How I managed my finances in my 20s

Posted by mapetitechou on Jul 22, 2015 in financial planning, lifestyle

I was suggested to do a post on this topic, which is a great topic. I always get questions from people on whether or not I was financially “savvy” — so to speak — when I was younger. You know what, I wasn’t. Besides the advice that I got from my parents, work hard and save your money, I didn’t know anything about investing and I didn’t know anything about financial freedom.

To our conventional standards, you could say I was a good kid in my 20s. I was good at my job. I lived below my means and saved my money. I always maxed out my contribution room for my RRSP. I was very religious about that. And I always had a good size emergency fund. I bought my first car (a used Mazda Protege) with cash. I remember one time when I was banking at CIBC, this older teller lady took a look at my balance in my chequeing account and said “why do you have so much cash in your account?” I said “I’m saving it to buy a car soon.” She was like “Good for you. You don’t see many young people with a good size balance their bank accounts anymore these days.” Because I come from an immigrant family, it was just second nature to be a saver. I thank my parents for that. When I graduated university and started working, I did not inflate my lifestyle as much as other young professionals. Don’t get me wrong, I was not deprived. I went out with friends, I went on vacations. But I was always mindful about not to live it up so much so that I lost track of savings. I always put my bonuses into savings.

It’s interesting that a lot of people it felt like people didn’t want to see me saving my money. One time my parents’ accountant was doing taxes for us, he saw how much I was saving for my car, he said “you don’t need to save so much cash for a car. Just finance. You live in Canada, you should live like a Canadian person. It’s totally normal to borrow money.” Mind you, the accountant himself was Chinese, maybe he was speaking from his own personal experience. Maybe he went from being a saver to a spender in a process of assimilating himself into Canadian society. I think I mumbled something about not wanting to be in debt. Now looking back, it is kind of shocking to hear that from a financial professional.

My then-boyfriend (now hubby) and I lived in an apartment until we got married, then we bought house together. He wasn’t as big of a saver as I was. So I had to kick his ass a little bit on that. Fortunately we got on the same page. Because we had both been diligent about saving for a house, we were able to use our RRSPs plus savings to put down a 25% down payment.

So throughout my 20s, I was a very good saver, but I did not take full advantage of putting my savings to work. I wish I had known what I know now and had started investing in index funds as soon as I started working. But I had a complete lack of understanding in investing. I thought investing meant buying stocks and I was scared of stocks. I thought “I don’t understand stocks so I’m not going to touch that.” And because of it, I concluded that I had very low tolerance for any kind of risk. I put my money in GICs and mutual funds (little did I know, the mutual funds that I was buying carried a lot of risk, and they had huge fees). I didn’t get into index fund investing until I was almost 30 when I had my first baby and I was on my mat leave. I finally decided that I should no longer stay ignorant and started learning as much as I could about investing.

Still, I’m pretty happy that I had some really good habits that helped me to be financially stable in my 20s. They helped me greatly in terms of saving and staying out of debt, which is a positive aspect in wealth building considering a lot of people my age are in a lot of debt that they can’t seem to get out of. I think for young people, saving and accumulation of cash is so much more important than trying to figure out which ETF fund you to buy. If you are in your 20s and you still have some debt aside from a mortgage, you should try to get rid of the debt as fast you can. Don’t inflate your lifestyle. Live below your means. This is your accumulation stage. Then learn as much as you can about investing and put your money to work for you.

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Friends who are more frugal than us

Posted by mapetitechou on Jun 3, 2015 in lifestyle, philosophy, traveling

If you think my husband and I are very frugal, you should meet our friends Sophie and Gary. They also work in the high tech industry. Gary is a software architect and Sophie is a senior software engineer. As you can imagine, they make very good money. I’d wager it’s upwards of $250,000 a year between the two of them. But they are probably the most frugal couple I know. They live in a modest 2000 square foot house. There are people we know who make way less than that live in much bigger houses. They drive two old Toyota Corolla and VW Golf. The Golf has over 300,000KM on it already. I don’t think they have any plans of upgrading to new vehicles anytime soon. Their two boys, age 5 and 7, are so well-behaved and not spoiled with fancy toys or iPads or gaming consoles.

Gary doesn’t seem to have any expensive hobbies. He’s learning to play the saxophone, which I think is fantastic. Any musical endeavors are a plus in my book and I totally support that in my family too. My husband plays the guitar and my son’s learning to play the piano. Gary and Sophie are just not materialistic people. Sophie isn’t a shopaholic like me when it comes to buying clothes and shoes. She tells me she doesn’t like going to the mall at all. Although I feel justified about my spending on my fashion somewhat because I have a fashion blog which is my main hobby that I completely love.

As for vacationing, they tend to stick with the low cost kind like camping. That’s where we differ the most from them I think. Because I’m a travel bug, I am willing to spend a substantial amount on traveling to faraway places. We go to China every couple of years because I still have family there. We’ve also traveled to Europe and South America quite a few times. So there’s usually one major vacation in a year, plus a few smaller vacations like going to Mexico for a week, or going away for a long weekend. Gary and Sophie’s traveling is much more cost-efficient. They just pack up the kids and drive. When you don’t have to pay for airfare and hotel for 4 people for a week or two, you definitely can save a lot of money. We just got back from a week of cruise to the Caribbeans. Sophie was asking how it was and if it was worth it. They have never been on a cruise so she was curious. I told her it was awesome. But I think she is skeptical about spending that much money in a week. In the same vein, they are also skeptical about tropical vacations in Mexico and similar places. We totally love beach vacations.

I was talking about how it’s hard for us to save money in the summer in my previous post because we tend to travel quite a bit in the summer. We love it and don’t regret any of it. But if you are like my friends Gary and Sophie, you know this is an area where you can either spend a lot or save a lot.

They are great friends and such simple people that they serve a good example to me on being frugal and finding little pleasures in simple things. I think they must be socking away so much that they can probably retire early, which is pretty inspiring because that’s my goal.

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Summer’s hard on the dollar

Posted by mapetitechou on May 9, 2015 in lifestyle, spending

Now that the summer’s here, I find it’s not as easy to save money in the summer. I’m not complaining or making excuses for myself here. I’m still keeping my eye on our financial goals. I’m just sharing what our spending usually looks life in the summer. I find my saving rate dips quite a bit in the summer.

We definitely like to be out and about, do all kinds of activities in the summer. And we usually have at least one getaway trip. This month we are going on a Caribbean cruise for week in May (Norwegian Getaway here we come!). And in July, we are going to Newfoundland for my sister-in-law’s son’s wedding for 8 days. Believe it or not, it’s quite expensive to travel to Newfoundland from Ontario even though it’s only a 3-hour plane ride away. Airfare, car rental, hotel, wedding expenses, it all adds up. It’s actually going to be expensive our cruise trip. Traveling is not cheap generally speaking. For the last couple months, our expenses seemed to have gone twice as much.

Also in the summer, I’d like to fill the weekends with fun activities for the kids and adults. We don’t usually do anything overly expensive, but it still adds up. We like going to African Lion Safari at least twice. The kids love that zoo. Just admissions alone set me back $200 each time. And we like to go to amusement parks and water parks. And we love going to the beach with friends. That’s usually a day trip. We’ll bring a portable BBQ and lots of good eats.

We also like to host dinner parties and BBQs for our family and friends. Now we don’t go crazy and pull out all the stops, but to throw a good party, I need to spend some money. That kind of expenses add up too.

This summer we also want to take the kids camping for the first time. That’ll be a long weekend trip. We’ll need to get some camping equipment.

Do you find yourself in similar situations in the summer? I mean I’m not wasting money. I think things like traveling and getting together with friends is time and money well-spent. I am willing to sacrifice my saving rate a little bit to have a lot of fun.

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I need to stop buying makeup and nail polish for a long time

Posted by mapetitechou on May 8, 2015 in spending less

So being a girly girl and a fashion lover, it’s natural that I love makeup too. Every time I go to the drugstore, I browse the beauty isle even though it’s not the reason I’m there. I don’t go on big shopping hauls, but a lot of times I just pick up a lip gloss here, a nail polish there, a mascara here and a brush there. Overtime, that definitely adds up.

So the other day, I re-organized my makeup drawer and I was astounded by how much makeup stuff i have! After purging the old expired stuff, I was still left with a lot. Just lip products and nail polishes alone were just a ridiculous amount. I could probably count the times I actually used a lipstick on one hand. And a lot of these shades are so similar that I told myself that I’m not allowed to buy any more. So I have a promise to myself — no more buying new lip products and nail polishes for at least 5 months. It’s just wasteful that I have so much already but I kept on buying. And obviously that goes against my financial goals. And you know, makeup can be expensive too. Last year, I put myself on an eyeshadow shopping ban because I had so many eye palettes already. And really I don’t wear eyeshadows that often. I’m more of a lip girl.

I’m much better with skincare stuff than makeup stuff. I have a pretty regular skincare routine. I pretty use the same faithful products all the time because they work for me, so I just use them up and then re-stock. Unless I try new stuff then I don’t like it, waste could happen. But normally speaking, not a lot of waste there. With makeup, there’s always a favorite lipstick of the moment, then a week later I want a new one. It’s a fickle love affair, haha.

Any of you girls out there have this problem? Do you put yourself on a shopping diet for makeup too?

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Just do it yourself

Posted by mapetitechou on Apr 29, 2015 in spending less

Right now I’m pretty mad at myself. Why, you ask? Because against my better judgement, I’ve hired someone to do a job that I should’ve done myself. And it usually ends up being a crappy job that they’ve done, as I feared. What was it? So my mom’s house has a large back yard with the house being on a corner lot. The lawn work gets very tiring and time-consuming. With two young children, my husband and I don’t exactly have a lot of time left do take care of her lawn. Last year it took a lot of time and I spent a lot of money on seeds, dirt, anti-weed stuff and the lawn still wasn’t in good shape. So I decided this year I would hire a lawn care company to bring the lawn to a good condition first, then hopefully I can maintain it throughout the summer, stay on top of de-weeding. Even when I was looking for a lawn care company, at the back of my mind I had doubts about hiring somebody to do this. Because pretty much every time we decided to hire someone to do something for/around the house, it ended up being a bad experience.

Once we hired a guy to build our deck. He over-charged us, lied about how much material he needed to buy, and delayed construction by a whole month. My husband is very handy. He put down hardwood floor at ours and my parents’ house. He put down tiles on our kitchen floor. He put down hardwood on the entire staircase. He built our fence. In comparison with other home reno jobs, a deck is pretty easy to build. So That experience made my husband totally swear off home renovation contractors. He should’ve just done it himself.

Another example was snow removal at my mom’s house. It’s a big ass driveway. We also help my mom shovel the snow. The winter two years ago, we got a ton of snow so shoveling the now became life-consuming. Literally I would spend 2 hours on Saturday nights shoveling snow. So I made the stupid decision of hiring a snow removal company to do it last winter. That turned out to be a crappy job again. The guy would not come in the morning even though there was two feet of snow on the ground and my car got stuck on the driveway and couldn’t get to work on time. His reason was because he had come the before. I was like “but you said you’d work with your customers and remove the snow whenever it is needed. We had a big snow fall the night before. You need to come now.” He wouldn’t even answer my call. So I got so fed up with him, I wanted a refund. And my husband had to call him and yell at the guy to give us the refund. For the rest of the winter, we shoveled the snow ourselves and I actually felt very rewarding. Luckily we only got a few very heavy snow falls, so it wasn’t a horrible winter. I felt again that this was something that I should just man up and do it myself. Never depend on someone else to do it especially if you expect them to do as good of a job as you do.

You’d think I would learn my lesson by now. But now I had to make another mistake. I hired somebody to take care of the lawn. Well, once again, they cut corners. The aeration was not done properly. They didn’t put down enough seeds. So now I’ve emailed them and want them to come to re-do the aeration. I haven’t heard from them yet. Of course I had to make the mistake of paying them already before I was satisfied. ARRRRGGHH! I should’ve known better. I paid $330 for the whole thing – de-thatching, aeration, seeding, and fertilizing. We can definitely do the de-thatching, seeding and fertilizing ourselves. For aeration, yes you need a heavy-duty machine to do it. A good job of aeration should cost no more than $50. So really I should’ve paid only about $50 for aeration and that’s it! I can’t believe paid $330!!! I’m kicking myself right now. Well, another lesson learned right? Next summer, I’ll make sure to just be diligent and be top of it all, and stop being a wuss and a complainer. I should always count on myself and nobody else. Hiring somebody else to do my own job is never going to work out the way I want.

If you are reading this and you live in the Kitchener-Waterloo area in Ontario, Canada, stay away from this lawn care guy Zana Yousif of TLC Property Maintenance! He told me in a very condescending tone that he is running a business, he can’t just come fix problems as time I want. I need to be patient. And he’s been ignoring my emails ever since. He clearly does not care about customer service, especially the PAID customers, repeat business or any good recommendations from his customers. He got his money and that’s that. Absolutely no business ethic. Do not hire him.
And for decks and fences, stay away from Andrew Wood of Built True Contractor. He is the same crappy contractor that does not care about customer service and is dishonest and only wants to get more money out of you.

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TFSA increased to $10,000 a year! Best news ever!

Posted by mapetitechou on Apr 27, 2015 in ETFs

If you live in Canada, you must’ve heard about TFSA change from the federal budget. It has increased to $10,000 a year! I am so excited. If you’ve already contributed $5,500 this year, you have another $4,500 to contribute! That’s huge. What do you plan on doing with the extra contribution room? Last week I had gotten the company bonus which I planned on using it to add to my US equity ETF (VUN) in my non-register account. Now I can add that money to my TFSA account instead. That makes me immensely happy :).

This increase could also potentially solve my re-balancing problem. Basically I follow one of the Canadian Couch Potato‘s model portfolio — 20% Canadian equity, 20% US equity, 20% International equity, and 40% bonds. All my bonds are in RRSP accounts. I maxed out my TFSA contribution room with an international ETF (XEF) which at the moment far exceeds the 20% target. It’s more like 38%. My Canadian ETF (VCN) and US ETF (VUN) are held in non-registered account. So if I wanted to balance the portfolio, I would’ve had to put more money into the non-registered account, which of course would be taxed. But now the TFSA room has expanded, I plan to purchase another US equity ETF in the TFSA account. By the way, if you are looking for an excellent online discount brokerage, I recommend Virtual Brokers. All ETF purchases are commission-free. And they also have a large list of ETFs that are commission-free when you sell them too. That’d cut down your trading cost significantly.

Anyway, hope everyone’s happy about the news and will be taking advantage of this soon! Cheers!

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Work bonus must be sheltered

Posted by mapetitechou on Apr 9, 2015 in saving

Just got the email from the CEO about the company bonus that is coming in 2 weeks! Needless to say, it’s very exciting. And we have the choice of putting it into RRSP. What am I going to do with my bonus? You guessed it, I’m going to put a major portion into my RRSP account. I would’ve liked to put the whole thing in my RRSP, but I would end up over-contributing. So 68% is the appropriate amount after I did some calculation. It’s too bad that the Tax Man still gets to take a big chunk out of the remaining. But I’m not too broken up about it, I will have some mad money to spend on fashion! 😀

The decision to shelter the bonus was a no-brainer. That’s what I’ve always done with my bonuses. I was so shocked to hear from some of my coworkers that they were still debating whether or not to put theirs in their RRSPs. One even said he was not going to put any of it in his RRSP and would rather take the tax hit! That is a huge tax hit. These are all high-income earners, so their marginal tax rate is very high.

For me, sheltering bonuses is a must. It does not matter if you think you need the cash so badly. It is not worth taking the tax hit, especially if you still have RRSP room. Put it in your RRSP, then take your tax refund and spend it however you like. Heck, if you really need the cash now, take out a small line of credit. The interest rate is so low right now, it’s not going to hurt you as long as you pay it off quickly. Save that glorious bonus and let it grow in a tax shelter.

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I’m the “Villain”

Posted by mapetitechou on Mar 26, 2015 in financial planning, philosophy, relationsips, saving

Apparently in my in-laws’ eye, I’m the “villain” because I am an iron-fisted wife with our money — I don’t let my husband spend any. I knew that they thought of me as “frugal” or “good with money”. But recently I think I got a better idea of what they really think. I find that quite amusing. I’m a private person so I don’t usually broadcast our financial situation, unlike some other family members. So I suppose it’s easy for them to speculate what’s going on in our family’s finance. For some reason all my husband’s family think that we have oodles and oodles of spare money laying around, especially my mother-in-law, according to my lovely youngest sister-in-law (my husband has three sisters). She and I get along very well and she’s very open about her life and her opinions and she appreciates that I’m a good listener, so we often chat. Personal finance is one of those topics.

When I explained to her, I basically said every dollar is accounted for. Ha, I wish we had a ton of spare money laying around for us to spend! If we did, I’d definitely let my husband get his dream car. He’s always complaining about having to drive my old Corolla because his Tiburon (a sport coup from his pre-children days) died last year and it was just not feasible to get a new sports car anymore. And my MIL thinks I’m holding him back somehow. There are quite a few aspects to our finance that she does not understand.

Because of my “pay yourself first” rule, basically for every paycheque some of the money is redirected to our RRSPs, TFSAs, RESPs and other investment accounts. These have to be taken care of first. I am very firm on not shirking our responsibilities because you are ultimately responsible for yourself, present and future. So if you don’t take care of your future self, nobody else is going to do that for you. I think because she and my father-in-law did not live this way, she cannot even comprehend it. They are living on government pension. They never saved for their retirement. They don’t have any investments. They live a very simple life in a small town in Newfoundland. So their living expenses are very low, except for my father-in-law’s penchant for a new car every several years (that’s a whole other issue for another post). So the question of why you are putting your money in all these places is pretty complicated to grasp.

Also, my in-laws (and all my guy’s siblings for that matter), seem to forget that my husband has been in school for as long as we’ve been together. And that university education costs A LOT of money. My husband is a very smart and hard-working person. He did computer science in college. Then when we were dating, he did electrical engineering. And after we got married, he decided to do a business management degree while working full-time. And after he got that degree, he went on to do his MBA also while working full-time. He also had size-able student loans during early years of our marriage that we managed to pay off quickly. Essentially we invested a lot of money in his schooling. Every month a portion of our income was going to his tuition. I told my sister-in-law it’s like paying two mortgages every month. We just don’t broadcast that, it’s not in my nature to complain about it. If it was any of other siblings, we would be hearing about constantly. Again, this speaks to my philosophy about taking responsibility for yourself.

And furthermore, because we feel so strongly about education, we are saving for our children’s education. And somehow that’s hard for my MIL to understand too. She thinks when we talk about saving for their university education, it’s something that might or might not happen in the distant future. It’s not! My son’s 5, my daughter’s going to be 3 soon. In only 12 years my son will be going to university. 12 years will be gone in a blink of an eye. If you don’t start preparing for it now, you’ll run out of time. Time is your biggest ally in investing. So to my MIL, it’s money that’s being not used right now and being wasted. Well, again, I understand it’s a concept hard for her to grasp because they didn’t save for their children’s post-secondary education. My guy and his youngest sister are the only ones that have university education and they paid for it themselves. Massive student loans. My parents saved for my education. I had a jump start on life after school. That is something so valuable for your children to have.

We have our fun money obviously. Traveling is our biggest hobby. We go to China regularly. We take beach vacations every year. We’ve been to Europe a few times. My kids are seasoned travelers. My son has traveled more and further distance-wise in his 5 years of life than my in-laws have ever traveled in their entire life. It’s a gift that I want to keep giving to my kids for as long as they will let me (we will see how that goes when they are teenagers). The vacation funds have to be allotted and these aren’t inexpensive vacations. My MIL doesn’t seem to understand that either.

So essentially, every dollar is accounted for. And if somebody thinks it takes an iron-fisted wife to manage that, so be it. I sleep very well at night.

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Do you buy everything new for your kids?

Posted by mapetitechou on Mar 16, 2015 in saving

When my first child was born, we bought everything new for him. Being new parents we conformed to what everyone else was doing and what we thought we were supposed to do. Buy the nice crib, change table, play pen, car seats, strollers, clothes, shoes, toys…everything! It was costing us so much money even though we thought we were being frugal. Then we saw through the ridiculousness of it all. By the time my second child was born, we stopped buying everything new. We took a lot of hand-me-downs. Bought a lot of used toys. And seriously neither of my kids suffered. My daughter has way more clothes than she ever needs. I always saved them and passed them onto other family members and close friends. I find people actually appreciate hand-me-downs a lot! And my kids have way too many toys, both at my house and at my parents’ house. My parents still buy new stuff for the kids. I let them ’cause grandparents are supposed to spoil their grandkids. It’s incredible how not buying new has helped our finances these years. Kids stuff can be a real drain if you succumb to the temptation or social pressure of buying fancy expensive clothes and toys for them.

These days I quite enjoying shopping at GoodWill and Salvation Army for children’s books and toys. Just the other day I picked up 11 children’s books for $9 and they were all in excellent condition. My son loves Franklin books. Even though we go to the library and get books every week, sometimes I still buy books just so he can have his own books to cherish. I also save old toys that my kids are tired of playing and give them to other people. Like clothes, people really appreciate it. It’s awesome that you can share and save money at the time.

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I’m so lucky that my husband is on the same page as I am

Posted by mapetitechou on Mar 13, 2015 in relationsips

The other day I was talking to my sister-in-law and she was complaining about how frustrated she was with her husband’s spending habits. Their finances are tight enough, she is on mat leave and her husband has to work overtime all the time to keep them above water. Yet her husband still wants to spend $400 on a new gaming console. She is more frugal than he is and sounds like she has to try to convince him to spend less. I just thought to myself wow that must be a constant struggle. I am so glad my husband is on the same page as I am with regards to our family’s finances. The other day I was reflecting on something that I read in “Millionaires Next Door” about how important it is to choose the right spouse, one that shares the same philosophy and habits on spending, and ultimately same goals. You’ll never become wealthy if you are married to someone who wastes money. And if your family is wealthy, the wealth will disappear if you are married to someone who wastes money.

“Choosing the right spouse” sounds very un-romantic. Especially if you are dating someone, in our society, the last thing you want to talk about is money. But it is so important that the two people get on the same page when they are getting serious in their relationship. My guy wasn’t always on the same page as me. I was definitely more level-headed and frugal. I’ve always been a saver. My guys wasn’t so much. He had student debt. He had little in his RRSP account. But throughout the years I’ve been able to influence him enough that now he is a hard-core finance guy, sometimes even more frugal than I am. He got me to shop on Kijiji for used toys, bread-maker, computer parts, etc etc. He always checks kijiji first before buying new. It’s pretty impressive how good he is at that. I still give into my craving for clothes, shoes and bags often. I’m incredibly thankful that we are in complete lockstep with each other.

And often I see couples that are struggling with this. One person wants to reign in the spending and the other people doesn’t think that’s necessary, so they have friction. That really affects the relationship and family life because there’s always stress between the two of them. My sister-in-law wants to sell their full-size SUV because the cost of keeping it is getting so high, but her husband does not want to get rid of it. I said basically she and her husband need to have the talk and get on the same page. She knows that too but she is just too afraid of bringing it up and causing a fight. I think a lot of people are afraid of that. I was like that too in the beginning. But eventually you have to say something or it’s going to snowball into something unfix-able. Her husband needs to hear the truth. Which is you are not entitled to buying new toys if you have way more urgent debt to take care of. If you are working overtime so much that you do not have any time left to spend with your wife and two young children, maybe you need to change your priorities. These are definitely hard words to tell your spouse. I said to my sister-in-law “maybe lead with I love you and I don’t want to fight, but we need to be a team and tackle this together.” What’s your money relationship like between you and your spouse?


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