Don't Buy The Latest, Expansive/Powerful Phones

A phone is only as good as it's battery and every battery will get worse over time. If you were to buy a 2000$ phone today, instead of the 700$ one, know that in 5-6 years both of these phones would struggle to run more than a few hours.

Expensive phones usually have better specs but is that really useful? What do you usually do on a phone other than take some pictures, browse online/social media, or text/call? Do you really need a phone that is as powerful as the latest generation of gaming console to do these things?

When buying a Desktop/Mac, what you want to do with it determines the specs you should be looking out for. For some people, this logic doesn't apply when buying phones but even if it did can we really use the phone for anything more than the bare minimum? Let me explain:

• If you get the powerful phone in order to play games wouldn't it be better to buy a switch or a laptop instead?
• If you're looking for the best camera/phone, wouldn't it be better to buy an actual camera instead?
• If you're looking to do video editing, wouldn't it be better to do that on a desktop/mac rather than a phone?
• ...

Perhaps the only reason why companies are making powerful/expansive phones is for those looking to satisfy their ego. Like Rolex is to watches, an expansive phone as a social status tied to it.

I bring this up today because I recently had to upgrade my phone and it took everything in my power NOT to buy the latest/powerful/expansive entry opting, instead, for a new/old iPhone 11 (rather than the newer iPhone 13). When questioning myself I realized that I don't need power as much as I need functional. The arguments I made with myself are the ones I shared above.

If you are in the market for a new phone I would encourage you to find out what you want to do with it and buy something that is on par with your findings, while also being within your budget, rather than something more powerful/expansive that you may not use to its fullest capabilities.

Debt Should be Illegal

(Image created by A.I. DALL-E/Bing)

It's illegal in Canada to own slaves but it's not illegal for financial institutions to own someone else's finances. The difference between a slave and someone in debt is that the person in debt has a "choice". However what choice is there really for someone making 30k a year when a decent house cost 3-5 times more? What choice does someone have when the average car is also 30k? What choice does someone have when the average college/university degree is 100k?

Debt is no longer a choice...

Maybe at one point debt was a choice but we it can't really be considered as one anymore. We don't realize how bad the economy is because part of it is covered up by debt and makes it look better on the surface than it actually is. As long as we can maintain the illusion then all is good right?

No - all is not good... When my dad was in his 20s, he bought a brand new car for 3k and a bag of chips was 5cents. He built a family home for roughly 45k...

Folks there's a problem here and the solution isn't to "raise minimum wage". Every middle class employee in the world needs to make payments on their government's debt. Can the Canadian Government really offer "free" Ambulance service when each Canadian ow roughly 60k towards the Government's debt?

We need cutbacks, we need a government that says "no", we need debt to be restricted or downright illegal... we'll never see something like this because political parties want to buy votes and you can't "buy" votes by removing something. 

Debt will never be made illegal because some people are making money off of it. Nobody owns slaves but who ever owns someone's debt can still exercise a degree of control over them.

Financial Discipline Gives You Choices

“If you don’t learn to spend less than you earn, it won’t make any difference if you earn twenty thousand dollars, fifty thousand dollars, or one hundred thousand dollars per year. Your spending would simply rise as your income rose.” -Dwight Nichols

The “get now pay later mentality” gives you an illusion of choice. Sure, you get the item as advertised but you sacrificed future time for it and in the end it isn’t worth it. What if that future time is needed to combat an illness or help a friend in need? Time is limited - what will you do then?

I recently decided to change city. I woke up and felt like I was in a rut and I missed my family. On my way to work that day, I decided that I would quit my job and move to be closer to the family.
Now here’s the thing, because I was financially stable, I didn’t care whether or not I had a job at the new city. I didn’t think about it because I knew that even if I didn’t have anything I could still go on. It wasn’t the end of me and I would lose nothing from doing so.

People that are heavily in debt do not have that choice. If they decide to move to a new city, they have to think about what they will be doing once there. If they do not find work, they can’t go. One has to wonder - was that “get now pay later” couch worth it?

Learn to say no to yourself. If you have to finance it, you shouldn’t be having it. “I need a car though” - sure you do, but does it have to be the latest model? Live within your means.

I changed My Mind on Debt!

We live in a financial system designed to make us work until the day we die if we let it. It's our responsibility to learn about the rules of the game and how to apply it to our advantage.  The sooner we learn about these rules the better it'll be for us as the earlier we begin the better it usually is.

Recently, I came across some information that changed my mind on debt. Before, I was against debt but there's some very specific situation where debt can be to our best interest and the secret is to look at the interest rate on that debt vs the interest rate you would get from investing that money. 

Example:

You have 10, 000$ in the bank to buy a new car and you can have a loan to buy this car at 0% interest for 5 years. The best thing you could do in this situation is take the loan and invest that 10,000$ somewhere that will likely have a return better than 0% over that 5 years. If you want to play it safe, you can invest in things that have a guarantee that you won't loose the money you invested. At the end of 5 years, you will have paid that car and made money on the investment that you've made.

Obviously, this requires us to investigate the market at the time of purchase/investing but doing so definitely has benefits that I hadn't considered before. Debt, in those conditions, can be a benefit. When it comes to investing, however, I will always follow the rule of "never invest what you can't afford to loose".

Money and You

Money does talk; Money is a good indicator of the type of person you are. If you have a lot of money saved up, chances are you're good at saving it. Where you spend money shows your interest and where you get your money from shows what you do for a living.

Save it and spend it wisely.

Money Talks

In Canada, you have freedom of speech. Quite frankly, that doesn’t mean much in the business world since money speaks louder than words.

You can complain all you want about how high the prices are, if you continue buying the product, the company see it as being a good price.

On a more personal level, I remember when the price for map packs went up 6 bucks for a game on consoles. People were furious about it! When you look at the numbers, they actually sold more units with the new price than they did previously with lower price.

If you were the company, would you lower the price?

They don’t care what you say, they look for what you do with your money.

You Need Money To Make Money - Really?

“Some people foolishly believe that only money can make money. This is not true! Desire, transmuted into its monetary equivalent through the principles laid down here [“Think And Grow Rich” book], is the agency through which money is “made.” Money, of itself, is nothing but inert matter. It cannot move, think, or talk, but it can “hear” when one who desires it calls it to come!” -Napoleon Hill

We've all heard the phrases "The Rich get Richer" or "It takes money to make money" but that simply isn't true. The rich won't get richer unless they have the desire to do so nor will the poor who lacks the desire. The old saying "When there's a will there's a way" applies here.

While it may be easier for the rich to make more money, since they've learned from acquiring their fortune, it is certainly not out of reach of the poor. The "money" excuses is just that - an excuse. We can all be rich if we want to be, we just have to learn how.

Now Isn't The Time To Buy a House

 

A friend of mine, who's in sales, recently contacted me regarding how "hot" the housing market was and wondered if I was looking to purchase a house. While my friend was well intentioned, I know not to buy when the markets are "hot" as this is when things are more expensive.

What's a hot housing market?

A hot housing market is simply that there's a high demand for houses which as an obvious effect on the price. The reason why it's hot right now is because many people are working from home, due to COVID, and decided to move as they no longer require to live near their workplace.

I live in the countryside and the obvious benefits of living here is the cost of living is a lot less than in big cities. Another friend of mine bought a decent size house, a few years ago, for 70K and could probably get double that today if he wanted to sell it. On my street, 2 houses were sold roughly 2 months after being on sale, which is unusual here, and because they were sold at higher price point than normal it had the adverse effect of raising everyone else's taxes on this block... but that's something for another day.

All this to say that you want to sell when the markets are hot and buy when they're cold. When the markets are hot, more people places bids which increases the prices and when the markets are cold less people place bids and you end up with a better deal. It's a bit like playing a game of hot potatoes ... you don't want to be on the receiving end of the hot potato as you'll get burn.

Understanding Impulses help with Finances

“An impulse is a wish or urge, particularly a sudden one. It can be considered as a normal and fundamental part of human thought processes, but also one that can become problematic, as in a condition like obsessive-compulsive disorder.” -Wikipedia.org

Most problems can be fixed by learning to controlled impulses. I will only focus on the financial aspect of impulses.

Impulses is a little bit like brain washing yourself to think that you need an item. It can be to the point where you think you can’t be happy without it. You know you have an impulse when the feeling goes away as soon as you buy the item.
Advertisement are design to create such needs and, while it’s impossible to block all ads from entering our mind, we should minimize our exposure to them.

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Revision Wednesday
Blog post edited/re-posted on June 3, 2015

Making More Money is NOT the Answer

There’s 2 ways to have more money in your pockets. You can either make more money or cut down on expenses. The way we all prefer (that includes businesses) is making more money but it’s also the least profitable one. If you live in Canada, you pay taxes on every dollar you make and it’s easy to spend the extra income.

It’s okay to finance a necessity* but it’s not okay to finance a luxury**.

*A necessity can be something like a car. It is very important to take into account that somethings, like cars, depreciate in value and should therefor be bought used. A car, that’s 2-3 years old, lost around 40-60% of it’s original value due to depreciation.

**A luxury is something you don’t really need (Cable TV,entertainment etc.) Due to constant improvements of technology, depreciation can be found with things related to entertainment as well like video-games, TV etc.. and is therefor not recommended to buy new or at all.

If you have to finance activities, you shouldn't be doing them in the first place.

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Originally posted - October 2010

You're Poorer Than You Think

If you live in Canada, you must of seen the financial institution "You're richer than you think" ad. How can a financial institution say something like this when they see first hand how in debt people are?

"The rich ruleth over the poor, and the borrower is servant to the lender."
-Proverbs 22:7

How can anyone feel rich when they have a debt twice (or more) as big as their yearly income? Being able to afford the monthly payments doesn't necessarily mean someone is "rich". One's ability to produce income may be high but that means little if the spending habits are just as high.

"If you don't learn to spend less than you earn, it won't make any difference if you earn twenty thousand dollars, fifty thousand dollars, or one hundred thousand dollars per year. Your spending would simply rise as your income rose."
-Dwight Nichols

Most people are poorer, not richer, than they think. To tell them otherwise is a lie. They need not to spend more but to learn how to make a budget, pay off their debts and invest in their thinking.

Give Yourself A Raise!

As you probably know, the “Get it now, pay later” is the biggest scam one can get into. If finances are tight, then you shouldn't own the most expensive gadget, live in the biggest/nicest place or own the newest car.

Too often, I hear people say they don't have any money but walk around with the latest smart phone in their pockets. When you go to their place, they have a 55 inch HD flat screen T.V. with cable, the internet plugged to a powerful computer and so on... No wonder you don't have any money!

I think it would be wise to look into what we spend to find money to save rather than look for a higher paying job or ask for a raise. Give yourself a raise by removing Cable T.V. (even internet if you're really in a jam – don't worry, you'll survive without it), selling the newest gadgets and cutting back on the restaurants and bars!

Save Money to Retire Early

A few years back, a manager of mine, who had saved millions up to that point, said to me that I should enjoy myself with the money that I have rather than save it all like he had done. 

Recently, an older woman admitted to me that she had no savings for retirement as her philosophy was to, in-fact, enjoy her money in her youth while she still could and not wait until retirement to do so.

My questions to these people are the following:

• To the manager - Why were you still working at the time you told me this? If you have millions saved, and you're sharing with me that you're regretting not having enjoyed yourself more in your youth, why didn't you just quit your job and enjoy the money you had acquired up to that point while you still could?
• To the older woman - Why aren't you saving money in order to retire earlier to enjoy yourself without the constraints of work?

I save money not because I plan on spending it when I'm retired but because I want to retire earlier. While I love what I do, I increasingly want it to become a choice the older that I get. I would find it stressful to not have anything saved up for my future.

We live in a society that's all about "buying now and pay later" but that's such a bad way to live. Why would you sacrifice future time for something now? Isn't that how people get stressed out? 

No.

Don't sell your future. Save money now in order to buy future time.

"Wealth consists not in having great possessions but in having few wants."

-Epictetus

What's the difference between a genius and an idiot?

“A genius is someone who takes a complex thing and makes it look simple. An academic does the opposite.” ― Robert Fanney

If you want someone to take a decision, make the information easy to understand. If it's complicated, he will feel like it's a bigger decision to make. In sales, simplicity is key!

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Revision Wednesday
Blog post originally created on June 24, 2008 and can be found here.

It's My First Time Filling My Tax Return

In all my years of being a productive member of society I have never filled out my own tax return out of fear. My biggest fear was to mess it up so much that the Government would come bursting through my door and arrest me.
Because I was afraid, I spent close to $100 a year on "experts" to fill my tax returns. Over 10 years that's $1000...

$1000 is a lot of money so this year I decided to fill out my own return and was pleasantly surprised at how easy it was to fill them out. Don't get me wrong, I still had to do some research online to figure out some of the terms but I think I got through it okay for my first try. If you have your T4, RRSPs receipt, and have little else to declare then you should try one of the free tools online this year(Turbo Tax & HD Block). If you can't figure it out you can always revert back to your old method.

I used HR Block this year (FREE) and I doubt that I will ever pay someone else to do my taxes again (unless my tax return becomes more complex).

I Forgot About Investing

I recently had a meeting with my financial advisor where we discussed my current financial situation and where I eventually wanted to be. I'm always a bit frustrated when speaking with a financial advisor as it exposes me to a world I don't know as well as I think I do. While I understand the benefits in knowing the rules of the game the complexity involve is daunting at times.

In the past, I've tried to fill the gaps by reading on the subject of finance. While it did helped me greatly, because I don't constantly use that knowledge, I forgot most of what I read. Perhaps it's time for me to pick these books up again. Two books that comes to mind right now are:

• Money Master The Game by Tony Robbins
• Financial Fitness by the Life Leadership Company

The most annoying part about all of this is that you pretty much don't have a choice about understanding finances because life is easier when you understand it more so than when you don't. Time for me to pick these books up again!

4 Rules for Saving Money

Wealth means how long someone can live forward, with his current lifestyle, without a source of income. For some people, it's not very long. It is good practice to have 3 to 6 months saved up in the bank in case of emergencies. The below rules can help achieve that.

1. Live below your means: If you make a million dollars a year but spend a million dollar a year, you're not wealthier than the person who made 30k and saved 5k.
2. Keep track of every penny spent: Keep track of your spendings to then make an accurate budget. Ideally, you want to save 25% of your monthly income so that you accumulate 1 month of freedom every 4 months.
3. Open a Tax Free Savings Account(TFSA) to invest and/or retirement account: There's nothing wrong with a government to want his share of the money you make but when you use a TFSA for your investments or a retirement account to store money in, the government gives you a little break. This will give you more money during tax season and I would encourage you to save it.
4. Don't finance things that depreciate: It doesn't matter if the item is at 0% interest, it's still not a good idea to buy new due to the depreciation of the item.

We generally want to clear off our debt before starting to save for the simple reason that the interest rate on a debt is higher than the interest rate on money we save. For more information, pick up the book "The Millionaire Next Door" book by Thomas J. Stanley Ph. D. & William D. Danko, Ph. D.

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Revision Wednesday(on a Thursday)
Blog post originally created on February 18, 2015 and can be found here.

The 45 Year Plan - Work Until You Die

The employee career path isn't designed to make anyone wealthy - it's designed to get us to work until we die. If we succumb to the marketing pressures, it's even less likely that we'll reach retirement with significant savings.

To break free of this "rat race" cycle, one must first take notice of it and then have the financial discipline necessary to, eventually, not require to actively partake in it. Sometimes, this means that we must forgo buying things in the immediate moment for future gains. Things, such as, streaming services, gaming services, internet, excessive hobbies, cars... could be destroying our future financial situation. It's important to identify the things that are holding us back and removing them from our lives.

We need to find ways to be less of a consumer and more of a producer keeping in mind that in a society based on consumerism, it's easier to be a consumer than a producer.

"Comfort is the worse addiction."

-Marcus Aurelius

The 45 year plan...

If you have no plans for your life then you're on, what is commonly referred to as, the 45 year plan. You start working in your early 20s, get a few pay increases until you're in your 30s where you plateau until you reach the retirement age of 65 (that may change) where you'll retire with a third of the money you barely could live off of while you were working. 

If that doesn't sound like a good plan then to you spend some time thinking about how you want your life to unfold and act accordingly, Keep in mind the following:

• You need a goal and to follow-through on them.
• Be mindful of the sort of debt you decide to take on. Getting a loan for a 4wheeler isn't the same as getting a loan for a house. 
• Have a budget that include contributions to saving/investment accounts.
• You partner must also be on board with the change. If you start saving, and your partner is spending... then it's not going to work.
• To earn more, you have to become more. Invest in yourself through self-education. Spend some time reading, watching documentaries, listen to podcast... on a wide range of self-improvement subjects. 
• Exercise and eat good food. Be mindful of your body - if it's under too much stress then you won't be able to think clearly. A healthy mind/body is more productive.
• Expand your social circle to include people that have the results that you want in life. Your life is roughly the average of your 5 closets friends. If you want a better life then hangout with people with better results. Good associations can expose you to better opportunities.

The 45 year plan doesn't have to be the plan for your life. Make the decision to move away from it.

"You don't pick your destiny. You pick your habits that in turn pick your destiny." 

-Claude Hamilton

It's About How Much We Can Keep!

If we're broke at 30k - we'll be broke at 100k. Mike Tyson made 400 million in his boxing career and declared bankruptcy in 2003! It's not how much money you make but how much money you can keep. Discipline is what is required to keep money in our pockets.

Wealth is how long you can go without an income and not loosing your current lifestyle. Some of us could probably not finish the week while others could last months/years.

What Would Be the Point of Money?

(Image created by A.I. DALL-E/Bing)

Governments are discussing ways to provide basic income. They understand that they’ll eventually be a need for this as all things productive will be handed over to various automated technologies.
When that day comes, what will even be the point of holding onto a monetary system? If money serves as a way to determine the value someone brings to society then what would be the purpose of it when the responsibility for production, or value, is handed over to automation?

We based our entire civilization on a system designed to encourage people to produce. If people are no longer required to produce then there’s no point to the system.

Intellectually speaking, we’re not ready for a system that would provide us with an excessive amount of leisure as we need goals in order to thrive. Money has provided us with a sense of purpose to the point that we can’t even imagine a world that wouldn’t require it to purchase something. How can we possibly “own” something without first exchanging dollars for it? 

We would need to learn how to live in this new world which isn’t something easy to do when you consider that we’re creatures of habits and we’ve carried this habit for millennias. Eventually, however, the new system would become the new normal.