Amazon Student: Get Amazon Prime for less

It makes me sad to write about anything school-related since I just wrapped up my MBA summer school courses a few weeks ago, but alas, Fall term is just around the corner and even I have to start thinking about getting back into the school grind. For those of you suffering through more post-secondary education like myself, Amazon just launched an offer that you might be interested in:

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I’ve sung the praises of Amazon Prime before, as I’ve been using the service for a year now. For $79/year, it gives you free 2-day shipping on all orders, plus special offers and access to free/discounted eBooks and video. I almost exclusively use the 2-day free shipping and find that’s enough of a perk to justify my subscription, and have yet to use the other benefits. I’ve been a member of Amazon Prime since July 30, 2013 — which means I’m up for renewal. However, this time I’m signing up for the student offer:

6 months FREE Amazon Prime membership (that’s 2-day free shipping on all orders!) + exclusive offers only for students (on everything from textbooks to dorm decor)

Better yet, after the six months end your membership is only $39/year so long as you’re a student.

Click here to sign up.

It’s a great deal if you’re a regular Amazon shopper. Chances are the cost of the membership will be recouped with what you’ll save on one textbook, so anything else you order for a year ships for free. Happy shopping!

Financial Literacy Won’t Solve All Our Problems

The personal finance community is over-enthusiastic about financial literacy, and I get it. The more people know about money and financial services, the better equipped they are to manage their income and financial obligations.  But sometimes there’s a key part of the discussion we’re ignoring:

Financial literacy doesn’t do any good if there’s no money to manage.

Prior to reading Pound Foolish, I thought financial literacy was the silver bullet to solve everyone’s money problems. Broke? You’re fault, you need to budget/save/work harder! For most of my debt repayment journey, I patted myself on the back for my discipline, completely ignoring the reality that the main reasons I was able to make so much progress was I had a good salary, excellent benefits, and had pursued an affordable education. Even though I’m aware of this privilege, I still sometimes only see through my Alberta-rose tinted glasses.

I deserve credit for maximizing my opportunities and resources,

but there’s no credit due to me for my lucky circumstances.

Compared to American readers, I’ve enjoyed low education costs, virtually no healthcare expenses, and a tax structure that favoured my student and recent grad status. Compared to other Canadians, living in Alberta meant I had access to both the strongest economy and the lowest taxes in the country. Furthermore, I have no dependents — children or even siblings and other relatives that need help — and I’ve never been disabled, laid off from work, or endured any other unfortunate circumstance outside my control.

What does all of the above have in common? They’re all HUGE factors completely outside the realm of financial literacy.

No matter how much you know about money, you can’t change these things!

So while it’s great to understand compounding interest, bank fees, the terms & conditions of your student loans, and how to budget, this knowledge will do little for you if you’re being crushed by an unfortunate financial situation outside your control.

Does this mean financial literacy is worthless?

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Nope, of course not! What do you take me for? I’d never lead you astray like that! Financial Literacy is awesome, and for many people it’s the difference between living paycheque to paycheque or becoming wealthy. But I do wish we would stop touting it as the be-all, end-all of personal finance.

We can’t just assume that if someone is struggling it’s because they don’t know enough.

All that said, having more challenging circumstances isn’t an excuse to do nothing. I’m often frustrated by comments on posts like 30 Financial Milestones You Need To Meet By Age 30 that assert an individual can’t make any financial progress because of their circumstances. There are absolutely NO EXCUSES not to track your spending, use credit cards responsibly, check your credit report annually, give up impulse purchases, set goals, and give up paying unnecessary fees. Things like the cost of housing or education has absolutely no effect on developing good financial habits. Managing your money effectively is not only about how much there is, it’s about how you use what you have. If you can’t save $25,000 for retirement by age 30, that’s fine — save $20,000 or even $15,000 instead. Whatever the amount, it’s better than nothing.

What’s the solution?

Firstly, we all have to stop pretending that financial literacy will save us all and condemning people for being in debt or making poor spending choices — sometimes there was no other choice. A great example of this is the un-winnable game “Spent” which you can play online here. In Pound Foolish, Helaine Olen talks about Spent and how it’s a reality for many — and it’s only getting worse.

The solution is obviously a more egalitarian society, but are we too far gone? 

I’m interested in national and global wealth disparity, but the more books I read like The Value of Nothing and posts I write like The American Dream Is Dead, the more I feel like we’re doomed. Financial literacy won’t save us from rock bottom, and we’re very nearly there.

Mid-2014 Check-In

Now that half the year has passed, it’s a good opportunity to check in on your progress towards your personal and financial goals. I try to check my progress quarterly, but I usually find the end of June is really when I have an idea where I’m going to end up. This year? Not so hot.

Click here to read my original 2014 Goals & Plans

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I ended up with a small income tax refund when I was expecting a much, much larger amount — as in, $4,000 more. Since my original intention was to go on vacation with the cash and then bank any leftovers for next year’s tuition, I had to make some serious adjustments to my original plans.

Without a fat income tax refund, I axed the vacation.

I assumed I wouldn’t get to go anywhere this year, but 2 weeks ago a side project took me to Toronto. I’ll take a free trip to a city I’ve been to before over paying to go somewhere I’ve never been any day!

Nonetheless, I’m looking forward to finishing up my MBA and getting back to annual vacations all over the globe.

The second incident that threw a wrench in my plans was ending up unemployed for the month of May.

As one of only six students in my MBA program that found an internship this summer, I’m grateful to have a job at all, but my bout of unemployment cost me $3,000 to $4,000 in lost income that I had been expecting. I won’t be so arrogant about finding a job easily after graduation, I’ve learned my lesson! Not only is this is making it a huge challenge to get my emergency fund to $5,000 this year, when I couldn’t find a job, I enrolled in 2 summer courses. Naturally 2 weeks into my summer classes, I found a full-time job and had taken on more than I could manage (including being halfway into the Insanity program which was demanding workouts 6x per week). Basically I ended up broke and overworked for a painful 6 weeks and it was the worst >:(

Since starting work, my savings is back on track and I’m confident I’ll get my emergency fund to the $3,000 to $4,000 range which is only a little bit short of my $5,000 goal this year. I’m currently revisiting my other financial goals in order to make sure all my automatic transfers line up to hit my new focus of getting $100,000 in my RRSPs by age 33. It’s still really important to me to eventually get to a $10,000 emergency fund, but I also know that $5,000 is plenty to deal with a crisis (or so I hope, I now have the foreboding feeling that those are famous last words).

As for my goal to read 100 books, I’ve completed 24 with books 25 and 26 currently on the go

…putting me 25 books behind schedule! In retrospect 100 books was probably too many, which just goes to show I’m part of the problem when it comes to setting stupid goals. I’m going to leave this goal as is right now and take another look at it at the end of the summer. As for now, I have more free time for the next 2 months so I’ll be crossing as much as I can off my to-read list.

Admit Stupidity, But Not Defeat

As a 24-year-old, I change my mind about things all the time. And why not? I’m getting older, getting more life experience, and (hopefully) getting wiser. Since the beginning of my personal finance journey, I’ve changed a lot of my viewpoints and I recently made fun of my old self on my own blog.

So many people are so afraid to change their minds on something and appear fickle, they try to convince themselves (and others) they still hold old viewpoints. And that’s just a waste of time. As we gain knowledge, we should change our minds. It’s irrational to believe otherwise. I don’t care if you were an idiot for 4 or 40 years — why would you want to continue your idiocy?

You can change your mind. For real. I’m giving you permission today to change your mind on any of the following:

  • Financial Philosophy: I have changed my mind on SO many things financially. You can change your mind on investment strategy, debt payoff methods, retirement age, emergency fund requirements, spending priorities, and saving percentages whenever you want. You don’t even have to tell anyone why (unless you have a blog, and your readers think you’re schizo).

  • Marriage: I never wanted to be married. EVER. According to my 18-year-old self at least. That’s why everyone was beyond shocked when I got married two short years later at the age of 20. You can change your mind on marriage in either direction at any time.

  • Kids: Once again, my 18-year-old self was dead set against kids. So much so, she got a Chinese symbol tattoo ON HER STOMACH partially as a reminder to never have children (and stretch it out). You can decide to or not to have kids and then change your mind. It’s really only up to you and your partner. Although, I would not recommend tattooing your stomach. Like ever.

  • Politics: I grew up a staunch Republican, just like the majority of my family. I have since changed my mind on almost every. single. issue. That’s okay. I’m allowed to be liberal now…and so are you, even if your family doesn’t approve.

  • Religion: You can go from believing in God to Allah to Buddha to Krishna to nothing and back again. As long as you aren’t nuts and don’t harm others, you do you. And do you unapologetically.

Change your mind. Announce that you’ve changed your mind. Then change it again if you want to. You do not have to stick with the same viewpoints your entire life. In fact, it’s pretty weird if you do. Forty-year-old you should have learned something since 16-year-old you committed to a Grateful Dead face tattoo.

What’s important is you don’t give up on things. Don’t become so entrenched in minutiae you refuse to grow. Especially when it comes to stuff like finances. If you have gotten on a cycle of using and maxing out credit cards, you are allowed to step off and clean up your mess. Past stupidity should not keep you down and it definitely shouldn’t keep you stagnant in a harmful pattern of familiarity. Admit stupidity — own it, embrace it, learn from it — just don’t admit defeat. You can come back from just about everything if you can put ego aside and say “I was wrong”.

Getting a New Car the Right Way

I am so enivous of Bridget’s ability to live car-free, but unfortunately living in a small town with no public transportation means I need a car. For the past couple of years I’ve been driving an older vehicle with racked up mileage (it should totally be called kilometreage in Canada, am I right?) and it’s finally having too many issues to be worth repairing any longer. Since this is a heart-hurting, expensive purchase, I am researching as much as I can in order to not waste my money. As I mentioned awhile back, winter is a great time to purchase cars because not as many people are out test driving in the snow. First up is deciding on what type of vehicle you’re interested in.

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The best selling vehicle in Canada is (cue country music) the Ford F-Series pickup truck which sold over 120,000 units in 2013, so I guess the nervous sweat I break into thinking about parking such a vehicle makes me feel a little bit less Canadian. Even with ever-rising gas prices, large vehicle sales are continuing to outgrow small, compact vehicles.

I’d like to purchase a hatchback. Inexpensive, small, fuel-efficient, and fold-down seats for extra space are amazing selling points for me. If your main concern is fuel efficiency, beware that smaller is not always better. Although the Toyota Yaris gets the top ranking in fuel-efficiency, several mid-sized, higher priced sedans like the Mazda 6 and Nissan Altima actually outperformed or matched fuel efficiency with smaller vehicles.

You need to decide whether you would like to purchase brand new or used.

I’ve always taken the hard-headed, stubborn approach that buying new is a bad idea. 45% of Canadians are considering a used vehicle for their next purchase, and with good reason. New cars depreciate in value by as much as 27% once you drive it off the lot. Depreciation is high at first, then tapers off, so some argue that the benefits of buying new (no previous wear, potentially lower repair costs, lower financing rates) can outweigh those buying used. If you are set on buying new, head to the dealership in the fall when new models are being released and dealers are trying to get rid of last year’s models at a lowered price. If buying new is important to you and you can afford it, by all means go for it, but its not the right choice for everyone.

Purchasing a car that is 1-2 years old with low mileage gets you the best bang for your buck, when the vehicle is still within warranty and hasn’t had a chance to run into many repairs yet.

You should start your used car search by checking out the going price for the make and model you’re interested in via Kelley Blue Book or Edmunds.

Masses of people are going online to look up vehicles for sale via Kijiji and Autotrader, but unfortunately more than half of Canadians who have purchased used cars have admitted to not having all the facts on the vehicle before they made a decision. Ensure you get a vehicle history report so that you know exactly what the vehicle has been through over its lifetime, and if the car is not certified, spend a little bit extra to get someone you trust to look it over before you buy.

Most importantly, do you know that you can you financially handle the cost of a new vehicle?

Include the cost of a car payment within your monthly budget, or better yet save up and pay cash. And don’t forget all of the extra costs of a vehicle beyond the initial price that need to be worked into your budget. The average yearly costs of a compact car are around $9,500, and includes insurance, gas, maintenance, and depreciation.

* During my research phase, I came across an article that claimed a downside to getting a hatchback is that people just don’t think they’re as “cool” as sedans. I realize my purchase of a hatchback will just make this seem true, but better to embrace ones’ “uncoolness” than to buy something else in hopes it will make me look cooler. The jig will soon be up regardless when I am getting passed by everyone in their Ford F-150s as I drive 10 km over the speed limit.