Holding pattern

I get paid every second Thursday, and my employer posts our pay advices online two days before our actual payday. This means that, on the Tuesday of every payweek, I can login to our HR site and check the amount of that week's pay. This is usually constant from one pay to the next, but as I mentioned in this morning's post, the first pay of the year is a bit of a question mark, because I don't know exactly what the CRA deductions will be.

I've already checked this week's pay advice online, so I have a pretty good idea of what to expect for the first half of the year. It's great to be able to check this in advance, because it helps to plan my cash flow over the next two weeks. I've set up my ING transfers, and worked out how much to allocate to debt payments, etc. I know how much is coming in, and I know how much is going out.

I just don't have the cash yet.

It's funny how knowing exactly what to expect can actually erode your patience. I really want to make the year's first update to my goal bars, and it's driving me nuts that I have to wait until tomorrow morning.

Apparently I'm a five year-old on Christmas morning.

Coping with the January pay-cut

For Ms. Loonie and me, tomorrow is the first payday of the new year. In Canada, the year's first paycheque is often substantially smaller than the last pay of the previous year, since it marks the return of our good friends CPP and EI. For those who haven't had the pleasure, these payroll deductions are used to fund government-provided pension and unemployment insurance, respectively. For 2008, the deductions are as follows:

• CPP - 4.95% of annual earnings in excess of $3,500, to an annual maximum of $2,049.30


• EI - 1.73% of annual earnings, to an annual maximum of $711.03

Once you've reached the annual maximum, the deductions stop, so you effectively get a pay raise around half-way through the year. The problem is that, if you get used to this increased income, it's a bit of a shock to the system when the deductions start again in January. Even if you have a year-end raise, unless it's an increase of 15% or more, your January paycheque will be smaller than its December predecessor.

How to deal with this "pay cut"? Ideally, you would base your spending around this diminished income, and have the discipline to save the extra that you earn after maxing out the deductions. Then, when January rolls around again, you're already spending less than you earn, and have built up a substantial cushion of savings. This takes a lot of discipline, but it puts you in great financial shape.

As for us, we have some room for reductions in several budget categories, so I'm making small cuts here and there to make up the difference. Since the Emergency Fund is already above $1,000, I'm reducing the bi-weekly contributions to $10. Our (modest) budget for eating out is also being cut. The good news is that, after having a cash-only Christmas, we don't need to spend January playing catch-up. I am also receiving my year-end bonus tomorrow, so that helps to ease the pain of a diminished paycheque.

UPDATE - The January "pay cut" only applies to Canadians who earn more than $41,100 per year. I completely overlooked this point when I originally wrote this post, and I should apologize for that. File this "pay cut" under "problems I'm fortunate to have".

Working toward an active 2008

One of my goals for 2008 is to lose 25 pounds. I'm carrying around more weight than I should, and as I move into my mid thirties, taking care of my health will become more and more important. I'm currently trying to put together a plan that will help me meet (and hopefully exceed) my 25-pound goal this year.

Ms. Loonie and I live in a condo that has access to a small gym. The gym has a few cardio machines, a universal-type weight station (for leg curls/extensions, butterflies, rowing, bench/seated press and leg lifts), a cable-crossover machine, free-weights, and a number of stability balls. That's not a bad setup for "free" (obviously we're paying for this indirectly through our maintenance fees), and it's an easy option for me to take advantage of. The key is to make myself use it: I need to make an appointment with myself to get down to the gym at a particular time of day several times a week. I'll have to figure out whether this is a morning time, or an evening time.

Between the gym and our squash court, I certainly have the means to get myself in better shape; it's just a matter of discipline. Over the past several months, I've really improved my financial discipline, and now it's time to do the same with my fitness.

Let's see how I do.

A nice start to the new year

I posted last month about a $1.25 mistake in managing my cash flow. Well, as expected, when I checked my bank balances online yesterday, I had been charged a $1.25 fee for going over my allowed debits for the month.

As I was tallying up my balances for my net worth update, I decided that I might as well try to get this fee reversed. So, I called up the call centre, and after a few minutes on hold (it is the first business day of the year, after all), I told my tale to a customer service rep, who was more than happy to refund the fee for me.

Net result: I finished 2007 $1.25 richer than expected.

It just goes to show that, if you want something, you might as well ask.

Goals for 2008

I've already posted my goals for January, so now it's time to post the more mid-term goals that I hope to accomplish this year. Here's what I've got in mind:

• Propose to Ms. Loonie - I'm living with a wonderful woman, and I think it's time I took steps to upgrade her honorific. It's a little scary to write that one down (how did I become such a grown-up??), but nothing would make me happier than to make her my wife.


• Reduce my revolving debt to $14,000 - This is a rough number, that should be a bit of a stretch, but I think I can get there. Once I've got my first couple of paycheques (with the renewed CPP and EI deductions), I'll have a better idea of how much I can put toward debt reduction.


• Grow my Emergency Fund to $1,500 - Since I'm already above the $1,000 mark, my growth here will continue to be slow, but I think if I can make $1,500 by year-end, I'll be in very good shape.


• Give $2,000 to charity - I have $45 of every paycheque automatically deducted for United Way donations, so this gives me $830 to make up. I should be able to manage that. It's still nowhere near a 10% tithe, but at least it's an increase from the $1,300 that we gave in 2007.


• Grow the readership of Loonies And Sense to 100 RSS subscribers - This is essentially my "be a better blogger" goal. I don't have full control over this, but there are things I can do to make this happen. I'm currently sitting in the mid-30s, so if I keep writing stuff that people want to read, and keep working the link love, then I think I can get there.


• Lose 25 pounds - I can certainly afford to lose at least this much, and I think it's a good goal to set. I need to make better use of the gym and squash court maintained by our condo corporation.


• Adopt and maintain a version of Getting Things Done - I need to be more organized and productive. By the end of 2008, I want to be fully up and running with a personal system that will keep me on top of the tasks in my life, and help me in my career.

That, in a nutshell, is what I'm looking for in 2008. What are your goals for the year?

Goals for January 2008

I've decided that, instead of declaring each month's goals at the end of the previous month's recap, I'll start writing dedicated "this month's goals" posts. This will make it easier to refer back to the goals as I post updates, and it also allows me to go into more detail where appropriate.

Since this is the first month of 2008, I'll also be posting my goals for the year in a separate post.

Here are my goals for January:

• Reduce my revolving debt to $22,900 (currently at $23,397.71) - I still have to see exactly what my take-home pay will look like in 2008, but I should be able to make this happen.


• Grow my Emergency Fund to $1,220 (currently at $1,162.96) - This is a tiny stretch above my automatic bi-weekly contributions, but I want to keep some forward progress here, however small.


• Blog 31 times in January - The holidays are over, so I'm shooting for one post per day.


• Finish my review of Getting Things Done - I want to review the other 12 chapters in the book this month. For real this time.

That will make a good start to the year.

December update; 2007 in review

Happy New Year! The holidays are over, and we've all rung in 2008, so it's time for my month-end review.

First off, here's how I did with my December goals:

• Grow my Emergency Fund to $1,160 - I made this goal almost without going above my $25 bi-weekly contributions, but with a small top-up, I ended December with $1,162.96 (including accrued interest). I deliberately set this goal at just above my auto-pilot amount, because of the financial strain of the holidays.


• Reduce my revolving debt to $23,400 - Once again, I set this as an easily attainable goal, essentially saying "don't get derailed by Christmas". When all is said and done, my revolving debt finished the month at $23,397.71, which makes this my first cash-only Christmas in a long time. That feels pretty good.


• Blog 25 times in December - Now we move onto the less rosy side of my December goals. I only managed to blog 17 times. I could offer up excuses, but it all boils down to this: I got distracted by the holidays, and by the year-end crunch at work, and I wasn't able to focus as much on my blogging as I would like. The lesson here is to identify busy periods in advance, and plan for them. One option would be to "stockpile" posts, so that when I hit a crazy patch, I can publish my already-written drafts. I'll have to figure this one out.


• Finish my review of Getting Things Done - As with the 25-post goal, I totally dropped the ball here. No progress on the review. I'm not getting this thing done as well as I'd hoped.


• Continue to blog once per week about productivity - I've said it all by this point; I didn't manage to write about productivity at all.

December ended up looking a lot like September, in that I met my financial goals, and completely missed the mark on my blogging goals. It's understandable that my first Christmas as a blogger took me by surprise, but I should still try to learn what I can from this, and do better next time. I think the issue is that I put so much emphasis on avoiding new debt from holiday shopping, that I lost focus on the other aspects of keeping the blog running. It was probably unrealistic to expect myself to meet these three goals this month, but that makes a nice challenge for next December. We'll see how I do.

Now, on to my month-end update:

Assets:
Online Savings - $2,001.63
Self-Directed RSP - $39,630.67
Employer Group RSP - $2,363.00

Debts:
Credit Cards - $3,573.29
Line of Credit - $19,824.42
Student Loans - $30,098.68

Net Investable Assets: ($9,501.09)
Net Liquid Assets: ($51,494.76)

My liquid savings took a hit, due to holiday shopping. Disappointing market performance meant that my retirement investments grew only marginally. Combined with debt reduction, my net investable and net liquid assets increased by $1,375.27 and $1,036.04, respectively. My NetworthIQ profile has also been updated (including loose cash, home, car and mortgage).

2007 in review

My progress during 2007 has been pretty well documented in a slew of six month updates, so I just have a few milestones to note for my "year" in review (May 1-December 31):

• My utilization rate on my credit cards and line of credit has gone from 53% to 42%. This is mostly due to debt reduction, although a recent limit increase on my primary MasterCard also helped.


• We've paid off $4,571 in mortgage principal (plus the remaining $1,472 of our CMHC premium), and $3,589 in student loans. This is all due to our automatic bi-weekly payments, with no lump-sum prepayments.


• I've increased my retirement savings by $5,906, through a combination of regular contributions and market growth. These savings are now mostly in the form of low-cost index funds, with a small position in my employer's stock.


• My net worth has increased by $21,234 (254%), while my net investable and net liquid assets have increased by $15,190 (62%) and $9,283 (15%), respectively.


• I've made a small amount of income from a paid advertisement. While monetization is not my primary goal with Loonies And Sense, it's nice to see some actual dollars generated by my efforts.

Goals

Starting this month, I've decided to set out my monthly goals in a separate post, rather than as part of the month-end update. This will make it easier to refer back to them as I update my progress. Look for my goals for the month of January, and for all of 2008, later this morning.