I just booked a flight to Australia to visit some close friends that moved there, and I wanted to share my tricks of the trade on how to get the best and cheapest flight.  The more money I save on the flight and hotels the more I can scuba dive, horseback ride, or visit other cities.  I always aim to have the best trip I can by saving on travel and hotel costs, then spending on the things that will make the trip truly memorable.  

Flights:
1. First, go see a travel agent and ask for the best rate from your city to the destination.  They’ll give you a price to start with.  Get quotes directly from your city and also quotes from smaller cities that are nearby.  I’m flying from Buffalo to Sydney, which is only a 1.5 hour drive from Toronto but saves me over $300!  There is a cheap bus from Toronto right to the Buffalo airport but I’m hooking a ride with my brother who wants to check out the Brooks Brothers outlet, which is a win win for both of us.  
2. Second, open a window with every cheap flight website you can find, such as expedia, travelzoo, selloffvacations, travelocity, priceline, etc.  There are even sites that will check all of the cheap flight sites for you, like cheapflights.ca, bookingbuddy.com, or farecompare.com.  Search all of them, slightly changing the departure and arrival dates until you’ve found the best price.  But you don’t book!  Call up Flight Centre with the flight still on your screen and they’ll beat the price by $10, and in my case they got my Australian Visa for me. I love my money and time!  
3. Travelling to Europe is a bit different.  Find the best rate into a hub like Amsterdam, London or Frankfurt.  Then try to get a Ryan Air, German Wind, or Easy Jet flight from the hub to your destination.  You’ll save literally thousands if you’re flying to a remote destination like I did when I flew to Malta.  That trip cost $800 to London and then $90 to Malta on Ryan Air.  That saved me more than $1,000!  

Hotels:
1. Hotels work the same way.  Open nine hundred windows on your computer and find the best price.  Google for a “promo code” for the hotel that you want and see if you can bring the price down even more.  Make sure you watch for any service fees or taxes before you book.  Click through to the page where you enter your credit card info and compare prices from the total sum. 
2. If you have a company like I do, ask to register for their corporate rate. This will guarantee you savings during the busy months when deals are scarce.  They treat their corporate clients like gold, which is a hidden plus. 
3. Whenever I travel I always aim to stay at the trendiest boutique hotels or historic hotels for less than a discount hotel.  I’ve done this in Greece, Sweden, Germany, Egypt, Malta, LA, and NYC. Why not stay at the best places in the best locations? You deserve it!
4. Get a US$ Credit Card if you stay in the US for long periods of time.  Credit card companies charge 2.5% on top of the exchange rate, so if you are in the US enough to charge $2,000 in hotel and travel expenses it will save you $50 from that 2.5% fee!  

Find the best foreign exchange rate place and pay off the card when you get home.  In my experience the ULTIMATE place in Toronto to exchange money is Foreign Exchange under the Sheridan Centre Hotel.  123 Queen St W. 416 364-3004. Tell Razia that Dave sent you.  

I’ll we away for two weeks putting shrimps on the barbie so I’ll write about all the ways I saved money down under styles!

Dave

As you’ve probably already read, 80% of mutual funds under perform the market.  Why would I ever pay up to 2.5% in management fees to under perform anything?  You can really see that they don’t have our best interests in mind.  When the market was correcting huge in 2008 and 2009 did any of the managers go to cash?  Any strategic moves? No way.  The reason for this is that if the market had swung upwards at any point during the correction and they had not participated in it, they would have been fired.  So over the cliff we all went.  As long as the managers stay close to the index, -30 may that be, the safer their jobs were.  

That doesn’t sit well with my love of money, and that is why I manage my own money.  I know at this point you feel queasy at the thought of going through company annual reports, balance sheets, and listening to conference calls, right?  Well it is so much easier than that.  What I do is find a mutual fund or index fund that I believe in and then I copy it and save the management fee.  I, for example, love dividend yield.  I’ll search for the best dividend funds or index funds and then rip off their top holdings for $5 a trade at my discount brokerage.  That way I’m in control of what I do with my dividends.  

There are many options when I’m in control of the dividends.  I could save the dividends up and buy another high yielding stock when I have enough funds to do so.  Which adds diversification to my portfolio for free.  I could also set the dividends up on a drip (dividend reinvestment plan) program.  My dividends would then buy me more stocks every quarter as they got paid out.  This way you naturally buy stocks higher and lower as the market changes over time. The indie term for this is dollar cost averaging. Quarterly I would receive more stocks that the following quarter would buy me even more stocks — and all for free.  This is a great way to accelerate growth over the long run. If I’m having a good month I might even pay myself my very own management fee and have an amazing dinner out with friends or family.  

If you share my love of dividends, look up the top holdings of XDV, the iShares dividend index. This ETF mirrors the 30 top stocks in the Dow Jones Canada Select Dividend Index.  You can grab the list of stocks right off their web site, plus their weightings.  To keep down my trading costs I buy just the top 15 stocks–making up 63% of the index. If you own them you’ll be participating when the index rises–in the last year it went up roughly 36%. You are given each stock’s weighting in the index which I could match, but with such small percentage differences between the top 15 I just buy them in equal weightings. If you did purchase the later you would have a 4.8% yield and some of Canada’s top dividend yielding companies.  When the dividend index is going up I know that I’m participating in the growth, and I have to keep checking back once a quarter or so to see if any of  my 15 have fallen off the list. I then simply make the appropriate trade to match the new top 15.  This is all on top of those sweet sweet dividends that are paying me quarterly.  

Make your own Mutual Funds and pay yourself instead of the managers.  You’ll love your money so much more.  
Dave

After the Holidays it is easy to feel a bit down because of the amount that you spent. When you’re falling asleep isn’t it always the thought of credit card debt that comes to mind? The best way to deal with that anxiety is with a plan. A plan to stop the bleeding, set spending thresholds and eliminate that debt! Below I’ve outlined my best strategies to flex your money muscle and live in the black.

Step 1:
Figure out where you want to be. It is crucial to envision yourself debt free on a particular date in the future. Day dream of yourself looking at your financial statements and knowing that you are master of your own house. You don’t owe anyone anything. Bask in that feeling of complete freedom and then remember that joy when you’re about to charge more crap you don’t need.  

Step 2:
Map out where you are. Take an evening, open a bottle of wine or drink of your choice and make a list of every debt you owe and the interest rate. Include overdraft, credit cards, department store cards, bank of Mom and Dad or Auntie Gertrude, student lines of credit, personal lines of credit, home owner’s lines of credit, auto loans, rrsp loans and mortgages. Make sure to include if you have a don’t pay now until later loan too. Just because you aren’t spending money on it right now doesn’t mean it isn’t debt.

Step 3:
Which of your debt products have the highest interest rate. This can be emotional interest too. If Auntie Gertrude makes you feel like jumping out the window every time you’re at a family event then prioritize that she needs to be paid off first. The killer interest rates come with department store cards and credit cards. Department store cards have up to 30% interest and credit cards are around 20% interest. If you buy a $1000 sofa on a department store card and only make minimum payments you’ll have paid $1,000 MORE in just over three years at 30% compounding interest. You could have had two sofas if you paid cash.  Crazy, right?

Step 4:
How you are going to bust that debt? Everything is on the table now. Remember how AMAZING you felt owing no one anything? First, holster the cards. Put them in the freezer or bury them in the living room fern. Next, figure out how much you need each month to pay all essential bills, eat and minimum payments on all of your cards. If you don’t need it don’t spend it. Deduct that from your monthly after tax salary. With the extra income throw it on your debt — highest interest first. Make it a game. We all love games! Try to live on as little as possible for one month. Brown bag lunch, drink office coffee, eat at home, watch TV, play board games or have a “nookie” night with your love monkey instead of going out. Use your imagination and cheap out for only 30 days and make a huge dent in your debt. It’ll feel incredible.

Step 5:
Make more money to throw on the debt. Put everything you don’t want on e-bay, craig’s list, take to a pawn broker or have a garage sale. Old comics, jewellery, coins, toys and collectibles can make you a tidy sum. Old furniture, cars, boats or trailers that you never use can get you a quick cash hit too. Ask for a raise or try to get extra cash doing something that you love to do anyway. Whatever you’re awesome at — try to sell it for some coin. Collect as much money as you can from selling your services or items that you don’t need and put it right on that debt. Be sure to celebrate your success every time you see that balance drop. Hard work deserves a pat on the back. Make sure you know how much you owe at all times to keep your eye on the prize.

Step 6:
What can you live without after your cheap-o month? Commit to an amount that you want to allocate to the debt and every pay transfer the money in chunks to pay down the most expensive debt first. Use cash for everyday variable spending and limit it by taking a tiny set amount out each week for the entire week.  When it is gone it is gone.  Calculate based on your payments when you’ll be debt free and mark your “liberation” day on a calendar. Write the date on your day timer or on the back of a card and carry it around in your wallet. It will motivate you every time you look at that date so post it everywhere. Tell your closest friends and family to crystallize how important the date is for you.

Step 7:

Dream how you’re going to reward yourself for that hard work.  When you’re debt free of all of your consumer debt (not including investment loans or a mortgages) you’ve turned the tables.  The consumer shackles are off and you need to be treated well for your discipline and industriousness.  Think of a “carrot” that will get you through your weak moments and think of how sweet that prize will be when you’re there!

What is better than holiday parties, presents, and delicious food? 2009 budget reconciliation time!  Not too many people get excited at the end of the year to see how much they have saved, but I sure do.  I go over all my expenses, income, investments, and loans to see how much I made and spent.  If you don’t know where the money is going or how it is coming in, how will you change your spending habits for the better?  This is the time to see where to cut next year to save for something that you really want.  

The quick and dirty way is to input all of your information into Quicken.  There is an amazing program at quickenonline.intuit.com that is super easy to use.  It populates all of your credit cards, bank statements, and investment accounts right off of online banking and lets you review them in one single program.  It shows you your spending trends for the last year.  You can set goals and it tracks your progress.  If you want to go over your statements the old fashioned way, you can do that too.  Just grab your bank statements and credit card statements with some Egg Nog (spiked) and get ready for a ripping evening.   

I look at cash from ATMs, bank fees, restaurants, clothing, and miscellaneous spending. When you see the amount you’ve spent I bet you’ll be shocked at how much money goes into these areas. I think that if I can simply save 10% from each category, I can do all kinds of things with the money next year to make my life better.  Maybe it will go towards a creative outlet, a night course, or socked away for retirement.  Those savings can go towards something that would make me happy, or invested to give me peace of mind.  

I never get caught up in guilt when I see what a drunken sailor I’ve been at bars.  Instead, I remember the great times I had spending it with friends. But then I think about how even happier I would be if some of that money went towards an investment or an amazing trip with my family. That will motivate me to hunker down on my spending and encourage me to save more than last year by moving me toward my preferred future.  There is no point tearing out my hair when the money is gone.  I made the right decision at the time to buy that sweater or go away for the weekend, and I will feel good about the money I save next year moving forward.  

Hard nosed budgets never really work for people like me with a strong sense of freedom, but limiting my variable expenses does.  Think of how much you really want to have saved for next year, what trips you want to take, prioritize what you want to buy for yourself, and then look forward to next years budget reconciliation and congratulate yourself on keeping to your plan.  

Next week I’ll show you how to dream big for the new year and back it up with your finances!

Have a fabulous holiday,

Dave

When thinking of what to give someone this year, try to give to their core values.  It’s easy to give socks, sweaters, and DVDs but a value based gift could bring them much more joy. Core values are what motivates us to behave the way we do. With my clients I motivate them to keep pushing for their ultimate life by reminding them of their values when doubts creep in over the long haul.  When we are offended by someone, it is generally because they have countered one of our values and that is why we feel offended.  By living by our values it brings us happiness and happiness is the end goal when buying for someone special.  

When going over your gift list, think about each person’s core values.  Values like Freedom, Creativity, Leadership, Family, Fun, and Adventure are all core values that you can buy gifts to satisfy. You’ll be giving a gift that creates true happiness by giving to core values.  

Have the best holiday season you can,

Dave

Money is that one subject that everyone dances around when dating.  We politely try not to talk directly about it but it is woven into the fabric of our conversation.  Let’s throw it right out there into the middle of the table, by the flowers, and address it shall we?  What are always the two very first questions someone asks on a date?  “What do you do?” and “Where do you live?” Which is the money talk equivalent of  “How much money do you make and how much real estate can you afford?”  Keeping your eye out for money problems will be the first sign of hidden people problems.  Remember money problems have nothing to do with dollars and cents and everything to do with emotions and fears. 

When dating look for someone who respects their money and is in control of it. It is the surest sign that they also respect themselves and are in control of their lives.  Someone doesn’t necessarily have to make gobs and gobs of money.  That isn’t what I’m saying but they should at least be strong in the following areas.  It’ll reflect positively in how they will manage your relationship moving forward. 

Money balance – do they balance their cheque book?  If they make more than they spend and always have money in the bank it shows that the person in mature and confident with themselves.  They don’t need to blow every dollar they make each month.  They live within their means and have cheque book and personal life in balance. 

Savers – do they save or spend like drunken sailors?  If they have money when the month runs out then that is a great sign.  Your potential “Snookums” needs to have a “saver” mentality.It shows that they are responsible, grounded, committed, and planning for the long term. 

Asset lover – do they appreciate big assets?  If your date has proven that they are interested in building assets over the long haul it speaks volumes that they are ambitious and driven.  It shows that they want to increase their financial position and has thought out and implemented a plan to get it.   If the asset is a home it shows that they are interested in “planting roots” which shows stability. 

Debt free – do they only have healthy debt?  Does your date have baggage aka consumer debt? If you’re date is debt free it means that they don’t have the emotional baggage that comes with the debt.  People overspend because they’re unhappy or trying to keep up with the Joneses and if they are free of credit card or personal debt then you know that they are self-assured.  A lot of people who make tons of money spend tons more money.  This race to always have the best and most of everything when they can’t afford it always leaves people coming last. 

Just after a few dates you’ll be able to tell if someone loves their money or not.  By seeing some of these money problems up front it could be a window to other issues lurching behind the unpaid bill.  If you know your date is cheque book balanced, is a saver, is an asset lover and is bad debt free, you will hopefully save yourself some grief down the road.

When people think of wealth they often think of having millions of dollars in the bank.  However, when people who don’t have money receive millions of dollars through the lottery or inheritance they seem to quickly burn through it.  Lotteries would be better if they paid the winner a huge salary for life instead of one lump sum!  Then the winners could only spend what they get each month. 

True wealth is not just having loads of assets but having the income streams that can come from assets.  That is why my philosophy of money and wealth is making sure that every asset I have pays me the highest level of income it can. 

The common line from financial gurus is that if you invest your money in an RRSP and that money is invested in the market, overtime it will go up and you’ll have a solid asset to retire on. We’ve all heard the line that if we invest $800 a month for 30 years at 8% growth we’ll have $1.2 million bucks and be wealthy! 

Well, what if I can’t get that 8% growth?  The last 8 years of growth were based on really cheap borrowed money and if that party is over how can I expect the market to keep growing at an average 8%?  I can’t. But what I can count on is an investment strategy that pays me streams of income.  That way I can at least count on the extra income if the market doesn’t keep going up. Extra streams of income will also improve your lifestyle now, so you don’t need to wait 30 years.

There are many investment strategies that can be based on streams of income.  One of them is buying monthly income or dividend funds or exchange traded funds (ETFs) in your portfolio.  Make sure that they are set up to buy more units whenever they get paid out. 

Building your own income-based portfolio is a great way to diversify.  After a quarter when your high dividend yielding stocks pay into your account you simply use that money to buy more shares that are also high yielding and high quality.  That way you are getting the market to pay for the porfolio additions.  Once you’ve owned them for a quarter they’ll start paying you so you can buy even more stocks.  In the long run this will really accelerate your growth instead of simply hoping that the market will do it for you.   

Investment properties are another smart stream of income that can pay your mortgage and free up cashflow.  By converting your underutilized basement into a rental apartment you can get your renter to help pay your mortgage.  To really help free up some cashflow look to buy a tri-plex. Rent two of the apartments out and live in the third one.  Work the numbers to see if you can live for free while building equity by paying down the mortgage. 

If you have a cottage, rent it out for one of the three months in the summer to pay for the property taxes, repairs, or the purchase of a new deck.  If you have an extra garage or parking space you’ll be amazed how much extra cash you can get by renting them out. 

Little jobs on the side really help out too.  I’m an extra on TV shows when I have free time. A day sitting backstage drinking coffee pays for my cell phone bill. Or a night of martinis!

I’m sure there are lots of ways that you can increase your income other than just the traditional pay cheque.  Something you do in your spare time can become a business, like for example developing websites, walking dogs, styling clothes or hair, etc., consulting, writing creative copy–make money from your passions!

Continuously bring in new streams of income and see what kind of true wealth it brings you.  Rental properties, high yielding portfolios outside your RRSP, and side businesses can give you the lifestyle now that you hope to have in 30 years.  Wealth really comes from multiple streams of income.

Count right now how many points cards you have  clogging up your wallet? When was the last time you actually went on a free trip or got some sort of reward from them? Have you ever thought how much more money you spend travelling across town to use that store or extra dollars you put on your credit cards to get a few more points?  
 
Due to the fact that I’m always trying to get the best “bang for my buck,” I’ve crunched all of the numbers and my chosen points system is the one that is the longest running. It’s called cash. I can use it to buy luggage, or gift certifcates, or travel on any airlines and my wallet is free of any cards of any kind.  It can be used everywhere and I can even save the tax or get a better price at some places when I use it. I’ve crunched the numbers and using cash for everyday spending saves you money.   
 
I recently tried to redeem two different points systems to get a trip to Calgary. A ticket that would have cost me $371, including tax, to buy with cash would have taken $45,000 worth of spending with one credit card and $25,000 with another card. Then on top of that they would have charged $187 or $114.80 respectively on top of my points for taxes and extra charges. I really don’t see how these point programs add up.  Here is my logic:
 
1. Using cash saves people up to 20% compared to using cards. You simply spend less money when you have to actually plop it down. Using cash puts a ceiling on your spending; if you’re spending virtue is in question–if you’re being naughty with your money–it’s very helpful. What I do is take $400 out of the ABM every Monday and that is my discretionary spending for the week. It has to cover everything from clothing and coffee to eating out for the whole week. If I drop it all on a crazy Monday night bender, then it is gone. I have to wait a week to get another $400 of play money.  
 
2. The average yearly fee for points credit cards is around $120 a year. To build the points to fly to Calgary it would take me two to three years to charge $25,000 on my card, plus two or three years of fees. Remember, the flight only costs $371. Yikes!
 
3. “”Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”  – Antoine de Saint-Exupery.  
 
Using a simple money clip is so refreshing. And elegant. Seriously, look through your wallet and see all the tacky crap the retailers get us to carry around. If they were not making money off the card, they wouldn’t offer them, so therefore we’re paying extra to use them.  
 
Cash really is king.  It keeps a ceiling on my spending, simplifies and streamlines my wallet, and gets me a better price on many things.  Now that’s a points system I can love!
 
Dave

As promised, here is my strategy for getting a free car (which is working quite well for me at the moment). The trick, and there is always a trick, is that you need to have the money upfront to buy the car. Many people who do have the money in investments don’t want to part with their investments to buy a depreciating asset, but here is a way to get your car and drive it too.  

First, pick the ultimate car that gives you that butterflies in your stomach feeling when it drives by. If you don’t have the money to buy a new car, start with a used version that you can afford to pay with cash. With my strategy you can keep trading up until you get the new one that you’ve always wanted.  

Having cash to buy the car will get you a better price, especially in today’s market. The sweet spot for getting the best deal on a car is to get it when it is 1 or 2 years old. If you do decide to buy brand new try to get an employee discount or check to see if your employer is on a preferred vendors list for automotive manufacturers. This will get you a quick  3-10% off a new car which will help to offset the first year’s 20-30% depreciation.  

The next tip, and my favourite tip, is to only buy luxury cars. This goes against almost every financial talking head’s opinion but I like to think outside the box to get the most “shazam” from things I buy. Luxury cars hold their value longer, are always the top cars in the industry quality reports, and always have demand for resale and longer warranties. They also have more and better features, which makes ownership that much more enjoyable.  

When you’ve negotiated the best possible CASH price for the car, go to the bank and get an investment loan for the same amount as the price of the car. As an example let’s say that the car costs $60,000 including tax. You then get an invetment loan for $60,000 and re-invest it. Investment loan interest rates vary but you should be able to get one for prime plus .50% or 1%, which would make it currently 2.75 – 3.25% and an open variable loan amortized over 15 years. The huge benefit of the investment loan compared to a standard car loan or lease is that you can deduct the loan’s interest as an expense. You will also be paying a much lower interest rate compared to standard car loans due to the fact that the loan is pledged against the investments.  

The bank will secure the loan with the investments and you have two options for investing. The first and easiest is a monthly income fund. My favourite income fund is the BMO monthly income fund. The units currently are around $8.00 and it distributes .06 per unit a month.  .06 x 12 = .72 / $8.00 gives the fund distributions a 9% yearly yield.  $60,000 / $8 units would give you 7500 units that would generate $450 a month in distributions to cover the monthly loan payments which would be $421.60. The natural balance of the fund having 50% in bonds and cash and 50% in blue chip high yield dividends provides a natural cushion for any market corrections. Through the worst part of the last correction the BMO Monthly Income Fund didn’t drop nearly as badly as the overall market. It is also reassuring that through the last two years of financial and world economic downturn the BMO Monthly Income Fund didn’t decrease it’s .06 distributions. In fact its distributions have been .06 since 2002.  

The second option is for you to create your own monthly income fund within your own account. I love my money way too much to give up the 1.49% or $894 management fee for the fund, so I have purchased the following portfolio to pay down my investment loan:  

I’ve purchased roughly $5k in each trust. They are properly diversified among many sectors and are all high yielders with upside potential due to market recovery or commodity price increases, such as oil. The basket of trusts generate $6k a year or $500 a month in income to cover the cost of the investment loan. They have all appreciated in price as the market has risen and I expect the oil trusts to increase their distibutions as oil continues to recover.  

“Money is like a sixth sense without which you cannot make a complete use of the other five”  W. Somerset Maugham

“Money is better than poverty, if only for financial reasons.” Woody Allen

Welcome to my I heart money blog!  I’m excited about sharing with you my ideas on personal finance and how to live your life to your full potential.  Since leaving a job I didn’t like in advertising and taking a life coaching program in Vancouver this summer, I’ve started to live the life that I have always dreamt of instead of the one that I had fallen into.

I’ve started my own coaching business, written a book, started horseback riding lesssons, spent more time with friends and family, gone to the gym more, and purchased my dream car.  These are all things that I have had on my goals list for many years and I made them all happen in the last six months.

My independance derives from knowledge about money.  Working at the banks and brokerages I learned the skills needed to manage my own money, buy the proper financial products, and cut fees in places where bankers and brokers made their money.  I learned how satsifying it is to build my own mutual funds, save tens of thousands in mortgage interest, and only buy products that made sense for me.

While working in finance I discovered that my clients didn’t think about their in the right way.  If you had money to invest you would see your broker and they would invest it without asking the all important question, ”How will you use this money to enhance your life?” If you needed money you would ask your banker for a loan without discovering your perfect financial situation in five years.

The goal of my blog is to help everyone dream their ultimate reality, discover steps to get there, enlighten themselves about why the dream is important to them (this has to do with personal values), and then align financial resources to make the dream reality happen. My job is help you make an overarching idea of what you want your financial reality to be and then align investing, banking, and budgeting to make it happen!

Over the years I’ve mastered the skills of saving, making, and sharing money and I’ll be revealing my tricks of the trade weekly to my loyal followers. I love money too much to give it away on service fees, trading costs, and frivolous purchases. Every dollar that I can save on fees, poor purchases or miscellaneous costs–or every dollar I can get my portfolio to make for me–I can spend it on something that makes me truly happy like having dinner with close friends or riding lessons.

Thanks for following me and stay tuned for next week’s blog where I tell you how to get a free car! Seriously. See you next week.

Dave