money sitting on the side, just in case?

One Week Closer to Your Dreams

Well, the first week of 2023 is in the bag. Either you’re one week closer to your dreams or you’re not. No need to share your response with the class, but which one is it?

Personally, I don’t do New Year’s resolutions. Any day of the year is a great time to make beneficial changes to one’s life. January 1 doesn’t hold any special power when it comes to setting priorities for how you want to live the rest of your life. That said, I do use the sentiment of season as incentive set and re-assess the goals for my life. (Since this is a personal finance blog, I’ll only discuss my personal finance goals.)

Some of my financial goals are long-term, i.e. retiring ASAP, while others are in my near future, i.e. maximizing my RRSP contribution in May or June. I find that January of each year is a good time to figure out what goals are most important to me. This way, I can focus my spending in ways that get me closer to the life I want to live.

So far, and in no particular order, my goals for 2023 include:

  • paying cash for Christmas 2023 (no credit card hangover in January for me!)
  • contributing to my TFSA and RRSP
  • taking myself to the spa for my birthday in August
  • upgrading my iPhone
  • increasing my dividend cashflow by 10%
  • using my newly-creating slush fund (shout out to Bridget Casey of Money After Grad)
  • taking lunch to work more often than not
  • doing more meal prep so there’s less motivation to choose for fast food
  • maintaining my contributions to my non-registered account
  • beef up my emergency fund to account for inflation

These are the financial concerns that are currently most important to me. And since it’s my list, I’m the only one who gets to add, amend, or remove items. By the same token, I’m the person who has to fund them too.

How I Meet My Goals

Unsurprisingly, I’ll be using sinking funds for many of my goals. As I get paid, various chunks of money will be saved in various sinking funds until it’s time to spend the money. Most banks allow you to create nicknames for your various accounts. I love this feature! Nicknames are the perfect reminder of which priorities are being funded with my money. Should I ever need to withdraw money, then I know exactly which priority is being sacrificed for some other purpose.

Let’s use Christmas 2023 as an example. I get paid bi-weekly so I have 26 paycheques coming to me this year. My sinking fund will see contributions of $50 bi-weekly, which will give me $1300 to spend on Christmas in 12-months time. Now, if I think Christmas is going to cost more than that, then I can bump the amount up to $75 ($1950) or $100 ($2600) to cover my anticipated expenses. Thankfully, my family is nearby so I don’t have to cover huge transportation costs. We’re also not too big on gifts and prefer to focus on the food, playing with the kids, and playing board games. The lower amount of $1300 should be more than sufficient to cover the anticipated costs.

By starting to save for Christmas 2023 now, I won’t be scrambling for $1300 in 11 months time. I’ll have been saving throughout the year in small chunks. When the time comes, I can spend on gifts, food, and decorations without wondering where the money will come from to pay for everything. The money will have been tucked away just for this purpose. Easy-peasy-lemon-squeasy!

Automatic transfers take a good many money-decisions off my plate every year. They allow me to fund my priorities with the least amount of stress. I achieve my goals and get what I want by following this simple 3-step formula:

  1. My employer deposits money into my account on payday.
  2. Automatic transfers whisk a good chunk of it away to fund the things that are most important to me.
  3. Whatever’s leftover is spent on the day-to-day expenses of living: shelter, groceries, utility bills, entertainment, and other little nice-to-haves.

I never have to ask myself if I’m going to transfer money from my chequing account to my various savings and investment accounts. Thanks to the power of automation, the money is siphoned away before I have a chance to spend it.

51 Weeks Left

The first week of 2023 is in the history books. Hope it was a good one for you and that you’re one step closer to living your dreams. And if you didn’t get any closer to your dreams, then take a few minutes to figure out why. Ask yourself the following questions:

  • How are you going to spend your money over the 51 weeks left in 2023?
  • Are there any financial obstacles that are preventing you from getting what you want?
  • If yes, what would it take to remove them?
  • Are you willing to bear the consequences of removing money impediments from your life?

I get it. Change is hard, and I’m not terribly fond of it either. Still, life has taught me that sometimes changes have to be made in order to get what I want. Other people will always have opinions about how I’ve chosen, or not chosen, to spend my money. Guess what? They’ll sleep just fine with their opinions, but I’m the one who has to live with my choices. I’ll consider their opinions, before I do what I think is best for me.

You’re in the same boat. My opinions on this blog are mine. You know your financial situation way better than I do so you have to make choices based on the facts of your life. After all, you’re the one who is going to be saddled with the consequences of every choice you make. Life is a series of choices, after all.

When it comes to your money, I’m suggesting that you be the one to choose what happens with it. Don’t let anyone else spend it for you. Never let anyone else put you into debt! No one else knows what is most important to you. At the end of the day, your choices with money will affect every aspect of your life. This is why you should put in the effort to articulate what you want most then craft a spending plan to achieve it.

This is the very best way for you to move closer to your dreams, and to seeing them come true.

I’m not an expert but….

I am not certified by any governing body to tell you how to spend your money. My words of advice were earned at the School of Life, a place where all of us are students. I’m telling you this so that you realize that I’m not an expert, but I’ve still learned a thing or two. If you do what I did, you’ll do fairly well with your money over a lifetime. Here are my tips to acquiring a heavy wallet.

Don’t spend every penny you earn.

First off, I’ve yet to meet anyone who’s been harmed by living below their means. Spending less than your take-home income has no downsides, as far as I can tell. The difference between your net income and your expenses is called “savings” and savings can always be stashed away for various things.

Emergency Funds are not optional.

Secondly, life without an emergency fund is an invitation for financial trouble. There’s an emergency in your future. You simply have no way of knowing when it will show up. I promise you this though. No one in the history of the world has ever lamented about having too much money set aside to deal with the inevitable emergency. If you don’t have an emergency fund, start one immediately and set up an automatic transfer from your paycheque to fund it.

It’s going to take a bit of time to build up a decent emergency fund. That doesn’t matter – just start building it. When the emergency hits you smack in the face, you’ll be quite grateful that you won’t have to worry about the financial side of dealing with it.

Investing for Tomorrow You isn’t optional either.

Thirdly, start investing your savings. Yes – some of your saving will go to building an emergency fund. The rest of your savings should be split between your short-term, medium-term, and long-term goals.

One your most important long-term goals is how to feed, shelter, clothe, and entertain yourself when you’re too old to work. Tomorrow You still needs money to survive until the very last day of your life. The steps you take today to invest your savings will increase Tomorrow You’s chances of having a financially comfortable life once employment is over.

You need to start funding your retirement accounts – namely the Tax Free Savings Account and the Registered Retirement Savings Plan.

If you have to choose between filling the TFSA or the RRSP, my recommendation is to fill up the TFSA first. The TFSA contributions do not generate a tax refund, but the money invested inside the TFSA will grow tax-free and can be withdrawn tax-free.

Should you be so fortunate as to have sufficient money to fill both your TFSA and your RRSP, then do so.

If you still have savings After you’ve filled your retirement accounts, then open a non-registered account with an online brokerage. Invest your remaining savings to earn capital gains and dividends. The money earned in your non-registered account will be taxed every year. The upside is that the taxable rate on your capital gains and dividends will be less than the taxable rate on your earned income.

Inflation isn’t going away anytime soon.

Fourthly, inflation is running high. No one knows when it’s going to go down, so assume that things will be increasingly expensive for the foreseeable future. There are no simply answers to this problem, so my advice to you is to cook more of your own food. I love socializing over food as much as the next person. And I do sometimes yield to the incessant call of the fast food window or the food delivery app. However, inflation running at 7%-8% has forced me to be a lot more disciplined. I’m heading to the grocery store instead of tapping out an order on an app. I’m slicing and dicing, mincing and sautéing, frying and baking in my own kitchen. One of these days, I’ll even master the art of meal planning for the week instead of simply for the next 3-4 days.

My advice to you is learn to grocery shop then spend more time in the kitchen. If there’s something you want to learn to make, there’s someone on the Internet who has a recipe and a video to show you how. I can promise you that $60-$80 spent at the grocery store will yield you a ton more food than the same amount spent at a restaurant, fast food outlet, or food delivery service.

Stay out of debt

For whatever reason, our society has decided that it’s a good idea to put people into debt. The scope and manner in which any one person is able to go into debt is truly breathtaking: student loans, vehicle loans, mortgages, credit card debt, etc…

There’s no legal limit either. It’s not like there’s a law which says “No person is permitted to carry more than $650,000 of debt at any one time.”

So long as there is a creditor who is willing to extend you credit, you can dig a deep a hole as you choose. Even after a creditor stops extending you new credit, the hole still gets deeper thanks to the power of compound interest and the piling on of fees.

Do yourself a favor. Don’t go into debt. If you’re already in debt, then work very hard to get out of it.

You know those savings that I was talking about at the start of this post? Take 25% of them and throw them at your debt. You can use the snowball method or the avalanche method to make extra debt payments over and above your minimum payment.

I really don’t care, which method you choose. Just start making those extra debt payments and get yourself out of debt as soon as possible.

Again, I’m not an expert.

I’m just a person who has learned a few things about money from my own experience. I’ve also observed the financial choices and outcomes of others. Getting out and staying out of debt has done wonder for my financial life. Spending less than my net income has allowed me to set aside money for my retirement while also fulfilling most of my short-term and medium-term goals. Cooking at home has definitely contributed to a heavy wallet. My emergency fund helps me sleep well at night.

Even though I’m not an expert, some of these tips might help you too. Take what you need – leave the rest.