We all have debt. It’s inevitable. No one comes into the world with enough money to immediately buy everything we could ever want or need. That’s okay. As long as you keep it under control, you can live a perfectly healthy financial life and, dare we hope, prosper at the same time.

Now you probably think of debt and prosperity as mutually exclusive. You can’t have both at the same time. But let’s borrow a basic tenant from the self-help field for a moment here in aid of our goal: Focus on the solution, not the problem.

Many people get so caught up in paying off any debt and bill they may have that it dominates all else. It becomes who they are and they focus on the elimination of that debt to the detriment of all other financial goals. Ensuring that your bills are paid on time IS important and gradually reducing your debt IS something you should be doing. But don’t let it distract you from creating some wealth for yourself.

Most financial planners advise that you set up an automatic debt repayment plan. This allows you to focus on savings, prosperity and growth. Having a mindset that is solely about getting out of debt and ensuring that your bills are paid is not going to be healthy financially in the long run. Set up a payment plan and focus on savings and growth together instead. Having debt is a reality that we all face. How you deal with it however is what’s going to set you apart.

Global index says MetroVancouver’s home prices are 65 per cent higher than they should be

Canada has been ranked the world’s third most overvalued country in the world for real estate, at 56 per cent higher than it should be based on typical incomes, according to a global house price index by The Economist.

Canada was beaten only by New Zealand and Australia in the rankings by the U.K.-based financial publication’s research team.

Looking at 22 major global cities, of which Metro Vancouver was the only Canadian city, The Economist reported that Vancouver real estate is valued at 65 per cent higher than it should be, based on local incomes

In terms of real estate values versus median household incomes, Metro Vancouver was deemed the fifth most overvalued of 22 major global cities studied, after Hong Kong, Auckland in New Zealand, Paris, and Brussels in Belgium.

The Economist found that the region’s home prices have risen by more than 60 per cent over the past five years.

Vancouver is followed by London, UK and Sydney, Australia, both of which were deemed overvalued by 50 per cent or above.

Check out The Economist’s interactive graph, which shows how overvalued the real estate in each of 20 countries has been since the 1970s.

New Zealand’s standing in the global index comes as the New Zealand government confirmed August 14 that it will introduce a previously proposed ban on foreign buyers purchasing New Zealand resale real estate. Overseas purchasers will still be able to buy new presale homes, and Australian and Singaporean buyers are exempt from the ban.

One key thing that all people who have financial freedom have in common is that they live below their means. For example, Warren Buffet is worth 10’s of BILLIONS of dollars and he still lives in the same house he bought in 1958 for $31,500! Getting in the habit of living below your means is important. Here’s some tips on how to do it:

Understand What You Have to Spend

Before you do anything else you have to understand your income. If you get paid consistently, this isn’t too hard. If you live on commission or your income is consistent, you have to look at your three month average and use this as your baseline.

Track What You’ve Spent

Look back over the last few months of financial statements and see what you’ve spent your money on, then categorize it. Separate into shopping, eating out, rent/mortgage, utility bills etc.

Now that you see how your money is being spent, how does this make you feel? Are you doing well or is there a lot of work to be done? If you’re reading this article, most likely you need to cut out some spending.

First, Eliminate

This is exactly what it sounds like. Take a look at your bills and see what you can cut out. Did you spend a lot of money on Starbucks? Do you order in a lot? Are you paying for subscription services you barely use? Memberships you no longer take advantage of?  Be ruthless and chop those expenses out. You’ll be surprised at how much ‘extra’ money you have.

Second, Economize

Once you’ve eliminated all you can, economize what’s left. This means find ways to save money on what you do spend. Sometimes this is easy, buying off-brand items at the grocery store, growing your own veggies, getting a lower cellphone or TV plan. Every single dollar helps.

Between Eliminate and Economize, your goal is to take your average level of predicted spending below your income level. That is living below your means!

Finally, Review

Very rarely is the first attempt at a budget perfect. As with anything, practice is key to success. Make sure you review your plan regularly in order to adapt to changes and sort out what is and isn’t working.

Now these tips alone won’t get on the level of the Oracle of Omaha, but it does go to show what a little financial discipline can do.

So, you’re thirty. You’re not a kid anymore, you know how to act responsibly and your life is getting a lot more complicated. Getting married, having kids, moving up in your career, buying a home, all these things are in transition and it can be overwhelming. Don’t let the chaos of your life turn into chaos for your bank account. Here are 5 pieces of advice that will help grow real wealth.

1. Live Well Below Your Means: Yes, you’ve heard the advice ‘live below your means’, but if you’re bringing in $4,000 a month and spending $3,990 of it, you’re not ‘being wealthy’ you’re ‘doing okay’. And you know what, that’s fine! But, the bigger gap you can make between what you earn and what you spend means the faster you can reach that financial goal. This leads into…
2. Focus on The Percent of Income That You Put Away, Not the Amount – So let’s say your household brings in that $4,000 a month and you’re putting away $750; that’s a good chunk of what you earn. Then someone gets a promotion and you’re still putting away that $750 and you spend the extra. This is called lifestyle inflation and it will kill your financial success faster than anything else. In the end, it’s not about the dollar amount, it’s about the percentage. This way you’re saving more because you’re earning more.
3. Be Proactive About Your Money, Not Reactive – You’ve probably already hit the point where you had to give yourself a little financial reality check. Did you learn from that experience long term? You shouldn’t take for granted how much money you have in the bank. Spend time looking over your expenses and see where your spending is leading you; if it’s a bad route, it’s time to course correct. Make sure you do this every month. It’s easier to keep up than catch up.
4. Don’t Spend More Money, Spend Money on What You Value – People think that the more money they have coming in the more that you can spend. This is technically true, but it’s the wrong way to look at it. Spending money on things that provide you with fulfillment and happiness are far more important. Your friend may have just taken a 10-day cruise of the Caribbean and you think that now you can afford that as well. You may be right, but what works for them may not work for you. If you’re spending money like everyone else just for the sake of it, you’re missing the point. Spend it on what you value.
5. Don’t Complicate the Way to Financial Success – At the end of the day, the best advice is keep it simple. There’s an entire industry out there that makes financial success sound difficult and complex, however all it takes is a little discipline and some small, simple actions. It’s like losing weight, you won’t see immediate results but keep going and over time you’ll reach your goals. Consistency is the key.

You always hear advice from people advocating living below your means. Why, though? Living within your means doesn’t sound like it’ll get you in trouble, you’re not overspending. So why should you pretend you have less money that you actually do? Here are a few reasons why living below your means can make your life much easier:

Debt Elimination – This is an obvious advantage of not spending more than you have and using that excess to pay off what you owe. Debt elimination takes care of the interest that you would have to pay on that debt as well, kind of like saving twice.

Saving for the Future – Where do you want to be in 5 years? What about 10 years? Will you have a nicer home? A luxury car? Maybe you want to take a European Cruise? Money impacts all of these decisions. Putting a bit of money away each month can soon add up to that vacation, down payment, or dream car.

Less Financial Stress – Have you ever lain awake at night worrying about those brown envelopes that never stop coming in the mail? You know they’re there and you don’t know how to make it stop. Living below your means is the first step in changing that process and eliminates that worry.

Ready for Financial Emergencies – What would you do if your car broke down and you needed to repair it TODAY? What if your washing machine broke down? If you’re going paycheque to paycheque, this can mean a major financial burden. If you’ve been living below your means, however, you have an ‘Emergency Fund’ that you can use to take care of those unforeseen emergencies. 

Less Worry About Work – Have you ever been in a situation where your workload constantly is increasing at work, but the salary is staying the same? Maybe there’s some downsizing and you need to be a ‘team player’ in order to keep the business afloat? If you’ve been living close to your means, then you possibly don’t have the ability to leave and find a new position because you can’t afford to take the financial hit it may take to work your way up in a new company. Not having to worry immediately about a reduction in income allows you to be freer with your job opportunities, so you don’t have to stick with something you hate.

Living below your means isn’t restricting…it’s actually liberating.