Gail's 2013 TedTalk

I heart Gail!

If you haven't seen her TedTalk at TEDx at St Lawrence College in May, 2013, you should:

My Money, My Choices - Level 2, Activity 2

Activity: Track Spending in a Spending Journal

This is the activity that I haven't been looking forward to...but the one that I think will finally see Jordan and I getting on track with our $600/bi-weekly allotment for all discretionary (is that the right word?) spending.  It's the amount that is automatically transferred into our day-to-day chequing account that we are meant to use for:

• Gas
• Groceries
• Entertainment
• Pets
• Clothes/Shoes/Hair
• Eating Out
• Alcohol
• Medical

What I have been doing for the last several years is tracking our spending by reconciling our debit and credit card transactions...and while that tells us if we hit the mark, it doesn't keep us on track during the month.  What ends up happening is that I categorize an entire shopping trip to Costco as groceries but we might have purchased dog food, and a couple of t-shirts while we were there too.

I think this activity is also really going to help me get my head around Anonymous' comment from a few days back about how much Jordan and I spend (combined) on groceries, eating out, and alcohol.  The eating out and alcohol are accurate - but perhaps sometimes they should be categorized as gifts if the bottle of wine is for a house warming.

First things first, we need a book.

As I am writing this post, it's March 13, 2014 - though i'm scheduling this for later on in the month.  So this picture is when I've started...but I hope in the next few weeks - I've got something more substantial to show you.

Check out the My Money, My Choices program by clicking here.

My Money, My Choices - Level 2, Activity 1

Activity: Align Cash Flow, with Bills

The first activity in level two is to align our cash flow, with our bills.  I went to one of Gail's older blog posts on the subject to frame the activity a bit.  Here's what we had to do:

1. Make a list of what you have to pay by date.
2. Plot these payments on a calendar
3. Write on the Calendar when you're paid, and how much
4. Determine which bills can be paid for by which paycheque (here - if because you don't have enough funds, you're meant to call and move your billing dates.)
5. In the calendar, indicate the 'paid' date beside the bill

Okay!  So I thought the best way to do this for Jordan and I is to use Google-Calendar, because we track all of our other activities that way anyways.

To the left you can see all of our bills, and the dates as well as our paydays (green box).  That takes care of step 1-3.

The next is to sort out which bills can be paid for by which pay cheque.

We'll start with the first series of transactions, just prior to being paid on April 11th.  All of these need to be paid for by the pay days that preceded it, less the amounts that occur on the same day as payday on March 28th (planned spending, and mortgage).

So - combined, Jordan and I will be paid $2,785.92 at the end of March.  I'll deduct $770.22 and $1,150 for planned spending - which leaves me with $865.70.

Prior to the next pay day (April 11th), we have $963.87 in payments which leaves us overdrawn by $98.17.  The problem here, is that not only would we be overdrawn by about $100, we also have several transactions about to happen and if the timing isn't perfect on our automatic payments and withdrawals, we could be in deep ca-ca.  

Let's keep going to see if it get's any worse.

From here, I can add one more pay day (mine), and deduct the transactions on April 11th, and the 14th.  That brings our balance down to $362.12.  But...we have a pay day, so we'll top up the account and settle at $667.53.  Following Jordan's payday on the 15th - we have payments on the 20th, 21st, and 22nd and our account is brought down to $191.08.  Following that, it's payday again, along with our planned spending and mortgage payments.  Again - depending on the order that the automatic transactions take place, we could be in trouble - but when the dust settles, we're up again to $956.78, ready to tackle the payments at the beginning of May.  

There's a lot of ups and downs here! Traditionally, what we have done to avoid overdraft (haven't paid an OD fee once in my life),  is keep our own buffer, or cash overdraft if you will, of $2,800 in our chequing account which helps us manage all of the flexibility of the ins/outs of our cash flow.

I get the feeling though, is that if we followed Gail's  method, and perhaps moved some payments around - that our 'buffer' wouldn't have to be so large.  I'm not ready to call this task complete - I think I'm going to look at the numbers some more and see if I can't get some of the payments that happen in/around the 8th of the month, moved to the second half, after the 15th.

Check out the My Money, My Choices program by clicking here.

My Money, My Choices - Level 1, Activity 4

The fourth, and final, activity in level 1 is to create a networth statement.

This was a pretty quick activity for me - but I did make a change to my regular networth statement (and why I missed posting for March 1st).  I've been including our home's market value, but I have not been including the costs that we would incur by selling our home to realise this gain.  That is now reflected in the statement.

The trade in values for the vehicles are updated once a year or so by the dealerships, so this is a fairly accurate number.

Let me know if you have any questions on this one!

Wahoo!  I've earned my first badge!

Check out the My Money, My Choices program by clicking here.

My Money, My Choices - Level 1, Activity 3

Activity 3 is to make a Balanced budget....balanced.

I already have a budget set up (see the 2014 budget tab), but I wanted to go through this process to have the opportunity to really look at everything.  So, I decided to download Gail's Build-a-Budget Excel download.

I made a few additions and a few deletions to account for categories we do, and don't have - and for variable expenses, I used the average numbers from 2013.  The big caveat here is that i didn't adjust Jordan's income to 2013 numbers - I've used his new base salary which is much lower (he's now half on commission).

So!  If we made no changes, we'd be in deep ca-ca over spending by almost $1,700/month!

But we're not going to do that, no siree!

Here's what we're actually going to do:

Yes, yes, I know that the total is still a negative, but that payment won't be made unless Jordan's commission is at least that amount.

This goes back to my promise a few days ago.  When we get Jordan's Commission pay - the first thing we're going to do is add extra to the escape - that's what the new Escape Snowflakes tracker bar is all about.  Plus, this doesn't include the recent change to our phone/tv/internet which will be going down.

Check out the My Money, My Choices program by clicking here.

My Money, My Choices - Level 1, Activity 2

Activity: Create a Debt Repayment Plan

This activity really aligns with what Jordan and I were talking about over the last few weeks - increase mortgage payment, pay of LOC, or pay off escape.  Well...let's look at it all and make a plan.

Gail feels very strongly that all debts must be paid within three years of starting a pay off plan in order to avoid debt fatigue.  It has to be quick enough to realize gains without being so fast that it feels like an impossible task.

So...leaving our mortgage out of the equation we have two car loans and a LOC - given that the Kia has a 0% financing I'm going to focus on the Escape and the LOC.

Using Gail's Own Up to Your Debt Worksheet online, I came up with the following options:

Jordan and I currently have $900/month committed to debt repayment - so we're short $230.96/month to get it paid within three years.  I believe very strongly that we will be able to come up with these funds with Jordan's Commission - but we need a way to stay on top of that.

To help us do this, I've done two things.

1. Added an extra line item on our monthly budget 'Extra to Escape' (because it has the highest interest rate) - as a reminder that money needs to go there before into the planned spending categories.
2. Added a tracking bar on my blog to stay accountable for the extra $8,314.56 we need to come up with over the next 36 months.

So, there's the plan...what do you think?

Check out the My Money, My Choices program by clicking here.

My Money, My Choices - Level 1, Activity 1

Activity: Complete a Spending Analysis

I've been tracking our spending for a long time, so this task was pretty easy for me to do.  Here was our year-over-year comparison for the last four years, and I've added 2014's average so far.

Groceries has been on the rise and as already described eating out and alcohol took a dip in 2011 but then have been rising ever since. Entertainment is on the rise as is vehicle maintenance - though with having two vehicles again, I'm not surprised with the dip and the return to 2010 levels. We're down a bit now, and so that's a good start to the year.

Home Maintenance is way down now that we're not in 'brand new house' mode, we want to buy everything to make it pretty' mode.  In to 2014 and Gas has indeed gone down - now that we're out of the worst of winter, I hope it will go down a tad more because we won't be warming vehicles up in the morning any longer. We're on a great start with groceries (thought an Anonymous commenter from yesterday has me thinking that Jordan and I have an opportunity to talk and really make some goals around this).  Eating out is creeping up, as is Alcohol.

We're on track for Entertainment, Pets, Medical...and I'm actually fairly happy with all of the remaining categories so far.

What is evident - and I know, I know I've said this before -  is that our weekly budget of $300 just isn't cutting it...need to have a think about our spending strategy...and perhaps our non-spending strategy.  I cant tell you that we haven't changed anything yet...but I'm hoping that through Gail's process, we might just get closer to working this one out.

Check out the My Money, My Choices programme by clicking here.

My Money, My Choices

I've just signed up for Gail Vaz Oxlade's newest project: My Money, My Choices.

I'm wondering if anyone else has decided to go through her process?  I've just registered and am at Level 1 - Financial Literacy.  I think I'll probably get through the first couple of phases pretty quickly (I've kept a spend record for three years, so that'a tick box for the first activity).

I haven't found a community or team to work with yet - but I wanted to log in and get started to see what it was all about first.

I would love to hear your thoughts on if you've started the program, heard of it but aren't interested - or anything else!

As I work through the process, and the activities, i'll post my progress on my blog.

$7,900 in Teeth

Jordan was born with two congenitally missing teeth - every since he was small; his benefits have only provided for a flipper/mouth piece that give the appearance of teeth.  That appliance after 20+ years is now starting to wear on his existing healthy teeth causing more problems.

So...given that for the past year we have been exploring alternatives to the mouth piece.  There are two - either bridge or surgical implants.  For a variety of reasons; primarily longevity, quality and ease of maintenance Jordan has chosen implants.

After many quotes, and many arguments with our benefit providers and dental surgeon...we have a plan.  The total cost of the two implants is $7,900 - are combined benefits will reimburse us $3,000 each calendar year....that led us to the tough decision to plan for two surgeries rather then one.

Jordan's already undergone the first surgery to implant a screw into his jaw bone and now we wait 2-3 months for it to heal. Once healed (end of December), the implant/screw will be fitted with a tooth.  Then, and only then - when the first tooth is considered 'complete' can the dentist submit the expenses to our benefit providers.  So, Jordan and I have had to pay cash (read use the credit card) for the first part of the procedure (and will continue to pay cash each time something happens related to the procedure).  In January we should get our first reimbursement; and then we'll promptly schedule the second surgery.  

Our debt load is getting a bit scary, but we have a plan and will eventually be reimbursed.  Jordan and I would both rather pay the interest now for him to have a happy and healthy mouth before we have kids or anything else when there are more demands for the money.

Our Life Pie

Inspired by a new year, and one of Gail Vaz-Oxlade's older posts about the life pie, I wanted to do some work to put together ours.

According to Gail, the Life Pie "is very flexible and is only meant as a guide so that you have some sense of balance in your budget. If you’re way over in one place, you have to be way under in another. The bottom line is that you can’t spend more money than you make."

You can see that because Jordan and I have 0% allocated to debt repayment, that leaves us a lot of wiggle room.  We have decided to allocate this money towards life - we've got plans to finish the back yard this year (deck, fence ect) - so that money will come in handy.

 For anyone who doesn't recall the post, or didn't click on the link, here is the breakdown of Gail's recommendations vs the exact percentages of ours.

Not only do we have 0% allocated to debt, we also spend less in housing then she suggests, and we contribute more to long term savings.

For those who like the details, keep reading below.

When filling this in, I started with what we spent last year and also had a look at what our budget for 2013 was - that helped guide this.  Using our utilities tracking history and tracking our daily expenses (gas, vehicle maintenance etc.) also was a big help in being accurate.

This Christmas

This Christmas was hard.

It was the first without my dad.  It was also the first without my brother (he's moved to Winnipeg).  It was Jordan's first without his mom and his brother (they were on a trip together).

I tried to stay upbeat and positive, mostly I faked it until I could make it.  I think for the most part people believed that I was in good spirits, and that put me in a better mood then I would have been otherwise.

I had a lot of lists.. I always do, but this year it felt a bit more mechanical.  That helped get through I think...task lists...accomplishing things.

To distract myself, I made a lot of Christmas gifts this year.  We also spent a lot - but instead of telling you how much we spent (I don't 100% know just yet... haven't added up all the receipts), I would like to share with you some photo's of my creations...

Homemade Chocolates

Hand Painted Christmas Bear

Home Made Spice Blends

Stocking Stuffer for Jordan

Scarf for Jordan's Cousin

Scarf for my Mom

Scarf for My Cousin 

School Lenders

Have you heard about Gail Vaz Oxlade's School Lender's Campaign?

If you haven't heard of it yet, now is the time to find out what she's talking about.  She's asking everyone she knows, through her blog, twitter and facebook - to get involved.  She asserts that the lending system is broken and we all need to take action to implore our MP's to make a difference.

You can - Join the School Lenders group on Facebook to stay tuned for announcements and you can write to your MP (Gail's got a nifty pre-drafted letter for us) to demand a change in legislation. Finally, during School Lenders Week (Nov 13 - 19) she wants Canadians to commit to not using credit for anything during that week.

It sounds pretty powerful to me!  While I only have about 200 hundred visitor's a day - I know that some of you have blogs that are far more widespread then mine.  Do you agree with Gail's message, will you help spread the word?

Centerpieces & Isle Flowers

This past long weekend I went to my parents place in BC to spend some time with my mom putting together the centerpieces and ceremony isle planter pots.  Other than getting a nasty sunburn, it went really well and was low cost too!

We had gathered the centerpiece pots and painted them a while back and had some excellent soil that we had been given a while ago which was fantastic.  My mom graciously bought some miracle grow as well as the flowers (approx $175) and we had bought some large planter pots from Walmart (approx $30) as well.

All told the total cost was just over $200 for our centerpieces (25) and isle flowers (12).

Here's some photo's of pulling everything together:

I am credit card debt free!

...that's right, I am finallly

credit card debt free!

wow.

I'm not sure I believed this day would actually come! I feel like in some way or another I have owed money on my credit card for the last five years or so. I've come very close to paying it off a few times, and then promptly plummeted right back into debt. I even cashed out a few RRSP's a couple years ago to try to pay it off.

My CC debt has never felt insurmountable, and has always felt insurmountable all at the same time. At it's worst it always ranged from $3,500 - $5000. I think that the relatively small sum made me feel even worse that I couldn't get it paid off. I would often wind up criticizing myself because, come on?! What's wrong with me?! Why don't you just do it!

I could blame the length of time on any number of factors, but I'm not going to go down that route. Instead, I'll tell you what I did that worked.

1. I had to make the decision that eliminating this debt was important to me!

It had to be more important then a haircut (which I haven't had in probably a year and a half), more important then new shoes, new work clothes, or a new couch (to name a few).

2. I put myself on a budget, and stuck to it.

I used Gail Vaz-Oxlade's 'magic jars' to get me on track. Living on cash really worked for me, although at first made me very uncomfortable. I had only to remind myself of point number one before I got over it. I put $250/bi-weekly towards my credit card debt while continue to save in my RRSP's and emergency fund.

3. I built a $1000 emergency fund

Once my credit card debt was in reach, I used the majority of that emergency fund to pay of my debt. I was wayy over my head with it, and truly needed it to be gone. It was my emergency! I am now working to build that fund back up.

4. I cut up my credit card!

I tried leaving it at home, leaving it with Jordan - I even wrapped it in paper with awful messages to myself reminding me that I wanted my credit card debt paid off. The only thing that got me to break the habit of using it, was to remove it from the equation. I had used my emergency fund to pay off this debt, and the only way to not regret that decision was to cut it up the card.

Not using the credit card finally enabled me to be able to have my debt repayments do their job and - repay that debt!

Thank you for following me through this first step towards financial freedom. Going forward in the short term I plan to get my emergency fund back up to at least $1000 and have a debt free Christmas. Come January I plan to focus on eliminating my student loan debt. I look forward to continuing this journey with all of you.

Borrowing to Contribute to RRSPs

I have a LOT of RRSP contribution room, well, I think it's a lot. My 2009 limit is $13, 116. Now while I wouldn't borrow the full amount - I wonder about the advantages of 'catching up' when it comes to RRSPs.

I read an article on CanadianParents.com, called Borrowing to Contribute which was written by Gail Vaz-Oxlade - and she supports it, big time! In reading the article, it would seem that the benefit does outweigh the interest you would pay. This is of course, only if you pay off the debt within one year and re-invest/pay off the RRSP loan with any refund you receive.

The latest I will start my Company Pension Plan in October, 2010, though I'm going to try to negotiate starting this in October, 2009. It becomes vested two years after I start, which means two years after I start, the company cannot take back the money they've contributed. I want to be 'caught up' within the next couple of years or so, to really start taking advantage of compound interest. I don't want to wait until my company pension plan kicks in (due to so many variables) to start seriously contributing.

Have you ever borrowed to contribute? What was your experience with that?

I will be credit card debt free in 11 days!

Hobbies

I asked Jordan for a post idea the other day and he said I should write about Hobbies, I kind of laughed it off because I couldn't really see the personal finance angle. I've been thinking about it the last week or two, and really, what doesn't have a PF angle?

I've been thinking about what my hobbies are and how much they actually cost. Here's what I've come up with in terms of my hobbies/interests:

• Horse back riding
• Fish keeping/breading (we have 3 fish tanks)
• Painting (ceramics or white ware)
• Cooking/baking
• Scrap booking (I have a lot of materials and one have finished book)
• I knit on and off and mostly forget how in between
• Checking out open houses/garage sales/estate sales
• Gardening
• Reading PF (and other) blogs
• Reading novels
• Camping
• Fishing
• I'd like to find ways to use all the tools I recently picked up (erm, I want to build a birdhouse, is that strange?)
• Wondering around home fixit stores getting ideas for my aunts place
• Spending time with family/friends
• Working at my aunts place

At this point, I'm not sure how much my hobbies cost, but wow! That seems like a big list. Some of the items above are free, some had large initial outlays however now wouldn't cost a lot (like camping & fishing). Some have fixed reoccurring costs (horse board), some have variable reoccurring costs (fish food ect).

Do you know how much your hobbies cost? What are your hobbies?

Budgets & Jars

I was cleaning out the pantry a bit last night and noticed that my brother and lindsay had quite a few mason jars that wern't being used. Seeing as buying jars is what stopped me from using Gail's Jar System last time I thought about - I don't really have an exuse now.

I worked through her online budget last night, and customized it quite a bit for my own needs - trying to make sure I hit everything that is in my current budget.

This is what I wind up with using Gail's budget (slightly modified):

I'm pretttty sure that I'm not forgetting anything,

but I kind of feel like I am. Perhaps this is really my heart saying - you promised you would stop mucking about with your budgets and just let them work.

This month has been a little crazy for $ and Jordan and I have done quite a bit of flip flopping back and forth - which has made it challenging to stick to much of anything - with 5 birthdays and a couple of camping trips and I'd say the budget or the system needs to be looked at.

Below, is a summary for each category - You can see that acccording to Gail - I'm over or underspending in some of her s/b columns.

Feel free to chip in and let me know if you think I under or over estimated in any categories

Now - the spreadsheet goes one part further - and tells you how much $$ you should put in the jars each week/month. Here is that break down:

So my variable spending for the month is $635/month, or aabout $150/week.

So - What do you think, should I go for it? Have I left anything out?

Gail Q&A - Answered!

So, back in March I wrote to Gail Vaz Oxlade about preparing for possible lay offs/recession. She had sent me an e-mail response within a few days, but didn't post the question on her website! Well, it would appear that she has soooo many questions in backlog as she just today posted my question and answer.

I thought I would share below:

Q & A

Hello Gail,

I am sure that you are currently being bombarded with questions about the recession and preparing for lay offs. That said, I haven't seen a question or a post about it, so I thought I would throw this out there.

The company I work with is touting the line about how this recession is actually an opportunity to refocus efforts... yadda yadda yadda and that because we are a private company we are safer than some of our competition. While that might be true, they are slowly but surely going division by division and group by group assessing business need and letting people go.

I do have a budget which I am pretty good at sticking to which includes an emergency fund (building slowly at about $600 right now), and a debt repayment plan (owe about 2500 on my visa and have 10,000 plus in student loans), as well as long term savings (RRSP).

So for the person(s) who have things on the right path, but just aren't there yet in terms of preparedness (3-6 months of savings and zero debt would be my goal). What should we do to prepare for a possible lay off, reduction in pay, or reduction in hours.

I have read in some newspapers and other sources, that while employed, people should seek out a line of credit. Is this something you would advise? It doesn't seem right to me to seek out credit when that is what got us in this mess in the first place.

Thank you for your sound and quality advice,

Jessie

Jessie, the line of credit is BAD advice. Let's say you decide to take out a $20,000 line of credit. You lose your job, exhaust your emergency fund and savings, and tap the line. Your bare-bones budget is $2,000 a month. You're out of work for five months. When you finally get a job, you're relieved, only to find you're now $10,000 in debt!

If you think there may be the likelihood that you'll lose your job (which, by the way, there ALWAYS is), then you should brush off your resume, and start looking at what other opportunities may exist. You might look at ways to work part-time to supplement your full-time income and build up your emergency fund faster. Or you might look at skills or talents you have that you can turn into a small biz... every penny counts.

Good luck. This is a tough time for lots of folks, and I suspect it'll get tougher before it gets better. g

A Question for Gail

I submitted this question to Gail Vaz Oxlade today, I hope she answers it (of course if you have any advise - please feel free to chip in):

Good Morning Gail!

I hope this note finds you well.

My question is about priorities – and how to sort them all out.

A bit of context for you:

I have a small credit card debt ($2,500) and a relatively small student loan ($9,000) in terms of debt. I put $250/bi-weekly (bw) towards my credit card and $150/month towards my student loans.

In terms of TRUE savings I have goals including: an emergency fund ($10/bw), & my RRSP ($50/bw)

My planned spending funds include: House down payment ($150/bw – this is matched by my partner), a Christmas fund ($37.50bw),a buy company shares fund ($50/bw), & an annual expenses fund ($35/bw).

As my fixed expenses (rent, utilities, cell, insurance - ect) are about $750/month, and debt repayment is $650/month, and my planned spending accounts get $550/month - that leaves me with about $400/month for variable expenses from groceries, to gas, to fun.

Okay! Enough Context.

Here’s my question – in terms of figuring out priorities, what is the most important? Is getting my emergency fund to 6 months worth of hearth & home expenses number one? Or is paying of my debt number one? You blogged about this a bit today – but I guess my question goes further then that. What about all the other ‘savings funds’ and ‘planned spending’ funds that people have – where do they fall into the mix of priorities. I’ve spoken with some people (friends) who think the planned spending should just go towards debt. I think however; that if I have no money tucked away for planned spending – I’ll still spend the money – which is why I owe what I do on a credit card. If I have the money saved – in theory, I won’t use my credit card.

What I think might work best is if I try your debt-snowball technique as a savings-snowball technique. For this to work, I have to have a priorities plan.

I appreciate any tips, or advise you would have for me and those in my situation.

Thank you,
Jessie

Managing your money...

I am a big fan of Gail Vaz Ozlade, and her show 'till debt do us part. One of the ways she encourages people to manage there money is to use her 'majic jar system'. Once the budget has been made, you can divide your variable expenses so that you have weekly amounts you can spend. She uses jars so people can see their money coming in and going. You also need a notebook to track every sent that you spend - it doesn't work unless you track it.

so using gails budgeting tools to help figure out my weekly amounts ( I used the budget numbers I posted preivously, but entered them into her spreadsheet. I also customized the sheet a bit to meet my needs - this is pretty easy if you are familiar at all with excel).

Below is a picture of the jar amounts I'm going to start using. I get paid next week, so I will start my jar system that week. This week, I will find the jars (going to try not to buy them) and a notebook to get organized.

I have hidden some of the fields, b/c I am not comfortable posting exactly how much I make. That said, if anyone needs help creating a sheet like this for themselves, I would be more than happy to send you something.