CanadianBusiness.com has some really good articles that are worth reading. Here’s another one.

How we retired in luxury — on $2,000 a month
Herman Heynen as told to Camilla Cornell
From the May 2006 issue of MoneySense magazine

Seven years ago, when I was 60 I took early retirement from my job in the customer service department at CP Rail. The company was reorganizing and I didn’t want to start another job, but the result was that I took a cut in my retirement pension. My wife, Anne, who is a year younger than me, wasn’t ready to retire yet, so she continued to work until 65 as a legal assistant and I just sat at home, on our acreage outside of Calgary, dreading the winters and watching the snow fall.

Every winter we would go down to Mazatlan, Mexico, where we owned a timeshare. We loved the warm weather (usually 25° to 29°C during the day in the winter months) and the long sandy beaches and the very Mexican feel of the place. We started off visiting for two weeks a year, then it became three. At first, we stuck to the tourist areas. But Mazatlan is a good-sized city of about 600,000 people and after a while we discovered what’s known as El Centro — the city centre — and we really liked it. The houses are old there — some go back to the late-1800s — and they’re very affordable. As well, there is lots of local culture, great shopping, an open-air marketplace and plenty of restaurants and cafes.

Four years ago, we decided to buy our own little place there. It was the year before Anne retired, and we bought a small two-bedroom house that was completely restored. It cost us only $45,000, which we put on our line of credit. Our home is in a traditional Mexican style, painted a salmon color, with pretty ironwork out front, cool ceramic floors and a shady little patio with a nice garden, about a 10-minute walk from the beach. Everything was in there, including furniture, appliances, linens, towels, dishes, cutlery and even a TV, because the owner’s original intention had been to rent it out.

When Anne retired, we sold our house outside of Calgary, which had 10.5 acres of land. With the proceeds from the sale, we paid off the house in Mexico and bought a 14 x 44-ft mobile home in a beautiful RV park south of Calgary. Now we spend November to April in Mexico and the summer months in Canada.

Overall, I’d say living expenses in Mexico are between a third and half of what they are in Canada. The two of us can live very well on about $2,000 a month. When we worked out our monthly expenses, we were paying about $135 a month for shelter, including utilities, property taxes, Internet and telephone.

Some costs seem absurdly low to Canadian eyes. Our property tax, for example, is just 381 pesos per year ($40), although we pay an additional bank trust fee of $422 annually because our house is within 50 km of the ocean. Even with air conditioning in the hot months, our electricity costs have averaged $16 a month. Of course, we never have any heating costs. If it gets chilly at night, you just throw on an extra blanket. Fire insurance is not necessary except for contents because all the houses are built of concrete.

Food is cheap. You might pay $2 for a 1.9-litre bottle of milk, 43 cents for a kilo of tomatoes and $2.50 for enough large fresh shrimp for a meal. Services cost even less. You can visit the dentist for $20 to $30, hire a cleaning lady for the day for $10, have your hair cut for $4, and get your laundry done for about $4.50 for three kilos.

We don’t need a car — the bus system is great and the local bus costs 4 pesos (41 cents Cdn.), or you can pay 8 pesos for the air-conditioned bus, which is mostly for tourists. That means we can afford to dine out often. On Valentine’s Day we went all out and had dinner at a Mexican-Greek restaurant. We had a large margarita, a bottle of wine, a delicious meal, a dessert flambé and cappuccino for about $50 including tip. Normally, we don’t spend that much. There are many places where the two of us can get a simple meal for $10.

Another advantage to being in Mexico, as opposed to, say Thailand or Costa Rica, or some of the other places where Canadians can live cheaply during retirement, is that it’s fairly close to home. The flight to Calgary costs us about $700 so if we need to go back to see the kids, it’s not a problem.

I would advise those considering retiring here to be realistic about what you’re used to. We eventually decided that the original layout of our little home was too small, given the amount of time we are spending down here, so we are building another floor onto the house with a large bedroom, an extra bathroom, a large balcony, and a back deck. It’ll cost us about $20,000, which is still very cheap.

You have to budget a little extra for health care. We have an FM-3, which is a special visa allowing us to live here for one year. It also allows us to buy into the IMSS, the state-sponsored medical plan, at a cost of about $580 a year for the two of us because we’re over 65. We have that plan just in case we get run over or have a heart attack, which would be costly without insurance. For the most part, if we go to our family doctor — who is well-educated and speaks perfect English — we pay directly. It’s only about $20 a visit, and if you need an X-ray or ultrasound, you’ll pay another $20, but you’ll get the results immediately and the care is top-notch.

We’ve been very happy with our decision to move to Mexico for half the year. Right now the skies are blue and its 29°C, yet at night it cools down and you sleep well. People ask us what we do down here. They’ll say, “You can’t sit on the beach for six months. Aren’t you bored?” The short answer is, no. We can go to the Angela Peralta Theatre, which is beautifully restored, and see a flamenco performance for less than $14. Movies are released at the same time as in Canada, but in English with Spanish subtitles, and cost $3 a ticket. And we have an endless round of barbecues, fundraisers and get-togethers, mostly with other Canadians and Americans, but also with locals.

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Here’s another inspiring story on getting out of the rat race.

How I escaped the rat race
Carole Dobson as told to Duncan Hood
From the May 2006 issue of MoneySense magazine

I used to work full time at a stressful job making a six-figure salary. Then, about 10 years ago, I started planning what I call Carole’s Freedom 48 plan. Today, I’m 50, and I only work when I want to, doing things I love to do. I’m living on less, yet I own a 1,700 sq-ft house in a leafy neighborhood in Calgary. I have a three-year-old Chrysler Concorde with leather seats and I managed to travel for three months out of the past year. That included almost a month in Venice — and I flew there business class.

There is no magic involved in how I’ve chosen to live my life, nor are there any hidden trust funds, wealthy relatives or hardship. To an outsider, it looks like I’m living on air. But once I decided that I’d rather be rich in experiences than in money, I figured, why wait until I’m too old? Instead of one big job where I’m not in control, why not have several smaller sources of income, each one related to something I can enjoy?

Before the switch, I worked for agricultural supply companies in Alberta. It was a lot of fun at first, but the fun was wearing thin. I was raising two teenagers, and my job was high-pressure work, because it was very seasonal. I was responsible for sales of crop inputs — seed, short-line equipment and so on — and about 60% to 80% of my sales would occur in a six- to eight-week period. To make matters worse, I seemed to be spending all of my waking hours involved in a systems project that didn’t work. It was initially supposed to last six months, but three years later we were still working on it, and it still didn’t work. People began losing their jobs. I was let go in 2000, before Christmas — and right before they handed out the year-end bonuses. I just said, “Fine. I’m outta here.”

A few months after being laid off, I landed a job as dean of agriculture at Lakeland College, which is about 300 km north of Calgary. Again, it started off fine, but we were soon faced with very severe budget cuts that had to be implemented overnight. Many jobs were lost and it was a wrenching time for the whole college. Eventually, I thought, what am I doing here? And I left in 2003.

It was then that I decided to launch my Freedom 48 plan. It started when I realized that after decades of diligent saving, my RRSP wasn’t going to save me much in taxes. By my mid-forties, I had managed to accumulate several hundred thousand dollars — which was great on one level, but meant that by the time I reached 69 and converted my RRSP to an income fund, I would probably have to withdraw such a large amount each year that I’d be paying as much tax as I was when I was working. Not only that, but my income from those government benefit programs would be clawed back. You’ve heard about people who don’t save enough? Well, I had the opposite problem — I had saved too much.

So I went to my financial planner and said, I want to have enough to retire on, but my lifestyle is not about making as much money as I possibly can. I want to slow things down between the ages of 48 and 65, and I still want to work a bit, but not at a frantic pace. I want to volunteer more, and spend more time with my friends and family. Can I slowly collapse my RRSP in a systematic way so that I can enjoy some of the benefits of all that saving while I’m in my prime? So my planner took a look and found that if I began taking out about $15,000 a year, I’d still have enough to last me until my mid-80s. My challenge was to make another $20,000 or $30,000 a year doing part-time work. So far I’ve succeeded even better than I expected. I haven’t even had to touch my RRSP yet.

I’ve earned much of my income from the homes I’ve lived in. Every three to five years, I’ll buy the dump of the neighborhood and fix it up, and later, I’ll sell it. I’ve learned how to fix a house so that my cost is minimal and I earn the maximum amount of revenue. Typically, after all the expenses of moving and legal costs, I’ve been able to clear about $50,000 a house — and all of that profit is tax-free because you don’t pay taxes on gains on your principal residence. An extra $50,000 every few years is modest enough, but it costs money to live somewhere, and this way I get it back. I consider the gardening, painting and upgrading that I do to be a part-time job. I actually enjoy doing it.

To help even out the income I get from my house, I take out a line of credit, secured by the house. I do that because even if I systematically withdrew $2,000 a month from the line of credit, the cost of that will be a heck of a lot less than taking that $2,000 from my RRSP. When I sell the house or earn extra income, I pay off the line of credit.

In addition to my savings and my real estate income, I earn a third stream of income from part-time work. When I was first laid off, I reported to the EI office and they suggested that I take an entrepreneurship program offered through a local accounting firm, which taught me how to get going. I started out doing contractual work and French translations of technical documents for agricultural companies — my family is from Quebec and French is my first language — but now I’m zoning in on landscape design and teaching art.

My love of gardening was what convinced me to get my landscape design certificate. Now I help people design yards that will enhance the value of their homes and do well in this temperamental Calgary climate. It’s seasonal work, but that was exactly what I was looking for. I also sometimes take on a fun, low-paying job, like working as a tree expert at my favorite gardening centre. I’m paid the princely sum of $10 an hour, but I love it, and I see it as sort of a paid fitness program. I also teach mosaic art at the Alberta College of Art & Design, where they put on a 15-hour program every other month.

The income I’m living on isn’t as high as what I was making when I was working, but you come to realize that when you’re working long hours and you’re stretched for time and feeling stressed out, you’re paying a lot of money for things you don’t have much time to enjoy anyway. Once you strip away your excess costs, you only need about $30,000 to $40,000 a year to live quite comfortably, even with an expensive teenage boy at home. I’m remarried, but my husband spends much of his time on his grain farm, and doesn’t contribute to my living expenses. Now I’m living on less, but my standard of living is not low. The truth is that somewhere between the people who read yesterday’s newspapers and eat week-old bread, and those who work flat out for a six-figure salary, there’s a middle ground.

I’ve found that the main thing is to eliminate your major sources of overhead, things like car payments and your mortgage. I’m now in a position where I’m fortunate enough to be able to pay cash for my houses and cars. I save money by cashing in Air Miles to go to the movies, and I put all of my purchases on a CIBC gold credit card for Aeroplan points. I volunteer for several non-profit organizations, such as the local arts society, and when they send me to a conference or other event, I’ll piggyback my personal vacation onto the trip. I shop the second-hand markets, I use a flat-rate Internet phone plan, I’ve done an energy audit on the house and I put in more insulation to lower my heating bills.

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Previously, I had complained about the content in CNN’s Money’s Millionaires in the Making. Its always a rehash of rich people who’re saving their extra money and are going to be rich.

Well after some research I think I’ve found something thats a whole lot better – but it comes from Canada!

How we paid off our house in three years
Perry Goertzen as told to Duncan Hood
From the May 2006 issue of MoneySense magazine

Have you ever wondered what you could accomplish if you saved 80% of your pay? Well I can tell you, because I did it.

Most people have trouble saving just 5% or 10% of what they make, but my wife Tiffany and I decided that it was worth living like paupers for a few years if it could give us a huge jump start on life. Saving as much as we did was challenging, but what we accomplished was amazing — I still can’t believe it myself sometimes. When we started, we had a rusty old Toyota Tercel, no house, few possessions and a crushing debt of $37,000. A few years later, we had two almost-new cars and a beautiful new four-bedroom house on a 46-ft lot in Milton, Ont. Everything was completely paid off — we had zero debt. During this time, neither of us made much more than $60,000 a year at any one job, but by working several jobs and saving almost all of our income, our net worth increased from negative $37,000 to positive $420,000 in less than five years.

I was born in rural Manitoba in my grandparents’ car on Mother’s Day, and my family still jokes that I came into this world fast and I haven’t slowed down since. But though I was always very energetic, it was channeled in the wrong direction during my teenage years: I was basically a juvenile delinquent. I quit high school at age 15, worked odd jobs, drank and partied. By my early 20s I hit rock bottom. I realized that I was going nowhere and that I had to make some serious changes to get back on track. So I gave up my old friends and my old lifestyle, and decided to move to Abbotsford, B.C., to start over.

It was there that I met my future wife, Tiffany. After a couple of years we got engaged and then we got married in 1995, when I was 27. During this time I changed dramatically. I started volunteering for an organization that worked with troubled teens, and I loved the work. Tiffany and my family kept challenging me to go back to school, and shortly before we got married, I applied to a private Christian university in Langley, B.C., called Trinity Western, and I was accepted as an adult student. Four years later, in 1998, I graduated with a B.A. in psychology.

I was proud of my degree, but a B.A. didn’t open as many doors as I originally thought it would, so we decided that I should get a Masters of Social Work degree. Wilfrid Laurier University in Waterloo, Ont., offers one of the better programs in Canada, so we packed up our belongings and drove across the country. It was an absolutely crazy trip — we did it in only 49 hours with one four-hour stop at a little motel — and when we arrived we settled into a small apartment in Milton, midway between the university and a new teaching job we found for my wife. During the next two years of schooling, money was tight, and I had to borrow heavily for tuition and books. When I finally finished my master’s degree in 2000, we had a total debt of $52,000 from my student loans.

This is when we made the decision that changed everything. With my new degree, I quickly found a job that paid well, but we decided that rather than rewarding ourselves for all those years of hard work, we would continue living like impoverished students for a few more years. In exchange, we figured we’d get a head start on the rest of our lives.

I got my first job as a crisis intervention worker before I even finished my degree. When I graduated, they gave me more hours, then offered me a second position doing the same thing at another location. I was just loving the work, and I took on a third job doing the same thing at the Credit Valley Hospital in Mississauga. As crazy as it sounds, I then took on a fourth position, and I saw clients now and then through my own counseling business as well.

The next few years are a bit of a blur. I worked an average of 90 to 100 hours a week, or about 14 hours a day, seven days a week. It wasn’t unusual to work 22 hours straight, go home, sleep for two or three hours, get up, shower, and work another 12-hour shift. I once worked 99 days in a row, took two days off, and then worked another 60 days. Meanwhile, Tiffany began supplementing her salary as a teacher by tutoring and giving piano lessons.

In some ways it wasn’t much of a life. My wife thought I was pushing it too much, and our friends and family thought we had lost perspective. But my father had taught me a strong work ethic and I felt like I had wasted a lot of years in my youth. This was my chance to catch up. With six or seven jobs between the two of us, within a few months of graduating, our combined income was well in excess of six figures. But even with our sizable new income, we continued living in our $900-a-month apartment in Milton. Most of our furniture came out of the garbage, and we rarely bought new clothes. We didn’t have cable and we didn’t go out much. Eventually, we splurged and bought a set of rabbit ears for our old TV.

We were able to save over 80% of our after-tax income, which amounted to over $80,000 a year. In a lot of ways, saving 80% of your income is absurd, but you would be amazed at how quickly you can pay off huge loans if you do. I obtained some loan remission from the government, which knocked my $52,000 student debt down to $37,000, and we managed to pay that off in just four short months. Paying off such a staggering loan so quickly was an incredible feeling. We realized that we had become accustomed to saving most of our income, so we decided to accomplish a few more goals before we broke the habit. We began by saving up for a down payment on a house, and it took us less than a year to save up $82,000.

In June of 2002, we purchased our first home in a new subdivision in Milton for $302,000, and took on a five-year, 5.2% fixed-rate mortgage for $220,000. At first, we intended to pay it off in 10 or 15 years. But then I began to look at what would happen if I doubled up the payments and paid an extra 10% a year. It was incredibly motivating to see how much interest you could save. So we decided to double up every bi-weekly payment, from $670 to $1,340. We also made the annual 10% prepayment, which was about $22,000 a year.

At the end of the first year, we realized that we were saving much more than we needed, even with the doubled payments and annual prepayment, so I approached the bank and asked them if we could make an annual prepayment of 20% instead. It took a little bit of coaxing and a few Tim Hortons coffees, but banks can be more flexible than you might think: don’t assume the terms of your mortgage can’t be changed.

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As a further update to my previous update, I deposited some money into my Prosper account.

Unfortunately an electronic ACH transfer takes about 7-8 days before it shows in your account. Sounds like someone’s enjoying a free ride on my money yet again.

I had a previous post about Prosper.com where I was planning on borrowing some money for investing.

However I decided against it and now I’m thinking I’ll lend some money out instead. If I lend money out at 10% and 10% of the borrowers default, I should still break even. There are several people asking for money who have stellar credit. If you like a bit of risk, you can get a higher rate. Lets see how it works out.

Here’s an interesting link Lenders on Prosper

And if any of you would like to share your Prosper experiences, here’s a great place to do so.

One of my friends quit his job to play online poker about 2 years ago. He was doing exceptionally well, quadrupling his salary through a few hours of poker playing. All was well until a few weeks ago when online poker was banned. All of a sudden he found himself out of work!

As Robert Kiyosaki says, always have multiple streams of income [or was it that huckster Bob Allen???]. The same thing could happen to almost anyone in any profession. You could wake up one morning to find some stupid legislation has taken away your income.

Ok, maybe its not the same thing, but if you depend on any one source of income there’s a risk that you should try to mitigate.

DHL is offering a special discounted rate for Costco customers. It seems to be around a 25-30% discount depending on the service. Use this link.

A billion is a difficult number to comprehend, but someone did a good job of putting that figure into perspective:

A billion seconds ago it was 1959.
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were living in the Stone Age.
A billion dollars ago was only 8 hours and 20 minutes, at the rate Washington spends it.