Let me start this post with a statement that even the dullest of you can get behind. Playing the lottery is a colossally bad idea.
Say you’re playing Canada’s most popular lottery, Lotto 6-49. As the namesake implies, you’d have to match the six chosen numbers out of the first 49 numbers to win the grand prize. Usually this grand prize ranges from a couple million bucks to occasionally 50 million or more. Since the Canadian government is kind enough not to tax lottery winners, the lucky moron who picked all six numbers right gets to keep every dime of their earnings.
Of course, winning the lottery is an incredibly unlikely event. I’m way too lazy to figure it out myself, but a quick search tells me the odds of winning Lotto 6-49 is about 1 in 13 million. The following events are more likely to happen than you winning the lottery:
– Getting a royal flush in poker: 1 in 649,000
– Getting two holes in one in one golf round: 1 in 9.2 million
– Having a threesome with those two hot girls you know: 1 in 2.9 million*
*I bet the chances of that threesome would increase greatly if you won the lottery first. Everyone’s got a price, right?
By far my favorite description for the lottery is that it’s a tax on stupidity. Is it any wonder that, statistically, the average lottery player also happens to be of a lower income? After all, a lower income is generally a good indicator of below average intelligence. The person with a lower income has more reason to play the lottery too, since their life will be comparably better if they happen to match all the numbers.
I’m sure you’ve watched the TV specials that interview former lottery winners who’ve gone broke. There are all sorts of people who cash in that lucky ticket, only to be broke again after a few short years. Then they show up on one of those TV specials, whining about how winning the lottery ruined their life. And I, for one, am tired of it.
If somebody pisses away the money the lottery gave them, they have absolutely nobody to blame but themselves. Coming up with a way to make millions of dollars last for years is incredibly easy — you just DON’T SPEND IT. Yet the people who win the lottery continually don’t figure this out. That’s because, as we’ve already established, you’re not very good at math if you’re playing the lottery in the first place.
I’m quite okay with the way this works. The lottery winner spends like a prince for a few years, runs out of money, and then has to go get a real job again. In the meantime, his spending stimulates the economy, helps to generate jobs, which in turn further stimulates the economy. Money is taken from the stupid, and then redistributed throughout the economy. This is generally good for the economy in general. It’s not so good for the guy who spent all his lottery winnings, but if he’s stupid enough to do it then that’s his own fault.
Here’s what really makes me mad. How many times have you heard this before?
If someone handed me a winning lottery ticket. I wouldn’t cash it.
Every time I hear someone say that I want to punch them in the face. They’re a million times worse than the people who cash it and then blow it.
If someone handed you the ability to provide for your children for the rest of your life, you’d be an absolute idiot not to take advantage of that. You’d never have to worry about losing your job again, or getting disabled, or even disliking work. You could afford to quit and knit tea kettle cozies for all I care. That’s the beauty of having money, it provides freedom.
So instead we have people who wouldn’t even take the money, because they’re scared of what might happen. They’re the same type of people who didn’t ask out the hot girl because risk makes them wet their pants. So instead of admitting that the uncertainty of a sudden windfall is what really scares them, they just assume all their friends and family will turn into greedy leeches, without realizing that if your friends were greedy leeches you would have figured it out by now.
And just about everybody says they’d donate at least a portion of their winnings to charity. Frankly, for the vast majority of people, that’s bunk. Most lottery winners don’t make more than token donations to non-profits. The reasons are simple really.
Firstly, people are inherently selfish creatures. That’s why so many of us pine to be wealthy. I fully intend to continue to amass wealth even once I have more than enough to spend. I want to make sure I have enough money to do whatever I want, whenever I want. Why would I donate large sums of money while I’m still young, when there’s still a chance I might lose that money somehow?
Secondly, if you really feel strongly about a charity, then you should be volunteering for them right now. Oh, your favorite non-profit doesn’t have volunteer opportunities? Find one that does. There’s plenty, and they’re just waiting for passionate people to volunteer. Trust me. Personally, I wouldn’t contribute a nickel to a charity that doesn’t utilize free help.
I despise unearned wealth. I’d much rather earn it. But, if given the opportunity, I think I could turn a winning lottery ticket into an empire. I’d be stupid not to. So please, for at least my sanity, don’t pretend you wouldn’t cash that winning ticket.
This has been another edition of Recycle Friday, the blog series that makes you read an entire post that you think is new but is really old. Even my weekly features troll my readers.
Hey, you all want to save a lot of money on your satellite TV, right? If you just answered no, I’m pretty sure you’re a communist. I will tell the U.S. government in the 1950s, and you’ll GO DOWN.
You’ve all probably heard that there are internet options for TV. Like, did you know, that various networks will put their latest season of shows online? Or that Netflix exists, and that it has all sorts of old shows on it? Oh, you already did? Then can someone explain to me why every single blog still continues to point that out?
Besides, cutting cable sucks. First of all, it turns you into an insufferable douche. Cable cutters always feel the need to tell everyone how they cut cable, especially when any sort of topic even remotely close to TV comes up. If one of those people shows up in the comments, you all have my permission to mock their tiny penis. Even if it’s a girl. I don’t eat Old Dutch chips, but you don’t hear me being all annoying about it. What does that have to do with cable? Never mind.
If you’re a sports fan, cable is the greatest thing since that time the waitress leaned over the table and I caught a nice view of cleavage (Mmm… cleavage). The major sports networks show all sorts of different games. The minor, regional sports networks show all sorts of regional games. The major networks dabble in showing sports, usually on the weekends. If you’re really ambitious, you can buy packages to watch every single game of every single major professional league. I don’t think there’s an Arena Football package, because Arena Football is worse than cancer.
Sure, at first glance, buying the (say) NHL package looks expensive. Up here, it’s like $200 per year. It looks expensive, until you compare it to the cost of actually going to a game. If you take
your girlfriend someone who actually likes sports to an NHL game, you’re looking at $200 minimum, and that’s if you sit in the crummy seats. Buying the package ends up being a pretty good deal, providing you replace going to games with it.
Plus, if you don’t have cable, you’re not going to be able to catch the big game. On Monday you’ll go to work, and your boss will ask you if you caught the game on Sunday. When you say no, he’ll go chat with that co-worker you hate about it. They’ll build rapport, and then you won’t get promoted. Reason #5367 you suck.
Or, you can do what one personal finance blogger actually suggested: go follow the game online on one of those live scoring update sites. Oh yes, that’s just like being there. A goldfish could come up with a better idea, and I’m not talking about that talking goldfish on American Dad.
Sorry, I got distracted there. Cable is awesome, you just don’t want to pay for it. I understand. Now that you’ve read through 500 words of filler, here’s how you get cheap satellite TV, at least in Canada. I’m not sure if this works in the U.S., but it definitely works here.
First off, you need to move into a house that already has a satellite dish installed. You can pay somebody to install one if needed, but don’t call the company to do it for you. Find someone who’ll install the dish, get everything set up, but don’t call the satellite company.
Step two, find a friend who already has service with that company. Get them to go down to the store and buy another receiver. If you’re nice, you’ll pay them back for it. Once they activate it on their account, take it back to your house. Offer to pay for a half of their satellite bill, or maybe repay them using your body, assuming you’re either attractive or they’re desperate.
That’s it. Once everything is hooked up, you’ll have TV, without the monthly bill. You’re limited to whatever viewing package your friend has, so here’s hoping he’s got all the porn.
This works because the receiver isn’t smart enough to know it’s using the wrong satellite dish. Satellite companies would never admit it publicly, but that’s why there’s that $5.00 per month charge for an additional receiver on your bill.
If you’re feeling really ambitious, you could charge like 4 people $50 per month, and actually make money on TV. What’s the worst that could happen? Is Bell TV going to send the mob to your door? Is Shaw going to go beat up a baby seal?
This is kind of a moral grey area. You kids can argue all about the morality in the comments. All Frugal Tips That Don’t Suck (or NAMBLA for short) cares about is saving you cash. Save the morality for church or something.
It’s been 2 years since this post originally came out, and as far as I know this still works. Does anybody do this? I promise I won’t rat you out to the feds.
This is one of my favorite posts of all time, back 3(!) years ago. A lot of you haven’t seen it. That changes today.
Congratulations! You’ve finally decided to take the plunge and launch your own product, leveraging the success of your blog into untold riches. Your potential for future earnings is basically limitless. After all, everybody is on the internet, even Nelson’s Grandma. If you can just sell one e-book to everyone, you’ll end up with at least a million dollars in profit. Maybe even more.
But, in order to do that, you’ve got to have a plan. I’m not talking about some crappy plan like the Maginot Line or whoever came up with the idea to make The Notebook into a movie. No, this plan has got to be good. Because if you screw up just one detail, you’ll be stuck working your crappy day job forever. And I’ve heard day jobs suck more than a certain movie I was coerced into seeing one time, called The Notebook. Have I mentioned how terrible that thing was?
Dammit, now I’m distracted. Let’s do this thing.
Step 1 – Hint Dropping Time
Screw actually having a topic, you can pull something out of your ass in 5 minutes. Take a few hours to write some of it, and then hire some guy out of India to do the rest. And then, when he’s done, hire some other guy out of India to edit it so it doesn’t sound like somebody who barely speaks English wrote it. You’re not going to have time to write it, since you’ve got promotin’ to do!
Starting about 6 weeks before launch, start dropping hints about this project you’re working on. You’ll want to use words like massive, epic and legendary a lot, since you want to create the impression your thrown together e-book is going to change people’s lives. Post Twitter and Facebook updates at 2 A.M. which talk about how hard you’re working on your project. This would probably be a good time to learn how to schedule updates ahead of time.
Because you went to the Financial Bloggers Conference, you’ve been promoting the hell out of your e-mail newsletter for months now, because some guy there told you to. As you compose your newsletter, take special care to mention your upcoming launch in every single paragraph. Present your product as the ticket to make all their non-sexual dreams come true. As long as you think it’s the greatest thing ever, then it’s gotta be.
Step 2 – Make A Landing Page
A week or two before you launch that bad boy, you’re going to want to make a landing page. This is where you’ll send prospective customers when they want some information on your product. What should you put on this landing page? Great question, I’m glad I asked it.
First thing, you should use this landing page to dismiss any legitimate criticisms people may have against your product. If somebody thinks the price is too high, call them cheap and stupid for not investing in their future. If someone questions the quality of the content, point them to your best posts and then call them cheap and stupid. And if someone has the audacity to question your qualifications, feel free to insult them again and maybe call their mother fat. You don’t have time for people who actually question what they buy! You’ve got products to sell, dammit!
I think you should mention your price on the landing page, but not before you write at least a thousand words on how awesome your product is. Feel free to repeat yourself as many times as needed. Point out how great of a deal this is, and for God’s sake, DON’T TELL PEOPLE THEY CAN GET THIS INFORMATION FOR FREE SOMEWHERE ELSE ON THE INTERNET.
Step 3 – The Launch
It’s time to launch this beast. Since you’ve been constantly dropping hints for weeks, your fans will be chomping at the bit to exchange their cash for whatever it is you’re selling. That’s great, but we’re going for more than that here. Remember, unless you sell to one million people, your product isn’t a success. Well, unless you charge like 12 grand for the damn thing, but no one would be stupid enough to do that in real life.
Finally, the day has come for you to launch your product. Is all the work over? Hardly. It’s now time to pimp that ho like you’ve never pimped before. Write all sorts of guest posts on other blogs. Go everywhere you can and mention it. Make sure you’ve got about eleventy billion blog posts scheduled right through the launch, all of which mention it. And just when you think you can’t possibly pimp it anymore… KEEP PIMPING IT YOU QUITTER.
PIMP. PIMP. PIMP. PIMP. PIMP. PIMP. PIMP. (Those 7 pimps are sung to the tune of the George In The Jungle drums)
Here’s a picture of a pimp to keep you motivated.
Keep Pimpin’ Boyeee!
I suggest printing it and taping it on the wall. Or, if you really want to get in the theme of things, go buy the get-up. Do whatever you need to do to get in the mood.
Step 4- Spend Your Money
I’d suggest spending it on cocaine and hookers, but it’s really your call. Remember, you will be wearing a pimp costume.
There you have it kids. Once you follow these 4 steps, you’ll be well on your way to conquering the internet. Soon Bill Gates will be hitting you up for cash. You can thank me with 20% of your profits. Or cheeseburgers. I like them.
This concept – compounding – struck him as critically important… If he started with a thousand dollars, and grew it ten percent a year.
In five years, $1,000 became more than $1,600.
In ten years, it became almost $2,600.
In twenty-five years, it became more than $10,800.
The way that numbers exploded as the grew at a constant rate over time was how a small sum could turn into a fortune. He could picture the numbers compounding as vividly as the way a snowball grew when he rolled it across the lawn. Warren began to think about time in a different way. Compounding married the present to the future. If a dollar today was going to be worth ten some years from now, then in his mind the two were the same.
Page 60-61 The Snowball: Warren Buffett and the Business of Life
The above story is from when Warren Buffett was just a wee tyke of 11. When you were 11, did you even have thoughts close to the ones Warren was having? Hell, you were probably just discovering masturbation for the first time. I had an interest in business and investing from a pretty young age, but young Warren got at the plan a lot quicker than young Nelson did. I was well into puberty before I started my interest in business and investing, and I was pretty much an adult before I really started to understand anything more than the absolute basics.
If you read The Snowball (and I would definitely recommend it – in fact, I already have) you’ll figure out very quickly that Buffett did all sorts of frugal things in order to save a few bucks. He was also relentless in trying to maximize his income, doing everything from buying pinball machines to selling golf balls in an attempt to make money, before he even graduated from high school. Buffett knew he wanted to be wealthy one day, and he knew maximizing his income early on was important. If every dollar was viewed the same as ten dollars, these were easy decisions to make.
Most of you already know that this concept is called opportunity cost. If you don’t start saving for retirement until you’re 40, you’ve incurred all sorts of opportunity costs, simply from all the time you’ve missed out on compound interest. And, at least from an investing perspective, that stuff is better than crack.
So, let’s get back to the title of the post. Why would Warren Buffett make a bad personal finance blogger, anyway? The dude is smart, funny, (at least, for an 80 year old) and has a way of explaining complicated concepts using simple language. He’s got all sorts of interesting stories (the guy essentially had two wives for years) and he’s probably forgotten more about business than any of us would ever know. All of this sounds like Buffett would make a very good personal finance blogger, except I’m pretty sure he doesn’t even know what a blog is. Remember, the guy is an octogenarian, and apparently doesn’t even have an email address.
It’s simple. Buffett wouldn’t make a good PF blogger because he understands opportunity costs much better than everyone else does. Do you think Warren Buffett would go on a vacation when he had any sort of debt? He would look at that $2500 and envision the $113,000 he could turn it into over 40 years (assuming a 10% return). Or, he would plunk the cost of the vacation onto the debt, because he knows every dime he paid in interest would end up being much more expensive in the long run.
Buffett certainly wouldn’t throw up his hands and give some lame excuse for making a bad financial decision, because he gets just how costly that decision really is. That’s not to say Buffett didn’t make some financial mistakes – of course he did. Buffett got up, dusted himself off, and learned from the process. But he never forgot the lesson he learned about compound interest, which ensured those financial mistakes were few and far between.
How many of you look at a $2500 vacation as a $113,000 expense? I bet it’s only the nerdishly fanatical people. I used to be relentless at this kind of stuff, choosing to live in my parents’ basement as a young adult in order to save more money. I had no car, because I actually figured out something similar to Buffett as an 18 year old. Plus, owning a car would take up about half of my meager $7000 income as a student, and that wasn’t even counting the opportunity costs of buying the car in the first place. If you thought my earlier example was impressive, try increasing the compounding period from 40 years to 50.
Perhaps, instead of looking at your vacation/new car/new iPhone/whatever as only costing you $x, try doing it the Buffett way. Figure out how much that the cost of the item would net if you invested it until you reached 65. Look at how many potential thousands of dollars you’d be throwing away.
As the cliche goes, you’ll only be young once. (Unless someone invents a time machine, WHICH WOULD BE AWESOME) The expression has been used as an excuse for young people to do stupid things for years. Screw up? Hey, no problem, you’re only young once. You’ll bounce back. You’ll have plenty of time to make that money back. And so on. But, what if you looked at that expression in a different way? Your money will never get the opportunity to compound as much as it will if you invest right now. For every minute that you wait, your investments suffer just a little bit.
Don’t assume you’ll have lots of opportunity to invest when you get older. You might, but compounding is begging you to get started now. Just imagine compound interest is a hot chick/guy, depending on what you’re into. (Bonus if you’re into both) You don’t want to let someone sexy down, do you?
It’s recycle Friday, and you just read something I first wrote about in 2012. But hey, it was useful, right? At least Buffett isn’t dead.
Canada is better than you in the following ways:
3. Larger in size, which, as the ladies can tell you, means everything
4. Hotter women
5. Less fat women
6. Dill pickle potato chips
7. Nelson, B.C. (never been there but come on! It’s named after me)
8. Real maple syrup
9. Not every crazy carries a gun
10. Socialized medicine
The following things about America are better than Canada:
Now that we’ve cleared that up, I can move onto the post. AND WHAT A POST. As a fellow Canadian, you might feel a little inadequate when our neighbours (see what I did there?) to the south start talking about their retirement plans. They’re acting all high and mighty, with their 401Ks and their Roth IRA’s, and their extra large sizes of Wendy’s. Sometimes, you might not even have a clue what they’re talking about, probably because they aren’t ending every second sentence with ‘eh’, eh.
Well, fear no longer little one. For Nelly is here to decode this mystery. How exactly do these plans differ from the ones offered in the U.S.? Are their plans better in every way? Prepare to find out, by reading the best part of the stuff I pull out of my ass.
The 401k is equivalent to Canada’s RRSP, with a few distinct differences. Firstly, up here, we come up with a nice acronym to describe our retirement plans, while they just used the line of the tax code which applies. How boring. It would have taken you guys like 10 minutes longer to come up with something nice, but instead you took the easy way out. No wonder your country is a pile of crap next to the all mighty Canadian empire.
Like with the RRSP, Americans enjoy tax deferred growth inside their 401k until they start to withdraw it, and then it’s taxed as normal income. In Canada, you can withdraw from your RRSP at any time, however you will pay a withholding tax if you do. Meanwhile, if you convert your RRSP to a RRIF (registered retirement income fund) then you can withdraw without paying a withholding tax. You’ll still owe tax, it’s just up to you to pay it. You have to start withdrawing from your RRIF once you hit 71.
Meanwhile, Americans can withdraw from their 401ks anytime after they turn 59 and a half for some reason. What’s up with the half year there, Americans? Like in Canada, there’s a limit to the government letting you enjoy tax deferred growth, as you have to start withdrawing once you hit 69. (giggity)
In Canada, the 2014 contribution limit is $23,820 or 18% of your employment income, whichever is lower. In the U.S., it’s been recently upped to $17,000. In both countries, you’re allowed to make up for last year’s contribution if you missed it, but the U.S. has a $5500 limit (on certain plans), where in Canada you get to keep all that precious unused contribution room.
There are all sorts of other little details, but they’re unimportant. Which plan wins, when put up side by side?
Verdict: RRSP! Higher contribution limits and longer tax deferred holding periods FOR THE WIN.
Ever wonder where Canada stole the idea of the Tax Free Savings Account (TFSA)? Look no further, because I have the answer. Just like we took their football and made it better, we did the same with the Roth IRA.
It’s so similar to the TFSA it’s scary. Their contribution limit is $5000, our contribution limit has been recently upped from $5000 to $5500. They don’t tax withdrawals when you hit retirement age, neither do we. They don’t give a tax credit for contributing, and neither do we. Their acronym is 3 letters, ours is 4. FINALLY A DIFFERENCE.
There are certain restrictions for withdrawing your Roth IRA funds before retirement, where in Canada we have no such restrictions. You can convert a Roth IRA to a traditional IRA (which is a lot like the 401k) and you can take your TFSA money and use it to fund your RRSP, but that would be silly, because you’d be looking for the tax break.
These plans are more alike than the Sedin twins. FINALLY, A HOCKEY JOKE HERE AT FINANCIAL UPROAR.
Verdict: Roth IRA by a nose.
Keeping up the boring name parade is the 529 plan, America’s version of the registered education savings plan (RESP). Isn’t the IRS allowed to have any fun?
Both plans allow parents to contribute money to fund little Timmy’s education, providing you don’t drop him on his head too many times. The big difference is Canada obviously wants little Timmy to go to school a little more than Obama does (bastard!) because they will give you an extra 20% of your contribution for free, up to a maximum contribution of $2500. So, they’ll top up little Timmy’s RESP by a maximum of $500 per year.
What happens if little Timmy decides college is for chumps, and runs away to join the carnival instead? In Canada, you’d have to pay back any money received from the government (boo!) but the parents get to keep the interest earned (yay!). They can also roll the whole thing into their RRSP, assuming the have the contribution room. Or, you can just give the whole thing to your kid, who’ll have to pay normal tax on the earnings, plus an additional 20% of that tax as a penalty.
Meanwhile, in the U.S., 529 plans don’t get any extra from the government, they can’t be rolled over into the parent’s 401k and they just generally kind of suck in comparison. They do have much higher contribution limits, probably because it’s cheaper to buy Taylor Swift and make her your love slave than go to college. If an American teenager decides against college, parents can transfer the plan to a smarter sibling, or just choose to withdraw it and only face a 10% tax penalty.
Verdict: R! E! S! P!
That’s it kids. Even though I’m not fooling any of you anymore, the police have made it mandatory to put this little blurb on the bottom to let you all know this post originally appeared back in 2011. Yes, the cops read my blog. They’ve been watching me for some time.