Canadian Personal Finance Blog

Last year, we bought a shredder because I kept taking stuff to shred to work, and felt I had enough stuff that appears in my house that I do not want to leave my house in the garbage where anyone might look at it, and I also enjoying destroying things.

What kind of things do I enjoy running through my shredder?

• Most of the credit cards I have keep sending me “cheques” that I can use to make cash withdrawals and get charge 20% interest from the moment the cheque is cashed. These things have on them my credit card number on it, and thus if someone got a hold of it in tact, I would be in very deep trouble. They shred very nicely.
• Credit Cards that I do not use, I have a bunch of credit cards that I do not use, that I am going to cancel, but I have already shredded them. They shred very nicely indeed.
• I also shred many old financial documents that I don’t need to keep, don’t want to burn and don’t want to leave out in my garbage either.
• Canceled cheques and the like as well.
• Old pay stubs.

I put my shredder in the same class as my safety deposit box as being something important in my Financial Planning, an important aspect of safety and security in finances.

New Housing Prices Still Rising

Just not as fast, and it’s acceleration is dropping. This means if you are buying a new house and you waited from last year it is going to cost more, it’s just not getting as expensive, as quickly.

Year-over-year growth in new housing prices slowed for a second consecutive month in March. This deceleration continues a downward trend that started in September 2006, due mainly to the softening market in Alberta.

Contractors’ selling prices rose 6.1% between March 2007 and March 2008, a slightly slower pace than the 6.2% year-over-year increase posted in February 2008.
(…)
Elsewhere in Ontario, contractors’ selling prices were 4.5% higher in Toronto and 3.1% higher in Ottawa–Gatineau compared with March 2007.

Personal Finance Update

So my attempts at stopping my spending at work begins anew. No spending over the last few days and that is a good beginning. De-Crapification continues as well, with more crap to go very soon.

The topic of what my household spends money on has been discussed before, but here is as a percentage of my entire expenditures, what my family spent it’s money on last month (April 2008)

• Tax 25.24%
• Recreation 19.68%
• Groceries 13.11%
• Insurance 8.88%
• Mortgage Int 5.55%
• Utilities 3.94%
• Auto 3.54%
• RRSP 3.04%
• Commuting 2.70%
• Savings (non RRSP) 2.28%
• Other 12.04%

These numbers are relatively trustworthy since I use Quicken fairly religiously, and my expenses are mostly tracked there (and we don’t really use a lot of cash in our household).

Financial Scary Things

Recreation being 20% of the money I spent things on last month. That is down to my kids recreational activities (basketball). That is one hell of a lot of money, and that is not registration fees or anything like that, that is money spent on going to and coming from and being at tournaments. That one scared the nickels out of my piggy bank.

Why was Insurance there? I pay for my house insurance in one payment every year, and I had to pay it last month. This month it will be big again, because I have to pay my car insurance as well. I also have on going Life Insurance costs that come up for my wife and myself (that was 9% of my spending).

Commuting, is actually the cost of bus passes for my daughters to be able to go to school, so that is not an insignificant amount of capital spent either.

Financial Oddities

The money I am paying in mortgage interest costs is only 6% of my expenditures in a month? Wow, that is really not a whole heck of a lot in comparison to say the amount I spend on Groceries (13%). I honestly don’t know if that is good or bad, it’s mostly confusing, I guess. Anyone care to hazard a guess, I am open to interpretations.

I am also putting 5% away in savings of sorts, in comparison to my total expenditures for the month. Since you don’t know how much I spent last month (no I am not saying what that number is), it’s kind of hard to figure out if this is a good or bad amount (it actually isn’t too bad, and I have to keep remembering that one).

Financial Insights

There are areas where spending can be curtailed, and there will be areas where spending will stop for a while too (specifically recreation), so that is a good thing. My guess is the Auto side of things is going to go up with the cost of gas continuing to go up as well.  I think also this is not reflecting debt repayments either (as this is not a category in Quicken) except for specific mortgage interest as a cost basis point. I’ll need to look at that more as well.

Any comments or insights from my readership appreciated.

So far, we have talked about the different methods folks use to pay bills every month (if you get paid every two weeks). I’ve actually been having a bit of a go at my readers on this one, this whole Bill Surfing thing is pretty obvious, but maybe not, it took me a while to figure it out.

Bill Surfing Set up

1. Make a list of all your monthly bills (with how much they are usually)
2. Order this list by most expensive to least expensive
3. Sum the entire list and then divide that value by 2 to figure out how much your “goal” should be for each bi-weekly pay cheque.

That’s about it, with the following caveat to watch out for. You do not want to pay any bills LATE, so if some bills must be paid earlier in the month or later in the month, that is the pay cheque it gets paid on. I almost did this with my Mortgage which actually has to be paid by the 22 of the month, so I was almost paying it late, but luckily my bank pointed out the folly of my ways.

Surfing Methodology

The first pay cheque in the month we will label Pay Cheque #1 and the second pay cheque, Pay Cheque #2 (if there are three pay cheques in the month, you don’t have to pay bills with that one, if you don’t want to).

Pay Cheque #1

First put all bills that must be paid within the fourteen day period of that month (for this example we’ll say all bills that must be paid from the 1st to the 14th of the month). These bills must be paid, so you really don’t have a choice, so pay them! Sum up how much these bills are and compare them to your “goal” bill payment. If these bills add up to the “goal” already, you are done.

If, however, you still have money left to pay bills, find other bills that need to be paid and add them to your list for this pay cheque and pay them as well, until you are close enough to your “goal” bill payment for that pay cheque. Then you are done.

Pay Cheque #2

Pay all left bills from Pay Cheque #1 (and presumably any bills that must be paid between the 15th and 28th of the month). There you have it you are done.

Pay the bills on the day you get paid (that way you are not leaving money around to accidental get spent later, leaving you in a bind).

The left over money is yours to work with now and your bills are paid, and you have one less thing to worry about.

A Few Important Points

Bill surfing is just an idea to make sure you have a good money flow, and you need to work with it to ensure you pay ALL your bills ON TIME, this is the MOST important part of it.

If you have bills that are paid straight from your bank account, you need to take them into account each month as your pay cheques will move around (if you are paid every two weeks), so some months you will need to use some finesse to work around those bills.

Income tax payments are coming straight off my pay, so I don’t worry about that, but if you don’t make sure you put THAT on your list of bills as well.

Have fun with this and make it work for you, in a way that makes your life simpler.

Real Example

Here is another page from my monetary statement, that is effectively my “bill score sheet” for the month with my monthly/weekly payments sprinkled in. Feel free to use this as a template to work from: