Sunday, September 30, 2007

Wake me up when September ends

Well, September has been quite an eventful month. I've been insanely busy at work (which you might have guessed from the pitiful number of posts I've been managing to get out this month), and between watching the Loonie climb and taking a crack at diversifying my retirement investments, I've been seeing lots of change.

Last night, we went with some friends of ours to check out Nuit Blanche. For those who haven't heard of this, it's a "free all-night contemporary art thing" in downtown Toronto. Seriously, "free all-night contemporary art thing" is how it's advertised on the posters. The event began at 7:00 yesterday evening, and finished at 7:00 this morning. It's basically hundreds of artists showing off their works, whether it be an exhibit of paintings, or a massive performance art installation. We had a lot of fun. One of the highlights for us was the "Ghost Station" exhibit, which was set up in the lower Bay Street subway station. This is a downtown subway platform that hasn't been used in decades, and it was open to the public last night with deep, "sub-audible" vibrations being emitted, that were shaking the support pillars, the trains, and the platform itself. It was cool (and a little creepy) to be down in this abandoned station.

I'm really still in the process of waking up, so I'll keep this short. I'll be back tomorrow morning with an update on my September goals, so until then, enjoy your Sunday evening, and I'll see you tomorrow.

Thursday, September 20, 2007

Negotiation tip

Blueprint for Financial Prosperity has a great post on negotiation. His advice is to "practise with live ammo", by going through real negotiations for items you don't actually want, in order to get the experience necessary to negotiate what you do want. To get the best deal on that Camry you want, go through the whole process with several other cars (obviously stopping short of actually making the purchase). This is a very simple idea, but it's a great approach, in that it focuses on developing a skill, rather than simply obtaining a one-time outcome. By rehearsing in a real-world situation, you build up the experience and skills to negotiate effectively for what you really want.

This is very much like the concept of paper trading, where you develop an investment strategy, and test it out by buying and selling securities on paper only. Then, by reviewing the results of the paper trading exercise, you can decide whether the rules you've developed seem to work for you.

I think this approach can be extended to many different situations, and it's a neat twist on the usual "do this to get the best deal" advice people give.

Loonies And Greenbacks

The Canadian dollar reached (and passed) parity with its American cousin today. The US dollar is now back up above the Loonie, but at one point this afternoon, it was trading for $0.9993 Canadian. This is the first time in over thirty years that we've had parity across the border.

On the one hand, it's nice to see the "Canadian peso" so strong, but I'm anxious to see just what this means for Canada in the next few years.

In the meantime, I'll just really enjoy our trip to Michigan in October.

Goals updated

Well, today is payday, so I've updated my goal summary in the sidebar. A few items stand out:
  • My Emergency Fund is at $753.20, so with some pre-emptive knocking on wood, I can check off one of my September goals

  • My Freedom Account has dropped from 33.2% funding to 14.4% funding. At first glance, this seems like a bad thing, until I remind myself that this is exactly what the Freedom Account is supposed to do. This account is a cash flow tool, and should be assessed based on its ability to cover my expenses, and not on the actual value of its balance

  • Debt reduction continues; I've brought my revolving debt down to $25,077.74, so when interest gets tacked on at the end of the month, I should be slightly under the $25,250 that I was aiming for. Not too shabby...
I'll have a "final" update on my September goals at the beginning of October, but for now, it looks like I'm nailing my financial goals for the month.

The only question is, where are those productivity posts?

Wednesday, September 19, 2007

Compartments and personal finance

Make Your Nut is an interesting blog that I've been reading recently, and has a great post on compartmentalizing your finances. This is a topic that really resonates with me, as it is such a big factor in the progress that I have made in reducing my debts and building some basic savings.

I've written quite a bit about the value of having a Freedom Account, where you save up over time for irregular expenses such as vehicle service and holiday gifts. This is a perfect example of the kind of compartmentalization that can lead to healthy finances: "I know I can afford to spend exactly $X on Christmas gifts, because that's how much I have saved up."

I think everyone who has made an effort to clean up their finances has probably had a moment when they just knew they were on the right track. For me, this happened last week when I had to take my car in for repairs, and the bill came to almost exactly the amount I had saved up for car repairs. Being able to pay cash for substantial repairs was a huge motivation in "staying the course" with my financial plan, and it was possible because I have compartmentalized my finances.

That's not to say that my compartments will remain static over time, but the basic approach of creating compartments will always be a key component of the way I manage my money.

Fun with funds

Good news, everyone. Effective tomorrow, I'll be yammering a lot less about my goal of diversifying my retirement savings. This morning, I placed orders to buy the five index funds I've had my eye on. These index funds come in two flavours: e-Series and Investor Series. The e-Series versions have a lower MER, while the Investor Series versions have a shorter minimum holding period (30 days vs. 90 days). I went the e-Series route, since I won't be touching these investments within the next 90 days. I'm aiming for a yearly review of my asset allocation in the future, so the expense ratios are more important to me than the redemption period.

Of course, the stocks I sold yesterday continue to climb, so I'm hoping that I'll enjoy the same buoyancy once I'm finally invested in the index funds.

My investing choices at this point are not being driven by emotion, but they're certainly affecting my emotions, as I watch these fluctuations. It's a little unsettling to be making these decisions, and I hope I'm choosing wisely.

Time will tell...

Tuesday, September 18, 2007

Market timer extraordinaire!

This afternoon, I finally sold my stock shares in preparation for the diversification of my retirement savings into index funds. I've been hemming and hawing over this for weeks, and I decided to stop trying to time the market, and just get the transaction over with.

So, with that in mind, I logged onto the brokerage website, and entered my "sell" orders. At 1:45pm, my 484 shares sold at $70.69 per share.

Fast-forward to the end of the day, and the stocks I sold have now closed for the day at $71.34 per share.

Consider me pwned.

I know my "loss" is only $316.42, which is peanuts in the scheme of my retirement plan, and since all these shares were purchased with a 50% employer match, my actual return on investment is still amazing, but it's kind of amusing to have such a jump so soon after selling.

I just hope that the index funds I'm buying into tomorrow haven't had the same kind of rally.

Wednesday, September 12, 2007

Freedom Account to the rescue!

Well, I just heard back from the mechanic about our car repairs, and the work is quoted at $689, so we're almost perfectly on-track (with next week's payday contribution, we'll have $625 saved up, so we're essentially over-budget by $64). My new "mini-goal" for September is to make up this $64 without dipping into the Emergency Fund, but we'll see how that goes.

Next to gift purchases (Christmas and birthdays combined), vehicle service is the single biggest category in my Freedom Account savings plan, so it is very encouraging to have had this "cycle" of saving and spending go so well, and to come out so close to budget. It remains to be seen how the gift-giving will pan out this Christmas, but I can see that my basic approach is working, and I am really stoked to keep working toward my goals.

Did I mention that I'm a fan of the Freedom Account? Just checking...

Welcome new subscribers; I'm still here, I promise!

Sorry about the dearth of posts in the last few days. There's been a lot going on, and I simply haven't been spending much time around a computer. I feel especially bad, given that my number of RSS subscribers has jumped to 21 in the last few days, despite the lack of new content. Welcome to my new subscribers; thanks for reading, and I promise I'll try to keep up my post count.

We were visiting friends out of town this weekend, and suddenly had our "Check Engine" light come on in the car. I immediately checked to make sure that the gas cap was secure, and that the oil level was high enough; both checked out, and the car was running perfectly smoothly. The light was also steadily on, rather than flashing, so we drove it home, and I have the car in today getting checked out. We also need a brake light replaced, and to have the suspension checked (there's a bit of a clunking when we go over bumps), so it may be a fair chunk of change to get the car a clean bill of health.

That's why I'm so thankful that I've been socking money away in my Freedom Account and Emergency Fund; I have $560 saved up that is specifically earmarked for vehicle service, and another $640 in the Emergency Fund, so it's unlikely that this will put us deeper in debt. I'll be annoyed if this wipes out the Emergency Fund, but being able to pay cash for the repairs will ease the pain considerably. I still hope that the Freedom Account will cover it.

We seem to be more or less on track to meet my goals for September (assuming the car repairs go well). There's one recurring monthly purchase that I forgot to factor in when calculating the available cash for the next week, but I'm hoping that I'll be able to ride it out anyway. I'll let you know...

Thursday, September 6, 2007

My RRSP transfers are complete

Last night, the last piece of my retirement savings was transferred into my self-directed RRSP account. This means that I can currently see the real-time status of my entire retirement portfolio by checking the balance in a single account. This will help me to keep closer tabs on these investments, and also give me more control over my asset allocation. I know that, in the spirit of keeping a long-term view of retirement savings, it's generally recommended to check these investments on a less frequent basis (such as quarterly or semi-annually), but I like the idea of having all these assets under one "roof". It somehow makes the money more real to me.

Anyway, in the weeks to come, I will be thinking long and hard about exactly how I want to allocate these savings. My initial plan was to switch the whole balance over into index funds, but I have started thinking that I should hang onto some of my company's stock, since it's done phenomenally well in the past, and I believe in the company's future. I certainly won't maintain the highly concentrated portfolio I have now (75%!), but I think I'll leave a chunk (less than $10K) in this stock, with a DRIP to take advantage of dividend growth. I'll also be continuing my bi-weekly contributions (with 50% employer match) into this stock, and periodically transfer and re-allocate this accumulation. I'm still wrapping my head around exactly how this will work, but at least I've now been through the transfer process, and I'll be ready to go when the next re-allocation is due.

I've done my bi-weekly update of the sidebar goals, and I've also updated my NCN Network chart. It looks like I'm on track to make my Emergency Fund and debt reduction goals for September, so we'll see how the other goals progress.

Tuesday, September 4, 2007

Setting goals for September

I'm still getting the hang of setting and tracking my goals. So far, I've been focused on where I want to be at the end of 2007, and while I've been tracking this fairly well, it's probably a good idea to keep an eye on the short-term as well. I'm concerned about how ambitious my 2007 debt reduction goal is, so if I can look back on a series of interim milestones and successes, it will help keep me motivated in the event that I fall short of this goal.

Here are my September goals:
  • Grow my Emergency Fund to $750 (currently at $543.20)

  • Grow my "short-term savings" fund to $500 (currently at $321.13 - saving for a road trip to Michigan in mid-October)

  • Reduce my credit card/line of credit debt to $25,250 (currently at $25,723.46)

  • Write five productivity-themed blog posts
From now on, I'll be reporting the status of each month's goals as part of my month-end update.

Let's see how this goes...

Credit card arbitrage comes to Canada

Million Dollar Journey has a couple of great posts on credit card arbitrage:
Now, credit card arbitrage is one of the most discussed topics in the PF blogosphere, but the Canadian focus of these posts is a great resource for anyone looking to apply this principle here in the Great White North. For those of us here in Canada, the hardest part of this arbitrage process is finding 0% balance transfer offers. This article lists a couple of offers, and also includes some sample scenarios to illustrate the actual benefit of a successful arbitrage.

Anyone living in Canada and looking at credit card arbitrage as a potential alternative income stream should definitely read these posts.

Welcome back, home cooking and discussing finances

I hope you all enjoyed the long weekend. My better half and I... OK, I've been calling her "my better half" for long enough; let's call her Ms. Loonie (original, I know). Anyway, Ms. Loonie and I had a very relaxing weekend at home, as we were both recovering from a cold we picked up last week. The cold wasn't much fun, but it was nice just spending time together, with nowhere else to be.

For the past week, Ms. Loonie and I have really stuck to our meal plans. Every day, we brew coffee in the morning, eat breakfast at home, take travel-mug coffee and a brown-bag lunch to work, and then come home and cook dinner. Except for Sunday afternoon, when we met a friend at the pub for lunch and then got cheap take-out sushi for dinner, we didn't spend a dime on non-grocery food expenses. That feels fantastic, and we're excited to keep it up.

Ms. Loonie is a very smart lady. She's highly educated, and is one of the sweetest, funniest people that I know. However, she is not really a "numbers person". In the past, she has always become a bit glassy-eyed when I've talked to her about personal finance, especially when I throw out hypothetical scenarios to demonstrate a point.

At her current job, her income tax is not withheld. This means that she will have a hefty tax bill to pay next April, and she knows that she needs to prepare for this. To her credit, she has been keeping a reasonable cushion in her chequing account, but her saving seems to have reached a plateau, and I've been gently nudging her for a while to open an online savings account that she can feed tax money into every payday. She had agreed to look into this, but had not taken any action until last week.

Last Tuesday, she finally agreed to respond to my ING referral e-mail (we each get $13 if she opens an account with $100 or more), and she completed the online form and mailed the cheque, which cleared her main bank account on Thursday. On Saturday morning, she called in and set up her online access, and also set up her bi-weekly contribution plan.

At this point she sat back and said, "That's it?" I think it had suddenly clicked for her just how easy it is to take that first step toward getting your finances in order. Having set up the account and seen the funds transferred so quickly, she suddenly went into organizational overdrive, reconciling all her accounts and even creating a simple spreadsheet budget to keep track of her spending each pay period. I saw that her interest had finally been piqued, and gave her a quick run-through of how I use my ING account, and how I track my income and spending every two weeks.

She is now genuinely excited to save as much as she can in the ING account. The thing that impressed her the most is that, having set aside what is needed to pay her taxes, she now knows that what is left over is really her money. Where in the past she has always had nagging doubts about her spending, she now knows at a glance how much she can actually afford to spend.

We have always been open about money, but although she knows roughly how much we have and how much we owe, she has always relied on me to deal with the specifics. With the "click" that happened this weekend, she has taken a much more active role in our finances. It feels great to be tackling things as a team like this, and I'm really proud of how she's stepped up and decided to learn as much as she can about "this finance stuff".

So I guess you could say it was a good weekend.

Saturday, September 1, 2007

August update

I know I signed off for the weekend yesterday, but it occurred to me last night that, with yesterday being a Friday and the last day of the month, I had the perfect opportunity to calculate a "clean" month-end financial summary. My previous summaries have been calculated as late as the 7th of the following month, so I now find myself far too excited about being able to provide you with a timely August month-end update.

Online Savings - $1,713.93
Self-Directed RSP - $35,327.40
Employer Group RSP - $4,740.82

Credit Cards - $2,561.00
Line of Credit - $23,162.46
Student Loans - $32,507.64

Net Investable Assets: ($16,448.95)
Net Liquid Assets: ($56,517.17)

The biggest change here is that most of my retirement savings are now sitting in my self-directed RSP account, meaning that I have much more control over the allocation of my investments. The recent market volatility has really made me nervous about having so much invested in a single financial institution, so I'm looking forward to getting this spread out across a few index funds..

As far as the numbers, assets had a huge jump of $3,151.17 this month, driven mostly by my rallying stock holdings, which had dropped by $1,500 the month before. Debts are down by $728.59 (remember that my debts now include our joint consolidation loan). Overall, net investable assets increased by $3,879.76, while net liquid assets increased by $1,441.12. Not a bad month.

I've also updated my NetworthIQ profile with the August month-end numbers. Note that this profile also includes my loose cash, and our condo, car and mortgage.

Now you can enjoy the long weekend.