Editor’s Choice – While I freely admit there was some sampling during the bottling process (quality control purposes of course),  I still managed to find a few posts that either impressed me.

Barbara Friedberg from BARBARA FRIEDBERG PERSONAL FINANCE presents Wealth & Economics; Community vs. Country Club -A great insight into what the GDP is and why in some ways it really doesn’t matter to a lot of your life.

Sandy from Yes, I Am Cheap presents I Make Money Online: Virtual Assistant – An interesting post about the art of ghost writing and how to get into it and other online freelance jobs.

Nelson from Canadian Finance Blog presents The Basics On Balance Sheets – Finally a good post on the basics of a balance sheet without getting sucked into too many details.

J.B. from My University Money presents What Classes Do I Sign Up For If I Don’t Know What To Do? – Apparently there is solution to the problem of ‘I don’t know what degree to take’. I wish I read this article when I was 18!

IS from Intelligent Speculator presents It Could Be A Lot Worse, We Could Be In Europe – And now I finally feel better about the Canadian government debt after reading this post.

Budget - Otherwise know as can I afford a Black Velvet (equal parts champagne and Guinness beer) or do you need to start looking for the cheapest wine in the store.

Green Panda Treehouse presents Your Daily Commute’s Impact on Your Wallet, and says, “Are you saving money on your daily travels?”

Adam from Rabbit Funds presents 4 Tips to good (or better) budgeting, and says, “Budgeting is a very proactive activity. Budgeting is taking the time to decide in advance how you are going to spend your money and how you are not going to spend your money.”

Jonathan from Deliver Away Debt presents Mint.com Review: The Ultimate Budgeting Software, and says, “Mint is a full featured money management website owned and run by the famous TurboTax. Mint is always on the lookout to provide the best and most revolutionary services all at zero cost to you. At the core of Mint is a passion for helping the masses manage their money.”

Frugality – Where you learn the best cooking tip ever: when in doubt add booze.

Corey from 20′s Finances presents How I Furnished My Apartment for $600, and says, “This article presents real information about how I used craigslist to furnish my apartment for $600.”

Miranada from Financial Highway presents 45 Ways to Save Money, and says, “You can increase the efficiency and effectiveness of your personal economy by finding ways to save more money. Here are 45 of my favorite ways to save money:”

Control Your Cash presents If you can’t grasp this you’ll never get rich, and says, “If you choose a credit card because of its balance transfer rate or introductory low-interest period, you’re a moron. Shut up and sit down.”

Saving – Otherwise know as the realization that a wine that costs 10 time more than your last bottle doesn’t in fact taste 10 times better. Rule of thumb, don’t exceed $30/bottle and ask around. There are lots of great wines in the $15/bottle range.

Money Beagle presents Unsure What To Do With That Extra Money?, and says, “Finding the right path takes time.”

Grace from GRACEful Retirement presents Saving & Budgeting–Two Entirely Different Things, and says, “I had a bit of an epiphany as I was setting out new goals for myself. For the first time, I realized that I cannot ‘budget’ my savings. To do so is to virtually guarantee that I will fail to save anything.”

Connie from Taking Charge presents Thanks for the 11-cent break, but can you make those gift cards reloadable?, and says, “On my next visit, I pulled the gift card out and asked to put another $50 on it. The cashier reached for a new card from a stack near the register and told me they weren’t reloadable. I would have to get a new card.”

Philip Taylor from PT Money Personal Finance presents Is Your Emergency Fund Big Enough?, and says, “So, how do you know if your emergency fund is big enough? This article gives you some points to think about to give you confidence in your emergency funds.”

Career – You know the thing you do to actually pay for all the booze in your house.

Paula from AffordAnything.org presents I Wanna Be a Billionaire!, and says, “Conventional personal finance advice says you should live in an area with a low cost-of-living. I disagree. ”

Money Walks presents 7 Ways to Get Funding for an Education, and says, “Money Walks looks at 7 ways you can get some extra money for your education. ”

SB from One Cent At A Time presents 10 pieces of financial advice for young adults, and says, “When you have graduated from college and trying to solve mysteries of financial world, what you should do to attain financial success. Advice of a life time for young people of the world!”

Suba from Broke Professionals presents What to consider before blogging for cash?, and says, “Lot of people think it is easy to make money blogging. Here is a list of things to consider before taking the plunge.”

Dividend Growth Investor presents Two High Yield Dividend Growth Stocks I am buying, and says, “Owning these two high income dividend growth stocks makes sense for investors looking for high yield and a rising passive dividend income stream. ”

md from Passive Income Now presents Are We Running Away From The Recession?, and says, “Has the recession scared us away?”

ElizabethG  from Modern Gal presents Starting Your Own Business?, and says, “I’ve talked to an increasing number of people who want to make the shift to working for themselves. I think some should give it a go, and others, probably not.”

Investing – Knowing the fact the a good vodka is basically tasteless, so don’t waste your money on tripled distilled crap when the next brand down tastes just as good for a fraction of the price.

Miss T. from Prairie Eco Thrifter presents Who Took the Service Out of Full Service Brokerage, and says, “If you are using a full service broker, make sure you are getting your money’s worth – there are a lot of other choices in today’s world to get your financial transactions processed. Know what services you should expect to get for the money you are paying and demand good customer service.”

D4L from Dividend Growth Stocks presents 10 Dividend Stocks Beating the S&P With Positive Returns, and says, “It is my goal to create an ever-increasing income stream from dividend growth stocks, while it is my desire to beat the S&P 500 index over the long-term. I believe in long term my dividend income will rise AND I will beat the S&P 500. Otherwise, it would not be a realistic desire. This has been the case since I have been publically tracking my dividend growth portfolio.”

Sustainable Personal Finance presents What is Passive Dividend Income?, and says, “If you are looking to generate passive dividend income then be prepared to put in the effort required to research a stock and find a good dividend paying stock for your portfolio.”

DSO from Dividend Stocks presents Pay Attention To The Ex-Dividend Date, and says, “Dividend investing can really be a good way to earn a little extra income. Indeed, if you create a plan, and take advantage of dollar cost averaging, it can also be a way to build up a substantial portfolio that can yield solid income opportunities. As long as you are reasonable about your dividend expectations, you can eventually build up a stream of income that can serve you well in retirement, during an emergency, or for other purposes.”

Kevin Mulligan from RothIRA.com’s Retirement Planning Blog presents The Importance of Retirement Investment Goals, and says, “You can’t navigate to retirement if you don’t know where you’re going. Here are six steps to coming up with a retirement investing goal.”

Dan Meyers from Your Life, Their Life presents How to Start Investing, and says, “One of the most difficult parts of investing is getting started. I explain what accounts to use and how to get started.”

Jim Yih from Retire Happy Blog presents Has the stock market changed your day to day life?, and says, “The good news for me, is the stock market did not affect my day to day life mostly because I do not depend on my portfolio to live and pay the bills.”

Sean from Grow Money presents How To Become A Millionaire, and says, “So if everyone wants to be a millionaire and most of us are not millionaire’s, it raises the question – what does it take to become a millionaire and where are people going wrong on their adventure to become one?”

Ramsay from Moneyedup presents How To Open A Roth IRA, and says, “Among individual retirement accounts, the Roth IRA stands out because of its special tax advantages. Instead of providing tax breaks at the time of deposit, Roth IRAs allow account holders to receive benefits completely tax free after retirement. ”

Ben from Money Smart Life presents 9 Ways to “Beat” the Stock Market, and says, “Nine tips you can use to avoid letting the market get the best of you.”

Debt – The regret that kicks in after your hangover when your credit card bill comes in.

Sarah Minton from The $60K Project presents How I Paid of $60,000 in Ten Months, and says, “Thoughts on why I successfully paid off $60,000 in less than a year, and tips for readers to help them do the same.”

Jason from One Money Design presents Pay Down Debt with These 10 Tips, and says, “10 essential tips to help you pay down debt.”

Money Management – Otherwise knowing your limitations and planning for them (for example, putting the booze in the hardest to reach cabinet in the house to make sure you drink less).

Hank from Money Q&A presents Book Review Of The Wealth Cure By Hill Harper, and says, “The Wealth Cure by Harper Hill is an excellent book that shares with its readers not only advice on how to handle your money, investment, and financial life better, but it is also a book that so many people can relate to.”

FMF from Free Money Finance presents Valuing Time in Home Repairs, and says, “In any buying transaction, time needs to be a factor that influences your final decision. A great example of this is deciding whether or not to do home repair work yourself. ”

Cathy Moran from MoneyHealthCentral presents Ready To Stake Your Retirement On The Stock Market?, and says, “If each of us manages our own Social Security account, what becomes of those who make bad choices or have bad luck? Will the social safety net be dependent on good money management?”

Glen Craig from Free From Broke presents Do You Need Disaster Insurance? What Type Should You Get?, and says, “Do you need disaster insurance? Depending on where you live you may find you need disaster insurance. See the different types available and if you need it.”

Mike from Stupid Cents presents Is A Reverse Mortgage Right For You?, and says, “A reverse mortgage allows senior citizens to tap into their home’s equity. Learn more and decide if a reverse mortgage is right for you.”

Odysseas from Wallet Blog presents Should You Be Mad That Free Checking Accounts Are Becoming a Thing of the Past?, and says, “More consumers around the country are all of a sudden finding monthly fees on their previously free checking accounts. It’s understandable that you might at first be angry about having to shell out monthly payments for a service that used to free, but what if there was a good reason for the switch?”

Real Estate – You know you have a problem when your house has a wine cellar because you either bought too much house or drink too much wine.

Eric J. Nisall from DollarVersity presents Shopping For A Condo Is Different Than For A House, and says, “Not all homes are created equal. Condos need to be looked at a little differently than single family or town homes. Don’t use the same criteria for each.”

Md from Studenomics presents 100 Words on The Home Ownership Decision, and says, “Straight to the point post on deciding to buy a home.”

Other – Also know as that strange cocktail that your create with the leftovers from three bottles that you will never duplicate again despite the fact it tasted excellent.

Evan from My Journey to Millions presents Why Global Economic Negativity, Doom and Gloom Doesn’t Disturb Me, and says, “I travel quite a bit, for business and for pleasure, and as I travel across the country and globally, I am continuously amazed, but not surprised, at the amount of discussion (more like complaining) around the economic condition today. However, the facts I see around me every day tell me that things are really not that bad.

Bret from Hope to Prosper presents Failure and Greed of American CEOs, and says, “25 of the top 100 highest paid CEOs had higher salaries than their company paid in federal income taxes. I don’t know what is more ridiculous, that companies paid their CEOs so much or they paid so little in taxes.”

Donna Freedman from Surviving and Thriving presents Get rid of junk mail, both virtual and physical., and says, “A couple of clicks will reduce clutter — and waste.”

Mike from The Financial Blogger presents Do You Live The Moment?, and says, “How do you treat your finances?”

Boomer from Boomer & Echo presents What To Do With Your Paper Clutter?, and says, “Have a good system to deal with your paper clutter by filing your bills, statements and important notices and setting a regular date to deal with them.”

Clint from Accumulating Money presents How The US Credit Downgrade Is Affecting Spending, and says, “Every person, business and entity has a credit rating. When the United States saw a reduction in their current credit rating, it created ripples throughout the US all the way down the average household and the average consumer.”

Bryan from Pinch that Penny! presents Craigslist Arbitrage – The Folly of my Youth, and says, “I bought some comic books on Craigslist and then sold them back on Craigslist (albeit for less than I apparently could have).”

Money Thinker from Money Thinking presents 5 Reasons This Decade has been Financially Unstable, and says, “9/11 was one of several reasons that our country suffered financially in the last decade, and today we’re going to look at that event and 4 others”

Suba from Wealth Informatics presents Loyalty Cards : Providing rewards or threats?, and says, “Loyalty cards are something we sign up without even thinking for a minute. They do provide discounts, but do you know what other threats they pose?”

• Margarine $4
• 8 L of Milk $8
• 1lb Coffee $1.98
• Fruit (5 nectarines, 4 plums, 3 apples, 5 peaches) $5.82
• Fresh Tomatoes (5) $1.27
• TOTAL $21.07 (84% of budget)

So you can see we actually didn’t even hit the total budget during our 18 day experiment.  In total we spent $0.29 per day per person.  What surprised me about this challenge was how easy it was to pull off with a bit of planning and focusing in on what we had in the house to eat.  To be honest I think the fact we had two packages of veggies from my farmer which made this so easy (which included green onions x 2, radishes x 2, small bag fresh greens (spinach etc) x 4, parsley).  If you included the retail value of that food that would bring us up to $0.71 per person per day.  Our diet was actually fairly normal for the entire couple of weeks and we ate fruit and veggies fairly regularly.

Actually my wife like the idea of cleaning out the pantry and freezer so much that she wants use to do something similar at least twice a year going forward to prevent food clutter from building up.  By the way, I define food clutter as that stuff you buy to try something new and then forget about for two months before you use it again (like rice paper wraps).  So overall the challenge can’t have been that difficult if she wants to repeat it.

Yet the challenge was useful for me to realize a few new lessons on how we approach our food:

1. Forget Name Brand - It’s all about what is on sale, not the name on the package (especially for generic items like pasta) .  If you follow that rule you can cut back a fair amount on some grocery bill.  When in doubt look for the cost per unit mass/volume on the shelf tag to find out what is the cheapest, when you hit a sale load up the pantry.
2. Junk Food is a Budget killer – I don’t think I really understand how much a bag a chips is until you realize how many potatoes or apples you can get instead.  Cutting back on this will make a huge difference to your grocery bill and likely improve your health.
3. Eat around what you have, not what you feel like – Most people know that dangers of impulse shopping what is interesting is we don’t consider how often we do impulse cooking which requires picking up something from the store.  I was guilty of doing this a fair amount, but now I realize if you plan your meals around what you have you will make less waste and throw out less leftovers.  Also you can then shop by the sale to restock your pantry, rather than paying full price for things that keep for a long time (can soup, oil, flour, etc).
4. Plan Your Meals Weekly – This is likely the key to eating on the cheap and ties into #3 as well.  By planning what to eat in advance you can make themes for a week.  For example, I had some ham in the freezer so we planned chickpea ham salad, chef salad and carbonara for one week. Also you can plan to eat your leftovers.  This can be a huge amount of savings in money and time since you don’t have to think about what to eat.  You can walk in the door get your defrosted meat from the fridge and start cooking.
5. Get Creative – Perhaps one of the more interesting dishes I made involved me looking at our pantry and trying to figure out what to do with a can of pork and beans and some pasta.  Thanks to Google I managed to dig out a recipe a template and then just adjusted it to what I had in the house.  It was surprisingly good to eat despite my concerns of trying it.

In the end, eating on the very cheap is entirely possible, especially for short periods of time.  The trick is to do an inventory of what you have and plan around that.  Also with a bit of work I think most people could cut their food bill in half just by shopping sales and eating what you have.  So would you try something similar?  If you have, what did you learn?

This post is now part of the Carnival of Personal Finance.

So let’s try out that theory, meet my crash test case of fictitious people called Bill and Jane.  They earn between them $71,000 a year (the 2007 median salary in Canada for a two income household with kids).  So let’s break up that pay by a 60/40 split of $42,600 for one and $28, 400 for the other.  You can pick out their careers and who makes more if you want, for me I’m just assuming they get in dead end jobs and never move from this salary during their entire working career.  In actually fact they may start lower and work up, but on an inflation adjusted basis I’m assuming they are a flat line all the way.  So after tax, CPP and EI and no other deductions they clear $33,161 and $25,762 respectively, or in total $58,923 (in SK).

They are a frugal couple so they only spend $24,000/year on expenses (but not the mortgage).  On top of  that is a mortgage payment on a $250,000 home (I’m assuming they buy within their means and stick to a condo or a smaller older house in a ok location, but not a great one).  Mortgage payment for a 25 year period at 5% average rate is $690.66 twice a month assuming they bought with 5% down when they turned 22 (combination of wedding gifts and saving).  I’m assume they don’t accelerate a single payment and pay off the mortgage at 47.  I’m also assuming they pick that $28,000 as their spending rate for retirement which includes some cash for travel and fun things since the mortgage will be gone when they leave work at 47.

I’m also going to assume that having a two kids eats up any spare money until they turn 28 when they start to get serious about early retirement.  After that point, after expenses they can save at most $18,347.16 per year, but wait, who’s looking after the kids?  Let’s take off another $12,000 a year for child care, but in reality you get a tax deduction for that so let’s assume after their tax return they pay $740/month net.  So that leaves only about $789/month for saving until the kids get older, so let’s assume that lasts for 10 years.

So Bill and Jane start saving but are smart and put the money in an RRSP and reinvest the tax refund.  So that boosts their savings to about $994/month while the kids are in care.  So at 5% for 10 years that leaves them with $154,350.  Then the kids leave care and they put the extra $740 a month into savings, but let’s assume outside the RRSP.  So in total they can save $1734/month for nine more years, leaving them with $477, 741 at 47.

Now the draw that down from 47 till 65 when they get OAS and CPP at their $28,000 a year and they only get 3.5% return now.  That leaves them with only $195, 577 at 65.  So assuming a 4% safe withdrawal rate they have about $7823 from their nest egg a year, plus their CPP and OAS they should be fine in full retirement.

So in conclusion it can be done, but you have to do just everything right.  Keep you costs way down and keep your shelter costs reasonable and it can happen.  If you want to spend more than that you will need luck or hard work to make more money.

This post is now part of the 243rd edition of the Carnival of Personal Finance.

I’ll offer myself up as an example I could have chosen another path that was better in line with my creative side, but no I was practical instead and took an engineering degree.  I chose it because I knew it was a more sellable degree that offered a higher and consistent income.  Ironically I have done very little true engineering work during my career, perhaps a third of my career so far, but that doesn’t matter it still got me a steady pay cheque.

Yet why did I do it?  I think perhaps because in our society we value financial security over happiness.  Happiness is a nice ideal, but people are typically more driven to pick the choice that offers financial security.  Yet is that security an illusion.  If you don’t believe me ask any one of the thousands of auto workers that have been laid off recently.  I’m fairly sure a year ago they thought their jobs were secure.

So why do we sell out if the security isn’t there?  I think we do it because we want to take the easy way out.  We want the arrangement of show up and do your work and we send you a cheque every two weeks or twice a month.  To do what truly makes us happy would entail a lot of self examination and likely hard work to make that dream come true.  Then after all that you wouldn’t even be sure how much you would be making.  It would be a questionable investment of time for an unknown rate of return.  We would be living on what we produced and none of us is sure enough of our talent to make that bet.  Our self doubts haunt us so we take the easy way instead.

Yet how many of us are really suited for this whole slave away at a job we don’t like for pay cheque?  What would happen if more of us took a risk on happiness?  Would the world change or would every look the same except for a lot of happier people?  I don’t know.

So what’s your story?  What did you sell out for or are you one of the rare ones who are living your dreams?  If you feel like sharing, leave a comment.

So what to do? Simple. Keep investing and put on your blinders to some of the noise. The media often seems to overstate the trouble of everything. For example I don’t recall a news release with an oil companies profits lately. That should cheer up some investors for a little while. At the same time if oil does keep going the way it is we would have entered the peak oil world which brings up an interesting question of if we should continue to invest they way we have.

Assuming for the minute peak oil is true as a theory (for those of you not familiar with it read this) and that it is here now or will be shortly. This would result in a rather fundamental shift of how people do business. Up until now transport was always taken for granted as being cheap. So getting something made in China where labour is cheap is possible do to cheap transportation costs. It is cheaper to do that than let someone in North America do it due to the difference in labour costs. If transportation is now more expensive that China may lose that advantage and now it makes sense to do things more locally. Why? Cheaper transport costs due to less distance traveled.

So if the shift for companies becomes local based will they get squeezed out of the local market due to more nimble small businesses which can react faster to the changing economy or will the big business world adjust to new reality of expensive transportation costs and continue to produce profits?

Overall I don’t know, but in any case a shift of some kind is likely soon. 6.5 billion people and growing population and cheap oil can’t go on forever. So what do you think? Is peak oil valid or bullshit?

This post is now part of the 161st Carnival of Personal Finance.

Monday’s child is fair of face (or at least wrote a great post which caught this editor’s eye).

• Wide Open Wallet wrote a great post on Credit Protection.
• Save and Conquer wrote an entertaining test on if you are financially boring.
• Amateur Asset Allocator wrote an interesting post on Will the Falling Dollar Cause Inflation?
• One Caveman’s Financial Journey talking about a tricky issue of Setting Boundaries for Grand Parental Spending
• Budgets are Sexy writes about the Four Stages You’ll Encounter during a “No Spending” Challenge
• Help My Cash Grow writes about Don’t Blame OPEC for the high price of oil.
• Five Cent Nickel writes about The Social Acceptability of Frugality.
• I’ve Paid For This Twice Already writes about Tracking Pennies (something that is painful to do, but useful).
• Are You Going to Be This Way the Rest of the Time I Know You (wow what a long blog title) writes a great post about Time and Effort are More Valuable Than Money.

Tuesday’s child is full of grace (perhaps owing to the fact they learned their money management and savings skills well).

• Personal Finance Hacks presents Avoid the Top 10 Banking Mistakes
• Blueprint for Financial Prosperity presents Top 5 Online Banks
• Accumulating Money presents What to Do Before Age 30 to Set You On a Firm Financial Path
• Saving Advice presents Falling Off the Dave Ramsey Diet
• Seaykopitiam presents Saving Vs Investing: Think like the rich man
• Money and Fitness Blog presents How Much Should a Graduation Gift Be?
• Results Junkies present The Best Way to Spend $20, Today
• Beyond Paycheck to Paycheck presents My Car is Driving Me Nuts
• $aving to Invest presents Why Online High Yield Saving Accounts are Poor Investments
• Discover Debt Freedom presents 5 Financial Rules to Live By
• Destroy Debt presents Manage Your Money with a Preparation Account
• The Personal Financier presents Budgeting for the Unexpected Expenses
• Happy Rock presents Step Towards Financial Simplicity
• Our Fourpence Worth presents Expensive Lessons in DYI
• Mighty Bargain Hunter presents Pay $15 for Gas Now
• Wealth Junkies presents Pinching Pennies
• Think Your Way to Wealth presents Ways to Educate yourself about Personal Finance
• Mastering Your Card presents Creating a Financial Emergency Plan
• Save to the Future presents Self Discipline and Your Money

Wednesday’s child is full of woe (potentially because they didn’t use their credit wisely and now have some debt).

• Not the Jet Set presents Credit Cards Aren’t Evil
• Taking Charge presents Protecting Your Identity While Protecting Us Abroad
• Until Debt Do Us Part presents There I Said It – Personal Finance is Boring
• Free from Broke presents Do you Love Your Job? A Credit Card Evaluation
• Single Guy Money presents the Twelve Year Car Loan (Editor’s Note: No that time frame isn’t a typo).
• Credit Addict presents The Death of the No Fee 0% Balance Transfer Credit Card Offers
• Pinching Copper presents Are Credit Cards the Next Financial Crisis
• Millionaire Money Habits presents Four Steps to Turn Debt into Wealth
• My Dollar Plan presents Turn Your Wasted Money Into a Debt Reduction Plan

Thursday’s child has far to go (but so does everyone who is investing for the long term).

• FIRE Finance presents How to Turn $5000 into $22 Million
• David Makes Cents presents My Alternative Incomes
• Dividend 4 Life presents When is Enough, Enough
• Dividend Growth Investor presents Why Do I Like Dividend Achievers
• My Family’s Money presents Dollar Cost Averaging: The Basics
• American Consumer News presents Automatic Savings with Automatic 401(k) Plans
• Retire to India presents Generating Income in Retirement
• Million Dollar Journey presents Hedge Against Your Bills by Owing the Company
• Can I Get Rick on a Salary presents a Success Story
• Don’t Feed the Alligators present Target Retirement Funds for Medium Term Savings
• Uncommon Cents asks What Asset Allocation For Older Investors?
• The Dividend Guy presents The Top 5 Ways to Lose Money in Stocks
• The Dough Roller presents An Easy Way to Invest

Friday’s child is loving and giving (at least by providing a review or teaching about being frugal).

• Free Money Finance presents a review of The Automatic Millionaire
• Pennies to Nickels presents Seven Trips for Travel Planning
• Bible Money Matters presents 7 Tips for a Frugal Wedding
• Sound Money Matters presents Budget Party Planning
• Out of Debt Again presents How to Get the Most Out of Your Tires
• Dollar Frugal presents Less Hairwashing – Better All Around
• Everyday Finance presents How I Saved Thousands on a Kitchen Remodel
• Finance Puzzle presents Online Coupons Codes Savings
• Living the Cheap Life presents Free Wireless Internet On the Road
• Coupon Diva presents Organic Tomatoes and KY Jelly
• Money Kings present Why Aren’t you Bald?
• You Might as Well Burn $5 presents The Battle of the Air Conditioner
• Value For Your Life presents Holiday Budget Travel Tips
• Money Smart Life presents Three Ways your Boss Can Save You Money on Gas
• Monroe on a Budget presents The Crayons in your Frugal Living Crayon Box

Saturday’s child works hard for a living (by looking into the economy or real estate)

• Trader’s Narrative presents Fed Funds Minus 90 Day T-Bill Rate
• Penny Jobs presents How Inflation Will Change Things
• Funny About Money presents Real Estate: Is Now the Time to Buy?
• Searchlight Crusade presents The Best Way to Avoid Default and Foreclosure
• Blunt Money presents What’s Really Involved With Buying Your First Home

But the child who is born on the Sabbath Day, Is bonny and blithe and good and gay (well with that many descriptors I think I can safely call this the misc posts section)

• Money Ning presents Taking Advantage of Different State’s Sales Tax
• Daily Money Hack presents Don’t Quit Jobs for Less Than an 8% Raise
• My Wealth Builde presents (Early) Retirement – The Final Frontier
• Smart Money Daily presents Five Perfect Jobs for Retirees
• The Platinum Year Network presents Shocking News About Social Security Solvency
• Insure Blog presents Why you Need Health Insurance, Redux
• Frugal Babe presents Ten Years Gone By
• Squawkfox presents How to Survive Losing Your Purse or Wallet
• Fabulously Broke in the City presents Do you Recognize This Bag At First Glance?
• Broke Grad Student asks What are you Doing with Your 2008 Tax Rebate?
• Cash Money Life presents Is US Currency Legal?
• Dreaming of Ferraris presents Getting Ready for a Planned Splurge
  
• Growing Money presents Salary Review

So that this the Carnival. Make sure to check out the main site for who is hosting next week.

PS: Sorry for the delay getting this published, but I had some sever issues this morning.

First let me explain how I handle my Christmas shopping. I plan really far in advance. We normally set our total budget amount a year in advance. That way I start saving in January for the following Christmas. Then in October I sit down with my wife and we check out our list of people we bought for last year and updated as required. We also set limits for each person at this time. Typically limits are $50 for an adult, $40 for older kids and $20 for babies.

So over the last few years our total budget has been between $1150 to $1500 for 22 to 24 people. After we buy a present we enter it into a budget spreadsheet. This allows us to track each year how under budget we are doing, since we have yet to ever break our total budget. Our actual spending has ranged from $900 to $1350 total or $40 to $56 per person including shipping.

If we go over budget on a individual present, we then reduce our spending on someone else. This way the overall budget stays below its limit regardless of what we spent on a single person.

This entire system works well for us partly because we have set limits on our spending that we don’t go over as a whole. To help you reduce your holiday bill I suggest the following:

1. Don’t buy gifts for people you barely have a relationship with. In my mind presents for teachers, mail carriers, babysitters and office co-works is insane.
2. If you insist on doing something for your office bring in something that everyone will like such as a sample tray of your Christmas baking.
3. Setup a gift exchange to reduce costs. A few years back my siblings got together and setup a gift exchange between our spouses and us. The idea was to let everyone focus more on the kids. It’s worked great so far.
4. Homemade is fine as a present. Actually when we first got married, my wife and I made gift baskets, which featured mostly homemade items such as candles, hot chocolate mix, cookies and then some assorted dollar store items like mugs. They went over very well because everyone realized the effort we put into them (not to mention our hot chocolate mix is better than any store bought one I’ve ever had).
5. Start shopping early. This allows you a stress free week before Christmas and also allows you time to find most of your presents on a good sale. Just because a present looks like it cost $50, doesn’t mean you have to actually spend anywhere near that amount.

So that’s my method and ideas around Christmas shopping. If you have an idea that has worked for you please share.

This post is part of the Canadian Tour of Personal Finance, check out the other blog posts here.

Over the years you most likely have heard numerous ‘rules’ about the amount of income you are going to need in retirement (For example, 70% of your pre-retirement income). The problem with many of these ‘rules’ is they don’t account for what your retirement is going to be like personally so in the end they are useless.

So how do you come up with how much your going to need? You do some math and a little soul searching.

First find your last couple of pay stubs and figure out how much money you took home last month after taxes, CPP and EI (if you have a spouse you can do this together).

Then minus anything you were saving for retirement, after all when your retired you don’t need to save for it anymore.

Then minus any directly work related monthly expenses. For example you won’t need too many suits when you retire or that parking space downtown. Also your bill for the gas to commute is likely to drop. Don’t forget about dry cleaning or the fast food for supper that you keep buying since you don’t have time to cook.

Then minus your mortgage payment (don’t forget to leave your property taxes in if they are combined into your mortgage payments). We are going to assume that you were smart enough to ensure your home is paid for when entering into retirement.

Then minus what you spend on the kids every month on average (after all they should be out the door or close to it when you retire) and don’t forget about that RESP contribution you’ve been making.

Then take that monthly amount and times it by 12 to get a yearly amount. This is your base number. Now we have to start adding a few things.

Add $1000/year for each property and/or car you plan to own in retirement. So if you have the house, cottage and a car you add $3000 to your base amount. This is to cover maintenance and depreciate costs for your home and car, respectively.

Then think about what hobbies you want to do in retirement and add in an estimate on the yearly cost for those. Keep yourself from going crazy here as this might make your total look way higher than it needs to be. Also I don’t recommend including travel here. I’ll get to that in a minute.

If you have an ongoing medical condition which you spend money treating regularly you want to also add an estimated yearly cost for that as well.

When the math is all done you now have an estimate figure of yearly costs in retirement.

For example your numbers could look like this:

Take home pay $3850/month
- retirement saving $700/month
-work expenses $130/month
-mortgage $1020/month
-kid $270/month
= $1730 Base Amount

Base Amount $1730/month * 12 months/year = $20,760/year
Add in one house and one car + $2000
Add in hobbies + $2000
Add in medical + $0

Total amount to live in retirement $24,760/year.

Now once you have your number you can divide that by two if your doing this with your spouse. So that would be $12,380/year/person. Now take your new yearly income and do an estimate to determine your tax bill. So let’s use some rough numbers.

If the basic tax exemption is around $8000 that would mean only $4380 a year is taxable. Let’s assume a 25% combined federal and province marginal tax rate. So the tax bill for each person would be $1095/year. So add that back in to your total amount to live. $1095*2 + $24,760 = $26,950.

This amount represents how much you need to live for your desired retirement lifestyle. It will not be a perfect estimate, but it should at least land you in the right ball park. As I mentioned early I do not suggest including travel money in this amount. Why? After your 75 birthday you are likely going to start slowing down a bit and not traveling as much. So if you include a set yearly travel amount your going to end up with an artificially high number because your assuming your traveling until your assumed death age which isn’t all that realistic.

Instead your better off just starting a slush fund for travel. Take your yearly estimated travel spending and times it with the number of years you expect to be traveling. For example, if you want $3000/ year for travel from age 75 to 45 you would need $90,000 ($3000 * 30). When calculating how much you need to retire early you just add this amount to your total.

Come back tomorrow as I start into revisiting my first try of retirement calculations (Part I, Part II, Part III, Assumptions) to see if I can really save enough money to stop working at 45.