SMS 143 – Staycations

Staycation is a combination of vacationing and staying at home or limiting the number of nights away from home.

Benefits of Staycations:
Save money – accommodations, transportation, & meals
Less stress – planning and coordinating
More time to relax
Support your local economy
Appreciate where you live

Make Some Rules:
Have a budget
Break your daily routine
Limit your chores to the bare necessity
Use you home as a hotel room
Tell your family and friends you will be on vacation

30 Ideas for Summer Fun, Staycation Style

SMS 142 – Camping Considerations

Camping

Questions to ask yourself: Do you really enjoy camping?

  1. Are you camping for convenience and/or cost
  2. Do your really enjoy nature
  3. Given unlimited money would your still go camping

Types of camping:

  1. Car camping (intermittent hotel/camping)
  2. Wilderness camping – back packing, canoeing
  3. RV camping – tent trailer, travel trailer, motor home

Camping considerations:
Most kids love camping
Camping comes with built-in entertainment
Equipment – the right equipment will make a big difference
Location – if you desire the most sought after places it will cost (proximity to attractions)
Meal preparation – can be a plus and a minus at the same time
The more comforts of home you desire the harder you will work
Have dedicated camping equipment and supplies
Build a family legacy, early exposure may have a lasting impact
Don’t overstay your welcome
Go with no expectations

30 Ideas for Summer Fun, Staycation Style

Full Time Canada RVing

SMS 141 – Financial Decision Fatigue

Financial Decision Fatigue

Decision Fatigue: In decision making and psychology, decision fatigue refers to the deteriorating quality of decisions made by an individual after a long session of decision making. It is now understood as one of the causes of irrational trade-offs in decision making.

The problem with decision fatigue
Bad decisions lead to bad outcomes which will result in reduced confidence
Procrastination – no decisions often leads to a decision
Impulsive decisions – lack of logic or emotion often leads to regret
The path of least resistance is not the path to prosperity

Solutions to decisions fatigue
Routine will automate the small decisions leaving time and energy for the big ones
Put big decisions on the calendar – use time to your advantage.
Eliminate distractions – when a decision is required make sure you are in a good place
Write it down – emotions turn off and logic turns on
Don’t operate in a silo – use your support system
Have a value system – these are pre-made decisions

SMS 140 – Harnessing Your Financial Emotions

Harnessing Your Financial Emotions

Your emotions make most of the decisions in your life and our logical brain tries to create sound reasoning to support your emotional decision.

Control: We have the elution that we control things we actually have no control over. If we submit to the fact that our emotions are in charge and we control far less that we think we do you can begin to put in place a framework of a financial value system that will drive our actions.

The problem with making emotional financial decisions is we often evaluate those decision later with logic.

How do you know you are making an emotional based decision?

  1. Excitement
  2. Sadness
  3. Anxiety
  4. Anger

Ways to control your emotions when making financial decisions

  1. Don’t rely on your “gut”
  2. Pause and come at it from a different angle
  3. Write it down – Pros and Cons (pen to paper awakens the logical brain)
  4. Get external opinion – hire a professional (lawyer, agent, accountant)
  5. Don’t marry yourself to an outcome – make it about the process

Solution: Have a value system based on overarching rules that you can rely on for your decision making process.

  • Car loan: maximum 3 year
  • Mortgage: paid off in 15 years
  • I will never pay for a service I can do myself
  • I will not commute more than 30 minutes
  • Borrowing money for things that go down in value is not an option
  • Credit cards are a form of payment never to be used for credit
  • I will never use the equity in my house as a source of money
  • Replacements decisions are based on an items functional utility
  • Never mix money and family

SMS 139 – Living on Minimum Wage

Living on minimum wage

Can it be done?

If you do figure out a way to survive on minimum wage you actually have a superpower.

When does it make sense:
To build a career or it leads to greater prosperity
Semi-retirement
Supplemental income
Summer employment

Concerns with living on minimum wage:
Not a long-term solution – deprivation will catch up to you
Living on the financial edge for an extended period of time will wear you down
Raising a family would be a challenge
Credit could be your undoing
Location is important – if you can’t solve the income equation work on the expense side
You will not be able to build wealth
Are you really being deliberate?

SMS 138 – Rent – How Much to Pay or Should You Buy

How Much Should You Pay for Rent?

  1. One week’s pay equals on month’s rent
  2. Consider all of the costs when comparing

Determining Your Housing Rental Needs:

  1. Can you do a reference check on your landlord?
  2. Location, location, location
  3. Assess how long you plan to live there
  4. How much space do you really need
  5. Luxury comes at a cost
  6. Beware of a deal that is too good to be true

Rent vs Buy:

  1. You are not throwing money away – you get a place to live
  2. Home ownership is not for everybody
  3. Home ownership does not make sense at every stage of life
  4. There are more costs to home ownership than just mortgage payments
  5. The transactions cost of buying and selling are significant
  6. Read the Wealthy Renter by Alex Avery

SMS 137 – Retirement Considerations

Retirement Considerations

Divide you expenses into three buckets:

  1. Survival expenses
  2. Comfort of life expenses
  3. Luxury life expenses

Considerations in determining your costs base in retirement:

  1. What costs will remain in your life in retirement
  2. You shouldn’t have any debt payments
  3. You won’t have any savings requirements
  4. You won’t be supporting your children
  5. You should relocate to a low cost region
  6. Don’t plan for the worst – unfortunate events will be offset by unanticipated benefits
  7. My research has determined – you need less money than you think
  8. Statically you send 2% per year less past the age of 65
  9. Part-time employment will provide more than just supplemental income
  10. You can always make more money – you can’t make more time

Sources of retirement income:

  1. Pension plans (DB and DC)
  2. Retirement savings (RRSP, TFSA)
  3. Government pensions (CPP and OAS)
  4. Other investments
  5. Inheritance

SMS 136 – The Cost of Convenience (Roundtable)

Types of conveniences you can buy

  1. Transportation
  2. Meals
  3. Chores
  4. One-time events
  5. Professional services
  6. Specialty

The problem with paying for convenience

  1. Cost – financial
  2. Resourcefulness – you will lose this skill faster than you think
  3. Quality – either less you accept lower quality or get use to very high quality
  4. Lazy – you don’t use your new found time productively
  5. Speed – you either have to wait or you get used to things being done immediately

SMS 135 – Guilt Free Spending

Guilt Free Spending

Guilt free spending vs purchase justification

Why guilt free spending is important?
– deprivation is not sustainable
– bring change into your life

How much should you be spending guilt free?
– relative to your income

Spending considerations:
– on a regular interval
– not on life’s necessities
– not automated spending
– be deliberate about it
– make sure it is aligned with your priorities
– no room for personal agendas (not significant in value)

Sources of guilt free money:
– allowance – make it part of your budget
– gift money

Beware of the purchase justification machine

Mr. Money Mustache

SMS 134 – Re-Thinking Emergency Funds

What is an emergency fund?

  • should be 3 to 6 months of survival expenses
  • Insulation from life (living insurance) – removes risk from you life

The purpose of an emergency fund:

  1. Job loss
  2. Unanticipated expense

Who needs an emergency fund:

  1. Negative net worth – having debt in your life adds risk
  2. Relative low income – close to the financial edge
  3. Home owner – learn to predict expenses
  4. Car owner – learn to predict expenses
  5. Unstable employment – be observant
  6. Significant number of dependents – adds complexity to your life
  7. Known credit issues

How to build and manage an emergency fund:

  • Make it a line item in your budget
  • Stop all savings & aggressive debt repayment until you have $1,000
  • Aggressively build up 3 to 6 months of survival expenses
  • Have the discipline to not spend it on non-emergencies
  • Make it accessible but not too accessible

Who doesn’t need an emergency fund:

  • Positive net worth with no debt
  • Earn significantly more than you spend
  • Do not have credit issues
  • Very stable employment

Mr. Money Mustache

MMM vs. The Emergency Fund – MMM Show Episode 9