Who knew a personal finance book would include references to rabbits, zombies, the losing record of the Toronto Maple Leafs and Super Mario Brothers? This is exactly what Wealthing Like Rabbits contains, an original new introductory personal finance book written by Robert Brown. Comparing the “mind-bogglingly cool” and “mind-numbing” power of compound interest to the multiplying power of rabbits (and zombies), Robert reminds us that saving early, saving often and letting your investments do the work is one of many keys to wealthing your way to financial freedom. Here are some of my favourite takeaways from Wealthing Like Rabbits.
On the subject of “how much money will you need when you retire”
That’s a pretty good question. Here’s my enlightened answer: I honestly don’t know. I do know this though: More is better. It is better to tee off with your driver in January than it is to scrape ice off your driveway in January.
On the subject of contributing to RRSPs over TFSAs
Some folks suggest that a TFSA is the better option for lower income earners. Perhaps, but I’m not completely sold. Rob goes on to say TFSAs are just too tempting for savers: savings inside a TFSA is really easy to get at. Tax-free. As in too easy to get at. Way too easy to get at. The very thing that makes them attractive also makes them dangerous.
On the lessons learned from the Toronto Maple Leafs
With each September comes the promise of a new NHL season, but before you know it the Leafs start losing winnable games, from October right through the Christmas holidays. Someone (like me) says something like, “they should have won more games before the All Star break,” or “they shouldn’t have gotten into the pathetic position of needing to win so many games this late in the season.” They say, “next year.” Every spring, millions of Canadians file their income tax returns. More often than not they fail to contribute enough to their RRSPs. They say, “next year.” Don’t be a Toronto Maple Leaf. There is only one truly effective way for you to make your RRSP contributions: Pay yourself first. I don’t know a single person who has embraced this philosophy and regretted it.
On the subject of mortgages and how much house you really need
When comparing two hypothetical mortgages taken out by the Super Mario Brothers, Mario and Luigi, Robert said this about mortgages, interest payments, amortization periods and the total cost of borrowing when comparing each brother’s mortgage: Mario bought a house that was worth $175,000 more than Luigi’s, which resulted in a bigger mortgage. In the end, Mario’s house will cost him $402,472 – over four hundred thousand dollars – more than Luigi’s house will cost him. The takeaway is: banks are in the business of providing financial services or products to make a profit. They are very good at it. They are not in the business of ensuring your house purchase is a smart decision for you and your long-term financial health. That is your responsibility.
On the subject of debt (that’s more like a disease)
Bankers love these things (credit cards). If you were to ask a room full of bankers to decide on which they loved more – big extended mortgages or credit cards – it would be a tough decision for them.
Lines of credit are very seductive. Now it has become acceptable and, in some circles, almost fashionable to take on mountains of consumer debt. Do not buy into this thinking (pun intended).
There is nothing good about payday loans. Nothing. Never. Ever. Get a payday loan.
In the last few chapters, Wealthing Like Rabbits offers a cornucopia of advice. I agree with Robert on these things:
- Get a copy of Preet Banerjee’s book Stop Over-Thinking Your Money! (My review of Preet’s book here.)
- Anyone who thinks taking personal debt, mortgage or otherwise, into retirement is a good idea should put away their bong.
- Never apologize for being financially responsible.
- Pay yourself first and budget the rest. Do that and you’ll be fine.
Robert Brown ventured out to write a unique introductory book on personal finance, and he did it. His book is witty, full of great analogies and simply makes too much sense not follow his “advice, irreverence, and food for thought.” Wealthing Like Rabbits shows us that sound financial planning is not overly complex but it does take discipline; saving for your future self and spending the money that is leftover wisely. I want to thank Robert Brown for sending me a copy his book – it was well worth the read.
You can get a copy of Wealthing Like Rabbits here starting at just ten bucks. You can follow Robert’s comments about personal finance (and probably a few about the Toronto Maple Leafs as well) on Twitter @wealthingrabbit.