An Interesting & More Real Christmas

If your local newspapers are correct, it would appear that the recent financial turmoil has changed the way in which many people have viewed Christmas in 2008. Everyone knows that Christmas is overly commercialized and it is difficult not to get caught up in the hype and frenzy. But recent reports appear to indicate that spending will be down this year, and that many people will be looking less at the material aspects that typically surrounds the holiday, and more toward the important aspects of Christmas such as spending time with family, giving gifts with meaning (i.e. making them) and still giving to those who are less fortunate as well as donating their time. Shelters and food banks in my hometown of Toronto have been turning volunteers away, as they already have more than they need. Some charities have noticed an increase of people making donations in others' names in lieu of giving them a Christmas gift.

Perhaps this year and possibly 2009 (if economic predictions hold true) will build the foundation away from rampant consumerism and materialism and with future holiday seasons remaining closer towards the true spirit of Christmas. That is my Christmas wish this year.

One Sector That's Thriving in These Thrifty Times

When bad news prevails throughout the economy, it's sometimes hard to find sectors that are thriving. The one I did find was the thrift store sector which encompasses those business that sell second-hand goods, sell items on consignment and even sell gently-used high-end, brand name clothing. I'm happy to see this sector thrive for a number of reasons:

1) It reduces waste by having more people recycle their unwanted clothing, and curbs rampant conspicuous consumption
2) Often donations and their subsequent sale of unwanted clothing helps support charities such as Goodwill and Salvation Army to provide important social programs in the community

3) More people start to realize that they can buy almost any type of item at far less than retail prices

4) It reduces the temptation to adopt a 'keeping up with the Jones' mentality

5) Greater adoption of buying used items, starts to change the stigma associated with thrift and second-hand stores

So, for me, there is a silver lining to the dark cloud sitting ominously over us.

10 Easy Ways to Save Money Right Away

The economic news continues to be bleak, with ongoing reports of job losses, gloomy forecasts and weaker economic numbers. Not even the euphoria of an Obama victory or aggressive rate cuts by numerous foreign central banks has been able to wash away the harsh realities of the current financial mess the world is in.

Now is the time to hunker down and tighten belts. While never easy to change one's long-standing habits, it can be easier than one thinks. Here are some easy ways to quickly (and somewhat painlessly) save some cash.
1. Lessen your debt by cutting up your credit cards, so that you don't spend as much

2. Reduce interest costs by paying off as much of your credit card debt as possible, or by consolidating your loans

3. Review all your insurance (car, home, life) and utility (cable, phone, cellphone, Internet) rates and change vendors

4. Cook rather than buy prepared foods (cheaper and healthier)

5. Cut out daily impulse purchases, such as candy, lattes, cosmetics, magazines etc.

6. Sell unused items - those items that you have purchased, but now languish in a closet, garage, attic or basement.

7. Use the library as your source for DVDs, books and magazines

8. Use coupons, and buy in bulk on staple items that are on sale
9. Comparison shop before actually buying

10. Dine in with friends, rather than dining out at expensive eateries

Sweetening the Deals in a Car Buyer's Market

With news that the Big Three Detroit automakers are flirting with bankruptcy, it is probably a great time to make a deal on a new car. While prices are rapidly falling through generous incentives and discounts, financing may still be expensive, but for anyone with cash, this is a particularly fruitful time to start shopping for a vehicle. I have noticed that prices have been dramatically lowered on cars that do not need to be financed through the dealership. In Canada, you can buy four cars for less than $10,000 if you pay for them in cash. These are the Hyundai Accent, Chev Aveo, Kia Rio and Pontiac Wave. I have recently seen the Kio Sportage SUV offered for less than $15,000 (cash price), a discount of $5,000. Or when I was in Vancouver last month, I saw a Honda dealership offering a brand new Honda Odyssey minivan for $24,000, an $8,000 discount on the $32,000 MSRP.

While you won't find incentives for the most popular of the fuel efficient cars such a the Honda Fit or Toyota Yaris, it is the complete opposite for the (sometimes perceived to be) gas guzzling sectors such as trucks and SUVs.

Traditionally the best time to buy a new car in North America is at the end of summer (mid-September onwards) as dealers attempt to get rid of the current year's stock, and making space on showroom floors for next year's models. Models whose sales have been disappointing are also ripe for a great deal. These days, with sales of almost all vehicles falling (and therefore having disappointing numbers), most car manufacturers are offering deals, discounts, rebates and incentives on almost all models.

With Christmas looking bleak for many consumer-oriented sectors including retailers, look for December 2008 and January 2009 to be another opportunity to strike a good deal, as car dealers experience a quieter-than-normal new year lull. Certain cars have specific times of the year when it is best to buy them. For obvious reasons, autumn and winter is the best time to buy a convertible. Likewise, after the summer holiday driving season is over, the price of minivans start to fall.

For new car buyers with cash in hand, the next year or two will feel like Christmas all year round.

When Buying Domestic is Really Buying Import

In these days of sky-high gasoline prices, drivers are looking for alternatives to reduce their overall costs of ownership - including purchase price, fuel efficiency maintenance and depreciation. The days of gas-guzzling V8 engines may be over, spelling a radical shift in the thinking of US car makers. Isn't it ironic that hybrids and electric cars were slow to the market by the domestic car makers (because their gas guzzling SUVs and trucks were their highest margin vehicles), but they have been able to unveil the Escalade Hybrid and Volt electric car in mere months after crude oil spiked to record levels?

It was not that long ago that Japanese (let alone the Korean) automobiles were considered to be of low quality and unworthy of consideration by discerning buyers. Where the Asian automakers have been very good (as opposed to the Eastern European manufacturers such as Yugo and Lada) is that they have persevered over their initial poor decisions of bringing low-cost, low-quality cars (remember the Hyundai Pony) to North America, and took a long-term approach to building vehicles that emphasized reliability, quality and fuel-efficiency. This is also a very different approach to the Americans who focused on lots of gadgets and features, big engines but poor reliability and low quality vehicles. Granted, they have started to follow the Asian philosophy, more out of necessity, and started building better quality products. This has been so ever since the Toyota Camry and Honda Accord surpassed the Ford Taurus as America's best-selling car. In the more conservative Canada, the smaller Honda Civic has been the best-selling car in that country, surpassing the Chevrolet Cavalier/Pontiac Sunfire a few years back.

Which brings me to this post, and how smart consumers can buy import quality vehicles but pay domestic vehicle prices. I have been doing this for years and have been rewarded handsomely for paying next to nothing for used cars that lasted me a number of trouble-free years. There are a number of cars on the market that are Asian but are badged as domestic. This has been going on for years, as all the US car makers have used their partnerships and/or ownership of Asian car manufacturers to help them bring smaller cars to the local market. They called it badge engineering. In the 1990's, the Dodge Colt was really a Mitsubishi, the Geo Storm was really an Isuzu, the Geo Tracker was a Suzuki, and even the Geo Priszm was really a Toyota in disguise. Buying them on the used car market was an especially good buy (except perhaps the Ford Festiva which was a re-badged low-quality Kia), as the rate of depreciation on these 'domestic' vehicles was much faster was much faster than those for their imported cousins such as Honda, Toyota and Mazda.

These days, such badge engineering still exists, although perhaps not as frequently as in the past. But buying a new Chevrolet Optra or Aveo is really buying a Daewoo, and the Pontiac Vibe is mechanically identical to the Toyota Matrix. Many Ford vehicles share a platform with Mazda cars. The Saturn Astra and Aura are really award-winning, German engineered Opels. Even some recent large-sized Chevrolet models such as the Epica were really Suzuki cars.

Because the Big 3 domestic automakers are currently in financial difficulties, they are more likely to offer all sorts of incentives and discounts, and you are much more likely to be able to bargain for a rock-bottom price with them than the dealers of imports. So get the best of both worlds by doing some research on the exact origins of the vehicles you are considering, and go get the salesmen to sharpen their pencils and grab yourself a bargain.

Are We Crazy or Is Everyone Else Lazy?

I recently wrote a post about the use of time, and as I am headed for a two-week vacation to the west coast (Seattle & Vancouver), I thought I would write a post about vacation time. This topic has always intrigued me, as people often tend to complain about a lack of personal time, and a need to find time to escape from the stresses of the rat race. Throw in the piddly amount of vacation time given to North American employers, and it becomes even more baffling that the average American and Canadian worker fails to use up all their allotted vacation days. Huh?

This anomaly has existed for many years. According to the OECD (Organization for Economic Co-operation & Development), recent stats show that Americans put in 15% more hours than their European Union counterparts, with Koreans putting in the most hours. At the same time,the average amount of vacation time for North Americans is two weeks while in Europe it is around four weeks.

And yet, according to Expedia's 2008 International Vacation Deprivation Survey, 31% of Americans do not take advantage of their full vacation allocation, leaving an average of 3 unused vacation days, compared to only 1 in Canada. This translates to employees giving away $65 billion of earned money back to their employers.

To me unused vacation is like throwing away money. Anyone trying to maximize their dollars would make sure they take their full allotment of vacation days, if not for monetary purposes, at least for their own health, sanity and overall well-being. By the way, according to the Expedia survey, the average French worker gets 37 days vacation.

Thinking About Time

Today is Thanksgiving Day in Canada, and a well-deserved respite for the workforce. I'm sure that everyone relishes the day off to relax, but also worry about maximizing their free time to 'get things done'. Since I quit working, I have had lots of time on my hands, and sometimes the things that I said I would get done "when I had more free", still haven't been done. Most are mundane tasks such as sorting out my old financial statements, cleaning out closets, wash the car etc. Sometimes, no matter how much time we have, we will still procrastinate because no-one really likes to do the small and often dull stuff.

I am a great proponent of making 'To Do Lists' as it prioritizes the day's activities and gives me direction. When I have completed the list of tasks, I also gain satisfaction in accomplishing things I probably would not have done if I had just been left to my own devices. My biggest problem, as is for most others, is that I often tackle the easy tasks on the list first, and carry over the hard ones to the next day (indefinitely). I know that I should be doing it the other way, but humans tend to look for the easy way out first.

This got me thinking about how I use my time, and how many people seem to be so time-stressed these days. Rushing around like crazy, not enough sleep, not taking their full allotment of vacation days are all symptoms. We often spend inordinate amounts of time doing unproductive things, e.g. watching re-runs on TV, standing in line-ups, window-shopping etc., instead of more important things like connecting with friends and loved ones. I remember when I was working 60 hour weeks, my Mom would often ask why I hadn't called or visited for a long time, and my excuse was always that I was too busy at work and ran out of time. I had broken one of my own rules that I had demonstrated in an exercises used in seminars and workshops that I had delivered. The exercise was simple: Fold a sheet in half, and on the left side of the paper, write down the 10 areas where you spend the most time every day. On the other side of the piece of paper, write down the 10 most important things in your life (that you value or are passionate about). More often than not, this simple exercise demonstrates that incongruency between where we spend the majority of time (work, shopping, commuting) versus what's most important to us (family, friends, travel, reading, hobbies etc.)
I came across a little note that I had cut out many years ago, and every now and then I use it to remind me of the value of time. I'm not sure who the author is, but it has meaningful lessons that we can all use in our daily lives. Here it is:

Some Thoughts on Time

- How you spend your time is how you spend your life

- Each hour you spend is a piece of your life that is gone forever

- Spend your time on those things that matter to you most

- How you spend your time is a matter of choice

- Time, like money, is a resource. But you can't steal it, borrow it or save it for a rainy day. You must use it or lose it

- You can make time work for you or against you

- Where you are in your life right now is a result of your past choices you have made about how to spend your time.

I hope this post helps you to make better use of your time or help prioritize where you spend your time. And Happy Thanksgiving to my fellow Canadian citizens.

Greed versus Morals - the Blight on Capitalism

Congressional hearings grilling the heads of Lehman Brothers and AIG have focused on the huge payouts to executives while the losers have been their employees and taxpayers. What has come to the attention of the public is how much money someone like Lehman CEO Dick Fuld made over the past few years (estimated to be $490 million of which none is recoupable) while tens of thousands of his employees have now lost their jobs and with the worthless stock price, their savings and retirement plans. How he sleeps at night is beyond me. There was a time where the average executive earned about 20 times the average salary of their workforce. Now, a CEO can earns hundreds of times the average salary of their employees. How much money is enough? It's one thing to be like Warren Buffet and Bill and Melinda Gates who have donated the bulk of their fortune to charitable work, but another thing to behave like former Tyco CEO Dennis Kozlowski who spent $6,000 of company money on a shower curtain. Really, how much greed can one have? I hate the phrase "Whoever dies with the most toys, wins" - it is shallow and narcissistic. I prefer the Talmudic principle which states "there are no pockets in the burial shroud" or in other words, "you can't take it with you".
Even worse is the milk crisis in China where melamine has been mixed into milk-based products such as baby formula and popular beverages. Not only have an estimated 50,000 Chinese babies been affected, but babies have died from kidney failure arising from the tainted baby formula. Again, greed has trumped basic morals. It is unconscionable that someone would knowingly risk another human life, and that of infants no less, to gain financially.
These examples are a blight on the capitalist system. I am a supporter of the basic concept of capitalism, but I believe in social capitalism which takes into consideration society as a whole and not just that of an individual. No, not socialism, but some balance where it is not dog-eat-dog, where rules and regulation are in place to safeguard society from rampant greed. If these were in place, the current economic crisis may not have happened or nay not have been as severe. While the days when society placed a greater emphasis on performing noble acts on behalf of their community and country may have been absent during this most recent baby boomer generation, there are signs that this may be changing.

The younger generation has become a force of change regarding the environment, more young people are shying away from being workaholics to focus on more time with family, there is a resurgence of people working and volunteering for non-profits, as they search for greater meaning in life. A terrific book to read is "Leaving Microsoft to Change the World" by John Wood which chronicles his journey from employee at Microsoft to starting a charity called Room to Read which has built thousands of schools in developing countries, and provided scholarships to thousands of girls in countries where providing education to females in not considered a priority. Before you say that here's a guy that had millions of dollars to do this, you will be surprised that he was not a wealthy man when he left Microsoft to do this - he only had enough stocks and savings to last a few years without drawing a salary. What is interesting about John Wood's story, is that he did struggle between the need to make good money, buy a nice house and attain status, versus the need to do something meaningful and fulfilling. He gave away many comforts and perks to make a meaningful difference in the lives of tens of thousands of children. What have you done for your community lately? As I see younger voters starting to take an interest in politics, and claim their right to determine how their vote will impact the direction of their lives, I take comfort that, at last, we are moving in the right direction.

A Lot of Dough & Advice, A Little Too Late

I've been watching a lot of TV lately, trying to keep track of the credit crunch, massive bailout money thrown out by Central Banks across the globe, plunging stock markets around the world, the Iceland economy on the brink of collapse and both the US presidential race and Canadian federal election.

Protestations from both Obama and McCain that they foretold the crisis by warning about the sub-prime mortgage crisis and Fannie Mae/Freddie Mac situation respectively sound hollow. Obviously neither of these candidates had enough influence to even have their concerns addressed or register a blip on the political front, as these concerns have only been brought to light after the crisis sit full stride. The smartest financial gurus at the switch, Hank Paulson and Ben Bernacke, didn't forsee this either. Why? Because greed trumped fear ....... until recently. Sound financial principles and regulatory oversight were ignored until it was evident that something had hit the fan. Now fear has overtaken greed and everyone is panicking.

In elections on both sides of the border, the electorate has spoken as to the most important issue for them - the economy. In Canada, the incumbent Conservative Party had a seemingly insurmountable lead a few weeks ago, and because of their casual attitude to a worsening economic environment, they have experienced a voter backlash and risk not only losing their lead, but also squandering their chance to lead the country. Likewise in the US, where the economy's troubles has helped Barack Obama and forced John MCCain to focus on a topic that he has admitted is not his strong suit.

Even on shows like Dr. Phil and Oprah, hot topics are how to tighten the belt, get out of debt, stop spending money unnecessarily and focusing on what is really important in life. Whereas shows with these topics were sporadic in the past, they are now coming thick and fast. Advice is easy to provide now. Sure, it is the topic de jour, but perhaps it would've been helpful if all of this was more proactive, adding to the warnings rather than trying to put out a fire after it had started. Have things other than money only become important when the situation has become untenable?
Unfortunately, critics like hedge fund manager David Einhorn who raised the alarm bells on Lehman Brothers, Warren Buffet who called the complex derivatives that started this mess, 'financial weapons of mass destruction' or Prem Watsa of Fairfax Financial who placed a huge bet on credit swaps because he saw huge flaws in the way financial companies were over leveraged, were all ignored. All of these smart men and astute investors were derided as Chicken Littles, only to be proven correct in the end.

The smart money will be made by those who stuck to the fundamentals and did not get caught up in buying expensive items on credit, have been living within their means and saved cash for rainy days such as these. They can now deploy those resources on assets that will be sold at fire-sale prices, obtain discounts from desperate car manufacturers and retailers that are overstocked, and stocks that have been sold at the lowest prices in decades by investors who are trying to raise any cash possible.

I hope the trend of going back to basics will be a long-term one, and not only until the economy rebounds.

Who Can the Average Joe Believe?

I had a recent post about the worth of stock market analysts, and a report released yesterday by Merrill Lynch just reinforced my opinion. Their analyst just issued an opinion that crude oil prices may drop as low as $50 per barrel. Huh? Was it not just three or four months ago that the same analysts were predicting with much confidence and certainty that oil prices were going to $200 per barrel?

While they may argue that the world economies are going to slow down because of the recent financial turmoil arising from the North American economy, their original assessment of the projected $200 price was based on the burgeoning economies of developing nations such as China and India. While China may be more affected by the American situation than India, since they export more to the US, collectively these two countries account for more than 2 billion of the world's inhabitants that are quickly increasing their standard of living, and are also living in countries where home and car ownership rates are still extremely low. Not only that, but these are two countries where cheap cars such as the Tata Nano and the Geely provide an affordable entry for the fast-growing middle-class to car ownership. So, while there will be a noticeable impact from a worldwide slowdown, the average Chinese or Indian will still see an improvement in their living standards, and while the rate of growth may slow down, a $50 per barrel price is almost assuming no growth at all which I think is unrealistic.
My point is, again, that these analysts tend to use whatever excuse possible to justify a retraction of their earlier incorrect opinion. In order words, they are trying to explain the market which reacts to investor sentiment. Thus, I still don't think these analysts have any better knowledge of what is going to happen in the future than the market itself.

How On Earth Do Stock Analysts Earn Their Keep?

I'll be upfront - I lost money on my investment in Lehman Brothers. In fact, I expect that I will lose every penny that I had invested in the venerable 158 year old investment banking firm that had survived two world wars, the Great Depression, and numerous stock market busts. What makes me angry is that I kept holding not because I was stubborn, as much as I kept listening to the advice of numerous and well-regarded stock analysts who kept a 'Buy' recommendation on the stock all the way down, until they finally cut their rating to a 'Hold' two days prior to Lehman declaring bankruptcy.

Obviously, these analysts have a relationship with the companies and can usually be granted an audience with their CEOs or CFOs. They are supposed to know the company inside and out, and yet the market knew before these analysts knew that the company was in serious trouble. As an investor who is more often conservative than speculative in nature, my portfolio is filled with well-known names of companies that have a long record of dividend payments. I am happy to ride out a drop in price while I receive a dividend (which I have been doing with companies such as General Electric or Microsoft). Fortunately, my portfolio is diversified enough that the loss has not been fatal. Even though my portfolio is showing a single digit percentage loss, I'm still well ahead of most indexes.
Where I have an issue is that the analysts were steadfast that the Net Asset Value of Lehman was three times the stock price, making it grossly undervalued. Not just one analyst but a slew of them took the same stance. Yet, the market seemed to know what these highly paid, overpaid and well-connected analysts didn't - that the assets of Lehman were worth much less than the stubborn (and arrogant) Lehman management had valued them at.

I take full responsibility for not selling, and I blame myself for my own inaction. However, as a well-informed investor, I do a lot of due diligence, research and reading before I make a decision. Now, I'm wondering if I'm wasting my time, because these analysts don't seem to know any more than the market does. So, how on earth do these stock analyst earn their keep?

Your BlackBerry or Your Wife?

Last week, I was traveling when I read an article about a new poll by Sheraton Hotels of 6,500 traveling executives that indicated more than a third of them (35% to be exact) would choose their BlackBerry over their spouse. Initially, this provided me with a good chuckle. While I'm sure there were a number of those polled who chose the BlackBerry option as a light-hearted gesture of how much time they spend on the now-ubiquitous smart phone, nicknamed the CrackBerry. But there were probably a good chunk of those who really, really preferred their PDA over their spouse. Having seen more than a few former colleagues display compulsive and addictive behaviour when it came to responding to their BlackBerry, I can understand the results of the poll. Nevertheless,this is definitely a sad statement on what the world has come to, when the need to be connected with technology has encroached upon the need to connect, develop, and nurture personal relationships. Yet, 75% of those polled also said that their time-saving electronic gadgets gave them more quality time with friends and family and thus helped them enjoy life more. Hmmm .......

Are Your Taste Buds Affected By Price?

I remember watching a blind wine taste on a major US network's morning show where a bottle of Two-Buck Chuck (Charles Shaw) was pitted against two other more expensive bottles of wine. "Chuck" as it is affectionately known, is sold for $1.99 per bottle at Trader Joe's outlets across the US. In the two rounds of tasting, Two-Buck Chuck came first or second, beating out bottles costing more than 20 times its cost. Wine connoisseurs were appalled. Last year its Chardonnay beat hundreds of other wines and won the top prize at the prestigious 2007 California State Fair Commercial Wine Competition. Two-Buck Chuck is not available in Canada, but every time I go to the US, I buy a bottle to drink. It's not a great wine, usually quite young and light in taste, but very drinkable, and hard to go wrong at that price.

What made me think of this was a recent article about an unusual wine tasting experiment conducted at Cal Tech and Stanford University. The scientists provided the wine tasters with identical wines at seemingly wide-ranging price points - from $5 to $90. Although the tasters were told that all the wines were different, the scientists were in fact presenting the same wines at different prices. The subjects consistently deemed the 'more expensive' wines tasted better, even though they were identical to 'cheaper' wines.

What was different with this experiment, was that a scanner was used to allow scientists to observe how the subjects' brains responded to each wine. When told they were being given a more expensive wine, a higher level of activity in a part of the brain known to be involved in our experience of pleasure was observed. What it revealed was the power of expectations. Since we may expect expensive wines to taste better than cheap wine, our brains convince us to literally make it so.

Wine snobs may not have any greater level of refinement when it comes to wine-tasting. They might just be basing their opinions on the price. That's why I always find it hilarious when Two-Buck Chuck beats out its more expensive competition!

So trust your senses and buy what your taste buds like, not what your eyes are telling you. By the way, my favourite daily drinking reds are Mezzomondo Negroamaro Salento at $8.40 per bottle or Zuccardi Fuzion Shiraz/Malbec at $7.45 (both of which are cheap by Canadian price standards).

This Month's Quote

"People don't change when they see the light; they change when they feel the heat"

How true given the recent economic turmoil. The signs and warnings of the credit crunch were raised over a year ago, but no-one did anything about it. Only now that the imminent collapse of the US banking system is a distinct possibility is anyone really willing to make changes to the system.

Can You Profit From This Financial Mess?

Exactly a month ago, I wrote a post about the need for accountability by banks and brokerage houses who were responsible for the current global financial crisis. With the demise of Bear Stearns and Lehman Brothers, the sale of Merill Lynch to Bank of America, the near collapse of AIG and the rumored shopping of Morgan Stanley to anyone who has spare cash, the contagion has spread faster and deeper than anyone could have imagined. At the heart of this mess lies greed and a lack of accountability. Bonuses have long been paid to the creators and promoters of these dodgy financial instruments, and executives and traders will be downgraded from billionaires to only millionaires. But the people left holding the bag will ultimately be taxpayers and shareholders - the average Joe.

The cornerstone of capitalism will surely be tested in the near future, as people ask how the situation could have gotten so bad without the majority of regulators and analysts raising the red flag. Up till the day they declared bankruptcy, most analysts still had a buy or hold recommendation on Lehman. Compensation based on short-term, quarterly results, will be looked at as a key factor with pressure on publicly-listed companies to perform in the short-term, at times to the detriment of building a stronger and longer-term business.

Unravelling the cause of all this pain, is the residential mortgage issue. However, this means trying to value (or sell) sub-prime mortgages and other loans which apparently now has an absence of an active market. How do you determine the value of something that no-one wants to buy? Mark it down so low until someone, anyone, nibbles at it. Barclays PLC bought a portion of Lehman Brothers for $1.75 billion which included physical real estate valued at $1.5 billion, and in the process, snagged the operations side of a leading investment bank for less than 5% of its value just a few months ago. Even though Bank of America paid a premium for Merrill Lynch, they still considered it a once-in-a-lifetime opportunity to buy a leading investment bank at a fraction of their price from a few months ago.

What does this mean for the average person such as myself? If I were extremely brave (and I'm trying to muster up the courage), I would consider selling my home in Toronto which has not (yet) been noticeably affected by price drops, and invest the money in top-quality, dividend-paying stocks in disciplined companies during the peak levels of pessimism (which surely must be close at hand). Why? Because housing prices worldwide are past their peak and will be continuing to head downwards. My friends in the US, UK, Australia and South Africa all report declining property values. Money invested in real estate will be dead money for a number of years and costly (leveraged and likely subject to potentially higher interest rates and stricter lending requirements). On the other hand, stocks will reach historic lows regardless of their performance. Just as the rising tide lifts all ships, the current contagion will hammer all stocks regardless. Look at all major stock exchanges around the globe and they are all down around 20% or more year-to-date. Sifting through the debris and trying to find solid companies will be the key to success. But if you can cobble together a decent portfolio, these will rise to their former levels in a few years, but regardless of how long it takes, you will be paid to wait out the storm. People are still going to drink Coke, clean houses with P&G products, shave with Gillette razors and eat Big Macs. Like I said, this is definitely not for the faint of heart. Any rube can buy a stock when it is going up. But going against the tide - buying when everyone is selling - has been the key to building fortunes. I am pondering ..... and it's a really big ponder.

Using Fame & Fortune For Good

In my hometown, the Toronto International Film Festival is in full gear, with hundreds of movie stars and executives in the city to walk the red carpet and promote their films. At the same time, thousands of movie fans are taking in hundreds of new films and fawning over their favourite celebrities. Such is the frenzy that accompanies North America's largest film fest (and second only to Cannes in prestige) that the city's theatres, posh eateries, hip night clubs and hotels are largely catering only to the film festival.

Which led me to think that while such events are great for the local economy and the Canadian film industry, it does reveal the shallowness of the industry and its followers and fans. Other more important social issues are relegated to secondary news stories by newspapers and television news programs when Brad Pitt arrives on the red carpet. Who's who and wearing whom at whatever party. To be invited to a celebrity party is to be considered to be one of the in-crowd. While the upcoming federal election in Canada may be boring compared to the sight of Jennifer Aniston in a dazzling black evening gown, it nevertheless speaks volumes about where our priorities lay in a materialistic world.

Even some of the movie stars and celebrities could do more. Kudos goes to the likes of Matt Damon who every year, supports the local One X One charity gala, helping not only to raise money but also awareness of grass roots development programs in third world countries. While there are those stars such as Angela Jolie, George Clooney, Brad Pitt, Bono and Wyclef Jean who are tireless advocates of social change, they remain a minority in the industry as others use their fame for their own purposes and not society as a whole. A pity some of the younger stars who exhibit self-destructive behaviour (yes, Lindsay Lohan and Britney Spears, we're talking about you) could find greater happiness if they spent more of their time, money and influence helping others, since spending it on themselves doesn't seem to be bringing them much happiness. Fans themselves could support those philanthropic actors rather than those who are the best-looking and pressure the others to do more with their star power to help the developing world or the environment.

Even those on the fringe of the industry such as Canadian Jeff Skoll (one of the first employees at eBay) whose Skoll Foundation funds films that have a powerful social message. He finances these films, usually not because he expects to have a blockbuster hit, but because he knows that these types of movies would not be made by mainstream film studios and that there is a need to get important social and political messages out to the mainstream public. The film industry should follow the various sports leagues such as the PGA Tour or the NBA with formal programs and funs to actively promote social change and use their influence, as sports stars do, to make the world a better place.

Then, we could truly look at these celebrities as stars.

Is Frugality the New Black?

Let's face it - there will always be rich people. Even during the Great Depression, while millions were starving and destitute, there were those who remained wealthy. As we head into tougher economic times, there will still be those around us who have money and will display their wealth conspicuously. On a global scale, the Arabs, and more recently, the Russians have honed it into a fine art.

While easy credit, affordable imported goods from the Far East and a (previously) buoyant real estate market, gave Joe Average in North America an excuse for conspicuous consumption, the tide may have changed. Not only has the recent financial crisis revealed that wanton spending is unsustainable, but the amount of time and effort needed to work to sustain such a lifestyle has led to higher levels of exhaustion, less family time, obesity and other general health issues, as well as greater levels of unhappiness and depression among North Americans.

But if there is a silver lining on this dark cloud, it is an increasing awareness of what people can live without, and during tough economic times, a return to sensible budgeting and spending. Whereas, keeping up with the Jones, and trying to mimic the lives of the rich and famous, may have been the societal norm (or at least the aspiration towards it), it appears that sensible spending, budgeting and frugality is making a comeback. In short, it may be the new black.
Not only have sales of McMansions, gas-guzzling SUVs and other status-bestowing luxury goods stalled, but even the use of the lowly-regarded coupon is rising. People are starting to get the message, as debt is crushing households, and any cost saving measure is utilized. Manufacturers of economy cars such as the Honda Fit cannot meet demand and smaller residences are becoming the norm. The use of the money-saving coupon, once derided as the tool of the poor and cheap, is growing by leaps and bounds. No more are people who make use of coupons looked down upon. Coupon use typically fluctuates with economic times, and right now, demand, interest and use of coupons is surging. In the US, over 300 billion coupons are offered every year.
If you read "The Millionaire Next Door" by Thomas Stanley and William Danko, you will learn that even millionaire households have long known the value of the use of coupons and frugality and budgeting, are important factors in those millionaires achieving the wealth that they have.

Interestingly enough, the vision of the general public of what a typical millionaire looks like, is very different from the reality. Individuals who live ostentatiously, are quite likely to be heavily in debt, lease their vehicles, live beyond their means and have very little net worth. Superficially, their lifestyle looks terrific, but in substantive terms, their facade is paper-thin.
To me, being frugal means living below your means. So start using coupons, turn it into a habit and use frugality to start on the path to becoming wealthy.

This Month's Quote

"Success is getting what you want. Happiness is wanting what you get" - Warren Buffett

An Important Movie But Will the American Public Care?

Tomorrow, an important movie debuts at 400 US theatres - one that will hopefully open the eyes of the American public as to the precarious nature of their economy. And citizens of other countries should not feel self-righteous and judgmental in their criticism of the US economic model because their economies are likely to be tied to the American economy, so that any pain will be spread far beyond the US borders. Case in point, the mortgage crisis and credit crunch emanating out of the US has spread like a contagion across Europe and parts of Asia. Enough said.
The movie, a documentary entitled I.O.U.S.A., focuses on the some of the issues that has the potential to cripple the US economy, i.e. ongoing trillion dollar trade deficits, out-of-control annual budgets that are raising national deficits to a point where two-thirds of the country's GNP (Gross National Product) can be attributed to the national debt. Americans are spending more than they earn with the result that savings levels are at the lowest level since the Great Depression (only $392 per year per American). The consumer-oriented nature of American society continues to spur on the economy with two-thirds of the country's GDP (Gross Domestic Product) being influenced by consumer spending. Unfortunately, most of this spending is done on credit. And with rising debt levels ($2.5 trillion in consumer debt alone), increasing unemployment levels, higher prices for fuel and food and less access to credit, this becomes a toxic soup that is resulting in record numbers of foreclosures and bankruptcies.

While the good news is that documentaries such as Fahrenheit 9/11, An Inconvenient Truth and Sicko have been able to draw movie goers, have they been able to influence others to make the seismic changes needed to rectify decades of poor decisions? As an optimist, I'd like to think that the more recent swing towards green vehicles has been a result of enlightenment brought about by environmental advocates and movies like 'An Inconvenient Truth', rather than sky-high gas prices. The mood is such that many Americans may decide that that they need to get a macro view of exactly how bad a shape the overall American economy is in, and go and see the movie. I truly hope so.

On the other hand, they may just ignore it, if, on a micro level, the current economic situation does not really impact them. But the worst case is if the know how bad the situation is (both on a macro and micro level), and ignore it anyways. Human nature sometimes means they will just shut it out and hope it gets better, rather than do anything concrete to improve the situation. Analogies of this would be those investors who don't open up their monthly statements even they know that their portfolios are tanking and in serious need of an overhaul or decisions to sell their poorly performing securities. Or the person who doesn't open up their credit card bills, knowing that they are past due and need to be paid, even though they know that the consequences of their inaction, they elect to ignore it. Hopefully, the American public (and their leaders) don't adopt this attitude of waiting for better times by doing nothing. Hopefully, they care enough to do something.

In the meantime, I hope you will see this movie when it opens on August 21st. Even though I am not an American, I know I will.

Strike a Victory Blow For The Little Guy

Unless you've been hiding under a rock for the past year, you know that the global economy is being hard hit by the meltdown in the US real estate market (and spreading to other real estate markets around the world), resulting in a huge writedowns for large and small financial institutions around the globe and a credit crunch for borrowers across the spectrum. The result is a quadruple-whammy, especially for American consumers who have an insatiable appetite for consumer goods and debt. Not only is the tap of easy access to credit being slowly turned off, but the equity in their homes which were being used as virtual ATMs is being steadily eroded. Add to that declining values in their stock portfolios, and sky-high gasoline prices, it's a wonder that there is any optimism emanating out of the US right now.

But the one positive development arising out of this financial mess, is that financial institutions are finally being held accountable for their reckless marketing and sale of the ABCP (Asset-backed Commercial Paper) and auction-rate securities (long-term bonds whose interest rates are reset every few weeks through an auction process), those seemingly 'safe as cash' investments that bundled all different types of loans together, thereby making the high-risk mortgages within this bundle almost unquantifiable and invisible to the retail investor. Because of this, these securities are difficult, if not impossible, to sell, and many investors are being left holding investments with no market in which to liquidate their greatly diminished investments. People, and especially retirees, are being financially ruined by having their yield-bearing investments obliterated, as the $330 billion market has collapsed.
Now large financial institutions including Merrill Lynch, Wachovia, JP Morgan, UBS and Citigroup are being forced to (and rightly so) buy back billions of dollars of such auction-rate securities from individuals, charities and small businesses.
Usually in such cases, small investors are left holding the bag. Before the meltdown, the originators of these securities (and the executives at the big brokerage firms) had made their big salaries and bonuses, the salesmen and brokers had been paid their commissions, but when things implode, the only ones who had not benefited is usually the little guy with absolutely no power or financial resources to challenge the status quo. But finally, the US Securities and Exchange Commission is holding those institutions accountable. And hopefully in the future, investments will be properly and ethically marketed by brokers and financial planners, and easier for small retail investors to understand. How many people can honestly say they have read a mutual fund prospectus prior too purchase?

While the odds are still slanted in favour of the financial institutions, this is a positive step forward in investor rights. Maybe all of us small investors should take a leaf out of legendary mutual fund manager Peter Lynch's rules for investing, i.e. don't buy any investment you don't understand, and know what investments you own and why you own it. And if a broker or financial planner tells you an investment is risk free, ask them to give you a written undertaking to that effect from their institution. Oh, and read the prospectus (or have your broker earn their money by reading it and explaining it to you).

Rising US Foreclosures Not Surprising

Foreclosure numbers in the US released on August 14th by Realty Trac showed a jump of 8% in July 2008 over the previous month and up 55% over the same period a year ago. The organization also estimates that there will be over 3 million foreclosures by the end of this year. Nowhere is it more troublesome than in Florida. I was visiting the state in May, and was astounded by the number of homes for sale. Everywhere I went, from Miami on the east coast to Sarasota on the west coast, it appeared that 3 in every 10 homes was up for sale or rent. Upon further research, I discovered that while a healthy real estate market has 3-6 months of available inventory on the market, Miami-Fort Lauderdale had 34 months of inventory on the market! The huge imbalance between supply and demand can only mean one thing - prices spiraling downward, exacerbating an already dire situation. Realty Trac says that currently the Cape Coral-Fort Myers is feeling the most pain in the country, achieving the dubious distinction of being the Foreclosure Capital of America, with 1 in every 64 homes under threat of foreclosure, a rate that is 7 times the national average.

When trying to understand how the situation got so bad, I stumbled upon three examples that underlined how out of control the situation had become. Most examples revolve around a few common themes: putting little or no money down, buying a home more expensive than they could afford based on traditional lending guidelines, taking on non-traditional mortgages with little understanding of their impact, and lastly, a belief that housing prices would keep going up.

You can read an interesting article on these examples of foreclosures at the link below:

http://articles.moneycentral.msn.com/Banking/HomeFinancing/HomeownersWhoJustWalkAway.aspx

Anyway you crunched the numbers, the scenarios are not going to turn out well for the individuals in these examples. While hindsight is 20/20 for those involved, I was still astounded that a number of people involved in these transactions did not raise a red flag long before the deals were sealed. In my opinion, a responsible realtor should advise the buyer what purchase price is within their range. I know my realtor has often spoken to me about what price would be considered reasonable for my budget. The second person was the financier who had to have calculated the numbers and realized that it was a very risky proposition for their organization (and in some cases, how do financial organizations justify giving loans with absolutely no proof of income?). And lastly, the buyers themselves should temper their expectations of what they can reasonably afford. The straw that broke the camel's back is then using the equity in their homes as a virtual ATM, driving people further into debt.
Even in more conservative Canada where the foreclosure situation has yet to show a marked increase, examples are starting to emerge of people buying expensive homes with little money leftover to afford any unexpected expenses such as a leaky roof, or broken down furnace. The Canadian Government has already indicated that they do not want financial organizations to offer 40-year mortgages, and no money down (100% mortgages) deals are almost impossible to arrange with traditional financiers.

Sorry to be so judgmental, but it irks me that in pursuit of the American Dream and also keeping up with the Jones, that everyone was looking out for themselves, hoping to make a buck, and praying that the house of cards didn't collapse, and hoping rising housing price continued unabated forever.

The main reasons given by Realty Trac for the current housing crisis are that many communities were overbuilt and based on over-inflated property values. The only silver lining to this very dark cloud, is that all parties concerned will learn that living within one's means is the surest way to financial freedom. A copy of the Millionaire Next Door by Thomas Stanley should be issued to every North American whose currently buried under a mountain of debt. Oh, and for those prospective home buyers who were not swept up in this mania, prospects look good toward the end of this year or in 2009 to snag a great deal on a home.

China's Image-obsessed Strategy Backfires

Less than a week after the world gushed at the jaw-dropping spectacle of the Olympic opening ceremonies in Beijing, comes word that the little 9 year-old girl in the red dress, Lin Miaoke, was lip-synching to the voice of Yang Peiyi, another young singer with superior vocals, but whose physical appearance, according to the program's chief musical director, was not 'flawless in image'. And that parts of the amazing 29 'firework footprints' leading into the National stadium were computer-generated. Or that the first Olympic Games to sell out all the event tickets is home to large numbers of empty seats in many of the events, causing an uproar for many of the corporate sponsors. To add insult to injury, the video of the original radio interview where these details were divulged, was abruptly pulled from the Internet by the government. Add to that the continuing controversy about alleged falsified birth certificates allowing under-aged Chinese gymnasts to compete. This is what I hate about the Beijing Olympics - the Chinese government's need to 'save face' by resorting to any means (and costs) to impress or win. The falsehoods have obviously backfired for the image-obsessed Chinese who are now having to answer some hard questions.

Which made me ponder the question of the transition for a country who, since moving to a capitalist system, has become increasingly materialistic and obsessed with their image in the international community. In trying to improve their superficial image, they spent hundreds of millions of dollars, only to further diminish their reputation when it comes to their integrity, honesty and trustworthiness. Any initial positive impressions was short-lived once all truths were revealed. That's on a macro level, but is eerily transferable on a micro level, where image-obsessed Western individuals spend money on improving their superficial image (clothes, make-up, cars etc.) to impress others while hiding their deeper insecurities and leading to greater levels of unhappiness. Rich countries such as the US have much higher rates of depression than in poorer countries. Why do you think that is - possibly because their population focuses so much of their energies aspiring to be the same as the superficial images and lifestyles splayed across billboards, magazine ads and television than on more important issues such as personal growth, family, community and service to others?

Pity little 7-year old Yang Peiyi, who was blessed with, and judged to have, the most pristine young voice in China, only to realise that it is more important not to be chubby or have crooked teeth.

Why I Both Love & Hate the Olympics

On the eve of the 2008 Beijing Olympics, I am torn between my love for the underlying principles behind the Games, the camaraderie between the nations' athletes and fans, and the irresponsible politics and financial greed that accompany the world's greatest sporting spectacle.

I was at the 2000 Sydney Summer Olympics and it was a thrill of a lifetime, and one of my life goals achieved. What left a lasting impression on me was not so much the sporting events I attended, but rather the sense of happiness on everyone's face at being at the Olympics, as well as the general goodwill shown to one another, regardless of colour, creed or nationality. I sat in a public square watching a basketball match between Canada and Australia on a large TV screen. Sitting in a sea of Aussies, I was seemingly one of only three Canadians and a Swiss who were cheering for the underdog Canadian team. When the Canucks beat the local team, there was no anger or animosity shown, but a shared experience of seeing a great game in an atmosphere of sportsmanship. It is a yearning for these experiences that I will be at the 2012 Vancouver Winter Olympics, so that I can take pride in my country hosting the world, and once again get that warm and fuzzy feeling of being one with the rest of the world.

On the flip side, I detest how the Olympics have led to drug-cheating by athletes, irresponsible spending by organizers, bribing of Olympic members, social 'cleansing' by local government, and price gouging/housing speculation.

A recent article in Maclean's Magazine lamented the fact that 4 years after the Athens Olympics, many of the facilities stand empty, unused, crumbling and behind fences. So much for leaving a legacy. How about the legacy left behind by the 1976 Montreal Summer Olympics, dubbed 'The Big Owe' by the local taxpayers who, after more than three decades after the event ended, finally paid off the debt left behind by the irresponsible organizers. True, certain games such as the 1984 Los Angeles Summer Games, actually made a profit.

Interestingly enough, the Beijing Games will be the first games ever to sell out all the event tickets. In Sydney, I was quite surprised that there were many empty seats at the events I attended, i.e. volleyball and baseball, although the soccer game I attended was sold out. One of the reason's why the Sydney Games was such a 'success' was also because it failed to attract as many visitors as they had expected - rumour had it that the organizers had anticipated 500,000 visitors, but only 300,000 showed up. Some local Sydneysiders who intended to rent out their homes at exorbitant rents to tourists, wound up losing money by having to carry two properties for the duration of the Games. The price of Vancouver homes shot up right after the city's successful bid was announced, making housing even more unaffordable for the average Vancouver resident.
In the 1996 Atlanta Games and now in Beijing, local authorities are moving 'undesirable' residents to outlying areas, so that tourists and press do not see some of the more authentic aspects of the host city. In fairness, the 1992 Barcelona Games left a fabulously revitalized city.
The Beijing Games also reflects the desire of China to 'show-off' the country and how far it has advanced in the past three decades. When I was last in China in the late 1980's, Guangzhou was a small city with only two tourist hotels, few tall buildings and little evidence of modernization. As one of the first economic trade zones established by China, it is a regional economic powerhouse. For the Chinese, the Games has everything to do with status, and how the rest of the world perceives them. Does that ring a bell, from an individual perspective? People spending money money than they should trying to impress people they neither know nor like?

So, for all my deliberations about my feelings for the Olympics, I still believe that it is something everyone should experience live, rather than on TV. So, if you were planning on spending a few thousand dollars on a brand new TV, I would rather use that money to start saving for the next Olympics in London or Vancouver. You will get this giddy feeling of the possibilities of how the world could live in peace and happiness and a sense of oneness with your fellow human beings.
On your deathbed, you may say that you should have gone to the Olympics, but you'll never say that you should have bought the 50-inch TV.

Why Libraries Can Be Your Best Entertainment Provider

I'm not sure what your public library system in your city is like, but the one in my hometown of Toronto, is excellent. Not only do they have an extensive branch system, but the selection and technology that is offered is comprehensive and surprisingly up-to-date (new release DVDs are available very quickly) . Catalogues are online, as are capabilities for reserving, renewing and researching. Some branches have recently added free Wi-Fi capabilities. Their 2008 operating budget is $170 million. Yet I know lots of family, friends and acquaintances living in Toronto that do not realize how much of these things are available to them, and therefore never make use of their local library.
I love to read and watch movies, both of which could be expensive propositions for me, given that I watch an average of 1 movie, read 1-2 books, and flip through 3-4 magazines per week. For movies, I will gladly pay the $12 to go to a cineplex if the movie is a big action blockbuster or Oscar contender. Other than that, I book my movies through the library system, sometimes as many as 30 at a time (their distribution I can manage online, so that I don't have to watch too many in any given week).

For books and magazines, I will get them at the library most of the time. I can't think of a book that I absolutely had to have right after it was released (I am not a fan of Harry Potter, obviously). Usually only the magazines that interest me and are time sensitive (e.g. Investing Guides at the beginning of each year) do I fork out the cash for it.

I estimate that if I were to rent all the movies, or buy all the books and magazines that I get from the public library, I would have to spend almost $2,500 per year.
Here's some interesting observations that I have made regarding the entertainment industry, based on my own experience, and not sure if you would agree or not.

The movie business is such that they rely not only on the tickets sales at the box office, but increasingly become dependent of the DVD sales. So they promote the hell out of DVD releases and people buy them in the millions. As someone who used to buy all sorts of videos and DVDs, only to see them gather dust because I didn't have time to watch them, or only watched them once, I now realize that collecting movies is a bit of a money waster. (This from someone who also still has a lot of movies on VHS format). With changing technology, does it make sense to still collect movies?

With books, I do buy used copies of my favourite books, although I have yet to read once for the second time. Instead, I loan them to friends who often ask for a recommendation for a good read. The people who really get fleeced when buying books are those impatient readers and fans who purchase them as soon as they are released. Why? Because publishers will always release the hardcover version first, at a much higher price than the released-later paperback version.

One magazine that I read, but will not buy, is Men's Health. Why? Because if you compare covers of the past editions, it always follows the same format and they seemingly recycle tips and hints. Obviously, this is a non-scientific statement, but when I put past editions of Men's Health side-by-side at the library, I can barely tell them apart from their covers. I'm sure that would seem to be the same for similar lifestyle magazines such as Cosmopolitan.

I know some people who lives in smaller cities and complain about their local libraries, and I sympathize with them. Large urban centres benefit from economies of scale and large number of taxpayers that help fund local libraries. So while not everyone can or will save $2,500 by using the library, I certainly make the most of my tax dollars at work.

Are We Destined To Be Poor & Fat?

Lately, I've been reading a lot about food, and its relationship to health issues such as obesity as well as its rising cost of the average basket of groceries because of high oil prices. It made me think of how I eat and how my relationship with money affects my eating and grocery shopping habits. I was traveling in the US a few months ago, and had the opportunity to shop for groceries as well as buy some fast foods. I can understand how many people would rather buy a burger or two at McDonald's from their dollar menu than go to a grocery store and pay the cost of the components to make it yourself, or even looking at healthier alternatives. However, from a longer-term perspective, diets such as these will (or already has) led to health issues such as increased obesity and more alarmingly, a huge spike in childhood obesity. I've read more often than once that this generation of kids may be the first in history to have a lower life expectancy than their parents. This has to be a red flag that raises alarm bells for parents, and society as a whole.

I have always enjoyed good food, and especially as my Mom is a great cook, our family always ate well growing up, even though I would consider my parents to have been extremely budget-conscious. Upon their arrival in Canada in the late 1960's, and having to work low-paying blue-collar jobs, there wasn't a lot of money left over to eat out a lot, or buy expensive cuts of meat. We seldom ate junk food and dining at a McDonald's was a treat.

At meals, my Mom would proudly tell us how little she paid to prepare a delicious meal. Sometimes, the amount bordered on the seemingly ridiculous - "this entire meal for 7 only cost $2!" - and she would proceed to break down the cost of each component of the meal. This is something that always stuck with me, and a practice that I now subconsciously adopt. And it always surprises me how economical I can cook meals (and save money) if there is even some small attempt at meal planning and knowing the fair prices of different types of food.

Where a lot of people spend large amounts of their monthly food bill is usually on prepared foods and/or fast foods. This is both less healthy as well as more expensive alternatives to making quick, easy and nutritious meals. Interestingly enough, I've just finished reading a book called "The Undercover Economist" by Tim Harford. The book explains a variety of everyday curiosities, not unlike the best-selling book "Freakonomics " by Steven Levitt. In the book, the author compares shopping at Safeway supermarkets versus the perceive-to-be more expensive Whole Foods supermarkets. True, there are many more expensive items at Whole Foods, but if a shopper only stuck to the basics, e.g. Tropicana orange juice and yellow onions, then Whole Foods is not more expensive than Safeway. Interestingly enough, Harford's advice is: "If you want a bargain, don't try find a cheap store. Try to shop cheaply". He also mentions that one of the ploys that supermarkets use is to make their "value", no-name or store brands as unattractive as possible, with very plain or crudely designed packaging. While this will not put off the most value-conscious of shoppers, it may spur those shoppers who may be willing to pay more, to move up to a more expensive (and more profitable for the supermarket) brand.
I am eating healthier than ever, partly because I am getting older, and know that as my metabolism slows down with age, the harder it is to break down food, but also because I no longer have a desire for processed food. Also, I enjoy cooking, so this post may not appeal to those who never turn on their stove. Smart shoppers plan their meals and purchases. I usually spend a few minutes a week deciding what I will eat for the week, based on what I have in my freezer or what's on sale at the supermarket. I then do my shopping and spend a few hours on a Sunday preparing the meals for the week. Sometimes this means cooking but often this involves mere preparation such as marinating meat/fish or chopping ingredients to be ready for use when cooking during the week. For example, if three recipes require chopped onions, I may as well do it in one shot rather than do the same activity three times.

Knowing about food also helps. As a teenager, I worked in my uncle's butcher, so I know my way around meat. While the average person buys the traditional (and expensive) cuts of beef such as T-bone, rib eye, tenderloin or New York striploin, those knowledgeable about meat know to look for much cheaper and tastier cuts such as sirloin tip or cap, hanger steak or bavette. Better tasting and half the price ..... hmm, that's a no-brainer to me. I still laugh when my Mom tells me that when we were growing up, chicken wings and pork ribs were considered poor people's meat. How things change.
I read an interesting article recently in the Weekend Living section of the Toronto Star (August 2nd), that talked about staff meals at restaurants where delicious and economical meals are prepared by staff (not always the chef) using economical cuts of meats, scraps and whatever vegetables are on hand. Creativity is a prerequisite - you don't have to be a chef to use your produce intelligently and creatively.

In the June 21st edition of Time Magazine, they challenged six chefs to prepare a healthy and nutritious meal for a family of four for $10. They prove that with some creativity, some basic cooking skills and keeping an eye on your budget, it can be done. To see these delicious budget recipes, go to:

www.time.com/recessiongourmet
At work, I seldom bought lunch, but brown bagged it, and still brought meals that are the envy of my co-workers, at a fraction of the cost of their purchased meals. As most people spend at least $5 a day on lunches, this translates to roughly $1,250 a year. If you were able to make a lunch at a third or even half that cost, you would save between $600 and $833 per year. That could go a long way towards paying down debt, investing in a retirement plan or for a vacation.

I'm Excited!

This is my first stab at a blog, so I'm excited! I think that it is a great way to get my thoughts,opinions and tips to a broader audience, and in a more efficient manner. I get so many requests from friends and acquaintances to explain to them my philosophy on the relationship between life, happiness and money, that this blog will hopefully be a better vehicle to accomplish that. I write this, knowing fully well, that not everyone will agree with all my opinions. That's fine, and what makes life interesting. If everybody thought the same way, how dull would this world be. I have had the good fortune (or misfortune) to spend time living or visiting three of the most materialistic (in my opinion) countries in the world - the US, Hong Kong (OK, perhaps technically not a country, but now part of China) and South Africa (I lived in South Africa for 18 years). I found that in these countries, people placed such importance on what you do,where you live, what you drive and what you wear. (Note, in South Africa, this refers mainly to the middle class population, black and white). Growing up exposed to this societal pressure was not always easy, as peer pressure is a powerful force. But succumbing to the shallowness of materialism was always something that made me feel uncomfortable or not genuine, and that has been my guiding light. So, I hope that this blog proves to be useful, constructive and enlightening. Use it in a way that gives you the most benefit. Some entries may be universally applicable, others to a select audience. I encourage any feedback and comments, and thank you in advance for taking the time to read this.