# What's your single best financial tip?



## CanadianCapitalist

November is Financial Literacy Month, an initiative by the Feds to improve financial awareness among Canadians. A number of bloggers recently published their best financial tips. Many of you are already financially successful and many are just starting out. Let's hear from the ones who've been there and done that. What is your single best financial tip?


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## mind_business

Pay yourself first ... and make it a generous payment.


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## P_I

Live within your means.


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## MoneyGal

Learn and live by the economist's maxim: _there is no free lunch _(aka "opportunity cost").


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## CanadianCapitalist

Keep em coming... Mine was:

_Buy a home you can comfortably afford._


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## Sampson

Spend less than you earn. (but that's been said) so maybe my tip is part financial and part life.

Learn to enjoy and cherish things that are free, time with friends and family.


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## Toronto.gal

On October 30th, I celebrated my 3rd year as a DIY investor, so I have not personally been doing it that long [others have done it for me], but my single advice, especially for the 20+ group, would be to start investing & paying debts early; the latter could be your best investment of all!

As we say, a picture speaks a thousand words:


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## jamesbe

Never buy it if you can't pay in cash!


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## Toronto.gal

CanadianCapitalist said:


> _Buy a home you can comfortably afford._


And a car that you can also 'comfortably' afford!

A friend of mine was telling me how it took almost her entire family to convince her brother-in-law [recent immigrant], that he could not afford the house that he was entertaining buying. The reason why he had been in a rush to buy, was because co-workers had convinced him that it could be done based on his salary/down payment amount [because they had done it too].

Anyhow, he ended up agreeing with his family, but consoled himself by buying an expensive car instead. :rolleyes2:

Don't be a copy-cat would be another advice!


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## kaleb0

I expect a lot of the advice here is going to be similar. One thing I will offer that is not directly 'financial advice' but can definitely have a big impact on one's financial future is to make a point with networking with people. I made it a new years resolution of mine to try to be more proactive in meeting people and building connections that might be useful in the future, and to invest more energy into strengthening the relationships that I already have. As a bit of an introvert this is a challenge for myself but I think it is important.


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## HaroldCrump

Here is my $0.02 -
Find a partner/husband/wife that shares your personal finance ideals and approach.

Agreement and compatibility between the spouses is a big part of running household finances responsibly.


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## MoneyGal

HaroldCrump said:


> Here is my $0.02 -
> Find a partner/husband/wife that shares your personal finance ideals and approach.
> 
> Agreement and compatibility between the spouses is a big part of running household finances responsibly.


I guess a corollary to that would be, figure this stuff out early enough in life so that you don't inadvertantly choose a partner with whom you are financially incompatible.


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## avrex

My tip is,

Avoid mutual funds. 
The costs are too high and you'll be able to retire sooner.


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## Square Root

Harold and MG: yours are good ones. Most of this type of advice is self evident that everyone is aware of but not many follow. Really not very useful as a result.


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## Toronto.gal

Square Root said:


> Really not very useful as a result.


+1.

Love is blind as we say.


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## Compounding1

Do your own research. Don't trust someones "hot tip".


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## Young&Ambitious

HaroldCrump said:


> Here is my $0.02 -
> Find a partner/husband/wife that shares your personal finance ideals and approach.
> 
> Agreement and compatibility between the spouses is a big part of running household finances responsibly.


As Gail Vaz-Oxlade says in Til Debt Do Us Part, Money is the number one reason people split up! 

Mine would be "We only get one chance so let's make some memories" which is one way to spend. Spend on what will make lasting memories. Bad spending = bad memories.


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## Daniel A.

Learn how to budget every dollar and don't assume the the guy next door is better off based on toys.


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## peterk

Don't do what everyone else is doing.


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## jcgd

Brew your own coffee.


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## blin10

don't be the richest guy in the graveyard when your number is up...


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## bayview

Health is Wealth!

"A woman's wealth is her capital" (Harriet Beecher Stowe).


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## bayview

Sorry typo.

" A woman's HEALTH is her capital".


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## marina628

Start saving early in life ,no amount is too small.I remember my first RSP contribution was $25 a month.
Tip #2 never co-sign a loan for anyone and if you need a cosigner you cannot afford what you are trying to finance!


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## Robillard

Hmm... one that hasn't already been mentioned yet...

When you're young, (and have little savings) the biggest threat to your household's welfare (aside from profligate spending habits) is the loss of you and/or your spouse's ability to earn income. Don't ignore long-term disability insurance and accident insurance, particularly if you are offered these through a workplace benefit package.


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## slacker

Pay yourself first.


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## KaeJS

avrex said:


> My tip is,
> 
> Avoid mutual funds.
> The costs are too high and you'll be able to retire sooner.


Hm. Don't agree with this.

I made quite a nice return off of my previous mutual funds. That statement is very subjective and does not apply in all situations or to all investors.

My advice would be to have discipline. If you don't have it, you'll never succeed no matter what you do.


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## andrewf

My best tip: don't be lazy. Learn as much as you can about managing your financial affairs. It's probably one of the single most important life skills in determining your long term success. It's worth investing some time.


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## Sherlock

Always be vigilant and lookout for scams, don't fall for get rich quick schemes. If something sounds too good to be true, it almost certainly is. Remember the saying "a fool and his money are soon parted" (I think that was a movie).


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## GoldStone

Don't sweat your investments when you are young. Leave them on auto-pilot. Focus on advancing your career. Your career is your most important investment.


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## indexxx

Stop drinking. (and this is coming from a bartender!)


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## kcowan

Build youself a Life Plan. This includes a financial plan and budget but also measurable goals in every aspect of your life.


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## Jungle

The path to financial sucess starts with earning some kind of income. (most likely a job or start a business)
SO my tip would be to first invest in education that will get you a good job, (above 40-50K) or invest the time to start a business or learn skills for self employment.


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## Karen

I've been talking with my three eldest granddaughters recently about money (they're in their early 20s) and I told them that one of most important things they can do is to use credit cards responsibly; it's fine to use them for convenience but pay them off at the end of the month. Pretty basic advice, I know, but many young people get themselves into serious problems over misuse of credit cards.


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## Cal

P_I said:


> Live within your means.


I will second that. Otherwise I wouldn't have extra $ left over to invest.


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## Islenska

Just observing but the majority of our friends are on #2......relationships and all of them are a bit behind the 8 ball financially.
We've been married since 1980 and in one aspect this has helped our finances along with all the other bonuses to that stability.
So won't hurt to buy some flowers today!


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## lonewolf

Love these tips, excellent thread

The only moral thing I can think of to do financialy is to do that which promotes the most long term happiness. The best way I know how to do this is to come in contact or possesion of that which I value i.e., I value life so to come in contact with, I would never spend money on cigarettes but instead spend money on healthy food @ a grocery store. I also value the lifes energy needed to obtain money so I have money work for me.

Avrex I think your really on to something regarding mutual funds & I wonder if the average investor has a true understanding of your wise words. (thanks for letting me back)

Regarding the mutual funds. I remember reading a few years ago (I think it was Robert Prechter) that the best performing mutual fund for the last 10 years the average investor lost money. I forget how much it gained but I if memory is correct I think it was in the double digits per a year. Reason being the average investor was buying high & selling low.
Ask any investor if they would have wanted to be the average investor in the best performing mutual fund. What do you think the answer would be ?


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## Echo

My best financial tip is along the same lines as Jungle's tip - Make more money 

http://www.boomerandecho.com/make-more-money-best-financial-tip/

After the recession hit, my employer froze wages for three years. Unless you can get a decent raise from a promotion or a career change, it's hard for the average Canadian to get ahead without having some type of second income stream. That could mean renting out your basement, getting a second job, or starting your own business on the side. There are a million examples of how to make more money. Cutting your expenses can only go so far. The path to financial freedom becomes much easier when you can find ways to increase your income.


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## Square Root

Make more money. That's very useful, along the lines of Buy low,sell high; plant your corn early; be careful, etc. Well meaning, obviously true, but not very helpful, typical of conventional wisdom I guess.


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## Echo

@SR - about as useful as your reply? Read the post, there's quite a few examples listed in there.


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## Jungle

Basic needs can cost and easy 20-30k year for small family/ couple..(and that might be underestimating) There are a lot of people that only make 20-35k. It becomes very hard to build financial independance, if living in the city. 

This is why I say invest in your education or skills, get a job paying min 40-50k a long with a second income (spouce) suddenly things become much easier. That is the first step. Then everything else follows.


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## Dmoney

Build a network, be part of a community.

In a world where who you know is more important that what you know, get to know as many people as you can. And get to know them well.

This can help in numerous ways:

Employment opportunities
Job security
Great quality, honest and personalized help (think a car mechanic who knows and likes you, that you can trust impeccably)
Discounts on items/services
Educational opportunities (apprenticeships for example, can be very difficult to obtain without a little push from someone who is connected)

Many communities are tight knit and help each other through the tough times, and share the wealth in the good times. If you can become part of a generous community, or build yourself a strong network, you'll reap the rewards. 

That and the cliche "make more than you spend". Always a proponent of people making more money. Get a better job, get a second job, ask for a raise, start a side business, start a full-time business, get a paper route, open a lemonade stand, mow lawns, shovel driveways, walk dogs. There are really no excuses not to make more money.


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## Islenska

Dmoney that is another good point.
We went to a dance last night at the community hall and observing again I realized half the people there were ones I knew fairly well.
Small town living can become claustrophobic but stepping back (or traveling) you appreciate the social network.
My 2 sons couldn't wait to move to the big city bur they always pine away about not only local friends but the local fabric.

Having the internet also really widens your world so much so that I forget we live in the boonies.
But I digress, not sure if this now ties into a financial positive, doesn't hurt though.


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## Eclectic12

Jungle said:


> Basic needs can cost and easy 20-30k year for small family/ couple..(and that might be underestimating) There are a lot of people that only make 20-35k. It becomes very hard to build financial independance, if living in the city...


True ... but then again, I've known people making $16K who have made tough choices to build their financial independence. 

+1 on the invest in education/skills.

If one had the energy, starting a sideline business has been another way.


Cheers


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## donald

I'd say concentration(on one thing!)Over the course of the last year i'm learning this in spades!(my foray into investing ect)I think it is a mistake to buy into:starting side businesses,creating extra streams of income ect(unless it is something that doesnt cost you ''mind'' capital)I have a business(it is/has been doing well)and i started to hatch a plan(investing)and ''adding" other streams(in areas im not strong in(yet)or uneducated/lack a advantage).Guess what starts to happen?You start losing focus and you start juggling multiple things(your mind/energy ect)gets sapped.....and you run the risk of mismanging everything you got going(esp,the chief thing your income comes from that brought you to the party in the first place),because you are scattered!Think of anbody you know in your life(that is successful/wealthy)9/10 they put there energy into ONE thing(and it aint speculated on the market) and mastered it or leveraged themself way above the competition.
I'm not sure i believe in the ''guy'' who has this/that and multiple incomes/business ect.(this could just be me/personality)but look around you who is at the top of anything-one thing/one business/one focus.


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## My Own Advisor

Definitely pay yourself first: http://www.myownadvisor.ca/2012/11/my-best-financial-tip/


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## jcgd

I'm not sure that pay yourself first is a great piece of advice. Always pay your obligations first. Pay yourself next. Having creditors come after you is not going to help your financial situation. Putting $200 in a savings account just to be $200 short on rent is not going to help you very much.

This is obvious to some, other take the "pay yourself" mantra literally.


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## Plugging Along

I have many I have come thought the years.


Invest in yourself first. Focus on getting skills before money. I remember when I first started working and looking at differen pt opportunities my father always said picked the one with the best potential or learning a even if it was for less money.

Understand yourself, I mean REALLY gap get to know what makes you tick, what are your stengths, and weaknesses. I spend more time on reflecting than I do learning abut investing. This has been able to guide me what I should and shouldn't do. This one is more of a life tip.

Start saving when your are young, and get out of debt or stay out of it as fast as you can.

Make long term plans, but don't be inflexible and follow them to a tee. 

Balance.... Money really isn't every.


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## Eclectic12

jcgd said:


> I'm not sure that pay yourself first is a great piece of advice. Always pay your obligations first. Pay yourself next...


It's really the same thing.

For me, what the "pay yourself first" did was cut down on the unnecessary spending. When I paid my bills first, whatever was left went into entertainment etc. as my attitude was "that's not enough to make a difference anyways, why not have fun".

Paying myself first meant that I did not touch that money and I knew I had to pay my obligations, so I'd make any adjustments needed to pay those (ex. I'd skip a night at the movies or out at the bar, knowing the electricity bill was coming where my bank balance would not support both).

As long as one does not touch both the first and second priorities, the order won't matter.


Cheers


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## Beaver101

Want is not the same as need so avoid using credit-card(s) if you can with your purchase.


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## HaroldCrump

I thought CC asked for one single best tip by everyone 
Since everyone is contributing multiple tips, here is my #2 (or actually this might even be tied for #1):

Buy good quality things, take care of them, and make them last

To clarify, I am obviously not recommending running out-dated, under-performing things like refrigerators, desktop computers, cars, etc. well past their useful life.

But we can make things last longer by buying based on better quality and then taking care of (i.e. maintaining and repairing) things rather than dumping them in the landfill and buy a new one, just because we can.


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## Toronto.gal

Beaver101 said:


> Want is not the same as need so avoid using credit-card(s) if you can with your purchase.


I respectfully disagree!

Credit cards are not destructive products & there is nothing wrong if used responsibly. Abusing them by piling up debt & using them to upgrade a lifestyle that they can't afford, is entirely another matter.

I almost always use credit cards [2nd debit/3rd cash] and get cash back & other rewards/consumer protection, etc.

It also builds credit history for those who need it.


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## Toronto.gal

HaroldCrump said:


> I thought CC asked for one single best tip by everyone


Exactly, at least a tip per post. 

Also, some have repeated what others had already mentioned.


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## Beaver101

*Toronto.gal:* Thanks for elaborating on what I wanted to say actually.

*Harold:*


> I thought CC asked for one single best tip by everyone


 ... yes, that's what his thread says. But doesn't hurt to hear all the tips, speaking for myself that's. each:


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## Square Root

Echo said:


> @SR - about as useful as your reply? Read the post, there's quite a few examples listed in there.


OK I deserved that-must have been a little cranky. I just find these conventional pieces of advice of limited use, although I agree they can be fun to discuss.


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## Toronto.gal

Square Root said:


> I just find these conventional pieces of advice of limited use....


Some yes, but not all.

You're thinking from the perspective of now being older/wiser [I believe a retiree?], but you forget that there are many young people on this forum [and even not so young] that still need the most basic advice of all [given their questions].

The thread after all, is about financial literacy.


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## smihaila

Screw the banksters / usury, pack your own lunch, live within your means, invest in your own/your family's education, don't trust your own Government and look also into other systems/see how other countries work / think outside the box. Find/build a real house, instead of barracks made of wood chips.


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## dogcom

Don't smoke.

This is probably the biggest one to come out of everyones life on this forum and everywhere when they are young and still in high school. I for one couldn't see the point in wasting hard earned lawn cutting and paper route money on such a useless item. Going forward the health costs and cost to smoke is huge over time.


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## hboy43

Hi:

Keep or take a car out of your life. The average annual cost of running a car is something like $9000. I didn't take on an automobile until age 35, and the avoided costs and investment returns on the capital paid for my first house.

Do some serious analysis on your work commute. The primary driver for so many automobiles is the daily commute. In my case, when I worked in Ottawa best case, if I had commuted by automobile, I would have saved 1 hour a day. This is best case, typical would have been 1/2 hour. So at 1 hour/day, working 250 days a year, and assuming no other usage of the car, the cost of that hour save is 9000/250 or $36 - after tax of course. At 1/2 hour/day we get $72/hour.

Of course, commuting isn't the sole reason for owning a car typically. But then the hour a day (or half hour) isn't necessarily lost time either. Some times, I got considerable exercise in bicycling to work where a car owner might pay for a gym membership and drive there 3 times a week. Some times, I commuted by bus and could spend the time reading, something I would do anyhow at home if the opportunity to do it on the bus wasn't there. Some times the girl in the next seat on the bus was plain stunning. Consider the intangibles.

Most folks won't give a good hard honest look at their relationship with the automobile. They don't have the imagination to consider their lives in an integrated fashion. If everyone in Canada did, I think that the number of cars that could come off the road would be well into 6 figures.

For disclosure, we had two cars on the go for a transition period, but are now happily down to one again.

Cheers,

hboy43


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## Jon_Snow

Hboy, your post got me to pull out the ol' calculator and see what our truck costs us per year - turns out to be around $4000. 

My advice to those who are fortunate to have above average household incomes would be this: instead of living within your means, or even below your means, consider living "well below your means". This isn't for everyone, especially those who like to "live for today", but if one can stay disciplined for a spell of years, you can pay off all your debt, and save/invest a tidy sum and simply stop stressing about money for good. My wife and I have been on this path for about 6 years. In the Retirement section I have detailed that our need for two incomes is pretty much at an end, so I am close to becoming a "kept man". :tongue-new:


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## Rusty O'Toole

It's ok to go into debt for something that goes up in value like a house. I hate going in debt for something that depreciates like a car.

Ignorance is bliss until you wake up in a train wreck with your face on fire Ha ha ha I read that on the net today and thought it was hilarious, this seemed like a good place to share it ha ha.


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## SJFornolles

*Your financial intelligence determines your financial success!*



CanadianCapitalist said:


> November is Financial Literacy Month, an initiative by the Feds to improve financial awareness among Canadians. A number of bloggers recently published their best financial tips. Many of you are already financially successful and many are just starting out. Let's hear from the ones who've been there and done that. What is your single best financial tip?


How is your career? How are you doing financially? How much is your net worth so far? Are you certain you can survive any financial turbulence that might soon come your way? Have you ever heard about the "pedagogy of the failed professional"?
Well, most of us have the necessary technical know how that will help us to earn income. While, we work hard for the money, we must understand that the JOB (working hard for the money) should only be the start. Technical knowledge cannot solve our financial problems – FINANCIAL PROBLEMS WILL NEED FINANCIAL SOLUTIONS!!


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## Plugging Along

SJFornolles said:


> Technical knowledge cannot solve our financial problems – FINANCIAL PROBLEMS WILL NEED FINANCIAL SOLUTIONS!!


Actually financial problems are not necessarily solved by financial solutions. Often financial problems are just symptoms, or have a deeper root cause. The financial solution to get out of debt is generally, spend less than you make which can be done through either making more, or spending less. However, people who over spend, general know this, but there is something stopping them from doing it. This is why you can have two families with similar incomes, and environment, yet one is in debt and the other is not. 

Just like everything else in life, there is a technical side, and a motivational side. You need to have both before you can suceed.


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## 44545

If I had to offer only one piece of advice, it'd be this:

*Consider that any belief you take for granted may be wrong or at the very least not compatible with your goals.*

Examples:
"I need a car."
"I need a 1,500/2,500/3,500 square foot house."
"Owning is cheaper than renting."
"I need to buy my lunch at work; it's not practical to make it the night before."
"My financial advisor at InvestorsGroup/Manulife/Sunlife/wherever has my best interests in mind; the fees aren't that bad."
"The Joneses are actually worth keeping up to."

But I can't leave it at that.

*Need and want are two very different things.*

*“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” - Will Rogers*


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## Nemo2

Toronto.gal said:


> Credit cards are not destructive products & there is nothing wrong if used responsibly. Abusing them by piling up debt & using them to upgrade a lifestyle that they can't afford, is entirely another matter.
> 
> I almost always use credit cards


We charge virtually _everything_........(although under $10 is usually, but not always, the cut off point)........the entire bill is paid in full each month, we have a clear record of expenditures, and (with our TD Visa) we accumulate travel/other points.

What we can't understand are debit cards......why use them when you can charge?


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## Toronto.gal

*Nemo:* we sound like twins. 

Debit cards/cash mostly for items under $10. :tongue-new:


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## Nemo2

Toronto.gal said:


> *Nemo:* we sound like twins.
> 
> Debit cards/cash mostly for items under $10. :tongue-new:


Twins? Our mother must've had a looooong gestation period, I suspect. :biggrin:

Debit cards.......the only exposure I've had to them is in supermarket checkout lines where invariably someone with 3 cards either forgets their password or the account doesn't have sufficient funds.......they take longer than someone trying to pay in pennies, and I have to resist the urge to scream _"Are you MAD?"_


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## Echo

What's wrong with using your credit card to pay for something under $10? It doesn't take any longer than debit/cash, in fact with contactless payment terminals available at a number of retailers now, it's probably faster to use your card to tap and go.


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## Nemo2

Echo said:


> What's wrong with using your credit card to pay for something under $10?


A purely psychological barrier, I guess..........and one that you've just helped us overcome. :encouragement:


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## Beaver101

Echo said:


> What's wrong with using your credit card to pay for something under $10? It doesn't take any longer than debit/cash, in fact with contactless payment terminals available at a number of retailers now, it's probably faster to use your card to tap and go.


 ... actually the use of credit cards is costing all of us, consumers, in the form of "merchant-fees" being passed on.


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## blin10

same, I probably got few thousand in cash back and rewards over all these years



Nemo2 said:


> We charge virtually _everything_........(although under $10 is usually, but not always, the cut off point)........the entire bill is paid in full each month, we have a clear record of expenditures, and (with our TD Visa) we accumulate travel/other points.
> 
> What we can't understand are debit cards......why use them when you can charge?


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## 44545

Beaver101 said:


> ... actually the use of credit cards is costing all of us, consumers, in the form of "merchant-fees" being passed on.


The genie's out of the bottle: those fees aren't going away. You may as well use a credit card with cash or points rewards and take some of that back.


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## HaroldCrump

CJOttawa said:


> The genie's out of the bottle: those fees aren't going away.


I agree - they are here to stay. 
Look around, the number and types of reward cards are increasing by the scores every year.
The cash users and the non reward card users are subsidizing the reward card users by paying a higher price for the products.

Which side of the field do you want to be on?


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## bayview

I, too dont use debit cards and I seldom charge to my credit cards below $20, especially for groceries which account for the most frequent transactions in my list. 

Reason: I just dont like keeping too many small receipts for statements reconciliation.


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## KaeJS

CJOttawa said:


> The genie's out of the bottle: those fees aren't going away. You may as well use a credit card with cash or points rewards and take some of that back.


Bingo.

I use VISA for everything. Even if its $2.

If the merchant denies the transaction, all you have to say is "Do you want the business, or not?"

They will take the VISA. I've done it many, many times.


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## Karen

I'm like Kae - I use my credit card for absolutely everything, and no merchant has ever questioned it. I use it both for convenience and for the rewards I earn - Air Miles on my American Express card and cash-back on my Visa. But I pay it off in full at the end of every month without exception so it doesn't cost me anything - I only use no-fee credit cards so I don't even have that to pay.


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## KaeJS

Karen said:


> I only use no-free credit cards so I don't even have that to pay.


no-free cards? :biggrin:


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## Karen

Fixed - thank you!


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## crazyjackcsa

My best financial tips are actually life tips. First off: Don't pay any attention to Belguy. Secondly (and more seriously) Always have a plan B.


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## Sherlock

Now why would I need to always carry around the morning-after pill?


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## Young&Ambitious

Oh my! Although I guess that is financial planning too eh..


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## Toronto.gal

Nemo2 said:


> Twins? Our mother must've had a looooong gestation period, I suspect. :biggrin:


Who's counting age Nemo? I have friends of all ages; from teens all the way to the 90's. 

I only count intelligence [in all its forms, not just IQ]/common-sense/kindness, etc., etc., so that's my tip for today, be as intelligent & nice as you can be! :wink:










I was told when my kid was around 5, that he was spatially intelligent, but he did not get that from me, LOL; my brain can't even tolerate 3D movies.


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## Jon_Snow

Paid for a week long Jeep rental with a years accrued points on our TD Travel Visa and have been doing so for the past several years - love it. That's $500 we can now spend on tequila. :biggrin:


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## DavidJD

I wonder when this info will be graphed and presented on blogs/articles from some of the authors who post here. It is a good scan, from a knowledgeable group. I would rather know this advice from you all than one 'guru' interviewed. I look forward to seeing its results.

Canadian Money Forum Folks say 11% pay yourself first, 15.5% live within your means...etc. A pie chart would be better in the image of a loonie.


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## CanadianCapitalist

DavidJD said:


> I wonder when this info will be graphed and presented on blogs/articles from some of the authors who post here.


I did mention this thread in my round-up because I personally found very interesting tips here (such as the one about divorce). A post on CMF member tips is a wonderful idea.


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## Nemo2

Toronto.gal said:


> Who's counting age Nemo? I have friends of all ages; from teens all the way to the 90's.


And here I was...caught up in the potential logistics of it all........with a nurse saying "I _know_ it's been decades since the other one, Dear...but let's try one more push". :biggrin:


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## Toronto.gal

CanadianCapitalist said:


> A post on CMF member tips is a wonderful idea.


I was going to suggest the same, but not with a post, but a chart or something as David mentioned, as a visual would be more powerful IMHO.

In fact, a book could be written based on the ideas of some members here [not just talking about this thread], hmmm, we even have the person with the talent to write such a book.

*Nemo:* You make me ROFL.


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## Rusty O'Toole

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” - Will Rogers

Actually it was mine. Originally it was "spending money they don't have to buy things they don't need to impress people they don't like". 
I started it off about 5 years ago. It seems to have gotten around, and come back to me.


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## Nemo2

Rusty O'Toole said:


> “Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.” - Will Rogers
> 
> Actually it was mine. Originally it was "spending money they don't have to buy things they don't need to impress people they don't like".
> I started it off about 5 years ago. It seems to have gotten around, and come back to me.


Wow....you _must_ be old.....Will Rogers paraphrased it from you.....and he died in 1935:



> “Too many people spend money they earned..to buy things they don't want..to impress people that they don't like.”
> ― Will Rogers


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## lonewolf

I already gave a tip but here is a secound which many will disagree with. Everyone with a mortgage should not trust what anyone says including me & run the numbers.

(rule of thumb) Pay off mortgage then buy RRSPs once mortgage is paid off in full.
unless the tax refund is big enough to pay off the mortgage or very close to it. 

The banks are making money hand over fist from the interest paid on mortgages, fees on the RRSP money invested & even make interest on RRSP loans when the mortgage is not even paid.

With the amount of money involved you might want to wonder if it is in your best interest to trust the common wisdom to buy RRSP then use refund to put down on the mortgage ?


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## Plugging Along

^ Agree & Disagree

Agree - everyone should run their own numbers

Disagree - Pay off mortgage then buy RRSPs. Depends on the people involved and the specific scenarios for them.
I had as low as a 1.5% mortgage at one point, and was in the highest tax bracket. For us it was a combination approach. We managed to do both.


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## dogcom

Have to keep it new.

If it looks to good to be true then it probably is.

Never trust anyone which includes the company numbers and so on.

Talk is cheap.


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## Lephturn

Here is my math: I pay my mortgage with after-tax dollars. Money that I put in my RRSP is pre-tax. Big solid companies (like the above mentioned banks) are paying a solid 4% dividend. If I put $10,000 into my RRSP I can yield $ 400/year. If I take that same cash and pay tax on it that leaves me (ballpark) $ 7,000 to reduce my mortgage of let's say 3% - so it saves me $ 210 in interest/ year. Granted I will pay tax on the money when I pull it out of the RRSP later in life, but paying "too much" taxes in retirement because I have too much income is a problem I would love to have.

That said, I certainly favour a balanced approach. I use a 5 year variable mortgage with a low rate (2.25%) and I make payments as if it the rate was 5%. That lets me accelerate payments while building in a cushion in case rates increase. Then I put money into my RRSP each year, as close to the maximum as I can get. Finally when I get the refund based on those RRSP contributions I use that money to do a balloon payment on the mortgage. You could argue that a more extreme approach one way or another is better mathematically, but I like the flexibility and balance this brings. It has served me well for many years now and I have a decent RRSP building up and my mortgage is being paid down at an accelerated rate.


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## lonewolf

Lephturn ia a very advanced investor

Iam going against the normal order of investing so think twice if what I say is better suited for you or not because it might not be ?

Sorry to get off track & post again about order of investing but I think another mistake is being made in the order in which the average investor invests.

First pay off mortgage, then max out RRSPs to the point it is practical i.e., taking into consideration tax brackets & TFSA into consideration Then put refund into TFSA. 

Few will agree with me on this. Money put into RRSP & PERHAPS (?) even a TFSA should not be invested in the stock market.

The reason being it takes a lot of money to keep the market well oiled & there is no way everyone can win the poker game. Most will not come out ahead. The independent thinkers will have a huge advantage.

The tax treatment of money made & lost in stocks held inside an RRSP account does not give as good an edge to the investor as money held outside an RRSP account. 

I say get the easy money "tax refund" by investing in RRSPS but put it in something that is given good tax treatment on the money earned i.e., GICs 


Then once the RRSPs are maxed out then consider investing in the stock market when your gains & losses will be treated differntly by the tax man . This will also give more time for research.


So here is the order that is differnt then which most follow. (assumming one has no other debt)

Pay mortgage
max RRSP & TFSA
Then invest in stocks only after RRSP is topped up

Getting this right is important & I would not trust a bank, because they have a conflict of interest, Credit unions since they are member owned, I kinda think the odds are higher for better advice due to less chance of conflict of interest. Order of investing can become complicated & it is best to try to figure out by yourself but sometimes it is best to pay for a secound opinion from an expert such as "Money Gal" for the thinking one might have failed to do.


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## Khlark

lonewolf said:


> Lephturn ia a very advanced investor
> The tax treatment of money made & lost in stocks held inside an RRSP account does not give as good an edge to the investor as money held outside an RRSP account.


I generally agree with this statement, except when it comes to dividend paying stocks. Like fixed income, there is an advantage to putting them into RRSPs because of the realized income. I believe this is what Lephturn is doing with his bank stocks.


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## Eclectic12

Lephturn said:


> Here is my math: I pay my mortgage with after-tax dollars. Money that I put in my RRSP is pre-tax....If I take that same cash and pay tax on it that leaves me (ballpark) $ 7,000 to reduce my mortgage...


Hmmm ... are you sure the RRSP contributions are pre-tax?

If it's regular employement income, without filing a T1213 Request to Reduce Tax Deductions at Source (or maybe a company Group RRSP) - it's more likely to be an after-tax $7K with another $3K from other sources (which may or may not be taxed) that is being contributed. Certainly, you mention getting a tax refund so there's some level of tax you've already paid.

If the RRSP contribution was pre-tax dollars - there should not be a refund.


Cheers


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## Lephturn

Eclectic12 said:


> Hmmm ... are you sure the RRSP contributions are pre-tax?
> 
> If it's regular employement income, without filing a T1213 Request to Reduce Tax Deductions at Source (or maybe a company Group RRSP) - it's more likely to be an after-tax $7K with another $3K from other sources (which may or may not be taxed) that is being contributed. Certainly, you mention getting a tax refund so there's some level of tax you've already paid.
> 
> If the RRSP contribution was pre-tax dollars - there should not be a refund.
> Cheers


A better way to say it is that with the deduction RRSP contributions are not taxed - they are 100 cent dollars net. Yes tax is paid on the income up front (although I do reduce the withholding as much as is reasonable) but with the deduction the net is those dollars are not taxed. Using my example above if I put all of the 7k I save into my mortgage I only reduce the mortgage by 7K. If I put 7k into my RRSP I get a deduction and get that other 3k that I can plow back into RRSP for the coming year or use to pay down my mortgage.

No matter how you slice it the up-front return on the RRSP is your marginal tax rate. Yes I will be taxed on that amount someday when I withdraw it, but only after it has been compounding for many years.

In regards to lonewolf's comment that I am a "very advanced investor" - that is not material. It does not take an advanced investor to buy a few stocks like RBC that yield 3-5% and are solid dividend growing companies.


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## MrMatt

If it doesn't make sense, avoid it.
If someone is selling you something, be skeptical, if they don't explain it because it is "secret" or "advanced", run.

If you can pay it off in full every month, and keep from overspending, get a good rewards credit card, and use it for everything.


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## Nemo2

MrMatt said:


> If it doesn't make sense, avoid it.
> If someone is selling you something, be skeptical, if they don't explain it because it is "secret" or "advanced", run.
> 
> If you can pay it off in full every month, and keep from overspending, get a good rewards credit card, and use it for everything.


+1


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## Eclectic12

Lephturn said:


> A better way to say it is that with the deduction RRSP contributions are not taxed - they are 100 cent dollars net...


Fair enough ... I'm usually looking to confirm my understanding and if it has a gap, learn new things - so no worries.


Cheers


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## Rusty O'Toole

If it's too good to be true... I want in on it!

Early on, I turned down some excellent deals because A) They looked "too good to be true" and B) I didn't understand them.

Now I don't automatically turn down good deals. I look into them and analyze them first. Usually they turn out to be duds but once in a while you score.


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## colossk

Live below your means, you don't need that 40k car or that 5,000 sq foot home ( I shoulda taken my own advice on that last one.) I would be morgatge free at the moment if we had not "moved up". Now to mention my property tax bill doubled, as well as my utilities and of course all the new furniture, toys etc to fill the space.

I greatly overestimated the need for future space as our 3 kids would get older. We went from a 1800 square foot house to one just under 5k and we don't really use 1/2 the house. Not to mention we now have dedicated rooms that we never had before that just were not needed. IE) I have my own home office (but it's 3x the size as the one in my old house and I don't need that much space.) My wife has her own private home office as well and she works as a police officer so she obviously does not need her own home office. Oh yea, we now have a "formal dining room" that is decorated nicely but gets used 2x a year (Xmas and thanksgiving) becasue our kitchen table is big enough to seat 8 comfortably.


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## bayview

colossk said:


> Live below your means, you don't need that 40k car or that 5,000 sq foot home ( I shoulda taken my own advice on that last one.) I would be morgatge free at the moment if we had not "moved up". Now to mention my property tax bill doubled, as well as my utilities and of course all the new furniture, toys etc to fill the space.
> 
> I greatly overestimated the need for future space as our 3 kids would get older. We went from a 1800 square foot house to one just under 5k and we don't really use 1/2 the house.


Agreed with you about upsizing too much much. If the extra is not rented out there is a sunk cost BUT it could be a happy problem if you caught the RE uptrend and your hood is a popular one!


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## kcowan

With eat-in kitchen "great" rooms, LR and DR become "glance rooms". People glance into them on their way to the kitchen. 

We have them here in PV. Never eat in the DR. Never entertain in the LR. Always on the patio.


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## Khlark

Since many people are posting indirect financial tips, here's mine:
Dress for the job you want, not the job you have.


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## Four Pillars

Khlark said:


> Since many people are posting indirect financial tips, here's mine:
> Dress for the job you want, not the job you have.


Mmm..in my case, that would mean wearing pyjamas to work.


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## kcowan

When I had been in sales, I started acting like a sales manager. When an opening came up, I was the obvious choice.


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## Sherlock

Four Pillars said:


> Mmm..in my case, that would mean wearing pyjamas to work.


You want to be Hugh Heffner?


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## Echo

Career advice: First year - learn your job. Second year - excel at your job. Third year - learn your boss's job.


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## RedRose

I am joining this thread a tad late.

In my situation my advice would be *to learn about investing early, then continue learning.*

I am still solvent even though I had many prophets of doom suggest I would be otherwise by now.
Glad to be back with you ALL.


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