In my practice I’ve helped many people pay off all their debt.  With borrowed money being so cheap right now everyone seems to be borrowing more and more of it.  It is also the single reason for people to lose sleep at night.  When I’m doing book signings I get most of my questions around debt and how to get rid of it.

My blog this week is (what I tell everyone when they ask) what I talk about in my book.  Debt is that weight that keeps you from soaring with your money.  Once it is released you can truly take off.  So let this be the day you draw a line in the sand and free yourself from bad debt.  Here is my action plan:

1. SAVE before you pay back.  This sounds counter intuitive but it works.  Save up $1,500 or $1,000 in your chequing account as a buffer.  If you pay chequing account fees, save enough to get these waived.  I have $1,500 in my chequing account at all times and it saves me $8.50 x 12 = $102.  On $1,500 that is a 6.8% return on my money.  Better than the average savings account.  If you don’t pay a bank account fee keep it in a savings account.  It will act as a buffer so if you’re short of money due to emergencies, you won’t go further into debt.  Keep it there no matter what.

2. ISOLATE your debt.  Try to get all of your debt on a low interest credit card or even better a personal loan.  Get the rate as low as possible and fix the payments.  If you owe $20,000 commit to paying $600 a month or whatever you can afford and wipe it out in three years.

3. PAY off something pronto.  Get the lowest balance card and pay it off right away – even if it’s $50.  Then celebrate the victory!  That was you first move towards being debt free and you want to associate it with something positive.  Just don’t celebrate on your credit!

4. MARK the day you’ll be debt free.  Write it on every calendar in the house, at work, and on your SmartPhone.  Once the debt is gone take the next payment that would have gone towards the debt and reward yourself with it.  Maybe a nice dinner, savings towards a trip, a nice new debt free pair of shoes.  Know that when you have hit your debt free day there will be a cash reward for you.

5. LOSE the guilt.  I see so many people feel bad about their debt and it doesn’t serve them well.  Use cash for spending, set up a budget, only use cards for fixed monthly expenses and have it automatically pay off each month.  Set a plan and then know what you’re a new money maverick/maven and don’t let old habits hinder your new positive ones.

Blow out your debt and start sleeping again,

Dave

In my book I explain how I use a covered call strategy to get the kind of return that I want for my portfolio. By comparing it to a rental property, I show how I like to use dividend stocks and trade around them with options to increase my overall yield. When you buy a dividend buying stock it is like buying a rental property with one tenant. You’ll collect that income from them each quarter, year after year, just like rent.

I like to buy big blue chip dividend companies with a 3-5% yield. If we continue like the past, good dividend companies increase slowly over time and when they have extra profit they increase the dividend payment to their shareholders. It’s similar to how housing prices have increased along with rental prices.

Now when I write covered calls on the position, I then add another tenant to my rental. I now have two sources of rent. One source from the call and one from the dividend. I go from getting a 3-5% yield to getting twice that amount when you write these covered calls every other month.

Using this strategy of buying blocks of big blue chip stocks and trading options around them gives me a much better yield. And with this increased yield I will re-invest the money to keep growing my portfolio. It has been working very well for me right now. In my book I explain how I do this and get a third renter by selling puts too!

Keeping my strategy in mind, I’ve come across an entire basket of Horizon’s AlphaPro covered call options ETFs! This takes my strategy and makes it crazy simple for everyday investors. You don’t have to write the calls each month, and you don’t have to worry about replacing the stocks that get called away. There are all of my favourite sectors, like Energy, Financials, and Gold. Plus they’ve just launched a US Equity (CDN $ headged) covered call ETF that helps diversify the portfolio.

The ETFs will sell covered calls on the basket of stocks every 1-2 months at about 5% over the current stock price. In any market other than a crazy bull market, this strategy has been shown to outperform. The fund management fees are only 0.65% too.

Here is what I would do for sector break down:

20 % HEE – AlphaPro Enhanced Income Energy

20% HEF- AlphaPro Enhanced Income Financials

10% HEP- AlphaPro Enhanced Income Gold

25% HEX – AlphaPro Enhanced Income CDN Equity

25% HES.UN – AlphaPro Enhanced Income U.S. Equity (It converts to an ETF soon)

This portfolio currently has over a 10% yield thanks to the extra income from writing the calls. It also writes calls on non-dividend paying companies in the index to generate income on stocks that otherwise wouldn’t have some. The ETFs are available in a DRIP (Dividend Re-investment Program) so that the juicy monthly yield buys more units. Right now HEE is paying a 16% yield and we all know how I love big yield. All we need now is an AlphaPro International Equity covered call ETF!

I heart Horzon’s new covered call ETFs,

Dave

Want to retire now? You might be able to. We are often told that we need million and millions of dollars to retire. That is only true depending on what kind of retirement we want for ourselves. If we want to continue with new cars every few years, living in our McMansions, eating out all the time, and enjoying the big city life we probably need even more!

But think how great it would be to just leave it all behind and enjoy life for what it is. If you didn’t have to work you could sleep in late, enjoy a leisurely coffee at a cute little coffee place with hipsters and artists. You could have long walks looking in all of the store windows. You could meet someone for coffee everyday and start doing all of the other things that you long for day to day.

Doesn’t that sound awesome? Let’s find out how much it would cost. Now if you cut all of your expenses and started fresh, how much would you need to live on? Let’s take the example of moving to a cheap retirement destination now, for example Mexico, Northern Ontario, or Istanbul like where I want to retire. Look around and see if you could get a cute pad for $500-$1,000 a month. You would need to eat, have some extra spending cash, and maybe some money to a have a trip home once a year to see all the workers!

Does that scenario sounded good to you? I could do that for $2,500 a month. Here is how I’d do it. I would have a pad for $800 per month, eat for $700 and have another $1,000 a month for travelling and trips home. To get $2,500 a month at a very conservative 6% return by laddering GICs I would only need $500,000–far from the $3 million that people call for today.

Now how would I get there? Knowing what my dollar amount is I can do some extra jobs before I go and teach English to earn extra money when I retire. I probably won’t be off to Istanbul this month, but I could if I wanted! My point is to set your dollar amount and start saving.

Anchor yourself to how awesome early retirement would be and look at ways to do it. The standard of living is so much cheaper in fantastic areas of the world. Get excited by the idea that it is possible now.

Life should be about enjoying our time, more freedom, more time with friends and family and more joy. Why spend another day in a bad office cubicle?

Love your money and it’ll love you back with early retirement and an awesome life.

Dave

Sometimes when we cut too much enjoyment out of our lives we fall
off the wagon and have a crazy spending spree to get some release
from the austerity. We wake up surrounded by shopping bags with
caviar smeared all over our faces from the night before. We can’t have that now can we dhaaaarlings?

My win win solution to this problem is to cut spending that doesn’t make you truly happy and then make way more money at what does make you happy. Look at what you do well and make more money at it. I, for example, love to talk about money, and now I get paid to write about it! How awesome is that?

What is Your Market Value:

Compare salaries to see what similar jobs are paying. Call a friend or a head hunter to find out. Many industry sites post the average salaries for any given job. You may be surprised to learn that you are not making the current average rate! And if you do make more than average you should still ask for a raise. Good people are worth hanging onto. You’re totally worth more.

List Your Accomplishments:

The birds are chirping and the bees are busy visiting all of the fresh flowers. The sun is staying up longer and the big sweaters and coats are about to be packed away for another season.  Time to clean out some clutter and enjoy spring with a fresh clean start.  Why not start with your wallet??!

It’s amazing what people keep in their wallets–old receipts, business cards, point cards, pictures, mints, and sometimes even locks of hair!  Cleaning out our wallets will serve the same purpose as cleaning our homes.  Let’s start fresh this spring with a new, slim, sexy, organized, and efficient wallet.

Having a wallet that you enjoy dealing with will change your mood towards the money that is held in it.  If your wallet is a cavern of slips, cards, and ATM receipts, looking into it each time you need to get your money could be a nightmare. If searching for your credit card makes you curse, it will effect your relationship with money.

So let’s spring clean your wallet and start the season in style.  Here is what you’ve got to do.

Get an awesome wallet:

First, go grab a new ah-mazing wallet.  I got a camouflaged Prada one (on sale of course).  It’s sleek and stylish and I love grabbing it off my desk in the morning and pulling it out to pay for something.  It makes me happy to deal with and it’s kinda awesome.  Buy one that reflects your personality and that makes you smile when you use it.

Organize non-wallet items:

Take everything out of your old wallet  and lay it on a table.  If there are business cards that you need to follow up on, put them in a pile and mark a date in your calendar to fire off an email for each one.  If  you have receipts, put them in your filing system.  Pictures can be stored on your phone or Blackberry.

Ditch Your Point Cards:

If you read my blogs or saw me in the Toronto Star last Monday, you’ll know that I don’t think point cards are worth it.  My wallet has my license, debit card, one credit card, my own business cards, and cash.  That’s it!  It’s lean and mean and all I need. Point programs always advertise you on a beach enjoying freedom from the work grind.  Well I enjoy freedom from point cards every single day by getting rid of them all!

Organize your wallet:

Once purged of all the extra cards, receipts, pics, etc., put one week’s cash allowance in your sleek, sexy wallet.  Put your business cards in one slot to keep them crisp and clean.  They reflect you and your trade.  Organize your bank cards so they are easy to whip out.  I have my debit, credit and license layers in order of use at my fingertips.  Quick draw!

Write three things you want:

With my cards I have written down the three things that I really really want this year.  They are on the back of one of my business cards and every time I pick a card or cash I can see them.  It re-enforces three important things to work towards that will make me happy.  I’ve been doing this for years now.  Try it.  It really works!

Your new and improved wallet will now reflect the way you see money.  Keep only what you need and organize them for easy use.  Your wallet should be enjoyable, efficient, and energetic.  Just like you!

Have an awesome week,

Dave

Here is my upcoming schedule:

May 14th  World’s Biggest Book Store

20 Edward Street,
Toronto, Ontario

May 15th  Eaton’s Centre Indigo

220 Yonge Street
Toronto, Ontario

May 22nd  Woodbridge Chapters

East Woodbridge Centre, 3900 Hwy 7 West, Unit 1
Woodbridge, Ontario

June 4th  Newmarket Chapters

Yonge Centre, 17440 Yonge Street
Newmarket, Ontario

June 11th Erin Mills Town Centre Indigo

5015 Glenn Erin Drive
Mississauga, Ontario

June 18th Burlington

1250 Brant Street #102
Burlington, Ontario

June 25th Milton Indigo

Milton Crossroads, 1180 Steeles Avenue East
Milton, Ontario

June 26th Richmond Hill Indigo

8705 Yonge Street
Richmond Hill, Ontario

July 9th  Runnymede Chapters

2225 Bloor Street West,
Toronto, Ontario

My friend Chris on our Route 66 road trip!

I just got my yearly car insurance bill and I saved more money again!  Insurance is one of those expenses where you hate to pay but need to have it.  Why not trim those premiums and try to make some money in the process?  That’s how we roll, right?  Here are some of the things I do to take the itch out of insurance prices.  Enjoy my money monkeys!

Reduce Your Deductible

I would never claim any damage under $1,000 so why not increase my deductible to that amount.  When my insurance agency tried to get me to reduce my deductible it would have cost me $1,000 a year.  I’ll save that $1,000 and keep it in my rainy day emergency fund making me interest.

Keep All of Your Insurance Policies At One Place

I save 5% for each insurance policy I have with my insurance company.  I keep my house and car insurance at the same firm to save that 5%. When I get my plane, boat, and cottage insurance with them I’ll save even more

Shop Around!

I love harassing the poor customer retention department staff.  When they call I’ll charm them by telling them what a great customer I am and how I deserve a better discount.  I’ll phone their competitors and if I find a better price I’ll have them beat it!  It’s getting very competitive in the insurance industry and they will bend over backwards to keep good customers.

Affiliate Discount Programs

Ask at work or your spouse’s work if you have any affiliate programs with insurance companies.  Being associated with a large company can save you a lot of money.  I get a discount for also being a UWO alumni.  Finally my schooling is paying me back!

Ditch The Extras

Get rid of any rental car benefits.  Cheap cars will cost you $20 a day.  Towing and other perks should be kept to a minimum that cost you more.  Think how often you get into an accident vs. how many years you pay these extra fees.

Buy The Insurance Company Stock

Insurance companies have great profits so why not buy their stock?  Do your research and if the stock pays a dividend and has been a good performer why not let them pay you a premium for a change?

Love your money and it’ll love you back with savvy insurance,

Dave

– SPEND on your perfect items. You’ll wear them way more and won’t buy as much saving money in the long run. If applied to spending on clothes, the perfect cocktail dress or suit that makes you feel like a million bucks when you wear it is worth spending on.  If you wear it all the time because you feel good in it and get compliments then it will pay for itself by the good things that happen to you when you put it on.  Feeling good in meetings is a huge advantage and will pay you back with greater results at work.  Plus, if you cut out on spending on the things that will just sit at the back of your closet that you never use, you’ll actually save money in the long run.  Only buy your perfect items and then love them!

- USE credit cards to get cash back and build your credit.  Charge all of your fixed costs onto a no fee BMO MasterCard CashBack credit card, like gas, insurance, cell phone, gym, utilities, cable, and internet.  You will get cash back on the things you need to use your card on and collect cash back dollars month by month.  Also, use your card for trips, furniture, and other big one-time purchases, it all adds up at the end of the year.  David received $271.02 back on these things this year!  That means free utilities for a month or a nice dinner with a good friend.

- BUY luxury cars – Never lease a car always buy it. You will pay interest on the entire product and you don’t even own it if you lease. Buy it used to save on the initial cost, loan interest and insurance. Buy a luxury car, it’ll depreciate more slowly, have more options, be safer, and easier to sell if you need to.

Being a miser will only keep a negative attitude towards money.  Spend smarter and enjoy your life!

Have an awesome week,

Dave

Not only have they made the physical appearance of the card look like a shiny new car, they get us drunk on points or trips, or free things to entice us to use the card for every single purchase.  New tricks like having money-tracking reports in our statements are there so we know exactly what category we spent too much money on to feed our egos.

Now I have fallen for this trick when I was just out of university.  I had the shiniest, goldest, sleekest card they had.  It would have been worshiped as an Inca goddess if it had existed in ancient Inca society!

I swiped it on everything from bars to trips to gas and groceries – all in the name of those most precious points.  I would throw it down whenever I was at a dinner and then I would grab everyone’s cash to get the points.  Then I would spend that money I had collected and still would have t0 pay back the cost of the dinner.  In the long run, you spend more with the Ferrari of cards than you ever would save on trips or gain in prestige for having a sexy card.

That was a long time ago and I paid interest on my gold card at 18.9% interest only ONCE.  I quickly dumped every pay cheque I had on the card until the debt was gone and I have never paid credit card interest again.  I also ditched the gold card for something that would actually benefit me.

My new credit card was the crappiest look wise I could find.  It’s a no fee card that gives me an “ok” cash back on fuel and my fixed expenses like gym, cell, insurance and anything I HAVE to charge like flights or parking meters.  I went from a gold card with a spiffy design, to rocks on the face of the card.  No more blinglicious card that encourages me to spend way more than I need to.

There are better cash back cards out there but I don’t want them. Anything that encourages me to spend more than I would with cash doesn’t make “cents” to me.  I’ll save way more not using it than I would get back from using it on things that I don’t need or even want.

Ditch your  fancy platinum, gold and fierce black cards and get one with a hampster, waterfall or rocks on it.  It’ll give you what we all TRULY want,  financial savvy.

Have an awesome week,

Dave

I’m back in Toronto and I’ll be doing a book signing at the following Indigo Chapters stores in the GTA.  Come meet me and let’s talk about our mutual love of money.  More stores will follow in May!

April 2nd – 1-5pm

Chapters – Woodbridge
East Woodbridge Centre, 3900 Hwy 7 West, Unit 1
Woodbridge, Ontario
L4L 1A6
Canada
(905)264-6401

April 9th 1-5 pm

Indigo – Yorkdale Shopping Centre

3401 Dufferin Street Unit #29
Toronto, Ontario
M6A 2T9
Canada
(416)781-6660

April 30th 1-5pm

Indigo – Yonge & Eglinton
2300 Yonge Street
Toronto, Ontario
M4P 1E4
Canada
(416)544-0049

Love your money by following my blog, following my twitter, getting a book signed and ”friending” my facebook page!

Dave