Gennyland's Modest Financial Tidbits

I have been thinking about money more than usual lately. Partially because I returned to work, with all of its attendant costs, and tried desperately to figure out if we could ‘make it work’ on one salary, and partially because we made the sudden decision to buy a new, not-so-cheap car, but mostly because the financial news these days is all doom and gloom. Between the business in Europe and the Occupy this-and-that movement, hubby and I have been thinking and talking about money quite a bit.

The other night he admitted to me that he was a bit worried, that he was afraid of the future. It’s the first time he’s told me this, and the first time I’ve kind of had to talk him down from financial worry. And here’s a bit of background info on the financial life of gennyland and Mr. gennyland: money is something we never, ever, EVER fight about. We see 99% eye-to-eye on all things financial, even though we may fight like cats and dogs at times about how the household recycling is managed. When we set out on this shared life together, hubby wasn’t doing so hot financially (bad student loans, terrible credit, had never had a credit card, wasn’t really 100% employed) but I was ok. I had a safety net, whereas he never had, and I had a job that paid me a decent amount for my lifestyle – living at home driving a crappy old car.

As soon as he got some solidity in his life, things really turned around for Mr. gennyland. He surprised me by becoming the better of us at saving money, at managing debt, and at figuring out how to work the system to our advantage. Add to that the windfall that we got when his aunt passed away, and I have to say (and remind him) that financially we are doing sort of ok.

In talking him down from the ledge the other day, I really started to think about what it is that we do to keep ourselves afloat. I am always fascinated when I am able to talk with people about how they manage their finances, especially couples, and what systems people put in place to make sure things are equitable and the bills get paid. Turns out, everyone does it differently. Everyone has a different balance of financial responsibility within their relationships and what works for one couple may not work for another. People are often surprised when they find out that Mr. gennyland and I keep all of our expenses separate. We have always done so; when we moved in together, he was less gainfully employed than I was, had some rotten debt that I wanted no part of, and our relationship was relatively new. He had just returned from six months in Thailand and we moved in together (partially) out of practicality, so we wanted to ensure that we didn’t become too complicatedly entangled in case things went funny. So every two weeks, I recorded our expenses and listed our purchases (keeping receipts is essential to our system) and balanced them against one another. Since I was the better of us two at remembering stuff and figured out internet banking faster than he did, I paid the bills, so usually what ended up happening is I’d balance all of our receipts and bills against each other and he’d have to pay me whatever I was owed.

Thirteen years, a house, an inheritance, five cars and a baby later, we still operate on the same system. Sometimes I go “are you sure you want to keep going this way?” because it is admittedly a lot to manage and sometimes we slip up, but the answer is always yes. I think we believe that since we make quite different salaries, someone would feel slighted if we shared an account. Bad blood might arise, and this system we’ve got going now works and keeps things neutral.

Anyway, onto the point of this overlong post, which is to share my modest financial wisdom with those of you who might be looking for alternative ideas, or starting out in a new co-habitation situation, or on the brink of a large purchase or life change. Humour me. This is more about recording my ideas for my own future reference than for educating the masses, because I am hardly a banking wizard or a millionaire:

1. Live within your means. I mean duh, right? In stating the obvious here, I am thinking of those people who stretch themselves to live in a certain kind of house or drive a certain kind of car. I bought my house when I was 26. Would I have rather had a larger house with radiant floor heating and three bedrooms? Yes. Would I rather have had a large kitchen with a breakfast bar, a window seat and butcher block countertops? Yes. But we didn’t have the money for it, so we bought a house built in 1976 that cost us $112,000 and had a kitchen I like to refer to as “pirate-chic”. We capitalized on timing, meaning that the real estate market in our area boomed just after we bought (18 new houses have gone up on our road in the 9 years since we moved in) so we were able to get in while the getting was good. Also some bad experience to draw from: we drove crappy second-hand cars for years believing that they were cheaper overall. What we learned (and continue to learn) is that you really do get what you pay for with cars, and while they are initially cheaper, it’s not worth the stress and ongoing expense of constantly repairing a shitty old car. It’s just not worth it, so unless you are a mechanic, and have that kind of money and energy, it’s not within your means to buy an old jalopy. A good compromise is to buy a used car from a reputable dealer, as they’ve been vetted already. Our 2005 Vibe has so far given us zero hassle, apart from regular maintenance.

2. Keep an emergency fund. When we bought our house, hubby and I agreed that we’d keep the two-party financial system going BUT that we would get ourselves a savings account that is shared. That way we both have online access to it, and we set up an automatic deposit system so that on each of our paydays, an agreed-upon amount went automatically into the emergency account. And it racks up. This money was to be used for all things house-related, major purchases, emergency expenses and such. We also use it as a bounce-over account for when hubby pays me his balance owing every two weeks – he transfers it in and I transfer it to my account.

3. Double-pay where and when possible In 2008 when the markets crashed and the banks yanked the interest rates down, we were able to capitalize on our variable rate mortgage. Since our day-to-day salaries and expenses didn’t change, yet our mortgage went down to like 2%, we decided to start paying it as aggressively as possible, to get a leg up for the future. We approached the bank and asked if, in addition to making our payments bi-weekly, we could increase the amount paid. Turns out we couldn’t just bump up the amount BUT there was a little-used rule that said we could double-pay, meaning that each payment is mirrored every two weeks. It’s an easy way to do it because if the rates go up again, we don’t have to negotiate a lower payment amount, we just cancel the doubling. Our mortgage is so low (see the aforementioned note about the $112k house) that after two or three years of this double-paying, we are set to have it paid off within the next two years – 11 years after buying the house. Sometimes I feel badly for capitalizing on a bad situation (the collapse of the global financial markets) but personally, it has worked out fine so far, enabling us to pay a 25-year mortgage in 11 years.

4. Balance your savings against your debt This would also seem to be a no-brainer, but somehow I have a problem with it. Like, I have a Tax-Free Savings account racking up a not-very-impressive 2% interest, yet I keep spending on my line of credit which sits at 4% and WORSE, my credit card which is like 19%. There’s a mental leap to be made in using your savings to pay off your debts, but it makes zero (maybe less than) sense to keep paying 19% interest when you’re only making 2% on your savings. Better to be at zero overall I say. Zero savings, zero debt. Then avoid the credit for awhile so you can rack up your savings again.

5. Tuck money away into hidey holes. To amuse nobody but myself, I opened a savings account with a separate internet-based bank, and have been ferreting money away into it whenever I have a bit extra. (This works best in our two-party financial system, as it could otherwise raise trust issues). I don’t use it much, and I often forget I have it. I never check it, but sometimes I will delight myself by remembering it’s there and then looking and being surprised that hey, I have a couple of thou saved up and I didn’t even feel it. I buy Canada savings bonds through work and don’t feel that either, but they’re there, which I always forget until I get a statement in the mail. Now it’s a bad idea to REALLY forget these things, as they’re all a part of your overall portfolio and personal worth, but it’s good to have some places to hide money from yourself.

6. Maximize free opportunities to save Hubby’s work has this great system where they don’t have a pension plan per se, but they have a great really terrific (as in, how do I get a piece of that action?) group investment plan. They make crazy interest. It comes off of his paycheque in agreed-upon amounts, and all contributions (up to a certain amount) are matched by the company. So it’s relatively painful, doubles your original investment, and gets an awesome rate of return. His investments through this company in the ten years he’s been there have climbed just about as high or higher than my RRSP has, and I’ve had it at least 3 years longer, much of that time in a quote-unquote “aggressive” portfolio (read: they make more money off of me for some reason) through the VERY USELESS Investor’s Group. (I do not recommend Investor’s Group. Go with a bank, they’re much more reliable). As well, he has signed up for a cash-back Visa, which gives him 2% cash back on specific purchases. It carries a monthly (or annual?) fee, so he ensures that he A) pays his balance off right away, and B) spends enough on it that the cash he gets back more than covers the annual fee. So he’s winning and the credit card company’s losing, because he makes sure to pay it just in time to never pay interest. This is the relationship you want with your credit card, though you do have to be on top of it. I am not that good, I am sloppy with my card, racking up interest and then paying it off in bulk when I can.

7. Compartmentalize this is more of a mental trick than a financial tip. Hubby gets easily overwhelmed and will sometimes indicate that we can’t, for example, order a pizza for dinner because we just paid $700 for firewood or some kind of thing like that. I like to compartmentalize my spending into everyday small cash-type amounts and large purchases. As long as one doesn’t completely overshadow the other, I feel pretty comfortable ordering that pizza. It keeps me from feeling cheated.

8. Minimize bad investments Examples of bad investments include cars (though see above, sometimes you have to bite the bullet. Just know that it’s never a moneymaking venture), technology, RVs, and things like gardens and other ephemera which you might think raises your property value but in fact unless you’re selling your house, are just an expense. Not to say that you shouldn’t have one, just don’t go into it thinking you’re making an investment, because a crappy badly-maintained garden has less curb appeal that flat grass in my books. This is obviously a sore spot with me lately. Examples of good investments include bathroom renovations (for the same reason, only not), land, your house, and anything that will make you comfy in the future. I would say art for obvious reasons but so few people are aware of ins and outs of the re-sale market that the chances you will actually re-sell it someday on anywhere but ebay, or through some shuckster auctioneer, are slim unless you are a professional collector or very rich person.

9. Want to donate money, but you’re not that flush? Try Kiva (www.kiva.com). These are microloans, so while you might be out of pocket for a bit and you don’t get a tax receipt, the money is repaid in installments and you get to feel great knowing that you’ve helped, say, some poor Nicaraguan single mother put a new roof on her house. It also helps very much to put things in your own life into perspective.

10. Speaking of perspective, a friend of mine posted this link to his facebook page last week, in light of the recent “Occupy Wall Street” and copycat protest movements. It’s sobering. http://www.globalrichlist.com/

So there, I babbled for four pages about money and now I feel so cleansed that I’m gonna go out and treat myself and a good friend of mine to a fancy lunch. Food is never a bad investment. See? Compartmentalize!

Feeling kind of itchy.

Every morning that I send her to daycare, I feel like I'm throwing Nora into a cesspool.

Don't get me wrong; Sue's place is relatively clean (as clean as any place which is overrun by toddlers every day) and Sue runs a fairly tight ship, making sure dishes are washed and anything that goes into mouths is scrubbed regularly. I've seen her confiscate soothers and I've seen the pile of toys sitting by the sink waiting to be cleaned. There are no untoward smells and Sue is very keen to change Nora's clothes at the first sign of a mess. Often she undergoes two wardrobe changes in a day, which is two more than I would give her at home barring a catastrophic event (i.e. barfing, shitsplosions, etc).

But the very nature of a daycare ensures that the children will get sick. And oh they get sick. Since starting daycare a mere 5.5 weeks ago, Nora's had a stomach thing, a terrible cold, and now she's got a mysterious nighttime cough.

Not only do they get sick, but there are also the unexpected (by me) side consequences of all this wonderful socialization; today Sue told me that the older sibling of one of the toddlers came home with nits. Lice. Head lice. And Sue said that she has to make sure to check all the little ones. Since we are in a relatively small community – which has definite benefits – the threat comes from three sides: Nora's in daycare with this little gal's baby brother (who is so far nit-free) but the poor little one with lice (J) is also in the same class as two of the other little girls who go to Sue's on Mondays and Fridays (V +E). One of those little girls (V) has a baby sister (C) who is with Nora at Sue's every day. And then we move up a generation: the little gal's (J's) father drives in with us some mornings, us being myself and the mother of the two sisters who go to Sue's (V +C).

So this is how it happens. This is the community illness effect. I never realized it until I had kids, but someone said to me "oh yeah, one person sends their kid to daycare sick, and hundreds of people end up catching it" and it's true, it's really true. Take a cold, for instance. You send your kid to daycare sick but maybe you didn't know it yet, maybe it was only a little sniffle when you dropped her off in the morning, but by 5 pm it's a torrent of green snot. That means that even if you keep her home the next few days, the rest of the kids could have already caught it, passed it to their siblings, their parents, classmates, the daycare provider, etc. Meanwhile you're thinking "I'm not sick yet, I can leave her with someone else and go to work" but then oh – by 5 pm you are a wreck, your skin hurts, your head is stuffed up and you have to squint to see clearly. Even if YOU take the next day off, you've likely given it to all of your close coworkers and smeared it all over the phones and keyboards, so there it is. Hundreds of people are sick. It's even worse in diseases with long, contagious incubation periods, like chickenpox.

Argh. It takes a village, but sometimes that village is beseiged by illness and needs to batten down the hatches.

That brings me back around to head lice. I hope to god my Nora doesn't get lice on her sweet little beautiful-smelling head, in her golden silky hair. My (bald) coworker told me I could always just shave off her hair but oh that thought nearly made me cry and cry. No way. Nuh-uh. If I have to buy a gold-plated lice comb and take a week off of work so I can comb her hair 12 hours a day, I will do it, but I will not shave her head. Nor will I dump pesticides all over it. I would rather quarantine her for five years than treat a baby for head lice, so I'm really not too sure what to do at this juncture. I am going to try adding a few drops of tea tree oil to her shampoo and see if that prevents them but that's not really a proven scientific method, I don't think.

My mom tells me neither my brother nor I ever had head lice. I see this as a positive by-product of being kind of a loner – maybe I never got close enough to other kids' heads to catch anything from them. And since my brother and I are 6 years apart, we didn't really stick our heads together much either. Small blessings.

I have to go now. Writing about this is making my head itchy. Tonight I am going to wash and boil everything our heads come into contact with, just in case, and spray my house down with tea tree oil.