Wednesday, 20 April 2016

Bought a new Watch

I recently bought the wife a new watch. Her old one, after 10 good years of use, bit the dust. Based on recommendations of several good friends and the fact I had some decent stock gains we decided to go for a quality name that can last a life time. Looked at Tag Heuer and but both of us agreed they were too gaudy for a lady. I’m not a watch wearer so I don’t care but for her she wanted understated elegance. In the end we So I bought her a beautiful Longines ladies watch. Looking at how to pay for this I decided it was more tax efficient to sell some stocks than to take money from our savings (more on that next post). The only problem was the particular stocks I wanted to sell were in a retirement account that I can’t access at the moment*. So I needed to figure out a way to journal them over to my non registered account without taking a big tax hit.

How I Approached it:

Sold some shares in my non registered account and used that money to buy the watch. Sell an equivalent amount of stocks, specifically ones that had increased in price from my retirement account and repurchase the stocks I sold in my non registered account. This had the effect of journaling them over.
As I was sitting capital losses from my Potash trade I was able to offset the gains I made here resulting in a tax efficient sale


At the moment I haven’t sold any of my Bank of Nova Soctia (TSX:BNS) shares as I feel they are still undervalued and the Dream Global (TSX:DRG.UN) are under a bit of downward pressure at the moment.
I will forgo a small amount of dividends but I willing to do that as I expect to make more from capital gains. If I’m wrong I’m still collecting dividends from BNS.

*not without taking a huge tax hit

Sunday, 3 April 2016

How to escape the two income trap in 6 easy steps

This from Financial Samurai (FS)

I can tell you for a fact that we are DYING at $500,000 per year. I’m struggling to make a new business venture work and grow it to multiple locations so we can eek out a retirement before my anesthesiologist wife cries herself to death. Knowing that we’re not alone helps, but now I need to gain control of a situation we let fall apart.

- See more at:

I know what you’re thinking, 500 grand a year and they’re struggling, well cry me a river. Two things to keep in mind, one is to reach that level of income means you have a high end high stress job. Secondly the nature of such a job means you tend to live the lifestyle earn more spend more is pretty much the rule. Breaking that cycle (earn more spend more) isn’t easy but here are 6 steps

  • Know your numbers
  • Trade TV time for blog reading time
  • Don’t trade time for money
  • Play to your strengths
  • Structural deficits
  • Calculate pension and work your way back
Know your numbers Sam’s done a good job of breaking the numbers down but everyone is different so first step it to get YNAB (or similar program) and start tracking your spending. Again from Financial Samurai

We shop at TJMaxx, buy second hand lacrosse gear for my son, use Amazon Prime despite protestations from local businesses to “shop local.” We can’t afford to!!! -
To be honest people aren’t as efficient with their money as they like to think. It’s not till you see the hard numbers that reality hits home. For me it showed that I spent a lot more on entertainment that I thought!

Trade TV time for blog reading time, Whatever your situation, stressed out Mom, deep in debt student, struggling one income family there are people out there who have lived this and come out the other side. Many of them blog about the struggles encountered the successes they’ve had. They do this with the idea that you too can find success the way they did. My lifeline many years ago was The Simple Dollar.

Don’t trade time for money.  Earning more doesn't always mean having more. The thing is when you have two high income high stress jobs you have little time for anything else. Since I’ve stopped working I’ve had the time and energy to be more efficient with our money. Not only that but we travel far more on one income than when we had two incomes. A direct result of having the time to find deals and bargains.

Play to your strengths. To be completely truthful I am not the most Mustachian of people. I've never been terrible successful in the “no shopping no spending” department. But that's OK because what I am really good at is managing my money As the old saying goes “I stretch my money till it screams”. Everybody has different strengths and weaknesses. Work on your strengths and strengthen your weaknesses.

Structural deficits (fixed payments and costs) It’s pretty easy to ditch the iphone but it’s far tougher to ditch the mortgage payment. Well the average American/Canadian moves or switches jobs every 5 years or so. It’s at that point that you have an opportunity to change things. When we lived in Madrid we lived way out in the country and even to go shopping was a 70K round trip. When we moved to Munich we were sure to move into an area where we could walk bike everywhere. We went from 2 tanks a week to less than one a month. Second advantage less mileage means the car holds its value better.

Calculate pension and work your way back Perhaps it’s because I’m a baby boomer but pensions and retirement loom large to me. Biggest concern is if I’ll have enough to retire on. While this is huge subject I’m just doing to touch on it. Using YNAB numbers I was able to calculate the minimum amount I needed so I didn’t have to live under a bridge. Thankfully that amount is less than my basic pension entitlement. So any extra savings are an added bonus!

It's not easy but it is possible and very rewarding to escape the 2 income trap.