Budgeting Debt-Free Living Financial Independence

BMW is Your Secret to Early Retirement

Everyone has to start somewhere. No one is born a financial genius, nor does everyone have an interest in their personal finances. We all have dreams, goals, bills, and expenses. Reaching early retirement might sound impossible but it isn’t. Anyone can retire early if they take the proper steps towards their freedom.

From a young age, children see their parents swipe those magic plastic cards that let you take anything from stores. They then learn how the bank of mom and dad can pay for the movie nights and new shoes.


Financial literacy is an ongoing learning experience. Kids should start learning basics at a young age so they understand that the “Bank of Mom and Dad” has limits. – Justin Thouin


Once kids grow, they quickly learn (usually the hard way) that those magic plastic cards need to be paid back and that bills don’t pay themselves.

Unfortunately, our school system does not teach basic finances and most parents are as lost themselves so young adults start in life with little guidance.

There are so many free resources available online there should not be any excuse to know basic personal finance. We should all know how to set up (and follow) a budget, manage daily finances, invest and make our money work for us, and live under our means. Starting on the right path from a young age will get you far.


You might get 85 years on this planet—don’t spend 65 paying off a lifestyle you can’t afford. – Cait Flanders


This year, since my sister is now in her twenties and will start her career soon, I wrote her guide to start off on the right foot and maybe, one day, retire early if she wishes to.

I thought this would be a great guide for anyone who needs a small introduction to the subject. This was written for my little sister but it is for all of you to learn, enjoy, and prosper.


Since you are a big girl now, and you will soon make a ton of money, it is time to talk finance. Here is my easy guide to freedom and financial bliss.


Step 1: Aggregate and create a budget

You cannot start saving until you track your money so let’s break the fear of looking at your monthly statements and get rolling!

  • Create a free account on Mint or Personal Capital and add all of your accounts (Banks, Loans, Credit Cards, Assets, and Investments). This will give you a snapshot of your current net worth and track all your transactions for you. Net worth is like your current financial health. Any credit and debt will pull it down and any assets will pull it up. Once you see where all your money is going, you can start optimizing your finances.
  • If you have too many accounts, try to consolidate them and close extra accounts to simplify your cash management. It can be practical to have one savings account per goal (Vacation Fund, Car Fund, Education Fund…) but it can also get complicated to optimize your finances that way. Open a high-interest savings account (we use Alterna Bank at 1.90%) and start saving!
  • Use credit cards for their good side, not their dark side. Always pay the full balance every month and use cash-back or travel reward cards to enjoy the best perks. That minimum payment they print on your bill is NOT the amount you need to pay. You will not pay a dime in interest if you pay the balance in full but you will definitively pay a ton if you only pay the minimum.
  • Once you are ready to write up a budget (or type it up), you can start with your fixed and variable expenses. In one section, write down all your recurring costs such as rent, internet, phone, electricity, and other bills. You can always cut these down but it will be harder than cutting down your variable expenses. Then write down all the other stuff; shopping, food, entertainment, gas… The best tip I can give you about budgeting is to include savings in there somewhere. Set aside money first and live on the rest.


Step 2: Lower expenses

Marketing is everywhere and companies are constantly coming up with new schemes to get you to spend your hard-earned dollars. It is important to revise and be very strict about your monthly reoccurring expenses. Now that you will see them all on your budget, you can revise each item one by one and see if 1; you really need that and 2; is there a way to lower that expense. Here are some tips arranged by budget category:


Bills & Utilities

  • Drop your cable plan and just have the internet. We cut the cable long time ago and now only use Netflix. It has better content, no ads, and is about 8 times cheaper than cable.
  • The single best thing a person can do to keep costs down is to reduce how much they spend on housing. Your home will be a huge expense throughout your life so only buy what you need. If you take the biggest mortgage the bank is ready to give you, you will end up spending half your pay on your house and you will be stuck to live paycheck to paycheck like everyone else.
  • You will find that many people in expensive neighborhoods are strapped in debt to the neck and stuck trying to keep up with the Joneses. Living in a low cost of living area not only costs less but also has much less competition and incentives to get all those fancy things. You will see once you start working that most people give in to lifestyle inflation; once they get a new raise or a bonus, their spending goes up. Instead, try living on what you need and saving the raises.


Auto & Transport

  • I have one word for this: BMW. Yeah, that’s right, Bike, Metro, and Walk everywhere you can. The less car-dependent your life is, the easiest it will be for you to control this expense. Cars are a huge expense for average Americans ($720 per month on average) but you do not need to spend nearly as much to get from point A to B.
  • If you do get a car, get one that suits you need and nothing more. Having a car bigger than you need or new than you need is just a hole in your pockets. Buying 5-years-old cars will literally save you thousands. Let the others take the depreciation loss and keep your dollars for something else more interesting.


Food & Groceries

  • Limit eating out to social activities and do not eat out just out of laziness. Meal planning and a good cookbook can easily cut down your restaurant outing to once per week and save you thousands per year.
  • Find the right mix of online stores, grocery stores, and bulk stores. We found that most household items are cheaper on Amazon and ethnic supermarkets offer the best produce at the lowest prices. Due to the home-cooking customs of the non-westernized world, their customers buy a lot more fresh produce so stores waste less of it and can buy in bulk. Those savings are going right in your pockets and you will eat a much healthier diet including more fresh produce in your meals. Their meats are also very cheap and they offer more variety than most chain supermarkets.



  • There are so many fun things to do outdoors if you let yourself wander.
  • Find local festivals and tastings in town.
  • Have house/dinner parties instead of going out with friends.
  • Go out with only a 20$ bill and leave the cards at home.
  • Eat at home. The more you get cooking, the better it gets.
  • Stop those impulse buys, always shop around and wait a few days before making any purchases.
  • Always compare on Amazon and craigslist before buying larger items. You can also apply the previous point by leaving items in your Amazon cart a day or two before checkout.
  • Do not think about the great sales stores are always advertising. Everything is 100% off when you are not buying it.


Step 3: One month of expenses + $1,000 buffer

It is important to have some breathing room and not live paycheck to paycheck. The first step is to have enough in your checking account (or savings) for 1 month of expenses + a 1,000$ buffer for unexpected emergency expenses. You will have a budget now so you know exactly how much you spend per month.

Once you are comfortable with this, you can even upgrade to a 3-month emergency fund.


Step 4: Eliminate debt

Your credit score is a number the credit bureaus (Equifax, TransUnion…) come up with to help lenders judge risk. Having a good score will make you save thousands over time. Not only do some lenders use your score to determine your interest rate but even some non-lenders also use your credit score to determine prices like insurance companies, landlords, utilities, etc… We have lower insurance premiums because of our score, get access to super cheap credit easily, and gained access to premium travel cards.

Scores are calculated based mainly on payment history, available credit limits, and age of accounts.

Basically, keep high limits but do not use them (try to use less than 20% of your credit card limits month-by-month), pay back your balances in full each month, and keep older credit products open. To eliminate debt as quickly as possible, start paying off the highest interest rates first (Credit Cards, Personal Loans, Lines of Credit).


Step 5: Get your money working for you

After you saved enough for emergencies (roughly 3 months of expenses) you can start investing to get your money working for you. Throughout the last century, stocks have outperformed other investment types and our tax system also encourages investors to partake in the equity market.

You could always try to pick stocks and hope to pick the winners but just think about it; out of all actively managed mutual funds, a whopping 82% of them did not constantly beat the index over the last decade. If even professionals cannot guess the next winners, I do not recommend you try to.

Since good stock picking is so hard and actively-managed funds the banks promote have large fees. An easy solution is index investing. This refers to simply buying all publically traded companies to benefits from the winners and average out the losers. You can start indexing through mutual funds or exchange-traded funds that track the index for very little fees.

Over the last 20 years, $10,000 invested in an S&P 500 index fund would have grown to $65,225 after a 0.05% annual expense ratio.

One quick tip; control your emotions! When your portfolio value goes down, you can keep investing and buy things at a discount. The market will go up and down and eventually, you will collect high returns on the upswing from the cheap shares you obtained when everyone else ran away.

On average you will hopefully get more than 5-6% per year from your investments and if you are saving enough, this will grow to a small fortune. All you need is a balance of a US Market Fund, International Markets Fund, and a Bond Fund.

  • TD Canadian Bond Index Mutual Fund (TDB909)

        or Vanguard Total Bond Market ETF (BND)

  • TD U.S. Index Mutual Fund (TDB902)

        or Vanguard Total Market ETF (VTI)

  • TD International Index Mutual Fund (TDB911)

        or Vanguard Total International Stock ETF (VXUS)


If all of this sounds too complicated, we suggest Wealthsimple.

Start your automatic investment account today!


Long-Term Retirement

Pre-Tax accounts like RRSPs (401k) are great to save on taxes once you make good money. There are also great advantages to use a TFSA (Roth IRA) to minimize your future tax bill.

Using this strategy early should set you up pretty well to retire. You can always access those funds if you wish to retire early as long as your income drops once you take it out, you will not be taxed much.

This may sound crazy but saving at least 50% of your monthly income is not impossible. It would be a huge step towards reaching early retirement. You do not need to work until you are 65 years old and simple, small tweaks in your spending habits could make a huge difference over your lifetime. Keep at it and you will get there while increasing income and decreasing expenses.

If you have been in the same job for a while, consider looking for new opportunities while you are employed. Yearly raises in your current job are usually very small compared to the salary bumps you can get from changing companies.

Once you have accumulated roughly 25 times your yearly spending, your investments can now sustain your monthly expenses. Congrats, you can now retire! You can then have the freedom of doing whatever you want with your own time. If you still enjoy your job by then great, if not, you can stop.


Step 6: Enjoy the journey

It may get rough at some point, especially if you have a lot of debt to pay back, but your finances can be kept simple. Have fun talking about money and reward yourselves when you reach certain milestones. The first big one is net worth zero and from then on, freedom is in your hands.

Live a life of abundance and luxuries but know that there is always a frugal way to do so. Approaching the big 3; Housing, Transport, and Food with frugality will drastically cut your expenses and make the difference between working until 65 or 45. You do not need to be cheap, just be conscious about your purchases.

As the American Dream thought us, we always need the bigger, newer, shinier thing. However, this is just a path down Forever Debt Road. Be mindful of your purchases and buy the things that make you happier but you do not need to keep up with anyone. Enjoy the present and enjoy life, most of the best things in life are free.

This is my road map to freedom and I wish you the best of luck in your wonderful career little sister.



Financial Independence

Interview with Liz from Chief Mom Officer

Today we have an interview with Liz from Chief Mom Officer. She is a breadwinning mom to 3 boys with a stay at home husband. She climbed up the corporate ladder to earn over 6-figures and now also writes about her life, ideas, and tips over at


Who are you and what do you do? What is your story? Where did you start, where in the journey are you, and where do you ultimately want to end up?

Hello, everyone! I’m Liz, and I write over at Chief Mom Officer – a blog dedicated to helping moms with their money, work, and frugal family life. I’m also an IT project manager for a Fortune 100 company, and the mother of three boys (13, 9, and 2).  Today I’m a six-figure earning MBA, but I wasn’t always a high earner.

My story is one of lots of struggle and hard work to get where I am now. I started by working my way through undergraduate school in a full-time job, going to school full-time nights and weekends, earning only $22k per year. My first job in IT earned me only $35k per year, but at least I was completely debt free, having leveraged my full-time work income as well as employer reimbursements to get there. From there, I worked my way up in income both quickly and slowly. I’m currently 36 years old and leading up $10 million of IT development work in my full-time job, in addition to running a successful blog.

I’ve had personal finance and investing as my hobby ever since I was a teenager. In fact, I like to say that I’ve been on a journey toward FI for the last 20 years. Unfortunately, five years ago, my husband nearly died of septic shock, which was totally unexpected for a 31-year-old mother of (then two) young kids. It took a while to work through that emotionally and financially. I’ve been through job losses (my husbands), job instability during the Great Recession (my own, when my company almost failed), and a medical catastrophe.

Fortunately, we’re now back on the up and up. I have no debt except the mortgage, which I’m on track to get paid off entirely before I’m 40. I’m also aggressively saving for my three kids college – paying off the mortgage is part of that plan. I’m targeting overall financial independence within the next five years, barring any additional crisis. But if something happens? I know I can deal with it.

How did you get started on the path to FI?

I’ve been chasing FI since before it was called that (old lady here). When I was a teenager I would read books like The Wealthy Barber and see just how simple it was to reach financial freedom. My goal has always been financial freedom/financial independence, where I wanted to have enough saved to cover my expenses indefinitely

Please describe what FI really means for you?

I’ve never had the goal of stopping work entirely. My goal has been to be financially free to do what I want – launch a business, work part-time, find location independent work when my kids are older, and other such things. I’m the family breadwinner while my husband is a stay at home dad to our three boys, so I need to make sure we always have enough for food/electricity/phone/heat/etc.

What are your criteria for saying you’re FI?

My criteria are the following:

  • No mortgage – I need to be completely debt free
  • Fully funded my college compact agreement with each of my three kids
  • Enough in pre-tax accounts to sustain my “traditional” retirement and old age using the 4% rule, with a reasonable projection of growth over time
  • Enough in post-tax accounts to sustain my lifestyle until I can tap the pre-tax accounts, plus a buffer for opportunities, unexpected events, etc.

Would you say you are more inclined to the not working anymore part of FI or the freedom part of FI?

Definitely the freedom part. FI doesn’t mean not working anymore. FI means you can choose whether or not you want to continue working in the same capacity, or not, or do something else entirely without needing to worry about the money.

What is your preferred way to invest? Do you have a preferred asset class in particular or asset allocation?

Index funds all the way! I’ve been with Vanguard since the early 2000’s, when I first had enough to open an account with them (and before it was “cool”). I’ve been a lurker over on the Bogleheads forum since it was the Morningstar Die-Hards, and feel strongly that a simple index fund portfolio is all you need.

I will say it was hard to hold on to that philosophy through the 2000’s. When I graduated from college, we were in the middle of the tech crash. Then a few years later, the Great Recession wiped out years of savings and investments in a matter of months. People talk about how they’ll be buyers in a down market, but let’s just say that if you haven’t experienced a real crash, you don’t know how you’ll really react. It’s much harder than you think it is to watch years of savings vanish like that.

So, the first 10 years of my investing life, I made nothing in the market. I believe the S&P 500 gained something like 1% over all those years.  But I had set a solid financial foundation through regular saving and investing, and that foundation has skyrocketed through the bull market.

Do you invest automatically on every paycheck?

Heck yes! It’s the only way to go. Right now, I automatically have investments in my 401k, college funds, and my mortgage payoff account.

What are your favorite financial tools?

My Excel spreadsheet. I’ve yet to find any app that beats it, although I’ve looked pretty hard.

What are your thoughts on house ownership vs. renting?

Well, I’m writing this from my home of 11 years, so for me personally, I’m very much for home ownership. I bought my first property a few months after I turned 20 – a condo purchased right before the home price run-up of the early 2000’s. I made over $60k on that condo just for living in it for a few years. That money became the down payment on this house.

When I bought this house, it was in early 2006 – near the market peak. So, on this house, I haven’t “made” anything, but I also haven’t lost anything because I haven’t sold it. We bought with an eye to expanding our family, so we didn’t have to move again (moving is expensive and a pain!). We had one kid (then two years old) at the time. Now we have the three boys and there’s still plenty of room for everyone.

When I moved out I made the deliberate decision to buy a condo instead of renting an apartment, and if I hadn’t done that I wouldn’t have had the down payment for this house. Had I not had the down payment for this house, I wouldn’t be sitting on a ton of equity and be on track to have no mortgage/rent payments by the time I’m 40. So I’m solidly “team homeownership”. But you need to look at your individual situation, and the market where you live, to know if it makes sense for you.

What is the worst financial decision you have ever made?

Letting my family sneak into some debt in our late 20’s/early 30’s. I was getting my MBA at the time and had changed companies, which caused me to miss out on some reimbursements. I took out loans to bridge the gap. We also had gotten a car loan and got burned with the “use the credit cards for everything and pay them off every month” strategy.

After my husband’s near death experience, I wised up. No more credit cards – now we use debit for everything that’s not travel or an online purchase. No more car loan – it was paid off entirely and I still drive that car (102k miles now!), with our other car purchased for cash. And that student loan was entirely paid off just months after I finished the MBA.

What is the best financial decision you have ever made?

Getting my undergraduate degree and MBA. Even though I incurred some debt (which, as I mentioned, I paid off in a few months), my salary has gone way up due to all that hard work and sacrifice to get both degrees. There are lots of people I know who started where I did but made different choices, and they’re still stuck in the same kinds of jobs I had 15 years ago.

What are your plans once you retire?

To not retire! I have plenty of hobbies that would keep me busy, but I’d also be working. Maybe I’d become a CPA (I was an Accounting undergrad) or a CFP for a fun second career!

What is the number one advice you can give a millennial starting out?

Save and invest early, even if you don’t have a specific goal. It’s more important to get into the habit and lay a solid financial foundation for yourself than to be striving toward something specific. Then, once you have a goal (starting a business, buying rental property, becoming FI, putting a down payment on a house, etc.) you’ll have the foundation to get you where you want to go.


Financial Independence

How to Reach Early Retirement and be Happy

Way before even thinking about early retirement, we all have that moment when we sit down and think; what do I want out of my life? You can have a great job, great family, health and all but still do not know what you want out of life.

For me, this was at 23. I was working full-time, one year in a great relationship and thinking about getting a house. Few goals in mind but I was not thinking of early retirement quite yet.

Extreme early retirement

Each pay, I was investing a large part of my income simply because I wanted to buy stocks. I saw the appeal of owning companies I liked such as Apple, Tesla, Facebook but I did not have any long-term plan or vision.

It took me a while but I finally took the decision to minimize my spending and increase my savings in the hopes of buying a house. With a concise plan in mind, I started cutting on anything that did not give me joy-for-the-value.

how to cut the cord

Slowly, cable was replaced with Netflix. Bar nights replaced with house parties. Soon enough, it all added up to good savings. After a year of investing, I sold all my stocks and we bought our first house.

I saw what others were splurging on but came to realize that it was not things I needed to be happy.

In my field of finance, for example, almost everyone drives to work in a brand new BMW or Mercedes. I was walking to work, living downtown, so I did not have a car. Once we needed one we got a used, 2007 SUV with low mileage and paid cash.

Here is the thing about cars, they are monetary sinkholes. On average, a car will lose 40% of its value in the first three years. So I thought to myself; what do I want to spend my money on?


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Older cars can still look nice and still run great! The other advantage of spending less on the purchase of a car is the incredible savings you will make paying cash rather than taking out a loan. Car loans can go up into the double digits of interest. You will end up paying almost double the price for that fancy new toy. You can see my calculations behind my car purchase if you want to see the reasoning of my purchase.


We live well, eat well, travel a lot… but always live under our means.


It is all about the lifestyle.

I really wanted to save enough for a down payment in one single year. That was not an easy feat but I achieved that.

As I continued to earn, I continued to save and invest. Had to think about the next goal, the next thing to save for… For me it was; early retirement.

If that is what you want to, you are at the right place. The very first steps are to cut the small things since they are the easiest to stop and often add up to a good chunk of your spending. Restaurants, bars, snacks, and outings can really add up.

You should really take the time to make a budget and track your expenses or use platforms such as Personal Capital to do it automatically. Once you have paid off any high-interest debt you have, you can start saving and investing.


Pay yourself first

Besides budgeting, you can set up automatic savings and invest a portion of each paycheck. Then, live on what is left to drastically increase your savings rate.

You do not need to be born in wealth or make a million dollars a year to be wealthy. Fortunes build themselves but you need to steer it in the right direction.

If there is one thing to keep in mind is that as a young saver, you have every chance in front of you. With dedication and perseverance, anyone making an average salary and living below their means can retire early.

Life is meant to be lived. If a slight change in lifestyle can get you to save and reach financial freedom, go for it!


Living on half our salaries

The basic goal I have given myself is to live on half my income and invest the rest. If you can live below your means and save a good chunk of your income, your dollars will work for you.

Your savings rate is a cornerstone to the number of years you will need to stay in the workforce.  The more you save, the less you actually live on and therefore, afford that lifestyle in early retirement.


Your personal savings rate =

Annual savings including any employer match (or any debt repayments) x 100

Total income less taxes, plus any employer match


For example, if you end up saving about 75% of your income, you are buying yourself three years of retirement for each year at work. With the magic of compounding, you will be able to generate enough passive income to pay for your lifestyle after a few years of hard work.

From previous research, we can assume that withdrawing 4% of our portfolio, adjusted for inflation, is safe to last and survive major market crashes. If one would want to retire on a  4% withdrawal rate, it would only take 7 years of work to save up enough money to safely retire solely on investments.


Use every advantage you get

Personally, I am currently saving 50% of my income each year and I am hoping to save up to 70% soon. When used in the proper tax-advantage accounts (401k / RSP), your savings will actually lower your taxes and you will barely feel the hit.

For example, I am currently at a 45% marginal tax rate, this means that for every dollar I invest in my tax-advantaged accounts, I actually feel a hit of only 55¢ (I got this figure since earning $1 working would only give me 55¢ to spend). This figure is even lower if you get an employer match!

I have included below a chart to illustrate the power of your savings rate. Feel free to play around with it in this interactive version. If you want to either pay off debts quickly or start saving for early retirement, you should learn to boss around your finances and build a strong budget. Bringing yourself closer to the 50% savings rate, or more can make any goal achievable relatively quickly.


saving rateSource:


Change your mindset

Savings are only a mindset. If you are thinking about it as something easy, it will be easy. To increase your savings rate, you need to start thinking:

How much can I save by doing this?

rather than

How much can I spend on this?


I am not saying you should not shop around and look for the best prices. However, you should definitively think about how much you will save by not buying that thing.

To put it in perspective, someone that makes 50,000$ a year, for example, would be left with about 35,000$ (depending on the state but we are assuming here).

Now assume he is Mr. Average American saving only 6% of his salary like the majority of Americans do today. This means he could retire after only 62 years of work (so at about 80 years old!). Basically working until the government or a private pension pays for his retirement.

10 frugal tips to save money

If he is so average, Mr. Average probably pays 100$ a month for the newest iPhone with a nice big data plan that he probably does not need. He probably never thought about it but if he just saved that 100$ a month instead of spending it on a phone, it still adds up to 1200$ a year.

This small saving alone could actually decrease his working years to only 51.4 years and just like that, he can retire 10 years earlier by skipping the data plan. (Assuming 5% market returns. and that your current annual expenses are equal to your annual expenses in retirement)

Now, instead of following the average, if you choose to save half you are income like me, you can relax and enjoy the security of having a safety net and become financially independent after a few working years. Your future self will thank you when your safety net will grow enough to become your retirement nest egg!

Then, you can work (or not) on whatever you want to. You will have the leisure to live your life at your own pace, doing whatever you want.


Saving does not need to be a burden

It cannot be said enough; if you can live on less, you need to accumulate less wealth to support your future self. The basic idea is to hold 25x your annual expenses in investments to sustain yourself in whether or not you generate more income.

This comes from the assumption that a 4% withdrawal rate per year can sustain you with a very high rate of success. I suggest you play around yourself with cFIREsim or Personal Capital’s free tools to test out scenarios to really get the grips of it.

.Welcome to my blog and best of luck. Stay happy! Xyz.