August update

I'm not quite sure how it happened, but yesterday was Labour Day. I'm still trying to figure out where the summer went, but even so, it was very nice to have such a beautiful long weekend to cap things off. We're now well into September, with fall on the horizon.

Let's take a look at how I did last month:

• Reduced my revolving debt to $10,940.26 - At this rate, I'll likely be a few hundred dollars shy of my $7,500 target for year-end, but progress is progress, so I'll take it.


• Emergency Fund grew to $1,781.57 - I had to move some funds around for a few reasons last month. Citizens Bank, which I had joined last winter to take advantage of their welcome bonus, is shutting down its deposit-taking business, so I had to withdraw my funds from that account. I also decided that I would start carrying $100 in emergency cash in my wallet. This gets treated as part of my Emergency Fund (I don't spend it if I can avoid it, and I replenish it as soon as I can when I do), and provides me with a buffer if I need some cash before I can get to a bank machine. This amount is denominated in $20, $10 and $5 bills, so I can also make change if needed.


• Wedding Fund grew to $4,026.73 - Nothing too exciting here; just slow, steady progress toward what we hope will be a cash-only wedding.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.


• Reduced our mortgage to $294,437.11 - Ever since we renewed at 2.65%, we're burning through the mortgage much more quickly. It's nice to see such strong progress on this loan, especially with all the news coverage of "upside-down" mortgages.

Now, on to my month-end update:

Assets:
Online Savings - $1,919.02
Self-Directed RSP - $43,737.55
Employer Group RSP - $19,762.56

Debts:
Revolving Debt - $10,940.26
Student Loans - $18,070.60

Net Investable Assets: $36,408.27
Net Liquid Assets: ($27,091.84)

The market recovery of 2009 continued in August, with my RRSP increasing well beyond my monthly contributions. Liquid savings were basically flat, for a net increase of $3,228.53 in my investable assets, accompanied by a $1,144.15 drop in my non-mortgage debt.

Overall, my net investable assets increased by $4,372.68, and my net liquid assets increased by $1,199.36. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

ING Direct $25 Referral Bonus

I've written before about my experiences with ING Direct. I actually attribute much of the credit for my financial turn-around to ING, since it was their no-fee, high-interest savings account that gave me "somewhere else" to put my money. This is what got me started with partitioning my money in order to develop an emergency cushion and shrink my debts. In 2007, I wrote a series of three posts on the subject:

• Canadian High-Interest Savings - A New Hope - I opened savings accounts with four Canadian institutions, and compared the experiences


• The Canadian High-Interest Savings Strike Back - I compared the web interface and money transfer experience at the four institutions


• Return Of The Canadian High-Interest Savings - I compared the other features of savings accounts at each institution, including bill payment, online banking and ABM/branch availability

The end result of this analysis was that, in terms of features and user experience, ING was a winner. Its interest rates are currently middle-of-the-pack, but they are a pleasure to do business with, and offer a full suite of savings products (including RRSP and TFSA options, as well as GIC and mutual fund accounts). Transferring funds is simple and fast, with a one-day turnaround in either direction. I can't say enough good things about ING, and they will always hold a special place for me as the first tool in my financial toolbox.

If you're looking for a no-fee savings account to add to your portfolio, I have a referral code that you can use to get started with a $25 sign-up bonus. Here's what you have to do:

1. Fill out the online application for a new account.


2. In the "Orange Key" field on the application form, enter my referral code: 17093935S1


3. Send ING a cheque, made out to yourself, for at least $100. This accomplishes two things:
   
   • It creates a link between ING and your chequing account, so that you can move funds back and forth between institutions
   
   
   • It qualifies you for the $25 bonus, since you need to make an initial deposit of at least $100 to qualify

Note that existing ING customers can not use the Orange Key to get the $25 bonus; this offer is only available to new clients.

The great thing about savings accounts is that there's no downside to opening them up and trying them out. Getting started with a $25 bonus just sweetens the deal, since ING is a great bank to deal with.

Disclosure: Since I'm providing the Orange Key, I will also receive a bonus for every new customer who signs up with an initial deposit of $100 or more.

July update: In which our blogger takes his sweet time posting

Happy August. Sorry to be posting this so late (theoretically, it should have gone up over a week ago). At any rate, I hope you enjoyed Civic Holiday last Monday. Toronto residents should also be enjoying the fresh air now that the CUPE strike is over, and basking in the afterglow of Caribana and Taste of the Danforth.

As we head into the home stretch of our Canadian "summer", let's see how I did last month:

• Reduced my revolving debt to $11,511.39 - Good, solid progress here. We had no real unexpected expenses in July, so I was able to stick to my debt reduction schedule.


• Emergency Fund grew to $1,730.07 - After the cash outlay for car repairs in June, I'm back on-track with forward motion in my Emergency Fund. $2,000 by year-end still looks achievable.


• Wedding Fund grew to $3,662.86 - July was a strong month on the nuptial front, getting us back in the black with our wedding savings. We're also starting to finalize some of the details of next summer's affair, and we should be able to hit the $6,500 target by year-end.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.


• Reduced our mortgage to $295,673.67 - Make no mistake; this is still a freaking big amount of money to owe. The important thing to note, though, is that this is a drop of $1,135.84 from a month ago. Compare that to the $794.73 in monthly principal reduction that we've been averaging over the last two years, and you can see why I'm happy. The new rate on our mortgage has everything to do with this jump. When we renewed in June, we basically cut our interest rate in half, but kept our payments the same. This sends a lot more of our payment toward principal on the loan, and represents the first time that we've really been "ahead" on the mortgage. In three years, when it's time to renew again, we will have made some very strong progress.

Now, on to my month-end update:

Assets:
Online Savings - $1,863.81
Self-Directed RSP - $42,719.10
Employer Group RSP - $17,607.69

Debts:
Revolving Debt - $11,511.39
Student Loans - $18,643.62

Net Investable Assets: $32,035.59
Net Liquid Assets: ($28,291.20)

This is getting repetitive, but I won't complain. Once again, my RRSP was buoyed by market growth. Liquid savings were basically flat, for a net increase of $3,505.19 in my investable assets, accompanied by a $1,242.07 drop in my non-mortgage debt.

Overall, my net investable assets increased by $4,747.26, and my net liquid assets increased by $1,164.64. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

More milestones this month, as my net investable assets cracked $30,000, and my net worth crossed the $80,000 mark. Things may not always move forward as quickly as I'd like, but I've made tremendous progress over the last two years, and I'm looking forward to the day in the not-so-distant future when my only debt is our mortgage.

Good timing, for once

I've bragged in the past about my market timing acumen, which tends to favour the party sitting opposite me in any transaction. I tend to dwell on my past decisions, but only to the point of nodding sadly in lament of my knack for choosing the wrong time to pull the trigger. These decisions don't consume me, but I can easily count them off for you on a moment's notice.

Not this time, however.

The Loonie household mortgage was up for renewal last month, so Ms. Loonie and I checked out the rates available to us. We were able to renew with our current lender for a 3-year fixed rate of 2.65%, more than 2% lower than our previous rate. The day after we signed the papers, rates jumped by 50 basis points, so we literally slid in just under the wire, and guaranteed ourselves three years of low-rate home ownership. I'm sure a strong negotiator with excellent credit could still have secured a lower rate, but given the ease of the transaction, I'm pretty confident in saying that we locked in "at the bottom".

But that's not all. Since I was at the branch anyway, I decided I would talk to the bank about managing our own property tax payments. Since our mortgage is high-ratio (more than 80% loan-to-value), the bank has been collecting property tax payments from us, and paying the city on our behalf. Now that we've mastered the art of partitioning our savings, we decided that we'd rather pay the city directly, and have more control over the balance in this account (and hey, why not earn some interest on it while we're at it?). This change turned out to be very straightforward as well. The tax portion of our bi-weekly mortgage payment has been eliminated, and I've set up a bi-weekly transfer of the appropriate amount to a dedicated savings account.

We're now making much faster progress on the mortgage, and we're in control of our property tax payments. Easy as pie, right?

Until I realize that, as a side-effect of the CUPE strike currently underway in the GTA, there's nobody manning the phones in the city revenue office to take our lender off the tax account.

Great timing.

June update

Happy belated Canada Day! We're now halfway through 2009 (today is the 183^rd day of the year), Canada is 142 years old, and the country has mourned the passing of a pop icon.

Now that summer is well under way, let's see how I did last month:

• Reduced my revolving debt to $12,182.64 - We had some financial hiccups this month, so progress was slower than we might like, but we still managed to carve away more than $500 in revolving debt.


• Emergency Fund dropped to $1,678.36 - Some car repairs and other expenses needed to be paid from savings. My Freedom Account was able to bear most of the burden, but the Emergency Fund took a small hit as well. We should still be able to hit $2,000 by year-end.


• Wedding Fund dropped to $2,958.88 - I had to pilfer the wedding account for some of the car expenses. We should still hit the $6,500 target by year-end.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.

Now, on to my month-end update:

Assets:
Online Savings - $1,941.24
Self-Directed RSP - $40,640.05
Employer Group RSP - $16,104.12

Debts:
Revolving Debt - $12,182.64
Student Loans - $19,214.44

Net Investable Assets: $27,288.33
Net Liquid Assets: ($29,455.84)

Once again, my RRSP was buoyed by the market rally this month, although the stumble in the third week of June kept the investment growth in check. Liquid savings took a substantial hit, for a net increase of $1,267.21 in my investable assets, accompanied by a $1,102.58 drop in my non-mortgage debt.

Overall, my net investable assets increased by $2,369.79, and my net liquid assets increased by $494.60. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

One additional metric that I track (on top of my net worth, net investable assets, and net liquid assets) is my after-tax net investable assets. Since my retirement investments would be taxed at the full marginal rate if I withdrew them, I assume the maximum Ontario MTR of 46%*, and only count 54% of the value of my retirement accounts. This essentially adds 54% of my retirement savings to my net liquid assets number. This month, for the first time since I've been tracking my finances, my after-tax net investable assets are actually positive, coming in at $1,186.01. That means, if I were to sell everything in my RRSP and use it, along with our cash savings, to pay off our student and revolving debts, we would end up with nearly $1,200 in the bank. That's another milestone on the road to solvency, a step up from when I first came out of the red last April.

* I'm not actually in the top tax bracket, but using the current maximum of 46% gives me a "worst-case" scenario for the taxes I would have to pay if I cashed out my RRSPs.

Pre-order Windows 7 for "cheap"

I've been reading a fair bit about the next version of Microsoft Windows, and it sounds like it's the same sort of "step up" from Vista that XP was from 98 or ME. New functionality, improved performance and a very open and transparent beta-testing process have really piqued my interest in the new OS. The press for Windows 7 has been pretty overwhelmingly positive, and there's currently a promotion to pre-order the upgrade version for a discounted price.

In Canada, that comes to a discounted price of $65 for the Home Premium edition, and $125 for Professional. That's basically 50% off the regular selling price of the software, and the promotion runs until July 11, or while quantities last.

I've foregone Vista entirely, and currently dual-boot a Windows XP/Ubuntu system, and $65 to upgrade from XP seems like a good deal, especially considering Microsoft isn't known for cutting its prices.

Here in Canada, you can pre-order Windows 7 through Amazon, Staples, Future Shop or Best Buy. I've placed my order for Home Premium, and I'm looking forward to installing it when it comes out in October.

You can read more details on the offer, as well as some background on Windows 7 over at Gizmodo.

Some times are harder than others

Over the past two years, I've successfully trained myself to spend only the money that I currently have in the bank. I've gone from a mindset of "it's only $20, and I'm getting paid next week" to a strict "cash-only" regimen. I use quotes around cash-only because I actually use my credit card, but I pay off each purchase almost immediately from my chequing account.

The positive result of this change is that, over the same two-year period, my revolving debt has decreased by more than 50%, and my net worth is now more than nine times as high as it was in 2007. I have a small emergency fund, and I save up for planned expenses like birthday and holiday gifts, car repairs and clothing purchases. All in all, although I still have a substantial chunk of revolving debt to pay off, I feel as though my financial house is in order.

The negative result of this change is that, when I deplete my savings to cover significant, unavoidable expenses, I feel as if I'm flat-out broke.

Last week, I took our car into the mechanic for an oil change and general check-up. After various small repairs and some sizable new parts, the bill came in at $1,400. Now, my Freedom Account has a "Vehicle Repair" category, which sat at just over $700. This meant that, in order to pay the bill, I needed to move some cash from some other savings accounts. I was able to pull $180 from my Emergency Fund, and $520 from our wedding savings. We've effectively paid cash for the repairs, but our cash savings are now diminished by $1,400. Our cushion is reduced, and with some other smaller expenses over the weekend, I'm left feeling a little naked.

The funny thing is, I almost enjoy this feeling. I know exactly where we stand financially, and that's a huge change from two years ago. Back then, the repairs would have gone on the line of credit, having the same net effect on our net worth, but a vastly different psychological impact. Shelling out $1,400 from your bank account can feel a lot more painful than adding that amount to your debt, and that pain forces you to be more watchful with your spending.

We'll rebuild our wedding and emergency savings. The vehicle category in the Freedom Account will be replenished, and the line of credit will continue to shrink.

We just have to get through this lean patch first.

The value proposition of a premium chequing account

Million Dollar Journey has a post today comparing the big five banks' high-end chequing accounts. These accounts charge a substantial monthly fee, and in return provide a number of "value-add" services, including the following:

• Unlimited transactions


• Free drafts/certified cheques


• Discount on safety deposit box rental


• Discount/waiver of credit card or discount brokerage annual fees

Some of these accounts offer a waiver of the monthly fee if a minimum balance is maintained in the account. For example, BMO's Premium account has no monthly fee if the account's balance never drops below $4,500 (otherwise the fee is $25 per month). The thinking behind these minimum balance fee waivers is that, while the customer avoids paying a fee, they also miss out on interest they would have earned on that balance in a savings account.

I was curious recently as to just how favourable the fee/interest trade-off turns out to be, so I decided to run some numbers. Using the BMO account as an example, I worked out what APR would correspond to $25 per month on a $4,500 balance. Assuming a 40% marginal tax rate (since interest income is taxed at the full marginal rate), I came up with the following:

• $25 = $4,500 X ((1 + APR / 365)^³⁰ - 1) X (1 - 0.4)


• APR = 365 X ((($25 / 0.6) / $4,500 + 1)^^{(1 / 30)} - 1)


• APR = 11.22%

This means that, in order to earn $25 per month after taxes on a balance of $4,500, you would need to find a guaranteed 11.22% APR. Since the market is currently swimming in 11.22% savings accounts, it's a no-brainer, right?

One of the best rates currently available for a Canadian savings account is Canadian Tire's 2.00%. At this rate, a $4,500 balance would earn a mere $4.44 per month after taxes. This means that, with today's interest rates, keeping the minimum balance in this account essentially means that you're "paying" a $4.44 monthly fee for the use of the account. If you take advantage of the features of the account, this can turn out to be extremely worthwhile (a safety deposit box rental can easily run $4 per month).

This doesn't mean that a high-end chequing account is automatically worth it, but it does mean that, at least for the foreseeable future, the cost of such an account is significantly reduced by maintaining the minimum balance.

HSBC has stupid account dormancy rules

Back when I first started testing the waters of online savings accounts, HSBC had one of the better rates out there. That, combined with their numerous access methods (including online bill payment and no-fee ATM access at BMO/HSBC machines) made them a strong choice for parking the lion's share of my Emergency Fund. For over a year now, I've basically kept just over $1,000 of my savings in my HSBC account, on the basis of a decent (though far from stellar) interest rate and easy access to the cash.

Fast-forward to today, and HSBC is offering a whopping 1.05% rate on their Direct Savings account, and I decide that maybe I'll move a chunk of that cash over to Canadian Tire, where I can earn twice as much interest. So, I login to my HSBC account (as I have at least once a month for as long as I've had the account), enter the details to transfer money to my primary chequing account, and am met with an error message that they can not complete the transaction at this time.

Wait, what?

This account currently has a balance just over $1,040, and I'm able to login and view the account details to my heart's content. Why are they barring me from making a withdrawal?

A quick call to customer service brings to light that, if you have no debits on the account over a 12-month period, they flag the account as dormant, and you have to re-activate it by faxing them your signature and waiting 24 hours before you can complete a transaction.

Looks like HSBC will no longer be my Emergency Fund container of choice.

I'll keep $150 with them, and set up recurring transactions to churn $15 in and out once every six months to keep the account "active", but I'll be looking to put the bulk of my balance elsewhere.

I realize that $1,000 isn't exactly big potatoes, but my Emergency Fund is growing, and they had been my preferred savings institution. I was willing to overlook their low rate in favour of their access methods, but now they've driven me out the door.

Maybe CTFS will be happier to have me as a customer.

May update

What a difference a bullish market makes! After what felt like ages bemoaning the monthly decimation of my investment portfolio, we've had three straight months of continuous market growth. Combine that with the improving weather we've had lately, and I am one happy camper.

Let's see how I did last month:

• Reduced my revolving debt to $12,716.58 - Since I started tracking my finances over two years ago, I've only had one month where my revolving debt increased. Otherwise, I've been making consistent forward progress, and although I'm still in "slow-and-steady" mode, I feel as though I've kicked the habit of blind spending on credit. Now whenever I make a purchase, it's effectively a cash purchase whether I use a credit card or not; either way the money is almost immediately debited from my chequing account, so I always know how much I can afford to spend before my next paycheque. I've still got the hangover from my reckless spending days, but I've learned my lesson, and things look better every day.


• Grew my Emergency Fund to $1,832.23 - I upped my bi-weekly contributions by $10 in May, and I'll continue to do this going forward.


• Grew our Wedding Fund to $3,160.79 - Steady progress on this front, and I'm crossing my fingers that we'll be able to pay cash for most, if not all, of the wedding.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.

Now, on to my month-end update:

Assets:
Online Savings - $2,549.22
Self-Directed RSP - $40,635.38
Employer Group RSP - $14,233.60

Debts:
Revolving Debt - $12,716.58
Student Loans - $19,783.08

Net Investable Assets: $24,918.54
Net Liquid Assets: ($29,950.44)

Once again, my RRSP was buoyed by the market rally this month; along with over $600 in contributions, this rally lifted my investment balance by $5,733.85. Liquid savings took a slight dip, for a net increase of $5,673.38 in my investable assets, accompanied by a $1,183.38 drop in my non-mortgage debt.

Overall, my net investable assets increased by $6,856.76, and my net liquid assets increased by $1,122.91. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

Who knows if this market rally will last, but for as long as it does, I'll enjoy the ride.

Credit defined

We're all about the metaphors and similes here at Loonies And Sense. A few months back, I posted about another blog that had described easy credit as a bottomless cookie jar. Well, a recent post at Consumerism Commentary once again has me all revved up with a "new" way of thinking about credit.

Smithee's post on credit cards that already follow the rules laid out in the new Credit Cardholder's Bill Of Rights in the US discusses the practice of double-cycle billing:

Avoid double-cycle billing (imagine paying your rent for May based on how many days you lived there in May and April)

Maybe this is grounds for me to turn in my PF-blogging credentials, but the concept of credit as renting money really hit me when I read this. Interest is the rent that you pay for the use of the money, and heaven help you if you don't return the money in good condition when you're done with it.

This is an incredibly simple concept, and it strikes me how differently people tend to think about debt than about other items they might rent. Nobody would refer to a rented DVD, a rental car, or a rented apartment as their own property, but try to convince someone that the new car they just financed isn't strictly their own property, and you've got an uphill battle ahead of you.

This concept of renting money also underscores the difference between "good" and "bad" debt: just as we derive utility from the tangible things we rent, we can derive utility from the money we rent. With leveraged investing, it's possible (though by no means guaranteed) that you will earn enough money to pay the interest and repay the borrowed amount. Of course, we can also use this rented money to dig ourselves into a hole. If you spend the money on something that you are not able to convert back into money (i.e. depreciating assets, consumables, etc.), then you no longer have the money to return to the lender. Kind of like handing the keys of a rented apartment to a complete stranger: it makes it kind of tricky to get out of your lease.

It's hardly groundbreaking insight, but it's a new way for me to think of credit and debt, and I found it really interesting.

Two years of progress: How am I doing?

Although I only started the blog 23 months ago, I've been tracking my finances to the penny since April 30, 2007. That means that, as of today's recap of April 2009, I have two years of progress to report. Just as I posted charts of my various metrics when I had built up one year's history, I thought I would post a graphical review of my progress to date.

Net Worth

As before, the fluctuating curve in my Net Worth represents my actual monthly numbers, while the smooth line represents the best straight line approximation of my progress over time. As you can see, the straight line doesn't do too badly at fitting the curve; it's still a generally increasing trend, although for the first half of 2008 I appeared to be over-performing, and for the last several months I've been under-performing. This can be tied to the market performance during this period, but it's interesting that my most recent month falls right on the line.

Retirement Savings

A look at my Retirement Savings confirms that most of the "off-trend" variation in my net worth over the past year can be explained by swings in market performance. Although I've been contributing steadily to my RRSP accounts over the entire period, this chart shows just how volatile the market has been over the past twelve months. The late-2008 crash is particularly evident, as is the current rally that has been buoying my bottom line for the last two months. A straight line turns out to be a terrible approximation of my retirement savings.

Cash Savings

Cash savings fare better in adhering to a straight line, although some periodic events still throw the curve off the linear approximation. You can see the build-up in October and November, followed by an abrupt drop in December, due to that constant annual surprise, the Christmas shopping season. Although I've successfully navigated through two cash-only Christmases, the impact of the holiday season can still be seen in my cash balances. It's interesting to see how, after my Emergency Fund hit $1,000 in October 2007, my cash savings have never dropped below this value, and since I set my sights on $2,000 last year, this has become my new effective cash "floor".

Revolving Debt

In spite of (or perhaps because of) its status as my most important goal, Revolving Debt has the most boring chart of the bunch. It's almost a perfect straight line, improving by a consistent $20 or so each day over the past two years. It's thanks to this trend (and two very similar trends in my Student Loan and Mortgage repayments) that my net worth has increased so consistently despite substantial fluctuations in my retirement and cash savings. This serves as a terrific illustration of the importance of focusing on the factors you can control: if I can throw $20 a day at my debt, that will always improve my net worth, no matter what the markets are doing. It's a risk-free return on investment, and more than you'll get in any savings account or GIC.

The Last Twelve Months

Over the past year, the overall trends have been comparable to what I see in these two-year views: net worth increasing, and all debts steadily decreasing over time. However, when I look at my retirement and cash savings over the last twelve months, I see something different:


Both these charts show a negative trend over the last year, although the trend is very slight for cash savings. Now, this is not really cause for alarm, since both charts show me currently outperforming the trend, and the trend for my retirement savings is clearly driven by market performance. However, it does indicate that I should continue to keep an eye on my liquid savings. Spending too much on holiday shopping, or dipping into the Emergency Fund to cover some car repairs, could leave me in a bit of a tight spot if I'm not careful.

April update

Well, this is a bit late. We're almost a week into the month of May, and I still haven't posted my April numbers. I don't really have a good reason for the delay, aside from a full plate at work and enjoying the nice weather we've been having. At any rate, let's see how I did last month:

• Reduced my revolving debt to $13,333.48 - This means that I am finally below 50% of the $27,610.74 that I started with two years ago. It also means that it's taken me twice as long as expected to pay off my revolving debt, but I've had two years of consistent, strong progress, and there's nothing wrong with that.


• Grew my Emergency Fund to $1,780.85 - This progress is very slow and steady, but until the debt is gone, this fund is more of a "nice-to-have" cushion than a true Emergency Fund, so it can't be my priority at the moment. Still, I'll continue throwing $25 into it every two weeks, until I'm able to get more serious about building up a few months' expenses.


• Grew our Wedding Fund to $2,643.23 - We should be in good shape for our wedding next summer, at the rate we're saving for it. Ms. Loonie has been building up her own wedding cache on the side, which is not reflected here, and we're pretty much neck-in-neck at the moment.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.

Now, on to my month-end update:

Assets:
Online Savings - $2,609.69
Self-Directed RSP - $37,831.13
Employer Group RSP - $11,304.00

Debts:
Revolving Debt - $13,333.48
Student Loans - $20,349.56

Net Investable Assets: $18,061.78
Net Liquid Assets: ($31,073.35)

Once again, my RRSP was buoyed by the market rally this month; along with over $600 in contributions, this rally lifted my investment balance by $4,530.09. Liquid savings also rose, for a net increase of $5,138.56 in my investable assets, accompanied by a $1,581.23 drop in my non-mortgage debt, helped along by April being a three-pay month.

Overall, my net investable assets increased by $6,719.79, and my net liquid assets increased by $2,189.70. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

Not a bad month.

The more things change...

I haven't written much about it here, but I've had a number of frustrations in the past with Rogers, especially their website. If you've been fortunate enough to avoid dealing with their customer-facing website, then I envy you. Personally, I find their site to be a bloated, unstable, convoluted mess that is very difficult to navigate.

In addition to the pain involved in visiting their site, I've been constantly annoyed by how long it takes them to post their monthly statements online. My billing date is the 26^th of the month, and my statement is never available online before the 30^th. It seems to me that, if banks can report the interest accruals on my accounts on the first of every month, then Rogers should be able to post my balance online more or less immediately. Sadly, this doesn't seem to be the case.

Although this month was no different (my April bill finally posted this afternoon), I was surprised and impressed by a change they've made to their notification e-mails. The message now contains the total amount of the bill, where previously you needed to click through and login to the site in order to get any specifics. Now I can get the amount owing from the e-mail, and login at my convenience to check the specific details.

I was really impressed by this innovation, and decided that, since I've delivered scathing criticism on numerous occasions using their website feedback form, I would let them know that I approve of this new feature. So, I punched up the Rogers URL, clicked "Contact Us", and made the appropriate selections to leave "Website Feedback".

Here's what they gave me in return:


I forget, how many words is a picture worth?

Experian discontinuing Canadian operations

I recently requested copies of my credit report from the three reporting agencies in Canada. It took a few weeks to get al three reports, with Experian's report finally arriving last Thursday. When I looked over the package from Experian, I was surprised to see their cover letter stating that they will cease operations as a Canadian credit bureau effective April 17. Here's the notice from their website (emphasis mine):

Effective April 17, 2009, Experian will unfortunately discontinue its Canadian consumer credit bureau operations as a result of the very difficult economic environment in Canada and around the world, which Experian believes will persist for some time. This means that as of April 18, 2009, Experian will no longer be providing credit reports out of its Canadian database regarding any consumer in Canada.

We will continue to respond to ongoing consumer requests for copies of credit reports, as well as handle disputed items and other consumer assistance until April 17. After that date and upon completion of any disputes in process, all consumer information will be deleted from our database and will no longer be available to consumers or creditors.

If you have not previously obtained your credit report from us or initiated a dispute on your Experian credit report, you may wish to contact one of the other credit bureaus for assistance.

So, after this Friday, Experian Canada is closing shop and destroying its records.

That's too bad; their report was by far the slickest-looking of the three that I received this time around.

I've updated my credit report post with this information.

Payday update - rolling over

OK, so this is kind of cool.

I got paid today (as I do every second Thursday), and in typical data-addict mode, I've been updating my financial spreadsheet. This is where I keep track of monthly net worth, as well as monthly and bi-weekly progress toward my various financial goals. Looking at the numbers, I noticed that a whole slew of balances crossed key thresholds today.

Here's the run-down:

• Revolving Debt - Crossed the $14,000 mark, dropping from $14,069.07 to $13,853.02. This finally puts me below my year-end target for 2008.


• Student Loans - Crossed the $21,000 mark, dropping from $21,195.20 to $20,913.86. This gets even cooler when you realize that the two loans making up this total went from $4,023.47 to $3,945.06 and $17,171.73 to $16,968.80, respectively.


• Mortgage - Finally crossed the $300,000 mark for the last time. At $299,116.04, we are at last beyond the reaches of accruing interest. Look out, $200K, here we come!


• Rising Above the Powers-Of-Ten Bias - Most significant of all, my Emergency Fund and Wedding Fund crossed the $1,732 mark and $2,127 marks, respectively, currently sitting at $1,733.86 and $2,160.11!

I've updated my progress bars, as well as the NCN Network chart for my revolving debt, bringing my Total % Paid to 49.83%. I'm so close to half-way I can taste it.

March update

April has arrived, and we're firmly into spring, so let's see how I did last month:

• Reduced my revolving debt to $14,069.07 - Still chipping away... I'm within spitting distance of $14,000 (my 2008 year-end goal), and almost half-way through my debt elimination. Over the next month, I'll be ramping up my bi-weekly payments to get a bit more aggressive with paying this off.


• Grew my Emergency Fund to $1,718.86 - Slowly but surely closing the gap to my $2,000 goal for the end of the year.


• Grew our Wedding Fund to $2,110.11 - I owe less income tax than I was expecting, so I was able to transfer some cash from the tax savings bucket in my Freedom Account over to my Wedding Fund. Ms. Loonie is working on her own savings account for the wedding, so by the end of the year we should have a nice bundle built up.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.

Now, on to my month-end update:

Assets:
Online Savings - $1,875.90
Self-Directed RSP - $35,174.22
Employer Group RSP - $9,430.82

Debts:
Revolving Debt - $14,069.07
Student Loans - $21,195.20

Net Investable Assets: $11,216.67
Net Liquid Assets: ($33,388.37)

For a change, my RRSP actually grew this month, thanks to the recent market rally and over $600 in contributions. Liquid savings are down a bit, for a net increase of $3,879.42 in my investable assets, accompanied by a $905.41 drop in my non-mortgage debt.

Overall, my net investable assets decreased by $4,784.93, and my net liquid assets increased by $569.97. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage). I recently re-checked the Canadian Black Book® value of my car, and found that it has dropped substantially since I last checked two years ago. I've reflected this change in my overall net worth calculation going forward.

Drawing a blank

If there's anything more lame than a note in your calendar that says "come up with something funny on Wednesday", it has to be a flat-out failure to produce said funny. I had the best of intentions to follow up last year's sale of the blog with another bit of tomfoolery, but it just wasn't in the cards.

So, for anyone who came here this morning looking for some chicanery, "April Fools!" Remember to keep a handful of salt handy as you peruse the Web today.

300 bits of sense and counting

When you start a blog to chronicle your journey out of debt, odds are your emotions are running a bit rampant. In a highly sensitive and impressionable state, you create an online profile, and have to choose a title for your project. If you're like me, you try to get clever and invoke some wordplay when naming the blog, and you end up with something like Loonies And Sense, hoping like hell that it will still seem even a little bit witty in a year's time.

Of course, having chosen a "clever" title, you also feel the need to revisit the play-on-words from time to time, referencing the pun in your post titles. This leads to posts like these, with milestone posts being especially heinous offenders. Eventually, you find yourself writing your 300^th post, and may decide to buck tradition by focusing on the sense rather than the Loonies.

All of which is to say that this post is the 300^th that I've written here, starting when I burst onto the scene back in 2007.

Let's take a look at the highlights of posts 201-299:

Canadian Stuff

• Loonies And Lexicons: Part 2 - I followed up my initial cross-border cheat sheet with some additional comparisons between Canadian and U.S. financial terminology.


• The P2P Lending Minefield - This industry still has yet to get off the ground in Canada, with at least one false start last year. In this economic climate, it will be interesting to see whether this idea gains any traction in the Canadian market.


• Comparisons In The Air - Four Pillars posted comparisons between Canadian and American retirement accounts and education savings plans, as well as comparing the TFSA to the American Roth IRA. Some good information here to complement my own cross-border comparisons.


• Deposit Insurance at Canadian Credit Unions - With the number of American banks that failed over the past year, deposit insurance has become a real hot topic. I've written in the past about insuring deposits and securities using CDIC and CIPF, respectively, but this post covers the insurance available on deposits at credit unions in each province.

Blogging

• 376 Days And Counting - A slightly belated celebration of my first blogaversary.


• The Worst Financial Advice I Ever Gave - I've been pretty light on the memes here at Loonies And Sense, but I liked this post about all the ways I led myself astray.


• Income From Blogging - I've also been pretty light on the blogging revenue, since I consider it my hobby and don't really run it as a business.

Milestones

• One Year Of Progress: Charting The Trends - I decided to chart my financial progress graphically, and the trends turned out to be very interesting.


• Payday Update: Under $300K Edition - The Loonie mortgage dropped below $300,000 for the first time this month. Since then, accruing interest has twice brought the balance owing back above this threshold, but with this Thursday's payment, we will owe less then $300K, at least for as long as we stay in our condo.

Taxes

• Making Sense Of Income Tax - This is one of the longest posts I've ever written. It takes a very detailed look at how income taxes are calculated, and explains the impact of credits and deductions on taxes payable.


• Getting The Most From A Group RRSP - I make the lion's share of my RRSP contributions into a group plan provided by my employer. As a result, the tax benefit of these contributions is immediately reflected on my paycheque, and I don't wait until April to get my refund.


• Claiming The Tax Credit For Charitable Donations - I took a look at how to optimize the tax benefit of donating to charity.


• Start Getting Your 2008 Taxes Ready Today - Whether it's setting up a folder to hold all your tax-related documentation, or setting aside cash to cover your tax bill next April, you'll be much more relaxed when preparing your next return if you've started thinking about it a year in advance.


• Feeling Some Property Tax Relief - After building up a surplus in our property tax account, the tax portion of our bi-weekly mortgage payment was reduced last August. We're up for renewal this year, at which time we'll look into paying the taxes ourselves.

Investing

• The Market Can Make You Crazy - With the toboggan ride the stock markets have been enjoying, sometimes you just need to step back, breathe, and tell yourself why you're investing in the first place.


• Time Changes Everything - A big rally can actually be as unnerving as a big drop. It's hard to keep your emotions in check.


• Some Perspective On A Month Of -38% Returns - A "terrible" (remember, this was written prior to October 2008) month in the market prompted me to check the data point against a trend line. Turns out it was actually right on target.


• The Loonie Portfolio: Asset Allocation And Half-Year Performance - I took a look at the allocation of my retirement investments, and how they stacked up through the first half of 2008.


• How Much Are You Up Or Down? One Ugly Chart, And One That's Not So Bad - Everyone's investments have taken a beating. That's part of the reason that I put so much emphasis on paying off my revolving debt: $500 of debt repayment will increase my net worth in any market.

Looking Back

• Remember The Tape Deck: A Lesson In Delayed Gratification - When I was 12, I saved up $100 (plus tax) for a dual cassette deck. To this day, $100 stands in my mind as a significant-but-attainable amount of money.


• Financial Archaeology: Unearthing Past Behaviour - A detailed look at the outstanding balance and accrued interest on my credit accounts before I "saw the light" in April of 2007.


• How Do You Think Of The Stock Market? - Gordon Korman introduced me to the stock market in his novel Go Jump In The Pool. It confused me at the time, but I think I'm finally getting the idea.

When you can afford to make the "wrong"choice

Trent at The Simple Dollar recently bought a new 2009 Prius, and took out a loan at 4% to cover the majority of the purchase price. Those who have been reading Trent's blog over the years know him as an advocate of frugality and paying cash, so this decision to finance the purchase has generated a lot of discussion among his readers. He addressed these concerns in a post today justifying his decision.

A lot of the thinking behind the pay-cash-don't-finance argument follows the line of "Won't it feel great when you walk into the dealership, write a cheque for the negotiated price of the car, and drive off the lot without a new loan hanging over your head?" The planning and discipline that it takes to save up enough cold, hard cash to pay for a new (to you) car are the same traits that help people get out of debt, plan for retirement, and become financially independent. When you look at the number of people who still live well beyond their means, spending more each month than they earn and mortgaging their future for today's wants, it's not hard to see that "save up and pay cash" is well-needed advice.

The difference here, though, is that Trent had saved up enough to pay for the car, and chose to finance the purchase (at a very low rate) in order to keep cash on hand for emergencies and any other opportunities that might come up along the way. This is very different than someone living paycheque-to-paycheque signing on for a 7-year loan at 12%. The interest on the loan may well cost him in the long run, but he's worked to put himself in a position where he can find a compromise rather than needing to make the perfect, by-the-numbers decision.

Much like the idea of getting ahead of the treadmill as opposed to getting off it, the message here is that, when you plan and save, you put yourself in a position of choice, and it can be surprising just how many options become available to you.

My life as a hamster

Back in 2007, a post by Trent at The Simple Dollar introduced me to the concept of the financial treadmill. The idea is that, if you're living paycheque to paycheque, and spending every dollar you make (or, worse, dollars you haven't made yet), you're basically running in place (or even falling behind).

I've written about this a couple of times, looking at my financial progress to see whether I can "get off the treadmill". So far, I still feel the treadmill spinning away, even though I've brought my cash flow out of the red, and built up a small savings cushion.

A post today at Generation X Finance put the treadmill dilemma in a slightly different light. The focus here is to "stop running in place and start making progress."

That "start making progress" piece is a subtle but important difference in the approach to the problem. It really suggests that, instead of looking to get off the treadmill (which really only happens at retirement), you should look to keep ahead of the treadmill. When you look at it this way, it takes "no, I'm not off the treadmill yet, but I'm getting closer," and turns it into "yes, I've come so far, and I'm getting better every day."

Forward motion is success, and helps to motivate future success. My debts (consumer, student and mortgage) are getting smaller every month, and my savings are growing consistently over time. If I have an off week, I may lose ground, but I still end up ahead of where I could be.

I'm still on the treadmill, but I'm running at my own pace.

Ah, to be young and naïve again...

Today was payday, and I've updated my progress bars and NCN Network chart. In looking at the chart, I noticed the "goal date" I set for myself when I started the blog.

My goal at the time was to be free of revolving debt by April 30, 2009.

At the risk of spoiling the ending, I have to say I'm not going to make it. A two-year payoff turns out to have been a bit unrealistic. On the one hand, I'm kind of bummed to see myself so far off this goal (I'll still have nearly half of the $27,610.74 I started with when the goal date rolls around). My shortfall is due to the choices I've made; it was possible to meet this goal, but I haven't made debt elimination enough of a priority to get there.

On the other hand, I've now reached a point where I always know exactly what my credit balances are, and I track my (ever increasing) net worth on a monthly basis. I've brought my credit usage under control, and have managed to pull off two consecutive cash-only Christmases. I have a small Emergency Fund, and Ms. Loonie and I are well on our way to saving up for our wedding next year.

Could I have been farther along if I'd made different choices? Absolutely. However, I'm miles ahead of where I was financially two years ago, and that counts for a lot.

The price of micro-managing

Back in 2007, I opened online savings accounts with ING Direct, HSBC Direct, Canadian Tire Financial Services and ICICI. I wrote a series of posts detailing the process of opening and using an account with each of the four institutions, including the transfer and hold times involved with moving funds to or from the savings account.

At the time, Canadian Tire was the only institution to credit the savings account immediately after initiating a transfer in. The other three banks credited the account on the following business day. This is the assumption I've since been using in planning my fund transfers between institutions.

This past Monday, I was working through my beginning-of-month financial shuffle, and I mistakenly requested a transfer of $600 from my chequing account into my ING Freedom Account. I quickly recognized my error, and tried to cancel the transaction. With the one-business-day turnaround time, I should have been able to do this, as the transaction would still have been pending. However, ING had immediately credited my account, so there was nothing for me to do but ensure that the $600 in question was in my chequing account to keep the account from NSF when the transaction went through.

Now I find myself in the slightly annoying position of having $600 that should not have been in my ING account in the first place, which is now on hold for five business days before I can move it back to where it belongs.

I've made my share of money mistakes in the past, and although this one hasn't really cost me anything, it's an annoying "open loop" that I have to keep in mind until it's resolved, and it illustrates the value of automating your finances to prevent errors that come from this kind of financial micro-managing.

Payday update - under $300K edition

I haven't done one of these in a while, but with today being payday, I thought I'd provide a quick update of my financials. My NCN Network chart has been updated with my latest revolving debt numbers.

Revolving debt is down to $14,212.71, which means I've paid off over 48% of the $27,610.74 I had when I started keeping track in April of 2007. Another $407.34, and I will have paid off half of my revolving debt. That's highly motivating.

Student loans are also dropping nicely. I recently renegotiated Ms. Loonie's interest rate, so both our loans are now at a fixed rate of 5%. Two more payments will bring my loan under $4,000, and hers under $17,000. Compare that to the respective $7,687.35 and $26,000 that we started with, and you can see the progress we've made over the past two years.

Finally, the really exciting news is that today's mortgage payment brought our principal down below $300,000, and we currently owe $299,883.42 on our mortgage. Granted, two weeks' accrued interest will boost the amount owing back up above $300K, but this is a huge milestone for us. It seems like only yesterday we finally bid adieu to our CMHC premium, but now we have a new first digit, and with our renewal date approaching and rates at all-time lows, we are in better shape every day.

I think it's safe to say that I'm happy with our progress.

February update

For such a short month, February seemed to last forever. Between work and personal commitments, I felt like I was being pulled in about fifty directions, but I did accomplish a few things since last month:

• Reduced my revolving debt to $14,413.42 - This was just keeping up with my regular bi-weekly payments. The drop of $377.82 was a little lower than last month, because I had to pay off my 0% credit card. This ended the "interest amnesty" I've been enjoying on my revolving debt since last January, and meant that the banks carried more heft in the tug-of-war of my debt reduction. Still, less than $30 in interest is nothing to gripe about. I'm looking into starting a new round of 0% offers this month, so let's see what I can find.


• Grew my Emergency Fund to $1,686.35 - Just a $33.06 increase this month, but even in slow-and-steady mode on this goal, I'm still on track to make $2,000 by year-end.


• Grew our Wedding Fund to $1,684.29 - I have just over $600 of this in a TFSA with ING, but the rest is available for any deposits we need to make over the coming months.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.

Now, on to my month-end update:

Assets:
Online Savings - $2,211.34
Self-Directed RSP - $32,949.57
Employer Group RSP - $7,440.61

Debts:
Revolving Debt - $14,413.42
Student Loans - $21,756.26

Net Investable Assets: $6,431.84
Net Liquid Assets: ($33,958.34)

My liquid savings (which don't include our Wedding Fund, since this money is already pretty much spoken for) grew slightly, mostly through contributions to my Freedom Account. This month saw yet another slide in my RRSP, in spite of over $600 in contributions. These changes translated to a net decrease of $2,057.05 in my investable assets, along with a $936.74 drop in my non-mortgage debt.

Overall, my net investable assets decreased by $1,120.31, and my net liquid assets increased by $1,397.63. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

Credit reports information updated

With the recent news that Experian is ending its relationship with myFICO in the US, I decided to check the information in my free credit reports post.

Turns out that Northern Credit Bureaus (formerly an Experian-owned company) now operates in Canada as Experian Canada. The top-level URL remains the same, but my links to the credit report request forms were broken, so I've updated the post. There's now a one-page PDF form that you can print, fill out and mail to Experian's offices in Toronto.

The information for Equifax and TransUnion has not changed.

Updated: Free credit reports in Canada

A look at my accounts

Putting together my January recap, it occurred to me that it might be a good idea to post a summary of how my financial accounts are set up. I've already discussed my cash flow setup in some detail, but I haven't looked at the individual accounts that comprise the gears of my money machine.

Don't take this as a recommendation of how you should set up your own finances; in fact, I may very well see this exercise as an excuse to simplify my own financial life. At any rate, here's the rundown:

Chequing Accounts

• Joint chequing account at a brick and mortar bank - This is the account into which my pay is deposited every two weeks, and our mortgage and loan payments all come out of this account automatically. You could call this the "hub" of my finances, as this is where money enters my life, and then moves out to the appropriate accounts and expenses.


• Individual chequing account at a brick and mortar bank - I keep this account as my own personal spending money. After all of my savings and fixed expenses come out of the joint account, what's left of my paycheque is transferred into this account to be used for groceries, gas, etc.

Savings Accounts

• Individual savings account at a brick and mortar bank - This account is currently empty, as it pays virtually no interest. I haven't used this in several months, and should probably just close it down.


• Emergency Fund at ING Direct - This used to be my primary Emergency Fund account, until I moved the majority of my emergency savings to HSBC. I still keep a few hundred dollars in this account, and I have a bi-weekly automated transfer of $15 into this account from my payroll account.


• Emergency Fund at HSBC Direct - Thanks to the myriad ways of using HSBC's savings account (you can essentially do anything short of writing a paper cheque), I decided to keep $1,000 of my Emergency Fund with them. I have an access card that gives me access to this account, and I can even pay bills from it if necessary. The balance has been slowly growing thanks to the $2-3 in interest that it earns each month, to the point that I now have nearly $1,040 in this account.


• Emergency Fund at Canadian Tire Financial Services - I opened this account when I was reviewing high-interest savings accounts, and I basically hold $20 in the account just to keep it open. The rate is comparable to ING and HSBC, but it doesn't really serve much purpose in my financial life.


• Emergency Fund at ICICI Bank - As with Canadian Tire, I opened this account just to see how it stacked up against the others. I have no complaints, but it's really a redundant account, with $20 earning pennies in interest each month.


• Emergency Fund at Citizens Bank of Canada - What is wrong with me? Yet another duplicate account. I opened this to take advantage of a $50 promotion in the fall, and now I'm just keeping a balance of $150 in this account until they remove the hold in March.


• Freedom Account at ING Direct - This is my most actively used savings account. This is where I stash money that I know I'll need in the near future, but not before my next paycheque. Condo fees, car insurance, cable and hydro bills are all paid from these savings, as well as clothing, subscriptions and car repairs. I use a spreadsheet to keep track of how much I have saved up in each category. $300 goes into this account every payday, and I transfer funds back out as needed.


• Giving Account at ING Direct - Really just an extension of the Freedom Account, this is where I save up for birthdays and Christmas, as well as charitable donations. $100 gets socked away in this account every payday, and I also keep track of the categories in a spreadsheet.


• "Fun" savings at ING Direct - Actually the first online savings account I ever opened, this is where I save up for "treats." I set aside $25 each payday in this account, and periodically wipe it out on something fun.


• Wedding Fund at ING Direct - This is a regular ING savings account, and I have an automated transfer every payday into this account, as well as any ad hoc savings I manage to set aside for our big day.


• Wedding Fund TFSA at ING Direct - Saving for a wedding represents a fair chunk of change, so I opened this account to take advantage of the tax-free interest earnings and flexible withdrawal rules.

Investment Accounts

• Self-Directed RSP at discount brokerage
- This is where I hold my index funds. I'm due for a rebalancing in this account, and I'm just waiting for my year-end bonus to transfer over before I make the jump.

• Group RRSP through my employer - This is where I purchase my employer's stock by payroll deduction. I set aside 6% of my paycheque in company stock, and they match 50% of my contribution.


• Group DPSP through my employer - This is where my employer's matching contributions go, again purchasing company shares.


• Group RRSP through my employer - This is a separate savings plan from the group RRSP listed above, with more flexible investment options and contribution methods. I defer a portion of my year-end bonus into this account to reduce my taxes owing (and save for retirement, of course!). I can hold company stock, index funds and cash in this account.


• Non-registered trading account at discount brokerage - I'm still deep in the hole thanks to my consumer debt, so this account has been empty since I opened it. One day, however, I hope to enter the world of non-retirement investing.

Credit Cards

• BMO Mosaik MasterCard with Air Miles - I've mentioned before that Air Miles are my reward program of choice. This card gives me one point for every $15 I spend, and it is my primary card, and the one with the highest limit.


• VISA from a brick and mortar bank - I subscribe to the "have one of each" philosophy when it comes to credit cards, so I have this card for the rare situation where MasterCard isn't accepted.


• American Express with Air Miles - AmEx is the only credit card accepted at Costco, so Costco ends up being pretty much the only place that I use this card. However, since these transactions usually come in at $150-300, being able to rack up rewards under the same reward program as my primary card is a nice benefit.


• MBNA MasterCard with 0% prmotional APR - This is where most of my revolving debt currently sits. I'll have to pay this off within the next month when the 15-month promotion ends, at which point I'll either look for another 0% deal, or simply close down the account.

Line of Credit

• Unsecured line of credit at a brick and mortar bank - Once the promotion on the 0% MBNA card ends, I'll pay it off with this account. I use this account to hold my revolving debt at a low interest rate. As I mentioned in past discussions of my cash flow, every time I use my credit card to buy something, I transfer that amount from my chequing account to this line of credit, and then pay the card from the line of credit at the end of the month. This saves me a fair amount in interest charges each month, since my line of credit balance is artificially lowered (essentially small-scale credit card arbitrage).

Term Loans

• Mortgage at a brick and mortar bank - This is the original mortgage on our condo, which we're slowly chipping away at. It's up for renewal this summer, so we should be able to lock in a better rate than what we currently have.


• Mr. Loonie's consolidated OSAP loans at a brick and mortar bank - I consolidated my student loans into a low-rate, 5-year loan back in 2006, and I'll be saying a fond farewell to this debt in February of 2011.


• Ms. Loonie's consolidated OSAP loans at a brick and mortar bank - In the summer of 2007, we also consolidated Ms. Loonie's student loans, which will be paid off about a year after my own loans. By that point, we should be chugging along with nothing but a mortgage, and that is just fine by me!

Summary

Wow. I have a lot of accounts. Two chequing accounts, eleven (!) savings accounts, five investment accounts, four credit cards, a line of credit, a mortgage and two loans. That's 26 accounts in total. However, most of these accounts serve a very specific purpose. The only place I could really simplify is by closing down some savings accounts. Even here, I don't trust my money management quite enough to throw all my savings in a single pot, so I would want to maintain my Freedom Account separate from my Emergency Fund, and so forth.

The good news here is that I can account for every penny of my savings and my debt, and I have current login information for each account. I've even put together a "road map" that provides the relevant information for every account on this list. Still, I can't shake the feeling that I'm doing some significant juggling here, so I may need to look for ways to trim this system down over the next couple of years. I've put myself on the path to financial recovery by swinging pretty far to the OCD end of the spectrum, and now it may be time to start loosening my grip.

January update

January is over, and we're into the second month of 2009. Let's take a look at how I did with last month's goals:

• Reduce my revolving debt to $14,800 - Bingo. I ended January at $14,791.24, a drop of over $400. Not a bad start to my year of debt reduction.


• Grow my Emergency Fund to $1,650 - Another triumph: I'm currently sitting at $1,653.29. Not a huge growth from December's $1,589, but it's moving in the right direction.


• Grow our Wedding Fund to $1,260 - I hit this one, too, ending the month at $1,318.03. We'll likely need to put down a deposit for a photographer within the next month or two, so it's nice to have this cushion set aside.
  
  NOTE: Since this money is earmarked to be spent on our wedding next year, any valid wedding expense that we pay for from this account will not reduce my progress on this goal. This may seem like funny accounting, but the real goal here is to pay cash for the wedding, so I don't plan to penalize myself for using these funds as intended.


• Run an average of twice per week, and play squash at least once per week - Whoops. I did manage to play squash once a week, but only ran once, and briefly at that.


• Try two new recipes, with a focus on doing as much as possible from scratch - Another flop. Our weekends ended up being far more chaotic last month than we anticipated, and although we weren't too bad about eating out, we didn't get to be creative in the kitchen.


• Write detailed posts on three subjects - I did manage to churn out three posts (besides my update posts), but hardly the treasure trove of insight I was hoping to produce. Shall I now throw down the gauntlet and attempt to redeem myself during the year's shortest month?

Now, on to my month-end update:

Assets:
Online Savings - $1,750.45
Self-Directed RSP - $29,744.12
Employer Group RSP - $13,164.00

Debts:
Revolving Debt - $14,791.24
Student Loans - $22,315.18

Net Investable Assets: $7,552.15
Net Liquid Assets: ($35,355.97)

My liquid savings (which don't include our Wedding Fund, since this money is already pretty much spoken for) held steady, with some expenses coming out of the Freedom Account offsetting the Emergency Fund growth. This month saw a jump in my RRSP, due to my year-end bonus and some payroll contributions. These changes translated to a net increase of $4,590.72 in my investable assets, along with a $987.62 drop in my non-mortgage debt.

Overall, my net investable assets increased by $5,497.34, and my net liquid assets increased by $850.72. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

Four Things

There's a bit of self-tagging going around these days, and I liked this one, so I thought I'd chime in.

4 Things I'm Passionate About

1. Family
2. Music
3. Wine
4. Reading

4 Words or Phrases I Use Often

1. "Ça va, et toi?" (my French is limited)
2. "Supposably"
3. "Halfway under the bus"
4. "That's what she said."

4 Things I Want To Do Before I Die

1. Have children
2. Build a house
3. Spend at least six months in Italy
4. Learn to play the drums

4 Things I Have Learned From The Past

1. I'm not as smart as I think I am.
2. Starting late is better than not starting at all.
3. Loving someone doesn't mean they're perfect.
4. The fourth in a list of four profound insights is always the most elusive.

4 Places I Want To See Or Visit

1. Giza
2. Ayers Rock
3. Iguaçu Falls
4. Stonehenge

4 Favourite Restaurants

1. Bâton Rouge
2. Ki
3. Fred's Not Here
4. Any good Irish pub

4 Things that Happened Yesterday

1. I stuck (pretty much) to my shopping list at Costco
2. I nailed "My Name is Jonas" by Weezer in Guitar Hero III
3. I finally updated my computer to Ubuntu 8.10
4. I played guitar for more than two hours

4 People I Tag

You, you, you, and... you.

Big day

There was something significant that was supposed to happen today, but I'm having trouble remembering what it was. :)

Congratulations to our friends in the US on your new president. Whatever your political leaning, it's a fascinating time to be alive. The next four years should generate some great discussion, and hopefully a good deal of positive change in North America and the world at large.

Back on our side of the border, the Bank of Canada today cut its interest rate to 1.00%. In the fastest response I've seen to date, all five of the big Canadian banks immediately matched the rate drop, lowering their prime rates by 0.50% to 3.00%. This puts the banks 0.25% behind overall in terms of passing on the rate cuts to the customer. Not too shabby, when you consider that interest rate spread is a bank's bread and butter.

As always, interest rate news is good for some, and bad for others. Borrowers are finding that their cost of borrowing is reduced even further (my line of credit currently sits at 3.25%), but savers will no doubt also be hit with a drop in the APR on their savings accounts. Now might be a good time to lock in any mid-term savings in a GIC before the rates get any lower.

An excellent metaphor for credit

For a while now, I've been a fan of the show 'Til Debt Do Us Part. It's a highly addictive reality show about couples trying to right their financial ship and salvage their relationship in the face of out-of-control spending and spiraling debt. The host, Gail Vaz-Oxlade, is a very entertaining, no-nonsense personality, who also maintains a great blog with tips, tricks and diatribes on all things financial. Scanning through her articles this morning, I found a fantastic post likening the age of easy credit to having a bottomless cookie jar:

The problem with the bottomless cookie jar is that eventually you begin to take the cookies for granted. It’s human nature. And so when a couple of weeks passed and none of the cookies had been eaten, I stopped filling the jar. Several weeks later, after the jar had been emptied, washed and put back in place, Alex dipped her fingers into the jar to find it empty. She was very disappointed. The cookies were gone. It was the end of the world.

This serves as a very effective metaphor for people's relationship with their credit. Just look at the mystery surrounding the calculation of credit scores and credit limit assignment criteria, and it's not hard to see why most of us don't really understand how we got the credit we have. When a bank first hands you a $10,000 credit line, it's difficult to imagine how you could ever spend that much money, and you can develop a false sense of your ability to manage the ensuing debt. "They wouldn't have given me the limit if I couldn't handle it!"

I remember when I first started digging my way into my hole of consumer debt, I looked into the option of getting a line of credit to pay off my credit cards. At the time, my utilization was so high that I didn't qualify (thankfully), and I spent a good deal of time thinking over how to approach the problem of my debt. I'm a smart person, but I found myself grappling with the idea of whether consolidating my cards onto a line of credit would solve the problem. A small voice in the back of my mind tried to explain that shuffling and adding to the pile wouldn't get me anywhere, but I still didn't get it.

I find this disconnect fascinating. The "math" of personal finance really couldn't be simpler: you need to earn more than you spend, and you need to pay off more than you add to your debts. There's not even any multiplication or division here; it's straight addition and subtraction. Heck, you can even reduce it to the point of "is this number bigger than that number?" All the same, however, we all seem to struggle at some point with this dilemma. We just don't understand how the cookie jar works.

Goals for January 2009

On the first business day of every month, I post my update for the previous month's progress, and set goals for the month to come.

Here are my goals for January:

• Reduce my revolving debt to $14,800 - Since my CPP contributions and EI premiums are about to start again, my cash flow will drop a bit over the next several months. This means less money to throw at debt reduction (especially given my focus on saving for our wedding), but a $400 reduction in my revolving debt should be realistic.


• Grow my Emergency Fund to $1,650 - I have an incentive bonus coming into my Canadian Tire savings account this month, so this target should be in line with my regular contributions.


• Grow our Wedding Fund to $1,260 - I was fortunate enough to receive a year-end bonus this year, and when it arrives later this month, I should be able to get this "seed" amount set aside, and then go from there in the coming months.


• Run an average of twice per week, and play squash at least once per week - I really need to get back into an exercise routine, so let's start here.


• Try two new recipes, with a focus on doing as much as possible from scratch - I have a few slow cooker recipes that I'm excited to try out, so we may be hosting some dinners this month as I experiment.


• Write detailed posts on the following three subjects:
  
  1. My TFSA plans
  
  
  2. My pension contribution plans
  
  
  3. My asset allocation

That should get me nicely back on track this month.

Goals for 2009

Last January I posted a set of goals for 2008, so here is my list of what I hope to accomplish this year:

• Save $6,500 toward our wedding - Ms. Loonie and I will both be aggressively saving for this throughout the year, and I should be able to pull this together without hampering my other financial goals. A cash-only Christmas is one thing, but I really don't know how well we'll do with having a cash-only wedding. Only one way to find out, I suppose...


• Reduce my revolving debt to $7,500 - With the increased savings in our Wedding Fund, there will be a bit less cash to throw at my debt, but this number should be manageable. That will leave me with 27.3% of my $27,610.74 starting debt.


• Grow my Emergency Fund to $2,000 - I really just want to repeat the success that I had in 2008, and get this savings cushion back up to where it was in October.


• Give $2,000 to charity - I'm not increasing this from my 2008 goal, but I want to make sure that we give at least as much as we did last year.


• Weigh 195 pounds - I've got the hunger for getting in shape. I have shoes that are kind to my feet, convenient access to a gym and a squash court, and a fiancée who's also excited to get back into an exercise regimen. With all that going for me, losing some weight should be child's play.


• Write at least three "researched" posts each month - My posting frequency really fell apart in the last half of 2008, so this is an attempt to get things back on track. In addition to my month-end and payday updates (which are highly cookie-cutter affairs), I intend to have at least three posts each month for which I need to do some background research. Hopefully, this will lead into far more than three a month, but it's a manageable goal that will get me started.


• Be promoted to the next job level - I usually prefer to list goals over which I have control, so this one is a bit of a stretch. This really puts a concrete success measure around my wishy-washy "be productive" goal. I've recently transitioned into a sort of "pre-management" role at work, and I can leverage this opportunity by showing my aptitude for the next job level (i.e. actually leading a team). It will take a lot of work on my organizational and project management skills, but I can do it. Even if I don't actually get the promotion, I'll be very well positioned in my career development.

That's what I'm looking to get done in 2009. What are your goals for the year?