Let's Review... Ryan's First 30 Money Rules

"Nobody is more vested in my family's financial future than me" - me

So I've managed to get the first 30 of our money "Rules" written and posted. These rules have helped us build our wealth, eliminate bad debt and take control over our finances as we move toward financial independence.  I have a bunch more that are in the chutes that I will post in good time.  Until then have another look at the rules linked below.

Rule #1: The Power of Compounding - Earlier is Waaaay Better!
Rule #2: "Lotteries are taxes on the stupid"
Rule #3: Defining Assets and Liabilities
Rule #4: Never Carry a Credit Card Balance... Ever!
Rule #5: Know your Monthly Expenses!
Rule #6: Forget the Latte, Its the Car/Vacation/Renovation Factor
Rule #7: Maximize income in AFTER TAX money

Rule #8: Your Home is not an Asset
Rule #9: Spousal Financial Compatibility is VERY important
Rule #10: Thumb your nose at the Joneses

Rule #11: Dividends - Buy Stocks for the Cash Flow
Rule #12: Use Leverage for MORE positive cash-flow!
Rule #13 Take Accountability. Stop Whining! Go Read a Book already
Rule #14 Live on one salary
Rule #15 Don't try to "Beat the Market"
Rule #16 Plan on Financial Independence without CPP
Rule #17 Save/Invest ALL windfalls or bonuses
Rule #18 Don't Diversity... too much
Rule #19 No Fixed Income
Rule #20 Set Financial Goals

Rule #21 Chart your Progress!
Rule #22 Pay your bills on time.. Every Time!
Rule #23 Automate all Monthly Payments
Rule #24 Borrow money for things that appreciate, pay cash on things that depreciate
Rule #25 Live like a student as long as you can
Rule #26 Create/Develop Multiple Income Streams
Rule #27 No Financial Advisor
Rule #28 Pay No Bank Fees
Rule #29 Talk about money. Ask about money.
Rule #30 Live where you Work, Shop and Play

Rule #30 Live where you Work, Shop and Play

There is a conventional wisdom these days that says "Buy a house in the suburbs of a city because you get more house, sometimes more yard, and the taxes are lower.  The nice neighbourhoods in the inner city tend to be more expensive and people practically live on top of each other."  When it came time for us to buy a house, we only looked in the inner city with the main (but not only) reason being...

I hate paying for parking.

I also generally don't like driving at all if I can get about by some other means.  When we lived in Calgary, I asked one of my work colleagues how much they paid for parking.  At that time, she was paying about $425 per month for a personal, reserved parking spot.  I couldn't believe people would pay that much for parking, but people love their cars I guess.  She lived in McKenzie Towne, which is a suburb of the city, and is about a 20 minute drive, if there is no traffic, from downtown Calgary.  During rush hour it can easily take twice that time to commute that distance.  I can't imagine spending 45 minutes commuting to work by car one way, only to then have to go through the hassle of either finding a parking spot or paying hundreds of dollars to reserve one.  Add in the cost of gas, car wear and tear, road rage, not be able to go for a few beers after work etc and all those negatives look pretty bad in my mind.  No thanks. The cost must be in the 5-figures annually.  Pretty expensive no matter what your paycheque is.

Since I've been a driver, I've never been a fan of long driving commutes.  It started in University where I lived within a few blocks of classes and could walk to everything such as pubs, groceries and other friends places.  For about 9 of my adult years, I either couldn't afford or chose not to own a car, so living close to where I worked, shopped and played was pretty important..  As time passed and I began to make more money, I continued to live inner city and not relocate to the 'burbs, choosing a bike as my main mode of transport.  It is a lifestyle choice that is not without sacrifice.  We pay more in property taxes, have a smaller home and yard, and live pretty close to our neighbours, but none of these have been dealbreakers for us.  We enjoy meeting a socializing with other people so the more opportunity to meet people the better.

The financial and social benefits of living inner city have been significant.  We both work downtown, so we can both walk to work.  We have significantly more time than our friends and most likely less stress.  On the walk/bike home, we are able to stop off at the pub to meet with friends or pick up dinner ingredients at the local grocer.  We are close enough to one of the shopping districts that we rarely need to get in the car to go shopping.  What we have noticed is that this way of living can save you lots and lots of money.  We've only ever had one car which we barely drive in the city. We pay nothing for parking other than what we paid for our house driveway.  If we ever fell on hard times and had to get rid of our car altogether, it would be no problemo because our lifestyle doesn't require or rely on personal motorized transport.  Public transit is always way better in the inner city and there is usually more to do there.  Walking to work gives me a half hour walk in the morning and another in the afternoon.  When does anybody make time to go on two half hour walks per day these days?

When it came time to sell our first house, it had appreciated quite a bit because it was in a desirable walkable neighbourhood.  As energy prices go up, people who live in the suburbs further and further away from where they work, shop and play will pay more and more for car costs that will leave less and less for saving and investing.   Not exactly a road to riches.

What we have done is chosen a lifestyle that on the surface looks more expensive because of higher housing costs (taxes, more upkeep for older housing, higher mortgage), but makes up for it in savings on the transportation costs.... and I have found people tend to underestimate how much transportation actually costs.  I would estimate that we save at least $10k per year and have a less stressful lifestyle but choosing to live inner city where we can walk to everything that we need.  While not for everyone, this lifestyle choice has allowed us to cheaply maintain our existing car and avoid buying a second vehicle, and the savings we've experienced has allowed us to save and invest significantly more that other families in our age and income cohort.

Rule #29 Talk about money. Ask about money.

"Money, like emotions, is something you must control to keep your life on the right track."

- Natasha Munson

Its funny how people refuse to talk about money.  I never really understood why money got grouped in with religion and politics as things NOT to talk about when at a dinner party.  And by talking about money I don't mean comparing paycheques, bank account balances, or hourly consulting rates.  When I say "talk about money", I mean discussing strategy, risk tolerance, debt management, negotiating tactics and so on.  I believe not talking about money is one of the reasons a lot of people are clueless about money management.  I suspect people are reluctant to talk about money because they don't want to talk about all the stupid things they have done or are doing with their money.   Or, it could be that they feel they're being compared to someone who makes way more or less than them and that makes them uncomfortable.  Maybe its because they don't want to find out they could be doing something better or that they are behind all their peers, as if there is some sort of competition going on.  The fact that few people talk about money is probably one of the reasons many families, singles, seniors, kids and governments all have such poor money management practices.

I for one have always been curious about money strategies, and I've never been afraid of asking questions however basic they may be.  I'm also a big fan of the sharing of ideas and problem-solving techniques, usually over a couple of beer.  When I was in University, I remember learning the most important and practical things about life through discussions at the student pub over cheap beer and poutine dinners.  The interactive discussion is where the magic happens, not the book learnin... and I think that still holds true today in the digital age.  I've managed to connect with a lot of like-minded money-talkers over the years and we have become a sort of financial network that I tap into quite regularly.  If you want to become well versed in a particular topic, it is beneficial to surround yourself with people who are smarter than you or have varying opinions on a subject, and the topic of money is no exception, and don't forget to ask lots and lots of questions.  I always like to talk about the mistakes I have made because I am a big believer in the sharing of ideas, both good and bad, and working through problems with different perspectives.  Making mistakes, or being unhappy with your decisions, is part of the process.  For me, it is not something to hide.

The Last Defence Lounge at the University of Calgary for Poutine and Beer nights.

With regards to finances, I am fairly opinionated on those strategies that work for us and those that do not.   However, I have had some great discussions with other people who have completely different strategies, and who are very happy to learn about what we do, and are keen to share their strategies with me.    Knowing and understanding the various routes to financial independence is the first step to actually getting there.  I try and learn from anyone who will talk with me about money.  One priority of mine is to talk money with our two boys when the time is right.  A lot of kids dont get "the (money) talk" with anybody until they find themselves up to their eyeballs in debt.  And while its never too late to learn about money management, it does sting less if you learn good money management earlier in life.

Some topics that might be worth discussing with other people when the topic of money comes up: Investment styles, debt reduction strategies, how to get the right mortgage and whether to pay it down or not, how to define and limit risk, alternative and multiple income streams.  It may also make sense to contact persons you know who have good money practices or have done well for themselves financially, and ask them for some advice.  My experience has been that if you are serious and genuine in your questions, most people are pretty open about talking about their money strategies.