Monthly Archives: August 2014

How to stay motivated to save money

Happiness and frugality together. We are having a great time. The park is free the food is not expensive and no one is wearing luxurious clothing. We all can have fun with little money.
Happiness and frugality together. We are having a great time. The park is free the food is not expensive and no one is wearing luxurious clothing. We all can have fun with little money.

We all know the formula to create wealth: “Spend less than you earn and invest the rest.”

But how do we stay motivated? how can we fight the urge to spend beyond our means?

Here are my solutions:

1. Trigger points.

The main trigger points are social pressure and media manipulation.

Social pressure: Here is a simple example. You work in an office where everyone looks like a magazine model… It is easy to feel the pressure to buy new and expensive clothes to  be the same as all the other co workers. There are many more instances where social pressure plays a big role in your spending behavior. The best thing is to be aware that you don’t have to be like everybody else. It is ok to say “no” from time to time. You don’t have to have a big house, you don’t have to own a luxury car, you don’t have to attend your best friend’s wedding in Hawaii. You can be a bit different. You can be known as the person who saves money. Many of us strive to be different, this is your opportunity.

Media Manipulation: Advertisers will tell you to buy their products  “Because you deserve it!” How can you argue with that? You work hard, you are under a lot of stress and yes, you feel you deserve that new item.  The solution for this is to always be aware that the job of advertisers is to manipulate you, that there are psychologists and sociologists who are getting paid thousands of dollars to influence your buying decisions. They will spin a story to play with your emotions, to make you desire the lifestyle that their products offer. Question their offers and keep your emotions in check.

I have become immune to social pressure. I practically don’t care about exhibiting social symbols. I ride a bicycle, I live in a modest apartment and I prefer to dress in shorts and sneakers. As for media manipulation. I simply don’t have a T.V. nor a radio nor do I read newspapers.

2. Make savings a ritual.

Have you heard this saying, “Pay yourself first?” You can simply ask your bank to take money out of your checking account and put it in your savings or investment account every month, then you will be a habitual saver. There are two ways of doing this:You can decide to put aside a percentage of your earnings, let’s say 10%; or you can put aside a determined amount, let’s say $1000 per month.  The final goal is that you don’t have to think about it, savings will become a habit that you will do unconsciously.

Every month there is an automatic transfer from my checking account to my savings account. I follow my own advice.

3. Visualize the future.

This step is more complicated. You will need a financial calculator or the help of a professional.  Try to predict until which age you will live. Let’s say you will live until age 95. Then decide at what age you want to retire. Let’s say at 65. Now you need to figure out how much money you will need to live for 30 years without working. Once you have figured out this amount, then you have to decide how much you need to save every year. This exercise should be done at least once per year.

My personal goal is to have one million dollars by the age of 60. What is your goal?

Many people commit the mistake of thinking (or hoping) that something will happen in the future that will take care of their finances. Well, yes, something might happen, but just as well, something might never happen and then what will you do? Visualize this scenario as well. How would you pay your bills when you are 80 years old and you no longer have the energy to work full or part time?

Saving money and living within your means is mostly a psychological exercise very similar to staying in good shape.

We are all capable of understanding the psychological factors that make us spend. We can learn how to ignore the triggers that make us buy one more item. We can learn how to make savings a habit that we do unconsciously. And we can learn to visualize where do we want to be financially in one year, in five years, and in 20 years from now.

Good luck.

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“Six Life Lessons.” Speech at Toastmasters Club

This was my speech number 6 at the McGill Toastmasters club.

Do you feel stuck in life?
Do you feel sad and tired?
Do you feel empty?

Those are feelings that have plagued my mind and heart for years. And in a quest to find the answer, I have read over 1,000 books. I have read about history, literature, psychology, philosophy and holy books of all the major religions. And through my readings I have learned six lessons that I want to share with you.

Lesson #1 take action.

I want to become a speaker, so I am standing here, in front of you, delivering my sixth speech.

Before me, many of you have stood in the same place, nervous and insecure.Many of you have become talented speakers, but it all happened because you took action.

If you have a goal, if you have a dream, don’t hold back. Take action!

Lesson #2 Become a reader.

Reading can change your life. Reading changed my friend Jimmy’s life

Jimmy was a truck driver making $12/hour at a job that didn’t satisfy him.

Jimmy went to the local library and borrowed many books, read voraciously and soon declared himself a website developer.

Today, he lives in Costa Rica, in a custom build with Internet connection in the middle of the forest. He builds websites for a living, he walks around paradise naked and he has a waiting list of clients eager to pay him $50/hour.

Reading changed Jimmy’s life and it can change your life as well.

Lesson #3. Follow your dream.

Let me tell you about Anna.

Anna is an accountant who hates her job. Her conservative family prioritized a career with job security.

Well, Anna has job security alright. She also has unhappiness security. Anna put her dreams aside in order to live the dreams of her family.

I have met many people like Anna, and I am sure that you have too. People who follow the social scrip of job security, yet they feel empty and unsatisfied.

I encourage you to live your life and your dreams and not the dreams of somebody else.

Lesson #4 Take Care of Your Body.

Your health is one of the most precious gifts that you have. Don’t let it go to waste.

There are two main things that you can do to have a healthy life. Exercise and eat well.

The exercise part is easy. If you exercise 20 minutes,  three times per week you will add years of vitality to your life.

As for a healthy diet, this is a multimillion dollar industry but it basically boils down to this: DO NOT EAT JUNK FOOD.

The book “The Power of Habit Charles Duhigg suggest that a new habit takes about 21 to create, so if you stop eating junk food for just 3 weeks, you will stop craving it.

Lesson #5. Choose your relationship wisely.

“He who walks with the wise will be wise, but the companion of fools will suffer harm.” The Holy Bible, Proverbs 13:20. Click here to get your FREE Amazon version.

Here at Toastmasters we are surrounded by people who want to improve themselves, people who want to learn, so in my opinion this is a positive influence to anyone’s life.

On the other hand if you are surrounded by people with negative attitude, people who abuse drugs, people who are not eager to learn;

then, some of those characteristics will rub off on you.

Look for people who inspire you, who motivate you, who push you to new heights and you will have a better quality of life without even trying.

Lesson #6. Mentoring.

When you mentor someone, you give a precious treasure – knowledge and in the process you also become richer. You feel better about yourself and by helping others your continue learning and growing

Find someone to mentor. The more that you help and teach, the more that you will learn and grow.

Fellow toastmasters, these are the six lessons that I have learned to have a better life. Take action, read, follow your dreams, take care of your body, choose your friends wisely  and mentor someone.

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Book Review: I Will Teach You To Be Rich by Ramit Sethi


I will teach you to be richI was walking through a second-hand store when I saw the book I Will Teach You To Be Rich by Ramit Sethi. This book has been on my Wish List for a long long time, but with over 200 titles on my  Wish List (and growing) it is hard to get to all of them. When I saw the book for $3, I bought it right away.

The book was written with a specific audience in mind – young men 20 to 30 years old. Although the principles of sound personal finance are the same for both genders and people of different age groups, when Ramit makes reference to dating hot twin blondes, he is certainly talking to young men. He is not talking to my sister or mother.

The book is basically a six week course on how to improve and automate your financial life. Here is the breakdown:

  • Week 1: Optimize credit cards.
  • Week 2: Set up no-fee high interest rate bank accounts.
  • Week 3: Open investment accounts (even if you have a small amount of money).
  • Week 4: Figure out how much you’re spending.
  • Week 5: Automate your finances.
  • Week 6: How to get the most out of your investments in the stock market.

Ramit starts off with a promise not to make us create a budget, like most personal finance books do, and he will not hammer us over the head if we like to drink a latte at the local coffee shop. Instead he focuses on creating a system which helps someone’s finances run smoothly. He focuses on automating your investments and the payment of your bills. Once the system is set up in the background, you can go back to enjoying your life without having to spend a lot of time analyzing spreadsheets or bank account balances .

 Here are some key points from the book:

1. Credit cards. The main thing that readers should take away is to never have a balance on their credit cards. Pay it on time. Period. Automatize it.

2. Bank accounts. Ramit is a big fan of the no fee higher interest rate checking accounts offered by online banks.

3. Investing account. The principal thing is to start investing, even if you start with as little a contribution as $50 per month into a 401k and/or a Roth IRA. The equivalent Canadian versions would be the RRSP (Registered Retirement Savings Plan) and the TFSA (Tax Free Savings Account). Ramit discourages people from doing active investing or giving their money to expert money managers who constantly underperforme the market. Instead, Ramit is a big fan of passive investment index funds with very low management fees.

4. How much you are spending. There are two concepts that I like in this book; the concept of automation and the concept of conscious spending. If drinking coffee at your favorite coffee shop is one of the things that you enjoy the most and you can afford it, go ahead and do it. We work hard and we want to enjoy our life. Coffee is just a metaphor but many other financial writers talk about it as if depriving yourself of your regular coffee would fix all your financial problems. What Ramit means is that if you have paid yourself first and you are being responsible with your finances, then you can spend money on the things that you like guilt-free. As for myself, I eat out in restaurants every day and make an international trip every year. This is my conscious spending and I do it totally guilt-free.

5. Miscellaneous. Ramit covers other aspects of personal finance such as:

  • Student loans,
  • Should you let your parents manage your money,
  • What to do if your parents are having financial difficulties,
  • How to have a money conversation with the person you are dating,
  • Special occasion spending: Ramit mentions that the average cost of a wedding is $28,000 and tells us how to prepare for it. My wedding cost me about $2,000 and it was lots of fun. My friend Silvia spent about $500 for her wedding and she is still smiling.
  • How to negotiate a salary or raise,
  • How to buy a new car. Ramit suggests that you should buy a new car with great reliability. I suggest buying a car with cash that is at least 2 years old but preferably 4 years old which is also reliable.
  • Renting vs. Buying a house: Ramit prefers to rent, but I believe that he’s thinking about the San Francisco market where he lives. His rationale does not apply to many other areas of North America. I know of many homeowners (me included) who are better off owning than renting.

Overall, I recommend this book. It is entertaining, full of useful information and if a reader puts just one of the suggested principles into practice, the book will have paid for itself.

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