I started writing this post while somewhat hungover after a night out in Toronto with friends from University that included a bar that had 343 different kinds of beer on it’s menu.  This was an expensive night (with that many different flavours, I felt it was my duty to try to get through as many as I could) that I don’t regret (other then the tiredness and sore head in the morning) and got me thinking about other things that I buy or spend money on that I know are a waste of money and are counterproductive to my end goal of retirement at 45, but I do anyway because of various justifications.  Over the years, I have also learned how to limit the amount of money I spend on these activities in order to at least have some semblance of budgeting with my vices, which are as follows:

Video Games: This “hobby” is probably my most expensive habit.  I own an XBox 360, Wii and Playstation 3, which means in total, I have approximately $1,000 worth of hardware that all play essentially the same games (in my defense though, the PS3 was a wedding present).  Trent at the Simple Dollar gave tips on how to reduce the cost of video games by buying only games that have long-time playability, reducing your cost per hour to a minimum.  I don’t have an attention span long enough to continually play a game for months and months and after I have beat it, I rarely feel the need to return to it to play it again.  Up until a few years ago, this meant that I would be trading in games for 25% of what I bought them for to get new games, something that is not entirely desirable.  Now, I spend $17 per month and rent games over the internet through zip.ca.  I pick the games I want to play and the company mails them to me as I mail them back.  This allows me to play several more games then I normally would for a flat fee, thus limiting the expensive ownership cost of the games.  The only downside of the service is that I never know what game I’m going to get, which is kind of interesting sometimes.

Golf: I love to golf.  If I had a choice, I would spend most of my summer wandering around courses in the area.  This is a very expensive hobby as well, with equipment and usage costs, a person could spend significant amounts of money over a season.  I have limited my costs in couple of ways:

1. I golf in the evenings, utilizing “twilight” deals offered by most public courses in the area.  For most courses, it works out to 25-50% just by starting the round later.
2. I limit golf equipment spending.  I limit club purchases to at most one per year.  Golf balls can also be expensive, but you can find deals online on used balls.  In my experience, a $0.20 golf ball will go just as far in the bush, or just as deep in a pond as one you’ve spent $1-$3 on.  Last year I bought 10 dozen used balls for $30 + $10 shipping.  These should last me several years and work just fine.
3. I budget year-round for this hobby.  I could fix the playing cost by purchasing a membership, but in general unless you play 50+ rounds at the same course during the day, it doesn’t work out to be cheaper then paying on a per-round basis.

Gambling: This vice actually costs me the least amount of money per year, and actually allows me to make a little bit of profit on a per year basis [If I pick the right teams, which I didn't do yesterday when I went 1 out of 4 in the first round of the NFL playoffs :(  ].  I found a gaming site that accepts bets as low as $1 per game and use this, reducing my risk, while still allowing a wager on the game, which is really all I want.  Profitability is uncertain, but if bets are researched (similar to stocks), I think that a skilled person could make decent long-term profit through betting.

Beer: I’ve been led to believe that most people also enjoy beer (unless I’ve been watching too many football games), which can get expensive to drink in Canada where alcohol and tobacco are taxed significantly.  This year, I am going to start brewing my own beer, mainly because I enjoy making most things from scratch, but also because I believe if I learn to do it well, it could lead to some cost savings down the road, after purchasing the equipment.  Right now, I just drink cheaper beer, after finding a few brands that I enjoy (I’m not sure if it’s available elsewhere in the country, but I would highly recommend Brava Light). It would be healthier to give up beer altogether, but it is something that I enjoy occasionally, and it’s just tasty :).

How about you, what are your vices?  How do you fit them into your financial plan?

Why do we refer to ourselves as consumers?  Because we consume, yet this isn’t what we really are.  It’s like trying to make sense of a person by looking at their water bill.  It doesn’t tell you much.

What we really should call ourselves are citizens.  We members of great nations who look to improve our standing in the world.  Collectively North America has long been a great place to achieve dreams, but it’s now lacking that somewhat.  We have forgotten true greatness doesn’t come with a new TV on credit but rather great people which starts with our leaders.

So remember to vote in your upcoming election.  There is no such thing as a wasted vote.  Find which party most agrees with your own beliefs and then vote accordingly.  Be a citzen and not a consumer and remember to vote.

Well after yesterday’s disaster of index performance I decided to do a little digging.  Exactly how bad has it been lately.

Well the following is the major stock indexes that make up my portfolio and their performance for the last few months.

TSX

• June 18, 2008 - 15073
• Sept 29, 2008 - 11285
• Down 25%

S&P 500

• June 18, 2008 - 1337
• Sept 29, 2008 - 1106
• Down 17%

MSCI EAFE Total Return Index

• June 18, 2008 - 1468
• Sept 29, 2008 - 1163
• Down 20%

Wow that sucks!  What is really scary is the US and world index have been falling since the start of the year.  If you take that in to account the loses are closer to 24% for the S&P and 26% for the MSCI Total Return.

And I’m just left sitting here with two thoughts on my mind.  Damn I wish I had more cash to go shopping right now.  Panic sellers can be good deals if you can stand the downside.  The other thought is bonds were a good idea to include in my portfolio for the sleep at night factor.  Best of luck everyone.

Alright the US is looking at the mother of all bailouts to the tune of $700 billion dollars.  They have even hinted at 1929 style crash and depression to follow if they don’t offer this bailout package and stiff the US taxpayer with the bill for the next 50 years or so.

Is it me or is this all strangely sounding like the famous ‘weapons of mass destruction’ wild goose chase?  We take something bad and pump it up to something ‘terrible’ and then get the public support to do something stupid and leave people paying for it for decades to come.  The trick is to get it passed fast so people can’t read the fine print and realize what is going on.

They keep saying it will wipe out lots of investors.  The really good question is which ones?  How much money will the average people lose?  After all in the lovely capitalist society isn’t most of the wealth concentrated at the top.  Who is really going to get hurt badly?  Perhaps a couple 100,000 people out of millions?

If the US is really all about free market, they should let it correct itself.  Afterall the market has been trying since 9/11 to correct itself downwards.  Will it hurt going down?  Yes, but think of it this way.  All they are really going to do is take a large hit now and spread it out over a number of years with interest.  So what do you want to pay $5000 now or $100/month for the next five years?  Either way someone has to pay to clean up this mess.

So what’s your thoughts on the big bailout?  Needed or hot air?

Ok, here are a  couple of reader questions I’ve been meaning to answer.

Chris asked:

Do you know if there are any tax advantages/disadvantages to buying a property down south?

I’m assuming by down south that Chris is referring to the US.  Perhaps the most obvious thing to point out is if Chris is a Canadian resident that he is subject to Canadian income tax on his world wide income.  Hence any money made on a rental in the States would be subject to Canadian income tax.  Yet, Canada and the US do have a tax treaty which is suppose to reduce double taxation.  Then to make matters more complex it depends if you setup the rental as a business or if you just own it personally.  Generally speaking I did a little research on this and concluded you need to really talk to a professional about this one.  There is just to many variables involved for me to take a guess at.  I would start by giving a call to CRA.

David asked:

Hi; I am looking for a mortgage calculator that allows me to put in principal, payment amt., payment freq. and interest; and then tells me how long it will take to pay off.  All the ones I find do principal, period,  ayment freq. and interest; and then work out the payment amt.

I want to fool around with my weekly payment amounts to find out how it will affect the length of the mortgage.

David you can use the calculator I mention in the Tools section of the site.  It will allow you to enter a payment and keep the amount of time to pay it off blank.  That way you can play around with your payments and find out how long it takes to pay your mortgage off.  Just keep in mind that the term number is in months not years.