Ready or not

How hard can making a savings plan be?

2009-03-08T12:53:00.002-04:00

Pretty hard, it turns out.

I played with so many scenarios in my head, I got dizzy. It took a few weeks, but I finally decided.

My priorities for this year are the trip to Russia and the scooter, so I have an account for each.

The trip to Russia being committed, it's getting 75% of my savings. The scooter is getting the rest (25%).

That took 3 weeks to decide? Not really. The delay was in opening the accounts. I just took forever! Too many things going on at once.

Take right now, for example. It's Sunday, and here's what I've got to do today, in no particular order.

figure out how to download Photoshop (blame Vista. I'm so sick of fighting with it to download software!)

return empty bottles

do at least 2 laundry loads

plan and prepare meals for the week

collect tax receipts and figure out what I'm missing

plan workweek

go for walk while the weather's nice

take recycling out

mend my beautiful cardigan that's unravelling

And I could go on. It seems it's always like this, and I have no kids! How do parents do it, I don't know. (Could it be that there's 2 of them? Humm, that's food for thought.)

Well, nothing like the present! Let's get started....

How many savings goals is too many?

2009-02-21T15:59:00.003-05:00

I drafted up a list of things I want to save for:

trip to Russia in August -- $8,000
bathroom reno -- $12,000 (I'm planning a big reno... total revamp!)
3-wheel scooter - $3,000
Weaving loom - $850
Sun blinds for living/craft room: $6,000 (my windows are huge.. 14' x 9')
Sofa -- $2,000
Bedroom upgrade: furniture & closet organizer system -- $10,000
Craft room set up -- $3,500

Total: Slightly over $45,000

Yikes! Clearly I've got to prioritize.

Well, the trip to Russia is committed, and I've saved a bit more than 1/2 the money I need (plus I've already paid $1,000), so that's priority 1.

Next is the 3-wheel scooter. As I lose mobility, I need a scooter just to maintain a degree of independance and lessen my taxi costs. These are so high now, the scooter will repay itself in a year.

That's about all I'll be able to save for this year, but I'm glad I've got that figured out.

Next, I've decided to focus on comfort: so the sun blinds will priority #3. My windows are huge and face south, so the temperature in here gets as high as 40 C on sunny winter days. The AC only works in the summer. Good quality sunshades will make this place much more livable, and as I spend more time here, comfort going to be more and more important.

Next will be the sofa. My sofa has been torn to shreds by the cats, it's lumpy, and more. Again, as I spend more time here, and a lot of that is sitting on the sofa, a comfortable one is important.

Then will come the craft room set up. I probably spend at least as much time here as I do on the sofa, and it's definitely not functional for my current needs. Not enough desk space, no filing cabinets and storage, uncomfortable desk chair. Need I say more? At this point, I can buy my loom. it will make sense to buy it once I have the right place for it.

So, we're down to the last 2 pieces: my bath and bedroom reno. I've got a super comfortable bed that I bought last year, so that's taken care of. Now, I need to take care of my clothes. So cramped in a crappy closet, I can't figure what I have, and half end up on the floor through lack of shelves for sweaters and such. The closet should be next. I'm planning to take some bedroom space to create a walk in closet.

So, I guess my bathroom is last. How sad. I was looking forward to a walk-in shower.

Next post, I figure out my savings plan. To start saving for everything at once, or 2-3 items at a time? Or even only 1? Gotta get me a plan.

net worth sucks

2009-02-12T20:37:00.002-05:00

I updated my net worth tonight. Needless to say, it's not a pretty picture.

The problem is, I don't feel it represents anything real. I've made my views of net worth known in the past, but in these wonky economic times, I think the problem with net worth is particularly evident:

This number is worthless unless I'm planning to sell or cash in something now. Which I'm not.

My condo is down about 20%, but I'm planning to be here another 10 years at least or until I die, whichever comes first. My portfolio is nicely balanced and will only appreciate once this recession is over. My dividend yield average is orgasmic and several of the stocks I have have increased dividends these past few months. Plus, as the first quarter results come in, all but one of the stocks I hold (who have released their Q1 results) have declared an increase in profits vs. 1 year ago. (Can I pick 'em or what!) My cash flow is flowin', my job is secure for at least another year -- and how many people can say that these days -- and I'm reducing my debt steadily.

From where I sit, everything is peachy keen. Yet my net worth doesn't come close to reflecting that. I hope I remember this lesson when boom times come back. Net worth is pretty much worthless unless you're applying for a loan!

Totally unrelated: I have the next 4 days off, so I'm going to visit my family and friends in Montreal. The luxury of 4 days where my biggest obligation is to make my bed in the morning. You gotta love it!

Lastly, remember there are always people worse off than you. Check out Kiva (button on top right hand) and do what you can.

From red ink to black ink...

2009-02-10T22:09:00.004-05:00

Slowly, very slowly, I'm crawling my way back to black.

I still can't quite believe how difficult it is to live within my means. I have resisted many opportunities to fall back into my old habits, and so far, so good. But man oh man, it's hard!

Just tonight, I came home exhausted, and with nothing prepared dinner-wise (oven on the blink again, wouldn't you know!). My first, second and third reflex was to order in. I even started filling in the online order form. Then reason got the better of me, and I cooked some pasta with broccoli. Actually much better than anything I could have ordered (and more healthy too!).

This is not the first time in the past few weeks that I go through this see-saw -- yes, I'm buying it, no I'm not, yes I am, not I'm not -- until eventually, no I'm not wins.

Kind of cool, really. And it reminds me of how I finally quit smoking: I just got tired of trying, and decided to finish it once and for all.

Here's to a successful and frugal 2 weeks, and to many more to come!

January update

2009-02-02T18:28:00.002-05:00

I plan to give an update on my 3 goals at the end of each month. Without further ado, my January report:

Goal 1: Cholesterol

I don't know what my level is, I will only get it checked in 3 months, but I do know that I've lost a few pounds and I have more energy. The weirdest thing is, the more I eat well, the more I want to eat well. I get cravings for apples instead of fries. How strange!

Goal 2: Lower my credit card debt

Well, I've set up 2 automatic payment schedules, 1 for each card. I will finish paying card 1 in August, at which time I will transfer the balance to card 2 and start reducing that one more agressively. I am making regular payments to card 2 as well, but much smaller ones, so right now, I'm looking at paying it off in 2010. Hopefully, once I transfer the other payments, it'll go faster.

Just as importantly, I have used my card once in the past few weeks and transferred the exact amount from my checking the same day.

I am being very, very frugal, so my cash flow is improving. Once I'm in the clear, I'll see if I can increase my payments a bit more.

Goal 3: decluttering

I'm falling behind on that one. I have decluttered a bit every week, but not nearly as much as I could/should have. Not 3 hours a week for sure. Gotta do some catching up here!

On another unrelated subject, my financial planner is not impressing me. She's recommending switching from buying equity funds to bond funds. Uh, aren't bond funds kind of high, right now? And stocks dirt cheap? Isn't it buy high sell low?

I think I need to ask more questions.

Our stimulus budget

2009-01-27T17:48:00.002-05:00

Not bad, but not good enough either. That's my personal take on the budget.

I like:

most of the infrastructure spending, particularly that earmarked for post-secondary schools, the environment and the Canadian Foundation for Innovation.
(an aside on the environment... it's definitely not enough, but for this government? A huge step.)
the workforce retraining budgets
At last, people on welfare don't get penalized if they find a job, thanks to the doubling of doubling the Working Income Tax Benefit.
All the business tax measures. Business success is what creates jobs. They need all the breaks they can get.
Anything that helps the First Nations on the road to respect and self-sufficiency gets my vote

But I'm very disappointed in most of the personal tax cuts, with the attending expectation that we're going to spend more. A few hundred dollars more in my pocket every year will not affect my spending, so that money would have been so better off on more tangible activities, like schools, housing, etc.

But overall, not bad. They get a B minus from me.

Goal #1: reducing cholesterol

2009-01-24T11:56:00.004-05:00

Well, it too a bit more than a week, but I have finally gotten over the fact that I've been fooling myself all this time.

Don't get me wrong: I knew I was using overdraft. Somehow, I just forgot that overdraft is debt. Whenever I start thinking I've really got it together, reality slaps me back down again. Enough, I'm moving on.

My # 1 goal for this year is to reduce my cholesterol levels, and to this end, I've joined a UofT study called the Healthy Diet Study.

Last week, I received my first delivery of free food. It was an amazingly large amount of food. I gave some away, and I still had quite a bit left when I got my 2nd order yesterday.

The study asks that I try everything they deliver, so I did. I got a bag of oatmeal: I made oatmeal bread and have been having that as my breakfast grain all week. I got canned beans: I made meatless tamale pie. I got winter tomatoes (yuck), I chopped them and threw them into a sauce for my chicken. I had to go and do a grocery to go with all this free food and I didn't plan it well (plus, I went to Whole Foods!) so my spend for the week including groceries was over $200.

I got the hang of it this week: I spent more time planning my menu once I saw what was in the box, and my grocery bill came to $65. Based on last week, that means that my spend for next week will be about $75.

But the goal was never about the savings. That's just a bonus. This is part of my plan to lower my cholesterol and I've got to give it to them, I'm eating much healthier meals and, with the literature they provided (plus my friend the world wide web), I'm also learning a lot about nutrition.

The only drawback is I have to cook everything over the weekend 'cos I have no energy after work. This weekend, I'm cooking: turkey breast stuffed with spinach, eggplant-spinach bake, barley-chorizo skillet pie, kasha & zucchini salad, and some kind of oatbran muffin. I might also try some stuffed peppers one night. Haven't done those in eons. Veg-wise, I've got carrots, mushrooms and broccoli and I've got clementines, applies and pears for fruit.

This will take care of breakfast, lunch and dinner for the next week, and provide snacks as well. Should be pretty thrifty week.

How I confused cash with overdraft

2009-01-13T20:11:00.004-05:00

Remember how a few days ago, I wrote how I pay cash now or, if I pay with my credit card, I transfer the funds immediately?

Well, I lied. Not only to you, but to myself as well.

I checked my bank balance yesterday, and lo & behold, I was overdrawn. As I am quite regularly. I've got overdraft protection, so I pay things right away rather than wait until payday.

I didn't connect the dots right away (I've been working long hours, brain is tired and slow) but when I did, it dawned on me that paying cash and paying from your bank account are not the same thing.

I can't believe it's taken me this long (I'm in my fifties, remember?) to figure it out: I'm not paying cash, I'm just using a different form of credit. And, in fact, just about the most expensive form of credit there is.

And just as I was starting to feel virtuous.....

The Two-Minute Portfolio

2009-01-11T17:42:00.002-05:00

Several years ago, my portfolio was all over the place. I had no investment goal, no asset allocation plan, I just bought and sold on whims.

I tried all kinds of techniques as I read about them. Heck, I even tried technical investing for a year, signing up with Stockscores to learn about it. That was loads of fun, even if it wasn't my best year. I still check out the technical analysis of the stocks I buy, but now, it's more for confirmation that decision-making.

Then, as it was becoming clear that I needed to calm down and figure out my strategy, I discovered the Globe & Mail's Two-Minute Portfolio.

And that, ladies & gentlemen, is when I started investing seriously and successfully.

I didn't follow the portfolio to the letter. There are some sectors that are too volatile for me. I would like to have enough money to take more risk, but I don't, so I stick to safer.
I didn't necessarily buy the top 2 stocks since I buy dividend stocks only. Note that the Portfolio is switching to dividend stocks only this year. My portfolio now matches theirs much more closely.
I couldn't afford the top 2 stocks, so I only bought one in the sectors I was interested in, for starters. I'm just starting to add 2nd stocks in each sector now.
I bought US stocks in some sectors as their dividend payments were stronger. A mistake during a few years as it turns out -- I didn't factor in the exchange rate. (I understand my broker, RBC Direct Investing, will be introducing wash trades this year. About time!)

I'm still roughly following that strategy in terms of diversification. I own one or 2 dividend paying stocks per sector. It's an easy way to diversify, and as the 2008 results are in, you see it performed better than the S&P/TSX composite index. I did better than the index too.

There's something to be said about simplicity.

Saving is easy. It's not spending that's hard.

2009-01-09T14:06:00.006-05:00

Saving is easy if you take advantage of automatic deductions.

I started saving $50 a month through my credit union's automatic savings program when I was 19, and I've (almost) never stopped using these programs. Right now,

I have 10% of my gross income redirected to my employee savings program. My employer matches 3%. Part of that goes to my RRSP every year.
I contribute to my employer's pension plan, also an automatic deduction, and it will significantly increase my pension.
I have a fixed amount taken from my account by ING direct every 2 weeks on payday.

Because this all happens without my doing anything, I've managed to build a good nest egg. Not huge, but it'll see me through retirement.

The spending part I can't get under control.

Some people say paying off debt is a form of savings. Not for me it isn't. I need real income when I retire. No debt is not enough.

I've had my banker go through the numbers, and he confirms that at my current rate, I'll have sufficient income if I have no debt. And I'm nowhere near having no debt.

So, this year, I gave myself as a goal to reduce my debt. I haven't worked out my plan yet, but I have worked out this: I'm starting by not adding to my debt.

No credit card use for me this year and, when I have to (like when I'm buying something online), I'll repay it instantly.

So far, I'm finding this incredibly painful, and it's only been one week!

Hanging out with my 25-year old goddaughter during Xmas made me miss my youthful insouciance. She spends like I do (we're both particularly fond of shoes). But she's different than me: she has no debt!

She had debt problems when she got her first card, and she's determined not to go there again. I had debt problems when I got my first card, and still do.

I think she's better off than me. Getting out of the debt habit at her age is a huge accomplishment, one that I hope to accomplish this year.

The mystery of the bond market

2009-01-06T22:15:00.004-05:00

I have never understood the bond market. Never.

I know what bonds are, and I understand how their yield works. I just don't understand the market. I never understood why when stocks go up, bonds go down, and vice-versa (although that piece of conventional wisdom seems to have gone the way of the dodo bird, so maybe it's not true anymore?) I can't tell they're going up or down just by looking at the numbers, so I have to trust what I read and hear. A hard thing to do for a control freak (but not hard enough to actually sit down and figure it out).

Now, I'm no dummy. As I believe I've mentioned before, my investment portfolio was doing quite well before this meltdown, and it's continued to do okay. But 95% of it is in equities, 'cos I don't understand bonds and I refused to buy GICs (although they're starting to look better). I sort of understand coupons -- I've bought a few in my time -- but not bonds themselves. So I shy away from them.

I have a small amount of Canadian government bond funds. I bought them because it's the "right thing to do." Everyone tells me I should have more, but I don't really get it. I'm doing just as well off my dividends. so I should buy more because? Ah, yes, capital preservation. Slow, small growth, but your capital is safe.

Today, Derek DeCloet in the Globe & Mail warned of an impending bond bubble. Huh? How can you create a bubble out of government bonds? Maybe US bonds are a bit riskier since the US Gov't now owes gazillions, but is he saying that the US may go bankrupt? And what about Canadian bonds? We're in pretty good shape (although you'd never know reading the news these days.)

Help me someone! Explain to me like I'm a 5-year old. I was thinking of buying more bonds every year as I get closer to 60 to preserve my capital, but now, I'm not so sure.

Isn't a well-diversified equity portfolio enough?

TFSA account opened!

2009-01-05T18:21:00.003-05:00

Today, I opened my TFSA account with RBC Direct Investing.

Now, I can't say I was overly impressed with the experience: the form was hard to find (it's here if you want it), and although you can fill it out on your computer, I don't recommend it. It has so many glitches I had to fill part of it by hand. I'd have been better to print it off and fill all of it out by hand - would have saved time and frustration.

I dropped it off at their Investor Centre downtown and told them how bad it was, but I'm not sure they're going to tell head office, so I'm going to call tomorrow.

I really like RBC DI, and they're improving all the time. This was just not up to their usual standards.

That being said, I'm very excited. As soon as my account is opened, I'll tranfer $5,000's worth of Royal Bank shares (you have to enjoy the symmetry!). They're at a miserable $36 right now, so I figure I'll get to benefit from tax free capital gains when the markets finally pick up, plus tax free dividends (no big deal given the great tax deal we get on dividends, but hey, every little bit counts).

I'm glad that's done. I have a tendancy to procrastinate on these things, so I'm pretty pleased with myself.

Investing for dividend income

2009-01-04T12:09:00.004-05:00

4 years ago, I started to move all my RRSP holdings into dividend-paying stocks, and set a goal of earning $60,000 in dividend income.

2 years ago, I opened a non-registered leveraged portfolio that's managed by a financial planner. She invested my money in dividend paying mutual funds. Currently, those dividends are going to (1) pay off the interest on my investment loans, (2) pay off my mortgage faster and (3) invest in other mutual funds.

This year, between my RRSP and non-registered account, I generated $36,000 in dividend income, most of which was reinvested.

My concerns:

I'm turning 55 this year, and I plan to retire at 60. I'm not sure I can grow my investments fast enough to reach my income goal. I hate spending time doing the math, but I'll have to. (Yes, I could get my FP to do it, and I probably will, but I'm a control freak so I'd double-check everything she does anyway!)
I have to start moving some stocks into fixed-income instruments. For a woman my age, I've taken on too much risk. Now's not the time to do the selling, but I will have to at some time soon. All the experts say I should have 50% in FI instruments, and I have 5%. Now, I probably did better this year than most of the experts, so I'm not taking their recommendation literally, but I do realize that I do have to start building some protection in my portfolio.

This totally sucks, of course, as I really love my dividend stocks and I've been reading up on them quite a bit this past week as I start rebalancing my portfolio. Oh well, that's the life of a mature investor I guess.

On another note: I was thrilled to find a Canadian FP blog that focusses on dividend investing. His goal is to generate $100,000 in dividend income.

I've read only a few posts, but I'm definitely subscribing to this guy's feed. His overall investment principles are close to mine, so I'm sure I'll be learning a lot.

Making goals that I'll keep

2009-01-02T12:57:00.004-05:00

Yesterday, I reviewed the year that was. Only today did I realize that my year was entirely focussed on money. Not unreasonable for a blog that claims to be about finance, but still, it makes me feel very one-dimensional (not to mention a little too materialistic maybe?).

My goals for this year look at the whole me, not just money-me. I'm also keeping them down to a manageable 3 SMART goals:

Reduce my LDL cholesterol to 2.5 or less by June 30. My most recent bloodwork shows my bad cholesterol is very high. High is 2.5mmol/L, mine is at 5.4 mmol/L, a dangerous level, and I'm determined I won't control through medication what I can control naturally.
Spend 3 hours a week de-cluttering and organizing until all I've got left is what I use and need. I've become a pack rat inadvertently. I just never seem to get around to getting rid of stuff I don't use anymore. I think it started with environmental awareness. I know it's wrong, but I miss the days when we could just throw stuff out. This year, I plan to go through my condo inch by inch and get rid of anything I don't need/use, and sort the rest out so I can find things when I'm looking for them.

Develop and implement a realistic plan to eliminate non-investment debt. I'm giving myself until the end of January to work out the plan and figure out the timeline. Given my aggressive savings plans which I don't want to reduce, I may not be able to pay off all the debt this year -- but I want it gone within 24 months.

Okay, so 3 clear, measurable goals. Now, I have to start making the plans to achieve them. So, a word of warning: that's probably what I'll be writing about over the next month.

Now, I said I'd stick to 3 goals, and I will. But I also have an annual goal that I renew every year: make 1 new friend. It's amazing as you get older how easy it is to lose friends (especially those who move to other countries!) and hard to make new ones.

I started thinking about this as a goal 4-5 years ago when 3 of my close friends moved away in the same year. I found it very lonely without them, and I realized that you need a minimum amount of friends, or good acquaintances, to keep you sane. At first, it was just "make new friends" and that didn't work. Now, it's "Make 1 new friend this year" and, guess what? It's worked for each of the past 2 years. That's why I like clear, measurable goals. Somehow, they help make it happen.

If you're having trouble keeping goals too, try SMART goals. It worked for me!

2008 in review -- moneywise

2009-01-01T16:58:00.003-05:00

January 1, and I've just wrapped up my review of 2008.

Basically, my net worth has dropped a bit, but it's not as bad as it could have been.

Employer savings plan:

I put 10% of my income in an employee savings plan that my company matches up to 3%. Although it's all in stocks, and they haven't performed too well this year, the good news is that I got a lot more shares for my money, which will pay off when the markets recover. Plus, this stock pays good dividends -- 6% yield right now.

Automatic savings plans:

I have money transferred automatically to 2 high-interest savings plans each payday. One is for my trip to Russia, the other is for my bathroom reno. The bathroom reno one is doing well, I'm about 40% there. But that account is a few years old.

The other account is only a few months' old, and I've dipped into it a few times (once, by accident!) so I might actually have to help myself to my bathroom reno fund. Well, better than than credit card debt, right?

RRSP (the Canadian Roth IRA):

My RRSP has gone down about 25%. That includes nearly $10,000 of dividend income I made in 2008. All in all, better than the overall TSX return this year.

Mortgage:

I paid off about 25% of my mortgage this year. Technically, I still have 3 years to go to pay it off, but I think I can do it in 2.

Other debt:

Not good. I've actually increased my debt this year. It's-low interest debt (3.5% and 1.9%) but it's debt nevertheless.

If it weren't for the "other debt" category, I'd be pretty happy with how the year turned out. But I need to better manage my cash flow. I have an agressive savings/mortgage payment strategy, but I make a good income and I should be able to do it without getting into debt.

Now, I've got to work on 2009 goals.

Paying down your mortgage faster, Pt 2

2008-12-31T12:05:00.005-05:00

Recently, I wrote about mortgage prepayments.

In his year end review, Get Rich Slowly highlights his 10 best posts of the year, and this one caught my eye.

Although the US system is different than Canada's, this post offers an excellent explanation of the benefits of making prepayments to your mortgage.

(I found the interest rate examples high. Then I remembered I have a variable rate mortgage.

Have a look at current mortgage rates from my bank. See the variable rates? Prime is 3.5% currently, so that makes the rates 4.5% for open, 4.3% closed. What a deal!)

Making it easier to give away stuff

2008-12-30T11:17:00.004-05:00

This week is de-clutter week.

The plan is to go through each room and make piles: garbage, donate, keep.

Piles 1 and 3 are easy. Pile 2, donate, is not. I spent hours looking for places to donate certain not so obvious items. (Keep in mind I don't drive so my options are limited.) And when I say hours, I'm talking dozens. Yes, plural. I wouldn't be surprised to learn that I've spent several weeks on this.

Yes, we all know where to drop off used clothes, but where to you drop off a used TV? And better yet, is there someone who will pick it up?

This has inspired me to start another blog on reuse and recycling facilities in Toronto. I'll probably post just once a week on that one since I'll need time to do research. But given the frustration I've experienced looking for this information, I hope other people will benefit.

There's real joy in giving

2008-12-29T13:37:00.006-05:00

I've been thinking of micro-lending quite a bit these past few years (since I first read about Muhammad Yunus and his Grameen Bank). I knew individuals could lend small amounts of money as a potential source of income, but that's not the same thing. Although not averse to making money, this wasn't a money-making project for me. I wanted to help people get started so they can become self-sufficient and rise out of poverty. I just didn't know how to go about it.

I found Heifer International, an organization that donates animals that can help feed a family or make income. (World Vision also runs a similar program.) It was close, but it wasn't quite what I was looking for.

And yet again, fellow bloggers to the rescue! I found out about Kiva through this post by J.D. at Get Rich Slowly and, just before Christmas, I made my first loans.

Now, if you simply google "microlending," you'll find lots of micro-lending sites, including Kiva. After reading a few, I decided that what I liked about Kiva is:

It's an aggregator site for hundreds of microfinance institutions (MFIs), which it rates based on past performance. It saved me tons of research and made me feel more confident in my choices.
Unlike Heifer or the Grameen Foundation, you decide who gets your loan, so it's easy to align your lending with your strategic philanthropy goals.

I'm not putting the others down, it's just that Kiva fits better with how I like to do things. (Okay, maybe I'm a bit of a control freak?)

Here's how it works:

Kiva posts entries about people looking for loans, the amount they need and what they'll do with it. Additional information includes the applicant's loan history, if any, info on the MFI that will be advancing the funds and their track record. It also includes the proposed repayment schedule and the amount raised to date.
You can donate any amount you want, from $25.00 up.
Payments go through Paypal.
You get regular email updates on your loan.
As loans are repaid, you can then decide to take your money or reinvest it in other loans.

The website is easy to navigate and very user-friendly. You get your own "portfolio" page which tracks your loans and repayments. Each lender gets a profile page so you can check who else loaned money to "your" projects.

Whoever designed this website definitely had the lenders in mind, which probably also influenced my decision to choose them.

I'm very excited about my first 3 loans. I'm planning to gradually add funds over the year until I reach a total of $1,000, which I'll then just recirculate into new loans as they get repaid.

For the first time ever, I feel that I'm making a real difference in a real person's life. In a weird way, it's the same pleasure I derive from knitting or baking: "I made this." Sometimes, just giving money is not enough. Seeing what your small loan can accomplish makes all the difference.

Paying down your mortgage faster

2008-12-26T12:56:00.003-05:00

I've just spent the past hour or so cleaning up old emails, most of them unread financial blogs. (I prefer to get my faves by email.)

There were a few on refinancing a mortgage -- not surprising given how low rates are right now -- and I read all of them and most of the comments to see what every one else is doing.

Here's what surprised me: not one of the posts or comments I read even mentioned open mortgages, variable rates, or double-up payments. Granted, these were American blogs, but surely they have those in the US? I have all 3, and I think they're brilliant.

An open mortgage means that you can make additional payments of any amount, at any time. These additional payments go straight to your principal, which reduces your amortization period faster. The interest rate is the same for an open than for a closed mortgage. I put my Xmas bonus and my tax refund towards my mortgage.
Variable rates: As the prime rate goes down, so does my mortgage rate. This is a great time to have a variable-rate mortgage. My rate is down to 2.75%. Variable rates have been a great deal for at least a decade now, and I think we can safely assume rates will stay low for awhile yet. And if they go up, you can lock in at anytime without penalty.
Double-up payments: Banks here allow you to double-up each mortgage payment. (It doesn't have to be double, any amount over $100 will do.) Nice feature if you have the money to do it. Every year I did the math, and as soon as I could, I changed my amortization to 35 years which lowered my payments enough that I could now double them. I'm paying the same amount I was paying before, but now, 1/2 my payment is going straight to my principal. So, my "real" amortization is going to less than 1/2 those 35 years, since I'm paying down the principal so much faster. And yes, I got my banker to do the math on his fancy tools and I will be saving on interest costs and paying off my mortgage faster even if I'm starting off with a longer amortization.

It all adds up. I will be mortgage-free in 2 years, and I can't wait!

Boxing day sales got me!

2008-12-24T20:12:00.003-05:00

It's Christmas eve, and I'm in Best Buy's virtual waiting room. I've been checking out cameras for a few months now, waiting for this day. The deal isn't quite as good as I'd hoped, but last year I waited too long (greed made me wait) and everything sold out while I was looking for better deal. Not this year. I'm heading off to Russia this summer and I need a camera!

I'm quite shocked at how this works: I clicked on "Buy" at 8:01. It took 4-5 minutes to get to the waiting room. And now, I wait. It's 8:16, and I've made no progress. How many of us clicked at 8:00 I wonder? Obviously, a lot. No wonder everything sold out last year.

While I wait, I wonder if this is the wise thing to do. I've always loved photography, and have had a few good cameras in my life, but since the advent of digital, I can't be bothered with my old film camera. Old is the operational word. It's a Pentax K1000. It's been around for... 20 years? Then I bought a Coolpix, and it's "okay," but not if you want really good photos.

However, it's not cheap, and I am trying to be careful with my money. So I really need the camera? Will my trip be worse without it?

8:21. I'm moving up the queue. I'm 30% into it. Wonder if there will still be stock by the time I make it? I can see now that even if I hadn't procrastinated, I might not have gotten what I wanted last year.

I was lusting after a Nikon D80, but I really can't justify it. It's more sophisticated than I need, but it is a beaut. I'm waiting for a Canon Rebel XSi. With an extra battery and accessories pack, it's $699. At FutureShop, I could have had the same camera with a zoom lens for $960. Just a little rich for my blood, so I'm going to try Henry's resale store next week to see if I can find a second hand lens.

84%. This is getting exciting. And it's moving fast.....

At last, 100%, I got the camera. I'm pretty happy with my purchase.

A designer sweater for $200? Do tell...

2008-12-21T12:19:00.003-05:00

MK & I went to my knitting guild's annual fashion show last week.

MK is just starting to knit, and I had promised to show her some techniques, which we did at the show during slow times. But the show itself was the revelation.

Sure, not everything was to our taste, but there were great ideas -- especially for someone who's just starting out.

The highlight? Patrick's gorgeous big wool cardigan with a high collar -- inspired by an $2000 Armani he'd seen at Holt's. The total price tag for his masterpiece? $225.00. And I can attest that the knitting time is quick: the thicker the wool, the faster the knit.

Yes, $225 is a lot of money for a sweater. But this is a custom-fit sweater in a high-quality wool that will last a very long time if properly cared for. It's stunning, a real head-turner. And he has the satisfaction of knowing that the original costs 10 times that.

That's the thing about knitting and sewing. If you have expensive tastes in clothes, you can teach yourself to make them for a fraction of the costs. Not free, but cheaper. And if you're a good shopper, you'll soon find the deals to get the wool/fabric at discount prices. (Try eBay, for starters!)

I'm knitting myself a spring/fall coat right now, from Rowan wool that I got on sale when they discontinued the yarn. The whole thing has cost me less than $150.

On top of the great value, it's a wonderful way to keep your hands busy while watching TV or listening to music or, like me, when you're trying to quit smoking!

What can make you lose money faster than the stock market?

2008-12-20T13:59:00.004-05:00

It's -14C. You get up, and pull on the thick wool socks that you knit for a day just like today. Then, you snuggle into your favourite sweater, the one that's so long you can totally wrap yourself in it. You settle down to read the paper, put your feet up and ... what? Is that a hole in your sock? You look closer and... more holes. Lots of holes. Some big enough to stick your pinky through. In your socks and in your perfect sweater!

That, my friends, is how you discover you have moths.

If, like me, you have lots of wool -- knitted or not -- you suddenly have visions of dollar bills bursting into flames and flickering away.

Do you have any wool clothes? Blankets? Scarves and mitts? You too are at risk! So listen up.

Lavender. As in lavender sachets. Lavender dryer cloths. Lavender wool wash. Place the sachets or softening cloths every where you store woolen items. Quick, before you too get invaded.
The deep freeze. Place all new woolen purchases in the freezer for 24 hours before putting it away (with lavender). Freezing will kill any larvae that's already in the wool.
Wash. Make sure you've thoroughly washed your winter clothes before you put them away. If you have wool carpets, have them cleaned at least once a year.

I have now spent weeks going through all my closets and drawers, throwing out clothes that were perfectly good a few months ago, washing the rest in lavender wool soap and, yes, putting all woolen items in the freezer before putting them away again. Washing and lavender will not kill the monsters... only the deep freeze will.

Don't moth balls do the same thing? Yes, they do, but moth balls stink and the smell takes for ever to go away. Lavender smells nice, and it's got calming properties too!

I've lost a lot of sweaters and socks, and to add insult to injury, I have to shop to replace them. Double-whammy. Learn from my mistake. Lavender. Now. Today.

Going green and saving money

2008-12-17T17:54:00.003-05:00

Not me, my workplace!

Yesterday, we had a tour of a floor that's being used as a pilot site and incubator for new ideas in office design and usage. My group is moving to a brand-new LEED-certified building (I think they're going for gold!) in 9 months and our office space will be based on the findings of this pilot project. It was a real eye-opener.

A recent study of our work environments showed that 40% of the workspace is empty at any given time. People are off in meetings, working off-site, on holidays, etc. Like me, I work from home every Friday, so my Dilbert Cube sits empty one day a week.

The survey also showed that when people need to get together to work, they can't find rooms to work in. That's me. I'm constantly looking for a room where I get together with one person for 1/2 hour or so. They're impossible to find!

The pilot floor had 8 meeting rooms and 110 employees in rows of identical beige cubes, plus a tiny kitchen and an copier/paper/fax etc. room. It was a miserably boring place -- I know, I was often there.

By using new office furniture designs that encourage working together, and offer more flexibility in how you configure workspaces, they managed to add 10 meeting rooms of all sizes while accommodating the same number of employees and adding a wonderfully large lounge/kitchen/rest area.

The spaces are open and bright thanks to glass walls and clear partitions, the furniture sizes and configurations vary from one area to the next depending on employee needs. The landscape variations -- different heights, different configurations, different directions -- give off a sense of energy which the rows of squares didn't have. Did I mention the new furniture is gorgeous?

But from a company point of view, the best is that it saves money. It does that by maximizing footprint use and reducing energy costs. Under the old design, they would have had to rent more room to accomodate their growing staff count even though they had 40 empty cubes at all times. Now that 1/2 the staff share their space when they're not in, they have room to spare.

The trick is that not everyone has their own "permanent" cube. There are shared spaces for people who are always on the move. When they come in, they just dock their laptop whereever there's a free space, or 2 people may share spot if they are regularly on different schedules.

Some people were concerned before they got there about losing their "office." But under this new plan, we get large lockers with file drawers etc. So you always have access to your stuff whereever you end up sitting.

I was bowled over at how flexible and workable it all is. And I'm amazed that my company is doing this. This is so progressive for a Canadian bank!

Although it will mean a huge change for my working habits (I have reams of paper every where!!!), I think I'm up to the challenge. A good workspace will do that to you!

Bonus time

2008-12-15T18:32:00.002-05:00

To my great surprise, we're getting bonuses this year.

We were all so sure they'd be cut, or very small. Not at all. Apparently the company decided that, as we were doing well (our stock isn't, but the company is), employees shouldn't be penalized for world events. Wow. Talk about progressive.

I'd already decided I'd put my bonus on my mortgage if we had one, so I don't really have to make any decisions about it. My small credit card debt is only costing me 1.9% for another year, and it'll be paid off before that, and my mortgage is costing me 2.75%. So, mortgage it is.

I do need a few bits of furniture, but I checked Ikea and I can get what I want for a few hundred bucks, so that won't make a dent.

That should cut a few years off my mortgage. I'm definitely paying this puppy off within 2 years. Yeah!

Free food for 6 months

2008-12-14T14:44:00.002-05:00

I read a lot this last year about developing multiple sources of income, which seems like a brilliant idea. So I started thinking of how I could add income sources.

So much easier said than done!

I knit, but I'm a slow (real slow) knitter. I started making scarves this year to sell, and I managed to knit 2. They took 3 months each. Okay, I'm not that slow, but I can't knit every spare moment like some people do. Knitting is a hobby, not a passion.

I make cards. And I love doing it.... to a point. I've made 20-odd Xmas cards so far, which is just enough for friends and family. And I really don't feel like doing more. (Actually, it's too late to do more!)

I started weaving this year, and so far I'm lovin' it, but I don't think I'll be good enough to think of making stuff for sale for another 6 months or so, and a table loom costs $800 ++! I'm not sure I'm willing to make the investment yet.

Maybe making things to sell isn't my gig?

While I was trying all this crafty stuff, I also looked into paid surveys and research. So far, I've only found research resources that pay points (gift cards) and such, but recently, I saw an ad in the Sunday paper and I applied. Guess what? I got accepted in a research program on nutrition that's going to be delivering free food weekly for 6 months! Not a source of income, but a source of great savings, so that's good enough.

I'm going to continue looking for other ways to generate income. I don't really need it right now, but I figure better safe than sorry, plus it's kind of fun trying out all these new things.

I'm also really enjoying talking to other people about it and sharing ideas. It's amazing how many people I work with who have hobbies they've turned into income streams. Who knew?