Canadian Personal Finance Blog

Archive for November, 2007

The week comes to a close with the end of November and the beginning of December. This week we have discussed the Quarterly Personal Finance report and hopefully this has helped folks think about how they want to share financial information with their spouse or their family (don’t feel you must follow a specific methodology, just that it is a good thing to communicate in this area).

Other interesting points from this week:

• I was actually written up in the Globe last Saturday so if you are really curious as to who I am and what I look like dig the paper out of the recycle bin, or read the link at the bottom of this article.
• Less folks are collecting EI year over year from September last year, by about 4.5%, now does that mean we have more employment or simply less folks getting benefits?
• The Canadian Capitalist had some Financial Christmas Gift Ideas for you to go have a look at, don’t buy any for me, I borrow them from the library.
• Michael James on Money has a very good essay on the Utility of Money, I sometimes wonder if he is writing these solely for me to read, because they seem to be directed at me.
• We Canadians and our beer fridges are wasting money, according to David Suzuki, but also are destroying the planet according to Fox News. All of this fuss over wanting to have a cold brew in the basement while you watch the Habs thump the Leafs? Do I wander into the wilderness and tell David Suzuki to not poop in the woods?

This Week’s Postings

• Personal Finance: The Quarterly Status Report Wrap Up
• Personal Finance: The Quarterly Status Report (Last Parts)
• Personal Finance: The Quarterly Status Report (What Debts)
• Personal Finance: The Quarterly Status Report (What Assets)
• Personal Finance: The Quarterly Status Report (How)

Other Interesting Articles

• Who is this wacko

Christmas time is the best time to think about a financial plan, for many reasons, but let me run through a couple:

1. The week after Christmas is New Year’s day and a completely new fiscal year starts for you (except for RRSPs), if this isn’t the best time to have a plan in place, I am really not sure when would be better.
2. You already are planning for Christmas, so if your mind is in a planning frame, just keep it going and put together an all together financial plan.
3. Christmas is the birth of the ultimate financial planner, Christ. Anybody who can feed that many people with a few loaves and some fish, knows how to plan (oh, I am going to hell for that one).
4. You have an entire year to look back on to base your next year plan on, no better data point than December to do a review of your financial year.
5. December is actually an anagram for Embed Rec but an anagram for Financial Plan is A Panic Fall Inn, and you don’t want to Panic Inn the Fall. OK, this one is a bit of a stretch.

December is a time to reflect on your financial year, collect all your pertinent data, and make a plan for the coming year. Without a plan, how can you tell if you are succeeding or not?

Conclusions and Recommendations

Now you have transcribed all of your pertinent information into a report, and you could simply say, “I am done” and hand this to your spouse, but, I have learned that if you do not put your opinion and conclusions into this report, your spouse or whoever reads this report won’t really understand what you think about your current financial situations.

You now have down on paper how much you make a month and how much you spend a month, this in itself is invaluable information to have. This in itself is the core of this report, you now know whether your income is larger than your output. If your report shows you make more than you spend, yet you continue to go into debt, you are not being honest with yourself and you need to revisit your income and/or debt reports (this report is simply paper if you are not being honest).

You need to add a section in your conclusions section about what your plans are for the coming quarter. Doesn’t have to be a long plan maybe just a one liner like, “Stop Using Credit Cards”, or “Pay off Credit Card Debt”, that is fine.

I call my summary or conclusion section as Truths, where I am brutally honest about the mistakes we (mostly I, but we) have made this quarter or in the past while that we have not talked about. My wife reads this, I’m not sure she likes it, but we do end up talking about something we don’t usually talk about. Will this work for you? I have no idea, I offer it as an idea.

For those of you who want to try this out a Powerpoint template of the Big Cajun Man Quarterly Financial Report Template is available here.

Previous Postings

• Personal Finance: The Quarterly Status Report (Last Parts)
• Personal Finance: The Quarterly Status Report (What Debts)
• Personal Finance: The Quarterly Status Report (What Assets)
• Personal Finance: The Quarterly Status Report (How)

Other Interesting Articles

• Who is this wacko

oThe question you must ask now is what else do you want to pass on to the reader of this status report? Remember you should keep the scope of the section to be within the realm of Personal Finance (might not be the best place to complain to your spouse about their hygiene or their ability to show up on time).

What Else?

A couple of other sections to think about adding to the report might be:

• What is in the Safety Deposit box? We have a safety deposit box that has some important documents and some securities in it, but if you don’t tell your spouse about it (and maybe where the key to it is) how can they get access to it in an emergency? If you have a home strong box, or safe or you have some important documents frozen in some ground meat in the basement, you might want to mention that here.
• Status of your will(s)? Do you have an up to date will? If you don’t you might want to mention that to your spouse, and then go out and fix that problem.
• Retired Debts in this Quarter which are important to remember. Simply forgetting about a retired debt, doesn’t allow you the satisfaction of celebrating the debt’s demise, and it also helps your reader to know that you are working towards actually getting solvent.

With all of this information you have collected there is no way anyone reading this document could say, “I don’t know where we stand financially”, but you might need to create a “Conclusions and Recommendations” section, and that we can talk about tomorrow.

Previous Posting

• Personal Finance: The Quarterly Status Report (What Debts)
• Personal Finance: The Quarterly Status Report (What Assets)
• Personal Finance: The Quarterly Status Report (How)

Other Interesting Articles

• Who is this wacko

Now that we have gone through and carefully accounted for all income in the family, insurance, investment assets and other assets, now is the time to figure out the other half of the picture.

Outgoing Money

If you know what you have and what is coming in, you need to know how much and why money is going out.

1. Debts : What do you owe money on?
   1. Mortgage, how much do you owe, how much are the monthly payments and when is this thing going to get paid off?
   2. Lines of Credit : do you owe? how much? when will it be paid off?
   3. Car loan: balance, monthly payments, pay off date
   4. Credit Cards : please don’t tell me you are carrying debt here? If you are what your plan is to pay it off and when, and how much you’ll have to spend to do it.
2. Yearly Large Payments: I tend to lump these into this category
   1. Taxes on my house
   2. Car Insurance payment
   3. House Insurance payment
3. Monthly Payments is an interesting section, and the meat of figuring out how much money you actually spend. I end up doing some math to figure out how much some of my “monthly” payments are, because some of them I actually pay bi-weekly (because I get paid bi-weekly).Some examples for this:
   1. Electricity
   2. Mortgage or Apartment Rent
   3. Heating (oil, gas, whatever)
   4. Cable TV (or satellite)
   5. Telephone(s) (Home and/or Cellular)
   6. Internet access charges
   7. Charitable Donations
   8. Life Insurance payments
   9. Savings or payments to investment vehicles
   10. Groceries
   11. Car payments
4. Weekly payments, was a section my wife asked me to add so she could understand what was being spent week by week in the house, so it is mostly the same as the above list except now split by a week to week schedule. This schedule can show you at what times of the month you may be spending the most money.

Now that you have written all your spending down, you will now have a good feeling for how much money you are actually spending, which is usually where your Financial Plan must address. You must be brutally honest with yourself and whoever reads this report in this area if this tool is going to help you figure out where your finances stand.

Tomorrow, the final section and the wrap up on the report and what you should be doing with it.

Previous Posting

• Personal Finance: The Quarterly Status Report (What Assets)
• Personal Finance: The Quarterly Status Report (How)

Other Interesting Articles

• Who is this wacko?