And now for something completely different…
As you know, the main theme of this blog is personal finance and relating with money. But sometimes I get questions sent to me about something completely different. For example, the other day somebody emailed me and asked if people celebrated Christmas in Soviet Russia.
While I’m not an expert on Soviet Union, I was born in Soviet Union and lived in Soviet Union till my teenage years until the country fell apart and became Russian Federation (or Russia for short). Few years later, our family decided to move to Canada where I lived ever since then. But I still remember my Soviet Union childhood rather vividly, and sometimes it’s fun to sit around and talk about how things used to be. So, why not?
Did people celebrate Christmas in Soviet Union?
Not quite. As you may or may not know, Soviet Russia wasn’t a religious country. While nobody would send you to jail for believing in God, it was regarded as something outdated and silly. Churches had their fair share of parishioners, mainly senior citizens. But younger people for the most part were non-believers. For example, I grew up in a atheistic family. Neither my mom nor my dad ever mentioned God to us outside of saying “Oh dear god, what have he done this time?” while talking to my school teacher.
Instead, celebrating New Year on December 31st was promoted. By far it was everyone’s favorite holiday. New Years holidays usually meant time off school and time off work. New Year celebration also meant eating a lot of food and spending time with your family and friends.
New Year is all about saying goodbye to the past year and the welcoming of a new one. It’s focused on celebrating happiness, love, prosperity, relationships.
We live in a day and age when majority of people live paycheck to paycheck and are under constant pressure of money issues. According to recent poll by The Canadian Payroll Association, more than half of polled Canadian employees would find it difficult to meet their financial obligations if their paycheques were delayed by a single week. For younger people it’s even higher – 63 per cent of people between ages 18 to 30 report living paycheque to paycheque.
I’ve had my share of financial issues in my life as well. I’ve lived paycheck to paycheck for quite some time. At some point, I had negative amount of money in my name. There’s nothing I liked about this way of living, and I knew I had to move towards something better.
What’s better? Personally, I think you can reach a point when money doesn’t worry you on everyday basis. It doesn’t mean you have all the money in the world and don’t have to work! It simply means that your financial side of life is under control and you are always prepared. I call it “financial awesomeness”.
Being financially awesome also means you’re no longer under great stress of living paycheck to paycheck. You can afford to spend more time with your family. May be working four days a week instead of five simply because you no longer need every single dollar from your paycheck? Enjoying extra trip overseas here and there? All these things sound appealing to both me and my wife, and we’re doing everything we can to move towards it.
Here are few steps I think will get us (and anybody else for that matter) to financial awesomeness:
I have seen several financial bloggers cover financial milestones one needs to hit by age thirty. Liquid from Freedom 35 blog not long ago posted his progress, along with Bridget from Money After Graduation.
Even though I’ve been enjoying 30’s for a couple of years by now, I thought I’ll follow their example and
jump off the roof see if I hit any of financial milestones along the way.
Please keep in mind I’m a financial underdog because I’ve came to this country in my 20’s, spent a number of years working minimum wage jobs, and had to learn personal finance on the go. My wife is an immigrant too and came to Canada in 2006. Because of this we might be behind on things.
What about you? Have you hit these milestones yourself?
1. Financially independent from your parents ?
Been so for a very long time. Sometimes I miss living with my parents. Adult life has too many responsibilities. You have to go to work, pay bills, act all mature…What a drag!
2. Debt free ?
We have no debt outside of our mortgage. Currently working on accelerating our mortgage repayment but it’s still a very long way to go. Unless I bump into Morgan Freeman tomorrow who wants to give me large sum of money for my opinion of his work (mostly positive), we probably have another 10 years before it’s fully repaid. This makes me a sad panda.
Don’t borrow money, people! Debt means less money in your pocket. Don’t you want to have more money?
Why we will never borrow money:
Just the other day my wife and I were having a discussion. Out of the blue, I asked her - is there anything you’d consider buying if it meant borrowing money? After thinking for few minutes, she couldn’t come up with anything. And then she asked - why would we ever borrow money for “stuff”?
She is a smart cookie. Much smarter than me, I fully admit. After all, I’ve borrowed money before and got into all sorts of trouble because I couldn’t control my borrowing and spending. I’ve had collection agencies call me several times a day and demand payments. I’ve worked two jobs with no days off to pay them off. I ate copious amounts of noodles with tuna to save every penny to pay them off. I’ve sold virtually everything I owned to pay them off.
And it’s not like I’ve borrowed money to do something cool - my borrowed money went into school I didn’t even finish and “things” I just had to have.
Oh, the insanity! I want to go back in the past and slap myself for doing it. It actually hurts to think about how stupid I was with borrowed money.
I want to be all about passive investment income!
One thing I’m always curious about is how people live. A bit nosey, but it became a habit shortly after moving to Canada from Russia as I tried to become more social and more familiar with Canadian people.
After looking at how people around me live, I’ve come to conclusion that there are two types of people. One group of people (group A) goes to work every day and works to get a paycheck every two weeks: store employees, nurses, police officers, business managers, truck drivers, and many others.
And group B lives off passive investment income without going to work. They enjoy income earned in forms of dividends, business distributions, royalties, and even blogging. Of course, there are people who happily enjoy both of these worlds and use passive investment income to increase their earning capacity.
Passive Investment Income
Personally, I’d like to see us slowly transition from Group A into Group B. And I been thinking about this for quite some time and discussed possibilities with my wife.
What would this transition look like? Well, currently we’re making decent income for our age group. Money we earn comes in every other week and leaves in form of bills and expenses. What if we could replace work income with passive investment income, and pay our bills and expenses with it? That would put us into strange world where we can choose to work, but are not forced to do so. We can spend more time enjoying doing things we are passionate about. We can probably do more travelling and connect better with our family members living overseas. Oh boy, do I like the sound of that!
Saving money can be classy
I’ve mentioned multiple times that investing a part of our income became a priority for our family. This year, our goal is to invest at least 30% of our working income towards future. You know, the good old “pay yourself first” principle that nobody really understands at first.
At the same time, we don’t make a lot of money. We’re still young, still lacking education and fancy titles, and our paychecks are much lower than we’d like them to be. But hey, it’s not just how much you make. It’s also how much you spend! And this is where saving money comes into play.
We enjoy saving money on things - especially when we can put these savings to work by investing it or spending on something we truly enjoy, like traveling. I don’t advocate living like monks and eating cat food just for the sake of saving money. But if you can save money without comprising anything and direct the savings towards something meaningful, saving money can be a beautiful thing.
Automating finances and why I love it!
Let’s be honest, running the financial side of your family affairs takes time, it takes effort, and takes discipline. Mundane tasks such as bill payments and shuffling money between accounts require your attention. Even small things take time that is a precious commodity these days especially if you have kids. Somehow you need to remember due dates, amounts, different bill types, save for retirement, invest your money, send checks, and prepare for large expenses coming up … This almost sounds like a full time job sometimes.
Would it not be wonderful if all of these things were happening automatically? This is what I call automating finances - making sure all these tasks happen independently of your actions. You can be busy doing something else or even be traveling in South America yet your financial affairs would require very little of your attention, and can run themselves automatically.
When I was much younger …
… I used to go camping almost every week with my friends. Growing up in Soviet Union (and later Russia) our camping trips were quite different from what kids these days do - we had no luxury of driving to a camping spot and bringing every item imaginable to use while we were there. Instead we were limited to what we could fit into our backpacks, and camped like little Spartans - no electricity, no running water, and total reliance on yourself.
We would cook our food from scratch with fish we caught, collect firewood and build our own fire, and sometimes even make our own shelter. So, you might say we were used to getting by with what we had instead of bringing everything and anything from home.
Naturally, just like every camper I’ve always packed my Swiss army knife when packing the day before. Swiss army knifes are ingenious because you’re basically carrying a dozen of tools with you that come in handy when the situation calls for it. Big blade is great for cutting down small branches. Small sharp blade is great for gutting fish. Little saw might not see action every day, but it can really help you out on occasion. Scissors are great when patching your tent. Can opener is quite awesome for opening cans, naturally. Some of these tools you’d use several times a day, and some hardly ever. But boy, that Swiss army knife helped on so many occasions.
Swiss army knife of personal finance
Why would I start off by talking about my swiss army knife and what does it have to do with main topic of this blog - personal finance? Everything.
You can’t predict what will happen with you tomorrow. Life can go seventeen different ways from Sunday, and you have to be prepared for it. Being prepared financially for life’s turns takes a number of steps which over the years I’ve identified and implemented in my life. Hopefully, by sharing them with you, I can help somebody to be prepared financially for tomorrow.
Here’s our Swiss army knife of personal finance:
Prepare for financial disaster
Whatever happened to our solar energy investment?
Back in May, I’ve mentioned how we’ve decided to invest directly into solar energy production in Ontario by investing into Solar Income Fund. This great company specializes in developing, acquiring, and management of solar farms. Some of them are simple rooftop operations, and some are major solar energy farms taking up acres of land.
Mr. Financial Underdog:
Age: Early Thirties
Current Occupation: Construction worker
Previous Occupations in Canada: Photographer, forklift driver, warehouse worker, phone book delivery person, computer assembly worker, video-game tester (not as exciting as it sounds).Continue Reading