The Super Boring Post on Normal Retirement

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Normal Retirement at 65 is basic personal finance, which is why it boggles my mind that Most People haven’t figured this shit out yet. Up until yesterday, I hadn’t figured it out either. After all, it wasn’t too long ago I said Retiring at any age wasn’t likely. The truth is I was just lazy and hadn’t run my numbers yet. I just got back from the bank, and I’m now 100% set for Normal Retirement (NR). Here’s how I did it.

I have $13,174.09 in my RRSP right now. $8,605.79 is invested in a Select Growth mutual fund and $4,568.30 is in US Index. I plan to go even more aggressive in my investment strategy and put 80% into US Index. I expect that to return 7% annually. I’m only 27, so I have 38 years of growth to look forward to before I’m an old sack of shit who won’t want to work anymore. If I do, I’ll have even more money, but let’s just pretend I’m useless at 65. Using our trusty Compound Interest Calculator, let’s see what happens if I maintain 7% growth for 38 years without further RRSP contributions: $172,307.50! Not bad, but I can’t Retire on that. What if I put in $100/month, or $1,200/year? Holy assballs, we’re looking at $393,875.85! THAT’S ONLY ADDING $100/MONTH! That’s enough to Retire on. I’ll still have my Home inflating my Net Worth to $500,000+ and I’ll most likely still be Working instead of being 100% Retired. I’ll be even richer! And all it took was $100/month. Go, me.

Are you in your 20s? Right now is the absolute most crucial time to save. Did you know investing just $15,000 from the time you’re 20-34 means more than investing $35,000 from the time you’re 30-64? WHAT THE FUCK. If, at 20, you start saving $100/month and invest it in US index funds with a 7% annual return, you’ll have $366,902.12 by 65! Are you an overachiever? $200/month gives you a whopping $733,804.23! HOW ARE YOU NOT ALREADY DOING THIS? ARE YOU NOT AWARE THAT BANKS ARE MONEY MACHINES DESIGNED TO MAKE YOU RICH?

If you’re reading this, you’re most likely a Millennial with no hope of Retiring. I’m here to tell you Retiring is possible. NR can be yours for less than $200/month. That’s approximately the cost of NOT buying a $5 latte every day. It’s also approximately the cost of NOT going to a club filled with douchebags and racking up a one-night bar tab every month.

Your Future is in your hands. What means more to you? The Retirement you never thought was possible, or the soy-mocha-frap-fuckdrink you “can’t live without”? Buy a coffeemaker. Go to shitty clubs less. Treat yourself still, but not in a way that costs money. Go for a goddamn jog. Eat well. Read a book. You’ll be Rich in no time.

If you need me, I’ll be over here mathing how to put an extra $100/month into my TFSA. Maybe I can try for EARLY Retirement. I can’t believe how simple Getting Rich is…

Shiny Things Are Stupid

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I own many shiny things. There’s a long list, but the main items up for debate are my Canon 1D X and my admittedly ridiculous collection of PlayStations (3 PS4s, 2 PS3s and 1 PS2). While the 1D can be written off as a business expense, the gaming expenses are pretty nuts. With all the screens, controllers and games added in, we’re looking at roughly $5,000+ I’ve spent on video games. Crazy, right? Or is it? Let us know in the comments, but let’s get down to the nitty-gritty of today’s post: Why are shiny things dumb, and how can omitting them from your life improve it?

I don’t drive a nice car. I’m actually driving my mom’s shitbox Corolla and don’t tell her this, but putting a few dents in it from time to time isn’t something that worries me. I get basic insurance, and MPG is something that matters to me. I crave efficiency and practicality. On the other side of the spectrum, I see all sorts of ridiculous cars in Richmond, BC where I live: Maseratis, BMWs and miscellaneous other expensive vehicles being driven by 20-year-olds. I admit flaunting wealth can be kinda fun, but when you’re 20 with an N on the back, you just look like an idiot trying to fit in. It’s obvious you didn’t earn the money to buy said vehicle, and it’s obvious you care more about appearance than substance. Don’t be a dipshit.

But wait! What if you’re NOT a dipshit and you still buy a car you can’t afford? I sat down with my friend Mike in the UK and prices are just a wee bit crazier over there. This is the story of his Toyota GT86. In his words:

“Toyota Gt86 list price in U.K is £28000. I pay £460 a month for the car, then i have to pay car tax and insurance plus budget for fuel which has been high in proce over here. around £1.20 per liter. ($2.45)”

UH, WHAT?!? Correct me if I’m wrong, but isn’t £28,000 about $52,723.06 in Canadian dollars? His £460/month payments are like $866.16! That’s like Vancouver rent, just for a tiny room with wheels! He also pays twice what we do for gas: £1.20 is about $2.26. WHAT. My immediate question is whom he’s trying to impress. If it’s women, I’d like to point out financial stability is far sexier in the long run than an overpriced sports car. But hey, I get it; I have toys too. IT’S JUST THAT MINE ARE 10X LESS COSTLY. But wait, it gets worse.

“as part of my contract, i have to have my car serviced by the dealer every year and there are different grades of service. my first was around £180 for oil and filter change basically which should be classed as fucking thef because i could do it myself for 1/4 the price.”

Don’t even get me started.

“year 2 was supposed to cost around £450 at toyota for the more detailed service. i found out i could get it done at any vat registered dealer. my friend has his own garage, he basically charged me for parts and a little labour. It cost me £190”

In short: Fuck you, Toyota.

I may be $22,535.05 in debt, but that was a series of hundreds and hundreds of minor mistakes. Mike made One Big Mistake and fucked his financial future in colossal ways. Luckily, he’s getting rid of it soon, and for good reason. The last time I saw him, a massive hailstorm had just hit Newcastle. His shiny GT86 was suddenly peppered with tiny dents. He lost his shit. Why put so much money into something that only causes you stress? That seems like a shitty investment! But wait, you wanna see numbers, right? Let’s run ‘em: $52,723.06, if I invested it now at 27 averaging 7% interest, IS $689,579.21 BY RETIREMENT AT 65!

Mike, sell the goddamn car. I know you’re reading this. Sell the goddamn car. Your future depends on it.

That’s just one example, but if you’re ever gonna succeed in life, you need to stop being so precious about the shit you like to keep pristine. Your shiny car is bullshit. The $1.2M mansion you’re pulling 70 hours a week for is bullshit. My PlayStation collection is bullshit. None of it matters. If it’ll cause you stress when it’s inevitably compromised in a way that WILL COST YOU EVEN MORE MONEY, it’s a poor investment. However, if it SAVES you money, or GENERATES money, you’re in the clear. That’s why my Canon 1D X isn’t stupid. That camera can make me thousands in a day. That can stay.

Here’s a Compound Interest Calculator. The next time you’re considering a Large Purchase, figure out the Real Cost and how much Money you’d have if you invest it instead. I calculate for 7% because I invest in US index funds. Literally NEVER skip this step. If you follow this advice, you’ll be richer than you ever dreamed.

See you when you’re Retired. Fancy some PlayStation?

A Story of Great Interest

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I owe a stupid amount of money. We’ve talked about this before and things are even more grim now, as I still appear to be spending more than I’m earning. There are a few reasons for this – namely that I keep my business finances entirely separate from my personal finances, and though I’m busier than ever, not a lot of money from my business makes it into my personal chequing account since I reinvest it in advertising. For instance, I’m currently producing my own video ad and that’s running up quite the tab. C’est la vie.

The point is I’m $22,000 in the hole because I’m the Dumb Ben, but this turned into a great opportunity to research interest rates and get debt savvy. I’d also like to point out my $22,000-in-debt is a little different than $22,000-in-debt for someone who still has Rent. I pay something in the neighbourhood of $100 per month as “rent” on my Debt. I’m pretty okay with that, but obviously, if you’re still paying Vancouverite prices on Rent, $22,000-in-debt is a bit of an emergency. Get on that. As an aside, I know I’m a bit of a financial shitshow. For one, if I don’t have Rent, why am I so poor with money management that I have Debt? I’m a mess. Anyway.

There’s always room for improvement in managing your interest rates. I’m sure many of you reading this carry some sort of balance on a 19.99% credit card. This is a huge no-no. Every $1,000 you have to pay interest on costs you $200/year with no added benefit. There are credit lines for a reason, and as you’ll soon see, even other credit cards can help you manage your Debt.

According to my bank, I owe $7,023.58. There’s $5,000 on a 9.68% credit line, $35.75 on a 7.69% RBC RateAdvantage Visa, and $1,987.83 on a 19.99% Visa Infinite Avion. Obviously, I’ll be moving my Avion debt to my super awesome RateAdvantage – get this! – and I’ll be popping into my bank this week to see if I can do the same for my credit line. If that all goes according to plan, my monthly interest payments are $45. Not bad at all for owing $7,000. Still carrying most of your Debt on a 19.99% credit card? Apply for a credit line. Ask about their low interest credit cards and avoid the ones with high annual fees. You could find something as low as my 7.69% RateAdvantage Visa. You won’t know unless you try. (Annual fee: $39.)

So what about the other debt? I also owe $15,511.47 at 5% interest, which hits me for $64.63 every month. Where’d I get such an awesome interest rate, you ask? I’ll tell you: my brother. Somehow, at 22, he has more money than I do. He’s got $50,000 in investments, but they’re silly investments so I’m trying to help him out. Instead of the 1.x% bond he’s currently investing in, which doesn’t even keep up with Canada’s 2% inflation, I offered him 5% with the condition that I pay it all off by July 22, 2018 – my 30th birthday. If I’m short and desperate, I’ll pull from my RRSP. I have $13,000+ in there, and I know that’s not a lot, but I never plan to Retire. I think I’m covered.

In managing your Debt, you have more resources than you realize. There are credit lines, low interest credit cards, even family members who’d love to help you out. The best part about utilizing people like your parents or siblings is it keeps your money in the family. Just make sure you actually pay people back. Done carelessly, this is the kind of shit that can tear a family apart. Not everyone is as awesome as my brother.

Total monthly damage for borrowing $22,535.05: $109.64. I’m not proud of that number, but let’s see what it would be if I were a total idiot borrowing at 19.99%: monthly payments of $375.40. I save $3,189.12/year just by doing a little research and shuffling some debt around creatively.

Is $109.64/month worth it to borrow that amount? I’m actually a Yes on this. Borrowing that money allowed me to buy the Canon 1D X I run my business on. Borrowing that money allowed me to strengthen my relationships and make new ones. Borrowing that money allowed me to have a shitload of fun. There’s no doubt I’ll pay it back before I turn 30 either. I just need to put $800+ toward it every month and now that I know it’s a goal, I’ll do my best not to backslide.

I really picked a shitty time to start this blog though, eh? Sure, let’s talk about saving money during my three slowest and spendiest months of the year! Jesus Christ.

WHY ARE YOU EVEN TAKING ADVICE FROM ME.

The Bens Conquer North America!

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Ben and I started this blog with the best of intentions, but month after month, we’re proving to be better examples of what NOT to do instead of being the personal finance wizards we like people to think we are. Since you’re already aware of my Questionable Spending Habits, maybe it’s time to update you on The Other Ben – pictured above – who recently moved to NYC to participate in a three-month programming retreat…

Ben is one of the smartest people I know. He’s so close to a six-figure salary, I freak out and flip tables every time I think about it. Before his move, he was averaging an estimated monthly expenditure of $1,750, or $21,000 a year. When you take a step back and remember how much he makes on average, it’s mind-blowing how fast he’ll reach Retirement. He’s 27 and had he stayed on course, he would’ve reached his Retirement Number of $525,000 by 38 like he planned. (Many of us in the personal finance community use The 4% Rule when mathing our Retirement Numbers.) Well, Ben quit his job recently to go to New York, so his current salary is actually $0.

This won’t set him back though. If anything, the things he’ll learn and the people he’ll meet at his programming retreat will help him reach his six-figure salary even sooner. In the long run, as long as Ben returns to his high-earning and thrifty ways, he’ll still be able to Retire by 40.

February was a spending disaster for Ben. He made it very clear I could only post these numbers if I made it obvious this wasn’t his usual spending. He’s renting in the US and Canada while he moves, and paying phone bills in both countries. Total expenses for February: $3,387.28. His Rent for both places was $1,650 of that. Food came to $750.20 as he explored his new neighbourhood. Honestly, I would’ve done the same. One surprise I noticed was he didn’t have an Alcohol category. Could he really have spent ONLY $750 on food AND booze? Holy shit. What kind of monster does that? I’m too embarrassed to even mention my Alcohol spending. It’s more than $750 and that’s all you need to know.

An interesting thing to note is Ben’s spending in February was almost exactly what I spent in January. The main difference is what he spent in Rent, I spent on Alcohol. At this point, I’m full on acknowledging I have a Drinking Problem, and March is already looking better. I’m keeping myself busy by taking on more photo clients, and my Alcohol consumption is way down. If you can believe it, we’re now seven days in, and my Alcohol spending is literally at $0. There’s hope for me yet.

What questions do you have about our spending? Any tips? What else would you like us to track? Let us know in the comments.