# young, dumb, and rich.. need life advice



## twowheeled (Jan 15, 2011)

Hello everyone. I am in need of financial and life advice, I really don't know where to turn to for this kind of help. It is sort of embarassing to approach financial advisors at my bank because they really don't understand my situation and usually ends in me angry and storming out. 

A little background on myself first of all. I have to admit I have a pretty easy life. My parents are in the average income bracket, but really prioritized my education in the household. As such they set aside my college tuition in full and I had my way paid through school. Whatever scholarships I earned along the way were used personally. 

During school I enrolled in a coop program which allowed me to work and go to school at the same time. I was fortunate enough to get a well paying job in school, and since I lived at home I had no living expenses. And as such, I enjoyed a very extravagent lifestyle. I was making around $50k a year while being sheltered from taxes as a student. I made a ton of frivolous purchases including 5 motorcycles and a sports car. On top of that I engaged in a hobby that only really wealthy individuals seem to undertake-motorcycle club racing. 

I spent money without regret and I had no budget. Each time I saved money, it was merely to buy a bigger or more expensive toy. And why would I have saved, I had no living expenses to worry about, no debt, and complete security. It is a little embarassing to admit but in 4 years of school I spent more than $200k for leisure. 

Now I am finished school and have a well paying job as a young professional. I have no debt to speak of and make a 6 figure salary. I still have the same bad habits, but part of me feels the need to fix this. I am fortunate to be in an OK spot financially, but honestly I would love to be stinking rich, who wouldn't right? 

The problem is my situation is really unique. I am 23 years old, and I live at home. It makes no sense for me to move out. I work in the oil patch and my shift is a 10 days on, 4 days off. While I am working my accomadations are provided, same with food. If I bought a house or rented, it would sit vacant for 20 days a month. 

I try to save money, but it doesn't seem to be going anywhere. Compounding this is a bitter resentment towards taxes and low interest rates. The only savings I have are RRSP's, which are maxed out. It seems like I am stuck, I can't make any money by saving it. I only try to mitigate the damage by buying RRSP's and trying to keep the govt from taking my money. When I went to check on a mutual fund last week at the bank, I saw that over a year my $10k earned $300. Now I know a lot of people think this is a good return. I'll be honest, to me it seems pathetic. The opportunity cost of tying up $10,000... not being able to spend that for an entire year, just for a measly $300!! I don't mean to sound like an ingrateful snob but I make more than that in a single day. I spend that on dinner and drinks sometimes! An entire years worth of interest!! 

I would really like to save my money and invest it, but not if I am going to be getting measly rates of return. To me these figures don't even make me blink, and that's really the problem with my bad habits I've developed. I would not think twice about dropping $300 on a watch or other frivolous purchase. It has already been ingrained in my head that it's an inconsequential amount of money. 

I really need some investing advice for my type of lifestyle. I am willing to accept risk, but I need high rates of return. I don't want 3%, I want 20%. The type of risk I am willing to accept? Well lets just put it this way, I have $10k to play with, and honestly I would not be against putting it down on a roulette table on red for the chance to double it. 

I know a lot of this comes across as brash and immature, and I apologize but I can't help it. My parents tried to teach me financial responsibility from a young age, and it worked until I got out into the real world and started making my own paychecks. Once that happened something took hold of me and I let loose, buying all the things I ever wanted but wasn't allowed to have. I would just slam down entire paychecks on purchases and when the money ran out I would go right back to work and earn it back again. This type of lifestyle was addicting and I got hooked


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## MikeT (Feb 16, 2010)

There aren't too many people I would recommend buying a house to in this market. 

BUY A HOUSE. 

That way when you're 33, you'll have something other than motorcycles to show for it.


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## Jungle (Feb 17, 2010)

If I can narrow down two concerns in your post. 

1. You want to cut your leisure spending
2. You want higher return on your investments and become weathly


I think you should start by reading a couple of books such as the wealthy barber and anything from david bach. Get them from your library so you don't have to spend money. 

Then read the millionaire next door.

What these books will teach you, is money management (including tracking your spending) and how people became self made millionaires by living below their means, making smart decisions and managing your time, money and energy. 

Next you need to learn how to invest. I suggesting investing for dummies, asset allocation for dummies and stock investing for dummies, Canadian version. Honestly they are great books, so much information. 

To get the 20% returns you want, is not really realistic, as it's too hard to be consistent. More than likely this will require gambling or speculation, not investing. But you can achieve great returns (almost half of 20%, over time) by index investing. Just buying low cost index funds that track the entire benchmark of stocks, such as the S&P 500, TSX MSCI EAFE and emerging markets. 

TD e-series mutual funds are the best products for starting out, then you switch to ETF's sold on the stock exchanges. These are all index funds. They will out perform like 90% of all high commission mutual funds. 

I once had a passion for cars and motorcycles too. I have spent my share of money on depreciating assets. The key word there is depreciating. That is why you never see your money adding up, as much as you want to. 

It sounds like you are maturing and trying to find a balance. A red flag has been raised in your mind saying that $200 k on toys is overboard. You need to find the balance between hobbies, your values and goals. 

You are very lucky to be making 6 figures and can save and invest a lot of money once you make some changes and self educated your self. This will have a huge pay off while you are young, as the magic of compound interest from investing can allow you to achieve above average wealth and financial independence.


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## Jon_Snow (May 20, 2009)

At 23 I didn't even know what a RRSP was...

With your substantial income, free shelter, you could save tons of money... you just have to decide to do it. Many would love to be in your situation.


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## Potato (Apr 3, 2009)

twowheeled said:


> I can't make any money by saving it. I only try to mitigate the damage by buying RRSP's and trying to keep the govt from taking my money. When I went to check on a mutual fund last week at the bank, I saw that over a year my $10k earned $300.
> 
> I would really like to save my money and invest it, but not if I am going to be getting measly rates of return.
> 
> I really need some investing advice for my type of lifestyle. I am willing to accept risk, but I need high rates of return. I don't want 3%, I want 20%. The type of risk I am willing to accept? Well lets just put it this way, I have $10k to play with, and honestly I would not be against putting it down on a roulette table on red for the chance to double it.



I'll put the dangerous comment up front: 3% was pretty low, especially since last year was a great one on the markets. You may not be in the right mutual fund for you (too much cash/fixed income?). So definitely learn about your other options.

That said, you definitely need to* moderate your expectations*. Getting your money to work for you and make some return is a good thing, one I try to teach people who only have GICs on an almost daily basis. But 20% isn't realistic over the long term. Playing roulette is _gambling_, you should remember that in roulette, the house always wins. It's for entertainment value only, and you shouldn't consider watching your savings burn as a valid form of entertainment. Trying to gamble and chase high returns, whether in the government casino or the TSX casino, will often leave you with nothing at the end. Also remember that you don't really have much control over your investment returns, all you can really control is what you put into your savings/investment/RRSP account.

Besides, saving is its own benefit. Even if you put $10k in your RRSP, and earned _nothing_, hey, you'd have $10k in your RRSP that wasn't wasted on ephemeral bullshit. You can use that money later.

So what is your plan for later? When you're fresh out of school and making a gazillion dollars on the oil patch, it's hard to think much beyond the next party or motosport race, but what is your long-term plan? Though you may not feel the need to move out and pay rent on a place that sits empty most of the time while you're in the field now, at some point you're probably going to want a place of your own, right? What about retirement? Do you want to, or will you be able to, continue working and raking in the cash until the day you die? 

If you do eventually move out, you'll have those pesky shelter costs to deal with, which will cut into your current lifestyle. The sooner you can start weaning yourself off the big spender lifestyle, the easier it will be to manage, so I'd recommend putting away an additional few thousand a month starting right now, just to see what life is like on a more realistic, sustainable budget. Don't even worry about trying to invest it until you've gotten around to reading some of the books Jungle recommended, just stick it in a savings account (or better yet a GIC so you can't touch it for 6 months or a year).


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## slacker (Mar 8, 2010)

Don't let anyone tell you that spending money is bad. If you can afford it, then why not?

Your problems are not that different when compared to someone of more moderate means. You have to figure out what your financial goals are, create a plan to satisfy those goals. Any money left is discretionary, and you have every right to spend it as you see fit.

You have a high paying job right now. Is it stable? Will the market and industry change so that high paying job won't be there someday? (think the GM workers who earn 6 figure income)

Do you have enough emergency savings in case you lost your job? or became disabled? (you mentioned you enjoy motor sport)

Do you have any medium term goals that require money? Do you plan to start a business?

Do you plan to retire some day? Do you want to maintain your current level of spending power even after you stop working?


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## Karen (Jul 24, 2010)

> I try to save money, but it doesn't seem to be going anywhere. Compounding this is a bitter resentment towards taxes and low interest rates. The only savings I have are RRSP's, which are maxed out. It seems like I am stuck, I can't make any money by saving it. I only try to mitigate the damage by buying RRSP's and trying to keep the govt from taking my money. When I went to check on a mutual fund last week at the bank, I saw that over a year my $10k earned $300. Now I know a lot of people think this is a good return. I'll be honest, to me it seems pathetic. The opportunity cost of tying up $10,000... not being able to spend that for an entire year, just for a measly $300!! I don't mean to sound like an ingrateful snob but I make more than that in a single day. I spend that on dinner and drinks sometimes! An entire years worth of interest!!
> 
> I would really like to save my money and invest it, but not if I am going to be getting measly rates of return. To me these figures don't even make me blink, and that's really the problem with my bad habits I've developed. I would not think twice about dropping $300 on a watch or other frivolous purchase. It has already been ingrained in my head that it's an inconsequential amount of money.


To be honest, I think you come across as a bit of a spoiled brat who needs a change of attitude before you can hope to accomplish anything worthwhile in your life. I know your parents meant well, but I don't think they have done you any favour by not making you face reality and take responsibility for yourself. What I'm reading in your post is that you want to be rich without going through the normal life process that most of us do before we learn how to become financially secure. Although you may find it hard to believe, for many of us here, there is a great feeling of satisfaction in starting out small and seeing our financial situation improve over time - note the people who post their Net Worth regularly and feel pride in seeing it grow as they pay off their debts and increase their savings and investments. I think things have been much too easy for you, and I suspect that you know that and want to find a way to feel better about yourself - personally as well as financially.

I don't mean my remarks to be critical or offensive. I'm simply trying to tell you that "growing up" economically isn't easy and, in your case, it will require a lot of self discipline to change your attitude toward money, but you're obviously very intelligent, and I believe that you are sincere in your desire to change. What you're not being realistic about is how you can do that - wouldn't we all like to earn 20% on our investments? - but we have learned that that's not possible very often. I don't even think it would be good for you while you're still in the process of learning about investing.

Read the books that have been recommended to you in the previous posts, set some realistic goals, and learn to take satisfaction in accomplishing them. You're fortunate in that you can afford to have it both ways, to a point, but set limits on the amount of money you're going to consider disposable income and stick to it. You have the potential to have a wonderful life and retire very young with a high income, but it won't just happen on its own. At the rate you've been living your life to this point, you could easily become one of those people who earn huge amounts of money over their working years, but end up with very little.

And, as someone who never earned more than $60,000 in my life, I retired a few years ago feeling good about myself because I know I have managed my finances in such a way that I have plenty of money to last me my lifetime and to leave a worthwhile inheritance to my daughters. I hope that when you reach your retirement stage, you will have that same feeling of accomplishment. It's not how much money you make that counts; it's what you do with it.

I realize this is coming across as preachy and "grandmotherly." I don't mean it to be, but I think you are at a stage in your life where you don't feel that you've handled your finances very wisely, and you want to change. In order to do that, you have to face facts and I've told you them as they look to a rather elderly outsider. Good luck!


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## Four Pillars (Apr 5, 2009)

I would take a good look at your savings rate and see if you can increase it.

Do you have any goals? Ie retire young, buy a house etc?

You might even consider watching some Til Debt Do Us Part episodes - you aren't in debt, but your approach to spending is similar to some of the people on there.


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## humble_pie (Jun 7, 2009)

this isn't really a finance story imho. It has nothing to do with parents teaching sound savings values that may or may not have been instilled.

as gently as possible, i wish to raise the possibility that the poster displays the typical profile of a hypomanic disorder. These are difficult to deal with, in that they are subclinical and often not diagnosed until a subject has reached a much older age.

even the age and suddenness of onset in this case was typical:

_" ... [financial responsibility] worked until I got out into the real world and started making my own paychecks. Once that happened something took hold of me and I let loose, buying all the things I ever wanted but wasn't allowed to have. I would just slam down entire paychecks on purchases and when the money ran out I would go right back to work and earn it back again. This type of lifestyle was addicting and I got hooked."_

i've known quite a few hypomanics at work and in my lifetime. They are more prevalent in the general population than one might think. Typically, hypomanics are penniless, crazy spenders, impulsive & marvellous idea creators, often charming & charismatic, can be romantically appealing, are infused with impressive extra energy, frequently get by on very little sleep, typically waste time, budgets, energy & resources on madcap schemes. On first meeting the hypomanic, people usually say Wow he's so dynamic, so creative, has such wonderful ideas. It's only later that the darker sequellae become clear.

as far as i know organized medicine does not have a fine-tuned approach to treating hypomania. A private approach could work much better. A sensitive family - or a caring wife or girlfriend - could work to build up a team of experienced professionals who will help the subject to instill and maintain discipline in his out-of-control life.


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## the-royal-mail (Dec 11, 2009)

Welcome to the forum!

>I am 23 years old, and I live at home. It makes no sense for me to move out. I work in the oil patch and my shift is a 10 days on, 4 days off. While I am working my accomadations are provided, same with food. If I bought a house or rented, it would sit vacant for 20 days a month.

In light of these comments I am going to agree that buying a house is NOT appropriate for you at this time. With all the work you do, the last thing you need is the added responsibility of having to manage a property. That is WORK and IMO you do enough of that. If I'm sensing correctly, after work you like to have FUN. There are other investments besides real estate that do not tie a person down as much.

So your investment returns suck and you want to mazimize their performance. Can we take a closer look at how exactly your RRSPs are invested? How much $ is there and in what type of accounts/funds is the $ invested?

I am also going to suggest you implement the 3 tiers of savings, not so much in case of emergency but moreso to give some structure to how you manage money. Use that as a goal to give yourself pride and confidence in your ability to take back control of your money.

The first step to fixing a problem is acknowledgement. I think you've done that by posting here. If we provide suggestions are you ready to implement them and provide us periodic status updates to help you stay on track? What do you think of what has been posted so far?


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## Assetologist (Apr 19, 2009)

humble_pie said:


> this isn't really a finance story imho. It has nothing to do with parents teaching sound savings values that may or may not have been instilled.
> 
> as gently as possible, i wish to raise the possibility that the poster displays the typical profile of a hypomanic disorder. These are difficult to deal with, in that they are subclinical and often not diagnosed until a subject has reached a much older age.


I was wondering the same thing! There is a fine line between the surging hormones of a young male and a persistent state of hypomania.
The fact that the OP is hear reaching out with his situation with a small degree of humility makes me suspect this is just a rambunctious young bull on the top of his world - ah, to feel immortal again ;(

You need to channel and focus this energy into something productive. As far as I can tell we get one chance on this planet and if you are lucky you will be old and healthy one day so take care of one part of your future now.

As others have said, read as much as you can on the subject of investments. Find a well-respected financial advisor who can show you how to create a core portfolio that runs in the background and still leave a pocket of fun money with which to expend some of your 'gambling' energy.

You have an excellent opportunity, but it's really not as unique as you may think. 
As the old bumper sticker said "Please God give me another _____ Boom and I promise not to piss it away this time"! 

This is your Boom Time, don't piss it away. Be patient.


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## I'm Howard (Oct 13, 2010)

The Wealthy Barber is being reprinted, read it.

You will get old, enjoy your youth, be cautious of advice from 60 year olds, they have lived most of their life, you have yours ahead of you.

Simple rule, pay yourself first, have 10% of your income automatically deducted and placed in a savings account.

Max TFSA's, also RRSP's.

Travel, Southern France, the Greek Islands, visit places where they don't speak English, and that doesn't mean Toronto.

Life will happen, when you least expect it some flashing eyes will rewrite your rules, then all bets are off.

Learn how to manage money, go to the Financial Forum, read books that explain in a manner you are comfortable with, understand that Planners earn commissions, and never buy stocks from someome who calls you with a sure thing.


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## Larry6417 (Jan 27, 2010)

Dear Twowheeled: Welcome to the forum!

There are lots of good personal finance books out there that basically say the same thing. I've concluded that the "best" one is whichever one speaks to you the most cogently. _The Wealthy Barber_ is as good as any and better than most. The majority of personal financial advice can be summarized in one sentence: Spend less than you earn. Since you're already doing that, you're well ahead of most people your age. You have no debt, and you're maximizing your RRSP. Perhaps you shouldn't be too hard on yourself.

Your life and finances have to be balanced such that you draw enjoyment from both. It's possible to enjoy life without spending yourself silly. You haven't mentioned a TFSA. If you don't have one, then you should start one ASAP. How much do your investments cost? The lower your investment costs, the better. I personally don't invest in mutual funds. The average mutual fund manager underperforms the market, so why not just buy the market through an ETF? The accounting is actually simpler with an ETF than a mutual fund. 

One of the difference between _The Wealthy Barber_ and other financial books: the author doesn't recommend budgets, which sound counter-intuitive but actually makes sense. He recommends automatically contributing to long-term savings (like retirement), setting aside savings (for emergencies or intermediate goals like a house), and having enough on hand for bills. That's it. I like this because it takes advantage of human psychology. If you're on a budget you feel guilty about spending one penny more than allowed for. With Chilton's method, you don't feel guilty and can enjoy yourself within the limits of your pre-arranged savings plan. If you don't see the money in your account, you'll never miss it.

Your immediate goals should include: building a liquid emergency fund in or outside of a TFSA; lowering the cost of your investments; defining your short, intermediate, and long-term goals and creating an automatic savings plan; educating yourself about your finances. If you don't see the money in your account, you'll never miss it. I do this, and usually spend well under what I can afford.


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## twowheeled (Jan 15, 2011)

Thanks for all the advice guys. First off, regarding the comments that I am spoiled. Yes absolutely, I am very fortunate to have my way paid through college and in a lot of regards I am spoiled. I don't pay rent to live at home and there is no pressure to move out from my parents. 

Although I did get that easy street in life, I'd like to think that I also worked very hard to get where I am. I started working at age 17, as a laborer in a warehouse making $13/hr. Throughout the years I've worked various labor jobs and moved my way up in the world. I still put in the hard work in college and I'd like to think that I have done quite well in that regard, since the average income of my colleagues is closer to 55k annually. 

But I think you guys touched on some very good points, mainly what are my long term goals? Well I just don't have any smart ones to be honest. A porsche cayman is my next goal, but I could go out and buy it in 3 mo's time if I wanted. I don't aspire to own a large house or to retire early. I enjoy work and putting in long hours, and using the paychecks freely as my own reward. Another important thing about my personality, is that I have an enormous sense of entitlement. From a young age my parents drilled into my brain that if I wanted to live well I would have to work hard in school and go to college, get a degree. Quite honestly I hated school and wanted to pick up a trade after highschool. I forced myself to enroll in engineering instead, for promise of a better life. Now I am looking back and thinking to myself "why can't I buy these things? Why can't I live large? Why do I have to exercise restraint? I went to school because someone told me it would allow me to be rich and live like a king" I feel like I sacrificed so much of my time, I should be reaping the rewards, not pinching pennies and worrying about my retirement. I recently went on vacation with a friend of mine who is studying in medicine, and we both discussed this attitude we seemed to share (as well as our spending habits). We both feel like a degree in a respectable profession was touted by our parents as the key to vast amounts of wealth in life, and we had certain expectations coming out of school. "you promised us that if we worked harder than the rest of the class, we would be rich and successful" 

So honestly my goal was to use my money to make more money, so that it can support my type of lifestyle. I make a good salary, but as you mentioned it is all going into depreciating assets, and I feel like I can achieve more, earn more, and I'm missing out on that opportunity by overindulging. Some of this is also fuelled by guilt. Nobody I know is living like I do, nobody spends the kind of money on toys like I do. Heck my mountain bike is worth more than my friends cars. For me it is a bit of a wake up call to look around me and ask "why is nobody else doing this? Something's wrong" You know the feeling, when the teacher tells the class to turn to page 4, and you missed the memo so now you're sitting there daydreaming and picking your nose wondering what is going on. It just seems like the "right" and "responsible" thing to do is invest, even though I am not understanding the urgent need to do so. 

I want to build wealth, but I also want to live comfortably when I'm doing so. I don't want to have to limit myself to only buying lunch once a week because it's not in the budget, does that make sense?

I have to clarify that while I don't make the best decisions with my money, I don't just spend it blindly. I am still very careful about shopping around for the best deals and using it to get the maximum return. I don't spend much money on things that don't interest me, for example most of my clothes are extremely cheap. I won't spend $30 on a shirt because I think it's overpriced and just don't care to pay for fashion. My wardrobe consists of free t-shirts, $5 shirts from value village, and 2 pairs of blue jeans. I do have a lot of discipline when it comes to saving money, not much when it comes to spending.. For example when I bought my first motorcycle, I went to the dealership with $1000 in my bank account and an application for financing. I was declined due to no credit history. A month later I walked in and paid cash for it, my "budget" for that last month was simply zero. I did not spend a single cent on eating out, movies, cd's, clothes, etc.

The books do seem like a good idea, I will look into them, but I think I will also take the advice of seeing a real financial advisor. I asked my advisor at the bank if he made a cut on my investments, and he responded no I am paid a salary by the bank. To which I responded "well what incentive is there for you to ensure my investments do well?" I'm still a little confused over the type of advisors/planners out there, can anyone recommend the type to look for?

I know my strengths and weaknesses, and although I do not know much about investing, I have actually taken a few courses in financial management in school. I know that managing my own investments is simply not for me, because trying to learn that particular skill in my free time is not going to compare to someone who went to school for it and does it for a living. Thus I would rather leave it to the pro's.


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## twowheeled (Jan 15, 2011)

Karen said:


> I don't mean my remarks to be critical or offensive. I'm simply trying to tell you that "growing up" economically isn't easy and, in your case, it will require a lot of self discipline to change your attitude toward money, but you're obviously very intelligent, and I believe that you are sincere in your desire to change.


No offense taken, and yes you are correct it is very very difficult to grow up. I have tried a few times to reel in my spending and it just never really seems to work unless I am staring at an empty bank account. This is the reason I have purposely chosen to work long shifts away from home, it physically seperates me from spending. I am busy with my job and don't have time to look up things I'd like to buy, or visit stores. I am very much a flavor of the week impulsive person. If I want something, I HAVE to have it. I will spend hours looking up reviews on the internet, shopping prices, etc. In my mind there was never a decision stage of whether it was a wise purchase. The decision was a yes/no can I afford this? By "afford" I mean does the price tag exceed the amount in my savings account, literally.



humble_pie said:


> this isn't really a finance story imho. It has nothing to do with parents teaching sound savings values that may or may not have been instilled.
> 
> as gently as possible, i wish to raise the possibility that the poster displays the typical profile of a hypomanic disorder. These are difficult to deal with, in that they are subclinical and often not diagnosed until a subject has reached a much older age.
> 
> ...


Could very well be the case. Although when I had a loving caring girlfriend I just spent all the money on her instead of me!  I do spend a lot of money on madcap schemes. I'm not extremely intelligent, but I am persistant. If I get an idea in my head I find ways to make it happen. It would be nice if I could channel this energy into something positive, like accumulating wealth.


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## twowheeled (Jan 15, 2011)

the-royal-mail said:


> In light of these comments I am going to agree that buying a house is NOT appropriate for you at this time. With all the work you do, the last thing you need is the added responsibility of having to manage a property. That is WORK and IMO you do enough of that. If I'm sensing correctly, after work you like to have FUN. There are other investments besides real estate that do not tie a person down as much.
> 
> So your investment returns suck and you want to mazimize their performance. Can we take a closer look at how exactly your RRSPs are invested? How much $ is there and in what type of accounts/funds is the $ invested?
> 
> ...


Thanks for the advice, yes I am very receptive to suggestions, it's the sole reason I signed on to this forum. I do have a problem and I would like to fix it, I think there has been a lot of excellent thought out responses. 

As to my investments/money

RRSP- about 11k invested in mutual funds. I did not give the type of investment any thought, I only maxed out my rrsp's so I could get every single penny back from the government. My reasoning being even a poor investment that didn't grow much would still yield a tax return and minimize loses.

TFSA- I haven't contributed to this much because it didn't have any tax return benefits. I think I have $2500 in a savings account simply because a GIC matured and I didn't know what else to do with the money.

Other finances- About 13k sitting in a chequing account earning no interest, basically just spending money. Assets tied up in vehicles are about $30,000.


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## peterk (May 16, 2010)

I, like you, have done co-ops for oil companies, and intend to start work there after I graduate. 
Despite you seeming to be a bit of a loose cannon with the wallet, I think you're not as bad off as you might think. I'm assuming you just graduated last year and are pretty exited about having a 100k+ salary. That's great! I wouldn't be worried about blowing some cash every couple months or so. Just keep in mind that dropping 120k today at 23 on a Cayman will be costing you 2-4 MILLION dollars at retirement. You seem like the perfect candidate for setting up an auto withdrawal plan that will take money right off your pay cheque and max out your RRSP with it. Assuming you make a 120K salary that means ONLY $500 less in your take home pay, so 3600 instead of 4200. 
Now you try and show me how you're going to be hard-up by only having $3600 every 14 days and not 4200. I dare ya!
You haven't mentioned who you're employer is, but since you're working in oil in Alberta, you probably have a DB pension plan with your company. If you truly do love working like you say you do, and plan to stay until you're 65, then I wouldn't worry. Saving $500 a pay combined with your pension plan will easily make you a multi millionaire when you retire.
The point is is that you just have have HAVE to get that little bit of money taken off you're cheque and HIDE IT from yourself. At this stage in life, it seems like giving it to the bank to manage would be the best idea so that you simply FORGET that you have it, and will not be tempted to dip into it for that Porsche...

You seem like a smart guy, and you already know the basics behind RRSPs and TFSAs and taxes. You know what you have to do to be "stinking rich". Just do it!

Now I know it's probably not your style, but just some food for though... If you could aggressively save 50% of your income for just 5 years. (which means you would still be taking home 45k a year (higher than the national average)) That 5 years worth of saving could grow to 5 or 6 million by your retirement. Wouldn't that be nice?


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## Oldroe (Sep 18, 2009)

My first thought was to pull your pants down for a good old fashion spanking!

That you are a lose cannon you might like that so scratch that.

As long as you are not living at 10x your income! Buying your toys with cash don't have bill collectors calling an good to your parents. BUDDY GET AFTER IT.

Tell use your story's.


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## humble_pie (Jun 7, 2009)

twowheeled you sure are one impressive young man. You have so much talent & positive energy.

i'm not retiring the touch-of-hypomania hypothesis because so far there's nothing to discount it. If there's any merit to it, it would do much to explain some of your feelings & how they drive your behaviour. Certainly it would mean that parties attempting to scold or reproach you are taking the situation in the wrong direction.

if it were a child of mine or someone close in my family, i'd probably pay little or no attention to what organized medicine does today to treat a patient with a hypomanic mood disorder. It's my understanding they prescribe the same drugs as for true bipolar, and those are strong drugs with unpleasant side effects. I wouldn't want any close relative or friend to take those drugs.

instead, what i'd try to do with my relative would be to work at installing extremely stable pylons or piers - as in foundation piers - in his life. These would act as natural and permanent limits and controls. Something like circuit breakers.

there's an excellent example right here in this thread when a student who is close to you in age suggests an auto-withdrawal directly from your pay checque into your rrsp. Perhaps you can include the tfsa as well, until you have topped this up by contributing the maximum 15k to date. Specifically your poster upthread suggests suggests you set up this mechanism in order to "HIDE" the monies from yourself. What a great way to put it.

that's the kind of circuit breaker or foundation pylon i mean. These are the kinds of controls to cement into the bedrock of your life, in order to make the reckless aspects less toxic (we all need some reckless aspects now & then, so yours will undoubtedly continue, but hopefully in a lesser mode.)

i'm wondering, too, about kind but firm adults in your life who could mentor you. Would your parents play such a role ? Especially if there's a touch of a hypomanic disorder, this is absolutely not your fault and it's absolutely not their fault, so one would imagine they'd be ready to help you program your life a bit longer. Or perhaps you have an uncle or aunt or cousin ... a sports coach ... a former teacher ... just make sure the mentor candidate is not addicted to extreme anything.

wishing the very best to a brave young man.


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## Pigzfly (Dec 2, 2010)

peterk said:


> You haven't mentioned who you're employer is, but since you're working in oil in Alberta, you probably have a DB pension plan with your company. If you truly do love working like you say you do, and plan to stay until you're 65, then I wouldn't worry. Saving $500 a pay combined with your pension plan will easily make you a multi millionaire when you retire.


FWIW, working as an engineer, chances are highly unlikely that he has a DB pension. My understanding is that most positions considered "staff" have DC and unionized positions may still have DBs, but they are on the way out.

My two cents - do one of those investor profile quiz things that most financial institutions make you fill out in order to invest. Assuming you've done some statistics, high returns are based on a larger distribution of potential yields - win big or lose big. Are you okay with losing money 2 years in a row?

Take your money to a financial planner and commit to giving them more automatically monthly. "Better" financial planners want clients with bigger portfolios, so maybe save for that porsche and then give the money to a financial planner? 

Had something else, but I've forgotten it at the moment. 

Maybe figure out if there's anything you want that is different in 5 years? House/career/work overseas instead/family/sabbatical type vacation/investment income amount/X in the bank... just a few ideas.


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## the-royal-mail (Dec 11, 2009)

OP:

>RRSP- about 11k invested in mutual funds. I did not give the type of investment any thought, I only maxed out my rrsp's so I could get every single penny back from the government. My reasoning being even a poor investment that didn't grow much would still yield a tax return and minimize loses.

I understand, but can you please tell us where exactly this $11K was invested? Like, which bank, which funds etc. You should NOT do things merely because you pay less tax. That's over and done. The real bang for your buck is the growth of those funds. They should work for you! You work hard enough.

>TFSA- I haven't contributed to this much because it didn't have any tax return benefits. I think I have $2500 in a savings account simply because a GIC matured and I didn't know what else to do with the money.

Maybe not short term benefits, but over the long term this is great because you can deposit the money and invest it the same as you would your RRSP (once we find out what's in there) and the growth will be TAX FREE whenever you withdraw in the future. Don't let your short term desires allow you to lose sight of the future benefits as well.

>Other finances- About 13k sitting in a chequing account earning no interest, basically just spending money. 

This is easy. Move this into a TFSA if you have one. So far you are able to contribute $15K to a TFSA and any profits will be tax free.


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## davext (Apr 11, 2010)

Here's a long term goal for you. Make as much money with your savings as your job pays you so that you can choose whether you want to work or not. 

When I was 25, I bought a pre-construction condo. It wasn't ready until last year and I sold it for $100K profit tax-free, but I only put in about $30K for deposits. Today I continue to invest in properties and trade daily. 

While investing is not for everyone, you should find someone to do your investing for you.

How about a condo in Miami? They're cheap and it sounds like you'd have a good time down there.




twowheeled said:


> But I think you guys touched on some very good points, mainly what are my long term goals? Well I just don't have any smart ones to be honest.


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## twowheeled (Jan 15, 2011)

the-royal-mail said:


> OP:
> 
> >RRSP- about 11k invested in mutual funds. I did not give the type of investment any thought, I only maxed out my rrsp's so I could get every single penny back from the government. My reasoning being even a poor investment that didn't grow much would still yield a tax return and minimize loses.
> 
> ...


Sorry I can't be more specific because at the time, honestly I really didn't care about the investment, just that I was getting a $5000 return. It was just a conservative growth mutual fund with RBC. 

I think I will end up spending the chequeing account or most of it. My parents got into a car accident and luckily they are OK but the car is toast. I'll put the money towards getting them a newer vehicle.

I'll also put away my next few pay checks. Like I said, I don't have any expenses at all, and I have plenty of toys to play with so I only have to pay for gas money. I wouldn't mind putting all of my next 3-4 checks into my savings and building a good foundation to start with. From my reading so far i think an index tracking fund with my TFSA is what I want to try, and then move onto ETF's and eventually shares.


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## I'm Howard (Oct 13, 2010)

ETF's and never shares, you arrive at ETF's after you realise you cannot pick winners 100% of the time.


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## Oldroe (Sep 18, 2009)

You probably have work insurance if so don't buy anymore. If not get just enough to plant your corpse if the toys get you.

Make sure your beneficiary is your parents.


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## jamiechese (Jul 13, 2010)

When I started reading the first post, the first thing that I thought of was how you as an individual seem to stubbornly "Refuse" to learn how to save money. From what I get from some of your posts is that you just "don't care" about how you invest and what happens with your money. It is understandable that you don't like those 3% annual return, which admittedly is low. Although from what I see is that you don't want anything to do with investing if it doesn't net you huge returns. I think the thing you NEED to realize is that investing...WILL NOT net you MASSIVE returns in a short period of time. It also seems to me that you are EXTREMELY shortsighted, and you need to get away from that mindset as you can see it does you no good whatsoever.

My suggestion to you would be to start off with a few things.... (Depending on whether you have done them or not as of yet).

1. Open up a TFSA and a RRSP at a discount broker so you can pay minimal fees. This will be the first step in creating a lump sum of money for later on in life for yourself. Remember, no matter how stinkin rich you are...the lower fees = HIGHER RETURN. (Depending on your situation make sure you check out your current bank to see if you qualify for reduced trading commissions if you do not want to open new accounts at another broker)
2. Begin looking up ETF's and their benefits and realize that most ETFs outperform their mutual fund counterparts and decide which path you wish to take.
3. Once you have decided whether you want to go with ETFs/Mutual Funds or Stocks then you must decide what kind of portfolio you want to create with a variety of investments.
4. For a few example investment portfolios go to http://canadiancouchpotato.com/model-portfolios/

It also sounds like you are tax-phobic like me . The thing you have to realize though is that no matter how you play it, you will always end up paying tax in some way. The best thing to get in your head is to know how to pay the least amount of taxes possible without breaking the law!

I think the main point that I want YOU to realize is that if you can get it through your head that investing is extremely important but it is NO WAY to make a quick buck.

Take it from an 18 year old who has taken a ton of interest in investing...its all about having money for the future when you need it, and rest assured you will eventually need it. Whether it be for retirement, for an emergency or dare I say for pleasure .

I hope my ramblings can knock some sense into your stubborn head, as I know all us "Youngins" can be very stubborn (guilty as charged) .


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## Plugging Along (Jan 3, 2011)

*Long response*

I've been debating how to respond. I have some thoughts, so my apologizes if this is a little mumble jumbled. I do understand your situation, as I have been in a similar place myself, and so has my spouse. Both my spouse and I were similar to you when we first started to make money. It was partying, toys, eating out, and whatever we really wanted. We’re still not as frugal as we should be, but we do have the means to pay for our lifestyle too. Like you, we are able to buckle down and save when we and we both have high paying jobs, along with businesses that we can bring in more money when we need to. I think there are many things you need to consider, much of it has to do with growing up and maturing. 


First, I think you’re giving up a tremendous opportunity costs spending the way you do. As a positive, you have youth on your side, any money you save now will compound into so much more when you are older. On the negative side, you have youth on your side. It’s difficult to see the future and set goals when right now the world is your oyster. You want to spend it on what ever you want. I look back in my twenties and even though we have done fine, I think that if I would have saved a little more, partied a little less, I would have even more choices than I do now. Hind sight is 20-20 of course. Right now you want to go out and have fun, and feel entitled to do so because you did work so hard in school. I look back if I would have saved just a little out of my fun money how much that would be today (only 15 years later).

Second. You’re young now, but you will get older just like the rest of us. It’s hard to think about being married, or with a family. I swore when I was in my twenties that I would still go be going out and having fun in similar ways. I was reminded by that with our friends as we toasted the New Year in at 830 with sparkling juice so we could tuck in the kids. You may or may not want kids, but they do get expensive. Especially when you want them to live in a house. You may want to visualize what you see your life as in 10, 20, 30, 40 years from now. You love your job now ( I still love to work), but when you have another person or people to share your life with, you may want to do other things that allow you the opportunities to work less and spend more time with them. When my spouse was laid off right after the birth of our second child, because we had a healthy savings, we were both able to not work to spend time with the kids. These are all options you allow yourself by saving earlier in life especially with a large income. 

Third, you are not rich, you just make a high income. This is just my opinion, to me being rich is having the ability to do what you want when you want, even if you don’t have a job. If you lost your job right now, you would no longer be ‘rich’. You would have toys that you wouldn’t be able to afford to maintain because you don’t have much for savings. To me, money used to be a mean to where you can have fun and buy what you want. Now I look at it as options, and security. By having it saved, I always have the option that I don’t have to work if I don’t want to. I do like my work, but there have been times where I didn’t. I was never worried about layoffs, losing my job, and always knew that if it got really bad, I could always leave. To me that is ‘rich’, not stinking rich, that’s a different thing, but you can’t get ‘stinking rich’ until you are rich.

Forth, you don’t want to manage your investments and don’t see small amounts aka $300 as real money. I was like that too. I was fortunate that I had much older siblings who were wizards in finance and money, and had connections. They put in contact with my advisor when I just got out of school, and ‘forced’ me to save. In the beginning, I trusted my advisor, and didn’t really care what happened. Now that I’m older, and we started to talk about ‘real’ money, then I have began to interest. I still trust my advisor, but I don’t let things happen as blindly. What I did learn is these ‘piddly’ amounts, when I started just to do automatic savings, even with average returns, over time really adds up.

So what is my advice to you. 

1. Find a financial advisor you can trust, go through word of mouth. You can find ones that will give you one time advice too. 
2.	Start saving automatically. I would save at least 10% off every pay check, in your case if you could do 20 because you have so much disposable income, it would be better. Have the money come off every paycheck before you even see it. Put the money either with your investor, or as others have said you can do the Coach potatoe. This is your long term money – don’t touch it. 
3.	Figure out what you want in 5, 10, 20 and 40 years. Just visualize what you want in your life. 
4.	Start taking out a set amount for a mid term 5 – 10 years. This could be for your house, wedding, travelling the world, Hummer, or Bentley, whatever it is. Have it come out automatically too. 

This wasn’t intended to come off too preachy, and hopefully you read this far. Good luck.


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## Sustainable PF (Nov 5, 2010)

Read The Wealthy Barber - thoroughly.

Once you're done with that, come back and ask specific questions. If Chilton can't get through to you I don't see any of us being able to.


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## Oilers82 (Jan 17, 2011)

Lots of great advice here.

OP you're in a fabulous position here currently and that is something to be thankful for. However it may not always be this way...you're still very young and have a long way to go in life. Have you ever considered the possibility that you may lose your job? You probably work up in Fort MacMurray AB or a community similar to that. Things may not always continue the way they are right now. 

What I would do, in addition to the advice to pay yourself first, is to set up an emergency fund and obtain disability insurance. Seems boring and useless now as you are young and healthy, but you never know what may happen.

As others have said, you have a good job but you want to structure your finances such that you'd still be doing well even if you lost that job or had to take a lower paying job.

Everyone else has posted excellent advice about saving, long-term investing and changing attitudes. Good luck!


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## DavidJD (Sep 27, 2009)

Achem, if I may, 

You have identified a problem that you wish to correct. Smart move. You have asked for advice. Again smart move. Taking the useful advice that will work for you is a smarter move.

I don't think you have any gentle disorder - you are like a lot of my buddies - it is a stage of life. We all look back on this stage as the best time of our lives so keep that in mind.

However you recognized that you need to 'manage your house' (get your **** together) as well as enjoy life, and it is the perfect time to do so.

I think you sound like a competitive person and driven. Stay out of business because you may end up a billionaire...on your second or third try. 

I think that you will become hooked (based on your personality) with investing and making money. Many here are hooked but describe it differently Note that I wrote make money - not earn money, as you do on the rigs.

One decision - I bought $17,000 worth of stock last summer. Today it is at $27,000 and has paid over $180/month since (another $1260). I enjoy seeing that and am amazed how distracting it is. It is very rewarding in the non-monetary sense. I am completely responsible for the risk and the reward. Apart from checking in on the investment I have had no other obligations since the purchase. Meanwhile my life goes on $11K richer (well before taxes) with barely any of my time lost to this income. This is the lifestyle you want to foster.

If you have the spending power/saving discipline (buying your first motorbike cash) you describe, your journey to becoming a millionaire early is almost assured...although based on your history a bit delayed.

Reconsider buying property - it is a great part of building wealth and a portfolio.

Very best of luck.


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## twowheeled (Jan 15, 2011)

Thanks for all the well thought out replies so far folks. I've had a bit more time to think this over. I tried to find the wealthy barber but to no avail, picked up personal finance for dummies and investing for dummies instead. I've been steadily working my way through them. I have also done a few things including pulling out my credit card statements for the last 6 months and getting an idea of where my money goes. I'm going to start a rough budget, maybe it will help..maybe it won't, but it will be an aid to help me keep track of my finances. 

I've also thought about my short term and long term goals, mainly making some period. One short term goal I have, save enough for a down payment on a house. I would like to buy a rental property within the next 2 years. If this works out I will consider shouldering a few properties in the long term and when paid off, live off that income. 

Here's a break down of my spending habits on a monthly basis:

$1255 - Car (payments and parts, car was paid off in the new year) 
$949 - Motorcycles
$181 - Gas
$171 - Mountain biking 
$151 - Vacation
$75 - Misc toys, dvds, games, etc
$65 - Clothing
$60 - Tools
$48 - Eating out
$26 - Groceries 

I've reeled in my spending over the last month, made no major purchases besides winter tires for my car ($800) which I deemed a necessity due to my long highway commutes. I got dinged with a $500 speeding ticket from last year, and also spent $100 on a toy. Other than that, the whole months paychecks will be going towards my rrsp and topping up my TFSA. 

I'm sure I will have many more questions along the way, but the main one right now is about these returns I'm reading about in my books. All these examples are the same ones we were shown in high school math class. Invest just $1000 today and in 40 years you will have millions. But problem is these are all assuming a fixed 10% return every single year.. honestly how realistic is that? It seems like a nice fancy number to give the math a "wow factor" and impress someone to start investing. Plug in my miserable 3% mutual fund rate with a $10,000 principal, 2% inflation, in 40 years I will have a pathetic $15,000. Same formula with a magic 10% interest rate and 0% inflation (like a lot of these examples I see) and I get a whooping $450,000.

This was one of the main things that frustrated me at a younger age, when I made my way to the bank with good intentions and a fresh attitude towards saving money. Only to receive my financial statement a year later to find my $1000 earned me a miserly $20-30. I think that is the biggest barrier for me still, being skeptical about making any real money out of this. When I read these examples I get irate. Stop lying to me. Stop fluffing the numbers to indoctrinate me into being fiscally responsible. Give me the straight numbers and let me make my own decisions. This is what I want to say to my grade 10 math teacher and the author of this book..


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## MoneyGal (Apr 24, 2009)

twowheeled said:


> I'm sure I will have many more questions along the way, but the main one right now is about these returns I'm reading about in my books. All these examples are the same ones we were shown in high school math class. Invest just $1000 today and in 40 years you will have millions. But problem is these are all assuming a fixed 10% return every single year.. honestly how realistic is that? It seems like a nice fancy number to give the math a "wow factor" and impress someone to start investing. Plug in my miserable 3% mutual fund rate with a $10,000 principal, 2% inflation, in 40 years I will have a pathetic $15,000. Same formula with a magic 10% interest rate and 0% inflation (like a lot of these examples I see) and I get a whooping $450,000.
> 
> This was one of the main things that frustrated me at a younger age


This is one of the main things that frustrates me NOW...the assumption of constant rates of return in financial planning software. Investment returns are not constant, they are random (largely within an expected range, i.e., standard deviation). Planners and textbooks that still present deterministic (constant) rates of return are living in some kind of alternate reality fantasyland. 

The point, however, is not that you should "stop investing" or "lower your expectations," but that you should inform yourself about how investments behave in the real world so that you can construct a portfolio that has the best chance of meeting your long-term goals.


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## steve41 (Apr 18, 2009)

I know I have said this before, but a 23 yearold has to spend a lot more time on stuff other than saving money. To sound like a broken record.... I see a lot of plans, and almost all individuals don't start saving in earnest until their 40s. Get your 'career asset' straightened away (more education, etc) such that you can look to a consistent set of paychecks coming at you until age 60 say. Figure out what your living situation might be long term.... buy a house, rent long term.

How about marriage? kids? It is refreshing to see someone as young as you asking these 'saving for retirement' questions, but IMHO.... worry about that later on.


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## KaeJS (Sep 28, 2010)

I know you make a lot of money, however;

*"$1255 - Car (payments and parts, car was paid off in the new year) 
$949 - Motorcycles
$181 - Gas
$171 - Mountain biking 
$151 - Vacation
$75 - Misc toys, dvds, games, etc
$65 - Clothing
$60 - Tools
$48 - Eating out
$26 - Groceries "*

That is the most ridiculous way to spend $3k/month that I have ever seen in my entire life. Seriously.

Especially the fact that you pay over $2.2k in vehicles, yet your gas is only $181/month. That means you rarely drive them.

Don't you realize that with your current situation, if you just chilled the hell out for a couple years and didnt do anything, you'd have it made for the rest of your life?

"It's easier to stay caught up, then to catch up."

And you know what you're going to be doing if you keep spending like this? Catching up.

You have the perfect freaking opportunity to be rich as hell.

It's not the 10% fixed return in textbooks that makes me frustrated. It the fact you make a 6 figure income at 23 and have the potential to be extremely wealthy and you are blowing a large portion of it on depreciating garbage that you can acquire in a couple years from now. *That* is what is frustrating.

Sell the motorcycles, ease off on your spending, stay at home for a couple years, buy a house, sell your car and buy a new shiny expensive one, and then you can buy your motorcycles (better ones) back after.

You make a good income. Don't "blow" it.


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## GeniusBoy27 (Jun 11, 2010)

MoneyGal said:


> This is one of the main things that frustrates me NOW...the assumption of constant rates of return in financial planning software. Investment returns are not constant, they are random (largely within an expected range, i.e., standard deviation). Planners and textbooks that still present deterministic (constant) rates of return are living in some kind of alternate reality fantasyland.


Money Gal:

As a tangent (and I apologize for the tangent), how about creating a casino model with variation in parameters, and create a distribution around norms, and look at various probabilistic scenarios?


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## twowheeled (Jan 15, 2011)

KaeJS said:


> I know you make a lot of money, however;
> 
> 
> That is the most ridiculous way to spend $3k/month that I have ever seen in my entire life. Seriously.
> ...


Like I said before, it probably wasn't the wisest choice at the time. But at least I had a lot of fun . As for the car and bikes, no they don't sit. My hobby is motorsports and a lot of my vacation is just taking the car or the bike out to the mountains for a weekend and just driving, all day. I know they are depreciating assets but believe me they get used a lot. Every weekend if I am not out driving them, I'm in the garage turning a wrench on them, that's just who I am. If I would have cut those out of my life, I probably would have cut engineering and going to college out of my life as well, and wouldn't be making the paycheck I do now. The cost is high because I chose to pay off the $30k car in 2 years. 

As for having it made for the rest of my life if I chilled, I don't really see how that could be. If having 200k savings is set for life, I'll be retiring at 25 . 

The reason I bought these toys? They *were *my goals 3-5 years ago. Seriously, at 18 years old I didn't care about a house or a wife and kids, I wanted a sports car and a motorcycle, and I focused my efforts into acquiring them. While my friends were working part time at the mall, I was working 12-14 hour, 20 day shifts in the oil patch chasing my goals. 

I am trying to turn over a new leaf because of my new income, but I am not going to sell off all my possessions and take a huge hit in depreciation, just for $30k or so worth of investment money.


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## KaeJS (Sep 28, 2010)

You're not supposed to sell the depreciating items for the investment money only. It's mainly for their monthly costs. But I get it, I own two cars and one of them is my baby. Sometimes I just drive for hours.

Just realize that the more money you have now, the more money you'll have later. And like someone else said about a Cayman S, more money spent now, is going to cost you more money later.

If I were you, I wouldn't worry too much. You make a crapload of money. Like others have said, Max out your TFSA, RRSP, etc. Maybe get one of those Tier 3 Savings strategies going on that Royal Mail is always talking about. As for investing, sure, 10% fixed is a little difficult, but not impossible by any means. Chase the trends.

And so, I have to ask.

Which car did you buy for 30k?


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## GeniusBoy27 (Jun 11, 2010)

I think if you can cap your spending of 10% of gross, that you can enjoy life, and have great long-term growth. 

The single hardest thing to do is to put away a portion of money, fix it in a portfolio, and ignore it. If you didn't know how you were doing, you may be stunned by how much things grow quickly over time.


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## MoneyGal (Apr 24, 2009)

GeniusBoy27 said:


> Money Gal:
> 
> As a tangent (and I apologize for the tangent), how about creating a casino model with variation in parameters, and create a distribution around norms, and look at various probabilistic scenarios?


You realize I work for a company that does exactly this, eh? (Although we don't exactly use casino models, which implies Monte Carlos. We use partial differential equations.)


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## Spidey (May 11, 2009)

The video in the link is well worth watching.


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## GeniusBoy27 (Jun 11, 2010)

MoneyGal said:


> You realize I work for a company that does exactly this, eh? (Although we don't exactly use casino models, which implies Monte Carlos. We use partial differential equations.)


*laughing* ... no, I didn't. I like Monte Carlos because they're simple and require good computing power with defined assumptions. Partial differential equations would require too much thinking ... *laughing* 

I'm curious but not THAT curious.

The difficulty is that anything that hasn't been observed in the past may always screw up future projections.


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## Eclectic12 (Oct 20, 2010)

twowheeled said:


> Thanks for all the well thought out replies so far folks. I've had a bit more time to think this over. I tried to find the wealthy barber but to no avail, picked up personal finance for dummies and investing for dummies instead. I've been steadily working my way through them.
> 
> [ ... ]
> 
> ...


Congratulations on setting goals, cutting spending and thinking of a rental property to two. This will help move you along nicely.

The other point I didn't see in the other posts is that between your company giving accomodations and being able to live at home, you have an amazing opportunity to get ahead of those having to pay rent/mortgage etc. It is probably also a good idea to figure out when, if ever - you might have to find another place and have the added expenses.

As for the question about the "10%" returns and being put off investing due to the bank paying less - what you are invested in will have a big impact on how achievable and what the returns are. Other factors such as your knowledge as well as asking the right questions will play a role.

My dad insisted on bank account/GICs for most of his life and rarely came close to the 10%. In contrast, I thought the Mar 2008 crash was hitting some Canadian stocks too hard as people panicked. I bought eight stocks where in a year, one is down 30%, one is down 5% and six are up between 100-250%. All are paying dividends so even down ones have given me income. Is this an exception event? Yes - but you only need to have average success plus a few exceptional events to do well.

An example of asking the rights question is when my tenant and I both wanted something better than the GIC rates at about 1999. Independently, we both signed up for three year Index Linked GICs that used the same index. I asked if there were limits on the payout and he didn't. The result was that my payout was 36% while his was limited to 10% - neither of which was bad compared to the 3% the regular three year GIC paid.


Bottom line is to forget about the 10% being inflated or not and learn as much as you can about investing, at *your* pace. This will help your understanding, may help you avoid mis-steps plus make it more interesting. 

BTW - some will make it seem that if you don't know everything, it's not worth doing. Going back to my Index Linked GIC example, I only spent a short time learning about them and it paid off.

Cheers


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## twowheeled (Jan 15, 2011)

Thanks guys. I'm still reading and still saving, got 3 paychecks put away so far and getting ready to max the RRSP's again this year. 

Someone asked about the toys... well just in case you were curious what a loose cannon spending habit buys


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## Jungle (Feb 17, 2010)

I really like your bikes as I used to ride. The R1 is crazy, I rode 600cc and feel that I'm lucky to be alive at this point. I think I'll leave it at that.


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## Jungle (Feb 17, 2010)

Spidey said:


> The video in the link is well worth watching.


+1 I really liked the video too. Explains the what's mentioned in the book as well .


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## petea4 (Dec 24, 2010)

Nice toys.


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## I'm Howard (Oct 13, 2010)

Emergency Room Nurses call them Doner Cycles, I call them Crash and Burn.

The Miata is an MGB wannabe.


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## twowheeled (Jan 15, 2011)

I'm Howard said:


> Emergency Room Nurses call them Doner Cycles, I call them Crash and Burn.
> 
> The Miata is an MGB wannabe.


 thanks, 5 years of riding haven't crashed and burned yet. Donor cycles? Yep, every single year.. rides to raise money for cancer and also gifts for young children each Christmas for our toy runs. The miata is what the MGB oughta been. 




A little update to those who were following along, last week I sold 2 bikes for a total of $10,000. Also managed to save another $7000 so far in paychecks and it will be split into my RRSP and TFSA. I did the math and it is actually better to hold back on my contribution for 2010 and use all that room in 2011 since my income bracket is higher. Short term goal at the moment is to have both maxed by April which is going to require about $40k. After that I'll build up a small emergency fund of around $3k and reevaluate my goals. Any more advice keep it coming, I am learning a lot.


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## the-royal-mail (Dec 11, 2009)

twowheeled said:


> A little update to those who were following along, last week I sold 2 bikes for a total of $10,000. Also managed to save another $7000 so far in paychecks and it will be split into my RRSP and TFSA. I did the math and it is actually better to hold back on my contribution for 2010 and use all that room in 2011 since my income bracket is higher. Short term goal at the moment is to have both maxed by April which is going to require about $40k. After that I'll build up a small emergency fund of around $3k and reevaluate my goals. Any more advice keep it coming, I am learning a lot.


Thanks for the update. This sounds very good.

What did you base the $3K number on for your emergency fund? Based on your average monthly expenses, how long would this carry you for with no EI if you lost your job?


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## twowheeled (Jan 15, 2011)

the-royal-mail said:


> Thanks for the update. This sounds very good.
> 
> What did you base the $3K number on for your emergency fund? Based on your average monthly expenses, how long would this carry you for with no EI if you lost your job?


To be honest it is a fund for the sake of having a fund. Like I said, I am not carrying any debt nor do I have any living expenses, so $3000 would carry me until I was too ashamed to accept the hospitality of my parents.


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## Four Pillars (Apr 5, 2009)

Nice pics! 

I'm not sure about the Miata though, doesn't it come with a lipstick compartment?


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## KaeJS (Sep 28, 2010)

four pillars said:


> nice pics!
> 
> I'm not sure about the miata though, doesn't it come with a lipstick compartment?


HA! 

I'm glad someone else said it!


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## Brian Weatherdon CFP (Jan 18, 2011)

*Celebrating a "Permission to spend.....later"*

Dear TwoWheeled, you present your story so honestly and articulately. Kudo's to you. I am confident also you've gained a great deal from the posts people have shared here. May I add a thought or two....

i) it's not what we spend but what we save that builds wealth. A friend taught me that; it still rings in my ears. I recommend it!

ii) your single-handed spending however helped the wider economy so we all owe you a debt of thanks for your contribution; now you can suggest we take our turn at building the economy while you turn to saving 

iii) insurance is an area you could investigate: (a) though you have no need for life insurance right now, getting permanent coverage could yield you a strong (like 6% or higher) longterm rate of return that's tax-free  and if you'll have a family someday then you'd have the risk already taken care of at the lowest possible cost. (b) critical illness insurance offers value to at least 50% of its owners, and while it doesn't build any value per se, it does give a liquidity when you may have a diagnosis at some time in life.

iv) self-directed investing is highly advocated by some, but hazardous for most people who try it. So either (a) you could use a planner to assist you, or (b) mutual funds wherever you bank would offer dividend- and other growth options that far outpace what you experienced last year.

v) a personal strategy around spending is really "permission to spend later". It's a way of celebrating your capacity to spend....without spending today. Here's how it works. If you want that 6th motorcycle or other shiny experience, and you realize you have the power & resources to buy it now, give yourself permission to enjoy the fact of your high capacity....and realize it doesn't really matter when you would buy it. You could buy it "tomorrow". "Next week". Heck, you could wait any amount of time - it really wouldn't matter. "Permission to wait" or "permission to spend...later" arises from the inner consciousness that you have the ability now, and therefore you really don't have the need. Along the way, you might end up owning an oil field instead of a gas burner. 

Best to you!
BW


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## 72camaross (Apr 26, 2010)

Four Pillars said:


> Nice pics!
> 
> I'm not sure about the Miata though, doesn't it come with a lipstick compartment?


I LOL'd when I read this! I was a little disappointed with the car choice after reading this full thread. But to each their own!

The bikes on the other hand are beauties! Is that an 08/09 R1?? 

This is one of my toys...I had the same problem as you, spending all my money on toys and saving nothing while living at home for free! Although I had student loans and only make half of what you do if I'm lucky,










I also have this...but need more money...it's a money pit and actually just put it up for sale today...










And now my step dad is trying to sell me this and I would like to keep it in the family but I'm not sure if it's in the cards... This is the car that started my passion for motorsports and stuff.










Now I'm 26...same job...I decided to buy a house and income property! They are great ways to save if you are good enough...I'm still learning because now that I have 2 properties I find myself going above my means to party like I used and do all the fun things I want to... I'm on a learning curve. But we are young and I wish you luck changing your ways!

What was your track bike and what track did you go to?? And do they need any IT guys where you work? lol I could use a different job!


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## rd_aaron (Jun 24, 2011)

Well I'm pretty new to the investing world too. I'm 23 and an Engineer as well so I guess we have something in common.

I agree with a previous poster that said you should get a certain amount (say $500 to start) taken off your paycheck automatically so you don't ever see it. That $1000/month at 8% compounded monthly (totally possible) could yield over $180,000 in 10 years... which means about $60,000 in interest.

That's one option. From your posts it sounds like you don't particularly want to give up your lifestyle but you also want to save. What I think you need is investments that generate cash flow.

I would say buy a rental property with a pretty big downpayment and you could easily generate a positive cash flow, but I don't think right now is the best time to buy a house/condo. You could however generate some cash flow using REITs (Real Estate Investment Trusts). REITs are entities that invest in real estate and then by law have to distribute 90% of their income to their investors. These corporations usually own and rent out office buildings, retail space (think malls, buildings that big box stores lease, etc), and sometimes residential properties. They generally pay out a pretty good dividend (annual dividend of 6-7% or more in some cases) monthly. If you can hide them in your TFSA, you'll be getting paid that 6 or 7% of your investment tax free. Might be something worth looking into.


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## I'm Howard (Oct 13, 2010)

twowheeled, I have made friends in Florida with a gentleman named Scott, since the bike accident He is learning to play with one arm.

I am totally fed up with all the Grey Ghosts who inundate my peaceful area and spoil the quiet with their incessant noise, and now they ride in packs and you cannot pass them unless you want to put them in the ditch.

CRash 'n Burn.


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## realist (Apr 8, 2011)

As an oil sands worker I’ll tell you the same thing I tell me ex-colleagues in the nuclear industry, and current ones in the aviation industry – you should probably never complain about paying taxes, but a longer explanation will be more political and less helpful 

I’m only about 10 years older than you and make less, and having decided to go back to school paying off my student debt put me behind a few years but I am now in a position where I make a lot more than I *need* to partly because we live pretty frugally. I think you need to figure out what you want. For us our priorities looking forward are property, vacations, hobbies. We are saving for property, probably a condo in Toronto since I hate commuting, and that’s what we can afford. We could get the property bigger/faster by travelling less but for us we want to be able to afford at least one “big” trip and some smaller ones per year so we are willing to have a smaller property. Similarly, we like the safety net of having a mortgage that we can still pay if only one of us is working for whatever reason. What do you want to do short term? Long term?

If I were you I would:
-	Start putting aside a large chunk of my paycheck. Call 1/4 of that the fancy car fund, 1/4 retirement “don’t touch this money”, 1/4 “life/fun stuff fund”, 1/4 General Investment TBD (Adjust the ratios as appropriate for you) 
-	Car Fund: Is the Cayman really what you want? Personal taste, but I think there are cooler cars for less money but to each there own. My own “lottery win” cars would be something like a Shelby Cobra, or a restored 1930s-1940s Ford truck converted to electric, lol. If you can afford it, why not treat yourself. BUT answering if you can afford it, means asking if buying the car hurts your other goals. 
-	Retirement: self explanatory. If you do this right you could retire early if that appeals to you. 
-	Life/Fun stuff: Trips, luxury items whatever, but the stuff that makes it worth living. In your shoes I would have an eye towards putting enough away to take off months at a time for say a cross Canada road trip or similar long trips. Are you going to get married in the next 10 years? We paid cash (with a little parental help) for ours as opposed to many of our friends who racked up the line of credit. Any chance you’ll have kids? 
-	General Investment: Call this the wealth building fund, or use it for other big purchases like property etc. I dunno. For use when you need it for something “serious” 

I think the reason your post raised so many eyebrows is the impression that you are “wasting” money that could be used to set yourself up comfortably in the future. If your biggest entertainment expenses are things like the cars and bicycles, and you hold onto them for a long time that’s not a big deal. Just don’t get them at the expense of your other goals.


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