I Don’t Make Mistakes. I Make Learning Opportunities.

mariaI came across this quote the other day and immediately related to it (it also reminded me of Wendy’s post about letting go of debt guilt<< Read it, one of my favorite posts ever).

So much about the financial journey that we’re on is mental. We could sit around and sulk about the situation we’re in, sort of like we did for three years before getting real about it, or we could seize this learning opportunity and change our lives a full 180 degrees.

Mistake #1: Too Much Credit, Too Early

By the time I was in third year of my undergraduate degree, I had access to almost 50k in credit between my lines of credit for school and credit cards. 50k when I was making like $11.00/hr at my part-time job. This is insane to me right now but I didn’t know any different. This was also during a time in Canada where credit limits were increased without consent. I’d look at my statement one month and by the next month my limit was increased by 2k. While credit cards companies are no longer allowed to do this, you must request increase yourself and go through credit check, I’ve learned that I should have called as asked them to lower it back down to original level. I also would not have signed up for every credit card offer that came my way! Credit card companies loved me.

Going for forward we will only have one to two modest credit limit cards (maybe a total of 5-6k) so temptation isn’t there. I will teach my daughter about doing research on your first credit card and the importance of managing it responsibly because, after all, opening and maintaining your first credit card helps your credit report!

Mistake #2: No Savings

I’ve been working since the age of 15, I’ve never really saved. I thought about it a lot but I never did anything about it. It seems so stupid but I just didn’t know how. I’d save a few hundred for some trips, paid for our wedding in cash by settling a bill as soon as it came in, but I have come a long way. I’ve learned my lesson and we have some savings now, even while in debt, especially while in debt, since we can’t afford to owe anyone else money if there was an emergency!

Going forward I know how to save and it starts with just doing it! Anything to start, then make more concrete goals. I know exactly how much money we need each month to meet our goals . When our debt is paid off we will have a nice chunk of money to allocate to retirement. We have also already started a savings for our kiddo. Again, while we’re paying our debt off we start small but as our debt decreases we will be able to bump it up a little. We’ll also teach her the importance of saving when the time comes for her to start earning money. Save some money as soon as you make it and have any opportunity to spend it!

Mistake #3: Thinking If You Can’t Give 100%, Don’t Try at All

The biggest reason I was overwhelmed with our debt at the beginning was that I was totally overwhelmed with ever how to start. I thought, if I can’t pay it all off immediately, or at the very least in increments of thousands of dollars per month why bother? Just two months ago I made an additional payment of $44 and change because I could, and it felt good.

It took me about a solid year of educating myself, reading blogs and other resources like Gail Vaz Oxalade’s books (a lovely Christmas gift from hubby) but I finally know, what we need to do to make our debt disappear and the knowledge alone is enough fuel to keep me going. Ignorance is not bliss when it comes to debt.

I beat myself up sometimes for approaching 30 and just now figuring out what I need to do, like I wasted five years of my life, but i guess it’s not all wasted if I had a great learning opportunity.

How to Find Insurance for Your Vehicle

When it comes to insurance for your vehicle, you want to make sure you have enough coverage if you are involved in an accident. However, you don’t want to go broke paying for the auto insurance. One of the best ways to ensure you are getting the most bang for your buck is to comparison shop, which means getting price quotes for auto insurance from various companies. This simple process allows you to find insurance policy that fits your specific needs and budget.

Determine the Amount of Coverage Needed

Before you can find the right auto insurance, you will need to determine how much coverage you actually need. This will vary depending on your current situation and your state’s requirements. Once you are armed with this information, you can then figure out the amount of coverage needed. Keep in mind that the more coverage you have, the more your insurance premium will be. However, the more coverage you have the less you usually have to pay out-of-pocket if an accident occurs.

Check your Current Policy

Check your current insurance policy and take notes on the amount of coverage you have and how much you are paying. This will help you figure out the amount of your yearly and monthly insurance costs. This will give you a figure that you can use when trying to find a better deal.

Review your Driving Record

Taking a look at your driving record will give you the insight on what incidents could cause your insurance premium to rise. If you cannot remember when you got that speeding ticket, simply contact your local department of motor vehicles. If the points against your license or the ticket are set to disappear from your record, consider waiting to find a new insurance policy. People with a good driving record typically pay less for insurance than those with a poor driving history.

Get Multiply Price Quotes

Now it is time to begin shopping for auto insurance. This process is rather simple and can usually be accomplished online or over the phone. Armed with the information collected above, simply visit the websites of various insurance companies who you may be interesting in doing business with and fill out their free price quote form. It can take anywhere from 5 to 30 minutes to fill out the information so leave yourself enough time to complete the task. Once you have their price quote, either write down or print out the monthly and yearly premium quote and go on to the next company. Continue this until you have obtained a few quotes from various insurance companies.

Once you have the quote price for auto insurance, you can decide what coverage and price works best for your needs.

Why Renting While in Debt is a Good Idea

The other night I was out for a solo evening walk (a very unusual feeling, I didn’t realize how out of touch I am with myself. I walk all the time but always with my daughter or friend, it’s been a long time since I got out alone). Anyway, on my walk I walked past a new apartment building close to our home that was advertising rental unit available. I couldn’t help but reminisce about our apartment rental days and how nice of a spot this particular building was. I also couldn’t stop myself from dreaming about selling our home and renting again. Yup, I said it. At this stage in our lives, sometimes I would rather sell our home and become renters again than be homeowners.

There is a lot I love about being a homeowner, but home-ownership isn’t always what it’s made out to be, especially if becoming debt free is a big goal.

Increased Bills

When we were renting we had very limited utilities. In utilities alone, we have an increase of about $250 per month with homeownership. We also now have stuff like property tax and general home maintenance to pay for. I figure being a homeowner costs us about $500 more per month than renting, even if we were to get a larger apartment than we had given that we now have a child and need for more space.

Maintenance

General home maintenance is time consuming and expensive. Some of it, like gardening, is enjoyable for me, but it still consumes my time that I could gladly fill with other stuff. I miss the days of being able to call the landlord and getting them to fix whatever the problem was. I can see how condos may be appealing. I certainly don’t want to spend the required money for our new front door and new bathroom taps, but we don’t have choice since we’ve decided to make this our home we need to pay the price.

Extra Money Designation

Logic would say if you’re trying to get out of debt, any extra money, such as a tax return or in my case freelance income, should go towards said debt, but when you’re a homeowner sometimes you just can’t. This week one of the taps in our bathroom broke and we need to now replace it. An expense we didn’t want to have to spend. I’ve already mentioned our tax return will likely be going towards a heat pump as well. This is extra money that, had we been renting would have been able to go towards debt no questions asked.

Like I said, I love being a homeowner for the most part, but if it was feasible I would sell our home and rent again until we’re debt free and saved a large (20%+) downpayment for our next home. This is a pipe dream for many reasons but it’s another reminder where I wish we hadn’t rushed into homeownership so hastily sometimes. Live and learn.

Do you rent or own? What do you love or hate about it?

 

Defining My Job, What I Love and Hate About It.

I get a lot of ”I can’t imagine doing your job” from patients at work. If you’re new here or have forgotten, I’m a dental hygienist. This week is National Dental Hygienists Week here in Canada so I thought I’d start by clarifying a lot of misnomer about my job.

1) My the daily goal in my job is prevention. Truthfully there is no other healthcare job whose main goal is 100% preventative measures. Yes, I do treat disease as well but ideally I treat then prevent further disease. If I do my job, and you listen to me, ideally you don’t need further restorative measures.

2) I am not a dentist. Or a dental assistant. I am a hygienist and my responsibility is, mainly, the structural support tissues in your mouth (gums, bone). I diagnose, treat and prevent all forms of periodontal related diseases. If you think about your tooth as a house, and your gums and bone as the foundation, my goal is to maintain the foundation. What good is a perfect tooth if the foundation is rotten? It’s like having a million dollar house on a ten dollar foundation, how good is that?

3) Don’t bother apologizing to me for not brushing after your lunch, when you see people who have been addicted to crack cocaine or haven’t seen a dentist in 15+ years, a little apple and sandwich isn’t going to bother me any. I am 100% desensitized to anything you define as ”disgusting”.

4) I genuinely want to help you but I need you to listen to me. If you wash your hands and they bleed, you’d freak out so why is it OK if your gums bleed with routine brushing? I want to help you get healthy but don’t get annoyed with me when I explain brushing twice per day and flossing, combined with routine dental appointments is the only way to do that.

I really do love my job. Most people who seek out private dentistry appreciate what you do. I love helping people and getting to know individuals and entire families. When I was on maternity leave, there were moments I couldn’t wait to get back to work to see how so-and-so was doing. I genuinely care about my patients. I love that I am autonomous and, if I wanted to, could be 100% self employed, opening my own clinic, something I may consider in the future but for now I enjoy being an employee and now worrying about all the stuff owners worry and stress about.

There are a few downsides to working in such a private sector though. Though I am paid competitively there is quite a range nationally for my position, we’re all regulated under the same national body (with individual provincial regulating bodies) but the job I do here on the east coast would net more over $10/hour more on the west coast. I also don’t get any benefits of any kind. If we didn’t get anything through my husbands work, the best health insurance available to us would cost us a few hundred dollars per month, an expense we’d rather not have to pay right now (my husband’s job covers 50% of health premiums which is a huge help!).

There are many more positives than negatives and all the negatives are very much fixable. What do you love or hate about your job?

How Not to Spend Your Money Like a Jerk

As Lee Scratch Perry would say, “Money Come and Money Go.” But that doesn’t mean you should throw your hard-earned cash around like confetti without a care about how it affects you financially. Sure, you might have enough in assets to fill briefcases full of hundred-dollar bills, but that doesn’t mean you have to be a jerk about showcasing it. With that said, here’s how to start saving like a mature adult. 

Stop Boozing and Losing

Believe it or not (OK, it’s not really that unbelievable), men spend twice as much money on alcohol as women do. Whether it’s hanging out at the sports bar watching your favorite team or buying drinks for everyone at the club because you’re tipsy enough to believe you’re a millionaire, alcohol burns holes in your pockets about as fast as it does your throat when you’re downing those tequila shots. If you’re not ready to get on the wagon, consider cutting the costs of drinking by doing it at home. You act like a jerk when you’re drunk in public, anyway.

Have an Education Plan

For most students, college is a huge investment. Many Americans will probably be stuck paying off student loans well after graduating. A big part of the costs of college can be not having a solid plan. Both students and parents feel the financial burdens that come with most 4 year institutions. That’s why it’s important to have a plan for college. Part of that plan is considering all of your options. Online classes are one of them. For those going back to school for a nursing degree or criminal justice, there are many affordable online options that give students the flexibility they need to take classes while working.  It’s also important to have a plan when it comes to paying off student loans. Loan interest has a nasty habit of adding up over the years if you’re not careful.

Stop Keeping Up With the Joneses

Your neighbor gets a brand new car, so you do, too. Your neighbor has a 60-inch flat screen HDTV, so you buy a bigger one. Your neighbor has the latest smartphone on the market, so you buy the same one. Are you starting to see the trend here? Not only are you living your life trying to impress your neighbor, but you’re spending needless amounts of money you could be investing or saving instead. If you really find yourself unable to control the urge to outshine your neighbor, check out this guide that describes how you can stop keeping up with the Joneses.

Stop Looking for Love Online

Sure, it’s worked for plenty of people, but searching for the love of your life on a computer can turn into quite the expense. Online dating services like eHarmony, Match, and ChristianMingle charge monthly or annual fees to browse through the portal of potential partners. That said, don’t just go cheap and use Craigslist to find love just because it’s free. That can result in even more trouble beyond your bank account. Instead, try dating the old fashioned way by talking to women or men at the grocery store, at your church, or at the local gym. Just don’t be a jerk!

Stop Making Stupid Investments

Benjamin Franklin once said, “An investment in knowledge pays the best interest.” Today’s translation: stop throwing your money into the market without knowing what you’re getting yourself into. If you want to stop making stupid investments and start making smart ones, consider putting your money toward high-quality growth stocks, bonds, and bank-loan funds. You’ll want to stay away from long-term treasury bonds, overvalued stocks, and commodities. Also make sure you watch your money closely by using a reliable app like MarketMinder.

Stop Driving a Gas-Guzzling Truck

Men love their cars and trucks, but there’s no need to drive one that sucks as much money out of your bank account as it does oil out of the environment (before it’s refined, of course). The Nissan Frontier 4WD and Toyota Tacoma 4WD are some of the worst culprits on the road, both having a combined fuel economy of 17 MPG. But don’t worry Nissan and Toyota fans, you’re not as bad as the single bros who enjoy riding in a spacious Hummer H3 that guzzles a combined 16 MPG. Quit being a jerk and get yourself a hybrid; they’re available in all makes and models.

Stop Visiting the Drive-Thru More Than Your Fridge

Fast food restaurants serve about 50 million Americans daily, with 44 percent of the country eating at one at least once per week. If you want to quit being a jerk and treat your body with some respect, start going grocery shopping and cooking meals instead of settling on a nightly dose of burgers and fries. Considering fast food restaurants take in an annual revenue of about $110 billion, you’re sure to save a buck or two by ditching the so-called greasy goodness and filling your fridge with healthy alternatives.

Quit being a jerk and spending your money on unnecessary items. Your mind, body, and someone in your life will thank you. 

Sometimes You Need To Spend Money To Save Money: Heat Pump Edition

It’s true, sometimes you need to spend a little money to save even more money. This is a situation we’re currently faced with. We’ve decided that we’re going to start saving for a heat pump for our house. A ductless unit that will hopefully be installed before end of July when it starts getting really hot here (August is usually brutal). My husband works in a sector of the engineering industry that deals with these types of units a lot (though usually on a commercial level). He knows pretty much everything about them. We didn’t think we’d bother installing one in this house, remembering that we bought this house expecting to be here 5-7 years when in reality it will be closer to 10 years (another 4-5 years likely).

We’ve decided to install one for a few reasons. The biggest reason being money. I figure with one installed we will save at least 40% off our power/heat bill every year. We have electric heat and currently spend about $3,000 per year for electricity. Gross eh? The heat pump will cool our house in the summer and warm it in the winter in a significantly more energy-efficient manner than our current set up.

As explained by Wikipedia: Heat pumps are designed to move thermal energy opposite to the direction of spontaneous heat flow by absorbing heat from a cold space and release it to a warmer one, and vice-versa. 

My husbands grandfather installed a unit almost identical to the one we’re looking at a few years ago, had a similar electric heating situation and saw a decrease of about 50% off his electric bill every year since.

Because of where my husband works he can buy these units at cost and knows certified installers. We figure worst case, it will cost us about $2,000 to purchase and install the unit (this includes having a licensed tech to install and electrician to wire it). A $2,000 upfront cost and an immediate savings of about $1,200-$1,500 per year, EVERY year. The unit pays for itself in less than two years. Seems to be a bit of a no brainer right? Also, when we go to sell our house I know it will be an added feature. I’d certainly be more inclined to buy a house with a heat pump than one without, wouldn’t you?

This is where we plan on designating a big chunk of our tax return. It wasn’t a big return to begin with but enough that it gets the savings started. I’m hoping we’ll have enough saved by July. In the summer when it’s really hot at night we sometimes go to hubby’s grandfathers house to sleep because our home is too stifling hot (we don’t have an A/C unit) I’m already picturing a cool oasis in our basement :)

We’re still in the planning stages and honestly haven’t even had someone out to check our house out but hubby doesn’t foresee any issues so I’m excited!

Do you have a heat pump? Do you think this is money well spent?

Working On Paying Off Our Vehicle

I am very close (less than $500) from paying off my first student loan! The starting balance was about $5,000 and now I’m about a month away from paying it off! I’ve discussed before that the order in which we will be paying our debt off is a bit non-traditional. I’m working on the small student loan first simply because it annoys me, next we will be working on the vehicle loan.

Our car loan is one of the largest non-mortgage loans we have and the highest interest rate too. There are a few online calculators, like the IMB car loans calculator, that I play around with to see how much interest I pay for various terms. If we don’t pay the loan off earlier than its end date, we end up paying something like $8,000 in interest! Needless to say we’d love to have it gone earlier so we can focus on our other debts.

There are advantages to paying off our vehicle loan too. I hate to go against the PF grain here, but if something happened to our vehicle in the next few years, while we’re paying our debt off, that was not covered by insurance for some reason, we would need to get a car loan. There is no way we could afford to spend thousands of dollars on a vehicle at this point in our lives. Driving a paid-off would give us some extra ”insurance” in case this happens. Our plan is, of course, to pay the vehicle off, for nothing to happen to it, and continue on with our debt repayment journey.

Once all of our non-mortgage debt is paid off we will likely need a second vehicle (truthfully we need one now but resisting the temptation). Our plan with our current vehicle was always to drive it until it basically dies on us but we’re also not ruling out the option of using it to help with a downpayment on a new vehicle either, a vehicle we would either pay in cash or, if there was a 0% interest rate financing option we may put a large downpayment and, gasp, take out another loan (again, only if it was interest-free).

I’m excited to have my small student loan paid off and start making a dent in our car loan and seeing it decrease even more every month, even better, paying it off 18 months before it’s expected pay-off date!

The Benefit of Hiring a CGA to Help With Our Taxes

 

Since my first job, I’ve always done my own taxes. Honestly for the average, straight forward return I can’t imagine why anyone would ever pay someone else to do it. This year however we has the first big change with me claiming freelance income. It took me a few weeks to gather all the info I thought I would need, and quite a few emails with fellow Canadian bloggers, but I finally gathered all the info I thought I would need.

Lesson #1, keep good records!

I opted to use a trusted tax software and after inputting all the information I had gathered, it came out with a net owe for our family. My husbands refund slightly offsetting my balance to pay. Though I was satisfied with my information, I decided at this point to find a CGA and get them to take a look at everything, confirming what I had done is right. I won’t lie. I had also heard of dream stories where the person brings the return to a CGA with a balance owing and with a few magic numbers being added, leave with a refund instead. I was somewhat hopeful…

Lesson #2, the yellow pages aren’t a dead commodity yet!

I have quite a few friends who work in different aspects of the finance industry but no general accountants. I didn’t have the first sweet clue where to start looking. At work one day during lunch I pulled out our yellow pages and just started calling. The first place I called (a larger firm) left me frustrated telling me help with returns starts at $375 and an hourly rate of $175 on top of that. Not what we were looking for. We wanted advice more than anything and weren’t interested in spending that much money especially since we already owed money!

I didn’t give up and called a few smaller places until I came across the guy we ended up going with. I instantly liked him on the phone, quickly explained what we were looking for and he was more than willing to help, bonus being could meet us after hours! He would charge us a rate if $75 for the hour and help us in any way we needed.

Lesson #3, spending money on professional advice is never a waste of money.

I have to be honest I went into the meeting thinking I knew everything and he was just going to confirm this, allowing me to sleep at night knowing I had done it right. The meeting was so much more than that! Though I was right with all the information I had gathered, some of my percentages were off. He was able to give us the confidence to increase some of the percentages (I was being too conservative with some things) and explain the reasons why. An example being internet. I was only claiming 50% of our internet bill saying 50% was for blogging related stuff and 50% being used for personal. He explained while we may use internet 50% of the time for personal usage that doesn’t matter because without any internet I couldn’t blog at all and therefore can claim 100% of internet.

He also explained that I shouldn’t worry as much about tiny details. I’m being honest about claiming my freelance income and trying to pay CRA money. So many people in my situation would try to get away with  not claiming at all. He went over benefits of claiming our home office too, something I hadn’t even considered. The calculations we did regarding the home office were very respectable and within reasonable norms. All of this is info I wouldn’t have known unless I talked to someone who has done this as many times as a CGA.

We chatted for almost two hours and he charged us for 1.5 hours total. $130 later and we left his office feeling much better about our situation.

I input the changes we discussed in the meeting when I got home and we both came out with a refund! It’s nothing like refunds I’ve received in the past (some years upwards of 8k with student rebates) but it’s something,  I don’t owe which is enough for me! Especially since we weren’t expecting a refund at all, we’ve decided to put it towards a few things we need for the house (maintenance) rather than debt, a decision I’ll explain in another post :)

Though this was the most money I’ve ever spent to do taxes ($130 for CGA plus $30 for tax software) I learned so much! It was money well spent!

Has a CGA ever helped you with taxes?  Did it help?

March 2014 Debt Repayment. This One’s For The Record Books!

When I say for the record books I don’t mean in a good way. March was a real bitch. It was expensive with the unexpected $850 car bill, my best friends father died after a two year battle with ALS, a former co-worker lost a 26 year old son tragically and we were hammered with a snowstorm which meant some lost job income (I don’t go to work, I don’t get paid). Needless to say I’m ready for April but so far Mother Nature isn’t cooperating. We’re covered in snow and ice. Beyond ready for winter to thaw out a little.

View from living room window during last weeks storm

View from living room window during last weeks storm

With everything going on I wasn’t sure if I would be able to meet my target of putting at least $2068 towards debt but…. I did!

I put a total of $2133 towards debt in March. $65 more than minimum required (to be debt free in 48 more months)! If I’m being honest, I forgot to make the extra payment before the 31st and technically paid it in April but it was from March income so that’s how it’s getting organized in my books.

Looking forward, things start getting expensive. April is an expensive month for us with Easter and three important birthdays but we also have an ”extra” pay in April to help offset these costs. We don’t budget our two extra pays each year per se. We use them as we need them when the month approaches. In the fall our extra pay (they usually fall april/october) is always used  to pay for my licensing fee which is due in October ($700) and set aside the rest for Christmas. The upcoming spring extra pay this year will hopefully be for used for birthdays, making up the $525 shortfall from February debt repayment and rest in savings for our summer vacation. This of course will only happen if the world cooperates with me and just leaves me be for a while. Seriously.

How was everyone else’s month? How do you budget bi-weekly pay?

What Are Installment Loans Used For?

Installment loans are large sums of money that are paid off over time. It can be for purchases, an actual financial loan or lines of credit. The terms will vary on each loan depending on the terms of the client and your personal credit. There may also be administrative fees or finance charges applied on top of interest. It is important to read the fine print before agreeing to the loan.

Obtaining Credit

If you need a credit card or an approval for a purchase, an installment loan is the ideal option. You are able to pay credit off over time in small payments. The best thing to do when you get credit is to double or triple the payment. Always pay more than the minimum payment. What this does is pay down the amount of the loan more rather than putting more toward the interest than the loan amount.

Pay a Large Purchase over Time

A large purchase, such as a home or car often requires payments to be spread out over time. This is what an installment loan is for. Most consumers consider this to just be a mortgage or car loan. The term installment loan is foreign to them when it is referenced as an installment loan. It is rare to be able to purchase a home or car in one payment. The good thing about these loans is that you can pay a little extra each month, such as an extra $20 even, and it helps reduce what you are paying in interest.

Line of Credit

A line of credit is something that is generally offered through a specific brand. It may also be offered for equity or home improvement purposes. This type of loan is different as it is solely gauged by the creditor themselves and not an actual bank. Their terms are different as well as their eligibility requirements.

Installment loans are good to obtain, when you are able. Keep in mind though that the better your credit is to start with, the less interest you will end up paying. What you want to do is ensure that you have enough income to afford repayment beyond minimum payment requirements. This helps you to pay the loan down faster and pay less interest. Consider it as saving you money over time. Getting what you need, rather than what you want, is satisfying when you are not stressed with having to put forth lump sums of money at one time.