Simple Inspiration Interview featuring Barry Choi

Barry ChoiThis week’s Simple Inspiration Interview features Barry Choi from Money We Have.  Barry is a personal finance and budget expert.  He provides practical money saving tips to help you take that dream vacation.  He also works at a Toronto TV Newsroom where he provides personal finance and travel tips.  Barry bio

Let hear how Barry has simplified his finances

What event lead you to simplify your finances and your life?

I started take things really seriously after I found out that my advisor had put me in questionable mutual funds that had high MERs and DSCs. This is when I realized I need to simplify things by learning to take control of my own finances.

What area of your financial life needed the most simplification?

After becoming a do-it-yourself investor I got a bit carried away and started investing in a few things I knew nothing about. After recognizing this problem I simplified my portfolio by selling off assets that didn’t fit my investing profile.

Where did you begin to simplify your financial life?

Cutting expenses and just spending less was where I really began to simplify things. By saving more I was able to increase my overall savings rate.

What was your biggest challenge or roadblock when it came simplifying?

Selling assets at a loss was a big challenge at the start. I would try to wait for things to break even before selling. This of course didn’t always happen but more importantly I didn’t factor in opportunity costs.

What app or tool helped you the most when it came to simplifying?

Plain old excel was the biggest difference maker since I was able to manipulate the numbers when I created a budget.

How has simplifying changed your life?

As an index investor I spend next to no time looking at my portfolio which has given me more time to spend doing the things I enjoy like blogging.

Are there any areas of your finances that you still need to simplify?

I’m pretty comfortable with where my finances are right now, but I would definitely like to learn more about taxes. I don’t think there will ever be a way to simplify that though.

What advice or tips would you give to others who want to simplify their finances?

Read a book. Honestly there’s so many great resources out there and if you read just one book, you’d probably know more about personal finance than 80% of the population.

What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?

For Canadians, my two go to people for anything personal finance related are Preet Banerjee and Gail Vaz-Oxlade. Both of them make personal finance easy to understand and they strive to help people learn about their money. Of course you could also check out my blog at Moneywehave.com

Do you have an emergency fund established, if so how did you determine the amount needed to fund it?

Yes I have an emergency fund of roughly $11,000. I came up with this number because between my wife and I; we have 3 bank accounts and that’s the combined total we need to avoid monthly fees.

How long did it take you to simplify?

Not long at all, it’s really simple once you’ve made it a goal.

What’s your best savings tip?

I have 3 savings rules I live by. 1) Spend less than you make 2) Pay yourself first 3) If someone offers you free money, take it! (pension plans, government grants)

What are your current financial goals?

I’d like to increase my income a bit this year by picking up some more freelance work.

Any other thoughts you would like to share with others who are looking to simplify?

Don’t wait, start now. There’s absolutely no reason why you should delay getting your finances in order.

Thanks Barry.  I appreciate you taking your time to sharing your thoughts on how you have simplified your finances.  If you would like to read more about Barry and receive some of his traveling and personal finance advice  visit his blog Money We Have or follow him on Twitter @barrychoi

To read previous interviews in the series click Simple Inspiration Interviews.

If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

One Simple Step to Simplify Your Finances – Spending

SpendingIn last week’s edition of One Simple Step to Simplify Your Finances mini-series I discussed how having an emergency fund will help you simplify.

Hope you have taken action to fund your emergency fund or if you already had one in place you made sure it was adequately funded.

Now it’s time for another simple step to help you simplify your finances.

As you know there are many things we cannot control when it comes to our finances. For example we cannot control the direction of the stock market, we cannot control interest rates, we cannot control fees, and we can not control those unexpected expenses (the reason you have established a emergency fund). Those are a few things that are just out of our control. That is why I always suggest focusing on those things that you can control.

One of those things that you can control that can have a positive or negative impact on your personal finances is your …..

 

Spending

 

You have probably heard the term spend less than you earn. If you want to grow your wealth and simplify your finances you must be able to control your spending. Its one thing you actually have control over and will have a significant impact on your financial situation.

You hear this often but many people are unable to get a handle on their spending.

How can I begin to spend less?

Its not always as easy as it sounds.

How to Control Your Spending:

Create a budget

You may not like to budget because it takes too much time or makes you feel restricted. I can tell you this if you don’t know how much is coming in and going out each month you will not be able to simplify your finances.

A budget is basically an anticipation of your monthly income and expenses. Here are several reasons why you must create a budget as soon as possible to make you financial life easier and help get your spending under control.

Know where your money is being spent
A personal financial budget allows you to know where the inflows and outflows of your money come from. It puts you in control of your finances instead of letting your finances control you.

Helps you achieve your financial goals
A budget is your road map to help you achieve your financial goals.

Helps you determine your priorities
Creating a budget allows you to see where your money goes as well as lets you know what your real priorities are. For example, you may say you want to save more for retirement however instead of saving this money for retirement you are spending it on other things.

Know your Financial Habits

Think about your financial habits. The good ones you have developed as well as the bad ones you may have. In order to simplify you have to develop good financial habits and eliminate the bad ones. Yes, I know it is easier said than done. Trust me I know. We all have some bad habits that can be a challenge to eliminate. So take some time to identify your financial habits – the good and the bad. Identifying your financial habits will help you on your journey to control your spending as well as help you to simplify.

If you are serious about establishing a simplified financial lifestyle make sure you know where you money is spent on a monthly basis.

Benefits of Controlling your Spending

More to save.

If you are not spending your money that means you will have more money to save. Saving enables you to have more to allocate to your emergency fund as well as your retirement. Having both of these in place will provide you with an financial peace of mind when those unexpected expenses occur as well as when it’s time for you to retire.

Less stress

Spending less enables you to save more which leads to reduced stress. You have less stress because you know your emergencies are covered, your retirement is being planned and money is set aside for those future purchases. You will sleep better, your overall financial and physical health will improve.

Helps Eliminate your debts.

Maintain control of your spending frees up money which you can use to reduce your debts. Also if you are spending more than you earn you are probably using credit card to make those purchases which increases your debt.

So take some time to review your monthly spending. You maybe surprised how much you are spending and may discover a few ways to reduce it.

It is one of the things you actually can control so manage it properly. Less spending means more saving which will lead to financial peace of mind.

So stop spending and start saving.

Now you must take action by reviewing your spending. Look for ways to reduce your spending.

  Are you ready to begin simplifying now?

If so, sign up for my newsletter and you will receive a weekly email to help you simplify as well as receive a free eBook which provides you 9 simple steps so you can simplify your finances with in 30 days. Sign up now by entering your name and email address below.

Til next week take one step at a time.

Next week I will provide another simple tip for you to implement.  So stay tune and sign up for newsletter so you don’t miss any of these tips.

 

 

 

One Simple Step to Simplify Your Finances – Emergency Fund

emergency fund

In my second edition of One Simple Step to Simplify Your Finances mini-series I discussed how consolidating can help you simplify.

Hope you have taken action and have begun to consolidate your accounts.

Now it’s time for the next simple tip to help you get your finances under control.

Are you financially prepared for your next unexpected expense?

How do you pay for those unexpected expenses?

A key necessity to living a simplified financial life is to be prepared for the unexpected.  We have all incurred those unexpected expenses which are many times out of our control such as:
  • You have a urgent medial treatment not 100% covered by insurance
  • Your car is damaged in accident
  • Your furnace or air condition needs to be replaced
  • Your company downsizes and you must find a new job

However if you prepare yourself you can minimize the stress and financial damage you incur if you establish an…

Emergency Fund

 

If you have an emergency fund in place you would not have to wonder where you will find the money to cover those unexpected expenses. You would simply go to your emergency fund to cover the expense rather than wonder how and where you will cover these expenses.  It’s much easier to save money for these expenses then not save and cause unnecessary stress.

Why Do I Need an Emergency Fund?

No additional debt
Having an emergency fund enables you to avoid taking on additional debt to cover unexpected expenses.  If you do not have an emergency fund in place, you are likely to turn to your credit cards or personal line of credit such as a home equity line of credit to pay your unexpected expense. It’s possible you may even delay paying one of your other bills to cover this expense.

By using debt to cover an expense it only increases the cost of the unexpected expense.  Once you have used credit to pay the expense you have only delayed payment.  You will still need to determine how you will pay off this additional new debt.  This once unexpected debt can set you back financially for several months or years depending on the cost of the expense and your ability to pay it back.

Financial safety net
Having an emergency fund is similar to having a safety net in place to catch you when those unexpected expenses occur.

With an emergency fund you have money set a side to pay for those unexpected expenses.  This allows you to simply pay for the expense without impacting your monthly budget which could create a financial hardship for you and your family.  Having an emergency fund can act as a financial bridge if you’re unable to work unexpectedly for an extended period of time without pay or suddenly lose your job.  Your emergency fund can cover your monthly expenses until you are back at work or have found new employment.

Less worries
Having an emergency fund in place and adequately funded you do not have to stress yourself out worrying where you’re going to find the funds to pay for unexpected expenses or how your going to pay your monthly expenses if you lose your job or unable to work.

Where Do I Keep the Money?

Since you do not know when an unexpected expense will occur, these funds must remain very liquid and easily accessible.  You should not put the money into any investment which could lose money.  That kind of defeats the purpose of an emergency fund.  You should hold the money in a saving account or money market account which you can access when needed.

How Much Do I Need?

The amount needed in your emergency fund is always up for debate.  You probably have heard you should keep $1,000, 6 months of expenses, or 6 months of income.  I believe it depends on your personal situation.  Everyone’s financial situation is different so you need to build your emergency fund that works for you and provides you the financial peace of mind you need.  Here are a few things to consider:

Your income stream is it consistent or does it fluctuate?

Your insurance deductibles?

Your current debt outstanding?

These questions can help guide you.

How Do I Fund It?

The best way to fund your emergency fund is to automate the process.  This way you do not forget to do it.  Once you set up the automated transfer you will continue to build it every month.

The above benefits are why it’s important to have an emergency fund in order to simplify your finances.

Now you must take action by funding your emergency fund. Start by establishing a monthly automatic deduction from your primary account to another account if you do not already have an emergency fund.  If you do have an emergency fund make sure it is adequately funded.

  Are you ready to begin simplifying now?

If so, sign up for my newsletter and you will receive a weekly email to help you simplify as well as receive a free eBook which provides you 9 simple steps so you can simplify your finances with in 30 days. Sign up now by entering your name and email address below.

Til next week take one step at a time.

Next week I will provide another simple tip for you to implement.  So stay tune and sign up for newsletter so you don’t miss any of these tips.

 

One Simple Step to Simplify Your Finances – Consolidate

Consolidate

In my first edition of One Simple Step to Simplify Your Finances mini-series I discussed how automating can help you simplify.

Hope you have taken action and have begun to automate your savings.

Now it’s time for the next simple tip to help you get your finances under control.

How many investments accounts do you have?

How many bank accounts do you have?

Having your money spread around across multiple accounts can be challenging to keep track as well as time consuming. Having multiple accounts means your money is spread out which can result in you losing track of your money. This can lead to financial mismanage and result in you not saving enough, causing overdraft fees, unnecessary account fees as well as possibly leading you to spend more. If you find yourself in this situation it’s time to simplify your financial accounts.

You can simplify the manage of your accounts by simply…

Consolidating

 

Why consolidate? I am managing my money just fine even with multiple accounts and providers.  You may be just fine but if you want to simplify things consolidating has its benefits.

Here are several benefits to consolidating your financial accounts:

 Consolidated Statements

When you keep your bank account or investment account with one financial institution its easier to see all of your money when in one statement versus having multiple statements to keep track of each month.  Even if you have more than one account with the bank or investment firm of your choice you can request a consolidated statement to see everything on one statement.

Less Paper

When you have multiple providers you may be inundated with statements as well as tax documentation during tax time. Consolidating reduces the number of statements and tax forms you will receive each year which makes it easier to manage.  You will spend less time tracking down year end tax forms or even remember which tax documents you should have received.  Less statement means less mail you have to sort out.

Less Time

When you have less accounts to keep track of it is easier to monitor your accounts.  It makes it less stressful as well as you spend less time keeping track of every account.

Less Passwords

Having a single bank relationship means less sites and passwords you have to keep track of. We can all use less passwords to remember.

Less Fees

Having a significant relationship with one bank or financial firm can help lower fees, receive better rates and open the door to better services.  With financial firms you maybe able to lower your commissions as well as receive personalized investment advice or service.  By consolidating your banking accounts with one bank you maybe able to obtain favorable relationship benefits such as waiving month deposit account fees and receive favorable terms and interest rates for loans.

Easier to Track

It is easier to track and manage your investments when they are in one location, as opposed to several. This makes it easier to track investment performance and determine your overall asset allocation.  When your money is scattered among numerous various account with a number of firms, it can be challenging to know exactly what assets you hold.  It also makes it more difficult to determine your asset allocation and if you need to re-balance your funds.

Helps Others Help You

There maybe a time when someone else has to help you with your finances.  It maybe a friend or family member.  It will be easier for them to help manage your finances if your accounts are consolidated and all funds can easily accessibled with one or two providers.

As you can see managing your money is much easier once you consolidate your financial accounts.

Review your existing bank and investment accounts.  How many deposit accounts, investment accounts and retirement accounts do you actually have?

But before you begin to consolidate determine what the purpose of each account is for.  When you consolidate review the benefits you receive from each institution and reason for each account to determine where you should consolidate the accounts to.  You don’t want to consolidate and later decide you should have use a different bank or financial providers.

Think through the process before you execute on it. Start with reviewing your bank account which are usually easier to move then an investment account.

Are you ready to begin simplifying now?  If so, sign up for my newsletter and you will receive a weekly email to help you simplify as well as receive a free ebook which provides you 9 simple steps so you can simplify your finances with in 30 days. Sign up now by entering your name and email address below.

Til next week take one step at a time.

Next week I will provide another simple tip for you to implement.  So stay tune and sign up for newsletter so you don’t miss any of these tips.