Category: Personal Finance

I’m reading and enjoying a book I got from a good friend for Christmas (“How to manage Residential Property for Maximum Cash Flow and Resale Value” by John T. Reed). Reed has a very pragmatic approach to life and investing, which I appreciate. One of his “rules of thumb” which seems like a good one, is only purchase something to save money if you’ll earn back the purchase price within three years.

He talks about this in the context of electricity metering and whatnot, but I think its probably pretty good universal advice. If you’re running a business and you’re thinking about investing in higher capacity machinery, if you’ll earn back the cost of the machinery in the next 3 years through the increased profit, get it, if you can’t don’t.

We encountered this situation at the building I’m a silent partner at. The active partner wants to install solar paneling. I’ve read about buildings that have installed solar panels and feed energy back into the grid (and get paid for it). It all sounds great, until I got to the part where it takes solar panels 20 years to save/earn enough to cover the costs of the equipment. Factor in the “time value of money” and you’ll never earn back what you put into it. Even though it would save us money every month, we’d never get back what we put into it, so it’s a dumb way to “save” money. I’ve told this to my buddy repeatedly, but he keeps bringing up the idea of installing solar panels every couple of months (I think he likes the idea of having a cutting edge building). We’ll probably eventually put them in (sigh). Down the road, solar panels will get more efficient (cheaper to make and/or more effective) and about the time they’ll pay for themselves in 3 years they’ll be worth installing in most buildings.

On a more personal level, if you’re doing something to save money around the house, make sure you’ll make it back in 3 years through savings. If you’re considering installing insulation, make sure the decrease in electricity spending will save you the cost of materials and installation over the first 3 years. If you’re considering putting a low-flow head on the shower, or installing a low-flow toilet, make sure the savings will be re-couped within 3 years, etc, etc.

What “cost saving” purchases have you made and how long did it take them to pay for themselves?

Merry Christmas to everyone who celebrates that sort of thing! Mike did an excellent Christmas post, so today’s post will only be slightly related to the season.

A funny perspective on entertainment that I’ve discussed with a few friends is the idea of “entertainment time per dollar spent”. The idea behind this being, you’re going to do/buy things for fun in your life (hopefully), and which do you get the biggest bang for your buck from? If you’ll forgive a little math, consider:

Entertainment ROI = Enjoyment * time / cost

Enjoyment is hard to quantify, so I’ll ignore it for this post, but I think it would be fair to factor in the idea that you enjoy something twice as much as something else.

Perhaps a clarifying example is in order. Say I go see a 2 hour movie and I pay $12. My “EROI” is 0.17 (2 hours/$12). You watch an hour of TV each day, and cable costs you $50 / month, your EROI is 0.6 (30 hours / $50). So if someone was trying to save money, and enjoyed both watching TV and seeing movies, they’d probably be better off keeping the cable and stop going to movies for a while (even though cable costs far more then a movie ticket).

I talked about this idea with a friend who is addicted to “World of Warcraft”. He defends it saying it’s his primary entertainment in life, and it offers an incredibly good deal ($13 / month). A “moderate” player probably plays 10 hours / week at least, so this really is a killer deal (3.1 + the cost of the computer and internet access). For someone playing it 40 hours / week, they’re getting an unbelievable deal (but it’ll probably lead to other problems in their life if they’re playing that much).

The extremes are things that you pay for and never use or free things you use often. Say you buy your kid a toy and he never plays with it, the EROI is zero. Alternatively library books can give you hours of enjoyment for free, for a EROI of infinity.

This is one of those ideas that might be worth considering, but it’s probably best not to go overboard with it. The EROI of an evening out with friends is quite low, but it’s a lot more fun than reading a library book at home, so you should still do it. If you find there’s some entertainment you’re doing on a regular basis that has a low EROI compared to other things you enjoy doing equally well (say a gym membership you don’t use, expensive theater tickets you don’t enjoy, a motorcycle, etc), it may be worth cutting out the low EROI activities.

For those who get gifts today, I hope they all have a high EROI!

I’ve never been a big fan of giving or receiving presents at Christmas time. I think when I was a child it was a big deal to get presents especially at an age where I might not have been able to buy much for myself. As I got older I found that exchanging gifts with my parents was basically a “what do you want?” exchange and we would just buy whatever the other party had asked for. Eventually it occurred to me that we could remove a lot of hassle by just skipping the presents all together and just enjoying the other parts of the holidays like eating and drinking which were the activities that we enjoyed the most anyways.

This year we are having Christmas at my house which means a fair bit of travelling for most of my family so we decided that we wouldn’t exchange any gifts between the adults. There will be four kids there and they are fair game for presents! I think this is a great way to do Christmas since it will be a lot of work for us to get the house ready for guests and to prepare meals etc so not having to buy a bunch of presents will make the holidays a lot more enjoyable. To me the best part of the holidays is getting together with loved ones and giving of gifts is irrelevant.

Does anyone else out there do anything different to cut down on giving presents? Anyone think we are ruining the “spirit of Christmas”?

Finally I’ll leave you with a link to Violent Acres who describes her feelings about Christmas gifts which are remarkably similar to mine (although she uses a lot of different words…).

I thought I would write a post about saving money and calories when eating out because like a lot of people I tend to eat out more around the holidays with work functions and family and friend get-togethers. Since I’m trying to lose weight along with limit my spending, these events can work against my goals.

I’m going to use a recent night out as an example of how I tried to save money and calories and still have a good time. I met up with some friends I used to work with at the Marche which is a great place for big groups because they have good food, separate bills and no tips!! Normally I like to have a beer or two (or more) at this type of function which can add greatly to the bill so this time I decided not to have any drinks. Since nobody else at the event was drinking very much I didn’t miss having a drink at all. It might have been different if everyone else was getting loaded but that was not the case here. I estimate I probably saved $20 from this action and quite a few calories. Another benefit of not drinking is that I was able to drive. Although I did pay $5 for parking, a cab home after drinks would have cost about $15.

For my food choices I had the potato rosti and salmon which is my favourite at the Marche. Normally I get sour cream as well but in the interests of my diet I passed on this extra. I have to admit that the dish just wasn’t the same without the sour cream which leads me to another lesson I have learned. “Diet” versions of yummy foods don’t work. If you want to cut calories and fat then choose a food that you like that has less calories and fat. Getting a “low fat” version of something you love or eliminating a key ingredient (sour cream) will probably just disappoint you. Being on a diet doesn’t mean you can’t eat “bad” foods but you have to limit your overall intake so be prepared to “make up” for a night out if you do decide to pig out. Another action I took was to avoid dessert. Normally at the Marche I have a chocolate pudding which is really good but I know it’s pure evil in terms of calories.

Lessons learned at the restaurant:

1. Don’t drink alcohol or at least limit yourself – buy a six-pack of the cheap stuff on the way home if you have to.
2. Don’t skimp too much on the food you like. If you want a certain non-diet dish then get it, but make up for it by having salad instead of dessert. And don’t leave out the sour cream if it’s necessary. 🙂

I recently had a buddy lose his job, and go through the whole job hunt process. He found a new position, and we got on the phone when he wasn’t sure if he was going to take it or not (the salary was lower than his last position). I was shocked that he was debating saying yes or no (leaning towards no) and leaving it at that.

With employment, two needs are being met. The employer is helping the employee with his need for money, and the employee is helping the business with their need for labour. By acting like a beggar when you approach a company, you really aren’t doing yourself any favours (and aren’t understanding the reality of the situation).

When I said to my friend to start negotiating, he glumly told me that the guy had said that the salary offer was the maximum the board would approve and he was viewing it as “take it or leave it”. My response was “ok, leave the salary alone and ask for other things”, such as:

1) A signing bonus. Some companies will balk at the idea, but will sometimes be ok with the idea if you deliver it as something else, such as a relocation re-compensation or training re-compensation for some courses you recently took.

2) A budget for training. Pitch it as it’ll be helpful for your personal development AND for the company. Stress that you’ll take courses that’ll be useful to the work you’re doing at the company.

3) An equipment budget. Ask for a discretionary electronics budget for a pda, laptop, external hard drive, books, or other small items that you wouldn’t want to official apply for approval to purchase.

4) A company car or some sort of car allowance (no idea how this works, as I’ve never gotten anything like this, but some people must).

5) More vacation, the same money for less work is as good as more money in Mr. Cheap’s book.

6) A conference budget, i.e. a discretionary fund you can use to attend conferences for career development.

In the end my friend got them to provide a Blackberry (which he loves and was missing from his last job) and a training budget, which when added to his salary, bumps him up to more then he was making before.

Surprisingly, even companies that have “fixed salary levels” can often be flexible with things like this (if you can call it something other than salary, they can often find the money to make it happen).

If you’re about to say no to a job offer, or are ready to quit, why not ask for a few extra perks? The worst the can say is no…

Any suggestions for other non-monetary job perks you can ask for or suggestions to other salary negotition mind tricks?

I (obviously) like to save money, but I also like to eat (which is how I “fought” my way up to 214 lbs at my heaviest). Toronto, like all cities, has the full range of eateries from bad to expensive to “cheap and tasty” (what I like and will detail here). All of these restaurants are good, cheap, and accessible by subway.

I’ll forewarn that I like ethnic foods, so if you’re a meat and potatoes eater, you probably won’t get much out of this post. If you don’t live in Toronto, please feel free to bookmark this post for your next visit to our (not-so) fair city.

Sushi:

New Generation Sushi on Bloor and Sushi on Bloor (also on Bloor 😉 ) both do a great lunch combo (and a reasonable dinner). If you talk to a Toronto based sushi eater, they’ll probably say one of these two places is their favourite (and hence they’re always fairly busy – be prepared to wait a while on the weekend at meal time). You’re looking at spending around $7 / person if you’ll drink the included green tea and not order anything extra. Katsu Sushi (572 Danforth Ave. E.) is great for when you’ve got a massive hunger and aren’t offended by the concept of all-you-can-eat sushi. Avoid Mariko for all-you-can eat (or generally). I managed to fish [pardon the pun] a piece of metal out of my sushi (which I delightfully found mid-bite), and after I pointed it out to the waiter and the chef, all they did was deny it (yeah, right, I’m trying to scam a free dinner) and gave us some free freezer-burnt green tea ice-cream. I haven’t been back.

East Indian:

Buffet is totally the way to go for Indian food (you get WAY more food and variety for your buck). My ex-girlfriend always insisted that ordering dishes individually was higher quality food, but I think this was just in her head. There are a ton of buffet restaurants, all competing with each other along Queen W. Get out from the subway on a Sunday around noon and just head west until you find one you like the looks of (competition is a beautiful thing). For some strange reason the buffets are just for lunch (at most places). In Little India (on Gerrard) you can get dinner buffets, but they’re more expensive. If you’re afraid of trying a restaurant without getting a recommendation first, go to Kama. They’re also great for their take-out lunches (they give you a container and you try to stuff as much food from the buffet into it as you can), which is super if you work in the area.

West Indian (Caribbean):

Not the cheapest in Toronto, but the curried goat for $11 from Albert’s is Mr. Cheap’s favourite food (for a while I was eating this almost daily!). The large serving is enough food for any except the most massive appetites. Everyone else seems to love the ox tail (which wasn’t bad, it just wasn’t as good as the goat).

Vegetarian:

Good, cheap vegetarian restaurants are tough to find, and about the best in the city is Jean’s Vegetarian Kitchen (1262 Danforth Avenue). Its Asian-style vegetarian food, and a great meal even for a near-carnivore like Mr. Cheap (the “fake duck” is disappointing but everything else is great). Avoid Fresh and Le Commensal, not because they’re bad, but just because there’s better food for the price.

Vietnamese:

Ginger (at 695 Yonge St. next to “The Brass Rail” [not work safe] where I’d recommend going for dessert 😉 or down the road a ways at 399 Younge) is a dirt cheap, cafeteria style Pho joint. I like the rare meat with beef balls Pho, a large bowl of it can be had for $5!

Cheap Date Restaurants:

These are a little pricier, but work better for a date (not so obviously cheap places). For Thai try Springroll’s (the seafood pad thai, satay chicken mango salad and sexy summer rolls are a feast for two when split). Ethiopian is a great choice to make you seem worldly (although you can spoil it by making the joke “I thought they didn’t have food in Ethiopia”, which I can’t ever refrain from doing) which is yummy at Ethiopian House. Be warned, you’ll be eating with your hands.  Their coffee ceremony is pricey, but fun to do once (tell your date that coffee originate in Ethiopia and they might be impressed).

So that should hopefully provide some new eateries to try on the cheap. Anyone have any suggestions for places I’ve overlooked or have had a bad experience at any of these?

After writing this I could really go for a curried goat…