Another Year Another Budget

Living on pensions, as I do now means my budget is pretty much set for the year. Same amount of money in, same amount of money out. The rest goes to savings and Misc. However, a new year brings cost-of-living increases and of course the inevitable increases in monthly bills.

What goes up:

Income

• Teacher's Pension
• Canada Pension Plan
• Savings - comes out of my pensions but worth a mention. My monthly savings amount has increased due to now receiving the CPP. All of it goes into savings so what with investment interest etc I am saving roughly $1000/month. And we know what that goes to - TRAVEL (and large items like a new appliance or furniture) but mainly TRAVEL!!

What goes down:

• GST Rebate - Prior to receiving the Canada Pension Plan I was eligible for a tax rebate which was $105 every 4 months. Now that I am receiving the CPP my income is higher therefore I may no longer be eligible for the rebate. I will receive it in January and April however. As for what I'll receive based on 2016 taxes shall remain a mystery until July 1st.

Hah, short list! 

What goes up:

Monthly bills

• Property taxes - well, I'm assuming they'll go up, I've never known them to go down! But it usually takes a few months for City Council to figure out by what percentage they'll increase. I wait with bated breath! 
• Condo Fees - guaranteed to go up every January. I'm sure I received notice of how much but I don't feel like going up to my office to rummage around (my filing is a trifle behind) so we'll just have to wait and see. I budgeted $290. 
• Cell phone - will remain the same (I hope)
• Internet - will remain the same (same hope)
• Insurance - things are in flux with insurance - I think I have a credit coming to me in January (about $20) and then my regular payment beginning in February is $134/monthly. Kazi has her own policy now so I'm paying for Dougie the Dodge and condo insurance. That is up a little but not much. I had an at fault fender bender in 2014 so that will continue to affect my insurance for a couple more years. 
• Union gas (heat, hot water tank & dryer) will increase a bit due to carbon taxes. I still pay the least of anyone I know averaging $30 in the summer to $80 in the winter. Yes, Kazi is always cold; you think she'd be used to it by now :)
• London Hydro - electricity for my American friends. Continues to go up and up and up! Still reasonable though I think. I budgeted $80 as we are using an electric fire in the TV room as it is in the basement. 
• Netflix - $9.99 no change.
• Reliance - I rent my hot water heater. I remember when that was about $8 a month - now it is $35.00 and will likely increase at some point. The cost usually goes up once a year. 
• Misc - covers my allowance :) and I rejig it to reflect the amount of $$ I have left after paying the above. It's usually around $150+/week. That covers meals out, clothing, wine, wine, wine...etc. household items...wine...wine....scotch...
• Variables: gasoline & food - I have been over funding my gas budget for quite some time so have cut it back a bit ($100 monthly); food continues to be a little overfunded as well so have cut it back a trifle. ($280 monthly). Any extra left in either budget line gets carried forward to the next month.

Remains the same:

• Debt - ZERO! I continue to have no mortgage, no loan, and no credit card debt. 

So there you have it. I'm hoping that by February changing amounts will be set for the rest of the year. There is a lot of hope in my budget! All I can say for sure is money will show up in my account once a month and I'll do my best to get rid of it. 

P.S. I had money leftover at the end of December. Since I practise zero budgeting I'm wondering if I forgot someone's Christmas present? 

P.P.S. I kill myself! 

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!

Debt to Income Ratio - It Makes NO Sense!!

Figuring out one's income to debt ratio is a confusing business. There's the front end ratio and the back end ratio...some calculators use gross income, some are for "disposable" income etc etc.

Here's a link for calculating yours if you're interested:

http://moneycentral.msn.com/personal-finance/calculators/evaluate_your_debt_calculator/home.aspx#Results

Canadians' debt to income ratio is the highest it's ever been at 148.1%. What does this mean exactly??  What "they" would have us believe is that for every $100 we earn we pay $148 on our debt. HOWEVER...their calculations are based on "disposable income" and it doesn't state whether they are using gross income or net income and whether such things as mortgage payments are included or whether they are using just personal debt like credit cards and what, if anything, is being deducted in order to determine "disposable income"...things like insurance.

So the 148.1% is kinda ambiguous. All of those variations listed above make a huge difference in one's calculations.

For example:

• if I include my PEI mortgage payment and use my net monthly income my debt to income ratio is 35.7%
• if I don't include my PEI mortgage payment the ratio becomes 31.25%
• if I use my gross income the ratio drops to a jaw-dropping 17% (I got this low ratio using the calculator link provided above for MSN Money

So you can see what different ratios you can achieve by making an adjustment or two which REALLY makes me wonder how "they" achieved the 148.1% ratio.  If anyone can give me a concrete answer on this I am dying to know!! Can you tell I've had a LOT of time on my hands today??