Make More and Spend Less

A Young Couples Journey Out Of Debt, And Down A Path To Financial Independence.

Monday, December 3, 2007

Financial Goals For 2008

1. Increase net pay from $3472.00/month to $4000.00/month. (from any source, not just primary employment)

2. Change my RRSP account to a mixture of low-cost index funds.

3. Finish paying off the Line of Credit. (March 31, 2008)

4. Increase investment account payments from $150.00 biweekly to $225.00. (after switching to index funds)

5. Make one extra weekly mortgage payment per month. (decreasing principal by $3392.00)

6. Have $12 000 to $15 000 saved up for my wifes' car purchase. Her lease is up in October, we want to pay cash for a car so we have no more car payments.


Most of these goals are attainable with a little hard work and some creativity. I am really looking forward to this year. Hopefully it will be a year with no debt. I haven't been able to say that in many years, wish me luck.

I would really like to hear what other pf bloggers are doing in 2008, Let me know?

Assets: +0.75, Debts: -2.74: Net Worth + 13.98%

November has not turned out to be quite as bad a month as I had previously thought it would be.

Our total debt load decreased by 2.74%. This was due largely to that lump sum payment I received from my pension.

I would have liked to see my total assets increase more on a month to month basis, but with the markets as they are I am glad that I am still coming out positive at the end of the month.

I am really pleased with our progress this month, we've had to resist a lot of consumer temptations, and it has paid off. We have also been able to resist temptation of another kind and are staying in the market for the long run. We are remaining positive and believe if we stay on the same path it will pay off in the end.

For a detailed look at the progress we have made, have a look at my net worth IQ profile.

Thursday, November 29, 2007

Net Worth Blues

I have not checked the state of my investments in quite a while. As the markets have been "correcting" over the last month or so I decided it would be better for my mental health not to check the balance. I am starting my investing career as a 'buy and hold' man and realize that this is just one month in many years of investing. This strategy has worked thus far, only now will I be checking my account for my October net worth update and I am wondering how bad the damage will be. I am having a great month in terms of debt repayment, and saving. So if the news is really bad I really can not be too depressed. I am sure I can wait it out, but no one wants bad news especially bad money news.

Tuesday, November 27, 2007

Pension Pay Out.

I received a cheque toady from the pension plan of my previous employer. Because I was in the same pension plan at both of my jobs I was not allowed to roll one pension into the other. Apparently you are not allowed to have greater than 12 months of earnings in any one plan. As I have mentioned previously, at the present time we are focusing most of our time, money and energy on debt repayment. For this reason, I decided to take a cash refund of my pension and use it for debt repayment. I was very apprehensive about this decision, as most personal finance advice tells you not to do this, but to reinvest it. I consider debt repayment a good investment in the current market, so I am reinvesting the money that I received from the pension plan and paying off debt. The total value of the pension was adjusted for taxes @10% because the total value was less than $5000.00. I was only in this plan for 10 months, all the while making pension payments at my other job, which I am now full-time. I decided to cash it out based on a short time in the plan, current investment market, already paying into another pension, and the timing of the payout. The only cons were not reinvesting in a down market, and being taxed on the total amount of the plan.

Here's what I did. I received a cheque for $4945.00, of which I applied $4221.59 directly to my unsecured Line of Credit. The other $700.00 will go into our savings account. Our line of credit now stands at $6684.00, It totalled over $22,000 just six months ago. I was very excited to wake up and find this money in my account. November is turning out to be a very good month in terms of debt repayment. We have paid off nearly $7000.00.

If we continue at our previous pace for repayment, $1500.00 per month, we will be debt free at the end of march.

We can see the light at the end of the tunnel. We are so excited.

Friday, November 23, 2007

New Tires

The weather here is getting bad. We had the first nasty storm of the season on wednesday, and thursday night. A lot of snow, ice and rain. Not a good combination if your tires are bald. I have been putting off buying new tires for my wifes' car, I just can't wait any longer as it getting too dangerous. The front tires on her car are really bald.

My wife leased the car in 2004. She was just starting out in her career, and the only way we could get a car that we could afford was to lease (lease rate of 0.9%). Leasing doesn't make a lot of sense, as you are only renting the car for 4 years, but it was the best we could do at the time. Now the lease is up in less than a year and we need to start thinking about what we want to do next. We may buy it out, but we are not sure.

So, the dilemma was this. Do I buy snow tires for the car (four tires, a lot safer in winter, but very expensive) or do I buy two new all season tires, still safe because of the new tread, but considerably less expensive (only have to buy two fronts, as the back tires are fine).

As the car is leased I chose the second option. I bought two new tires for the car, totalling $394.00. It was $322.00 for the tires, and almost $60.00 extra because I had to replace one of the front rims due to damage (my wife hit a curb).

In Canada the winter season is cold, snowy and wet. Snow tires are the better option in the winter. All season tires are not all season with respect to Canadian winters. They are acceptable, but not ideal. The rubber in winter tires is designed to grip in wet conditions, and cold temperatures, all season tires do not have the same rubber compounds. I have never had winter tires. I am not sure what I am missing, but the few friends that do have winter tires say you can drive the same as you would in the summer during a blizzard. Not so sure that would be safer, and definately not enough of an endorsement to make me want to spend $1000.00.

Wednesday, November 21, 2007

Do Not Pay until 2009

With Christmas quickly approaching the average consumer is being bombarded with a very tempting offer to buy now and pay no interest until later. This option allows you to have that 42" flat panel today with no worries until 2009. Sounds good, what's the catch.



My good friend found out the hard way what the catch was, and I think a lot of other consumers find themselves in the same situation when the loan comes due.



He and his wife bought a house and needed to furnish it. They did what many other people do, they bought their new furniture with no money down and no payments for a year. My friend is self-employed and could not make the payments on the due date, as a result he was charged the purchase interest (21.5%) on the entire purchase, that hurts. He is still making payments, only now he is paying interest on each one. He had every intention to put money away each month to pay the t.v. off on the due date, but like so many other people he did not.



This offer seems to good to be true, and it is. Retailers are offering free money (no interest) to purchase their products. They must know something that we do not, I think they know that we want "stuff" right away. They know that at the back end they will make money on extremely high interest rates because we will not be able to pay.



If you must buy nowand pay later I have a better strategy, one that does not require you to save. Instead, most offers of buy now pay later will give you the option to make equal monthly installments at 0% interest. Why not use the credit, with no interest. This works best if you already have the money saved in a high interest account. You can withdraw the monthly payments while making interest on the balance of the account. This way after two years of no interest payments the t.v. is yours free and clear.



We used this when we moved into our house and it worked out beautifully. New appliances for the kitchen @ 0% interest, and our savings remained in the bank earning us interest each month.



We all can agree that the best option is to enjoy what we already own, or pay cash for that big ticket purchase. But if we have the choice of no payments for a year or equal monthly installments over two years I think the later is the better option.

Taxing Bottled Water

Toronto politicians are floating an idea to tax bottled water anywhere between $0.05 - $0.10 a bottle. They hope to use this money to help offset the cost of running the city. As I very rarely drink bottled water, and do not actually reside in the city I am not affeted by this potential tax.

The city is also trying to promote municipal water sources, and reduce waste to landfills. If the tax reduces consumption, and decreases waste, I am all for it. This is just an idea at the moment, but it is out there. Bottled water is not necessary, and wasteful. I think a tax on the "luxury" item is a good idea.

A reuseable aluminum bottle with water, ice and lemon is great all day.