Hello again everyone!

Well. Here we are…January 23rd. Statistically, the most depressing day of the year according to scientists who bother to spend time tracking this sort of thing! I’d have to say that had I not gotten back on track financially by reviewing my finances and committing to stay on top of them, I would probably be feeling the full brunt of that statistic today.

Last time I mentioned I would talk about my financial goals for 2006, so here they are:

1. To return to regular financial review and money management (this means to review my bank account and expenses once per week [or at minimum twice per month on each payday] before I withdraw money from the bank. This means no more “oh, looks like there’s enough money, I’ll just take out $60 now and figure it out later…”

2 To start my own business and benefit from the tax advantages of small business ownership, as well as earning a second income.

3 To research passive income opportunities and find three possibilities which can be developed (one primary, plus two back-ups in the event 1st/2nd choices are not viable).

4 To research property ownership (where, how much I can spend) to have a mid-term goal to save toward.

5 To be able to re-invest in RRSPs this year, ideally by way of my second/passive income source.

I set these goals to really help push myself to the next level in my financial management process. The first goal about financial review is really my foundation, without knowing the state of my finances I can’t improve them! Good or bad, it’s very empowering knowing where things stand because it allows informed decisions to flow from that starting point.

Starting a small business and then separately developing a passive income source have been on my list of priorities for over a year now and I’m finally at a point where I feel capable of taking these steps. Passive income source means a business in which I do not have to be involved in the day-to-day running in order to earn money from it. Some examples of these are things like a owning coin-operated laundromat, a parking lot, real estate.

I’m still in the early stages of learning so I don’t know what a viable option for me is, hence the research. I have no cash available at present for a down payment, so ideally I need to look for an option which doesn’t require initial large sums to get started (isn’t everybody looking for that opportunity?). I also know I don’t want to do a network marketing business, which is a popular option with little start up cost associated, so it will be a while before I find what’s right for me. But I know I want the benefit of money being made while I do other things! Additionally, having a small business (offering my facilitating/teaching services on contract) will allow me to write off associated expenses, helping to lower the amount of tax I will pay this year and ultimately leaving more money in my pocket. Last year I learned a statistic that said that the average small business (whether part or full-time) saves the business owner about $4000 in taxes! If that’s true, that’s a LOT of cash!

This year my Christmas holiday away on an island at my friend’s rustic cabin reinforced my desire to have my own piece of green space. She has done exactly what I hope to do…found a little piece of property, undeveloped, which she used to camp on for the first several years and then over time she built the cabin when she was financially ready. That plan works very well for me. It’s more feasible for me to find a little undeveloped property to afford than to try and purchase a waterfront lot with full amenities and cabin ready to go. Her property has already quintupled in value in the 12 years she’s owned it!

Lastly, I was buying RRSPs monthly before my career change. As previously mentioned, I took a significant pay cut to move into this line of work so RRSPs have not been an option until now. Getting my debt load down and accumulating a couple of raises has finally allowed a shift that should mean I can buy RRSPs on my current salary, even absent a second income. Although it would be nice to use a second income to be devoted to RRSPs exclusively, without needing my primary income. This is beneficial not only for my future but also for tax purposes. Whatever advantages are offered to me to avoid paying tax legally, I plan to use them!

Depending on where you’re at, these goals may look very different from yours. My goals are much bigger (for me) this year than they were last year. That is because I have made significant strides and am ready to tackle bigger goals. Initially my goals looked similar to Jeffrey’s. I found (am still finding!) tons of small ways to make changes that really add up in the long run. As I wrote out my goals this year I realized it’s also important to have a vision for the long-term, so I can visualize the big picture and keep my sights set on the things I would like to achieve. I really wanna “Go for the Gold!” (Literally and figuratively!)

Until next time, I wish you good health, financial and otherwise!
Kat

It’s budget and planning time at work. Not my favourite activities but I’ve been struck by how much easier it is for me to go through these exercises for someone else – work – than for myself. So this weekend I spent some time thinking about what it would look like if I applied a similar process at home. At work I begin with the routine on-going components of my job that don’t change year to year. Over this I outline projects and initiatives that must be done this year. Once I have a sense of the components over which I have no control, then I look at what resources are left – time & money – to see what projects I can include from the “wouldn’t it be nice” list.

I realized it seems easier to do this at work because I know that I simply “must” do it. Also, we have a very team-based approach at work so I work closely with the accountant and other directors to ensure the budget and plan is reasonable. This relieves the “oh-my-gosh-this-is-too-much-for-me” syndrome. And though I’m committed to the work of my organization and the impact of this process on my work life in the coming year, it’s much more bloodless than doing personal budgeting. The size of my budget and what can be done with it does not reflect on me personally. When I play with line items I don’t gasp, “But I simply can’t live without that!”

So I’m blowing the dust off the spread sheet that Nancy helped me put together and I’m going to try and think about my personal budget and coming year in similar terms. What is the total budget? What are the commitments that are routine and on-going? What are the things I have to do this year? What’s left over that I can put towards one or two items on my dream list? And most importantly, who are the two or three people in my social circle that I can talk it over with as I’m thinking about it and then moving it forward? Perhaps a personal team would be as helpful as it is at work.

Anyways – that’s where my head’s at this week. Wish me luck and I’ll keep you posted!

You’ll notice both Kat and Jeffrey allude to the strength that comes from knowing what’s going on for them, financially.
Again and again, I find that when clients face their finances, they feel empowered - even if the news isn’t the greatest. Something about taking a deep breath and choosing to take charge, regardless of what’s entailed, is a way to reclaim ourselves. And that always, in our heart of hearts, feels better.

If you have a story of courageously/determinedly (is that a word??) facing your finances, we’d love to hear! Send an e-mail via the ‘contact me’ page.

On New Year’s Eve this year, I sat and took stock of the big picture. The shifts I have experienced this past year left me feeling rather reflective on the year’s events and what I hoped to accomplish in the coming year.

Like Jeffrey, I chose a theme for 2006, mine is Purpose: awareness of what my purpose is for my life, each day as I live it, in each action I take, in each thought or belief I entertain.

I took the time to write out my goals for this year, financial and otherwise. Knowing the impact that writing goals down has on one’s ability to achieve them, I felt it was important to see in writing the things I want to accomplish this year. This blog is absolutely part of that process: not only does it allow me a way to log my progress but it makes me accountable for my intentions as I share them with you. A bit scary, but undoubtedly helpful! And hopefully it will help you learn about your own situation too.

I can already say that in the several weeks since agreeing to write this blog, I have already seen a positive impact on my finances and other areas of my life. As I wrote my goals on New Year’s Eve, I recognized I had become lax about a few habits over the past 6 months and I saw a few areas that needed tightening up. So I committed to resuming some habits and adjusting a couple more to get better results. One habit I sorely needed to get back to was regular financial review.

After tracking my expenses in Nancy’s course, one of the things I did both to save money and to be better informed about it, was to switch to a more basic service plan at my bank, one that went from “unlimited” to one that only includes 20 withdrawal/bill payments/cheques per month. This meant I became much more aware of how many withdrawals I made during the month, exactly how often I was using Interac (generally when I had no cash in my pocket!), and it stopped me from using other Banks’ ATM machines - which not only used my allotted transactions, but tacked on extra services charges as well (I used to think “it’s only a buck or two…who cares?!). Before this change I didn’t pay close attention to my bank statements or how many withdrawals I made in a month, so I never really knew how much was coming in or going out. Because I paid for “all inclusive service” I didn’t really care what happened in my account. I knew in another couple of weeks there would be another paycheque to cover those service charges, I figured that they were simply the price I paid for the “freedom of not having to watch every penny”, something I always detested having to do because it felt stifling.

Once I understood the value of knowing exactly where my money is going and reviewed my bank statements for a full year to see my habits, I realized the price I paid for “freedom” of not having to watch my money was actually one of the factors keeping me financially imprisoned!So I chose a new service plan that would cost me half as much per month yet still leave me room to do the necessary banking without my spending being frivolous or unaccountable, AND allow me to be much more informed about the state of my money. The key components of this choice were:

• To stop buying on Interac all the time (I still use it on occasion, but it’s covered in my 20 transactions);
  To make between two and four cash withdrawals per month to live from between paycheques (again, covered in my 20 transactions);
• To review my finances weekly (or semi-monthly at a minimum - i.e. before I withdraw money from the bank).
  These steps require me to be aware of my habits, where my money is really going, to know how much I’ll need to spend between now and the next paycheque and to actually hand over cash so I can feel it leaving my hands when I spend it! (Very different than handing over plastic, for sure!)

Over New Years I realized I had fallen back into old habits: I was not reviewing my finances carefully, was not considering how much I needed to live on for the next two weeks, I’d simply withdraw some cash & when it ran out, draw some more. This habit was partly responsible for that “sinking feeling” I was having prior to Christmas…it was fear, a sense of dread, not knowing exactly where my finances stood after having spent more than a year being very aware. I recognized that I didn’t like the feeling the lack of that knowledge created, so I’ve again begun the process of reviewing my finances, and specifically apportioning my income through the month so all the bills are paid and I have cash to live off of for my weekly expenses.

This allows me to move money around where I want to spend it instead of just spending it willy nilly and then seeing my account dip into overdraft protection because I wasn’t alert. I feel much more secure when I know what’s happening with my money.I also divert more money to debt reduction because I’m paying attention to all the balances in my various accounts. I don’t just slap on a minimum payment and forget about it till next month. It’s so rewarding to see those debt numbers diminish with each statement, I want to keep moving forward!

Perhaps this will inspire you to look at your own habits and what you might do to make some small but significant changes. It’s amazing how they add up so quickly!

Next time I’ll talk about some of other goals I’ve set for the coming year and my plan for achieving them. Until then, may you be “Savvy with Money”!

Kat

Happy New Year! I can hardly believe it’s another year. A fresh clean slate ahead of us. I wonder how many dramatic resolutions and promises have been made. Over the past few years I’ve learned that for me personally its better not make extreme resolutions or set impossible goals. Better to focus on some big pictures things that I want to work on over the course of the year and a few achievable goals.

Last year marked some pretty big events in my life so for 2006 the theme is “consolidation”. Continue integrating the events and learnings from last year and understand the changes they have made on me.

In terms of finances I have a couple of very simple goals to work towards –
Quit smoking which will save several hundred dollars a month.
Making coffee at home in the morning rather than grabbing a Starbucks on the way to work.
Taking lunch to work a couple of days a week and saving the minimum $10 a day that goes to take out.

Not startling life altering decisions (except for the smoking) but things that I know are possible and will in fact make a difference on the disposable side of my income. When Nancy first got me tracking my expenses I was amazed to discover how much money I fritter away on little things without realizing it. Five dollars here. Ten dollars there. It’s amazing how quickly it adds up to a tidy little sum that could be invested elsewhere or go towards a major purchase that will make a noticeable difference in my life. The little purchases are not missed – I barely remembered them five minutes after consuming them. The money it frees up is astonishing.

What are your thoughts about your life and finances as you move forward into a new year? Be gentle on yourself and take small steps in the right direction. And remember – it’s not all or nothing. Allow yourself some breathing room. I’m not trying for never buying lunch again. Just not everyday.

Happy New Year!

Happy New Year to you!

Well, the holidays are over and I’ve managed to survive financially…and thrive otherwise!

I was not relishing Christmas this year, in large part due to the end of my three-year relationship under some painful and rather unexpected circumstances earlier this year. That situation left me riding somewhat of an emotional rollercoaster and my financial health has not escaped unscathed. Let’s just say a little retail therapy has ensued these past 6 months and while it hasn’t been huge, I have incurred some debt whereas last year I engaged only in debt reduction.

Plagued with a sinking feeling about that for several weeks as Christmas approached, I was feeling distressed about spending more money, fearful of further debt. Additionally, I work full-time while doing part-time education and my family lives half-way across the country. So I’m pressed for time as well as money and in my current situation travelling home for the holidays was not a realistic option. Even buying and sending gifts haunted me because I was wanting to avoid the commercialism of Christmas while offering something meaningful which didn’t empty my bank account or cost a fortune to ship (in my experience, it’s often as - or more - expensive to ship a gift than it is to buy or make it in the first place!!).

To deal with time constraints imposed by finishing school only 10 days before Christmas, I chose to buy restaurant gift cards. This way I was able to do all my shopping one place for the family, complete it quickly, and slip the gift card into a greeting card that could be mailed for under a dollar. No waiting in line for an hour at the post office and a card seems to ship much more quickly than a parcel in the final 10 days before Christmas, without costing me a fortune.

Part of me felt this was a cop out because it didn’t feel particularly “meaningful”. But the practical side of me concluded that I was taking my family out for a meal I couldn’t otherwise afford to fly home for, that they might appreciate getting to go out together over the Christmas holidays when it’s so busy and everyone’s too tired to entertain yet again and the multi-restaurant option offered by the gift card meant a variety of choices in their local area. Dad & Sis live in different cities, but by sending the same card to my Dad and a separate one to my sister and her family, it also meant that if they all wanted to get together to have dinner then they could do that. The cost of the two cards combined was $75 so it didn’t break the bank!

Best of all, without a significant other to shop for this year, I was spared the expense, stress and endless hours of shopping I’ve done in past years. This year I decided to forego all gifts except for my immediate family. In so doing, I became very aware that one of the ways that Christmas is most costly for me is that as I’m buying gifts for others I think, “Wow, this is a really cool gift….I’d like to have one of these!” and I’d end up buying TWO of everything…d’oh! This year, the money I didn’t spend on everyone else (and a 2nd set of gifts for myself!) I was able to put towards taking a much-needed break over Christmas at a friend’s rustic cabin. I stayed for six rejuvenating days for the cost of transportation and food. And I bought her a very small gift to thank her for hosting me.

This was, by far, my least “commercial” Christmas yet. Amid the splendor and silence of a wooded cabin overlooking the ocean on BC’s Sunshine Coast, I took stock of my choices - financially and otherwise - and felt very blessed…and VERY peaceful.

May 2006 hold that for all of you!

Kat