Do you find yourself checking your bank account statement every month, wondering where all the money has gone? Do you wonder why you find yourself still living paycheck-to-paycheck no matter how many raises you get at work? The problem is cash flow—or a lack of it. Gordon Stein is an international keynote speaker, blogger, personal finance expert, and author of Cash Flow Cookbook, $2 Million of Financial Freedom in 60 Easy Recipes. He delivers transformational talks that help people crush their number one stress, their finances. I sat down with Gordon this week to talk about how increased cash flow can not only improve your financial wellness, but help you regain focus, and balance, and find more joy in your life. According to Gordon, it can be done with minimal effort and no budgeting. 

 

Welcome to the Maple Money Show the podcast that helps Canadians improve their personal finances to create lasting financial freedom. This episode of the Maple Money Show is brought to you by Willful. Did you know that 57 percent of Canadian adults don’t have a will? Willful has made it more affordable, convenient and easy for Canadians to create a legal will and power of attorney documents online from the comfort of home. In less than 20 minutes, and for a fraction of the price of visiting a lawyer, you can gain peace of mind knowing you’ve put a plan in place to protect your children, pets and loved ones in the event of an emergency. Get started for free at maplemoney.com/willful and use promo code Maple Money to save 15 percent. Now, let’s chat with Gordon… 

 

Tom: Hey, Gordon, welcome to the Maple Money Show. 

 

Gordon: Great to be here, Tom. How are you? 

 

Tom: Great. Thanks for being on. You’ve got a book, Cash Flow Cookbook, that I thought was an interesting topic—breaking down these opportunities to increase your cash flow by a recipe which are tactical things you can do to improve your cash flow. Just to start us off, can you explain what the importance is here? What is cash flow and why is it helpful to increase that? 

 

Gordon: If you read a lot of personal finance books— I read one a month for several years in my 20s (which is helpful) but a lot of them are on a similar kind of theme. They’re saying, “Hey, free up 10 percent of what you earn and invest that in real estate, ETFs, or mutual funds,” which is great. But when I talk to Canadian investors, a lot of them say, “I don’t have the 10 percent. The idea is good, but I can’t get started. I don’t have the 10 percent. We’ve got kids in university and we’re doing some renovations on the cottage. We just don’t have it.” And what I find with people I have spoken with, the research I’ve done, and in speaking across stages in the U.S. and Canada is that people actually do have the 10 percent. In fact, they probably have 15 or 20 percent. And the really exciting part is, they can do it and free up that money without giving anything up. That’s the premise behind Cash Flow Cookbook. 

 

Tom: That’s a great thing I learned early on when I started to be more aware of my finances. In my early 20s, I was not only just lost but blissfully unaware—just kind of spending the money how you want. You’re happy to start getting a better salary but it seems like it’s really easy to spend what you make. Like you said, after that there’s really nothing left over. 

 

Gordon: Yeah. It’s about getting a little bit more mindful. Some of the ideas in the Cash Flow Cookbook are about conserving—ways to reduce the amount of gasoline, heating fuel that you’re using or reducing electricity. There are really easy ways to do that. Some is about comparison shopping—different ways to buy car insurance, home insurance, life insurance, and cell phone plans. All of these things can be reduced. There’s no yelling or screaming. There are no cuss words. These are all very simple tactics people can do. Some of them are about going after things in a little bit more innovative ways—doing things they may not have thought about. Things they’ve been doing the same way for years. There’s probably a smarter way to buy them. The last part would be things just getting a little bit more mindful. We can go through all kinds of examples across the board, but for most people, there’s probably $1,000 a month they can free up, or even more. 

 

Tom: There are a few things you mentioned there I want to touch on. One of the first ones was the idea of saving on insurance. It’s something I had done myself and will review regularly. Maybe not every year but every second year. Just the idea, whether it’s car insurance, or home insurance, to have a look at these free quotes. You can’t just say one insurance company is cheaper than another because it kind of depends on that person’s situation. If you have a certain item that’s outside of a certain insurance company’s coverage, maybe you have to pay an extra rider. But in my case, I checked with a different insurance company, they had a higher limit and it was covered so the additional expense wasn’t required. It’s not as simple as telling someone, “Oh, just go to this insurance company, they’re cheaper.” You’ve really got to get that quote for your own individual situation. Do you recommend that kind of process? Is it an annual review or at least occasionally just checking and seeing what the current state is? 

 

Gordon: I think definitely doing it—at least occasionally. It’s interesting when I talk to people about, let’s say, re-shopping their car insurance, their home insurance, or cellphone plans, the reaction is always the same. They say, “Oh, I’ve got to wait on hold and I have to explain everything and go through all these companies…” First of all, there are much, much easier ways of doing it. The second thing is, let’s say you do invest an hour in re-shopping your cell phone plan or your re-shopping your home insurance, your car insurance if you could free up $400 a month and invest that at 7 percent over a 40-year career, that’s an incremental $1 million at retirement. It’s unbelievably easy to free up that $400 a month. If it means that every now and again you’ve got to wait on hold, listen to some bad old music, and repeat yourself a few times for an hour if that hour frees up $200 a month, you didn’t free up $200, you freed up $200 a month for several years, which, if you invest that money, can grow into some real material wealth. I think the value of it is bigger than people think and it can be much easier than they think. 

 

Tom: That’s an interesting way of looking at it, too. Your book breaks down those things like, if you were to invest it, what would it be worth in 10 years, 20 years. I’ve often said to at least look at things as annual savings. I just mentioned on a recent episode (and many times before) that the usual idea of this $5 latte or anything like that, doesn’t sound like a lot, but if you look at it annually, it starts to look like real numbers. So reviewing your spending on an annual basis is helpful, but you take it the step further of actually investing that savings. It’s not just saving money to spend elsewhere because you haven’t really, truly saved, you’re just getting a deal. You’re suggesting that you invest it and project that into the future to really see the money. 

 

Gordon: Well, let’s take an example. When I started working on Cash Flow Cookbook, I was still working in a corporate job. There was a person I worked with who was at a number of meetings—a project coordinator. I’d see she’d bring up a Starbucks latte to a morning meeting. We had an afternoon meeting on a different project, and she’d bring another one and then some chips and snacks from the machine at the end of the day. So, I did some quick math on that which was about $330 a month. When you think about getting a $4 latte or whatever, who cares? It’s $4 and doesn’t make any difference at all. But if it includes a morning one, a late morning one and then a snack for the ride home and a couple of cans of pop throughout the day, you get into about $300 a month. Then it goes from being a $5 coffee to a $330 a month habit, which, of course, is about close to $4,000 a year. But that’s not even the real story. The real story is, giving that money to your wealth advisor— $330 a month. That’s a material difference. Now you’re talking about adding hundreds of thousands of dollars of wealth for retirement, and it becomes a big deal. 

 

Tom: I don’t think we want to suggest that people can’t have their latte, but when you start looking at it that way, at least you’re deciding what you really value. Is it really that coffee anymore? Because when you think of it as a $5 thing, it’s not so big of a deal. But when you start talking into six figures, maybe all of a sudden you don’t like it as much. 

 

Gordon: Yeah. People can do what they want. If that really is important to them, that’s terrific. Go do your thing. But maybe you’re leaking cash flow in all kinds of other areas. And some of them are quite stealthy. They’re not the obvious things like coffee and latte. That was probably some of the most interesting research in the book. 

 

Tom: What are some of these stealthy things? I know we covered insurance. You’re really not losing anything by getting a better offer somewhere else but are there other expenses that creep in, and creep up without people noticing them? 

 

Gordon: One of the most interesting ones— I laugh at myself because I missed one of the biggest ones through all seven printings of the Canadian edition of the Cash Flow Cookbook. It’s so stealthy and I didn’t realize it until I came to the U.S. I tried to get a credit card here and got shut down. I couldn’t get a credit card for $300. While I was in Canada, I had several with $20,000, and $30,000 limits. What I didn’t realize was that your credit score doesn’t get carried across as you switch countries. Lots of Canadians may have errors in their credit score. Or their credit score may not be great. When I heard about people talking about credit scores, my eyes would glaze over and my ears just shut down. It’s the most boring topic ever until you understand a little bit more about it. The credit score, depending on if it’s good or bad, can swing the total interest costs of a loan by 70 percent. It can swing the cost of car insurance and home insurance by 30 to 50 percent. For example, you and I, Tom. Let’s say we had similar mortgages and similar home and car insurance or anything else. I might be paying $1,000 a month more for all of those things, and it could all be due to errors on my credit score. So take a minute to check your credit score. If you’ve been paying your bills and everything seems good but your credit score is poor—let’s say it’s in the 500s (the peak is 850), check for errors and get those fixed. You can do it on your own or get companies to help you. But having a good credit score affects so many things. And you’re not giving up your latte, your chardonnay, your merlot—you’re not giving up anything. But that’s a really important one to fix. In the Cash Flow Cookbook, I run through how to get your credit score and how to “right” any errors that are in there and how to improve it. It’s very important. 

 

Tom: I like that. I think a lot of times when people think about their credit score and the credit history in it, it’s more about, can I get the mortgage or can I get the credit card? It’s not that so much. It’s also just the idea that you may not even see it. You may be told, “Oh, yes. We’ll give you a mortgage for the house you’re looking at,” but they’re not necessarily telling you that you’re paying a percent more than someone else. 

 

Gordon: Right. Which is a huge, huge, huge, huge thing. This could add up to all kinds of money. Those kinds of stealthy ones are the kinds of things that people often miss because they have this headspace of wanting to “live” for today. They’re not worried about saving for the future, which is fine. But let’s make these simple changes where you go ahead and live for today, but you can also have a great future. 

 

Tom: And you mentioned earlier lowering your cell phone bill. This is something I’ve had success with in the past too—selling on the Internet. It’s very easy, really, to Google and look up a loyalty and retention line and get the direct number to these companies’ specific lines so you don’t have to work your way through tiers. You can talk to these companies and tell them you’re considering other options. They always seem to have great offers. If you’re just renewing under normal circumstances, you get the worst deal. If you’re a new customer, you get great deals. But the only way as a current customer to get a good deal is to be willing to go somewhere else. Then all of a sudden these special monthly rates come out or there is a better deal on the phone you get. Again, you’re dealing with being on hold and all that, but I almost found those calls kind of exciting because the offers you could get are actually kind of fun. It’s not just to save a few dollars. Sometimes you’re getting extra perks or maybe a better phone or something like that. 

 

Gordon: Yeah, there’s no question about it. We’re talking about some of these comparison shopping things which giving up things which people don’t want to do. Why give anything up? Have a great life. But there are these kinds of comparison things we’ve been talking about that are interesting. The credit score is really interesting because you literally don’t even give up anything whatsoever. But there are some categories where people really miss a ton of savings and spend way more than they need to. An interesting one I found in doing the research is—and I talk about it from the stage, is around clothing. When I talk about savings on clothing, people say, “No, I love shopping. I love to have great outfits.” But what the research tells us is that we only ever wear 20 percent of the clothing we buy. And at first, people say, “Oh, no, that’s not the case for me,” but it is the case for you. Whether you do that trick of putting all your hangers one way in the closet at the start of the year and seeing how many turn around as you reverse it (once you’ve worn something) or if you’ve been in the situation where you have a clothing drive, where you bring in clothes to give to your company and they give it to the homeless or needy, it’s shocking. In year two, you’re able to give up as much as you did in year one and the same thing in year three. So all of these things start to conspire to make you realize you’re buying a ton of stuff that you’ll never wear. If you have an important meeting, like you’re going to go out on a match date or you’ve got your employee review in the office or whatever it is, you’re not looking for your third or fourth best outfit to wear. You’re looking for your very best outfit. And that means you bought the shirt on sale. You didn’t bother to try it on. The sleeves are a little short. It’s on sale so you can’t return it. That adds up over the course of the year. If you think about a typical family clothing budget of maybe $10,000 a year. Let’s say it’s a family of four. Or it might be just a couple spending that much. They’re only going to wear 20 percent of it. So, what does that mean? Getting a little bit more mindful in your clothing shopping means you could actually have twice as many great clothes to wear while spending half the money. Clothing is another one where it’s interesting. It’s not about giving anything up. It’s about getting a little bit smarter, a little bit more mindful, and a little bit more planning in the clothes shopping. 

 

Tom: Being mindful and planning I think applies nicely to everything. You mentioned the idea of comparison shopping. One thing I found is, that if you take the time to comparison shop, you make better decisions. Say you’re in a store—in Best Buy and you’re looking at some fancy new electronic thing. “Um, I’m just going to wait and look at the reviews and compare the prices.” If you just take that break, you kind of may reconsider the whole thing. Maybe you didn’t really want that item or the item isn’t right for you. Maybe you do decide to get something else or you find a better deal. There’s a comparison in prices but there’s also a comparison in the quality of the item. Did you really want that instead of being stuck on this immediate impulse shop? 

 

Gordon: Yeah, you slow it down a little bit. We had a situation here where one of my relatives had a really dilapidated garage on their property. What do you do with it? Well, we got three quotes. One of them said, “Yeah, no problem, we can redo it. Here’s all our references. It’s going to be $6,500.” The other quotes said, “Yeah, we can do it. It’s going to be $10,500.” A third one say, “It’s beyond repair. We’d have to tear the thing down and we’d have to do some math on it.” We did the work for the $6,500, but it was a fantastic contractor who has since become a favourite with great references. He went above and beyond the call of duty. Just slowing it down a little bit. A little bit of extra research made a huge difference. Another one that’s really interesting with COVID and the whole work-from-home thing, people don’t think about their commuting costs. If you take a major center like Vancouver, or Toronto, it’s not unusual that people are commuting an hour each way. People talk about the time but they don’t think about the expense related to that—the gas, incremental insurance, more miles driven, the depreciation, the wear and tear and all that. Can you work from home more? Can you carpool with somebody? Can you make those kinds of changes? Could you work from home one additional day? If you do that, you’re going to reduce your commuting costs by 20 percent. Here’s a whole area people don’t even think about the cost of. It might be not unusual. It’s $300 a month, $400 a month. You can re-shop the parking. If you’re paying for parking, you don’t have to park underneath your building. There are apps that can help you find cheaper parking in the vicinity, a block or two away. Maybe that’s $200 a month. There’s so many areas. Even if you re-shop car and home insurance, what are all the other ones you’re missing? 

 

Tom: With the commuting costs idea, most people focus on time and not the expense. But I even like to add the time on top of that as an expense because there’s sort of an opportunity cost to it. What could you be doing with that time? Maybe you’re paying someone to shovel your sidewalk because you don’t have the time to do that or mow the lawn or clean the house. Maybe if you had those extra 2 hours a day, like you said, at least once a week, all of a sudden maybe you’re saving expenses elsewhere in addition to the costs of going back and forth to your job as well. 

 

Gordon: Well, that’s it. I work quite a bit with wealth advisors speaking to their clients, showing them how to free up more cash flow to invest. And I would say it’s fairly typical that people are freeing up $1,000 a month. In Cash Flow Cookbook, there are $13,000 of monthly savings ideas. People say that can’t be right because they don’t even spend that. You may not be able to use all of them, but not it’s not unusual that people can find an extra $1,000 a month. That’s a huge deal, whether it’s paying down debt or incremental investment. 

 

Tom: It makes sense that it’s not going to apply to everyone. Some of the examples we’ve used, maybe you do the research and you are already getting the best deal. That’s great. You move on to the next one. Maybe you’ve got the best cell phone plan or you are with the right insurance company. At least you know that. Then you go on to the next one. You will find something, somewhere, where you can reduce without really changing much. 

 

Gordon: Exactly. And, you know, sometimes people say, “I just don’t have the time to do all that.” What’s interesting is, the stats tell us now that we’re spending 5 hours of screen time a day, and that’s before we talk about the 20 hours of television a week that we watch. So the answer is, yes, you do have the time to do it. You can run through the whole book and pick out the things that are relevant. I would say maybe it’s 10 hours of work to implement everything that’s going to be relevant for you. I would set a target of freeing up $1,000 a month. Everybody has that kind of time. 

 

Tom: Yeah, I think so. Go through the book and kind of just make a little to-do-list of things you think you can win on. There’s one other thing I thought about this book that was interesting, the idea that when things get emotional, you make bad decisions. If you are living paycheck-to-paycheck and you feel like you have no money, that’s when people make some of the worst decisions. You don’t have that breathing room. Like I said, you don’t have time, you don’t have money, and you just kind of do what you need to do to keep going. One thing I like about this idea is that you’re freeing up these expenses, you’re increasing that cash flow. But I think it probably also leads to better decisions elsewhere. When you just don’t feel this this tightness… You’re not feeling like you have no maneuverability. Maybe you do free up that $1,000, they you think, “Okay, maybe I want to save $500 of it. And I have these other goals…” You can start to make decisions instead of just figuring out how to make a paycheck and move on. 

 

Gordon: I think that’s exactly it. The American Psychiatric Association says that our number one stress, is our money. So it opens up all kinds of things from a mental health perspective. You get some breathing room, you get some calm. You can see your future looking better. You can deal with today’s financial pressures. I like to think that it helps people move up that Maslow’s hierarchy, rather than spending your whole life working and sweating about this month’s bills, you can start to think about your bigger purpose. Maybe you want to take a year and do a family sabbatical. Maybe you want to retire a little earlier. You want to go build a school overseas some place. You want to increase your charitable contributions, whatever it is. I think the bigger picture that you’re raising is exactly the reason to do it. Some people say, “I don’t care about money. I don’t want a Ferrari.” Well, that’s great. But maybe they want to turn their hobby into their business and not have to grind it out in their day-to-day job that they really don’t enjoy. Those are some great reasons to look at this type of work. 

 

Tom: One, if you’re saving for the future, you don’t really know what the complete picture of your goal is anyway. If someone says they don’t care about money right now, well, it’s not always a dollar amount. But when you’re older and maybe you have health issues or something like that, are you interested in retiring five years earlier? There’s benefits you might not even see or predict. But having that money lets you make those decisions easier instead of being forced into what you’re in because you don’t have that cash flow. 

 

Gordon: And a lot of people have this mindset kind of a “zero sum” game. If I want to free up more cash flow, I have to give up something I love. And I think that’s preposterous. The whole premise when I wrote the book is, what can you do with minimal effort, minimal sacrifice that lets you free up the cash flow? It isn’t this, give up your latte, give up your beer, your glass of wine, your night out—don’t give any of those things up. Do what’s really important, do what you enjoy, but don’t spend a penny more than you should be on your electricity bill, loan interest or any of these other things. 

 

Tom: Yeah, and it feels good. At least for me. I’m probably more numbers guy than some people who think they don’t care about this. But when you get those little wins, it’s like, “Oh, I’m getting the same insurance I had before and I’m saving money.” No matter what you decide that money gives purpose to making those phone calls and saving that money. 

 

Gordon: I do everything that’s in the book, myself. I just re-shopped my car and home insurance. You can do it with some of these online systems, which is great. You get a lot of phone calls if you do that. You can also go to an independent agent who carries multiple lines, which is what I did. I thought I was doing well because I had made a change about a year and a half ago to a less costly, firm, a major provider. But then I re-shopped through this independent insurance agent and saved $2,000 a year. And in some cases, I actually tripled my coverage, including tripling my liability coverage with an umbrella policy that sits over home and car. It was much, much better coverage. I saved $2,000 a year. And I have to say, I got off the phone and I thought, “Okay! That’s a great call for an hour.” 

 

Tom: Yeah, exactly. It is exciting. And obviously, it frees you up for better decisions going forward. 

 

Gordon: Yeah. 

 

Tom: Thanks for running through all this. Can you let people know where they can find you and where they can find the book? 

 

Gordon: Sure. My website is cashflowcookbook.com. There’s about 60 blog posts up there. They’ve been on hold a little bit while I was putting out the new U.S. edition. So those are going to resume and there will be a new Canadian edition coming. There are lots of tools and ideas to help with your finances. The book itself, Cash Flow Cookbook, is available on Amazon in every country in the world. There’s a Canadian edition and a U.S. edition. And it’s also available as a Kindle or a paperback edition. So there’s an edition that’ll work for you out there on Amazon. 

 

Tom: Great. Thanks for being on the show. 

 

Gordon: Pleasure. Thanks so much, Tom. 

Tom: Thank you, Gordon, for showing us how to find the extra money that for many of us is hiding in plain sight. Even a few hundred extra dollars each month can go a long way when it’s put to good use. You can find the show notes for this episode at maplemoney.com/206. As usual, head over to our YouTube channel and subscribe there as we’ll be getting back to releasing never-before-seen content, soon. Either search for Maple Money or go to maplemoney.com/youtube and subscribe today. Thanks, as always, for listening. I look forward to seeing you back here next week.