Hey everyone! Here is the final section of budgeting made fun. We already talked about adding up all of our fixed costs like mortgage/rent, loans, taxes, electricity, etc. We then talked about how we can squeeze our other bills by calling the companies and trying to get a better rate. I hear success stories from clients all the time after doing this! Remember that honey gets more bees. Be super sweet to the customer service rep but demand to match a competitor’s price that you’ve seen or threaten to cancel. All of those savings will now be pumped back into things you love like trips, dinners with friends, or a retirement in Fiji. Whoop.

Take three months of statements and see how much money went to clothing, coffee, lunches out, movies, restaurants, and other miscelaneous areas. I bet this number will shock you! With unlimited swipes of a debit or credit card we normally stop spending when our money is all gone. Today, we change all that.

Look at your last three months statements and figure out how much you spent. Now think if you really enjoyed any of those purchased to their fullest. OR, would you have much preferred that money going somewhere else?

Take your average spending amount on miscellaneous items from the last three weeks and then cut it in half. Then divide by the number of weeks that are in your current month. If you spend an average of $2,000 on dinners, drinks, and good times, now $1,000 will be your monthly amount. If there are four weeks in the upcoming month then divide the $1,000 by 4 = $250. That is your weekly variable spending amount.

On Sunday go to the bank machine and take out your $250. Go get some jars, envelopes or some other divider and now plan out the week. If you have dinner with Aunty Gertrude then you need to have $100 on Wednesday night. If you need $500 totally fierce pumps – you need to save $100 for five weeks to get them. What, you say? Saving before you spend? I know it’s crazy, but you’ll fall in love with your fierce pumps that much deeper when you pay cash for them. You might even pass them up? Ohhhhhh snap.

We now have set you up so that everything that has to come out, comes out, including money towards retirement an your goals. Now you’ve put a cash ceiling on your clothing, dinner and fun times spending. You’ll be amazed how well this works. Love your money and it’ll love you back with an auto fantastic financial life.

Have a super fun all cash week money peeps,

Dave

When we think of budgets we normally think of the boring things like gas, groceries, and electricity bills.  The way for people to stay on their budgets is with a budget “carrot”.  If you use a goal or “carrot” to keep you on track you’ll achieve more of your financial goals.  It works on donkeys and it works on me!

Now that you have all of your fixed budgeting from last weeks blog, deduct it from your income to see how much you have left over.  Make sure you squeeze all of your cable, internet, mobile, energy bills, etc.  I’d rather spend my money on a trip than give it to greedy cable companies.

Now make a list of all the things that we want to do this year or in the future.  This is the fun part!  Most experts focus on all our boring bills but to get people to stay on budget we need to focus on the fun costs.  Take a piece of paper and write down all of the things we want to do or buy this year.

It could be a trip for $1,800,  Italian lesson so you can speak to Nona $50 x 12 $600, saving for another degree $2,500 a year x 2 $5,000, or buying a cottage $50,000 for the down payment.  Take some time and think of EXACTLY how you’d like to retire and then cost it out.  Remember that things will be more expensive depending on when you retire so be generouse with costs.  There are retirement calculators out there to help.

Take your goal like the trip and divide it by the amount of pays you’ll have until you can go. If you have ten pays until you can go, then you want to get an AUTO transfer from your account into a savings account for $180.  In ten pays you’ll have the $1,800.  When you have the money you can run out and buy your trip for cash and then fly away with only a feeling of accomplishment.  PLUS saving any credit card interest you would have normally paid when you had bought it on your credit card.

Go through all of your goals and start allocating your free cash flow towards them.  When you’ve achieved one, and paid cash, target the next in order of importance to you.  You’ll quickly see how money that would have just vanished is now being re-directed at getting you the things that make you happy.  And that is how we do it.  (snap)

Next week I’ll show you how to use your petty cash and bring all areas of budgeting together.

Have an awesome week,

Dave

Hey everyone, here is the press release for the launch of the DCL Capital Option Income Portfolio.  People always ask me where they can find a manager to manage money how I write about in my book.  Now you can!

I’ll write about budgeting for big items later in the week so stay tuned,

Dave

Higgins Investment Group Launches the DCL Capital Option Income Portfolio

-DCL Capital Option Income is one of the first actively managed portfolio focusing on selling options to increase yield.-

Toronto, Canada (January 9, 2011) - David Campbell Lester, president of DCL Capital and author of the best selling personal finance book I Heart Money, has licensed Higgins Investment Group to use his dividend stocks plus option income investing strategy from his book. The DCL Capital Option Income is one of the first ACTIVELY managed portfolio that focuses on selling options to increase yield.

Lester’s strategy is best described by using stocks as a rental property.  The best companies are big blue chip companies that have been around for 100 years and he expects them to be around for the next 100 years.  He understands the business, and recognizes there is a need and more importantly growth in the business.  The dividend that he collects from the stocks is his first rent. “I can write Puts on the position to create an additional stream of income and write Calls on the entire portfolio for a third stream,” says Lester.

“I first described my strategy in my book I Heart Money. The entire book focuses on teaching people how to have a healthy relationship with their money by giving them tangible and easy to understand tips that work,” said Lester.  “These tips include investment portfolio strategies, like this one. With volatility being so high, the options premiums are currently extremely high providing many opportunities that can be leveraged with the right strategy.  In my own portfolio I can generate more income from the option premiums than I get with stock appreciation or dividend payments.  The stocks are there for me to trade around and with the collected premiums, I buy more stocks.  The stocks appreciating in price is gravy on the entire strategy for me.”

Higgins Investment Group is now licensing Lester’s strategy of buying big blue chip dividend stocks and then selling “Call and Put options” around the portfolio to gain extra income. When the stock market goes sideways or down like Lester predicts it will for the foreseeable future – this is a great strategy.  Only now are exchange traded funds (ETF) companies coming out with this kind of product and Lester’s is more effective for the following reasons:

A) It will be actively managed as opposed to ETFs that follow a set index.  Mr. Higgins will cherry pick the best companies with the best dividends with the best option premiums.

B) The Portfolio not only sell Calls but sells Puts to open the position.  The current ETFs on the market only sell Calls on their positions.

C) ETFs only do what the market does.  They simply follow an index or sector.  In the Portfolio, Higgins will use the Lester strategy and set it up to beat all the indexes.

Gordon Higgins was Vice-President, Canadian Equities of Elliott & Page/Manulife Insurance created and managed the E & P Monthly High Income Fund from inception to 2001. Mr. Higgins managed closed-end funds with a covered call strategy from 2004 to 2009. Currently, Mr. Higgins is the President of Higgins Investment Group Inc. “David’s strategy fits with HIGI’s core business of tailored portfolios focused on the combination of cash flow and wealth preservation. As David’s book describes, there are advantages to collecting dividends and option premiums while owning quality stocks.  Everyone wants to get paid to wait for the stocks to rise; his strategy allows the investor to get the opportunity for enhanced income.”

About Gordon Higgins B.Comm, C.A., M.B.A, C.F.A, DMS: Mr. Higgins was the Vice-President, Equities of mutual fund and closed end fund manager Sentry Select. Mr. Higgins was Vice-President, North American Equities at Howson Tattersall/Lancet Asset Management and, prior to that, was Vice-President, Canadian Equities of Elliott & Page/Manulife Insurance. He graduated from the University of Toronto with a Bachelor of Commerce degree and received his Masters in Business Administration from York University, Schulich school of business. Mr. Higgins holds both the Chartered Accountant and Chartered Financial Analyst designations. He is now President of Higgins Investment Group.

About David Campbell Lester: Author and President of DCL Capital David Campbell Lester recently launched the United States version of his successful Canadian book I (Heart) Money. After seeing the tremendous response and countless success stories about lives being transformed as a result, Lester has decided it’s time to reach a broader audience. David’s fusion of humor, positive reinforcement, and tangible tips that work, make managing your finances something you love.

He is now a personal finance writer and President of DCL Capital. Lester writes for his blog iheartmoney.ca that breaks with traditional attitudes towards finance and describes his own philosophy towards money and life that he has gained through his personal and professional experiences. His philosophy on money applies to many areas of everyday life including:  banking, investing, goal setting, shopping, and entertainment. David is a repeat guest as a Financial Relationship Expert on FOX and CW6 San Diego as well at CTV in Canada.

Visit dclcapital.com for more info.

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Hey everyone!

Now that we have all the trees and lights down the next biggest priority is being a super star with your money.  Everyone should have a new year resolution where this year they’ll be awesome with their bling.  My next few blogs are going to take you through the process of being a budget star.  Here we go money maverick/mavens!

First thing for a good budget is to figure out where you are.  Get three months of statements or more and go through your bank account, credit cards, lines of credits and try and remember where your cash went.  A really easy way to do this is at mint.com.  You enter your debit cards and credit cards and it pulls all of your info and categorizes it for you.  There is now a Canadian version too!  If you do have US$ accounts like I do, it’ll pull data from them as well.

Once you have all the data the first thing you will be is shocked.  We always drop from our memory this expense or that expense.  Or forget exactly how much we spend for Christmas.  Take a good hard look at where your money is going and make sure that you’re spending less than you are making.  Here are some quick rules of thumb:

1. Rent or Mortgage plus property taxes plus, electricity, plus home insurance should all add up to a MAX of 33% of your gross income.  Gross income is the amount you negotiate with your boss before all of the taxes come off.

2. Retirement savings should be at least 10 and I say 15-20% of your NET income.  That is the amount that gets dropped into your account or how much your cheque is after your expenses if you’re self employed.

3. You are probably paying too much on all of your bills.  Cable, Telephone, Mobile, gym, and internet, etc. Call all of those companies up and say you are going to a competitor.  When they transfer you to the loyalty program tell them that you found a better deal.  Keep pushing with them until you get the best deal.  If you find a better deal with more perks at another provider then go ahead and change!

4. Bank fees and interest charges.  Take a close look at these and go to the bank to see what plans they have to eliminate them.  I put all of my fixed charges (gas, groceries, gym, mobile, insurance) on my no fee MasterCard and then pay if off at the end of the month.  Then I use cash each week for EVERYTHING else.  Keep $1,500 or the minimum in your account to waive the monthly account fee.  It’ll all add up!

Get all of these numbers together and next week I’ll show you how to budget for the bigger stuff.

Have an awesome week,

Dave

Hi everyone and Happy New Year!  This January I’m going to walk people through my process of budgeting and how you need to get excited about what you are saving for in order to be good at it.  Keep checking back while I use myself as an example of how to budget. My strategy that I write about and outline in my book is now available to retail investors!  Managed by Gordon Higgins, of Higgins Investment Group, there will now be a managed portfolio that ACTIVELY sells options on an underlying blue chip dividend portfolio.  It’ll be called DCL Capital Option Income Portfolio and I’ll be writing about in next week but you can find out more right now at dclcapital.com. I was in the Montreal Gazette last week and the Vancouver Sun and Windsor Star this week.  Here is the article below.  I concur with John’s opinion.  Everyone should run out and buy my book!  I Heart John Archer! Have an awesome week, Dave

Hi everyone and Merry Christmas!  Here is another article from Barrons’ that discusses selling options as a way to increase your portfolio return in these trying times.  Enjoy and I hope all of my readers a Happy New Year!

Have a great week,

Dave

A Holiday Gift for Traders

By STEVEN M. SEARS

By using a strategy known as overwriting, the options market will pay you to buy or sell stocks.

The buy-and-hold strategy has legions of fans. However, an options strategy, known as overwriting, often does better.

By selling bullish calls, or bearish puts, against stocks that investors own, or want to own, investors can boost returns with little risk. The strategy often outperforms the standard buy-and-hold approach because it increases income earned from stocks.

The money received for selling the put or call, however, is a conditional dividend as investors must sell the stock at a higher price if a call is sold or buy the stock at a lower price if a put is sold.

The key risk with overwriting is that if a stock plummets, and you own a loser at a higher price denoted by the put’s strike price, or the stock surges, you miss out on any gains above the call’s strike price.

Many strategists are increasingly recommending that investors overwrite their portfolios to enhance returns. The implied volatility of many options is elevated due to lingering global economic concerns and Europe’s sovereign-debt crisis. By selling calls, or puts, investors can benefit from the fear of other investors, and use that fear to more cost-effectively buy stock or increase returns.

“All investors are struggling with high market volatility and elusive returns. Selectively selling options lets investors overcome those hurdles,” says Michael Schwartz, Oppenheimer & Co.’s chief options strategist.

On Thursday, for example, Schwartz advised his clients who own emerson (ticker: EMR), an electric equipment stock, or want to own the stock, to think about selling puts or calls. Consider the Emerson trade a case study that can be used with any stock.

With Emerson at $46, Schwartz likes selling the January $50 call that expires in 2013 at $4.40. Emerson pays a $1.60 dividend. If the stock price does not rise above $50 before the call expires, investors pocket the $4.40, and earn a 14% return. If the stock exceeds the call’s $50 strike price, they are obligated to sell the stock, and they will receive a 21% return.

Conversely, Schwartz also likes selling Emerson’s June $46 put for $4. If the stock advances, investors keep the $4 received for selling the put and earn a 9.5% return. If the stock declines below $46, investors are obligated to buy the stock, though the cost is defrayed by the $4 received for selling the put.

Many savvy investors have made overwriting a regular feature of their investing discipline. Depending on their view of a stock, they sell calls if they think shares are under pressure and unlikely to advance. If they think a stock will advance, they sell puts.

In essence, overwriting lets investors take advantage of the fear and greed that pulsates in the market. It is a clever approach, and one worth mastering.

Back by popular demand, here are my shopping tips!  I’m very serious when I shop for the holiday.  I don’t just buy things willy nilly or on a whim.  I shop to win.  Nothing drives me crazier than to buy something and then see that I didn’t get the best deal.  I’ve listed my shopping strategies below for everyone to use for their ultimate items and save money to re-invest in more amazing treasures.  Remember, shopping is like war.  To the victor goes the spoils (shoes).

1.  Scouting Parties:  Shopping for the best holiday deal is a war of attrition.  You need to scout out what you would LOVE to give, and then keep checking back for it to go on sale.  I have a routine where I keep checking my favorite stores to see when my prize gift sweater or amazing scarf goes on sale.  I keep my visits frequent until I don’t think my target item will go any cheaper or I risk the chance of losing my size–and then I pull the trigger.  Buy it with cash and celebrate your victory.  If it doesn’t go on sale or I lose my size–they didn’t really want it that badly.

2. Love it or Leave it:  Make sure that when you buy, you buy something that makes your heart go “thump”.  Think of what that person would really love, because you love them. Buying because you’re tired, your friend bought something and you feel you need to also, or because you just want to go home is no way to holiday shop.  Make sure that when you envision that sweater on your family member it is amazing.  Make sure they’ll wear it a hundred times and something that you would wear too.  Think of all those extra sweaters in that person’s closet that they probably never wear.  Make sure it’s ah-mazing.

3. Buy Classics:  Make sure that when you buy, you buy good quality, classic products that they won’t have to pitch next season.  We are all about the average cost per wear over here.  A classic piece is timeless and contributes to their clothing basics.  Keep in mind what classics they still need to buy, and when shopping hit them up first. 
 You’re a super shopper and this is going to be the best holiday yet!

4. Befriend the Sales People:  If you’re charming and lovely with the sales people they’ll tell you when things are going on sale, hold things for you, and invite you to the friends and family nights.  Allies are crucial in holiday retail reconnaissance.

5. Determine How Much You’re Going To Spend On Everyone First: Make sure you have the money saved and have a set limit that you now you can afford spending on all of your Holiday list people before you buy anything.  This allows for you to truly enjoy the task of holiday shopping without any money malice.

6. Save The Entire Year Before So You Have The Holiday Money Cash! Open a daily high interest savings account and deposit your budgeted allowance for the entire holiday monthly starting in January. Give it a boost by adding your tax return.  See how much the holiday cost this year and divide by twelve and start saving.  How wonderful will it be to have a war-chest ready for next year!

7. Make a List: Organize everyone you need to shop for, how much you’ll spend on them and everything that you want to buy prior to hitting the mall.  If you see a fierce fleecy thing that Nana would look sick in – add it to the list.  When you have enough cash to buy the number one gift for everyone and it’s the right price, strike!

8. Buy something for you!  By setting a budget and keeping to it.  Saving the cash before you shop and getting your loved ones their ULTIMATE gifts for the best holiday yet – you need to be rewarded.  Take some of your savings from all of these strategies and get yourself a little somethin’ somethin’.  This positive re-enforcement will be motivate you to keep this new positive money behavior next year.  And you got shoes babe!

These strategies will help you to get ultimate holiday gifts for the best price and guilt free.  It makes shopping more enjoyable and gets you more bang for your buck.  You are now master of your holiday mall jungle!

Love your money and there will be way more to love during the holiday,

Dave

New BMO Covered Call Utilities ETF (ZWU)

I don’t know how this one slipped under my radar but BMO launched a new covered call ETF on one of my favourite sectors – utilities.  If you are a regular to my blog you know that I believe that the only way to make money in this market is by owning dividend paying stocks with a call-write strategy for extra income and downside protection.

Utilities are a defensive sector and as the European debt problem continues to be get bigger and US unemployment stays close to 10%, this is where I want to be.  Currently ZWU has a 7.2% yield made up of dividends and option premium that they distribute to unit holders monthly.

BMO describes the ETF as follows “Allows investors to access a portfolio of widely recognized Canadian utilities companies, which include telecommunications and pipeline companies, while potentially earning call option premiums.”

The companies that make up the ETF are all companies that I’m sure you are familiar with.  Warren Buffet always states that you need to understand the business you are investing in and utilities are something we all get.  Utilities are also something that if Europe explodes and we go into another down turn – we’ll still need to use their services.

Check out the ZWU top holdings:

Telecoms, energy, and utilities also all pay a quality dividend as a sector and as more and more of our government and corporate pensions seek income to pay out their retirees – they’ll be gobbling up these companies.  Tweens will keep sending more and more texts on their SuperPhones, we’ll need to use gas to drive and electricity or natural gas in our homes in the foreseeable future.

Having a constant demand for larger, stable, dividend paying companies is a great backstop to have in such volatile markets.  Utilities have also been one of the only sectors to increase their dividends being paid to investors.

Volatile markets are also key to increase the price of the premiums that this ETF collects when it sells the call options on the entire portfolio.  As long as there is fear in the market, you’ll collect a juicy yield.  And if the market takes a 10-15% drop, the sold calls will soften the drop and let you get “paid to wait” for the market to go back up.

Keep loving your covered call portfolio and it’ll love you back with a great yield,

Dave