Tips and Tricks - Millionaire on the Prairie

Financial Independence – Make It Your Goal!

Over the past few months, I’ve been seeing many articles about the death of FIRE. For those that don’t know, FIRE is an acronym for Financial Independence, Retire Early. Its popularity as an idea really took off before March 2020. Since the return of inflation, not as many people have been preaching about it.

For my part, I’ve always wanted to retire early – ideally in my 30s and 40s. Believe me when I say that ship has sailed! To be fair, I’ll retire before the traditional age of 65, but I definitely won’t be considered a super-early retiree. And if we’re being honest with each other, I’ll admit that I’m a bit sad that I can’t retire right now. So while I’ve always been a big fan of FIRE, the second half of the acronym was intriguing but I was never able to be fully wedded to it.

The first part of the acronym is a completely different story. Financial independence? Yes, please!

Achieving financial independence is one of my foundational beliefs about the purpose of having money. In my opinion, everyone should be striving for financial independence. Nobody should be financially dependent on someone else their entire life. As a single person, I’ve always known that I didn’t have the luxury of another person’s paycheque coming into my household. I’m the only one responsible for ensuring that there’s enough money to pay for the life I want to live. To that end, I’ve made financial independence one of my life’s goals because I know that one day, I won’t be able to work anymore. When that day comes, I need to ensure that I have enough money to pay for my life’s expenses when my employer and I part ways.

I have always been enamored with the idea of having sufficient passive income to live comfortably without having to go to work. This was my Holy Grail. And the best way I knew how to achieve this was to invest a portion of every single paycheque into the stock market. What do I mean by a portion? I’d describe it as a decent chunk – maybe not half but certainly more than a measly 10%.

A long time ago, I decided to invest and that decision has paid off handsomely. I started slowly, with $50 bi-weekly. As my income grew, so did my bi-weekly contribution amount. The habit of investing was made much easier by the power of automation. I didn’t have to decide to invest every 2 weeks. The automatic transfer whisked the money out of my chequing account and into my investment account without my participation. Today, I’m very happy that my stock portfolio kicks off an ever-increasing amount of passive income every single year.

So how did I get to this point with my money? And is it something others can do too?

When I was 21 years old, I knew nothing about investing. I started anyway.

My parents’ accountant told me I wasn’t making the wisest choice by contributing to my RRSP. I ignored him and put money into my RRSP. He had suggested that I save for my first house. Looking back, I can appreciate his advice and, with the benefit of hindsight, I’ll admit that it made the most sense. I was a 21 year old student, therefore in the lowest tax bracket, so contributing to an RRSP might not have been ideal for my circumstances. That said, the fact remains that I was headstrong and so I did what I wanted. After all, I knew what an RRSP was and I’d been influenced by the Freedom 55 commercials that were popular at the time.

So for a few years, all I did was invest money into mutual funds within my RRSP. Remember, I knew next to nothing about investing. I didn’t let my lack of knowledge stop me. I consumed books about personal finance. When the internet allowed, I started to consume websites and blogposts about money, investing, and personal finance. Eventually, I graduated and got my first adult job, so I set up that life-changing automatic transfer from my paycheque to my investment accounts.

I moved out of my parents’ house and really had to pay attention to where my money was going. At some point, I started an emergency fund. It took a very, very long time but eventually my emergency fund grew to where it is today. I can easily cover 6 months’ of expenses, if I have to.

In 2009, the TFSA came into existence. I decided to stuff my TFSA to the max every January. When I learned that ETFs were cheaper than mutual funds, even though they do the exact same thing, I switched the securities inside my RRSP and TFSA from mutual funds to ETFs. That was the second smartest money move I’ve ever made.

Again, it took a very long time but eventually my RRSP and TFSA were both maxed out. I still wanted to invest a portion of my paycheque, but where? And that’s when I remembered my brokerage account. (My parents had bought me a few bank shares when I was a baby, so I’d been holding them in my brokerage account.) By this point, I knew that money earned in the form of dividends and capital gains would be taxed less harshly than money earned from my job.

And while the RRSP and TFSA had contribution limits, my personal brokerage account allowed for unlimited contributions. In theory, I could invest so much money that income from dividends and capital gains would be enough to pay for all of my life’s expensive. Stated in a different way, I could live on passive income and pay less taxes at the same time! Once I’d had that realization, I was hooked. Every time I got a raise at work, I increased the contributions to my brokerage account.

By now, I’d heard of FIRE. I thanked Younger Me for putting me on the path to financial independence. Of course, Younger Me made some very big mistakes. For example, I was investing in dividend-paying ETFs instead of equity-focused ETFs for way too long. As a result, I didn’t benefit as much as I should have from the stock market bull-run between 2009-2020. Had I invested in equity-based ETFs from Day 1, I would probably be retired right now and my portfolio would probably be twice as large. No sense crying about it. I’ve since corrected my investment strategy and my portfolio is doing much better.

Financial independence was my goal, and I’m well on my way to meeting achieving it.

And the longer I strive for it, the more I believe that everyone owes it to themselves to be financially independent too. I’ve watched colleagues get trapped into jobs they hate by their debts. So many people live off their credit cards and lines of credit, which makes them slaves to their creditors. Living in debt equals sacrificing your financial future. It also means that your employer has more control over you life’s choices than you would otherwise want to give them.

Can you imagine the options you would have if you had a portfolio that covered your basic needs?

Such a portfolio would give you the power to walk away from any employer at any time. You wouldn’t need the paycheque! Your portfolio would be paying for your food, shelter, clothing, transportation, and communication needs. You could live without a job. How awesome would that be? No more Sunday-scaries!

Alternatively, if there was a job you loved and it paid peanuts, you could happily take that job and still not worry about how to pay for your life’s expenses. Think about it! The money from the love-job would be your fun money. Passive income would ensure your survival and you could join that exalted group of People-Who-Love-What-They-Do-For-A-Living! Those are truly some of the luckiest people in the world.

This is why I believe that everyone should be striving for the first part of FIRE – financial independence. And if you want to retire early, then go for it. Not everyone wants to retire ASAP and that’s fine. When to retire should be your choice. If you want to keep working after having accumulated a nice, fat cash cushion of investments, then you can do so… with the added comfort of knowing that it’s truly a choice, rather than a necessity.

So, is the idea of FIRE really dead? No. I think it’s still alive and well for many people. What I think has changed is the sentiment that it’s okay to talk about FIRE in the current economic climate. Many, many, many people are suffering due to the impacts of the high inflation we experienced in 2022-2023. Prices skyrocketed while wages and salaries remained the same. Many people were squeezed and continue to feel the pinch of their money not going as far as it used to.

Talking about FIRE would be crass. People who are struggling financially, yet also want FIRE, do not need to be reminded that it will be harder for them to become financially independent and that retirement is further away. Instead, the pursuit of FIRE has returned to the shadow and those of us who are still pursuing it are simply doing so very quietly and very discreetly.

And now, I Replenish the Sinking Fund!

Last month, I went on my first post-pandemic overseas trip. It wasn’t cheap. However, travel is one of my spending priorities so I have a sinking fund to pay for it.

It was my first trip to the Netherlands, with a very short stop in Belgium. I traveled with a dear friend of long acquaintance, who had suggested this trip the fall of last year. After months of blue-sky ideas, we settled on a river cruise since we’d both wanted to do one. And that river cruise was followed by 3 days in Amsterdam. The trip was amazing: canal tours, chocolate-making, stroopwafels, the Red Light District, Keukenhof Gardens! There simply wasn’t enough time to do everything that was on offer in the amazing city that is Amsterdam. Trust me when I say that we made the most of our available time.

First things first. You should know is that I spent every nickel of my travel sinking account:

I used some of the money to upgrade my airline seat, and those extra 4 inches of room were well worth the splurge. (Shout-out to another dear friend who’d made the suggestion to upgrade!)
Purchasing an all-inclusive tourist app prior to leaving home was a fabulous use of funds! That app allowed for free transportation on buses, trams, and the metro within the city. It also gave us free entry to many cool museums and various other tourist spots.
I also had the funds to book a more expensive hotel very close to all the things we wanted to see and do. Had we stayed elsewhere, precious time would’ve been wasted on commuting from one location to another. As it was, we were able to walk to almost all the places on our itinerary. The spectacular Vondelpark was a stone’s throw from our accommocations and the stunning Rijkmuseum was only a 10-minute walk away.
During our river cruise, we realized that the Hague was only an hour away from Amsterdam by train so, without any consideration as to cost, we made a last minute decision to visit the city of Peace and Justice too.
My souvenir knapsack came back stuffed with chocolates, magnets, tulip bulbs, cheese, stroopwafels, and books.

My travel sinking fund allowed me to say “Yes!” to everything I wanted to do, eat, taste, see, and buy. Again, I spent every single nickel of that fund on this trip… And I felt absolutely no guilt in doing so! The money was earmarked for this purpose. I spend freely when I travel because there’s no guarantee that I will ever pass that way again. I don’t want to come home with any regrets or thinking “I should have <insert missed opportunity here to do what I wanted> while I was there.”

Looking back, I can say that this was one of the very best trips that I’ve ever taken.

So, now that I’m home, it’s time to replenish the travel sinking fund. I want to go somewhere new in 2025, and I don’t want to come home with debt. Where I want to go hasn’t yet been decided, but I’m thinking that I’d like to travel in April or May of next year. Destination is very important, but there’s a high chance that I’ll change my mind about what I want to do next year. Scotland had been on the list for 2020, but those plans were destroyed when the world shut down. I haven’t been to Asia yet so it might be nice to go there. Japan has always intrigued me, and I’ve heard many wonderful things about Vietnam. There’s also this culinary course combined with local tours that’s also available in regions of Italy that I haven’t visited yet… So many options!

Determining where I want to go isn’t the main driver here. There’s a good chance that the destination will change a few times. Nope, my first task is to figure out how much to save from each paycheque going forward. If I save too little, then I can’t do my 2025 trip the way I want to without incurring credit card debt. That’s a no-go for me. Literally! I’d rather stay home that pay interest to a credit card company for my trip.

And if I save too much for travel, then my other financial priorities will be short-changed. I don’t want to do that either.

First things first, I’ve considered the size of my paycheque and I’ve figured out how it has to be allocated amongst all of my financial priorities. Long-time readers will know that I have sinking funds for property taxes and insurance premiums – the unsexy, necessary expenses of adulthood. Sadly, they take priority over travel so they have to be funded first. There are also some landscaping projects around my house that are slated for 2024. Gardening has become a hobby of mine and I want more perennials around my home. The kind of plants I want to buy are not particularly cheap, so I need to budget for them. I’m also still a fan of live theatre and those subscriptions don’t pay for themselves.

Thankfully, I’m debt-free. I managed to pay cash for my latest vehicle. Student loans and mortgage debt have been in my rearview mirror for a very long time. As such, I don’t have to have send money to creditors every month. While I use credit cards, the balances are paid in full every single month. A good portion of my former debt payments is put towards travel every time I get paid. (The rest of those payments has already been re-directed towards building my emergency fund and investing for my retirement.)

Even though I spend a lot of time talking about the future, I recognize that money is also meant to be spent to bring us some joy today. The Care and Feeding of Future You is incredibly important. That’s why you should be investing a good portion of every paycheque for long-term growth. When your paycheque stops, your investment portfolio should be ready to take over.

However, taking care of Present Day You is also a serious responsibility. You should be able to do some of the things that you really, really, really want to do now without going into monstrously expensive credit card debt to do so. And that’s why I advocate for sinking funds. Setting aside the money first means that you don’t burden yourself with debt while still getting to do what you want.

Figure out your priorities, then create sinking funds for each of them. When the money is in the fund, spend it as intended without any guilt whatsoever. When you get home, replenish your fund so that you can get down to the business of turning your next dream into a reality.

4-Wheeled Money Pits Always Need a Sinking Fund

I don’t know if you’ve taken a look at the price of vehicles these days, but they’re not inexpensive. I’m showing my age with the next statement, but I want it to make an impression. Today, there are pick-up trucks that cost more that my first condo, which was $83,000! Unlike today’s trucks, my condo came with a bedroom, a fridge, and a nice view.

My question to you is – have you started planning for how to pay for your next 4-wheeled money pit?

Myself, I hate car payments. The idea of someone reaching into my bank account every month and taking out my money… it makes my blood boil! Nope – not happening. As far as I know, there’s still one sure-fire way to keep the finance companies’ fingers out of my pocket. It’s called paying with cash.

When I bought my last vehicle, I employed what is quickly becoming a quaint, old-fashioned idea. That idea is called paying cash. And even though it was a 5-figure amount, I don’t regret doing so. Paying cash eliminated the need for me to pay interest to a creditor. I hate debt. And I really hate paying debt on a depreciating item. It’s not like my vehicle is going to be worth more in 10 years. Not a chance! Every fifth car on the road is the same as mine, so there’s no possibility that mine will ever be coveted as a collector’s item.

My vehicle is a transportation device, pure and simple. It takes me where I want to go. That’s all it is; that’s all I need it to do. No sense paying interest for the privilege of owning it. I paid cash to acquire it. And now…

Now, I can start saving up for my next vehicle. Ideally, I won’t have to buy another one for several years. That said, the days are long but the years are short. I’m quite confident that, in the blink of an eye, it will be time to buy my next 4-wheeled money pit . When that time comes, I want to have the money set aside to pay cash again.

Today, I encourage you to put yourself in a similar situation. Figure out what it will take to pay cash for your next vehicle.

Whatever you’re driving now, I can promise that it won’t last forever. At some point, it will need to be replaced. Start a sinking fund today. Believe me when I say that shopping for the next vehicle is tad bit easier when you’re not also worried about how to pay for it. And, once you’ve bought next vehicle, you’ll probably love the fact that it didn’t put you into debt. I drove my last vehicle for 13.5 years without a car payment. Trust me – that was one of the things that I loved best about it!

If you don’t already have a sinking fund, go and open a high interest savings account right now. Pick one that doesn’t charge you any fees. You can find one at EQ Bank, if you don’t know where to look. ***

Every time you’re paid, throw a few hundred bucks into this account. Better yet, set up an automatic transfer from the account where your paycheque is deposited to your HISA. When the process is automated, you won’t be tempted to spend the money elsewhere. Technology does the transfer for you. It’s a simple way to ensure that the sinking fund actually gets funded.

If all goes well, you’ll eventually have enough to buy your next vehicle in cash. This is ideal. Think about it for a second. When you have to take on a car payment, that means added stress on your budget. You have to find several hundred dollars every month to pay your creditor or else they will take the vehicle away from you. Where do you cut? Food? Entertainment? Travel? Sports? Gym membership? Self-care? Other fun-stuff? When you pay cash, your budget doesn’t have to suffer. The money is gone – you’ve got your vehicle – debt payments aren’t stressing your budget.

Should you have to buy a vehicle before you have enough to fully pay for it in cash, then the funds that you’ve set aside will become your down payment. The larger your down payment, the smaller your monthly car payment and the less interest you’ll pay over the life of the loan. This is smaller win for your budget, but still a big one. Instead of a $850 monthly car payment, maybe you can get it down to a $300 one. Not ideal, but also not more than $10/day.

If you currently have a car payment, try to pay it off early. The sooner it’s gone, the sooner that money is yours again. Re-direct that former car payment to your sinking fund. Within a few years, you’ll have a nice chunk of change in place for when your current 4-wheeled money pit needs to be replaced.

I’ll say it again, and louder for those at the back. Pay cash for your next vehicle. Start saving for it today so that the money’s sitting there waiting for you when you need it.

*** For the record, I have an account at EQ Bank. I’m not getting compensated for recommending them in this post.

Tools vs. Anvils – How to Use Your Credit Card

Credit cards are an exceptionally useful tool if used correctly. However, they can also cause great financial harm when the basic rules of use are ignored.

There are two terms that you should know: deadbeat and revolver. Deadbeats do not carry credit card balances from one month to the next and they reap the benefits of rewards programs. Revolvers are the people who do not pay their credit card bills in full and they have to pay interest and fees.

For the purposes of this post, deadbeats use credit cards as a tool. Revolvers are the people who are carrying the anvils, which are in the shape of credit card debt.

Just in case it needs to be said, banks love revolvers and they really hate deadbeats.

The Tool

Your credit card is a tool if you pay it in full every single month before the balance is due. You can use it throughout the month, happily collecting points (or not) as you spend. When the bill is due, it’s paid in full. This is the only correct way to use credit cards, in my humble opinion. So long as you never pay interest, then I think it’s perfectly fine to use a credit card for all of your purchases.

For my part, I know how much I can spend on my credit card before I pull it out of my wallet. I’ve been tracking my expenses for years. As such, I have a good sense of how much I spend in a given month. It’s around $2,500. As such, I never spend more than this amount on my credit card.

Spending more on my credit card than I earn in one month is a recipe for disaster! Expenses go on my card simply so I can earn points towards free groceries. (If I were coupled, I would use the credit card that earns points towards companion fares. If I could find a free cash-back reward card, then that’s the one I would use on a regular basis.)

There are a myriad of reward cards out there. I don’t really care which one you pick. My advice if the same whether you accumulate travel points, grocery points, free movies, or any-other-benefit-that-works-best-for-your-goals. Pay off the entire amount of your credit card bill every single month.

If you’re never carrying a balance, then I think credit cards are a wonderful tool that should be used with abandon.

My opinion changes drastically if you don’t pay off your credit card every single month.

The Anvil

If you carry a balance from one month to the next, then your credit card is an anvil. It is holding you back from spending your money the way you want to. No one wants to send interest to the bank.

If you are paying interest on your credit card balance, then look at your statement. It will tell you how much extra money you have to pay to cover the interest. So on top of the $100 you spent on your initial purchase, you’ll be spending an extra $9 – $29.99 to pay for your whatever-it-is depending on your credit card’s interest rate. Keep in mind that the interest will continue to compound until you pay the credit card balance in full.

This is how credit cards become an anvil. It’s very, very hard to repay a debt when the interest is over 5%. At double-digit rates, your best bet is to cut up the cards, go cash-only for a year or two, and get a part-time job to pay off the debt.

Get Rid of the Anvil

Cash-only means stopping all subscriptions until the credit card debt is gone. We now live in the world of streaming services, wine-club memberships, gym memberships, online subscriptions of every sort, Patreon & Only Fans account, etc, etc, etc… You don’t have to give these up forever. Far from it! Maybe you have to give yourself a hard “No!” for 6 months. All of those “small” subscriptions add up to a decent amount.

Take the amount of those subscriptions/memberships/fees and add them to your minimum monthly credit card payment. Continue to do make these payments until the debt is paid off. While you are paying it off, do not use your credit card to pay for anything! When you make a new purchase, that purchase will only increase your outstanding debt and it will also be subject to interest. You’ll be working backwards if you continue to make purchases on your credit card while trying to pay it off.

Once you’ve paid off your credit card(s), you can re-start your memberships/subscriptions/fees that you were paying before but only up to the amount that you can pay for in full every single month. If your monthly financial commitments are more than you can pay for in full, then you need to cut some of them out permanently until you’re earning enough money to cover their cost.

Once you’re out of debt, you can continue to use your credit card. You need only follow my 3-step plan for staying out of credit card debt for the rest of your life.

Make a purchase on Day 1.
Wait for it to post to your credit card account on Day 3 so that you can earn your credit card points / rewards. (You can check your credit card account online. I check mine every few days.)
Once the purchase has been posted, make a payment in the amount of the purchase on Day 5.

By the time you receive your credit card statement, you will have paid off nearly every charge from the prior 30 days.

Real Life Experience

I think the interest rate on my credit card is 23.99% per year, or maybe even 29.99% per year. I don’t really know because I never pay interest. In my case, I follow the 3-step process outlined above so that I never pay interest on the balance.

Believe you me, the only time I ever want to see a rate a high as 29.99% is when I’m looking at the rate of return of my investment portfolio.*** When I’m the one earning this kind of return, it’s a great thing because compound interest is working in my favour.

Paying 23% or more on a credit card means that compound interest is working against me and hurtling me down into a deep, dark pit of debt. I don’t ever want to pay this amount of interest to a bank!

I’ve had a credit card ever since turning 18. Thankfully, I knew enough to pay it in full ever since the first day. I’m not the bank’s favourite customer because I’ve been a deadbeat since the beginning.

So take this information and do with it what you will. While I have strong suggestions, you are best-positioned to know the circumstances of your life. You will make the choices that you think are appropriate with the knowledge that I’ve shared. The choice to be a deadbeat or a revolver lies with you. Choose wisely.

*** Interestingly enough, I don’t earn anywhere close to these returns even though my portfolio has a significant weighting in the financial sector.

Your Emergency Is On Its Way – Prepare Now!

“I have too much money during this time of emergency!”
No One Ever

If you’ve been paying any kind of attention, you’re no doubt aware that natural disasters have touched many people’s lives in fundamental ways. Threats of fire forced the evacuation of the city of Yellowknife in the summer of 2023. A wildfire in Maui destroyed the city of Lahaina, on the island of Maui. People in both cities are displaced and trying to figure out their next steps. I can’t even begin to imagine the stress and anxiety that they are feeling. However, this blog is about money and protecting yourself for the negative consequences that come with not having any.

Being evacuated from your city is an emergency. It is precisely the kind of situation for which one builds and maintains an emergency fund. The people fleeing from Yellowknife had to convoy along a 12-14 hour trip to next major center. That wasn’t free. They had to pay for gas. Those without family or friends had to pay for accommodation if they weren’t willing to stay in the shelters. With only hours to flee, there wasn’t sufficient time to think of everything. Once in a safe location, they had to pay for food, clothes, toiletries, and pet food. It’s doubtful anyone had budgeted for an evacuation that month. For those working hourly jobs, there’s no more income until they go back to work. The emergency fund exists to cover these costs.

Right now, you should be assessing your emergency fund. Ask yourself some hard questions. Is my emergency fund enough to sustain me if I couldn’t work for a month? If I had to flee from a natural disaster, do I have enough to cover my expenses until I can get back on my feet? And if I don’t, then what am I doing to build my emergency reserves?

Unless you’re one of those very fortunate people who have a year’s worth of expenses tucked away somewhere, you should be adding to your emergency fund every time you’re paid. Even if it’s only $10, $25, $50, add it to your fund and leave it alone. When the day comes that you need to rely on those reserves, you’ll be very happy with yourself that the money is there waiting for you.

In my opinion, emergency funds are not “dead money” sitting in a bank. These aren’t the dollars that are meant to fund your retirement, or your short-term goals. You’re not looking to invest your emergency fund to earn a big return.

Your emergency fund is your safety net.

It is there when your income disappears. It exists so that you don’t go into debt when the universe lobs a grenade that blows up your life. Even if you have insurance and you’re going to be reimbursed, insurance companies sometimes take longer to pay than you may like. They might even try to fight you and you may have to appeal their decision on what is covered and what isn’t. Your emergency fund pays for the necessities while you get yourself re-established.

Even after becoming debt free and building my investment portfolio, I still contribute to my emergency fund. My goal is to have a year’s worth of necessities socked away. If anything goes too terribly off-course, I want the comfort of knowing that I can survive for a year. I’ll be able to make decisions without the pressure of needing to earn money immediately. My emergency fund offers me peace of mind. It gives me time to breathe and to think carefully before making my next move.

There’s no reason to wait. If you have an emergency fund, contribute to it from every paycheque. Every dollar counts. The more you can stuff away during non-emergency times, the better. If you can afford it, save an amount equivalent to your age. Increase the amount when you can. Start your emergency fund today if you don’t already have one. Opening an account is as simple as clicking a few links on any bank’s website. Automatically transfer money from your chequing account to your emergency fund.

There’s an emergency headed your way, but you can’t know when it will arrive. Today is the best time to prepare for it financially. When that emergency eventually hits, finding the money to deal with it should be the last of your concerns. Adding money to your emergency fund is entirely up to you. Choose wisely.

Best Time to Invest in the Stock Market

Most investors are interested in a definitive answer to question of when is the best time to invest in the stock market. And for good reason. After all, no one – and I mean no one – ever wants to lose money. We work very hard for our paycheques. It stands to reason that you would want to buy at the very best time in order to ensure that your investment realizes the maximum return.

For my part, I’ve been investing in the stock market since I was 21. My method isn’t perfect, and I’m sure that there are other ways to do things. However, I’m going to share my 3-question strategy with you and let you decide for yourself if it will work.

Question 1 – Is the stock market heading down or dropping?

If the answer is yes, then I invest.

Here’s my reasoning. When the stock market is dropping, that means stocks are on sale. My exchange-traded funds are comprised of stocks, so my the price of each unit in my ETF is lower too. In other words, I can buy more units in my ETFs when the market is down than I can when the stock market is up.

It’s akin when my favourite coffee is on sale at the grocery store for $4.99 instead of its regular price of $8.49. I stock up when the price is lower because I know the price is going to go back up! I need my coffee and it’s best to buy it a lower price.

The same principle can be applied to investing in the stock market. I need the capital gains and dividends that my investments generate each year. Those returns are consistently re-invested for compound growth. When I retire, my portfolio will continue to generate capital gains and dividends. At that point, I can stop re-investing them and use the money to fund my retirement.

To re-cap, if the stock market is down, I invest and take advantage of the sale on stocks.

Question 2 – Is the stock market going up?

If the answer is yes, then I invest.

Let me explain why. Bear markets are when stock markets are going down. Bull markets are when stock markets are going up. If we’re entering a bull market, that means the value of my ETFs unit will be going up and it also means that the value of my overall portfolio is going up. Companies within my ETFs might decide to increase their dividend and capital gain payments, which means my ETFs will pay me more money each month.

In order for me to benefit from those increased dividend and capital gain payments, I will need to own as many units as I can in my ETFs. One of the only ways to own more is to buy more. The other way to own more is allow my dividend re-investment plan to buy more units each month. However, I think you’ll agree that buying more with my monthly contribution + relying on the DRIP-purchase means that I’ll acquire more units more quickly than by relying on the DRIP-purchase alone.

So when the market is on its way up, I want to invest so that the value of my portfolio also benefits from the increase in the stock market value.

Question 3 – Is the market going to go up or is it going to go down?

This is just a trick question. Whether the answer is “yes” or “no”, I invest.

See, I’m not a professional stock trader. I don’t spend my days staring at the stock market screens or doing in-depth stock analysis. I’m just a Blue Lobster who likes spending time in my flower garden, cooking tasty things, playing with my littlest family members, going to theatre & dinner with friends, traveling at home and abroad, reading good books, and getting enough sleep.

I have no inclination to learn about stock market fluctuations, nor to track them day-to-day. I would rather invest monthly into an equity-based, broadly diversified ETF and let time do the rest. (For the record, I still have my dividend ETFs, but I’ve been investing my monthly contributions into VXC since October of 2020.)

My strategy for finding the best time to invest in the stock market is very, very simple. I invest in the stock market every 4 weeks, which works out to 13 transactions in a year. My next step is not sell what I buy. It’s what’s called the buy-and-hold strategy. I buy – I hold – I re-invest – I repeat. This is how my strategy has resulted in very nice, very passive cash-flow that’s equivalent to an entry-level, full-time job. My dividend ETFs continue to pay me a 4-figure amount every single month, and that amount is continuously increasing. My equity-based ETF pays me a 4-figure amount each quarter. All of my ETFs pay me capital gains at the end of the year.

The way I see it, the best time to invest in the stock market is when I have the money in my bank account to do so. Up, down, or sideways – my portfolio is paying me cold, hard cash on a regular basis. When I automatically re-invest that cash and add it to my monthly purchases, I’m effectively giving myself a licence to print money. Each month, I earn a few more dollars in dividends than I earned the month before. It’s a wonderfully passive way to grow my portfolio, without having to worry about picking the “best time to invest”.

There You Have It

This is my 3-step strategy for picking the best time to invest in the stock market. Your mileage may vary. I’m humble enough to admit that there may be better ways than mine to decide when to invest. What I can tell you from personal experience is that my method works. I’m a self-taught amateur investor who has managed to create a portfolio that will comfortably support Future Blue Lobster. I continue to read and learn. Some tips I like. Some, I don’t. The one constant theme in everything that I learn about investing is that you have to invest your money. It’s the absolutely most important step you simply must make to successfully grow your investments.

When someone asks if this is best time to invest in the stock market, the answer is “Yes!”

I Need to Work on Getting Better at Budgeting!

Earlier this year, I decided to try my hand at budgeting. Some of the bloggers I follow online repeatedly state that having a budget is integral to managing your money. I’m always willing to learn and improve how I handle my own money. Since I work hard for it, I don’t want to waste a single nickel if I can avoid it. After hearing about OhhYouBudget, I watched a few of her videos on Instagram and TikTok before purchasing the budgeting dashboard. It’s been 3.5 months now, and I’ve learned a few things.

Budgeting is very definitely not the same as tracking your expenses. I’ve been tracking my expenses since 2016. That was the year I created 2 spreadsheets – one for my household/recurring expenses and another one for my day-to-day variable expenses. I would spend money, record my expenditures on the appropriate spreadsheet, and go on with my life. At the end of the year, I had a pretty good idea of how much I’d spent and what percentage of my annual spending was covered by my dividend income.

It’s a whole different ballgame with a budget. You see, the budget requires me to say in advance how much I’m going to spend in the categories of my choosing. Then I’m supposed to spend only that amount of money in each category. This where I face a serious challenge.

Never in my life have I limited myself to spending a certain amount in a given category. My #1 rule for spending my money was to never spend more than I earn. My #2 rule was to spend however I wanted after my automatic transfers sent funds to pre-determined destinations. You know – the emergency fund, the sinking funds, and the investment/retirement accounts. So long as I only spent whatever was leftover after the transfers went through, it didn’t matter to me under which category the money was spent. I honestly and truly believed that I was pretty good at managing my money.

Enter the budgeting dashboard to show me that I might need to change my perspective.

I suck at budgeting.

To say that it is not going well for me would be an understatement.

First off, I consistently overspend in the groceries category. I’m doing more meal prep, which means taking a list when I go grocery shopping. Not to brag too much, but I don’t waste food. I eat what I cook. I freeze various things for later use. Since I really hate cooking every day, I portion out my meals so that there’s always something tasty to take for lunch or eat for dinner. Yet somehow, I am always going over my budgeted amount for groceries.

Secondly, my MISC category is a wildcard. I allot a decent amount to this category. Some months, I spend nearly nothing. Yet the next month means that I’ve spent way more than planned. How does one predict MISC expenses? Am I not using that category properly? I have an emergency fund and multiple sinking funds for large, anticipated purchases so rest assured that my MISC fund is not being used for those kinds of expenditures.

Thirdly, I have to admit that I don’t say no to myself except when it comes to dining out. Planned meals with friends is one area where I don’t skimp. I have money allocated for that. Stopping at the drive-thru on the way home from work is verboten. I’ve stopped doing that because the reality is that I have food at home, and the stuff at home is healthier for me.

In order for this budget to work, I need to limit myself. I really, really dislike this aspect of budgeting.

Up until I started using this budget, I was very proud of myself. Automatic transfers funded my priorities from each and every paycheque. Whatever I had left over, I spent however I wished and my credit card bill was paid in full each month. I felt very good about how I handled money.

Then I decided to try and use a budget! Man, oh man! I’ve really been knocked down a peg or two. Every time I update that dashboard and see all the red, I feel badly about myself. This budget is telling me that I’m doing money wrong. I’ll admit that it’s a burr under my saddle. How is it possible that I’ve been doing money wrong all these years yet I’ve still managed to create a 5-figure dividend cashflow and to become a member of the Double Comma Club?

A Few Key Take-Aways

Even though I suck at budgeting, I’ve learned a few things about myself and how I handle money.

There is no perfect budget. Each month, I get to tweak my numbers as I see fit. The budgeting dashboard that I use comes with various graphs and charts, and I really do love them! They’re easy-to understand, visual representations of where I spend my money each month. I can tell you that a vast majority of my money goes to savings and investment accounts. And if I simply cut back on those contributions, I wouldn’t be going over-budget my other categories.

It only took two months of seeing lots and lots of red for me to ask myself the following: “Am I going to cut back on my monthly savings & investing?” And the answer I’ve arrived at is: “No, I’m not going to do that.”

While I might hate being in the red in multiple categories on my dashboard, the bottom line is that I am not going into debt every month. The credit card bill gets paid in full every single month, and that’s what matters most to me. Should there come a time when I have to choose between earning 5%-6% on my investments and paying 29.9% to my credit card company, then I’ll cut back on my monthly savings and investing to pay that debt. After all, it makes no sense to pay 30% to a credit card company if I’m only earning 6% on my investments!

Even though I spend too much in a few categories each month, there are some categories where I spend considerably less than I’d planned. Surely that signals that I’m getting pretty good at budgeting certain things.

Another thing to be noted is that my budge has nothing to do with my new worth. I’m only tracking my paycheque income on this budget, not my entire income. I also earn dividends and capital gains from my investments, but that money is separate from my salary income. My dividends accrue in another account, but I don’t use those to pay for my current expenses. They’re on a dividend re-investment plan (DRIP). If I absolutely had no other choice, I could use my dividends to supplement my paycheque. Even though I can’t get my budget to balance every month, I’m still earning passive income and my net worth is increasing over time.

I think that being good at budgeting is helpful to building wealth, but I don’t think it’s essential to doing so. Other factors are so much more important when it comes to increasing your net worth and benefitting from long-term investments. In my humble opinion, a budget is an excellent tool in forcing you to articulate where you want to spend your money. Reviewing your budget at the end of the month is equally important. Doing so forces you to admit to yourself where your weaknesses are and whether you have properly identified your priorities. Sometimes, people think they want one thing when they really want something else. That’s okay. There’s no harm in learning what you truly want and spending your money in a way that allows you to obtain it.

Do Some Meal Prep & Keep More of Your Money!

Remember how I’ve talked about the money-saving magic of your kitchen?

Well, I’ve upped my game. You see, I really hate grocery-shopping. It’s a recessive gene. I know this because both my mother and my brother love grocery shopping, and even my father didn’t mind doing it. My mother loves it so much that one time she complained that I went through the store too fast. “It was like you were on roller-skates! I didn’t get a chance to look around!”

Look around?!?!! It’s a grocery store! You’re here every week – sometimes twice. Exactly what is there to see that you didn’t see 48 hours ago?

Anyhow, I’ve had to adjust my perspective over the past year…

Step 1 – Saving Money While Grocery Shopping

We all know that inflation has impacted the prices we pay for food. As a result, I’ve cut back on dining out. Instead of it being a casual, spontaneous thing, I’m far more meticulous about planning my restaurant visits. Dining out is now a treat, rather than a weekly staple. That said, I still get hungry with alarming regularity. Going to the grocery store is no longer optional. Meal prep is now mandatory in my home. My belly demands satisfaction!

Currently, my credit card of choice is issued by PC Financial. This card allows me to accrue points that can be used to pay for groceries and it doesn’t have an annual fee. I pay the balance in full every month so I never pay interest. If you’re the sort who carries a balance, then stop using your credit cards and pay cash for everything until you’re out of credit card debt.

Accruing points to pay for groceries is one way to lower my grocery bill each month. At a minimum, I earn 10 points for every $1 that I spend on the card. Every time I accumulate 10,000 points, I get $10 in free groceries. By running nearly all of my expenses through my card, I earn a substantial number of points every month. There’s something especially sweet about leaving the store with several bags of groceries and only paying $5.76 for them!

Getting the groceries is only half the battle. The next step is figuring out how to create tasty things for myself.

Step 2 – Cooking at Home Way More Often

Finding recipes I love isn’t that hard. I’m a fan of TikTok and YouTube. My favourite creators are the ones who cook and bake. I’ve discovered some really fantastic things to eat just by watching videos then finding the recipes online. Now that I’m back in the office several days a week, I’m doing a lot more meal prep on Sundays. A couple of hours in the kitchen results in a several meals at the ready during the week – lunches, dinners, snacks, even dessert! One small change to my weekend routine allows me to take my lunch to work instead of spending $20 or more each time I go into the office.

I’ve even taken to making my own muffins for snack breaks. The coffee shop in our building makes delicious food, but their menu isn’t set. Sadly, there’s no way to know in advance if the carrot loaf with cream cheese that I love ever so much will be available from one day to the next. So I’ve started making my snacks. Right now, I’m quite happy with the morning glory muffins from Baker by Nature. They’re so damn delicious! They’re easy to make and I only need one bowl to make the batter. (By the way, Damn Delicious is the name of another fantastic recipe blog that you may want to check out!)

I love chicken and am always looking for new ways to prepare it. A few weeks ago, I discovered how easy it is to make cajun chicken pasta. Like all of my favorite recipes, this one is simple & straightforward. It takes maybe 10 minutes to prepare the chicken before it’s left to marinate in the spices. After a little bit of time in the oven, I pair it with whatever I want if pasta’s not calling to me that day. And so long as I don’t adjust the recipe, there’s always leftovers so I need not cook every single day. Meal prep for the win!!!

Is is my turn to host book club? Then let’s head to the World Wide Web for some appetizer ideas? Surely there’s one or two recipes out there to make finger food that is suitable to please my guests. How about some buffalo chicken pinwheels from Cooking for Keeps?

Same principle applies to sporting events. As a guest, I don’t like to show up with my hands swinging. A few minutes in the kitchen means I always have something to bring. Grey Cup parties & Superbowl Sunday are perfect opportunities to share my favourite appetizer cheeseball from Natasha’s Kitchen.

Even when it’s my turn to bring dessert, I find that there’s no reason to hit up a bakery. I can make something delicious in the comfort of my own home. Whether it’s a marble cake, a bumbleberry pie, or a cookies, I’m ready to spend some time in the kitchen with my handy-dandy KitchenAid stand mixer. In the past year, I’ve overcome my fear of making mini cheesecakes. This recipe for mini pecan pie cheesecakes, also from Baker by Nature is one of the best things I have ever made! If you like pecan pie and you also like cheesecake, then this dessert will make you very happy.

Everyone needs to eat. And we all enjoy eating delicious foods. Don’t let inflation stop you from doing so! Meal prep is an effective tool to minimize inflation’s impact on your wallet. Sure – you might have to spend a little more time at the grocery store and in the kitchen. Big deal! Trust me – you will not regret improving your culinary skills and expanding your repertoire of recipes. Doing so means eating very well while still keeping more of your money in your pocket. And who can complain about that?

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!

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.