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Sunday, November 7, 2010

Financial Update

It has been a while, so here is the most up to date information on what I have done (and what I plan to do) before the baby comes:

- frugala paid off a loan for me, so rather than charging her the equivalent of rent, she keeps her entire paycheque and I pay for all tbe mortgage and bills (minus half groceries, car stuff and dog stuff)
- I have received two raises since September: for the first one I increased my mortgage payment and increased my RRSP. For the second one I increased my RRSP and my TFSA (the TFSA increase will turn into the baby's university savings)
- I save $300 every two weeks now: $225 goes into my TFSA and $75 goes into my RRSP. From the $225, for every $1100 I accumulate, I take $1000 and pay something off (be it a loan, or a credit card, or a mortage or hopefully one day into the RRSP). The idea is to minimize the loans and to slowly build up an emergency fund (from the extra $100 that get put into there)
- I have started two part time jobs, where to money gets funnelled into my TFSA (for the purposes mentioned above). I work for Homework Help, where I get paid to tutor math in the evenings. I also tutor 3-4 students each week (it was supposed to be 4 but the last one has cancelled the last three weeks, so I am counting on three now). The idea of these extra jobs is to use the money for savings and/or paying things off, not for the regular expenses for week to week. This is important, because when second semester starts (February), we are getting close to baby time and my energy will (properly) go to my family rather than gaining extra cash. The plan is to have my credit cards at zero and another student loan paid off by the time the baby is born.
- When the TSX hit around 12500, I dumped half of my Canadian Index fund into a bond index, with all of my current contributions going into the Canadian Index fund. The TSX has continued to rise, but I have taken my profits from it. Long term I think this is going to work. I will only re-balance next when the TSX hits 13500.
- Finally I have been thinking about using the Smith Manoeuvre (this will be once my student loans get paid off). The idea is that you borrow for investment purposes, and then the loan is tax deductible, and with the tax benefits you put that towards your non-deductible loans. It makes a lot of sense as you gain equity in your house. The plan for me would be to pay minimal on your loans, and then increase the loan for the amount of equity that you have on your house. Theoretically, when you are done paying your mortgage, you can either pay off your Smith loan, or continue to keep it and keep the deductions and increase your investments with the extra money. There will be considerable more planning as we get closer, but it makes a lot of sense. There will be little change in the daily handling of my finances, but there will be a much larger tax deduction and more investments in the long haul.

Thanks for reading!
I have been updating our net worth on spreadsheets, and will update the post either later today or this week.

Thursday, September 2, 2010

The Housing Market

I was alarmed the other day when I was watching the news and it was reported that we are on the verge of a housing bubble in major cities in Canada. "Yeah right..." was my initial thought, but looking at the numbers I may have changed my mind.

The statistics that the show shared was that the average house is now valued at 4.7 to 11.3 times the annual household salary. Now quickly run the numbers to see how much house the minimum and the maximum would be for you. frugala and I make a little more than $100K per year together, so for us that would be from $470,000 to $1.1 million for a house. I am having a difficult time finding ways to have our next mortgage for $250,000 so these numbers are impossible.

Historically, the books have said that you should spend about 2.5x your annual salary on your house. What is the problem if you have a house that is worth $1.1 million and you make $100,000 per year, other than the $5251.57 monthly mortgage (that is 4% interest in my calculations over 25 years which isn't possible I think to pay on $100,000 per year). Since our interest rates are basically at 0%, any increase will cause these houses to be out of people's price range. If we change my calculation above to 3% over 35 years compounded monthly (you can tell I am getting ready to go back to school) and a $800,000 mortgage, that is still $3078.80 per month. These people will be house-poor (meaning that they live in a beautiful home but will be unable to afford anything outside of their house).

I prefer to be a little more flexible with my income. My suggestion, if you are unable to afford a standard 25 years mortgage then you can't afford the house. Another great suggestion that I read was for the six months before you decide to move, put the amount of your rent aside for savings (so essentially you are paying double for rent). If you can do this comfortably, then you can afford to buy a house.

Monday, August 16, 2010

New Baby and New Yearly Goal

frugala and I are pregnant! We formally announced it at our six month wedding anniversary on Saturday so I can talk about it on the blogosphere. With a baby on the way, for the next school year I am going to shift my plans from saving to paying off debt.

I got a new job at the Homework Help centre, which will pay me about $130 per week, and along with tutoring on the side, I should have more disposable cash this year. The plan will be to get my student loans paid off before the baby is born (or at least close to that time).

Right now I save $200 per paycheque and put $500 towards my mortgage and $400 towards my student loans (monthly). Out of my money from the Homework Help, all will go towards my student loans. I should get two raises this year, one from seniority and one from moving up to the highest category. I estimate this will be about $200, so I will take $100 from that. My mortgage will go up to $525 and my savings will go to $275. The shift will be that $75 will go to my RRSP and $200 going to my TFSA. Then every time my TFSA gets to $1100, $1000 will be removed to pay towards a student loan. In this way, lots will be paid off my loans. As well $200 x 26 pays per year is $5200 so I shouldn't get into trouble with the government over the $5000 cap on the TFSA (considering that I have undercontributed for the first two years).

In this way I am still making my regular payments, and the extras are coming out of my TFSA. I will comment on the effectiveness in the upcoming weeks (once it happens in September), as well as the price of having a baby and how the extra work on the side is going. It is a plan anyway...

Monday, August 2, 2010

Net Worth Update - August 1st, 2010

frugala's and my numbers are finally linked, and despite doing two weeks of painting and installing laminate flooring (which costs money), we still ended up okay for our first update.

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.


ASSETS:
- down $15,682.92 from July 17th, 2010

frugala donated some of her assets to remove one of my loans, which is why this number looks really bad. The theory is that I will be taking on all of the bills myself in exchange instead of splitting them down the middle which has happened in the past.

LIABILITIES:
- better $15,775.32 from July 17th, 2010

Once again, with a loan paid off, this looks very nice. Next week will have more realistic numbers.

NET WORTH:
- better $92.40 from July 17th, 2010

With my loan being charged a much higher interest rate than what frugala was earning on her GIC, this will naturally improve more. A nice start though!

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,713.43
Highest Value in Last 2 Years: 13771.25 (August 29th, 2008)

We are exactly two years from the high within the two years. The market hasn't been over 12,000 consistently since September, 2008. For these purposes, the stock market was about 13000 in mid September 2008, so I will either rebalance when the TSX hits 13000 or 12500 after September (once I get my raise).

Saturday, July 24, 2010

Home Renovations

As of now, for our home renovations, we have
- ripped out the carpet and kitchen (3 person days)
- bought laminate floor and underpad (approx. $1000)
- bought paint and accessories (approx. $200)
- painted one coat on the main floor (2.5 person days)

We will still have to put down the laminate floor, paint the kitchen cabinets, paint the rest of the kitchen and possibly put another layer on the main floor.

The plan is that when we look to sell, be it next summer or whenever, that the house has been improved so that it is ready to go. Even if we decide to stay for a few years, it would be much more livable. Financially, doing cosmetic house renovations always increases the value of your house when you go to sell.

Saturday, July 17, 2010

Net Worth Update - July 17th, 2010

frugala and I have finally decided to combine our finances...on the spreadsheet at least. So this is my final individual net worth update. frugala's numbers are in there, but the relative totals for mine will be this week alone.

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.


ASSETS:
- up 647.55 from July 3rd, 2010
- up $6938.09 from July 17th, 2009 (one year ago)

Slow and steady wins the race, and I have made nice consistent progress on this front since I have started recording. Even without frugala's numbers in there, my assets are at an all time high!

LIABILITIES:
- better $799.99 from July 3rd, 2010
- better $16,453.74 from July 17th, 2009 (one year ago)

Because of the three pay month and the way that the numbers fell, I had two major loans come off this pay period thus the nice liabilities numbers fall. Even without Frugala's numbers, my liabilities are easily at the lowest point since I bought my house. Steady progress!

NET WORTH:
- better $1447.54 since July 3rd, 2010
- better $23,391.83 from July 17th, 2009(one year ago)


The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,569.65
Highest Value in Last 2 Years: 13771.25 (August 29th, 2008)

We are exactly two years from the high within the two years. The market hasn't been over 12,000 consistently since September, 2008. For these purposes, the stock market was about 13000 in mid September 2008, so I will either rebalance when the TSX hits 13000 or 12500 after September (once I get my raise).

Saturday, July 3, 2010

Net Worth Update - July 3rd, 2010

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.


ASSETS:
- down 349.00 from June 19th, 2010
- up $6571.09 from July 3rd, 2009 (one year ago)
These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The stock market took a dip this week and thus my assets dropped for this week.  In the next net worth update, frugala's assets will join mine on paper so these will rise significantly!

LIABILITIES:
- better $3.27 from June 19th, 2010
- better $16,957.30 from July 3rd, 2009 (one year ago)
These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). Even though this was my three pay month, things didn't go quite as nicely as I had hoped.  On my next update, I will have all my bills coming off so there will be a huge decrease here.
NET WORTH:
- worse $345.72 from June 19th, 2010
- better $23,528.39 from July 3rd, 2010 (one year ago)
You have to ignore the slight bumps and look at the long term progress.  We are going on vacation (which I have saved up for throughout the year so it won't be affecting my assets/liabilities) so we'll see how this affects me in the upcoming weeks.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,196.06
Highest Value in Last 2 Years: 14153.57 (July 3rd, 2008)

We are exactly two years from the high within the two years. The market hasn't been over 12,000 consistently since September, 2008. For these purposes, the stock market was about 13000 in mid September 2008, so I will either rebalance when the TSX hits 13000 or 12500 after September (once I get my raise).

Sunday, June 20, 2010

Net Worth Update - June 19th, 2010

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $602.22 from June 5th
- up $7175.48 from June 19th, 2009 (one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The stock market rose this week bumping my assets. Three condos on my block sold this week (all for at least $20,000 more than I have mine valued at), so when frugala and I decide to move, there will be some extra assets in our pockets.

LIABILITIES:
- better $280.30 from June 5th
- better $17,157.58 from June 19th, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). A nice little improvement, which I hope to continue as the summer progresses.

NET WORTH:
- better $882.51 from June 5th, 2010
- better $24,333.06 from June 19th, 2009(one year ago!)

A nice set of weeks, and I want to keep this up through the summer. I will have a few tutoring gigs throughout the summer which I will put directly against loans to pay them down. As well, my buckets are filling nicely, meaning that when we need to buy new floors, or new clothes for me, or go to Golden Lake for a week, it will not impact my liabilities. This cash isn't included on these spreadsheets so there will be no effect.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,927.59
Highest Value in Last 2 Years: 14790.15 (June 19th, 2008)

We are exactly two years from the high within the two years. The market hasn't been over 12,000 consistently since September, 2008. For these purposes, the stock market was about 13000 in mid September 2008, so I will either rebalance when the TSX hits 13000 or 12500 after September (once I get my raise).

Friday, June 18, 2010

More Buckets: Donations

Another bucket that I created for myself this year is my "donations" bucket. Everyone feels that they should give more (or at least I do), and when a good cause comes along that I feel I should donate (be it sponsoring one of my students, or at church, or just a worthy cause) I used to have major problems with this because of my lack of spare cash. This year I have begun putting $20 aside each paycheque towards "donations" and then one I need to, this money comes out of that bucket. From a personal point of view, it makes you feel good to donate, and from a financial point of view you get a generous tax deduction because of it so everyone wins!

Monday, June 14, 2010

My Most Important Bucket of 2010

I am somewhat of a spender. What I have to do to limit myself is not to bring my wallet with me when I go shopping (or to school in the morning), as well as only spend cash within a paycheque. My wife and I went for some snacks last night and I said to her "I think this is the first time in the last year that I have used my debit card".

Nonetheless, in order to manage my cash I have decided to create "jars" or "buckets" of money that I will contribute to each paycheque and then spend out of them from day to day. When the cash is gone, I have no money to spend. It is a great system to me and has allowed me to limit my spending.

My most important bucket that I have created for myself in 2010 though has been the "XMas Bucket". Now, you may be asking yourself, isn't it June? Why is Christmas so important to you in June. Let me clarify myself: this cash isn't just used for Christmas, although it was the original intent, it is used for gifts all through the year. So when people have babies, or it is Father's Day, or you go to a wedding or whatever, you don't put yourself in the hole because of it. It is also always good to have some spare cash laying around so that you can take part in these wonderful events as the year progresses.

On the negative side, my goal was to have Christmas entirely paid for before hand. For 2011 I will probably have to create another bucket for Christmas (because that is definitely my biggest gift giving time of the year) along with my generic gifts bucket, so I don't go into the hole around Christmas as usual.

Saturday, June 12, 2010

Too Tight?

As you have read recently, the improvement in my finances has been slowing recently. There are two options to improve this: either spend less, or earn more money. I had been earning more money for tutoring, and this kept me moving in the right direction. Additionally, one of my biggest loans was recently paid off so that will give me a little more breathing space, but yesterday evening was an example to myself that I am far too tight now.

I received my HST cheque for $100 from the Ontario Government last night (the next coming in December 2010). I was fairly excited, because despite the fact that a lot of things will be more expensive because of this, I had just received a cheque for $100. I talked to "frugala" and gave her about five scenarios on what I could do with this money. She finally looked at me and said "It's only $100". At that moment I knew that my financial picture was far too tight...

Saturday, June 5, 2010

Net Worth Update - June 5th, 2010

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $259.90 from May 22nd
- up $6707.03 from June 5th, 2009 (one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. Things are bouncing back quite nicely, and because I live in a condo I can get an accurate value of my house based on what others in the neighbourhood and my estimates are extremely low. What this means is that when I sell, my assets will immediately rise because I am underestimating the equity in my house.

LIABILITIES:
- better $93.89 from May 22nd, 2010
- better $16,379.97 from June 5th, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). Although the year-to-year numbers have been great, the week to week pace has slowed to almost a crawl. Since April 24th, I have only improved about $400. This will be my goal in the summer not to make any hugely extravagent purchases (although we are planning to paint and put laminate flooring in...)

NET WORTH:
- better $353.79 from May 22nd, 2010
- better $23,087.00 from June 5th, 2009(one year ago!)

Things are starting to slow down for me, and without me doing summer school this year I will be unable to make a nice dent in my loans, although the sanity is more than worth it. I just have to remember that this is a long range plan rather than a short term plan.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,569.61
Highest Value in Last 2 Years: 15073.13 June 18th, 2008

For these purposes, the stock market was about 13000 in mid September 2008, so I will either rebalance when the TSX hits 13000 or 12500 after September.

Saturday, May 22, 2010

Net Worth Update - May 22nd, 2010

It's been a long while since an update, but here it is!

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- down $139.73 from April 24th
- up $7084.30 from May 22nd, 2010 (one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The stock market had a correction recently, which affects my assets

LIABILITIES:
- better $287.30 from April 24th, 2010
- better $16,787.51 from May 22nd, 2010(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). I continue to make bill payments slowly decreasing my liabilities. I had to pay for my last two teachers college courses which affected this.

NET WORTH:
- better $147.57 from April 24th, 2010
- better $23,871.81 from May 22nd, 2010(one year ago!)

Things are starting to slow down for me, and without me doing summer school this year I will be unable to make a nice dent in my loans, although the sanity is more than worth it. I just have to remember that this is a long range plan rather than a short term plan.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,521.35
Highest Value in Last 2 Years: 15073.13 June 18th, 2008

Friday, May 7, 2010

Babies and RESPs

My brother and his wife just had twins (congratulations from frugala and I) so we decided that a nice 0th birthday gift for them would be a contribution to their RESP (once they have their birth certificates and social insurance numbers I guess). The benefits of these savings are that you begin saving for post-secondary education, the money grows tax free on the growth, and that the government contributes between 20 and 40% extra to your contributions (based on your income) and that you can have up to $50,000 for each child.

For more information, check out RESP Information for more information.

As an aside, some shock in the stock markets yesterday as a slip of the finger may accidentally have caused a 1000 point drop in the Dow Jones. Check out this link for more information.

Friday, April 30, 2010

Students and Money

This week we started our Finance unit in MCR3U at the school that I teach at. I decided this year to began our unit with a discussion of how much University would cost, what the ways would be to obtain money for school, and how much debt you could have and how you can best deal with it.

University tuition has jumped on average 4.5% per year over the least decade, to the point where it is expected to cost almost $17000 per year for residence, books and tuition. This should be frightening for parents and their teenagers alike.

We then talked about the ways to get money for school: gifts, working, OSAP, personal loans and so on. The students sat in disbelief as I explained about OSAP and how it would be paid back and how much their loans would cost them on a monthly basis (and in return why I cannot afford a car).

We then spent the second day talking about more positive things: how to save your money to be a millionaire, how real estate and starting your own business have fundamentally been the most successful ways to become rich. Finally, the big picture is if you spend less than you make, you will end up being rich. We talked about stocks, bonds, RRSP, TFSAs, mutual funds and all the rest of the jargon.

Finally we talked about ways to reduce your debt. I gave the example of a mortgage, and by increasing your mortgage by any amount shaves the time and the interest off what you owe. I hope every time that I do this that at least a few people get something out of this and that students learn to save.

Sunday, April 11, 2010

Net Worth Update - April 10th, 2010

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $350.09 from March 26th, 2010
- up $7898.81 from April 10th, 2009(one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The stock market continues to inch up, helping me out.

LIABILITIES:
- better $1450.99 from March 26th, 2010
- better $15,969.18 from April 10th, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). I got my tax return this week and that is what really helped this segment of my net worth improve!

NET WORTH:
- better $1801.08 from March 26th, 2010
- better $23,867.99 from April 10th, 2010(one year ago!)

Things have really been moving in the right direction for me, especially with my tax return giving me a nice boost. I have to remember to keep the positive momentum and the plan in place nad good things will happen in the long run for me financially.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 12,176.84
Highest Value in Last 2 Years: 15073.13 June 18th, 2008

Wednesday, April 7, 2010

What To Do With Your Tax Return...

So tax season is pretty much over now and people are starting to get some money back from the government (if you have been reading this blog and have put some money into RRSPs and donations and education anyway). So the question is, what are the best options to do with your tax return?

Option 1: Get a lower tax return next year

Remember that when you receive a return from the government it means that the government has overtaxed you in the previous year. They have hung onto an extra chunk of each pay, with you getting no benefit. So next year, get less taxes taken off each paycheque, so your cash flow improves.

Option 2: Reinvest in RRSPs (or an RRSP loan)

The next best option is to re-invest in RRSPs any money that you get back from the government. So if you get back $1000, immediately contribute that into your RRSP for next year. If you do your taxes (or estimate them) and find out that you will be getting $1000 back, take out an RRSP loan from your bank for $1000 and pay them this back with your return. The advantage to doing this is that you will get an extra $350 back on your return (depending on what your marginal rate is) so you have extra money regardless. I haven't tried this yet, but "fatcatc" has this planned for the future. Don't just pick a random amount though: make sure that you only borrow what your previous potential tax return was, so that this loan can be repaid immediately, rather than linger over the year.

Option 3: Pay off bills

If you have credit card debt, that is another option for your tax return (although still less preferable than options 1 and 2).

Option 4: Build an emergency fund/planned spending

What can also be done is to build an emergency fund with your return or planned spending. What planned spending means is if you know that you spend $500 for Christmas each year, rather than putting it on your credit card this upcoming year, pocket aside $500 from your return so that money is available to you at this time.

Option 5: Upgrades on your house

I rate this a little higher than my last option because this is something that is building value. Although I always think of "Christmas Vacation" where Chevy Chase is counting on his Christmas bonus to put in a pool. You can't really plan "in 2011 I will spend my return on a new deck and in 2012 I will spend my return on hardwood floors", etc. in case things don't happen as expected.

Option 6: Random spending

Some people decide to buy a big screen television or new furniture with their tax return...they treat it like a lottery winning each year. If all of your bills are paid, your TFSA is maxed and your RRSPs are maxed out, then I say "go ahead", but for the other 99.999% of Canadians (at least that I know), there are better fiscal ways for this.

As far as what I did with my tax return, most of mine went to bill payments, although about 10% of my return went to emergency fund contributions and 10% went to "random spending". "frugala" is planning to take her money and "throw it on the pile", which is her way of saying that she will keep it in her emergency fund.

Sunday, March 28, 2010

Net Worth Update - March 27th, 2010

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $345.97 from March 12th, 2010
- up $7985.85 from March 26th, 2009(one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The stock market continues to inch up, helping me out.

LIABILITIES:
- better $77.69 from March 12th, 2010
- better $15,021.23 from March 26th, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). This was a little more painful as it was frugala's birthday and I was still catching up from having less pays for the last two weeks. Hopefully in the next net worth I will be able to get back to business.

NET WORTH:
- better $423.66 from March 12th, 2010
- better $23,007.08 from March 26th, 2009(one year ago!)

Continuing the nice positive moves over the last year. As long as I can do the "slow and steady" progress I will be happy. I haven't combined frugala's numbers into here yet (if I ever will), but because she doesn't owe anything, the liabilities section will always be mine. Just sitting back and thinking about it, I am better $23,000 this year as compared to last. If you think of being a millionaire, it will take me over 43 years at this point (which I don't want to wait that long), so I will have to pick up the pace.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,957.37
Highest Value in Last 2 Years: 15073.13 June 18th, 2008

Saturday, March 27, 2010

How Tight Is Too Tight?

As someone who is selfly admitted as "frugal" (and reminded constantly by his friends and family), the question comes up to me is when are you setting yourself up without enough "wiggle room" in your finances. I have my finances balanced so that a certain percent goes to savings, a certain percent goes to mortgage, certain to monthly bills, certain to spending, etc.

By setting an emergency fund up, this allows some wiggle room, so that you may be tight with your weekly spending allowances for yourself, but if something comes up that is unexpected you can still handle it. Also a key to remember for the "frugal" among us, who are frugal because they have to be, rather than that they want to be, is to remember that life always gets easier, especially in a financial sense. There is never any competition between where the average 25 year old and the average 45 year old should be financially. This is the difficulty that some young people have, accepting that things are tough for everyone when they start out and get easier over time.

When I purchased my house, I was literally "house poor". This means that I had a house, and my assets and liabilities were working quite nicely, but I had no disposable income at all. Two years later, because of an increased cash flow based on increases in income, I think to myself "Why didn't I buy a house sooner?", but advice like this is easy to give on the other side. My advice will be to give yourself a plan, and stick to it. I personally revisit my plan every time I get a raise (annually for me) and modify it then, but whenever a significant life event changes things it is time to revisit your plan.

FatcatC commented the other day to me that although my net worth has improved by whatever amount over the last year do I know if that is good or bad or what (because I have nothing to compare it to). My response is that because I am saving at least 10% of my income towards my retirement, am building a emergency fund, and paying off all my debts (plus more than the minimums) that I am doing well for myself and living within my means. Does this mean that my plan is perfect and that it couldn't be improved? Obviously not, because I have nothing to compare it to, but the plan fits my goals and that is enough for me.

Sunday, March 14, 2010

Net Worth Update - March 13th, 2010

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $680.89 from February 27th, 2010
- up $8311.93 from March 12th, 2009(one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The stock market has jumped nicely recently, and I read on a website that the TSX is at its highest value in 18 months. I am still going to stick with my plan of a two year plan before I rebalance though.

LIABILITIES:
- better $719.17 from February 27th, 2010
- better $15,923.70 from March 12th, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). This week I got dinged for taking a week off during the school year (meaning that my salary was lower than it should be). We'll see how this affects me as time continues forward.

NET WORTH:
- better $1400.06 from February 27th, 2010
- better $24,235.63 from March 12th, 2009(one year ago!)

Continuing the nice positive moves over the last year. As long as I can do the "slow and steady" progress I will be happy. I haven't combined frugala's numbers into here yet (if I ever will), but because she doesn't owe anything, the liabilities section will always be mine. With my nice tax return eventually coming in, this will help around this time as well.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,629.23
Highest Value in Last 2 Years: 15073.13 June 18th, 2008

Saturday, March 13, 2010

I'm Not Such An Accountant After All...

I forgot a piece of paperwork (my 2008 taxes to get my RRSP contribution limit and how much I need to re-pay for the home buyers plan) so I was unable to finish the calculations for my income tax, but the software worked extremely well (I was able to save what I was doing). Frugala and I worked together (her organizing the paperwork and me doing the computer part) and it took about half an hour for each of our taxes. It was a great system because we didn't need to flip between pages and all that. The software was Quick Tax software and I would recommend it, as you can make changes on the fly and there is no chance for calculation errors. Additionally, you can submit your taxes automatically electronically and allows you to save your tax forms as .PDFs or print them for future reference. I will finish my taxes up on Friday when I go with frugala to work, but it seems like I will still be getting significant money back, encouraging me to deduct less tax at the source again for the remainder of 2010.

Taxes...this afternoon!

This afternoon, frugala and I are going to her parents place to do our taxes. Both of us are confident that we are getting money back (because of RRSPs and education and donations) but we still have put it off for two weeks. The reason for this is that frugala's parents have tax software that we want to try out. We have all seen the advertisements (or the packages themselves) in the supermarket, or store and said "I don't know if thats a good deal or not" (to pay $20 for software to do your taxes). Frugala's parents already bought it and there are extra licenses to do taxes, so we will try it out and I will post either this evening or tomorrow with a recommendation or not.

For myself, I am curious to see how much money I will be getting this year, because I dropped my taxes at the end of last year. I am expecting about half of what I got last year, but we'll see how it turns out.

Tuesday, March 9, 2010

Cashflow Reminder

This post is just a quick reminder for myself (and my loyal readers) on the three potential ways to increase your cash flow from paycheque to paycheque. Everyone wants their financial life to be easy, and there are three options to do so.

1) Make more money: to do this you either to make more money at your current job, or find alternative ways to make income. If you have a job where you can get bonuses, are you doing enough to get the maximum bonus. If you aren't, ask your boss what you can do to be more effective. If you are in a union, are you at the top of the pay scale? If not, what can you do to get there. Can you work overtime? If not, what can you do to earn some extra cash in your spare time. For myself, I am taking courses to get myself to the highest level for my job, and tutoring on the side to make some extra cash.

2) Spend less: the other easy way to have more cash flow is to spend less money. You can do this by trimming your fixed expenses (find somewhere cheaper to live, cut down/out television/internet), cutting down your variable expenses (trying to go out less, or limit your free spending in a paycheque, or shopping around before you buy something), or go on a budget. A budget is difficult to work with, but for myself, I use the "bucket" technique, where I have a set amount of money set aside for groceries, spending, holidays, house maintenance, etc. coming out of each paycheque which physically goes into buckets. When I run out of cash, I stop spending that month. Another tool that I use is to not bring my wallet or credit cards/debit cards with me when I shop. If I only bring cash with me, it is impossible to go over in my spending. At school each day, I know that I am weak so I leave my wallet at home.

3) Have no debts: Easier said than done, but imagine if you didn't have a mortgage, or a Mastercard bill, all of the extra money that you would have. We all have these dreams, so to improve our long term cash flow it is always in our best interest to minimize our debt. Our goal should be to be debt free at retirement, but for myself I will be debt free as soon as possible. Right now a large percentage of my paycheque goes towards student loans, mortgages and personal loans. If I didn't have those loans, my paycheque would go to exciting things like RRSPs and early retirement, or a new house.

Monday, March 1, 2010

Learning To Say "No"

One of the difficult things in life is learning to say "no" to your friends and family, especially when it comes to money. There is nothing wrong when someone says "do you want to go out for supper" to respond with "Oh, I have ____ pulled out for supper, how about you come over?" or "How about we have drinks after". You don't have to say "Sorry I'm broke..." (unless you have the self-confidence to do that), but everyone knows that it is far more expensive to go out and I think that everyone is a little guilty of taking to ease of going out for supper rather than cooking for themselves from now or then.

So what about the legitimate celebrations? (Marriages/babies being born/birthdays/etc.) What I personally do is have a "bucket" for this and take money out of it for birthday gifts/Christmas and those times that we should go out for. If you have a slush fund (either in a bucket like me, or several hundred/thousand sitting in a chequing/savings account somewhere), when you do go out, it shouldn't go on a Mastercard/Visa. If you are doing that, then clearly you can't afford it.

This leads me into income taxes (don't ask how I got onto this). Hypothetically, if you get $500 back from the government, is this free money? Technically, no, because it is extra money that the government has taken from you over the year and that they owe you. If I get money back this year, there unfortunately won't be any extravagant purchases, but I will continue to pay things down, as that is my priority for frugala that I get out of debt so we can buy the house of our dreams. Another use for this money could be creating an emergency fund, or a Christmas fund so that when these requests come that they can be met with a smile rather than thinking "I can't afford this", or with a grimace when the Visa bill comes in at the end of the month.

Sunday, February 28, 2010

Net Worth Update - February 27th, 2010

It has been a long while since this update, but here it is. My first update since the wedding!

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $394.08 from February 13th, 2010
- up $8010.47 from February 27th, 2010(one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The stock market has been climbing nicely for the last year and my assets are appreciating because of it.

LIABILITIES:
- better $488.90 from February 13th, 2010
- better $15,781.28 from February 27th, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). I am unfortunately down to a single tutor which will slow down my extra payments on things.

NET WORTH:
- better $882.98 from February 13th, 2010
- better $23,791.75 from February 27th, 2009(one year ago!)

Continuing the nice positive moves over the last year. As long as I can do the "slow and steady" progress I will be happy. I haven't combined frugala's numbers into here yet (if I ever will), but because she doesn't owe anything, the liabilities section will always be mine.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,629.23
Highest Value in Last 2 Years: 15073.13 June 18th, 2008

Thursday, February 18, 2010

Chateau Frontenac

Last night (and tonight), frugala and I stayed at the Chateau Frontenac, a beautiful spot in majestic old Quebec City. It is a wonderful old hotel that reminded me of Titanic, but frugala assured me that this hotel is much older. We went for supper at a restaurant called Aux Anciens Canadiens that is in a building built in 1677!

I was exhausted and we missed out on the horse-drawn carriage ride last night, but we will make up for it with plenty of touristy stuff today. If they needed English speaking math teachers here, I would bolt in a minute. Very hilly here, as you will see in our pictures - so many trigonometry problems!

This post has been edited by frugala.

Wednesday, February 17, 2010

Morning After The Ice Hotel

(Pics to come)

Unbelievable is the only way to describe the Ice Hotel! The "ooh" and "aah" factor in every room was great. From the ice bar to the ice slide to the unbelievable ice artwork, design and architecture, the entire experience was wonderful.

We got awoken at 7:15am with a warm coffee and then frugala and I jumped into the hot tub to begin our day. We also rented a room in the chalet where we are showering before breakfast. We had a great four course dinner late last night so we aren't in a rush this morning (spring rolls, French onion soup, veal tenderloin and cheese cake for desert)

The final question will be about sleeping. We all had "mummy" sleeping bags so we were wrapped literally head to toe. I like it cold anyway and frugala had us dressed properly so I had a far better sleep than the night before. From the hot tub though, some people were wet and cold and unpreared and looked as if this was a once in a lifetime experience. For me, sleeping at -2C was just comfortable. Frugala adds that her nose was cold.

Tuesday, February 16, 2010

I Love All Inclusive

It's 11:07am and frugala and I have had breakfast, a snack and I'm on my first Caesar of the day! Thanks VIA Rail (pics to come). Currently east of Brockville.

On the train to Quebec City

Just a non-financial update...I got married on Valentine's Day and am about to begin our honeymoon to the Ice Hotel in Quebec. I will try to post pics from frugala's iPhone throughout the week.

IMG_0151.JPG

Thursday, January 21, 2010

Book Review: 397 Ways To Save Money

Over Christmas, I was given 397 Ways To Save Money by Kerry Taylor, a book from the creator of the blog Squawk Fox. From her site:

"Kerry K. Taylor is the creator of Squawkfox.com, a journalist, and a two-time Ironman triathlon finisher. She beat $17,000 in debt and saved a six-figure portfolio. Kerry lives on an organic farm in British Columbia with her husband, Carl, and their mutt, Pivo"

Her book is a collection of paragraphs on different ways to be frugal and save money on every day items. They are organized into fifteen chapters, and at the end of each paragraph there is a bold caption summarizing the annual cost savings. For example, when talking about dishwashers, "BOTTOM LINE: Start an open-door policy by air-drying dishes and save at least $20 a year on energy costs.

Overall, I was very happy with this book as there were several ideas that I had not thought of to save money around the house. Some of the ideas though leaned from "frugal" to "cheap" (watering down your shampoo to save $20 per year...come on!).

I'd recommend this book to pretty much anyone, but especially to those starting out and looking for ways to save money around the home, where her ideas were the best. At the end of the book, there is a month-by-month listing of household items to check. Things like "Clean air conditioning filters", and "check water and drainpipes for leaks". Obvious things to some, but a good idea of what to do on a regular basis to prevent large scale problems.

Tuesday, January 19, 2010

Net Worth Update - January 19th, 2010

Not a pretty two weeks...with a few small expenses here and there (going out for congratulations for the wedding, getting a new birth certificate (don't ask)) my numbers weren't great this week. Also not having an extra $150 per paycheque because of my tax deductions at the end of the year hurt as well.

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $139.36 from January 2nd, 2010
- up $7488.58 from January 16th, 2009(one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. The market dropped slightly, but overall I am still in good shape.

LIABILITIES:
- better $143.36 from January 2nd, 2010
- better $15,922.17 from January 16th, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). I am now up to five tutoring jobs, where the extra money that I earn goes to paying off my liabilities. My Mastercard shot up this paycheque and that is what is causing the problems here.

NET WORTH:
- better $282.72from January 2nd, 2010
- better $23,410.75 from January 16th, 2010 (one year ago!)

Once again, automatic pilot means that things will be going in the right direction without major intervention on my part no matter what. We'll see if I can keep my nice streak going. My fiancee and I hope to combine our finances once we get married (February 14th!) so hopefully my cashflow in a month will slightly improve.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,750.54
Highest Value in Last 2 Years: 15073.13 June 18th, 2008

Monday, January 18, 2010

Spousal RRSP

As I am getting married soon, we were talking about taxes the other day, and my fiance joked that "I had better be able to get her below the tax bracket so she gets her GST cheques this year". Then I started thinking, I am taxed at a higher bracket than she is, so deductions above the amounts to get her to that tax level are better given to me.

The option that I am thinking about is Spousal RRSPs. Because I am getting taxed at a higher marginal rate, the contributions will still be whatever we individually do, but the deductions would go to the higher income earner.

Here are some links (for myself for further reading)

Spousal RRSPs from TD
How Spousal RRSPs Work (from Million Dollar Journey)
Can RRSPs and Spousal RRSPs be rolled into one?"

Thursday, January 7, 2010

Net Worth Update - January 7th, 2010

I was a little slow with the update because my bank was a few days behind because my paycheque came out on a holiday. But my bank statements are now up to date and I can update finally!

Every time I get paid (every two weeks), I update my net worth. The idea behind this is that my goals are that my liabilities drop every two weeks, and by tracking them in this way, I am able to get a nice picture of where I stand financially. Its not a perfect balance sheet that I have (because of student loans I have a negative net worth), but the progress is what I am looking for.

ASSETS:
- up $532.16 from December 20th, 2009
- up $7523.36 from January 2nd, 2009(one year ago)

These assets include my house (I give it 1% appreciation each year in my appreciation), my RRSP and my TFSA. At the end of the year, distributions are up as well as stocks tend to rise so portfolio managers (in my opinion) can look better in a year to year comparison. (I don't know if that's true but it seems to be)

LIABILITIES:
- better $816.14 from December 20th, 2009
- better $15,171.80 from January 2nd, 2009(one year ago)

These liabilities include my mortgage, student loans and a consolidation loan (mainly for my Masters Degree for teaching). I am now up to five tutoring jobs, where the extra money that I earn goes to paying off my liabilities. I have a small Mastercard amount but once that is paid off these will continue to be tremendous amounts here!

NET WORTH:
- better $1,348.30 from December 20th, 2009
- better $22,695.16 from January 2nd, 2010 (one year ago!)

Once again, automatic pilot means that things will be going in the right direction without major intervention on my part no matter what. Technically, this was my three pay month so these numbers look great no matter what here.

The last thing I am going to track is the value of the TSX. I have some asset allocation goals that are dependent on the value of the TSX.

TSX Graph
Current Value: 11,944.54
Highest Value in Last 2 Years: 15073.13 June 18th, 2008