October update

Well, October is over. We've all gorged on Hallowe'en chocolate, and 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 October goals:

• Grow my Emergency Fund to $975 - After interest posted to the account this morning, my Emergency Fund sat at $1,008.57. I had a $50 sign-up bonus from HSBC Direct that came through this month, so without that, I'm actually around $960. However, since I ended the month above my 2007 goal of $1,000, I'd say I met this goal.


• Finish October with $75 in my "short-term savings" fund - The trip to Michigan drained our short-term savings, and I also hosted a bachelor party for my brother a couple of weeks ago. The combination of these two factors kept me from meeting this goal.


• Reduce my revolving debt to $24,750 - My total month-end revolving debt is $24,891.93, so I fell a bit short of my goal. The same factors that kept me from my savings goal played a part here.


• Blog once per week about productivity - How's this for a start:
  
  • Week #1
  • Week #2
  • Week #3
  • Week #4
  
  I think I actually pulled this one off. Actually, October saw my highest post count ever, at 24 posts for the month. Not bad...

So, for October, I met two out of my four goals. My Emergency Fund goal actually put me above my year-end goal, so that's encouraging. I now have my $1,000 Emergency Fund, and can redirect these contributions toward debt reduction.

Now, on to my month-end update:

Assets:
Online Savings - $1,015.87
Self-Directed RSP - $41,605.84
Employer Group RSP - $1,212.95

Debts:
Credit Cards - $1,527.73
Line of Credit - $23,364.20
Student Loans - $31,442.68

Net Investable Assets: ($12,499.95)
Net Liquid Assets: ($55,318.74)

My liquid savings dropped considerably, due to the vacation and bachelor party. However, the market continues to improve, so with my bi-weekly RSP contributions, I saw an overall asset increase of $1,403.06 this month. Debts are down by $890.01, so I had increases of $2,293.07 and $356.31 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 October:

• Grow my Emergency Fund to $1,100 (currently at $1,008.57; my contributions are slowing down, since I've met my goal for 2007, and am now focusing on debt reduction)


• Finish November with $200 in my "short-term savings" fund (currently at $0)


• Reduce my revolving debt to $23,850 (currently at $24,891.93)


• Blog 30 times in November


• Review two chapters of Getting Things Done


• Continue to blog once per week about productivity

The financial goals have taken into account that November is a three-pay month. If I can meet these goals, I'll be happy.

Happy Hallowe'en

It's that time of year again: time to prepare to be swarmed by children. I always enjoy the spectrum of kids that you see out trick-or-treating. You get everyone from wide-eyed three-year-olds, to teenagers walking around in hoodies carrying grocery bags. We live in a condo tower, so we don't get any trick-or-treat traffic, but friends of ours live in the suburbs, so we usually go to their place to hand out candy and watch a scary movie.

Tomorrow, I'll post my October month-end results (finally, we get to something scary!), and update my NCN and NetworthIQ charts.

Have a fun and safe night tonight.

Federal income tax cuts

There's been a lot of talk about whether we would be seeing tax cuts with the fall fiscal update, and it's now official.

The following personal tax measures are being introduced:

• The federal basic personal amount (the maximum income you can make without paying any federal income tax) is being raised from $8,929 to $9,600, retroactive to January 1, 2007, and continuing through 2008. The limit will increase to $10,100 for 2009.


• The lowest personal income tax rate (paid on income between $9,600 and $37,178) is being reduced from 15.50% to 15.00%.


• The GST is being knocked down another point to 5%.

I'm excited about the income tax measures. Basically, if you make over $37,178, the change will save you $241.90 in income tax for 2007. The GST reduction will also be handy, although I now have to learn to calculate 13% tax in my head, just when I had 14% figured out!

Tracking my investments

I've written about the recent re-allocation of my retirement investments, and the subsequent performance of the new investments versus the old stock-only portfolio I used to have. As of today, my current portfolio (consisting of index funds and a few shares of my company stock) is up 2.4% over where I "bought in", whereas my "old" portfolio is down 2.7% over the same time period. This represents a net gain of just over $2,000 due to the re-allocation. That's a nice little gain.

I thought I'd take a moment to go over how I track this performance. Basically, I use the "portfolios" tool provided by my brokerage's web interface. This is a web form that allows you to create up to five theoretical investment portfolios so that you can track their performance over time. You enter the symbol, number of units, and purchase price for each security, and the display will then show you the current dollar value of the portfolio, as well as the percentage gain or loss relative to the purchase price you entered.

I have the following five portfolios set up:

1. Current portfolio vs. purchase price - Here I list each holding in my current portfolio, and the actual price I paid for that holding. This shows how well my investments have done since I bought them.


2. Current portfolio vs. dollars invested - Here I again list each holding in my current portfolio, but I take into account the employer match I receive for contributing to our Employee Savings Plan. By taking the match into account, I essentially reduce the purchase price of every holding in my portfolio, so the gain/loss I'm seeing represents the return on actual dollars invested. Note that the total value of this portfolio is exactly the same as portfolio #1, but the gain/loss is different.


3. Old portfolio vs. purchase price - This is similar to portfolio #1, except that the holdings included are the stocks that I had before I re-allocated. This shows me how my "old" investments have done since I bought them.


4. Old portfolio vs. dollars invested - Similar to portfolio #2, but with the pre-allocation stock holdings. This shows me my return on actual dollars invested for my old stock holdings. Note that the total value of this portfolio is exactly the same as portfolio #3, but the gain/loss is different.


5. What could have been - For every time I've sold stock, I include the number of shares and the price at the time I sold the shares. This shows me whether the stocks have gone up or down since I sold.

These five portfolios give me all the information I really need at the moment. At any moment, I can check to see whether I'm doing better or worse since re-allocating. The last portfolio isn't particularly useful, but it's interesting to look back and see whether each sale I've made was a good deal.

Google Finance provides a similar portfolio tracking tool, and I'm sure most online brokers also provide this functionality.

Starting from scratch

Berko at 43 Folders asked yesterday what users would do if starting over in a new environment. As I look at the ragged piles of paper on my own workdesk, I'm very interested to read people's thoughts on this. Ideas include a second chair for guests (which I have in my cube) and a dry erase board (which I do not have).

At work, our team just completed a desktop migration from Windows 2000 to Windows XP, so my computer is actually in a fairly "fresh start" state at the moment. I'm considering re-working my Firefox and Thunderbird installations to make the most of my settings. News about the new IMAP support for Gmail and Google Calendar support for Thunderbird have really got me thinking. I'd like to have the most same-at-home-as-at-work configuration possible, so I'll be looking into these options.

I have some tinkering to do.

More exchange rate news

Well, it's finally happened. A purchase I made online from a US vendor has posted to my credit card for less than the purchase amount in US dollars. The net exchange rate on the transaction (including the credit card provider's foreign exchange markup) was $0.9977 per US dollar. Compare this to the card rates of $1.0043 and $1.0008 that I experienced on our trip to Michigan.

Again, as I mentioned in my earlier post, the difference is minimal, but paying less than par is paying less than par, no matter how small the spread is.

Making sense of pensions

Reading Tim's post last week at Canadian Dream: Free at 45 about his company's new pension plan got me thinking about the components of my own retirement plan.

I contribute to an RRSP. That's it.

My employer offers a defined-benefit pension plan, but I have not enrolled. The big reason is that I don't know how long I will stay with the company (who does know this?). Of course, there's also the fact that I really don't understand pensions all that well. I know the contribution rates, and can calculate what my future benefit would be under certain assumptions, but I'm having a hard time working out just how the pension plan stacks up against the option of investing my would-be contributions myself.

With a pension, in addition to your monetary contributions to the plan, you're making a time and service investment to your employer, so it makes sense that you would get more out of it than just the dollars you've put in. If I make the $3,250 annual contribution to the pension plan, then 20 years of service gives me a benefit of roughly $20K per year, whereas an annual return of 7% on the same amount invested in the market for 20 years comes to $146K, which, assuming 5% investment income, could sustain $20K per year for only 8 years. That's a big difference.

What I've realized during my hashing out of these scenarios, is that I'm not sure how to handle a number of the assumptions required to make these projections. How do you forecast something like an RRSP contribution limit? Marginal tax rates? Pension contribution limits and YMPE? Do you assume these factors will remain constant, or do you apply some sort of inflation factor over time? I'd appreciate your thoughts on this.