Pay Day July 2014

My income from disability insurance when I’m not working is a total of $2,519.98 for this month.

Housing

Mortgage - $1,564.82

House Maintenance - $175.00

Housing Taxes - $200.00

House Insurance - $72.00

Utilities – $215

Total – $2,471.82

Transportation - $0

Savings - $0

Life

Food - $120

Cell – $30

Internet - $60

Health Insurance – $23.52

Clothes - $0

Gifts - $0

Misc - $20

Big Ticket Item - $0

Entertainment - $10

Social/Sports - $0

Financial Planning - $14

Cat - $15

Slush – $0.64

Total - $293.16

Of Note:

- Transportation is at $0 since I still have my student bus pass and have a good chunk of change saved for train and taxi rides.

- Savings is at $0 for two reasons. The first is I won’t be making an RRSP contribution since my income will be low. The second is I’m concentrating on getting my house paid off to decrease interest costs and meet my 5-year goal.

-Non-essentials (Gifts, Clothes, Big Ticket Items, and a portion of Home Maintenance) have been put on hold. My pay from insurance went down because I earned some money at my day job, but I haven’t gotten around to picking up said paycheck from my day job. These will be topped up when I get my (2^nd) pay check in the near future.

Writing Camp Is Here!

This is a bit of a short notice announcement however I thought it prudent to give a last minute shout out:

Camp NaNoWriMo starts on the 1st of July. All writers welcome, no experience necessary!

The National Novel Writing Month organization is dedicated to helping writers and as a result runs two virtual camps in the summer when folks can get together, set a writing goal, and active it with the support of the online community. you can sign up here: http://campnanowrimo.org.

I've taken part in this year's April camp and last year's November contest. If you're intimidated by November's 50,000 word challenge then Camp is a great way to warm up your writing since you get to set your own goals and can chose to work in a cabin where a dozen writers come together to support one another. I've found that NaNo events help me to integrate writing fiction as a daily part of my life instead a nice to have after all of the Master's papers are done. NaNo's challenges have helped me to grow as an author and are well attended in the virtual world.

I'm looking forward to camp, hope you'll consider joining me!

Milestones - The Mortgage

Long time followers of this blog will know that I have some pretty big long term goals. One of them is paying my mortgage off in 5 years. You can find the details of my plan here.

Having big goals is great but they can seem daunting, which means that in order to reach them you need to break them down into smaller chunks. Each time you reach a mile stone you celebrate. This gives you a sense of achievement and the energy to keep going.

For example, every year when I make my 10% payment I celebrate. Sometimes it means a special dessert, or a night out with my friends, or even just a happy dance. I also celebrate when I hit owning 30% or 40% of my house. Today I hit another big milestone that I've been looking forward to for months.

Today the amount that is outstanding on my mortgage went from 6 digits to 5.

My outstanding mortgage is now $99,918.35. This brings my ownership up to 47.7% and gives me a total of $91,081.65 in equity. The next big milestone that I'm looking forward to is owning 50% of my house. I should reach this point in 4 months.

I look forward to celebrating with you then.  

Pay Day June 2014

My income from disability insurance when I’m not working is a total of $2,795.59 for this month.

Housing

Mortgage - $1,564.82

House Maintenance - $315.00

Housing Taxes - $192.00

House Insurance - $72.00

Utilities – $225

Total – $2,368.82

Transportation - $0

Savings - $0

Life

Food - $120

Cell – $30

Internet - $60

Health Insurance – $23.52

Clothes - $0

Gifts - $10

Misc - $10

Big Ticket Item - $100

Entertainment - $15

Social/Sports - $10

Financial Planning - $14

Cat - $15

Slush – $19.25

Total - $426.77

Of Note:

- Transportation is at $0 since I still have my student bus pass and have a good chunk of change saved for train and taxi rides.

- Savings is at $0 for two reasons. The first is I won’t be making an RRSP contribution since my income will be low (more on investing plans at a later date). The second is I’m concentrating on getting my house paid off to decrease interest costs and meet my 5-year goal.

-Food is back up to $120 because I’ve used up the excess over the last 6 months

-Entertainment got bumped up because I’ve been spending more time socializing with friends for my Masters program.

A New Kind of Present

In the past week my illustrious father celebrated his birthday. (Happy Birthday Dad!) While I won't go into details about the festivities I would like to introduce you to the gifts that my father choses to receive.

Last year my father decided that he had sufficient in terms of material goods and instead asked that each one of his children write him a letter telling him describing how the last year has gone and what they are looking forward to in the year to come. Which I had to admire as a pretty neat idea. While the move from a generic greeting card to a letter personalizes your emotions on any occasion I think that the letters my father requests are particularly neat. Instead of a letter poetically thanking him for being the coolest Dad around (which I'm sure I could prove scientifically given enough time and resources) it allows a chance to reconnect. While my father is involved in all of his kids lives a one year summary is kind of like the sports highlights, bringing the most interesting aspects of the year to the foreground for consideration. It also allows us kids to keep copies which we can look back on each year to see what has changed.

Needless to say, I love the idea of Happy Birthday letters and I would love to start something similar when I have kids.

Don't Call Me

… I'll call you.

The above isn't my philosophy with dating, rather it's my philosophy for dealing with businesses. On one hand if I want to talk to you, I'll let you know. Otherwise let me be. On the other, and more important hand, it protects me from fraud. For example just this weekend I got an e-mail from my internet provider asking me to update my credit card information. Failure to do so would result in additional fees due to late payment.

Minor inconvenience. I don't, and never have, paid my internet bill with my credit card.

Lets just say I didn't click on the link let alone enter my credit card information. Rather I woke up this morning and called the customer services number on my internet bill and after speaking to three people confirmed that (1) my account was in good standing and (2) it was a scam.

So, my philosophy will continue to be that the only time I will speak to the people I do business with is when I call them.

Working from Home: A newbie's perspective

Now that my master's courses are over I'm working full time on preparing my thesis … at home. Let's say that working full time from home has been an interesting experience and while I haven't managed to iron out all the problems yet I have picked up some important pointers.

- Take evenings and weekends off. Yes, my first pointer of of working at home is to not work! The point is two fold, it will make you more focused and productive during the time you are suppose to be working and it will help to prevent burn out.

- Be accountable to others. Of course, I am naturally accountable to my thesis supervisors when it comes to making deadlines but I also call or get a call from my Mom first thing in the morning to make sure I get out of bed at the proper time. (Thanks Mom!) Otherwise it's easy to get lax and let your standards slip.

- Keep a regular schedules. Wake up and go to bed at roughly the same time every day. It can be any time you want, just keep it regular so you don't get too much or too little. Same goes for food. Three healthy meals a day at regular intervals is important to prevent you from constantly snacking or skipping important meals.

- Have a designated work space. If I have a pile of articles to read I might curl up on the couch with my cat but for typing it's nice to have a proper desk, not to mention place to spread out your work without interfering with the rest of the house and which will allow you to shut out distractions.

- Get out of the house regularly. This means going outside at least once a day and breathing the fresh air. You also need to make sure that you take time to interact with other human beings, doubly as important if you live alone like me. Socialization is important.

Finally, figure out what works for you, you're not going to get it right the first time so feel free to experiment. Personally, I find it impossible to take my day's work seriously until I've made my bed. Don't ask me why, especially since I don't usually make my bed on days I work in the office or am going to class.

Investing Plan 2014

Retirement savings has taken a bit of a back seat this year due to the fact that I'm in the middle of my Masters and my income has dropped. None-the-less I had a nice little sum $6,443.96 that I had saved up in the previous year sitting in my savings account ear marked for retirement.

My knee jerk reaction was to dump it into my RRSP (which has a whole bunch of room in it now that I no longer have a pension) and celebrate my tax return. But, after some wise words from my father, I got out a tax calculator and ran the numbers. (By the way I often use this one.)

As summarized in the table below, if I wait until 2015 when my income will return to $70,000 I'll be in the 31% tax bracket and will see a tax return of $3,426.50. On the other hand if I contribute this year with a $42,000 income I'll be in the 24% tax bracket and I'll see a return of $2,656.50. In other words, waiting a year to fill up my RRSP I'll see an extra $770 on my tax return.

Taxable income	$70,000.00	$42,000.00
Taxes paid	$14,924.00	$6,339.00
Marginal Tax Rate	31.15%	24.15%
RRSP contribution	$11,000.00	$11,000.00
Tax Return	$3,426.50	$2,656.50

In the mean time my $6,443.96 of retirement savings have been moved to my TFSA and invested. The breakdown is as follows - 55% in a Canadian Stock Index, 15% in a US Stock Index, and 30% in an International Stock Index. (The International Stock Index doesn't include US companies.) I've left bonds out of the equation this go around because my TFSA also holds the money I've saved for a car, which is invested in a Canadian Bond Index and the money I've saved to make extra payments against my mortgage which is sitting in a high interest savings account. As a result the total risk for my TFSA is only moderate. 

Mortgage Update

I thought that it was about time that I give an update on the progress on my mortgage. If you've had the chance to mosey on over to my goals page or have followed my blog for a prolonged period of time then you'll know that it is my goal to have my mortgage paid off 5 years from when I got it. That would be the 8th of November 2017. This is when my term is up and by having the house paid off will mean that I don't have to worry about an increase in interest rates and that my money can start heading towards some other really big goals.

There are two portions to my being able to pay off my mortgage in 5 years. The first is making a 10% payment against my mortgage every year and the second is a combination of increasing my payments by 10% each year and doubling up my payment every month.

PART 1

Since my mortgage started at $152,000 each year I can make a lump sum payment of $15,200. I have successfully made the 10% payments for the first and second year. I have the payment for the third year sitting in the bank and part of the fourth year as well. The final year I'll only need $1,900 since paying more then that will have me paid off ahead of time and I'll incur penalties.

Year 1	$15,200.00	Paid
Year 2	$15,200.00	Paid
Year 3	$15,200.00	$15,200.00
Year 4	$15,200.00	$5,499.47
Year 5	$1,900.00	$0.00
	Total Needed	Total Saved
	$62,700.00	$51,099.47

Since I have $20,699.47 sitting in the bank for my 10% payments I only have a short fall of $11,600.53. Since I should have a double pay check coming at the end of the month (my disability insurance is on a different schedule than my work and I just started working again) it should get knocked down to about $9,000. I can come up with that $9,000 by raiding my car savings fund should worse come to worse, however, I am pretty confident that I can come up with that amount over the next three years with tax returns, bonuses, and extra money off my pay checks. 

PART 2

The monthly portion has been a bit more difficult, especially since I took a pay cut to go back to Graduate school, and since that pay has been irregular and of uncertain amounts. Each month I have to pay $646.62 towards my mortgage. I have increased that each year by 10% and I double it up each month so each month I pay $1,564.82. All of this comes off my monthly pay check and the plan is to continue that. A bit challenging after my pay cut but it mostly came down to picking priorities. I don't currently have transportation costs since I commute on my student bus pass and savings is currently at $0. Dropping retirement savings was a bit of a struggle at first. However, I decided that it would make sense to wait until the 2015 fiscal year to make RRSP contributions since I'll be in such a low tax bracket this year. I also figure that being a student again I'm ahead of the game seeing as my net worth is still increasing as opposed to decreasing. By the end of the mortgage term I'll be paying close to $2,000 a month towards my mortgage. So for the next three and a half years I'll need to concentrate on keeping my income high and my expenses low. But all in all it seems doable. 

CONCLUSION

I have to admit when I first signed my mortgage papers a year and a half ago I wasn't sure if I would be able to hit my goal. But I told people about it. I told my family, my financial adviser, the people who were handing me the mortgage papers, and all my lovely blog followers. As of today I own 47% of my home (see the goals page for more details). From where I'm sitting now the goal of paying my mortgage  off in 5 years suddenly seems very possible, almost matter of fact.

So the next time someone asks - I'm not planning to pay off my mortgage in 5 years, I AM going to pay off my mortgage in 5 years. 

Pay Day May 2014

Now that I’ve survived most of my graduate studies course work (one project left, and so close to done I can taste freedom) I have a bit of time to talk about my budget. I’ll talk in a separate post about living on a variable income while in school, but for the moment we’ll just look at how my reduced income is divided up. My income from disability insurance when I’m not working is a total of $2,795.59.

Housing

Mortgage - $1,564.82

House Maintenance - $315.00

Housing Taxes - $192.00

House Insurance - $72.00

Utilities – $225

Total – $2,368.82

Transportation - $0

Savings - $0

Life

Food - $100

Cell – $30

Internet - $60

Health Insurance – $23.52

Clothes - $0

Gifts - $10

Misc - $10

Big Ticket Item - $100

Entertainment - $10

Social/Sports - $10

Financial Planning - $14

Cat - $15

Slush – $44.25

Total - $426.77

Of Note:

- Since living on a variable and reduced income I’ve been writing how much came in at the top of a piece of paper and subtracting expenses (essentials mostly) in terms of importance.

- Transportation is at $0 since I still have my student bus pass and have a good chunk of change saved for train and taxi rides.

- Savings is at $0 for two reasons. The first is I won’t be making an RRSP contribution since my income will be low (more on investing plans at a later date). The second is I’m concentrating on getting my house paid off to decrease interest costs and meet my 5-year goal.

-I spend a little more than $100 a month on food but I had quite a bit accumulating some I’m working on that. Clothes is at $0 because I have $130 saved up and I still don’t need any clothes.

The Fire Hose Effect

Have you every tried drinking out of a fire hose? I can't say that I have done it literally, but I tend to do it quite often figuratively. In the past year I have figuratively drunk out of a fire hose of information by:

• Starting my Masters
• Taking a course before my Masters attended mostly by people with PhD's (including a number of people who are my Master's professors)
• Decided that a normal course load wasn't enough and went off and signed up for a Mechanical Engineering course ... when my background is nursing. 
• Took a 10 week PRIDE course complete with huge binder
• Picked a difficult Thesis subject for my Masters

I really am a glutton for punishment aren't I? Why do I do it? Not sure I entirely know the answer, nut I'll give it a shot. 

When I walk away from a class with a headache from thinking too much I know I've made some intellectual progress. Add to that the fact that there are a million different things to learn in the world if I take it slow I'll never accomplish everything that I want to. To top it off, by absorbing information and learning from many fields on many topics I become a resource for those around me. That means that I can help to build the world's scientific knowledge and I become irreplaceable to my company. 

All in all, I'll probably never learn. After all why walk when you can run?

Financial Autopilot

Over the past four months I've been a tad busy. (Insert me rolling on the floor laughing at the understatement of the century.) As a result my finances got interesting. I basically went on autopilot for four months. Pay check came in, got divided up, and bills got paid. But other than that finances got ignored.

Then the new year came and I took stock of where I was and was very happy. My good habits were sufficient to put me in a very good place. This month when I looked at my net worth I realized that I had surpassed my goal of being financially self sustaining. I've hit a net worth of $161,347.49 and I only needed to $159,400 to proclaim my goal completed. I had passed it (a year and a half early) and didn't even realize it.

If you're wondering what this financially self sustaining thing is click on the link bellow and you'll get the full explanation. 

Financially Self Sustaining

Goal:  $159,400 by July 2015

Current:  $161,347.49

101.22%

START

END

All of this was possible because I had instilled good financial habits including spending little, saving a lot and investing every month like clockwork. Other mile stones I've hit are:

-I'm down to 14 years left on my mortgage. 

-I have enough money set aside for this years 10% payment on my mortgage ($15,200) which I can pay down on the 8th of November 2014. (This will be my third of four payments for this amount, the fifth 10% payment will be approximately $1,900 so that I don't pay off my mortgage before the five year term is up.) The mortgage plan is going really smoothly and I'm supper happy with the progress. 

-I have just over  $6,400 set aside to put in my RRSP once I have the room after tax time. I should have $10,440 worth of room this year so I'll be able to fill up over half of my RRSP contribution room right off the bat. The rest of the room I'll be able to fill up over the 2014 year with contributions of $335 a month. So over the year I'll use all my room up for maximum tax refund. 

-My total Retirement Savings have reached the happy total of $29,140. Retirement is best saved for when your not actually looking at the pot grow. 

Pay Day January 2014

My budgeting for the month is a bit off because I wasn't able to pick up my check until I got back from holidays. Nonetheless my monthly pay check is in for a total of $5,635.22.  My pay has increased for the next few months as I’ve paid my EI for the year and my end of year bonus worth $2,500. My budgeting will continue as if I did not see this extra money and the surplus will be put towards my House Payments.

Housing 40% - $1,439.35

Mortgage - $646.62

House Maintenance - $315.00

Housing Taxes - $192.00

House Insurance - $72.00

Utilities – $213.73

Total – $1,439.35

Savings 10% - $359.83 – All going to my RRSP

Extra Mortgage Payments 10% - $359.83

Transportation 15% - $539.75

Bus Pass – $0

Train - $0

Other - $15

Car Savings – $0

Total - $15

Leftover - $524.75

Life 25% - $899.63

Food - $130

Cell – $30

Internet - $60

Health Insurance – $28.52

Clothes - $10

Gifts - $10

Misc - $10

Big Ticket Item - $100

Entertainment - $10

Social/Sports - $0

Financial Planning - $14

Cat - $10

Slush – $0

  

Of Note:

- I have a total of $4,166.14 to put against my mortgage. My monthly payment is currently $782.41 but I can double up my payment to $1,564.82 and have $2,601.32 left over to add to my yearly 10% pot.

-I’ve added $5 to my monthly budget for Health Insurance which will cover my Insurance deductable for a year. 

-Incidentally this pay check has given a jump start to a couple of my goal . . . but I'll let you know about those a little later. 

2013 Review

I've decided to break down a year's worth of spending since it will all have been done while living in my current house which means that these should reflect next year's numbers pretty accurately. 

Total Spent 2013 – $19,165.04

Total Income 2013 – $55,142.62

In other words I’ve spent 34.8% of what I earned in the past year.

Expected Spending 2014 – $23,176.72

Expected Income 2014 – $30,000

I’m giving myself a very conservative expected income assuming no side jobs, and assuming that my disability insurance pays out. Also it should by noted that the $8,000 that I expect to spend on my Masters tuition over the next year is already sitting in a savings account. But it is nice to see that even with conservative estimates my Income is greater than my expenditures.

Mortgage

Total Spent – $47,477.19

Interest – $4200 *

Principal – $43,277.19 *

Total Expected Next Year - $34,134.32

Expected Interest – $3,300.00*

Expected Principal – $30,834.32*

*Numbers are estimates

Monthly Expenses

	Spent per Month	Total Spent	Expected 2014
Groceries	$132.83	$1,593.99	$1,500.00(1)
Misc	$12.57	$150.79	$150.00
Utilities	$298.14	$3,577.63	$3,600.00
House Maint.	$43.28	$519.36	$550
House Taxes		$2,246.70	$2304
House Insurance		$1,105.56	$1,200
Bus	$68.25(2)	$606	$0
Car Payments		$45(3)	$0
Gas		$70.17(4)	$0
Train	$4.36	$52.29	$60
Cabs	$3.86	$46.28	$50
Entertainment	$10.95	$131.37	$120
Social Memb. Fees		$45	$30
Health	$32.59	$391.08	$300(5)
Clothes	$0	$0	$0(6)
Gifts	$4.90	$58.83	$60
Cell	$28.72	$344.65	$339
Internet	$47.14	$565.64	$691
Financial Planning	$13.56(7)	$122.04	$162.72
Total	$701.15	$11,672.38	$11,116.72

(1) It will be a tad cheaper since I’ll be vegetarian all year long.

(2) For the months that I needed a pass, which ended in August. I have a pass included with my Masters Tuition.

(3) Actually it was a wagon payment.

(4) I only had my parents van for one month, I have no expectation to pay for gas in the next year.

(5) I am now out of Wisdom Teeth to remove. : D

(6) Why break my streak?

(7) Only paid the monthly fee for 9 months, it will be 12 months next year.

Other

	2013	2014
Masters	$2,283.46	$8,400
Cat	$149.63	$120
Professional Memberships	$403.25	$190
Masters Application	$142	$0
CPR Recertification	$100	$50
Furnishings	$54.32	$0
Passport Renewal	$160	$0
Total	$3,292.66	$8,760