Posted by Canadian Dream on November 10, 2011
Around this time back in 2006, I had a crazy idea in my head to start a blog to discuss money issues. Since all blogs need a theme I decided to write mine from the angle of wanting to retire by my 45 birthday. At the time, I wasn’t even sure if that would be possible or not, but ‘free at 45′ had a nice ring to it (heck I liked it so much, I titled my first book that).
Now five years later, I barely recognize the blog anymore. I’ve switched blogging platforms, tried out more themes than I would like to admit and now I don’t even write half the content anymore thanks to Robert, Dave and Gwen.
On the financial front I went from a net worth of $76,000 to $459,000, which works out to an annual increase of $76,600 per year. Granted that was partly fueled by a crazy hot housing market in Regina, so even if you strip that out it still works out to an increase of $41,200 per year. Ah, the joys of having a plan and compound interest. Not to mention my plan for early retirement has gone from a dream to a something so certain that only thing up for debate is the final age I’m at when I pull the plug.
Then of course I’ve also learned a lot about happiness from this blog including the following key points:
- Wants are unlimited, instead focus on your needs. Which by the way are a lot more than food, water and shelter, you also need affection, a sense of belonging, the ability to create something and the freedom to choose.
- More spending does not equal more happiness. Actually depending how much you are already spending it will make you less happy.
- Quality over quantity and more experience, but less stuff will take you further to being happy than you realize.
- Forget what your suppose to do in life and do what works for you. Following what every else does will just land you in an over sized house filled with too much stuff , fat, in debt to your eyeballs and noticeably less happy than I am. Skip average and go straight to being different and be proud of it.
Now of course to celebrate any good event, you need a party, but that is fairly hard to do well online. So instead let’s have a good old fashion blog contest with the following prizes:
The grand prize will be a Vox tablet (worth ~$200) or I will donate an equal amount of money to a charity of your choice.
Ten secondary prizes of the following books:
- Wise Investing Made Simple by Larry Swedroe
- Juggling Dynamite by Danielle Park
- The New Investment Frontier III by Howard J. Atkinson
- What Investors Really Want by Meir Statman
- Understanding Wall Street (5th Edition) by Jeffrey B. Little
- Uncontrolled Risk by Mark T Williams
- The Wealth Cure by Hill Harper
- The Wealthy Barber Returns by David Chilton
- Findependence Day by Jonathan Chevreau (signed)
- Free at 45 by Timothy Stobbs (signed)
To enter the contest you have several methods:
- 1 entry for leaving a comment on this post
- 2 entries if you tweet about this post on Twitter and include my user id @canadiandream
- 5 entries if you link to this post from your blog and email me a link to candian.dream.free.at.45[at]gmail.com
Contest closes at Nov 16, 2011 at 7pm CST. Multiple entries from a single method are not allowed. Winners must have their prizes shipped to an address in Canada or the US. Please note secondary prizes won’t ship until the end of Nov.
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Filed Under: Blogs
Posted by Dave on November 8, 2011
This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
I recently decided I wanted to play my X-box on my desktop computer in my room. I had previously played all video games downstairs in my living room, but figured for the winter it would be much more comfortable to play in bed (my video game playing time is usually about half an hour before I go to sleep). The cord that would convert it (I know riveting drama right?) cost $50 and tax at Future Shop. I however found one on Amazon for $6, with decent reviews. I bought that one and waited, and waited and waited. Five weeks later, I contacted the seller and was told they couldn’t do anything for another week. After that point I got a refund, then ordered a similar cord (this one for $7.50 from a different seller) and waited another 2 weeks for this one to finally show up.
My point here is that I saved $40 for waiting a few weeks, rather than going to the store right away – I found an alternative. Now, admittedly, I could have saved the entire amount by not playing video games at all, but that’s not the point of my story. There are many instances where a bit of patience can save you money.
When negotiating for a car or a house or any large purchase, having patience is an asset – if you can “out-wait” the seller, you are generally better off than jumping on a first offer.
Not buying things like books, video games or movies new can also save you a bunch of money. I recently bought a video game that is 4 years old that was $60 new and I got it for $10. You can generally find used books for less than half the price of a new one, either online or at a used book store – all you have to do is not be first in line for this stuff in the first place.
Another area where patience could save you some serious money is driving. Over the past year or so I have significantly mellowed while behind the wheel and have noticed significant savings in fuel consumption. My wife and I travel to her parent’s place (about 200 km away) once a month. Just by slowing my drive down from 120 km/hr to 105 km/hr on that long drive saves a lot of fuel (and really, is that half hour really all that important?). So many people are in such a rush, they are wasting money on wear and tear on brakes, higher fuel consumption, and added stress – if they just slowed down a bit, gave themselves the (in most cases) extra 2 minutes they’re going to “make up” by slamming on the gas they could make things easier on themselves and their vehicles.
Do you have patience? Do you wish you did? Where have you saved money in the past from being able to wait?
Posted by Robert on November 7, 2011
This is a guest post by Robert, who lives in Calgary and works as a financial adviser retired at 34. He is married, has three kids. Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.
A gentleman approached me at church because he found out that I worked as a stockbroker and financial planner. He started asking me questions about investment accounts and retirement savings. He told me that he had met with a couple different “advisors”, but ended up investing his RRSP at the bank. He wanted to be reassured that he had made the right decision. When we talked about why he made his decision, I realized that he was really wondering who he could trust.
Insurance Salesman. It is said that a man with a hammer sees every problem as a nail. Likewise, from talking with an insurance salesman, my friend got the impression that every financial problem can be solved with insurance. The intended use is to provide for your dependents at your death. A person could also use it to pay taxes in their estate or to divide their estate privately and unequally. It could be used for a chartiable donation. It could even be used for education savings for children (I’ve been told). Many of these secondary uses are more complex and expensive than other tools. While I believe that the majority of insurance brokers can be trusted with insurance sales, they may not be qualified financial planners.
Mutual Fund Salesman. Like insurance, mutual funds are a tool. Whether or not the salesperson offers good advice depends on their training and motivation. Personally, I would look for a qualification like CFP (certified financial planner) before trusting that their advice is better than an online calculator.
Bank Advisor. This is what my friend ended up choosing. Advisors at the bank may not have access to as large a toolbox as a mutual fund salesperson, but there’s little difference between Canadian Large-Cap Dividend mutual funds, and most banks have very good offerings. In addition, the bank needs to protect its reputation, so these advisors likely have received a certain amount of training. They can also usually refer you to other sections of the bank as your needs change: chequing, lending, GICs, mutual funds, insurance and stocks or bonds. My friend was concerned, because he got his first mortgage through the bank, but renewed with a broker. The difference in price caused him to mistrust the bank. But when it comes to investments, the price difference is minor and he likely made a good choice.
Stock Broker. A stock broker, especially one that earns an annual fee rather than a commission on each trade, usually has a certain level of experience and professionalism. When I worked as a stockbroker, I had a number of new clients who arrived with accounts from other institutions. I often shook my head over the ones who arrived from a mutual fund salesperson, but most of the ones that arrived from stockbrokers had very reasonable portfolios. I remember one couple who complained that their broker didn’t pay much attention to their account over the past couple years, and wouldn’t recommend any changes. It was a small RESP with just two stocks, but I found that it had far outpaced the index. It’s too bad they didn’t have confidence in his advice, which had served them so well.
When it really comes down to it, trust isn’t based on a job title. Trust comes from knowing that your advisor is competent (eg. from training and experience) and honest (eg. puts the client’s interest first). You can judge whether or not an advisor is trustworthy from their background, but also from the types of questions they ask to understand your needs and from the feeling you get from being with them. It may not be easy to determine, but most people will do very well to start at their bank. They can interview prospective advisors until they are comfortable with one and their account has grown to a size that will benefit from a higher level of customization.
Who do you trust when discussing money issues? If it’s another person, how can you tell he or she is honest? If it’s yourself, how do you know you’re competent?
