Deals Go To Those Who Are Flexible and Prepared

I am heading to Europe in a few weeks time, because I was given the opportunity to go on a trip for 10% of the retail price. I went to Vegas in April because I was able to take over someone else's flight, and wound up getting the hotel and car rental for virtually nothing. This pattern holds true for many other things that I am able to secure, be it goods or services, or events. My friends are always envious, but I am in no better financial position as many others. My only difference is that I am extremely prepared and very flexible, and I have found that this is the most critical factor in getting deals or not.

Firstly, I have an amount in my mind that I will spend on a travel opportunity, whether it is cash sitting in my bank account or at my disposal through a line of credit. It is not outrageous, usually about $2,000, which I will tap into without hesitatation if the deal is right. Secondly, everything else is prepared in advance - my passport is always updated, I keep a small amount in foreign currency, I have a list of people I can call who may want to join me so that I don't have to pay a single supplement, etc.

Secondly, I subscribe to certain newsletters that alert me to great deals, so that I am aware of what is available as soon as it is offered.

Thirdly, you need to know what something is worth, whether it is a flight or an item. The most important thing someone told me was that most people "know the price of everything and the value of nothing". I know what the typical price of a flight from Toronto to Vancouver is, or a weekend package to Las Vegas should be. I know that repositioning cruises provide one of the best values for a cruise. Or that many charter flights in winter to the Caribbean switch to local routes in the summer and must compete with local carriers on price. Many people are too lazy to identify opportunities - they would rather flip open a cataloguie at their travel agent and pick something when thye could save thousands of dollars.

So, there is not much difference between me and anyone else besides flexibility and preparation.

A House as a Home, Not as a Retirement Vehicle

A friend of mine recently moved away from the city and after visiting her in her new home, it got me to thinking about how things are changing (positively,m in my mind) as far as attitudes about home ownership. I have always been critical of the suburbs, the increasing size of homes and the infrastructure that relied on a dependency on cars.

I live in probably the most modest and lowest price home of all my homeowner friends and family. However, I do live on the waterfront -prime real estate in the largest city in Canada. However, because of the ownership structure, a co-ownership versus the more commonplace condominium structure, the price hasn't appreciated as much as the rest of the real estate market. On the other hand, the price hasn't fallen at all.

My purchase was based on two factors - firstly, it was priced well below other similar sized units in the city and secondly it was the cheapest place I could find in the best location (waterfront). I never bought it as a future retirement nest egg (which many of my friends have), but as a home. Conversely, I know people who have built the most expensive home in a not-that-great area. The argument that your home is your best investment currently rings hollow to many millions of Americans, and even Canadian memories are short after their last real estate bust in the late 1980's.

What real estate buyers also conveniently ignore are the carrying costs of holding this investment. Novice buyers become quickly horrified to find that after 10 years, the bulk of their mortgage payments have only gone to pay the interest portion of their loan, or that after the 25 years it will take to pay off their debt obligation that the amount of interest can sometimes be twice the amount of the purchase price of their property. Throw in annual maintenance costs, soaring property taxes and condominium maintenance/strata/HOA fees, and the equation doesn't always look good. Price appreciation? That is a pipe dream for millions of homeowners right now.

I'm not advocating that one doesn't buy real estate, but only that one does so, firstly as a place to live, and secondly, as part of a ddiversified investment portfolio. A number of my friends have sinced followed my lead, selling their large suburban homes to move into smaller, lower-priced homes. All are very happy with their decision, as they have now discovered that their mortgage carrying costs and debt obligations (not to mention their financial stress levels) have decreased, their utility bills for things like heat and electricity have declined, as have their property taxes and insurance costs. They have also discovered that they can live comfortably in smaller homes and that it's not the size of the space that counts, but how it is used. Not to mention the fewer hours it takes to clean a smaller house or less time on the garden in winter or shovelling snow in winter.

I hope that my small circle of friends is but a small slice of what is happening in society today, and if so, then I am happy in the direction it is going.

This Month's Quote

"It is through creating, not possessing, that life is revealed" - Vida Duncan Scudder

Tiny Houses .... Yes Please!

I've written in older posts about the explosion in the sizes of houses in North America during the past 30 years, and how the blight of McMansions has led to the consumer's over-consumption of land, energy, consumer products and debt. This has definitely been a contributing factor to the current economic crisis, where the over-extension of leveraged debt has caused a massive meltdown in liquidity, equity and net worth.

This has led to a return to (hopefully permanently) more sensible proportions of homes, a renewed emphasis on the environment, and a diminishment of rampant materialism. As I have mentioned before, my first home was my largest, and I have been downsizing ever since. I have always been intrigued by small space living - when reading design magazines and books, the issues that always excite me are not of sprawling mansions, but compact living spaces.

I have once again contemplated living in a small cottage or a boat. If I lived in a warmer country than Canada, I may just have made the jump already. However, with the Canadian winters, a lot more thought needs to be given. I have just finished browsing through a fabulous little (appropriately) book called Tiny Houses by Mimi Zieger. It profiles 36 unique abodes that are 1,000 square feet or less. What I love is that it proves that space can be used far more efficiently, a unique home need not be only for the rich and that these spaces are far more interesting than your cookie-cutter, suburban monster-home.

Does a Peasant Lifestyle Increase Longevity?

I've recently finished reading Dan Buettner's book, "The Blue Zones". You may have heard about it or seen it profiled on TV programs such as Oprah. The Blue Zones are areas in the world where there is a much higher than average proportion of the population that live beyond the age of 100. There numbers are quite astonishing, and the author spent time researching these elderly residents and tried to find out what contributes to their longevity and good health.

These identified "Blue Zones" are mainly located in smaller communities in Japan, Italy, Costa Rica and even the US (Loma Linda, California to be specific). While certain aspects differed, what was common among all of these communities was leading a simple lifestyle, eating healthy (with little or no meat in their diets), maintaining strong connections with family and friends and regular exercise.

For some (especially in the poorer communities) regular exercise was a function of their livelihood, i.e. if they were farmers or herdsmen, they spent time in the fields or walking up and down the hills. Even the women who may not toil in the fields, did spend part of the day making meals from scratch, including grinding grains by hand in order to make bread. In wealthier areas such as Loma Linda, there was regular exercise like walking or going to the gym.

The absence of stress was also a common denominator. While there was some stress regarding money and maintaining a livelihood, it was not the same stress that most of us might associate with having a high pressure job, sitting in traffic, trying to make money to maintain a consumer-oriented lifestyle, etc. In fact, when interviewed, there was little to no mention of materialism.

Diets were simple, and while they did indulge during special occasions, generally their diets were simple, yet very healthy. The Italians would drink a glass of wine every day, the Californians were mainly vegetarians who ate a lot of nuts, while the Japanese ate many root vegetables.

Instead of the western disdian for the aged, in these communities elderly people are revered for their wisdom, and treated with respect, rather than shipped to an old age home. They sit at the head of the table, as the matriarch or patriarch of an extended family across many generations, and showered with love and respect. In all these communities, the social network means human contact, not Facebook or Twitter. Meals are important gatherings that bring the family together.

Aside from the residents on Loma Linda, the residents of the other "Blue Zone" communities live an extremely simple life, almost a peasant-like existance. Yet, they all apear to be healthy and content. Perhaps living a peasant lifestyle is the key to longevity?

Start Saving Money ...... Right Away

In these tough economic times, unless the upcoming global recession is short and shallow, people all over the world will be forced to adopt a new way of living. This is especially so for Americans whose access to free-flowing credit will dry up as lenders continue to turn off the taps.

As I had commented in a previous post, there may be a silver lining to this dark cloud, as people wean themselves off consumerism and credit, and start to live more authentic lives and within their means. It will be a long road, as mindless, wanton spending has become a bit of an addiction for millions of consumers.

I have just started to re-read a book that I had last read over 10 years ago, but one that is especially relevant these days. Called "Your Money or Your Life" by Joe Dominguez and Vicki Robin, it provides an interesting view on our relationship with money. Its concepts are not for everyone, but is worth a read.

The book does give tips to save money which may be useful to some readers. These include:
1) Stop shopping - or at least, only shop for things that are essential

2) Live within your means - Cut out all unnecessary expenses and luxuries such as eating out and travel holidays

3) Take care of what you have - This will reduce or eliminate the need to keep replacing things, often unnecessarily. This will also reduce the amount of items that are thrown away or wind up in a landfill.

4) Wear it out - Most of us replace things well before the end of their useful life because we see something cheap or on sale, or spend because we are bored or think we should keep up with technology.

5) Do-it yourself - Learn how to fix things yourself rather than spending money having someone do it for you.

6) Anticipate your needs - Impulse spending occurs when you do not know exactly what you are looking for. This is especially prevalent (and exploited by grocery retailers) during your weekly grocery shopping trips. Have a shopping list before you head out the door and stick to it.
7) Research before you buy - Do your homework before buying. Reading reviews will help you make an informed decision to get the best deal, whether based on price, quality, value or durability.

8) Get it for less - I never pay retail for anything, as I know that there is always somewhere to get an item cheaper, be it on eBay, Craigslist, online discounters, liquidators, using coupons, waiting for sales.

9) Buy it used - There's very few things that I wouldn't buy used, but a careful shopper can get great deals on gently or hardly-used items that people are trying to get rid of because of a multitude of possible reasons, including gifts that are unwanted, a need for quick cash, dissolution of a marriage, a move, remodelling of a home, upgrade in technology etc.

While these are obvious tips to me, I know some people who never think of these options.

This Month's Quote

"After a man has made a lot of money, he usually becomes a bad listener" - Paul Theroux

This is so true! When everyone was (seemingly) becoming more prosperous from easy credit and rising house prices, they failed to listen to warnings. Only after the house of cards has collapsed, are people starting to take heed of advice.