Archive for December, 2010

Where the money went in 2010: Part 4 – Savings

When 2010 started, saving money was not on my radar. I had one mission – retire my line of credit/consumer debt. Early in the year, I struggled with whether or not to put all my eggs in my debt basket, or to put the odd bit into longer term savings.

The recommendation for savings is approximately 10% for long term savings.

In 2010, I primarily focused on savings for post-secondary education for my two girls. Eventually, as a secondary goal, I realized I needed to re-start contributions to my RRSP, even if they were woefully inadequate. The girls are heading off to school either in 2011 or 2012 or both. My retirement is a bit of a longer way off, however, will be much costlier.

In 2010, my total contribution toward long-term savings was $6,700, or 7%.

Each daughter received $3,000 and I managed to tuck away $700 to my RRSP.

Here’s a bigger picture, however:

My RSP: My contributions this year were a modest $700. I know that’s not nearly enough. However, my RSP portfolio from December 2009 to December 2010 has increased $11,500, or about 15%. That’s a MUCH better story to tell. I had made some changes to the portfolio early in the year, and apparently those were good decisions. I really don’t pretend to know much about investing, if anything at all. I’d like to say I want to learn more, but somehow it doesn’t seem all that exciting. I better get excited soon, because those investments will keep me off the streets in my old age. There’s many times I think I’d like to buy stock in something, and frankly, I just don’t know how.

The youngest’s RESP: Last December, the balance was $9,900. My contributions this year were $3000. The Canadian Government, through their Education Savings Grant, pitched in another $550. The money, which is in a very conservative, very safe money market, gained about $40. She now has just over $13,500. With tuition quoted at about $6,000 per year, and another parent to pitch in, I’d say we’re just about there with her post-secondary savings. Amazing. Actually didn’t think I could pull it off! Just about time too, she’s in Grade 12!

The eldest’s TFSA: Although the eldest has completed college (and I’ll be able to say officially it’s paid for once my line of credit is really at zero), she’s looking at another 5 years of post-secondary (Nursing + 1 year specialization as Diabetic Educator). Again, with a $6K per year price tag, she’s looking at $30,000. Since her Dad and I already paid for one education, we want to help out on her goals, but will need her to have a more significant financial responsibility too. She’s too old to have an RESP, so her TFSA is her post-secondary savings. With her new, full-time job, she can go after this reasonably aggressively. My contributions were $3,000, and she has pitched in another couple of thousand. I’ve suggested to her that she needs to have $12K saved for September 2011. In my mind, there’s no reason she can’t accomplish that.

For 2011, my goals are to start getting more serious about savings. My debt will be gone, and I’ll be better poised to focus more aggressively on my own long-term security. For the girls, my commitment to them will remain the same – $3,000 each.  For myself, however, I aim to contribute $3600 to my TFSA and another $3600 to my RRSP. I also want to pack away an extra $1,000 toward my mortgage debt. Yesterday, I sent twelve post-dated cheques in the mail to my bank branch, incase I changed my mind and thought it was too aggressive. While that $1,000 isn’t really long term savings, per se, it will save me a bundle of interest in the long term.

If I achieve all that, I will more than double my savings commitment for 2010. Frankly, I’m excited about working on saving money and earning interest, rather than paying off what I’ve already spent, and paying interest.

Tomorrow: Part 5 – Debt Repayment


Where the money went in 2010: Part 3 – Life

Life is an awfully big piece of my pie. Good thing I like pie.

The Life slice of one’s financial pie is to include everything from groceries and entertainment, to medical. It is, in fact, supposed to be everything that isn’t housing, transportation, debt repayment or savings. Perhaps we have too much life ’round here?

For my house, “Life” would have to include: Cable TV, phone(s), groceries, booze, garden/lawn care, home decor, hair/cosmetics, dining out, entertainment, vacations, gifts, books/subscriptions/music, school expenses, vet bills, clothing, medical expenses, charitable giving, life insurance, disability insurance and home office expenditures. I’m exhausted just typing it.

Our “Life” rang in at $34,680 or 34%. It’s a shocking number.The recommendation is 25%. Since you know I’m already under the housing & transportation budget by 3%, you gotta presume in the days to come, I’ll be reporting that I’ve under spent the categories of savings and debt repayment as well.

Here’s the deets:

  • Cable TV – $606; I actually reduced my cable package at some point in 2010, funny, the rate didn’t really go down. I hate that I can’t bring myself to cancel it all together.
  • Phone(s) (one landline, one cell phone) $868; The home phone, and my youngest daughter’s cell both come in just under $40/month. (The eldest pays for her own cell phone).
  • Groceries – $6385; This is where keeping money in a jar/envelope saved me this year. I managed to stay on budget in this area for the first time in my life.
  • Booze- $262; I’m actually shocked I didn’t spend more. I think I must have buried some in the grocery budget  😉
  • Garden/Lawn care – $556; Not one single cent of regret here. I intend to stage a repeat for 2011.
  • Home Decor – $1910; Okay, I stopped in my tracks on this one. I had to go back to my spreadsheet to see if I had an error in my formula. Nope, everything added up correctly. Over half of this expenditure was attributed to January 2010. I had just finished recovering from a split from my ex. I’m not talking about an emotional recovery, I mean a recovery in the budget world. Specifically meaning that I had a final installment due on some furniture I had purchased to replace stuff that went out the front door in a moving truck. My attitude when I replaced stuff was “get what you want (within reason), and pay it off diligently.” I was also under an impression I could buy an old antique chair on Craigslist for dirt cheap, and have it reupholstered and save a bundle. Chair was dirt cheap, I refinished the wood myself – still dirt cheap. Reupholstery – nasty expensive, but gorgeous. The biggest chunk of the remainder for this category were planned purchases of a new set of dishes that I strategically bought a few pieces of each month. I now have a complete set, and they were purchased month, by month, by month. Yep, they all add up here!
  • Hair/Cosmetics – $465; For a woman who only got her hair cut once at a discount shop, this sure seems like a lot. There was a month I gave the girls money to get their hair cut, and we purchased gobs of sunscreen (necessary around here), and the other usual things you’d expect three gals to have. Nothing too elaborate, it just added up.
  • Dining Out – $828; This was more than I had budgeted for, but I realize, eating out is part of staying sane.
  • Entertainment – $754; We didn’t do any big events this year, at least not with big price tags. We did enjoy a number of local fringe festival shows ($10 each – honestly), and I joined a few clubs, like a Garden Club and a Drawing Class. For 2011, we’ll have to be sure to budget for some inexpensive local stuff, like festivals.
  • Vacations – $356; I had to look this one up too. This was a hangover from our Christmas vacation 2009. Charges on my VISA bill for baggage fees (forgot how nasty they are), lunch at an airport and a cab home.
  • Gifts – $887; I’m proud of that number.
  • Books/Subscriptions/Music – $106; There’s a lot of thrift store/yard sale novels and iTunes downloads in there!
  • School expense (includes drama daycamp) – $908; The Daycamp was a killer at the time, but no regrets. One has to have balance. My daughter learned a great deal from the experience.
  • Vet bills – $1818; Ouch. You’d think a woman with a 15 year old cat would have budgeted differently for vet bills. I didn’t. Nor did I project the adoption of three new fur babies. I have to admit the pets have had a significant impact on my budget (remember the laptop?). At risk of sounding like a crazy-old-cat-lady in training, the value add I get from sharing a house with them is really priceless. Even when they’re driving me mental. I suspect my bill in 2011 will look similar – the spaying and neutering will land on my credit card for the year ahead. Maybe I am a crazy cat lady already.
  • Clothing – $2050; At first I thought this seemed like quite a bit. For most of the year, I was responsible for clothing all of three us. In hindsight, I guess it’s not so bad. I suspect in my past life it was much, much worse.
  • Medical Expenses (non reimbursed) – $5574; There is precious little I can do about this one. This is about 1% of my total spending. In 2011, I’m looking forward to this going way down with the eldest being covered for medical expenses through her new, full-time job.
  • Charitable Giving – $400; I’m not proud of this. It’s not where my values are. I realized, however, I didn’t have the cashflow to be charitable with in 2010. Let’s hope we get our life more in line with our values in the year(s) ahead. I would like to see this significantly higher.
  • Life Insurance – $968; What can I say, I have no benefits and I have two homes, mortgages, debt and children who depend on me. Gotta have it.
  • Disability Insurance – $3,279: (see above).
  • Home Office Expenditures (claimable on my taxes) $5,700. This would have looked more reasonable had I not replaced my laptop this year.

As I look at the list, and I realize that I’m spending too much in this area (which causes me to under save, or not put enough toward debt reduction), I wonder what I could do differently in the future. There are some big expenses in here. On one hand, the financial experts want to ensure that you have your “house in order”, which means stuff like Life Insurance and Disability Insurance. This is particularly true for a single parent. If I lose my job, there is no spouse that has my back. If I get hit by a bus, I want my children to inherit my real estate and posessions without any accompanying debt. I also want to be able to provide for them some of the things that I would have provided if I were still around, like post-secondary education.  If my two girls were left now with my properties, they would have to hire somebody to help them manage their affairs.

My Disability Insurance is steep because I earn a good living, and I have the kind of insurance that would cover me in the event that I am unable to do MY job, not just ANY job. Many people have been burned by this because their disability leaves them able to pour coffee at Tims or greet folks at WalMart. That’s not the kind of income I earn. I want to be able to insure my income. So, being responsible adds to my life pie.

The whole phone and cable TV thing really gets to me. I think the Telecommunications companies are just earning money hand over fist, and I’m ticked off that I’m reliant on them. I’m unlikely to cut my own cable as long as the girls are home. Who knows if I would when they go. (Hey, think of how liquid I’ll be then!).

The whole issue with pets is a choice I’ve made. A classic example of “just because they’re free, doesn’t mean they don’t cost anything!” I really can’t imagine being petless.

The vacation budget will go way up in 2011, that’s what I’ll be saving for. I suspect my life pie will be as big next year as it was this year. Down with medical expenses (hopefully), up with vacation expenses!

One would hope there will be no more emergencies with laptops, and the Home Office budget will be a bit more reasonable.

What do you see in my “Life” pie that you would advise me to do differently?

Tomorrow:  Part 4 – Savings

Where the money went 2010: Part 2 – Transportation

I’m a single mom who doesn’t own a car. Don’t think for a minute that I don’t have any transportation expenses.

According to Gail Vaz-Oxlade’s guidelines, transportation should be about 15% of your expenditures.

This year, I spent $4049 on transportation, or about 4%. Considering that I over shot housing by about 8% this year, it’s totally reasonable that I underspend in this category. In her guidelines, Housing plus Transportation equal about 50% of your spending. In my case, I come in at 47%. Not bad. Folks in urban centers may find themselves in a similar situation: housing is costly, transportation is chaotic and expensive to own a car, so folks depend on public transportation and car sharing/car rental services. My friends from the suburbs are still dumbfounded that I’ve been without a car for 16 months. Sometimes, so am I!

Where’d the $4,049 go?

Public Transportation & Parking: $2609. Most of this is Public Transportation (TTC largely, a few cabs), there’s likely less than $50 in parking in there!  In Toronto, there are no school buses to take kids to school. My youngest is in Grade 12, and we live 6 km from her High School. On nice days, she does walk.  Most of the time, however, she takes the TTC bus to school. We pay for her student Metropass. Additionally, my eldest now commutes to and from her full-time job, using TTC. She and I share the cost of an adult Metropass. When there’s a Metropass available, I use it to transport myself to my part-time gig with Weight Watchers. Otherwise, I use a token to pay my way. It adds up, doesn’t it?

Car rental: $991. Thank you AutoShare for making sure I can take treks up north to visit family and friends, or to just collect a big haul at the grocery store and not have to carry it home.

Fuel: $374. Still have to put gas in those rental cars.

License renewal: $75.

Early this year, I was really torn with the idea of owning my own car. Many of you helped talk me off the ledge. Even if I had a car, I would not escape the cost of Public Transportation. (I’m not going to become Mom’s Taxi if I own a car). With the insurance alone for a five year old model being about $250 a month ($3,000/year), it’s easy to see now why I didn’t make the move.

I’ve also been torn over a desire (not a need) to purchase either an electric bike or an small motorized scooter, like a Vespa. As I look ahead to 2011 I think this will continue to be a want. Even now, the store that sells electric bikes in my neighbourhood is going out of business and having a December liquidation sale. As I peered through the window on Boxing Day, I saw the model I really liked sitting on the floor still. I’m sure I’ll be in there this week taking a look at it again.

In recent months, I’ve started charging my eldest for half the cost of an adult Metropass each month (or $55). I was presuming that we’d share it, and I’d have access to it almost any time I needed it to go to WeightWatchers. In the last month, it’s rarely available when I need it. I’m considering getting two adult metropasses (rather than one student, one adult) for a few extra bucks a month, to save me from purchasing extra tokens when my eldest is working late.

One of my budgeting flaws in 2010 was not budgeting for the cost of car rental and fuel.  So, every expense I made in this regard became an over expenditure. I know – I was delusional. At any rate, my 2011 budget has 200 per month set aside for car rental/fuel. If I can manage to shave $165 off my car rental expenditures in 2011, I’ll have balanced the books. In 2010, my rental property was vacant for a while, and I made a number of trips to Barrie and back. This year, it promises to be vacant again (as my tenants will vacate in the Spring), but I’m hopeful I won’t need to make near as many trips.

Tomorrow – LIFE! (prepare yourself, it’s expensive!)

Where the money went in 2010: Part 1 – Housing

I’m particularly excited to do a calendar year end wrap up, where my personal finances are concerned. If you’ve been around here for a while, you’ll know I’ve tracked my expenditures for years, but what I haven’t done consistently is actually budgeted (and followed it), nor have I kept with it for a full twelve months.

Like a kid going back to school who vows to keep their sneakers white and their notes neat, I often let this self-promise slip in the last half of the year. This year, however, I have to say my sneakers are still pretty clean and my notes, albeit not perfect, are quite good.

Over the next few days, I’ll be taking stock of where the money went. Like many of you, most of my money goes to housing.

For those of you who are Gail Vaz-Oxlade fans, you’ll know she recommends that about 35% of your money should go toward housing. (She also mentions these are guidelines, and one can be over or under in one area, and compensate in another). By her definition, housing means mortgage/rent, taxes, utilities, insurance and maintenance.

For this exercise, I will not include any housing fees for a rental property I own, I’ll only use my principle residence, in a groovy neighbourhood in Toronto.

Here’s the sobering number: $43,600, or 43% of my total spending this year.

Mortgage: $34,173. This was a couple hundred bucks more than I had budgeted. I have a total of three mortgage products on my home (no, not a second mortgage – it’s a long story). Two of those products are at a variable rate. When the Bank of Canada adjusted the overnight lending rate three times in 2010, my total mortgage payments were impacted. Still, my largest mortgage loan is at 2.15% (variable), and the second largest is fixed at 4.16%. I won’t complain.

I’m not expecting three increases from Mr. Carney in 2011, but who knows. I’ll sit in my non-financial expert armchair and say there’ll be one increase in 2011.

Taxes: $3995. Remarkably, this was a couple hundred dollars less than I had budgeted. Early in the year I asked for a reasssessment on my property, and I was granted one.

Utilities: $1977. This includes heat, hydro and garbage/water. My heating was a shockingly low $625 for the year. We had a warm winter, and didn’t have the heat set up as high. We wore more sweaters too!  The hydro came in at $795, which was much lower than the $1,150 I had budgeted for. Toronto Hydro introduced the “time-of-use” billing this year. and We really tried to do our laundry and run the dishwasher after 9 p.m. on weekdays, with the bulk of the laundry relegated to weekend tasks. Finally, we paid Toronto Utilities another $557 for garbage collection and water/sewage use. This was actually about $150 more than I had budgeted for. My eldest daughter moved in with us in August of 2009, and I likely didn’t have enough utility data to really assess how that may impact our water use (read: showers). I didn’t put too much water on the garden this year, but made good use of the rain barrel.  Mother Nature was also kind in this regard.

Home Insurance: $1142. This actually increased in 2010 – twice. That was the story just about anywhere I looked in 2010. Insurance rates are on the rise. I even read a few stories that suggested single people pay more for insurance because the presumption is the incomes are lower, therefore the necessary repairs may wait until a home is in a state of disrepair, and an increased risk for an insurance claim.

Maintenance: $2315. There weren’t a lot of major repairs for the house in 2010. I did replace the kitchen floor (only because my favourite contractor was available, and he only charged $335). It may not be the right spot to put this expenditure, but from January to September, I also had a housekeeper, once every other week.  She quit in September, and she hasn’t been replaced yet. She will be (I hope) in 2011. This was a big part of keeping me sane and also keeping me from thinking that I just worked all the time.  Other things in here are pretty mundane household things.

For the record, I have about $155K equity in my home. Toronto’s real estate market remains pretty hot in some neighbourhoods – mine is one of them. A home recently for sale on my street continued to enjoy a bidding war. I expect the same would happen if I put a sign on my front lawn. My home is appraised over $500K, and I totally get that’s a lot for a single mom with two kids. However, the past year has taught me I can hold onto it, if I can continue to stay gainfully employed. If something should happen to my income, at least I know that it wouldn’t linger on the market too long.

The other value in my home is that my girls can live here and still seek post-secondary education in Toronto, without the additional expense of residence and meal plans. With them both looking at another 4 or 5 years, that’s a lot of value to add to my thoughts about my home. Finally, my income is largely linked to my location. I’m attractive to my employer because of where I live (access to major services fast) and my part-time gig is possible because of my location.

Tomorrow – we’ll look at transportation!

Merry Christmas to you!

As this week wears on, it’s clear to me that life won’t get much less busy, and regardless of any other event – Santa comes Friday night.  I’m really very excited.

The shopping is done. I didn’t manage to stay within my budget for Christmas shopping, but frankly I didn’t budget enough. Having said that, I didn’t go totally nuts either. I took some lessons from you smart people and used some Aeroplan points for gifts or gift cards to go and buy the things that the girls wanted.

The kittens have been spayed and neutered this month, which hasn’t slowed them down any. The price-tag for that came in just over double what I had budgeted for in January (charged to VISA). Over the holidays, I’ll have to seal the deal on my 2011 budget. It’s largely done, but it still needs some tweaking here and there.

For those of you who were wondering how my friends and I did with our 5 pound challenge over six weeks – well in those particular six weeks I weighed in EXACTLY the same as I did when it started. Right on the ounce, if you can imagine. However, in the week that followed, I lost 3.6 lbs. So, the challenge worked. Apparently I just like to keep my own schedule. With the amount of baking and chocolates that have managed to sneak into my house, I’m not sure how long that little victory will last.

I’ll be excited to do a year-end wrap up from a financial perspective. Despite the number of months that I finished in the red, or the challenges with one thing and another, 2010 has been a year of great learning and accomplishment. Thanks for being part of it!

Best wishes to you for a magical and merry Christmas, for good health, hearty laughter, lasting memories and pleasant surprises in 2011!

Must be December!

Friends, I apologize for my sporadic posts this month.  It doesn’t seem to matter how organized or together I think I am, when December arrives, it all goes out the window!

The story of the last couple weeks in Ontario is SNOW! Lots of it!

Here in Toronto, there really hasn’t been that much, but it doesn’t take too much to clog up the city streets either. Hugs to my friends in the London and Sarnia area who’ve been whallopped (if that’s a word), and also big hugs to my old friends and family in Barrie and up around Georgian Bay. I haven’t got my shovel out here yet, but that’s only because I haven’t had time.

I can’t even intelligently speak about my progress to date on the personal budget. There’s a pile of receipts forming again on my diningroom buffet, and one of these days I need to deal with it. It won’t be there much longer because I can’t stand Santa coming into a messy house. He needs room to put his presents around!

Despite the reincarnation of the receipt mountain, I can say that the grocery budget is under half spent even though it’s over half-way through the month. Again, just too busy to get out there. We’re not starving, don’t worry.

There are some interesting changes for the budget in 2011, and once I wrap my head around them, I’ll share them with you. It’s all good – nothing worrisome.

Hope you’re managing to stay healthy, stay within your holiday shopping budget, and enjoying the snow (if you’ve got some).

Christmas & Costco

I really missed being here last week! Thanks for your well wishes about my youngest. She is on the mend, and thankfully has only a little cough lingering. The common cold, around here, can turn into something far worse. We had a couple of sleepless nights with fevers, but that’s over now. I’m thankful that it’s just a common cold.

If you’re anything like me, you’re in full December nutty-land right now. Although my Christmas shopping is virtually all done and most of it wrapped, I’m still up to my neck in things to do on the work front, and things I want to do around the house. Add to that a bunch of Christmas parties, cards to mail, dinners, drinks with friends and you’re in nutty-land.

Yesterday I had the pleasure of heading north of Toronto to gather with some family for our holiday meal and gift exchange with the kids. There are 9 grandchildren in this bunch. Mine are the oldest, and officially surpassed the “gift receiving age”, which is totally cool with them. Two more grandchildren are in Texas, and we don’t get to see them too often.  The remaining five were present and accounted for! They’re all great kids.

I seem to remember a time when the grandchildren received some pretty generous gifts. Even I was more generous in the past than I was this year. The idea to give out children’s movie passes (complete with treats) was the overall theme. The kids got one from me, that I ordered online at a discount, and they also got some from their other aunt and uncle. This was a pretty cool gift for my brother, who cringes at the price to take his four boys and himself and his wife to the movies. More family time for them, and the boys are anxious to see the new Yogi Bear movie coming out.  Win-win for everybody.

Before arriving at the Christmas party, I had the opportunity to take my Mother’s Costco card and do a bit of shopping.  Seems like years since I’ve been in Costco. When I lived about a ten minute drive from Costco, I went there all the time. Their milk and eggs and bread were usually cheaper than I could buy at the grocery store. I also stocked up on some stuff we used a lot of in big, bulk quantities. I was married then, and my ex-husband has never been a light eater. It seemed to all make sense. Back then, I also bought lots of stuff that I didn’t intend to buy.

Yesterday, I was a bit shocked at how big everything looked to me. I found myself looking in people’s carts and checking out what they had. Maybe they were checking out my cart too!  I had eight loaves of bread (6 regular whole wheat, and two loaves of raisin bread on sale) to go in the freezer. Does that look weird to anybody? There were folks with a dozen or more rolls of Christmas wrap in their carts. To me that says “I have spent a bundle on presents, and this is all the paper I need to buy to wrap ’em all”. Maybe it’s something else entirely – what do I know?

With my WeightWatchers hat on, I’m always amazed at how much stuff gets out of the store that’s processed. The frozen pizzas, the frozen desserts, deep fried wonders, baked muffins as big as your head, etc. Bundles and bundles of that stuff.

I was pretty restrained, I thought. Stocked up on dish soap and dishwasher soap, chocolate chips (can’t get them for that price for Christmas baking anywhere else), healthy choice soup, frozen blueberries and raspberries and those eight loaves of bread.

Costco makes it pretty easy to overspend. The staff poised at the end of every alternate aisle gives you some sample of something yummy that’s stacked in a pile right beside them. My daughter and I had almost a meal just shopping and taking advantage of their samples. We had crackers with crab, we had lobster bisque, we had chocolate, more chocolate, green tea, etc. This strategy obviously works for them.  I remembered as I was checking out that Costco takes AMEX now.

Overspent? Why not put it on credit? Sure, you have to pay off your AMEX card in full when the bill comes, but you can use your line of credit or your other credit cards to pay it off!

Although I did enjoy stocking up on some stuff there, and walking around the aisles and checking out their wares, I’m glad I’m not within temptation range of this store any longer. As it was, I spent just over $100 without indulging in anything that I’d be having guilt over. My Toronto kitchen doesn’t have room for those suburban sized boxes of Cheerios and Oatmeal. I think I’ll stick with my local bulk store.

Not sure if I’ll make it back to Costco again before Mom comes back from the south in April. If this is my only trip, I think that’s ok with me. I realize now, I’m not missing too much.