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).

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.

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.

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.

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.

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.

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.

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.

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).

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).

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.

December update; 2008 in review

Happy New Year! I don't know about you, but I'm happy to see the end of 2008, and I certainly hope that 2009 has a little more sunshine to offer.

This is the my second New Year's post, and the end of my first complete year of blogging, so let's take a look at how I did with my 2008 goals:

• Propose to Ms. Loonie - I did this in November, and we are now engaged to be married in 2010. We couldn't be happier; this was probably my most important goal for the year, and the only reason it took so long was that I really wanted to pay cash for the ring. Long story short, I now have a beautiful fiancée with a paid-for ring, a tentative wedding date, and a whole lot of planning to do.


• Reduce my revolving debt to $14,000 - Not quite. I ended the year with $15,204.77 in revolving debt, a drop of $8,192.94 that put me at 87.2% of my debt reduction goal for the year. I would have liked to hit this target, but 87% is a lot better than the 75% of progress I made last year. The good news regarding my debt reduction is that I managed to have my second cash-only Christmas, thanks to my Freedom Account. It's amazing how good it feels to start the year without a holiday debt hangover.


• Grow my Emergency Fund to $1,500 - My Emergency Fund is meant to be small for the time being, until I pay off my revolving debt. However, I'm still looking to make continuous, small contributions to this cushion, just to keep the saving-for-saving's-sake habit alive and well. I closed the year with $1,588.90 in emergency savings, an increase of $425.94 that put me at 126.4% of my savings goal for the year. This is the net increase in my Emergency Fund, after taking out a few hundred dollars toward the end of the year to top-up Ms. Loonie's engagement ring fund and some car repairs.


• Give $2,000 to charity - I don't buy into the notion of a religious tithe, but I definitely believe that it's important to give. I contribute to a number of United Way charities through bi-weekly payroll deductions, and also make monthly donations to a local listener-supported radio station. On top of this, we sponsored a few friends in fundraising activities, and bought into casual Fridays at work. All told, we made $2,002.00 in charitable donations this year, which nails my goal for the year, and is a big improvement over the $1,300 we gave in 2007.


• Grow the readership of Loonies And Sense to 100 RSS subscribers - At this point, it starts to look as if I simply stopped reading my list of goals. I currently have 54 RSS subscribers, which is a far cry from 100. That's really my fault, however, because my posting schedule really fell off in the second half of the year.


• Lose 25 pounds - Things looked so promising, as I started running and playing squash on a regular basis, as well as walking consistently to and from work and eating a healthier diet. However, I got laid up with some really bad heel blisters just before the holidays, and coupled with a bounty of Christmas treats I'm back to square one. All is not lost, however; I received a digital scale as a prize through work, and I'm well-equipped to get back into the saddle in January. Let's see those pounds disappear!


• Adopt and maintain a version of Getting Things Done - D'oh! I'm well shy of having this system in place. I have made some improvements in my organizational system at work, including using more folders to manage my paper, but I still struggle with staying on top of my to-do list. This really needs attention in 2009.

A few significant misses on this list, but my finances made significant progress in the right direction, and I've taken my relationship with Ms. Loonie to the next level, so I'm happy with what I got accomplished (especially considering how much bad news was flying around throughout the year).

Now, on to my month-end update:

Assets:
Online Savings - $1,887.35
Self-Directed RSP - $31,092.25
Employer Group RSP - $7,169.25

Debts:
Revolving Debt - $15,204.77
Student Loans - $22,889.27

Net Investable Assets: $2,054.81
Net Liquid Assets: ($36,206.69)

Holiday shopping and car repairs put a $1,661.98 dent in my liquid savings this month. However, my retirement savings finally had a flat month, growing by $2.57 after three straight months of multi-thousand-dollar drops. Combined with debt reduction, my net investable and net liquid assets decreased by $415.59 and $418.16, respectively. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

2008 in review

Besides the financial progress detailed above, here are the rest of my 2008 milestones:

• I knocked off 35% of my revolving debt from the beginning of the year. This leaves me with only 55.1% of the $27,610.74 in debt I had in April of 2007. That's a significant chunk of cash, averaging $682.75 per month.


• We've paid off $9,646 in mortgage principal, and $7,209 in student loans. This is all due to our automatic bi-weekly payments, with no lump-sum prepayments.


• My retirement savings have dropped by $3,732, in spite of over $11,000 in RRSP contributions. This rather sizable black cloud has two silver linings: 1) I'm getting my first taste of a serious bear market, and a chance to see how I react to a period of horrible market performance; and 2) I've spent a good chunk of the year buying stock and mutual funds at a deep discount, holding up the "buy-low" side of the investor's mantra. Since I have no need of these investments for at least two decades, I'm content to sit back and enjoy the ride. Besides, it's hard to imagine 2009 being any worse in terms of market performance.


• My net worth has increased by $21,396 (72%), while my net investable and net liquid assets have increased by $11,750 (124%) and $15,482 (30%), respectively.

Goals

I'm getting back on top of posting my monthly goals. Over the next couple of days, I'll be posting my goals for January, as well as my year-long goals for 2009. Stay tuned!

How much are you up or down? One ugly chart, and one that's not so bad

When I calculate my net worth for the month, the data get fed into some dynamic charts that I've created, to provide a visual representation of my progress over time. I've posted these charts a couple of times, but this month's output really stopped me in my tracks. Behold the majesty of my retirement investment performance since I started tracking in April of 2007:

Despite contributing roughly $18,500 to my retirement accounts since April 2007, my investments have gained only $2,171.50 in value.

Yippee.

Now, I need to point out a couple of things here:

• This chart only shows the month-end value of my investments - I haven't done any adjustments to show "what $10,000 invested on April 30 of 2007 would be worth today", or the like. This is a very basic "what was my investment portfolio worth on X date?" view of my RRSP's value over time.


• This graph starts at a value of $36,087.43 - Although a quick look at the chart makes it look like I've come full circle, there is actually another 6 years of progress prior to April 2007 that got me up to that point. I have to keep in mind that I'm really "up" by $38,258.93 over where I was at the beginning of my career (namely $0).

Since the beginning of the year, my retirement investments are down by 7.9%. I'm OK with that, since this money is for the long term, but it still hurts to see such a pronounced drop-off over such a short period.

A post at Clever Dude made me stop and think about how I'm really doing this year. True, my investments are down (by a lot), and my net worth has been slowly declining the last couple of months as a result. However, I've been making consistent progress on paying off my revolving debt, and tucking some cash away in my Emergency Fund and Freedom Account. As a result, my net worth is actually up by 71.8% over where it was at the end of 2007, my revolving debt is down by 32.1%, and my cash savings are up by 96.0%:

There's no question in my mind that I'm moving in the right direction, and although net worth has been stagnant the past few months, I'm laying a very solid groundwork for the future. By starting with a small base, and sticking to the plan, I've survived a huge drop in the market and actually grown my net worth by over 70%. That's not too shabby.

How is your big picture looking? Is market performance overshadowing the rest of your financial life, or are you seeing small changes add up to something better?

November update

Somehow, December is already here. I'm not entirely sure how this happened, but the holiday season is upon us, and we're in the final stretch of 2008. How are your holiday savings coming along? Have you been planning ahead for the shopping season? Are you scaling back on your purchases this year?

I didn't set specific goals in November (two months in a row equals a big slap on the wrist for Mr. Loonie), but here's a summary of my progress for the month:

• I reduced my revolving debt to $15,892.86 - This $498.99 drop pales in comparison to the $1,041.94 I paid off in October, but it's still a good-sized chunk of debt that's now gone. Not much new to see here, but it's movement in the right direction.


• My Emergency Fund dropped from $2,067.70 to $1,701.46 - What happened??? Did I have car repairs? Did I need to cover a health emergency out of pocket? No, things are fine in the Loonie household, which brings us to the third point...


• I proposed to Ms. Loonie, and she said yes! - The slowdown in debt repayment and the slight dip in my Emergency Fund are due to my purchase of an engagement ring last month. For most of the year, I've had some money stashed away in a savings account, and I finally put it to good use to pop the question to the woman of my dreams. We're looking at dates in early 2010 for the actual wedding, but for now we're just basking in the glow of being engaged.

Now, on to my month-end update:

Assets:
Online Savings - $3,549.33
Self-Directed RSP - $31,128.93
Employer Group RSP - $7,130.00

Debts:
Revolving Debt - $15,892.86
Student Loans - $23,445.00

Net Investable Assets: $2,470.40
Net Liquid Assets: ($35,788.53)

My liquid savings grew slightly in November, which reflects some substantial contributions to my Freedom Account, offset by the withdrawal from my Emergency Fund. This month had a much smaller drop in my RRSP, which shed only $2,789.20 (as opposed to $6,200.26 in October). Still, the last time my retirement savings were this low was July 2007. These changes translated to a net decrease of $2,590.82 in my investable assets, more than offsetting the $1,066.52 of progress I made in reducing my non-mortgage debt.

Overall, my net investable assets decreased by $1,524.30, and my net liquid assets increased by $1,264.90. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage). The market took a much smaller bite out of my retirement savings this month, which is a relief. The continuing forward motion in my net liquid assets is good to see, considering that the Loonies have a wedding to plan. Let's keep building those savings and shrinking that debt!

October update

Hello there. Remember me?

I don't know if you've noticed this, but a lot has been going on during the past month. Between the bailout in the U.S., the injection of cash into the Canadian mortgage market by the CMHC, and the rest of the turmoil going on in the markets, it's been really tough to keep on top of everything that's going on. Frankly, it seems to have turned me from a commenter to a spectator, as I try to wrap my head around it all. It's taken all my "finance sense" just to reassure myself while watching the decimation of my retirement accounts, and I just haven't had the wherewithal to post on any of the financial goings-on in October.

In spite of my complete radio silence this month, I have still been bringing in a paycheque, and I have been doing things with that money, so let's take a look at how I did. I didn't get around to posting any goals for the month, but I can still post my financial progress:

• I reduced my revolving debt to $16,391.85 - A three-pay month is always welcome when looking at my debt elimination progress. I was able to knock more than $1,000 off my debt, which feels good. I'm not sure whether I'm going to hit my $14,000 target for the end of the year, but at least I'm maintaining forward momentum.


• I grew my Emergency Fund to $2,067.70 - I'm well above my year-end target of $1,500, so I have a nice cushion for the days between my payday and Ms. Loonie's paycheque.

Now, on to my month-end update:

Assets:
Online Savings - $3,350.95
Self-Directed RSP - $32,794.73
Employer Group RSP - $8,253.40

Debts:
Revolving Debt - $16,391.85
Student Loans - $24,012.53

Net Investable Assets: $3,994.70
Net Liquid Assets: ($37,053.43)

My liquid savings grew substantially in October, thanks to the three paycheques that fell during the month. However, my RRSP shed another $6,200.26 in value, bringing my retirement savings below where they were one year ago. I'm thankful that I'm dealing with this market crash so early in my saving process; as long as the markets do rebound, the coming years should provide some very favourable rates of return. It still hurts to watch my balance sheet decrease by thousands of dollars each month. These changes translated to a net decrease of $5,270.17 in my investable assets, which dwarfs the $1,888.72 of progress I made in reducing my non-mortgage debt.

Overall, my net investable assets decreased by $3,381.45, and my net liquid assets increased by $2,818.81. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage). I'm glad that I calculate my net liquid assets each month, because this metric keeps me focused on the items I actually control: debt reduction and cash savings. Other than setting an asset allocation I'm comfortable with, my investment performance is largely out of my hands, so being able to see the impact of my behaviour on my bottom line is very important. It's been well over a year since I had a month-over-month drop in my net liquid assets, so I must be doing something right...

September update

For a month with only 30 days, September seemed to go on forever. Now we're into October, and the Christmas merchandise is already starting to crop up in stores everywhere. Have you been setting aside cash for holiday shopping? If not, now might be a good time to start.

Let's take a look at how I did with my September goals:

• Reduce my revolving debt to $17,500 - I nailed this one, closing the month at $17,433.79 in revolving debt. That's still a lot of revolving debt to have, but it's $644.41 less than I had a month ago, so I'm happy with the progress.


• Grow my Emergency Fund to $2,000 - Done. After interest posted to my accounts, my Emergency Fund balance was $2,018.33. That puts me at a point where I can ease off my emergency savings and focus on other areas that need the funds.


• Run at least twice per week - Not quite. I did get out running five times this month, which is more than once per week, but unless my math is wrong, it falls short of twice a week. We also played squash a few times, so my activity level wasn't bad, but I didn't quite get there.


• Try two new recipes for foods that we would usually buy prepared - Not so much. We've been a tad lazy on the cooking front this month, and haven't been flexing our creative muscles in the kitchen.

Now, on to my month-end update:

Assets:
Online Savings - $2,420.86
Self-Directed RSP - $38,853.91
Employer Group RSP - $8,394.48

Debts:
Revolving Debt - $17,433.79
Student Loans - $24,859.31

Net Investable Assets: $7,376.15
Net Liquid Assets: ($39,872.24)

Due to some items being paid out of savings this month, even with the growth in my Emergency Fund, my cash savings dropped by $187.45. Also, thanks to the shenanigans on Wall Street this month, my retirement investments once again showed a month-over-month decrease, dropping by $4,343.09 in spite of over $600 in RRSP contributions. This translates to a net decrease of $4,530.54 in my investable assets, which more than offset the $1,205.93 of progress I made in reducing my non-mortgage debt.

Overall, my net investable assets decreased by $3,324.61, and my net liquid assets increased by $1,018.48. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage). Over the 17 months I've been tracking my progress, this is only the fifth time I've had negative growth in my net investable assets, and each time this has been driven almost entirely by a drop in investment value. The silver lining to this is that I'm maintaining forward progress on the items I can control (like debt reduction and cash savings), in spite of the factors I can't control (like investment returns).