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.