When Living on the Wrong Side of the Tracks Can Put You on the Right Track Financially

It has always amazed me how much stock people place in living in the 'right neighbourhood'. My first home was in the trendy 'Beaches' neighbourhood in Toronto. I no longer live there, but do visit occasionally. It is a lovely area that, as the name suggests, comprises a stretch of sandy beach adjacent to Lake Ontario. As such, it is wonderfully lively area and a favourite among yuppies and tourists. There is nowhere in Toronto that has a higher per-capita rate of baby strollers, dogs or convertibles. The main thoroughfare through this neighbourhood is Queen Street, and any house that is south of Queen Street commands a much higher price than any house north of Queen Street. Such is the popularity of the area, and by extension the desire to live there, that there is even an area called the Upper Beaches. The northern (and invisible) boundary of the Beaches 'proper' is Kingston Road, and any property south of Kingston Road will command a much higher price than anything north of Kingston Road, lest any self-respecting snob be caught living in the 'Upper Beaches'.

The point I'm trying to make is that people can, by merely crossing a street or two, save tens, if not hundreds of thousands of dollars - by locating to the edge of a trendy or desirable neighbourhood, rather than spending the premium for the right address within the actual neighbourhood itself. One might ask if this strategy would not affect resale values. My response is that, if a neighbourhood is that desirable, it will encroach upon its outlying areas and bring up the property values with it (the 'all ships rise with the tide' theory). Also, the money you would save on the mortgage payments will provide you with a lower debt burden, and if those savings we funneled to a savings or retirement account, would lead to a better qulaity of life and retirement. Many people have mistakenly thought of their homes as their retirement nest egg, but the recent market turmoil has shown that this is not a sure-fire retirement strategy.

In Ottawa, Ontario, there are many people who work in Ottawa (where salaries are higher and opportunities more plentiful) but who live across the provincial border in Hull, Quebec where housing prices are significantly lower than in neighbouring Ottawa. With a short drive across a bridge, people have been able to increase their revenues but minimize their largest expenses.

I have also previously lived in an area that was considered to be 'sketchy', but bordered another neighbourhood that was becoming gentrified and subsequently became known as the 'Gallery District'. The previously 'sketchy' hood is now home to stylish boutiques and cozy coffee shops. With it, rising property prices have followed. I actually prefer a neighbourhood that has some grit and realism to it, rather than the vacuous falseness of many of the high-priced, lily-white neighnbourhoods.

Start thinking outside the box and you may want to live on te other side of the tracks.

Are More People Abandoning the Rat Race?

I have, for now at least, abandoned the rat race. It is not an easy thing to do, nor easy to explain to people, especially when most others of my age are hitting their peak earning years. I had often wondered whether I was a pioneer or just a social misfit. While I was definitely not ahead of my time, I am probably just the tip of the iceberg of millions of people who are willing, but maybe just not ready yet, to drop out of the rat race.

With the recent financial crisis, many ordinary workers are probably wondering what good all of their hard work over the past few years has gotten them. Hundreds of thousands of pink slips from the financial industry, the auto sector, the construction industry and airlines? And while they may be (involuntarily) re-evaluating their career options, this is just a repeat of another time not that long ago when similar decisions were made. Remember the dot-com era of the late nineties and into the new millennium? Many technology workers regularly spent mind numbing 15-18 hour workdays, while others either slept under their desks or pulled all-nighters in order for their companies to be the next Yahoo! or eBay. Sure, the lure of stock options and huge capital gains from impending IPOs were the driving force for many, while others were just youngsters excited about building a company that could or would change the world. However, the luster soon wiped away, and while some were fortunate enough to cash in and retire at a young age. Interestingly, many such as Jeff Skoll, Pierre Omidyar of eBay and John Wood of Microsoft started charitable foundations. Others were not so fortunate but decided that what these digital dropouts valued more than money was a balanced lifestyle, a personal life and a need to do something meaningful.

We're starting to see more of this thinking again as the economy sours. More people are opting to work in less stressful occupations or work for themselves. My cousin who worked in the finance industry just lost her job, and her employment search now revolves around opportunities within the charitable sector. A recent article highlighted how many Wall Street casualties are looking to buy small retail businesses or franchises. Others are opting for work that that is more flexible when it comes to work hours, ability to work from home or take longer vacations.

Some are being even more radical, moving to smaller communities where their dollar goes further or where they can get away from the craziness associated with large cities like New York. Some like Geoff Goodfellow, who started and sold his tech company called Radiomail, wound up moving to Prague in the Czech Republic. Even in my hometown of Toronto, there was an article about a rising trend in residents originally from Atlantic Canada, returning to their hometowns after becoming tired of long working hours, high housing prices and exhausting commutes in Canada's largest city. As one rat race escapee said about society's view that your worth is measured by how much you make, "I have a fresh appreciation that there are a lot of Americans making $22,000 a year and they are worth something".

Gen-X and Gen-Y employees are also more likely to rebel against the workloads thrust upon the backs of their Baby Boomer parents. In other words, they are finding greater value in working to live, rather than living to work.

How Some Things From the Past Never Change

At the World's Fair held in Chicago in 1893, a presenter named Mary E. Lease made a bold prediction about the future. Her statement was, "3 hours will constitute a long day's work by the end of the next century. And this work will liberally furnish more infinitely more of the benefits of civilization and the comforts of life than 16 hours' slavish toil will today".

To some degree she was true, in that many of the items we now take for granted as being staples, would have been considered as luxuries not that long ago, and certainly unfathomable during her times. Now ubiquitous electronic items such as GPS, home theatre systems and cell phones were out of the reach of mainstream consumers when they were first introduced to market. In fact, cellphones were never designed with the average consumer in mind, but businesspeople and the military. Most of the above-mentioned consumer items are now manufactured in low-cost developing countries and then sold widely and inexpensively through retailers such as Wal-Mart. This has led to increased buying power, but also contributed to rampant consumerism.

On the other hand, Mary E. Lease and others after her, were way off the mark when they predicted that technology would allow workers to toil fewer hours at their jobs and have more free time. In fact, the opposite has been true, with the majority of North Americans not taking the full allotment of their paltry (on average) two-week vacation time. Mobile technology (think e-mail, laptops, cellphones, Blackberry) that was once the purview of the executive ranks, has now enslaved even the levels of middle manager. The pressure to respond immediately to e-mail on a mobile device has helped to cloud the boundaries of what constitutes the number of hours of a typical workday.
A friend and previous colleague of mine was a reporter, and she observed an interesting distinction between the North American and European attitudes to work and their boundaries. When she was doing a story and was seeking a quote or an interview from a specific American spokesperson or source, the organization would inform her that the person was on vacation, but would be willing to take the call to give an interview or quote, if a specific time was set up. When she requested something similar from a European organization, she was politely told that the person was on vacation and therefore unavailable, and to please call back upon their return from holidays. Even more surprising is that attitude exists even when European companies give far more (if not double the amount of) vacation time to their employees than their North American counterparts receive from their companies. You would think that the response would have been the exact opposite for both parties.

So, I guess you could say that Mary E. Lease was right about the 16 hours of slavish toil - she just didn't think it would still exist 105 years after her prediction.

Perhaps No Better Time to Buy a Car

Despite the woes of GM and Chrysler, they are obviously not alone, as all car manufacturers are suffering from steep sales drops. Probably the best performer in North America is Hyundai, as they have taken a calculated risk in the US by offering to buy back your new Hyundai if you lose your job. But there are now acres of unsold new cars sitting in dealer car lots and also offshore tankers.

The deals on cars were very good a few months ago, but have now become almost irresistable. The automakers have sweetened the deals so much so, that anyone who is in the market for a new car, may not find a better deal again. As an example, in Canada, Hyundai was selling the base model Accent for $9,995 which was a reduction of $3,500 off the MSRP (Manufacturer's Suggested Retail Price). At the time, this price was only available if you paid cash or arranged your own financing. Now, Hyundai is offering a price of $9,995 AND zero percent financing for 36 months. In theory, someone with cash could invest the money for 3 years, and then buy the car and hopefully, any return from interest, dividends or capital gains would offset som eof the cost of the car.

Likewise, GM was recently offering a Chevy Uplander minivan for $15,995. Now, the price has gone down to $14,995 and has the added incentive of 3 years of free maintenance, 2 years of On-Star and 2 years of XM satellite radio. Despite an entry-level price, the car itself has upmarket features such as Stability Control, Air Conditioning, 7 passenger seating, Traction Control, power windows and door locks, four wheel disc brakes and ABS. Some dealerships are selling it for as low as $13,999!

My brother-in-law recently (in late April/early May) bought a brand new Mazda 5 minivan, paying a price of $19,995 for the basic model (before adding on any options). He was ecstatic, as his friend paid almost $25,000 for the same car. Last week, I noticed that Mazda was advertising the same car - this time for $17,995!

Considering that in 1992, I paid $12,500 for a base model Honda Civic 2-door with manual transmission, crank windows, no radio and no air conditioning, I am tempted to buy a new car. Short of the government providing a rebate or a tax-break on the purchase of a new car, it's hard to see the prices going much lower, but then, I've said that before.

The Odds of Getting a Decent Meal in a Tourist Area

I'm heading out for dinner tomorrow night to celebrate a friend's birthday, and one of the advantages of living in such a multi-cultural and cosmopolitan city such as Toronto, is the availability of almost any type of food imaginable. I love food, and more than that, I love eating different types of foods, especially when I travel. Admittedly, I am an adventurous eater, and will, with little or no hesitation, eat from food carts in any city in the world. But I also dine in restaurants when I travel, looking for good, authentic local dishes. So, being peak tourist season in Canada right now, it was with amusement that I read an interesting hypothesis raised in a book I recently read - that the odds of getting a great meal in a major tourist centre (e.g. Times Square in New York) in a city is stacked against the tourist.

Why? According to Tim Harford, author of "The Undercover Economist", there is little incentive for these restauranteurs to provide fabulous food, stellar service or reasonable prices, because the majority of tourists will likely only make a single visit and any ambivalent or dissatisfied diner will be quickly replaced by another tourist who has no idea where other better restaurants may be or may not be willing to make a detour off-the-beaten tourist track.
I also think that while the Internet sites like Trip Advisor may be a more recent method of spreading the word about lousy restaurants, many tourists don't bother to read restaurant reviews as much as they do hotel reviews. This may be because you often don't plan far ahead of time what type of food you want to eat until you get hungry and evaluate the options around you.

Also, many tourists almost expect that they will not find a good deal in the main tourist spots, and therefore are almost resigned to paying high prices. Notice that many of the great restaurants in your city are probably not located right next to your city's most prominent tourist attraction, but likely a bit out of the way - exactly where locals want them to be. I know that I never eat at restaurants located in our tourist areas. For dinner on Saturday, I will be heading to a highly rated, small bistro in a gritty east-end neighbourhood where few tourists would venture.
Looking back at my past travels, I believe this has been true. A recent trip to Peru in May definitely cemented this hypothesis. In the UNESCO-heritage city of Cuzco, the tourist-oriented restaurants I frequented had mediocre food at best (and some were quite expensive), while the best food I experienced was from food carts (cheap and tasty) and in restaurants that were away from the city centre tourist areas and recommended by the locals such as our hotel receptionist. I don't trust recommendations by tour guides as they often get kickbacks or commissions from restaurateurs to bring tourists to their establishments.

I had read recently that while guide books claim to be completely objective, that their authors do favour some establishments and put them in their guide books regardless of whether they are the best around. Another reason to not follow guide book recommendations is that usually all you see in those restaurants are the tourists who read the guidebook, and then the restaurant becomes complacent as they now have a steady stream of tourists.

My opinion is to ignore the guidebook recommendations, travel off the beaten track, and ask the locals where their fellow locals would dine. These are locals such as taxi drivers, doormen, store clerks, hotel staff etc. You will save money, get a better meal and have a more authentic travel experience. BTW, here's a tip - if you are ever in Toronto, have a street hot dog (much better than those in New York City) or a burrito from Burrito Boyz. Both are delicious ..... and cheap!

Cottage/Rural Life - is it still an option for me?

I haven't written much in the past month, as I have been trying to sort out a real estate transaction. I had purchased a small lakefront cottage that was supposed to close next week, but I had to kill the deal upon my lawyer's recommendation because of a legal issue regarding road access to the cottage. During this time, I was driving up and down to the cottage which is about 150km east of Toronto, to do the requisite home inspections, water tests etc. The resulting cancellation of the deal cost me a few thousand, but I would rather pay that than avoid potentially paying tens of thousands of dollars later in a protracted legal battle.

One other thing that I learned was just how much work goes into maintaining a vacation property that is either not going to be used year round, nor connected to all municipal services (in the big city, we take things like connections to sewage for granted!). Prior to the cancellation of the deal, the owner was showing me all the things that needed to be done when opening and closing a cottage. These included, draining all water from all sources like water tanks, pumps, toilets etc. so that it doesn't freeze and subsequently flood during the winter. Also, lifting out docks, disconnecting and storing water pumps etc.; shutting off power, notifying certain utilities, pumping out holding tanks and septic tanks. While not undaunted, I came to realize that many people fall in love with the concept of owning a vacation property (myself included), but severely underestimate the time and expense needed to maintain the property, even if not in use. Also, I had a lot of difficulty trying to arrange high-speed Internet access (I was hoping to spend a fair amount of time there, and do some work there as well). While some utility companies will provide some type of seasonal pricing deals, it is still much more expensive than what can be found in a competitive urban environment.

I also discovered that the more time I spent away from Toronto, the more I appreciated the city, and what was available in terms of choice when it comes to things like entertainment, libraries and food (restaurants and grocery store food selection). On the other hand, I did notice how friendly the local people were and how much slower the pace of life was, as well as the quaintness of some of the lkittle villages that dot the area.
While not entirely rid of my desire for a cottage, I do have a greater appreciation of the time and expense it will require, and a better sens of myself in terms of what I want versus what I need.

This Month's Quote

“There is only one success … to be able to spend your life in your own way” – Christopher Morley, Author