Just around five years ago, we’ve bought our little home. Five years ago we’ve signed on the dotted line and became proud owners of our own townhouse. For young immigrants like us, it’s kind of a big deal. For somebody who had a negative net worth and was completely broke just few years prior to this, it is even a bigger deal.
Surprise-surprise, I haven’t won the lottery since then, so the mortgage is still with us five years later; which isn’t at all this surprising given the fact that I never buy lottery tickets. So, our mortgage is up for renewal, and we’re getting ready to sign the refinancing documents.
You know what really grinds my gears sometimes?
It’s when you drive by a car dealership and see a kick-ass car on display with a huge sign - “Easy payments of $199! *”.
I’ve noticed - any time you see an asterisk (fancy way of saying “star symbol”), it means you’re about to step into a mine field. It might as well have a skull and bones in it. Watch where you step, and read carefully whatever is on the bottom.
Of course, in much smaller print it says “bi-weekly, on approved credit”.
Consumers have been fighting stores, corporations, and dealerships trying to outsmart each other for a long time. I must say, sadly we’re losing. Bi-weekly car payments is just another type of ammunition they’re using against innocent consumers with devastating results.
Bi-weekly car payments
Here are some interesting stats for you:
- Average American spends 3 hours/day watching TV for a grand total of 90 hours/month
- Using your mobile device comes at 30 hours/month - talking, texting, playing games, etc.
- We spend 13 hours/month playing video games (obviously this number is much higher for younger people though some seniors might be addicted to Tetris, you never know).
- Exercising only takes around 9 hours/month for most people
- We socialize for almost 20 hours/month (including online and in person)
Rest of the time we spend working, sleeping, and eating. I could not find studies showing how much time we spend standing in front of the fridge pondering about food (at least 4 hours in my case) or arguing with your spouse whose turn it is to take the garbage out (none in our family - it’s ALWAYS me).
It’s been a while since I’ve updated my blog, and I do apologize for that. In case you haven’t noticed, I’m not exactly a professional blogger (heck, my blog looks amateurish even compared to amateur bloggers), and I work for a living. Things in our sleepy town of Kelowna, BC tend to be very seasonal, and sometimes it catches me by surprise. All of sudden work got busy, and writing things on my little blog became a lesser priority. Life happens, you know.
Recently, I’ve received an email from one of the readers asking me to describe my philosophy when it comes to money. After coming to terms with the fact that I have a philosophy, I have spent a couple hours of trying to figure out what it is and how I can translate it into text.
Personal Finance Principles
Ever since I’ve decided to get better at personal finance, I’ve been calculating net worth for myself and later for two of us. Of course, during first couple of years it was mostly negative because I borrowed too much and had a tendency to spend every dollar I’ve made.
In fact it was just sad:
My assets: $124.45 on my checking account
My liabilities: $12,400 in student loans + 9,700 on credit cards
Net worth: - $21,975.55
(These are my actual numbers circa 2004!)
Of course, now our net worth statements look much more positive (check out our net worth update from 2014).
But I believe you should be calculating net worth even if you’re broke. You might say - heck, why should I? Net worth statements are for rich people who have money, stocks, and flying cars. Why should broke people bother with this?
Old Russian superstition and attracting money
Personally, I’m not a superstitious person. My wife isn’t one either, but we do share couple of superstitions between us which we stick to for some reason. Perhaps we’ve inherited them from our parents. After all, kids do what parents do without questioning it.
My wife’s superstition is somewhat cool. If she ever gives somebody a wallet as a present, she always puts money into it. Some people consider giving an empty wallet a sign of bad luck - if you give an empty wallet, it will stay empty. At the same time, if you put some money into it and hold on to it, this money will be attracting money for you and making you wealthier as the time passes. So, she always puts $5 or $10 dollars inside a wallet before gifting it.
I’ve received two wallets from her as a gift over the years, and both contained money. For the last 4 years since she gave my current wallet as a gift, I’ve been walking around with a $20 bill tucked away inside of it. She laughed a little when explaining it to me the first time, and said it’s all stupid, but her mom has always been doing it, so she does the same thing now. Monkey see, monkey do!
How did we do on our New Year Resolutions?
Last year, I’ve compiled a list of goals and resolutions for 2014 to hit by the end of the year. Some of the goals were financial, and some personal. Now it’s time to revisit them, and find out if we did in fact hit our New Year resolutions this year!
1. Invest 30% of our income - HIT!
Our goal was to save 30% of our after tax income towards investing. Basically, every month we were to move 30% of our paychecks into special savings account and invest these funds. Also, any of the dividends or investments cash flow were to be reinvested - moved into the same account and not be touched for consumption. Basically, we wanted to live on 70% of our income.
I’m glad to say that every single month we did this without failing once. In fact, we’ve bumped it to 33% halfway through the year just to keep things a bit more challenging. On top of it, we’ve managed to increase our mortgage payment by 10% and to set aside money for a car in case our car decides to call it quits on us.
What really worked for us is budgeting our monthly expenses, avoiding frivolous spending, and sticking to the plan. While we didn’t live like monks, we always thought twice before pulling out the bank card.
2. Update my blog on a weekly basis - HIT!
I’ve been rambling about money online for over a year now. Every week I feel the urge to post something. Sometimes rather philosophical, something instructional hoping it will help somebody who is in the similar situation. The subject of money is considered taboo for the most part and people don’t freely talk about it. Online though you can talk about anything you want with like-minded individuals all day long, and I’m glad I can contribute to the global conversation about personal finance.
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.