Why do you work so hard to get what you don't even want?

The day is short, the night is long.

Why do we work so hard to get what we don’t even want?

We work so hard to get ahead of the game; work half our lives until we’ve won. And then one day, we sit at the edge of our bed and think: Lord what have I done?

The day is short, the night is long.

Why do we work so hard to get what we don’t even want?

Man in a suit, comes home and kisses his babies goodbye. Daddy’s gotta go on a trip honey, oh no don’t you cry. He’s gone for a week and then he’s home for a day. Well, pretty soon the babies won’t cry when daddy’s gone away.

The day is short, the night is long.

Why do you work so hard to get what you don’t even want?

You know we go to the mall and we go from store to store, yeah. Everybody seems to be wasting time until death walks through the door. And then you look at all your merchandise and you see. We’ve paid too high a price, you’ll see....

The day is short, the night is long.

Why do you work so hard to get what you don’t even want?
Why do you work so hard to get what you don’t even want?

Jearlyn Steele.


This is just a timely song, heard in a film called "A Prairie Home Companion" which reminded me how often we replace things we already have with things that do the same job, but "better". This endless upgrade cycle, often motivated by the need to impress "other people" is often at the root of our financial problems or shortfalls.

I know that I have been "victim" to the desire of always wanting something better, working hard at work to earn money, selling flesh, bone and time and then rushing out to quickly dispose of that paycheck on the latest temporary, fizzy gizmo.

So..

Why do we work so hard to get what we don't even want?

Buy one set of pans.

The blog is not really about making lists of all the things you can do to save a penny here and there, the internet is a vast resource for that sort of advice, however, there is a trend in our consumer driven society that encourages waste, so I thought I'd catalog a few concepts based on what my mum and dad did that made perfect financial sense.

The first being that you only ever need one set of pans.

Apply this thinking to a lot of things in life. If you buy a quality set of pans, good guage stainless steel, good lids and good handles, then you should never have to buy another. Then add the advice of our Scottish member, Jimmy; "buy great pans, but buy them at the best price". As I said, apply this concept to other things, but use your noggin about what is "best" for you, don't listen to the system, listen to your financial mind.

Common sense again? - well, don't forget that it's not just parents that "teach" you common sense, in a consumer driven society the system has a hand in educating you and a lot of that valuable information is the very information you should ignore.

As an example, why buy one mop (like mother did) and use it for ten years, when you can go out and buy a "Swiffer" every two months. Mother quietly went about using that simple mopping device without "educating" the kids that it was all you need, and now, with TV and the constant onslaught of media, young adults are being told to "throw that old fashioned thing away" and get the new, convenient, easy Swiffer.

Well, I don't know about you, but to me, mopping is mopping and I'd rather buy a quality, sturdy, "old fashioned" ten dollar mop that will amortize out at a dollar a year for the next ten years, than a fragile eight dollar Swiffer, that besides needing replacing in two years, needs "convenient" refils every month or so.

It's not better because they tell you it is.

The same is true with the pans especially if the only reason you're going to buy a particular set is because Jamie Oliver endorses them as pucker. In addition, for reasons known to themselves, the big retail stores like Sears tend to occasionally offer these valuable eight hundred dollar pan sets, to the shoppers, at seventy five percent off, that is you only pay two hundred bucks.

A great deal?

You should take your time, as with all things that affect your long term financial health, do your research and due diligence and then buy once and forever at the best possible price.

Hands in your Pockets

If you cruise the net and ask the question "How much money do I need to retire" then you'll spend a lot of time reading reports from banks, insurance companies, investment firms and other official bastions of financial hopelessness.

In the early nineteen nineties, so called self made advisors were preaching at "free" seminars that we Canadians would need a couple of million dollars to retire, and not to expect anything from the Canada pension plan or the old age pension scheme.

In 1991, according to one statistical website, the average wage of a Canadian was around $35,000 and if one of those individuals was attending the related seminar by the Papes, Costellos or Givens of that time, they would have been educated as to the hopelessness of their situation, however, that very hope could be purchased, in book or newsletter form, from the speakers minions at the end of the show.

"I'm not a financial advisor, but I play one on TV"

I don't think times have changed in the last fifteen years as far as the financial industry selling hope, they are slick and sophisticated and basically want to extract your hard earned cash from you with their MERs, commissions and fees.

As they preach that "you can't do it alone" and "we'll help" you have to take a step back and smell the coffee, see the wood from the trees and do anything you can to hold onto your money. They will use loss leader methods to snare you into one of their custom plans, lock your money away with skewed past performance figures and then quietly extract their two or three percent each year while your money stagnates.

In one pocket, out the other, that extra couple of percent you carefully save ends up on an insurance company or banks profit sheet.

So, take a deep breath, because you can do it, you don't need a couple of million bucks (unless you're going to retire at 30) and you don't need to pay, over and over, for the advice and guidance from the financial industry. All you need to do is start thinking for yourself about money, dedicate some serious time to the topic, use online resources (with a pinch of salt) and be strategic.

If you want to learn more, send $29.95 plus shipping and handling to.......

The Treasure Trap

It seems that early in my adult life I was constantly requiring rewards, payday would come along and the money would not even burn a hole in my pocket because it was never going to arrive there in the first place.

The advent of TV and the glossy magazines and billboards that dominate our society became a constant reminder that I should buy stuff to be happy, apparently, that was the only thing that could make me happy and content, stuff.

But it never did in the long run.

So, I bought more.

I've talked before about the credit trap, and from my own personal experience, it is a very elaborate trap that is extremely difficult to escape from.

The group Pink Floyd, defined our society as a machine, and what an efficient machine it is. The machine educates all levels of the consumer society, enticing us all into spending hard earned cash on the "must have" things that are needed, to be happy.

Once again, Jimmy has his two cents worth here:

"Some spend money that they do not have, to buy things they do not need, to impress people they do not like...."

That's a good point and back to my mothers comment about "all fur coat and no knickers" where it is actually the facade of wealth that needs to be portrayed to win points over other people. The reverse of this are the people in our society, who have a lot of money, and are quite happy to hang around in their old brown shoes and jeans, with no requirement or urge to impress.

But, enough about me.

I digress somewhat, the key thing here is although the credit trap is elaborate and well honed, it is reasonably easy to avoid if you take a contrarian approach to what the machine is telling you. Yes, it is a consumer society but leave the frenzied buying to the rest of them, as I've said before, you have to stop digging to get out of the hole.

If you are already in the trap, well, admit it and do something about it. There are non profit agencies out there that can offer good advice and constructive help, again be wary of anything that is free and always look for "traps within the trap" where those that offer to help are just after their own piece of your misery.

At the end of the day, there is really only one person who can control what you spend.

And that be you.

Pinch of Salt

Please remember one thing about financial advice.

"Don't take it personally, just take it seriously"

We've seen people arrive at the clubhouse, listen to our advice and become uncomfortable. It's a familiar sight here and at many financial seminars we've attended, throngs of people who listen, smile, but never act on the advice.

On a more personal basis, I've talked to people at work, about how to save money, and suddenly an invisible shield is thrown up, the perception appears to be that I was having a go, being critical of a chosen lifestyle.

Or they think I'm a nutter....

Well, they could be right about that one, but, advice is just that, it's never an attack on your choices, it's just words and information, it could be right, wrong or misguided.

But, you should listen.

Seriously.

What Mother should have said

The Scottish member, Jimmy, has been diligent in making money an interesting topic for his two children and his son has aquired an interesting perspective on it all.

"The bigger the house the bigger the mortgage, the bigger the car the bigger the car loan and the bigger the TV the bigger the line of credit"

Absolute common sense, but quite the comment from a 10 year old to his 8 year old sister!

In my house, growing up was always about money, but very little of what was going on financially "with the grown ups" was ever discussed, probably because they were too busy making ends meet.

"children should be seen and not heard"

At my schools, primary and secondary, it was very important in the curriculum that we be educated regarding Pyramus and Thisbe, the Capital of Yugoslavia or the importance of Venn diagrams. The subject of Economics was so vast and complicated that it never lowered itself to teaching the basics of running a bank account, balancing a budget or saving for retirement.

The point here is that, as you learn to master your own finances, take time to teach your children the same, sure, fiscal responsibility may be a huge topic for an 8 year old (or an 80 year old) but if you start them young they will at least know the basics for when they stop spending your money and start saving their own.

Ten things mother might have said.

I've compiled a list of money sayings or proverbs, some that came from mother.

1) Look after the pennies and the pounds will take care of themselves

This is something we advocate at the Millionaires Club, be frugal, don't waste your pocket change and over time you'll see the benefit.

2) Pay yourself first

I don't know if Dave Chilton (The author of The Wealthy Barber) was the first to coin that phrase, but, saving money as soon as you are paid works. If you immediately save 20% of your paycheck, you will learn to live on the remainder.

3) Money does not grow on trees

That's so true, most of us have to work extremely hard (and long) for our money, so why is our first instinct to waste it?

4) A fool and his money are soon parted

Impulse buys, instant credit, no money miracles. They'll get your cash off you if you don't think before you spend. If a deal seems to good to be true, then it probably is.

5) Those who seem the luckiest have often worked the hardest

Make no mistake, it's often not about luck or being in the right place at the right time, It's about hard work, frugality and common sense.

6) She's all fur coat and no knickers

This was mothers comment about people who bought items on "hire purchase" or the "never never" and often indicated a person who put up a facade of wealth and funded it with debt. If you follow the Millionaires Club, you'll realise that we don't like debt of any sort.

7) Money won't buy happiness

This is true, won't buy you love either, but a lot of family discussions and arguments focus on money, if you have it, it's just one less thing to worry or fight about. That is until your kids read the will.....

8) You won't win the lottery if you don't buy the ticket

Face it, You're not going to win the lottery, try the get rich slowly approach instead. If you plan and are wise with your money, you will have the equivalent of a lottery win over a period of two decades, plus, that time will go by quickly, believe me.

9) It takes money, to make money

The magic of capital gains, dividend yield and compound interest, topics we should discuss in depth at some stage. There are resources on the web that can show you how impressive the effect of compound interest can be over those 20 (short) years of saving. One dollar, invested at ten percent over twenty years will increase almost seven fold. Start now.

10) The best way to stop digging is to put the spade down

This is back to avoiding debt, especially credit cards, car loans and anything else that will allow you to buy stuff that you can't afford. Live below your means, fill in that hole and stand on level ground. Only then can you start to build your mountain of money and afford to retire early. Stop now.

Mother was usually right, but unfortunately, it took me the best part of three decades before I realised and began my plan.

You can start your plan right now.

Education Savings Plan

If you are a Canadian, with a child, you should be taking advantage of an RESP.

A Registered Education Savings Plan is a type of savings account that grows tax free until a child is ready for post-secondary education. RESPs are a good way to save for a number of reasons:

* the money grows tax free until the child needs it for tuition, residence and other educational expenses;
* an RESP allows you to apply for the Canada Education Savings Grant on your child's behalf;

The idea is that, once again, the Canadian Government is encouraging you to save money and is providing a tax shelter, which is good, and as a secondary incentive you can apply for the Canada Education Savings Grant which will provide an additional government contribution to the RESP, for each eligible child.

If you contribute $2500 to the RESP, the government will contribute an additional $500 which is an immediate return of 20% in the first year.

More information is available at :

http://www.hrsdc.gc.ca/

Close Shave

I've just finished shaving, sort of the old fashioned way, soap and razor.

Well, sort of the old fashioned way, the soap being the aerosol kind and the razor was a kindly donated Gillette Fusion, five blade, twin lube strips, all bells and whistles.

It must be, I've just seen Tiger Woods on the telly with one, and yes, by golly the thing gives an excellent shave. It's quite the coincidence that I received the razor as a freeby at the last company golf tournament.

What has this to do with a financial blog and the Millionaires Club?

It appears to me, that every time we receive something free, or amazingly cheap, there is a big catch and often a financial penalty if we don't do our homework.

Gillette make great razors and Hewlett Packard make great inkjet printers and both companies use the "loss leader" approach to selling their products. There may be other examples, but these two come to mind.

This is how it works, basically, the original product is free or very cheap, and it comes with an introductory blade cartridge. Thanks very much. The shock comes when you need to replace the cartridge and you realise that the product is "back end" loaded, that is, the replacements are incredibly expensive.

The same is true with inkjet printers and is particularly painful with the color printers. HP have been giving these printers away in many of the major electronics chains, buy a laptop or desktop PC and hey, here's a free inkjet printer. If they're not giving them away, well, I've just checked and you can buy one right now for sixty bucks at Future Shop.

You probably get the point, the cheap printer comes with introductory ink cartridges with about a 25% loading of ink, when you've cranked through those in the first month and need replacements, you'll find that, combined, they'll cost more than the original printer purchase (if you paid for it).

If you receive a "gift horse" take your time to look into your financial consequences, a free razor is fantastic, as long as you don't play their game, a free printer is excellent, but take it down to Goodwill when it's empty.

Jimmy says, If you really need a quality printer, see what the best deal is out there, do your homework, find out how much it costs per page and hey, once you realise that, don't buy another, just take all your documents to work on a USB stick and print them out for free.

Keep your money

You will probably already know this, but, it always helps to be reminded.

You do what your parents did, you save up 25% and you buy a house, the remaining 75% of the purchase cost is taken as a first mortgage.

House cost : $200,000
Deposit : $50,000
Mortgage : $150,000, amortization over 25 years, rate = 6%

This will mean that your monthly payments, excluding taxes, utilities, beer and cheese will be $959.71

25 years, 12 payments a year, your $150,000 loan costs you $287,913 and of course, not forgetting that in Canada there are no tax breaks on mortgages, that money is after tax money, if you pay taxes at around 30% you will have to earn around $374,286 to make those payments.

Everything we buy, we buy with after tax dollars. Even RSPs are funded with those discounted dollars, fortunately, the government gives us the taxes back when we save through a registered plan.

So, back to the mortgage, hopefully you realise how much it will cost you and will take the following steps to destroy your mortgage as quickly as possible.

1) Reduce the Amortization period (your monthly payement will go up)
2) Pay Biweekly, not monthly (your net monthly payment will go up)
3) Use that tax rebate (from your RSPs) to pay it off
4) Always be as aggressive as possible with interest rates, shop around
5) Make sure your mortgage is flexible, with good paydown options and no penalties

Item 3 answers the age old question "should I maximise my RSP or pay down my mortgage" and the answer, from the Millionaires Club, is yes. You can do both, maximise your RSP to get the maximum tax rebate, then apply that refund check as a Balloon payment to your mortgage.

Remember, there is no such thing as good debt, the plan is that you should keep your money, not give it to the banks or credit unions in the form of interest payments.

Pensions

Once again, Jimmy has come up with an important list regarding those tempting, or not so tempting, Company Pension schemes.

Ten questions you should know the answers to before entering a company pension:-

1) What type of plan is it.
2) Who pays for it.
3) What is the benefits formula.
4) Is the plan indexed.
5) When can I retire.
6) Can I retire early.
7) On what terms.
8) What happens if I die.
9) May I make past service contributions.
10) Who gets any pension surplus.

We've found that some companies insist on you joining their pension scheme and they enforce control over your money, others give you the choice of enrolment and allow an element of self direction, others match your contributions or call them group RSP plans which remove company responsibility on the direction of your money.

The example from an Ontario company where my wife worked is, in my opinion, a fine scheme. The company offered the employees a group RSP plan with an initial 2% matched contribution, stepping to 3% after five years and 4% after ten years employment.

So, that's all good, joining the plan gives you an immediate 2% increase in earnings which rises the longer you're employed, the deposits are to a self directed RSP format where asset mix can be controlled by the employee via the internet and, on termination of employment, all funds can be transferred out to an individual RSP with no penalty or fees.

The flipside of that is the enforced pension plan, no contribution matching or employment increases, no control over how your money is invested and limited or no transfer ability if you change jobs. This is why that list is important, you should understand all aspects of the plan before you enrol.

Remember that Contributions to pension plans or group RSPs always affect your contributions to external RSPs, so, make sure you understand the consequences as there can be penalties if you over contribute to your personal plan.

Who wants to be a Millionaire?

A quick search on the Internet brought this up.

"Traditionally, Americans have sought to realise the American dream of success, fame and wealth through thrift and hard work. However, the industrialisation of the 19th and 20th centuries began to erode the dream, replacing it with a philosophy of "get rich quick". A variety of seductive but elusive strategies have evolved, and today the three leading ways to instant wealth are large-prize television game shows, big-jackpot state lotteries and compensation lawsuits"

I like the first bit, thrift and hard work. If you follow me, then thrift, frugality and hard work will do it for you. If you are a leech on society, a wastrel or a fool with your money then you will reap what you sow.

Oooch, sounds uncomfortable does it not, but it's true. Work with yourself and start by being thrifty and work hard, if you do that, in time, you will be a millionaire.

Fact.

Bump

A quick follow up on the Cinram story.

The stock closed at $12.80 yesterday, down a scant 5 cents on the day, which was not too bad in what is a volatile market. Then, after the markets closed the company announced that they were reducing their distribution, and then, next month, stopping giving money out to their shareholders until further notice.

8,500,623 shares traded hands today and the stock closed almost 50% down at $6.48 as the stunned shareholders ran out of the crowded (multimedia) opera house.

Hey, but you know, food for thought here. There are the same number of shareholders at the end of the day, 8,500,623 shares were bought today.

The new shareholders must have done their research and have great hopes for the future of the CD and DVD industry.

They also have great hopes for an income fund that no longer provides an income....

Cinram

Lets try and be topical about this investing thing.

Cinram International Income Fund , the world's largest provider of prerecorded multimedia products such as CDs and DVDs, announced today that it is cutting its distributions and plans to suspend them amid weaker prices and slumping demand for its product.

In the household here, over the last five years, I've noticed that CDs and DVDs have lost the "fizz" appeal in the needless things marketplace, which means that we don't buy them anymore.

So, the Cinram situation comes as no surprise.

If you'd bought this Income Fund back in July you would have paid about $27 a share, and by the look of it, quite a lot of "investors" were buying at that level.

The same amount of investors who were selling actually.

At the conclusion of todays trading, before the announcement, Cinram was being bought, and sold, at $12.80 which was down 5 cents on the day. If you check tomorrow, there should be blood on the streets with this stock as everyone runs to the exit door.

The lesson here is reasonably straight forward, it was unlikely that a CD and DVD manufacturer and distributor would grow it's business in this video and music on demand, digital environment. The odds would be that growth would be flat, or diminish and that at some point, distributions from this "trust" company would vaporize.

That's the sort of thing that you should be thinking of before you take that important step of investing your money in any company, especially an income trust.

I apologize, but another short list is about to be thrown in your face.

1. Research all aspects of the company, do your homework.
2. Past performance does not guarantee future success.
3. Dividends or Distributions can always vanish

I'll post an update tomorrow about how the stock performs.

Investing

You can be an investor in most things, investing in real estate, investing in currency, or, more commonly, investing in publicly traded companies.

If you take the time to research a company, weigh it against it's peer group (if it has one) and decide that, for the long haul, this company is worthy of your ownership, then, using your trading account, you may take some of your hard earned money and make an investment in that company by buying a block of shares.

Your goal, as an investor, is to see long term growth in your chosen company, and, as a shareholder, reap the benefits of that growth, both through capital gains and often, dividend payments.

The key thing here, is that you pick good, solid companies and hold onto them for the long term.

You'll check your portfolio every three, six or twelve months and between those checks, you'll enjoy your life.

That is investing.

Financial Links

The last thing I want this blog to be is an endless set of lists or rules that you should follow in your financial career, after all, it is a blog and the human aspect of it all is what it's all about.

If you surf the big financial institution websites, you'll see an endless supply of formal advice that encourages you to invest, usually with them. The market people with these behemoths are always on the prowl, so, you'll also see alternate websites that are giving you the same message in a young, trendy and hip way.

Although I'm not sure if the young people out there use the words trendy or hip any more.

There are now thousands upon thousands of sites offering up advice about investing, providing conflicting messages for the young investor and to filter out some good ones I thought that I'd start adding links to those websites that have helped me achieve my goals over the years.

Instead of embedding them in a post that will scroll away, I've added a permanent box at the right hand side of the blog called financial links.

The first is a Canadian site from a chap called the Marketguy, if you cruise to his site and go through his archives, you'll find a human slant on this financial minefield, and, in the spirit of the Millionaires Club, a touch of humour about the whole process.

Have a good read, but remember, as with the Millionaires Club, these websites are opinion and not advice, often constructed by normal people without financial titles and, as we will repeat again and again, you are ultimately responsible for your own money.

Look after it.

Strategy

At the meeting last night, Jimmy was keen to have another list added to the blog, this one being about strategy for investing in the market.

1) Do not use the banks advice, use only a professional Financial Advisor.
2) Develop a long term approach, ignore what the markets are doing.
3) Remember that "Risk" is a four letter word and should never be used in the same sentence with the word investing.
4) Educate yourself.

Well, there's a list that has to be explained a bit, especially with the benefit of experience.

If you visit bank web sites, you'll see that they encourage investing, encourage tax planning and have a lot of resources available for investors. A lot of their information is well presented and should not be discounted when researching your investment decisions. I think the issue, with banks, unfortunately like Canadian doctors nowadays, is that they have little time for the small investor, so, if you go to your nearest bank and ask for advice, you'll find that after a brief question and answer period, you will be dovetailed into a strategy that "fits" your profile.

The same is true however with a financial advisor, and we wish you luck in finding a good one or someone who will recommend one. We here at the club have outgrown these people, usually after much pain, suffering and lacklustre performance.

The development of a long term approach is easier said than done with the emotions you will feel when you are investing your own money, so learn about yourself in the early years, there will be ups and downs, that is guaranteed, but keep track of everything and identify what works for you and stick with it, often flying in the face of what the market is "telling" you.

At the end of the day, be responsible for your own money by educating yourself, do not rely on banks, advisors, websites or blogs (like this) and understand risk and the effect of time on your hard earned money.

Pay yourself First

The follow on to living below your means is a recommended book.

The book, by David Chilton, is called "The Wealthy Barber" and it's basically a recipe for success, a guideline to "get rich slowly" by living below your means and "paying yourself first".

The book offers an exceptional introduction to personal finance, covering the simple ten percent rule, through life insurance, wills and tax planning. What we always liked here at the club was the way the book was presented as a fictional story about a barber (surprise, surprise) in the Canadian town of Sarnia. The format makes for an entertaining read and you'll learn a lot about personal financing along the way.

Here's a Wikipedia link :

http://en.wikipedia.org/wiki/The_Wealthy_Barber


Oh, and please don't buy the book, go and join your local library and borrow it.

Live below your means

Of all the advice for wealth building, the simplest is probably the best:

Live below your means.

When you spend less than you earn, there are two benefits.

One, you create a surplus that can be invested for your ultimate and possibly early retirement.

Two, by living simply and frugally today, it's likely the financial life habits you develop mean you won't need as much money in retirement as the person addicted to perpetual consumption.

Whenever advice is offered, there is often a defence by the non members who attend on a regular basis:

"Hey, I live for today, tomorrow may never come and besides that, I work hard for my money and I should enjoy it, not live like a hermit"

Well, yes, live for today but start living below your means by developing good financial habits and drop defeatist or dismissive attitudes. You don't have to live like a hermit to be frugal and you don't have to waste money to be happy.

Remember, there is one thing that is sure to happen, if you don't plan for it :

Tomorrow.

Six Major Obstacles

We all have to start somewhere and usually that means making a plan.

"If you don't write it down it will never happen"

Those words are quite true, you can say things like "I'd like to retire early" or "I'd like to manage my finances better" and the words will fly out into space. Those phrases, and many other similar utterances are usually followed by one word..

"but"

So, write it down.

"I will retire early and to do that I will manage my finances better"

The very first member of the Millionaires Club was a Scottish gentleman called Jimmy who qualified for his membership card (number 1) back in September of 1993.

He wants to ask the attendees to write down the Six Major Obstacles To Successful Investing:

(1) Procrastination.
(2) Failure to establish goals.
(3) Ignorance to what money must do to accomplish your goals.
(4) Failure to understand and apply tax laws.
(5) Being sold the wrong type of life insurance.
(6) Failure to develop a winning mental attitude.

Again, some simple and some complex topics there, but the first obstacle, procrastination, is the one that will steal your early retirement away from you.

Start now.

Write it down.

Simplify

How many bank accounts and credit cards do you have?

This is a massive topic, but let's try and simplify it all.

If you're married, then you need one joint checking account and one, non rrsp, savings account.

You need one, yes just one, credit card. No Sears card, No Canadian Tire card, just one.

On the bandwagon again, Presidents Choice offer a no fee checking account, that's absolutely no fee (at the moment) for transactions, withdrawals, deposits, atm (at CIBC machines), interac payments and transfers. In addition, printed checks are always free.

They also offer a high interest (currently 4%) savings account, with access to your money within 24 hours via transfer to your checking account on the internet.

It may sound as though the club is affiliated with PC in some way but that's just not true, they just happen to be one retailer who are offering good deals to consumers at the moment, try ING for your banking or mortgage needs and surprise, surprise we've recently heard that even Canadian Tire are stepping into the banking business.

Oh, and back to that single credit card.

Don't use it.

Hot Water

As we're on the topic of standalone hot water heaters, do you know what temperature you have set on the thermostat? - a good check to see if it is too high is to run your hot tap and see if you can keep your hands in the water stream without redness, scalding or second degree burns.

The minimum temperature you should have "at the tank" is one hundred and thirty degrees, and you may find that your thermostat temperature is set much higher than that.

Every extra degree above 130 is going to cost you money.

If you have a standalone electric tank, two thermostats need to be adjusted. If you're going to adjust them, a handy tip is to switch off the tank at the fuse or breaker panel to prevent that unwanted electrocution thing.

Calculated Risk

Saving little bits of money here and there is essential, and all it needs is a question from a club member to keep money in your retirement bucket.

Do you own your hot water tank?

The water heater rental charge is a monthly line item on a gas or hydro bill. Along with that ten or fifteen dollar charge (before taxes) comes the feeling of well being that, if something ever goes wrong with the water heater, the gas or electric company are liable and will fix or replace it free.

Free.

A club member phoned the gas company and asked how much it would be to buy his existing hot water tank, he was warned it was a risk and that he would be responsible if anything went wrong with it and then told that, as the tank was seventeen years old, they would sell it to him for twenty five bucks.

Two months rental.

That was about three years ago and it's worked flawlessly. I calculate that one local phone call and five minutes of his valuable time saved this member a minimum of five hundred dollars.

Of course, if the tank fails tomorrow, he may have to spend that money for a new one, probably lasting another ten or fifteen years, potentially saving him thousands of bucks.

This is the concept of underwriting your own risk, even if three years ago the gas company refused to sell the tank to him, he could have installed his own and accepted the risk of tank failure. The break even point would be more like three years, not two months, but by now he'd be in a profit situation, with potential of a dozen more years of enjoying the savings from his own tank.

Something to think about as you relax in the bath.

Green Shield stamps

This may seem like a no brainer, but we've seen it work in so many good ways over the years.

A small number of retail outlets reward their customers for spending all their money at the store, however, there's a catch there, as one of the Millionaires Club members pointed out :

"You shouldn't be encouraged to spend your money"

This is true, rewards for spending should be avoided if you want to retire early.

However, we all have to spend money, often on food, gas and other essentials such as table saws or radial arm drills.

In the case of Canadian Tire, they reward their customers with token money, only redeemable at their stores. If you pay for your goods with cash or Interac they give you Canadian Tire money, something like two percent of your purchase and often, gas bar "booster" coupons can bump up that percentage quite dramatically.

This all sounds like chicken feed, what use is a couple of percent?

The local Canadian Tire does not have a gas bar, which is a shame, however, another of the rewards companies, Presidents Choice, have a gas bar that gives about three and a half percent in bonus bucks grocery coupons, in addition, if you possess a Presidents Choice Interac card, they reward you PC Points for using it. If you own PC Green bags and don't use their plastic bags, they give you bonus PC points. These points can be used like cash to purchase goods.

More chicken feed.

However, mother saved Green Shield Stamps and occasionally, after browsing the catalog for hours on end and a visit to the town centre, a pair of binoculars or a new set of kitchen utensils would appear in the household from the redemption of the little green tokens.

Mother would say "look after the pennies and the pounds will take care of themselves" and these days we have a better system than the Green Shield Stamp Catalog, our rewards can be used at Canadian Tire to obtain the supplies for a free oil and filter change or a nice roasted chicken at your local Presidents Choice Superstore.

The point is that a couple of percent can be worth your trouble, Canadian Tire money from your yearly gas purchases and Presidents Choice points from a year of essential food purchases can be quite significant, maybe give you free oil changes for life and pay for the annual holiday hamper.

Look after those pennies.....

The Millionaires Club

Those guests entering the club house today are reminded of the minimum standards required before a membership card can be issued:

The prospective member must :-

(1) Own the family dwelling and be mortgage free
(2) Have a minimum of $100,000 in savings

If the above two requirements are met, and the applicant is in good standing with the president, then a membership card will be issued.

The goals of this organizations members are :-

(a) To be debt free
(b) To be financially independant
(c) To fully own at least one property by the age of 40
(d) To be a millionaire by the age of 50
(e) To have investment income more than earned income
(f) To retire before the age of 60 without a reduction of standard of living

This blog is an extension of the club house and we welcome all guests who share our financial goals. Thank you all for attending.

The winner of the book prize is once again, Mister Graeme Wright of Oshawa, Ontario. The title of this weeks book is "101 profitable things to do with your wifes fancies" which was kindly donated by the Bottomless family.

Coffee and Cake will be served in the back room.

The Price of Bananas

Do you know the price of Bananas?

A simple question, but a keystone in the world of personal finances.

It has been a long standing discussion point here at the Millionaires Club, we have people at the monthly meetings shouting from the cheap seats [*] about the relevance of the cost of something as simple as a banana.

Today, I can tell you that they're forty nine cents a pound for "premium bananas" at Super Valu, fifty nine cents a pound at IGA Marketplace and once again, Canadian Tire, for some reason, are out of stock.

I hear from the unretired club members that it does not matter, that running around searching for the cheapest produce is counter productive, that "its not worth the gas" or "its not worth my time" to research and that at the end of the day, you get what you pay for, beans is beans.

Well, beans are not beans when the price of the same fourteen ounce tin varies between forty nine cents and a dollar twenty nine. Same brand, different store. Thats 163% more for the same item between what would be perceived as competing stores.

Sure, "its not worth the gas" if you're going to eat all those extra beans at the same time, but it is certainly "worth your time" because every extra nickel or dime you save on bananas or beans goes into the retirement bucket.

Once you get the time, you'll realise it's worth it.



[*] Actually they're all cheap seats in the club house.

Disclaimer

The author of this blog has no financial training or qualifications whatsoever, in fact, in his short life he has made hundreds of mistakes regarding money, credit, investing and managing his money.

Regardless, the author and his wife recently managed to retire before they were fifty years old.

This blog, an outcrop of the Millionaires Club, run by the fictional Bill Bottomless, is a forum for highlighting all those mistakes that prevented the author from retiring ten years ago.

A lot of the information here will be perceived as just plain old common sense, other peoples ideas and age old solutions for retiring early, or saving well.

Welcome to the Millionaires Club!