Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.
It may not seem like it, but owning and driving a car will be a major part of your financial picture throughout your adult life. As with all financial aspects, it pays to be a smart and savvy decision-maker and shopper and to know how to save money on car expenses.
Adobe stock image: Syda Productions
By Dan Coconate
Special to Financial Independence Hub
Cars, believe it or not, are considered an asset. However, it’s good to remember that cars are indeed a depreciating asset. Every year, they decline in value due to wear and tear and also due to the release of newer models. As a result, cars are not a smart investment since they only hold value for a short amount of time.
So be wise about your cars. Making sound financial choices about the cars you drive, and the car insurance you obtain, will equal more money in your pocket in the long run.
First, let’s take a look at some tips on how to save money when you are buying a car. If you’re aiming for a stress-free and independent retirement phase, you’ll love these unique strategies to reduce your car expenses and save money.
Transitioning to early retirement is an exciting chapter that requires a smart approach to manage your finances. Car expenses are significant parts of any driver’s budget, and you can actually save money with a few strategic adjustments. Here are some unique strategies to reduce your car expenses and save money for more pressing needs.
Negotiate with your Insurance Company
One of the most effective ways to reduce car expenses is to negotiate with your insurance company. Many people assume their premiums are non-negotiable, but that’s not true.
By contacting your insurance provider and discussing your current rates, you might find opportunities for discounts or better rates. Highlight your clean driving record or inquire about senior discounts.
Consider Bundling Car Insurance with other Policies
Insurance companies often offer discounts to customers who bundle multiple policies. If you have homeowner’s or renter’s insurance, consider combining it with your car insurance.
This strategy will simplify your payments and provide a discount on your premiums. The savings from bundling can add up over time, helping you reduce your car expenses and invest more in your retirement savings!
Take a Defensive Driving Course
Defensive driving courses are excellent for lowering your insurance premiums. Many insurance companies offer discounts to drivers who have taken these courses. Completing a course shows your insurer that you’re committed to safe driving practices.
Lower your Driving Speed
Driving at low speeds can reduce your car’s fuel consumption. When you maintain a moderate speed, your engine works more efficiently, conserving fuel and reducing wear and tear. Small fuel savings can add up over time, making a noticeable difference in your car-related expenses. Continue Reading…
One of the most important developments in the financial world in recent years has been the growth of evidence-based investing. But what exactly is it? In the first of a new series of exclusive articles for Justwealth, the UK based author and journalist Robin Powell explains why founding your investment strategy on four basic principles can dramatically improve your chances of achieving your long-term goals.
By Robin Powell, The Evidence-Based Investor
Special to Financial Independence Hub
It takes between seven and nine years to train to be a doctor in Canada. For surgeons it takes as many as 14. Even then, both doctors and surgeons are required to engage in continuous learning throughout their careers.
Becoming a financial adviser, investment consultant or money manager is considerably less onerous. What’s more, unless you deliberately set out to defraud your clients, you’re unlikely to be stripped of your right to operate.
Of course, there are still examples of poor medical practice. It was only as recently as the early 1990s that a group of epidemiologists at McMaster University in Hamilton, Ontario, first coined the phrase evidence-based medicine. Sadly, though, professional malpractice in the investing industry is far more common, and there are many who have worked in it for decades and yet act as if they have little or no grasp of the evidence on how investing works.
A glaring illustration of this is a study published in May 2018 called The Misguided Belief of Financial Advisers. The researchers analyzed the returns achieved by around 4,400 advisers across Canada: both for their clients and for themselves. They found that the advisers made the same mistakes investing their own money as they did when investing their clients’ money.
For example, they traded too frequently, chased returns, preferred expensive, actively managed funds, and weren’t sufficiently diversified. All of those things have been shown, time and again, to lead to lower returns. On average, the clients of the advisers analyzed underperformed the market by around three per cent a year: a huge margin.
What is evidence-based investing?
In recent years, we’ve seen the development of what’s called evidence-based investing (EBI). Like evidence-based medicine, it entails the ongoing critical appraisal of evidence, rather than relying on traditional practices or expert opinions.
So what sort of evidence are we talking about? Essentially there are four main elements to the evidence that underpins EBI.
First, the evidence is based on research that is genuinely independent; in other words, the research wasn’t paid for or subsidized by organizations with a vested interest in the outcome.
Secondly, it’s peer-reviewed. This means that the findings are published in a peer-reviewed journal which is closely examined by experts on the subject.
Thirdly, the evidence is time-tested. Investment strategies often succeed over short time periods, but fail over longer ones. Investors should disregard any evidence that hasn’t stood the test of time.
Finally, the evidence results from rigorous data analysis. As everyone knows, data can be very misleading if it hasn’t been properly analysed.
The good news is that, even when all four of these filters are strictly applied, there is still plenty of evidence to inform our investment decisions. Since the 1950s, finance departments at universities across the globe have produced many thousands of relevant studies.
What does the evidence tell us?
What, then, are the main lessons from academic research on investing? This is a wide-ranging subject, and one we’ll look at in more detail in future articles, but there are four main takeaways.
Markets are broadly efficient
Because markets are competitive and prices reflect all knowable information, it’s very hard to identify stocks, bonds or entire asset classes which are either undervalued or overvalued at any one time. No, prices aren’t perfect, but they’re the most reliable guide we have as to how much a security is worth.
Diversification is an investor’s friend
It’s vital for investors to diversify across different asset classes, economic sectors and regions of the world. As well as reducing your risk, diversification can also improve your returns in the long run, and it is rightly referred to as “the only free lunch in investing.”
Costs make a big difference
The investing industry and the media tend to focus on investment performance. But while performance comes and goes, fees and charges never falter. Continue Reading…
One of the biggest challenges in Canada’s rental housing crisis is the lack of new affordable housing units being built.
Despite efforts through the National Housing Strategy’s five programs, only 17,000 units were delivered after four years. This disappointing outcome is only a modest improvement over Ottawa’s track record in the past 30 years. For example, between 1996 and 2013, fewer than 7,000 new units were provided by federal and provincial governments.
In contrast, the United States built 3.5 million subsidized rental units from 1987 to 2021. Adjusted for population, this is equivalent to building 11,000 units per year in Canada. Both countries have tightened the tax benefits of rental real estate, but the U.S. offset this policy shift by introducing the Low-Income Housing Tax Credit (LIHTC) to mitigate the impact of these changes on low- and middle-income renters.
A Canadian LIHTC would offer an alternative method of federal funding by leveraging private-sector expertise in owning, building, and managing low-income rental housing. The LIHTC would provide tax credits to both for-profit and nonprofit owners of rental housing, with nonprofits having the option to sell these tax credits. A key aspect of the program would be its efficient resource allocation, achieved by creating competition among developers for tax credits and using a market-based test for the viability and need for low-income housing.
Complements existing Renter Support Initiatives
The program could be designed to complement existing renter support initiatives, such as local government programs, housing allowances, and rent supplements. It would work by providing tax credits to developers, who would then pass them on to investors to offset their income tax.
Unlike earlier tax credit programs like the Multiple Unit Residential Buildings (MURB) provision, this program would have a cap, with credits allocated annually to each region based on population. The credits would be federally funded and awarded according to provincial objectives. Continue Reading…
Solo entrepreneurs face unique financial challenges, including inconsistent income streams, high operational costs, limited access to capital and the difficulty of separating personal and business finances. Effective financial planning becomes crucial to navigating these hurdles and ensuring sustainable business operations and long-term success.
Creating realistic budgets, building emergency funds and managing expenses allows solo entrepreneurs to stabilize their financial health. Additionally, seeking professional financial advice offers personalized strategies, tax planning and investment guidance, which are essential for securing a stable and prosperous future.
Unique financial hurdles for Solo Entrepreneurs
Variable revenue presents significant challenges for solo entrepreneurs in budgeting and managing expenses. The unpredictable nature of income makes it difficult to plan for consistent cash flow, often leading to financial strain. According to a recent survey, 77% of respondents reported their expenses increased by 6% or more due to inflation, further complicating financial planning.
Solo entrepreneurs also face the challenge of managing overhead costs without the benefit of economies of scale. Unlike larger businesses that can reduce per-unit costs through bulk purchasing, they must find ways to cover operational expenses efficiently. In fact, 37% of small businesses resort to borrowing to meet their operating expenses, which highlights the financial pressure they endure.
Securing loans and investments is another hurdle for solo entrepreneurs. Financial institutions and investors may view them as high-risk due to their lack of a proven track record and limited collateral. This makes it difficult for single proprietors to obtain the necessary funding to grow and sustain their businesses. Continue Reading…
In the quest for Financial Independence, milestones vary from mastering debt to embracing minimalism.
We’ve gathered insights from nine professionals, including Finance Experts and Founders, to share their personal triumphs. Discover how these individuals have navigated their paths from mastering debt through frugality to paying off mortgages independently.
Mastering Debt through Frugality
Achieving Total Debt Freedom
Securing a Higher-Paying Job
Early Retirement through Real Estate
Eliminating Debt with Side Hustles
Embracing a Debt-Free Minimalist Life
Regulating Finances with Nervous System
Strategically Paying off Student Loans
Paying Off Mortgage Independently
Mastering Debt through Frugality
Each milestone marked an important stage towards a more confident future on this road to Financial Independence. One turning point occurred when I became a master of managing Debt and adopted frugality as my way of life.
Although, in my pursuit of financial freedom, it dawned on me that Debt was both a burden and a tool; this happened at the time when I decided to confront my debts openly. Eventually, I divided them by interest rates and then talked with lenders about much better repayment terms. With discipline and focus, little by little, I got rid of a mountain of debts while coming closer to financial liberty after each payment.
Another significant landmark was when I began practicing frugality. For instance, being mindful of small savings that accumulate over time into significant wealth-creation opportunities has been one key lesson that I learned from this approach. In other words, I dissected every expense into what need was involved for its necessity or want and became good at finding creative ways to save without losing sight of the quality of life.
Whether it is meal planning or relying on loyalty programs or DIY solutions; being frugal does not mean living without but instead making conscious decisions towards personal financial objectives.
Whenever I look back on the path that led me toward my financial independence, I don’t see these checkpoints as just what they are; instead, I think of them as turning points in how I think and act. Learning how to manage debt properly and adopting a saving lifestyle have given me complete autonomy over my financial future, thus laying down a foundation for abundance and stability. –– Arifful Islam, Finance Expert, Sterlinx Global LTD
Achieving Total Debt Freedom
One of the biggest milestones on my journey to Financial Independence was finally becoming 100% debt-free. This achievement felt especially meaningful because it required a serious commitment to smart money management and embracing a frugal lifestyle.
Early in my career, I was weighed down by a ton of student loans and racked up credit-card balances. I realized all that debt was just holding me back from reaching my bigger financial goals and living the life I really wanted. So, I made a decision to make paying it all off as fast as possible my top priority.
I started by creating a super-detailed budget that accounted for every dollar of income and expenses. Then I looked for any areas where I could cut back on non-essential splurging: like eating out, entertainment, shopping sprees, etc. Any money I could free up got funneled directly towards making bigger debt payments, focusing on the highest-interest accounts first.
At the same time, I fully embraced a more frugal, minimalist lifestyle overall. I learned to appreciate simple, free pleasures and find joy in experiences over buying a bunch of material stuff. I also hustled to increase my income through side gigs like freelancing or selling unwanted items.
Through diligent budgeting, living frugally, and a strategic debt repayment plan, I managed to become 100% debt-free within just a few years. Not only did it drastically improve my overall financial situation, but it gave me this incredible sense of freedom and control over my life. It laid the foundation for even bigger money wins down the road while teaching me the value of living below my means to prioritize long-term goals. –– Loretta Kilday, DebtCC Spokesperson, Debt Consolidation Care
Securing a Higher-Paying Job
The most critical milestone I reached was getting a job that paid more than just “enough.” I’ve tried freelancing, selling online, starting a website, doing social media, and I even tried digital marketing for a startup. But it wasn’t until I got a plain old job that just paid more than I needed that I found everything I needed: peace of mind, freedom from debt, the start of a retirement fund, and more.
For anyone who’s struggling even $50 makes the difference between starving or surviving: I suggest just building your skills and portfolio and moving up to better-paying jobs. Get the certainty and security that comes from a regular salary, one that allows you to pay all your bills and gives you breathing space.
Once that’s done, you have the room to plan for the future, to pay off debt, to organize your finances so that if you want to budget, it’s actually possible. — Debashri Dutta, Founder, Dmdutta.com
Early Retirement through Real Estate
Being able to retire in my early Thirties was a significant milestone toward Financial Independence. I started investing in real estate in my twenties, and I had to work two jobs and live frugally to afford a down payment.
But today? I don’t have to worry about working a job I’m not particularly passionate about. Instead, I can spend my time doing what matters more to me, like coaching others who want to escape the rat race and build financial security for themselves.
Bottom line: If you have a goal in mind, short-term sacrifices will be worth it in the long run. — Ryan Chaw, Founder and Real Estate Investor, Newbie Real Estate Investing
Eliminating Debt with Side Hustles
I gained Financial Independence through hard work and side hustles. The biggest milestone I achieved was paying off US$60,000 in student loans. That debt was debilitating, and I was able to pay it all off by devoting all the money I made from side hustles to debt reduction. After I paid off my student loans, I used the same methods to pay off the house.
The next milestone that was incredibly important to me was having US$250,000 in savings. That milestone was important because it felt like the investment income began to snowball. It also felt like my hard work was paying off, and it made it easier to make the effort to save money after that point because I felt it working. — Jonathan Geserick, Managing Attorney, Texas Probate Pros
Embracing a Debt-Free Minimalist Life
I had a business go very south about 10-15 years ago. I held on way too long because it was “my baby.” Because of this, I racked up a lot of debt that I really knew I shouldn’t have, trying to save the business.
I moved that debt into a very low-interest situation long ago, which allowed me to pay a very small amount towards the principal and interest every month. That was a great solution; however, I recently decided to just pay the whole thing off. Continue Reading…
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