Bill Creep

I struggled with a title for this post - but basically what I'm talking about is all of those bills we have - for TV, phone, internet, radio etc. that starts off at a promotional rate, and then creeps up in price over time.

I don't have a set schedule for it, but at least a couple of times a year I call up our service providers to make sure we're paying the best rates for our services and see if I can negotiate better prices.

Today I called up Shaw (TV/Cable), Bell (cell phones), and Sirius (satellite radio) - I had no joy with Shaw and Bell - but I had great success with Sirius.

We got our satellite radios when we purchased our cars - of course it was free for the first six months and then there was a fee for it afterwards...but I didn't really look at the details until now.

We had been paying $190.84/year for one of them and and $119/year for the other...what?! $310.88!  So I asked if we bundled them what pricing deals he could offer - and the agent came up with $294/year ($175+$119) - I told him $300 for radio was just ridiculous, commercial free or not, and asked one more time if there was anything he could do to get me better pricing.

and he did.

We renewed the account for $120 for the next year!  Saving over half the price if I hadn't made that phone call.

That's pretty good for only 15 minutes of time over my lunch break on a Friday.

Hail Damage

Quite a few of you know that Jordan and I are based out of Alberta, and some of you may know that we had some pretty intense hail storms here this past month (among others).  We certainly didn't have it as bad as many people, but both the Escape and the house took some damage.

Here's a snapshot of Aries eating the hail off our our patio furniture...she was in heaven!

I don't have any good pictures of the vehicle or house damage - bad angles.

We've seen the adjusters for both the Escape and the House and are now just waiting for the damage estimates and the next steps.

From the sounds of it - we'll at the very least need a new roof and some new siding...and the Escape it's right on the cusp of being a total loss.  We should know in the next week or two for sure.

Life Insurance

There are a lot...a tonne of resources online around Life Insurance.  Calculators for how much you should have, blogs on what kind you should buy (whole, term, term to 100, universal), and debates around insurance as an investment vehicle...not to mention the plethora of do's and don'ts articles out there.

So..I'm not going to recycle all of that and write something of my own, but entirely unoriginal, but I will share with you a couple of my favorite blog posts as well as what I think Jordan and I should do.  I would also really appreciate your thoughts, and opinions of our plan.

Assumptions

• We will not use life insurance as a way to invest
• We will use life insurance to hedge our bets on the timing of our eventual deaths
• We will, sometime in the next few years have children.  Maybe one, hopefully three, probably two.
• While our mortgage and other debts will decrease over time, and assets will increase over time - other financial needs (for eventual kids) will go up.
• That while we both of life insurance through our employers, we may not forever and so this won't be counted on (mine is 3x salary, Jordan's is 1.5x salary).

Our intention with regards to life insurance is to leave one another with enough money so they have choices. The choice to move, or to stay. The choice to take as much time that is needed away from work to grieve. Our intention is not for either of us to have more money than they need - our deaths will not be a lottery.

Assets & Income

• Current debts including mortgage, both vehicles, and the LOC is about $375K.
• Removing our home and vehicles from the equation (because we want choices), our current assets are about $72K.  This leaves a gap of about $300,000.

Okay...what else, well, we need to sort out other than the debts - what the loss of each other's income would do to our lifestyle.

Monthly Budget Needs

We both earn respectable salaries - and either of us could run the household bills without the others salary without the mortgage/car payments needing to be serviced. I have only to look at my stay at home mom/dad budgets to get an idea about income replacement needs.  The fixed bills would be fine, but when I add in a childcare assumption as well as continued savings for emergencies/vehicles ect - things get a bit tight...and by tight I mean un-affordable.  Have a look:

I would need about another $400/month, and Jordan would need about another $900/month.

Looking to Life Insurance Canada's website, endorsed by my favourite money author Gail Vaz Oxlade, I used the income replacement calculator to sort out how these monthly costs translate into insurance needs.  To replace the $400/month for 20 years, Jordan's policy would need to be for an additional $87K.  To replace the $900/month Jordan would need for 20 years, my policy would need to be for an additional $197K.

Something we'll have to ask an insurance broker is should we buy insurance assuming children - or wait until we have them and then adjust the policy, or buy another policy.

The Cost of Death

Okay...this one is sort of uck to talk about, but it's important too.  For my dad for example, who passed just two and half years ago, we had a very modest reception in a community hall.  The fees for the funeral parlor were just under $6,000 which included the rent of the hall and the incidentals associated with that.  His headstone was around $3,000, and the cost of the plot in my home town was around $500.  So $10,000 is not an unreasonable estimation.

Summary

Okay...so when we have kids I'll need a policy of around $500K and Jordan will need $400k - before kids I need a policy of around $310K.

What do you think?  Are we ready to go to a broker, are there things we're not thinking about?

Good Links

• 8 Common Mistakes
• Insurance you Shouldn't Buy
• Do's and Don'ts

Getting a Will

Yes, yes we have finally found a lawyer and set up an initial appointment.

We'll be looking at $700 + GST for $735 for Wills, Power of Attorney and Personal Directives. I have been advocating for both family and friends to have these documents in place...in fact, I have even used the words 'it's the greatest gift that you can give to your loved ones'....and 'it's a selfish thing not to take care of things so your loved ones don't have to'

I've said it so many times that I've been starting to feel like a bit of a hypocrite.

My Great-Aunt is an amazing example of how to stay on top of these....end-of-life documents, for lack of a more rosy-way to put it.  She reviews and updates them  at least on an annual basis.  One of my grandmothers on the other hand has no will, no poa, no personal directive...nothing.  She also is on the slippery down-hill slope of dementia and so there is no one who can legally speak on her behalf...now, I say legally because while I can't speak on her behalf I do advocate for her at every opportunity - but that's a story for another day.

It'll be a few weeks before the i's are dotted and the t's are crossed, but I sure can tell you that it feels great to get it started.

Powers of Attorney....Continued

The Alberta Human Services department as a really good brochure on POAs that can provides a brief overview on the types of POA that exist.  It came up in the comments from the last post; but I thought it was important enough to mention here as well.

First is the concept of 'enduring' a POA agreement by itself would cease to be effective in Alberta once the donor (the person for the the POA is for) becomes mentally incapacitated.  An Enduring POA gives a few more options, namely it can take effect:

• Immediately
• When the donor becomes mentally incapacitated, or
• When some other event specified by the donor occurs.

It my great-aunts case - she chose to give me Enduring Power of Attorney, effective immediately.  In doing so, she also has effectively voided the previous POA agreement that was in place with another relative of hers.  By and large, my family is happy that I will be assuming the role.  I am the closest blood-relation, with a very good personal relationship in the city...everyone else lives 3-12 hours away.  So with regards for appointments with banks etc. I make sense as a practical choice.

...So, what does that mean?  What are my new responsibilities under this agreement?

• To act in her best interests - this includes a duty to protect her interests
• To consult with her, and those who take care of her and with family and friends as appropriate
• To keep accounts, and given an account when called upon to do so including: list of assets, assets acquired and disposed of, receipts/disbursements, investments bought/sold, liabilities, and payments - all with dates and a clear paper trail

Good Reading

• Powers of Attorney Act in Alberta
• Legal Resource Centre of Alberta
• Miller Thomson Law Firm

Power of Attorney

Do you have one?

Are you a representative on someone else's behalf?

Over the last few months I have been working with my great aunt and her lawyers to make some changes to her current POA over to me.  It's right around the corner now, so I thought I would share that with all of you....I'm not going to be renaming my blog, Jessie, Jordan, and Jessie's Great Aunts money - but I might have some new things to write about.

Some topics that I expect will come up will be managing other peoples money, financial planning in retirement, and even elder abuse.

Does anyone have any other topics they might find interesting around POA and the responsibilities or the risks involved?  Drop me a line to let me know!

Net-worth & Debt Update

Bam!

We did it!

We've broken the $100,000 net-worth barrier!  As of July 31st we're sitting at a sweet, sweet $102(+).

We've been tracking net-worth for the last 19 months...and it's incredible to see how far we have come in that time.

Not including the mortgage, we're not sitting with just over $50K in debt.....where does that debt come from?

• $28,700 left on the Escape and the Kia combined
• $2,180 from Jordan's dental work (waiting to be reimbursed)
• $21,500 on the LOC

...but what, what is sitting on the Line of Credit?

• $5,500 - purchasing shares at work
• $1,000 - tires
• $2,000 - random vehicle work/repairs (living in a construction zone is rough on tires/vehicles)
• $2,500 - guessing...interest over the last year and a half - embarrassed about this part.
• $3-5,000 - consumer spending, gifts, camping etc.
• $3-5,000 - remaining from the back-yard project

It's a whole smash of things, and why a lot of people don't like LOCs...it's so easy to pile extra's on to them. We've been making steady progress over the last six months though; and haven't actually added anything new to the balance for quite some time.  It's hard sometimes not to feel like we're failing because of this...but when I look at our Networth, and I see the overall progress - I know that we're making good choices (yes, we could always make better ones), but good choice, with good results!

If this year continues to trend the way it has so far, it looks like we'll be able to pay down an additional $7,000 from now through to December...oooh that'll feel good!