Category Archives: Life

Easy guide to never paying a cable bill again – part 1

It is called “cord cutting” and record numbers of Canadians are doing it every year. This year alone 247,000 households are expected to sever all ties with traditional cable packages. The idea of paying for a bundle of channels, most of which you won’t watch, is as outdated as renting a movie from blockbuster.

The savings from cutting a cable bill can be substantial. The cheapest “bundle” rogers offers (internet + TV) is $116.97 per month (regular price, not limited term promotion) pre-tax while a decent set of channels will run you $141.97. In addition, to get any decent movie channels you will have to shell out another $23.95 per month for the cheapest movie theme pack. Total average bill coming out to $187.49 including tax per month or $2,250 per year. That’s some highway robbery right there.

Assuming you don’t want to give up watching TV all together, what are the 100% legal options to avoid this? It turns out there are plenty, but I’ll start with the cheapest one, costing a total of $0 on a monthly basis.

Over-the-air(OTA) TV

Monthly cost: $0

All Canadian and US network TV stations are required by the CRTC to broadcast their signal in the same digital HD format as you get through cable. This requirement has been in place since 2011 and many of the broadcasters have since added digital sub-channels so they can offer additional content.

For example, the regular PBS channel broadcasts on channel 17-1 but a special PBS Kids channel dedicated to children’s programming is available on channel 17-3.

You can review a full list of channels available in the GTA by clicking here and see what’s on these channels here.

The technology used to transmit the signal is essentially the same old “rabbit ears” technology you likely grew up with if you are as old as I am. However, none of the old issues exist, since the signal transmitted is now digital. There is no ghosting, synchronization problems, or quality issues. When the signal is available the picture is crystal clear and extremely smooth, and in some ways superior to the cable signal.

The only device you will need to purchase is a $100 good quality over-the-air antenna (will likely be on sale after Christmas) and mount it on the outside or inside of your house. Mounting it inside is a 2 minute setup, and is ideal for condos or apartment buildings, while mounting outside is a bit more work but does give you more channels if you live in a house. Once you’ve placed the antenna you connect the cable that comes from the antenna into your TVs antenna input. That’s it, you now have 100% free HD TV!

The selection of channels available for free over-the-air surpasses the Rogers started package ($116.97), however, for most people this will likely not be enough. To get more than enough movies, shows and sports for a reasonable price, you will likely need get on-line.

More on that in Part 2 of this series


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The simple formula to improve your decision making

I just watched The Big Short last night and became inspired to write this post. Having read the book years ago, I didn’t know what to expect, but I’m happy to say they’ve done an exceptional job. The movie offers the most accurate depiction of the years leading up to the 2008 financial crisis that I’ve seen. It doesn’t mean it didn’t take some artistic liberties, but far less so than many so-called “reputable” news outlets. I watched it with my wife and was impressed how it managed to keep her attention despite stories about my day job generally being her favorite natural sleeping aid. I highly recommend the movie to everyone, but I digress.

The Formula

I think the movie illustrates that we as people are very bad at estimating and properly weighting risk, both in our day-to-day lives, and in our investing. Therefore I want to introduce a simple and powerful way of thinking about risk through the following formula:

formula1

 

Beyond finance

I recently had a conversation with a friend about whether cycling in downtown Toronto is more dangerous than driving in downtown Toronto. His argument rested on the fact that there are fewer bike accidents than car accidents per year, making biking safer. He focused in on “# of times bad things happen” part of the formula.

Why is this incorrect? There are even fewer “accidents” resulting from getting trashed and trying to frogger yourself across the QEW.  It doesn’t mean it’s a safer thing to do.

In order to truly assess risk you need to know more than the number of accidents cyclists got into (# of times bad things happened). You also need to know how many total bike trips have been taken as well as how badly the cyclists were hurt when they got into accidents (impact of outcome).

Let’s say that cyclists get into accidents every 100 trips they take, but cars get into accidents every 50 trips taken. Which is safer?

Probability of bike accident = 1/100 =1%
Probability of car accident = 1/50 = 2%

Cars are riskier right? Actually the above tells us nothing about the relative riskiness of the two methods of transportation. We need to consider the impact of having an accident. Let’s say that cyclist’s get three times as badly hurt (on average) as car drivers when they do get into an accident, what is less risky in that case?

EVbike = 1/100 * 3 = 3%
EVcar = 1/50 * 1 = 2%

When taking into account and quantifying the impact, it is now cycling that appears to be the more dangerous of the two modes of transportation.

Before I get a bicycle helmet thrown at my head I just want to point out these are not real stats. I actually have no clue which mode of transportation is safer. In fact I doubt anyone really does because it’s hard to get a reliable estimate on the number of cycling trips taken. I’m just debunking the idea that comparing the number of accidents gives us any indication of risk.

Investing

While sometimes difficult to use in everyday life, this formula is a great starting point of any investment analysis. To illustrate let me go back to a scene in the “Big Short” movie when the Cornwall Capital guys decide to short (that means profit from the demise of) AA mortgage bonds (relatively stable) versus BBB mortgage bonds (far worse quality). They make this bet despite the fact that the latter are far more likely to fail. Why did they make a bet on the far less likely outcome, rather than take what seemed to be the sure thing? The movie does not address this well, but it comes down to the EV formula above.

The guys would get back 5 times their money if BBB bonds failed, but they would get 20 times the money if AA bonds failed. If the probability of BBB bonds failing was assessed at 90% and probability of the AA bonds failing at 40%, which bet would you take?

EVaa = 40% * 20 = 8
EVbbb = 90% * 5 = 4.5

According to EV logic you should actually take the AA bet, despite the fact that you are less likely to be right, because it has almost double the expected value of the alternative.

Investing with non-binary outcomes

The above analysis works because there are only two possible outcomes and one of them involves losing everything. If the guys are wrong about the mortgage market, and none of the bonds fail, they lose their entire investment regardless of the bet taken. This is what’s meant by a binary outcome, you either win or lose everything, but nothing in between. In reality most investments offer a fluid set of possibilities. However, in many cases an initial analysis can still be done using a multi-part EV.

EV of investment = EV of good outcome – EV of bad outcome

Let’s say you believe all the news stories about the housing market in Toronto flattening out. This means you would expect prices to start stagnating or rising very slowly for a number of years. In this scenario, after taking into account mortgage and other ownership costs, you should expect real returns on house investments to be somewhere between 0 and 1% a year. You assign this scenario a 95% probability.

EVgood = 95% * 1% = 0.95%

Let’s say that you also believe there is a very slight possibility that there is a bubble and it’s going to burst. Given that rates cannot go below 0 (at least not much), the Bank of Canada would be powerless to stop the decline of prices by lowering rates, likely leading to at least a 30% decline. You assign this scenario a 5% probability.

EVbad = 5% * -30% = -1.5%

You can then combine the two events to determine whether you should invest:

EV = 0.95% + (-1.5%) = -0.55%

Since the overall EV is less than 0 you should not make this investment even if you think there is no bubble and prices will not fall. The near certainty of modest returns in the future is more than offset by the small probability of a severely bad outcome.

While I used only two scenarios, you can use this same process to come up with as many as you like, and add them together to come up with an EV value for the investment you plan to make. You can also calculate EV values for a number of competing investment options to help you decide which offers the best risk/reward balance.

Conclusion

I know it’s hard or near impossible to accurately quantify the impact and/or probability of an outcome in many cases. This is why assessing risk is something that requires years of practice and a good intuition. However, making decisions without taking into account all the factors represented in the formula is extremely dangerous. The expected value formula is simple starting point to anchor my thinking. It is the minimum that I consider when making important decisions under uncertainty.

I hope the above is relatively clear and you’ll find it helpful in your decision making. I know it has helped me make the right decision many times when the choice that seemed superficially obvious was the wrong one. Not to mention, thinking this way also has the added benefit of completely frustrating my wife and friends. Can’t wait until my boys are old enough! They’re going to love this!


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How to take paternity and maternity leave at the same time

This summer, I am taking 2 months off work (paternity leave) to spend with my wonderful wife and our two beautiful sons. While fathers taking paternity leave is starting to become a bit more common, what surprises people is that I am taking this time off concurrently while my wife is also at home. Most people believe that if the father is taking paternity leave then the mother has to return to work, which might be why most Canadian fathers are still not taking advantage of this option. The reality is both parents are entitled to 37 weeks off work to take care of their newborns, it’s just that the language of the law is a bit confusing, and there is one somewhat important caveat.

To understand how the law works we need to first distinguish between the two different types of leaves.

Maternity/Pregnancy Leave

The first type of leave is called Maternity Leave by Service Canada (the people who handle EI payments) and Pregnancy Leave by the Ontario Ministry of Labour (similarly for other provinces, but I’ll focus on Ontario since that’s where I live). This leave is 17 weeks long and is only available to biological birth mothers. The leave can be taken up to 17 weeks before the child’s due date all the way up to the date of birth, but not after. This leave is often “topped up” by employers to a certain percentage of the employees salary.

Parental Leave

This leave can be taken at any time in the 52 weeks following the child’s birth and is between 35 and 37 weeks. It is available to both parents even at the same time. The Ministry of Labour website states:

Parental leave is not part of pregnancy leave and so a birth mother may take both pregnancy and parental leave. In addition, the right to a parental leave is independent of the right to pregnancy leave. For example, a birth father could be on parental leave at the same time the birth mother is on either her pregnancy leave or parental leave.

The leave is shortened from 37 to 35 weeks for the biological mother, if she already took the 17 weeks off for maternity/pregnancy leave, for a total maximum 52 weeks off. This leave is generally not topped-up by employers, something that catches many people by surprise in the second half of their leave. The drop in income from the topped up maternity leave to the EI-only parental leave can be very significant for many families.

How will taking paternity leave affect my prospects at my employer?

Some fathers may be afraid to take paternity leave in case it adversely affects their career. It’s important to know that fathers taking parental leave have the exact same rights as mothers taking maternity leave. This means:

  • The right to reinstatement – You have to get your job back , or a similar one if yours is no longer available, at the same salary or higher.
  • The right to be free from penalty – This means the employer cannot punish you in any way for taking the leave.
  • The right to continue to participate in benefit plans – Your employer must continue paying their own share of the premiums on your insurance.

Why doesn’t everyone do this?

Most fathers don’t know that it’s even an option. While splitting parental leave between the mother and father is gaining in popularity, most families don’t seem to be aware that they can take parental leave at the same time.

How do I get paid?

There is always a catch right?  While the Ministry of Labour allows concurrent parental leaves and protects both parents, Service Canada will not pay both parents EI. The following note can be found on the Service Canada website.

Can both parents apply for EI parental benefits?

Yes, but they have to share the benefits. In total, there are 35 weeks of parental benefits available to eligible parents of a newborn or newly adopted child.

There are many ways you can decide to use your parental leave. For instance, one of the parents can take the entire 35 weeks of benefits, or both parents can share them.

This means if you both want to stay home and take care of the newborn only one of you gets paid EI (Note: to clarify, it IS possible to both get paid EI at the same time, but the total of 35 weeks is shared between the two parents regardless, so it does not really make sense to do so unless you both plan to go back to work early). Since the maternity leave is often topped-up by your employer while the parental leave is not it’s best to have the mother claim the entire EI amount. This turns the fathers paternity leave into an unpaid leave.

In summary

While fathers are fully protected to stay home with their wife and newborn for up to 35 weeks after the baby is born, this is not a cheap option. Since only one parent can get paid EI at any one time, taking paternity leave requires some very careful financial planning. It’s important to save up not only for the paternity leave itself, but also for the reduced income after all the mothers employer top-ups run out.

I know it seems difficult to save up for a month or two off work and then have to deal with a reduced income afterwards. However, it’s the best decision I’ve ever made, and I’ve done it now twice, with both my sons. If you think about it, it’s really just a matter of making this time off a priority in your life. The EI that one of you will receive is worth $524 a week based on $49,500 a year salary. This means most people will get $2,270 a month from EI alone. Assuming a generous family budget of $5,000 a month, and no employer top up for the mother, this means you would need to save $2,730 per month off.

While $2,730 is not a trivial amount it is not more than a single week vacation to Mexico (2 people),  far less than even a minor house renovation, and probably the same amount as the delivery fees you pay when you pick up your new car. It might only require getting a bit creative on your baby room expenses and toys. What would you rather have, a quartz counter-top in your bathroom that will be out of style 2 years after you install it, or a once in a lifetime experience spending a summer with your family?

You know what I would choose each and every single time!

Spending time with my son on my paternity leave

Enjoying Paternity Leave at Lake Huron


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Something awesome has happened

Something amazing happened on June 25th, 2015. His name is Alexander and he is the reason why I haven’t had the time to write any new blog posts.

IMG_1555-6

I’ve been off work pretty much since the day he was born and it’s been a wonderful, but yet, incredibly exhausting time. I am savoring every moment, thinking how lucky I am to be able to spend all this time getting to know him, and helping my wife by taking care of our other 20-month old little terror.

Given how busy I am with both of the boys I keep wondering how other parents do this. Few couples have the kind of time and support my wife and I are blessed with. With both of us at home and both sets of grand parents close-by to babysit my older son 3 times a week, it still feels like more than a full time job. My full respect to all the mothers out there who somehow manage to juggle two little ones with their husband at work. Same goes for all the fathers out there who barely get any sleep helping their wives with the newborn, and still get up in the morning for a full day of work.

I fully realize that few parents have the luxury to take two months off when their babies are born. I do hope that reading this blog may help some of you planning to have a family prepare for this day financially, so you too can choose to spend the summer with your newborn. Believe me, your spouse or partner will love you for it!


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money, budgeting, spending, personal finance

The best way to curb the urge to splurge

We’re out and about somewhere and we see this amazing dress or a really fancy car, and we get an irresistible urge to splurge. We may be at a friends place and their newly renovated kitchen or porch makes us want to run out and hire a contractor. We’ve all been there.

There is nothing wrong with buying the things we like. The purchasing of items and services is, after all, the whole purpose of money. If we couldn’t exchange money for useful things it would be just worthless pieces of paper, or maybe just a meaningless number in a computer somewhere. However, we often get ourselves in trouble when we don’t fully visualize what it will cost to purchase this item we’re currently coveting.

The trouble is the cost in dollar terms is easily lost on us because we are not very good at visualizing numbers. Therefore, the best way to control the urge to splurge is to visualize the cost in terms of something else we really covet. 

This “something” else could be anything that we value very highly in our lives. In the case of my wife and I, we often use travelling as a point of reference. My wife will often joke about getting an expensive designer purse, but she immediately puts it in travel terms, and it makes the urge go away.  “It’s only enough money to backpack Asia for 3 months” is the best antidote to a bad impulse purchase. “That kitchen reno would be great! it’s just about enough money to finance a full year travelling around the world for the entire family.” Ehh, maybe we’ll skip it.

The same goes for putting money away for retirement or for time away from work. We try to fully visualize what that extra $3,000 spent on furniture means in terms of buying our time back. Would I rather buy new furniture for my basement, or take 2 months off work to spend with my newborn child, as I am doing this summer. To me, the choice is pretty obvious once it’s stated in this way.

This can also work for recurring purchases such as cable bills and gym memberships. What we usually do is multiply this monthly bill by 12 and put it in terms of vacations or plane flights. $1,500 a year for cable can buy two plane tickets to somewhere in the Caribbean, Central America or even South America.

The use of travel and time off as a comparison works for us because we value these things very highly. However, you may have entirely different priorities. Perhaps your priority is improving your home, or being able to go out to your own cottage every week, or to buy a boat. Whatever the priority is, the key is recognizing it, and then making the little daily decisions to get you there. Framing any impulse purchases in terms of delaying or preventing you from reaching those true priorities will help you control the urge to splurge. It will also help you achieve those goals much sooner.


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Providing for your kids does not have to be expensive

As my wife is getting closer and closer to her due date we are starting to get really excited about meeting our new little guy. We are packing all our hospital bags and making sure everyone knows “the plan” when the day finally arrives. We are also preparing ourselves mentally for the long months with lack of sleep. One thing we are not particularly worried about is the additional costs of having another baby.

In fact I can’t wait to take my two months of paternity leave when my son is born! I will be able to spend time with both of them during the summer months and help my wife with the first 2 months of having our 2 boys under 2.

How are we able to afford a second baby without any worries? It’s because we make boat loads of money of course!

OK, just kidding, I’m guessing you already know that I turn to the income side of the equation only as a last resort. In fact, my wife has only been working part-time since returning from maternity leave after our first son was born, and I took a sizeable pay cut in order to have a job within a shorter commuting distance.

Yet, we bought a new house last year and I took last July and August off to spend with my son. We’ve even managed to somehow increase our total savings over the course of last year. How is that possible?

Sometimes a picture is worth a thousand words so I’ve decided to show you guys what we’ve been able to give my son at little to no cost.

Vintage Glider Chair

Cost: $0
Comparable Retail Cost: $400 – $1,100 (or maybe infinity)

Vintage glider

Vintage glider

Gliders are EXPENSIVE!!! You can really spend a ridiculous amount of money on these.

This baby found its way into our hands through our awesome friends who saw a neighbour throw it out on the curb. It squeaked a bit initially but we WD40’ed it and cleaned the crap out of it, while my mother in-law sewed up those cushion covers. Since she’s retired she loves little projects like this. This glider would command a serious price at a “Vintage” furniture store in a hipster neighbourhood.

Chest

Cost: $0
Comparable Retail Cost: $200 – $1,700 (I’m just googling West Elm <insert item> to get the highest possible price)

Awesome free chest

Awesome free chest

This is where we keep our baby supplies. You can see there is a little work that needs to be done on the bottom drawer to make it look completely respectable, however, I think it has a very nice modern look. We inherited this from my brother in law as we bought our in-laws house and he eventually moved out. Thanks Andrew!

The best part is it has a friend…

Dresser with mirror

Cost: $0
Comparable Retail Cost: $500 – $2000

Free dresser with mirror!

Free dresser with mirror!

These drawers are where we keep the majority of my sons clothes. Again thank you uncle Andrew! This piece is actually in an even better shape than the chest. Score!

Crib

Cost: $100
Comparable Retail Cost: $80 – $1,100

Splurgy Crib

This is the most expensive thing I’m going to list in this post. It was bought for a crazy $100 on sale at IKEA. It wasn’t even the cheapest IKEA crib. Horrors! However, we are going to use it for at least 4 years, and we really wanted to spoil ourselves with a brand new crib. So there!

As I’ve mentioned a few times on this blog my philosophy is not to cut costs down to the bone. Sure we could have found a cheaper second hand crib, but we could have also spent $1,100 on some hard-wood Pottery Barn monstrosity. Because, you see, it’s worth the $1,100 because it’s going to last forever and even has storage! Never mind that your kids are not some baby vampires that will stay 2 years old for eternity. Or maybe they are and that’s why this crib even exists?

Toddler Tricycle

Cost: $5 (including delivery to my door!)
Comparable Retail Cost: $60 – $160

wpid-20150603_120838.jpg

One of my sons first words was car. It wasn’t dada or mama or please or thank you. It was CAR!

He absolutely loves anything on wheels that makes a  vroom sound or that he can mount. Leads to some pretty funny scenes when he tries to ride his one-foot long fire truck.

I was biking down to the local Shoppers Drug Mart when I saw this beauty sitting on the curb at a garage sale. I didn’t stop because even if I liked it I couldn’t strap it to my back and bike it home. However, on the way back I stopped and inquired about the price. I immediately liked the home owner, good guy, and after a little banter he answered “Whatever you think is good, we just want it gone”. I told him I can give him $5 but I’ll have to go home and drive over first. “We’re going to be packing up soon. Do you live nearby? My car is right there, would you like me to drop it off at your house?” he inquired. How could I say no? A $5 tricycle with delivery included!

Toddler Wagon

Cost: $0
Comparable Retail Cost: $70- $200

Toddler Wagon

Toddler Wagon

I take my son everywhere in this thing. I think it’s his second favourite form of transportation after my coupe. It makes getting to all 4 neighbourhood playgrounds a breeze without having to worry about him falling out, and it gives me some exercise in the process. Who needs a gym membership?

Yes, I actually walk to the playgrounds, I was shocked to discover this is not the normal thing to do around here. People I spoke with were apparently equally shocked that I actually walked the 5 minute walk rather than take out my car to get there.  One conversation went like this:

Them – “You took the wagon here?”
Me – “Yes, he loves riding in it!”
Them – “So you must live near the playground?”
Me – “Yes, not too far away, on street abc, where do you live?”
Them in an awkward tone – “I live on cba street” – which happens to be closer than my house
Me – “Ahh I see”

More awkwardness and eye contact avoidance happens later when they take their kids into their gigantic SUV to drive them home.

OK sorry about the rant. Where was I again? Oh right, the wagon came to us courtesy of my wonderful frugal parents who overheard a neighbour saying they wanted to throw it out.

Playroom full of toys

Cost: $0
Comparable Retail Cost: ????

Playroom full of toys

Playroom full of toys

Nothing you see in the screenshot above cost us any money. Some of these toys are old toys that my wife and my brother in-law used to play with as kids. Other toys are gifts from family and friends, and often things that their own kids have grown out of. There is one particular item that deserves extra special mention though.

Matthews Playhouse

Cost: $0
Comparable Retail Cost: $150 – $400

matthews clubhouse

This piece of art is truly magnificent! It is the brain child of my extremely talented sister and my ridiculously frugal dad. The whole thing is made of discarded cardboard boxes which means its light and therefore very safe. My boy loves to run in and out of it and I can’t count how many times he has smacked his head right on the top of the door way. Thank goodness its cardboard!

I’m lucky because my sister is an amazing artist which you can see through the attention to detail and level of personalization of this play house. It is not something everyone can do but it is something that we are taking full advantage off.

Thank you Ciocia Sylvia and Dziadek Janusz!

Note: If you have any art or graphic design work you need done don’t hesitate to contact sylviat.design@gmail.com for a quote!

What does this all add up to?

Let’s do some quick math here, this is after all a personal finance blog.

Our total cost for all 7 items: $100
Comparable retail cost – Low end: $1,460
Comparable retail cost – High end: $6,600

Overall savings: $1,360 to $6,500

My personal feeling is that most people fit somewhere in the middle of the above range. They buy some things high end, some low end and most mid-range. This means we saved approx. $2,500 over the average family on just these 7 items! 

If we invest this $2,500 into the stock market at the average 10% total return for 25 years we will have $27,000 more in our retirement account for virtually nothing!

Obviously these items are not all the costs associated with having a child. The post would be much too long if I tried to list everything we saved money on. It’s the right mental approach when making purchasing choices across the board that makes the big difference.

The thing is we are not even actively trying to be frugal. We are not going out of our way to clip coupons or scour garage sales or check every flyer for a sale. You could do much better than us if you did! All we do is take advantage of all the opportunities that fate provides us with instead of passing them up for silly superficial reasons.

You can say were lucky to have awesome friends to pick up the glider for us, to have a brother in-law who decided to leave his furniture behind, or to have such a talented sister. I agree completely! Yes, we’re lucky, but we try to take advantage of all the opportunities we are presented with. Have you grabbed a hold of and taken advantage of all the opportunities you’ve been presented with? 

Look around you and try not to get tunnel vision as to what is you need to get. When it comes to chance there are the things you can control and the things you can’t. You cannot control what opportunities will present themselves. What exact brand or type of item will become available to you free or at a ridiculous discount.  I could have easily decided that my brother-in-laws furniture wasn’t quite the right color or style and purchased an entire new baby room furniture set. What you can control is whether you take advantage of the opportunities that do present themselves to you.

Focusing on the part that you can control, rather than worrying about what you can’t, applies equally well to savings money on kids items as it does to everything else in life.


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Choosing to stop living paycheque to paycheque

A friend messaged me recently after seeing some of my articles to tell me that, while interesting, the advice is not something he can practically use. In his particular case this is absolutely true. I spend most of my time on this blog discussing how to make better financial choices with whatever existing income stream you might already have. This post is a bit different in that I want to make clear there are cases where it really is impossible to save without fixing the income part first. Let’s start with a little background on myself.

I grew up in a government subsidized building with at least one of my parents unemployed a large percentage of the time. The building was a new one and it was one of the first to be built in a residential home area as part of a government initiative to integrate us “poor people” into middle class society. The thing is I can’t with good faith complain about the living conditions. Sure we did not have a dishwasher, or even a washing machine, and you can forget about a dryer. OK, so once I did wake up to a bomb squad SWAT team knocking down the door to a unit on the floor above me. However, whatever was provided worked well, and it wasn’t a big problem to take your dirty clothes to the laundromat downstairs in the building. There were 3 bedrooms so me and my sister did not need to share a room and the square footage was adequate enough to fit a dining table, sitting area and a TV in the living room. Everything one could possibly need, what would be considered luxury living in the vast majority of the world, and yet most people in Canada would thumb their nose at this as inadequate. Most importantly the building was kept clean and well maintained and the rent was very affordable.

While my friends were getting driven around to hockey games and got their parents to buy them the newest snowboard and ski equipment I was working a paper route to pay for mine. I bought my own baseball glove and paid the league fee myself to join a baseball league. The skis I learned to ski on were from play-it-again sports and were over 2 meters long with old style straps instead of brakes. Those of you that ski will recognize how ridiculously difficult it was to learn on these things!

Once when I told a friend the story of how I bought my own equipment and paid my own fees she remarked as to how sad that is. It caught me by surprise, I’ve never though of it as sad, and I don’t regret any of it today. The lessons I learned during those formative years are the reason why I am the person I am today and I wouldn’t change any of it. I may have had horrible ski equipment but I still made the ski team, and once I got better skis, I was actually able to ski far better than if I had gotten high end equipment to start with.

Once it was time to choose a university to go to I made sure that the school I chose had a co-op program. I knew I could not take any money from my parents as they were already tight as it was. I applied and got some student loans to get me through the first 2 semesters but after that the school was paid for from my own pocket and some bursaries I was able to dig up. Sure I couldn’t go party as much as some other kids and I had to actually hold down a part-time job. Is that such a bad thing? I don’t believe it is and once again the lessons I learned were invaluable. In addition feeling the cost of that education in my own pocket, I never took it for granted, which made me work harder to make sure it wasn’t a waste. I even got into credit card trouble one semester and had to live on bread and instant noodle soup for the last few weeks of the term to make the money last. This taught me the danger of overusing high rate credit and I paid off the entire card through my co-op term earnings over the summer.

I know many of you want to give “more than I had” to your kids, but the fact is I believe my parents helped me a great deal despite not giving me much monetary support. They gave me a free place to live when I was working co-op terms in Toronto and they set the example of how to live on very little income. They helped me understand what was essential and what was just fluff and I thank them for this every day.

I want to emphasize that this entire time I NEVER felt like I was poor. I guess at some level I knew that my friends driving expensive cars and buying expensive toys without actually working were “wealthier” than me but it never bothered me in the least. I didn’t feel inferior to them or bitter like so many other people in my situation would and that inadvertently helped me keep these people as friends. No one likes an envious person and jealousy is a quick way to kill any friendship. I again credit my parents for this and the fact that they instilled values in me that raise personal character, humility and intelligence above material wealth.

I am able to afford some more spoils these days and I do indulge but I make these choices knowing they are choices and not necessities. I know I can live on far less than I do currently I just choose not to and I make sure my finances are balanced without short changing my future. It is this understanding of it being a choice that I believe is the key to achieving financial Independence rather than just pure frugality.

What does all this have to do with the title of this post?

The friend I referenced at the beginning of my post truly does not have a choice. He makes far less than the 70K median family income in Toronto and has children to raise while his wife can’t work. Yet he gets through every month and is working hard on improving his situation. If you are in this situation it’s incredibly tough and your first step is to find a better source of income with saving money a far distant priority. I don’t want anyone out there thinking I’m making light of a truly difficult situation such as his. However, for most families at or above the median family income, living paycheque to paycheque likely is a choice.

I’m not advocating extreme frugality here such as that advocated by some other bloggers who live on 25K in total family costs a year (it IS possible, just google it!). I am advocating taking a serious look at the discretionary choices being made and not ending up like this now famous house-poor couple. If you are in this type of situation you need to get angry. You need to say average or adequate is not enough. Just because everyone else seems to be living paycheque to paycheque too does not mean you can’t do better. Average choices, by definition, can (at best) only lead to average outcomes.

If you own a house that you mostly don’t use because there are only 2 of you remember that’s a choice you made. If you decide to buy in the “hottest” area of the city that is also a choice. Private pre-school? a choice, brand new car, a choice. Buying a second car, a choice. Living in a place with no public transit access, a choice. Driving everywhere instead of walking or biking, a choice. Doing that second degree or pursuing a masters, a choice. Going shopping at that artisan organic grocery store, a choice. Buying a new wardrobe every season because the old stuff is out of style, a choice. Redoing your kitchen to the latest style and installing exotic marble counter-tops? Most definitely a choice.

None of these choices are bad in and of themselves. There are real reasons why people make these decisions and I do respect those reasons. There are benefits to making many of these choices, but are those benefits worth the cost to their future? Not in all cases will the answer be “no” as peoples’ preferences and values are a personal thing. The key is to do the calculation and then decide which of these choices are most important to you and which and how many can you afford without jeopardizing your future.

I think I needed to outline my background before being taken seriously when I say the following: once both costs and benefits are analysed there are probably some relatively painless CHOICES that most people can make to save money. They might not seem like choices, but this is where I hope this blog can help.


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Welcome to the Blog!

This blog is about achieving financial independence while still checking off all those superficial desires along the way. It is not about making more money but rather how to make the most out of the money you make. The fact is if you live in the US or Canada (or most of the first world) and are reasonably well educated, financial independence is very much achievable and at a young age.

Part of my inspiration for writing this blog has been hearing how surprised people are that I am taking 2 months off for paternity leave. The surprise only increases when they find out it’s the second year in a row I am doing this and that I am not taking a dime from the government to afford this. I wanted to spend this exciting time with my entire family including my wife and the Canadian government only pays for one person at a time. Therefore she’s living on EI and I’m taking two months off unpaid.

I work in a very well paid industry and yet make less than the industry average. The people most surprised at my freedom make far above the average Canadian or Toronto wage and double what I make, and yet still live paycheque to paycheque in such a way that taking 2 months off unpaid seems like an unattainable luxury. I started to genuinely wonder why that is and this led me to a very inspiring community of bloggers.

The other part of my inspiration for this blog has been discovering and reading all the awesome frugal living blogs out there on the internet (Mr. Money Mustache, Mad FientistEarly Retirement Extreme, Financial Samurai etc.). These amazing people prove saving lots of money for anyone in a developed country is not only possible but relatively easy if you know how. I have nothing but respect for all of them. While much of what they’ve written is what I’ve been unknowingly following myself I did notice a difference between my own approach and theirs that is subtle but I think important.

In this blog I will try to hit a middle ground between the completely self-reliant approach most of the other bloggers advocate and the mainstream consumerism that most people follow. Instead of focusing on what purchases should or should not be made I will instead focus on how to achieve the things you want at a far lower cost to your future. This blog is not so much about anti-consumerism as much as it is about smart consumerism. It’s very much about looking a bit deeper into those desires and finding a way to re-frame them in a financially responsible way. 

Through my blogging I hope to show how actions often considered frivolous, such as buying a fast fuel inefficient car, travelling while young, renting an apartment or paying people to renovate your house rather than doing it yourself can actually be completely rational and financially sound decisions.

I really believe you can get everything you want out of life, even some of those seemingly irresponsible and vapid things, and live financially worry-free anyway!


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