Debt-Free Forever Gail Vaz-Oxlade (best ereader for epub TXT) 📖

by saying something like, “I never buy myself nice things” or “I work hard” or “I haven’t spent a penny in the last two weeks,” then you’re listening to the Gremlin and you should think twice about spending the money.

If new furniture, a family vacation, or a spectacular wedding is so important to you, why haven’t you saved the money to pay for it? I have no problem with how people spend their money, as long as it’s their money they are spending and not credit. You want to blow $50,000 on a wedding? Then have $50,000 in the bank. It’s that simple. But to go into debt for a wedding is just about the stupidest thing I can think of.

If you really want to buy something, and you don’t have a system for keeping your mental accounting honest, you will create the ambiguity you need so you can justify spending the money. But whatever justification you come up with for spending money you haven’t yet earned (shopping on credit) or spending money that should really be going somewhere else (to savings, debt repayment, or on an upcoming bill), you’re just fooling yourself. If you’re ripping off tags, hiding stuff in the back of cupboards, lying about what you spent, or creating excuses for your shopping, you’re playing games, and you’re going to lose.

If you have a well-thought-out plan for buying something you need or want—if you’ve put it on your shopping list, planned your spending, and accumulated the money—you can go shopping and enjoy the pleasure of the acquisition. You can revel in the drugs your brain releases when you bag your treasure. And you can enjoy shopping without worry of going home with Buyer’s Remorse because you are in control.

PART FOUR

PREPARE FOR THE FUTURE

8

SAVE FOR THE LONG-TERM

Once upon a time, when we made $10, we saved $1. Some people saved $2. Some saved 50$¢. But people knew that if they wanted to feel safe they had to have some money put aside just in case. Back in the mid-1970s, Canadians saved 10% or more of their income. By the 1980s, the Canadian savings rate had jumped to about 18%, which is why Canadians got the reputation of being “savers” and so much better than our American cousins when it came to money. How the mighty have fallen: by the end of the 1990s, Canadians’ savings had dived into negative territory.

One reason we stopped saving is that we was fooled. Because of record growth in both the stock and real estate markets, we let ourselves be convinced that we were rich. Another reason we stopped saving was that with ample credit available, we saw no need to save. We believed that the money would always flow smoothly from pocket to pocket, and there was plenty to go around. If you needed money and couldn’t get your hands on cold hard cash, you could always use credit.

Each of us holds in our hands the power to make the life we want. Each of us can create for ourselves a life that is full, inspired, happy, peaceful, creative, loving, exciting, grand. To do so means setting aside a little of what we have now for when we don’t have so much. Yes, it means “saving.”

SO YOU WANT TO RETIRE? SOMEDAY? MAYBE?

We’re full of trepidation about retirement. Some of us just ignore it because we’re sure we’re never going to be able to stop working. Some of us stick our heads in the sand because we’re afraid to look at the possible outcomes. Even those of us who are socking away money every year often find ourselves confused about where we should be putting our money. There are so many conflicting messages that many of us feel paralyzed. Taking no action seems so much easier than trying to figure out the answers to the big questions.

Ya know what? It isn’t that big a deal. Yes, you have to think. And yes, you have to do some math—oh gawd, not more math!—but figuring out how much you’ll need is actually pretty simple. It’s a matter of answering the four key retirement questions:

How old are you and how much time do you have before you retire?

How much will you need and what sources of income do you have?

How much return will you earn on your investments?

How serious are you about saving?

How Much Time Do You Have?

The earlier you retire, the more you’ll need to get you through retirement. According to the Stats Man, our average life expectancy continues to go up and the gap between men and women is closing. If you’re planning to retire at 60 and stay put until you’re 82, you’ll need enough money to get you through 22 years of not working. The longer you put off your retirement, the more you can accumulate before you trade in your workboots and the less time that money has to last.

If you plan to work part-time during retirement, you’ll be able to supplement your pension with money you earn. This is a growing trend as we recognize that work ain’t all that bad after all.

Part of how you decide how much will be enough for retirement will be affected by how old you are right now. If you’re in your 20s, you’re about 40 years away from dusting off the rocker. While you may have very little information to go on in terms of what things will cost and how much you’ll need, you’re in the best position since you have loads of time on your side.

It’s been estimated that if you wait to start saving for retirement until you’re in your 40s, you’ll have to sock away 18% of your income. But if you start in your 20s, then you only have to put aside 6% of your net income.

Early savers can also behave a lot less desperately when it comes to choosing an investment with