Just another Money Monday

Don't you just love the end of a month?  I put my nice clean (for now) budget page for March on my clipboard, forever consigning February 2016 to my filing cabinet. I know March isn't until tomorrow but I actually closed February last Friday. I had $60 in my wallet plus $150 in my snowflake box just in case of emergency. And I still had $120 in my chequing account.

So I did what any sane person would do - I went shopping!! No, I didn't go wild. I bought some super bulky yarn at Michael's for my next project - an infinity scarf for Kazi. And I bought a cute little book with a nice variety of crochet projects including a SUPER darling pair of baby shoes :) Well, I can dream can't I? I wonder if they have a kitty-cat version??

Now THERE'S and idea....nope, just couldn't do it!

I used money from my wallet for the yarn and book which came to about $22. Then I danced a jig over to the Currency Exchange store at Masonville Mall and purchased 100 euros!! Woo hoo!! When all was said and done I withdrew the $120 left over in my chequing account and put it into my snowflake box towards my next purchase of euros! I should be able to buy another 100 euros by the end of this week or next! As long as Murphy doesn't rear his ugly head! Thankfully the euro is dropping too which makes it a bit cheaper than a few weeks ago.

My February budget goals were met: a Christmas present for my great-nephew was purchased and I donated $25 to United Way. What really helped me out in February was the weather and the price of gas. We had a bad storm that kept me home for a few days - with another one due tomorrow!! And with the price of gas being at its lowest in years I only spent $68 for gas for Dougie the Dodge. Unheard of!

The big grocery shop in the middle of the month ($102) is still feeding us! And my heating bill was at its lowest in years as well (for a January!) I'm curious to see what my heating bill will be for February - yes, it's a shorter month but I tried something a little different. I set the thermostat at 19c and didn't touch it once! If I got chilly I put on a sweater or put a quilt over my lap. When we watch TV we have an electric fire to keep us toasty. So, happily, I ended up with surpluses in both the gas and grocery budget lines :) Yippee!!

Savings increased by about $550 which was then used to pay for some Ireland-related expenses. Easy come, easy go! Still awaiting my whopping tax refund of just over $200 plus I have some good RSP interest due this month. That will all go towards the trip. So that was February! I think March is going to come in like a lion according to the latest forecast. That's ok, let's get it over with - only 3 weeks til SPRING!! 

Once again my snowdrops are blooming but if tomorrow's forecast is accurate they'll be covered up for the second time. (Just checked - we're in for anywhere between 15 and 30cms)  Crap.

Bye Bye January!!

It looked like I was going to end up with money left over at the end of January's budget but, alas, I had to replace my laptop charger after a kitten who will rename nameless decided to give it a good chew! Woe is me.

Hard to believe that these precious munchkins love
to eat my cords!! Such dumplings!

 And, prior to that happening I had a little thrift shop splurge at Talize so I actually ended up spending about $5.00 more than I should have. Woe is me again.

Meh, no biggie. I'll just take that off my misc budget for the first week of February. Actually, I'll be ahead of the game as Kazi is paying me back today some money I loaned her for a car repair - that will go directly into savings.

Happily I also got a $30.00 monthly pension raise :) which along with a $5.00 weekly decrease in misc spending allows me to put $400.00 into savings monthly instead of the current $350.00. That puts a smile on my face!! When I look at my budget it seems like I spent a lot of money this month AND I managed to tuck a little extra into savings over and above the usual automatic transfer of $350.00.

Misc Spending:

• $120 for an eye exam
• $50 for charitable donation
• $38.19 Walmart (?) no memory of what I bought! Must have been really important!
• $14 - movie
• $11 Value Village ( a brand new area rug and a shelf for my treasures)
• $17 - Shoppers Drugmart (chapstick and lipstick)
• $8 to play volleyball
• $40 - wine and food show
• $8 - music from iTunes
• $58 - Michaels (yarn, 2 frames, rub-ons)
• $9 - pint at book club meeting
• $45 - new charger (that hurts!)
• $55 - thrifty splurge at Talize - a lovely black and white quilt (for $10!), brand new set of flannel sheets!, a gorgeous green/gold paisley throw that is backed with sheep skin!, 3 new tops (2@ 50% off) (will post photos once I take some!)

They look so innocent, don't they?

As I allow myself $150.00 weekly for misc spending these expenditures represent $473/$600 misc spending for January. The discrepancy is cash withdrawals (and a couple little transfers to savings) throughout the month which paid for a breakfast out with a friend, a lunch out with a friend, 2 movies that I saw last week, yoga fees, coffees, newspapers and so on. 

I came in under budget for gas (spent $67/$160) and food (spent $242/280) so that helped with extra amounts I put into savings. Also received some interest from an RSP that bumped savings up a bit.

At the end of 2015 I decided that I want to give a monthly charitable donation of at least $25.00. I exceeded that in January by donating $50.00. The other thing I want to do is buy one Christmas gift per month to lessen the sting in December. I accomplished that by purchasing a large piece of material for my friend Julie who creates banners for activism purposes. 

This fiscal year is off to a great start. My taxes are finished and ready to netfile on Feb. 15th. Due to decreased income and income tax paid thanks to now living on a pension I will only receive a refund of $200 (last year's was $1236) but I am thankful I don't owe any money to the tax dep't!!

Did you end up with money at the end of January or did you break even? 

By the Numbers - Keeping it Simple

It's been a long time since I've talked about those all important NUMBERS: number of days until summer holidays when we can go east again, number of days until I retire and of course - the financial numbers - how much I'm saving and how much I need to pay off. 

Down the side of my blog....WAY down....are my two counters - and I am happy to report that there are only 124 days until summer begins with the annual trek to PEI and only 491 days until RETIREMENT!!  YOWZER!! Getting below 500 days is so exciting!

Below my two counters are the financials. I just updated them and this is where I'm KEEPING IT SIMPLE! There are only two financial bars now plus the one that I've completed which was the repayment of my Line of Credit last year. I could delete it, I suppose, but it was such a HUGE moment I'm not ready to let go of the reminder of one of the most significant financial accomplishments of my life! Oh yes, and the Line of Credit account is officially CLOSED!

It was either April or May of last year that I emptied every savings account I had (with the exception of RSPs) and paid off the remainder of my Line of Credit. It felt a little scary, no a LOT scary but I felt I could replenish my savings accounts pretty quick since I'd no longer be making payments on the Line of Credit.  Here it is 9 or 10 months later and I've resaved $15,000 plus I made a $2400 RSP contribution today. I am still on track to save $100,000 by the time I retire plus I am steadily reducing my PEI mortgage month by month. I've reduced the amortization period by 8 years over the past 2.5 years by paying an extra $42.00 twice a month and when I renew in August at a lower interest rate the amortization will be reduced even more.

Eventually I'll sell my condo and add that to my little nest egg of savings. People tell me I'm lucky because as a teacher I have a defined benefits pension tied to the rate of inflation. Believe me, luck had nothing to do with it. I've had hefty deductions taken off the top of my paycheques for over twenty years now. That's why my RSP room each year is only around $2400. I've put the maximum into my RSP that I'm allowed annually plus 12% of each paycheque goes into my pension plan.

I won't be living high off the hog. Retiring two years early means a smaller monthly pension.  Happily, my needs are few and my wants fewer.  I have no consumer debt and hope to have my PEI mortgage paid off within the next few years. I'll manage quite nicely on my monthly income and can look forward to getting more pension monies as I age - CPP (can begin to collect at age 60 or higher) and OAS at age 65.

 With low monthly costs I'll still be able to save each month to pay for home and vehicle maintenance as well as travel. I plan to have a barn built on my land and renovate my kitchen.

Best of all I plan to watch the sun rise every morning from my front porch - free of charge!

No More RSPs For Me

Big Pile of Locked-in Money

I do not enjoy giving the government my hard-earned money. Before I even see my paycheque the government has taken their cut which amounts to about $3,000 a month. As if that wasn't enough I pay huge taxes on just about everything I buy from gasoline to groceries. GST, PST, and now HST. Oh, I'm not done yet...there's also all the other little or not-so-little fees throughout the year for things like a fishing license, a new sticker for my car's license plates and so on.

So, I try to find ways to hang on to more of my money hence I've been a faithful contributor to an RSP account for over 20 years. Because my employer takes off a big chunk every month for my teacher's pension I haven't had a ton of contribution room in my RSP each year therefore I don't want to lose a lot more of my money to withholding taxes when it's time to withdraw.

Yeah, here's the kicker. Putting money INTO an RSP really helps out at tax time - I've gotten some juicy refunds over the years. However, I didn't do the smart thing and reinvest that refund - if I had I'd be sitting on a pretty nice cushion of savings right now. No, being a single parent meant I used that refund to catch up on bills, buy my daughter a new pair of ghillies for her highland dancing and pay off credit cards etc. 

BUT, using another highland metaphor - EVENTUALLY YOU HAVE TO PAY THE PIPER!!  Yes, the government was nice to you when you put your money IN, but when you take it OUT they want more than their fair share.  See chart below for taxation rates depending on the amount you withdraw.

Withholding Taxes

Funds withdrawn from an RRSP will be charged withholding taxes. This amount must be held back by the plan administrator and remitted to the government on your behalf.

Effective January 1, 2005, the following withholding tax rates apply:

Amount of RRSP Withdrawal	All Provinces Except Quebec	Quebec
Up to and including $5,000	10%	21%
$5,000.01 to $15,000	20%	26%
More than $15,000	30%	31%

You will receive a T4 RRSP receipt for any funds withdrawn during the year showing the amount to be included in your taxable income and the credit for the withholding tax.

YIKES, right? Just think a minute. $15,000 x 30% = $4,500!!! Whoa Nellie!!

My plan, then, is to only withdraw $5,000 per year so that I pay the lowest taxation rate of 10%. So for every $5000 I withdraw I will only receive $4,500. HOWEVER, that's not the end of the story unfortunately. The gov't has a mighty long arm here in Canada and when TAX Time rolls around again the next year I will have to declare that $4,500 as income because when I put it into my RSP it was DEFERRED income. Soooooooooooo if my income is too high the gov't will take some more of my $4,500. It's so frustrating!!!

So I have a plan. You know me, I've always got a plan. I will retire in June 2014. The following year, 2015, I will withdraw $5,000 from my RSP and put it into my Tax-Free Savings Account (TFSA).  My income will be drastically lower due to living on a reduced pension so HOPEFULLY I won't have to pay any more tax on my RSP withdrawal come tax time. 

I will put off collecting Canada Pension until at least age 65 in order to keep my income lower. Once I've got all of my money out of RSPs and into TFSAs I'll start to collect my Canada Pension Plan which will be a higher monthly amount than it would be if I started collecting it at age 60.

So I can no longer put any money INTO RSPs as it's going to take me up to ten years to withdraw my $$ at $5,000 per year. From now on my savings will go into my TFSA, so I'm really, really hoping that the contribution rate of $5000 per year gets doubled to $10,000 per year after the Federal Election.

Other factors in my decision:

• I want to have the control over my money, not the gov't (yeah, right!)
• I want to have access to my RSP funds in the years before I'm eligible for OAS (Old Age Supplement) and before accessing my CP (Canada Pension Plan). Once I hit 65 I will be receiving CP & OAS as well as my teacher's pension. It will be the years from 58 to 65 that will be the leaner years, income-wise thus making it the ideal time to withdraw funds from my RSP and keep tax rates at their lowest. (Not that 10% is low by any stretch of the imagination!!)

So that's my story and I'm sticking to it! I hope.