So just a summary from the last post...it's a girl! My daughter Ava was born on March 15th, 2011 and that has been a wonderful blessing to our family. She has received her SIN number so we are heading to the bank on Friday to begin her RESP for schooling!
Financially, I took out a $5100 RRSP loan and ended up getting back over $3000 from the government, so all of that $3000 will go towards paying back loans (both the RRSP loan and my student loans). My priority for paying back loans will be
1) smallest student loan (done)
2) RRSP loan (I have about $3200 left)
3) last student loan (I have about $9800 left)
4) house mortgage (I have about $120,000 left)
We'll see if I do another RRSP loan for next year...chances are that I will. The net worth increase is tremendous and the regular payments aren't a strain on me financially.
As far as investing, once the TSX gets to 15000 I will take 20% of my Dividend holdings and turn them into bonds. After that, it will be once the TSX gets to 16500. All of my contributions are going into the Dividend Fund at this time.
Sunday, April 10, 2011
Monday, February 21, 2011
RRSP Loan
So this weekend I took out a loan from the bank for RRSPs. Generally I think it makes more sense to save ahead (which I do anyway), but I had some extra cash floating around (paycheque to paycheque) and some RRSP contribution room so I decided to take a loan. I ended up borrowing a little over $5100 (which turns into me paying back $200 per paycheque). The total cost of borrowing is about $70. Considering that I'll get at least 30% of that back through my income tax, it sounds like a pretty good investment to me! The interest rate they gave me as well is below prime, so it will be my lowest priority to pay off.
When I get my income tax back, I will split the return three ways: 1/3 going towards an RRSP re-contribution (for next year), 1/3 going towards my mortgage, and 1/3 going to a student loan. Once my student loan is paid off, then I will concentrate my energy towards the RRSP loan, and then finally to my bigger students loan. All in all, this will really help our next worth and things are moving in a perfect direction before the baby is born!
When I get my income tax back, I will split the return three ways: 1/3 going towards an RRSP re-contribution (for next year), 1/3 going towards my mortgage, and 1/3 going to a student loan. Once my student loan is paid off, then I will concentrate my energy towards the RRSP loan, and then finally to my bigger students loan. All in all, this will really help our next worth and things are moving in a perfect direction before the baby is born!
Wednesday, February 16, 2011
Rebalancing
The TSX hit over 14000 today so I rebalanced my portfolio, taking 20% of my TSX fund and switching it over to bonds. 100% of my contributions will be in the TSX fund and I will rebalance 20% again when the TSX hits 15000.
Saturday, February 12, 2011
First Update In A While...
With a new baby on the way in a few weeks, I should maybe give an update on what has happened to us financially in the past six months or so, and give a few of my financial goals that I have for myself.
Goal #1: Put $25 per paycheque towards baby's RESP
This is a no-brainer. Right now I contribute $225 towards my TFSA each paycheque, so I will just chop $25 off this and put it into the RESP. Until I am financially comfortably able to retire (whether I do or not), it will stay at $25. Most financial books say for parents to take care of themselves before they take care of their kids and that's what I will do for now.
Goal #2: Every 1000 point gain on the TSX means 20% contribution into Bond Index
I need to get this into writing so that I have it. When the TSX gets to 14000, 20% of my TSX money will go into bonds (whatever the current value). When the TSX gets to 15000, another 20% of the TSX money will get transferred over. Let's say I have $10000 in TSX and $5000 in bonds, it will change to $8000 in TSX (20% reduction) and $7000 in bonds. All of my regular contributions will go to the TSX.
Goal #3: Increase my passive income
I re-read "Rich Dad, Poor Dad" over Christmas (come on...I'm about to become a father) and one of his statements was that you are wealthy when your passive income meets your expenses in a month (or a year or whatever). That is, if you have $2000 per month in expenses (food, mortgage, hydro, whatever), if you have $2000 per month coming in and you don't have to get off the couch, you are wealthy. This is my goal. So the question is how to get passive income. One of my friends has solar panels installed, and claims that a $30000 investment will net him $300 per month over the next 20 years. Another option for me is to take an RRSP loan out and then get a huge chunk of money back, increasing my net worth a lot. The problem is that there would be no passive income. The third option would be to start the "Smith Manouevre", which is to take a loan out for investments and then get the tax benefit for the interest paid. The passive income is your tax benefit, but I can't make it work in my head because the interest paid each month would obviously be higher than your tax benefit. The hope/dream would be that your investments would increase faster than the loan that you take out. I have some thinking to do about that.
Goal #4 - Take a vacation to Hawaii
Although she won't say it, I think that frugala was a bit disappointed that we didn't go someplace warm for our honeymoon (although the Ice Hotel in Quebec City was fabulous!). So we decided that when our collective net worth is $100,000 we will go on a holiday to Hawaii. She has family there so we may be able to stay more frugally than most people, but it is an expense for sure.
Goal #5 - Buy a new house
We will be moving in the near future (probably the next year or so), so I should probably be starting to save some money towards a bigger down payment. The current mortgage is dropping quite nicely for me, but probably the mortgage will be at least $100,000 more than it is now.
What I Have Accomplished
In the last bit, I have a Visa bill of $0, increased my investments and paid off one of my student loans (there is still one left). My cash flow is rising, which is why I am at decision time as far as what to do. Obviously with a baby there will be changes in all aspects of my life and maybe things will be tighter, but I set these goals for myself in September when I took the extra tutoring jobs. A big thanks to frugala who took over one of my loans (in exchange for me paying for most of the monthly bills and all the mortgage payments) that allowed me to get into the black much more easily.
Goal #1: Put $25 per paycheque towards baby's RESP
This is a no-brainer. Right now I contribute $225 towards my TFSA each paycheque, so I will just chop $25 off this and put it into the RESP. Until I am financially comfortably able to retire (whether I do or not), it will stay at $25. Most financial books say for parents to take care of themselves before they take care of their kids and that's what I will do for now.
Goal #2: Every 1000 point gain on the TSX means 20% contribution into Bond Index
I need to get this into writing so that I have it. When the TSX gets to 14000, 20% of my TSX money will go into bonds (whatever the current value). When the TSX gets to 15000, another 20% of the TSX money will get transferred over. Let's say I have $10000 in TSX and $5000 in bonds, it will change to $8000 in TSX (20% reduction) and $7000 in bonds. All of my regular contributions will go to the TSX.
Goal #3: Increase my passive income
I re-read "Rich Dad, Poor Dad" over Christmas (come on...I'm about to become a father) and one of his statements was that you are wealthy when your passive income meets your expenses in a month (or a year or whatever). That is, if you have $2000 per month in expenses (food, mortgage, hydro, whatever), if you have $2000 per month coming in and you don't have to get off the couch, you are wealthy. This is my goal. So the question is how to get passive income. One of my friends has solar panels installed, and claims that a $30000 investment will net him $300 per month over the next 20 years. Another option for me is to take an RRSP loan out and then get a huge chunk of money back, increasing my net worth a lot. The problem is that there would be no passive income. The third option would be to start the "Smith Manouevre", which is to take a loan out for investments and then get the tax benefit for the interest paid. The passive income is your tax benefit, but I can't make it work in my head because the interest paid each month would obviously be higher than your tax benefit. The hope/dream would be that your investments would increase faster than the loan that you take out. I have some thinking to do about that.
Goal #4 - Take a vacation to Hawaii
Although she won't say it, I think that frugala was a bit disappointed that we didn't go someplace warm for our honeymoon (although the Ice Hotel in Quebec City was fabulous!). So we decided that when our collective net worth is $100,000 we will go on a holiday to Hawaii. She has family there so we may be able to stay more frugally than most people, but it is an expense for sure.
Goal #5 - Buy a new house
We will be moving in the near future (probably the next year or so), so I should probably be starting to save some money towards a bigger down payment. The current mortgage is dropping quite nicely for me, but probably the mortgage will be at least $100,000 more than it is now.
What I Have Accomplished
In the last bit, I have a Visa bill of $0, increased my investments and paid off one of my student loans (there is still one left). My cash flow is rising, which is why I am at decision time as far as what to do. Obviously with a baby there will be changes in all aspects of my life and maybe things will be tighter, but I set these goals for myself in September when I took the extra tutoring jobs. A big thanks to frugala who took over one of my loans (in exchange for me paying for most of the monthly bills and all the mortgage payments) that allowed me to get into the black much more easily.
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