Moving Downtown & Apartment Budgets

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Background

I briefly mentioned in previous posts that I will be moving out of my basement apartment soon.  I am really excited!  I have been living in my current basement apartment for almost 4 years, and I have really enjoyed my time here.  My landlord and landlady are really kind and caring people who have treated me like a grand daughter, and I am very grateful.

In the 4 years living in my apartment, I have been able to save a lot of money and have been able to build up my networth, while also allowing myself to indulge in some travel and the occasional shopping.  I have a lot of space which I share with a roommate and it’s a nice, quiet and safe neighborhood.

Why I’m Making the Move

The main reason I am moving downtown is purely for fun – I’ve always wanted to live downtown downtown.  Where I can walk everywhere and just soak in the city.  I know it doesn’t really make financial sense – in terms of saving money on housing/rent – but it’s something I want to do when I am still young.

To be able to make this move a little more wallet friendly, my sister and I will be sharing a 2 bedroom apartment.  This way, we can both live in a great location and share the burden of rent.  I’ve given up my car (again!), and I’m going to walk or bike to as many places as possible to save on transit costs.  My sister is an awesome cook and I foresee lots of cooking together and spending time together 🙂

Another reason I wanted to move downtown was to have a bit of change in my life.  With BF moving to Boston for his MBA, I wanted to do something a little exciting for myself, as well, and this is a little treat for me.

Let’s talk Numbers

The PF blogger in be is both excited and nervous about this part.  So, I put together a preliminary budget comparing my budgets for my current basement apartment and my new downtown apartment.

I took my average annual spending from 2010 and 2011 (that’s why I love tracking my expenses – real raw data!!), and broke them down to monthly averages.  Then, I took my best guess at what my anticipated expenses would be when I moved downtown.

Much of my savings will be in giving up my car.  The bold red font are discretionary items that may need to be tweaked as needed.  All in all  – it’s not too bad, although I’d love to have my annual expenses be around $20,000 total, and I still want to be saving at 50% of my take-home pay.

Readers, have you lived downtown before?  What are some frugal tips you’d like to share about living fabulously and frugally downtown?

Cheers,

Entertaining the Thought of a Rental Property

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A lot of PF bloggers out there either already own rental property, or are looking to invest in a rental property.  Owning a rental property has been something that I’ve always considered.

Background

Back about 5 years ago, when I was still a student, I befriended my land lady, and she advised me to own real estate as soon as I was able to afford it.  She also offered to share her experience and help me out with getting started.

A month after I started my full-time job, we got together for dinner and I raided her brain on what I needed to know to get into the rental market.  I walked away from our conversation excited and scared stiff.  At that moment, I really wasn’t ready to take the risk that came with owning a rental property and the real estate market.

But I also came away with it knowing that in order to make anything happen, I needed to save money.

My PF Journey So Far

Shortly after my meeting with my land lady, I started to think more about where I wanted to be financially.  Even if I couldn’t get into the real estate market, I wanted to figure out my finances.

I paid off my student loans, and started to read PF blogs.  I learned about investing and what an RRSP and TFSA were and maxed out my company match every single year. I learned to track my expenses (using this awesome tool!) and started my own PF blog to share my journey and keep me on track to financial freedom.

Why I am Thinking About a Rental Property

I’ve spoke with quite a few individuals who currently own rental property. I asked them about how they do it, what they look for, and I’ve had pretty positive feedback.   These are individuals who do their research and take a calculated risk when they think it’s worth it. It seems very do-able.

As you know from my monthly budget recaps, I spend very little money on rent, every month.  Especially for living near the city!  I try to have a bit of fun, but also funnel extra money into my investment and savings.  It took me  a while to get comfortable with buying RRSP, and TFSA for my investment portfolio.  I was so scared that I would lose all my money!

With a rental property, I’d approach it the same way.  Similar to how I approached my investment portfolio, I want to do my research first, so I can make a decision that is within my risk tolerance and comfort level.

What are your thoughts on investing in rental property real estate?  Do you have any experience owning any rental property?

Cheers,

April 2012 Networth and Goal Recap

April Expenses

Over budget – $5.20 😉

• Groceries  – I think that I need to increase this to $125 a month since I also used $20 from my PC credit card to pay for groceries.
• Cellphone – I went WAAAAY over my 100 text messages, so I increased my monthly plan to include 250 messages for $36 a month after fees and taxes.
• Medical – I stocked up on my contact lens.  After medical reimbursement and the manufacturer’s rebate, I will be paying $85 out of pocket for 2 years supply.

I am really happy about how this month turned out.  I was even able to take BF out to a nice dinner out on the town, and my family out for a Korean food – while not blowing my budget.

I haven’t shown it, but I’ve saved 67% of my income this month, and I can’t wait to throw more money into my TFSA.

April Net Worth

Since I missed March’s recap, I’m really pleased with squeaking out with a 4% increase in net worth from February.  As my net worth increases, I know it will get harder to increase the net worth percentage increase, but I will keep trying.  I am so excited to see my net worth inch closer and closer to 6 figures!

I am also expecting a $2,400 tax refund – which will mostly go towards paying for my annual car insurance… but money is money! 🙂

March/April Goal Recap

• Pitch for Screening MissRepresentation – fail!  My colleague and I talked to my manager about it, but haven’t followed through with a business case/proposal.  I focused on studying for my professional licensing exam and job searching, instead.
  
• Finalize my resume – check!  I’ve completely revamped my resume – twice.  I’ve gotten great feedback from friends and colleagues and I am so pleased with the final product.  I even went in for an interview! 🙂
• Study for Professional License Exam – check!  I’ve written the test and need to wait for the results.  I feel pretty good about the test and am so glad that it’s over.

On-going Goals Recap

• Pack my lunch everyday (including fruits)- check!
• Get off the computer by 9:30 – 10:00pm – fail!  I’d get off the computer by 10pm, but then, I’d check my iPod.
• Finish a book – pass  I finished Jean Chretian’s autobiography.  It’s the first politician’s biography that I have finished, and I really enjoyed.  What a character! 🙂

I like the 3 goals.  It’s much easier to keep track of.  Time to think of May goals! 🙂

Readers, how has your April?

Cheers,

Budgeting is Therapeutic

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Being the Type A that I am, I like being in control of all aspects of my life (or at least, feeling like I am in control, anyway).

Of course, it’s impossible to be in control of all aspects of my life. When things start to spiral out of control, and I get stressed out, I find that working on my budget and calculating my net worth is therapeutic.  For instance, this month has been a bit of a roller coaster for me – both emotionally and mentally.  I was unhappy at work, I was starting my job searching and interviewing, I wasn’t sure about where BF was going for his MBA and our future together, and I wasn’t sure where I was going in life.

But one of the things I can be in complete control of is my spending on variable expenses.  It’s now second nature for me to make a purchase and then enter the expense right away in my expense tracker, then do a bi-monthly and monthly tally, followed by a net worth calculation.

It gives me a sense of triumph to budget $300 for eating out, and then come in at $301 at the end of the month – even with a special $200 dinner for BF and an unplanned treat out for my family.  I feel a sense of pride as I tally up my net worth – being sooooo close to reaching a net worth of $90,000 I can almost taste it – and knowing that I can reach a six figure net worth before the end of the year.

And you know what I started working on next?  BF’s budget for his 9 months of school, and figuring out how much money he needs to save in the next few months.  BF said it was okay for me to share it with you all, and get some feedback from you.  Stay tuned!

Do you find budgeting or being in control therapeutic?  What do you do when your world is spinning out of control?

Cheers,

Confession: A Long Distance Relationship (LDR)

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A lot of things have been on my mind lately, and one that I can’t keep from writing about any longer is a very likely long distance relationship in the near future for BF and myself. BF has been applying for MBA programs and he has been accepted to some of the world’s finest, with full tuition paid to boot. He has worked very hard, and he is so smart, and I am so proud of him and excited.

But another part of me is really scared and dreading the long distance relationship. BF and I have done LDR before when he was traveling for work, but it was never for that long. We’d go 3 to 6 weeks without seeing each other, before his company flew him back (and into my arms!). But things are going to be a bit harder now (and more expensive!).

My Plan

At first, I didn’t have a plan going forward, and I hate that. I’m a planning type of girl! I like plans.

Then, I started thinking some more and I knew that I needed a plan or else these 2 – 3 years will pass by very, very slowly and possibly painfully. After BF decides which school and program he will accept, we can work out a schedule for visiting and seeing one another and how we can stay in touch and be a part of each other’s lives.

Two years may seem like a long time, but it also means having summer and Christmas holidays. With summer holidays, he will only be away 8 months at a time, and I’m pretty sure that I can go see him at least once or twice during that time, or him come back. So, I will be focusing on the 2-3 months we will be apart instead of the 2-3 years.

I will need figure out my new budget for traveling and also see if there is a better rewards card which can make it worth it.

Self Improvement

I used to have my hands full between work, sports and maybe even taking a course. Now, I’ve gotten lazy, and only have been going to work and vegging at home (awful, I know).

I need to kick it up a notch, and look into ways to improve myself.

Option 1: Take a course or Write a Test

I’ve been curious about writing the first CFA test. I would like to learn more about finances and perhaps advance my degree in that direction, as opposed to just doing technical engineering. I think this would be a good first step, and also keep my busy and learning.

Option 2: Enroll in a MBA Program Part-time

This obviously takes a lot more commitment and planning than Option 1, but it’s not off my radar.

I’ve told myself that I won’t pursue more education until I feel a real need for it- such as a roadblock in my career. However, if I have the flexibility at work to work 9 – 5, I think that doing 2 courses a week would be do-able.

Even though the thought of being apart of my BF for so long is daunting, having a plan makes it a lot less scary. Well-heeled also had a great article about how her and her husband to be will be getting ahead financially by doing long distance.

Have you been in a long distance relationship with your sweetie? How do you guys cope with being apart? What made up your plan to work on yourself and your relationship?

Cheers,

Thoughts on Slice’s Princess Show

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“Princess” is a show hosted by one of my finance gurus – Gail Vaz-Oxlade.  It follows a similar format as Gail’s first show “Til Debt do us Part“, but focuses on (mostly) single women who feel they are entitled to spend money they don’t have on anything from make-up, clothes, cars, condos, eating out, entertainment, amongst other “luxuries”.

I’m not sure why I am so captivated by these “Princesses” – I guess a part of me is giving myself a pat on the back for not being “that bad”, but I guess that’s the lure of reality television.

Although I don’t consider myself a Princess, I can see how I can become one.  A nice haircut here, buying a nice outfit there, oh, and stocking up on some make-up — rinse, wash, and repeat — and tada.

A Low Annual Salary

Most of the Princesses make an income that is nowhere near sustaining their lifestyle, and they supplement their income with their parents’, siblings’, friends’ and boyfriend’s/girlfriend’s income.  Some Princesses are unemployed or work very minimal hours.

The income range of most Princesses range between $20,000 – $35,000 annually, but spent as if they earned much, much more – usually between $50,000 to over $100,000 annually.

What’s with these guys???

I know there are a lot of things that I don’t understand or know about these girls, but what always boggles my mind is that there is usually guy in the picture and he has been putting up with it.

In last night’s episode, one of the Princess’s boyfriend was giving her an “allowance” of $250.00 a week.  This Princess is unemployed, and wasn’t even looking for work.  Instead of taking public transportation, she was — get this — hiring a private driver!!  She was making about $6,000 a year and spending like she made $97,000 a year.

Maybe it’s because I’m biased and know so many great, smart and single females.  But why are these great women single, and why are these ladies just mooching off these men?  (Check out Mochi’s article – it really struck a chord with me.)  It just seems so off balance to me.

I’m not so naive to think that these types of guys would even be compatible with these women.  But it just seems unfair to me, you know?

Do you watch Gail Vax-Oxlade’s shows?  What do you think of the Princess show?

Cheers,

Thoughts on the Amended Canadian Pension Plan

Please note that I am not a trained accountant or tax professional, just a regular gal trying to navigate the world of personal finance, like yourself. Below is my understanding of the amendments to the Canadian Pension Plan (CPP), and should be taken with grain of salt. Please consult a third party professional and complete your own research before you make any financial decisions.

Background

Early retirement has been something my dad and I have openly discussed for the past few years. Both my parents work in the automotive industry. It’s a very labour intensive work, being on your feet all day and operating (often times) heavy machinery. It’s a job that is more and more difficult to do as one ages.

My dad and I have been crunching the numbers, and figuring out when he could retire, and of course, how much CPP “income” he would get.

For those who don’t know, a portion of one’s paycheque goes towards “CPP” and that amount is not taxable, and cannot be withdrawn until retirement. This amount was capped at $2,217.60 in 2011. After retirement, one’s CPP monthly payments are based on what one contributed during their working years.

Amendments to the CPP

This is all information available on the internet at the Service Canada website. Here is the link I found helpful for changes to the CPP.

In a nutshell:

The CPP retirement pension amount will increase by a larger percentage if retirement is taken after age 65, but it will also decrease by a larger percentage if retirement is taken before age 65.

Since my dad is not planning on working after age 65, we only focused on how much of a decrease in his CPP amount he will have to take.

From 2012 to 2016, the Government will gradually change this early pension reduction from 0.5% to 0.6% per month. This means that, by 2016, if you start receiving your CPP pension at the age of 60, your pension amount will be 36% less than it would have been if you had taken it at 65.

What this means:

The earlier you retire, the more you are “dinged”. So, someone who retires at age 60 will be “dinged” 36% (0.60% per month x 12 months x 5 years), whereas if you retire a year later at age 61, you will be “dinged” 27% (0.58% per month x 12 months x 4 years), and so on.

Present Value Analysis

I love seeing charts, so I decided to plot a chart of how much money in total my dad would get at age 70, 75 and 80, if he were to retire at 62, 63, 64 or 65.

This is my first run at it, assuming his maximum CPP monthly payment was $700 or $8,400 a year.

Since the $700 a month is “future” payment, I brought all future value payments back to present value, and assumed an interest rate of 3%.

According to this chart, at age 70, even though his annual payments are lower, because my dad would have been collecting payments for longer, he comes out ahead (total payment) from taking early retirement at age 62 than waiting until age 65.

Even at age 75, he would still come out ahead if he had taken early retirement at age 62 than waiting until age 65.

And at age 80, he still almost breaks even if he were to take early retirement!

Conclusion

One of the biggest reasons I hear from relatives and co-workers who don’t want to take early retirement is that they don’t want to be penalized with lower CPP payments.

Of course, this is true, but as the above analysis shows, one may not be penalized as much as one would think. Don’t get me wrong, a 36% reduction in your monthly payments is a big deal, but one must also factor in that the total amount can be comparable, since the payout period is longer.

There are many factors to consider for early retirement and CPP payments is only one of many. So, always consult with your financial planning professional before making any decision.

Have you thought of early retirement, or early retirement for your family members? What are your thoughts on the amended CPP?

Cheers,

2012 Portfolio Re-balance Part 1: Where and Why

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One of my February goals was to re-balance my investment portfolio – mainly my RRSP and TFSA. I currently don’t have investment outside of these two vehicles. I have RRSP mutual funds and index funds in my ING account, my Manulife account and my TFSA is with TD Canada Trust. I want to have as few accounts as possible, and pay the least amount of fees.

Background on TD Canada Trust E-Series

I want to move most of my RRSP into my TD Canada Trust e-series self directed RRSP. The e-series are various index funds, so these funds are NOT actively managed, and they have one of the lowest MERs on the market. For instance, a Canadian index fund has an MER of 0.3% and the global index fund has an MER of 0.5%.

Getting a TD Canada Trust e-series account set up is like pulling teeth, but worth the effort for the low fee’s, IMHO. For come great how-to’s, check out step-by-step instructions from Krystal and Young and Thrifty, I followed their instructions, and 3 weeks and a rejected copy of void cheque (you must use an original cheque – the ING void cheques do not work), I finally got a confirmation from TD my e-series account was up and running. Hallelujah!

Where and Why – ING

I have some of my RRSPs in ING Streetwise account which I started about 3 years ago when I first started getting into Personal Finance. It was easy and it was quick.

Three years later, my account sits at almost $17,000! 🙂 However, even though ING Streetwise Mutual funds are mostly index funds – the only difference is in their asset allocations in bonds vs market indexes – they charge a 1% MER (high for a non-managed account).

I want to move out all my funds in my ING Streetwise RRSP Mutual funds into TD e-series self-directed RRSPs.

Where and Why – Manulife

I have most of my RRSP mutual funds with Manulife. My work has an employer RRSP matching program through Manulife. Since I can automatically contribute to my RRSP from my paycheque – I get the tax benefit right away, as I was too lazy to fill out the required form to lower my taxes. My account currently sits just above $23,000.

The lowest index fund MER charged my Manulife through the work plan is 0.7%, whereas I can get a similar e-series index fund for about 0.3 – 0.5% (half the fees!!). The only trick is that I must keep my employer match and the money I contributed to get the match, with Manulife for 10 years. In order to keep my employer match, I must wait 10 years, before I can take it out.

Frugirl’s Plan

Move the entirety of my ING Streetwise RRSP into my TD Canada Trust e-series self directly RRSP, and keep only the minimum in my Manulife account and transferring the remaining to TD Canada Trust e-series self directly RRSP.

In order to receive my tax benefits right away (I’d rather not wait for a return every year), then I need to fill out the required forms and send them in. I have this form printed out, I just need to set up my automatic contribution with TD Canada e-series so I have the necessary proof I need for the reduction in taxes.

Re-balancing my Portfolio with TD e-series funds

I had about $33,000 to re-balance from my ING and Manulife account into my TD e-series.

This was my first stab at re-balancing my portfolio. Since I am approaching 30, I decided to go with a slightly more conservative asset allocation: 30% bond and 70% stocks.

Do you see something that is missing? If you don’t see it, stay tuned for 2012 Portfolio Re-balance Part 2.

Hint: See my networth break down here
Cheers,

PF Confession: I Bought 10 Pairs of Shoes

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Blogs – I ❤ thee

I love reading blogs.  It’s so much fun to read, and I learn so much.

Before reading fashion blogs, I was never really interested in online shopping.  I am the type of girl who likes to try things on before I make the commitment, and unfortunately, online shopping doesn’t let me do that.  Until…

I realized that many bloggers buy things online – from sales, stacking coupon codes, etc, and then they try on the items in the comfort of their own home, and they can return the items if they don’t fit/like it.

Can I get a Hallelujah? 🙂

Shopping Online

I felt like I got a free pass with shopping online, whenever I had the option of getting a full refund for whatever it is I am buying.  It took the guess work out of ordering something online, and truly made the shopping process more enjoyable for me.

See a good sale and hate to rummage through piles of discarded clothes, only to find the only shirt in your size is ripped?  Why not shop online and have access to the store’s entire warehouse inventory?

Return Policies

In my small venture into the online shopping world, it is very important to understand the return policies of the stores you are shopping at.  Some stores have final sales on clearance/sale items, or perhaps you can only return for a store credit, as opposed to a full refund.

Make sure you read carefully and understand the return policy before checking out!

My 10 Pairs of Shoes

A couple weeks ago when I saw Red Flag Deals tweet an awesome shoe sale at MySpringShoes.com, I couldn’t help but take a peak.  They still had quite a selection left of shoes marked at 50 – 70% off regular price, with a coupon code for an additional 15% off.  Some of the shoes I got came to under $10 after taxes!!

I quickly checked Spring’s return policy, and it was exactly what I hoped for.  Full refund in the original form of payment for ALL items, including clearance items.  A few clicks, and $225 later, 10 pairs of shoes were enroute to me.

Of course, I didn’t keep all 10 pairs (what?  Did you think I was crazy?!).  I ended up keeping 2 pairs which I really liked.   These are the two I kept.  Cute, eh?  And the best part, they cost ~$65 total 🙂

Crazy?

Maybe buying 10 pairs of shoes was crazy of me.  I know that when BF saw my backseat full of shoe boxes, he thought I might have gone insane but I reassured him that I had a plan!

My plan also included parking at the mall entrance closest to the Spring shoe store, and him helping me carry back the 8 boxes of shoes to be returned. 😉

Conclusion

Next time, I may be more selective in ordering, since it was a pain to carry all the shoes back to the store.  But I did score a great deal on 2 pairs of shoes!

Readers, do you shop online?  And have you bought a lot of things, only to try them on and return the ones you don’t want?

Cheers,

February 2012 Networth and Goal Recap

February Expenses

Over budget – Epic FAIL

• Groceries  – I’ve been cooking a lot and have even had a few friends over, instead of going out to eat.
• Clothing – I bought a pair of winter boots, 2 pairs of shoes during the MySpringShoes sale, and also a pair of skinny jeans – that (finally!) fit!
• Entertainment – I bought an extra pair of movie tickets from my sister at a discount for use in March/April
• Transportation – I forgot to budget in for an oil change and buying washer fluid ~$60.
• Toiletres/Grooming – This was a bad month.  I got a haircut, serum and succumbed to the Revlon sale at Rexall and Shoppers Drugmart.
• Gifts – BF and I split gifts for weddings 25/75.  But we decided this the day of, and so it wasn’t in my original budget.  I also got a few baby books for my friend who is expecting!  (You guys should really check the Baby Owner Manual).
• Travel – Plane tickets for a spontaneous trip to Boston with BF in March.
• Career – Forgot about the sitting fee for my professional licensing exam.

I think my only saving grace (can I still say that when I am >$700 over budget?) is that I stayed within my eating out budget! 🙂

February Net Worth

Because this month’s budget had been shot to hell, and I also gifted my parents with bus tickets to NYC, I will only be able to contribute $305 – instead of $750 – towards my TFSA.

I hope that I budget better for March!

February Goal Recap

• Update my resume – check!  I’ve completed the first draft and am asking my friends to look over it. 
• Prepare to file my income taxes – check! I’ve completed a first draft (by hand) of my income taxes this year.  I’m expecting a refund of ~$1,600.
• Re-balance my Portfolio – pass. I’ve figured out my current asset allocation, but I want to move my RRSP money out of my current ING and my Manulife account to save on fees.  I am working on the allocation of those funds to my e-series funds.
• Make my shopping list– pass.  I made a list, but I haven’t published it, yet.  It’s long.
• No buying make-up – EPIC FAIL!!  I was really good up until the last week.  Rexall’s sale on Revlon products just got me really good.  The good news is, that I have enough lip glosses and lip butters to last me until next year.
• Walk for 30 minutes, 3 days a week – fail! I started doing this with a co-worker during our lunch.  But when the weather got cold, or work got busy, I flaked out.
• Get my credit report – check!  I got my free Equifax credit report and I paid $9.95 for my credit score.  Score is coming up! 🙂

On-going Goals Recap

• Pack my lunch everyday – check!
• Eat more fruits – pass… I’ve been having smoothies in the morning, and packing an orange with me for lunch, until this week.
• Exercise 3 times a week – fail! 
• Get off the computer by 10pm – fail!  I got off the computer by 10pm, but then, I’d check my iPod.
• Finish a book – fail!  I’m almost halfway through Jean Chretian’s autobiography.  I’m really enjoying it and hope to finish next month.
• $0 Budget – check!  I tallied up both my expenses and savings and figured out how much I could allocate to my TFSA.

I think I have too many goals.  I must prioritize which ones are most important and have 3 monthly goals, and 3 ongoing goals. Seeing all those red fails are getting me down and discouraged.

Whew.  That was tough.  Readers, how has your February?

Cheers,