Category: Money & Investments

The Ridiculous Cost of Convenience: DoorDash vs. Ordering Directly

I didn’t grow up with gig economy delivery services, so what might seem normal to some in 2024 seems absolutely insane to me: paying a ridiculous price for convenience.

How much of a price? I had an opportunity to do a direct comparison on the same order from Five Guys (who make tasty burgers and fries) because I happened to have a $50 DoorDash gift card. It was my first time using the service, and likely the last barring injury or some other blocker to me going to get food directly.

My Five Guys order directly placed with the restaurant.

Three cheeseburgers, one grilled cheese sandwich, and two large fries: a meal to feed my family of four. $47.04, with tax ($4.78) and a 20% tip ($9.29), that’s a total of $60.52. Now let’s look at the same order with DoorDash…

My DoorDash order.

This is a bit convoluted because of fees and credits, but here’s how it breaks down:

  • $61.14 for the food. This is 30% more expensive than ordering directly 💸
  • Because I am a Chase Sapphire credit card holder, the $12.10 delivery fee was waived, but let’s assume that most people ordering don’t hold this particular credit card, so add the $12.10 fee 😕
  • What makes up the “Fees & Estimated Tax” of $9.55? The state tax should be $4.78, so there’s an additional $4.77 for…something 🤔
  • My $50 gift card makes the order $30.10, but without it we’re looking at $80.19, which is 33% more than ordering from Five Guys directly 💰
  • If you were to pay the $12.10 DoorDash fee, it’s 52% more expensive than ordering direct 😲

Everyone’s time is worth something, and ultimately the use of money is about saving time. If you have the ability to pick up food from a local restaurant (which I know is not the case for everyone), you need to ask yourself if your time is worth paying 52% more for the same end product. If someone’s being rational, the answer is no, it’s most definitely not.

Eating out is expensive enough, but delivery services such as DoorDash and Uber Eats make it even more so. Save money, give the restaurant more profit per order, and go pick up your food yourself. And hey, it will probably be fresher as well!

Compound Growth is Indeed a Wonder of the World

There’s a famous quote attributed to Albert Eistein that came to mind as I thought about writing this post:

“Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it.”
– Albert Einstein

Whether or not he was the one who said it is irrelevant. What is relevant is the fact that this statement is absolutely true; compound interest/growth is one of the most powerful tools someone can deploy to build long-term wealth and retire with dignity…and I daresay joy if you have enough saved to enjoy your final years. I am planning to be in the latter group with my wife, traveling the world. 🌎

It’s not often that life offers an individual a pure economic laboratory, but when I moved from Canada to the USA in 2011, a very specific limitation was placed upon me: I could no longer make contributions to my Canadian retirement savings account (we call them RRSPs). My investment accounts were/are made up of Fid. Special Situations Series B and Fid. Canadian Asset Allocation Series B.

This meant that unlike most retirement accounts that benefit from regular contributions and growth over time, my account would not get another penny of mine added to it. So, what have the results been after 12 years? If ever a picture was worth a thousand words, the one below is. ⬇️

I’ve removed the numbers, as this post isn’t about my personal finances, it’s about how powerful compound growth is. The web site showing the data doesn’t allow me to go back to 2011 for the above chart, but that was the year I transferred money into this investment account, then I left for the USA. My investments grew 15% by the start of 2013, the first full year of growth.

The dark blue line on the bottom of the above chart that stays constant is the total amount of my initial investment. The upper light blue line shows the growth of that investment over a 10-year period. You can see slow but constant growth from 2014-2017, a market crash in 2018 that hurt*, then a strong rise from 2018 to 2020. 2022 was a rough year, then it’s been rising strongly ever since. Will it crash again? Yes. Will it rise again, even higher than before? Yes, that’s very likely.

The bottom line? My initial investment has, via means of compound growth in the stock market and continual re-investment of dividends, increased by 346% from 2011. That’s an average of 28.8% growth per year.

It breaks my heart 💔 when I see financially illiterate people talk about how they don’t trust the stock market or investments and believe cash in a savings account paying essentially nothing is the best way to plan for their future. It’s not. Anyone who takes this approach is robbing their future self of economic benefit.

If you’re not sure where to start, I’m a big believer in automated investment platforms such as Wealthfront or Wealthsimple if you’re in Canada. They combine friendly, easy technology, automated investing, and low fees.

So go forth, invest, and be patient. 🤑

* A critical mistake some people make is reacting to financial pain in the market by taking their money out. When they do that, they miss out on the inevitable upswing that always comes after a crash. I’ve watched this play out in my investing lifetime twice, once in the 2009-2010 era, and again when Covid19 hit.

A quick financial tip: embrace automation

August 14th is Financial Awareness day, and unlike some of the other silly “holidays” – I bet National Left-Handed Scissors Day is on the list somewhere – financial awareness/literacy actually matters.

Financial literacy is generational: unless you come from a family where credit, debt, interest rates, and income are discussed, you may have grown up without an understanding of these topics. Our first paycheque should come with some instructions on how to manage our money, but it doesn’t, so most of us are left to muddle our way through our financial journey on our own.

One financial tip I can share is to embrace the human trait of laziness. By that I mean don’t pretend that you’ll always have the mental energy to think about savings and set money aside. Instead, take human nature out of the equation and automate your savings by pulling money into a high-yield savings account on your payday. I use Wealthfront myself. There are many options, but none of them are likely to be with your bank. The day you get paid, the money is taken out. You never see the funds in your bank account for more than a day.

It doesn’t have to be a lot – it should be an amount you can handle not having and won’t go “Ouch!” and re-think whether you should save it. Maybe it’s $50 a month. Automate it and pretend that account doesn’t exist. Ignore it entirely if you can. Do this for five years.

$50 a month over 5 years at 4% interest is $3381. Imagine yourself “finding” that money five years from now and being thankful to your past self for making that choice. What if you could save $100 a month? That’s $6763 after five years. Could you maybe do $300 a month? That’s $20,291 after five years.

Compound interest is nice, but what’s even more impactful is automating your savings and taking human nature out of the equation.

Concrete Equities’ Varun “Vinny” Aurora Pleads Guilty to Fraud

It’s been quite a while since I’ve posted anything on this blog about the debacle that was Concrete Equities, but the wheels of justice move slowly – when they move at all – in the realm of white-collar crime. Finally though, some good news:

“While one of his victims sobbed in the back of a Calgary courtroom, a city man pleaded guilty Friday for his role in bilking $23 million from hundreds of investors. Varun (Vinny) Aurora pleaded guilty in provincial court to fraud over $5,000 in a scheme centring on Mexican real estate investments. His own father lost the largest amount — $901,000 — in the fraud run by Concrete Equities Inc. that roped in 1,200 investors, about 20 of whom showed up in court. The play, which began in 2007, sold investor units in a Mexican development known as the El Golfo project, whose purchase price Concrete Equities greatly inflated for investors.”
– Calgary Herald Article

What kind of a person would defraud his own father out of $901,000? I’ll leave that for you to decide. While I’m glad to see him charged and his guilty plea, I am stunned at the “justice” being served here: according to this CBC article, he will spend no time in jail. Incredible – just incredible. ? $23 million dollars was stolen from 1200 people – much of it retirement savings – and he doesn’t go to jail. His punishment?

Continue reading Concrete Equities’ Varun “Vinny” Aurora Pleads Guilty to Fraud

Canada: Paying More Taxes, Getting More Services

I don’t often delve into politics or healthcare economics on this blog, but I’d spent some time writing up a reply on a Facebook thread that I felt was worth re-posting here. The single biggest struggle I’ve had since moving to the USA has been the healthcare system. It’s…insane. The people who have lived in it their whole lives don’t all grasp how insane it is. This response was written to one such person who brought up the Canadian tax system and said the taxes were too high.

Yes, you pay more taxes in Canada. But you know what you don’t need? Basic healthcare insurance. Guess how much I had to pay out of pocket in 2015 for health insurance? Just under $10,000. My employer also paid $5300 above that cost, so figure $15K all-in to insure two non-smoking adults and two kids. Oh, and another $6500 off my paycheque for the HSA because I’m on a high-deductible plan and I have to pay for ALL my healthcare until I hit the deductible for the year (which is about $2000 per person or $6500 for the family I believe). The HSA is a great invention, but since it’s only for healthcare, it’s another healthcare cost – so figure I’m paying $21K per year so my family has healthcare coverage…yikes! The only good thing is the HSA rolls over each year and helps people save for the more expensive years of healthcare. And that I can pay for dental stuff with it – which of course I have ANOTHER plan for the costs me $1300 a year for. Oh, and vision…
Continue reading Canada: Paying More Taxes, Getting More Services

PayPal: The New Credit Pimp on the Block?

I don’t use PayPal as much as I used to – maybe a couple times a month – but I noticed something earlier this year that struck me as odd. Every time I logged into my PayPal account, rather than taking me to my home screen showing my balance and transactions, PayPal would show me a page promoting their credit card, or promoting their “pay later” service.

paypal-credit-pimping-2015

Recently, in this holiday season of buy-buy-buy, I used PayPal a couple of times and in every instance the default was “Pay After Delivery” and it was set to withdraw money from my bank account.  You have to dig a layer down to find what should be the logical default: PayPal Balance.

PayPal has been spun off from eBay, and there’s clearly maneuvering afoot to re-invent PayPal as more than just a digital payment tool. They want to finance your purchase, and touch your bank account more often – they don’t want to be an isolated island like many of us (myself included) use them.

We have enough credit cards companies in the world destroying the financial lives of average people – we don’t need more of them. PayPal shouldn’t be going down this road…

A Quote About Credit Cards

“Credit cards are like chainsaws: the more of them you juggle, the greater the odds you’ll lose a financial limb.”

– Anonymous

Quote About Paychecks

“Your first paycheck, and every one after that, is what you save part of in order to prepare for life after your last paycheck.”

– Anonymous

Writing Cheques Like It’s 1993: Having a Dedicated Chequing Account

Personal finance management and investing is one of my newer personal passions, so I’m going to start blogging about those topics here on a regular basis. I’d love to hear from people on how they manage their money!

I still use cheques now and then (those are “checks” for you ‘muricans) but they tend to be larger values (my son’s school tuition, summer camps, community HOA fees, etc.) and I despise the unpredictability of not knowing when they’ll be cashed. I’ve been burned more than once by having a cheque I’d forgotten about be cashed, pushing my account into a negative balance and triggering an overdraft move of money from another account (and sometimes a fee).

Leaving money in my chequing account is a pain since I zero it every week (on Thursday nights to be precise). If someone was doing old-school cheque-book accounting, and keeping a running tally, they wouldn’t have this problem – but I just can’t run my financial life using a model so restrictive, and, frankly, cumbersome. I wanted a solution that would work for my financial management style.

I decided instead to take an approach that would give me more control, but took the essence of the chequebook approach: you make sure for every cheque that is written, there are sufficient funds to cover it, and those funds are never touched because they’re already spent. I created a “Write a Cheque” bank account where I move the exact amount of the cheque over from my main chequing account, and leave it there. So over a period of weeks the “Write a Cheque” account goes to zero as each cheque is cashed. I’ve been using this method for several months and it has completely solved my challenge.

How do you deal with cheques in your day today financial life?

Photo above courtesy of eComm Merchant Solutions.