So you THINK you saved money

We hear it all the time.

“I got a great deal on that car it was 20% off the regular price.”

“These things never go on sale”

“these were so cheap I bought two of these”

Now everybody loves a deal and nobody want to pay too much for something, myself included. But the issue comes when you end up buying a product because it is on sale. We’ve all been there. “this is so cheap, I can’t let this deal go.” You can ask yourself some questions to determine if it makes sense to purchase this product. Do I need this product? A simple question. But there is power in this question. First; what is your definition of need?

I want to share a situation that I got caught up in the other day. I am usually good at avoiding these things but I got caught and now I am stuck with the bill. Door to door markets visited my home from the cable/internet provider. They first asked where I had my cable service. I explained that I didn’t need cable services at anywhere from $60-$100 per month. There are much more productive things I can do with my time than watching television and the once per month I would like to watch something or when we reward the kids with a show there is Netflix at $10/month.

He then attacked the cell phone option. We do pay for two cellphones in our household but we are satisfied. He then offered a free tablet with its own SIM card and 2 GB of data outside the home. I explained that we already had 2 tablets and we didn’t need a third. But then he mentioned only $7/month. He got in my head. Wow, $7/month for a free tablet with its own number and 2 GB of data. He also mentioned that as part of this deal it would also increase our monthly home data to the unlimited package.

Man…what a deal!  In a moment of weakness, I signed up to a 24-month commitment!

But here is the thing. I DON’T NEED ANOTHER TABLET! We have two already. I don’t even use them. Sure, the ones we have are slightly cracked from the kids dropping them, it would be nice to have a shiny new one. But really, they work fine and will likely work fine for a few more years.

But what about the extra 2 GB of data when we bring our tablet with us? The truth is we never take the tablet out of the home. We have cell phones on data plans with more than enough data.

Yes but, we were able to move our monthly data package at home to unlimited! So, what? We rarely if ever go over our monthly allotment of 200 GB.

So, they got us. $7/moth for 24 months. $168 for something we don’t need. Not to mention the return we would have made on that $168. We could pay down our mortgage or invest those funds to generate a return.

You know what is even more tragic? And even funny really? (If it didn’t cost me $168) I can’t even find it at this moment to take a photo and include it in this post. I suspect I will find it eventually, otherwise I will take a photo of the old one and include that instead.

Now back to the question; How much did you save? Well the answer goes like this. If you didn’t need the item in the first place you saved nothing. In fact, you spent money that could be allocated to other things like buying your freedom. And if you purchased an item you did need for less than you usually do, congratulations but if you didn’t actually put that money towards paying down debt or into some sort of investment vehicle you haven’t actually saved anything. You have only re-allocated it to spend on some other item. Let’s be smarter with our spending and resist the pull of big company marketing.

Beware the Creep!

I am a father who prides myself in being an expert manager of money and a financial role model for my kids. I am an expert at saving money, building wealth and I feel pretty good about myself.  I know that I am getting ahead each month, each week and each day by making a whole bunch of small but correct decisions with my money. When we have a solid foundation to build on it becomes easy to increase our wealth and make decisions that direct us toward our goal of being financially independent.

But overconfidence can be the start of a downwards spiral. When complacency sets in that’s when things start to go the wrong direction. We feel that because we have put some good habits in place and we have done so well with reorganizing our affairs we can let our foot off the gas a bit. A few extra dollars spent here a few more there. We don’t really need it but we’ve done so well and we’re way ahead anyways. That’s when spending creep sets in. I’m not saying we can’t splurge on something now again but “beware the creep”

Hold on. What’s that on my credit card statement?

Examples I have found of spending creep in our household spending recently are;

One off spin classes, when we own many bikes-go for a bike ride

Yoga, how can they charge $15-$20 for a 75-minute class?

On demand movies, when we have a Netflix subscription-watch one of the thousands on Netflix

I-tunes songs, when we can listen for free on YouTube

Coffee out when we can make it at home for pennies a cup

I-tunes cloud storage…??????? Do we really have that much we need to store?

Annual photo software subscriptions

The above are some of the small ones that drive me nuts as I see no need for them. But common spending that adds up more quickly are as follows;

Eating out fast food

Work lunches out

Bottles of wine and six packs of beer

Toys (we are fairly good at this) Its’ usually the grandparents

Costco, they have damn good deals on clothing

Little by little these things creep back into our regular routine. Each one by itself is no big deal we think. Of course, we’ve all seen the example of a $2 coffee per day measured over a week $14, a month $60 a year $720, 5 years $3600 or $7200 over 10 years. In addition, if we had invested this money instead of spent it the savings would compound even further. Then we add the coffee on top of the yoga, on top of the fast food on top of the…you get the picture. Pretty soon we are wondering how we are going to find enough to pay the credit card statement.

That is why doing a budget regularly is so critical. It allows you to find all these little things and weed them out before there becomes more of them eating away at your cash flow, you net worth and ultimately your freedom. And, of course support your kids by acting as a role model and instilling these habits at a young age when they are more malleable.

 

Bottles and cans, just clap your hands.

When teaching our kids about money and how the world works and preparing them for the future it’s important to remember the little things. Especially when our kids are young. We want to ensure they are prepared for whatever the world throws at them. While we want them to thrive by giving them the skills they need to excel we need to make sure we give them a solid foundation.

Which is why I want to share a story about our most recent trip to the bottle depot. About once a month we take all the bottles and cans that we, and our downstairs roommate, have used back to the bottle depot. The boys love it and look forward to getting a little bit of spending money. We usually get between 15 to 20 dollars. I split the money between the 2 of them (when my younger one is old enough they’ll have to split it 3 ways.) For them the simple rule applies, 50% goes to Daddy Bank and 50% for spending money.

This most recent trip was different. We had a neighbor who was having a large birthday BBQ party at his place and needed to clean-up his yard in preparation for the event. He asked us if he could park his trailer at our place and explained that the contents of the trailer was all trash destined for the city dump. Being neighborly I agreed thinking nothing of it. Of course, the boys decided that playing in the junk trailer was a good idea. While they were there they discovered a large black garbage bag full of cans and became excited. After further investigation, we discovered 13 full large garbage bags full of bottles and cans. Before taking these during our regular run to the bottle depot we checked with our neighbor who had no desire to sort through them at the bottle depot. His intention was to take them to the dump with the rest of his trash.

Now first off I love how my kids responded. They understood that an opportunity presented itself and the payoff was going to be greater than the usual payoff from a bottle and can run. In addition, there is much to teach my kids from this event. However, I think my next thought would be to explain the difference in how people think. Changing how we think can change our lives. My neighbor was looking at a way to clean up his yard, my kids saw a way to make money. I also believe we need to start with the little things, especially with our kids. On our monthly run to the bottle depot we may only bring home $20 but add that to $10 saved by shopping at the thrift shop, additional funds saved by refusing to buy things that we would likely through away anyways and look over a few years and we are talking about the difference between student loans and being debt free after college or university.

I am not saying we forget that there are bigger prizes than a few dollars in bottle money but for our kids at an age when we need to target what makes sense in their heads, money is money. And a little over time can mean a lot in the future. And that can mean a mindset of saving rather than spending.

 

 

Why waste your time with a Garage Sale?

It’s a beautiful sunny Saturday summer morning. Off work for the day. No projects needing to be completed, nothing needing attention right away. You could head out to the lake or beach, go for a hike, take the bikes out, maybe brunch or just hang out in your back yard with a beverage while the kids build or play. The possibilities are limitless and there are so many good options. It’s going to be a great day!

But here is what actually happened; you remembered that you had made arrangements to haul all the junk in your house that you didn’t want onto your front lawn and invite people to rummage through it to see if they would like to exchange a few of their dollars for said junk. Junk that you, your kids or your significant other were really excited about getting just a few years or a few months earlier sometimes shelling out hundreds of dollars of your hard-earned money to obtain. Of course, much of this junk was presented to you or your kids as gifts that you really didn’t want anyways. Or your kids really loved it for a short time and then forgot you had as they moved onto the next item. Your kids made some colourful signs that you had the pleasure of wandering the neighbourhood finding the best spots in which to display these signs.

 

So. There was a garage sale at our place a couple weeks ago. A similar but less dramatic scenario unfolded. Mommy and the kids were in charge of going through all our stuff to see what we needed to get rid of. (Is it just so we can make room for future junk?) Then Mommy needed to coax the boys into letting go of some of this stuff. Much of the stuff they hadn’t looked at or enough thought of in several months. After assembling several boxes and bags during the preceding week, I hauled everything out to the front lawn. Mommy and the boys also created signs the night before, big bright beautiful signs. Of which, I was in charge of riding my bike around the neighbourhood and putting them up in spots where passing motorist would likely see them and be enticed to stop in and open their wallets.

After 5 hours of sitting on the front lawn trying our best to entice others in the neighborhood to accept our stuff at a steep discount we came away with $100.40. I couldn’t even calculate how much was spent on the stuff initially but certainly significantly more. And why the 40 cents? I am told there was a negotiation for a toy and the child didn’t have quite enough. Eventually a bargain was struck and the child went away happy. After it was all over Daddy had the pleasure of carting all the remaining stuff including some heavy furniture back inside the house. The next day we dropped the remaining items at the thrift shop for someone else to sort through. At least some other families will be able to enjoy these items at a reasonable price while helping the charity associated with the thrift shop.

One hundred dollars and forty cents richer and a bunch of stuff that was getting in the way taken care of. But was it worth it? Dr Daddy Dollars would say the easiest way to deal with this stuff is to not obtain it in the in the first place. Not only do you save yourselves the hassle of the garage sale event itself but likely come out significantly better off than $100.40 richer. Although this is the financial utopia for which we all strive most of us aren’t there yet. Certainly measuring this form a purely time and money perspective this is a losing venture. Four people and approximately six hours equals $4.18 each per hour (not including the cost of obtaining the stuff in the first place.) But I think there is something much bigger here for the kids. Learning. Of course, at each age they will take away something different but as a parent I think there is much to teach and as a child much to learn from this experience. It is important to use this as a learning experience. What I mean is the responsibility lies with the parents to help the children understand the lessons that can be learned from this exercise. Below are some of the things myself and my family took as a result of the garage/yard sale event;

  1. Counting and money management skills
  2. Bartering and negotiation
  3. That putting in the work leads to reward(one of our boys went inside while the others stayed outside and was amazed to find that his brother had sold something and therefore had made $$)
  4. How to manage your stuff(or not obtain it in the first place)
  5. The cost/value of stuff brand new vs. used
  6. Attachment/How to let go of physical things

The other benefit is that you get to meet your neighbours if you haven’t already. All in all I would say this is a worthwhile activity to go through with your family. If you are lucky the kids will be better of for it and you may even make a few bucks!

Set your mind and the rest will follow

I enjoy my morning walk to work. For about thirty minutes I am able to clear my head, think and relax before I start my day. Fresh air and exercise without the stress of bumper-to-bumper traffic, stoplights and stressed out drivers. We all make choices and mine was to arrange my life in such a way so that I don’t need a vehicle. This allows me to enjoy what I have mentioned above all the while saving me a ton of money on travel expenses.

https://www.thestar.com/business/2014/07/08/canadians_monthly_car_bill_43748.html

This article estimates the average savings of not having a vehicle at $5,250 per year.

On my walk to work this morning there were several things that caught my attention. Being that we all want to be positive role models for our children as discussed in a previous post. http://drdaddydollars.com/is-it-really-all-about-your-kids/ I observed a few interesting things;

I walked by a man that was watering the road in front of his house. I would have thought he was washing it but in this case the city had just removed the top layer of asphalt in preparation for repaving. As I continued to walk down the street and past his home I struggled to find a reason why he would be doing this. I never did figure it out. He was friendly enough saying hello as I passed by while uselessly pouring gallons of water onto the road and into the storm drain. Wasting his time and a valuable resource.

 

A few blocks over I passed the same late model Toyota land cruiser V8 SUV that I have seen several mornings in the past. Parked at the side of the road idling its V8 engine while unoccupied. In fact I rarely see the driver and this day I made it to the end of the block and out of site without seeing anyone. I think we all know on a spring day idling a new vehicle for 10 minutes is not only pointless it is also harmful to the environment, wasteful, inefficient and creates an unnecessary expense.

 

A little bit further down the same block I observed a large mobile storage container in the driveway of a home. I wondered how these people accumulated so much valuable stuff that they needed to store it offsite so that they could (not) use it in the future. Certainly the topic of a future post, I feel that obtaining too much stuff in the first place leads to not only an empty wallet but added stress in managing and getting rid of, replacing and maintaining what you have acquired.

It is how we program our minds. Sometimes our minds are programmed without us knowing by our environment, the media, out parents and our peers. We need to understand that we can control our programming.

Financial security is all about how we think. What is our mind set? Most of us don’t have the awareness that if we do things a little bit differently on a day-to-day basis we can progress towards financial independence. We need to make the small decisions each and every day that will affect the bigger picture, scrutinize everything we do.

 

In spite of the above I did find some encouragement. I did see a few rational souls doing things just a little but differently than the majority of the insane population nowadays. There were a few people walking to work and many more waiting for the bus. I was also excited to see a few people commuting by bicycle even though it was not prime cycling weather. Are these people taking the bus, cycling and walking because they can’t afford a car or because they have made a choice to be smarter travellers of commuters? I could make the choice to buy a $50,000 car to drive me the 2 miles to work, possibly financing the vehicle on credit. (I didn’t include the cost of borrowing above) I have chosen a better way.

 

It is important to look at all aspects of our lives and see if what we do is serving us and driving us towards our goals? Is what we do on a regular basis getting us closer to financial independence? And more importantly are we aware of the example we are setting for our children? We are constantly judging others but I believe our kids are always judging us. Our children take their queues from the way we act so it is important that we act in the in a way we want them to follow.

Who is it really about?

 

Nowadays it really is all about our children. That’s why we work so hard. Extra hours, overtime to earn a few extra dollars and impress our boss and co-workers. Running around in the evenings and on weekends to shuffle them to activities. So we can make their lives better. We want to make their lives easier than ours were. We are prepared to sacrifice our time, our time with our families and children, money and often our happiness so that they get a better start in life. It really is a dog eat dog world and our children need all the advantages they can get so they won’t be left behind. Our children are the most important in our lives.

How else will we be able to send them to daycare, pre-school, private school (average cost over $10,000/year) and after school learning? Here they are going to learn the skills they need to be successful and to get a step ahead of all the other children who don’t have the resources to access this additional learning. It is more competitive than ever and we need to ensure they are getting a well-rounded education. Additional activities are important such as soccer, swimming, piano, gymnastics, martial arts and ***insert additional activity here***.

“I want my kids to have all the advantages that I didn’t have growing up and not have to worry about them fighting to get a good start” -Time-starved, broke ass, stressed out role model for his kids.

Or this one;

“ I can’t tell my child they cannot have the new star wars toy, that would break her heart and I can’t stand to see her cry.” –Parent who is working two jobs and still wondering how to pay the mortgage at the end of the month.

We all get caught up in our responsibilities to our children. Of course, we want the best for them. We would all like them to grow up to be self-sufficient, confident, happy and wealthy. We either, have seen or have heard of those who have strayed down the wrong path or those that no matter how hard they try can’t make any progress. And our instincts as parents make us want to ensure we protect them. Sometimes we are so conditioned by marketing, the media and peer pressure we feel we need to do everything for them, and we end up going overboard. Instead of creating an environment where are kids can flourish, we are created undue stress and confusion.

I am not saying raising kids is easy or that we have our shit together all the time. But it is important to consider, we are our children’s first and most important role models. They watch us and how they view us shapes their world and their future. Do you want your child having a role model that is never home because he or she works too much? How about a role model that is constantly spending all of their money on activities and spoiling their children but doesn’t ever have any money leftover? Or stressing out because there just isn’t enough time or money to accomplish everything you want to. Just as important is that if they are constantly involved in activities you may even cease being a role model for them because your time with them is limited.

My goal is to be a strong role model for my children. I want to be confident, self-sufficient, happy and supportive. And work hard to achieve that and to show that to my children on a regular basis. I am working towards a position where I am financially independent so I can stay home and spend time with my family. I want to choose how I spend my time and show them it is possible for them to achieve that as well. I want them to understand that we have choices in life and that we don’t need to work into stress-induced exhaustion. I suspect they will all achieve financial independence at a much younger age them me if they want to. Showing them a father that is financially secure demonstrates to our children that they don’t need to spend money to be successful.

In regards to activities how much is too much? Well, don’t we want to be spending more quality time with our children rather than at work? How much time do you spend with them each day or each week? I truly believe that if you want to positively influence your child you need to be spending quality time with them. If you rarely see them or if they are exhausted it’s too much. And if you’re living paycheque to paycheque, if you feel like you are struggling, maybe the private school bill doesn’t make sense. If you are not putting money away towards savings for your future how can you expect your child to learn to do the same?

Activities and education don’t necessarily lead to a more financially healthy adult. They don’t even always lead to a better, higher paying job (although they can) I have seen many individuals holding bachelors and even masters degrees and they still struggle to find a job. Throughout my career, I have seen individuals or families that earn several hundreds of thousands a year but are drowning in consumer debt. I don’t want my kids growing up in that situation.

Let’s give them the space to be creative and think for themselves without always filling their time with activities or television or Netflix. I truly believe that if we want our children to be great then we must do something different than what we are currently taught to do. Teach them how to problem solve and to create and to learn that there are other ways of doing things. Let’s stop conditioning them to follow the path that will lead to our kids being okay, Let’s lead them to greatness.

 

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The “Toys R Us test”

How many times have you been at a store and the kids try to pick up something and leave with it and you have to play the bad guy and say no? Sometimes the kids cause a riot and you may even reluctantly leave with a piece of candy or toy you did not intend to leave with. This is frustrating to no end but often we take the short-term solution just to get them out of the store without making a scene. I have a solution for that.

The “Toys R us test”

Now it doesn’t have to be Toys R us. It could be any toy store or department store with a large toy section for the kids to be able to find something they want to leave with. A candy store works as well for short trips. In fact it is very likely any store the kids go into they will find something that they absolutely have to have. But it goes as follows;

Take your kids to Toys R us and spend an hour or more there. Let the kids play, look at and touch anything and everything they want to. However, and here is the hard part; you cannot leave with anything. This is a test for the parents as well as a learning experience for the children. Be prepared to be constantly putting things back and being firm with your kids. The purpose of this is to learn to say no to your kids and to teach your kids they can’t have something every time they go into a store. This will test your patience. Likely it will be harder for you as a parent than for you kids. But it helps to go to the store knowing what is going to happen and setting aside the time to be able to deal with whatever the kids throw at you. Temper tantrums, crying, guilt-tripping, running away, and throwing things are all things you can expect to happen as well as some things you may not expect.

You may feel that you are egging your kids on or purposely putting them in a situation where they are going to get upset. And that may be exactly what you are doing. That is kind of the point. This is a test of their ability to resist buying something and your ability to resist buying them something. It is exactly the challenge of putting them in this situation that will lead to benefit.

A couple of other ways to play this;

 

  • Go looking for a birthday gift for a friend’s birthday. My kids found it hard at first picking something for someone else rather than themselves. Whatever they choose they wanted to keep for themselves.*
  • Explain to the kids that you are going shopping for a child who doesn’t have any toys and that we want to help them by buying them something they can’t buy. This is a different experience altogether but I think it’s a good lesson for them.
  • When they get a little older you can take them to a thrift store or teach them about pricing. But the key is to get them out of the buying mindset. So if you need something I think that shopping around and other strategies make sense. Train them that over buying is a recipe for being poor

 

When you leave with nothing you will have saved yourself some money, now and in the future and you will have made your life easier next time you enter a store with your kids. You will likely have to try this many times before they stop the nagging. Let’s be honest this may never stop but it will get easier.

*Making something for their birthday is probably a better solution

** As much as I think the birthday gift and the charity variations are valuable, I recommend trying this without buying anything at all. Sometimes leaving the store with nothing at all can be harder than with something even if it is not for them.

 

 

 

 

What am I going to do with that?

What do you want for your birthday?

My wife is constantly asking me this question. Weather it be my birthday, Christmas or fathers day my answer is always the same and it pisses her off “nothing.” And every time she explodes with frustration. This is particularly annoying to her at Christmas when it is almost expected that gifts are bought for everyone in the family weather people want them or not. I know that the family is asking her what they can get me, and I don’t do it to be an asshole but most times there really isn’t anything that I want. And when I receive something like another piece of clothing, or a collectible or a gift card I ask; what am I going to do with this?

I take great joy in giving gifts to family and friends. But only when I know the gift is really going to make them happy or when it’s something that they really want or need or cannot afford. Not just because I feel obligated or because its tradition or because somebody will be angry if I don’t get them anything.

“But it’s the thought that counts.” Bullshit. Too often people give and receive gifts that are worthless or thoughtless. The gift may have increased your credit card bill by $50 and within a week it is underneath the couch covered in dog hair. This is especially true of gifts for the kids. We go through this cycle over and over with the kid’s toys. The kids receive gifts of toys from Grandparents and birthday parties from other kids. They also occasionally pick something up from the thrift store for cheap on one of our financial learning outings (other post). A few months later as the toys and games pile up, we clean out the kid’s room to make space for all the additional stuff that has been acquired and get rid of it.

For mothers day this year the kids and I built a flower box for mom with scrap wood found in our shed. *The kids then painted it with old paint we had left over from when the house was painted and we filled it with dirt from the garden. This was a simple gift that cost virtually nothing and the kids learned something in the process. I also got do what I want to do more of what I love to do; spending more time with my kids.

Recently I have started answering her question by asking for tools. I figure that this will teach me to be handy around the house and in turn save money. It will also help me to be creative with the kids. Next time one of them asks me to help them build a tree fort, a go-cart or a birdhouse I will have the tools needed to help them get it done.

We need to teach kids that spending money just to satisfy a craving or a tradition is unhealthy. Kids watch everything that we do and so when I say I don’t want anything it’s because I am happy with what I have. Let’s be positive financial role models for our kids. I have a wonderful family and kids that constantly want to dig in the back yard with me, have me take them bike riding or play the troll game. I want them to understand that they don’t need physical things to be happy. And I try to be around as much as possible to show them that.

 

 

Who is Daddy?

About me and the why Dr Daddy Dollars.

I needed an outlet for the frustration I felt as a financial professional and an average person, as a responsible adult and as parent raising three young boys. I needed to vent about the people constantly complaining about how hard it is to make ends meet and get ahead and then spend their student loan money on I-phones, frappuccinos (it took me several tries to spell this) and Mexican holidays. Buying a brand new $50,000 car financed on credit but not being able to save a down payment for a home. I also felt that along with helping people understand and manage their money better, it made sense to start with the kids. I feel the best time to learn about money is early on in life and I feel that school doesn’t adequately prepare us well enough to deal with money.

Dr. Daddy Dollars will share his experiences raising kids with a focus on teaching kids and adults about money management from an early age. I also wanted to write down everything that I was thinking and organize it in a (semi) logical way so that my wife could better understand me and why I do the things I do. I do not believe that money belongs above everything else in this world but I do believe when money isn’t an issue it opens up the ability to be more focused on the things that matter most. For me that means family and spending more time with my kids. If we manage our money in an efficient way we can free our time to use as we chose rather than spending time working to generate income.

Many of the things I reference on this site occur in my own life. I will share experiences of myself and my family and pass on what I have learned. We are not perfect as a family but we have done pretty well. It is a matter of choice, but I believe that we can be financially independent in 5 years by the time I am 45. And if I can help others learn from our successes and mistakes I will have accomplished what I set out to do.