Monthly Archives: June 2016

Wage Slavery Emancipation

Slave Venture Smith buys his freedom
If a slave in the 1700 can do it, we can do it as well

Slavery in the 1700s

During the late 1700s and early 1800s slaves were allowed to buy their own freedom. They earned money by doing work in excess of what was expected of them. Sometimes they worked for other masters on weekends or engaged in entrepreneurial activities such as fishing or farming.

When those slaves earned extra money, they could have easily spent it buying stuff, but they didn’t. They had a higher goal in mind. They wanted to buy their own freedom.

Here is the story of Venture Smith, a slave who at the age of 31 had saved enough money to buy his own freedom, and 10 years later he had saved enough to buy the freedom of his wife, his son and his two daughters.

Although self-purchase was rare, an 1839 census reveals that 42% of blacks in Cincinnati and Ohio had purchased their own freedom.

Wage Slavery
Alain Guillot and friends at the park
Against Wage Slavery. One of my favorite activities is to spend time at the park with friends. It’s fee and we have lots of fun

It is my belief that today most people live a similar slavery, a wage slavery. Sure, we don’t get beaten by our masters and we don’t suffer physical violence (but we can be put in jail by the tax authorities) but the feeling of slavery is way too similar.

Wage Slavery refers to the circumstances in which a person’s livelihood depends 100% on his salary.

As opposed to the 1700s slaves who were forced into slavery, today’s wage slaves fall into slavery by psychological manipulation. Today’s wage slaves are persuaded to spend money on frivolous things, to buy clothes every season, to buy gadgets every year, to eat in restaurants they can’t afford, to use brand names as a way to signal how unique they are, to buy new cars when an old one would do fine, to live in housing they can’t afford. Today’s slavery is self inflicted. We spend every dollar we earn and then borrow more, we belong to the credit card companies and to the government.

Save to buy our freedom

We are constantly bombarded with all kinds of advertising. We have to buy the new thing to feel unique and special, we deserve it because we are different. But if we take a moment to reflect, we could easily discover that we are being played by corporations and by our governments.

The way to get out of wage slavery is to consume less and invest the savings in a tax efficient manner. We can reduce the power of our two masters, the advertising machine and the government, by saving and investing.

When we reduce our spending and invest our savings, we shouldn’t  think of it as deprivation, we should think of it as a method to buy our own freedom.

When we invest our money, our money works for us. Therefore we are not 100% dependent on our salary. At the same time, we can invest it in a way that allows us to pay less taxes.

If slaves were able to buy their own freedom at the end of the 1700s, we can certainly buy our own freedom today.

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Profiting from the Brexit panic selling

Stock market falls after the Brexit.
After the Brexit, the market tumbled. I was greedy when others were fearful

It’s all over the news. England is separating from the European Union.

The English got tired of having their lives dictated from Brussels. They found the excessive control asphyxiating. They decided to give up some of the economic benefit of being part of the European Union in exchange for gaining back some of their sovereignty.

With friends at a picnic table at the park
Enjoying time with friends.

On Thursday June 23rd, the market rallied over expectations that there would not be a Brexit, but on Friday we woke up to a different reality. Britain decided to separate from the European Union. There was panic selling. There was blood in the streets.

Warren Buffett often says: “Be fearful when others are greedy and be greedy when others are fearful.”

Be fearful when others are greedy and be greedy when others are fearful.

It seems to me that others were fearful. There was panic selling all over the world. The French index went down 8.04%. The Euro SToxx 50 went down 8.62.

What was my reaction?

I bought the Developed Europe All Cap Index ETF sold by Vanguard (VE.TO). This index focuses on companies located in developed European markets. VE.TO dropped 8.23%.

The rationale:

This is not the end of the world, this is not a terrorist act, nor a war, nor a major natural disaster which could damage the productivity of the companies in the index. This was a democratic decision taken by a developed nation in a peaceful fashion.

All the companies included in the index will continue doing business through the weekend, next week, next month and next year. Commerce will continue to happen within Europe and with the rest of the world.

It is my belief that over the weekend traders will have the time to analyze the situation and realize that things are not as bad as they believed it to be. At that moment the European market will rebound and I will get out of my position with a small profit.

Anytime a person buys a position, he/she does so with the knowledge that the price could go down. I might not make my profit right away. It could take me a week, a month, or even a year. That’s ok. The alternative is to have my money in the bank earning 0%. I prefer to take a risk than to let inflation erode my money.

I bought VE, an index composed of 1,220 European companies. It represents the whole European economy. The index might go down, but it will not go down to 0$.

I bought 400 shares of VE at $23.16. I will write another post when I get out of my position.

Update: Five days later I sold at $23.70. Only a 2% gain, but it was fun.

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Interview with Elijah Baker. I don’t believe money brings happiness

drums
Having purpose in life brings happiness

This is the second in a series of 10 interviews which I am calling Canadian Hustler.

We have won the geographic lottery. We live in a rich country, full of opportunities and numerous safety nets to catch us if we fall through the cracks. We can afford to take risks, we can dare to do something that we are passionate about. We don’t have to restrict ourselves to so-called “job security.”

This is an interview with Elijah Baker, a person who I met at my Toastmasters Club. Through his speeches Elijah has shared snippets of his life, but through his actions  he tells us about his creativity, his optimism, his humility and his ability to see the best of life in every circumstance.

Elijah has opted out of the 9 to 5 lifestyle. This is how he lives his life:

Elijah Baker

Alain: How do you make a living?

Elijah: I have always been able to make a living doing things which interest me. I studied communications and music at university and right now I give music lessons, plus I do independent video contracts. (This is Elijah’s website Inspiration Media).

Alain: Have you always been a hustler?

Elijah: When I was in my 20s, I worked for about 4 months in a 9 to 5 job and that was enough.

Alain: How were you able to escape from the 9 to 5 mindset?

Elijah: My parents were my role models, they had unconventional ways of earning a living.

My  mother always worked part time. She only worked 2 days a week and the rest of the week she spent living her life gardening and doing  other things.

My father works in the film industry as a freelancer.

The idea of doing the same thing, every day, from 9 to 5, scares me. I would worry that it wouldn’t be fulfilling for me and I would not feel passionate about it. I gave myself permission to live outside the box.

I gave myself permission to live outside the box.

Alain: Don’t you feel afraid? Not having a regular paycheck?

Elijah: Not really, hahaha.

We live in a society with lots of safety nets, but I feel if I ever fell, my family would be there to catch me. I’m really lucky to have a great family. I’ve never had to call upon it.

What is the worse that could happen? That I get a crappy job? Getting a crappy job would not be the end of the world and I can always find a job.

Alain: What advice would you give to someone who would like to get out of the 9 to 5 but don’t have the courage?

Elijah: We only have one life to live. I would encourage anyone not to suffer for too long. If they don’t like their job, I would encourage them to find something that they feel more passionate about.

Alain: How do you find business?

Elijah: Word of mouth, networking at events, being present in different activities, always speaking about what I do, and Facebook events.

Alain: How do you stay motivated?

Elijah: I always try to do my best. My work represents me. I put myself into my work and I feel good when I produce something of quality.

Alain: How much do you earn?

Elijah: Lately I have a lot of work, so I am doing fine, but I don’t know how much I earn. For me, as long as I have enough to pay my bills, I’m happy.

As long as I have enough to pay my bills, I’m happy.

Alain: How do you deal with the stress when you are not earning enough?

Elijah: Lack of money is not the most stressful thing. We have safety nets and I don’t believe that money brings happiness. I believe that having a purpose and engagement in what you’re doing brings happiness.

I don’t believe that money brings happiness. I believe that having a purpose and engagement in what you’re doing brings happiness.

Alain: Which books can you recommend to the audience?

Elijah: Creating a Life Worth Living by Carol Lloyd. She asks, what kind of person you are, what environment you want to work in. What is your creativity style? And then she encourages us to create a life for ourselves worth living.

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Alain and friends in a dance floor

An emergency fund is not that important

Do you need an emergency fund?

Most personal finance books promote the idea of creating an emergency fund as a fundamental step in personal finance. ( See personal finance guru Dave Ramsey and Senator Elizabeth Warren.)

Why? Because if you have an emergency, you can use that money instead of using your credit cards or dipping into your savings account.

The recommended amount for an emergency fund is the equivalent of 3 to 6 months of your regular monthly expenses.

For example, a person with a $40,000 salary will have an income of about $3,350.

A three month emergency fund would be about $10,000

A six month emergency fund would be about $20,000

That’s a lot of money.

The typical textbook recommendation is to put this emergency fund into a zero risk, liquid account, like a savings account. Usually these kinds of accounts earn zero interest.

Your credit card is your emergency

I just read an article from the blog NerdWallet  which reported the average amount of debt carried by a typical person:

Credit Card:        $15,762
Mortgage:        $168,614
Auto Loan        $27,141
Student Loan        $48,172

In a world where credit card interest rates fluctuate between 18% and 22%, it makes no sense to have $10,000 sitting in a bank account, earning 0% while holding a credit card debt of $15,762 at 18%-22% interest rate.

Paying down your credit card debt should be your highest financial priority. There should be no savings for retirement, no savings to buy a house, no nothing, until your credit cards are paid. Your credit card debt is your emergency.

You should also pay off other debts, such as your mortgage debt ( about 4%), auto loan (about 6% ), and student debt ( about 6% ). Why forgo reducing these debts in order to have money sitting in a checking account earning 0%? This makes no sense.

Invest your emergency fund

Let’s suppose you have paid all your debts. Would it be a good idea to have an emergency fund now?

No!

Either the Canadian index or the US index has an average return of 8% per year. Investing money at 8% sounds a lot  better than letting your money sit in a bank account earning 0%.

But what if you have an emergency?

The usual examples used by experts for an emergency fund are:

  1. Your car breaks down, or
  2. You get sick.

Car repairs don’t cost $10,000. If yours do, you are driving the wrong car and you have a consumption problem. Your problem is not lack of an emergency fund.

Most people get sick for about a week, this is not an emergency. If you have a more serious illness, $10,000 will not solve your problem. Your problem is lack of proper insurance.

Emergencies should be rare events which happen every 5 years or so. If you have an emergency every year, then it is not an emergency, it is a recurring expense.

What if you have a more serious emergency?

Credit card: Get your credit card, pay for your emergency, and then pay for your credit card debt within 30 days with alternative forms of financing..

Line of credit: The interest on a line of credit (right now) is about 5%-6%. It is better to have this debt at a low interest rate than to use money in your investment account which could be earning about 8%.

Your investment account: A final alternative is to take money out of your investment account. Assuming that a real emergency happens every 5 years, your investment account had 5 years to grow at an average 8% return for 5 years. Assuming an scenario where the market drops 20% right before you need your money, you are still better off than leaving your money at a savings account earning 0%.

How do I deal with emergencies?

I don’t recall having an emergency during the past 18 years. The biggest unexpected expenses I’ve had are parking tickets.

However, I do keep a checking account with a balance which fluctuates between $5K and $10k. If it has less than $5k, I panic and find ways to increase it. If it has more than $10k, then I send more money to my investment account.

How do you deal with emergencies?

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Addendum: On November 2016 I had a big emergency. See article.  I need it about $10,000 to get our of a financial setback. Since I don’t have an emergency fund, I sold some of my stocks. I sold at a 2% gain over 10 months.  I don’t regret not having an emergency fund. This emergency showed to me that I am following the right strategy.

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Interview with Raja Chemani about entrepreneurship and self-reliance

base
Raja enjoying his free time

Canadian Hustler

This is the first in a series of 10 interviews which I am calling Canadian Hustler.

Since our birth, we are indoctrinated to believe that the 9 to 5 lifestyle is the only option to make a living. This indoctrination is so deep in our subconscious that when we don’t get a 9 to 5 job we feel destroyed physically, emotionally, and psychologically.

drink
Having a drink. Cheryl, Raja, and Alain

Our lack of creativity, self-esteem and self-reliance makes us believe that if no one hands us a job we have no way of making a living. For this reason, we are always searching for approval, for diplomas, for certificates and many other forms of endorsements from the permission-givers.

People fight and beg for salary increases or government support because they don’t realize that they can take matters into their own hands. They don’t realize they can create their own salaries and be masters of their own lives.

With the intention of showing that there is an alternative to the 9 to 5 indoctrination, I have decided to interview 10 people who have taken control of their own lives, 10 people who don’t care about minimum wage nor government social programs because they have created their own jobs.

Raja Chemali

Raja was born in Lebanon. He came to Canada in 2007 and went to McGill University to earn a master’s in biomedical engineering.

As soon as Raja started working in his field he found that working in a small lab was tedious and stressful.

In a search for an alternative way of living, he opened an event production company where he invited guest speakers to share their knowledge. The business model consisted on charging people for the privilege of listening to the speakers. Due to the extraneous time and emotional demands, after some time, Raja gave up this business.

While developing the event production company, Raja was working as an independent contractor, knocking on doors, finding contracts for a landscaping company and keeping a 30% cut for his efforts.

The event production company was struggling and Raja needed more money to keep it going, so he decided to continue knocking on doors, but instead of giving the jobs to the landscaping company, he decided to do the job himself. This is how Raja started his present business Sparkle Window, a window cleaning company. Raja created his company in only two weeks and earned a few thousand dollars the first week.

Interview

Alain: Raja, How come your instinct pulled you towards creating  your own business, instead of looking for a regular 9 to 5 job?

Raja: I didn’t want to have a 9 to 5 job, that is not my type.

A 9 to 5 is not for human beings, we are not machines that can be programmed to work a certain amount of hours. Sometimes we can get the job done in one hour, sometimes we need 12 hours.

We are organic beings, our lives should not be framed into 9 to 5 blocks.

A 9 to 5 job kills our creativity, it kills the spontaneity of doing things we want to do when we want to do it.

We are the smartest creatures on earth, we should be able to find other ways of making a living other than the typical 9 to 5 system.

Many people don’t enjoy the 9 to 5 schedule, they do it because they feel trapped. They don’t know any other way.

Alain: Many people go to fancy universities to study 4 to 8 years to earn a degree which will help them make a living. And here you are, doing manual labor in a job that only took you 2 weeks to create and you are earning thousands of dollars. How do you feel about that?

Raja: Washing windows doesn’t identify me, I am a lot more than a window washer, I am a human being. My window washing business provides me with the money I need to live and enjoy life on my own terms. Our jobs should not determine who we are as individuals.

Alain: How do you find business?

Raja: I do some Kijiji ads, I keep my website up to date, but mostly I knock on a lot of doors to offer my services.

At the beginning, I wasn’t used to rejections, but then I accepted it as part of the business. Knocking on doors is like a muscle, the more I use it the stronger it gets.

Alain: How do you keep motivated?

Raja: Sometimes it’s difficult. I do it by switching off the creative and intelligent side of my brain and switching on the stupidity mode. I become an automaton.

I also keep myself motivated by thinking about upcoming projects or goals that I want to accomplish and how I am going to use the money to fulfill those goals.

Alain: How much do you make?

Raja: It depends on how much energy I put into it, on how many doors I knock on doors, but when I push myself, I can make up to $1,000 per day.

Alain: Can anyone create their own business or does this require a special mindset?

Raja: The system is designed to take all the creativity out of us and it doesn’t allow us to become human beings. We have the potential, creativity and intelligence to do anything we want but we are taught to obey, we are taught to take orders.

Everybody is an entrepreneur. Children are the biggest entrepreneurs, they believe anything is possible but the system robs them of that belief.

Self-doubt is the biggest barrier to entrepreneurship.

Alain: Which books do you recommend to your friends?

Raja:

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