Author: Mike Holman

Categories
Baby Expenses

9 Frugal Ways To Get Children’s Books

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Book reading is a very important activity in my family as it is with many others. My wife owns several hundred thousand books, I like to read a lot and our son is a big advocate of reading as well. I should probably clarify that since my son can’t actually read yet, he’s a big advocate of having other people read books to him. Over and over and over again!

One thing that really bothers me about children’s book is the extreme cost. You can buy a adult novel for around $15 for a 350 page book which works out to four cents per page. Obviously there will be a wide range for that calculation but my point is that it’s fairly low. Kid’s books on the other hand seem to be able to charge up to one dollar per page which I think is excessive. Now I will concede that they often have much thicker pages and nice illustrations but it’s still a lot of money. We’ve been able to obtain children’s books for very little cost so I thought I would share some of those ways here.

  1. Borrow from the library – most libraries have kids sections so if your child is getting tired of the current batch of books then this is a good option. Our library is pretty understanding if there is a bit of wear and tear on the returned books.
  2. Buy from the library – our library has a small section where older/hacked up books are for sale for a small price. The book in the photo was purchased for 25 cents and it’s our son’s favourite book.
  3. Yard sales – this is a great, fun way to pick up new (to your child) books for a small price. 25 cents, 50 cents are reasonable prices for a used book.
  4. Book exchange – if you know other people with similar age kids then offer to exchange some books with them. Both kids will benefit. Just make sure you don’t give away their favourites!
  5. Hand-me-downs – neighbours, friends and relatives with kids a bit older than yours, can be a great source of used books.
  6. Gifts – some people (who don’t read this blog) just have to buy new gifts for your child or newborn. Even though it’s a waste of money, hinting that books are a better gift than yet another pink, frilly dress might at least get you something useful.
  7. Used book store – this is probably the most expensive option on the list but it’s worth a try.
  8. Online classifieds such as Craig’s list, Ebay are good for buying used children’s books. You might end up with a batch rather than individual books.
  9. Freecycle – this online exchange is hit or miss but the important thing is that it’s free so if you can grab some books then it will be worthwhile.

Let me know in the comments if you have any other frugal ways to get kid’s books.

Categories
Announcements

No Post Today!

Because of the Victoria Day holiday there is no post today. Check back tomorrow however for more exciting content!

Categories
Announcements

Saturday LinkStuff, Funny Comments And Weight

Weight was 179.5 pounds this week. Holding steady which is surprising considering my diet hasn’t been stellar. I’ll take it.

Funny comment

This week I did a post on some moronic Toronto parents which generated lots of great comments. Looby was inspired to leave the following comment which I thought was one of the funniest I’ve read:

True story with a Vancouver twist: my friend and I were in a store when a loud voice from the doorway proclaimed “a little help with my stroller, thank you” aimed generally into the store. As we were nearest we went over to see what assistance she needed, only to discover her baby was in fact a white poodle, with bows.
The truly depressing aspect is that I have lived here long enough to not even be surprised but I sincerely hope she never has any human “children” I imagine she’d be insufferable.
As for children in fancy restaurants, please no, I’d rather find the poodle at the next table.

Articles that I really enjoyed over the last few weeks

Canadian Capitalist wrote that it’s ok to revisit your asset allocation and make changes once in a while.

Million Dollar Journey did an interesting comparison of Canadian vs American retirement accounts.

Thicken My Wallet talks about companies splitting up and the stupidity of Wall Street.

The Financial Blogger gives us a look at a typical day in his life. Let’s just say he keeps busy!

Canadian Dream had a second child as well and has lost track of time. I can totally relate – I find the lack of structure of not working to be extremely unproductive.

My Dollar Plan faces an interesting situation – she has two young kids and would like to work at home. So far she hasn’t given up her day job but she has an option of taking an early retirement package – at age 28! If she’s retired she might have more time to feed her spread sheet addiction! 🙂

The Dividend Guy says that dividend growth is far more important than dividend yield when selecting dividend stocks. Excellent advice. Next question – which companies are going to grow their dividends the fastest?

Middle Class Millionaire is giving up the city life and moving to the country. Good luck with the move.

A big congrats to Ron at the Wisdom Journal and Lynnae over at Being Frugal who both paid off their credit cards. Ron wrote a pretty good post about the myths of credit card debts and I loved Lynnae’s picture of her Citybank credit card which she attacked with a hole punch (and probably a few teeth as well).

The Money Gardener wrote an interesting piece on how to hedge your gasoline stocks with energy trusts. The cool thing about this post is that he actually puts forth a specific plan.

Financial Jungle wrote about Community Lend which is the Canadian equivalent to Prosper and Lending Club. Hopefully it will be more successful than its American counterparts. Lending Club isn’t taking any new lenders and Prosper didn’t renew their advertising on our blog which is clearly a step in the wrong direction.

Where Does All My Money Go wrote about the costs of mutual funds in Canada. This might be entertaining for our American readers to find out how dumb the average Canadian investor is (to pay these fees).

SquawkFox wrote a great piece on buying life insurance and how to be a woman which got linked from Steve Pavlina. I don’t read Pavlina but he has a huge blog.

Brip Blap put together an absolutely brilliant list of ways to simplify your finances. I’m not a big fan of list posts, but sometimes (like this time) they turn out pretty well. I agree with all of his suggestions entirely.

Triaging my way to financial success wrote a piece on a favorite subject of mine – the sub-prime crisis!!

Gather Little by Little wrote a really good post about being bored at work. I can relate to that. Check out the photo as well – it’s a classic.

Categories
Personal Finance

Concentrate On Savings First

I wrote this post quite a while ago but when Mr. Cheap published a post on a similar idea (Labour versus Investment Income) yesterday, I figured it was a good time to post it. His post focussed more increasing income rather than investment strategy whereas this post has more to do with savings.

I was talking with my sister a while back about investing and she was asking about some of the types of investments that I own. I am a passive investor and own mostly exchange traded funds. Since she is moving to Asia later this year, she doesn’t have access to the same exchange traded funds that I do and was worried about missing out or not having the best investments. My answer for her was – don’t worry about the exact investments you own – the main thing is your savings. If you spend less than you earn, hopefully a lot less than you earn, then you will be fine. You don’t need to have the absolute best investment plan to secure your financial future.

What are savings?

I define savings as using your earnings to increase your net worth. If you earn $1000 and pay off some debt then you have saved that money and your net worth has increased. Normal savings of course, is when you have the actual cash and can keep it in the bank or invest it. Ultimately your financial security depends on how much money you have – how you got there doesn’t really matter. Whether you invested in bonds, stocks, expensive mutual funds – whatever – that is not as important as how much money you saved in the first place.

Some proof

I set up a little financial model to show the effects of investment return compared to rate of savings. Basically I want to compare one person who save a lot of money but gets a low rate of return with another person who is a much better investor and consequently gets a higher rate of return – but they don’t save as much. The question is who ends up with the most money?

Scenario

Saver Bob saves $10,000 per year and invests in a tax-free account. Saver Bob is very conservative and can’t stand the thought of his investments declining in value so he invests in government bonds which pay 4% per year.

Trader Tim saves $5000 per year and also invests in a tax-free account. Trader Tim is very aggressive with his money and invests only in equities which have a higher expected rate of return compared to bonds, but are also a lot riskier since he can lose money. Trader Tim is a pretty successful and get 8% per year which is double that of Saver Bob’s 4% return.

After 20 years, who has the most money? The saver with the low rate of return or the not-so-good saver with a much better rate of return? The answer is that Saver Bob wins the race by quite a bit. Saver Bob ends up with $320,000 which is 27% more than Trader Tim’s total of $252,000.

Summary

We saw from our example that the investor who saved twice as much but got only half the return, ended up with a lot more money. The point is that you should put more effort into saving money rather than how to invest it. I’m not suggesting that it doesn’t matter how you invest – just that it shouldn’t get the same priority as the saving. Once you have your costs under control and feel like you have maximized your savings, then worry more about things like asset allocation, investments etc.

Categories
Opinion

Why Are Some Parents Morons?

Katrina Onstad wrote a very interesting article about babies and their parents in a recent issue of Toronto Life. She looked at the phenomenon of parents who are too focussed on trying to project their own tastes and styles through their kids. There were several little “stories” sprinkled throughout the article told by parents on various topics. Two of them inspired this post.

Story #1 – Fine dining with a 3 year old

We went to Tomi-Kro one Friday night, and it was crowded so we sat at the bar. We drank wine, and Max (3 years old) had apple juice. Then Max had a bit of a tantrum – he kept asking for more ice. The bartender and all the staff were cool, but we got a mixed reaction from other people – a lot of really dirty looks in that passive-aggressive Toronto way, like they thought we were bad parents.

Tomi-Kro is our favourite restaurant – it has excellent food and is very expensive which is why we only rarely eat there. When we go there it’s a special occasion so we get a sitter and have a lovely meal. I wouldn’t even consider bringing my kids for dinner because the idea of chasing my son around a restaurant while my expensive meal is getting cold just doesn’t make sense to me. The other reason I wouldn’t bring my kids is consideration for the other patrons. In a nice restaurant, a certain level of behavior is expected and if you can’t meet that level then you shouldn’t be there. It doesn’t matter whether you are a three year old in the middle of a tantrum or an obnoxious 35 year old who has had too much too drink – either way you don’t belong there.

To be honest, it wouldn’t bother me if there was children in a nice restaurant, but if they started acting like kids (imagine that), then it would definitely put a damper on my dinner. I do enough diaper changes at home so that when I go out, I don’t want to have to interrupt my filet mignon to tell another parent changing a messy diaper that they missed a spot.

Story #2 – Riding streetcar with huge stroller

When I was hugely pregnant, few people would give me their seat on the Queen streetcar – like they were practicing selective blindness. These days I have a big, honkin’ all-weather stroller that only just fits onto the streetcar; the driver or another passenger has to help me on and off. So when people have to squeeze by or when Gabriel start screaming, I view it as payback.

I couldn’t believe this story. First of all – just because nobody gave up their seat to you when you were pregnant doesn’t give you the right to block the entire isle in the streetcar. Second of all – I don’t bring our larger stroller on the streetcar mainly because it’s just a lot easier to have a smaller stroller in a crowded public place. I like to call this concept “COMMON SENSE“. I have a big double stroller that I use for jogging, but I am extremely aware that it takes up the entire sidewalk so I go around anyone who is coming the other way. If I’m going anywhere in any kind of vehicle at all (car, bus etc) then I take the umbrella stroller which is very small.

What do you think – are these people the morons I think they are? Does this qualify as a “Mother’s Day post?”

Categories
Announcements

Festival of Frugality #125 – Save Some Money If You Are Rich Edition

Welcome to the 125th Festival of Frugality!

We have lots of good posts for you today and we’ll also learn how to save money on some higher-end items – because rich people like to save money too! Make sure you submit another post for next week because my friend Mike, The Financial Blogger is hosting.
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photo by ArchanaRCars can be very expensive, especially this Lamborghini. I keep seeing a nice black Ferrari that looks like the batmobile driving down my street which is very odd considering it’s probably worth more than most the homes in the area. If I owned a car like that I would save money by washing it myself. I would use the $500/year or so savings and apply it to about two weeks worth of insurance.

Best car washers (editor’s picks)

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photo by Lost ConnectionOne of the trappings of the extremely wealthy is that they are not restricted to living in one measly house and maybe a crap shack in the country. No, the mega-rich can buy whatever they want, wherever they want. My suggestion for them however is that they try to buy a cottage that is not too far from where they live in order to save gas. Sure it’s nice to have a cottage in France or on the opposite coast, but gas isn’t getting any cheaper!

Best gas jockeys

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Hired help – we all know how expensive it is to have a full complement of hired help these days, gardener, nanny, cook, butler etc. My suggestion here is to try to hire people who can do more than one job. A cook doesn’t need to be cooking all day so maybe he can cook part time and work in the garden or clean the house for the remainder of the work day.

Best French maids

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photo by ulterior epicureIf you are entertaining guests on a regular basis then you have probably noticed how the costs of caviar has gone through the roof. For your next get-together, try doing a quick estimate of how many guests you will have, multiply by a reasonable serving per person and only order enough so that you won’t have to throw out thousands of dollars of fish eggs like your last several parties.

Tastiest appetizers

Categories
Announcements

Globe and Mail Stats Breakdown (and weigh-in)

If you are a regular reader of the blog then you couldn’t help but notice that we were listed in the Globe and Mail’s “Best of the Blogs” competition this week. Rob Carrick who is the top personal finance journalist in Canada (and clearly a pretty brilliant guy) picked our blog as one of his favourites. This was a big deal for us because it generated a lot of traffic that was not only plentiful but of high quality since it’s fairly likely that some readers of the Globe and Mail Business section would be interested in our blog and will hopefully become regular readers.

One of our long time readers, Guinness416 who has a blog of her own called “Drinkin’ Guinness in the 416” (416 is the telephone area code for Toronto) asked in a comment about the traffic we were getting so I thought it would be interesting to look at all the traffic for that day and see where it all came from.

Traffic breakdown for May 6

Total visits = 2661 This is much higher than our normal daily average of about 900.

Where did all the visitors come from?

  • The Globe and Mail – 1054
  • Search engines such as Google – 497
  • Stumble (social networking site) – 488
  • Three other sites that were mentioned linked to us that day and gave us 280 visits – The sites were Canadian Capitalist (129), Dividend Guy (76) and Million Dollar Journey (75).
  • Other sources (blogs, direct etc) – 342

 

In the three days after May 6, we have gotten another 870 visits from the Globe and Mail which is a lot less than the initial day but still pretty good.

So there you have it – if you want some quality traffic all you have to do is get linked by the Globe and Mail!

Weight

The weight was 180.5 pounds. Diet hasn’t been great but I’m going to try to work harder on this.  One of my problems has been too much junk food around the house which is hard to resist after a while.

Categories
Real Estate

Zero Down Payment On A House Is Just Fine

Now that we are in the sub-prime era, it has become very fashionable to declare that home owners that bought houses with little or no down payment are a big reason why foreclosures are at record levels. I have to respectfully disagree.

In my opinion, when buying a house, it doesn’t make a big difference how much of a down payment you have. Ideally, if you have 20% or more then you save on fees and interest which is a good thing, but if you are set on buying a house and you have don’t have anywhere near 20% then I wouldn’t worry about it.

The down payment has nothing to do with the affordability of the house

Your ability to make your mortgage payments will determine how well you can afford your house which is completely unrelated to the size of the down payment. In other words, it’s the size of the mortgage that matters. Now you might be thinking that for the same house price, a larger down payment will reduce the mortgage which will reduce the payments. This is true, but unfortunately most house buyers don’t think that way. Typically they will look at how large a mortgage payment they can afford, figure out a maximum mortgage and then add their down payment to the maximum mortgage to give them their maximum house price. This of course will get thrown out the window once they start looking at houses but that is at least, how the initial house price maximum gets calculated.

An example

One house owner, let’s call him “Mike” bought a house for $168,000 with $20,000 down payment. Because he only had 11% down payment he had to pay an extra insurance fee of $3700 which left him with a mortgage of $151,700. With a 30 year amortization mortgage at 6%, his monthly payment is $902.

Another house owner, let’s call her “Sue” bought a house for $268,000 with $53,600 (20%) down payment which left her with a mortgage of $214,400. She avoided any extra fees because she had the 20% down payment and she also qualified for a better mortgage rate of 5.6%. Her monthly payment is $1222, 35% higher than Mike’s payments!

In this case, Mike’s house was more affordable even though he didn’t have as big a down payment as Sue.

Down payment is only one factor

Having a larger down payment is preferable to a smaller down payment, but not having an arbitrary percentage shouldn’t stop you from buying a house. It’s important to look at all the numbers which affect your ability to afford the house – mortgage payments, taxes, utilities, maintenance etc and decide if it make sense to buy a house with a small down payment or wait until you have a larger one.