Archive for May, 2010

Good days ahead

I’m late posting today – sorry ’bout that!

These seem to be the dog days, or in my house, the cat days of summer. The sun has been out all week. Why does everything seem a little bit better when the sun is shining?

This is Zoe, by the way. She likes to hide out in the Tiger Lillies to stay cool. Then she brings her dirty, furry self in and lays on the sofa. Oh well, I’m not perfect either.

As the week winds up, I’m feeling pretty damned lucky.

Yesterday, I was moaning about not having my Notice of Assessment from the CRA yet, and having only one tenant potential for my rental property.

By end of day yesterday, the CRA had advised me they were in the final stages of reviewing my tax return, and I’d have the Assessment by late next week. The nice people at the CIBC are really happy to hear that.

I also got a phone call from another potential tenant, one who reportedly wants to stay put for a while. I’ll be showing them the property on Sunday.

A few of you have weighed in with your thoughts about my friend Jane (not her real name). Thanks for taking the time to shoot me your thoughts. She’s really on my mind, as you can tell. You’ve helped me confirm what I know, but have second guessed. I can be helpful by providing the knowledge and skills I have, but it’s up to her to do whatever she decides is the best course of action.

With four days left in May, and zero dollars in the grocery envelope, we’ll be raiding the freezer and the fridge this weekend. The girls actually think it’s fun when we run out of grocery money and then we have to get creative. Never once has one of them panicked and thought we’d starve to death. We won’t, of course. Keeping the grocery money in an envelope is a sure fire way to stay on budget. (I prefer an envelope over a jar, it’s a little more stealth in the cupboard, takes up less room too)

There is $20 bucks in the entertainment envelope, so if we have a crisis, I’m sure that’ll cover it.

It’s Doors Open weekend in Toronto, so there’s entirely no need to spend money on entertainment at all, There’s tons of stuff to do for free.

Next week I’ll be spending a lot of time at the rental, and getting it prepped for new tenants. It might be a bit quieter ’round here than usual. I’ll be sure to check in with a month-end report for May (although it’s a bit grim).

Thanks to all of you for being a part of my daily journey here. You’ve become an important part of my day, and I really appreciate reading about your journeys, thoughts and advice.

These are the good ol’ days, aren’t they? Aren’t we the luckiest?

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Opportunities & threats ahead

When a month draws to a close, I try to review my budget/cashflow spreadsheet and ensure that I have tracked all that needs tracking, that I review/adjust the next month’s obligations, and try to think about stuff that’s on the horizon that could advance/derail my goals.

Here’s a list of what’s on my mind:

  1. I have one potential tenant for the rental property. They have a rental application to complete and a credit check is pending. If this tenant turns out to be a good risk, they get keys for July 1. That’s good. The not so great part is that I’ll be without a rent cheque for June. This potential tenant is also looking at a short term rental, ending in December, January or February. Since I have no other options, I hope this one pans out. This is the first time I haven’t had potential tenants climbing over each other to get the rental.
  2. The CIBC hasn’t firmed up the deal on the mortgage switcheroo yet. They would like to see my Notice of Assessment (NoA) for my 2009 tax return. My tax return was filed about a week before the deadline. Although the CRA was very swift to cash the cheque I sent along with my return, they’ve been less than swift returning the NoA. I’ve given the CIBC every slip of paper they could ever want, but this one remains outstanding. I have six weeks left until the mortgage actually expires. My current lender’s offer has expired. What if I don’t get my NoA in time? Guess I’ll have to stay with my current lender, at whatever rate they dictate when I’m under the gun. I don’t like that scenario one little bit. Note to self, call the CRA today and inquire after some paperwork.
  3. Financial experts are now divided on whether or not Bank of Canada Governor, Mark Carney will hike the interest rates on June 1. A month or so ago it was practically considered “a done deal” that the rates would increase. Now, with the serious instability in Europe, and new reports that Canadians are carrying more debt than they were six months ago, it’s possible that Carney could hold the line a little longer. The great news is I could make more headway against my line of credit while the rates are still so low. Even another month or two would be a gift.
  4. Neither of the girls have a part-time job for summer. Neither of them have spent too much energy looking either.
  5. The employer for my part-time gig is changing the way they pay staff. This may mean a couple more bucks a month. (When I say a couple, I literally mean a couple). I’ve also been asked to give up one shift. This means I’ve adjusted my revenue projections for August and beyond downward slightly. That’s actually fine with me. Two nights a week and one Saturday morning is enough for me to handle.

That’s the look ahead at the opportunities and threats I see in my horizon. What’s on your radar in the months ahead?

Helpful or hurtful?

I’ve been inspired by Radio Girl‘s posts. Not only the content, but the serene pictures of her  life in an RV. Thought I’d post a shot that is my patch of serenity, my backyard.

I took full advantage of the holiday on Monday and spent the day in the garden getting dirty, and planting some perennials from my Mom’s garden. For Toronto, it’s a pretty sweet backyard.

This is where I spend a lot of time reflecting. Found myself thinking about my friend that I told you about yesterday – Jane. I presume the lack of comments on the post may mean there are no easy answers for her.

When I speak with Jane, I sometimes wonder if she thinks I’m a real pain in the butt. Some people think I have it all together. They think I have all the right answers. I really don’t. I’m only on a path to get out of debt – meaning, I still have debt and I’m not debt free. From where I sit, that makes me a debt-free wannabe. I didn’t just arrive here in January 2010. For years and years I’ve been mindful of money, and I’ve budgeted and tracked – sometimes. In the past, I didn’t do as good a job as I could have. In my old ways, there wasn’t enough discipline to go with my plan.

I get tough when I speak with Jane. Partly because she’s a long-time friend, and I don’t have to sugar coat much with her. But mostly because I hate to see her in this turmoil. I would like to wave my magic wand and make it all better – but alas, I have no magic powers.

There’s another woman I work with on occasion at my part-time gig. She’s mentioned to me that she and her live-in boyfriend would like to get married some day, and buy a house. She’s late twenty-something and has a reasonable student debt. She’s mentioned in passing that she tries to put some money toward that debt. She’s also thinking about starting a family at some point soon. I often see her carry a little something from Starbucks. After our work shift she always orders take-out for her and her boyfriend. She makes the same minimum wage as I do. I can’t imagine that there’d be much left over after she works a couple hours then picks up take-out for two. Since I don’t know her very well, and she didn’t ask for my opinion, I just keep it zipped.

This journey, for me, is 10% planning, 5% revising the plan as needed, 5% tracking and 80% discipline. Who wants to hear that advice? Can you tell your friends that it really isn’t all that complicated, all they need is a bucket o’ discipline? That’s pretty tough to hear. If a friend asks for your advice, where’s the point when being helpful becomes hurtful?

Back to Jane. She hasn’t told me that I’m a pain in the butt, I just feel like I must be at times. Although it’s taken a couple years, she’s finally speaking to a credit counsellor to get some answers. That’s a step in the right direction. I’ll look forward to hear how that went. She thinks I have it all together because I’ve managed to financially survive a divorce and a failed common-law relationship. Supported, of course, with a line of credit that’s being whittled away.

As I countdown the days to the end of May, and know I’ve spent more than I’ve earned, I am assured that I don’t have it all together. Excel tells me that every time I turn on my computer. Despite my inability to balance the books for the second month in a row, I am confident that I’m working this plan I’ve developed for myself. Now, if I could just manage to master knowing when to zip it, and knowing when to be helpful and hoping I’m never being hurtful.

Can you help me help a friend?

I have a girlfriend in deep fiscal doo doo. She’s been in this spot for a long time. The financial hole she’s in gets deeper and deeper. Now, she’s at her wits end.

Let’s call my friend Jane.  Jane is married to Dick.  Dick and Jane have three kids. They’re in their mid-40s.

Until recently, Jane hasn’t worked outside the home in about ten years. Now she has a part-time job at about 33 hours per week. Dick, who has been in sales for a number of years, is recently unemployed and isn’t bringing home a regular pay cheque. He brings home a bit of cash by helping folks out with renovation projects around their house.

Dick and Jane have, to my knowledge, never had a conversation about money. Neither of them know exactly how much they owe. They’ve consolidated consumer debt to their mortgage twice in the past five years. Their mortgage debt is probably on par, or slightly greater than the value of their home. The bills aren’t getting paid now. Mortgage payments are being missed. A family member is helping by purchasing groceries. A line of credit with a balance of $20,000.00 only gets interest payments, the principle hasn’t been touched in years. She keeps her money in her nightstand, because her bank accounts are frozen.

Jane is exhausted. She doesn’t even want to discuss the money or lay blame about who did what, she just wants it all to go away. Dick has a fragility about him. I think he buys things as a substitute for whatever may be missing in his world. When he’s lost his job in the past, or can’t provide, he falls into a depressed state. He sometimes has difficulty controlling his anger.

Today, they’re going to chat with a professional about bankruptcy, and their options. Dick wants to go to the bank and consolidate the debt, again. Jane figures the bank will laugh them outta town.

This family hasn’t attempted to live on a budget. The kids participate in sports leagues, which involve fees, travel, eating out, etc. This isn’t a family that lives the high life – they don’t have fancy clothes, they don’t have top-of-the-line furniture, no elaborate vacations. The stuff like eating out, cell phones for kids, repairs on aging vehicles, renovating an old house and travel to a family cottage have done them in.

If bankruptcy is the answer for now, I’m not convinced they won’t be right back where they are in short order. They don’t discuss money nor budget together. Jane is afraid of the anger and the depression, so she lets Dick do almost anything. Jane wants out.

Jane brings home about $1625/month in her part-time job, and another $770 in child tax benefits from the government for a total of $2395. If she decides to leave and rent a house, average rental costs in her town are about $1300/month for a house big enough for her and the three kids.

Do you have any ideas about how a single parent in Ontario can apply for housing subsidies? Can she work and still apply for some social benefit that would help her bring up the rear, so to speak? There would be no guarantees that Dick would be able to pay for child support on any consistent basis, if at all.

I’ve suggested she needs another part-time job and to apply for Trillium drug benefits.

Your thoughts welcome…

Should we ask for credit when we don’t need it?

Over the last couple of years, it’s occurred to me that when I needed money, it’s been harder to get. When I don’t want/need it, it falls from the trees.

I don’t mean extra income or windfalls, I mean offers of credit.

A number of years ago when my eldest was heading off to College, I inquired about an increased line of credit to help with tuition, residence and books. I had just moved to Toronto and signed the deed on this pricey brick box we call home. The bank where I had an existing line of credit said “nope, thanks for asking though”. This was the first time a lender ever said no to me. I was in shock. I mean, how could they say no? I was gainfully employed, made a reasonable salary, paid my bills on time. What gives?

I was so put off by their denial, I started shopping around. That’s when I moved my day-to-day banking to CIBC. In order for CIBC to get my business I asked them for a line of credit. I was crystal clear this was a deal breaker for me if they couldn’t offer it. They extended one, but cautiously.

Last year when I renegotiated the mortgage on my principle residence because I was buying out an ex, Scotiabank had a difficult time figuring out how to extend me the funds. I won’t even try to explain how it resolved itself, but it did, and it was a bit of a legal nuisance to be honest. The bank and I both took some risks, but calculated risks on both sides.

Fast forward to now. Without even asking, CIBC has boosted my line of credit from $20,000 to $27,000. No, I didn’t ask. They just sent me a letter telling me what a lovely customer I was and here’s another $7,000 if you need it. No, I don’t need it. My first reaction was to call them and say “thanks a bunch for thinking of me, but please just keep my credit limit where it is!”  I reminded myself that just because it’s there doesn’t mean I’ll use it. I’m rock solid confident I won’t use it. BUT, if something happens when I do need it – it’s there. Knock on wood, I hope I don’t need it.

In the same week Scotiabank, who only eight months ago had to move Everest to get my mortgage sorted out, called to offer me a high limit credit card, because I am “such a great customer”. Can you believe it? I wanted to use my favourite line from the movie Misery when Kathy Bates’ character says “have you all got amnesia?” I did say a polite no thank you to the nice man from Scotiabank. I assured him I didn’t need more credit, nor another piece of plastic in my wallet.

Now that my debt is being whittled down month after month, seems the banks are trying to bait me with a few carrots. It’s nice to be in their good graces again. I’m thinking it’s easier to get access to credit when you don’t need it.

What would you do in those situations?

Happy Victoria Day weekend to my fellow Canadians. I’m looking forward to a weekend of friends, family, art and dirt. See you on Tuesday.

Projecting a deficit for May

There’s the last headline I wanted to write. Especially the second month in a row.

Truthfully, I knew two months ago that May might be dicey. I have a rental property, and my current tenants gave me notice they’d be out at the end of May. When they first became my tenants three years ago,  I collected first and last month’s rent. I have no idea where the last month’s rent went. So, I’m on the hook entirely on my own for the mortgage and taxes for the rental property.

Lesson learned in my new reality: when I get new tenants, park last month’s rent in high interest savings, and forget it’s there until it really is the last month.

Considering the revenue loss for that one item is $1295.00, my projection of about a $250.00 deficit isn’t bad.

Since I saw it coming, I did make a few changes. I took away my $50 for gardening. That hurt a bit. Also cut my public transit budget by $75.  We managed just fine. The nicer weather meant we walked a bit more.

Other hits against the budget included a dishwasher repair of $95.00, and a last minute invitation to a family 80th birthday party, which meant an expenditure of $80.00 for our brunch bill. I wouldn’t trade the working dishwasher or the brunch with family.The family dinner is really my ex-husband’s family. I haven’t seen most of them in over five years. A special invitation was extended to me to attend. On the drive home the youngest said “how much was brunch?”  When I told her she then asked “how much did we have in our dining out budget?”  When she heard me say “nothing” she gave me a funny look. It gave us a good opportunity to talk about priorities and how to identify the things that truly are important, rather than stuff that we’d forget about in a week or two.

I was hoping that the mortgage switcheroo for the rental property would have been a done deal in May, which will mean a windfall of about $1900.00. Doesn’t look like it’s likely to shake down for May. I haven’t projected that $1900 in my cash flow because it isn’t a done deal, at least not yet.

I may be holding the rental without tenants in June as well. We’ll just have to see. When I became a landlord, I accepted the notion that there may come a time when I have to carry the property for three months without revenue. I was prepared to do that then, and I am still prepared to do so.

So, for the second month in a row, there’s a couple hundred bucks spent that isn’t earned. The deficit doesn’t mean an increase in debt load. Back in February I met a short term goal of having a minimum balance in my chequing account to help shelter me from little storms. Although I used up some shelter last month, there’s still enough there to keep things on an even keel. I will restore that minimum balance by July.

There are no more months in 2010 where I’m projecting a deficit. Knock on wood. As of this morning, there’s $90 in the grocery jar to keep us going until May 31st. Time to dig deep in the freezer and get creative!  I know we’ll do it.

The cost of not owning a car

It’s been eight months since I have been living without a car in Toronto. Sometimes when people hear this, they gasp a bit.

Over the weekend I attended a family brunch to celebrate an 80th birthday. Most of the people there haven’t seen me for a long time, they didn’t know about my carless status. When  I mentioned to a few folks that I didn’t own a car, somebody asked “how did you get here?” It wasn’t a stupid question. The brunch was in London, a good two hours west of Toronto. We are so accustomed to having a car in the driveway, usually when I say “I rented one” they feel a bit stupid.

When I started out on my carless journey, I was honestly thinking it would be a hardship. I was prepared to suck it up and really analyze what I’ve spent on transportation after six months. After the sixth month went by, I thought I’d be on the market for a little, affordable ride. Boy, was I wrong.

Eight months later, I can honestly say there is no hardship. Sure, there have been days when dragging my little bundle buggy with groceries down an icy sidewalk has made me cuss a bit. Yes, it’d be easier to throw the 7 kg bucket of cat litter in the trunk than it is to haul it home.

When I started to get religion about budgeting and retiring my debt, I knew there was no room for a car payment or car savings. At the six month mark, I didn’t bother to do an analysis – I knew it wasn’t a priority for me to shift my budget in order to put a depreciating hunk of metal in the driveway.

I’ve spent $1,325.77 renting cars since September 2009 with the nice people at Autoshare. Of that expenditure, $487.09 was reimbursable. Therefore, my outlay is $858.68, or an average of $107.34 per month. This is my total, all in cost. This includes fuel, taxes and insurance. I don’t pay for car repairs. I didn’t pay for parking (just got lucky).

I cannot own a vehicle and put it on the road for $107.34/month. The insurance alone would exceed that amount. Add to that the car payments (if there were any), fuel, maintenance, licensing and parking. I wouldn’t save any money on my regular public transit spending if I had a car.  The kids still need bus tickets to get to school. In the city, it’s easier and often faster to take public transit. Parking in my neighborhood is a nightmare. (Although there is a vacant parking spot at my house!)

This month I’ll be doing some serious car renting. There was last weekend’s brunch. This is a long weekend and I’m heading up to Georgian Bay for a couple days. The last weekend in May I’ll be heading up to my rental property in Barrie to prepare it for new tenants. Now that I’ve done the math for the last eight months, I’ll stop fretting about racking up rental charges for May.

If I had a car, I’d likely go to places (that really means stores) that I don’t go to often to “browse” around. It’s a lot easier not to spend money when you’re not in the store in the first place. If I had a car, I’d hear a lot more of “Mom, can you drive me to ……”  One of the things I love about the city is the freedom the girls have. One subway token and they can go from Scarborough to Mississauga. I don’t have to go along. That saves me time, and my time has a value too.

Folks that live in cities with less than adequate public transit may not have as easy of a time being carless as I do in Toronto. I’m usually not waiting any more than 10 minutes for a bus or streetcar. Rarely more than 4 minutes for a subway. Being without wheels forces me to shop locally. Thankfully, I live in an area where I can easily walk to Loblaws, Sobeys, Foodland (formerly IGA), Food Basics and a couple of great, independent fruit stands. A short bus ride and I can be at No Frills. My doctor, dentist, bank and library branch are within walking distance. There’s a great florist and garden center within a stones throw. The drug store and post office are close, and there’s both a new and used book store near by. What seems like the smallest Home Hardware in the world is a short walk. Honestly, I have never gone looking for a gadget or problem solver this hardware store didn’t have. They’re amazing.

Yes, the real estate is pricey here. That 15% that I’m supposed to be able to allocate on transportation goes largely to housing. I only spend about 3% on transportation.

Now that I’ve stopped even considering owning a car, I wonder if I’ll keep thinking that way when I have a greater cash flow? I really hope not. Anyway you slice it, I still can’t put a car on the road for $107/month. When the cash flow is greater, it still seems like a good idea to pack it away for the future. I really don’t need to depreciate my money in the driveway.

At least when guests come, there’s somewhere to park.