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
Sunday, March 28, 2010
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.
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
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.
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.
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.
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.
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