Saving more is the only way | General financial discussion | Discussion forum

What a great article and so true! I bought my first rrsp saving plan when I was 16 as I grew up with nothing and figured out early I better start saving if I wanted a better life later. That luckily got me through a disastrous loss of a lot of money in the crash in 2008 as I made the mistake of listening to a young big bank investment planner who put me in a high risk portfolio where some of the companies went under and I could not recoop any losses. My mistake, as I was always super conservative and only invested in GIC's. Bad time to take that leap, but live and learn. Saving, working hard and always paying off debt has seen me retire early and live a very comfortable life. This site has been super helpful and I am very appreciative of all the great advice, suggestions and information I have received here.

For my 38 years working I brown bagged it pretty much every single day, rode my bike or walked to work, and took virtually no money with me. At night I pretty much stayed home doing family stuff, weekends was time for cycling or other outdoor pursuits or working around the house. Moved out of GTA at age 18 so I could pay off my mortgage in my 20s, still in the same house and city. Made a fortune over decades of just not spending money, now my adult kids are marvelling at how I'm able to blow it now that I'm retired. I say what's the point of saving if you're not going to spend it later? They laugh (sincerely, I think) and can't disagree.

frizun said
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I think the best I can do is to just live off the income from my nest egg and
let inflation erode the true value of the principal over time.
The good news is that I'll probably never run out of money.

I think one could live better than just off the income.

The verifiable oldest person lived to 122. So, one could live off the income plus some principal, to run out of money by age 125.

It was only in the last few years before retirement that it became clear that our retirement income would be OK. It was only then that all the non-spending we had done actually began to add up to something worthwhile.

I have never budgeted, and prefer non-spending, i.e. each expenditure has to justify itself as something of value both in utility and cost. I recognize that a lot of people probably need to budget in order to keep themselves disciplined, but it can be a negative experience, especially for those who are arithmetically challenged. By being really careful about every expenditure, you can take control of your spending and avoid a lot of the tedious arithmetic.

My attitude has generally been to simply not spend unless it was necessary or gave me something I really valued, and then to look for the best way of getting what I need from a financial perspective. Not going into stores and not going to shopping websites unless I needed something specific also helped. I'd rather read a book than go shopping!
You can actually train yourself to get your jollies from things other than spending money. Spending can become a "hobby" or something to pass the time, but there are lots of other hobbies that don't burn a hole in your wallet. I taught myself to regard walking out of a store empty-handed as a victory rather than a disappointment, because I didn't waste any money on anything that wasn't right for my needs and emerged from the store with my credit card untouched. When in doubt, go home and think about it -usually you won't bother going back. Keep all receipts, pay attention to return policies, return things that you probably shouldn't have bought in the first place, etc.
The thrust of advertising is to make us think that shopping success is in buying stuff, but in can equally be in NOT buying stuff. It's all in how you conceptualize it.

Worked for me, in the long run.

And it hasn't been a miserly life. We have always gone out to restaurants at least once a week, usually more often. I usually buy the best available seats to concerts that I really want to go to, and ignore the rest. - we don't go to a lot of them, and why go if you're going to be complaining about the seats? MasterCard paid for our last 6 hotel nights (points).

I might have trouble funding 125 years, but I am pretty sure I won't have to - and if that is anyone's worry, then you can probably insure against living past 100 for a relatively small premium with a specially underwritten policy of some kind! I think the odds are much higher that humanity will have extinguished itself by then, at the rate we're going.

And don't forget about the joys of giving. Pleasure doesn't have to come from self-indulgence. I recently gave something I owned to an old friend who needed it and couldn't afford it. Yes, I could probably have sold it for $500-$1000, but that would have involved work and aggravation, and I could afford not to. I wouldn't have gotten much pleasure out of just selling it and putting the money in Tangerine.

This reminds me of a conversation I had with the owner of a hardware store a few years ago - one of the major chains. I was returning a large number of items which had been purchased by someone whose estate I was clearing up, and several of them were duplicates! They were unused and for the most part I had no receipts, but they were willing to take back anything that was still in their inventory at the lowest sale price, which was fine by me as it was more than I would get any other way and much easier. I expressed astonishment at how much stuff there was - several carloads (and that was only the stuff that had never been opened!). Even though less than half of it was accepted for returns, it still amounted to a lot of money. I had thought that my person was unusual in his (over-)spending habits. But the store owner assured me that this was not unusual at all, and that it is normal for people to buy a lot of stuff they never use at the hardware store. It had seemed like a good idea at the time, no doubt. I really had the impression that if it weren't for people like that, a lot of these stores would go out of business. Yikes!

As I understand it, Bill, (and I'm no expert), we have to consume because that's how they calculate the GDP. This makes no sense to me, which is why I can't explain it. To me, GDProduct should be about Production, pure and simple, but apparently it is in large part about Consumption. They say it's about Production, but then the definition reverts to Consumption: "GDP includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory." Production is only referred to by inference; GDP depends on consumption. http://www.investopedia.com/te.....z4FlhGTjPQ

So, GWBush may (to the extent that he was thinking straight) have been thinking about the potential impact on the economy. But it also shows how shopping can function as a distraction and pacifier. Under the circumstances, his comment was about equivalent to "go stick your head in the sand."

I see a lot of potential problems in defining progress in terms of consumption, but it is a complicated issue beyond my expertise. Anyone who wants to explore further might benefit from reading The End of Growth (Random House, 2012), by Jeff Rubin, former Chief Economist at CIBC World Markets, who apparently asserts that countries with smaller GDPs are successful in human terms and people happier. Clearly they don't do a lot of shopping! I haven't read the book yet.

It's a BMO card which they don't advertise at all. I believe it's only available now to business owners, but it may have been discontinued entirely for new customers. It's a cashback system which you can only apply against travel costs billed to the card. We used to own a corporation, which is when we got it, but have folded that since retired although still do some unincorporated business from time to time.

You could, instead, try MBNA Smart Cash World Elite MC. It has a fee (about the same as ours) but gives 2% cashback on all purchases, at least the last time I looked. You could decide to apply that cashback to your travel budget. The main difference between that and ours is that MBNA does not offer any insurance products with the card whereas ours does, and MBNA offers 2% cashback whereas ours offers 1.7%. We like the BMO insurance package, so we don't mind the difference in return.

With either of these cards, your annual purchases on the card must be high enough to justify the fee. As compared to some of the better no-fee cards, I would estimate that you need to be putting about 20K on your credit card to make it worthwhile, and more is better.

MBNA also offers additional rebates on some merchants. These vary from time to time, but currently Hilton Hotels (covers several sub-brands) is on their list. https://www.onlinesmartcashmall.com/home.htm

Loonie said
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I might have trouble funding 125 years, but I am pretty sure I won't have to - and if that is anyone's worry, then you can probably insure against living past 100 for a relatively small premium with a specially underwritten policy of some kind! I think the odds are much higher that humanity will have extinguished itself by then, at the rate we're going.

And don't forget about the joys of giving. Pleasure doesn't have to come from self-indulgence. I recently gave something I owned to an old friend who needed it and couldn't afford it.
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Planning to age 125 was meant more as a sanity check. If it looks like one's money will last until age 180, then there is definitely room for a better life or more giving. On the other hand, if it looks like money will run out by age 85, then one should lighten up on the spending.

I think one needs to be careful of leaving too much to heirs. I think it was Hinckley who said "That which comes easily departs easily. That which comes of struggle remains." Inheritances can be seen as "easy" money.

One relative warned me about how ungrateful heirs can be. He was not impressed with some of the children of their deceased friends. The children blew through their $100,000+ inheritances in just a few years. The children then complained afterwards that their parents didn't leave them enough!