Ok, I’ll be honest.  I have had two vehicles at various times in my life.  Usually one of them was work related, but anyway I do know how nice it is sometimes to have that second car. Yet for the last three years or so we have been running with only one vehicle.  Beyond saving those CO2 emissions from the second car, we have saved a LOT of money from not having to buy all that extra gas, insurance or maintenance.

So how do we get along with a busy family and just one car?  Well here’s what works for us.

1. Plan ahead.  Even if you do nothing else you need to plan ahead to keep just one car.  On those days my wife needs the car I take the bus and she then tries to plan as many appointments and errands into one day that she can reasonable get done.
2. Use public transit.  For a while I actually just took the bus to work all the time.  It wasn’t that bad except for those -30C or colder days.  Then yes, it wasn’t nice, but it is doable.
3. Use a cab for those odd trips.  Ok, sometimes you need to get somewhere in a hurry, so take a cab.  Yes it is pricey, but cheap when you only do it once every few months compared to that second car.
4. Walk or bike.  Now to really save some money skip the car entirely.  We often do this for short shopping trips or on a nice night as a family when we go to the library.
5. Be flexible.  All in all the main thing is to be flexible with planning your trips and realize you can’t be in two places at once without some extra effort.  Once you get that the rest if fairly easy.

So overall I don’t mind only having one car.  After we got used to it I don’t even really notice it anymore for the most part.  Try to think of a second car as a luxury item at about $4000/year for all costs .  Yes it is nice, but wouldn’t rather be spending that money on something more enjoyable?  I know I am!

Ah, the annuity, in some cases people think it is great while others think it is an awful way to invest.  I tend to think both are wrong, an annuity isn’t evil or great.  It rather is just another option.

So what’s good about an annuity?

• It’s easy.  Sign over a lump sum of cash and get a guaranteed stream of cash till you die.  No worrying about investment performance or how much you need to take out of your RIF each year.  It can be funded by pension money or RRSP money.
• It’s secure.  Basically with an annuity you are buying an insurance product where someone else is taking the risk of you out living your money, but if you don’t get an inflation adjustment you are taking on some risk too.

What’s bad about an annuity?

• Limited application. If you die the day after you buy one and you didn’t specific a minimum payout time frame you money will be gone.  Also don’t assume your spouse will get 100% of the cash flow.  Read the fine print and understand what exactly you are buying.
• The more options you add on the lower the payment becomes.  So if you want it the cash flow to transfer to your spouse and have a long minimum payout and be inflation adjusted you will be paying a lot of cash for little return.

So where do you use it?  I tend to think an annuity is best used when you are getting older (65+) and you just don’t want to worry about your investments as much.  It allow some security and ease without much effort.  I would also suggest not putting all you money in one.  Keep some outside to hedge against any inflation risks or you dying early.

For early retirement I’m not even thinking about using one.  It’s just too far out to worry about locking in some of my money into a product like this in my mind.  I would consider one as I get older and don’t want the hassle of watching everything, but only so much to provide a minimum standard of living.  The rest I would keep outside of one.

In the end, it is just another tool.  Use it or not, it is really up to you.

Well happy birthday Canada!  Enjoy yourself today what ever you are doing.  Regular posts continue tomorrow.

Also please note I’ll have limited internet access for the next while, so it may take me a while to response to comments.

Ah, summer.  The road trip season.  So with that in mind, how do you take a vacation that is fun, but won’t break the bank.  I typically suggest camping as a good option for some people, but if you don’t have the equipment try to borrow some and try it before investing too much money in supplies.  Spending $500 on gear you don’t use more than once can turn a money saving venture into a money wasting one very quickly.

Even if you don’t camp, I’ve tried to make some of this tips generic.

1. Bring you own food or buy it at a grocery store.  Even backing a few basic supplies to do lunch/breakfast on the road can save you a lot of money over a two week trip.  All it really takes is a bit of planning a cooler.  We typically take things that travel well like harder fruits or veggies like apples and carrots over items like pears that bruise easier.
2. Consider a shorter trip.  People often underestimate trips that are closer to home.  Beyond having more time to relax, you can also save gas and see explore places you never been and can get back to easily.  We typically alternate years with bigger/longer trips every second year.  That way we balance costs with enjoyment.
3. Leave later and come back earlier.  Want to have a really great trip?  Then leave a day later and come back a day early.  Having that time to unwind at either end makes things SO MUCH easier.  You can ease back into your regular life without the shock of coming home at 6pm the day before you got back to work and having to buy groceries, wash the car, do laundry and unpack.
4. Seek out the out of the way.  People often travel to the big parks or cities as the main places to see and do, but going out of the way can often result in unique memories as well as cost savings.  Camping fees, hotels attraction fees are all often cheaper in smaller centers so next time try out the smaller towns you might be surprised how much fun you have have there.
5. Be flexible.  I’ve gotten away from having a set schedule on trips and now more often than not wing it with nothing better than a vague plan of I want to see these things and be away for about 10 days.   By doing that you can often find good deals at the last minute or linger in places you happen to enjoy more than you thought.

So there are my tips? Do you have some other ones?  If so please share.

It’s one of the classic personal finance issues: do you invest or pay down debt?  People often answer the question: it depends on the numbers, which is true.  Pay off debt at 20% on a credit card will crush likely most investments, but if your mortgage is at 4% and your investments usually get 6%, the math gets a little complex.

The major issue if to really compare you options you need to make them equal.  Trying to compare just straight percentages is stupid, since you often need to consider if that money after tax or before tax.  If it is taxed, then how it it taxed: dividends are much cheaper than interest.  I’m not saying the math isn’t difficult at times, but really it varies so much from situation to situation that you really need to do it yourself and find out what works on paper.

Then we have to evaluate the more fuzzy issues like risk.  A extra mortgage payment grants you a after tax return equal to your interest rate at no risk.  Stocks on the other hand have a lot more risk, so you have to weigh those issues.  How you do it will vary from person to person.  I tend to keep in mind the fact you need to balance all your investments for risk.  So if you are fairly heavy into high risk investments and you get some extra cash, consider a lower risk option for that extra money.  You don’t want to be too conservative or risky, but rather balanced on the overall picture.

Then last, but most important, you need to consider your personality.  Often decisions we make are not logical, but rather emotional.  You may know the math says you are likely better off investing, but you really still want to pay off the mortgage early?  It’s ok to pick the mortgage.  Not even decision in life must be optimized for maximum return.  The point is are you paying off debt and investing regularly? Yes, great you are ahead of most people in the world.  So don’t panic about trying to do everything right.  Remember to do what works for you.  There is no point investing if you are mentally not really for the risk.  The sleep at night factor is worth something so don’t sell our yourself out for a 1% extra return if you don’t think you will handle it well.