Category Archives: podcast

Announcement: My podcast about personal finance and entrepreneurship

People learn in many different ways. Some people learn by reading, others learn by watching videos and some learn by listening.

My goal with this blog is to share some of the information I have about personal finance. I am sure that whatever I know it can help some one else. But I know that not every one likes reading, so I have created other channels of communication. About a year ago I created a YouTube channel and today I want to announce that I have created a podcast.

What can you expect from this podcast

Dancing tango with Dasha

Expect, most of the time, the same information which I publish in this blog. But also, because podcasting is such a nice medium to have conversations, expect to listen to interviews with other people interested in personal finance or entrepreneurship.

The podcast will be aired about once per week, sometime between Friday night and Monday morning.

The podcast will be about 30 minutes long, but the truth is that it will be as long as it needs to be. If a guest and I are having a wonderful conversation, then it could be as long as one hour. If I don’t have much to share on that day, it could be as long as 15 minutes.

I hope that you will join me in this journey. If you have a question that you would like to be aired, please write me a message and we will air it.

Would you subscribe?

At this moment, I am at the first stage of my podcasting journey, I am in the learning process. I am sure that with time my podcast will be of great quality. For the moment, I would ask you to help me out by subscribing. I need to show iTunes that my podcast is worth listening to, and the only way to do that is by having some subscriptions.

Here is the link

I will be very grateful if you subscribe.

Would you like to be interviewed?

If you want to share your story about personal finance or entrepreneurship, I would love to interview you, just send me a message and we will set it up.

My services

I am a money coach, if you would like to have a conversation about your personal finance, send me a message.

Thank you.

Book Review: Rich Dad Poor Dad by Robert T. Kiyosaki

rich dadAnyone who enjoys personal finance books has read or should read Rich Dad Poor Dad. This classic has transformed many people’s lives and is still working its magic on all of us.

The book starts with a parable about Robert’s personal life and his two dads. His own father, a well educated university professor who struggled financially all his life, and the father of his childhood best friend who had very little formal education but who became one of the most successful business people in Hawaii.

Robert sought the mentorship of his rich dad and through that mentorship he learnt the importance of self education and the accumulation of assets that produce cash flow.

Some of the major points emphasized in the book are:

  1. School does very little to give us a financial education. We mostly learn how to be docile good employees who follow orders. Creativity is discouraged in the school system. We learn more and more about less and less through specialization. In order to succeed in the corporate world we have to get master’s and PhD degrees and follow the orders of our employers. This option, instead of giving us more financial security, makes us more vulnerable to the whims of our employer and the market place. Personal note: I know many PhDs who struggle financially and who live in constant fear of losing their jobs. Higher education does not translate into higher income nor higher job security. Some of these PhDs have confessed to me that they would have been better off working as waiters.
  2. Wealth is defined, not by how much we earn but by how long we can live from the income of our assets. Financial independence is achieved when our monthly income from assets exceeds our monthly expenses. Many people have high salaries, but they also have high expenses and they are not better off financially.
  3. In order to become wealthy, we have to invest in income producing assets such as real estate and/or stocks. The secret to wealth is to have your money working for you instead of you working for your money. If you have high a salary but don’t have assets producing cash flow, you will always be a salary slave.
  4. Our house should not be considered an asset. Instead it should be considered a liability. An asset is something which produce revenue. For the majority of us, our house does not produce revenue. Instead, it a house is one of the biggest expenses in our budget. Personal note:The only way a house can become an asset is if you rent the extra space either to roommates or via Airbnb.
  5. Many financial writers (such as Dave Ramsey) warn us against financial leverage. They claim that we should save until we have enough money to buy an asset. Robert suggests the inverse. He suggests that we use other people’s money to achieve our financial objectives; for example, borrowing money to buy commercial properties.

I think the book may be a great motivational tool for people who wish to leave the rat race. Robert tells us that it is possible to become wealthy and we believe him. However, he does not share any specific information with us.

Robert has licensed his name and his trademark “Rich Dad” to sell educational products and expensive real estate seminars. The price of those courses can be as high as $45,000. Although the book is a great source of inspiration, I believe that Robert is in the business of pushing his workshops to desperate people. In my eyes this different business model tarnishes his reputation as a source of inspiration.

Free money for the education of your child: RESPs


partyI came to Canada in 1998 to study. I found that Canada’s education system offered the best value for my money. At that time a school year cost $3,000 CAN. The same school year in the U.S. cost over $20,000. The difference in price is because the Canadian government subsidizes secondary education.

Not only is the Canadian education system more accessible, but the government also creates tax incentives to make it easier for Canadians to save for higher education and they contribute by depositing cash into the student’s education savings account.

The vehicle by which the Canadian government helps Canadians is called the Registered Education Savings Plan (RESP)

How do RESPs work?

Usually the parent will open an RESP account at a financial institution ( a bank, a mutual fund company, a broker, or an investment house) and names the child as the beneficiary. Once the account is open, the parent can start making contributions (maximum contribution $50,000).

Every year, for every $2,500 the parent contributes, the government of Canada will contribute an additional $500. Can you imagine? This is a guaranteed 20% return on your investment. The government will contribute up to $7,200 over the lifetime of the account. This is FREE money. $7,200! If you are considered a low income family, the government will contribute up to $600 per year.

When the child goes to school, the money can be withdrawn under his name. Since the child has little or no income, all of the gains can be withdrawn tax free.

More FREE money.

The government of Canada will add another $2,000 free to low income families, through the Canada Learning Bond  ( the CLB is a grant paid by the government of Canada to assist low income families with saving money for their children’s post-secondary education) as long as the money is used towards the education of a child. If the child decides not go to school, the government will claim back its money.

The provinces want to help out as well.

There’s no ending to this country’s generosity. Not only does the federal government want to help people get a secondary education, but some provinces want to help out as well. Here are a few programs sponsored by the provinces.

Saskatchewan Advantage Grant for Education Savings (SAGES):

The Government of Saskatchewan provides a grant of 10% on contributions made into a Registered Education Savings Plan (RESP) to a maximum of $250 per child per year, up to $4,500 per child. Wow, so you get $500 free money from Canada and $250 from Saskatchewan. This is a total of $750 free money if you put aside $2,500 from your own pocket. This is the equivalent of 30% return on your money.

Québec Education Savings Incentive:  The government of Quebec has a plan similar to the Saskatchewan plan: $250 free money per year up to $3,600 per child.

Hypothetical scenario.

Maria has a newborn baby and wants to save for the baby’s education. She opens an account at her local bank. She deposits $2,500 every year for 15 years. As soon as she deposits the money, the government of Canada contributes $500 and the government of Quebec contributes another $250. Assuming that she can get an 8% return on her investment, at the end of the 15 years, she would have about $95,000 for the education of her child. $37,000 which she invested out of her pocket, $11,250 contributed by the government, and $46,750 in capital gains.

The child will withdraw the amount as needed when going to school and the capital gains of the amount would be taxable under his name. In this case, the capital gains are about $46,750. Since the child has no job or only a part-time job, his taxes will be almost zero. What a great opportunity. $46,750 Tax free gains.

Conclusion: If you are a parent, investing in an RESP should be a fundamental part of your financial planning. Nowhere else can people get a guaranteed 30% return for their investment and all the gains tax free.

My services:

I offer money coaching services in person for people living in Montreal or via Skype if you live in the rest of Canada or the United States. The price is only $20/hour. To book a session, send me an email at guillot.alai@gmail.com.

Debt reduction, paying for college and planning for retirement


toastThe three most common financial objectives for Canadians are:

  1. How to get out of debt
  2. How to pay for education
  3. How to plan for retirement

Getting out of debt

I have been rich and I have been poor, but the fear of being poor has taught me to be frugal and to always stay out of debt.

For some people, being frugal is difficult because we are constantly bombarded with advertising which makes us desire and purchase things that we can’t afford. It therefore takes a lot of effort and discipline to stay debt free.

The most efficient way to get out of debt is not to incur it. Question all your expenses. Ask yourself: do I really need this? Does it have to be new or can I buy a used one? Can I do with a less expensive model? Do I have to buy it now or can it wait a bit longer? Make it a point not to buy things on credit and not to buy things that you can’t  afford.

I consider credit card debt the greatest enemy of financial independence. I recommend paying the debts with the highest interest rate first and then continuing down to the one with the lowest interest rate.

My preferred tactic to accelerate the payment of credit card debt is to get a line of credit at the local bank and to pay all the credit card debt. Then you’ll only have only one debt at a lower interest. This process makes your debt payment more manageable and you can save lots of money by paying less interest.

Paying for education

We Canadians are lucky to live in a country which subsidises education. A school year in Canada can cost between $3,000 to $6,000 while in the United States the same school year could could be than $20,000.

If you are a student and your parents allow you to stay at home until graduation, you could easily earn $3,000 working part time or working during the summer. A diploma is within reach of almost every Canadian.

If you are a parent and you would like to pay for your child’s education, you have a wonderful tool called “Registered Education Savings Plan.” This plan allows you to save and invest money for education tax free. Even better, the government is willing to contribute up to $5,000 towards your child’s education. This is a wonderful opportunity to get some free money and to invest it tax free.

Planning for retirement.

The main ingredients to plan for retirement are discipline and consistency. Many of us put off the idea of planning for retirement, until one day we wake up with the feeling that it might be too late.  For me, I began to have a sense of panic during my early 40s and ever since then I have been working on my plan. At the same time, I realize how much better off I would be if I’d have started saving in my early 20s.

It’s my opinion that a person should start saving for retirement as soon as they start earning money, even if it is a small token amount, to get into the habit of saving and planning.

In Canada the most popular saving tools are RRSPs (Registered Retirement Savings Plan) which allow you to defer taxable income until age 65 and TFSAs (Tax Free Savings Account) which allow you to invest money and not pay taxes on its gain. I will give more information about these plans in future articles.

After taking advantage of those two savings plans, the next step is to invest in non-registered savings accounts or real estate.

Conclusion

If a person has the proper plan, it’s not difficult to stay out of debt, pay for education and retire comfortably. It is all in the planning.

My services:

I offer money coaching services in person for people living in Montreal or via Skype if you live in the rest of Canada or the United States. The price is only $20/hour. To book a session, send me an email at guillot.alai@gmail.com.

What are your goals?

Ivan, Sapan, Alain, & Kelly
Ivan, Sapan, Alain, & Kelly

1st step. Your net worth

When money coaching, the first thing I do with my clients is determine their net worth. It’s important to know where you are, where you want to go and then make a plan.

Determining the net worth is not difficult. The formula is: assets – liabilities = net worth. But when I ask my clients: “What are your goals?” I sometimes get a blank look. “Mmm… I am not sure,” they respond.

Then, I suggest the typical stuff: get out of debt, plan for retirement, etc.

We don’t know what we want

The reality is that most of us don’t know what we want out of life. The advertisers keep bombarding us with their messages and we lose track of our own thoughts.

For example, many people say: “I’d like to travel, but I can’t afford it.” And they never make a plan to fit traveling into their budget.

Many people borrow heavily for education knowing they’ll have a hard time paying back their student loans. They just do it because everybody else does.

The in-between

Many of us live in the “in-between.” The in-between is that uninspired space in which we are not satisfied with how things are going, but we are not dissatisfied enough to do anything about it.

We are institutionalized

We are completely institutionalized. We are born in a hospital. As soon as it’s possible, we are placed into some kind of child care facility, then we go from grammar school, to high school, to college. We work in an offices for 45 years, and finally, at age 65, we are allowed to be free for a few years before we’re put in another institution, to die quietly and away from the public eye.

We are exposed to advertisers all the time. We watch TV, listen to the radio, surf in the Internet and look at billboard on the streets. Advertisers to manipulate our way of thinking. We are told that in order to succeed we have to buy 4 years of education, get a mortgage, buy a car every 4 years, be up to date with the latest fashion trend and technology. Many of us live in that manipulated world for the rest of our lives. Very few make a conscious effort to get out.

We are addicted to our paychecks, and we are imprisoned by our mortgages. We willingly work at a job we don’t like in order to pay for a property which we don’t have time to enjoy. We see the other people, not as who they are, but as what they own.

We are not only shackled by our jobs, salaries and debt, but we are also shackled by our inability to see that there are other opportunities available. Our chains are not physical, our chains are mental, which is even worse because we become our own prison keeper. We see that pension at age 65, or the lottery, as our only way out and meanwhile we complain about the system, the government, income inequality, and so on.

We are the system. We are the 1%

But we don’t realize that we are the system. We keep the system alive by following the rules as we are told, by our aversion to uncertainty. We would rather be unhappy than face uncertainty. So we take a path that we don’t like because we fear the path we don’t know.

We live a life of material abundance, we are consumers. We complain about income inequality but only when others earn more than we do. We are the 1%. We are considered successful when we are perceived to spend than our neighbors.

We are considered successful when we spend money. We prefer riding 20 minutes to work by car than riding 20 minutes by bike. We give higher value to the person who has a garage full of stuff than the person without a garage and no stuff. I see people spending $5000 on bicycles that are 2 pounds lighter, instead of just losing two pounds. We pooh-pooh the idea of public transportation and instead spend $20K+ buying a car.

It doesn’t have to be this way

It doesn’t have to be this way. We could do things differently. For example, how about if we could get our education for free just by going to the local library or by taking free courses on the Internet? We would get rid of student debt.

Rather than working more to have more stuff, how about if we have less stuff in order to work less? Can we trade cars for bicycles? Can we do away with TV and cable? Do we really need to buy Apple gadgets every year?

Here are some suggestions:

  1. We can start by accepting personal responsibility. Instead of blindly following the system, we should realize that we are prisoners of our own culture and behavior. Just like the alcoholics who recognize themselves as alcoholics, we have to recognize that have been active participants in our own situation. We bought that iPhone on credit, we purchased that education which we are not able to afford now nor in the future, we continue living beyond our means.
  1. We can increase our dissatisfaction with the present situation. Instead of accepting things as they are, we can increase our displeasure of the situation to the point of where we are forced to do something to change our present environment.
  1.  We have to visualize life outside of the system by reading and educating ourselves about all the different alternatives.
  1. We have to build a plan to change our life. Set a series of milestones which you will able  to achieve by a set time period .
  1. Take action. Don’t postpone the changes in  your life, build that plan and start taking little steps or big steps toward that better financial and personal life.

Live a richer life, consume less.

Alain holding a baby boa
Live a richer life, consume less.

Let’s consider our priorities.

I have been watching the crazy Black Friday in the United States, Canada, and England. There is a consumer frenzy to buy more, more, more. We are so easily manipulated by the media and our ability to reason goes out the window.

We are in such a vicious cycle. We work more to buy more, and to constantly upgrade our possessions. For example, my mother buys a new car every four years. I have another friend who upgrades her luxurious vehicle every four years. And the examples are endless.

When examining our financial situation, we have to put life into perspective. What do we really want? Do we really want the big house, the two cars, the boat, and the chalet? or do we want to be happy?

In Canada, I am very close to the poverty line, I earn about $24000 per year. Yet, I consider myself rich. I live in a nice apartment in one of the nicest neighborhood of the city. I have internet connection, a cell phone, a laptop computer and I pay all my utilities on time. I work part time and I have lots of leisure time.

I compare myself with some of my friends who are well off, and I would never trade places with them. Materially, they have everything, yet, they work 8 hours per day, in stressful jobs, commute one hour and then they are too tired to enjoy their lives. If they are too tired, all their money becomes useless.

For me, it’s possible to live comfortably with such a small amount of money because I just don’t care about buying stuff that will only collect dust at my place. I don’t have a car and I don’t have a TV. All I need is to pay for food and rent, and I am good. I wake up when I want to, and I take siestas during the day when I want to. For me, this relaxed lifestyle is more important than money. What do I do with my free time? I read, write, attend toastmasters meetings, study. These are things that many rich people wish they could do, but they can not afford because they are busy selling their time for money.

Imagine that you are already rich, that you already have all the money that you would ever want, then, what would you do with your life? Would you like to paint? Do sports? Write? Read? Imagine that you just work part time, you have a frugal lifestyle and you have enough time to do the things that you like to do. Isn’t this scenario much better than having lots of money, having lots of stuff, and not having the time nor the energy to enjoy your blessings?

Now, if your true desire is to have a professional career and spend 60 hours per week working, if this is what fulfills you, then, you are a lucky person. You get to do what you want and get well paid for it. Then, all your financial rewards are almost meaningless, because your true joy is to exercise the career that you love.

Although earning money should not be the primary purpose of our life, we do have to recognize the importance of money, especially when planning for our future.

Recently I had a conversation with a friend of mine. She is a talented artists. Our conversation went something like this:

-You know, I am a talented artist who has done many amazing things. How come I have to constantly reinvent and promote myself? How come people are not running up to me begging for my services?

In any profession, we are only as good as our last project. Clients, customers, employers, they all have this mentality: “What have you done for me lately?” So all of our previous achievements are easily forgotten. Out of sight, out of mind. And here comes the importance of living for today, but putting something aside for the future.

Let’s say that you do the most amazing performance at your job. You are congratulated and you are rewarded appropriately, but one year from that day, your accomplishment has been practically forgotten. 5 years later, it is as it never happened.

On the other hand, when you make a point to save something for the future, the money that you save can continue rewarding your accomplishment for decades to come.

Lets say you do a fantastic job at something, and you are rewarded with much recognition and $5,000. You spend $4,000 and save $1,000. Well, that $4,000 will be gone forever once you spend it, but the other $1,000 will continue producing and thanking you for years to come. Let me show you:

Assume that you can invest your $1,000 and receive 8% gain on it per year, this is what it will look like:

One year $1,080
five years $1,469
Nine years $2,000

You see, your amazing job does not exist in anyone’s mind after 9 years, but your bank account considers it twice as valuable.

How to put this mentality into practice?

The first thing is to meditate and to discover what is really important to you, your true wishes, what society expects of you.

After you have determined your goal, make a plan. How can you get there? How can you do the thing that you love and still be able to provide for the future?

Once you have made your plans, consider that you will be thrown off track many times. This is normal. Imagine that you are an airplane flying from one city to the other. The wind will be constantly taking you off course, but you will continue readjusting and eventually you will arrive at your destination.

Constantly evaluate your performance. Every time you feel tempted to buy something, ask yourself this question: Do I really need this in my life? Do I value this thing more than the security and protection that cash can provide me in the future. If the answer is yes, then go ahead and buy it. If the answer is no, then forget about it and leave that cash in your bank account.

Finally, don’t stop living because you want to plan for the future. Go ahead and buy yourself a beer or a latte from time to time. Go to the movies or on a date. Live the present, but don’t’ forget to put something aside for the future.

I love coaching and I think that I am good at it. If ever you want to book a session, feel free to contact me through my website. As a coach, I will help determine where you are in life, where you want to go, and I can help you draft a plan to achieve your objective.

Please connect with me via Facebook, LinkedIn, Twitter or Google +

Book review: Market Wizards by Jack Shwager


MarketThis book had been on my reading list for almost a year. I was lucky enough to find it at my favorite second hand store for only $3.

The book is a compilation of 17 interviews. 16 interviews of  top traders and one interview of a psychologist who focuses on helping professional traders. The book was originally published in 1989, so we don’t get to read how those top traders did during the most recent economic crises.

Some initial observations: All the traders are from the United States. I am sure that there are excellent traders in other parts of the globe. Maybe Mr. Schwager wanted to keep it simple by staying in The United States. Another observation is that all the traders are male. I hate to stereotype, but I have noticed that there are not that many women who work as professional traders.

The stories collected were incredible. Many of the traders interviewed went from trading a few hundred dollars to becoming millionaires or managers of multibillion dollar portfolios.

Although each story on its own was interesting, when you put all of them together, they all begin to sound like the same story. For example, Michael Marcus started trading with $700 and retired with 80 million dollars. Bruce Kovner borrowed $3,000 from his credit card and now has over $4.8 billion dollars. All the other traders have similar stories. They all went from very little to an incredible amount of money. They all are fanatic about trading at the expense of everything else in their lives. All of them gave practically the same advice: “You have to work hard. You have to do your homework.”

There were two stories in particular that I found very valuable; the one of William O’Neil, and the one about David Ryan. They did not talk so much about how they became successful, instead they explained their process in becoming successful. Although the purpose of the book was not educational, I felt that I learned something reading those two chapters.

Overall, I give the book four stars out of five. The material was excellent, except that after a while it became too repetitive.

AmazonEvery time you purchase a product through our Amazon link, you are helping with the production of the show.

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How I will make one million dollars in real estate


Sometimes you just have to bend over and pick up the money off the floor.
Sometimes you just have to bend over and pick up the money off the floor.

Life without a plan

All my life I have wanted to be a millionaire. So far, I have failed and to be honest, the gap between wanting to be a millionaire and doing something about it, has been quite wide.

I have always been a mediocre student with grades ranging from Ds to Bs. I had many odd jobs. I have worked as a janitor, busboy, store clerk and so on.

I consider my college degree to be a complete waste of my money, time and energy; but it did give me a student visa to come to Canada and to stay here for at least 4 years.

After graduation, I worked as a financial adviser for one of Canada’s big financial service firms, but the work made me feel dirty and dishonest. We were never focused on helping the clients; we were always focused on earning fat commissions. I quit after only 9 months.

It was then that I started day trading. The serotonin created in my brain after a few big wins was enough to keep the hope going for many months. I day traded for almost 10 years. To this day, I still don’t know if I would had been better off just parking my money in a market index mutual fund.

My other endeavor was teaching dance classes. What a wonderful job. It created a steady flow of cash while it helped me create a rich pool of friends and kept my body in shape.

After many years of teaching dance and daytrading, I decided to get into the short term rental business. With my own capital I bought one condominium and with borrowed capital I bought a second condominium.

The real estate method

My formula for becoming a millionaire is quite simple: Buy four condominiums, each one of them worth about $250 000 for a total investment of $1,000,000 investment. Then rent those condominiums to long term tenants. The monthly rent received for the condominiums would pay the mortgages and provide a bit of cash flow.

As the years pass, property owners are allowed to increase the rent to the rate of inflation, but the amount of their mortgages doesn’t go up. I could use this opportunity to increase rent, increase my cash flow and, at the same time, increase the regular payments to the bank.

If I increase the regular payments that I make to the bank every year, I should be able to pay off all the mortgages within 15 years instead of the regular 25 years.

To implement this strategy, I would buy one condominium per year. As mentioned before, I have already bought two, so I am already half way there. In two more years, if I buy one condo per year, I will be set to own one million dollars in property. Within 15 to 20 years all the condominiums will be all paid off and I will have achieved my goal of making one million dollars in real estate.

Next week I will write a blog about how to make one million dollars in the stock market. My real life scenario will probably be a combination of the two methods.

Sponsors:

AmazonEvery time you purchase a product through our Amazon link, you are helping with the production of the show.

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10 tricks to cut your expenses without cutting your quality of life

Couple eating at restaurant
At Beauty’s. Great breakfast for little money.

There are two ways to increase wealth:

  1. To earn more money and
  2. To spend less.

I prefer to build wealth by earning more because there is practically no limit to how much a person can earn. On the other hand, you can only cut expenses so far. Eventually everyone has to eat and sleep somewhere. All that being said, there are many ways in which a person can cut unnecessary expenses without diminishing their lifestyle.

I want to clarify that being frugal is not being cheap, it just means getting better value for your money.

  1. This is a comment from a reader, her name is Lorrie: “No cable bills; just Netflix and free streaming sites. No land-phone, just a smartphone and the REALLY reasonable MagicJack ($20 a year for free long-distance across North America).” I’d like to add that with Google Voice you can call phones all across North America for free and with Viber, you can call from your cell phone to someone else’s cell (for free) anywhere in the world.
  2. When looking for a mortgage, many people go to their regular bank, not realizing that by shopping around they can save thousands of dollars.
  3. Buy a used car. It’s a much better deal than buying a new car. If you buy a car and sell it the next day, the car is still valuable, but the price drops dramatically. I find that the sweet spot for buying a used car is four years. At four years old it’s no longer considered new but it could last you for over a decade.
  4. Sometimes the main difference between an expensive restaurant and a less expensive restaurant, is just that, the price, nothing else. When eating out, go to restaurants which give you better value for your money. Also, choose restaurants where you can bring your own wine.
  5. Comment from another reader: “Buy at a fripperie (second hand store).” I really like this advice. I have bought so many books, dishes, furniture and some clothing at second hands store. The satisfaction of buying something for a quarter or its original price can last for years. I shop at Le Chainon.
  6. A big way in which many of us can save lots of money without making any sacrifices, is by buying generic products rather than brand products. When at the supermarket, just buy the store brand. Most of the time it’s exactly the same product with a different label.
  7. When traveling, use Airbnb instead of a hotel. You get so much more for so much less. Use Uber instead of a taxi. Eat at people’s house with Eatwith.com.
  8. If you are a smoker, a habitual drinker, or a drug user; reducing or eliminating these drugs will be a great benefit to your health and to your budget.
  9. When considering an education, take as many free online courses as possible, then find classes at your local community college, and then and only then, go to a university.
  10. When getting together with friends, consider potlucks at the park or at your house or the house of one of your friends. This is a great way to socialize and have a great time for very little money.

This list is only a start. I am sure if you think about it for a few minutes, you could find ways to cut your expenses without cutting the quality of your life.

Additional advice from our reader Ivan Murcia, Coach & Business Consultant, http://about.me/ivan_murcia

  • “Shopping & Selling on Kijiji, Amazon.ca and the new Amazon Subscription  where you can have excellent products, save time and money plus delivery included! There is also Alibaba if you want to have different quotations or buy directly from the factory.”

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Book Review: Outliers by Malcolm Gladwell


ouliersThis book was a gift from from my co-host and business partner Cheryl.

There are some chapters which I found to be a great read and some chapters which I found long and boring.

The introduction: “The Roseto Mystery,” tells us about this little Italian town in Pennsylvania where people die mostly of old age. “There was no suicide, no alcoholism, no drug addiction, and very little crime.” It turns out that the reason for this small town’s well being is that they have a strong social network. The takeaway here is that one of the best thing that you can do for your overall health is to give priority to the quality and quantity of time with family and friends.

In The Matthew Effect (or accumulated advantage), Malcolm explain why most of the Canadians best hockey players are born in January, February and March. The reason is that the leagues of teams are determined by calendar year. So a kid born in January is older and bigger than a kid born in December. Since the kid born in January is more mature, he is considered a better athlete and he gets extra coaching and extra practice and he does become a better player, therefore becoming a self fulfilling prophecy. Other than being an interesting fact, I don’t know how to use this information.

The 10,000 Hour Rule. I believe that this is the chapter that made this book famous. In principle it’s easy to understand. People who have 10,000 hours of practice in any particular activity, become experts in those activities and eventually they get a break which catapults their careers and makes them famous and successful. Some of the examples are Bill Joy, co-founder of Sun Microsystems, The Beatles, Bill Gates, etc.

I wonder, what happens to the people who practice over 10,000 hours and never become successful in their fields? And people who became famous and successful without paying their dues.

Malcolm tries to democratize success. As he explains the series of particular events which occurred in Bill Gates’ life, he implies that Bill Gates had many lucky strikes which contributed to his success. Unfortunately, he discounts character, perseverance and determination. Bill Gates was lucky to have affluent parents and to have access to computers when practically no one else had access to computers. But Bill Gates had to use one of those computers between 2 to 6 am. in the morning. As a teenager, to have the ambition and the determination to get up every night to use this computer, in my opinion, shows that his character had a bigger roll in his success than his lucky chances.

Of course, the examples that disprove the 10,000 hour rule are abundant. Sir Richard Branson created one of the most successful airlines without knowing anything about airplanes, the rock band The Sex Pistols became a great success even if their musicians could barely play their instruments.

In The Trouble with Geniuses, Malcolm proves that being smart is not enough to become successful. Smarts is no more than a factor in the equation. It does help to be smart, but many other factors can become more important. “Intellect and achievement are far from being perfectly correlated.” Another factor which is considered more important, is the upbringing of a child, and he explains the concept of “Concerted Cultivation.”

This chapter makes me feel hopeful because I don’t consider myself an intelligent person, yet I like to think that I have a chance at being successful in life.

In The Three Lessons of Joe Flom, Malcolm tells us the story of how Joe Flom, a Jew,  became a prominent attorney in New York City. Malcolm attributes this success to the fact that Joe could not get a job working at any of the well known firms in New York City, simply because he was Jew. So Joe opened his own law firm in association with other Jews who also were discriminated against. Joe et al. ended up doing the kind of work that no other law firm wanted to do, mergers and acquisitions. When merger and acquisitions became popular, Joe et al., were at the top of the pyramid and they became among the most successful law firms in New York.

What is the lesson here? to become a well known, high paid attorney you have to be Jew and be discriminated against? Maybe to become a good gardener in California you have to be a Mexican immigrant? To become a good maid you have to an immigrant from the Philippines?

Here are two excerpts which summarize Malcolm’s attempt to democratize success:

“Successful people don’t do it alone. Where they come from matters. They’re products of particular places and environment.”

“The sense of possibility so necessary for success comes not just from inside us or from our parents. It comes from our time, from the particular opportunities that our particular place in history presents us with.”

True in most part. You have a higher chance of success if you live in the U.S. than if you live in Ethiopia. But there is a point in which we have to acknowledge the character and personal ambition of each individual.

In the chapter “Harlan, Kentucky”, Malcolm explains why people from the South of the U.S. have a hotter temper than people from the North. My question is: How is this relevant to me. This chapter suggest that we are the sum of all the generations before us. I agree with Malcolm, but was not able to figure out how to use this information.

The Chapter “The Ethnic Theory of Plane Crashes” is one of Malcolm’s favorites. He claims that airplane pilots from countries which have pronounced social hierarchies have more airplane accidents than airplane pilots from countries with less pronounced social hierarchy. The reason given is that the copilot is less likely to question the actions of the pilot.

This chapter was 47 pages long. He could have made the same point in 2 pages.

In Rice Paddies and Math Tests, Malcolm claims that there is a direct relationship between countries that farm rice, such as Japan, Korea, Singapore, and Taiwan and the outstanding math results that kids from those countries achieve.

On the surface, this seems plausible, but then how does he explain that kids from India, Indonesia, Vietnam and many other countries in Southeast Asia, which are major rice producers, don’t do as well in math exams?

Marita’s Bargain turned out to be my favorite chapter and the only one with information that I can put to use. He uses a case study of KIPP (Knowledge Is Power Program). KIPP is a national network of college preparatory schools in under-resource communities throughout the U.S.

What makes this network special is that the students spend more time in school every day and they have shorter summer vacations, therefore giving its students the edge of extra preparation. I see the logic in this chapter, the more that you prepare, the higher the chances of success.

The last chapter A Jamaican Story, was Malcolm’s autobiography. He shares with us the origin of his ancestors,  from the racial mix of a white landlord and a slave woman in Jamaica, to the present time when Malcolm has become an accomplished writer living in New York City. Malcolm finds a way to thank his grandmother Daisy for the sacrifices that she endured in order to get an education for her daughter (Malcolm’s mother), who in turn provided an education for Malcolm.

In short, I found the book highly entertaining and I appreciated the nuggets of information through the pages. At the same time I will not go out of my way to recommend this book. For each anecdote that proves the points he is trying to make, there are many anecdotes which prove the contrary.

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