Saturday, 26 September 2015

3 Steps to Financial Freedom.

Financial freedom means different things to different people. To some it means working till 65 and not having to worry about money anymore. To others it means still working but choosing what you want to work at. To me it means leaving my good paying job with benefits and pursuing a more relaxed lifestyle where my money works for me and not the other way around. Though this may sound too simple, the truth is if you dedicate yourself to these 3 steps you will become financially secure.

Step 1. Cut your expenses!

If you are living day to day or paycheck to paycheck that is the first thing that needs to change. Take a dollar and put it in a jar, stop buying your takeout coffee or pack a lunch. If you are an impulsive person stop carrying cash or your Credit Card. (I remember about 15 years ago I used to place my Credit card into a Ziploc bag full of water and put it in the freezer to ensure I wouldn't use it.) Take a grocery list for example, 2/3rds of the average persons grocery store purchases end up being an impulse purchase. What ever it is, you need to find a way to have a little extra at the end of the month.

Step 2. Get your self out of debt!

We have all heard the saying, "Money is the root of all evil" but it is just not true. Evil is just evil, and debt is its understudy. Every time that you make an interest payment on your consumer debt you are taking a step away from the end goal of financial freedom. Now take that money that you have found in the last section and put it on your debt. Make a list of all your debt payments from smallest to largest. You are most likely you are already paying the minimum payment on all of these debts so put the rest of your money that you have saved on your smallest debt. This will have the biggest effect on your bottom line as every month now your minimum payment will be lower and therefore your savings will be higher. Take that new amount of money saved plus any additional money that you can to keep paying down the smallest debt until it is gone. Once that is gone, now you can move the rest of your debt repayment to the next smallest and get that one paid off. Over time your debt repayment money will grow and grow as you pay off the smallest debt on your list until they are all gone. This strategy is called the dept payment snowball.

Step 3. Make your money work for you!

Alright, now you are debt free but you are still a long way from being financially free. However all that money that you were paying towards debt can now be put to work for you. Sure if you miss your daily "Double Double" go ahead and get one but don't make it a habit again. My personal favourites are dividend investing and owning investment property. It is called passive income and it will work while you sleep. With dividends you consistently get paid every dividend reporting period (usually quarterly) and they are taxed very kindly unless they are placed in a tax free or taxed deferred account and then they aren't taxed at all. With the rental properties you get paid usually monthly but will have some extra responsibilities to deal with as well as a few headaches. With the extra revenue you make you will be able to save more, and every dollar you save will be making you more and more. Now instead of the debt snowball, the saving snowball has been activated.

These are the three things that you need to do to in order to become financially independent. This is how I am getting there how about you? 

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Friday, 18 September 2015

How I paid off my mortgage! (Part #2)

After determining that we were not fans of renting and finally buying the property I talked about in "How I paid off my mortgage! Part #1", we then realized how much we did not enjoy paying interest, and due to this we finally got our financial feet under us. We started to quickly pay off the principal on house #1 and had gotten it down to roughly owing $100 000. That's when the priorities needed to be adjusted.

An Easier Life

The discussion about having children turned from a discussion to a "soon". My wife and I both worked full time jobs and we travelled a lot with our jobs. With that being said we decided the relative remoteness of the property from neighbours and hospitals was more than we were willing to deal with so we decided to sell and move to the city. 

We called a realtor to make the sale and purchase. Our appraisal for the house we were selling came in at around $250 000. The property value increased by just over $100 000 in 4 years.

(Mistake #3) Like the majority of people we had chosen to move up in houses. That is, getting bigger and better. We had paid off a good portion of our principal on our first house and now also had an extra $100 000 in equity. We bought a beautiful 2600 Sq ft raised bungalow for $305 000.00 after selling our first home for $245 000 That left us with a $160 000 mortgage. Now we realized that if we had just traded properties for one of the same price we would have had a $100 000 mortgage like we did in house #1 and would have been satisfied with our location.

If you are keeping tabs, I have mentioned that we made three costly significant mistakes in the first four years of home ownership. At this point in time we could have been much further ahead financially but through either financial ignorance or just plain greed we had made these choices and as it turns out they still weren't that bad.

We again did significant work on this house #2. We completely finished the large basement and finished the yard. Most of the work was done through sweat equity. Our first child was born a year and a half after moving to house#2 and so the prophecy was fulfilled.

Changing the Game

We were continued to pay down our mortgage as fast as possible  but were also putting some money aside for investments. In 2009 we saw an opportunity to purchase a unit in a building that was undergoing a condo conversion. We had the down payment, jumped in with both feet and became landlords. I will go into this in detail in a different post and talk about our passive income streams and income properties.

The Only Constant Is Change

In the summer of 2010 our company transferred us from Edmonton to Toronto. What a change that was and again the priorities were changing and once again our priorities needed to be adjusted.

If you want to find out more about "How I paid off my mortgage" keep coming back or subscribe to my blog below.

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Tuesday, 15 September 2015

Sweating the small stuff

Every one has heard the saying "Don't sweat the small stuff". I completely disagree and I'll explain why.

Imagine that your finances are like a boat and you are on that boat fishing in the ocean. You have certain quota of fish that you must fill before you are finished or you will not get paid at all! You have all the tools to stop a lot of small leaks or one huge hole. Think of all of the minor expenses you make, like your takeout coffee habit. Now think of these as little pinholes in your boat that are slowly dripping, accumulating water onto the floor. Now the saying of "Don't sweat the small stuff" says not to worry about that coffee, or the small drip in the boat, and don't worry about not packing your lunch, or the new pinhole on the other side of the boat.

Eventually if you don't look after the small stuff, that small stuff will become a larger problem. Now instead of fixing these small holes with a tiny bit of resin you have to fix a large hole using various types of resources.
Now what happens if you start getting the small holes again. With your resources depleted you will be in danger of sinking unless you head to shore for more  resources. If you head to shore you will not be catching fish and therefore you can not finish your job and will not get paid. Now lets put this into context. Think of those small holes as your expenses, so small expenses like coffee, paying too much for cable or going out for lunch regularly. Also, think of the fish as your yearly income. If you go to shore to get more resources that means you are putting more time that you should be fishing into fixing the holes when if you had just patched them right away you would be finishing earlier (retiring earlier).

The same thing can be said for thinking that it's not enough to save $1.00 a day.  I won't even say probably, it is enough to save even the smallest amount when that savings will create more fish for you and allow you to retire earlier. Just that $1.00 a day invested over 10 years at a 5% rate is $4677.88!

So ask yourself, at what age do I plan on retiring? For most it is age 65. If you can save just $5.00 a month extra you could probably retire 2-3 months earlier just like $10.00  would probably increase that to 6 months early.
Happy Retirement
 This is the life I've chosen. I choose to sweat the small stuff and therefore I'm planning to leave the workforce by age 42. Hopefully I'll see you there.

Friday, 11 September 2015

An apple a day!

I'll be honest I never really understood the analogy of "an apple a day keeps the doctor away!" That is until recently but only with a small twist. Thanks to Joshua Sheets and his Radical Personal Finance podcast I now understand the phrase as the "doctor" as a "financial doctor". Mr. Sheats broadcasts a very detailed but very interesting daily podcast in which he wants, if you listen long enough, you to be able to pass financial planning certification exams.

It comes down to being financially savvy with your hard earned money. This is another way to be frugal and sweat the small stuff. This is my interpretation of his "love for avocados".

Like him I love the taste of fresh fruit and vegetables. Unlike him I do not live in a forgiving climate for many types of fruit. That being said I constantly have bananas, peaches and apples on my counter or in my fridge. Forget the bananas, lets concentrate on the apples.

Your Own Produce Section

Look through the flyer for your local grocer for apples. You can get 3lbs of apples for roughly $4.00 and the apples will last you probably just over a week if you eat 1 a day. Now let me introduce you to the oldest form of dividend investing. If you buy an apple tree, you can probably get a six foot tall sapling for under $40.00. Now this isn't an immediate payoff but no investment should be looked at as an immediate payoff.

For the next year you keep buying your bags of apples but when the next apple season rolls around you'll get your dividend payment and will not have to buy any apples for a while. Maybe you will get back $20.00 dollars worth of apples that first year or it may be as little as $8.00 or less but now you will have that tree for years and the payback each year will increase as the tree gets larger.

After five years you will have easily made your initial investment back plus and you will have a continuous supply of apples when they are in season. You will have fresh apples and will also be able to make apple sauce and some frozen desserts and meals that have apples in them. Maybe you will have enough that you might even be able to trade some for raspberry canes, a blueberry bush or a strawberry plant.

The cycle can continue and as you can see that small investment can yield a high return after several years. 

This is just one more way I sweat the small stuff.

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Sunday, 6 September 2015

How I paid off my mortgage! (Post #1)

Yes it is true, the title is no lie. There was effort and a lot of mistakes involved, don't get me wrong but to be honest it just happened and it happened before I turned 37!


I always hated the idea of renting my living space. I grew up in a home and for me something that I was renting did not feel like a home!

My wife and I moved in together in October of 2000 when we were both 23. It was a small 900 sq ft rental. It was a conforming duplex with a nice yard and at the time the rent was very cheap. We had nothing for furniture other than what we borrowed and received from our families.

We lived there for about 9 months when we decided we were not happy renting. We both had a very small RRSP account but at the time the combined totals were enough to come up with the down payment of a small starter style home in Edmonton.  We had a total of around $5000.00 and decided to go look for a duplex. Our thought was that we wanted a fixer upper that we could live in one side a and rent the other to help supplement the mortgage and property tax payments. After a couple weeks we couldn't find anything in our price range that was workable enough so we decide to wait a year and save some more money. This was mistake #1. Of all the success I have had with my personal finances, I still see this as my biggest regret in my financial life. We should have spent the extra $50,000 and bought a duplex.

The First Property

We remained unhappy in the rental but saved a little more cash and come January 2002 found a property 25 minutes outside of Edmonton that we could afford. This was mistake #2.

 The property was 3 acres with a 1200 sq ft bungalow on it. It didn't even have municipal water or a well! We paid someone to truck water in! We paid $147 000.00 and the down payment of 5% was $7350.00. This is where I learned about CMHC (Canadian Mortgage and Housing Corporation insurance) fees which were 5% on the balance equalling $6983.00. In reality only $387.00 of my original $7350.00 down payment actually paid down the house. Doesn't that make you furious it sure made me mad.

After a year of saving money and working on the property we decided to try and drill a well because everybody in Canada can find water under their feet right? Wrong? We threw another $7500.00 away to 2 different drilling companies.

Changing the rules

Let's get back on track and talk about mortgage payments. As much as we hated renting we hate being in debt, seeing those yearly mortgage statements with the amount of interest and the amount of principal paid made my stomach turn. We decided that we should concentrate on paying down the mortgage immediately and from the outset doubled the minimum payment. Over the next 4 years we paid down nearly $47 000.00 of principal by raising the minimum payment 20% and lump summing as much as we could up to 20% of the principal.

Different priorities came into play in 2006. Well not different but extra priorities. Children!

Continue the
journey How I paid off my mortgage! (Part #2), keep coming back or subscribe..

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Saturday, 5 September 2015

How much did your Peanut Butter Cost? Save money on your groceries!

One strategy that I use to save money on groceries is price matching and using coupons. I have reduced my grocery bill by approx 30%-40%. We spend an average of $500 a month on groceries so that is approx $150-$200.

Flipp LogoPrice matching is quite simple so please do not feel overwhelmed by the thought of it. It does take a bit of preparation but it is worth it. I am a visual person so I like to look at my weekly flyers and write my grocery list down. I write the name of the store and what I want to price match down. Another tool that I use is Flipp, it is an amazing app. You can search what you are looking for and then save it on your phone. For Flipp you can download it from the Google Play store.

When you want to price match you need to match apples to apples. If you see Kraft Peanut Butter for sale and it is 1 kg then you can not price match the Skippy brand, you must price match the exact same item. When you go to the register you tell the cashier that you would like to price match the peanut butter. If the peanut butter is $4.99 in the store but $2.88 in the flyer or Flipp app then you just saved  $2.11. Price matching does not stop at shelved items, I price match produce, meat, bakery, pharmacy, quite honestly anything that the store sells and you can prove another stores price. Unfortunately  you can not price match at all stores. My go to stores are Wal Mart, No Frills and Superstore. Hopefully you can see how these savings add up.

When prices are low, such as the Kraft Peanut Butter for $2.88 then I stock up on them. My kids eat Peanut Butter by the spoonful!

These flyers are from the same week.

Another strategy for more savings is to use coupons when you are shopping. You can find online coupons, obtain coupons from your weekly flyers (Smart Source inserts), or sign up through manufacturers for coupons. Did you know that Chapman's gives out a yearly coupon for $5, all you have to do is ask. There are some great blogs out there for saving money while shopping, one of my favourites is Savings Guru

Image result for imaageWait I am not done! There are also rebates that can be
obtained after you shop. Checkout 51 is a wonderful
app and a way to get some of your hard earned money

I am nowhere near as good as I could be at price
matching and coupon shopping and I know that if
I had the time to put more effort into it, I could
most likely save another 20%. When I retire this will
happen but for now I am content knowing that I am
saving money.

A few other techniques I use are I always look to see what is in the reduced, bakery and produce area and the discount shelves or carts in the store. I also ask the employees what day and times they look through the  inventory and put it out (some stores have specific times they have to go through their stock). Hopefully the tips that I have given you can help you save some money as well, remember a penny saved is a penny earned.

This is just 1 more way that I sweat the small stuff!

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Thursday, 3 September 2015

A big mortgage mistake

Today is a great frugal day! I made $89.85 in $10 minutes

However that being said it was nearly a sweat the small stuff catastrophe!

A mortgage I have on an investment property was due on Monday and a payment I was expecting didn't come in. I had enough money to cover the cost in a different account but wasn't paying attention. Today I received phone call from the bank saying the payment was not received for the mortgage and now I was being charged interest (only $0.15 at that point) but also a $45.00 service fee. I looked at the bank account that the payment should have come from and I noticed an additional $45.00 non-sufficient funds charge! So one from the bank and one from the mortgage department.

For a frugal person that always sweats the small stuff this $90.15 hit to my finances was also a hit to my pride. My wife was not happy and therefore I was not happy (remember happy wife, happy life). Then Mrs. Frugal said "call them back and ask the mortgage department to waive the fee". As a no fee banking establishment I thought there was no chance but I called anyway. After getting transfered 3 times I found someone that could assist me. I mentioned that I carry 3 mortgages with them right now and have had 5 from them in total and never had been late before so I would like them to consider waiving the $45.00 mortgage company fee. He actually waived both and returned a full $90.00 of penalty fees.

The moral of this story is that I learnt a huge sweat the small stuff lesson about paying attention to my finances and that having nothing to lose is the best negotiating position and all that lesson cost me in the end was $0.15. Phew!

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Tuesday, 1 September 2015

Saving Seeds #1

As they say there is a first time for everything. So as my first gardening year begins to wrap up I thought what was the next step in my frugal lifestyle. Actually it came to me as I walked past where my peas used to be.

Right there on the ground was a full yet dry and shriveled pea pod. I was about to throw it in the compost when I realized the dry peas looked exactly like the peas I had planted in the spring. So as a test I took them out of the pod and replanted them. 5 days later I had pea shoots coming up and the new step in frugality was born! The best part is I received the original peas from a neighbor.

I guess this is a good time to go over the disclaimer. I have no idea what I will get out of these peas. I do not know if they are heirloom or hybrid. All I know is as I write this I have 5 small pea shoots growing in my small raised bed. Disclaimer # 2 I am by no means an expert gardener, this is trial and error but by my triumphs and failures you might be able to achieve better results than me.

Getting Started

Here is my next step Cherry tomato seeds. I originally bought these seed in the garden area at Walmart. I assume these will not produce the same type or flavor of fruit, if they produce at all. I will plant these next year as well as buy some new heirloom type. I am also try to save the seeds from a Roma tomato that I received in trade from a friend for a spaghetti squash.

So far I have squished the tomatoes into a cup.
(I am partially following the steps but didn't have enough tomatoes to half fill the cups as stated)

I have added water to the cup and then strained through a paper towel. I then let it dry for 24hrs

 Then I picked the seeds of the dry paper towel and placing on a plate.

I am planning to plant these seeds, and any new tomato types I can get my hands on, around the April 1, 2016.

You will need to come back now and then to see how my experiment is going and what other seeds I am going to try to save.

Don't forget to "Sweat the small stuff" and the rest will take care of it self!

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Sunday, 30 August 2015

Why Compost?

As a frugal person having a a garden no matter how small was basically inevitable. Once started the goal was how to produce the best quality and quantity of produce to off set our grocery bill.

One obvious step to take is starting to compost some kitchen scraps.

The Good

If you are considering a garden of any kind maybe you would want to take a look at the benefits of a compost. Here is a link to the US Composting Council fact sheet for your perusal.

Below I will list what I believe to be the top benefits of composting and some negative affects as well so you get the majority of the facts.

1. Improves Soil structure.

Compost will improve the drainage of clay soil, improves the water retention of sandy soil. Making all soils workable and fertile for plant roots.

2. Waste Management Reduction.

The less stuff that goes in your garbage the less ends up your garbage bag or Green bin means the less trucks on the road and the less waste making it to the waste management facility. This chart shows what the Edmonton waste facility deals with

3.  Free soil/fertilizer

I would be re-missed if I didn't some how have some type of frugal reason in this list. You could go to your garden centre and buy a bag of compost or triple mix for $3.99 or collect your yard and kitchen waste for a year and have 4 to 5 bags of compost for free! On top of of this I find I also get volunteer plants growing from the edges of the bin like this cherry tomato!

The Bad

Now for some of the negatives.

1. Pests

Compost piles can attract animals such as mice. If you put a small wire mesh under your bin you will stop the rodents but still allow worms to travel in and out of it.

2. Flies

Again a side affect will be a large amount of soldier and fruit flies living in the compost. This can be mitigated by always placing your dry material on top.

3. Smell

The compost depending on how much wet material vs dry material could have a rotting odour. This can be mitigated by having it away from your door if possible or keeping it covered with your dry material (carbon).

If you have a compost benefit that you would like to share please do!

Check out an apple a day or Bungalow to Duplex!

Friday, 28 August 2015

A coffee a day keeps retirement away!

What do you value?

Do you value your morning coffee?

How about your lunch?

Or that mid morning snack?

Every day I see the huge waste of money being spent on frivolous things. Small things that are going to have a huge impact on the bottom line or future date the someone will be financially independent. Thanks to David Bach of Finish Rich and Automatic Millionaire fame we know about "the latte factor". Myself as a bit of simple/basic person have never even had a latte so I 'll explain this using a Canadian Institution, Tim Horton's. Half of all my co-workers walk into work in the morning with some form of beverage, usually a Double-Double. What is the cost of that coffee? $1.50 - $1.75. Before you cry out about the loss of your morning coffee, I don't mean you need to give up coffee to be financially independent. It's just that there is a more efficient choice for your caffeine fix.

The True Cost

We can look at this inefficiency a little more in depth.

$1.50 X 22 work days = $33.00/month

or you could buy a 12 cup coffee maker for under $20.00 and a travel mug for under $10.00.

using these you can brew a good coffee at home for roughly $0.27 a cup according to this post on Coffee Detective.

$0.27 X 22 workdays = $5.94/month

Cost for month 1 $20.00 + $10.00 + $5.94 = $35.94 vs the $33.00 for Tim's
Month 1 savings is -$2.94 Actually more spent than before but now you have the coffee maker.
However ever month after that you would save $27.04
Do you think that is not a lot of money?
Over a year = $324.48
10 years = $3244.80
35 year career = $11356.88 Now this is some serious dough!

Now if you save the extra $27.04 and get just 5% interest you can turn that frivolous spending into $30847.94 according to the calculator site

You can break down almost all of your minor "frivolous" expenses like this and save oodles of cash.

Because it really is all about "Sweating the small stuff" when it comes to your finances.

Do you have a story you want to tell, leave me a comment, I would love to hear about it!

Thursday, 27 August 2015

Frugal means cheap! or does it?

I pride myself on being cheap. Not super cheap but cheap enough.

But what does being a cheap person mean? Here's a definition of cheap.

1. Relatively low in cost; inexpensive or comparatively inexpensive.
2. Charging low prices
3. Of poor quality; inferior
4. Stingy; miserly.

I hate spending money. Some people tell they get a rush while they are shopping but I on the other hand feel sick to my stomach. In the former case I believe it is the same rush as people get when they are gambling. Spending money to me is gambling because that is what I am doing with my future.
Obviously there are necessities and don't get me wrong I like to have the occasional gadgets around the house but I try not to pay full price. I think maybe that full price gets clarified as well. Not everything I buy is on sale but I usually only buy it after it has been around for a while and I have done my comparative homework on it.

Lucky for me, my wife is fully on board. One might even say that she is steering frugality ship!

What does it mean?

Let's go back and look at the definition of cheap and then my onion on what it really means:

Line #1 "Relatively low in cost;inexpensive or comparatively inexpensive".

Why would anybody pay more for the same product if they can find it cheaper somewhere else.

Line #2 "charging a low price"

Well this is a good ting isn't it. Isn't it foolish to pay more for the same product if you can find it cheaper. To me this is going out to your upscale restaurant when you can get the same steak for at least 1/2 the price if not in some cases 10% of the cost. As with nearly everything in life there are exceptions but should not be the norm

Line #3 "poor quality or inferior".

OK now here is where cheap and frugal take too different roads. different will find products just like in line 1 the people that are cheap will you will buy the cheaper products instead of the more expensive product that is actually better who by the inferior product instead of the superior product which is better no matter what my number for

Line #4 "being stingy or miserly".

Now this is putting yourself ahead of others. If you out for dinner and you have a coupon to save 20% of the meal that's good. That's being frugal, but if you go for dinner use your coupon and then only  tip the server based on the reduced price and not the original cost, that's being cheap or miserly. In what way is it fair that your server has to be negatively for their employer possibly a major corporation giving you a a big discount. This person is actually counting on your the tips from the table to possibly buy their kid a backpack for school or a Christmas gift, or whatever, anyway you get the point.

When it comes down to it I've had to learn #3 more than once. In an attempt to save money I have bought vehicles that were not exactly what I wanted or need but were cheap. In the end this vehicle ended up costing my family more in fuel, more in repairs, and more in dissatisfaction the the other vehicle would have. I have bought the bottom of the bin gadgets that had less than half the capabilities than the basic good model and had very little use out of them and ended up purchasing another that had all capabilities the capabilities I was looking for.

The take away

The moral of the story is that if you are frugal you will save money and be on the path to financial freedom but if you are cheap you will, more times than not, spend more money in the long run and be possibly cause financial harm to others.

Do you have a story you want to tell, leave me a comment, I would love to hear about it!