Why Young Buyers Should Choose a Repairer

Almost everything there is to say about personal finance has already been said in a book. The narrow space for originality was exploited by Sam Dogen, a San Francisco-based personal finance blogger who wrote a book called Write Buy This, Not That.

Mr. Dogen’s goal is to help people make smarter spending decisions on the path to financial independence. To find out more, I invited him to do a Q&A via email. Here is an edited transcript of an exchange that includes Mr. Dogen’s perspective on housing in Canada:

Q: Financial freedom is an attractive idea, and we know that because many books, blogs, and the like focus on it. What is your definition of financial freedom?

A: When I helped start the Modern Early Retirement for Financial Independence (FIRE) movement in 2009, I defined financial independence as when your passive income can cover at least all of your basic expenses. . Passive income can come from rental income, dividend income, bond income and royalties. Basically, any type of income that does not require a lot of active energy to generate is considered passive income. However, I have noticed that there has been an evolution of the different types of FIRE to accommodate the different stages people are at in their financial independence journey. The most convenient is Barista FIRE, where one usually takes a low-paying job to help bridge the gap between living expenses and passive income and also to get health insurance. For example, my family of four pays $2,200 per month in unsubsidized health insurance! Every time I pay the bill, I wish I was Canadian!

Q: You say in your introduction that you want to help people improve their financial decision-making. What’s wrong with the spending decisions people make?

A: Many people spend without much intention. Instead of spending frivolously on things you don’t really need or want, make it a point to spend intentionally on the things that will bring you the most joy and the greatest returns. Treat your investments as a major expense to take care of your future. Otherwise, you’ll wake up one day years from now and wonder where all your money went.

Q: What are your thoughts on spree shopping during the pandemic – puppies, packs, food, travel, home renovations?

A: They are completely rational. During difficult times, we rationally spend money to feel better. Ironically, it’s during the good times when we don’t have to spend so much money because life is so good. A single person would like an adorable puppy or a cat. A person who is afraid of working out in the gym would like a stationary bike to reduce stress and help them stay in shape. Since we’re all in our homes more, spending money on home renovations and bigger homes is also a logical decision. Personally, my spa, which I installed years ago, was my biggest investment to date.

Q: What’s wrong with the traditional approach to money management – ​​pay yourself first, that is, save, then spend what’s left?

A: The traditional approach of paying yourself first and spending what’s left is fine. However, you can’t save that much. Saving and budgeting is a defensive strategy that everyone should adopt as a baseline. If the amount of money you save each month doesn’t hurt, you’re not saving enough. However, to create great wealth, or at least more wealth than the average person, the focus must be firmly on generating more income through work, entrepreneurship, and your investments. This offensive part of the wealth creation equation has far more benefits. Working 35 to 45 hours a week is an artificial construction. If we want to achieve financial freedom sooner, we need to spend those precious hours outside of work earning and learning.

Q: Do you have any “buy this, not that” advice for people shopping for a first home (i.e., remodel or fully remodeled, prime neighborhood or less desirable but less expensive)?

A: The problem with the Canadian housing market is that valuations are overly stretched. With rising rates and a slowing global economy, I would be patient and look for better deals in six to 12 months. Real estate cycles can take one to two years to transform. My second advice is to buy a repairman if you are between 20 and 30 years old. One of the financial advantages is that you can usually get a discount on the market value, even after the expected costs of repairing the property. Plus, you gain the experience of learning to renovate for future repair shop purchases. You can also learn handyman skills, which will prove invaluable for your own home and for future rental properties.

More here: https://www.financialsamurai.com/should-i-buy-a-fixer-upper-property/

I will be on vacation for the next two weeks. Erica Alini, personal finance reporter for The Globe, will write this newsletter in my absence. Enjoy!

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