With our recent move we have also moved towards a simpler financial life. Not only did we purge some of the excessive “stuff” we/I owned, but we also took advantage of the opportunity to consolidate our consumer debt into our mortgage. In order to keep our payments low, we also bought a house for a lower price than we were approved for. The result is that our mortgage payments are well within our one income budget and our “disposable” income is temptingly high at the moment.
My initial reaction was to fall back into old habits and fill the “space” with new stuff. I spent the first two weeks shopping for stuff I felt I needed. Luckily I didn’t buy too much and most of the unneeded items were returned. I’m glad I came to my senses as I don’t want to lose the progress we have made. I wanted to buy a new water cooler (to replace the one that decided to leak all over our old floors) but couldn’t find a reasonably priced one with the hot water feature that I like. I opted instead to try a water filter jug and an “old fashioned” kettle for the stove. So far I am surviving and have saved us about $150 plus the cost of filtered water from Safeway (probably about $15-20/month).
As I struggle to fill my time with an enjoyable activity that don’t cause a negative impact, I’ve re-aquainted myself with gaining financial knowledge. My new goal is to get our daily/monthly/annual financial plan on track and see if I can’t figure out how to get a great return on our money. One of the struggles is that there is a lot of conflicting advice so you have to wade through the weeds to find the pearls of wisdom. Also, I find a lot of the advice is American which means its not necessarily applicable to us Canadians as we have different laws and financial systems.
Two resources I am enjoying so far are MoneySense magazine (also at www.moneysense.ca) and Gail Vaz-Oxlade’s website (www.gailvazoxlade.com). Both are Canadian specific resources and quite reputable. Gail has/had a TV show called “Til Debt Do Us Part” that is very educational.
Here’s a quote from one of Gail’s articles on her website:
Gail Vaz-Oxlade (Canadian Financial Guru): If you don’t understand what you’re buying, you shouldn’t be buying it. If you don’t know the risks involved, you shouldn’t be buying it. And if you think it’s too good to be true, you shouldn’t be buying it.
I think this is one of the first pieces of advice everyone needs to hear and understand. Gail also had an interactive budgeting tool which is not only helpful with crunching the numbers, but also had the max recommended ratios for your Net Income budget which is a great framework to utilize:
Housing 35%
Transportation 15%
Life 25%
Repaying Debt 15%
Savings 10%
One of the key items I am looking into right now, is the best place to house our “Emergency Fund”. It’s a sizeable amount of cash so I’d like it to be earning some amount of interest to at least keep up with inflation. However, since it’s our Emergency Fund it needs to be very accessible so it can’t be locked into an investment. Normally it is recommended to be put into a high interest savings account. Lately the “high” is a contrary term as I seem to only find rates at about .5-2%.
If you all have any ideas, please share!
No comments:
Post a Comment