Property Taxes

Up until today, we have been going on the assumption that our property taxes would be about $2,000/year - this is based on what our builder had been telling as about property in the area - so our budget has reflected a monthly amount of $167.  Thinking about it, this was probably a good guess based on the house before upgrades and on the 2010 tax rate.

I had some time to call the City's tax office today and learned quite a bit about how the taxes are calculated/adjusted.

When a new home is built, the taxes are based on purchase price of the home (including GST, down payments, and upgrades - not including CMHC insurance) - that would make our approximate tax bill for 2011 $2,104 - that divided by 12 gives us monthly payments of $175. I'm not sure what the 2012 tax rates will be, so this is the value we've used to sign up for monthly payments to the city.

Because we only owned our home for 6.57% of the year, we we owe approximately $138 for the 2011 year - the payments above are for 2012 while we wait for the adjustment notification that we and our home builder will have to sort out. 

When the new property assessments come out in the spring, we'll find out the City's assessment of our homes value and adjustments will be made for payments from June through to December.  That could mean that for the remainder of the year our tax bill goes up, or down, depending on if we over or under guessed when signing up for the monthly billing cycle.

You might asked why we signed up for the monthly payments instead of paying annually.  Unlike vehicle insurance, there is no interest charged for setting up a monthly payment program vs paying in a lump sum - the only drawback is that we lose out on a very slight amount of interest if we had been putting the money away in a savings account when the annual bill came due.  For us - with home ownership being so new, we thought the monthly plan suited us best.

If you are a homeowner, do you pay your property taxes annually or monthly?  Why?

The Credit Card is Paid Off!

It feels amazing to have this debt wiped out for the second time...and I hope, the last time.  I'm not sure how many of you caught my guest post on Krystal's blog a while back, but it described how we wound up here ni debt again and more importantly a theory on why it happened again.  I would like to re-post my thoughts here:

When I first started blogging, I wrote from a single person’s financial perspective. And I struggled to stay committed – not to the end goal, but to the process. I found it easy to come up with goals and to write about them, but I had a very difficult time tracking my spending. So while I could check my debt balances, I had no clue if my spending was in line with my budget. I also spent a good part of the first year of my blog worrying about job loss. Thankfully I survived three rounds of layoffs, and I continued to get recognition and pay increases – which helped the progress on my debt goals.

A year or so ago, Jordan (my now husband) and I merged all of our finances. We got a joint credit card that we used for all of our spending. We were able to start tracking where our money was going, and it was a huge eye-opener for us.  We found out that we spent a lot more on eating out and alcohol than we had imagined – including our groceries, we were putting an average of $1,000 in our mouths every month!  That realization brought us to a place where we were more focused than ever and we progressively curbed our spending in those categories each month.

We were able to pay off not only my debt, but his as well. Merging our incomes provided us with opportunity to re-think our spending and saving strategies. It also provided us with the financial power to pay off our debt.

We enjoyed being debt-free for about four months before we started to fall into the debt hole again.

We had convinced ourselves that because we had good jobs. And because we were not afraid of a job loss, we told ourselves we would be ‘fine’ no matter what came up. On top of that, we were both really really tired of thinking about, talking about and writing about money. Then, Jordan and I bought a new vehicle together, adopted a dog, got engaged, purchased a home (through a new home builder) and got married – oh, and we just adopted a second dog. With the wedding planning underway and having to make decision after decision about our new home purchase, we became – quite simply - exhausted.

Most of us have heard of debt fatigue.  Gail Vaz-Oxlade describes it as the mental state that occurs when you have been in debt for so long that it feels like you’ll never get out – so you stop caring and just continue buying. She believes that it is at the three year mark when debt fatigue tends to sit in. The description never really seemed to fit for us; we certainly got debt paid off the first time in less than three years – so why were we so tired?  Why did we stop caring?

My mom found an article in the New York Times that talks about Decision Fatigue which seemed to describe what we were going through. Here is how the article describes it:

No matter how rational and high-minded you try to be, you can’t make decision after decision without paying a biological price. The more choices you make throughout the day, the harder each one becomes for your brain, and eventually it looks for shortcuts, usually in either of two very different ways. One shortcut is to become reckless: to act impulsively instead of expending the energy to first think through the consequences. The other shortcut is the ultimate energy saver: do nothing. Instead of agonizing over decisions, avoid any choice. Ducking a decision often creates bigger problems in the long run, but for the moment, it eases the mental strain.

Wow! That described Jordan and I to a T.

I don’t want to use “decision fatigue” as an excuse, but it certainly helps explain so much of our behavior. We had been making so many huge decisions that our capacity to make small ones has been diminished.  

I’m hopeful that understanding this type of fatigue will help us to avoid getting in debt a third time. Come November, we will take possession of our new home and we will be debt free again – aside from our mortgage and car loan. 

It’s the awareness of our money and our energy levels with both paying off debt, and with the mental energy it takes to make good decisions, that will keep us on track. Combine that with the love and support we have for each other, and a couple of good spreadsheets – and we should be just fine.

Organized for the New Year

I hope you all had a fabulous Christmas/Holiday celebration with friends and family - I've enjoyed having a week off and am looking forward to another.  I spent some time this morning finalizing the transfer of all of our accounts to our new house and getting our 2012 budget confirmed.  Jordan and I, unless an unforeseen disaster strikes, will have our credit card totally paid off by the end of the year and we are both so looking forward to entering 2012 being consumer debt free (aside from the vehicle loan).

We have settled on the following as our monthly budget:

Our utilities won't be that high - but it was the average of the bills in the rental.  While our home was built with some upgrades in the windows and insulation and we also have six months free of our phone, internet and satellite tv services - we haven't received our first bill yet and just want to have a bit of wiggle room.

Our insurance has been a huge win, we had further discounts when we actually moved and so this payment includes both of our vehicles as well as the house.

I have increased our gas budget because our commute is a bit longer - we don't have a good gauge on what it will be, but if it's more - the overage in the utilities guess should cover it.

I'm not really concerned if we spend more or less in either booze or eating out/entertainment categories - as long as the three combined are equal to or less than $450/month.

We have started our allowances up again so that we have a bit of personal spending freedom.  It's so nice to be able to treat someone to lunch without having to check in with each other first.

The Joint House account is a planned spending account that includes everything from clothes, shoes, hair cuts, pets, annual expenses, vehicle and home maintenance as well as large household purchases.

The majority of the Joint Gifts account is for Christmas, but it is also intended to include birthday presents/housewarming gifts and that sort of thing too.

The Joint Emerg and RRSP accounts are pretty self explanatory - although last year we only put $100/month into each of these and we've increased it to $200/month for each of these categories.

Financially, I'm feeling a lot more positive as Jordan and I embark into the new year as a married couple in our own home.  I'm looking forward to staying positive in the rest of my life too!

think..think..think...

I feel a bit like Winnie the Pooh tonight - always had a lot going on, but had troubles focusing. 

Financially there's a few interesting things going on, I'm getting a Profit Share from work and we got part of our damage deposit back from our landlord - but I've talked so much about it with Jordan and I'm not really motivated to go into great detail about it. 

Emotionally I'm pretty drained.  My Maid of Honor has made it really easy to settle in at her place, but it is her place - not our place and so I feel a bit out of place. 

Family wise....My brother just got a promotion at work - so we're really excited for him and he's starting to take a pretty keen interest in his finances which is awesome.  My dad is sick, and while most of the time I'm pretty okay, once in a while I hear a song or think of something and just have to have a little cry.  Jordan is pretty amazing thought, I get hugs whenever I need them.

Work is super busy right now.  We are completely understaffed and don't appear to have a training or hiring plan in place...we're not meant to work any over time, but I am and am hoping that the axe doesn't fall on me for that.  I feel like my team is spinning a bit out of control and I'm doing what I can to hold it together, but I really don't feel like I'm doing a good enough job (I'm not a supervisor, am one of two intermediates on my team).

I'm really looking forward to Christmas, but am starting to put a lot of pressure on myself to get the house totally unpacked and settled before the holidays, but I'm not sure how realistic that is.  It's like I can't help but to put pressure on myself where none really needs to be there.

I asked Jordan what we were going to do with ourselves after we get settled in - it's been a pretty big year with buying a new vehicle, adopting two dogs, getting married and building our first home.  We had some jokes about it - but I really am not sure what I'll do with all my energy. 

Will I put more into work? life? family?

I hope to put a bit more time into family and friends and maybe, just maybe, a little time for myself.

Unexpected Laptop Issues

While my computer is packed, we kept Jordan's laptop out and available for our transition period of homelessness.  Unforutnatly, a couple of days ago we realized it had shifted in the vehicle (read dropped) and unforutnatly the hard drive crashed.  In to Memory Express we went - $250 later, we have a new hardware and new operating system.

The good news is that $250 is a lot less money than a new laptop!

The next couple of days should be pretty quiet as we had our last house related meeting, prior to possession, on Saturday.  I'm hoping to get caught up on blogging and go visit the pups a few times while Jordan is studying for and then taking an exam this week.

I hope you all had a great weekend!

Officially Homeless

We handed over the keys to our rental last night to our landlord and don't have possession of our new home until December 8th - we are officially homeless.

My gracious Maid of Honor and Best Friend has opened her doors to us and we've now taken over her spare bedroom - we brought more items that we had planned on because the weather dropped into freezing temperatures and we didn't need exploding/frozen bottles of cleaners and bulk kitchen goods in the truck...good thing she's such a gem!

Jordan and I are both mentally and physically exhausted and are looking forward to resting for a few days.

We have our orientation of the new house this afternoon - wish us luck!