Cash Saving Tips

Happy Cash Saving New Years!

2012-01-03T14:58:00.006-05:00

Happy new year and thanks for making Cash Saving Tips the #1 cash savings blog. This year will be filled with new and interesting ways to save and make that dollar go the extra mile. After all we work hard for our money, so our money should work equally hard for us.

Be sure to stay tuned for lots of book reviews and great cash saving tips! There have been over 100 posts over the years. It may be time to compile them into some sort of publication. If anyone out there has experience in publishing and editting please contact me at reynoldtor@hotmail.com. I would love to turn these posts into a practical cash savings book.

2012 is going to be filled with great savings tips!

Here are some wise words from the Oracle of Omaha to start the year:

4 Inexpensive Gift Ideas

2011-12-12T13:23:00.009-05:00

The holiday gift season is fast approaching. With it comes packed malls and rabid consumerism. Somewhere along the way we've lost touch with the real spirit of giving. You shouldn't have to break the bank to show someone you care about them. Also, this is the one time of year when you can give a gift to someone without it being too weird. Gift giving is an awesome way to strengthen a relationship, even the smallest gestures can result in huge dividends.

Here are the top 4 ways of giving this season while staying within your budget:

1) Regift
Regifting is a great way of purging unnecessary stuff from your life, creating space and at the same time giving somebody something they may want or need. One of my favourite regifting ideas is to give away books you've already read. If you've discussed the book with someone than it becomes an excellent gift idea. A great way of personalizing the gift is to write a brief message inside the book.

2) Make Something

Making someone a card or something artistic can be a great gift idea (painting, sculpture, pottery, etc...). Even writing someone a song if you're a musician can be a great gift. If you're a great cook or just want to practice a new recipe, making a great meal for friends is a great holiday crowd pleaser.

3) Provide a Service
For those of you who are professionals or trades persons with skills such as hair dressing, repairing cars or carpentry. You can give friends and family a free hair styling session, do a check up on a friend's vehicle, or fix something around their house. Hiring a professional to do this work can cost people a fortune. If you know how to do these things, you can save your friends and family a ton of time and money.

4) Donate to Charity in Someone's Name

This is a great gift for the person who has everything. I find parents are especially difficult to buy for. A small donation in their name to a charitable organization is always a great gift. My personal favourite is the Heart and Stroke Calender lottery. This is a triple wammy of a gift. Firstly, it's practical because it's a calender. Secondly, the receiver of the gift gets a chance to win cash everyday of the year (giving them a reason to wake up every morning). Thirdly, it's a donation to a very reputable charity. Here's a link if you're interested:

http://calendar.heartandstroke.on.ca/

If you have any interesting inexpensive gift ideas please feel free to leave a comment.

Happy holidays and keep on savin'.

Valu-Mart Student Discount on Mondays 10% Off

2011-11-13T22:48:00.006-05:00

Looks like grocery retailers are competing hard in Waterloo for student's grocery dollars.

Valu-Mart now has a student discount day on Mondays where all groceries are 10% off with a student ID.

Zehrs has a student discount on Tuesdays (10% off) and Sobeys has a student discount on Tuesday, Wednesday and Thursday (10% off).

Also, if you're a fan of buying stuff in bulk, Bulk Barn has a student/senior discount on Wednesdays (10% off).

Grocery Cost Cutting Tips by Jeff Yeager:

The Lighter Side of Science and Money

2011-11-03T12:04:00.018-04:00

Here are some excellent cartoons by Sidney Harris who created comics for American Scientist and The New Yorker. Science and money don't always mix well, but when combined correctly can produce hilariousness:

Research Science Budget Cuts

Fuel Efficiency

Renewable Energy

Computer Scientists

Food Scientists

Professors

McDonald's Free Coffee from Oct 31 - Nov 6, 2011

2011-10-30T17:42:00.009-04:00

It's the best time of year for coffee lovers. McDonald's is giving away free small coffees for a week. At some locations they won't charge to upgrade to a medium or large size. At others they may charge 0.25 or 0.50 cents to upgrade the size.

There is quite the rivalry brewing in Canada over being the low cost coffee provider. By giving away free coffee, McDonald's is hoping to claw away prized market share from their competitors. Personally I like McDonald's coffee and would choose it over Tim Hortons coffee. Check out this article for more information on why McDonald's coffee is better value:

http://reynold-savemoney.blogspot.com/2010/09/tim-hortons-vs-mcdonalds-coffee.html

I'm sure the numbers have changed since that article was written (prices and cup size), but McDonald's still allows you to refill you coffee if you drink it in store. This way you can be so wired that you won't sleep for days!

Here's an inexpensive way to keep your coffee grinder clean:

Avoid Taxes

2011-10-23T18:26:00.018-04:00

As the saying goes there are only two things that are certain in life, death and taxes. We work approximately 3 months out of the year just to pay our taxes. When we work for a pay cheque the first person who usually gets paid is the government in the form of income tax, Canadian Pension Plan (CPP) and Employment Insurance (EI). Income tax accounts for about 20% of our deductions (can be more depending on your tax bracket), while the other 10% of our deductions comes in the form of CPP, EI and any other charges (union dues, professional dues, etc...).

At the end of a working year we may be left with less than 70% of our annual salary. In addition to these taxes on our income, we are taxed when we spend. Most goods and services are cost an additional 13% which is charged in the form of a harmonized sales tax (HST) in the province of Ontario.

With all these taxes and fees it's a wonder how anyone can get ahead. Are there any legal ways to avoid taxes? One excellent way is to plan out your purchases. The province of Ontario has acknowledged that there are things necessary to life and that these things cannot be taxed. Examples are shown below. Planning your purchases based on what can and cannot be taxed can give you 13% more purchasing power with your money by avoiding HST.

Here is a list of non taxable goods an services from the Ontario Ministry of Finance website (http://www.rev.gov.on.ca/en/taxtips/rst/01.html):

Common goods that are not taxable

Here are examples of the most common goods that are not taxable to anyone

basic groceries such as flour, sugar, spices, breads, cereals, eggs, butter, margarine, cheese, peanut butter, jam, honey, fruits, vegetables, milk and yogurt
food products (except for candies, confections, snack foods and soft drinks)
prepared foods sold by an eating establishment for $4 or less
children's clothing (including diapers)
footwear costing $30 or less
feminine hygiene products
newspapers
drugs and medicine sold under a doctor's prescription
goods designed solely for people with physical disabilities
vitamins and minerals.

Non-taxable services

Examples of non-taxable services include:

dry cleaning
carpet and upholstery cleaning
personal services, such as hair styling, barbering, and beauty treatments
medical and health services
veterinary care
car washing and engine shampooing
labour to install or repair real property or fixtures.

I'm a big advocate for not having the taxes added to the prices when we pay for goods and services. In a lot of other countries the price of goods and services include the taxes. This is convenient, however the amount we pay in taxes can be hidden in the price. Adding the tax at the time of purchase helps us stay aware of how much we are taxed. Knowing what goods are not taxed and seeing the savings is a great feeling. We work hard for our money and this is a great way to make it go the distance.

Here's a video on how to calculate you income after taxes:

Caveat Emptor

2011-10-20T09:57:00.017-04:00

Caveat emptor originates from Latin meaning "let the buyer beware." This phrase holds so much truth in modern times since we are bombarded continuously with marketing where ever we turn. Advertising is ubiquitous in our day to day lives and has gotten to the point where we tune it out. Although we may not be paying attention, whether it's the billboard on our drive to work or the TV commercial in between the programs we love, subconsciously the advertising seeps into our minds.

The idea of branding is the marketer's main tool to seer images of quality and trust in one's mind. Whether this is based on fact is irrelevant. The idea is to create some kind of loyalty to brands we have come to associate with certain feelings. When we see the Nike "swoosh" we think athleticism, when we see the iconic Apple logo we think sleek sexy technology.

The important thing to note is that as a consumer we vote with our dollars. We make decisions based on price and quality of the product or service. We would like to believe that our choices are purely based on logic, but when we are bombarded with multi-million dollar marketing campaigns our logic may be subdued by these forces. Being an educated consumer is the way to consumer sanctuary where we can escape the iron grip of corporate branding.

Ralph Nader is perhaps the most influential consumer advocate of our time. With his landmark book entitled "Unsafe at Any Speed," he shattered the motor industry's paradigms that vehicle owners were responsible for their own safety. Today, car industries are required to meet safety standards which make the roads safer for all of us. Ralph Nader has fought relentlessly for consumer rights, without him there would be no such thing as false advertising.

In our quest to spend our dollars as wisely as possible, it is critical to become an educated consumer to ensure that when we spend our hard earned dollars we are not just joining the heard guided by corporate marketing agencies. Instead we must stay vigilant and proceed with caution when making purchases. It's important to be skeptical about advertisement claims and question your purchase patterns. Like the saying goes, buyer beware!

I've included a link below to Consumer Reports which is a great resource when considering any purhcase (http://www.consumerreports.org).

Meet Ralph Nader!

Sobeys Student Discount 10% Off - Tuesdays, Wednesdays, Thursdays

2011-10-12T14:26:00.005-04:00

Sobeys is offering a 10% student discount on Tuesdays, Wednesdays and Thursdays. I know that the Sobeys at Bridgeport and Westmount in Waterloo, Ontario has this deal. I'm not sure where else in Canada Sobeys has this deal.

If you know of any other Sobeys offering this deal please leave a comment.

Grocery Shopping Tips:

What's the Big Secret to Riches?

2011-10-11T21:04:00.009-04:00

There are two schools of thought when it comes to investing in stocks. One is growth and the other is value. Warren Buffett believes that these two strategies are "joined at the hip" and that you cannot think of them separately. So what are the main differences between these two types of investment styles.

A growth investor is looking for companies that are expanding quickly. Typically these companies don't pay a dividend since the earnings are reinvested into the company so it can "grow" faster (such as Research in Motion). Whether the funds are used to grow the company faster than you could by investing the earnings elsewhere is questionable. In this case you are looking to buy these companies at a high price, hoping that the price will continue to climb.

Value companies on the other hand are companies that have good valuation metrics such as price to earnings or price to book value. Value purchases are made when the economics of the industry may be out of favour or the company has hit some kind of snag that is solvable. Usually the price will reflect these uncertainties and for that reason it may appear to be a bargain (but be aware it might be cheap for a reason). Value companies tend to offer a dividend which can be invested elsewhere or can be used to maintain your quality of life. In this case you are looking to buy low and sell high (although you could hold on to the stock for it's sweet dividends).

So what is the best investment strategy. In "The Big Secret for the Small Investor"by Joel Greenblatt, he makes a strong argument that value investing is the way to go. Be warned that I am biased, I would classify myself as a value investor so I tend to read books about value investing. This book is more than just a sales pitch for value investing, it gives deeper insight into an age old strategy of investing known as index investing.

Index investing is when you purchase mutual funds or ETF's that mimic the entire market index (TSX, NASDAQ, DOW, or S&P 500). This is a great passive way of participating in the market that will be sure to beat approximately 70% of actively managed portfolios (most of which is due to the low management fees, low portfolio turnover and transactional costs). When it comes to finding the perfect stock it can be analogous to finding a needle in a haystack, so index investing is like purchasing the whole haystack. Greenblatt goes above and beyond by testing out different index fund strategies.

Something he's noticed is that market indices are usually market capitalization weighted, meaning that as a singular stock price rises, the index causes you to own more of that stock. So what if that stock is overvalued? In this case your portfolio would be over weighted in overvalued stocks and we all know what happens when a stock is overvalued. The price increase won't continue forever and when bad news eventually surfaces a price crash ensues.

So what's the best solution. Consider an index fund oriented towards value investing, which would set up the weighting of your portfolio a little differently. Causing you to buy more of what is out of favour so you purchase more undervalued stocks (buying low selling high). This balances out your portfolio and produces higher rates of return in the long run.

Here are some wise words from the Oracle of Omaha himself:

Tall Cans vs. Bottles vs. Pitchers

2011-09-23T20:28:00.013-04:00

Beer lovers will especially enjoy this article. I myself am a big fan of beer and would choose it over a lot of other alcoholic beverages. This has drawn me to some cost comparisons that may be of use to fellow beer drinkers interested in saving some cash.

In Ontario all beer retailers are regulated by the province, therefore the only places to get beer for household consumption is either at the LCBO or the Beerstore. Recently I came across a sale for Moosehead tall cans at the LCBO, where a 473 ml can was selling for $1.95. This got me wondering if it was a better deal than buying a 24 of Moosehead at the Beerstore.

A 24 of Moosehead bottles at the Beerstore sells for $39.50. Each bottle holds 341 ml, so to make an apples to apples comparison we must calculate the unit price (cost per ml). Luckily, I have so much time on my hands I made this calculation for you.

From the above chart, it shows that the best deal are the tall cans on sale at the LCBO. In fact if you bought the same volume of beer that you get in a 24 by purchasing tall cans instead you would save $5.76. Futhermore, we can see that buying pitchers of beer at the bar costs almost 3 times more (average pitcher price of $17 without tip), which is a terrible deal.

So, buy tall cans on sale and be sure to predrink a bit if you're going out. Drink responsibly and keep on savin'!

Here's a great way to make your own inexpensive beer holder:

Built to Last - 5 Ways to Increase the Life of Your Stuff

2011-09-14T13:11:00.009-04:00

In our pursuit to cut cost in our daily lives we are always on the prowl searching for the best deals. We want to make wise decisions with our money and get the most bang for our buck. Unfortunately, these days most consumer products are built to be disposable, meaning that products rarely last longer than their warranty and that some things are even designed to be thrown away after one use.

Not only is this wasteful and bad for the environment, but it can really hurt the pocket book. I've included a couple tips here to ensure that you will buy products that are built to last.

1) Do your homework
It's important to research the product that you're comtemplating purchasing. Whether it's a car, mp3 player, laptop, or an appliance the more information you can find on your prospective purchase the better. It's not always going to be the lowest priced merhcandise that will give you the best value, since the product may be of low quality, you may need to make the same purchase shortly after to replace it. A good resource is consumer reports which tests products and summarizes the results http://www.consumerreports.org/.

Also, marketing and fancy packaging can make you feel that you're getting a good product but in reality it might just be a lot of "smoke and mirrors". The best thing to do is read customer reviews about the product and to listen to people's experiences with the product.

2) Put it away
It's important to take good care of your stuff. Whether it's changing the oil in your car or maintaining your roof. It's going to last longer if you take good care of the things you own, that way you don't have to make the purchase again. The more you use something the more value you get from it, so making a product last is a good use of your hard earned money. Puting your car in the garage can protect it from the elements when you're not driving it, which can definately extend its life.

I remember when I was a kid, my dad would always put the bbq cover on it after each use. I thought it seemed like a hassle to take this extra step. Over time the sun and rain devestated the cover, however the bbq was still in good condition. Putting away your things can definately increase the longevity and useful life of a product.

3) Use it for what it was designed for
Stop using your I-Phone as a bottle opener. We love the fact that it can do a lot of things but when we start using it for something it wasn't designed for it will get damaged.

There's an old saying that when all you have is a hammer than every looks like a nail. It's important to have the right tools to get the job done. When we try to do something with a tool that wasn't designed for that particular job, something is going to break.

4) Know when to call it quits
It's a great idea to fix and maintain the things that you own rather than going out and buying a newer one to replace it. By extending the useful life of a product you can save tons and squeeze every last bit of value out of it. However there is a point when it may start costing you more to fix something than to buy something to replace it (i.e. a car).

It's important to know when this point is reached and to cut your loses.

5) What's your idea to make stuff last?
Please leave a comment about how you make your things last longer

New Home Buyer? Mortgage Basics.

2011-08-18T18:43:00.006-04:00

Purchasing a home can be one of the biggest investment decisions we make in our lives. It is important to understand how mortgages work since we don't usually pay all the money upfront to purchase a home.

Depending on the type of mortgage you choose (fixed vs. variable, open vs. closed) you can save tons on interest over the life of the mortgage.

One tip is to increase the frequency of your mortgage payments. Instead of paying once a month, choose a bi-weekly payment plan. You cut the payment that you would regularly pay in a month into half and pay it every two weeks. Since there are 52 weeks in a year you actually end up making 13 mortgage payments in a year instead of 12. That extra payment cuts down the amount you pay in interest over the life of the loan dramatically and will allow you to own your home mortgage free years sooner.

With little to no change in your life style you can shave off $1000's in interest. For more on mortgage basics check out this video:

Got a Mortgage? Shop Around!

2011-08-18T10:28:00.001-04:00

When we go out shopping we often try to get the best deal, whether it's by clipping coupons or checking the weekly flyer. The same goes for mortgages, only in this case we're shopping for the best interest rate. It's always a good idea to get at least two to three different rates from different banks. Knowing who can offer the lowest rate is an excellent bargaining chip when negotiating for the best rate.

To find the most competitive mortgage rates in Canada go to Ratehub: http://www.ratehub.ca/

This is an excellent site that has the most up to date Canadian mortgage rates. It also has some cool calculators that help you find out how much house you can afford and what the payments would be like.

Don't forget that the bank is in business to lend money. You can always take your business elsewhere. Shopping around and paying the best rate will help you become mortgage free years ahead!

Here's a video with some tips on how to negotiate the best mortgage rate:

Welcome to Moneyville!

2011-08-16T09:50:00.007-04:00

Here are some links to an excellent personal finance site. It's a site that is run by the Toronto Star. Moneyville has numerous bloggers that update it with great articles on a weekly basis.

Here are some of the latest must read articles:

Confessions of a Car Salesman
http://www.moneyville.ca/article/1039552--confessions-of-a-car-salesman

Why Life Insurance Premiums Are Rising?

http://www.moneyville.ca/article/1039555--why-life-insurance-premiums-are-rising

The 7 Certainties of Investing

http://www.moneyville.ca/article/936324--the-7-certainties-of-investing

5 Things You Should Always Buy at the Dollar Store (Instead of Regular Retail Store)

http://www.moneyville.ca/article/1036954--5-things-you-should-always-buy-at-the-dollar-store

These are only a select number of the many articles available at this site. It's a great resource so I'll leave a link at the bottom of this page.

Are you Moneville.ca's next blogger?

Market Turmoil - Time to Search for Bargains!

2011-08-10T14:39:00.005-04:00

The last 6 months of stock market trading on the TSX has been especially troubling. We've watched it drop from it's high of 14, 469 to 11, 670. A decline of nearly 20%. In the last two days it looks like a rebound is taking effect. So are we out of the forest yet?

It's impossible to predict the short term movements of the market and it would be foolish to try. However, with the recent turmoil many bargains may be popping up. For long-term value investors these market corrections can present incredible value opportunities.

To get a better idea of how to spot great deals in the market place read "The Little Book of Value Investing" by Chris Browne. A lot of people panic when they see the value of the portfolio drop precipitously and bale out shortly before the market recovers. Value investors inherently avoid the herd mentality and are constantly on a hunt for bargains while looking more towards long term prosperity.

To quote Warren Buffet druing the bottom of the bear market in October 1974 when Forbes magazine asked him how he felt, Warren responded "Like an oversexed guy in a whorehouse. Now is the time to invest and get rich." Don't forget another great quote from the Oracle of Omaha, “Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors.”

Don't take my word for it, listen to the man himself:

4 Important Factors to Consider Before Consolidating Your Debt

2011-07-27T15:47:00.004-04:00

By Anya Bennett

With personal debt consolidation you can merge all your existing debts into a single monthly payment at a lower interest rate. You can use a home equity loan or a personal loan as a consolidation loan and can use it to pay off your credit card debts and other loans. Consolidating with a home equity loan can be beneficial as the interest qualifies as a tax deduction. However, the process of consolidating loans is not as easy as it sounds. You have to pay the price for curbing your monthly payments and for bringing the loan terms in your favor. Just like any other debt relief plan, personal debt consolidation has its pitfalls and should only be undertaken after a lot of contemplation. Here are 4 important factors to consider before choosing to consolidate your debt:

1) Hidden Fees and Extra Costs
Often debt consolidation loans cost more than imagined and can make you fall into greater debt. The consolidation loans often carry origination fees and other hidden costs which you sometimes overlook while signing the agreement. Sometimes consolidation loans require an expensive loan insurance to protect against bankruptcy losses. In addition, by consolidating your debts you can incur a higher interest rate that can increase the overall price of the debt.

2) Pay More Over The Long Run
Consolidation loans can lower your monthly payments considerably, but it can only be made possible by stretching the repayment duration. As a result by the time the loan gets actually repaid, the borrower ends up paying more than he/she currently owes.

3) Adverse Impact To Credit Score
Closing accounts and opening consolidation loan accounts result in severe damage to one’s FICO score. The FICO score is determined on the basis of debt-to-income ratios to some extent and by closing current credit accounts and opening up a single line of credit for the consolidation loan. By doing this the consumer reduces the amount of credit available to them, which may eventually harm his/her credit score.

4) Causes Collateral Damage
To obtain a lower interest rate consolidation loan the consumer often borrows against personal collateral for security. However if the borrower defaults on payments of a consolidation loan, the lenders get the legal right to seize the collateral. As cars and homes are the only assets that some Americans possess, losing them can leave the borrower with nowhere to live and no way to get to work.

Personal debt consolidation can certainly help you minimize your outstanding debt burden but it is best for you to be prepared for the consequences.

Suze Orman's Debt Consolidation Tips:

4 Reasons To Open A PC Financial Account

2011-07-24T21:43:00.005-04:00

We all have to have a bank account, but we rarely spend much time thinking about where we should do our banking. In some cases you may have opened your account because your parents banked there or they were having a promotional offer at the time (a free Frisbee!).

Most of the big banks in Canada (RBC, TD Canada Trust, Bank of Montreal) operate in the same way and offer comparable banking services with fees associated with them. This may be the best choice since most of these fees are now avoidable. These fees may be small but they add up to a lot and really you aren't getting much value for it. For instance if you are paying $20 in bank fee every month, that is $240 you're spending each year. Invest that money at 8% interest for 30 years and you end up with $27, 188! So that's why banks have those fancy offices in those big beautiful sky scrappers.

Today we have the option of choosing an electronic banks (President's Choice Financial, Ally, ING Direct) which have shed away all the bricks and mortar of conventional banks. These banks are able to offer great value because they don't have a huge building with lots of overhead, such as clerks and expensive office space. This does have the disadvantage of not being able to do complex banking transactions easily but for most of your day to day banking needs electronic banking is great. Here are 4 reasons to open an account today:

1) No Fees - as mentioned earlier you can avoid fees by having an electronic bank account. PC offers a great chequing account where you can pay your bills online, withdrawal money, make interac transactions all without any fees.

2) Free Cheques - on top of not paying transaction and other account fees you can also get cheques for free. Banks usually charge anywhere from $30 to $40 per booklet so there's a potential for big savings here.

3) Highest Interest for Saving Account - hands down the interest rates on savings account will always be higher than any conventional bank. This is because they avoid the high expenses banks have to deal with. PC is currently offering a promotion where their interest rate on savings is 2% until October. There base interest rate for is currently 1.5% which is better than any interest rate you can get at a conventional bank. I know that 1.5% is nothing to brag about, but the idea here is that electronic banks always offer the highest rates. So you don't have to do a bunch of research and move your money around.

4) Accessibility - finally a PC account is better than Ally or ING because your money is very accessible. Since PC has some agreement with CIBC you can access your money anywhere there is a CIBC atm machine without any fees.

PC is the electronic bank I'm most familiar with, however Ally and ING also offer similar banking options. The important thing is that we have a choice, stop lining your banker's pocket with your hard earned cash. Make the switch today!

How to Want What You Have

2011-07-16T17:12:00.009-04:00

In our quest to banish our debt and reach financial freedom we often get caught up with keeping up with the "Jones". We often end up making poorly thought out purchases that bring us temporary joy, that lacks long term fulfillment. How to Want What You Have by Timothy Miller is a great book that teaches a fundamental philosophy to live by. In it Miller describes the basic human instinct that drives us to perpetually desiring More.

We are never quite satisfied with what we have because a basic survival instinct is to strive to become the "leader of the pack". Whether we do this by obtaining status symbols or accumulating wealth there is a deep desire to continually consume. The problem is that once we reach the bar we set, it ends up just rising again. Miller explains where this instinct originates and some ingenious methods in overcoming this instinct.

The three principles in which he presents in the book are Compassion, Attention, and Gratitude.

Compassion: is the ability to understand that all others around us are pretty much striving for the same things in different ways. Also we must understand that no one is more entitled to getting what they want more than you are. When we have compassion for the people around us we become less critical and judgmental which frees us from hate filled feelings towards others.

Attention: is focusing on the present. Sometimes we get so caught up in reaching our goals we forget to stop and smell the roses. Attention means not dwelling on the mistakes of the past and not wishing for a better tomorrow. Attention means belonging to the now and enjoying the present for all that it is.

Gratitude: is being grateful for what you have. We live in one of the most wealthy countries in the world. An individual in Canada may not think of themselves as wealthy compared to friends, neighbours or family, but in reality we are in the top 5% of the wealthiest in the world. A majority of the world's population is more worried about how they will feed there family tomorrow rather than how they will get there plasma screen and surround sound set up.

This book should be read before any other personal finance books because it helps set the foundation for a meaningful life. Having this insight will help us set meaningful goals that will bring us lasting joy and purpose. As the saying goes true happiness comes from not having what you want, but wanting what you have.

Don't take my word for it. Here is a video of the Dalai Lama's thoughts about inner peace, happiness and money:

Spending vs. Fulfillment

2011-07-04T20:50:00.006-04:00

We all know how great it is to go out and purchase something we've always wanted. It makes us feel great to finally bring home something that we've been eying in the mall display for months. But how many times have you ended up bringing something home only to find that your purchase wasn't as great as you though or that once you owned this object you ended up not using it at all. In many cases you may have been ecstatic at first, but psychological studies have shown that our happiness quickly fades after most discretionary purchases. Eventually the widgets we purchased may not be used and end up in storage where it collects dusts until next year's garage sale.

Not all purchases are created equal and this article is about how we must separate our wants from our needs in order to live a more fulfilling life. Knowing the difference will also help us reach our financial goals faster. Here is an excerpt from the book “Your Money: The Missing Manual” by J.D. Roth.

Two writers are at a party thrown by a billionaire when one jokes “How does it feel to know that our host makes more in a day than your best known work has made in its entire history?” The other writer responds, “I’ve got something he can never have. I’ve got Enough.”

Tthe relationship between spending and happiness is non-linear, meaning that every dollar you spend brings you a little less happiness than the one before it.

More spending does lead to more fulfillment – to a point. But spending too much can actually have a negative impact on your quality of life. The authors suggest that personal fulfillment, that is being content with your life can be expressed graphically like this:

Survival: A little money brings a large gain in happiness. If you have nothing, buying things really does contribute to your well-being. You’re much happier when your basic needs-food, clothing, and shelter – are provided for than when they’re not.

Comforts: After the basics, you begin to spend on comforts: a nice chair or extra pair of pants. These purchases also bring increased fulfillment, but not as happy as the items that satisfied your survival needs. This part is still positive but not as steep.

Luxuries: Eventually your spending extends from comforts to outright luxuries. You move from a small apartment to a home in the suburbs, and have an entire wardrobe. You drink hot chocolate in the winter and sit on a new sofa with a library of DVD’s. These things are more than comforts they’re luxuries, and they make you happy pushing you to the peak.

Overconsumption: Beyond the peak, Stuff starts to take control of your life. Buying a sofa made you happy, so you buy recliners to match. Your DVD collection grows from 20 titles to 200, and you drink expensive hot chocolate made from Peruvian cocoa beans. Soon your house is so full of Stuff that you need to buy a bigger home and rent a storage unit. But none of this makes you happier. In fact, all of your Stuff becomes a burden. Rather than adding to your fulfillment new Stuff actually detracts from it.

The sweet spot on the Fulfillment Curve is in the Luxuries section, where money gives you the most happiness: You’ve provided for your survival needs, you have some creature comforts, and you even have a few luxuries. Life is grand. Your spending and your happiness are perfectly balance. You have enough.

Here is a video from MSNBC about how spending on experiences is more valuable than most widgets you could be wasting your hard earned money on:

Visit msnbc.com for breaking news, world news, and news about the economy

Gas Price Crystal Ball

2011-06-23T11:26:00.005-04:00

As gas prices hit all time highs we're finding our transportation budgets stretched like gumby. One way to save is to time the purchases of gas when you know that the rates are going to fall.

Check out Tomorrow's Gas Price Today http://tomorrowsgaspricetoday.com/

When you're down to about a quarter of a tank and can get gas within a 3 day period it's best to check this site and purchase gas on the down days or just before the price is about to rise.

Check out this excellent video with more gas saving tips:

Dollar Cost Averaging

2011-06-14T11:24:00.005-04:00

In my last article I talked a bit about the concept of dollar cost averaging. Here is a video with a better explanation of how this works.

DRIP: Compound Interest On Steroids

2011-06-12T20:15:00.007-04:00

Here's a great book by Derek Foster for anyone who's starting there investment journey. This book teaches you some of the basics about investment. The best concepts covered in this book are:

1) Dollar Cost Averaging
2) Dividend Re-investment Programs (DRIP)

Dollar cost averaging is a concept where you consistently invest a set amount of money regardless of how the individual security or market is performing.

Using this method allows you to purchase more shares when the price is down and less shares when the price is up. Over time you'll end up owning more shares at a lower average price. This method takes advantage of price fluctuations and market volatility. Here's an example I found of dollar cost averaging at the www.theshapeofmoney.co.nz:

Introduction to dollar cost averaging

You're able to regularly save $100 per month.

In May, the units cost $1 each, so you're able to buy 100 units.
In June, the cost of the units falls to 95c, so you're able to buy 105 units.
In July, the cost of the units again falls, this time to 85c, so you're able to buy 118 units.
In August, the cost of the units rises to $1.05, so you're able to buy 95 units.

At the end of August, you own 418 units. The cost of the units is now $1.05, so your total investment is worth $439.

The cost of your 418 units over the four months was $400, so the average cost of each unit was 96c.

Your investment has increased from $400 to $439.

The second concept covered in this book is dividend re-investment plans or DRIP's. A DRIP is where a company offers its shareholders the option of re-investing their dividends into the company by purchasing more shares. Some companies even offer a discount which is a super attractive deal (sometimes up to 5% off the share price with the dividends re-invested).

Even if there is no discount on the share price, you can avoid hefty commission charges by signing up for this plan. Also you are using dollar cost averaging to your advantage.

Only some companies offer a DRIP so it's important to check before purchasing shares. Here is an excellent site introduced by The Lazy Investor which lists all the companies on the TSX with DRIP's http://cdndrips.blogspot.com/ .

DRIP's are an incredible way to compound your growth. If you've picked a great company and the share price increases over time and you are enrolled in the DRIP program your investment will grow astronomically. Not only will you be owning more shares over time, but as you own more shares you'll receive more dividends as a result. Which means you'll be purchasing more shares each time dividends are paid. It's a vicious cycle of wealth creation!

Check out this great video from money.com about DRIPS

McDonald's Dollar Drink Days Are Back!

2011-06-01T15:11:00.007-04:00

$1 fountain drinks are back at McDonalds. From now until Sept 6, 2010, you can get any size fountain drink for only $1, any time of day. Iced coffee is also included on the list of drinks.

Don't forget you can also refill your soft drink when your drink it in the restaurant. You can drink so much pop that your teeth will rot off from the sugar.

Protect Your Credit Score

2011-05-23T23:20:00.014-04:00

We spend a majority of our youth in school where we strive to get good grades. Good grades are important since they can lead to acceptance to a prestigious university or college. Also, with good enough grades it can lead to scholarships and one day graduate school. However in the "real world" educational success doesn't necessarily equate to financial intelligence or the guarantee of greater earning power. After all some of the wealthiest people in the world didn't even get their university degree (Bill Gates, Mike Lazaridis, Richard Branson and John D. Rockefeller).

This isn't a message against higher education. Instead, it's a message of the importance of your credit rating. When you approach a bank to get a mortgage for a home, they'll ask to look at your financial report card and much of it is contained in your credit score. No banker will care how you did in Econ 101 or Introduction to Basket Weaving. They will try to gauge your reliability for paying your bills on time and whether or not it will be risky to lend you a large amount of money.

That being said what's the best way to protect your credit score? Pay your bills on time! Ideally you would pay your credit card bills in full every month, but if you can't, at least make the minimum payments. Your credit score gets dinged when you miss a payment. Also, applying for several credit cards will ding your credit score. When you're automatically approved for a card that's fine, your score can be effected when you're actively searching for credit.

Canadian credit scores vary between 300 to 900. 300 being dreadful and 900 being the best possible score. Having a high score is like having an excellent bargaining chip during mortgage rate negotiations. People with high scores can negotiate a lower interest rate and save tons in the process. So be sure to protect yours!

Here's a video for students who want to develop a good credit rating. Also included are frequently asked questions from student investors:

10% Student & Senior Discount at Bulk Barn on Wednesday

2011-04-21T12:48:00.011-04:00

There are different definitions of buying in bulk. Bulk buying usually means purchasing a large quantity of an item at a discount. In other cases it means purchasing a product per unit weight instead of a pre-determined amount. This is exactly the way you purchase things at Bulk Barn.

Buying per unit weight is a great way to save when you only need a small quantity of goods. For instance a cup of flour or fistful of prunes. I find that you're probably not saving very much when you need larger quantities and that you'll probably be spending more shopping this way. For larger quantities you're probably better off going to Wal-Mart for what you need.

It all comes down to how much you need and when you're planning to use it. If your purchasing perishable items than its best to purchase the amount you need, rather than going to Costco and getting a bathtub full of olives because the price per unit weight is unbeatable. There is a good chance of spoilage and that'll be money down the drain.

If you're a fan of buying by unit weight there's a great discount on Wednesdays at Bulk Barn for students and seniors. If you're neither, than befriend a student or bring gramps to your next Bulk Barn expedition.

Also check out this video on the "Bulk Buying Queen":