Focus on February

Even with the second bonus from work now sitting safely in my chequing account, the Excel spreadsheet I use to plan and track expenses running through this account just gobbled it up. All of it will disappear in February, with none leftover for the line of credit.

Of this I am nearly certain, the in-house supply of wine and coffee can be rationed to last the month. I share both freely with the daycare provider. I have tamed this expense considerably since I started buying both items in larger quantities a few months ago, with fewer impulse trips to both stores and much less wine consumed when I go out.

SAQ Depot in Hull further discounts wine by 15% with every twelve bottles purchased. Bridgehead gives me a free pound of coffee based on the number of stamps I accrue on their customer loyalty card.

The following self-imposed restrictions from January must carry over:

• electronics, including anything sold through the iTunes store
• services related to hair and foot care
• sporting goods and events
• clothing and shoes
• out-of-town travel/vacation (no advance bookings for hotels or camp sites)
• parking

In the foot care camp, I've recently acquired a bottle of fairly glamourous nail polish for $2 (marked down from $12) and a foot file for $3. Paying closer attention to my feet takes time I often don't have, but I will try and find a few minutes every day. The vaseline and socks trick at night works wonders too. A proper pedicure can wait until spring, hopefully.

Cosmo magazine says that big bangs are back big. I've boldly trimmed them up again.

Keeping away from the iTunes store is harder. I might pick up a fixed-amount iTunes gift card for myself to budget and restrict my purchases that way.

Thankfully, February will be a short month. It always is.

Taming the tiger

This post is a credit card update. I pay the card off monthly, so there is never an interest payment to Visa. The amounts shown per month are the actual amounts I charged to the card per month, and do not reflect any back-debt or accrued interest due because there is none. To pay it off in full every month, I have sometimes borrowed from my line of credit.

I started this blog in November. It helps!

The amounts paid are associated with a payment date 15 days following the statement. For example, the February amount is the amount I will pay on Feb. 15 to clear the Jan. 27 statement.

Dumb and dumber

Inspired by the flurry of annual statements I'd received recently, I called FirstLine to request an annual mortgage statement. It's on its way to me now, by regular mail. The customer service agent who helped me with my request noticed that my five-year fixed-rate mortgage is up for renewal this year. She pointed out that the interest rate was a little higher than current rates, and asked if I would like to speak to someone about switching it.

In her opinion, I would certainly stand to save money. I asked about the penalty, and I mentioned that my last mortgage had a three-month interest penalty associated with such a change-up. She did not answer the question.

Instead she patched me through to someone who could answer it for me, and set things up. I spoke with him for about two minutes. When I asked him about the penalty, he paused before saying... thirty three ... thirty three ... ... eighty five. That's four months interest!

I ran the numbers on how much the interest drop might actually save me. It would lower the monthly payments by approximately $50 per month, over a new five-year term. I fail to see how increasing the debt by $3333.85 would save me any money. That's because it would not, unless something truly horrifying happens with interest rates in the next 11 months.

Approximately $50 per month X 12 months per year X 5 years = Approximately $3000.

Unless I've overlooked something, I just don't get it. There are a lot of mortgage choices out there. It seems to me that if I choose to continue doing business with FirstLine for an additional five years, there should be some sort of return consideration, like waiving the fee, not penalizing the customer. I wonder if they have a customer retention department.

One thing that strikes me as particularly weird here: they approached me about breaking our contract, not vice versa. I did not approach them. Who really stands to benefit?

Most closed fixed-rate mortgages have a prepayment penalty that is the higher of three-months interest or the interest rate differential (IRD).

December 31, 2010 closing balance: 
$160 960.17

Maturity date:
January 1, 2012

I did not see that coming

I experienced my first eTrade this morning. While I was sleeping, they sold 56 of my restricted Intel shares, leaving me with 78. When I called for an explanation, I was told that it's an automatic transaction scheduled on my behalf to cover taxes.

I was surprised to learn that they were being collected on behalf of my employer. That's not the right amount for a capital gains tax, and I don't think I've realized the capital gain yet.

Will I be taxed again when I sell them?

When I did the math on the potential capital gain for the grant, it came in around 25 shares... leaving me to wonder, how is it really taxed, and how much of this money will actually be mine to keep?

Further research reveals that it's called withholding. It's required by the Canadian Income Tax Act. The 2010 federal budget changed employer withholding requirements on stock option benefits to shift the tax collection risk to the employer, effective January 1, 2011.

Update, January 31:
"This order was initiated by your employer based on your restricted stock tax payment election. You can review your elections any time by logging into etrade.com. At the top of the page, just below the main tabs, click Plan Elections."

RRSP roundup

Just getting caught up on my mail.

The residual funds from my aforementioned dot-com glory days are managed by Assante. The new statement indicates a total portfolio value of $60 472.17 as of December 31, 2010.

There's a statement here from Sun Life Financial as well. I've been setting this money aside since my return to full-time employment in October 2009. The RRSP itself is currently valued at $17 913.41, funded by employee contributions. The unvested DPSP sits at $3 041.01, and is funded by employer contributions. The DPSP vesting date is November 17, 2011; it's not mine yet.

These are before-tax dollars.

In between sits a seven-year self-employment gap in which I made no contributions at all.

Risky business

I woke up to another surprise from eTrade this morning. In addition to the 128 shares of restricted stock options they've been teasing me with for the past few weeks, I also now have 383 shares of regular stock options vested. Both batches vested this morning.

Regular stock options are issued with a strike price. The strike price is somewhat tethered to the price the shares were trading at the day you joined the company. In my observation, they operate on the principle that your contribution to the company over time can help increase its value. Vesting schedules are laid out in a job offer to encourage retention.

Once options have vested, you can sell them at nearly any time (before you leave the company) and profit on the difference. It's taxed as a capital gain. If they do not increase in value, you simply do not exercise them and walk away from them without realizing a loss. There is also a small fee associated with exercising them.

In 1997, I was issued a significant number of regular stock options in a relatively obscure tech company. They vested three years later, nearing the height of the Nasdaq and dot-com madness. My strategy was simply this one: it's essentially free money, exercise as they vest, sell immediately. I realized a capital gain of approximately $250 000.

My former colleagues who held a similar number of options to their peak made $1 000 000. My former colleagues who held past the peak made $0. It's a best guess, gut feel, risk threshold, comfort level kind of decision you usually don't get to make twice.

This time I have vested shares in Intel, and right now they are trading pretty close to the strike price. I'll let them sit for now. I'm not ready to sell the restricted stock options either.

I looked up the strike price: $20.30

Is it just me?

I have absolutely no idea how much in total is owing on two of my main assets:
my house and my car. I've not seen a recent annual statement for the mortgage, nor am I set up to monitor its progress online. I've just confirmed the service is available.

While there is equity in this house, the amount is not clear. I paid my last house off in its entirety, over a 10-year period. That turned out to be a costly decision, and I do not aspire to do such a thing again in my lifetime. This one is financed over a 35-year period at a rate of 4.9%, and the $845 monthly payments are mostly interest-only. To date they have been lower than rental payments would be, and the house has significantly appreciated in value.

The car loan scares me a little. In addition to the outstanding loan amount of approx. $10K, I recall it was financed in a accordance with a lease-style arrangement to keep the monthly payments low with a shocking interest rate of .8% (less than 1%, really not a typo). The final monthly payment for the vehicle is followed by a lump sum; I don't how the amount is determined. Will it exceed the car's book value? It still runs well, and for that I am grateful. I've kept the mileage low, installed a trailer hitch for our bike rack, and invested in a second set of (winter) tires on rims for it. The current value is hovering close enough to $10K.

I know precisely how much is left on the adoption loan ($7250), and the rate at which I have been clearing it. National Bank sends me an annual statement. The interest rate is much lower than I thought it was, hovering variably between 3% and 3.75% in 2010.

Light bulb moment:
Realizing why the credit line torments me. Mortgage excluded, it may be my primary debt. There is something wrong with this picture. It's supposed to be for unforeseen expenses.

One trap today

Family dinner.

Today is Friday. It's the day my eldest child returns to our household after a week with her father. She splits her time between two homes. She does not like change. In her absence, my youngest child asserts the role of Only Child. It's one they both reluctantly give up.

I collect them from two different locations before Friday dinner, and more often than not, they bicker all the way home. In the evening, it can escalate to whacking, biting, and sometimes includes spitting. It's a scene playing out across town; I have no doubt.

My best strategy to pre-empt it is a sit-down family dinner. Sometimes we go out. The temptation can be very strong, but it adds up quickly. I'm planning something different tonight. Although we're generally a meatless household, I will bake another small black forest ham. It's the same kind we had for Christmas, and they know it's a treat.

I enlisted their help in the meal prep, and it worked. No whacking. No biting. No kidding.

Traps for today

Here we go:

• Buying surplus donuts for this morning's office warming social. One dozen will be enough for seven people, plus I picked up a half-price vegetable tray at Metro last night. It has not expired yet, they look fresh to me, and I saved $5.
• Hospital pay parking lot. I will choose sensible footwear to reduce temptation.
• Networking dinner, which may involve multiple courses, wine, and simple-math bill splitting. I will indulge a little, enjoy the company of my colleagues, and lead by example on pushing back the dessert menu, firmly and swiftly.
• Overpaying the babysitter, which of course I will do!

In the plus column is the stop downtown I'll likely make on the way home from dinner.

Much ado about nearly nothing

Tax Free Savings Accounts (TFSAs) appeared on the Canadian financial landscape in January 2009. There was a bit of fuss on my Facebook feed on this theme in late December 2009. The consensus was that if you did not open an account somewhere and make a first contribution in 2009, then you would lose the option of carrying forward any unused portion of the $5000 contribution limit to 2010. One year later, it still sounds like urban folklore to me but then again, it might be true.

My account is set up through ING direct, and they mail me paper statements quarterly. It pays interest at a rate of 2%. I have a small monthly amount deducted directly from my chequing account at RBC. My TFSA closing balance one year later is $322.06. I should eventually check out the facts, and I probably will. I do not yet need to know.

Interest paid this quarter? $1.03

Update, January 23:
Just opened a great letter from ING Direct in which they clearly lay out basic facts:

• Deposit up to $5000 a year and carry forward any unused portion. With TFSAs now in their third year, that's a total deposit limit of $15 000.
• You can withdraw money from the TFSA at any time without paying tax, but you must wait until the next calendar year to redeposit that amount.
• Any money you withdraw can be deposited again the following year, in addition to the annual $5000 limit.

Money for nothing (and trips for free)

In recent years I have accumulated approximately 170 000 Aeroplan miles, through a combination of adoption-related travel, work-related travel, and a Visa points program. I was completely off the points card for a few years, but when you know you have to travel, there are definite advantages (such as travel insurance) to the card. The card has an annual fee.

I routinely retreat to these points in fantasy. My current thinking is that they will get me, my kids, and my father up to the Yukon for a week in 2011. It will take some advance planning to book that trip, the kind that is not necessarily compatible with the custody arrangement for my eldest. I digress. That's not a financial problem, and has no place on this blog.

All of my grocery shopping expenses route through Visa. I am a careful shopper, and my thinking is that we might as well get points for things we need to buy.

Costco will sell me groceries, but won't take my Visa. For reasons I still don't understand, I renewed my club membership twice last year. I don't shop there any more; I don't trust their memory. I learned from my experience of a first phantom renewal to demand a receipt upon the second renewal in April. While I can use it to challenge their claim that it is again expiring, I've decided not to renew. I might if the membership had tangible benefits to me. I question how much the renewed membership actually saved me. The answer is none.

Update, January 19:
169,639 points

List of banned expenses for the rest of January

It's an experimental post. Writing it down helps. The aim is reducing my next Visa bill.

For the next two weeks, I will not spend money on any of the following goods or services:

• electronics, including anything sold through the iTunes store
• services related to hair and foot care
• sporting goods and events
• clothing and shoes
• out-of-town travel/vacation (no advance bookings for hotels or camp sites)
• parking

Seemingly random, this list is compiled from a detailed analysis of how I actually spent money in 2010. Temporary cutbacks in these specific areas can make a difference.

Update: January 18. (One day later.)
I just registered for a 10K run in May at a cost of $50. On the plus side, my new glasses were $85 cheaper than I expected them to be. I'll be good tomorrow. Maybe.

Update: January 28.
Visa statement date is today, with a balance of 2054.87 owing. This is progress.

Two dumb things I will not do this week

Last week, I paid $14 for on-site hospital parking - that is just for a single appointment. It was silly. I got there on time but the specialist was running two hours behind schedule. This week I'll park on the street for free and take a chance that no harm comes from the extra three minutes the walk will probably cost me. I also will not take the youngest through the McDriveThru for McHappiness, no matter how zany the week gets.

Woman's work, mostly done

Metro supermarket has windshield wiper fluid on promotion today for $2.99. It's probably cheaper over at Food Basics, but I was already at Metro and I knew I was running low. I sprung the hood myself and topped up before leaving the parking lot of the store. It doesn't sound like much of a common sense revolution, at surface level, on a sunny winter's day.

Last time, I left it too long and had to stop at a full service station during a storm, in which I was also talked into a $50 set of winter wipers. While they are indeed fit for a princess, and I did need new ones, it's the sort of snap judgment call that can add up in the long term.

In other news, I just cut my bangs, which puts off the decision of what to swap out for a haircut until February. To cut and foil/camouflage the silvery grey now takes three hours.

In the undone column still sits an unwritten invoice for accepted and undisputed services provided by my company to a long standing client via subcontractor last month, which ideally should have been issued by me to the client early last week. It's straight commission for me on these services; my role is simply administrative in this case.

This client has a history of paying on time, within 30 days of receipt. On that note...

Update: Done. It takes 15 minutes to issue an invoice. I slap my own wrist, and carry on.

It gets better

The parent company had a banner year; I'm getting another bonus: $1000 (gross). I see a return trip to the yarn store in my near future, and a few music lessons for the eldest child.

Update, January 23:
Located next door, bi-weekly guitar lessons will start in February at a cost of $20 per hour.

Update, January 29:
$447 net.

In the delivery

The net bonus appeared in my account last night, with net amount: $3975. That would mean approximately $7000 in deductions have been taken from the source for income tax or other purposes. Wow. Fingers crossed for a payroll error.

Not an error. Sigh.

Focus on the positive

My first batch of restricted stock options from my current employer will vest in ten days. The work bonus program also pays out this week: only two more sleeps until then.

The temptation to immediately apply both to a cottage down payment is overwhelming, but... it is not the quickest path to owning the cottage/land outright! I've done the math.

The interest rate on my Line of Credit still hovers around 6%. I also need to do more homework on the actual costs of property ownership outside my home province, before I firmly commit to buy.

Tech stock is by nature a wild card, even on a good day; the analysts currently expect this one to increase in value by approximately 25% over the coming year.

Land value is not expected to significantly change during this period. I considered it.

I plan to hold the stock, and I will apply the bulk of the bonus to the credit line debt.

As for the rest of the bonus, I will be getting new eyeglasses (including progressive lenses and new frames), but I am not ready to fix my broken tail light quite yet.

Simply beautiful

There was some yarn leftover from the Christmas sock project. I have just made myself an infinity scarf from it. I saw one I liked in a magazine at the doctor's office earlier this week. I improvised a pattern for it, which turned out well. The Ostrich Plume Panel is taken from the Harmony Guide to Knitting Stitches, Volume Two.

Knit on 6.5 mm needles with approximately 75 grams of Patons Decor (acrylic/wool blend) as follows:

Cast on 45 stitches = 3 x 2 + 3 X 13. Work 3 Ostrich Plume Panels (13 stitches each) on a background of stocking stitch. One panel: 1st row, knit. 2nd row, purl. 3rd row, k4tog, [yf, k1] 5 times, yf, k4tog. 4th row: purl. Repeat until desired length is achieved. The dimensions before sewing are approximately 12" X 42". Twist it once or twice, then sew the short ends together.