What is “The Latte Factor”?

You have heard me reference David Bach many times, and this post is no exception.

Bach is the author of “The Automatic Millionaire” which is a National Best Seller. His primary premise is to make everything automatic from your retirement savings to your dream savings. Before doing that however, he recommends that you walk through his process that he calls “The Latte Factor”. Simply put, Bach encourages you to track every penny you spend in a day from coffees to periodic lunches to groceries and then evaluate the amount of money that was not necessarily urgent. In other words, determine what your latte factor is by defining how much of your daily and/or weekly spending you can start saving instead of spending on non-essential items.

Your Take-Away: I’ve included a link directly to the “Latte Factor” because I believe this is an extremely useful exercise for anyone to walk through. In fact, both my wife and I have used it before and will be using it once again in the very near future. There is no question in my mind that if you follow the instructions, track everything you spend and then simply sit down and review what you could have lived without, you will be shocked at the money you could be saving if you truly wanted too. 

If and when you take advantage of this very useful tool, please do let me know what it works out for you and what you thought of the exercise.

Until next time, have  a Wonderful Wednesday!

Chris

Become a Millionaire!

An article was recently published at www.cnnmoney.com sharing the story of two US Army Captains.

Although this story is US based, it is amazing to see how relatively simple it can be to become a Millionaire. In the article we learn about two Captains who have decided to live off one of their salaries and invest the other so that they can retire as Millionaires. It may sound tough to do, but as you read you will notice that it really isn’t all that complicated. In fact, they spend $800 a month on entertainment and “going out” and even own a small plane that they are restoring. Doesn’t sound too bad does it?

Your Take-Away: You CAN have your cake and eat it too. After all, their family income is not necessarily huge, but they have chosen to make the right decisions with what they have to work with. If we can learn anything from this article, start wtih this:

  1. Define your goals clearly
  2. Make your savings plan automatic
  3. Find a balance and enjoy life as much as possible

As one of my closest friends says, “it’s all about the memories”. After all, what’s the point of having money if you aren’t enjoying it, and I would venture to say that this young couple has found a balance that works perfectly for the two of them. What is the perfect balance between saving and spending for you?

Until next time, have a Magnificent Monday!

Chris & Elisseos

David Bach on Monthly vs. Bi-Weekly Mortgage Payments

If you are anything like my wife, you watch a lot of Oprah.

David Bach is the author of the “Automatic Millionaire” and has been featured on Oprah on multiple occasions. The video below is an exerpt from one of his appearances on the show discussing how home owners can shave years off their mortgage payments and save them thousands of dollars in interest. Enjoy.

Your Take-Away: Making one simple change from monthly to bi-weekly payments can save you literally thousands of dollars over the life of your mortgage. It’s simple yet effective, so why not at least consider it?

Until next time, have a Wonderful Wednesday.

Chris & Elisseos

Interest Rates set to Rise or Fall?

Are interest rates on the rise in Canada, or are they set to continue to decline based on the US economy?

That seems to be a fair question, especially considering the shaky economy in the US and the question mark that looms over our Canadian Economy. To make matters worse, TD released a report yesterday saying that they “expect another 100 basis points in rate cuts out of the Bank of Canada to help fend off any fallout north of the border”. Ironically, on the very same day, CIBC World Markets released a report stating “Higher prices for food and energy will reverse the direction of interest rates in the next 12 months, and lift energy and materials stocks to new record highs”.

Your Take-Away: With drastic contradiction like these two reports create, it is very difficult to know just what is happening and more importantly, what to expect. If I were to be forced to make a decision of whether to choose a variable or fixed rate mortgage in this economy, I would make the same one as though the economy was strong and fruitful. Don’t let yourself get caught up in the hype and try to time the market, and definitely don’t step too far outside of your comfort zone and make a decision you would not normally make because of one report or the other.

 At the end of the day, do your research and do what you are most comfortable with for yourself and your family. It is impossible to know what the future holds, which is why sticking to your guns and your core values (otherwise known as gut instinct) is key in this environment.

Good luck with your decision making, and until next time, have a Terrific Tuesday.

Chris & Elisseos