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Sunday, July 14, 2013

My money moron budgeting experience

Last week, I watched a couple episodes of The Money Moron and it gave me the courage to look a bit more deeply in my living expenses for the next 2 weeks. I gave myself a $100 for 2 weeks. I busted the amount by $21.54. But it was a bit out of my control. I had paid a Marichito I think its called at Starbuck for me and a co-worker. It cost me $10 right there. And yesterday, the weather was extremely hot in Montreal, so after spending the afternoon outside, I decided to go to the movies. Nothing better to beat the hot heat of the summer. Once out, I saw a parade, Just to Laugh Festival was beginning and it was their parade. I am already at $121.54, but I have everything I need for next week. So my personal challenge will be not to spend a penny next week. I doubt I can make it happen because I am a coffee addict - especially Second Cup coffees. So I may spend 10 bucks in I have in pennies but it won't be more than that.

My $121.54 included some makeup and eating out. So I think that I could survive without too much trouble on $70 per week on regular week. So from now on, I will stick to cash and keep my receipt and look at my expenses once a week.

Here's what my budget will look like:

Rent: $610
Grocery, coffees, other: $280
Student Loan: $98
Credit Card: $37
Laundry: $30
Cell phone: $40
Internet: $23
Banking fees: $6
TOTAL: $1 124

I had been paying cash for my stuff, leaving my credit cards at home. I also kept all of my receipts. It make me realize that I may had spent too much on makeup, eating out and entertainment. I stay more at home, which is not exactly a bad thing now that the must of the summer are behind, the Francopholies and the Jazz Festival. There's currently the Just for Laugh Festival downtown.

I bring my lunch at work everyday and I try to skip my morning coffee at the Second Cup. A medium coffee is at $2.42 if I recall at the Second Cup. That represent alone $12.10 per week. and does don't include the lunch coffee or afternoon coffee or weekend coffee. I brought a cup at work and some tea bags. The taste doesn't compare to my lovely Second Cup, but its a compensation. I realize I had been spending too much on coffees.

I usually bring my lunch to work, but I sometime skip one or two day. The cost to that laziness is around $10 each time.

I am not in need of any new summer clothes, so I won't buy anything else. On that point, I don't have problem to skip the shopping. I don't like to have too many clothes in my closet. At a point, where are you doing to store all your stuff anyway?

If I can respect the $1 124 budget, I will be able to save around $1 700 per month (from paycheck and dividend income). Its quite interesting to realize that the amount of saving is larger than the amount that is being spend for my living. Its a must because I go to New Brunswick a couple times a year and also a few times per year in Ottawa where my brother is.

I always been great to save money, but on the past couple of months, I had been spending too much on entertainment mostly. Having total control over your budget will help not only to save more money, but also to become financially independent. Even while working in a great job, where everything seem to be fine for the next couple years - that's what it is in the immediate - but the situation could changed.

Most people who completed a university and are living in Canada will find themselves in a comfortable situation. However, it is  important to stick to the basic because you never knows when it could turn ugly, you never knows when you'll need your saving to rely on. Its better to always be prepared for the worst. That's why I not a fan of home or condo ownership, and that's why I think no one should be spending more than 10k on a car. Instead of buying luxuries and moving in that 200k condo, the real luxury is money saving. A cool expensive car or condo - its not what will be able to support your living. Its actually the opposite direction. A condo/house and car represent increase your expenses and increase the amount you need for your living.

I am really not comfortable with the purchase of a new car or getting enroll on a mortgage. And I feel its a bad choice for the middle class to chose to get enroll on a mortgage or purchase a new car. A new car cost a fortune in insurance. But that's not the worst. A car doesn't gain in value, but decrease in value. And its terribly easy to get involve in a car accident. There's some expenses that exist for the rich only and a new car is a concrete example of that.

On the other hand, a house or condo will mostly appreciate in term of value, but with the actual economy, I wouldn't take that for granted. When you get involve in a mortgage, you need a job to pay for it. It mean you totally rely on your job for the next 20-30 year of your life to pay for the damn mortgage. Is it really what financial freedom is about?

When Gail asked her guest what their money goal is, the answer is usually to get a home. Gail always respect the goal without saying anything about it. What she does is that seek for ways to arrive to that goal. She totally respect her guests in what they want out of life but I don't. I don't think a home is a good goal. Its a goal projected by our society. Its not a personal one that the individual set up by him or herself. A home is very costly because of the municipal taxes. Each year, taxes increase for no reason, but home owners have to deal with that. So you have the mortgage, all the utilities that come with it, like electricity to pay and all the municipalities taxes. How the middle class is supposed to pay for all that? Once done, there's no room left for saving. Its catastrophic.

I never dreamed of owning a nice expensive car, I never dreamed of having my own home. Those are things that are not important to me. My dream are much bigger. I had been born without any luxury needs - if not being entertain and Second Cup coffees.

Anyway, I already have a home in New Brunswick that me and my brother will inherit one day. Its a little house, nothing fancy, but we have a nice view on the Maine. So is there anything else I should asked for? Income taxes are lower in New Brunswick - actually lower than in Quebec! Because in New Brunswick, we understand that people will spend less if they are taxes too much. Lowe taxes mean a bigger impact on the economy. And too high taxes is not classy, its being disrespectful to the citizens. In New Brunswick, we have class and we have money, we know how to manage ourselves. New Brunswickers are the best at everything.

:) !!!!! 

Fact is, I don't want anyone to have to rely on their employer to make ends reach each month. Businesses are there to make money. Don't expect them to be generous. If they stop making money, you'll get laid off. That's why the power of saving on the income you currently earn from an employer is precious. Its our job to make the best out of it.

My only goal is to increase my dividend income and, why not, pay out some debt. Because I won't be able to retire very safely if I hold too much debt. Currently, my annual dividend income is set up at $6 681, about $556 a month. I am not missing terribly much in order to pay my minimum living expenses. This is why the dividend income is sooo interesting and that's why I don't leave Derek foster alone. I won't be able to escape the rat race anytime soon, but the willingness is quite sexy. And its important to diversify our source of income.

I haven't work too much on my online articles and my self-employed work lately but hey, summer is too short not to enjoy it. In the meantime, pushing the savings is the thing to do.


Anonymous said...

Not only summer is too short, but life is too short not to enjoy. Comparing yourself with a salary of 30k to someone with an education that could be a couple both working and earning over 100k is not the same. If you would earn 100k, you could save 2k a month, and still be able to afford a house and new car and live comfortably.

Sean said...

In your budget I don't see anything about your margin interest or any of those low-interest credit card charges. Once you take out your margin interest from the dividends you've actually earned, I think there isn't that much left...

Anonymous said...

Did we not talk about homes in the past? I recall that it really depends on your own situation regarding home ownership. I recently looked at my cost of ownership and owning my home mortgage free now for a few years, our monthly ownership costs are $800/month, 1500sqft bungalow south of Ottawa. That incudes heat, hydro, taxes, insurance and of course planned and unplanned maintenance... And that is for 3 people. Life is about choices, and what might be good for one may not work for another. Home ownership works for us and should it no longer, and we decide to move we'll pocket the $400K in equity we've built up - if you move what do you get other than a free last month's rent? - Cheers.

Anonymous said...

First. Don't count on an inheritance. Situations change (often radically), you presently don't have ownership, and any creditors, lawyers, and government will get their due at the time. You're actually better to have an insurance beneficiary payout. Second. I agree with Anon July 15th. for most instances. If you're happy living in a small apartment, thats fine. If you can't do any maintenance yourself, then you're better off living in an apartment (even condos require maintenance from the owner.) But an apartment isn't preservation of capital (aside from the investment argument-which always doesn't work out). An apartment is pay for useage. If this is a cash flow question (as in uneven income or difficult to project), then maybe apartment life is best for you as you're also single. Thirdly. Most people aspire to some material trappings. A car is often first on the list. Your goals, Sunny, are not "average". Usual goals are job stability, reasonable income, and reasonable comforts. They are not trying to live primarily off an investment income during the "earning years". They are usually trying to set aside enough money/cash flow to sustain their present life style in their "retirement years" which exist in the future.

Francis Laroche said...
This comment has been removed by the author.
Anonymous said...

what happened to the tmx takeover, did your shares get called away and for how much??? I still see the stock trading at 44...

Anonymous said...

As Dave Ramsay says "You got to live like no one else, so later you get to live like no one else".

So as you build your passive income, what would you do when you can escape the rat race? That is a topic for a future post.

I know of another blogger that rents and his doing all he can to retire at 40 by investing in the dividend growth companies.

Anonymous said...

life is so temporary and extremely short and there is really nothing to lose and nothing to gain despite whatever goal we want or we already achieved.

We are all users not owners in this world. The goal for life in my opinion is to gain maximum happiness within your means. And I don't see relatively poorer people have less happiness than the richer...

Anonymous said...


Anonymous said...

Hi Sunny,

Can you do a portfolio update soon and include your cost basis? I'm interested to know how well your performance compares to market indexes.

Also, since you will eventually have to pay back your margin, locs and balance transfers, could you present the numbers with the interest costs subtracted? And can you post your net dividend income per month/year instead of giving updates of the total dividends per year?

I find that the way you tell the numbers is hard to follow/misleading and it's not clear how well your dividend strategy and stock selection is doing. E.g if you say you're at 120k in your portfolio, its not always clear to your readers if that's increased from capital gains, dividends, or if you added leverage, or added cash. I've read other commenters say similar things so I'm not the only one who has had troubles understanding. Also, I think if you are more clear/transparent about what you are doing, there will be less negative comments critiquing you, or at least the extra bit of analysis will help evaluate yourself.



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