Save money

I’ve said this to a few people and it seemed to make a significant impact on them, so I thought I’d share it here too.

In an effort to save money, I used to refrained from buying what I want and, in some cases, even refrained from buying what I need.

This usually lead to some degree of misery, disappointment or discomfort.

I have tried to completely change that. I will pay for whatever I need. I even pay for things I want – yes, I buy what want and don’t really need.

But the difference is that, now, I work towards keeping my needs and wants as minimal as possible.

I’m much happier for it.

It makes a lot of sense from a modern quality management perspective too. It’s less costly, less stressful to find and fix problems earlier in the process rather than later. And by “earlier”, I mean in both the temporal and causal sense.

If you walk backwards within yourself and trace what causes you to spend money in the first place, you can change the cause and the “spending too much” problem takes care of itself without you having to worry about it. =)

‘Freegans’ are a growing subculture that has opted out of capitalism by cutting spending habits and living off consumer waste.

This is an interesting idea. I know that we waste a lot and I know that a lot can be had for free.

I also know that I couldn’t nearly go as far as Nelson is and go through garbage for food… but I’d like to go on one of these tours (if it were available in my city) to see if there are tips I could pick up.

I’m not above getting things for free or asking for free stuff. I think as long as I could frame it right, I could explain it to some of my less understanding family members.

How to Feed Yourself for $15 a Week

This is an excellent article with great tips on how to live on less. I don’t follow or agree with all the things written here. But there is good advice in it and there are links to other excellent entries on related topics. And it got me thinking about other stuff, which any good article should.

That’s my personal advice to anyone who asks [and doesn’t ask] me. I follow it, myself. It’s proven to be the most powerful and solid advice ever.

But if you must see more long-winded versions of this exact piece of advice (and from ostensibly more trust-worthy sources), here are some excellent links.

31 Days To Fix Your Finances

Suze Orman always has excellent advice.

And a nifty tool, recommended by a friend who is a Financial Advisor (not my FA, mind): Is It Better to Buy or Rent (use someone else’s userid and password from BugMeNot).

I met a 劍俠, a Paladin Swordsman, in a realm I pass through every day. This Swordsman is unique. Perhaps not as legendary as others in our day, but he does draw a crowd. He only appears occasionally.

We catch each others’ eye every once in a while and we exchange a silent, temporally mismatched greeting. We’ve exchanged actual words only once or twice in five years. Neither of us has any desire to say more to the other.

The Swordsman says a lot of things. I don’t always like him or what he has to say. I listen intently when I’m interested and go on my way if I’m not. He wouldn’t have it any other way either.

In one of his narratives, he said that wealth, in and of itself, does not make anyone good or evil. Wealth accords you the freedom to be yourself. It allows you to act the way you want to act; treat people the way you really want to treat people. Money allows you to show your truest colours.

If you were a jerk with no money, you’d be a world class asshole if you were wealthy.

If you were nice with no money, you’d be at least kind, possibly a philanthropist if you were wealthy.

Bravo, 劍俠. Bravo.

I know the look on peoples’ faces when I tell them that I’m thinking about my own retirement plans. You’re too young. Isn’t it too early for you to be thinking about retiring? Honestly, I’m in disbelief that people can be that retarded about planning for the future.

Finances aside, there’s also the question of vaguely formulating the actual living arrangements and logistics. No, I can’t predict the future and my life may change drastically before any of this ever comes to pass. But we’re at a point where our retirement savings has long been set up, monthly contributions are pre-authorized, annual reviews with the Financial Advisor Guy happen, we talk as things come up and things are ambling merrily along. There’s not much more I can really do about that except keep going to work every day and wonder if it will be enough.

Which raises the question: enough for what?

“Keeping up with the Joneses” is not the way to go. I need to keep up with myself. But I also need to develop some kind of measure to see how well I’m doing against myself, which isn’t easy either.

Perhaps thinking about what I actually want to do and how I want to live in my retirement will give me better focus and give my Financial Advisor Guy a better idea of my goals. It could answer some questions of how much and how aggressive my portfolio needs to be.

From volunteering at an elderly intermediate care facility, I really don’t want to stay in those types of places. It’s full of looming death in the air. Granted, that was just one place I worked at. There are other ones I can look into as well. I’ll see if that one’s any better.

What got me thinking, though, was the story of Bea Muller, who was living on a cruise ship exclusively in her retirement. I can’t remember when I saw it, but that’s a pretty nifty idea. I could see myself doing that. At least for a while. I’ve been wanting to whittle my material posessions down to the bare minimum anyway. All I need is some wireless enabled gadget, some clothes and some personal effects XD

The Port of Vancouver is a major cruise port. Between that and the lovely bed & breakfasts all over the Pacific Northwest, I think it could be a wonderful way to spend my retirement.

This is an awfully expensive retirement plan. I know that. Living onboard a cruise ship is said to work out to approximately (USD) $5000/month, plus taking into account that cruise ship prices have gone up, plus accounting for inflation. And I’ve never been on a cruise before, I really don’t know what “extras” are not included in the regular prices.

That’s definitely not including health insurance which is only going to become more important to have as I get older.

But I think it’s a good direction and goal to work towards. If I’m prepared for this, but end up doing something less expensive, then will I not do just fine? Maybe I could stay put somewhere during the winters and go wanderlust in the summers. Maybe I could find someone else who wants to run a bed & breakfast but not have the capital… I purchase the property and they run it. I don’t know.

This, of course, is a half-baked, hair-brained idea. I’m still thinking about this.

I’m Canadian, so the US dollar being what it is, I opened a USD account. I should have done this a few weeks ago when USDCAD was at 1.10 … which is pretty mind blowing!! But, oh well. I think I caught the exchange rate in a decent place today.

It kinda bugs me that I almost had enough for the minimum balance to qualify for the next tier up in interest. It’s quite a bit more, so I’m going to try to save and save and save to make Tier 5 as soon as possible.

Hmm… I also have ugly 24K gold jewelry that might be good to sell right now too. I feel slightly bad about that because they were wedding gifts. But they really are ugly things that I’d never wear and they’re sitting in my safety box doing absolutely zit-all to make me pretty.

As slimey as it is, I’ll just take pictures of them all and talk about them like I know and love each piece. None of them are heirloom pieces, they were bought specifically as wedding gifts. No, I’d NEVER sell a family heirloom unless I were beyond desperate. =\

Well, roughly Q3 and Q4 2005 to now. Let’s see:

We took a trip to Taiwan, Singapore and South Africa. It was a fantastic 3 week trip for the husband’s cousin’s wedding. Spent lots on airfare, but well worth it.

We talked to a mortgage broker and we’re switching to a different lender. We’re getting a variable (Prime minus 1.5) for the first year, then (Prime minus 0.4) after 1 year, but with an option to lock into a fixed anytime. We’ll be saving at least $2000.00 from the looks of it.

I’m doing a professional certification program. It’s not cheap, but I feel I need to do this for myself. I get some of it back because tuition fees are a non-refundable tax credit. But it would be for the 2006 taxation year which means I don’t get it until 2007.

We weren’t going to do anything for Giftmas. We seriously didn’t feel bad about not celebrating at all. But that was inevitable because his mother decided to bring his nephew to live with us for the few weeks over Christmas. So we had to do something in the way of gifts for the kid. Even trying really hard not to go fucknuts about it, just getting a box of chocolates for all the adults to share, the kid gets approximately one gift per adult. Even that hurt the wallet a bit.

The Canadian RRSP deadline is March 1, 2006. We’ll be making an appointment to talk to our financial advisor about contributing to our RRSPs this year. I really want to max it this year because of both of our salary situations from 2005. We both had significant increases. I think he went up a bracket. I had a huge chunk of severance pay from being laid off, but I found a job shortly after which means my taxable net income is much higher than usual.

This really wasn’t an ideal year to go on that vacation, we should have stuffed as much as we could into the RRSPs this year to avoid the tax implications. But his cousin’s wedding came up. I’ll have to pull out the pile of papers and see exactly where we stand and what we can do. Maybe we can use some of the Emergency Fund money if we both decide that avoiding the taxes is crucial.

We do have some donation tax credits that we didn’t use last year that we can use this year. That should help a little.

We need to tighten our belts and live like we’re dead broke again to save up a bigger safety net again. We have no other debt. Our mortgage guy pulled our credit report and said we have excellent excellent credit, so that’s good.

But still. I’m really not doing well this year. =\

Are You in Control Of Your Money? By Karin Price Mueller

Your Results

You’ve Found a Healthy Balance

So you’re not perfect with your finances, but you’ve certainly got your situation under control. You’ve made money maintenance part of your lifestyle. It doesn’t consume you, but you don’t ignore what has to get done, either.

“People who have it under control have made financial independence a priority to them, and they’ve worked it into their lives as part of their regular routine,” says Debra Neiman, a certified financial planner with Neiman & Assoc. based in Watertown, Massachusetts. “It’s who they are. It’s not a chore or something they dread.”

Instead, you choose to pay attention to your money. It helps you keep this part of your life stable so you can concentrate on other things without having a cloud of debt or financial uncertainty over your head.

You also see the big picture, and you understand that each area of your financial life affects the others. Sometimes people focus on one goal, such as retirement or college savings, and they make their money decisions in a vacuum. But you’re able to look beyond one money event to see how your overall financial plan will be impacted.

“When you’re in control, you know it’s important to step back and see how your decisions work with the rest of your plans,” Neiman says.

Why are you this way?

It’s your temperament, your past experiences with money and, in some cases, how money played a part in your upbringing, says Leah Dubberly, a certified financial planner with Merrill Lynch in Montgomery, Alabama.

Plus, you remember to enjoy your money once in a while.

“You’ve got to set aside a certain portion of your money to have fun,” Dubberly says. “A lot of people will build up their savings and when they get past a certain number, they start to enjoy the extra. That’s learning how to balance.”

I’ve been reading through some of the things other people wrote about saving money, namely putting a small amount away every day for decades and ending up with a million dollars.

It made me remember something that I was told a long time ago about why that type of saving isn’t the best thing to do. It’s fine for short term savings, like having 3 months of salary for emergencies. But it’s not the way to go for long term savings because of the purchasing power of the money you’ve saved today being much less than what it will be decades from now, assuming whatever rate of inflation.

I see two options for overcoming that: A) invest the savings so that the rate of return is much higher than inflation (so, at least 5% annual return) or B) spend it now.

A) is obvious. I’m doing that right now and doing fairly well. I’m beating the market, so I guess I can be satisfied. But with those kinds of returns, the funds are not very liquid.

B) is less obvious and probably very counter-intuitive to the whole “save money” initiative. But I think it’s important to realize that after a certain point, you need to do something with your money otherwise, the value dwindles away to nothing. “Value” can be intrinsic value, sentimental value or some other type. After you reach a certain sum, your money is useless if it’s not used.

What’s happening is I have a bunch of savings sitting in a 2.5% Savings account which would actually be losing value in the long run. If the purchasing power of that money is declining anyway, then it’s clear that I should take some of it and buy something with it so that I at least get some value for it now.

If the thing you buy appreciates in value (real estate, for example), then you would have beaten inflation. And if the thing you bought depreciates in value, but you’ve gotten good use out of it (car, lawnmower, laptop, vacation), then you would still have “gotten your money’s worth”.

It makes sense. Life is about balance. Win some, lose some. Make some, spend some. It’s the wisdom to hold that balance that makes life manageable in both excess and dearth.