Saturday, March 5, 2011

The Wealthy Barber

Yesterday I spent the day at a convention mingling with other teachers, and listening to keynote speakers.  I started my morning with a glo-bar and a coffee.


Some teacher friends and I went to Earls for lunch where most of us ordered the Kung Pao.

In the afternoon our keynote speaker was David Chilton, author of "The Wealthy Barber: The Common Sense Guide to Successful Financial Planning."  He was incredibly amusing, and entertaining, and I got a lot out of his presentation.  

Some of his main points that really stood out for me include:

- Beware of line-of-credits (basically, don't get one!)
- Save 10% of your income into a high interest savings account (TFSO is best - tax free savings account)
- Cheer Up!  He talked about how people complain a lot, and don't appreciate how spoiled they really are.
- Max out your RRSPs (he went on to talk about how lucky teachers are to have such a great pension ... we basically get 60% of our income, with inflation increases, until the day we die - guaranteed).
- We don't need all the things we think we need (granite counter tops, huge homes, hardwood floors, etc.).  
- Good debt is debt that will be paid off by the time you retire, does not cut into your 10% savings, and is for something that won't depreciate in value.  By this logic, vacations and vehicles are VERY poor choices for things to go into debt for.  Houses are okay, as long as you are not house broke and cannot afford to save 10% and enjoy life.

I have always had good money managing skills.  When I was a 12 year old kid making money for babysitting, I would budget my money, setting aside some for saving, some for spending, etc.. I continue to do this, and when I met the hubby (we started dating when I was 16) I taught him the same money skills.  Neither of us have ever paid a cent of interest on our credit cards, and we refuse to buy something we cannot afford to pay for upfront (with the exception of our house and 1 small car loan).  I also do not see the point in buying an expensive vehicle - what a waste of money!!  Cars depreciate in value the second they are off the lot.  Also, all vehicles eventually breakdown.  I don't care if I made an extra 100,000 grand a year, I still wouldn't waste my money to show off my BMW or Mercedes.  I couldm't care less what I drive, or what people think about what I drive.  I am not here to impress anyone with my stuff.  What about you?

I used to want, want, want for material things, but I have realized that these things do not lead to happiness.  When living in this way, there is never a time where you acquire enough.  There is always something new and better to buy.  In my opinion, experiences, especially those shared with others, lead to happiness.  The hubby and I choose to spend the majority of our extra money on experiences, not on objects.  I think of people who spend all their time consuming, and wanting more and more, showing off their brand names and expensive purchases, and I wonder if those things really are making them happy.  I think some people feel as though the objects they own define them.  

Is the constant pursuit for more one that makes us happy or miserable?

Are you good at managing money?  What are your spending rules? 

Do you have a pension plan through your work?


Stephanie said...

I wish that I were a bit better at managing money. I have a tendency to buy-now-pay-later. When we sell our house later this year, we're going to pay down all of our debt, including car loans. I can't wait!

A CopyCat Cooks said...

Love Kung Poa, 3 chili's

Lisa from Lisa's Yarns said...

I think I am good with money. I have alot of student loan debt, but this is good debt, esp by the definition that you provided as it will certainly be paid off before I retire!

No matter how much money I make, I will never buy a luxury vehicle. I agree with you on that 100%. I get annoyed by all the 'status seekers' out there. Now if you are a person who loves cars and is into that kind of thing, I understand spending money on performance vehicle like a BMW. But if you are just doing it so people on the road say, 'oh wow, she drives a Lexus'? Then yah, that is dumb in my opinion.

I try to balance long term objectives (such as retirement) w/ enjoying the here and now. I am healthy now, but there is no gurantee that will always be the case, so I make sure i do things I enjoy, like take vacations. I have some friends (mostly men) who are sort of obsessed with their nest egg and accumulating wealth so they can potentially retire young and I just think - what if you get cancer in your 40s or have a stroke in your 50s. Will you still be glad that you worked like a dog during the healthy years of your life?

Wow, long rambling comment here. Good topic, though!

Jolene - EverydayFoodie said...

I agree 100% Lisa! There is no way I would ever want to work away my life. I work to live, not live to work. I also would never work a job that made me work on weekends because it interferes with my life priorities which are spending time with family and friends.

I think vacations are very important to go on now, not wait for retirement - very good point!

Anonymous said...

Man...that line of credit one? So, so's what's kicking my butt big-time now. That coupled with the student loans have put in $130,000 in debt.

And I hate my job!! Erg. I can't even consider RRSP's or savings (which scares the crap out of me).

BUT - I have to refrain from all that...think of the good, think of the good...I could have nothing...or be one of those HouseWives who went into bankruptcy ;)

Kacy said...

I'm not great with money and could use some help in the area, however I pay all my bills and haven't had to file for bankruptcy yet so I'm calling it good!
I definitely feel like I could complain less sometimes, that is a great tip.

Amber said...

Love it! Eric and I got together when I was 16 too and I also taught him all I knew about money and taught him GOOD money skills (he used to be TERRIBLE with it!)

Anonymous said...

I have to go to the opposite kind of seminar... I am ridiculously cheap and takes a life or death situation for me to part with my money! I'm constantly reminding myself to "live a little"! I agree with you 100% though, in that I'd rather have a lifetime of experiences than a house full of things. Great post!!

Michelle @ HER said...

You should check out the blog and These blogs share great tips on how to become a minimalist and live a life through experiences and not just conceptual knowledge.

suki said...

I'm definitely lucky with my upbringing, always looking to save money where I can. :) I contribute to 401K and IRA where I can. I'd like to retire comfortably, so I'm taking the steps to make it happen.

Anonymous said...

I used to be very good with my money. We used credit cards for convenience, but paid them off right away, saved, etc. Then I started dental school. My tuition is $33,000 per year + supplies. I have a gigantic student line of credit, and unfortunately, we were used to living like a 2-income household so we haven't cut back on spending, really, which would be the prudent thing to do. Ah well, at least I know I'll be able to pay the debt off fairly quickly once I'm a dentist. Still, sometimes I shake my head at myself.

Averie said...

such a great post!

i posted twice in the past few weeks about money not equaling happiness. it makes life EASIER, for sure, but not necessarily happier unless there are other things, intrinsically, that are making the person happy. I love nice things, they are wonderful and do make me happy to a point, but my daughter, my yoga, my friends, etc...those are the things that sustain me and make me happy for the long haul! Not a new purse!

nice new header!!!!

Yelena said...

I am starting to see the need more and more for a work-life balance. The people I work with are insane- truly insane and I get emails from them at 10:00 PM, 11:00 PM, and later and I just can't live life that way. Unfortunately we do have a mortgage (our house owns us) and have to both work. I try to spend money on experience and value vacations over new renovations.

I guess because I have worked since 15, I manage my money fairly well- I'm conservative with a few splurges.

Madeline - Greens and Jeans said...

I'm trying to be better at managing my money, namely building my savings. I keep telling myself I'll get on it next year...

Anonymous said...

My husband is awesome at managing money and he's been teaching me a lot!

Anonymous said...

HEY LOVE!! Just stopping by to say i am going to catch up on your bloggie! sounds like lots of exciting things going on in your life! love you!!

Anonymous said...

i save 30% of my paycheck into my savings acct and I save 5% in my company's 401k plan. I agree with the experience is better than material things statement...why do you think I travel alot? Not gonna lie...I want an audi for my next car though!!i drive 40 minutes TO work..I deserve a nice drive there!

Why am I here??? said...

AHHHHHH I'm so happy to know that there are ppl out there that share my idea of finances. Experiences over materialistic things ANY DAY!!! Now, I've just got to get my hubby on board....hehe

Okay I'm going to stop commenting before you think I'm stalking your blog...ha!