Monday, June 30, 2008
Well, the grass is cut and we’ve been watering. A few things died, a few are struggling and some are going pretty well. Unfortunately, the weeds aren’t among the things that died! We’ve been debating over how to get rid of them.
On one hand, we could borrow a rototiller from friends in town and mow it all under. The disadvantages are that it’s a lot of work, we have to have the van in order to borrow the rototiller and when you churn up all the weeds you release a lot of weed seeds that then start to grow.
Or we could try the extinction method. Basically, you cover the area with layers of newspapers, then cover the papers with a tarp and weight it all down with rocks. The disadvantage is that it doesn’t happen right away but it’s not a problem if time isn’t an issue. Since we’re only here some of the time we could cover an area just before we leave, then deal with it on our next trip out.
In a way, we did just that already on a limited scale. One of the things we accomplished the other day was to hire someone with a truck to haul away all the construction debris, leftover junk from the previous owner, etc. It had all been stacked in a particular area of the yard and, once it was removed, the ground underneath was pretty bare.
Hubby painted the master bedroom, which is now a very pale blue that looks different in different lights. We put new hoses on the washing machine and I’ve done laundry and demonstrated that it no longer leaks. We also had a plumber in to work on our pipes and more than half of the job is done, although he’s going to return after we’ve gone to replace the trap under the sink.
On the fun side, we took our Dear Child to the beach yesterday, over her strenuous protests. She just wanted to go home to play with the girl next door and gave us quite a list of reasons why she absolutely would not go to the beach. It stinks, there’s seaweed, the water is disgusting, the sea dragon in the lake might come and get her, etc. We pointed out that she’d never been to a lake before and that most of her objections were based on her previous trips to the ocean. I ignored the Ogopogo red herring, just drove to the beach, parked and we all got out of the car.
She loved it! She splashed around with her PFD on (we were in an area where there is a bit of a drop off), made a sand castle, tossed rocks in the water and just generally had a riot. In fact, she cried when it was time to go home! We’re planning to go back later today (and probably to take Dog with us because there were quite a few dogs there yesterday).
I need to go to the credit union today while it’s actually open and order more cheques. I’d like to lay the laminate flooring I’ve got in the master bedroom so we can move our beds and night table back in there and I still want to drive around in the nice weather and tour a couple of wineries. Plus, we were talking about maybe painting one wall in the living room and putting up the new curtain rods and the drapes I have for the room (instead of the nasty ones from the previous owner). We’ll leave sometime tomorrow afternoon for the drive back, but we have to remember to buy gas today before the price goes up tomorrow when the carbon tax kicks in.
The more we come here and spend time like this, the more I wish we could just stay. That isn’t possible right now, so I’ll just enjoy what I have and come back as often as we can.
This is why entering everything you spend into a spreadsheet can be so helpful. I had no idea we were going over by that much. It’s crazy and we have very plain meals during the week (things like tomato soup and grilled cheese sandwiches, French toast, pasta, noodle soups and tuna melts). I usually buy meat (or occasionally fish) for Friday night and Saturday dinner (midday) but that’s a maximum of about $20 per week. We definitely need to cut down on junk food and I ought to eat out less (although I usually only eat lunch out twice a week and we seldom go out as a family).
We haven’t been able to figure out why we’re so short of money and it’s obvious that black holes like our grocery “budget” are contributing to that. And, yes, kosher food is expensive but that’s not the whole story. We’re all about the convenience. I do most of my shopping at a Safeway because it’s directly on my way home from work and it’s open at the strange hours I tend to shop, but prices for certain things we buy regularly are more expensive there than at the Superstore (about 30 blocks away). I know it costs more in gas (another black hole that I was just discussing the other day) to go to Superstore but it might still make sense to go even once every 2 weeks and buy the things that are notably cheaper.
For example, I drink half a Bolthouse protein drink every morning for breakfast. The big bottles cost 4.99 at Safeway and I occasionally end up buying a small bottle for 2.99 (or 2.50 on sale) if they don’t have the large bottles in stock. Mornings that I’m out of my drink I spend more money on an inferior breakfast at work ($3.75 for a decaf coffee and chocolate muffin that taste great but don’t provide anywhere near the 20 grams of protein I get from the Bolthouse drink). But, if I go to Superstore, I can get the big bottles for $3.89 each. For 7 large bottles (a 2 week supply) the difference would be $7.70 and there are things I have to go to Superstore for anyway because they aren’t available kosher at Safeway.
It’s actually going to get worse because our youngest goes to kindergarten in the fall and will have to start taking a formal lunch, complete with 2 snacks, a sandwich and a drink. This is a real pain because she’s a very picky eater and doesn’t really like much in the way of sandwiches (and, of course, there are no nut products allowed in school because of allergies). She also often doesn’t like whatever we’re having for dinner, much less want to have it cold the next day, which pretty much kills leftovers. Making school lunches she’ll eat is going to be another real challenge as I try to get a handle on our grocery spending.
I think I’m going to have to do a follow up post on this after we get home and I have a chance to go through hubby’s spending too. I’ll post some new goals for July (and look at how I did with June’s goals) once I’m home and have access to everything.
I know Krystal’s Transportation Challenge for July is going to be just that—challenging—but I’m really glad she’s been doing them. I’m learning a lot.
Sunday, June 29, 2008
Ah yes, this is the dark side of paradise. We have mosquitoes. Or more accurately, they have us. We are definitely losing this battle. I have 4 bites on my forehead. Hubby has more than 10 on just one leg. He’s definitely in worse shape than I am. I probably don’t have more than a dozen bites in total and I think he has at least twice that.
They’re holding us hostage in the house, which really makes me mad. It was pretty hot on Shabbat. I looked at the outdoor thermometer in the hottest part of the afternoon, but I’m sure it was wrong. It said it was 114 degrees Fahrenheit but I don’t think it was really more than 98 or so. Still that’s plenty warm. So, when the sun finally went behind the hill and it started to cool down about 3 hours before it got dark I took a chair and sat out on our back deck reading Psalms. It was really nice for about 10 minutes, until the mosquitoes found me and called all their friends.
I’d brush one away from my skirt and another would land on my arm. I’d shake my arm and 4 or 5 would congregate on my ankles. I retreated pretty quickly and finished my reading sitting on the window seat in the living room by the screened window.
Sunday we’re planning to have a fun day. We’re going into town (so I can post this) and we’ll see if there are any Elvis events still going on or if they all took place on Shabbat.
I want to take my hubby to a couple of wineries, even though we can’t taste non-kosher wines (not even to sip and spit) because the rules about grape products are among the strictest of all the kosher rules. But Tinhorn has a wonderful demonstration vineyard, with maybe a dozen different types of grapes, all the costing (admittedly a few years out of date, but still useful) and all kinds of other information. And I want to go to an all-organic fruit winery because the organic issue is another very important aspect of this for me. I need to meet people in the industry and there’s a lot for me to learn.
And maybe we’ll take Dear Child to the beach for a while. When I was a child I used to go every single day in the summer and I don’t think she’s ever really been in her 5 years. I actually learned to swim in the lake but she’s signed up for 2 weeks worth of lessons at the community centre pool in the city (along with her 3 year old niece) in July.
But first we’ll need to spend some time at Safeway, on their free wifi. I haven’t looked at any blogs since Thursday morning and my DC is suffering from withdrawal from Webkinz World. And the best thing is, there won’t be any mosquitoes there!
Friday, June 27, 2008
This is why I love the country. This is why I want to retire here and grow lavender and grapes and have a big English style garden. I’m happier here than anywhere else, which is no small thing in life.
But there are bills to pay to make that happen and it seems there are more of them every time I turn around. I got my Rural Property Tax assessment the last time I was here and was pleasantly surprised to see that it was only $123. I got here yesterday and discovered the reason it’s so low is that the garbage disposal costs had been removed and billed separately, along with the water. Now, the water I knew about but the extra $120 bill for the garbage was unexpected.
The property tax is due in July; the garbage bill is due in August. I’ll manage to dig up the money for them but after that I’ll have to start putting $20/month away so I’ll be prepared next year.
The water is a flat rate of $345 per year or $28.75 per month. I become responsible for that in October and will have to pay it monthly. So, my costs for this house, including the cost of the land, will be a total of $257 per month plus electricity (and gas, if we ever find a gasfitter to get the fireplace hooked up). Add to that the cost of fuel oil (about $50/month, based on a little under 2 tanks per year) and we’re paying $307 per month for our little slice of heaven.
That would be incredibly economical if we were living here full-time (even though our electric bill would go up and we’d end up putting in satellite and high speed internet) but it’s a bit pricey for the amount of time we actually spend here. We can’t spend long stretches of time here due to work and childcare issues plus the cost of gasoline has increased dramatically since we first started looking for property.
The car takes roughly 50 litres of gas and we use 1½ tanks on average actually driving here and back, plus driving around while we’re here. When gas was $0.79/litre our cost was $59.25. Gas is currently around $1.45/litre, so the same trip now costs $108.75! It hasn’t quite doubled, but it’s getting close. And coming by myself on the Greyhound costs $118.76, so I don’t save any money that way.
I’d love to come here every weekend in the summer and every 2 to 3 weeks in the winter (when we can generally only stay for one day). But the reality is that I can’t possibly afford to do so. We’ve been spending close to $10/day for gas in town recently, or about $250/month. Add even 2 trips to the house per month and that brings our gas expenses to almost $470/month! Coming every week would run us a stunning $700 per month! That is so not possible for us.
Now, we are going to try to cut back somewhat in town but it remains to be seen how much we’ll be able to save there. If we can save $5 per workday that would be about $110 per month (the equivalent of one trip to the house) but we’d also have to pay for a bus pass out of that, so our real saving would be about $40 per month.
What’s the solution? In the short term, it’s to make more money and use the cash to pay the credit cards back down. Once we no longer have payments to make to them we’ll be able to redirect the money we’re spending there in other, more life-enhancing ways. I also want to find ways to reduce the cost of some other things, notably our cell phones and bank charges. I was stunned to realize that bank charges on our 3 bank accounts (well, four, but ING doesn’t have any charges) total a minimum of $42.35 per month! If I actually use my overdraft protection I also pay overdraft interest but that’s the least of my worries. The last time I used it, I was charged a whole $0.12! Twelve cents I can handle, but paying just over $500 per year merely to have our bank accounts is outrageous.
In the long term, the solution is to arrange our lives so that we can move here permanently. That’s not something I expect to happen overnight. We’re scheduled to retire in 15 or 16 years and that would be the longest time before we could move here. The minimum would be 4 years (when my youngest granddaughter will go to kindergarten full-time) but the most realistic assessment is probably about 8 years from now when our youngest Dear Child will be entering high school. At that point it’s fairly likely we’d be sending her away to school anyway so where we live matters much less.
Even if there is a suitable girls high school in our city by that time she could potentially stay in the city with her sister (seeing as we live in the same house already anyway) while we lived in the country and we’d bring her back and forth every other weekend or so and she could spend the summer and other holiday times with us.
So, I’m facing eight more years of living my life in bits and pieces. Can I handle that? I guess I can deal with fragmenting my life so long as the costs to do so don’t increase too much more. But I look out at the sunshine and that beautiful blue sky and, for now, it’s worth it!
I’m off to relax before Shabbat, which doesn’t start until just after 9 pm tonight (the latest it ever gets). We’re having an easy dinner. Honey garlic chicken wings that will just take a few minutes to reheat, potato salad and coleslaw tonight. Roast beef on challah buns with potato salad and chips tomorrow (when it’s supposed to be very hot). I’ll pick up a bottle of wine on my way home now from posting this, so I’m not sure what I’ll get. The liquor store here does stock a number of kosher Israeli wines but I don’t know what’s actually on the shelves at the moment.
Thursday, June 26, 2008
What I've found often works very well is to take anywhere from 1 to 3 days and combine them with statutory holidays or religious holidays. (One of the benefits of working for a religious non-profit is that you get religious holidays off without having to use up your vacation time!)
We're on our way to our rural home because we've taken Thursday, Friday and Monday off. Combined with the weekend and Canada Day on Tuesday that gives us a 6 day vacation, while not really missing a lot of work.
The thing about going to the house is that we're doing a lot of work there, so it's not so much a vacation as it is a change. I mean, my idea of a vacation is sitting around in the shade on a sunny beach with a cold drink, or sitting in front of a crackling fire in the fire pit as the sun goes down, or having a picnic by the river.
The reality is that most of our time is going to be spent painting our bedroom, removing the rest of the wallpaper from the 3rd bedroom, having construction debris hauled away and getting the plumbing issue fixed. We'll mow the yard with our push mower ("we" being a code word for Hubby) and see how the garden is doing.
But I also want to do those other things. The evening fire is easy. And we can go to the beach, although it's a 20 minute drive because I discovered the small lake 10 minutes away has leeches! (Can I just say, eeeeuuuww?) And I suppose we could do a picnic too, though I'm not sure we'll work it in this time.
The thing is, I always feel like I'm working. I go to the office, I take care of the girls, I have boxes and renovation projects going at both houses. I want to feel like I'm having a vacation even though I'm going to have to accomplish a bunch of tasks too. That's why I'm determined to also do fun things over the next few days.
So, where does this blog fit in? Well, I'm going to continue to blog to a certain extent while we're gone. After all, I enjoy writing and I have ideas for a couple of posts that connect to the house and our plans for the future.
If I could make the scheduling function work properly I could make sure there would be a daily post (except Shabbos, of course) but it's not working and I can't promise I'll make 4 trips into town just to get to the free wifi. So, there will probably be at least one day in addition to Shabbat when I won't post. But I might post 2 articles in one day too. You just won't know unless you come and check it out!
Wednesday, June 25, 2008
Since I've been pretty committed to publishing on a regular basis I just hit "publish post" at that point, turned off the computer, rolled over and went back to sleep. (I write on my laptop, sitting up in bed for the most part. Sounds odd, but it works for me! Well, usually.)
Last night was even worse. I was still reading other people's blogs and it was at least an hour before I usually go to sleep but I started dropping off. So I did what is, for me, the unthinkable. I went to sleep without posting.
I woke up an hour early this morning and just started my normal routine that much earlier. And here I am, getting in a post before I leave for work! I'd love to be able to sit and write during the day, but I have 3 little girls bouncing around and the baby likes to climb up and push random buttons. Sometimes she even manages to hit a vital one before I can scoop her up, move her away and distract her with food or a toy.
I spent 45 minutes one day restoring my computer after she got on the keyboard while I was taking a 2 minute bathroom break. The bigger girls were on the computer, playing games in Webkinz but they couldn't stop Super Baby. She was intent on her task, which seemed to involve going into my administrative passwords and changing them! No mean feat, since I wasn't even logged on as admin when I left. Luckily she wasn't able to replicate her new password, so she didn't manage to permanently lock me out of my own system but she put up a valiant effort and, using some interesting key combination as I came into the room, she managed to prevent Windows from being able to reboot. You can see why I don't do much in the way of posting when the little ones are downstairs.
My own 5 yo Dear Child isn't as much of a problem. She'll probably be starting her own blog when she no longer needs to ask me how to spell every other word but her damage to the computer itself is pretty much confined to getting crumbs in the keyboard because she's eating and typing at the same time.
Anyway that pretty much explains why I generally write between about 11 pm and 2 am. It's not that I want to burn the candle at both ends (really, I'm not as young as I used to be and it's getting harder to do) but there are only so many hours in a day. I get up early (and I'm a night owl, not a morning person), daven [pray], do Chitas [religious learning] for about 1/2 an hour, eat, walk Dog and go to work. Some days I work all day, the others I put in an hour or 2 and come home to spend the day with the girls (ages 5, 3 and 1). We have dinner when Hubby comes home and then I go back to the office for the evening. I do groceries, buy gas, etc. on the way home, spend some time with Hubby and then I start writing.
If I didn't keep Shabbat and have that total break from the regular world one day a week I'd probably go bonkers. I believe it was Herman Wouk who described Shabbat as an "island in time" and I love that phrase. I find I can generally keep going so long as I know the Shabbat is coming soon and I'll have time to recharge. It's just that occasionally at some point in between I need to get more than 4 hours sleep.
My next challenge is going to be that we are planning to go away to our other house for a few days. I hope we're leaving tomorrow, in fact. Since we don't have internet there (I have to drive 20 minutes to town to use the free wifi at Safeway) it will be challenging to continue posting on a regular schedule. Believe me, I won't be sitting outside Safeway every night at 2 am! I've been experimenting a bit with Blogger's new scheduling feature, but it hasn't worked consistently for me so we'll see. If you see 3 or 4 posts appear all at once you'll know what's happened, right?
Edit: I just tried to post this for about 1/2 hour in the future and got an error message. Luckily, I was able to retrieve the auto-saved draft of the article, although it had added extra blank lines between all the paragraphs. So, scheduling is not working too well....
Tuesday, June 24, 2008
Does this mean I should blog about what I'd do with the money if I won the 6/49 ($30 million is currently up for grabs)? Well, I guess first of all I'd have to buy a ticket!
That reminds me of the old joke about the man in the flood. The man's on his roof, the water is rising and a rowboat comes by. The man turns down the would-be rescuer, saying that G-d will provide. The water gets higher, a speedboat comes along and again the man turns the speedboat driver down, saying G-d will provide. The water keeps rising and the Coast Guard sends a helicopter but the man turns it down too for the same reason. The water eventually covers his roof, he's swept away and drowns.
He goes to his Heavenly reward and immediately begins to complain, "Hashem, I trusted in you. I had faith that you would rescue me but here I am." A Voice floats out from on High, "So who do you think sent the rowboat and the speedboat and the helicopter?"
The moral of the story is, of course, that you have to do something. You can't just sit there and expect pennies to rain down from Heaven.
Sunday, June 22, 2008
But there are two more carrots on the horizon. The first is the Climate Action Dividend. This is a $100 payment to every resident of BC and is not income dependent. Adult or child, employed or not, if you were a BC resident on December 31, 2007 you're supposed to get the Climate Action Dividend cheque this month.
The second is the Climate Action Tax Credit. This is a tax credit designed for low income individuals and families. It pays $100 per adult and $30 per child and is supposed to be available annually. If an individual's net income is over $30,000 or a family's is over $35,000 the tax credit is reduced by 2% of the amount of net income over the threshold level. If you qualify, the tax credit is paid quarterly like the GST credit.
So, we'll get the Dividend cheque but not the Tax Credit at our house.
And just what are we supposed to be doing with this money? Well, the idea is that we're supposed to spend it on something "green", like CFL bulbs. But it's really kind of like the US economic stimulus cheque in that people are going to use it for what they want as opposed to how the government suggests you spend it. One of the local TV stations was asking people on the street what they'll do with their dividend cheque and at least one person said it was going towards her Visa bill! Mine will almost certainly also go towards reducing credit card debt. A lot of people are saying they'll just fill their tank with gas and drive for free for a few days.
How about you? What will you do with your climate action dividend cheque? And, if you qualify for it, will the tax credit make a difference?
The first thing I did was get current on a bunch of little bills (electric, gas, cable) and repay my daughter for some money she'd spent on my behalf (her little sister's ballet lessons, pierced ears and haircut). I also paid my cell bill, the bottled water, internet and made a couple of payments to IKEA. Now, when I return the mirror that doesn't fit over the fireplace, I'll have only a couple of dollars balance to pay off. I also made a payment to Capital One even though I didn't have a minimum payment due.
I paid them $100 plus the almost $80 tax refund plus the payment that I made for my internet bill that I had to charge on my card (I'd been kicked out of the pre-authorized system a couple of months ago without my realizing it). Then I rounded it up by a few dollars to $300.
I took the $750 I received in vacation pay and opened a new sub-account at ING, labeled (how original) Vacation Pay. Now, when I take vacation days, I can just transfer back $50/day into my regular bank account. I also raised the pre-authorized weekly deposit from my main bank into my ING Emergency Fund from $10 to $12.
I want to go to Home Depot tomorrow and pay them the approximately $750 that is coming due in July on the first of three 0% interest payment plans. This one was for the electric fireplace and light fixtures. The hardwood floor doesn't come due until next year. I know I could wait 3 weeks or so to pay this off, but I don't care. It's better to do it now than to risk forgetting and incurring all the accrued interest over the past 5 to 6 months.
We're planning to spend a few days at the other house next week and that will entail spending a little money too. We need to get a plumber out to fix the leak under the sink and to get someone with a truck to haul away all the junk from the renovations to the dump (along with some things the former owner left us).
Oh, wow! I almost forgot that I arranged to pay off Dell! I was getting close to the date of the next automatic withdrawal, so we set it up that almost all the money will come out of the bank account on Wednesday and then the balance (the regular withdrawal) will come out on the 29th.
I can't believe how much money I wasted by not paying cash to start with. The painful thing is that I had cash from selling our condo to use when I bought the laptop. But Dell is clever. Their kiosks don't take Interac, but they're happy to open up an account for you (I was approved for $2,500 when I only bought a laptop, backpack carrier and mouse totalling just a little over $1,000 with tax). The payments were about $30/month and the interest was about $20! Such a bad deal, but I was "too busy" to deal with it to start with and then I spent the cash on things like new appliances for both houses and the floor and roof repairs. Getting the insurance settlement was just what I needed to get me to deal with this.
I feel so much better getting back on top of everything. And there is still more bonus money to come in! We should be getting $300 at the end of June from the BC Provincial Government (for the carbon tax), plus my child tax benefit money (the retroactive payment) in about July. I don't know exactly how much it will be, but I figure it must be at least $600. All that will really help with knocking down the credit cards.
So, what have I achieved? I'll have paid off Dell and IKEA by the end of the month, I'm current on all my bills, and the credit card balances will stop going up and start coming back down instead. That's pretty darn good! Of course, it'll be better when the credit cards are back at zero but that's getting ahead of myself. The best thing is that each bill that's totally paid off is one less monthly charge to deal with on a regular basis.
Friday, June 20, 2008
They matured in 2004 and, with interest up to November 2004, were worth $188.13 each! More money to put towards those pesky bills.
I had to post the good news but I'm very tired and I've got a migraine coming on. I'm going to take something for it and go to bed. If I don't have time to post tomorrow, Shabbat Shalom.
Thursday, June 19, 2008
First of all, I have to admit that I read Derek’s second book “The Lazy Investor” first and bought “Stop Working, Here’s How You Can!” in an attempt to understand a little more about how his strategy worked and how he did it. And I do have a better sense of how the process worked now.
I also realize that there are very definite omissions. Let’s look at the basic ideas. Derek started putting away $200 per month in 1992 and retired in 2004, 12 years later. He started off investing in mutual funds, but switched to buying stocks and income trusts that paid regular dividends or distributions. He bought stocks in established companies he believed to be recession-proof, that had a long history of paying ever-increasing dividends. He reinvested the dividends and added additional funds from his GST rebate, tax refund, job bonus, etc. over the years.
This is all very solid advice, but what would that reasonably get you 12 years down the road? Well, $200 x 12 x 12 = $28,800. For the sake of argument, let’s say he also had another $2,000 per year from various sources to add, or another $24,000. That would give him $52,800 to invest. Remember compound interest doesn’t enter into this, because he’s buying the stocks each month and then holding them indefinitely. They’re generating dividends that are being reinvested, that’s true, but even if he were to have doubled the amount of shares by this reinvestment (highly unlikely in 12 years, I think) he would have $105,600.
It happens that the sample portfolio he lists in Chapter 20 would have cost $103,500 if it had been accumulated at various times between 1993 and 2000, when the prices of the individual stocks were each relatively low (even though he apparently didn’t accumulate cash and then buy large quantities of a single stock, but rather bought a few hundred dollars worth each month).
Anyway, the quantities listed of the sample stocks would pay (at the time of writing) about $18,845 per year in dividends and distributions and this income would be only minimally taxable. That doesn’t seem like a large income (frankly, I make more than that per year working just over half time) but the key point is that there would be little or no tax to pay once all the figuring was done, plus there would be no health care premiums and additional money in child tax credits for parents, etc.
As Derek pointed out in Chapter 19 when he looked at how much money a person really needs to retire, a couple with 2 kids and one wage earner making $60,000 gross per year could actually end up with less available income ($22,265) than the same family earning $18,845 in dividends (who would end up with a net income of just under $25,000 after child tax benefits, GST rebate, etc.).
Looks good on the surface, right? But key in that evaluation of the wage earner’s salary were a mortgage ($14,196 per year) and a car payment ($3,600 per year), expenses that don’t appear in the dividend earner's list because Derek says you should have all debt including house and car paid off before retiring. Now, you can pay a car off in 3 to 5 years, but a mortgage is generally a 25 year term. I shortened my period to just over 20 years by making payments weekly instead of monthly, but you still have to pay down chunks of the principal in order to pay your place off within this 12 year time frame.
The mortgage he shows for the wage earner is $175,000. Since you need a minimum down payment of 5%, this means the family has a place worth at least $185,000 and put down a minimum of about $10,000.
First of all, he could have bought the condo I sold last year for that kind of money in Vancouver, but not much more and certainly not a single family home. (One of the issues with owning a condo is the ongoing strata or maintenance fees. You may pay off your mortgage, but you’ll pay strata fees forever in a condo.) It may or may not have been realistic for Ontario (or perhaps small town Ontario) when it was written in 2005 but it certainly wouldn’t buy adequate shelter for 2 adults and 2 children in Vancouver in 2008. Right now single family homes in Vancouver start at around $500,000 for an old house on a small lot. That would be a minimum $25,000 down payment and a $475,000 mortgage, way out of our $60,000 wage earner’s budget.
All of this leads one to believe that Derek had financial help getting into his home. I mean, where would the down payment have come from at the very least? And how do you pay down the principal on your mortgage while you’re putting every windfall into adding to your investment portfolio? This is one area that really doesn’t bear up under scrutiny, especially as I’ve read elsewhere on the Net that Derek has a paid for home and an investment property! In addition, he now has 4 children, according to a post he made in September 2007.
Raise 4 kids, pay off your home early, have a rental property, plus invest a little over $100,000 in dividend paying stocks all in 12 years, while earning around $25,000 per year! That is really stretching the boundaries of believability.
Now, the other thing I’ve read on the net (and Derek didn’t dispute it) was that he made one or more highly leveraged deals that really paid off and that’s where a chunk of the money came from. All well and good, but not highly replicable.
Can I do it with my family? Well, we’d have to divert the money my husband currently puts into his RRSP and add about $150 that would be very hard to come up with at the moment. (I couldn’t divert my RRSP contributions, as I’m still required to repay the money I took out of my plan for the next 4 or 5 years.)
I could invest that $200 per month in dividend paying stocks, but I’d be paying more for them per share than he did early in the decade. We make too much money to get the GST rebate, our child benefit payment will probably be in the $50/month range and my husband actually owes a few hundred dollars in taxes every year, so there’s no refund or other money to increase the annual contributions. And since higher share prices mean I’d be able to purchase fewer shares, they’d pay less in dividends. That means I’d still be reinvesting my dividends but they’d be growing more slowly than Derek’s did.
All in all, I’d probably end up with about a quarter of what Derek did in a dozen years. That means only a quarter of the dividend income, maybe $5,000 per year. That’s better than nothing, but it’s not enough for us to live on, even at our rural home, although $18,000 to $20,000 in dividend income might very well be enough.
The bottom line is that there are significant gaps in the story of how he gathered enough money to retire and I don’t believe a person would be likely to replicate his achievement now in the same timeframe, given changes in the stock market, the economy, and the taxation rules.
Yes, the fact that the rules for income trusts will change in 2011 is significant and I think the best thing Derek could do right now is to revise his books based on current data. At the same time he could do some major editing to make his meaning clearer and he could provide some of the missing information.
I do think his strategy could pay off for a person who was just beginning to invest and who’s willing to wait 20 to 30 years to retire. I'm not sure it will work for someone like me who wants to retire within 10 to 15 years.
Wednesday, June 18, 2008
15. The Tax Man Cometh, My Money Goeth!
Derek intends this chapter to provide a basic overview of Canadian personal income taxes (with a little CPP and EI thrown in). He recommends “Jacks on Tax” for a more in-depth look at taxation in Canada but also throws out a few Tax Facts.
Employment income is the highest taxed form of income.
Interest income is the highest taxed investment income source.
Income from dividends or capital gains attracts a much lower rate of tax than employment or interest income.
Investment trust income usually attracts a low rate of tax. [This is changing.]
Deferring taxes is a great way to accumulate wealth.
Split income with other family members wherever possible.
He has a bunch of examples but the bottom line regarding #3 is that a person in the lowest tax bracket, living in Ontario, who gets $100 in income from various sources will keep $70.50 of earned income, $77.95 of interest income and $95.54 of dividend income!
16. Home is Where They Send My Bills
Derek offers the following Housing Tips:
Never pay the posted mortgage rates at your bank. Negotiate!
Try to save as much as possible on the fees levied when buying a house.
Paying off your mortgage is one of the best investments you can make.
Focus on home-ownership as a means to lower your living costs.
17. I Owe. I Owe. There’s Lots of Work to Go!
This chapter contains the following Debt Rules:
If you have a credit card, never carry a balance.
Pay cash for your car and then make the payments (to yourself).
Tax-deductible debt is the best kind of debt to have.
If you’re a student, minimize the amount of debt you take on.
18. RRSPs? No Thank You
Derek talks about what an RRSP is and how it works. Then, he gives some tips (but you knew that was coming, right?).
It may be better not to contribute if your income is below $32,000.
Although contributing to your RRSP can be a great move, so is paying off your mortgage early.
Borrowing money from a paid off home and investing it can be a better strategy than buying RRSPs.
RRSPs can be used to split income between spouses to lower the overall taxes a family has to pay.
As the chapter title indicates, Derek runs counter to everybody else’s views and doesn’t like RRSPs. In fact, he doesn’t have one.
19. How Much Do You Really Need?
Isn’t this what everybody always wants to know? Derek thinks the final figure is less than your bank or financial advisor would like you to believe. His formula:
Total current income minus work related expenses minus all interest expenses plus new lower tax expenses plus costs for new hobbies equals the total amount of income you’ll need.
20. An Example Portfolio
When I first read this chapter, I understood it to be Derek’s portfolio, but it doesn’t seem to be exactly. However, it contains several of the stocks he owns and talks about the cost to acquire them both now and over the past several years, using what he paid for them as an example.
21. Your Journey Begins
Derek closes with a story of a salesman and passes the ball into the readers’ court.
Tomorrow I’m going to give my opinions on the book and Derek’s strategy for early retirement. I’ll agree with some things and disagree with others (can you guess which ones?). What will I say? What will my final judgement be?
Tuesday, June 17, 2008
I stayed up tweaking the post I'd prepared instead of going to bed the moment I came home and morning came all too quickly today. I went to work for an hour and came home as usual but didn't have the baby at all today because my grown daughter was home sick. Actually, she and the baby are sick and I'm trying to stay as far away as possible because I don't want it. So I had my 3 year old granddaughter off and on through the day but she and my Dear Child play pretty well with minimal supervision.
I took the opportunity to tackle some boxes and emptied 4 of them! I filled one box to overflowing with stuff to be sold or given away, found a handful of really important things and got a load of laundry done. In between I played with the girls, read a few blogs, and paid a bill over the phone. Then I made and ate dinner, went back to the office for 3 hours and did grocery shopping on the way home!
Hubby had taped The Mole, so we watched that and I tried to work on Part 3 of my book review, but I just couldn't do it. I need a certain amount of mental alertness to write about something complex and that's just not happening right now. As a matter of fact, I keep falling asleep with my fingers on the keyboard as I'm typing this! I'm not going to try to force myself. I'll just wake up around 5 or 6 AM with the laptop still open beside me on the bed and my body contorted into some odd shape.
I'm going to go to bed now and start fresh in the morning.
Monday, June 16, 2008
Here’s the 2nd part of my review of Derek Foster’s book “Stop Working, Here’s How You Can!”. Does he give enough detail to allow the average person to follow in his footsteps? Will his strategy still work today? Can you really do this for $200 per month?
Let’s check out Chapters 8 to 14.
8. Put Your Money Where Your Mouth Is!
This chapter shows the thought process Derek goes through before buying a stock, using the example of Colgate Palmolive, a stock he actually purchased. He goes through the various items he listed back in Chapter 5 Let’s Pray for a Stock Market Crash and methodically ticks them off to see if this company qualifies. It did, and he bought it.
9. Location. Location. Location.
Now Derek comes back to real estate investing. His solution for obtaining the benefit of real estate ownership without the burden is a Real Estate Investment Trust (REIT). Basically the investment trust owns a lot of properties and the unit holders (like shareholders in a company) own a piece of the business, effectively owning a tiny portion of each building.
He spells out a list of advantages ranging from spreading out risk and being hands off to the tax advantages. [Don’t get too excited; the government made changes in 2006 that will take effect in 2011 and make it less advantageous.]
Then he talks about the various kinds of REITs and dismisses most of them (residential, office, warehouse and hotel REITs all get panned). Basically he likes 2 kinds, a retirement residence REIT and Riocan, which owns shopping malls and big box stores. [In his subsequent book, “The Lazy Investor”, Derek reveals that he sold the retirement REIT after it lowered its distributions.]
10. Electrify Your Portfolio!
Derek recommends 2 Pipeline Trusts (Pembina Pipeline Income Trust and Enbridge Income Fund) and 2 Power Generation Trusts (Algonquin Power Income Fund and Trans Canada Power). [See my comment above regarding changes to income trusts.]
11. Black Gold, Eh?
Derek talks about oil and natural gas both in the world and in Canada specifically. He’s a big fan of investing in the energy sector; stating flatly, “Everyone thinking of retiring should have some exposure to energy because each and every one of us is an energy consumer”.
He goes on to recommend 2 Royalty Trusts (Pengrowth Energy Trust and Canadian Oil Sands Trust) along with Encana as a recommended hedge for Canadian oil sands. [Right. Trusts again.]
12. How Do You Start?
Derek opens this chapter with a warning that trusts might not always enjoy the tax-deferred distributions that were the norm when he wrote the book (in 2005). A very valid warning, considering that government changes were made in Fall 2006 that will take effect in 2011.
Then he says that the previous chapters show anyone with a nest egg where to invest, but asks what someone with a low income can do to get started investing. He sets up the rest of the chapters, describing them as focusing on simplifying spending, saving money on housing, reducing debt, saving tax and discussing RRSPs.
13. Financially Free by 35! My Financial Journey Retraced
This is the chapter that discusses what Derek did. He says he started in 1992 (at age 22) by putting $200 per month into mutual funds. He graduated in 1993 with no student loan debt, having paid for his tuition with earnings from summer jobs. He alternated between working and taking off to travel to Europe, Australia and Korea (where he met his wife, Hyeeun) but kept contributing (although he sometimes deferred the contributions). While he started with mutual funds, he later added (dividend producing) stocks.
14. Simplify Your Spending
Derek feels this is crucial and lists some spending ideas that he then expands on.
1. Simplifying spending should not be a form of self-deprivation.
2. Budgeting does NOT work for most people.
3. Try to save as much as possible from non life-enhancing expenses.
4. Saving money is twice as powerful as earning more money.
The final chapters will cover taxes, housing, debt, RRSPs, how much you really need to retire, a sample portfolio, and putting the ball into your court. We’ll look at those tomorrow and then I’ll put in my .02 the following day. Did I like the book? Did I have problems with it? Stay tuned.
Sunday, June 15, 2008
“Stop Working, Here’s How You Can!” is a book by Canadian Derek Foster that claims to show the average person how to retire very early (Derek retired at age 34). Is his experience replicable? Does his advice make sense? Is it something the average person would be willing to do? Let’s take a look at it, chapter by chapter. Since it’s 21 chapters long and I’m not the most succinct person in the world, I’m going to look at 7 chapters each day and then finish up with what I thought of it.
1. If It’s Broke, Fix It!
Derek opens with a couple of questions:
1. Have you ever asked your financial advisor why he is not already retired if he’s so knowledgeable about investing?
2. Are your investments working well for you?
His point is that you have to be the one who plans your retirement because no one else really cares and these advisors aren’t really financial geniuses or they’d be retired themselves.
Derek says he can offer a different strategy and that the rest of the book will deal with investing, simplifying spending, paying off your mortgage, eliminating debt and reducing taxes, along with an evaluation of the pros and cons of RRSPs.
He started this plan in 1994 and retired 12 years later. For him, this is the proof that his strategy works.
2. The Ultimate Perk? 52 Weeks Annual Vacation!
This short chapter consists of his story about riding a wild horse in Australia and selections from his list of things to do before he dies. His point is that if you retire young you’ll be able to do more of the things that would make your own personal list than if you work until 65 or beyond.
3. Money Isn’t Everything, But…
Derek touches briefly on compound interest and the Rule of 72, then goes on to give his opinion on various types of investment vehicles.
A good place to put your money temporarily, very liquid, protected by CDIC insurance up to $60,000 [although I’ve recently read elsewhere that it’s now $100,000]. The downside is the miserable interest rates.
Important historically, but Derek feels it’s not a good investment because it doesn’t increase in value quickly over the long term and you may cash out at the wrong time and lose part of your investment. He prefers “black gold” i.e. oil and foreshadows how he will cover it as an investment later.
Rare Coins and Collectibles
He doesn’t recommend it because it’s a lot of work with no guarantee that the items will increase in value and many possible negatives such as the risk of damage.
Derek rates real estate as one of the best investments although the downside of being a landlord (such as repairs and dealing with tenants) causes him to recommend indirect ownership (another area he’ll expand on later).
He doesn’t like bonds for a long-term investment for 3 reasons. First, bond interest is taxed at your highest rate. Second, they’ve historically provided a lower rate of return than stocks. Third, bonds don’t provide as much inflation protection as stocks.
Mutual Funds and the Stock Market
Here’s where Derek’s eyes light up. He says that stocks are what allowed him to retire early and that his investment strategy makes his retirement plans “impervious to market crashes”. The strategy itself is spelled out in later chapters.
4. Getting Answers from “The Three Wise Men”
Derek’s Three Wise Men are David Chilton, Peter Lynch and Warren Buffet for reasons described throughout the chapter.
Derek opens the chapter by saying how much he loves stocks, but then goes on to tell the story of how he invested $5,000 in Intertan (the former Radio Shack, which is now known as The Source) and lost about half his money. Ouch. That experience taught him to research investments thoroughly before handing over any money. A few years later his supervisor at work gave him David Chilton’s book “The Wealthy Barber”. From there, he picked up the idea of paying yourself first and started investing $200 per month in mutual funds.
Eventually Derek decided to get away from funds because of the management fees, figuring that if he could eliminate a 2% fee he could save as much as $626,000 ($50,000 invested over 30 years, with a return of 12% as opposed to 10%). Still, he recommends mutual funds as a starter program while you have under $20,000 invested.
Looking for a way to duplicate the results of mutual fund managers on his own led Derek to Peter Lynch and his books “One up on Wall Street” and “Beating the Street”. One method Peter mentioned briefly for choosing stocks actually became one of Derek’s cornerstones. It was the idea of selecting stocks from “Mergent’s List of High Dividend Achievers”. He also picked up the idea of only investing in companies that a child could understand.
Derek also started reading everything by Warren Buffet and picked up certain ideas from him. Only invest in what you know and understand and ignore short term swings in the market because it’s like a manic depressive person.
5. Let’s Pray For A Stock Market Crash!
He lists 9 tenets that form the basis of his investment philosophy and then expands on each one.
1. Only invest in companies you understand
2. Only invest in companies that pay a dividend (preferably a rising dividend)
3. Look for companies that are selling cheaply
4. Invest in companies that are “recession proof”
5. Don’t focus on foreign companies
6. Only invest in companies that are dominant in their industry (or that cannot be seriously hurt by a larger competitor)
7. Only invest in companies that have displayed a long history of strong performance
8. Only invest in companies that have a strong brand loyalty among its customers
9. Once you’ve bought the perfect company, never sell it!
6. “Show me the Money!” Investing
Derek’s main focus is #2, above. He isn’t interested in buying low and selling high. He wants to buy stocks of stable companies that will return ever-increasing dividends (or distributions in the case of investment trusts). He uses the analogy of planting trees on your land, cutting them down to sell the wood, then replanting as opposed to planting an orchard and harvesting the fruit from then onward.
7. What Should You Buy?
Derek is not big on index funds (recommended by pretty much everybody else I’ve ever read) because he says that 90% of businesses aren’t worth buying at any price. He says to buy mostly Canadian stocks because it makes sense to keep most of your assets in the country where you live and will retire. Canadian dividend income (the cornerstone of his strategy) is also taxed more favourably than foreign dividends. He goes on to suggest the following stocks or areas.
· Big Canadian banks
· Big Insurance companies
· George Weston Limited
· Corby Distilleries
· Rothmans Inc.
· Mutual Fund Companies
It should be noted that in his subsequent book “The Lazy Investor” (which I will also review) he says his Weston stock has been somewhat disappointing and that he eventually sold his shares of Rothmans. He closes the chapter by saying if you want increased diversification you could look at American multinationals like Johnson and Johnson.
Tomorrow we’ll look at Chapters 8 through 14 including his story of how he got to where he is today.
Friday, June 13, 2008
So, why am I asking what's on your iPod? Well, I have a confession to make. No, my iPod Shuffle isn't packed with illegally downloaded music. Actually, it's empty. I got it mumble, mumble at least 2 years ago and have never used it because I don't know how! The only good thing I can say about the situation is that it was free. (I listened to a pitch for a timeshare and the Shuffle was my reward.)
So when did I get to be some kind of Luddite? I was always ahead of the curve. I used to record audio from the TV to cassette tape when I was a teen. I learned to use a Wang word processor when everybody else was exclaiming over getting a new type ball for their IBM Selectric. I was DOS Girl, comfortable with the C prompt. I learned not only Word and Word Perfect, but dBase and FoxBase. I never got into the BBS thing but CompuServe and AOL were my friends. I started surfing the web a little behind the curve, but I caught up fast. I was slower with blogging, not even reading blogs until some time in the past year. Then I wanted to start a blog but put it off for a while, at least in part because I don't know the first thing about html. In a way, starting this blog was a jump into the unknown designed to force me to learn.
I'm sure if I just sit down and read some real material on the Shuffle (not the Quick Start guide that has more pictures than words) I'll be able to figure out how to get it going. I don't think I want to download music from the iTunes store, but I want to add songs I particularly like from CDs I already own. Then I'll only be behind the times, instead of hopelessly behind.
Anyway, I have to finish preparing for Shabbos. If anyone is interested, we're having salmon with mayo, lemon, dill and parmesan cheese along with potatoes and green peas tonight. Tomorrow is lamb stew in the crockpot. I've tossed in a large lamb shank, a whole onion, potatoes, baby carrots and spices along with enough water to cover. And I have a bottle of Dalton Red for both kiddush and drinking with the stew. There's chocolate ring for dessert both days.
Thursday, June 12, 2008
You see, it's this way. If you file your taxes on time and you qualify for the CCTB you get a cheque every month, kind of like the old Family Allowance program back when I was a kid. Unlike the Family Allowance, this payment is based on your income and you have to requalify for it every year. So, this year you might be getting $100 per month but at the same time you had more employment income as a family. Next year you might only qualify for $60 per month. Taxes are due April 30th and the new amounts for CCTB come into effect in July. But, because the CRA is a tad busy during May and June and might not get through everybody's return in time for the new cheque amount to be calculated, they give you a cheque at the old rate in July if they don't have the new information. If it turns out that you don't qualify at all anymore you have to give the money back.
I didn't file last year because I didn't think I owed anything and because all my paperwork was in several of the 400 boxes packed by the restoration company after our flood. I have no clue about the rules in the US, but here in Canada you don't technically have to file even if you earned money so long as you don't owe the taxman any money. But then you don't get the other goodies, like the CCTB. And you do have to file if the CRA asks you to.
So, I didn't file and I didn't get CCTB last year, except for that July payment. But now that I've filed for both last year and this year I will get everything they should have paid me all at once (probably in July). The previous year we qualified for $75 per month but we both made somewhat more money. So maybe they owe us $50 per month for last year and $40 per month for this year (totally guessing on the amounts). That would be a $600 lump sum retroactive payment and then regular cheques around the 20th of each month of $40 (or whatever).
Anyway, the point is that they didn't need to take the whole $75 back and they could have taken the smaller amount that really was overpaid out of the lump sum payment instead of taking it out of the $155 refund. Plus, this was only my 2007 Notice of Assessment. They still have to do the 2006 one and I think I made the same mistake on that return. That means I probably have more money coming to me from that!
But, really, it's all good. For whatever reason, the money has started pouring in from all different sources and I'm happy with that.
Guess what? She paid out everybody's 2008 vacation pay, all at once. The amount is right, but I can't just trot off and spend it because I now have 15 days coming to me where I won't get paid! So, what to do?
I'm going to take $750 and move it to my ING account. Whenever I take vacation days, I'll just transfer $50/day back into my regular bank account. The rest of the money goes into this month's pot.
Then I retrieved the messages on my cell from the 2 holiday days (I was too tired to do it last night). Remember in my last post I hinted at something? Well, I've been waiting for the final payout of the insurance claim from the flood we had 2 years ago. It was actually supposed to arrive around the end of February (right about when we were moving in here with my daughter and son-in-law) but it never did. Some other mail, including another cheque, went missing and I had tried a few times to follow up, but messages left on the adjuster's voice mail went unanswered and eventually that progressed to his mailbox being perpetually full, so one day a week or so ago I finally looked up a main number for the insurance company, fought my way through their voice mail system to a live person in the claims department and discovered that my adjuster was no longer working there!
Anyway, I got a call from a nice girl who just had to confirm with her Accounting department that the cheque hadn't been cashed and arrange for a stop payment on it before she could issue a new one. And Monday or Tuesday she called and left a message saying it was ready! Hip hip hooray! I worked for an hour this morning, then went and picked up a cheque for $3,000!
So, how is this cheque going to be spent? Pay off Dell (the laptop I bought to replace the desktop that was fried in the flood), IKEA (furniture we bought to replace stuff that was trashed in the flood), Home Depot (the first of three 0% interest plans we used for our fireplace, lighting, flooring, etc, for the new city place) and some miscellaneous bills that we need to catch up on. I want to use the rest to pay down a chunk on at least one of our 2 major credit cards. Hubby would like to use $300 of it to pay the deductible so we can have our car repaired.
You see, there has been a recurrent problem here in the Lower Mainland with a guy who goes around to parking lots and keys all four doors of every car he can get his hands on. We were actually one of the early victims, before every episode of keying started making it onto the nightly news. He's been arrested, but we'll see what happens to him when the case goes to trial. If he's found guilty maybe several hundred angry car owners can sue him for all the deductibles, but I don't know if he has the money to pay it anyway.
Or we could use $200-$300 to take Dog in for his annual physical, rabies shot, blood tests, etc. He just had his birthday, so the anniversary of when we actually got him and started taking him to the vet will be coming up in August. If we set aside money for that now, we won't be scrambling in 2 months time or whipping out the plastic to pay the vet.
Or I could just go out and buy that $3,000 purse people have been talking about over on The Simple Dollar. Yeah, right.
Wednesday, June 11, 2008
So, this evening I thought I'd just provide a taste of things to come over the next week or two.
One of my goals for the month is to write at least one book review. I've been looking over my books, trying to decide which one to review. I think it's important to talk about books that have a specifically Canadian outlook, ones that talk about RRSPs and RESPs and similar things that are unique to those of us who live north of the 49th parallel. I can read countless books and blogs that talk about the difference between a 401(k) and a Roth IRA, but that doesn't help me with my financial decisions.
I think I've decided to begin with a one-two punch. First I'll review Derek Foster's "Stop Working, Here's How You Can!" followed by his other book, "The Lazy Investor". I actually won my copy of Lazy Investor (thanks Mike from Four Pillars!) and Mike and I have had a bit of a discussion via email about the book and the author's M.O. in general.
In case you haven't heard of Derek before, he's 38 this year and retired four years ago. Most of his retirement strategy is built around dividend income and income trusts. He says he began investing in 1992 with the intention of investing $200/month and retired 12 years later with his wife, kids and (I believe) a fully paid for home about an hour out of Toronto.
Is this a good strategy for the average person? I'll weigh in on this and several other things that came to mind when reading his books.
I also want to post about the rebate cheque we British Columbians are expecting at the end of June. While $100 per person is not quite in the same category as the economic stimulus cheques our American neighbours just received, it is an opportunity to devote some windfall money towards achieving our financial goals.
Gas prices are horrible and they just keep getting worse! I want to talk about that a bit. I could vent about how dreadful it is to have the increases happen so shortly after we started traveling hundreds of kilometres to our second home on a regular basis but there is actually a lot to talk about that is a little deeper than saying Poor Me.
And I hope to have some news on the debt reduction front, but I will keep that under my sheitl (wig) for now.
Sunday, June 8, 2008
I want to do more interior renovations, such as laying down laminate flooring in the living room and master bedroom, painting more walls, moving the furniture back into the bedroom and then doing just a little decorating in the living room. Honestly, the previous owner’s behemoth of a couch needs to go! But I also need to get someone in to reattach the gas line to the fireplace, to service the 40 year old furnace and to repair a small leak under the sink and an intermittent back up of water there.
Then there’s the house in the city. I need to tile the foyer and I’m desperate for the renovation of my bathroom (financially a joint venture between myself and my kids).
But everything costs money. I don’t have enough coming in right now and we’re already in debt. I’m still rebuilding my $1,000 emergency fund after replacing part of the roof. And our DC starts school in the fall. We’ve applied for a tuition reduction but haven’t heard back on it yet. I want to work towards my dream of both lavender and wine and to save for our retirement in about 15 years time.
This is why “miscellaneous” is such a good label for my life. I’m all over the place and I feel like I’m not getting anywhere as a result. But if I only pick one area and focus on it nothing else will get done. The two things that are holding everything up are lack of money and lack of time. I usually only have Thursday nights and Sundays to do any projects. Some projects only require time. Those are things like painting, using paint we’ve already bought, or unpacking boxes. Others require an outlay of some kind first.
An example of that would be the foyer. Originally, I planned to only tile a small area in front of the door and run the engineered wood across the rest of the area. When I installed the Dricore I realized that the concrete floor wasn’t level there so I decided to tile that whole area instead. I have to buy enough Ditra to cover the additional area to be tiled and rent a drill attachment that will mix up the thinset the day I actually do the tiling. I figure it will take an entire Sunday to do and then it will have to be grouted after the thinset has totally dried. In terms of my available time, that means I won’t be grouting until at least the following Thursday evening and possibly not until the Sunday. So the whole project takes about a week in terms of disruption of the area but can’t be started until I have both the money and a free Sunday.
Once the tiling is finished I can move the secretary desk back into place near the front door and I can build and place the small wardrobe I bought from IKEA at least 3 months ago. It will go beside the door to the storage room and hold our jackets. I would never have thought it would take this long to get the foyer tiled but that’s the reality of my life. The earliest I will have time to do it is not next Sunday, but the following one.
Anyway, what I want to take away from my time alone is the feeling of peace and the reduction of my stress level. All of the things that need to be done will happen in their own time, not necessarily when I plan and obsess for them to happen. I will have the life I want, debt free, stress free and with beauty. May it happen, as we say, bimheira v’yameinu, speedily in our day.
I’m off now to have a lovely Shavuot. I’ll be back to post again late Tuesday night or Wednesday.
I’ve discovered that the quality of my reading, etc. is different when I have time truly to myself. It’s interesting. Perhaps it’s worth coming here by myself once in a while.
Everything that I’ve come to do has to be done on Sunday before I drive back. The rest of the time has been my own. However the weeds have been doing very well in my absence and are up to mid-calf height in the back yard after just 3 weeks. So, I “pay” for my retreat by mowing the lawn as best as I can and watering the front yard.
My garden is coming along. A couple of things haven’t made it or are iffy. The basil is dead, along with half the oregano. The marjoram is hanging on. The tomato looks like it’s not going to make it, but I won’t give up on it yet. The lilac has a couple of new leaves dying on it and the ground around it is very dry again.
Everything else seems to be growing okay. The mint is already trying to spread and the Munstead lavender is insisting on blossoming. I thought I removed all the budding stems the last time I was here. There are a few strawberries forming too, but they’re totally green still.
I had a lovely weekend, even if I had no way to connect to the Net!
Friday, June 6, 2008
So I'm sure it comes as no surprise that I'm probably going to the other house just beforehand. Stop. Rewind. What did I say? The plan is to leave on Friday in the early afternoon and return on Sunday before the holiday starts at sundown. Because of the timing, I'll have to drive. The Greyhound was great but it only leaves at 3 pm and gets in at 9 pm. Candlelighting for Shavuot, the holiday where we celebrate the giving of the Torah, is at 8:58 pm!
And you noticed the singular pronoun "I" in the above, right? That's because it's looking like a solo trip. My DC has been taking ballet for the past couple of months and doesn't want to miss her class, especially when she has not one, but two new tutus to wear (a gift from her big sister). So I'm looking at 8 hours in the car (about 4 hours each way), Shabbat totally by myself, Sunday to do some gardening and to try to cut the lawn with our manual mower.
We didn't go last weekend, we can't go next weekend and we may not go the weekend after that because we want to try to take a few vacation days at the end of June and again at the end of July so we get close to a week there at a time without interfering with the whole family's work schedule and child care needs. I also hate to have 3 weeks or more pass in the summer without spending some time there. I don't feel comfortable dumping my garden on my neighbours for that length of time and there were actually budding strawberries when I was there 2 weeks ago. If there are any I could bring them back for DC.
All this means a certain increase in expenses. With gas in the $1.35/litre range (very roughly, that's about $5.40/gallon!) it means I'm going to spend about $120 on gas, plus whatever extra I spend on food. For example, I bought sliced roast beef and potato salad again for Shabbat as I won't have time to cook for Shabbat and my hubby won't want to if he and DC really do stay home. That's about $20 just for the meat, about $6 to $8 more than I would be spending for the meat portion normally. Hey, at least it's not dining out so it doesn't count towards Krystal's June Dining Out challenge. I'm already having problems staying on track with that.
Now, I have to admit, the $120 on gas is a little misleading. I fill up at about the halfway point, where gas is cheaper than here in the GVRD (because we have an extra transit levy on top of all the other taxes that are hidden in the cost of gas). I certainly don't use a full tank of gas to get home after that. In fact, I'll have between half and 3/4 of a tank left over that we will drive on for the next week or so. That actually means the Greyhound isn't as good a deal as it looks on the surface. It cost approximately $118 for my ticket when I went 2 weeks ago, but that doesn't put cheap(er) gas in the car.
Anyway, I think I'll have to take ingredients with me and make at least a dairy kugel motzai Shabbos [Saturday night, after the sabbath is over when it is fully dark]. Dairy foods are traditional for Shavuot and we do love eating dairy!
It's late, already well past midnight so this post will say "Friday" instead of Thursday, and I'm tired. If I have 4 or 5 hours of work plus a big drive ahead of me tomorrow I'd best get to bed now. Just note that I won't be able to post while I'm away and that I don't use the computer on holidays so there will be no posts Monday or Tuesday (unless I post late Tuesday night).
Wednesday, June 4, 2008
1. I started an RRSP when I worked for a company that offered a match.
I may have started late, but when I became eligible for a company pension plan with an employer match a number of years ago I jumped at it. After a while, the company changed to mutual funds and, with our contributions from the previous plan, bought everybody annuities. So, if nothing else, I know that I will have $98/month coming in when I retire! When I was downsized I had the annuity and 2 RRSPs. One contains my employer match and is locked in until I turn 62. The other contained my contributions and I had access to that money.
2. I used my RRSP for a down payment on a condo.
I cleared out my RRSP to the tune of $7,200 and used that as a down payment on a very small condo. I paid $96,900 ten years ago and sold the condo last year for $176,000. Not too shabby. As I wrote the other day, I've been repaying $10/week into my RRSP all along and have about 5 years to go, even though I'm back up to $5,000.
3. I paid off our consumer debt with the money that was left after the mortgage was paid out.
We had 2 credit cards and a car loan and I paid all of them off when the condo was sold. We're back in credit card debt now, but think how much worse off we'd have been if we'd just treated the money as a windfall and taken a trip overseas.
4. We went looking for land in our chosen retirement location and ended up buying a manufactured home in the area.
It felt really good to pay cash for our place, which has 3 bedrooms and is within just a few minutes of several of the parcels of land we've looked at. It provides us with a base of operations and was a much smarter solution than continuing to pay $100/night for a motel every time we came to look at a property. Now we have a decent sized fenced yard and have planted a bit of a garden. We travel back and forth pretty regularly although we can't stay for long most of the time. Eventually, we hope we'll find our dream property and build our home on it. But this works for now and, in a worst case scenario, provides us with an adequate home in a pleasant area in the event that we find ourselves moving there permanently. It's also very economical.
5. My husband and I share child care with my daughter and son-in-law.
No, we don't share a nanny! We live in the same house and have all our schedules worked around to enable one or another of us to be home with all three preschoolers at once. That is a saving right there of about $700/month per child over having to pay for day care! The benefits to the girls are tremendous too.
So, there you go. I haven't done everything wrong. There may not be a fortune tucked away in our retirement accounts but we own a paid-for place in the area where we plan to retire, have a paid-for car and we do put away money every month into both RRSPs and an RESP for our 5 year old's eventual post-secondary education.
Tuesday, June 3, 2008
6. I've sunk a lot of money into depreciating assets.
I've purchased cars that cost my entire annual salary and then spent 4 or 5 years paying them off. I've spent $2,500 to $3,500 on a couple of computer systems. I allowed Dell to set up my new laptop (the one I was going to pay cash for) on their financing with pre-authorized monthly withdrawals that barely reduce the principal owing each month by $10 or so. (Their explanation for doing the financing plan was that their kiosks aren't set up to accept Interac.) And I didn't pay it off when I had the cash in hand!
7. I often don't pay in a timely manner, even when the money is in the bank.
This one is related to the last one. I also forget to pay things like my cell bill or the bottled water. Because I know I have this tendency, I put everything that has a fixed monthly amount on pre-authorized withdrawals. But I won't do it with bills that vary from month to month and I always have good intentions of paying the bills when they're due but my follow-through is not so good. This means I also incur extra charges, such as more interest, late fees, etc.
8. I let my daughter talk me into buying a $500 gym membership.
She was going to a great gym, just for women, we could go together and I paid for 18 months up front. Then they bought their new house and she quit the gym because they had to cut back on their expenses. I haven't been back since. I'm really busy and I don't have that motivation I had when we were going together. But I feel guilty. I'm wasting the money, the clock is running on the membership, and I'm not getting in shape!
9. I don't always file my taxes on time.
Since I normally get a small refund it's not a big deal, right? I mean, in Canada there's no requirement to file a tax return if you don't owe money (unless CRA asks you to do it, of course). But the problem is that you don't get the child benefit or BC benefit unless you file (the universal child care payment is automatic if you have a child 5 or under whether you filed or not). We earn enough that I don't get the maximum, but that's still $50 to $75 per month that I haven't been receiving because I hadn't filed. That's $600 to $900 per year! I need to give my head a shake. Anyway, I'm caught up now and am anticipating the nice retroactive payment that will turn up around July.
10. I don't know how to say "NO".
Not to my hubby. Not to my kids. Not to non-profits within my religious community. I'm good with telemarketers, at least.
So, there you have it. Ten financial errors that continue to hold me back. But the picture isn't all black. Tomorrow I'm planning to post some of the good moves I've made!
Monday, June 2, 2008
So, let's look at some of the mistakes I've made along the way. I'll do the first 5 now and follow up with the rest later.
1. I stayed tied to the parental purse strings for too long.
I was an only child and it was easy to stay too dependent on parental assistance both when I was single and during my first marriage (and then again when I was a single parent). I actually think it was at its worst while I was married. I had moved several hundred miles from home, hated the new city and its climate and spent a lot of time on the phone, talking to my folks at very expensive long distance rates (this was the late '70's and early '80's, when long distance cost $ 0.25/minute or more). We rented a new house that turned out to be practically uninsulated in a city where winter temperatures varied from freezing to -40 degrees. I think the one winter we were in that house our heating bill averaged $400/month. The phone bill was about another $250, the rent was $450 and we were making between $800 and $1,400 per month, if I recall correctly. Did I mention that my first husband liked to eat out? A lot. We ate out on average once a day! My parents were forever paying some bill or other for us.
2. I didn't start saving for retirement until I was in my mid-30's.
Two words. Compound interest. I missed out on so much compounding time. If I had started saving with my first job out of high school I would have been saving money and earning interest for about another 18 or 19 years! Now, it's true that I took 7 or 8 years off in the middle of that time when I was having kids but the money I already had in there would have continued to grow. Instead, I started late and have never caught up.
3. I bought my kids so many toys they could barely find the floor.
There were lots of collections. He Man, My Little Pony, Star Wars, Transformers, pretty much everything Fisher-Price put out for about a decade. Getting all those things made my kids happy in the moment, but left them wanting more in the long term. It was a huge financial drain and I have very little of it left now. A lot of it got ruined or lost in various moves. I never recouped the money I spent initially by selling toys the kids had outgrown. I remember once filling a big box with He Man figures and vehicles and taking them to the after school day care my kids attended. Why didn't I take them to a kid's consignment store?
4. Repaying my RRSP the money I took out to use as a down payment on my condo at the slowest rate allowed.
I definitely don't regret taking out about $7,200 from my RRSP for the down payment on my first place. But Canada Revenue Agency only requires that you repay 1/15 of the money you took out each year. So, when I had to start repaying, I set up a $10/week automated transfer from my bank account into an RRSP. I have to admit, there are times I've been glad it's only $10/week but if I'd even just doubled it I would have finished paying it back over 2 years ago and I'd be back to getting a deduction for my RRSP deposits.
5. Not keeping track of my spending for long periods of time.
I've always known how to budget. My mother kept track of all our family's spending and I remember knowing how to do it from the time I was in high school. In fact, there were times when I kept very careful records. But there were more years when I didn't and that was a huge mistake. When I don't write it down it's very easy to delude myself into believing that I spent less than I actually did. A shocking amount of money just disappears into a black hole and if I were tracking it I'd probably be inspired to do something more useful with it (like invest it)!
Sunday, June 1, 2008
I know that sometimes I forget to take things like bank service charges into consideration. This is a huge mistake because bank fees are often significant, especially if you get charged per ATM or Interac use. Other bank accounts don’t charge you a monthly fee if your account stays above a certain balance. Drop below the threshold amount and suddenly you get charged $10 or more per month.
Another miscellaneous category that I continually underestimate is gifts. (Ever wonder how I come up with topics? This morning I was informed that it was my sister-in-law’s birthday.) I don’t know why these things are always a shock. I know that people have birthdays every year and that Hanukkah comes around every winter, but I’m better prepared for the horrendous expense of Passover (easily another whole post in and of itself) than I am for birthdays. Even Hanukkah isn’t so bad, because I pick up little things throughout the year so I’m not buying 8 presents each for 4 little girls all at once in November or December.
Birthdays just seem to jump up and bite me. Part of the problem, of course, is that I had my children at inconvenient times (just kidding). One child is born just after Passover, another 6 weeks later (just about Shavuot). A third is born in the fall, after all the High Holy Days and Sukkot. The fourth is born just after Hanukkah. Then there’s my spouse, in-laws, etc. I’ve added it all up before and come to the conclusion that I should be putting away $100 every month towards gift giving. It just doesn’t happen because I don’t have an extra $100 that isn’t already committed elsewhere.
So, when another birthday rolls around, I pull money from somewhere else to buy the present, the card, the paper or gift bag. And then when the other thing comes up (like having to buy fuel oil) the money isn’t set aside so I put it on the credit card. Then I pay off the card with money from somewhere else. It’s just a giant game of musical chairs and eventually I always get caught short.
Another area I tend to underestimate is how much money the dog really costs. It’s not just $18.95 a month for a bag of his food. He goes through another $10 in treats at least. Plus there’s the annual physical, the lab tests, the rabies shot, tags, a new extendible leash every so often. Plus, did I mention that Dog is a poodle? Uh huh. Poodles have hair that needs to be cut like people hair. I take care of it some of the time although I’m not very good at it. But we also get him professionally groomed 3 or 4 times a year and he goes away for Passover every year. That’s a lot of money. But again, I don’t notice it because it’s not all at once or every month. Then I have a $200 vet bill and I choke.