I'm trying very hard to keep this a "cash-only" Christmas. I've written about this before, but basically I'm trying not to create any new debt with this year's Christmas purchases. So far, I've been managing this well. I've been using my Freedom Account, and diligently tracking my holiday spending. I think I'll pretty much break even.
As a result of this "spotlight" that I've placed on my holiday finances, I've been moving cash between my accounts pretty much constantly. I've mentioned before that I use my line of credit as a sort of money merge account; every time I make a purchase with my credit card, I make a payment in the same amount to my line of credit, reducing the interest-bearing balance on that account, and then I pay my credit card in full using my line of credit at the end of the month. I've been making very good use of this system for the past few weeks.
In addition to my two chequing accounts, online savings accounts, line of credit, and credit cards, I have a savings account with my primary bank. In order to avoid the wait times involved with moving funds between my chequing and online savings accounts, I decided last week that I would use this "extra" savings account as a holding area for my holiday funds in between purchases. This account earns next to no interest, but it's convenient because it's at the same institution as my chequing and line of credit, so transfers are instantaneous.
Yesterday afternoon, as I made my third transfer in as many days from this savings account to my line of credit, I suddenly remembered the fee structure for this account. The account comes with two free debit transactions per month (including transfers to other accounts at the same institution), with additional debits costing $1.25 per transaction. My cash flow shenanigans had just cost me $1.25.
On the one hand, it's only $1.25, and I did catch on before I made more than one non-free transaction. However, it really rankles me that, when I thought I was being so clever and attentive to my finances, I could make a dumb mistake like this. It's entirely my fault, as I have known about this $1.25 cost since I opened the account; it just slipped my mind (mainly because it's been so long since I used the account).
Let's hope that I've learned my lesson, and this will be the last "stupidity tax" I see this season.
Tuesday, December 11, 2007
Friday, December 7, 2007
Will the six-month milestones never cease?!
I started formally tracking my net worth at the end of April, so my first data point is my April 30 net worth. With my September month-end results, I had six-month s of data to explore. One month later, I had my starting point plus six months of progress to report.
Well, it suddenly occurred to me that today is Loonies And Sense's six-month anniversary. Yes, it was six months ago that I opened my doors to the blogosphere. A lot has happened in that time:
Well, it suddenly occurred to me that today is Loonies And Sense's six-month anniversary. Yes, it was six months ago that I opened my doors to the blogosphere. A lot has happened in that time:
- I've written over 100 posts
- I've hosted a carnival
- I've increased my net worth by $13,124.86 (90%), through a combination of $3,829.86 in asset growth and a whopping $9,835.00 in debt reduction (including $4,621.71 in mortgage payments)
- I've accumulated a $1,000 Emergency Fund
- I've re-allocated my retirement investments into low-cost index funds
Tuesday, December 4, 2007
Credit card rewards can really pay off
I use a Mosaik MasterCard as my primary credit card. The Mosaik card is a "modular" product: you apply for the basic credit card, and you then select a card design and add features (like a rewards plan) à la carte. For my card, I have selected the "Gold" Air Miles reward plan, which gives me one Air Mile for every $15 that I spend on the card. Air Miles are redeemable for a wide variety of rewards, from travel purchases, to gift certificates, to electronics and kitchen gadgets. One Air Mile typically has a value of $0.12-$0.14, so with the Gold plan, this works out to the equivalent of about 0.9% cash back.
The rewards don't end there, however. With the Air Miles program, I also receive a free Air Miles collector card, which I present when I shop at Air Miles sponsors (including supermarkets, liquor stores, gas stations and several online merchants) to earn additional rewards. This earns me an additional Air Mile for every $20 that I spend at an Air Miles sponsor. By using my Air Miles MasterCard at an Air Miles sponsor, I'm actually "double-dipping" my rewards.
I was surprised to see how much these rewards actually add up. This year alone, I've redeemed Air Miles for the following rewards:
Obviously, Air Miles isn't the only reward program out there; there are several cards that offer cash back rewards. The point is that I've managed to use my rewards to purchase $350 in gifts ($150 of that for Christmas gifts), where I otherwise would have been out-of-pocket for this amount. If you're careful about how you use the card, and don't get caught up in the "I'm-getting-points-so-spend-spend-spend" mentality, then you can really make out like a bandit.
The rewards don't end there, however. With the Air Miles program, I also receive a free Air Miles collector card, which I present when I shop at Air Miles sponsors (including supermarkets, liquor stores, gas stations and several online merchants) to earn additional rewards. This earns me an additional Air Mile for every $20 that I spend at an Air Miles sponsor. By using my Air Miles MasterCard at an Air Miles sponsor, I'm actually "double-dipping" my rewards.
I was surprised to see how much these rewards actually add up. This year alone, I've redeemed Air Miles for the following rewards:
Obviously, Air Miles isn't the only reward program out there; there are several cards that offer cash back rewards. The point is that I've managed to use my rewards to purchase $350 in gifts ($150 of that for Christmas gifts), where I otherwise would have been out-of-pocket for this amount. If you're careful about how you use the card, and don't get caught up in the "I'm-getting-points-so-spend-spend-spend" mentality, then you can really make out like a bandit.
The 37th Carnival of Money Stories
Welcome to the 37th edition of Carnival of Money Stories! I'm thrilled to be hosting this carnival. Thanks to everyone who submitted articles; there's lots of fantastic reading here.
Before I start, I'd like to wish a very happy 62nd birthday to Roberta Bondar, Canada's first woman astronaut, who flew on the Space Shuttle Discovery in 1992.
Here are this week's carnival picks:
Before I start, I'd like to wish a very happy 62nd birthday to Roberta Bondar, Canada's first woman astronaut, who flew on the Space Shuttle Discovery in 1992.
Here are this week's carnival picks:
Inspiration
- plonkee presents a tale of two men - a guest post posted at plonkee money.
- Homelife presents I dare to win, no matter what posted at I am for Eternity.
Earning More
- Raymond presents Make Money By Letting Scientists Experiment On You posted at Money Blue Book.
- FMF presents Grow Your Career by Promoting Your Work posted at Free Money Finance.
Spending Less
- glblguy presents Why Do I Always Find a Better Deal AFTER I buy it? posted at Gather Little By Little.
- Christine presents Being Frugal in France: Buying Cheap Theatre, Opera and Dance Tickets posted at Me, My Kid and Life: An American Single Mom Living in France.
- paidtwice presents And Now The Spouse Gets Tested posted at I've Paid For This Twice Already....
- JP presents Make coffee at home and save money posted at Watch Me Become A Millionaire.
Investing
- The Dividend Guy presents The Metamorphosis From Mutual Fund Investor to Dividend Investor posted at The Dividend Guy Blog.
- MoneyNing presents The Billionaire Investment Guru within Me Called Billy posted at Personal Finance Blog by Money Ning.
Holidays
- wealthy_1 presents The Giving Tree posted at collectingmycash.
- Ryan Russell presents It’s All Cash For Christmas! posted at My Money Thinks.
- Silicon Valley Blogger presents A Fantasy Shopping Experiment posted at The Digerati Life.
Money Mistakes
- Eric presents My First Debt And A $5 Lobster posted at A Penny Closer.
- David presents Money Mistake Monday - I Didn’t Have Enough Taxes Taken Out Syndrome. posted at My Two Dollars.
Other
- JvW presents Commission Backslide posted at The Good Life on a Budget.
- Mr Credit Card presents Amex Global Assist Experience - Left my car key in the car! (Ask Mr Credit Card’s Blog) posted at Ask Mr Credit Card's Blog.
- Super Saver presents Our Journey To Financial Freedom #9 - The Professionals We Used posted at My Wealth Builder.
Monday, December 3, 2007
And the lightbulb goes on...
Last month, I wrote about the allocation of my budget to different categories, and how it differs from my "ideal" allocation. One of the biggest points that stood out for me was that I use 12.9% of my gross income for debt repayment.
Get Rich Slowly has a review today of the book All Your Worth, and there's a point made that really jumped out at me. The target budget allocation recommended in this book is 50% for "needs", 30% for "wants", and 20% for savings. The big eye opener for me is that they include debt repayment in the savings category.
This concept of debt-reduction-as-savings isn't exactly a new idea to me, but it doesn't seem to have sunk in, because I list my debt repayment under my "needs" category. If I look at it as part of my savings, then I am actually saving 22.3% of my gross income (9.4% actual savings; 12.9% debt reduction). I think it's fair to look at it this way, for a few reasons:
Get Rich Slowly has a review today of the book All Your Worth, and there's a point made that really jumped out at me. The target budget allocation recommended in this book is 50% for "needs", 30% for "wants", and 20% for savings. The big eye opener for me is that they include debt repayment in the savings category.
This concept of debt-reduction-as-savings isn't exactly a new idea to me, but it doesn't seem to have sunk in, because I list my debt repayment under my "needs" category. If I look at it as part of my savings, then I am actually saving 22.3% of my gross income (9.4% actual savings; 12.9% debt reduction). I think it's fair to look at it this way, for a few reasons:
- These debts represent money that I've already spent, so I'm really saving up for these purchases retroactively
- Every dollar that I pay toward debt reduction is a dollar that my future self won't have to pay (actually, it's more than a dollar that my future self won't have to pay, because every dollar that I don't pay now will accrue interest over time)
- Once the debts are fully paid off, this is money that can be redirected toward "real" savings
Sunday, December 2, 2007
December surprises
I've written a couple of times about planning for holiday spending. In previous years, I always "planned" my holiday spending by working out how much my year-end bonus would come to after taxes, and ensuring that my total spending did not exceed this amount. While this approach technically adheres to the "spend less than you earn" commandment of personal finance, it isn't exactly the best way to stay in control of your finances.
This year, I've been saving up funds specifically earmarked for the holidays, with the goal of not needing my bonus to pay for any of my holiday expenses. If all goes according to plan, my holiday purchases will all be bought and paid for before my bonus even hits my chequing account. We've done a good chunk of our holiday shopping this weekend, and we look to be on track to keep things under budget this year. That is a great feeling.
This afternoon, we were at a birthday party for a friend's 1-year-old, and we were talking with one of Ms. Loonie's closest friends and her husband. After a little while, the subject suddenly turned to New Year's plans, and what we are planning for ringing in the new year.
When it comes to New Year's celebrations, Ms. Loonie and I generally have a nice dinner with friends (usually at a friend's house), and spend the evening chatting and listening to music. It's pretty low-key, but it can be a lot of fun. Well, Ms. Loonie's friend suddenly decided today that we should all go away somewhere for New Year's. The current proposal is Mont Tremblant (a ski resort in Québec).
Now, our plans for the holiday season have not made any allowances for taking a ski trip to Québec. We simply haven't budgeted for this, and we really can't afford it at this point. It's frustrating that this is being brought up now; if we had known a few months in advance, we might have been able to save up for it, but with less than a month's notice, there's not much we can do.
I think we'll be passing on the ski trip, unless we find a really spectacular deal that will let us do this on the cheap.
It's funny how full of surprises the holiday season always turns out to be.
This year, I've been saving up funds specifically earmarked for the holidays, with the goal of not needing my bonus to pay for any of my holiday expenses. If all goes according to plan, my holiday purchases will all be bought and paid for before my bonus even hits my chequing account. We've done a good chunk of our holiday shopping this weekend, and we look to be on track to keep things under budget this year. That is a great feeling.
This afternoon, we were at a birthday party for a friend's 1-year-old, and we were talking with one of Ms. Loonie's closest friends and her husband. After a little while, the subject suddenly turned to New Year's plans, and what we are planning for ringing in the new year.
When it comes to New Year's celebrations, Ms. Loonie and I generally have a nice dinner with friends (usually at a friend's house), and spend the evening chatting and listening to music. It's pretty low-key, but it can be a lot of fun. Well, Ms. Loonie's friend suddenly decided today that we should all go away somewhere for New Year's. The current proposal is Mont Tremblant (a ski resort in Québec).
Now, our plans for the holiday season have not made any allowances for taking a ski trip to Québec. We simply haven't budgeted for this, and we really can't afford it at this point. It's frustrating that this is being brought up now; if we had known a few months in advance, we might have been able to save up for it, but with less than a month's notice, there's not much we can do.
I think we'll be passing on the ski trip, unless we find a really spectacular deal that will let us do this on the cheap.
It's funny how full of surprises the holiday season always turns out to be.
Saturday, December 1, 2007
November update
Well, November is over. Interest has now posted to all my accounts, so it's time for my month-end review.
First off, here's how I did with my November goals:
Assets:
Online Savings - $2,155.74
Self-Directed RSP - $39,479.44
Employer Group RSP - $2,175.00
Debts:
Credit Cards - $3,007.65
Line of Credit - $21,040.90
Student Loans - $30,637.99
Net Investable Assets: ($10,876.36)
Net Liquid Assets: ($52,530.80)
I grew my liquid savings considerably, mainly through Freedom Account contributions. However, the market simply hammered my retirement investments this month, so my investable assets basically held steady. Debts are down by $1,648.07, so I had increases of $1,623.59 and $2,787.94 in my net investable and net liquid assets, respectively. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).
Finally, let's get down some goals for December:
First off, here's how I did with my November goals:
- Grow my Emergency Fund to $1,100 - I met this goal, ending the month with an Emergency Fund of $1,104.62. Part of this was a $13 referral bonus for referring Ms. Loonie to ING.
- Finish November with $200 in my "short-term savings" fund - Ran into some trouble with this one. I had to use these savings to cover some expenses. This is really meant to be my "fun" money, though, so if I used it to catch up my Emergency Fund or debt reduction, then I don't view that as a failure.
- Reduce my revolving debt to $23,850 - I missed this by about $190. Ms. Loonie was planning to give me some money toward our Michigan trip, but some things fell through, and she wasn't able to. It's a minor setback, but we still made good progress, reducing revolving debt to $24,048.55.
- Blog 30 times in November - I nailed this one with a total of 32 posts in November. Now, whether you would consider all of those quality posts...
- Review two chapters of Getting Things Done - I just snuck this one in under the wire with last night's post. Follow along with my entire review here.
- Continue to blog once per week about productivity - Counting my GTD posts, I had 8 productivity-related posts this month, with 4 of them not involving my GTD review. So, on average, I got one per week, even if there was a week there with no productivity posts.
Assets:
Online Savings - $2,155.74
Self-Directed RSP - $39,479.44
Employer Group RSP - $2,175.00
Debts:
Credit Cards - $3,007.65
Line of Credit - $21,040.90
Student Loans - $30,637.99
Net Investable Assets: ($10,876.36)
Net Liquid Assets: ($52,530.80)
I grew my liquid savings considerably, mainly through Freedom Account contributions. However, the market simply hammered my retirement investments this month, so my investable assets basically held steady. Debts are down by $1,648.07, so I had increases of $1,623.59 and $2,787.94 in my net investable and net liquid assets, respectively. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).
Finally, let's get down some goals for December:
- Grow my Emergency Fund to $1,160 (currently at $1,104.62) - I'm not really stretching this one this month, because of the holidays
- Reduce my revolving debt to $23,400 (currently at $24,048.55) - This basically means no new debt from holiday shopping. I'm counting on you, Freedom Account...
- Blog 25 times in December - I was going to repeat November's one-a-day goal, but time will be tighter with holiday preparations
- Finish my review of Getting Things Done - I want to review the other 12 chapters in the book this month
- Continue to blog once per week about productivity
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