My Own Advisor

For today’s post, I thought it would be interesting to crunch some numbers…

Your Mortgage

Owing $250,000, at 3% interest over a 5-year term, amortized over 25 years, making bi-weekly payments and you’ll pay over $90,000 in interest costs over the amortization period.

The lesson:  even a cheap mortgage rate will cost you BIG bucks over time.   Get a good mortgage rate and make lump sum payments on your mortgage when you can to significantly reduce your borrowing costs.

Your Credit Cards

Owing $10,000 on a credit card, paying 18% interest, paying just the monthly minimum:  you’ll pay almost as much in interest as the original balance.  It will take you around 22 years to pay off this debt.

The lesson:  credit cards are great for temporary credit, getting cash-back or travel rewards in the process.  Credit cards could cost you a bundle if you don’t pay off the balance in full by the due date, always.

Your Mutual Funds

Investing in your average Canadian equity fund at ~2% management expense fee, putting down $10,000 initially and keeping that money invested for the next 20 years:  should earn close to $24,000 (based on historical returns of about 6.25%) but it will cost you about $9,000 in fees during that period.

The lesson:  look for active money management fees less than 1%, since almost every single mutual fund charging more than this will be hard-pressed to keep up with indexed products that charge you much lower fees for the same (or better) returns.

What does this mean to us?  Our plan is to accelerate our mortgage payments where we can, avoid any credit card debt and stay out of all high-priced mutual funds for good.

I can’t promise you’ll save all this money but there are options available to all of us.  You can visit this page here to play with some math yourself.

Thanks for reading and sharing this article.

Over the years I’ve spend on ton of cash on things that didn’t provide value. I can’t offer that list today because that’s an entirely new set of blogposts which I’m sure I’ll cover at some point  As I become more financially aware about what I spend my money on I find I’m wasting less money; which is a great thing.  Value for money is an important principle to me.  In the name of value, some things in life are definitely worth splurging on; I get value for money from different sources.  For today’s post I’ll share some specific things I enjoy spending my money on and have little regrets in doing so.

Dining Out

For special occasions, this is a no-brainer for me.  I’m no foodie or wine connoisseur but I enjoy a great meal paired with some tasty grapes now and again to celebrate something.  Dining out every week is definitely not my thing.  I can’t afford it first of all and secondly I’m too money conscious (cheap) for that.  Because I don’t dine out all the time I have no problem spending my cash on a nice meal at a good restaurant every few months since I consider this evening out as an experience or a reward.

Travelling

In my former life, I might have been a gypsy.  I love to travel and try to do so for pleasure as much as I can afford it.  Seeing new places and meeting new people is a rewarding experience for me and I suspect it always will be.  Over the last decade, I’ve been very fortunate to travel to countries like Cuba, Mexico, Spain, Italy, Argentina, Costa Rica and many U.S. states on vacations.  I don’t regret spending that money on those experiences for a second.  Travel has enriched my life and given me tons of perspective I would never have otherwise gained.  I can only hope as I age and become financially free I maintain my good health to visit many more lands I have yet to experience.

Buying a nice TV

I don’t watch an abundance of movies but I love sports.  I can’t imagine not owning a decent cable package, with a decent TV at home that does not include The Golf Channel or access to NHL hockey for 8 months of the year.  Forking over good money for nice big screen TV is well worth the cost in my opinion.  Although watching the game(s) live is great, and I pay money for that as well, I do it infrequently because of the costs involved:  the time to get to the game, the parking, the food and drink at the concessions not to mention the ticket prices themselves.  For example, watching an NHL game in Ottawa, with all that factored in can easily cost about $100 per game in the cheap seats.  If you want to sit closer to the action, the cost might be double or triple that amount, especially so during Round # 1 of the NHL playoffs right now.  Live sport is awesome but I can still be a fan of my Ottawa Senators at home most nights, certainly when there are more pressing financial priorities this spring and summer around our house.  There is only so much money to go around…

There isn’t a day that goes by that I regret getting my big screen TV and on the topic of my Ottawa Senators, I can’t wait for tonight’s game between my hometown team and the Montreal Canadiens.  #GoSens!

If you’ve always wanted a nice big screen TV then you’re in luck!   I am co-hosting a killer giveaway brought to you by QuoteMeAPrice.com where you can win a Samsung UN50EH6000 50-Inch 1080p 120Hz LED HDTV.  How awesome is that?!

How do you win this huge TV for your home?  Just enter this FREE contest using the rafflecopter widget below.  The contest closes the end of May during Round # 3 of the NHL playoffs and is open to everyone.  Good luck!

a Rafflecopter giveaway

Thanks for reading and sharing this article.

A few weeks ago, I read about a sad financial story in The Star.  After winning $10.5 million nine years ago thanks to a winning Lotto Super 7 ticket, Sharon Tirabassi is now almost living paycheque to paycheque.

The article stated the payout “…didn’t come with a financial adviser and before she knew it — big house, fancy cars, designer clothes, lavish parties, exotic trips, handouts to family, loans to friends — the money was gone.”

How did she plow through $10 million in less than 10 years?

• She took friends on multiple all-expenses-paid trips.
• They moved into a massive home and still took out a mortgage.
• They bought flashy cars and toys.
• She gave her parents and siblings money (understandable).
• She bought several houses, rented them out, including loaning many people rent money.

According to the article, the OLG (Ontario Lottery and Gaming Corporation) does not have a system to follow up with winners and there is no requirement for winners to work with financial professionals.  “There’d be no way for us to make that requirement of winners … people are adults and need to be able to make their own decisions,” said spokesperson Don Pister.

That comment by Don Pister leads me to these questions…

Should OLG have any follow-up system for lottery winners, to “check in” on their financial well-being?

Does OLG have any obligation to prevent future cases like this?  Is the lack of a financial adviser to blame here?

I wish Sharon continued happiness.  Money certainly never bought it.

Thanks for reading and sharing this article.

 

Recently, my wife and I went to the movie theatre to watch Skyfall, the new James Bond flick.  It’s been some time since we had a night out at the movies and the latest installment in the Bond series seemed like a good one to see.  Besides, I certainly didn’t need to convince my wife about seeing Daniel Craig on any screen larger than the one in our living room…

It must have been ages since I’ve been to the movies because I cannot remember the prices being sky high to see one, taxes included:

• 2 adult tickets on Saturday night:  $21.98
• 1 large popcorn, 1 large pop drink, 1 bag of M&Ms candy:  $17.60

Grand total less a few kilometres in gas:  $39.58

The last time we went to the movies, I don’t recall spending that much to go.  Maybe we had a 2-for-1 coupon or something from Air Miles our last time to reduce the price.

Anyhow, I was talking to another personal finance and investing blogger recently about how he sometimes puts the cost of things or activities into an hourly rate, to better understand the economic cost or benefit as a measure.  He’s a math guy and that math makes some sense if you’re trying to justify an expense using time as your baseline.  So, in this case, including our commuting time to the theatre and back, watching Daniel Craig at the movies cost this couple only $13 per hour, which doesn’t make the $40 tab for entertainment sound too harsh.

I don’t own any shares in Cineplex (CGX), Canada’s largest motion picture operator and exhibitor, but after witnessing the volume of people in that theatre recently, including all the folks in the concession line willing to buy the same overpriced treats for the show, it might be a consideration at some point.  As someone who watches where he spends his money more often than not I was definitely surprised at the ticket and concession prices that came with our Skyfall evening out.

What money saving tips do you have for moviegoers?

Lastly, do you ever think about putting expenses into an hourly rate?

Thanks for reading and sharing this article.

I’ve been a loyal BlackBerry user for over three years now but I’m feeling the urge to switch phones.  The urge comes with seeing newer technology on the market, smartphones with faster processors, more features and better browsing experiences.  It’s a want over a need – got to acknowledge that…

Actually, it’s hard to believe it was only a few years ago a BlackBerry was the phone to have.  This fall/winter, I’m in the market for a new Android phone, not an iPhone.  Here are a few reasons why…

I don’t get the iPhone hype

I simply don’t get all the hype.  What is so remarkably special about the iPhone over any other smartphone?  I want a phone that is reliable and easy to use.  BlackBerry, Android and Apple smartphones can all meet these requirements.  The new iPhone screen size is 4 inches (which is great) but other newer Android phones provide this screen size and larger.  iPhones look sexy (maybe this is where all the hype is coming from) but I’m not trying to make a statement based on how my phone looks.  Siri is a nice feature but with newer Android phones comes Google Talk.  I liked my BlackBerry (and bought it) because of the tactile keyboard but I’m convinced I can survive without it.  BlackBerry Messenger (BBM) was nice nice feature and still is but I can do without that as well but based on the phones my friends and family have I use SMS/text just as much.

Proprietary Apple stuff, forget it

If you’re like me, you have enough USB cables and other connectors around the house.  In fact, I have plenty of micro USB cables.  The iPhone 5 however uses a proprietary connector instead of “standard” micro USBs.  Why?  Also, what’s with that black box called iTunes anyhow?  I’ve never used it and I listen to a bunch of music.  The proprietary attitude of Apple borders on arrogant.

Technology

The Android smartphone I am looking at has video recording with 1920×1080 (1080p HD) (30 fps) and 1280×720 (720p HD) resolution.  That’s plenty good for me.  It also has an 8 MP rear facing camera with LED flash featuring auto-focus and face detection.  Great because I don’t need my phone to be a camera.  The 1.5 Ghz dual core processor from the Android phone will be great for browsing; it should be as fast if not faster than the iPhone.  The battery life is also expected to be better than the iPhone although anything close to 1 full day of use with data ”on” is good with me.

Price and plan options

Seriously…Rogers, Telus, Bell and others…you want me to pay what for an iPhone?  $699 no term for an iPhone 5?   Good try but no thanks.  I’m leaning towards staying with Koodo for a great plan on a tab.  So far, this plan is looking good:

• $20 for up to 50 anytime minutes + Canada-wide calling + voicemail and call display and more + 50 text messages per month.
• $5 for unlimited messaging (TBD).
• $5 for 25 MB data per month.

I currently use about 20 MB of data per month and use my BlackBerry for BBM and moderate texting and surfing.  I don’t make many calls on my phone and typically use less than 30 minutes per month.   Even if I decide to add on the unlimited messaging for an extra $5 per month I’ve got everything I need for taxes-in for under $40 per month – about what I am paying now.

There are more specifics I could have gotten into, for example on the software side comparing apps and on the hardware side comparing RAM, but for the largely the reasons above I’ve decided to resist the hype.   Sorry Apple faithful.

Let the comments fly everyone….what phone do you own?   BlackBerry?  Android?  Apple? 

Why?

Thanks for reading and sharing this article.