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.