Buying a more fuel efficient car

In my previous post, I compared the fuel economy of different types of cars in light of the news of the Ford Motor Company replacing their fuel-efficient cars for less efficient SUV's at a time when the price of gas is escalating. One of my readers pointed out that the Hyundai Tucson and Hyundai Elantra are built on the same platform, and have the same engines, and wondered how they compared. I like to use the real world fuel economy reported at fuelly.com, as these numbers are going to be more reflective of what people are getting day to day as opposed to what's calculated in some lab. As it turns out, the Elantra gets noticeably better fuel economy than the Tucson, which might have some people scratching their heads. That's when I realized, this is a perfect opportunity to look into what matters when it comes to fuel economy, as the Tucson and Elantra might seem like they should both get very similar fuel economy. So let's do the research, dig into some history, and figure out how to buy a more fuel efficient and safe car in a country where gas is set to go past $1.50 per liter.

Real World vs. the lab

If you were to look at the Hyundai Elantra and the Tucson from below, you might have a difficult time telling them apart, as they are literally built on the exact same platform. Car manufacturers have been doing this for a long time; one of the most notable was Chrysler in the 1980's, building everything from a compact car to a minivan to a luxury sedan on the K car platform. As remarkable as this seems, it makes sense that a frugal car company should try to get as much diversity from a platform as possible so as to offer a greater variety of cars for a better price. Both the Elantra and Tucson are IIHS top safety picks, so it's pretty clear that safety was not compromised in this cost-savings move. 

If we look at Hyundai's own numbers, the Tucson is reported as delivering 10.1L/100km in the city, 7.8L/100km on the highway, and 9.0L/100km combined. The Elantra is reported as delivering 9.3L/100km in the city, 6.4L/100km on the highway, and 8L/100km combined. When we go to fuelly.com, we find out that, when looking at the 2017 model (as the 2017 model year offers us greater data points), the 2L Elantra is delivering an impressive 7.27L/100km combined, while the 2017 2L Tucson is averaging 9.87L/100km. This tells us that the Elantra's economy is being understated, while the Tucson's economy is being overstated. One of the reasons why this could be is that the Elantra starts at $15,999, while the Tucson starts at $24,999, nearly $9,000 more, indicating that the profit margins are significantly better on the SUV than on the sedan, so Hyundai sales executives, knowing the Elantra will sell on price alone, are going to want these two vehicles to appear to have similar fuel economy so that they can push the more profitable Tucson.

I've heard many people, including those on the evening news who claim to be on your side, praise the fuel economy of modern SUV's, but in actual fact, all else being equal cars nearly always do better, and the main reasons are aerodynamics and weight.

Aerodynamics

The history of automobile aerodynamics dates back to before the turn of the 1900's, and has been refined to a perfect science throughout the last century. The result was sleek, rounded coupes and sedans. This video by VOX demonstrates the value of aerodynamics when it comes to fuel economy over the last century:

Now, it's pretty obvious that the Hyundai Tucson is pretty rounded for an SUV, and is definitely more aerodynamic than a regular truck. However, it's not nearly as aerodynamic as the Elantra. One reason is because it's taller, and the other reason is because it sits higher off the ground. A taller vehicle has to deflect more wind than a lower vehicle, and one that sits higher generates more turbulence beneath the car caused by tires (which are not aerodynamic) and components like the exhaust system. Auto makers contend with this by installing a front chin wind deflector, which is that black piece of plastic under the front bumper that always seems to get caught on curbs. An SUV sits higher up, so you probably won't scrape the front chin wind deflector on any curbs, but that still does sacrifice a bit of fuel economy. This is one of the reason why many crossover vehicles tend to have less ground clearance today, but generally still more than a sedan.

An easy way to tell how aerodynamic a new car is going to be is to look for the drag coefficient number in the specifications. You don't need to understand how this number is calculated, all you need to know about it is that the lower this number, the more fuel efficient it will be. Any number under 0.3 is going to be decent. If this number is missing from the advertising literature, it's probably because the vehicle isn't very aerodynamic. When it comes to the Elantra, Hyundai proudly proclaims that it has a drag coefficient of 0.27, which is very good. The Tucson's drag coefficient was more difficult to find, but I did manage to find it, and it's at 0.33, which is significantly worse than the Elantra, but still better than some other SUV's and even some older cars on the road.

Weight

Another factor that helps to determine the fuel economy of a vehicle is it's overall weight. In the case of the Elantra, it has a reported curb weight of around 1,255 kilograms, while the Tucson is reported as having a curb weight of 1,508 kilograms. That 253 kilogram difference is going to have a negative impact on fuel economy as well. SUV's and crossovers will generally weigh more than their sedan counterparts, because they are taller and therefore require more metal to create the taller structure. They also need larger, heavier components to give them greater ground clearance (shocks, struts). A sedan design makes more efficient use of the metal that the vehicle is made out of, which is why it will be lighter.

Trade-offs

When you buy an SUV like the Tucson over a sedan like the Elantra, you are obviously trading off fuel economy for greater ground clearance and a more upright seating position. These can be important considerations if your mobility is impaired or you frequently drive in places where the road conditions are poor. However, you are also trading off the fact that a sedan does handle corners a lot better due to a lower center of gravity, and provides better performance when accelerating due to lower weight and better aerodynamics. There is also the fact that a trunk in a sedan offers greater security of items stored within than does the hatch of the SUV; a would-be thief only needs to smash the back window to clean out the back of the Tucson, while breaking into the trunk of an Elantra will require a lot more work.

At this point, I think we should plug some numbers into our spreadsheet to find out how much more the SUV is going to cost us in five and ten years with gas at $1.50 a liter:

Model	MSRP	L/100km	30k/year
Elantra	$15,999.00	7.27	$3,271.50
Tucson	$24,999.00	9.87	$4,441.50
	5 years	10 years
Elantra	$32,356.50	$48,714.00
Tucson	$47,206.50	$69,414.00

What is interesting is that this demonstrates that we can buy and drive a base model Elantra for 10 years for nearly the same cost as buying and driving a base model Tucson for 5 years. Also, the savings of driving an Elantra over 5 years is just a tad over $1,000 shy of buying another new base model Elantra. 

Other considerations

There are other things to consider when buying a new car; this blog post doesn't take into consideration predicted reliability, cost of maintenance, and insurance costs, which are all factors one should also consider when buying a new car, truck, or SUV. Insurance costs on a sedan may be better than they are on an SUV, simply because the replacement value is lower. I would expect the maintenance costs to be similar on these two vehicles, except that some SUV's require truck tires which tend to cost more than car tires. A quick look at Canadian Tire's site shows this to be true; new tires on the Tucson are going to cost more than will new tires for the Elantra, further proving the sedan to be the frugal choice.

Conclusion

While SUV's and CUV's are the hottest trends in the market today, it's important to remember that being frugal means ignoring the trends salespeople are trying to push on us and to make calculated, intelligent decisions for ourselves. SUV's and crossovers are an excellent choice for some people depending on their needs and lifestyle, and may represent a more frugal option compared to buying a full out SUV or truck, but at the end of the day, the modern sedan is hard to beat for economy, safety, and overall value.

Coping with rising gas prices

Welcome back! It's been a while since I wrote my last article, but lately there's been a meme going around social media. While this meme is political in nature, and one of my goals in this blog is to keep it politically neutral, it raises a valid question that needs to be addressed:

First of all, the cost of a barrel of oil changes from day to day, month to month. While the cost of a barrel of oil did reach $146 US dollars in 2008, it was not that price for the entire year; that wasn't even the average. Fortunately, we can cut through the political bull and check the data ourselves at www.macrotrends.net. First, let's look at the year 2008:

So it's pretty clear that the price of a barrel of gas fluctuated wildly throughout 2008, ranging from a high of $159.55 USD per barrel to $52.94 USD per barrel, averaging $114.09 USD for the year. While this shows us the price of a barrel of oil, it doesn't show us how that compares to gas prices in Ontario. For this, I'm going to use the services of Gasbuddy:

Ontario Historical Gas Price Charts Provided by GasBuddy.com

While this doesn't go all the way back to 2008, it does provide better data as to the relationship between the cost per barrel of gas and what we pay at the pump, and what it shows is that, in actual fact, the cost that we pay per liter of gas today is more in-line and consistent with the price per barrel of gas today than it was at the end of 2015. There is a relationship between the price per barrel of gas, but as we can see from this data, it is not direct and we actually appear to be insulated somewhat from the wild variations of the cost of a barrel of oil in the international market. While the price of a barrel of crude fluctuated wildly, the price we paid at the pump wasn't so dramatic. Do notice that, after November 2014, the price of a barrel of oil and the price we paid per liter of gas tended to be a lot closer than they were in previous years. There is one other thing that we need to consider that would explain this trend: The value of the Canadian dollar.

I remember for a fact that, for most of 2008, our dollar was stronger than the US dollar. to prove this, we only need to visit the Bank of Canada's web site and download the historical exchange rate data. In the year 2008, we went past $1.23 for a few days, but the Canadian dollar was worth, on average, $112.53 to $100 US dollars. This means that a barrel of oil that averaged $114.09 USD in 2008 would have cost us, on average,  $101.39. 2014 was the last year for a strong Canadian dollar, which averaged $109.77 US dollars for $100 Canadian. In 2015, that dipped to an average of around $98, and in 2016, it dipped further to $94.98. We did a little better in 2017, averaging $97.20. These averages do not account for the day to day trends of the market, where there were days when our dollar would have been significantly weaker and when a barrel of oil cost more, which accounts for the variations we see in this graph; however, these averages do illustrate the overall trend and illustrates the true reason why what we pay at the pump did not go down as significantly as the cost of a barrel of oil.

As I write this today, the cost of a barrel of oil is $67.97, and our dollar is worth $0.78 US dollars, so that barrel of oil today actually costs us  $87.14, which is only a $14.25 difference from the 2008 average. Since I'm comparing a specific data point (today) to an annual average, the comparison is not entirely fair, which makes the chart from GasBuddy.com so valuable. However, it illustrates one very important fact: The price of a barrel of oil is in US dollars, while the price of a liter of gas in Canada is in Canadian dollars. As our dollar has been trending downwards compared to the US dollar and other international currencies, this means that the increase in the price of gas actually has more to do with our weakening dollar than it does with anything else.

Don't get me wrong; I disagree with taxes like the carbon tax on fuel, because it unfairly penalizes people living at or near the poverty line, and believe that there are more fair ways to tax, but the fact of the matter is, the price of gas will go up as our dollar trends down and the price of a barrel of oil trends up, regardless of whether or not we have a carbon tax, and you can flip a coin to see if political Party A will do a better job than political Party B, but the fact of the matter is, the frugal Canadian knows how to insulate themselves from these inevitable market fluctuations.

Ironically, this comes at a time when Ford has announced they are doing away with their economy sedans, to replace them with trucks and SUV's. A quick browse through the data at fuelly.com shows that the popular 2018 Ford F150 averages 14L/100km and the 2018 Edge averages 11.4L/100km, while the 2018 Focus averages 8.4L/100km and the 2018 Fusion averages 8.6L/100km. The Focus has an MSRP of $15,678, the Fusion starts at $22,488, the F150 starts at $25,149, and the Edge starts at $31,999.

Let's break this down into a spreadsheet, looking at fuel cost differences between models, based on an average driving of 20,000 kilometers per year, with gas at $1.30 per liter, and $1.50 per liter:

Model	L/100KM	$1.30	$1.50	20k km @1.3	20k km @1.5
Ford F150	14	$18.20	$21.00	$3,640.00	$4,200.00
Ford Edge	11.4	$14.82	$17.10	$2,964.00	$3,420.00
Focus	8.4	$10.92	$12.60	$2,184.00	$2,520.00
Fusion	8.6	$11.18	$12.90	$2,236.00	$2,580.00
F150 vs Focus				$1,456.00	$1,680.00
F150 vs Fusion				$1,404.00	$1,620.00
Edge vs Focus				$780.00	$1,680.00
Edge vs Fusion				$728.00	$840.00

Consider this: The difference in running costs of the Ford F150 between $1.30 and $1.50 per liter is $560 per year, but will cost the Focus driver $336 more per year. However, the savings in model differences is even more significant. The amazing thing is, the Fusion and Focus aren't even the most fuel efficient models in their price range on the market! Now let's look at the 5  and 10 year cost of ownership of these cars, including the purchase price:

Model	MSRP	$1.30 @5yr	$1.50 @5yr.	$1.3 @10yr.	$1.5 @10yr.
Ford F150	$25,149.00	$43,349.00	$46,149.00	$61,549.00	$67,149.00
Ford Edge	$31,999.00	$46,819.00	$49,099.00	$61,639.00	$66,199.00
Focus	$15,678.00	$26,598.00	$28,278.00	$37,518.00	$40,878.00
Fusion	$22,488.00	$33,668.00	$35,388.00	$44,848.00	$48,288.00
F150 vs Focus		$16,751.00	$17,871.00	$24,031.00	$26,271.00
F150 vs Fusion		$9,681.00	$10,761.00	$16,701.00	$18,861.00
Edge vs Focus		$20,221.00	$20,821.00	$24,121.00	$25,321.00
Edge vs Fusion		$13,151.00	$13,711.00	$16,791.00	$17,911.00

Once again, we notice some interesting trends. When we factor in both the purchase price and the running fuel costs, after 10 years of ownership, the Edge ends up being cheaper at both $1.30 per liter and $1.50 per liter than the F150 even though it costs quite a bit more to buy. Also, the difference between the Edge and the Fusion after 10 years is enough to buy a brand new Focus even at $1.30 per liter! Alternatively, the difference between the Edge and the Focus is enough to buy a brand new Fusion after 10 years at even $1.30 per liter. The most interesting comparison is between the F150 and the Fusion; even though the two are fairly close in price to buy, the difference between the two after 10 years will buy a new Focus.

What the data shows is that driving a more fuel efficient vehicle will do significantly more to save you money than will a change in fuel prices by 20 cents a liter. Once again, these are not even the best fuel economy value for your dollar; for example. the 2018 Chevrolet Cruze is currently averaging 6.3L/100km and starts at $16,395. At $1.30 per liter, running 20,000 kilometers over 10 years, the fuel costs are $16,380; nearly as much as the MSRP of the car! At $1.50, it's $18,900 over 20 years.

Safety

The main reason many people cite for wanting a larger, less fuel efficient vehicle is because of safety. My opinion on safety is that if people put down their cell phones, paid attention, and took a defensive driving course, they would be safer in a car with the worst crash test rating than driving inattentively and aggressively in a truck with the best crash test rating; however, wanting a vehicle that protects better in a crash is a valid reason, as we can't really put a price tag on the safety of those we love. It is true that small cars used to be death traps in an accident, but they've come a long way. Consider this video showing a modern Nissan Versa crashing into an older generation Nissan Sentra (known as the Tsuru in other countries):

Or, how about this modern Toyota Corolla crashing into an older generation Toyota Corolla:


It's pretty dramatic, and it goes to show how much safer modern cars are across the board.

Should you replace your truck or SUV with a smaller car?

The short answer is, no, unless your truck or SUV is old enough to be unsafe or will cost you a lot in ongoing maintenance, or if you're in a financial position to buy a new car. If you're driving an SUV or truck that is reliable and reasonably safe, you can buy a lot of gas for the finance payments of even a sub-compact economy car. For example, to finance a bare bones Nissan Versa, it's going to cost at least $86 semi-monthly to lease, or $95 semi-monthly to buy. Over a year, that's going to cost an additional $2,064 for a lease or $2,280 to buy per year. Remember, you still have to put gas in that car, and over 20,000 kilometers at $1.30/L, it'll probably cost you around $9.88 per 100 kilometers, or $1976 per year at 20,000 kilometers. Combined, that bare bones Versa will cost you over $4,000 per year either way.

The long answer is, maybe. If gas is going to go up to $1.50 a liter and you're driving a 2007 F150 that gets 17L/100km on average, you're going to be out $5100 per year. At that point, the cost in fuel is significantly greater than would be car payments and fuel for a new small car. However, I'll let you in on a little secret: Many of these small cars loose nearly half their value after only two to three years, and yet have the same safety features, ratings, and fuel economy as the latest model. If we assume that we will keep the car for 10 years, that's like paying half price for a car that will last 70-80% as long. Because the depreciation continues, you can buy a small but still reasonably safe and fuel efficient small car for what you'd pay in gas for a  couple of years for that old 2007 F150. You're probably looking at an 8 year old car but with a reasonable amount of mileage left to go on the clock. The 2-3 year old used compact or mid-sized car has been something many frugal-minded people like to exploit, and it's not uncommon for people in my trade to have a 15L/100km truck for doing the things they really need a truck for, and to buy a 2-3 old compact or mid-sized car that gets around 7L/100km for daily commuting paid for with the savings in fuel. Of course, it all depends on the length of the commute, how often a truck is needed, and other details that are beyond the scope of this blog post, but let's run some numbers.

A 2015-2016 Nissan Versa Note can be bought for around $10,000, and after 8 years at $1.50/L of fuel, will cost $17,040 in fuel costs at 20,000km per year. With 40,000km of driving, the fuel costs will be $34,080. Even though we are only going to run this for 8 years instead of 10, when we factor in the cost of the car, it's easy to see how the savings are realized compared to the $36,000 in fuel it would cost to drive a truck that gets 15L/100km 20,000 kilometers a year for 8 years.

Hybrid, electric?

Whether or not a hybrid or electric car is right for you depends on many factors. Many of my frugal-minded friends really like the Toyota Prius, which does not really depreciate all that much in the used car market. With a starting price of $27,650, and an average of around 4.5L/100km, we can run the numbers and see how it adds up:

Model:	Price:	L/100km	@$1.30	@1.50
Prius	$27,650.00	4.5	$5.85	$6.75
Annual fuel costs:			After 5 years	After 10 years
@$1.30, 20,000km	$1,170.00		$33,500.00	$39,350.00
@$1.50, 20,000km	$1,350.00		$34,400.00	$41,150.00

So it's pretty clear that the cost of running the Prius is actually comparable to a compact car like the Ford Focus for someone commuting 20,000km per year. However, if someone is commuting 40,000 kilometers per year instead of 20,000 kilometers, the Focus is going to have a total cost of $59,358 at $1.30/L and $66,078 at $1.50/L after 10 years. Compare that to the Prius at $51,050 at $1.30/L and $54,650 at $1.50/L, and it's evident that the Prius becomes significantly cheaper. With that in mind, however, we must still compare it to something like the used Versa. 80% of $54,650 is $43,720, which just slightly beats our used Versa that will come in at around $44,080. That's pretty phenomenal, but only if gas averages $1.50/L and your commute is 40,000 kilometers per year. At lower gas prices, the used compact car is still the more frugal option.

As for electric cars, it's difficult to tell. A car like the Nissan Leaf starts at $35,998, but its range may limit you, and there's a question as to whether or not you'll have to change out the battery pack after 7 years, and what will that cost? Then there's the Bolt EV for $44,400, which does significantly better in range, but without the discounts, may end up being no better, or maybe even worse than, the Prius, because we can drive the Prius for 40,000km per year for 8 years for the MSRP of the Bolt. I honestly believe the future will be electric cars, and we are at the point today where I believe they could represent a viable alternative for certain frugal-minded people. At the very least, I can say that an electric car will insulate you almost completely from the market fluctuations that exist in the gas and oil industry, because we buy our electricity from generating stations in Canada, not from a global market. However, gas would have to get pretty expensive before it would be viable for me.

Conclusion

This study is very simplistic and is not comprehensive when it comes to the cost of owning a vehicle. There are other factors, such as taxes, insurance, maintenance costs, reliability, and so on that really affect the cost of owning a car. However, it is a good starting point, and illustrates the importance of good fuel economy. We can complain all we want about the cost of gas, but as long as we buy a commodity that's price is governed by international markets, we need to understand the risks and rewards of doing so, and make our choices accordingly.

Eliminating unwanted credit card charges

Ah, the dreaded credit card that I love to hate. There is no denying that a cash-only lifestyle is the one that ultimately leads to peace of mind, but there is also no denying the convenience that credit cards offer us. When paid off every month, a standard credit card does not cost anything extra to the consumer, and some even offer rewards in the form of points or cash back that some people find rewarding. Some even offer the "Illusion" of buyer protection. However, there is a trap that is all to easy to fall into: The unwanted credit card charge.

Unwanted credit card charges are an insidious thing. One way they can work may be like this: A company offers a good or service, with the promise of no commitment and that you can back out at any time. All they need is your credit card information. This could be a gym membership, or a service that delivers skin care products. Giving them the benefit of the doubt, you turn over your information and, without knowing so or being advised of, agree to terms and conditions that allows the business to charge your credit card every month unless you go through extraordinary or even impossible measures outlined in the terms and conditions to cancel your subscription. If you try calling your credit card company, you will be advised that you need to contact the business that is charging your card to get them to stop, but when you contact the business, they give you the run-around. At this point, it seems like you're going to be on the hook for those unwanted charges every month, but there may be a quick and easy way out.

First, a disclaimer: I'm not offering legal or financial advice, I'm just saying what I would do in this scenario. If you find this doesn't work for you or causes things to end badly, then you probably shouldn't get advice from Internet web sites. That said...

If I lost my credit card, I have a responsibility to report it; the reason is simple: There is an assumption in the terms and conditions of most credit cards that I am responsible for my credit card and its information, and if I have lost my credit card, I am no longer in control of it. Notifying my credit card company of a lost credit card will cause them to stop any further charges to that card, and then they may issue me a replacement credit card with a new number and expiry date. What this means is that any future charges made to my lost credit card cannot happen. Of course, this also means that if I am using my credit card to pay off monthly bills automatically, I will need to contact those businesses to notify them of my new credit card information or arrange an alternate method of paying them.

Suppose I noticed an unwanted charge on my credit card this month, and I discovered this will be a recurring charge that is going to be impossible to get rid of. If I were to lose that credit card (preferably in a shredder), I would need to call my credit card company and tell them that I lost my card. I would be responsible for the charges made before the time and day I called them, so there may not be much I could do about the initial unwanted charge. I would pay this credit card off in full up until the date and time I reported it lost in order to protect my credit score. However, moving forward, if I did not provide a business with my updated credit card information, they cannot charge my credit card. You can be sure they would try to contact me to get this information from me, but I would be very much in control. For example, I could tell them that I no longer own any credit cards and therefore have no credit card information to provide them with.

Moving forward, there may be a threat of a penalty that must be paid for cancelling early or outside of the conditions of the terms and conditions, but without my credit card information, they would have no direct way of charging this to me. They could invoice me, or there may be threats of litigation or collection agencies, but so long as I did not explicitly consent and am no longer using their goods or services, I would think there would be little grounds for them to collect, and I most certainly would be willing to challenge them in court. At the end of the day, it's likely that if I was duped into a monthly charge that I didn't explicitly consent to, so have a good many other people, and the only way such a business can remain viable is to continually dupe people; chasing me would be a waste of their time and resources. They like credit cards because they're an easy way to get money.

As you can imagine, this is a pretty contentious issue, and possibly the most controversial topic I've ever posted on. We seem to live in a culture where consumer rights are being eroded and where businesses can create all sorts of loopholes in their terms and conditions to deny us of any consumer rights we might think we should have, so I believe in taking a stand where necessary to take back control of my finances.

Is College worth it?

We live in a culture where we are conditioned to be accustomed to things like consumer debt, unemployment rates, post-secondary education, and giant corporations seemingly in control of everything for our best interests. As children, we are raised to believe that it's important to get a credit rating, college diploma, and a lifelong career with benefits and a pension. My own experience has shown me that the traditional College system is a multi-layered business, and is largely unnecessary once we unpack the indoctrination that has lead us to believe they are necessary and good.

Lies and myths: Post-secondary education

One of the greatest lies I was told as a child was that I could be anything I wanted to be when I grew up, so I decided I wanted to be an astronaut. I realize now that this desire stemmed from my exposure to some great science fiction shows and movies of the 1970's that came on the tail of the Apollo missions and growing up in a time of the promises of the shuttle missions. By the age of 12, I was already too tall to be an astronaut by conventional standards. As it turned out, only a select few people would be chosen to pursue this occupation. The other problems with this lie is it doesn't take into account the realities of future job markets and places too much importance on the vocation. The hot job of today may not even exist 10 years from now.

How we really need to start teaching our children to think is the importance in investing in themselves. They need to understand that greatness and talent aren't things a person is born with or that we wish for, but rather are things that are cultivated through a process of self-investment and discipline. A great magician didn't just buy his tricks from a store and start performing; a great athlete didn't just drink a protein shake and then win a gold medal. Some of the greatest business leaders of our time skipped past College; even Bill Gates dropped out of college, which should speak volumes about how unimportant a College education really can be. This leads into the next myth, and that is the myth of work-life separation. Once we buy into that myth, we buy into a lifestyle of unnecessary complexity and consumption. We must want to fully invest ourselves in what we do and allow it to be an important part of who we are throughout our lives so that even our interests and hobbies contribute to making us the best we can be at what we do.

From Grade nine on up, students are streamed into three levels: Academic, applied, and locally developed. Students come to understand that academic is just for students who wish to pursue a university education, while applied is for those who wish to instead go on to college. Locally developed is generally considered a stream for mentally challenged students. 

The problem is that this suggests there is something lacking in the current education system, which is not true at all. At least in Ontario, Canada, and in spite of what you may hear from fear mongers who likely have a vested interest in post-secondary education, a high school diploma is all most people will ever need, as long as a child makes the right choices starting with Grade 9. One of these choices is to commit to taking science and math all the way through to Grade 12. Another choice is to take courses at the academic level, if possible. If a child shows any interest in any building or mechanical trades, then I would encourage them to take valuable skill building shop courses in order to get the most out of the four years of high school that they can. To a teacher wholly indoctrinated with the myth of post-secondary college education, it may seem foolish and a waste of time to take academic science and math while taking shop classes, but to a person who knows how to cut through the crap and get to what's real, this is a strategy in extracting the greatest value in the least amount of time.

Now I will expose the biggest, dirtiest secret of post-secondary education: What a traditional college program offers is a diploma, but what employers want are certifications. For example, let's suppose a child decides he or she wishes to become a Computer Systems Technician. After taking a two year program and spending thousands of dollars (often in the form of a burdensome student loan), this graduate soon learns that what employers really want are certifications such as CompTIA, Cisco CCNA, Microsoft MCP, A+, Net+, and possibly others, and that the college diploma is little more than a useless piece of paper. Suppose, for example, you want to pursue a career that requires CompTIA A+ certification, you can go directly to their web site and pursue training specific for that certification that would take weeks for a fraction of the cost of a regular college with nothing more than your high school diploma. In one year, a motivated individual could obtain all of the certifications the Computer Systems Technician program offers to "Prepare" them for in two, and for less money.

Missing out on the "College Experience"

Afraid of missing out on the traditional "College Experience?" This is indoctrination at its finest, and what students will really be missing out on is learning how to be good consumers to serve the interests of corporate giants. One of the first things students are offered is a student credit card, because, as the myth goes, it's important that they build a good "Credit rating" so that when they graduate, they can enjoy lower interest rates on things like car loans. The truth of the matter is, all a person needs to build a good credit rating is to have a regular bill - say, a cell phone bill, or car insurance bill - that they pay 100% on time every time every month in their name. That's all it takes to build a good credit rating. But don't worry; if they pass up on the credit card, maybe they can still score a "Free" smart phone from a major carrier that they will pay for many times over during the life of their contract.

Besides starting young adults off with a lifestyle of indebtedness, the traditional "College Experience" also teaches young people what music to buy, what shows to watch, what products to buy, what beer to drink...the traditional College system is very much a multi-layered business engineered to keep kids inside the bubble of the traditional college experience as long as possible. This means they get to take the summer off, plus all of the statutory holidays, along with forced days off during exam week, and if the teachers go on strike, too bad. Don't worry though, the courses are designed to keep them busy with plenty of busywork memorizing useless trivia to keep them from recognizing what's really going on. Also, they get the privilege of spending thousands of dollars per year on big heavy textbooks that get updated every two or three years so that they can't buy them used or sell them when they're finished just to milk them for every possible penny to keep an otherwise dying pulp and paper industry thriving in this day and age of digital media.

Missing out on the traditional "College Experience" means a person may also miss out on opportunities to binge drink and engage in other regrettable behaviour, eat unhealthy cafeteria food, and live an unhealthy sedentary lifestyle, so they can also later contribute to a booming healthcare industry. It's all part of the cycle.

Exploring direct routes

I provided a shortcut example for Computer Systems Technician, but there are direct routes for many other vocations. For example, I have learned that "Police Foundations" is a babysitting course to keep young adults busy until they're old enough to be police officers. If you studied law and physical education throughout high school and got a job as a security guard with a reputable security company upon graduating high school (which only requires a clean criminal background check), you could create your own path to becoming a police officer. If you want to be a writer, write! Take seminars on how to become a better writer. However, going into each and every program is beyond the scope of this essay; instead, I would like to provide the reader with the tools necessary to plan out their own path.

A good place to start is at the end; in the case of a traditional college education, that end would be browsing the job boards. The Government of Ontario has their own job bank, but many of the good jobs there get pulled from job sites like Indeed, Workopolis, and Monster. Not only do these job sites provide links to available employment opportunities, they also offer all kinds of great career advice. When you've found an entry level job that interests you, scroll down to the requirements. Do this for several, even dozens of jobs in the field you are interested in, taking note of overlap. This will provide you with detailed information about what certifications and qualifications the employers are looking for. Often, job postings are a "Dream list" for an ideal candidate who may not exist; for example, plenty of entry level positions ask for 1-3 years of experience, but odds are very good that if you have every certification they demand and demonstrate tact and professionalism, you will get the job.

Making the big bucks

Ultimately, what many people are after when they enroll in a traditional college program is to make really good money. Traditional college may prepare you for an entry level clerk or assistant position, but sooner or later, you're going to realize that earning more than $60,000 a year on a college diploma is nearly impossible, unless you luck out and manage to get into a municipal union, for example. To land an upper middle income to high income job, you need something special, and this is why making the right choices in high school can make a big difference.

One path to a better paying career is by way of a red seal trade. Many high school students who studied shop courses throughout high school and have their grade 12 science, math, and English have everything they need to pursue a career in the trade of their choice. I recommend researching your local trade unions, as these will usually offer valuable additional training and certifications free of cost in addition to a better wage, benefits package, and pension plan, and they will often find the work for you. Earn while you learn, and in 5 years you have a ticket that actually means something. A good place to start is at the red seal web page, where you can peruse the various trades, find out the latest local job market reports, and see if any of them would be a good fit for you.

If trades isn't your thing, then you may discover that a degree in your field is something employers want to see in order to pay the big bucks. This is where taking courses at the academic level in high school is important. You could enroll in University right from high school, but, as some have pointed out, not everybody has $200,000 or the time to attend an accredited university. In the year 2017, it's now possible to earn your degree online. This again moves beyond the scope of this essay, but I do suggest that you do your homework and make sure your degree comes from an accredited organization and not some mill. Some traditional accredited colleges now offer degrees via on-line training.

Changing perspective

By taking charge of one's career and life armed with little more than a high school diploma with the objective of investing in training and certifications that matter, perspective changes. Instead of putting your future into the hands of some corporation so that you can earn an income to pay off your perpetual debt at a job you eventually grow to loathe while hoping you don't get fired so that you can afford endless distractions, you are now in control of your life. Without the burden of debt, a regular paycheque becomes unimportant as you can create your own cycles of earning and learning. This change in perspective is liberating, though as is often the case may draw the ire and contempt of those who, from their perspective, "Play by the rules" and got a conventional College education.  

Why do Colleges exist?

Community colleges came into existence at a time when information was hard to get. The benefits of the Internet did not exist, so your options were to do what your parents were doing, or follow the advice of a guidance counselor who, in the interest of making his or her day as easy as possible, would gladly move you along up the line to your local community college. The community college became the gatekeeper of knowledge for those who could not afford a university education but wanted better than a minimum wage job, and provided the service of connecting employers to new recruits. Plenty of people have pursued great careers with their college diploma, but even then the brightest could see through the crap. Once a person learns that financial success comes from delivering a good or service that other people want, they realize that they need to become very good at that.

Today, you may still find yourself attending a local community college if you're taking a red seal trade, as most red seal trades have an educational element that goes along with the hands-on learning, and since red seal trades are regulated and entrenched in tradition, the local community college is the legitimate accredited learning institution. Mind you, these programs don't offer the same profits to the College business like a traditional two or three year diploma would, as these courses are condensed into 8 or 10 week blocks, but you still get the opportunity to keep the textbook industry rich and happy, so at least you get to enjoy that part of the college experience.

Many community colleges now offer distance learning opportunities. This is more out of necessity, as they no longer hold a monopoly on information and are legitimately competing with other on-line learning services. For example, if you want to be an accountant, you could take all of the necessary courses through the Durham College continuing education online courses. This is very cost-effective both in terms of time and money. I got my own Electronics Technician certification through the George Brown college distance learning program. I can apply the credits earned from that program in order to obtain a fully accredited Bachelor of Science degree through distance learning.

Your Future

Moving forward, this is good information even for those who may not have made the best choices in high school, had a conventional college education, got their diploma, and now want to move on to something else. These ideas and concepts are free to explore by anyone at any age; the idea of investing in yourself, committing to self-improvement on your own terms. Picking and choosing what you need to be successful in your life will ultimately be the future of education, as the old institutions die away to give way to generations of increased diversity in skills in training that allow each person to reach their potential.

DIY Income Tax 2015

It's that time of year again, when we figure out whether we've given our government too much of our money or not enough over the past year. On a personal level, I find it ridiculous that income tax has become almost mystical to many people, what with all the rules, regulations, and loopholes, but I'm here to tell you, it's not that bad. At the most basic level, preparing an income tax return is little more than a data entry job that, for the average person, can be done in under an hour.

Many people want to take their taxes to an "Expert," but all these experts are really just data entry clerks, who punch your data into software that you can get yourself, and for free. All the work has been done by your employer or employers and financial institutions with the forms they've sent you.

Start by looking at your T4. There are boxes with numbers. Some of those boxes are empty. That's because your company is probably using a generic T4 form provided by the Canadian Revenue Agency, likely generated by their accounting software, and those don't apply to you. For example, box 44 is for union dues, but if you don't belong to a union, or if your union dues aren't automatically deducted from your paycheque, there won't be anything there. If your company hasn't deducted charitable donations from your pay, box 46 will also be empty.

Now, try a program to file your taxes. The Wal-Marts and Staples are pushing DIY tax software this time of year, and for a premium price for what most people need it to do. I mean, we are talking about what amounts to a simplified spreadsheet that accepts data, does the calculations, tells you where you may have entered something wrong, and create a file that you can send off to Revenue Canada. I prefer to go the free route with StudioTax, which has been around for the past 12 years. Some people have asked me, how can they make software for free, when others are charging $30 and up? I answer that question with the question, why would you spend $30 and up for software when you could probably do it yourself with pencil and paper very easily with the blue and pink forms provided by the government? In any case, the choice is yours; whatever route you go, it's all fundamentally the same.

The software will start with "Interview" questions, where you tell it who you are, where you live, whether or not you're a Canadian citizen, whether or not you've been married, whether or not you've had kids, how long you've been at your address...and this is why I prefer an offline program like StudioTax as opposed to an on-line tax program solution; this is personal information that could be used for identity theft, so I stick to software that can run on my computer without an internet connection. I do use the internet connection to ensure the software is updated and to enjoy the convenience of Netfile, but I know my personal information stays on my computer.

An interesting fact is that, if you used StudioTax last year, it can retrieve all of your personal information from last year's tax return. If nothing had changed, you can skip the interview questions and go straight to entering your data, which is a huge time saver. Most programs are similar in this respect, if you stick with the same software year after year.

Now you get to enter the data. You'll see a screen with numbered boxes, even more boxes than you had on your T4. That's because this software covers absolutely everything. Note on your T4 an area towards the bottom that says, "Other information," with a "Box" and "Amount." If you turn over your T4, you'll see all of those box numbers listed on the screen in your program. That's because the T4 is generic, and while the generic form tries to cover 90% of what most people need, they can't possibly fit every box on that piece of paper and still have it readable. If you have something in "Other," you should check to see if the program has a place to enter the amount. You might have something in "Other" that has a box number that isn't listed in your program. If that's the case, then it's likely something that doesn't need to be reported on your tax return.

You've entered your data, now you think you're finished, but wait! This software, like the T4, is generic and tries to meet the needs of the majority of the population. What if, for example, you paid union dues but they were not deducted from your paycheque? You'll get a statement from your union for auditing purposes, but the program may not ask you about it. This is why, at the end, you'll see all the forms available in tabs. For example, when you click on the tab that says, "T1 General," you can go through all four pages of the T1 portion of your return. These are digital representations of the paper version you could do without the use of software. Scanning through them line by line, you'll discover on page 3, line 212 which reads, "Annual union, professional, or like dues (box 44 on all T4 slips and receipts)." You can click on the white portion, and enter this here. If you've paid both union and professional dues (for example, Ontario College of Trades), add them up then enter them here, as this represents the total sum.

There is a bit of a learning curve, but the good news is, once you've done it, you'll know what to look for next year and it becomes easier. The reason I recommend everyone do their own income tax is because you can become an expert for your own income tax. The first time around you might have to search for help and watch some how-to's, but the more you do it, the better you'll get at it. I've been doing my own income tax for years now, and even though I'm not a professional accountant, I'm certain that I'm better at preparing my income tax return than anyone who does it professionally, and probably as good as a high priced professional accountant. Of course, that's just for my income tax. You can be an expert for your income tax, and not only will you reap the rewards in savings, you are also rewarded with a better understanding of your finances and our screwed up income tax system.

Why open source matters

I'm a big advocate for open source operating systems and software. For me, it's more than the fact that it doesn't cost any money. Compared to the alternatives, open source operating systems and software ensure that I have control over what I buy, who I buy from, and when to buy. In this article, I'm going to explore the issues that exist with the alternatives, with embedded links that will take you to other sources so that you can expand on each topic.

The problem with Apple

Apple is a computer company that has been around for as long as I've been a computer nerd. I had a secret crush on the Apple IIc, but with a price tag of around $1,300 for just the computer and disk drive, was a bit too expensive for my 13 year old self, and so I opted for the equally functional, albeit less aesthetically pleasing, Commodore 64 system that cost less than half and had better sound capabilities. Since then, Apple's focus has been building up a brand image to convince people to pay more for their product.

Setting aside technical and aesthetic merits, the problem with Apple is that once you've made the commitment to use Apple products, you give up more than your money. Any apps and software you buy and invest time into learning how to use will only run on the Apple platform, locking you out of the option of choosing a different platform in the future unless you are willing to go through the time and expense of replacing all of your programs and apps. Furthermore, you place yourself on Apple's treadmill of their upgrade cycle. Apple makes its money by selling its expensive products. If they want, they can disable features of a current product or cripple it with an "Update" to encourage you to upgrade to the next thing, which will be of their choosing. What's good for you as a consumer is irrelevant.

All of this wouldn't be so bad if Apple kept up on the leading edge, but given that their customers are locked in, they eventually become complacent knowing full well that their customers aren't likely to go to another platform, even when it's significantly better.

While companies like Microsoft have been made out to be the "Bad guys" and Apple has been made out to be the "Hero" who will save us all, in actual fact Apple has done things that have made the Microsoft's transgressions seem petty in comparison. They've gotten away with it because they don't dominate the market. They do conspire to dominate their own market, end-to-end, taking away consumer choice, and in the markets where they are starting to dominate, we're starting to see some legal action being taken against them. 

To summarize, once you've bought into Apple, you're in their walled garden, you have turned over your decision-making process on what to buy and when to buy it to them, which will leave them wealthier and you with fewer options. I don't believe any company should be allowed that level of control.

Microsoft

Some of the issues with Apple apply to Microsoft, though they're not nearly as bad. This is because they're not necessarily interested in pushing you to buy new hardware. They built their fortune on getting their operating system onto every PC sold (except for Mac's), and they did this by making their operating system license reasonably priced to the vendors, and making everything open, allowing anyone to develop hardware to work for their operating system. In this way, they're less evil than Apple in that you get to decide when it's time to update your hardware. 

One of the benefits of running with Microsoft products is that corporations and small businesses use Microsoft, and corporations are usually run by frugal-minded people if the business is to remain successful. Sticking with the same thing as corporations is a good strategy; as we've seen, demand from the corporate world will dictate what Microsoft will do.

The times are changing, and so is Microsoft. These days, they're more interested in getting their customers onto a subscription-based service for their OS and software. This type of service takes away your ability to decide what to buy and when; what used to be an investment suddenly becomes an ongoing expense. To use the popular car analogy, this would take you from the opportunity of "Owning" a car to "Leasing" a car, even though Microsoft might argue that you don't own the Windows on your PC, you just have a license to "Use" it. Once again, it's taking away options from the consumer for the greater profit of the company.

Android

Android, the OS that's based on open source code, would seem to be the thing that will save us. Like Windows, it's hardware-agnostic, but unlike Windows, it's based on the Apache 2.0 open source license. This means that anyone can develop for that operating system and keep it up to date, and no one company can pull the plug on it to force you to upgrade.

Unfortunately, many Android tablets come pre-loaded with utilities and applications that are not open source. Some manufacturers embed these applications in the OS, so that you can not get rid of them. Some of these apps are subscription-based services, so you get "Nagged" to pay for this subscription from time to time. Generally, this is more of an issue in lower priced tablets, as manufacturers offset the smaller profit margin with commissions made from subscribers to those services.

This isn't so bad, as there's nothing to obligate you to those subscription services, and some of them might actually be worthwhile. There are also "Unofficial" methods to remove this sort of thing.

Linux

Linux based operating systems are the most important pieces of software for your financial and computing freedom. There are plenty of distributions to choose from. 

Imagine this: You decide which operating system to install based on your needs. You install that on a computer you own, and then you decide which applications to install. Some, like Ubuntu, come with applications that most people would use, like a word processor, spreadsheet, and a web browser like Firefox or Chrome. After that, you get to decide what applications to install, and what to pay for. It's not so much about getting things like the operating system for free, it has more to do with providing you with complete control over your computing experience. 

Those interested in video games can download and install Steam, where they can buy the games they like. A person who needs to do professional video editing can buy Lightworks for Linux. There are even high quality Enterprise distributions that cost money, though the free offerings like Ubuntu and Mint are very well polished and of excellent quality.

Open source provides us all with the ability to determine what matters to each of us, and that is why open source matters. If everything works and you're not ready to upgrade, why should you? Many people frustrated with the changes in Microsoft Word have found stability in the tried-and-true LibreOffice Writer. On the other hand, if you want to live on the bleeding edge of technology, why should you wait for a corporation to decide when you get to play with it? Most of the latest developments today in computer technology are happening in the open source world. 

Open source matters to me, and that's why I continue to support it and encourage others to use it. While I don't begrudge Apple, Microsoft, and the tablet makers for wanting to earn a profit, I am thankful for the freedom and choice that open source offers. If you're ready for something new, why not give it a try?

Stop staying poor

I recently read an article explaining why poor people stay poor, and was advised by this article that saving money costs money. I then continued to read about how this person lost their truck over a few hundred dollars. When I read further to find out that this person was running between two part time jobs, neither of which paid a hundred bucks a day, I found myself wondering, why in the world did this person think she could afford a truck in the first place?

A motor vehicle is a huge expense for anyone; the cost of the vehicle is just the tip of the iceberg. Add in the cost of gas, insurance, and maintenance, and it soon becomes apparent that owning a vehicle is an expensive luxury. Funny thing is, something like an old worn-out pickup truck might cost more month over month than would a new small car along the lines of a Mitsubishi Mirage. But then this line of logic would play into the whole notion of the cost of saving money, which misses the entire point. The real issue is, what was this person doing with a truck in the first place?

It's often the case that a person would feel insulted that I might suggest they should not own a vehicle; they see vehicle ownership as some sort of right. What has really happened is they've bought into the lifestyle marketing campaigns of the automobile industry that tell us we need to own a car or a truck. In fact, it's quite often the case that we're constantly chasing after different lifestyle dreams that are advertised to us, our lives become a disjointed mess, then suddenly, we believe we need to be chasing after two part time jobs in order to attain our dreams. In reality, the dreams aren't really ours, things are barely holding together and, unsurprisingly, a couple of unforeseen expenses undoes the whole "Rube Goldberg" machine.

What I suggest is that people take a moment to tune out the advertisers and take a holistic look at their life. I recommend starting with understanding the actual cost of owning a car. Some studies put just the cost of owning an average car at nearly $10,000 per year of after-tax dollars. If you believe you need to work at two part time jobs to own a car, the first thing to consider is whether one of those jobs will net you $10,000 after tax in a given year, the second is if owning the car is worth the hassles of that second part time job. To put this into perspective, if you're earning $11/hour, you'll need to put in 22 hours a week EVERY week of the year JUST TO OWN AND OPERATE a car. Even if you got the car for free with a full tank of gas, sooner or later these expenses will need to be paid if you actually expect to continue to drive. I ask you; is the second part time job really worth it just to have the headache of car ownership?

Perhaps it's better to abandon that second part time job, sell the car, and use the extra cash to invest in yourself. Growing numbers of people are living car-free, but it takes a big-picture view of your life. For example, you may need to relocate to a different city or find a different job. If you're in a relationship, it may mean making some short-term compromises. If there are children in the picture, there's all the more reason for you to start taking a holistic approach to life. There is no single easy solution, this is why it's critical for each of us to take a holistic approach to our own unique lifestyles.

I'm not suggesting anyone give up on the dream of owning a car forever; what I'm suggesting is that it will impede progress if one is struggling financially right now. Giving up on the car may allow one to focus on the better of the two part-time jobs, and perhaps that will allow you to develop a career out of it. Or maybe the time gained from leaving the less desirable part time job could be put towards self-improvement. It's all baby steps towards building a life that works. At the end of the day, recognize the car as a tool rather than an entitlement and necessary expense.

It really doesn't cost money to save money. What it takes is recognizing that saving money isn't be be-all and end-all in financial stability, and that taking a holistic approach to life is the solution. The money not spent on keeping that truck means a second part time job may not be necessary, which could mean time better spent at building a lifestyle that suits you and is one you can truly call your own.

Finally, if you find this blog post offensive, then you are looking to find offense in that which is not intended to be offensive, but perhaps feeling offended is the first step to your financial recovery and putting yourself in a position where you no longer consider yourself poor. It really is your life, nobody is in control but you. Make it the best life for you that you can.