Archive for January, 2011

Thinking about money, but needing a holiday

Friends, it’s official. I’m cranky and tired.

Despite my routine thoughts about my taxes, my after tax pay, my retirement and my debt load, I’ve avoided blogging for a few days because I’m dog tired, likely incoherent, and I think now – just plain cranky.

There’s been a perfect storm brewing over the last little while. I’ve worked pretty hard in my full-time gig. Now, I’d expect we’re all working pretty hard in our jobs, and I don’t expect any sympathies or pats on the back for doing my job. But, it’s been just over a year since my last holiday, and my last holiday was not restful.

The part-time gig is just crazy busy, in the best kind of way. Weight Watchers has amped up their marketing and promotions and we’re busier than we’ve been in 13 years.

Gus, my littlest furry son, who is adorably cute and soft, likes to get up at 4 a.m. for a love-in. I can’t resist his charms even at this ungodly hour. His approach is soft and loving. He wants nothing other than just to snuggle and purr and lick my nose. By 5:00 a.m. he usually wants up. He changes his approach to annoying. Therefore, I’ve been up at 5:00 a.m. every day (yes, EVERY day) for about the last four months. It’s amazing how much a person can accomplish between 5:00 a.m. and 7:00 a.m. if they wanted to.

The youngest has been in a Lupus flare since Christmas. Not a bad one, but a flare none-the-less. She’s been at school for two days since Christmas. This always means increased Mommy demands at home.

The snow in the driveway and on the front walk will simply have to wait to be shovelled. I physically can’t do it.

Hope this doesn’t sound like complaining or whining. Like the meterologist on TV, I’m merely pointing out the high pressure approaching from this direction, and the other high pressure zone approaching from another direction, to create a bit of a personal hurricane.

I have a vacation scheduled to start February 2. This morning, I’m wondering if I’ll make it to February 2. There are certain things I want to have crossed off my to-do list by the time I walk out of the office. Both things are rather large. It’s possible to accomplish them both, but one certainly trumps the other. Send me productive vibes, and perhaps I’ll make it to next Wednesday before I walk out of the office for a couple of weeks.

What do I have planned for my vacation?  About 15 afternoon naps.


Just call me FIFI

A million years ago, I took a rug hooking class. I actually really loved “hooking”. Come on, stop thinking naughty thoughts!

I still have a couple of rugs in the basement in the “to do” pile. These are the traditional hooked rugs, not latch hooked rugs like you might see in kits.  In those days, my rug hooking instructor had classes that she called FIFI classes.  She meant “find it & finish it”. They were very popular. Seems with two projects still to be completed, I could use a good FIFI session myself.

This week, I was thinking of FIFI in a new way – find it and FIX it. Over the last year or so, I’ve not only tried to be smarter with money, and more accountable about where it goes/should go. I’ve also tried to be a better custodian of my stuff.

My step-mother has been a good teacher about this. She’s a very devout Christian, and never misses an opportunity to count her blessings. In her view, she’s been entrusted with the care of things, because she’s been blessed to have them. In my usual world view, I have stuff because I brought it home. I probably don’t spend enough time really assessing how lucky I am to have that thing – whatever it may be.

This week, with the snow (and salt trucks) bombarding Toronto, I did a lot of thinking about my boots. There are a couple pairs of boots in my cupboard. There’s the big Sorels, a.k.a. snowmobile-type boots. I probably haven’t worn these yet this year. I used to wear them all the time. In Toronto, you just don’t see much of them, unless you’re shovelling the driveway for hours on end. There’s a brown pair, that are sorel-like, but every so slightly more delicate. They match my day-to-day brown winter coat. Then there’s my gun metal gray long, dressy, shiny boots. Yep, those are the ones I want to wear most often. Trouble is, they’re not very practical when there’s ice, or slushy goop on the streets and sidewalks.

As I look at the salt stained boots inside my front door, I can envision my step-mother wiping off her boots and shoes. I know she does this every time she wears them. Man, wish somebody would do that for me! Her stuff lasts a long time. (I also have to point out she’s retired, so she has a tad more time for this sort of thing than I do.) On the weekend, I noticed my gun metal gray boots had worn heels, and salt stains. I wiped off the salt, but the heels, both bottoms and sides look rather chewed up.

In my neighbourhood, there’s a kindly old fella that runs a shoe/boot repair spot. He’s often put lifts on my heels in the summer time. The other day I wondered if he could rescue my shiny boots. When I took them in he looked at me and said “I have to build up the heel a bit” and I gave him a hesitant “okay”. Then he added “it’ll be $25.”

Initially, I thought that was a lot. Normally it costs about $10 or just under to put lifts on my heels.  I knew this was a bigger job than lifts on my red pumps. I also know I can’t go buy a new pair of boots that I’d like as much for $25. They were looking raggedy enough that I was no longer wearing them with my dresses or slacks. It’s a shame to have nice boots that I’m not wearing. So I gave the shoe maker the nod and he’s now delivered my boots back to me, they look almost like new!  I’m so excited that I FIFI’d my boots.

Now I’m excited to sew on some buttons to pants and shirts that are also waiting for a little fix. I’ve expanded my wardrobe just by fixing stuff. Maybe one day I’ll become a better caretaker of things and need fewer fixes.  For now, fixing is still an economical option.

Maybe I’ll try and be a slightly better caretaker of my stuff for 2011. I can’t promise I’ll wipe off my shoes and boots with every wear, but once a month would be a vast improvement. Now, if I just knew how to stop the coffee machine from turning off every time a pot brews….

Canada’s new mortgage rules

No doubt you’ve heard some news about Mr. Flaherty’s announcement yesterday regarding Canada’s new mortgage rules. If you haven’t, you can check it out in today’s Globe and Mail.

I’ve noticed, by a casual and highly unscientific poll of my friends Facebook updates, not everybody is excited by the change. Since I seem to be the only one that applauded quietly in my office when I read the news yesterday morning, I’ll stay quiet about it on Facebook.

Some experts say this will slow the housing market and cause existing sale prices to go down. Some say this will slow the economy, folks will buy less stuff.

I’m not an economist nor an expert at very much, but I’d be happy to list the reasons why I think this is a good move by Flaherty.

I’ve watched two of my friends lose their homes because they borrowed too heavily against it, and then owed more on it than the house was worth to sell. The new rules indicate that folks can borrow loans up to 85% against the value of their home, instead of the previous 90%. In the two cases I know about, my friends had simply spent more than they earned on a consistent basis. They’d bought new homes in a new subdivision and suddenly needed new furniture, new trees to plant outside, new vehicles, new, new, new. Jobs were rare, particularly those that paid reasonably well. In both cases, the women, who previously worked, couldn’t find jobs and wouldn’t work for minimum wage. Eventually, they both made consolidation loans against their home, up to 90% of the value. Seemed like an okay move when real estate was in a heyday, but they heydays didn’t last. One family lost their house (and marriage), the other is in the middle of bankruptcy filings.

In my network of friends, I know two people who did this, and they both lost. That’s a 100% failure rate. How much safer will 85% be? I’m not convinced it’s much better, but it is a start.

If it’s safe to have a 20% downpayment and not trigger Canadian Mortgage and Housing Corporation (CMHC) insurance, isn’t 20% equity the magic number? Perhaps we’ll get there eventually.  Flaherty knows he can’t push too hard.

One of the biggest changes Flaherty made is changing the maximum amortization from 35 years to 30. Ok, I understand a longer amortization means you pay less week to week or month to month. For some, it may mean the difference of owning a home or not owning a home. Flaherty is saying if that’s the benchmark, then you can’t afford to own a home, at least, not yet. Rules aside, folks will find all sorts of creative ways to get around this kind of thing. Perhaps they’ll borrow money from a line of credit in order to make the payments, maybe they’ll borrow from friends or family, or sell investments. I’m not suggesting any of this is wise, I just know folks will find a way if they want something bad enough. I have about 37% equity in my home, and quite frankly, I tremble at times when I look at the remaining obligation I have. Some folks want to be in a home so bad, and they have no idea what the costs are to just maintain it, and to keep paying the mortgage month after month, and year after year. I’m looking forward to saying goodbye to this mortgage before I retire. Imagine paying a mortgage in your retirement?

When the mortgage on my rental property was up for renewal last year, the bank said “20 year amortization?” and I said “nope, it was 20, now it has to be 15, right?” Yes, it costs more, but I have a plan for this property to be paid for by the time I retire. I can’t execute that plan if I’m still paying a 20 year mortgage 15 years down the line.

All of these changes are about reducing our exposure to risk. More debt means we’re destined for more trouble when those interest rates rise. I can imagine the conversation over a pint at a pub on the Hill between Carney and Flaherty:

“Jim, I can’t keep these rates this low forever you know. Canadians are holding record debt. The kids aren’t all right.”

“I know Mark, I worry too. What if we take a small step to help protect a few thousand Canadians. What do you think of shorter am’s and decreased borrowing against value?”

“It could work Jim. It’s a start. Some people would be ticked at you.”

“I know, but we have an obligation, don’t ya think?”

“Yeah Jim, we do.  Bartender, another round please…we have a plan to draft up.”

Do Flaherty’s changes impact your world?


Domestic blues soon to disappear

One of my secondary motivations to get my financial house in order in 2010 was to be able to hire a house cleaning service. In my old life, when I lived in a house that cost under $200,000 and I had a car and I lived in the ‘burbs, I had this little perk.

Her name was Diana, she’s still a friend, despite having moved and stopped being her client many years ago.  Diana spoiled me for just about anybody else, so I was hesitant to start a hunt for somebody new again. I had also convinced myself I couldn’t afford it here in Toronto.

Last year, however, I met Karolina. Karolina runs her own cleaning company. She’s serious about what clean means and her standards are similar to mine. While Karolina doesn’t (usually) do the cleaning herself, she brings in her staff and explains the drill on their first few visits. Then she comes back when they think they’re done, and she does the walk through with them and reviews their work.  I’ve always loved this about Karolina, because it takes the pressure off me for doing that job and feeling like a jerk.

In 2010, Karolina brought me this lovely woman named Victoria. It took Victoria a couple of visits to really get a feel for the place, but she mastered it. I’m a bit of a tricky client too, because I’m usually home, although in my office, and I prefer not to be disturbed too much. Victoria found the perfect way to do her job, while allowing me to do my job.

In September 2010, Victoria got what she called “a real job”. I was very happy for her and her family. They are recent immigrants, and her and her husband landed a property management job at an apartment building. It came with better pay, and it also came with a place to live for her and her three boys. I was outrageously happy for her. Of course, that meant I had to say goodbye to Victoria.

Since September, Karolina has not been able to recruit new staff that are up to her standards. I wasn’t too concerned about the delay, because I was putting that money toward other things (hello? line of credit?)

Over the last 6-8 weeks however, I’ve really started to ache for some serious help in this department. My full-time work life is really high octane, my part-time work life is also busy when I’m there. The youngest has been in a mild Lupus-flare since Christmas, the eldest is working pretty flat out at her full-time gig. All this means that I’ve been really falling behind on a bunch of things.

My grocery budget in December was under spent because I couldn’t actually leave the house to get groceries on a few occassions.

Stuff around the house is like litter on the street. As soon as somebody fails to put one thing away, a dish, a coat or a comb, it gives permission for the next person to leave whatever they have in their hand around. Don’t think for a minute this is all about the kids – I have a role in this too! I also leave my dishes on the counter, and coffee cup on my desk and clothes on the floor, etc.

Some of you may be reading this and thinking “sheesh, she’s whining about having debt and she wants a house cleaning service?” Well, yes, I guess that’s the broad strokes. Oh, and I hope I’m not whining – I hate whining.

Although my kids aren’t toddlers at 22 and 17, I’m still their Mom and at various times, the Mom role trumps everything else. If somebody isn’t well, I’m Mom and nurse.

Still, the cats need to be fed, the cat litter gets scooped, the garbage/recycling/compost needs to go outside daily, the driveway and walkway needs shovelling/salting of late, groceries need to be bought, fetched with the rolly cart through the snow and put away, the bills get open/paid, meals are cooked, dishes are washed, laundry and ironing is done, medical appointments/tests are made, doctor’s notes are written, prescriptions are filled and sent away for reimbursement (in some cases)… you get the idea. I haven’t even mentioned the housework yet.

Imagine my thrill when Karolina called to say she has a couple of new staff, and she wants to bring one in next Friday! She’s also given me the assurance that if this one doesn’t work out, there’s a plan B with another staffer. I’m elated.

The option that works best for me is every alternate Friday. Karolina knows if I can’t have Friday morning, I don’t want any time at all.  This is based on years of knowing myself. If the house looks undone on Friday – I’ll clean it myself. There’s no point in sending somebody in here on a Monday, it’ll be done. I can’t help myself. I pay $85 every alternate week.

To me, this averages out to $42.50 weekly, which means my weekend days have a value of $21.25. Yes, I’ll pay $21.25 to have my Saturdays and Sundays to do whatever else I choose to do, other than scrub the floors, do the dusting, vaccuuming, bathroom cleaning, etc.  After all, there’s still the cats, the kids, the driveway and the recycling to deal with.

The house rules about this have always been clear for the kids. The things in their room must be picked up, because the person who comes is a cleaner, not a tidyer. We don’t expect a house cleaner to know where the socks and shoes go. I always give the cleaner full permission to not clean a space if it isn’t tidy, because I don’t want to pay anybody to put my own socks away.

This has been a good strategy for all of us. It means that at least every alternate Thursday, things get picked up. Sure, I do a light-duty tidy in the alternate week, but I much prefer that than the heavy duty deal every weekend.

I can barely wait!

Extreme Couponing?

Last week my eldest happened on a new show when channel surfing – Extreme Couponing on TLC. I suspect some of you likely saw it.

In the event you missed it, the show, now a series in production, features Americans who make it their life’s mission to pay nothing or very little for their groceries, with coupon use, stacking, matching and sales sleuthing. You know this is an American show, because I just don’t think this kind of stuff is possible here in Canada.

Yes, they get awesome deals. Yes, I’m a bit envious that I’ve actually laid down money for toothpaste and a few of these folks have not done that in years. Other than that, I’m a bit bewildered.

One fellow cheerfully confessed he has 150 years of deodorant stockpiled in his home. I can’t help but wonder why. I didn’t hear him mention that he wanted to open up his stash to his neighbours and friends and invite them to help themselves and throw a few cents in a jar. These were for his own personal use. Maybe he’s also a vampire and plans to live forever, but that’s another show I guess.

One woman seemed quite rational. She explained that in her analysis of sales flyers, similar products go on sale about once every three months.  Therefore, she purchased only enough of something (where she had a coupon) to last her three months. I was impressed until the clip of her and her young son at the grocery store were confronted with the sale of pasta sauce and she opted to purchase 40 jars. Seriously? That’s a three month supply?

One fellow inspired me when he discovered a deal on cereal and ordered 1000 boxes to donate to his local church/food bank. Those 1000 boxes of cereal set him back about $150. Good for him.  Still, rooms of his home were set up like a storage warehouse, where him and his wife kept their stocks for personal use.

Most of the participants told a similar story: they were in debt or in some sort of financial turmoil, and turned to clipping coupons or coupon clipping services to help curb the costs at the grocery store. For many of these folks, their couponing has turned from habit to a full on job, where coupons are ordered in binders, plastic sleeves, etc.

Hey, I like being organized. I just had a million questions when I was watching this show.

  • Do these people work? Or do they spend their entire days hunting for deals and coupons to match?
  • Do they live in bigger homes (with higher mortgages) in order to stockpile their great deals?
  • If they rent, have their landlords checked out the condition of their place lately? Does anybody whisper anything about a fire code?
  • Do they drive bigger cars and own trailers to take their haul home?
  • Are they all charitable, or is it all for family/personal use?
  • Have they been banned from some stores?
  • Have they been former shop-a-holics for non-grocery items and they’ve simply transferred their shopping high to consumables and think that’s a more noble cause?
  • Do their friends and family tell them they’re freaks?
  • Are they re-selling stuff at a profit?
  • Do they all have weight issues?

I will say, the show inspired me to look at my little stash of coupons in the cupboard and see if I could use any on my grocery trek this weekend. Obviously I’m not as organized as some of these folks because I ended up tossing a few that had already expired before I could use them. However, I did end up taking a small fistfull to the grocery store yesterday. I saved just over $10, which was cool.

Still, with my 7 or 8 coupons in hand, the guy behind in me in line huffed and puffed and picked up his groceries and went to a different line. Remember, I don’t have a car, so I only buy as many groceries as  I can physically carry. This was NOT a lot of groceries. Clearly this guy had other things on his mind.  On my last coupon, the cashier had to get a manager’s approval to override the register – apparently it only likes 5 or 6 coupons, not 7 or 8. Imagine what would happen if I had a binder full and a truck and trailer outside?

When there are sales here, I often see stores limit the quantity at that price. When you exceed that quantity, there’s a different price.  Additionally, most of my coupons often say “cannot be combined with any other offer” or “maximum four coupons in a similar transaction” or some such thing. There aren’t any grocery stores, that I’m aware of anyway, that have coupon matching like I know they do in the States.

Sure, I’ve used store’s price matching and price guarantee. I’ve called stores on the Scanning Code of Practice. I’ve used my Shopper’s Optimum points to get stuff for free. I’ve had some free flights (save for the taxes) thanks to Aeroplan points. But I suspect I’ll never emerge from the grocery store with $600 of stuff and lay down $2 or $3 and walk out without being arrested.

Thanks to TLC for reminding me I can be better at using coupons.  Still, I can’t help wondering if the folks featured here will be in line for the next season of Hoarders



2011: still under construction

You’d think if a person started drafting their 2011 budget months ago, they’d be done by now. Perhaps most are. I’m not convinced mine is done – at least not yet.

In my wrap-up of 2010, I took the opportunity to take stock of went well last year, and what needed improvement. In the past, I think I drafted my budget in haste. Figured I had all the answers, and pushed ahead like a bulld0zer. This year, I’m being a bit more reflective, and taking some time to really think about what needs to be done.

Add to that, a couple change-ups in 2011 that will have a financial impact.

One of the biggest changes is this: I will wrap up my small business, because the company that I’ve contracted my services to over the last couple of years has given me an offer of employment. This offer comes with the same compensation, although I’ll have all the appropriate taxes and other deductions taken off at source, like most people do. The offer comes with no additional benefits. What’s it all mean? Like anything, there are pros and cons. After weighing both, I see this as being very positive.

In the “pro” side of the column, my new employer will be a partner with me in contributing to CPP. This alone should save me about $1200 a year. I’ll also be eligible for EI, should, heaven forbid, I’d need to tap into it. I’ll also be able to stop fretting throughout the year about whether or not I’ve tucked away enough money to pay the CRA when I file my taxes annually. Finally, I’ll not have to worry about the collection and filing and reporting of HST. Hooray, less paperwork.

On the downside, I will lose the opportunity to keep the HST on the purchaes I make for the office. Those expenses will now be office expenditures, rather than business expenditures. While I’ll still be able to claim legitimate home-office expenditures when I file my taxes, I’ll have to eat the HST. It doesn’t add up to a bundle, but it’s something. I’ll also lose the opportunity to deduct the mortgage interest (the portion pro-rated to my home office) as an employee. Although my mortgage interest is a hefty sum, by the time I pro-rate a portion, again, it isn’t a fortune.

So, while it will all likely net out to a similar amount in the end, it means that I have no clear idea right now, what my take-home pay will be month to month. I know my deductions will be heftier at the beginning of the year than the end, but I’m not sure what number to plug in for revenue. I’ve used a CRA calculator to come up with a best estimate. A few months down the road I’ll be smarter.

The next  “ah ha” moment happened only a few days ago, is that I will only contribute $1,500 to my youngest’s RESP this year, rather than the $3,000 I originally budgeted. After talking with her Dad and understanding how much he had invested in an RESP for her benefit, I realize that together we need about $30K for her post-secondary education. After my $15,000 contribution this year, and his saved $12.5K, I think we’ve officially arrived. I’ve calculated this knowing there are 4 years at $6K per year ($24K in tuition), then add another $1K/year for supplies ($4K in supplies), and another $2K for those unexpected things. I would predict that my daughter can also make a contribution here, which will help bring up the rear on the savings for the final year. It’s highly possible that she’ll be in a good position for a bit of scholarship money.

Yesterday, the eldest and I took a look at the state of her TFSA, and discussed what she could contribute over the next 9 months to her account. With her current earnings at the grocery store, she’s reasonably confident she can contribute $1K/month to her TFSA. This would max out her TFSA in September to $15K. If she’s able to do that, she’s got her first two years of post-secondary paid for. Therefore, I’ll stop contributing to her TFSA for her education, because between the two of us, we’ll over contribute. Instead, I’ll take the $3K I’ve earmarked for her, and contribute it to my TFSA, but for her education. By the time she’s in her third year, I should conceivably have $6K she can use for her third year. In her fourth year, I should be able to continue to provide another $3K, and she can either see if her Dad can help out, or save through summer work, or a combination of both. Her marks are pretty good too, perhaps there’s a scholarship in her future too! This was another great moment, and I’m really proud of her for saving what she’s saved so far, and keeping her eyes on the prize.

She also revealed, as we were speaking, that she’s a regular reader here, and she felt I’ve misrepresented how her previous post-secondary education was paid for, which is true. She was a big contributor the first time around as well. For the record, she worked hard then and put many thousands toward her College Degree as well. Her Dad and I didn’t pay half of the total cost, we paid half of what was left over after her contribution. I’m just so darned proud of her. I owed just over $10K when I graduated from University. If the girls play their cards right, and if we’re able to stick to our plans, they should owe just about nothing when they graduate.

Finally, after a question from Jacq at Single Mom, Rich Mom about whether or not I should contribute more to my RRSP than my TFSA, I thought some more about my plans to contribute $3,600 to each savings vehicle. I had wondered about this myself, and Jacq’s smart question gave me the confirmation that I should be thinking more about it too. As I thought about the question, I realized pretty quickly that I still operate day to day with a little bit of fear, and a heaping tablespoon of caution. For me, putting some money in a TFSA means if something goes wrong, I’ve got money available fast, without dipping into my line of credit any further. As I pondered this for a bit, I realized that in 2010, I never touched a cent of the credit available to me through my line of credit. I only paid it down. I also realize that I don’t have an emergency fund yet, and if the stuff REALLY hits the fan, a balance of $3K in my TFSA may not save me.  I’ve decided to plug away at putting some liquid cash in my TFSA for 2011, but not $3,600. I’ll shoot for $1,000 this year (in addition to the amount that I’ll put in to go toward school for Daughter No. 1), and the remaining $2.6K will go to RRSP. That is smarter. Thanks Jacq.

I will, however, commit to the extra $1,000 toward the mortgage. I want to have a mortgage burning party when I’m 60. Although, when analyzing my net worth with the girls, I realized my equity in this place is $197K, not $155K as I’d reported previously. I love an error in my favour. (I just watched a local real estate show, and the ‘experts’ are projecting a 5-6% increase in the Toronto market for detached and semi-detached homes for 2011. I’ll totally accept that. The condo market, however, is projected to cool in the latter half of the year. Too many speculators a couple of years ago, and they’re feeling the cash flow crunch now. Add to that lots of new condo projects to hit the market in the fall and we’ll have a supply and demand conflict).

Finally, and although it has nothing to do with my budget, I’ve got a couple of books about WordPress, and I’d really like to spruce things up ’round here a bit. Some of you have these cool widgets and fancy things. Heaven forbid I could actually learn something about the platform here!

All that to say, I’m still working on the budget. The goal, however, is to continue to be diligent, change it when it needs to be changed, and finish a lot fewer months in the red in 2011.

Are you confident your budget for the year is wrapped up?