But Why is the Rum Gone?
#define Rum Money
I've been doing a fair bit of reading over past while regarding financial planning. It started with the Wealthy Barber, which I plowed through; financial planning in the form of a rather well written novel. Admittedly, some of the numbers were dated. I don't expect I'll be able to purchase a house for one hundred thousand dollars, nor do I expect to average 12% returns over the next 30 or so years.
Still, its less about the specific points and more about the general principles. Pay yourself first, that little bit you save today will be worth alot. For a practical demonstration of compound interest, you can see what even 10000 over 35 years at 3% interest will do. Now see what 35 years at 5% will do. 28,000 dollars in the former, and 56,000 dollars in the latter. As you can see, over time, small things become big and big things become bigger still.
Now, over the past few years, I've been pretty good about paying myself first in terms of my RRSP. I've had a preauthorized payment plan ticking away for the last 4 years, and I've never really missed the money. By the same token, the money I've had left over just seems to evaporate, leaving me with no realistically accessible savings. And this was the key point I had to realize; I need to pay myself first by placing a bit more money elsewhere, so that it would be accessible, but not within easy reach. Possibly something like INGDirect.ca, where I could transfer money to and from, but it's not so easy as a linked savings account.
Once I got that setup, I think the first order of business would be to pay off the consolidation loan I got earlier this year. I must say, there's a certain sense of satisfaction to see it in the 4 digit range.
I've been doing a fair bit of reading over past while regarding financial planning. It started with the Wealthy Barber, which I plowed through; financial planning in the form of a rather well written novel. Admittedly, some of the numbers were dated. I don't expect I'll be able to purchase a house for one hundred thousand dollars, nor do I expect to average 12% returns over the next 30 or so years.Still, its less about the specific points and more about the general principles. Pay yourself first, that little bit you save today will be worth alot. For a practical demonstration of compound interest, you can see what even 10000 over 35 years at 3% interest will do. Now see what 35 years at 5% will do. 28,000 dollars in the former, and 56,000 dollars in the latter. As you can see, over time, small things become big and big things become bigger still.
Now, over the past few years, I've been pretty good about paying myself first in terms of my RRSP. I've had a preauthorized payment plan ticking away for the last 4 years, and I've never really missed the money. By the same token, the money I've had left over just seems to evaporate, leaving me with no realistically accessible savings. And this was the key point I had to realize; I need to pay myself first by placing a bit more money elsewhere, so that it would be accessible, but not within easy reach. Possibly something like INGDirect.ca, where I could transfer money to and from, but it's not so easy as a linked savings account.
Once I got that setup, I think the first order of business would be to pay off the consolidation loan I got earlier this year. I must say, there's a certain sense of satisfaction to see it in the 4 digit range.
Labels: Finances
posted by Serdic at 05:58
3 Comments:
My father always brought me up with the rules of the wealthy barber, and I agree with a lot of the principals.
That being said, I contest his main point: savings.
Savings in today's society is out dated and comes from the generation who were taught by those who lived through the depression. The dollar is structured to become a value of only 1 cent in 40 years. Knowing that, does saving make sense?
Investing is a much better way of doing things.
I used to believe in RRSPs, but after they bled away more than 25K in the last 8 months, I'm not so sure.
Real Estate, baby. That's the key from my point of view.
Good luck!
I'm not looking at long term savings right now, but more for emergency fund and nice to have things.
I think long term though, and I'm fortunate enough that I have the time (I think), yes investing is what I need for savings in order to beat inflation.
Emergency funds are for just that, and you need to be able to access them. Rather than a traditional passbook savings account we use a money market account with full check writing privileges. It pays better interest and you don't have to pay penalties on withdrawing it. As long as you have it in an account that stays up with the rate of inflation, which I believe is usually figured at about 4% you should be okay.
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