“Be yourself and work as hard as you can to bring wonderful things into the world. Figure out how you want to contribute and do that, in your own way, on your own terms, as hard as you can, as much as you can, as long as you can.” — John Lilly on Steve Jobs
(Source: lilly)
As everyone thanks Steve for the impact his vision and technology has had on their lives, it’s hard not to be upset. Without Steve, we wouldn’t own a company right now. We wouldn’t have the creative, personal, and financial freedom that I often take for granted. I wouldn’t work with 20 young men and women that I respect more than anyone else in the world. Friends who are proud to work with friends. There is probably no one in Ottawa who’s lives have been changed more substantially than the incredible people at Select Start, who’s careers have been tied almost directly to Steve and the success of Apple. Steve taught an entire generation to never settle for anything less than perfection. The only limits you experience are the ones you impose on yourself. Your ability to overcome them is the measure of your character. It’s time to think much bigger. I’ve been settling for good. Exceptional is within reach, with far more vision and a little more persistence.
September 30th was Select Start’s second full year as a business. Speaking for myself, Josh, and Tariq, it has been the most stressful but rewarding thing we’ve ever experienced.
In October of 2010, we had just convinced (duped?) our fifth employee to join the family. Revenues were modest and runway was always an issue. We occasionally got very creative with distributing founder salaries to make sure our team was looked after first. We were finding our DNA as a company and our capabilities as individuals.
This year has been incredible. It’s one that we’ll never forget, both personally and professionally.
To everyone who we’ve had stressed-out, candid, off-the-record conversations with: thank you for telling us to keep our heads down.
To our clients: thank you for trusting our engineers and designers like they were your own.
And to our engineers and designers: you are exceptional at what you do, and together you are unstoppable.
You buy furniture. You tell yourself, this is the last sofa I will ever need in my life. Buy the sofa, then for a couple years you’re satisfied that no matter what goes wrong, at least you’ve got your sofa issue handled. Then the right set of dishes. Then the perfect bed. The drapes. The rug. Then you’re trapped in your lovely nest, and the things you used to own, now they own you.
~ Chuck Palahniuk, Fight Club
Things have their own network effect. Do you want a car? Well you’ll also need to get winter tires, cleaning supplies, and insurance.
Now, think of the time, effort, and money required for each one.
I’m not saying I’m going to get rid of my car. I love the thrill of going 200kph into a corner on the track. I don’t think anything could replace it. But I’ve started thinking about the network effect of having more. Specifically, I’ve been looking at how I can replace complex things with those that are simple.
I had to buy new kitchen knives. That’s right, kitchen knives. So what do I buy? Most people buy a knife block full of knives they’ll never use. It turns out that you only need three knives:
I bought them. Was it the right move? I have no idea. They’re only knives right? It’s true, but that argument can be used for everything.
According to most “fashion people”, you should buy a few core, high quality, versatile pieces of clothing. I think they’re onto something and I’ve been extending it to the rest of my life.
I’ve started asking:
Only invest in the things worth investing in. Remember, simplicity is the ultimate sophistication. Don’t let all the things you own own you.
Rogers is trying to start a bank. Based on their current practices, here’s what I expect:
The money that was in your account last month is gone. Deal with it.
You want a bank account? Please choose between the 24 month and 36 month options. With our 36 month option, your debit card is FREE.
You’ve decided that Rogers Bank isn’t for you? An early termination fee of 30% of your balance applies.
You’d like to have the same plan as your friend? We’re sorry, but that plan isn’t available anymore. If it were, you still wouldn’t qualify because of some arbitrary condition. But our other, less attractive plans are available.
Travelling abroad? We’re excited to offer our new Travel Packs, giving you 80% off our posted rates. Debit transactions are now just $27.50/transaction when travelling abroad! The savings just keep piling up!
Your Rogers Bank account comes with a $1,000 monthly purchase limit. Should you exceed your limit, an overage fee of $2.00 for every $1.00 spent above $1,000 will apply. Please refer to the formula below to calculate your fees.
Ducati Superbike EVO 848 Stealth. Time to increase my life insurance coverage.
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Read the first post in my series Buying A Condo - Fun Facts About Ottawa Real Estate.
Calculating what you can afford is a tough exercise. On one hand, you want the best deal, and on the other, your eyes are bigger than your stomach.
One of the best visualization tools I’ve ever run across is the New York Times’ Rent vs Buy Calculator. I strongly encourage your to try your own scenarios after reading below.
First, I had to decide what I wanted:
This meant that I’d be spending around $350,000 + closing costs. Yikes. Prices have skyrocketed to nearly $500/sqft for a small place in downtown Ottawa.
My current place is a 2 bedroom, 1000sqft apartment for around $975/month. Living in the ghetto has its advantages. It’s also nicer on the inside than on the outside (twss).
The NYT calculator tells me that there’s no way I should stop renting given my current situation. In fact, I’d be substantially better off continuing to rent.
But, I want to increase my standard of living. To get this, I’d have to rent a condo from someone else at around $1600/month.
Again, it’s actually better for me to rent unless I stay in the same place for the next 22 years. Chances are this won’t happen.
Let’s assume for a moment that I hit the real estate jackpot. This means:
To clarify, I don’t believe this will happen. But it outlines the choice one is faced with today.
As you can see, after the second year I’m making money hand over fist. You’d be stupid not to buy. But wait…
What happens if real estate takes a turn for the worse? People already stretching their affordability are mercilessly squeezed by ballooning mortgage payments, or forced to renegotiate into substantially longer terms.
Even a 1% annual market retraction leaves this once sound “investment” at a significant disadvantage over alternatives investment vehicles. Setting aside the rule of thumb that real estate always appreciates, this presents a sobering scenario.
Proceed, with caution. The goal is to increase my standard of living while maximizing wealth. Real Estate may be the first answer, but not necessarily the correct one.
I’m looking to buy a condo in Ottawa. I haven’t purchased one yet, so this is an “as it happens” series of posts.
As a practicing geek, computer scientist, business person, and anal retentive, I have a process:
This post is about the fun facts I’ve learned:
Ask a broker, agent, condo company or anyone else in the industry if you should buy and their answer is always “yes”. Most of my initial conversations have went something like this:
Me: ”I’m thinking it’s time to finally buy a place, but I’m just looking at the moment.”
Rep: ”That’s a brilliant idea. You must be an astronaut you’re so smart. It’s a great way to build equity and wealth. Have you selected a property yet?”
Me: ”No, I’m just developing an understanding of the market.”
Rep: ”Well you should definitely buy a property. This is a beautiful investment property and our amenities are superb. We’re also offering a cash-back incentive so you can start building your equity right away.”
On the surface, the words “equity”, “property”, “amenities”, and “investment” give most people the feeling that they’ve already started down the path to financial world domination. In most situations, that couldn’t be further from the truth.
Interest rates are historically low. They’re also artificially low. The global economy went down the crapper in 2007 when US banks played hot potato with subprime mortgages (mortgages that for all intents and purposes should have never been awarded to people who simply couldn’t afford them). Today the cost of borrowing is next to nothing.
Source: tradingeconomics.com
Interest rates will rise again. When they do, people who took on too much “leverage” will find their “investment” is really a “liability”. My advice would be to take today’s interest rate, increase it by a few points, and use that in your affordability calculations.
Canada’s monetary policy aims to keep inflation at a target rate of 2%. But, the average MLS sale price has increased an average of 7.4% each year for the last 10 years.
There are various attempts at explaining this, including:
Whatever the reason, simple economic theory dictates that real estate cannot continue to outpace cost-of-living salary increases in perpetuity. Assuming that your property will continue to appreciate forever is a fallacy. It has to be, or no one on earth will be able to afford it in the future.
Ottawa presents an interesting dynamic in the real estate market:
Look out for future posts “Calculating Affordability: Rent vs Buy” and “The Best Condo According To Math”.
Eames, Flipboard, “Where Good Ideas Come From”, Reasonable Doubt on vinyl. These are my friends tonight. (Taken with instagram)