Merry Christmas & Happy New Year

For some reason, Happy Holidays just seems a tad impersonal and less festive.

I am not Christian, but I have grown up with greetings of Merry Christmas and Happy New Year.

For those of my readers who celebrate hanukkha, Happy Hanukkha.

Best wishes for safe and happy times, for my readers and their families.

It’s been so much fun blogging, and I love hearing your feedback.

Here’s to an awesome 2011 to all!

Cheers,

 

 

 

 

Photo source: http://aramide.blogspot.com/2008/12/merry-christmas.html

Book Review: Money Sense Guide to Retiring Wealthy

A week ago, I received a copy of the above book from the Canadian Capitalist giveaway.   This is my first book review, so please bear with me.   I will briefly summarize the topics covered and list what I like and didn’t like about this book.  Let’s begin.

Summary

This book introduces us to the idea of retirement and breaks it down to different stages of our lives.  Generally, it focuses on a “typical” couple living in Canada, and what they can expect living and working from their twenties until they reitre.  I’ve  briefly summarized each chapter below.

Ch. 1 Retirement Made Easy:
Figure out costs of your basic needs and what would be luxuries.  Count on the government for Canadian Pension Plan (CPP) and Old Age Security (OAS) payments.  Factor in pensions (if any), and Registered Retirement Savings Plan (RRSP).  Figure out your level of risk.  Balance your present with what you want to do in the future.

Ch. 2 Your Twenties:
Spend less than you earn and invest in yourself.  Your earning potential is your biggest asset.  Start to pay off your student loans, and learn how to make and follow a budget.  Avoid consumer and credit card debt (“bad” debt), and if you must take out a loan (i.e., for a new car), know what your options are and do your research before you set foot in a car dealership.

Ch. 3 Your Thirties:
You will have a lot of expenses – try to stay afloat without incurring “bad” debt.  Your mortgage, RRSP’s, TFSA, car payments, RESP, home expenses – you cannot do it all, all at once.  Embrace “good” debt (i.e., your mortgage), and focus on paying that down.  You will need to prioritize RRSP, and RESP.  You may also have one spouse stay at home after a child is born – make sure to explore the tax benefits of this.  Have an emergency fund for at least 3 – 6 months of expenses.

Ch. 4 Your Forties:
Your expenses will (likely) be less than your thirties.  Your home is most likely paid off, and you have more flexibility to save towards RESP and RRSP.  Check in with a (fee based) financial advisor to make sure you’re on track. Life changes may happen (i.e., divorce), so you may need to re-visit your budget and adjust accordingly.  Consider a line of credit if you need money, and can pay it back relatively quickly.

Ch. 5 Your Fifties:
Even if you haven’t saved much towards your retirement, in your fifties, you have more flexibility to save very aggressively.  Likely, you have no mortgage, and your kids are out of the house.  Fuel your additional disposal income towards your retirement savings.  Know what your investments are (i.e., risk factor, MER) and have a back-up plan.  Know the perks of a pensions and be realistic about your retirement needs.

Ch. 6 Your Sixties:
Evaluate all your sources of income: CPP, RRSP, OAS and any pension. Evaluate what your needs in retirement are. Evaluate the benefits of retirement: no more CPP payments, lower tax bracket, etc.  If you don’t have enough to cover your expenses (both basic and luxury), consider working part-time. Know how much you can safely withdraw each year.

Ch. 7 Your Seventies:
Focus on enjoying and simplifying your lifestyle.  Plan your legacy.  Be aware that the government will force you to withdraw your RRSP in the form of Registered Retirement Income Fund (RRIF) or convert it to an annuity, and know your options.  Consider the options of a retirement home, and how it compares to a nursing home.

Ch. 8 Self Test:
This chapters pulls a bunch of data from Statistics Canada and the reader can compare themselves with the rest of the nation.  One thing is for sure, wealth is not balanced in our nation.

“The richest 20% of Canadian household control about 69% of the wealth.  The next quintile down possesses a further 20% of our national net worth.  There is not much left over for the other people.  The bottom 60% of households control only 11% of Canada’s wealth.  In fact, the bottom 20% of the population posses no wealth and actually owes a few thousands dollars more than it owns.”

Likes

I like that this book gave a very general overview for the general population, and has current data.  It gives sound advice for all ages, and gives a reality to check to what we should all think about for retirement at each different stage in our lives.  It reminds use, that we may not need millions of dollars, but we would like to do in our retirement will affect how much our nest egg needs to be.  The book doesn’t try to go beyond the most basics, and advises consulting a lawyer or financial planner.

Dislikes

This book is primarily geared towards a “typical” married couple who will be working from their twenties to their sixties.  It assumes they buy a house and will have it paid off by the time they retire.  We all know that most peoples’ lives are not “typical”.  Life happens, divorces happens, illnesses happen.  And while the books briefly touches on the “non-typical” topics, we are mostly left to our own devices to figure that out.

This book also doesn’t provide too much insight for the Twenties.  That was the shortest chapter, and since I am in my twenties, I would have liked to see more on that stage.

This book also makes the assumption that the government will help you out to cover basic necessities when you age.  It also briefly mentions that there are fears of CPP drying up, or payments may not be available for our generation.  Yet, thoughout the book, it assumes the maximum CPP and OAS payment for a “typical” couple (i.e., two incomes).

Verdict: Recommend

This is a great beginner book for any savvy personal finance person.  For me, I didn’t learn too much for the early chapters, but I learned a lot about what to expect later in life, and how I can educate and help my parents figure out their retirement.  I learned how great a pension can be, what an RIFF  and annuity is, and how to protect my estate.

Hope this helps!

Cheers,

 

 

 

 

Disclosure – I received this book from a giveaway from Canadian Capitalist.  I am not affiliated with Canadian Capitalist or Money Sense in any way.  I do not earn commission from either parties and my review of this book are my honest opinions.

A Season to Give

(Photograph Source)

As most of us prepare for the coming holidays, I’m sure many of us are juggling work, family, friends, preparing for the holidays, Christmas shopping, New Year’s Eve plans, etc.  Sometimes, the Holidays can be overwhelming and we may even forget why we do what we do.

I am not a religious person, but I do believe in giving to others less fortunate than ourselves.

Even though some of us are struggling with our own problems, whether it be with our personal finance or just personal, let’s not forget to be thankful for everything we do have.

For me, I am thankful that I have a wonderful family.  My parents didn’t have much when they first came to Canada more than 30 years ago, but they always found a way to make it work for us.  We always had good healthy food, warm clothes to wear, and the company and love of one another.  Nothing fancy, but it’s all we needed.  The greatest gift my parents gave me was a humble beginning.

This holiday season, please don’t forget about those who are less fortunate than we are.  Find a charity that you believe in and feel comfortable giving t0.

If you don’t know what to give to, may I suggest giving to an organization that helps victims affected by Pakistan’s Flood.  Over 20 million people are affected. Men, Women, and children are dying every day due to lack of shelter, no clean water and diseases carried by insects, etc.  Three foundations that have sent help over are Unicef, the Red Cross and the UN Foundation.  Every little bit counts.

Wishing all my readers a safe and happy time.

Cheers,

Motivation by Fear

(Photo Source)

Fear was my main motivation to take a hard look at my finances and get aggressive in setting my financial goals.  Fear that I was far behind in what my savings would have been should I have started earlier, and fear that I would be stuck in a situation (such as a bad job) without any place to go.

I was Afraid I was Behind

When I was in grade 11 and grade 12, I had a wonderful math teacher who taught us about the potential we all had, thanks to the miracle of compounding interest.   She introduced me to a book called “She Laughed all the Way to the Bank” by Cindy Skrukwa.  And my teacher emphasized the fact that if I start investing just a small portion each year, maybe just $1,000 a year when I’m 18 or when I turn 20, I would be better off than most people to securing my financial future.

She was right.  And you know what I did?

Nothing.

I was working at McDonald’s on weekends and tutoring math and science on weeknights, but I saved all that in my bank savings account to use in University.  The thought that I might have an extra $1,000 a year to put in something that was untouchable until I turned 65 was unthinkable.  What if I needed the money?

I took out a student loan from the government (which was interest free until I graduated), and I worked in internships between school terms to fund my education.  I usually made enough during the internships to cover my expenses for the internship itself, and for tuition and living expenses the following school year.  But it felt like I had no wiggle room to contribute towards retirement, and the motivation to do so soon left me.

I graduated from my Degree almost 5 years later, and I picked up that book again. Then I got scared.

I hadn’t put away anything during my 5 years in school.  Even though I felt like I was given a great secret by my high school math teacher, it was too late to execute it.  And I felt like I failed my teacher, and myself.

Fear of Being Stuck

I have heard of so many people being a slave to their jobs because that is the only way they could afford to live.  Their job was their livelihood, and there were bills to be paid.  There was no time for fun, and no time for life.

Last year during the recession, a friend told me that their boss asked them how their investment portfolio and rental income was doing.  When my friend replied, “Not so great.”  His boss said, “Good.  Now you will be here for a while.” At the same time, his boss refused to give him a promotion or a raise, even though he kept taking on more responsibility.

I was afraid because I never wanted to be in that position.  I never want to continue working at a place that I don’t want to, just so that I can pay the bills.  I will live frugally and save diligently, but I do not want to be owned by my workplace.

The Plan

After a bit of  a pity party, I picked up my calculator and decided to figure what I needed to do to get myself back on track.  Better 5 years later than never, right?

I talked to my parents about how they budget (and they are amazing budgeters!)  I read blogs.  I read books.  I looked into what RRSP’s were, and how I could use them.  I looked into what my company offered for resources and vehicles to save.  I started to track my spending, and save towards paying off my student loans. I did everything that I could think of to catch up.

I worked out what my personal cost of living was and came up with a budget.   I came up with a savings goal.  I learned that no one cares more about my money than me. And now, I am tracking my progress with this blog and sharing with you my experience.  I try to live frugally and simply, so that I can enjoy my life, and not have to fear that I am not in charge of my own future.

What motivates you to save or spend?  Is fear a motivation for you?

Cheers,

Frugal Dinners: Spinach Lasagna with Potato & Leek Soup

One of my big time and money saving tips for food is batch cooking ahead of time.

I usually cook a big, huge meal once a week for the rest of the weekdays.   Then I package them in tupperware (freeze the extra’s, if any), and eat the portions through out the week for lunch and dinners.  This works if you don’t mind eating the same thing the entire week.  If not, then try freezing some portions for next time.

Tip: I highly recommend packaging the portions individually, as opposed to scooping out what you eat from a big dish.  The reason for this is because you can portion the servings.  I find that when scoop out left overs from a big dish for dinner, I usually take too much and end up either over eating or wasting food.  Not to mention it’s way easier in the morning to just grab and go.

This week, I made Spinach Lasagna and Potato & Leek Soup.

Total cost for ingredients: $22.35
Number of servings: 10
Cost per serving: $2.24

I adopted a recipe from Plant Organic Cook book for the Spinach Lasagna but I never really follow recipes (which explains why I suck at baking!).  Feel free to use this as a guide and substitute to your heart’s content.

Spinach Lasagna Recipe

• • 2- 200g packages of chopped frozen spinach
  • 2 lb fresh white button mushrooms sliced
  • 1 medium onion chopped
  • 2 cloves of garlic chopped
  • 2 cups of ricotta cheese
  • 2 cups of mozzarella cheese
  • 1 cup of Parmesan cheese
  • 2 cups of marinara sauce (or pasta sauce)
  • Lasagna pasta sheet
  • 2 tbsp of olive oil
  • salt and pepper to taste
  • Left over chicken (Optional)

1. Pre-heat oven to 350F.  Cook lasagna sheets.  Thaw and drain frozen spinach.  Mix mozzarella cheese with Parmesan.
2. Saute garlic, onions and mushrooms with olive oil until mushrooms are soft.  Season with salt and pepper.  Cool.
3. Mix spinach, chicken and ricotta cheese into mushroom.  Salt and pepper to taste.
4. Divide marinara sauce into 4 portions (roughly) and reserve 1 portion. Divide mozzarella cheese into 3 portions and reserve 1 portion.  Set reserved portions aside.
5. Make 2 layers of the lasagna.  1 portion of marina sauce, 1 layer of lasagna sheets, mushroom & spinach mixture, 1 portion of mozzarella, press down firmly and repeat.  For the last layer, add 1 portion of marina sauce, 1 layer of lasagna sheets, reserved marinara sauce and reserved mozzarella cheese.
6. Cover with aluminum sheet and bake for 40 minutes.  Then uncover and bake until cheese is golden brown.  Cool.  Eat.

I love soups in the cold weather and I had a craving for Leeks.  Below is an original Fru-girl recipe:

Potato & Leek Soup

• • 2 leeks rinsed and chopped
  • 2 medium onions chopped
  • 2 large potatoes chopped
  • 2 medium carrots chopped
  • 6 – 8 cups of water or stock
  • Bread
  • 2 tbsp olive oil
  • salt and pepper
  • Dried seasonings

1. Saute onion until soft, set aside.
2. Bring water or stock to a boil.  Add carrots and potatoes.  Cook for 15 – 20 minutes or until carrots are fork tender.
3. Add leeks, onions and chicken.  Season with salt and pepper.  I also like adding in dried spices, I used herbs en provence but you can use whatever you have onhand.
4. Bring to a boil and simmer on low heat for about 10 – 15 minutes.
5. Serve with crunchy bread or baguette.

What are you having this week for lunch & dinner?

Cheers,

Groupon Does not Save Me Money

(Photo Source)

It seems that discount group buying sites, such as Groupon, Team Buy, Wag Jag, etc., have started popping up like daisies this year.  I am guilty of signing up for the e-mailing lists (I’m signed up for both Groupon and Team Buy), and have been a member for about 2 months.  I will also be un-subscribing shortly.

After being bombarded with all these daily e-mails to save money, I’m thinking that this is just another way for businesses to entice us to spend away our hard earned money.  Here’s why.

Spaving

Definition: Spending to save money.

Groupon encourages us to spend money in order to save money.  Which, as most financial savvy people know, is silly, for things that we do not need.  Sure, we may save 25% off thing-a-ma-jig, but you know what?  We would have saved 100% if we didn’t buy it at all.  And you don’t even need a Groupon for that 😉

Buying Because it’s Cheap

Sometimes, when we see a great deal – such as 75% off super-thing-a-ma-jig, we may just go ahead and buy it, even though we don’t need, nor we were planning on buying it.  We create a need for the item after we see that its such a “great” deal.  And the main reason we’re buying it is because it’s cheap.

Take a Photography session, for example.  How many of us have seriously considered getting professional photography done?  Would we do it if the session was 85% off?  I know that I considered it when I saw the Groupon deal.

Impulse Buying

Since these deals usually expire daily, there is a sense of urgency.  We are forced to make a decision without really thinking it through and doing the research that we would have otherwise done for the same purchase.  All for the fear of missing this awesome-never-to-happen-again deal.

Even though there is  a discount from Groupon, I found that if you shop around and have some patience, you can often score a similar deal through a combination of promotion codes, store promotions, etc.

The Fine Print

We need to make sure we understand the deal completely, and read fine print.  There are often limitations in the fine print that make the awesome-never-to-happen-again deal not quite as awesome.  Some of the fine print I find makes or breaks a Groupon deal are as follows:

• Does the cost of Groupon Dinner cover drinks?  Alcohol?  Taxes?  Gratuities?  Limit of use per group or table?  Black out dates or times?
• Do you have to attend those 10 Yoga classes for 90% off in 10 consecutive days?
• Does your 80% photography session include prints, or tell you how much each print will cost?

Buying Groupons and Not Using Them

You’ve spent your money, but when you don’t use them, you are not getting any value from them.  Having a stack of Yoga or gym Groupons isn’t going to get you into shape.  I am guilty of this, as well.  I had my Groupon for an entire month before I used it.

My Experience

I’ve bought one Groupon so far.  It was a $10 coupon for $25 worth of food at a Himalayan restaurant.  It was delicious.

One thing to be wary of, is that the Groupon was advertised for 60% off my meal.  However, since the Groupon does not cover taxes or gratuities, even if you only bought $25 worth of food, your bill would still be about $32.50.  Your out of pocket money is $7.50 + $10.00, so you really save 46% off your meal, not 60%.  I’m not pointing this out to be stingy, it’s just something to keep in mind when buying Groupons for food or other services where taxes and tip are not included.

Conclusion

Buying in bulk and saving money is a great idea.  However, you only save money when you buy things that you were going to buy anyway, but buy it for less.  Obviously you don’t save money when you go out and buy things that you weren’t going to buy – even if it’s priced at 75% off.   There is also the constant bombardment of ads or glittery temptations of deals every single day, mailed straight to your inbox.

I am going to un-subscribe from Groupon, Team Buy, etc.  As mentioned previously, I have purchased the Entertainment Book, and I think I can get similar deals without the constant temptation to spend more.

What have your experiences with Groupons and other bulk buying discount sites been?  What are some tips that you have to share?

Cheers,

My $1,000 Budget

(Photo source)

FB from one of my favourite blogs, Fabulously Broke commented on my November Recap, and asked me the reason behind my $1,000 monthly budget.   Great question!

This budget came from a combination of tracking my finances in 2009, and my saving goals.

Tracking my expenses in 2009:

As many of you who track your expenses know, this can be painful and shameful.  There were months when I didn’t really want input purchases into my budget sheet – even though nobody saw my budget but me.

There were months I spent $350 on clothes alone.  Or months I spent $300 on eating out.  There were months I spent $2,230 (hello, October 2009!).  There were also months I spent $675 (hello, July 2009!)  in total expenses.

This is how I spent my money in 2009:

I use FB’s Fabulous Budget Tracking Spreadsheet and I analyzed where my money went in 2009 to determine how I wanted to spend my money in 2010.

My bare bone budget is $750 and includes: rent ($335), groceries ($120), cell phone ($60), gas and car insurance ($220), Misc ($15).

Note: My parents lent me their car, and I pay them insurance at the beginning of the year.  I also pay for their cell phone plan ($17/month).  I know that my bare bones budget can further be reduced if I took  public transit and ask them to take care of their cell phone bill if I really need to.  So super bare bone budget is  $620.

Of course, living on a bare bones budget is not too much fun, although this would be my plan if I were to be unemployed or really wanted to save super aggressively.

The bare bones budget means none of the following: eating out, clothes, grooming/make-up, entertainment (i.e., volleyball), travel, massages, travel, gifts, etc.

My Savings Goals:

As I mentioned in my $100,000 at 30 post, I wanted to save aggressively in my twenties, when I have a fair bit of disposable income and have the power of compounding interest on my side.

Recap from $100,000 at 30 post:  Assuming 8% annual return and 2% inflation, if I had $100,000 in my RRSP by the time I was 30 years old. I would not have to contribute another cent, and by the time I retire at age 65, I would have an annual income of $50,000, assuming I live until age 85.

Since I was 25 years old at the time, I would have to contribute an average of $20,000 a year (until I was 30).  Holy moly, that’s a lot of money.  But was it do-able?

At the time, I was making a gross annual salary of $48,000.  After taxes, that was approximately $33,600 annually*.  If I save $20,000, I was left with $13,600 – approximately $1,133 a month.  And from my analysis of spending in 2009, this was certainly do-able.

From the average monthly costs I spent in 2009, and I came up with a budget that is sustainable.  I get a little fun in – mainly volleyball, eating out, and the occasional movie.  I can also go get my haircut at my favourite salon 3-4 times a year.  Life is looking good with a budget of approximately $1,000.

My average monthly sustainable $1,000 budget:

So there you have it.  By combining my barebones budget, some fun, and my savings goals, I came up with my monthly budget of $1,000^.

How do you come up with your monthly or annual budgets?

Cheers,

 

 

 

Note*:  My net income is a little more than $33,600 since the amount I contribute to my RRSP is not taxable income.

Note^: I don’t include car insurance in my monthly budget since I pay that upfront.

General Note: I don’t include my donations to charity or what I call the “Parent Fund” on this blog.

November Recap

November was a good month!

Income: $3,518.92

Spending: $1,036.67

Getting really close to reaching that monthly budget of $1,000 – even with a little bit of extra spending :)!

Here’s where the money went:

I had budgeted to buy a new wool winter jacket, since I’ve had mine for 5 years and was looking to upgrade.  Alas, it wasn’t meant to be and I have given up on jacket shopping.  I may add that item as a freebie during my shopping ban.

Nothing too crazy this month.  BF and I started to use more coupons/groupons when eating out in addition to eating out less.

Under Misc items, I bought a stainless steel skillet and pot since mine are from my university days and are rusty.  I also bought the Toronto Entertainment Book so that BF and I can still do fun things on a tighter budget.  Will review the Entertainment Book once I get a chance to use it!

Here is my net worth:

Summary:

Overall, I am very pleased with this month’s outcome.  I admit that I have fallen off the bandwagon of tracking my spending a few times this year, but the important thing was that I brushed myself and got right back on.  I’ve also made some mistakes that I’d like to share (another post).

I’ve been a little obsessive with  my net worth calculations.  It’s just so encouraging seeing those numbers go up and up.  My goal was to have a net worth of $60,000 by the end of the year, and I’m thinking that I may even surpass that goal.  Time to put together that December budget.  December budgets are always tricky.

How was your spending in November?  Are you ontrack to your goals?

Cheers,

My CPP and EI “Bonus”

I got super excited last Friday when I got my paycheck.

My usual Canadian Pension Plan (CPP) Contribution per paycheck is $101.54 and my Employment Insurance (IE) is $37.74.  Last week CPP was $39.20 and EI was $0.  I did a little happy dance when I got home because that’s $100.08  more cash in my pocket!

I was speaking to one of co-workers about this, and she said this usually happens at the end of the year when we’ve “maxed out” our CCP and EI contributions for the year.  That’s awesome.  Here’s to hoping that my remaining paychecks don’t get anymore deductions.  I’ve got 3 more paychecks left this year, which brings my total “bonus” to $517.92.

I know it’s not really a bonus, that’s why I call it a “bonus”.  Basically, it’s extra money in my pocket that I wasn’t expecting.

Note: I didn’t notice this last year.  I went back to check my last year’s pay stub, and I didn’t get my “bonus” until my last two paychecks.

How are your year end bonuses and “bonuses” shaping up?  And more importantly, how are you going to use it?

Cheers,