Wealthing Like Rabbits: Book Review
Note: this is not a sponsored post, but I did receive a free copy of the book.
There’s no shortage of personal finance books out there, and so many of them are nearly indistinguishable from the rest. Which make sense: the rules mostly stay the same, with occasional tweaks when a new federal budget is released. That said, I’ve been meaning to write a review of Robert R. Brown’s Wealthing Like Rabbits for months. It’s really, really good. I’ve dog-eared maybe half the pages. I wouldn’t have expected a personal finance book could make me laugh out loud on public transit.
While the material is valuable for readers of all ages, as a Millennial I’m squarely in Brown’s target audience for this book. Really, I should know all this stuff. I’ve worked in financial services since 2004. I’m acquainted with some of Canada’s most popular personal finance bloggers. But knowing and doing aren’t always the same thing.
So, what did I get right?
- Not blowing a ridiculous amount of money on a wedding. In fact, there were only 5 people at our actual wedding, which was held on our back porch and officiated by a justice of the peace. We Skyped in our nearest and dearest for the ceremony, and held a casual reception at our house a couple of months later, which by all accounts was a damn fun time. We provided lots of tapas-style food and drinks, and paid a photographer friend to take candid photos. My mom and sisters did an amazing job decorating with supplies bought on a budget. As Brown notes, “Your guests will care more about whether the bar is open than they will about whether or not it is adorned with gold satin.” True.
- Buying a used car. I lived in downtown Vancouver for a big chunk of my young adult life. But then I moved to northern BC and transit wasn’t an option. Sure, I’m still paying it off and no debt is better than any debt. But it was a frugal purchase that I’m happy with. In his (lengthy) section on automobiles, Brown points out, “today, a quality used car will go as far or further than many new cars did as little as fifteen years ago.” Also true.
What did I get wrong?
- For starters, buying real estate in the Lower Mainland of BC. Brown firmly believes in having a small mortgage on a small house, which is absolutely solid advice. So I found myself laughing (and then sobbing uncontrollably) at the examples he gives in the real estate section of the book.
- Brown tells a cautionary tale of brothers Mario and Luigi and their house-shopping exploits. Foolish Mario splurges on a 5-bedroom, 4-bathroom, 3,000 sq ft house that costs $525,000, whereas sensible Luigi chooses a modest 1,600 sq ft home with only 3 bedrooms and 3 bathrooms for $350,000. To which I said: “HAHAHAHAHHAHAHHAHAAHAHA” *uncontrollable sobbing*¹
- We bought our previous townhome in the suburbs, about an hour’s drive from the downtown core. It was brand new and gorgeous, but certainly at the higher end of what we could afford. I’ll tell you from experience that being house poor is no fun. We knew the property market was overheated, and there was always a lingering fear that it would collapse and we’d be forced to take a loss when the time came to sell.
- As it turned out, we had some good luck with timing, and were able to sell the townhouse for a bit more than we bought it for. But it easily could have gone the other way. It was a risk I’d be very hesitant to take again. Most people wouldn’t weight their overall investment portfolio heavily in real estate. But when you spend a lot on a house, it’s pretty much the same thing.
- This past September we relocated to a smaller community where housing prices are much more reasonable. Now our housing costs are more appropriate for our financial situation and we plan to be mortgage free well before we retire.
- Using a home equity line of credit to finance renovations in our previous house. This kind of credit facility is incredibly popular in Canada, and promoted heavily by banks. Revolving credit means the money is tantalizingly available. Too available. It becomes easy to make minimum payments and use the credit room to cover expenses beyond the original intention.
- We learned our lesson – when we bought our current home (a 1980s house straight out of Stranger Things) in need of renovations, we chose a fixed rate loan with scheduled payments.
Other highlights and key insights from the book that bear repeating:
There’s such a thing as good ‘bad’ debt, and bad ‘good’ debt. For example, while a mortgage is often considered ‘good’ debt, having a huge mortgage on a huge house isn’t necessarily ‘good’. Likewise, financing a car (a depreciating asset) is generally considered ‘bad’ debt. But if you need a car to get to work or to facilitate a side hustle, taking out a loan for a reliable used car is usually a smarter choice than financing or leasing a brand new vehicle.
Do not buy mortgage life insurance from your bank. Just don’t.
On credit card ‘rewards’: don’t carry a balance. “If you are carrying a balance at all on your credit cards, the value of whatever rewards you are receiving is insignificant compared to the interest you are paying.”
¹As of January 2018, The MLS® Home Price Index composite benchmark price for all residential homes in Metro Vancouver was $1,056,500. The benchmark price for detached properties was $1,601,500. The benchmark price of an apartment property is $665,400. The benchmark price of an attached unit was $803,700.