This is where your finance takes place

Today is my last day of work before my vacation. Well, I’ll take the first week to prepare my MBA exam and the second week for my frugal vacation. I must admit that, for the past month, I wake up and the only reason why I go out of bed is because I know I have vacation coming. This is why I came back to my old habit of buying coffee at Starbuck’s or Second Cup since April…

A coffee is about $2,50. If you take one every working day, you will end-up with a yearly coffee bill of about $500. But you already read that a hundred times on different personal financial blog or PF books. You can imagine the rest if you buy 2 coffees a day for 15 years compared to investing that money in the stock market (that’s 25K by the way…).

However, what if the coffee becomes free? What if you don’t have to budget it? This is exactly what is happening now. It’s magic! Free Starbuck’s coffee every day; only available in Montreal, though…

Nah… I’m just kidding you. In fact, I decided to use my old Airmiles points and treat myself. I used most of my points to travel and now I have a few left. Since I changed for another point system, I not getting that many Airmiles anymore.

I found out that the conversion rate for coffee card was pretty good compared to other stuff you can buy through this reward program. This is why I ordered 2 Second Cup cards and a Starbuck’s coffee card as well.

Since I actually need coffee in order to keep up right now, I think it is a pretty good investment! However, the bottom line of this post was most to show how you can use your points for small expenses that could result into 25K in 15 years

Little treats are good for my mental balance and I think it is a great help to maintain productivity at work. If on top of that I can have them for free, it’s even better!

Some say that I probably had to spend $100 in order to get a free coffee but I had to spend that money anyway. Since I use my credit card for everything and I pay it monthly, this is just a small “optional” rebate I get from my spendings;-)

 

 

 

image source : downtownwinnipegbiz.com

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Some people will keep their job indefinitely and live a modest life. Others that are less fortunate will be condemned to flip burgers and seek for payday loans all their lives. And, there is a small part of this world who is trying to make more money and become millionaire. So asked myself that question: At what age do I want to become a millionaire?

The easy answer is “as soon as possible” but that is not a goal, it’s a dream. In order to transform a dream into a goal and eventually into reality, I need to setup a plan, I need to look at all my possibilities.

So today I am trying to see what I can do to worth 1M$ by the age of 40. This means I have 13 years left to achieve my goal. My present net worth is about 49K so I am far behind my goal!

My first way to the top would be my Smith Manoeuvre account. Counting a $400 month deposit with a 7% return, I should get about 120K in investment on my 40^th birthday. That’s a great start, I am at 170K now

On my RRSP side, I can put roughly $2,500 each year since I have a pretty heavy pension plan. Counting an investment of 2,5K every year with a 7% return, my rrsp account should worth about 65K with what I have in my account as of today. We are now at 235K, it’s almost 25% of my objective

Even though I am doing a Smith Manoeuvre, I am still paying a part of my mortgage as well. With a rough calculation, I should be able to pay down my mortgage by another 65K by that time. This would make 300K net worth at the age of 40… still short by a lot of money right?

But wait, I am not done yet! My house will also grow in value (hopefully!). According to an increase in value of 3% per years (the housing market historically raises by 4 to 5% in average per year), my house would worth about 405K. Since it was appraised at 275K last year, my net worth would grow by another 130K. 430K net worth and still increasing!

Wait! I do have a pension plan as well! While this is very difficult to assess (it is a determined pension plan), I would make the following assumptions: It is now worth about 4K and would grown by 7K in capital every year at a 7% return. I used the 7K since I have 9,000 in RRSP room contribution less 7K in Equivalence Factor due to my pension plan. So that would create an additional 150K. 580K total net worth.

This really not going to make it for 40…. However, the good news is that if I wait until I’m 50, it becomes really easy. It would bring me to a net worth of about 1,3M$, well diversified between property, registered and non registered investments.

There is one more thing to think about; inflation rate. All my calculations were made with today’s dollar. So even then, I would not be a real millionaire… So in the end, I better off revising my plan so I can make more money faster!!!

Do you have any tricks to become a millionaire sooner?

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It is interesting to find many similarities between personal finance management and how people handle their day-to-day life. This post is more about attitude than anything else. However, your perception and your way of acting will make an enormous difference for your career and your personal finance in general.

Before going to bed

The 10-15 minutes before I go to sleep is often used to recap my day and prepare the next one. I think of what has been done so far and try to make a game plan for what is coming next. This is a great way to make sure I didn’t forget anything important and that I will everything I want to do before the end of the week. These days, I am thinking mostly about my MBA.

It is funny how everything becomes possible right before going to sleep. I have ideas, I find solutions to problems and I decide exactly what needs to be done further one. Unfortunately, I don’t write any of this on a piece of paper and I close my eyes to get a few hours of sleep.

The Next Morning

My brain doesn’t really start in the morning until I am in the shower. Then, I start thinking about all the great ideas I had (or I dreamt about). The hot water running down my neck makes me realize that most of it is unachievable on a short term period. My ideas would be good for another situation but are completely useless for now.

I call this period the “reality check”. While this moment is not the most constructive of my day, it prevents me for going on something that has absolutely no sense.

Challenge yourself

The brain is sometimes a very lazy dog. If I would listen to it, I would not be writing this post write now. In fact, I would not have continued my blog period.

I suspect my brain letting my creativity works its full potential at night as the rational part of me knows that nothing will be done overnight. No efforts besides thinking will be required in my bedroom.

However, in the morning, actions need to be taken. This is where we have a tendency of finding all the “right” reasons for not doing things. In fact, we are pretty good at conquering the world in our bedroom, but we are cheap on actions to be taken the next day.

This is exactly where you need to take a step back (and put back some cold water in your shower!) in order to determine if your ideas were good or not. This is especially good for your work and when you are trying to solve money problems.

When you find solutions, write them down along with a few more lines explaining the basic plan of action. It will become much harder for your brain to let it go if it makes sense

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