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.
Monday, October 29, 2007
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.
"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.
Sunday, October 28, 2007
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.
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.
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.
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.....
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.....
Saturday, October 27, 2007
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 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.
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!
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!
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