The Expense Report – 2016

OK, this should be fun! This post is the first of an annual series that I will publish, usually around this time of the year. It will be pretty much what the title alludes to: my total expenditures from the previous calendar year, with comments on what I would like to reduce/change/improve going forward. But before I go any further, there is one big question that I’m sure a bunch of you out there are asking right now:

“Why on Earth is this guy doing this??”

The rationale behind this kind of post is pretty simple – it’s an accountability piece. It’s for me as much as it is for anyone else (although it may also be a decent demonstration of how to build simple budgets…for those who are in search of a way to do it!). It’s a demonstration of what a person who has early financial independence as a goal can do once their brain is wired to pursue its achievement. My approach and my openness isn’t anything new and it’s the modern father of frugality, Mr. Money Mustache, who has inspired me to be so forthcoming. I’ll give some secondary kudos to an up-and-coming millennial blogger, Gwen from Fiery Millennials, for her work on publishing monthly status reports as well. I admire her honesty and sense of humour when talk about this subject!

Note: the name of this report doesn’t have the word “income” in it. For the time being, I’m not yet comfortable publishing these kinds of numbers. That may change one day though…

My process isn’t perfect: although Mint.com allows me to track all of my electronic transactions, I’ve let $800 in undefined cash purchases slip through the cracks. It’s rare that I use cash, however, so the impact of omitting some of my purchases isn’t huge in the grand scheme of things. Still, it does prove that I have something to improve on as I track my spending! I typically use cash to pay for things such as the occasional dry cleaning bill, some haircuts, the odd drink, and the (very) odd cab ride, so those are the areas of spending (laundry, grooming, alcohol & transport) that would have reflected my use of cash.

Upon further review, I found one final loophole: I spent approximately $300 across a range of random purchases, including things such as a (now-cancelled) newspaper subscription, some kitchen items, as well as a few music downloads. I’m going to add this amount (and the $800 in cash spending) to my final 2016 expenditure total toward the end of the post.

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Finance Friday: Everyone Wants You To Spend!

This past weekend saw me venturing out into my community to experience a wonderful, educational and free (well…paid for with tax dollars…) source of entertainment – I went to my local library!

Looking to feed my appetite for personal finance, I went over to Dewey Decimal System section 332 and, after browsing the section for roughly fifteen minutes, pulled out David Chilton’s The Wealthy Barber Returns (the sequel to The Wealthy Barber, which sadly I have not yet read…), and proceeded to devour the pages with my brain.

At two million copies sold in Canada, The Wealthy Barber is among the best-selling personal finance books ever published in this country’s history. Unfortunately, the library didn’t have the book in its collection. Based on the sequel though, I can tell you that Chilton possesses a light and personable writing style that makes it easy to interpret his teachings and approach to personal finance. This blog post, however, isn’t a book review!

Although I didn’t finish the book during my roughly two hour sitting, I got through enough of the content to get my head wrapped around a logical, but easy-to-overlook financial fact of our 21st century life: everyone wants you to spend money, borrow money, and spend again!

And when I say everyone, I mean everyone! Governments (notice how slow they are to crack down on the housing bubble we’re facing in a bunch of regional markets here in Canada?), your peers (often indirectly and sometimes unintentionally) and of course your local banker (that’s how he/she makes his/her paycheque…) are often all looking for you to make one of two choices with your money – they’d rather you spend it than save it!

These social forces aren’t inherently evil entities, but they can sometimes get totally in the way of what is really advisable for our own personal financial situations.

As stated in the book, governments want to see increasing consumer spending because that boosts overall consumption, which boosts economic growth. Governments love leading growing economies!

Our peers often influence us in subtle ways, such as when one of them flashes a sweet new gadget or drives by in an amazing new ride. This can set off emotional responses in our brain that make us seek out our own joy triggers, which are often accompanied by some shrinkage of our bank accounts.

Speaking of banks, although I’m not fundamentally anti-banking, it is important to keep in mind that a bank is a for-profit business. Its job is to make money, and one of its main product lines is its selection of various lending vehicles (mortgages, credit cards, lines of credit, etc.). All of these offerings can lead to the bank coming out way ahead of you in the transaction. The more money you borrow from them, the better their bottom lines become.

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Finance Friday: Are Gen Y’s Housing Concerns Really That Scary?

As Generation Y continues to stress out about whether or not it will ever be able to afford owning a house, as opposed to renting or living in a condo, my own personal attention has recently been drawn over to this subject.

As some of you may know, I live alone in a rented studio apartment in a neighbourhood that is within walking distance of my full-time job, and is just one- to five-minutes away from good public transit infrastructure. If it wasn’t for the fact that I coach football at a local college about 30 kilometres from my place, I would probably not have a car. As it is still the middle of the football off-season, my car typically doesn’t get driven more than a couple of times a week. But I digress…

Earlier this week I listened to an episode of the Radical Personal Finance podcast (among a trio I have recently recommended) that spoke about a book that I am bound to read in the near future: Dr. Tom Stanley’s The Millionaire Next Door. In Episode 161, Josh Sheats pays tribute to the lessons learned from Dr. Stanley’s writing, and mentions how his work has affected his own life and philosophy regarding money.

Throughout the hour-long recording, a number of very interesting statistics were mentioned (as it appears that the late Dr. Stanley’s work was quite numbers-intensive). Here’s one that really jumped out at me:

“…half of the millionaires in America [at least back in 1996] do not live in “high-status” neighbourhoods…now that means that half of them do, but half of them don’t…your house actually drives many of your expenses…”

Joshua Sheats, Radical Personal Finance

The house and the neighbourhood where we choose to live often exert some strong yet subtle pressures on us to lead our lives in a certain way. This affects the financial decisions we make, which in turn affects the amount of wealth we have and can accumulate.

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