Posted by Tim Stobbs on December 31, 2010
After Christmas is a great time to review all the ‘stuff’ you just got and all the ‘stuff’ you already own and ask yourself if you really need this at all. It reminds me of a conversation I had with my wife the other day when I was making breakfast. We figured out the number of cooking bowls we need is exactly three. Meanwhile I still own eight…so why exactly do I have the other five?
You know what, I don’t know other than the usual excuses like:
- I used it once in a while…typically when I haven’t washed the other three yet.
- I might use it for [insert lame reason]….what a cereal bowl won’t work for that? Or perhaps just wash one of the three bowls.
- My wife’s “It’s a set.” No comment if I want to stay married.
So this leads me to a theory about the average household in North America when push comes to shove we could likely live our entire lives with just half of the things we currently own. This isn’t to say that you should throw out half of your stuff and immediately move to a house with half the square footage. Yet you should at least question why you are keeping all your presents beyond the fact it was a present.
The idea of the gift if more important that the gift itself. It’s okay to immediately donate or sell something you know you will never use or return it for something else. I’ve started to get really good with this and the toys our boys get. For example, my one son got a piece of a train set from one friend, but during a recent purge we decided our boys only need one type of train set and having three in the house was getting out of hand. So we asked for a gift receipt and returned it for a train of the set they do have. He also got a movie of show he loves. So all in all the kid is happier and we also keep less stuff in the house that won’t be used. Was it hard to ask: yes, at first, but it was worth it in the end.
If you can do that you might be ready to look at your closets and drawers and defend to yourself by asking ” Why do I need this?” It’s a skill that takes time to develop, but avoiding more stuff and getting rid of stuff can be useful for saving money and retiring a little bit earlier.
So do you keep all your gifts or are you good at returning things you don’t want or need? Or do you give up and just lie about already having one so you can return it?
Posted by Tim Stobbs on December 30, 2010
Ok, now I’ll break down and admit the horror of it all: I took a vacation before I had finished saving up for it. I will now proceed to burn in personal finance writer hell for all time for it….or maybe not.
You see the tricky thing about personal finance is knowing when you can push the rules out the window since they no longer matter that much to you. This isn’t to say that I don’t believe in saving up for things prior to buying them, but at the same time you don’t always have to practice delayed gratification.
In this particular case it had to do with the timing of it all. I could have easily saved up the money prior to going on the vacation, but I decided to push that off in order to buy some more RRSP prior to the end of 2010. I will of course pay off the remainder of my vacation when I get back within the month, so I’m not actually borrowing money to take the trip at all. I believe the context of a decision is often just as important as the decision itself.
Had I taken the trip without any money available to pay it off right afterward I would question why that particular trip is so important you have to borrow money for it. Your brother’s sudden wedding or perhaps a funeral might be a good reason to take a trip without paying for it in advance, yet you have to be careful on a slope like this. You see if you really think it is so important shouldn’t that qualify as an emergency situation and have you dip into your emergency fund? If so, go ahead and take a trip.
If not, then you are on the slippery slope where things can get out of hand if you go down that path too often. Hence the idea in the first place of saving up for most things in life prior to buying them (typically exceptions include a house, education or a vehicle).
In personal finance there really isn’t any ‘rule’ that can’t be broken under the right situation. Circumstances really do matter and your own view of the situation to determine if it will work for you.
So what personal fiance ‘rules’ have you broken? Why did it work for you?
Posted by Tim Stobbs on December 29, 2010
2010 is almost over?!? Well that came a little quicker than I realized. Here are my final numbers for the year.
Wife’s RRSP $19,700
Wife’s Investment Account $11,700
Wife’s TFSA $8,400
My Investment Account $6,100
High Interest Savings Account $3,600
Net Worth $383,400 (+$13,400 or +3.6%) [+ 25.9% YTD ]
Investment Net Worth $126,900 (+$10,000 or +8.5%) [+ 28.6% YTD]
Mortgage is down by $37,700 or 87.7% of my goal for 2010.
You know what for failing to make my mortgage goal for the year I still managed to do over 85% of that goal which is fairly damn amazing when you consider I took a 20% pay cut from my largest source income for half the year. So even in failure I still feel good about what we got done this year.
Also I have to say I’m blown away how much the investment and net worth have increased this year with both of them over 25%. What I find particularly interesting is if you strip out the gains in the house value from the net worth that is still an increase of $65,900 or 21.6%.
What is really mind blowing is the long term net worth trend from back in 2006 when I started this blog.
- 2006 – $80,200
- 2007- $215,000
- 2008- $219,600
- 2009- $304,500
- 2010- $383,400
Hope you have a great New Year!
(Click to see larger version)