2008 financial resolution

I saw over at Brip Blap that Cash Money Life is holding a contest on establishing 2008 financial goals in order to promote the new Carnival of Financial Goals. The challenge is to write a SMART (see acronym spelled out below) financial resolution for yourself for 2008. If you choose to participate, you’ll be helping to set yourself up for financial success in the New Year, and you could win an iPod Nano or one of three finance books. Whether you choose to participate in the contest or not, I highly recommend you do the goal setting exercise.

Okay. My SMART financial resolution for 2008 is:

Specific:
To pay down at least $5000 worth of Hubby’s Canada Student Loan by the time our baby is born (current due date June 19th). We’ll start this resolution on December 1st rather than January to jumpstart the New Year.

Measurable:
Once I’m back on my feet, I’ll calculate how much money we’ve contributed from December 1st to Junior’s birthday. If it’s over five grand, we’ve been successful. This is yet another reason not to be premature, kid. You hear me down there?

Actionable:
We’ll submit a large percentage of our Christmas cheques (unless they’re specifically intended for baby by the giver, in which case they’ll go to savings) and bonuses to the loan, and buy used baby gear for items we deem to be safe to do so (e.g. not the car seat). We’ll also start doling out a set allowance every two weeks for each of us to spend as we please rather than spending whatever we like when we like. This should cut down our spending quite dramatically and allow us to reach our goal.

Realistic:
We’ll have to send an average of $834 a month to the loan in order to reach $5000 by June 1st. This should be well within our abilities given our current income and necessary expenses.

Timely:
We’ll be able to tell monthly whether we’ve been reaching our average payment goal. If we’re ahead, great. If we’re behind we can step up the effort. The uncertainty of the end date will give us incentive to make larger payments early, which will help our overall debt reduction by chewing through more principal and thus reducing interest. Once we’re parents our expenses and income will change dramatically and I’ll have to set a new goal once I’ve become accustomed to the changes. This is why I’m ending the resolution at that point.

I’ll post our progress in a trackbar on my side panel.

Thanks to Cash Money Life for the great idea and best of luck to the Carnival.

Student Loan Status Update – the Continuing Saga

I’ve so far sent $1500 towards my student loan. $500 more will be sent tomorrow when I get paid. That will leave about $75. The lender will automatically remove $50 from my account on Monday as per our original consolidation agreement. Once that goes through I’ll be calling them to determine how to finish it off and close out the account. Woo hoo!

Next.

I’ve discussed previously how much I loathe Private Bank (pseudonym), which holds Hubby’s student loans. It’s reached a new level. I’m naming names.

Private Bank is Scotiabank.

I’m aware that some of the Canadians reading this probably love Scotiabank and hate TD. Or BMO, or Royal or CIBC. Everyone in Canada seems to have one of the Big Five that they refuse to deal with.

Scotiabank is mine. Here’s the latest reason.

We decided that we would use part of our emergency fund to get rid of the Provincial Loan (PSL) that is so irritating. Hubby called them to find out how to do so. After confirming his information and identity by putting him on hold after ever question (Last name? Please hold. Date of Birth? Please hold. Social Insurance Number? Please hold.) Chickie (who refused to give her actual first name, and so receives my arbitrary derogatory nickname) announces that it’s not possible to transfer funds directly to the PSL since those accounts are not online. Hubby points out that the consolidation forms state that they can automatically withdraw monthly payments from his account, therefore they should be able to withdraw the full amount from his account given his written permission. Hubby is informed that monthly payments can only be automatic if the chequing account is from Scotiabank.

Hubby is irritated but says that he will write a cheque, can he please be given the total amount of the loan including interest for the next three days? Chickie states that it’s not possible for her to determine what future interest will be. Hubby points out that they’re a bank and since their profits are tied to interest coming in it seems odd they’d be incapable of future projection. He asks what the daily interest was from yesterday, and says he’ll add that amount times five to the cheque.

He dropped the cheque off at a branch yesterday. The people at the branch had no access to his provincial loan accounts (since apparently they keep them securely locked in the Stone Age), so couldn’t process it themselves, but were kind enough to put his cheque, loan document and letter directing that the cheque be used to pay off the full amount into their interdepartmental mail. I have no quarrel with the people at that particular branch.

First issue solved, though with no help from Chickie.

Hubby then tries to set up payments on the much larger Canada Student Loan. This one sends out statements and is reportedly available to other banks. However Hubby had already tried to set up bill payments through our PC Financial account. Scotiabank CSLs were not one of the available bills. He called PC and was helped by Shaila, who said she’d be happy to set it up for us but Scotiabank had not supplied them with a merchant number for that type of account. If Hubby could have Scotiabank contact PC or get the merchant number from them himself, Shaila would arrange it.

Fast forward to Chickie. She laughed when Hubby asked why PC Financial didn’t have access to those accounts. Her response was that they only dealt with the other ‘old banks’ for these types of accounts. Apparently in her mind the old banks consist of Scotiabank, TD, and Royal.

I looked it up. The Bank of Montreal is older than any of those three, and all five of them (CIBC being the fifth) are over 140 years old if you don’t count name changes. Nice argument. Quite the snob for someone working phone support. Here’s a hint: If you’re going to be condescending, do try to at least have a clue what you’re talking about. It’ll make you appear merely rude instead of rude and stupid. Still, she’s right in saying that PC is a new bank. But since its services are run through CIBC, it should have access.

Hubby requested a merchant number for the account type and Chickie had no idea what he was talking about. She suggested that he open a Scotiabank chequing account and deal with the payments through it. Hubby valiantly refrained from telling her hell would freeze over first, and instead asked to speak to her manager since she couldn’t help him.

Chickie hung up on him at that point. I could understand if she hung up on me, because by that point I would have been rude, vulgar and belligerent. Hubby has infinitely more patience than I do, both through natural gifts and years of working IT phone support.

Anyway, what are we going to do?

We have a currently unused line of credit through TD, one of the two banks deemed worthy for Scotiabank CSLs to deal with. I’ll be sending payments to it from PC, and three days later sending payments from TD to Scotiabank. We won’t pay any interest on the line of credit, though we’ll lose out on the three days of interest from PC.

I’ll probably also draft a letter to their complaints department and cc Rick Waugh, the President and CEO. He deserves to know why we will never, ever get another service through his bank.

Good thing he’s 'richer than you think’, because I bet he won’t care in the slightest.

My big money mistake and how to avoid it

The Canadian Capitalist is running a contest in celebration of his third year blogoversary. He’s offering some truly snazzy prizes. Go check it out and recall your own biggest mistake for him. We’ll all learn from it.

My biggest monetary mistake was taking eight years to graduate from university. Yep. Eight. Impressive, no?

Why did it take me eight years? A combo of reasons, the first of which is going to sound arrogant as hell. Apologies in advance.

I’m an intelligent person. It doesn’t always show (this being a case in point), but I score highly on IQ and other aptitude-type tests and breezed through most of my school years with no trouble at all. I never learned how to study because I never needed to. My parents never noticed the deficit. I was getting As, clearly I was doing all right.

My grades started to fall in my upper high school years as the work got harder. Sadly, this corresponded time-wise with my highest levels of teenage insensitivity and angst, so I didn’t even try to figure out what was going wrong. Consequently I still got into the university of my choice, but I didn’t get the scholarships my earlier marks would have assured me. Financial mistake #1: Not realizing the potential savings four years of free schooling would have provided. Luckily for me, my parents were prepared to pay for my first two years, and I had enough saved up to cover the other two.

Enter first year. Become overwhelmed with entirely new level of expectations and knowledge. Still fail to learn to study. Ergo, fail first year.

I made a substantial effort to learn more (and drink less) and scraped through my second year, earning the credits needed to pass the first year and ending the suspension the university had placed on me for failure. But I still had no study habits or methods that I could apply regularly. Financial mistake #2: Not taking full advantage of half a free education.

Then I got married. Hubby and I moved into our first apartment. We both went to school that year and scraped a few credits out between us. Seemed Hubby had the same problems I did, for similar reasons, only he wasn’t draining his savings, he was chewing through student loans. Financial mistake #3: Wasting my own money on an education I wasn’t paying enough attention to, and allowing us to become saddled with more debt than was necessary.

I spent the next two years going to school part-time and working full time in an effort to keep us above water before taking a year off to 'rest' (from school, not work). Hubby went to school and advanced slowly, graduating in computers just in time for the dot.com crash. Suddenly the streets were filled with out-of-work programmers who had way more experience and knowledge than he did. He ended up working at Timmies...not the most lucrative of positions.

I finally went back to school full time where I was fortunate enough to meet two important people. Erica was gregarious and naturally brilliant, and spent every spare moment sucking up spare knowledge and learning everything she could from everyone around her, be they biophysics professor or homeless man, because to do otherwise was a waste of time to her. Penny was not as quick at picking things up and not as brave, but she worked like a pack mule until she understood everything she needed. I learned to love learning for the sake of it from Erica, and I finally learned how to study from Penny. Together they were unstoppable, and after three years I finally graduated with an excellent upper year average.

Hubby went on to take a three year college diploma in computer engineering, which he worked very hard at. Guess he learned to study somewhere along the way too. I eventually landed a research position at a non-profit, and he recently started working for a now-recovered software company.

Financial mistake summary: In total I wasted four years of my life and ended up with a $4000 student loan and an $11,000 line of credit. We also had $22,000 in Hubby’s student loans to pay.

Couple of geniuses, that’s for sure.

Things you could learn:
1) If you’re good at something, you can always become better.
2) Don’t under-appreciate other people’s generosity, be it institutional or familial.
3) Make sure your children value and nurture their gifts as much as is possible, be they academic, artistic, athletic or otherwise. Ensure they’re not bored or coasting through life without effort. It’ll bite them in the end.
4) Watch the spending, particularly when your income is slim to none.

Any lessons in there that I missed?

Sharing the news - Help required

So, this Saturday will be a big day in babyland for us.


No, no. I still have more than six months to go on this whole pregnancy train, as my morning sickness reminds me every day. I'm sure my general level of crankiness is what reminds Hubby.

On Saturday we're having both sets of parents over for lunch at our place. Ostensibly it's an apology meal for being so busy lately that we haven't had time to socialize with them (and by busy I mean sick and tired, though not of them). In reality it's the day we've chosen to tell them to expect their first grandchild.

I'm eleven weeks pregnant today, and close enough to the three-month mark to feel fairly confident that all is going well. I'd hoped to have undergone my first ultrasound so that I'd have a visual aid, however my parents are unavailable every weekend after this until Christmas, and the ultrasound isn't until next Tuesday. I'm sure they'd make themselves available if they knew such big news was in store, however that'd spoil the surprise.

Reasons I want to tell them before Christmas:

1) It's going to be increasingly difficult to hide the belly bulge that is beginning to make itself known. My pants are starting to get a bit tight, and for the first time in my life this is not a sign to lay off the crap food because I haven't been eating (much of) it.

2) Apparently I'm such an alcoholic and cola addict that the tip-off sign to everyone who has figured it out so far is that I'm not drinking booze or Diet Pepsi. There is no way I'll be able to find a non-tip-off way out of the wine that accompanies every meal leading up to the holidays at both families' houses. Since we want both sets of parents to find out simultaneously, I can't let them figure it out on their own.

3) I don't want to receive a bottle of my favourite expensive port from my generous in-laws for Christmas. I won't be able to touch it for at least a year (assuming breastfeeding goes well), and having it sit in my wine fridge completely untouchable will just make me cry given my overly-hormonal state these days.

4) I don't want either set of parents to waste money buying brie and blue cheeses just for me to eat over the holidays. You're supposed to stay away from unpasteurized cheese while pregnant, and to have it sitting in front of me...Well, see the statement about the port. Drinking 20-year-old Taylor Fladgate while eating a nice piece of blue cheese is my idea of nirvana. Hmm. Maybe I'll just have that cry right now.

5) I want to tell my far flung relatives about the pregnancy in their Christmas cards. It'll be nice to have a piece of interesting news to share for once, and it'll save on overseas postage and phone calls if I do it all together. However, I can't tell Uncle Mort if I haven't told Dad yet, can I?

6) Some of the friends who know we're expecting have family in the same small town as our parents live. They've been very good about keeping the secret so far, but it's bound to come out over the holidays. And in a small town, once someone knows, everyone knows.

7) This is where I get selfish. I'd like to receive some baby-oriented gifts for Christmas. A gift card from Toys"R"Us will be more useful than one from Best Buy. Sorry Hubby.

So, all four of the parents will be told this weekend. The question remaining is how. This is where I need your help.

If you've had kids, how did you tell your families, especially about the first one? If you haven't but are planning to, how have you dreamed of doing it? Feel free to share your stories in the comments. I need all the ideas I can get.

Christmas Spending: Gaining control and keeping it

'Tis the season for spending money. Since everyone is probably well into the mindset of the holidays, I thought I might share how I try to keep control of my spending as I gear up for Christmas.

Christmas is the big buying holiday that my family celebrates, but it can work for any of the other religious or cultural annual events as well. If you celebrate Diwali, Eid, Hanukkah, Kwansaa, Winter Solstice or anything else I've left out, adjust accordingly for your traditions, be they gift-giving, wearing new clothing, giving charitable donations, holding a feast, or otherwise.

Step 0: Start doing everything that follows in January so you can save up for it and take your time.
I’ll assume that you haven’t done so this year (usually I have, but this year I stupidly didn’t), but that you’ll think about doing it next.

Step 1: Figure out who you have to buy for.
My list consists of my parents, my grandmother, Hubby’s parents, brother and two surviving grandparents, my niece, our eight closest friends, two children of friends, and whoever’s name I pull out of the office Secret Santa hat. Don’t forget that you’ll probably send Christmas cards to people you don’t send gifts to, which naturally involves postage.

Step 2: Figure out how much you can afford to spend.
This may be a very different amount from what you wish to spend, or what you spent last year. I’m hoping to spend around $500. I’d been planning on $1000, but since I became pregnant my financial priorities have changed significantly. Sorry to my family for the cheaper gifts, but you’ll have the grandchild you’ve been harping about for eons sometime next June.

Step 3: Divide your total spending budget among your recipients.
Keep a reserve of extra money for those ‘great deals’ or ‘oh, it’s perfects’ that’ll otherwise blow the budget. I’m planning on breaking up the bucks along these lines:

Mom & Dad: $70
Granny: $25
In-laws: $70
Granny-in-law: $25
Grandpa-in-law: $25
Brother-in-law: $15
Couple friends 1: $25
Couple friends 2: $25
Couple friends 3: $25
Single friend 1: $20
Single friend 2: $20
Niece: $25
Friends’ kid 1: $15
Friends’ kid 2: $15
Secret Santa gifts: $15
Christmas cards: $10
Stamps for cards: $30
Wrapping paper: $15

Total: $470; $30 worth of breathing room.

Step 4: Start coming up with ideas.
Brainstorm with your partner if you have one. Check catalogues and flyers. Browse online. Ponder your recipients personalities, hobbies and upcoming life events. Think about your beliefs and values. Try to put off strolling the mall until absolutely necessary, unless you have the willpower of a saint and a lock worthy of Fort Knox on your wallet.

Step 5: Take advantage of your skills.
Can you bake? Sew? Knit? Paint? Are you an amateur photographer? Good with wood? Like scrap booking? $10 worth of ingredients can be turned into a fortune in cookies if you have the know-how and a recipient with a sweet tooth. Same goes for yarn and blankets or scarves. Lumber and furniture or frames. Creativity and time can make an inexpensive idea really mean something to someone. But keep it appropriate. No fudge for a diabetic, no mittens for a snowbird.

I’ve made pies in the past. I’ve found cheap photo frames and filled them with a montage of old family photos I dug up from the basement. I’ve decoupaged Gladware (hint sandpaper the outside first) into holiday cookie containers and filled it with yummies. All of these take time and effort, but save money.

Step 6: Use child labour if it’s available.
No. I don’t condone sweat shops. Trent at The Simple Dollar mentioned picking up end rolls from your local newspaper for a couple of bucks and letting your kids loose with the holiday crayons or markers as a way to make cheap and personal giftwrap. I think it’s a brilliant idea, though I of course haven’t tried it yet. You can probably do the same with thick cardstock to make your Christmas cards.

If you’re artistic yourself (which I most certainly am not), you could make cards and/or wrapping paper in a similar (if more elegant) way and have them be much lovelier than what you’ll find in stores.

Step 6: Hit the stores, either online or in real life, with your budget and idea list in hand.
Obviously the earlier you start this, the more time you’ll have to find the perfect gift at the perfect price. Try to be firm. That $85 sweater may be perfect for your sister, but if you’ve only budgeted $50, it’s going to cause a problem. Keep the sweater in mind. You can probably find something similar for cheaper somewhere else. And if you’re lucky it’ll be even more perfect.

Step 7: Don’t resign yourself to it if you’ve blown it.
In a moment of weakness you’ve spent three times what you were supposed to on a massive snow globe for Uncle Mort. You have three choices.

Option 1: Suffer through it, cursing yourself when the Visa bill comes in January.
Option 2: Head back to the store and return it.
Option 3: Futz with the budget and spend less on everyone else.

Obviously I recommend option 2, and suggest option 3 only if the store won’t take it back. Which reminds me: make sure you know the exchange and return policies. You can get great deals on Final Sale purchases, but you better be sure you really want them.

Step 8: Enjoy the conclusion.
Okay. You’ve finally purchased everything you need. You’ve wrapped it all, sent off the cards and the distance gifts, had the big day, stuffed yourself with turkey and/or ham, given out some of your gifts in person, received some in return.

Whew. Glad that’s all over and done.

It’s time to analyse a few things:
How’d it go overall?
Did your recipients like your gifts? If not, why not?
Did you stay on or near budget? If not, why not?
What went well and what went badly?

Once you have the answers to those, you’ll be able to start getting a handle on next year. Christmas stuff is usually on sale and some great bargains can often be found during Boxing Week and early January. Just don’t forget to plan all the steps that come before the buying stage, or you’ll still end up with the brutal Visa bill.

What? You just finished Christmas? You’re far too tired and emotionally wrung out to start preparing for next year right now?

Fair enough. Solution? Take a month off and start in February. $10 saved a week starting in February will give about $470 (plus interest) by December 25th. That’s my whole budget for this year. If you can save more, great. If you can save less, great. Knowing way ahead of time what your budget will be gives you more time to find gifts at the prices you want.

Hopefully next year I listen to my own advice.

Best of luck!

Investing adventures

Moolanomy is hosting a contest on investing stories. I’m not interested in entering the contest, since I just won another one, but I thought it might be a good story to post about anyway.

Plonkee has recommended that all investing stories be boring, which is very good advice. My current RRSP investing strategy is somewhat boring, and will get more so as time goes by:

• I invested first in a Canadian equity fund. It’s doing very well.
• I then invested in a Canadian monthly income fund which DRIPs with satisfying drabbles back into itself every month. It’s not particularly high yielding, but it balances my otherwise heavy equity (higher risk) funds.
• Next I bought a global equity fund. It grew so fast that it’s now frozen to new purchases while its managers figure out what to do with all the spare cash lying around in it. High risk, but high profit so far.
• Since I couldn’t put more money into that fund, I spent another couple of weeks finding a second global fund to invest in, which I then did. I’ve only had it for a month. It’s up a bit, but that’s meaningless over so short a timeframe.
• My next set of cash will go into a low-cost S&P/TSX composite index fund. I’m just waiting until I have the minimum investment required for the one I want.
• I’ve been starting to check out bond funds for more diversification, but since I believe interest rates will rise over the next few years (and therefore bond prices will fall), I’m not sure it’s the best time for it. Correct me if I’m wrong on the logic of that sentiment; I’m certainly not a market expert, and I’m more ignorant of bonds and bond funds than I am of pretty much anything else out there.

I’m still fairly young. I’ll slowly move into safer investments as I age, but right now I want growth since I still have time to make up for losses.

I do have one interesting investing experience, however. One that thankfully was no risk to me, but cost my father quite a few bucks. He was an investment advisor before he retired, which he did quite comfortably I might add. I have the postcards from around the world to prove it.

When I was about 20, Dad had a look through my incredibly boring portfolio (about $10,000 in a single mutual fund, not tax-protected) and said “If I guarantee your initial investment, would you let me play the market a bit with this?”

Um, so if you lose money you’ll give me back my $10,000, but if you gain money it’s mine?

Duh. Go for it.

So he did. He sold my boring and low-yielding fund, and bought some shares in a software company. They did great. He sold at the right time for a tidy profit. Sadly, the next investment was not so well timed. The company in question was due to come out with this great new product. It tanked, as did their share prices before Dad could get back out of it, and my portfolio was down to a measly $1700.

Happily for me, Dad gave me roughly $10,000 in nice solid Royal Bank of Canada shares from his own portfolio. Since I received them, they’ve split twice. I paid for two years of university with them, and I still have about $11,000 worth, give or take a grand depending on the month. Nice.

Lessons learned:

• The market is tough, even if you’re a professional.
• I don’t have the stomach for buying and selling stocks. I prefer a buy and hold strategy of a solid stock from a solid company.
• I like the diversification inherent in mutual funds.
• Dad keeps his promises, even when they hurt.

Luckily, those lessons didn’t cost me a thing. Dad sucked up an $8300 loss, but it didn’t harm him too badly or for very long, and I think he had a bit of fun trying to make me rich.

Win some, lose some. Learn from it. Move on.

Now I just have to convince Hubby that just because his US equity fund is currently tanking it doesn’t mean the market is out to get him. It just means the American market is having a rough time, compounded by the change in exchange rates between our dollars. Two issues which I’m sure some of you have suffered as well.

How much am I expected to help?

My friend is starting her own business...sort of.

She’s joined up with one of the retail groups that does ‘parties’. Some sell cosmetics, some candles, some knick knacks, some cookware. The company she’s joined sells spices. Which I must admit are pretty good. I bought a few last night.

I like to go to these things occasionally. I’ve bought cookware at one, and a couple of candles from another. They’re sometimes a nice night out where I can spend time with other women and look at girly things. I’m not a particularly girly girl, but I do like to pretend every once in a while.

I’m happy for her that she’s started to do something she thinks she’ll enjoy, which has the potential to bring in some extra cash. She just got married and they bought a house, which means they’re a bit strapped at the moment.

The problem is my friend is pushing me to host a sales party for her.

I really don’t want to.

I have few female friends, and the ones I do have were at the party she ran last night. My coworkers tend to be male. My mother loathes sales parties with a passion, and although my mother-in-law loves them, I don’t want to invite her to something where she’ll feel obligated to buy things she can’t afford and isn’t supposed to eat for health reasons.

Even if I did have a large group of women to call upon, I don’t really want to be the hostess. I’m tired, and large groups of people in my home aren’t my thing on a good day, especially if I don’t know them well.

So, am I being selfish by not helping my friend out as she begins selling and networking? Or can I bow out of this gracefully without looking like a bitch?

Welcome to a Winter Wonderland

Woke up this morning to see about 8 centimetres of snow outside my windows. Apparently winter has arrived wholeheartedly. I’m fairly certain I didn’t place that order.

I did some early morning shovelling with Hubby to clear the driveway. Looks like we’ll have to do it again tonight too. Exercise is good for us, right?

Also reminded Hubby not to get used to the help. He’ll be on his own in a couple of months on the shovelling front. Just when it’ll get truly unpleasant, too. Maybe pregnancy side-effects aren’t all bad.

Hopefully the snow will melt by the weekend, which is when we’ll be putting up the Christmas lights. Have to buy a couple more LED strings for the giant evergreen we have in the front yard. We only had two strings on it last year, and the poor thing looked more like a DNA strand than a Christmas tree.

Hmm, also better pick up some salt/sand for the driveway too. Wouldn’t want the mailman maiming himself. Not so sure if I care about the guy who reads the utility meters.

I’m kidding! Mostly...

What the snow has really reinforced for me is that unlike most years, I haven’t even started Christmas shopping yet. This is a profound lack of planning on my part. It’s not like I didn’t know it was coming; I’m pretty sure it arrives on December 25th every year.

So, I guess I’ll have to get myself to a mall this weekend as well. It’ll be just me, Hubby, and the 453,867 other procrastinators in town.

Fun times.

Holiday Frugality Roundup – Mid-November Edition

Several finance bloggers out there have started to write about the upcoming money-draining season, AKA the holidays:

Trent at The Simple Dollar has Eight tips on kids, Christmas and frugality. One of these we’re already doing (LED lights), others I have plans to do once I have a child that’s old enough (wrapping paper made with child-labour, open-ended toys).

J.D. at Get Rich Slowly has some basic advice on discussing gift exchange plans with family and planning now what you’ll do with any holiday bonuses you may receive. Way to resist those comic books, J.D.

Steve (who you may know from Brip Blap) wrote a useful guest post on what you should think about before giving to charity over at Consumerism Commentary. It covers thinking about what the charity stands for, how it’ll spend your money, how you’ll contribute, and whether you can receive a tax deduction. That last part is US-oriented in Steve’s post, but you can find a link to a listing of charities registered with the Canada Revenue Agency here. You can also find riveting subsections of the Income Tax Act at the CRA site. If you’re from elsewhere a quick search of your country’s tax bureau’s website will probably lead you to a similar listing and set of rules. I’m sure they’ll be every bit as thrilling to slog through as the Canadian ones, so don’t feel left out.

Feel free to add any other holiday frugality tips/links that I've missed in the comments.

Zzzzzzzz – What? I can’t curl up under my desk?

1 snoring husband (who I may yet smother with a pillow)

+ 2 late-night phone calls from friends (Hello? Weeknight!)

+ 2 ambulances driving by at 3am (okay, I can’t actually be angry about this one, uncharitable 3:01am thoughts not-withstanding)

+ 4 bathroom trips (thanks, Junior)

= 1 very cranky and exhausted Fecundity

Yeah, yeah. It’s good training for when I have a newborn/toddler/teenager. I know.

Why do people seem to think that will make me feel better?

Weekend report: Good news, bad news.

Good news: I sent $1000 at my student loan on Friday. About $570 left to go.

Bad news: Hubby went on a weekend bachelor party and spent over $400.

Good news: Went to dinner and a movie with an old friend yesterday. Caught up on news and saw ‘Across the Universe’ which was about as close to an LSD trip as you can get while remaining law-abiding.

Bad news: Dinner sucked and cost me $16. The movie cost $12.50. Apparently we managed to locate the only theatre in the area not interested in competing price-wise with everyone else. So noted for next time.

Good news: I’ve been invited to be in a bridal party next September, which will give me the inspiration and dedication required to hopefully drop most of the baby weight I gain before then.

Bad news: I’ll also be dropping at least $200 on the dress plus alterations.

On the plus side, I get to be that bridesmaid that all dress shops must loathe. The pregnant one [evil grin].

Things I shouldn't have read at work

To everyone who is or wants to be a parent,

Read this in your cubicle at work. It's not profane. There's no violence or smut. It's just far too funny to be read in an open office area without sounding like a gibbering idiot whilst trying to stifle laughter. So go ahead and read it at work. I dare you.

Preparation for Parenthood

Thanks to FourPillars and Guinness416 for pointing it out.

Blogs for the financially frightened parent-to-be

I’ve been regularly cruising the blogosphere for a few weeks now and have happily stumbled upon or been lead to several excellent blogs written by financially savvy people who have had children and write about what expenses you may incur when you take the parenting plunge.

Here’s the ones I’ve found so far:

Trent at The Simple Dollar often writes about parenting issues, almost always from a financial standpoint. He even has posts where he’s tallied up the daily cost of having a one-year old, and subsequently a two-year-old. Although it’s from an American perspective, he’s broken down the costs in such a way that it’s easy enough to estimate what each category would cost in your area.

For example, because Canada has universal health care, and Hubby’s and my employers provide dental, drug and other coverage, our costs in that category will be much lower. However, it’s likely that our food, hygiene and entertainment and child care costs will all be somewhat higher than what Trent has to pay in the States. That may change if retailers start lowering their prices on imports to match our currently strong dollar, assuming it stays that way for a decent length of time.

Mike at Quest for Four Pillars has a great series on Baby Expenses. I must admit that I’ve only made it up to Lesson IV: Car Seats and Strollers, but it’s been very helpful, somewhat reassuring, and not-at-all painful so far. It has the added benefit for me of being written by a Canadian. Thanks for the point to the series, Mike. I’ll be reading the rest shortly.

J.D. at Get Rich Slowly has quite a few articles on raising financially savvy kids. A lot of his posts are on trying to avoid marketing aimed at your children. A topic I’ll be reading up on for several years to come, I’m sure.

I’m sure there are plenty more out there, I just haven’t found them yet. If you know of a good one, feel free to let me in on it.

Fun: Cheap and Easy

As Hubby and I start to cut back on our expenses we’ll be looking at a few cheap or free ways to entertain ourselves over the coming months. Winter in Canada always makes for an interesting challenge. Often it’s far too cold and/or icy to go for a hike or to spend significant time outdoors. Or maybe that's just because I'm a temperature wuss.

We already enjoy a few things that don’t cost anything:

We play board games with our friends on a semi-regular basis: Taboo and Cranium are the usual favourites, though we’ll throw in Trivial Pursuit or Scene It for variation from time to time.

Hiking: There are some beautiful mountain trails around here which are lovely in the summer, gorgeous in the fall and completely inaccessible in the winter.

Skating outside: Once you own the skates and know how to use them, this is free. If you’re on a body of water rather than a backyard rink, make sure someone in authority is overseeing its safety.

Tobogganing: There are some great hills around our city. Sleds, disks or Krazy Karpets are often very cheap, and you can’t beat the adrenalin rush.

Sadly, skating and tobogganing are going to be out of the question this year. No careening down hills or dodging mini-Gretzky wannabes while pregnant for me. No beer with the board games either.

I seem to have gotten the raw end of this deal...

Trent at The Simple Dollar has a couple of good lists of stuff to do for free here and here.

The problem is that Hubby is easily bored. When he becomes bored, things like video games tend to be purchased. I’d like to avoid such things in the future, so I’m looking for new ideas.

So, the question is: What do you do for free or cheap fun?

I actually won something!

Seems I won the birthday contest at Canadian Dream: Free at 45. It's probably the first thing I've won that didn't involve someone trying to get me to pay transfer fees.

A big thanks to Canadian Dream and congrats again on your blog's birthday!

Student loan issue resolved...at least for now

On the way home from work last night I finally got my husband to open up a bit about how he wants to handle his student loans. Turns out I was mistaken about what issues were driving him in his decisions.

I’m planning on having my student loan paid off by the end of the month. I’m on course to have this done, as I don’t think I’ll have any problem coming up with the roughly $1500 remaining on it out of the four paycheques we still have coming to us this month.

I’d planned on tackling his provincial loan next, which is currently about $4200 and must start to be repaid at the end of this month. I’ve previously written a rant a post about this loan. It has a somewhat lower interest rate than his larger Canada Student Loan (CSL), but it’s less accessible and much more irritating.

I can’t explain exactly why this loan bothers me so much. I think it’s the lack of control. I can’t look it up on the Internet or pull out the last statement to see exactly how much it’s worth at any given time. That drives me nuts. To the point that I want to use some of our emergency fund to pay it back in a lump sum, and then spend several months bringing the fund back up to $5000.

It turns out that my husband’s desire to pay back his larger CSL first was not driven by the larger interest rate, as I’d previously believed, but by the fact that he sees it as an albatross around his neck. The smaller provincial loan doesn’t bother him. He doesn’t see it as a problem or an issue, though he can’t quite explain why. He wanted to use the emergency fund money to make a large inroad into the CSL.

I balked at that. By using the fund to pay off the provincial loan, we’re completely getting rid of a monthly payment which means our absolutely required expenses will go down before I go on parental leave.

Current minimum payments are $50 (my loan) + $58 (provincial loan) + $181 (CSL) = $289. By getting rid of the two small loans, we’ll only be obligated to pay $181 a month.

I had every intention of putting at least $289 a month into the CSL until it’s gone, but I’ll feel much more comfortable if we have the ability to reduce payments if it becomes necessary.

So, we’ve compromised. I think my threat of making him call the Private Bank every month to get his provincial loan’s exact balance tipped the scales. I’m a meanie that way.

We’ll pay off my loan this month. We’ll pay off the provincial loan in full rather than signing up for monthly payments, and we’ll sign the CSL consolidation forms for $400 a month. Once the fund is back up to $5000, I’ll sock any extra money into the CSL.

My most loathed loan will be gone, he’ll see significant decreases in his most loathed loan, and the emergency fund will never drop below $1000. If we have income problems in the future, we can call the Private Bank and have them reduce withdrawals back down to $181.

It’s not perfect, but we can both live with it, and that’s what’s important.

Anyone else discover that they were looking at their debt issues in a completely different way than their partner? Did you resolve it? And if you did, how?

Can-Am mutual comprehension

There seems to be one rule in the blogosphere. If you have plans to write about something, someone has already done it before you, and done it better than you were going to.

Since some of my readers (yes, 2 out of the 4 of you, or [as I prefer to view it] 50% of you) are viewing my site from the US, I figured it would be a good idea to start thinking about having a glossary of some of the differences between the Canadian and American financial systems.

And so I discovered that someone with a readership level currently 600% larger than my own has already done just that. I present the four of you (and anyone else who has since stumbled their way here) with Loonies and Lexicons and Loonies and Savings Plans from the blog Loonies and Sense.

May it help the Americans understand this site and others like it, and the Canadians to understand the vast array of helpful, if foreignly confusing, American personal finance blogs.

The joys of grocery shopping with your spouse, or, Why I’m an idiot.

Last night on the way home from work we went grocery shopping. This was necessary, since food level in the house was getting low, particularly perishables.

But I must confess that I’m an idiot. Why am I an idiot? There’s actually quite a lengthy tabulation of ways, but only a couple are pertinent to last night, the first of which is that I went to the grocery store while hungry. And not only was I hungry, but my husband was hungry too. Everyone who’s ever done the remotest bit of introspection knows that two hungry people going to the grocery store is a colossally stupid idea.

Edit: To see a collection of things that may help you lose weight, see Brip Blap's 101 Thoughts on losing 100 pounds. A few of them will also save you money. Note number 75. Let that reinforce the idea that I am an idiot.

I had a shopping list.

It was a good shopping list.

If I’d stuck to said shopping list, I’d have saved myself about $30.

I decided that instead of making macaroni and cheese from scratch, we’d try the fresh tortellini with cheese sauce the store had on sale. I’ve always thought it looked good and have been wanting to try it for a while. Because it was on sale, it wasn’t that big a splurge. It cost about $7.00, which isn’t too bad considering the mac and cheese would have cost about $4.00 to make, what with all the cheese. Not the most frugal choice, but I could have lived with it.

If I’d stopped there.

But instead of stopping I made my second idiotic move of the night. I let these five words escape my mouth: “Do we need anything else?”

Why, yes. Yes, we did.

We apparently needed some fresh crusty bread for the pasta. We also needed a frozen pizza, some pop, some chips and dip, some crackers and some cookies. I caved on each of these except the crackers, which were wholly my idea.

This falls safely into the category of ‘you win some, you lose some’, right?

We’re moving on today. I have a lunch of leftover pasta and bread. We’ll be having the pizza tonight and while it’s cooking we’ll put the ingredients for a nice, hearty, frugal beef stew in the crock pot so it’ll be all ready to go tomorrow morning. Thursday night we’ll eat out somewhere inexpensive as we have a pre-natal class which starts too early to go home in between.

And on Friday we’ll make homemade macaroni and cheese with four dollars worth of ingredients which we already own.

The ever-dreaded Christmas budget

I’ve been pondering our Christmas budget this year.

This is the first year that both my husband and I have been employed simultaneously with decent jobs. The decent is of course relative, but for us it means each job A) required those expensive pieces of paper we have hanging on our wall, B) provides benefits like dental and/or a pension, and C) pays significantly better than we were making when working retail.

Since this is the case, I’d planned on being more generous with the Christmas spending than we have been in the past whilst starving students.

However, now that we’re pregnant, my priorities have changed. Now I want to maximize our debt repayment and savings because my income will drop when I go on Canada’s (much appreciated) year-long parental leave.

So, it’s with somewhat heavy heart that I’ve budgeted a mere $500 for Christmas shopping. This includes our four parents, three surviving grandparents, a brother, eight friends (six of whom are couples and therefore cheaper/easier to buy for), a niece, two kids belonging to friends, and my father’s and grandmother’s birthdays.

That being said, I won’t be too upset if we go a bit over budget here and there, but I think we can get reasonable gifts for these amounts. I’ll be starting to look online this weekend.

How much are you budgeting this Christmas (or other holiday) season, and how many people are you buying for?

Belated Remembrance Day

I'd like to take a moment this day to thank each and every one of the people who have served my country well and those who have served its allies, both in war and as peacekeepers, now and throughout history.

In special memory of both of my grandfathers, one of whom fought for Canada and the other for Britain in WWII, as well as for the wives and children they left behind for years in order to fight for freedom from oppression.

Lest we forget. N'oublions jamais.

How much is it worth to keep giving money to a bank you hate?

My husband’s student loan consolidation forms came in the mail on Friday. He has two loans. A Canada Student Loan (CSL) of $17,800 which is at Prime + 2.5% (currently 8.75%), and a Provincial Student Loan (PSL) of $4,200 at Prime + 1% (currently 7.25%). To add to the confusion, the interest on the student loans is tax deductible, which at my husband’s tax rate would make the true interest rate approximately 6.02% and 4.99% respectively.

This doesn’t look too confusing yet. We could either take Dave Ramsey’s advice and pay down the smaller PSL first to get rid of it as part of a debt snowball, or we could pay down the CSL first, since it has the largest interest rate.

The true issue is annoyance factor. My husband first took out these loans before the government set up the National Student Loan Service Centre (NSLSC) to administer them. Unlike more recent student loans (like mine) which are held through a subsidiary run by the government, my husband’s are held by the one Private Bank that was allowed to administer student loans before the de-privatization. The two loans were mandated at two different levels of government, and thus have different rules. The Private Bank will only follow these rules to the lowest effort legally required.

The CSL is legally required to have statements mailed monthly. This allows us to easily see how much we owe, and what we’re paying in interest each month. The PSL does not have this requirement, and thus the Private Bank refuses to send statements. Nor has the Private Bank enabled any way for the PSL balance to be seen online. The only way to know how much the loan is currently worth is to call their 800 number, or to go into a branch. Since the even the most convenient branches are only open until 5, realistically it means my husband would have to call them and wait up to an hour on hold each time, unless he wants to take time off work.

Because they are no longer in charge of any new student loans, the Private Bank has no reason to switch their policies. The customers affected dwindle each year and are not replaced by new ones. There’s no payback for them to switch over to a less draconian policy.

Nor can my husband switch the loan to another bank without penalty. They are the only Private Bank able to cover student loans. The moment he switches, the loan loses student loan status and thus loses tax deductibility on the interest.

This is the point in time where I thank my lucky stars that I took out my loan after the government had taken over. My loan is accessible online. I can send them electronic payments and know exactly how much I owe any time of the day or night. I see a daily tally of how much interest I’m paying and what part of my payments went to the principal.

Now comes the decision. My original plan was to finish paying my loan (on track to be done by the end of the month), then to start on my husband’s PSL and finally to tackle his CSL. This would follow the ‘debt snowball’ plan and get rid of the lowest balance loans first.

My husband would rather get rid of the higher interest rate loans first, and I’m willing to do that since it is more financially optimal. I think the psychological aspect will still work for me as long as the total number in the NetWorthIQ student loan section is going down significantly each month.

But how do we measure the annoyance factor? By paying the CSL off first, we would be minimizing the interest we pay, but we’d also be maximizing the profit the Private Bank is making off its poorest service account. Every time I want to calculate our net worth, my husband will have to spend an hour of his time on the phone waiting to speak to a Private Bank “customer service representative” (insert eye-roll here). That’ll be once a month.

Personally, I’m leaning towards using our $5,500 emergency fund to pay off the $4,200 loan in one shot to save ourselves the headache of dealing with it, and then spending the next couple of months pouring our money back into the fund. The emergency fund will never drop below $1000, and the interest rate its earning is 4.25%, lower than either of the loans.

Since they are my husband’s student loans, ultimately it’ll be his decision on exactly how we want to repay them. I just want to present the options and my viewpoint.

Does anybody out there have any other solutions or thoughts on the issue? Anything I’m not taking into account? I’d be very interested in another perspective.

Seven Habits of Highly Successful Fathers

This looks like a wonderful set of habits for a dad. I'm not sure the first one is always wise, but the other six certainly seem to be.

I do have some problems with Habit #1, which is "Keeping Stress to Yourself". I think that in most cases it's a valid rule. No kid needs to be bothered hearing about the day-to-day hassles of work and adult life. They're too busy with their own hassles and childhood traumas.

However, I think kids do need to know what's going on in your life, particularly if it's important. Kids are smart. They're going to pick up when something is bothering you, and if you're not careful, they'll think that it's them.

They also need to have changes in behaviour explained to them. If you're going through financial difficulty or you're reassessing your spending priorities, sit down with them and talk about it at their level in a non-frightening way. They need to know that just because you're purchasing fewer toys for them doesn't mean you love them less, and they definitely need to know something is up before you're all moving into a smaller home because Daddy lost his job. If you and your spouse are having relationship issues, you both need to be mature enough to A) not fight in front of the kids, and B) sit down with them and explain that while Mom and Dad are going through a bit of a tough time with each other, it hasn't got any relationship to how you both feel about them.

I learned a lot from my father about how to behave and react in stressful situations because he'd occassionally come chat with me about problems he was having that might put him in less than his usual good spirits. I still value the laid back way he'd talk through things, which was a nice juxtaposition to my mother's tendency to pretend everything was always peachy until her emotions exploded, often in a random direction.

In any case, I agree Habits #2 through #7 are always a good idea, and that #1 usually is. I also think they're excellent habits for successful moms.

Healthy (well...Healthier) Food Cheap and Easy – Tuna Kraft Dinner

I can’t say this is healthy food, but it’s definitely healthier than the original version. And it certainly is cheap and easy.

1 box regular Kraft Dinner [Kraft Macaroni and Cheese to non-Canadians]($0.99/800 calories)
250mL (1 cup) frozen peas ($0.49/110 calories)
30 mL (2T) fat-free sour cream ($0.15/30 calories)
Splash of skim milk ($0.05/15 calories)
1 (170g/6 oz?) can of tuna ($0.79/200 calories)
Salt and pepper to taste (negligible/negligible)

Boil the noodles according to package directions. For the last 5 minutes, add the frozen peas. Drain and return pot to burner. Turn off heat. Add sour cream and powdered cheese, stirring until smooth. Add small amounts of milk until desired consistency is reached. Stir in tuna. Add salt and pepper to taste.

Makes 2 large servings, or 4 side dishes. I usually split it into three, taking the third to lunch with me the next day.

This costs me $2.47 to make the whole thing. Since I split it in three, that’s 82 cents a portion. I've quoted the regular prices at my normal store. Both KD and tuna are often on sale, making this dish even cheaper. If you like the generic brands of macaroni and cheese boxes, this will be an even cheaper meal.

Total calories:1155. Split into three that’s 385 calories per serving.

The best part about this recipe for me is that I always have all of the ingredients in my pantry. The only thing I’m occasionally missing is sour cream, in which case I’ll use butter, margarine or just extra milk. If I don’t have or don’t feel like tuna, I’ll add half a pound of cooked lean ground beef instead, although this increases both the cost and the calorie count.

If you’re pregnant, please remember that tuna should only be eaten occasionally. It’s an oily fish, and as such may have relatively high levels of mercury in it. The guidelines change regularly. Health Canada’s 2007 fact sheet on mercury in fish advises no more than 150g per month of fresh or frozen tuna, and no more than 2 cans a week of albacore or white canned tuna. Other types of canned tuna may be safer, as those species generally have lower mercury levels. Check with the health agency in your own country as your fish populations, sources or guidelines may differ.

Be aware that price and calorie count will of course vary by region.

Prices are in Canadian dollars, which on the date of this post were worth US$1.07, ₤0.51, €0.73 or AUS$1.16.

First big payment sent in on my student loan

This morning I sent $500 sailing from my chequing account to my student loan. Since the test dollar I sent earlier this week took three days to arrive, it should get there by next Tuesday.

This will bring my student loan down from $2072.91 to $1572.91. It’ll save me $3.49 in interest this month, or approximately 11 cents a day.

I’ve also discovered that I get paid three times this month. This is good for two reasons:

1) I’ll have some extra money to split between paying off our loans and buying Christmas presents.

2) Since the mortgage is automatically withdrawn on the same date as my paycheque, we’ll be making three payments this month, nicely reducing our principal.

I’ll pay another big chunk of the student loan after the 15th, which is when my husband gets his paycheque. With any luck I can get rid of my loan entirely by the end of November, which is just in time for us to start payments on his student loans.

A first-time expectant parent's fear of the unknown - myself

I'm expecting my first child.

I'm not very far along yet; there's still seven months to go. Apart from starting to have a look at our financial situation, I haven't done any of the things that expectant parents do to prepare for the birth of their child. I haven't painted the nursery (AKA the soon-to-be-former guest room). I haven't picked out the perfect crib/carseat/receiving blanket yet. I haven't bought the toys or books I'll need. I haven't even told the prospective grandparents about their impending grandparentosity yet.

That doesn't mean I haven't been thinking about all those things. I've checked out how much diapers cost. I've started thinking about paint colours. I've been to ToysRUs and strolled through the aisles looking at all the stuff I may or may not need. I've been frightened by the fact that I couldn't identify something that was hanging off of every crib in the store. It only served to enhance the knowledge that I have deep down inside me that I can't possibly be ready for this.

I'm not mature enough. I'm not responsible enough, and if I can't even figure out what that...that thing on the cribs is for how could I ever have thought I'd be smart enough for this?

Okay. Deep breath. I can do this.

I believe I'm experiencing the fear that every parent-to-be has no doubt felt since our species became capable of (ir)rational thought. The fear that I'll be completely responsible for an utterly dependant human life and that I'll screw it up. I can't predict how I'll react to the situations I'll soon encounter, because I've never been in them before.

Then I read this: Open letter to the family I saw at Target last night, while my sister and I were buying a mop.

The first example in the letter is of a mother who, after her younger child almost runs off into a busy street, spanks him a few times with a Nerf bat. This is the type of thing I'm afraid I will do. That fear or rage or helplessness will make me lose control and I'll do or say something I'll regret.

But the point of the letter, a telling-off of the atrocious parents that the author saw the previous night, actually relieved my fears. Not that I was in any way pleased by what I read. That poor child will grow up brutally in a house full of people that don't care about him, which will have lasting negative implications throughout his life. No one deserves to be treated that way, especially not a child and especially not by his own parents.

No, the reason I was relieved is because I cannot by any stretch of my imagination see myself behaving in a way that approaches this behaviour. I can sympathize with the mother with the Nerf bat. I can laugh at Homer Simpson strangling Bart because they are fictional characters doing things that all of us have at one time or another wanted to do. But I can never, ever imagine telling my child that not only do I not love them, but that no one does.

And I hope that if I ever do behave in such a manner that someone around me will call the police as the author of the letter did, because my child doesn't deserve that. No child does.

My One Day Commitment - How'd it go?

Yesterday I made a one day commitment not to spend any money needlessly. All in all, I think I was fairly successful.

I had breakfast and dinner at home and didn't stop at either Tim Horton's or McDonalds. Approximate savings: $9.
I packed a lunch from home rather than eating in the company cafeteria. Approx: $4.
I stuck to my grocery list and didn't let my husband con me into buying chips and dip. Approx: $6.
I bought gas at $1.02 a litre for my empty car. Boooo.

I spent most of the night curled up with a book. That was nice. However I failed to go to sleep especially early because House was on. It's my favourite show, and with the writer's strike currently happening I may not get to see it for a while after they run out of scripts.

So, all in all I'd call my first foray into frugal commitments a success. Next time I'll see if I can get my husband to join me. He spent yesterday drinking a Starbucks Cappuccino Venti and eating lunch at a restaurant with his coworkers. Approximate cost: $25.

Sigh.

What we owe, and to whom...

Today’s the day I catalogue our debts and savings goals. I have no doubt it’ll be a thrilling post for all [insert eyeroll here].

First, I prioritized what I wanted to accomplish. I’m roughly trying to follow what I’ve gleaned from other blogger’s discussions about The Total Money Makeover, but as I’m still waiting for the copy I’ve reserved from our local library, I’m winging it for now.

Dave Ramsey recommends starting with a $1000 emergency fund. Luckily for me, I already have $5000 sitting in a savings account. We saved it up during my husband’s co-op semesters in college to help get us through his last four months of in-class studies and the time it took him to find a job afterwards. We didn’t use it all, and thus I’m happy to call it our enhanced safety net. I’m torn between using all or part of the extra $4000 towards some of our debts, but I think for now I’ll leave it where it is. It’s giving me some peace of mind. Since I’m already morbidly worried about stuff (side effect of pregnancy, apparently), I’ll take what little I can get.

Next come our debts.

We have no credit card debt, as we pay off our balance on our cards every month and we’ve already cleared out the line of credit we used as a safety net for much of our university years. So, happily, we can move on to that other remnant of university life, the glorious student loans.

My consolidated loan - $2,072.42 – minimum $50 monthly, automatically withdrawn.
Husband’s smaller loan - $4,435.19 – minimum $53.94 monthly, starting Dec 1st.
Husband’s larger loan - $17,823.39 – minimum $181.11 monthly, starting Nov 30th.

Hoo boy. That last one’s a whopper. My goal is to have mine polished off by the end of 2007, and his smaller one by April 1st, 2008. I’m not going to make a guess how long that big sucker (change the ‘s’ to an ‘f’ and you get my true feelings for it) will take until I’ve had a true look at how our income will be impacted by my upcoming maternal and parental leaves.

After the student loans are gone comes saving 3 to 6 months of expenses. To simplify it for myself, I’m going to call 3 months of income 6 months of expenses. For us, that’s roughly $17,500, which will be $12,500 if we leave the emergency account where it is.

Next is our retirement savings. Ramsey apparently advocates 15% of income to Roth IRAs or other pre-tax retirement plans. I’ll translate that to make more sense for me as a Canadian.

I have about $22,000 of unused contribution room in my RRSPs. My husband has about $18,000.

Every year the Government of Canada allows you to contribute 18% of your income, minus pension deductions, up to a maximum amount (which doesn’t apply to either of us). Anything unused is carried over indefinitely. This year, that means approximately $5454 ($9090 is the 18%, my company pension paycheque deductions total $3636 a year) will be added to my contribution limit, and about $9900 will be added to my husband’s.

I’m currently treating these as a debt, with a minimum payment of $50 to each of our accounts every 2 weeks (average: $216.66 monthly). On the downside, until we finish paying the student loans, we’ll be falling further and further behind with the RRSPs. On the upside, when we do start rolling the money snowball that was previously being used to pay back student loans, we’ll be in for a whopping tax refund that can be shunted right into the plans as well.

After we’ve caught up, we’ll continue to contribute 18% of our income annually (minus any pension plans we have at that time).

Next on the list is an RESP for our child-to-be. Since the first $2000 we contribute every year is eligible for a 20% grant from that (sometimes) generous government of ours, we’d be stupid not to take advantage. What’s the likelihood of finding an automatic 20% return anywhere else? Any returns we get on the investments we choose are gravy at that point. So, once our kidlet is born, we’ll be socking away $166.66 a month for his/her education. (Mental note: determine what dates mark the end of a year for this: calendar, fiscal, or child’s date of birth).

After the retirement and educational savings are up-to-date, it’s time for the mortgage. The current balance is $153,328.57, with a minimum payment of $505.99 every two weeks. We can pre-pay up to 25% of the principal each year as a lump sum. This is 25% of the initial principal, not what’s left at the time. We can also increase our biweekly payments by up to 25%.

And, finally, there’s a $100,000 gift we received from family to help us buy a home. It allowed us to give a whopper of a down payment, and to buy a house that has room for children in a neighbourhood where I’d be willing to raise them. The gift had the qualifier that if the givers are ever in serious financial difficulty, they might come to us for (at least) partial repayment. I don’t see that ever happening, as the family members in question are quite well set up and are very financially savvy. But you never know. I’m keeping the possibility that I might have to repay this open.

All of this information is being tracked with NetworthIQ. If you want to see my profile, it’s in a link on the side. Seems to be quite a handy little tracker, though you could do the same using Excel or any number of other programs.

And now, to start on this marvellous plan. I have several hundred dollars in my chequing account awaiting transfer to my student loan to get the ball rolling. Since I just set up the bill in online banking, I’m just waiting for the test dollar I sent to make it to my student loan account so I know everything is hunky dory.

We’ll soon be off and running.

The One Day Committment

Today I’m not going to spend money needlessly.

That’s it. No long-term plan. No cutting the extras out of my life permanently. Just today.

This is by no means an original idea. The Simple Dollar has discussed it. I’m sure countless others have as well.

This morning, I didn’t stop for a muffin and tea at Tim Horton’s or the cafeteria downstairs. I packed a lunch from home, so no hitting the cafeteria at noon either. I will be stopping on the way home to make some purchases, but they will be groceries that we need (got my list) and some gas for the car (sadly empty).

After the groceries and the gas station, I’m going to go home and make dinner rather than stopping by McDonald’s as has become my habit lately. Cheaper and healthier. After that, I’m going to curl up with a book I’ve been meaning to read for ages and haven’t quite gotten around to. I paid for it months ago. Actually, come to think of it, I bought it with a gift certificate I was given as a house-warming present, so it didn’t even cost me any money back then. Sweet.


Also, I'm exhausted, so an early night with no TV will be good for me.

As for tomorrow, we’ll see what happens. One day at a time, right?

Credit Cards – Useful tools, or evil debt traps?

Most finance books and blogging gurus that I’ve read seem to hold the opinion that the best way to get out of debt is to chop up all your credit cards.

They have a good point.

Many people find it difficult to control their spending if they have access to easy credit. My grandmother has never had a credit card. She’s terrified of them. My in-laws got rid of theirs after digging themselves into a financial hole which is still threatening to eat them alive (the fact that their elderly days may be financially strapped is something that often weighs heavily on my mind, but that’s a tale for another day).

If you have difficulty treating purchases on credit cards as real money, or if you’re prone to impulse buying, then this is certainly a valid strategy, and will no doubt help you immensely.

My problem is I tend to do the opposite. Cash that’s in my wallet has already left my bank account, so I tend to think of it as already spent. I therefore have very little difficulty parting with it. Purchases going on my credit card increase my balance, and end up detailed on my paper statement. An ATM withdrawal of $100 is just an ATM withdrawal. A purchase of $97.96 from VideoGamesRUs goes down in the annals of family history as the waste of money that it is.

I tend to view our main credit card as a tool. It’s a no fee MasterCard that has a 18.97% annual interest rate. We pay off the full balance every month, since I'd rather swallow paint thinner than 19% interest.

While my husband was in school and I was working a crappy retail job, I must confess that we weren’t always able to pay off the full balance with cash on hand. For that we had an unsecured (since we had no assets) line of credit with an interest rate of about 7%. Once we were both working, it took us about 6 months to pay off that line of credit.

Used the way we do, our credit card gives us a 30-day interest-free loan every month. It also provides us with 1% back in groceries. In the past we’ve tended to cash that 1% out during the summer for the expensive meats we love to barbecue. This year we’ll probably store up the credit and use it to buy baby supplies. I’m thinking the 40-odd diapers people say you go through the first week would feel slightly better if they were free.


In addition to the free groceries, I also like the credit card because it provides immediate mergency funds when necessary. Now, I would never suggest that you rely on a credit card for your source of emergency funding. That's not smart at all.


What I'm saying is that a credit card allows you to instantly pay for emergency needs while maintaining a slightly less liquid true emergency fund.


For example: We have just over $5000 in an account set up for emergencies. It's in a high-interest savings account currently making 4.3% interest. Unfortunately, while I can instantly transfer money to it from my chequing account, it takes 24 hours to get it back out again. This means that if I needed to access that money in order to remove my car from a ditch, I'd have to wait a day.


Not helpful.


However, with my credit card, I pay the nice tow truck driver when I need him. Then, when the credit card bill comes, I transfer the funds from my emergency savings account to my chequing account, and from there to Mr. MasterCard.


Note that in order for this to work well, you need to pay the balance on the credit card off in full every month. Otherwise you're being charged an astronomical rate of interest while you're paying the nice tow truck driver. Talk about adding insult to (hopefully) metaphorical injury.

In addition to our main MasterCard which has my husband as the primary cardholder, we have a much smaller Visa in my name. This is because I discovered a few years back that I had no credit rating. That was a thrilling moment, let me tell you.

When my husband and I were first signing up for our accounts and credit we put the chequing and savings accounts in my name primarily and the MasterCard in his. It was an arbitrary decision and seemed fair. A little while later we had an offer for a line of credit which came in his name. Because money was tight while he was in school, we accepted.

Three years ago I applied for a separate credit card because I intended to start my own hobby business. I was only applying for a $1000 credit limit, so imagine my surprise when my bank turned me down.

I couldn’t understand it. I’d occasionally paid a bill a bit late, but nothing had ever gone into arrears for longer than a couple of days. We always paid at least the minimum due on everything, none of our cheques had ever bounced. Why on Earth couldn’t I get a little bit of credit?

It turned out I couldn’t get credit because I hadn’t had any in my name for over seven years. I was the secondary cardholder on the MasterCard, and while any failure to pay would reflect badly on me, I didn’t benefit from my husband’s (i.e. my) good record of payment. A good history of writing cheques was meaningless, only a bounced one would affect my rating. My student loan wasn’t large enough and hadn’t been in repayment long enough to be meaningful.

My first thought when getting this information remains unprintable.


My second thought was to panic because I knew that in a year or two we’d be looking at buying a house and if I had no credit history that was going to be difficult.

The bank I tried first is a good online firm for the most part. They give relatively high interest rates on savings, they have no-fee chequing accounts. They’ve saved us a lot of money. They are, however, completely inflexible. Because everything is done online or by telephone, they adhere to strict formulas and rigid schedules about who qualifies for what. There’s no wiggle room. They wouldn’t help me.

Our line of credit is through a brick and mortar bank. I decided to call them next. They were remarkably more helpful, but even so I had to have my husband co-sign my $1000 Visa card with them. As the sole breadwinner at the time, it was unbelievably grating, let me tell you.

It all worked out in the end. I now have a credit rating. We successfully acquired a mortgage last year and it’s in both our names. My husband is still the primary holder of our large MasterCard. I still hold the smaller Visa. We regularly pay everything with the MasterCard so that we earn the free groceries, and so our expenses are easier to track. I put one to two purchases on the Visa monthly to keep it active and to show that I can regularly pay it off. We have no need or desire to have any other credit cards.

I understand why cutting up all credit cards can be the best solution for many people, but you might consider having at least a small one to maintain your credit rating if you can practice discipline. You can always ask your lender to reduce your credit limit to $1000 or even $500, so that you can never dig yourself too deep.

Just remember to ignore all the other ‘great’ offers you’ll likely receive in the mail once you have a good credit rating.

November 10th Update: Guess who called me last night to offer me a $15,000 credit card?

If you guessed the bank that turned me down three years ago when I begged them to give me a $1000 credit limit after having been a customer for four years, you'd be right.

Now, guess who had me laughing uproariously in their ear? Go on. Guess.

Healthy Food Cheap and Easy - Cheese and Egg Pasta

170g (6oz) multigrain macaroni ($0.85, 620 calories)
250mL (1 cup) frozen corn ($0.62, 160 calories)
2 medium-sized eggs ($0.32, 130 calories)
Salt, pepper, oregano to taste (negligible, negligible)
125 mL (1/2 cup) shredded cheddar cheese ($0.90, 230 calories)

Boil pasta according to package directions. During the last 5 minutes, add frozen corn niblets.

Turn off the burner. Drain the pasta and corn and then return the pot to the hot burner. Crack the eggs into the warm pasta, and add the spices and cheese. Stir briefly and then put the lid on the pot. Allow the heat of the pasta to cook the eggs and melt the cheese, approximately 2 minutes. Serves 2.

Total cost per serving: $1.34. Calories per serving: 570


Prices and calorie counts will of course vary by region and brand.

If you’re serving more people simply add 85g (3oz) pasta, 125mL (1/2 cup) corn, an egg, and 63 mL (1/4 cup) of cheese per person.

To make it lower in calories, substitute light cheese for the regular cheddar. You can also use frozen peas and/or carrots instead of corn, but I’d recommend switching the herb to thyme rather than oregano.

To make it cheaper, try substituting regular pasta for the multigrain, or use less cheese.

Prices are in Canadian dollars, which on the date of this post were worth US$1.07, ₤0.51, €0.74, AUS$1.16.

An overview of our financial goals

The current situation: My husband and I are in our early thirties. We own a modest home with a fairly low interest rate mortgage (5.3%), which will need to be refinanced in about 3.5 years. We have no consumer debt, apart from two credit cards (one with each of us as the primary) which are fully paid off every month. I have a small student loan on which I’m currently paying the minimum. My husband has a larger student loan which is due to start being repaid this month. I have a small investment account. We both have RRSPs started, but there is plenty of unused contribution room. We have $5000 saved up in case of emergency in a high-yield savings account, along with $2000 in another account which was originally going to be spent on buying me a nice ring for our tenth anniversary, but which I think will be better spent getting ready for the baby. I’m ever the pragmatist.

(Let’s not discuss the TV for my husband which had already been paid for when the second line on the test turned pink, except to say that it’s big, it’s flat, it’s highly defined, and, yes, I’m enjoying watching it too. Hockey season has started. We’re suddenly very popular. Must be my glowing personality which has of course been enhanced by fatigue, morning sickness, and hormonal mood swings.)

Moving on...

Our combined gross income is just over $100,000 a year, though that's only been true for about 3 months. We’re in decent financial shape overall, but it could be better. We have the money to pay our bills, but I’ve occasionally forgotten to pay one for a month or two, which leads to embarrassing red letters in the mail, and no doubt a ding to the credit rating.

The desired future situation: We’ve paid off the student loans. We’ve maximized our RRSP contributions. We’ve increased our emergency funds to at least three months income. We’re paying off the mortgage early. We’re contributing $2000 a year to RESPs for our child(ren).

How do we get from here to there, you ask?

Excellent question.

Our net worth as of October 31st, 2007 is:

$2,996.00

Well, at least it’s positive. But I’d like it to get it much higher.

In order to do so, this month I’m making the following adjustments.
1) Learn to stay on top of the bills. No more forgetting to pay the hydro man. He gets cranky, charges insane ‘late payment’ fees, and threatens to make it very dark indeed.
2) $50 will automatically be sent to each of our RRSPs every two weeks. This won’t be enough to catch up, but it’ll get us started.
3) $100 will automatically be sent to the emergency fund (for the ole ‘my car and furnace broke down on the same day’ conundrums) once a month.
4) $100 will automatically be sent to the general savings account (for cribs and diapers and supplementing the parental leave) once a month.
5) I’ll increase payment on my student loan from $50 to $250 a month.
6) Payments will start on my husband’s student loan. Joy!

This will undoubtedly be a gradual process.

On a side note: I live in Canada. Most of the stuff I post on this blog will apply most directly to other Canadians, although people in other developed countries should find most things familiar.

Introduction

I’m the author of Fecundity, and I’m pregnant with my first child.

If your first thought was ‘Congratulations’, thanks very much. I appreciate it.

If your first thought was ‘Why would I care?’, I don’t blame you at all.

The point of this blog:

My husband and I have been married for over a decade now. We were 21 when we walked up the aisle, and we kissed our twenties goodbye almost two years ago.

We’ve always planned to have a child or two, but it took us a long time to feel prepared enough to take the plunge. One or both of us have been in post-secondary educational institutions for most of our marriage, we it’s only recently that we were able to buy our own home.

Now, for the first time ever, we both have ‘real’ jobs simultaneously. Y’know, the kind of job that come with a dental plan and a pension. No more retail work for us! At least, that’s the plan...

I thought other people might benefit from our trials and tribulations as we try to prepare for such a large change in our lives. Our plans will change, our finances will change, our priorities will change. I’m certain that how we view the world as we bring a new life into it will change. Possibly our tenuous grasp on sanity will change.

I’m going to be doing my best to learn from people who have done it before, and hopefully some of you can learn from me. You should at least be able to learn what not to do.