Nelson’s Coming To Toronto

Nelson’s Coming To Toronto

Just a short post today as I promise that FU will be back up to the usual posting schedule in a few weeks after my winter/spring project is finally coming to an end.

A few months ago I asked y’all if you wanted to hang out with THE MAN, THE MYTH and THE LEGEND, Nelson in Calgary. And people did want to hang out, which was pretty cool. Except it seemed like all of them were in the Toronto area. Thanks a lot, jerks.

Anyhoo, I’m planning a trip to Toronto to visit a buddy that lives in the area. So I’ll be in the city on June 4th to the 6th and I’d love the opportunity for you to buy me a meal to meet some FU readers. We can talk about investing, running a blog, or how I manage to keep my physique so ripped.

If you want to arrange something either leave a comment here or fire me off an email (financialuproar (at) gmail) and we can work something out. No weirdos, please. Just kidding we’re all weirdos.

Seriously though don’t murder me.

Instead of Dropping Coffee, Do This Instead

Instead of Dropping Coffee, Do This Instead

If I had a nickel for every time a so-called “personal finance expert” (i.e. some windbag financial planner type with a desire to grow assets under management) told the masses to stop drinking coffee and invest that money instead, I’d have enough to buy the entire Canadian economy. Or something like that.

Many people have debunked the latte factor over the years, including the handsomest finance blogger out there, yours truly. They correctly point out that having takeout coffee a few times a week isn’t really that big of an expense compared to stuff like getting a place in a major Canadian city or paying off student loans on an education that continues to increase in cost faster than inflation. And sure, while the little things have a way of adding up, they’re still little things.

Anyway, good news coffee drinkers. Feel free to imbibe all you want. Because there’s another liquid that I think you might want to start avoiding instead.

The booze factor

The thing about coffee is you usually only have 1-2 a day and I’ve yet to meet anyone who has ingested a few cups and started acting like a jackass. But alcohol is a whole other story.

One beer with the buddies quickly turns into three or four. For some reason we tip bartenders much more than we do baristas, so $5 per beer is really $6. Add in some greasy bar food and you’re looking at a $35 tab.

Do that once a week and we’re talking serious money here. Do it twice a week and it’s a $3,500 annual bill. Ouch.

Getting drunk has other downfalls, too. Only a maroon drives home after a handful of drinks, even if they’re spread out over a few hours. Uber might be losing a boatload of money, but their rides still aren’t free. Drunk people are talked into other dumb decisions, too. I have an autographed piece of hockey memorabilia I purchased at a charity auction (I use the term charity here loosely) that seemed like a good idea after four drinks. A decade later and I’d still rather have the $300.

Sure, alcohol does have some benefits. It can allow a shy guy to turn into one of the group for a few hours or give us a little encouragement to do something we just don’t have the nerve to do so sober. But it’s a really fine line between being the boisterous life of the party and being a drunken jackass. And I’d argue if you need a shot of liquid courage to do something, that’s your brain telling you maybe it’s something you shouldn’t be doing in the first place.

Alcohol is such an ingrained part of our culture. You’re going to get some resistance if you tell your friends you’ve given it up completely. These folks believe you really can’t have a good time unless you get hammered, which is a pretty big buzz kill for the folks in the room that don’t get completely sloshed. So mission accomplished, I guess?

This all really doesn’t matter

Look, at the end of the day I don’t really care what you spend your money on. As long as you’re saving enough to meet your long-term goals then do whatever you want.

If you want to go to McDonald’s, Timmy’s, or even (gasp!) Starbucks every day for your cup of joe and you can maintain a 25% savings rate, then knock yourself out. You’ve earned that luxury.

Hell, I’d even argue that the average Financial Uproar reader has the opposite problem. They’re saving too much today, worried about a future that will be much more rosy than they ever imagined. It’s hard to go from a huge savings rate to something much more manageable. I’m having a hell of a time telling myself to spend more money now that I’ve made it to FI.

So if you’re looking for something to cut to increase your savings rate, let me recommend booze instead of coffee. But if you’ve already taken care of the big stuff and have a good savings rate today, feel free to indulge in both. Just don’t call me when you’re hammered, drunky.

Where’s The Cheapest Place to Live in Canada?

Where’s The Cheapest Place to Live in Canada?

God, you people are all cheap bastards. Every last one of you. Y’all make me sick.

Sorry, I was talking to the teens that have camped in my backyard. Do you guys have any ideas of how to get rid of them? I’ve tried nothing and I’m all outta ideas!

Many nearly-financially independent folks who JUST CAN’T TAKE WORKING FOR THE MAN ANYMORE, DAMMIT do themselves a little geographic arbitrage, moving from an expensive city (like Toronto or Vancouver) to somewhere like Thailand. Or Mexico. Or  Costa Rica. As long as it’s warm, cheap, and filled with many beautiful ladies, you’ll find a good supply of retirees of all ages regularly soiling their Depends. Yes, I am implying a 30-something retiree wears Depends. Are you really retired if you don’t?

But a lot of people don’t want the aggravation of moving to a whole new country. You have to deal with a long and annoying immigration process. Simple stuff like going to the grocery store is suddenly more difficult. Hell, even navigating streets that are all labeled in some weird language is a pain in the ass.

So let’s look at geographic arbitrage another way and see just how inexpensive you can live without leaving the country. Just where is the cheapest place to live in Canada, anyway?

Cities

According to my crack research squad (four parrots who only know swear words and a dead kitten), the cheapest cities are located in the eastern part of the country, primarily eastern Quebec and New Brunswick. Ah, New Brunswick. We meet again.

Like Shawinigan, Quebec. The small city in eastern Quebec has approximately 50,000 people and is a short two hour drive from Montreal. It boasts industry like an Alcan aluminum plant and a pulp and paper plant. Unfortunately, the city has been slowly shrinking since the 1950s.

But we don’t care about that. All we care about is cheap living, baby! And Swawinigan delivers, with average rent for a two-bedroom apartment hovering at just $476. I did a little Googling and it’s hella easy to get into a half-decent place for less than $500 per month.

Seriously, Quebec. You guys need to list your real estate like the rest of us. If it has three bedrooms, just call it a g.d. three bedroom place. This isn’t hard.

Other places in Quebec are pretty damn cheap, too. In St. Georges the average two-bedroom place will set you back a mere $515 per month. Victoriaville’s average is $525 per month. Trois-Rivieres (more like manage-a-trois AMIRITE, GUYS?!?) offers an average price of $587 for a two-bedroom apartment. And so oh. These small cities are hella cheap.

Okay, but what about a real city with public transport and whatnot? The cheapest of the six largest metro areas in Canada is Montreal, but the average two-bedroom place is going to cost you north of $1,000 in Canada’s most European city (sorry, Guelph, but Montreal just edged you there).

Small towns

Without a doubt the cheapest place to live in Canada will end up being some obscure small town nobody has heard of. I don’t doubt you can get your own place for less than $300 per month in some little bullshit place on the prairie that shouldn’t even exist. $300 in Toronto doesn’t even get you a shitty parking spot in Scarborough.

Here’s an 848 square foot house located in Hanna, Alberta, for the low price of $49,000. If you took out a standard 25-year mortgage to buy the place your mortgage payment would be approximately $200 per month. It’s a 15 minute walk from a grocery store (but only five minutes to a liquor store!), and it’s super close to the hospital and arena if you’d like to get a little part-time work action to further stretch your retirement dollars.

But we can get cheaper! Here’s a three-bedroom house in Heisler, Alberta, a place I assure you actually exists, for the low price of $29,900. That includes the lot and everything. Sure, it’s not a great place — the 70s called and want their wall paneling back — but do you really care if you get a whole g.d. house for the price of a car?

Yes, it’s in the literal middle of nowhere. It’s 45 minutes by car to the town of Stettler or the city of Camrose. The nearest grocery store or hospital is like 20 minutes away. But we have Amazon Prime and Walmart.ca. These websites will ship all the necessities of life right to your door. And for free, too! Assuming you hit the $39 minimum, that is.

Think about how little you’d spend if you lived in Heisler. You’d have no mortgage payment since only the poors can’t scrounge up 30 grand. I know you’re not poor because the FU servers automatically punt such people. Utilities would be $500/month, max. Property taxes would be $75 per month; house insurance would probably be around the same. (Remember, house insurance is optional when you don’t have a mortgage.) Even including a weekly trip to Camrose to keep you sane (they have strippers) I think you could still live for $1,500 per month for everything. Easy. You could even be cheap and get it down to $1,000.

Want more? I saved the best for last. $27,000 gets you this fixed up two-bedroom bungalow in Prelate, Saskatchewan, a village of 126 people located 12 km east of Leader. Leader has all the amenities an early retiree needs, like a couple grocery stores (gotta comparison shop, yo), at least one gas station, and a hospital. Prelate is also home to the Islamic Academy of Saskatchewan, which is home to approximately 100 male students looking to learn the ways of Allah. No, rural Saskatchewan isn’t an odd place for such a thing. Why would you even bring that up?

It’s time to end this

The cheapest place to live in Canada is undoubtedly some tiny village in the middle of nowhere, which comes with its own set of problems. But we don’t care about that, at least for this blog post. All we care about today is getting your cost of living down to virtually zero.

It turns out it’s possible to live on a third-world income without even leaving Canada. And let me tell you from experience, these villages are tight-knit groups. They take care of each other. Will you get the same thing in Bangkok? I doubt it.

Focus Only on What You Can Control

Focus Only on What You Can Control

Let’s talk a little bit today about one of the major risks that could impact your retirement, and there’s nothing you can do about it.

Well, besides a sale down at the glitter store. SHUT UP I LIKE GLITTER, OKAY?

This big risk is what happens if the economy stays stuck in a rut for years and your investments stay stagnant for the better part of a decade? Or even longer?

Some might laugh at the sheer notion of a lost decade or some other such nonsense, usually folks who have little investing experience outside of this current bull market. But these things happen. And more often than you’d think, too.

It took the S&P 500 a full 12 years to surpass its all-time high (set back in 2000) in a meaningful way. U.S. stock markets also famously languished for more than a decade from 1968 to 1982. Japan has seen the Nikkei fall some 40% since all-time highs set in 1989. And so on. Like I said, these lost decades happen. All the time.

So what’s an investor to do today, as worldwide markets bump up against all-time highs again? How should you plan for another lost decade, which does tend to happen after long bull markets?

You don’t.

Focus on what you can control

You can’t control what the market is going to do over the short-term or even the long-term. All you can control is how much money you put away, what you spend, your asset allocation, and your proximity to the glitter store. A glitter sale? I’ll see you guys in three months!

Dude, enough with the glitter jokes.

Nah. I figure I’ve got another three decades until those stop being funny.

Your savings rate is the big one, of course. A high savings rate can erase a lot of other sins. Which is a good thing, because index funds might not be the best investing choice going forward. How well is an index fund going to perform if underlying stocks don’t go up? I’m no mathematician, but I’m going to guess the answer is not great.

But if you keep shoveling money into the market, eventually stocks will go up again. There’s a reason why every financial commentator this side of Nairobi advocates dollar cost averaging — because it works. And I’m happy with my dividend portfolio, churning out ever-increasing income each year, no matter what the market does. Unless the market really goes to shit, of course.

You can also diversify your portfolio outside of the stock market. Bonds are the easy choice, and they come with the bonus of holding up pretty well if stocks don’t. You could invest in real estate (either via physical property or REITs, although the latter is at risk of rising or falling with the overall market) or private mortgages. I know when the market was crashing hard back in the fall my private mortgage portfolio didn’t see a cent of decline.

And so on. There are a million asset classes out there. Take your pick. I suggest glitter Beanie Babies. I hear those things are making a comeback.

Keep on chugging

It’s challenging to consistently put cash to work during times of market weakness. It’s one of the reasons why I’m not a big fan of doing up my net worth on a monthly basis. It’s too easy to get discouraged during a tough period, although it’s pretty fun to do when markets go up a lot.

If you just focus on saving enough and investing those savings in an index or what you view as great businesses, then you’re bound to get ahead in the long-term, even if there’s some short-term pain in the meantime.