Blunt Money is the one blog in our new network that I wasn’t familiar with until recently and I have to say I’ve been pleasantly surprised since I really like reading her stuff. Here are a couple of articles I enjoyed:

• Are single stocks too risky? She questions Dave Ramsey’s advice on this one.
• Staying Motivated. Blunt talks about how she and her husband have done the ‘easy’ work on their new business and now have to find the motivation to get the other 90% of the work done. I can relate to this as I have another website I’m planning to “launch” (as we say in the biz) but getting it ready with material etc is just plain hard work. Of course I can use my new baby as an excuse, but I can only do that for so long!

Million Dollar Journey talks about his idea of retirement and invited his readers to share their visions.

Amateur Asset Allocator (one of my favourite blogs lately) says that investing in bank stocks will pay off in the long run. A good post if you own any bank stocks!

Canadian Capitalist talks about one of my favourite subjects - ETFs!! Vanguard has a new all-world ETF and he explains why it’s not so great.

Financial Blogger talks about the bizarre Quebec tradition of everyone moving on the same day.

Clever Dude wrote about how he gave his economic stimulus check to his father-in-law’s church and the father-in-law wasn’t too happy.

Squawkfox created a neat calculator for gas mileage which I’m going to try. She also created a video which explains how to use it

Moneyning signed up for some “free stuff” and is wondering if he got scammed. Nothing is for free!!!

A friend is planning to move to another area, but she has a rent controlled apartment that she rents for $100-$150 below market price. One thing I suggested she consider is hanging on to the apartment and subletting it to someone for closer to market rent. This would let her keep the place (in case she comes back to the area) and make a little cash at the same time.  EDIT:  A COMMENTER POINTED OUT TO ME THAT THIS IS ILLEGAL IN ONTARIO (look under section 3a) - Its probably worth checking your local laws before doing this.

Another friend rents a professional office but only uses it 4 days a week. As part of her lease, she’s allowed to sublet days. Renting out 3 days from the office would almost pay the monthly rent.

These aren’t really arbitrage situations, since they aren’t risk-free. They ARE situations where you can increase your risk a bit (if anything happens with the subtenant you’re going to be in the middle of it) in exchange for some cold hard cash each month. The nicest thing about the situation is that your income and expense are very clear (and as long as you’re able to promptly get a tenant and they don’t cause you any problems, its cash flow positive). In one sense, you’re buying living (or working) space in bulk and reselling it.

I’ve toyed with the idea of renting a 3 bedroom apartment in Waterloo, taking the smallest room and renting out the other two individually. If you get $450 / room and could rent a 3 bedroom apartment for $1,150, you’d be living quite cheap ($250 / month for your share of the rent). Again, you’re in the middle of it when one of your roommates puts his head through the wall: Welcome to the life of a landlord!

Living with other people isn’t always a joy, but being the person on the lease would give you total control over WHO you were living with.

Sadly he was interested that I’d lost weight, but his reaction was simply “70 pounds? That’s great dude!”. Kevin himself (I can use his first name since we’ve met and are now such good friends) has written about how he tries to avoid meeting his heroes, as they often let him down.

More recently I saw a trailer for “Expelled: No Intelligence Allowed“. I was excited that it was a project Ben Stein was associated with, as I find him wicked smart and funny. Once I realized the topic was the “unfair” treatment of people who try to bring religion into scientific curricula I had an unpleasant experience as Mr. Stein (alas, I have yet to meet him) was championing a cause that I find quite kooky.

As Superintendent Chalmers said “Prayer has no place in schools, just like facts have no place in organized religion”.

I have no problem reading articles or watching movies that present an alternative viewpoint from my own (I quite enjoy it). Mrs. Pillars (Mike’s wife) wisely pointed out at one of our get togethers that the best blogs to read are those that present views different from your own: they’re the ones that challenge you and help you grow. I love Michael Moore movies, even though I don’t buy a lot of his views on society. I’m looking forward to watching Expelled (but I’m not going to pay $10 to see it in the theater: it’s a renter).

It wasn’t that the movie was presenting a kooky idea that shook me, it was that Ben Stein was. I know what to expect from Michael Moore, but this took me by surprise. I’ve had similar experiences with bloggers who otherwise seem to be intelligent rationale people, but then they post one thing that seems to be way out in left field (or very poorly thought out). It makes me question their other ideas (past and present). Probably people have come across ideas I espouse and disagreed with them enough to become skeptical of other things I write. Every time we get together Mike says at least once that he’s “shocked at the depths of my ignorance”.

I wasn’t sure if the proper response was to re-think my position on the subject (intelligent design) or re-think my opinion on Ben Stein and the ideas he presents in various mediums.

In the end I came to the decision that Ben Stein is a human being. He has very clear, well founded ideas on many topics. He has goofy ideas on other topics. Different people will put his different ideas into different categories. Its probably good to never accept a source as an absolute authority. How much trust you put into someone’s ideas should be a continual evolution, and some skepticism should always remain.

Have you ever lost faith in a hero when you found out information about them or disagreed with a cause they supported?

I’ve decided to investigate two alternatives:

1. Go to a bank branch and get the money converted.
2. Go to a proper currency exchange company ie Thomas Cook - this is much less convenient since I’ll probably have to go downtown to accomplish this one.

I phoned my bank and got the spot rates for Euros to Canadian dollars. They will give me 1.5234 Canadian dollars for each euro for a total of $700.76. Interestingly the conversion rate to buy is 1.6602 which implies a 4% fee for this conversion - seems like quite a bit.

Then I called Thomas Cook and got a sell rate of 1.509 which only nets me $694.14 which is $6.62 less than CIBC. This difference isn’t enough to be significant but for larger amounts it could be relevant.

Of course these results are also dependent on all being executed at the same time - the realities of the currency exchange markets could mean that a big currency swing from one day to the next could outweigh the different rates charged.  I ended up going to my local CIBC branch and after waiting in line for 5-10 minutes, I got my $700 loonies!

Does anyone have any other ideas about how to convert money at a good rate?  Is it worth even discussing for smaller (ie less than $5k) amounts?

Without further delay, here are the members of the Personal Finance Network:

Blunt Money - an American woman who talks about a variety of finance related topics.

Canadian Capitalist - most of our regular readers know him and his highly regarded blog. Mostly Canadian-related and investment topics.

Clever Dude - a very clever (or so he claims) American who is pretty funny and writes about “Family, Marriage, Finances, Life” - in other words pretty much anything!

MoneyNing lives in California but grew up in Canada so although he wasn’t born here, I’m including him as an honourary Canuck!

Squawkfox - another Canuck who writes very interesting posts on very interesting topics. Regular readers will recognize this blog as well.

Quest For Four Pillars - and of course this blog which you are probably already familiar with.

Please note that because of Canada Day there will be no post on Tuesday.

My friend Christine has kindly agreed to write a series of posts on her experiences with buying a home for the first time which will be posted occasionally. See Part 9 - Closing costs.

Insurance of various kinds

In arranging insurance for our house, my husband and I were presented with other forms of insurance for consideration. Insurance is akin to gambling with your future; it is something for which one pays, but hopes never to require. The insurance companies take a similar approach in evaluating your circumstances, as they lose profit when they have to pay out money. Deciding what was appropriate for our circumstances was really a calculated guess based on what we thought the future could bring against how much money we were willing to put towards potentially (and hopefully) unnecessary expenses.

Home Insurance

Mortgage lenders require that fire and liability insurance in the form of home insurance be in place before closing. The insurance company places a replacement value on the house and property, and is another form of guarantee for the bank or trust company that its investment in your home is protected.

When shopping around for home insurance, I found it odd that it is an industry that is not transparent about its products. The insurance companies that I contacted, all recognized names, provided quotes based on the parameters that were discussed, but the specifics of the policy and its exclusions (i.e. the fine print) were not available until a policy had been accepted. Costs seemed to vary greatly between companies, and it was tricky deciding which policy was superior based on incomplete information. Nonetheless, home insurance is not something that one can choose to go without and I accepted a reasonably priced policy from a reputable company.

There are many elements that are factored into the cost of home insurance. If you own a car, it is best to start with the company that holds your car insurance as there are incentive discounts for purchasing additional products with the same company. Also check if your employer or professional membership association has negotiated any group discounts.

When calculating your policy cost, an insurance company creates a risk profile of your home and property. Factors such as the age of the house, type of exterior (brick, siding, etc.), style of the roof and percentage of older knob and tube wiring are examined.

Based on the insurance company’s criteria, a replacement value of the house and property is calculated. The replacement value is the cost to the insurance company to rebuild your home if anything should happen to it. I was dismayed to learn that the replacement value of the house was considerably less than what was paid for it, but learned that the land has a significant separate value.

Other factors which determine the cost of property insurance include the size of the deductible selected and the comprehensiveness of the coverage. Choosing a higher deductible, or a higher amount that one is prepared to pay before filing a claim, lowers the cost of the insurance. In addition, having a monitored security system in place will also decrease the annual insurance cost by anywhere from 5 to 20 per cent depending on the type of system installed and the insurance company’s criteria.

A comprehensive policy is the most inclusive home insurance policy and covers both the building and its contents for all risks, except for those specifically excluded. There are other policies that insure against specified perils, but I did not look into them. Like everything else, insurance products vary and merit some homework.

Term Life Insurance versus Mortgage Insurance

It is optional whether you choose to take out insurance to cover the mortgage. Mortgage Insurance is paid directly to the bank for the mortgage, and as I understood it, does not necessarily cover any administrative fees that may crop up. Term Life Insurance was recommended to us as an alternative to Mortgage Insurance as it cheaper and paid directly to the beneficiary upon the death of the policy holder. Another benefit to term life insurance is that the screening takes place before the insurance is approved so there is very little chance that the insurance won’t be paid out because of pre-existing conditions which is the case for mortgage insurance. Here are some ideas on how to calculate the amount of life insurance you might need.

Term Life is taken out for a specific time period, and can be cancelled at any time. Unlike Whole/Universal Life Insurance, which is a permanent life insurance vehicle, there are no penalties to cancel a policy. Term Life Insurance is a temporary type of product. Policies are usually for 10 or 20 year periods. A Term 10 policy has cheaper annual premiums, but the premiums fees can increase substantially after 10 years quite simply because one is older and may have had health changes. Term 20 premiums are slightly more expensive than the Term 10, but the fees remain the same for a 20-year period. The choice with these products is entirely dependent on individual circumstances and financial means. Some of the Permanent Life policies are advantageous in financial planning, but exactly how that works is a bit of a muddle to me.

When you have dependents, life insurance makes a lot of sense in that you want to ensure some money for your family’s future. The question is whether two healthy individuals require life or any other additional insurance when there are no dependents. After all, that extra $20, $50 or $100 a month could be directed to an RRSP or other money-earning vehicle.

Disability and Critical Illness Insurance

Aside from life insurance, my husband and I were asked to consider insurance in case something happened which threatened our livelihoods. These are very personal decisions and definitely expensive considerations. The group health plans with many companies often include life and disability benefits. You may want to confirm with your Human Resources Department about the particulars of your company policy and decide if they are sufficient for your circumstances.

Poor and No Skills

• Sell some junk from around your house each month. Arguably this isn’t passive, but with all the stuff most of us have gathering dust around our place, you could make $30 pretty easily slapping an ad on Craigslist or Kijiji and having someone come by your house to pick it up. I could probably make $30 / month for the next couple years if I started selling off my DVD collection.

Poor and Some Skills

• Start blogging. I was actually surprised when Mike start monetizing the site. My expectation was that we’d get enough money each month to mail a letter or two, but its been better than that. Its debatable whether this is passive or not, but if you’d blog even without getting paid, then monetizing it can be viewed as passive income (its especially passive for me since Mike does all the work).
• A generalization of the first point, but sell something that you’re currently creating for fun. Do you knit, sell what you make! Paint? Sell them! Make pottery? Ditto. You probably won’t get anything near minimum wage for your efforts, but if you keep enjoying it for its own sake, getting a bit of cash from it might be ok.
• Create some product that can sell on its own. Think T-shirts at Cafe Press, a how-to or recipe book at Lulu or create a casual game and sell it through Reflexive Arcade.
• Buy other people’s junk cheap and re-sell it on Craigslist or Kijiji.
• Get other people’s broken junk for free, fix it, then re-sell it on Craigslist or Kijiji. Think computers, cars, or bicycles.
• Property manage OTHER people’s real estate. If real estate is passive, than managing other people’s property should be passive as well. If you found someone who had a condo or small unit they’d probably be willin to pay you 5-10% of the gross rent to show it to potential tenants and be a “first line contact” in case of problems. 5% of $600 is $30 / month.

Not Poor and No Skills

• Pay off $1,242 on a 29% credit card (saving $30 / month is as good as earning it in my book)
• Buy $8000 of General Electric stock (currently yielding 4.5%) or $8372 of Royal Bank stock (currently yielding 4.3%)
• Put $11,804 in 3.05% PC Financial’s Interest Plus Savings Account.
• Buy real estate that will have cash flow after paying all expenses (including a monthly vacancy and maintenance budget).

Not Poor and Some Skills

• The world is your oyster, seize it!

Some of these are a stretch as “passive” I’ll admit, but passive income always seems a bit ambiguous.

What ideas do you have (or better yet, things you’ve done) for getting $30 / month in passive income?

One of the most common financial complaints that I hear is that the price of gasoline is too high. I agree that it’s tough to see higher fill-up costs at the pump, but I sometimes wonder if some consumers doth protest way too much? Most people have bigger expenses than gasoline to worry about and gas costs are one of easiest expenses to reduce.

Gas prices are visible and frequent

If you own a car and use it regularly, then you will probably be familiar with market gas prices since you probably buy gas at least once or twice a month (or a lot more frequently). Because gas is a commodity and is sold in standard unit prices, it’s very easy to compare the price with other gas stations and with the price you paid last week. For most other consumer goods, the unit costs are not as quite as transparent and there are different brands to consider.

How much of your budget goes towards gasoline costs?

This will vary widely for different people but in my case we spend about 2% of our net pay on gasoline. This is probably on the low side since we don’t use our car everyday. Groceries, on the other hand, take up about 16% of our budget. Keep in mind that our grocery budget includes a lot of common household items such as diapers, kitty litter etc.

My point is that if I want to cut back on our expenses or even just complain about them, I should focus on what’s important. Our gasoline bill could double and it wouldn’t make a big impact to our budget. If our grocery bill doubled then we would be hurting. I suspect the average consumer has many other expenses which are much bigger than gasoline costs.

How to lower your gas costs

Here are a couple simple ideas on how to lower your gas costs. There are many other lists on the internet which are a lot more comprehensive but I’ve tried to stick with a few solid ideas that if applicable, will make a significant difference.

Drive less - If you can reduce your driving then you will reduce your gas consumption by a proportional amount. This can accomplished by planning your trips better - if you drive to the grocery store seven times a week then do some planning and cut the trips down to twice a week. If you can carpool, walk, ride or take transit to work instead of driving then you will save money.

Drive slower - the faster and more aggressively you drive, the more gas you burn. No more racing!

If you can’t beat ‘em, join ‘em

Consider investing in oil related companies. The stock prices won’t be perfectly correlated to your gasoline costs but over the long run if the price of oil keeps rising then your stocks (I would look into buying an exchange traded fund) should perform well.

Other posts on gasoline prices and driving tips

Frugal Dad says gas prices are still relatively cheap.

My Two Dollars says to stop complaining about gas prices.

Debt Free Revolution delivers pizza so she knows all about gasoline saving driving tips. Check out the funny photo on this post!

Cash Money Life explains hypermiling which is extreme gas savings.

Being Frugal says she doesn’t drive as much to save gas.

The Dough Roller has a list of 25 ways to save money on gas.

One of the natural tendencies of anonymous (or semi-anonymous) communication is that people act like jerks (”Trolls” is what the kids call them). I was a SysOp on a BBS (think mini, proto-internets) years ago. There would be message boards (forerunners of the forums we see today) and without fail they would degenerate into a flame war, drive people off, then run smoothly for a while until the next one occurred.

I see the same thing happening with forums and sites that allow comments today. When its small, you get a community of smart people having great discussions (”think Four Pillars” he modestly suggested). When it gets too large, the trolls drive off the decent people and you’re left with Slashdot (I love the posts, can’t stand the comments - I don’t think the people who run it even read them).

This business would be an infrastructure for creating private versions of public websites. Say you like Slashdot, and would like to talk about the articles, but can’t stand the comments on the main site. A mirror of the site would be set up, that would either post the articles in a simple form (strip all the style away from it - you could just format their RSS feed), or would automatically duplicate the look of the site (which wouldn’t be too great of a technical challenge, see below). The comment area would be replaced with a private comment area (on this business’ server). You invite people you like, kick off the idiots, and maintain the community you want to interact with.

Companies could do this to allow them an area to privately and confidentially exchange ideas on topics relevant to the company. Perhaps Microsoft would like to have discussions about articles posted on Slashdot, but don’t want the world at large to be able to view them or participate. Perhaps Investors Group would like to have their own private versions of top personal finance blogs to discuss how to use the ideas presented to market their products, perhaps a research group would like to talk about way to extend research other groups are working on and discussing.

I am not a lawyer (although I play one on the Internet), but my understand is that there’s ways to re-mix websites in this manner that are legal (one option is to have the USER load the content from the original site, then make modifications on his computer. Greasemonkey is an example of something along these lines.

If you were targeting companies, this could be sold as enterprise software. If you were targeting consumers, you could slip your own ads into the pages you were generating, or charge the “host” (the guy who originally sets it up and moderates it) of the private site.

For this post, or any other of the wacky business ideas I post, obviously I’m releasing any ownership claims I may have over these ideas. If you like something I post and feel like you can make money from it, please feel free to do so! Let me know when you’re opening and we’ll do a post on it to give you some free advertising.

First of all, let’s look at the normal process to get a passport for an infant in Ontario, which can take up to three months.

Statement of live birth

This is a form you should get from the hospital. It will have your information as well as the baby’s. The attending doctor should have signed it. Make sure all the information is filled in.

Register statement of live birth

You need to send the statement of live birth to the registration office. Since I live in Toronto, I sent the form to the City of Toronto Registry Services Office. Make sure you fill in the form correctly or they will send it back. For example, under the “father’s last name if different at birth”, we left the field blank since my last name has not change. Well, they sent it back! Check with your city to see how to register the birth of your child. Please note that in some areas, the hospital will send the form to the appropriate government division for you.

In Toronto, it take about two weeks for them to officially “register” the birth.

Birth certificate

Once the live birth is registered then you can apply for a birth certificate with your provincial government. In Ontario you can apply here. This process can take a while - in our case it took about a month so we could have skipped the travel letter step indicated below.

Apply for Passport

Once you have the birth certificate for the child, you have to get two passport photos from a photo place. These cost about $20 (ripoff) but you have to buy them - you can’t use your own photos. The form for a passport can be obtained from here - select the “Children” link. I believe it takes about two weeks to get the passport so the entire process can take up to a couple of months.

I need a passport for my infant quickly!

If you are planning a trip within a few months of the birth then you need to do the following steps.

Register the birth (same as above).

Obtain a division registrar statement or “travel letter”. Please note that different jurisdictions might have different terms for this. Once the birth is registered then you can fill out this form (for Toronto), bring it to the city office and they will fill out a travel letter on the spot. The cost is $35.

With the travel letter, you can apply for a limited validity passport which is the same form as the normal child’s passport application (see above). Once, the birth certificate is obtained at a later date then the limited validity passport can be upgraded to a regular passport.  Keep in mind that the guaranteer can be pretty much anyone, much like the adult passport.

In addition to the fees paid to a real estate lawyer for his/her professional services (approximately $1100 and up), you will also have to factor in closing costs of between 1.5-4% in Ontario. These will include some or all of the following:

- Ontario Land Transfer Tax – this can be largest portion of the closing costs, and is charged on a sliding scale depending on the house purchase price (see below)

- Toronto Land Transfer Tax – charged on a sliding scale depending on the house purchase price (refer to previous post)

- Survey or Certificate of Location fee — $600-$2,000

- Legal Fees - $1,100 +

- Title Insurance – approximately $200 against defects of title to property

- Disbursements – fees undertaken by lawyer for registrations and searches. These may include City Tax Certificate, City Building Department Report, Water Certificate, Hydro Certificate, Gas Certificate, Land Registry Office Title Search, Registration Deed, Registration Mortgage, Law Society Transaction Levy, New Survey/Title Insurance

- Fire insurance – as part of home insurance

- Home inspection: uncovers small and major repairs that will be required; may assist in reducing asking price when major issues are found; check that an inspector carries liability insurance in case of errors ($350+)

- CMHC fees if you have a high-ratio mortgage (discussed in a previous post)

- Adjustments to reimburse seller for pre-paid property taxes, utilities, etc.

- Taxes – resale homes unless classified as “Extensively renovated” are GST exempt. Most fees and disbursements are subject to GST. GST is not payable on the Ontario Land Transfer Tax.

- New Home Warranty for newly constructed houses

Ontario Land Transfer Tax

As the name describes, the tax is applied on the transfer of land and is paid by a purchaser. The fee is charged on a sliding scale based on the purchase price, and for us, 2% amounted to a lot of money.

Detailed information is available from http://www.rev.gov.on.ca/english/taxes/ltt/rates.html.

The Mortgage Negotiations

As I explained in a previous post, the important elements of a mortgage are the rate, term, amortization period and type of product (e.g. fixed versus variable rate). The appropriate mortgage should be determined based on one’s financial circumstances and comfort level. My caveat – study and clarify the differences between the mortgage products of different lenders offering comparable rates.

Embarking on the process of finding a favourable mortgage rate felt like steeling for battle. Friends emphasized the impact of a single percentage point over the full course of a mortgage. By nature quiet-spoken, I found it an intimidating prospect. Any initial fears that I had about negotiating with my less than assertive personality faded as the banks and brokers clamored to be updated about our status, and strove to match another institution’s rates a number of times. It was an exhilarating and time-consuming process spanning several weeks.

In talking to the banks or brokers, remember that a mortgage (and its interest) presents a lucrative money-making potential for them. It is therefore important to sell yourself as a business proposition by pointing out your desirability as a client. Emphasize your current and future earning potential, and point out any investments or RRSPs that you have which could be moved over. This is not the time to be modest. Trumpet your professional background and point out any family or business relationships with the bank, especially sizable investments or accounts of long-standing. Play off one bank against another by keeping them informed about the rates you receive. The banks do want your business, and from my experience were willing to match a lower rate from a competitor. This is especially important if there is a bank that you would prefer to deal with and are receiving a lower rate elsewhere. It never hurts to ask.

As well as “shopping the banks” on my own, I also called two mortgage brokers that came highly recommended by friends. To the surprise of my husband and I, the rates that the brokers were able to negotiate on our behalf came nowhere near to matching the rates that I was able to obtain on my own. The rates did not even match the PAM (pre-approved mortgage) rate that we had received months earlier. One of the reasons may be that while there is no fee charged to the borrower, the broker still has to earn a commission. Although that broker commission is paid by the lending company, the broker’s “cut” likely factors into the discount that is obtained from a lending institution.

Our experiences with the brokers were different from that of our friends who found that the brokers obtained better rates than they could on their own. It may be a matter of timing with the financial markets or differences in our financial circumstances. As long as there are no fees involved, it doesn’t hurt to give a mortgage broker a try. I would still do my own rate research though, just in case.

Keep in mind that you should not burn any bridges along the way in your dealings. Bank staff, especially in a large city like Toronto will change employers, and you do not want to jeopardize any future negotiations when it is time to renew a mortgage. Each mortgage renewal is like a “free-for-all”, as the bank holding your mortgage may not necessarily grant you the same good rate, or may not be able to match a rate from a competitor.

At the start of the process, my husband and I were undecided about whether to go with a fixed or variable rate mortgage. Our friends and some of the mortgage agents were of the opinion that mortgage rates were on the decline. This was based in part on the sub-prime mortgage fallout in the States, as well as an unusually buoyant Canadian dollar. The mortgage that we went with in the end is a 5-year open variable one, with the borrowing rate based on a set discount off the bank prime rate. Our financial position is stable and will improve over time, thus having an open mortgage allows us to periodically make lump sum payments directly on the principal. A variable rate mortgage is essentially a gamble on the expectation of stable or declining lending rates. We feel reassured about our mortgage decision as the prime rate has already decreased and with it our mortgage rate.

Bank lending rates are based on the rates set by the Bank of Canada. These rates are adjusted on a fixed timetable eight times annually. While financial institutions base their prime lending rates on Central Bank recommendations, they are not obliged to do so. Rate changes have historically not fluctuated by more than a quarter percentage point at a time. As our initial best variable rate was much lower than the lowest fixed rates we were quoted, we could weather a few interest rate increases before worrying about converting to a fixed-rate mortgage.

After deciding about where to take out our mortgage, there was paperwork to be completed and official bank underwriter approval to be obtained. The bank application required the following: the MLS listing, Purchase Agreement, salary information and assets information. It is standard procedure, at least according to three of the major banks that I dealt with, that a house purchase of over half a million dollars requires a bank appraisal. The house appraisal was undertaken at the cost of the bank as an assurance on their investment that the property is correctly valued. The appraisal also looked at comparable sales.

After the approval by our bank’s underwriting department, our dealings with the bank were concluded. The final paperwork was signed at our lawyer’s office, and it was our lawyer who sent us copies of the mortgage documentation.

While re-reading “The Millionaire Next Door”, one idea they mention in passing is that one view of “your wealth” is the length of time you could go without working (i.e. without receiving a paycheck). I thought this was an intriguing idea, as it factors in your spending and lifestyle as well as your assets.

The calculation would simply be: (assets - liabilities) / monthly spending.

As an example, my assets (after subtracting liabilities), including cash, stocks and my investment condo were worth about $87,318 as of June 1st (I’d also consider this my networth). Since I’m living on about $1300 / month, I could go for about 67 months ($87,318 / $1300), or 5.5 years without working (BIG IF: my living expenses didn’t increase and my assets didn’t decrease in value).

Alternatively, you could use assets / monthly spending (including debt servicing) if your liabilities are greater than your assets (and having a negative number would bum you out).

I especially like this calculation as it favours my approach to life :-). I’d be significantly higher on the networth ranking of PF Bloggers if we factored in lifestyle costs.

Factoring in the principal residence is still a tough issue, as selling it would probably INCREASE your monthly expenses (since you’d have to rent something comparable). *sigh*

How long could you go without receiving a paycheck? What do you think of this measure of wealth compared to networth? Any ideas for what we should call it?

I wrote a fairly detailed post about how to apply for parental and maternity benefits a while ago but since I just went through the process again, I figured it was time to revisit the process.

First of all, since I am a repeat baby-maker, it was a lot easier to apply for EI this time. I logged into the online EI application and didn’t have to set up a new account which saved a lot of time. The application took about 10 minutes to complete. My next step was to take my ROE (record of employment) to a nearby Service Canada Centre. All I did was line up for about five minutes and handed the form in (after paying for two hours of parking). I realized later that I could have mailed it but that would have added a couple of days to the process. I should start getting my benefits within four weeks.

Don’t delay

It’s hard to get your act together when you have a new baby but it’s important to get the application in as soon as possible so that you can start receiving the benefits. If you wait too long, then you might not get all the benefits you are entitled to.

Who claims EI - Mommy or Daddy?

The way this benefit works is that the mother can get up to 50 weeks of benefits (if she qualifies) which is a combination of maternity and paternity leave. Dad is eligible for up to 35 weeks of benefits but the maximum number of weeks paid for a couple is 50. Two things to note:

1. When the mother applies, she only applies once and that will be for both parental and maternity leave benefits.
2. Although the EI benefits have to be shared within a couple, the time off allowed does not have to shared. The mother can legally take 52 weeks off and the father can take 37 weeks off and there is no “couple maximum”.

I’ve used dating sites a fair bit over the last 8 years. Match.com was the big site for a long time, then LavaLife.com got big (a buddy of mine is gearing up to marry a woman he met on there). The two I recommend to friends are OkCupid.com and PlentyOfFish.com (both are free, of course).

For a while I thought collaborative filtering (where things you like help match you up to things people who are similar to you like: think Amazon’s recommendation system) would be an interesting idea for a dating site, but someone beat me to it.

The other idea I’ve had comes from what I think is a massive problem with on-line dating. Dating sites CLEARLY came from a techie’s mind. They aren’t much more than than a web interface slapped on a database. You choose the characteristics you want (red hair, not religious, no kids) hit search and start working through the list of results. This is a great way to order stereo equipment, but is it really the best way to find romance and/or a life partner?

Ok Cupid gets around this by having all users answer questions, rate how important each question is, then match people up algorithmically this way. Better, but it still involves a lot of shifting through people pictures, scanning their profiles and writing lots of messages for every response you get.

The joke of it is, women on these sites often get big egos because so many guys are contacting them, but then they don’t like the guys that they’re meeting. Some try to deal with this by putting a list of “requirements” on their profile for any guy who expects a response to them, and often come off as prima donnas. Guys realize these sites are a numbers game, and start spamming the women. There’s a very low signal to noise ratio for the whole experience.

The dating site *I* would design would be a radical departure from this model. Instead of wrapping a website around a database, the site would be like cocktail party with a VERY attentive host. When you first logged on, there would be minimal information to enter (for some reason people hate filling out profiles, about 1/4 of them whine about not knowing what to write). Say you get started with an e-mail address and password. You’re assigned 3 people to “talk to”. You can enter VERY, VERY minimal filtering criteria (perhaps just sexual orientation and geographic location). You and the three people you’re chatting with are given a question with a very limited space to answer a general question (perhaps “what was the last good movie you saw?”).

The next day you log in and see the responses from the people you’re currently interacting with. You pick the ones you want to keep talking to and reject the ones you’re not interested in. The ones you want to keep talking to and you are then given a more detailed question (or are asked more personal information which is exchanged, such as “how many children do you have?”). The ones you reject are replaced with other people you then exchange a short question with again.

If you get a question you’ve already answered, it resends your previous answer (you can update these if you want), so then you just accept or reject the response you get. Eventually you have chosen to interact with someone enough that the system suggests you exchange e-mail addresses, phone number or meet “off-line”.

Collaborative filtering could be applied to pick the people for you to interact with from the general pool of people.

The big advantage of this system is that I think people don’t really know what they want and are attracted to. With the database search we filter out people we may have taken a real liking to. Perhaps a woman refuses to date men younger than herself, until she starts interacting with a guy who loves the same music she does, has a wicked sense of humour and looks like her favourite contestant on “Survivor”. Perhaps a guy normally would have rejected dating outside his race until he gets into deep exchanges with a woman who shares his values and spiritual outlook. Perhaps two people who are 20 years apart in age find out they’re more compatible with each other than the people they’ve each been dating in their own age range.

This site would obviously be the complete opposite of a meat market. People who can’t write worth a damn and get by on their photo on other sites would be at a disadvantage on this one. It doesn’t seem to me to be the worst thing in the world if the site distilled off the flaky, beautiful people and built itself on a core of people who were serious about finding a partner and willing to put some work into connecting with like-minded people (maybe this would be too small of a niche). There are tons of “meat market” sites for people looking for that.

Dating sites are DIRT cheap to create and run (Plenty of Fish is arguably the number one site and is run by a guy out of his apartment), so the financial risk of starting such a site is pretty low (no need for venture capital or anything). Its a HIGHLY competitive area, so if this approach worked you’d quickly get lots of competition. There definitely is a benefit to being established (more users lead to more matches, which leads to more users -> its winner take all). Like the free sites, I’d be tempted to monetize it via advertising in order to maximize the user base. You could do other things like allow more conversations at higher (paid) membership levels and not canabalize your membership when you started charging.

For this post, or any other of the wacky business ideas I post, obviously I’m releasing any ownership claims I may have over these ideas. If you like something I post and feel like you can make money from it, please feel free to do so! Let me know when you’re opening and we’ll do a post on it to give you some free advertising.

Eligibility for CCTB

• Child must be under 18 years of age.
• Primary caregiver must be a Canadian resident.
• Family net income must be less than approximately $102,000. Keep in mind that net income is AFTER any deductions such as RRSP contributions.

How to apply for the CCTB

The form for this benefit is called Form RC66 - Canada Child Benefits Application and can be downloaded from www.cra.gc.ca/forms or call 1-800-959-2221. Keep in mind that this application is the same one as for the UCCB (Universal child care benefit) so you only have to fill out this form once for both benefits.

Do I need proof of income to apply for the CCTB?

No you don’t. However the exception is if one of the parents became a new resident or returned as a resident of Canada in the last 2 years - or if you became a Canadian citizen in the last 12 months.

Do I need proof of birth to apply for the CCTB?

No, unless the child was born outside of Canada or was born in Canada and is one year of age or older.

How much will I get from CCTB?

Check out the CRA’s online calculator to find out how much your benefit will be. The benefit is a sliding scale so the more net family income you have, the smaller the benefit will be.

Weight was 171 this week.  I’m back on program, eating healthy again and seeing the results.  I’m *SUCH* a fan of logging information you’re trying to change (be it spending, saving or weight).  Come to think of it, that might make a good post…

I’m just going to give one link this week, and its from an older post. I just came across an interview on Financial Jungle that I really liked.  It was posted back in January, but I missed it somehow.  Good to see the results of someone who has pursued this strategy over the long term.  Of course, his results are no indication of what ours will be, but encouraging nevertheless.

I always love interviews:  bloggers should do more of them!  (I don’t think I’ve ever done one on this blog either, that’s something I should change).

Adapting to life in Kitchener-Waterloo has been going well.  The sushi here is over-priced and inedible (and the Pad Thai is just minimally better), so there may be regular trips to Toronto in the future.  Mr. Sushi was good when I was here before, but its gone downhill.  I can make sushi, but its A LOT of work.  Probably it’d be worth learning how to make a decent Pad Thai…

I got my funding all sorted out, and it should be enough for me to live off of.  It looks like I’ll be clearing $1418.40 / month (before my condo or dividend income) and spending around $1300 (given my current estimated and recent spending).  Tight, but manageable.

2 months ago I made a prediction that Toronto was in a housing slump and it’d be clear to everyone by today.  Its still uncertain (although I still feel the market is cooling), so I guess I’ll call myself wrong on this count.  Please keep this in mind any time I make predictions in the future :-).  I keep counseling friends and family to hold off buying, so I hope I’m not leading them astray.

I’m bouncing around the idea in my noggin’ of putting together a book about living cheap in the big city.  Mike suggested that there might be interest in expanding on some of my “frugal living” posts (I had previously suggested expanding his RESP series to a book and us writing a book together so this might have just been a suggestion to get me to stop bugging him).  I’d probably set it up as a print on demand book from Lulu or some such site.  One of my life goals is to write and publish a book, and this may be the time and topic to do so.  Any thoughts about what the level of interest might be in such a beast?  Would any regular readers consider ordering it?  Do you think there’d be interest from people who don’t read the blog?  Do you think this is a topic that’s already covered well by existing books?  Which ones?  What topics wou