Friday, February 13, 2009

Don't you guys love money?

I adore tax time and thinking retirement savings and RRSPs and compound interest. I'm a big nerd in case you guys still haven't figured that out. Of course all of this is only fun and wonderful if you've planned ahead and done good things with your money. (yes I still love RRSPs even though the bottom fell out for most people lately, we had so little in there that it didn't set us back very far. Plus we have a big big pile of money that's eventually going to be invested in RRSPs but we haven't done it yet, because it's also our basement building fund. So thank goodness the basement wasn't finished last year because we'd have lost so much of it, but the way things worked out, we had it earning 3% interest (still not great of course, but better than -30%!)

My parents do taxes and financial planning for farmers. Dad has his own business. They raised me to just think certain things are stupid and really unthinkable. (not paying cash for furniture or electronics or something? STUPID! Don't care if there's no interest for 6 months or something. They bump up the price then! Buying a new vehicle? Why not just flush dollar bills down the toilet?) So I was raised like that, just having smart money sense as an instinct. Then I go and become a grown-up and realize, the majority of people, do NOT see this as the default. In fact that's why my parents taught us this! Growing up I'd just hear them complaining about how stupid some client was by doing whatever. So obviously tons of people do these stupid things! (in fact, probably most of you! so I do appologize for calling you stupid...)

I know I'm very lucky and I make good money. I have no student loans thanks to my parents (they paid for my undergrad tuition, let us have their hand-me down vehicle, and bought a condo for us kids to live in at minimal rent. My summer job paid for my books, groceries, clothes, gas etc.). We were lucky enough to buy our house a few years ago (well lucky or advised by our finacial advisor to not wait) when things were still inexpensive, where I live, real estate pricing has doubled in the last 2 years. So I know some things were just stacked in my favour to begin with. But I think that part of this was our own making (we had to be able to afford the house in the right timing, I was smart enough to get through school to find a good paying job etc etc).

Anyway, I've realized it's all about how you were raised. I was super lucky to have my parents be so smart at money. BIL to be (sis's fiance) was raised by a women who is a complete idiot when it comes to money. his dad died, leaving them insurance money I'm sure which is all gone now. His mom retired last year but is going to have to go back to work because she's blowing all her money already. Poor sis is guaranteed to have to look after her when she's older because she wont' be able to support herself (and is the kind of person who expects people to look after her...)

Hubby's parents did instill a wonderful work ethic in hubby, and he knows the value of a hard earned dollar. But they also are the kind of people who are bailing their daughters out all the time, loaning them money free and clean, pay back when you can (we took out an official loan from my parents when we bought our car, paid them the same interest we would have paid a bank, but they were more flexible about paying it off faster if we wanted etc). They have no plans to retire, probably work until they physically can't any more. Heck, they're late 50s and are still paying off debts, let alone saving for retirement!

My dad had a plan to retire early (which with the market fall out is no longer happening, but you can't forsee this coming 10 years in advance! well maybe somebody could...). He also had savings for the kids education, set up so each kid would get the equivalent of 4 years university tuition (taking into account rising tuition, inflation etc). I feel really lucky that any stupid little question I have about money, they'll explain it to me. (sometimes I still feel dumb about things other people know though, like last night, I asked them about mortgages and pay cheques and bank account balances, like percentages and what to keep it at, but they don't have regular pay cheques, self employeed, and they live in a small town where you pay cash for your house, no mortage. hm.)

Just today I opened up my tax free savings account, invested the full $5000. (not that I have that kind of money hanging around, we're basically paycheque to paycheque, but that's by design, we save or invest what's left. I moved the money from our basement fund, we'll still get the same interest, but tax free.) I also upped the amount deducted from my paycheque each month. They don't take it right off to an RRSP (small company, it's the boss's wife who rights the cheques.) but I have them take off $500 extra each month for taxes. I know it's not the best way to do things, because the government is getting money for 12 months that I could invest and make interest on, but since hubby is much more nervous about money and doesn't want to put too much away where we can't touch it (he has no retirement plans, think of his parents. I want to retire at 50!) and since early in our marriage I made the mistake of letting him pay the bills and deal with the day to day of the accounts (always make the saver in charge of this! not the spender!) this is the only thing I really have control over (my pay cheque). So this way, I'm guaranteed a huge refund come tax time, and we can put some of that into short term savings (baby fund, etc) and then buy RRSPs with the rest.

I'm sure everyone knows all about compound interest and so on, but I just want to remind you guys how important it is to start young. I don't remember the exact numbers, but if you start putting away like $1000 a year when you're 18, but stop when you're 30 (12 years), you'll have more money (assuming the same interest rate) when you're 65 than somebody who starts when they're 30 and puts in $1000 every year until 65 (35 years!). It's crazy. I think it's definately worth it to live poor for a few years and start saving when you're young (and probably used to living poor if you were a student or anything). It's really really hard to go back to living on less. I say just about impossible.

Hm, strange post. But I do love me some money talk! I think it's really interesting and exciting. Basically everyone makes enough to be rich. If you've ever bought yourself a coffee a timmy's or starbucks you have enough to invest to be rich. Not saying you shouldn't treat yourself to a coffee, but realize you're setting that as a priority over being rich. (straight out of my book I'm reading, Automatic Millionaire). Like if you spend $5 every day eating out or on smokes or fancy lattes or something, you could basically be costing yourself a million dollars. no joke.

Anyway, long weekend here this weekend! Sask gets a family day monday. so woohoo! We have no v-day plans. hubby has to work. I told him we have to watch a movie together this weekend. Sit down with popcorn and hold hands. that's the whole extent of it. we might do it tonight instead or tomorrow.

I've also got big plans of a huge chore list. Things like cleaning out the tupperware cupboard, washing the shower curtain, getting a hair cut, taking a suitcase in to get the zipper fixed, picking out toilets and shower stalls for the basement. Big plans.

Oh, and it's friday, so WI, 145.4. Down from 2 weeks ago. I didn't weigh last week we were off on holiday. actually I did weigh, I just didn't write it down, don't think I liked the number. But that means I had a good loss this week and it included the holiday last weekend so that's good.

I treadmilled last night. Just a 20 minute interval workout. Faster intervals. But the dog was being so cute and trying to get on the treadmill with me I cut 'er short and took her outside for a walk. And then a run. It was cold and icy, but I had good tunes in my ears and just felt like running a bit. I forgot how much nicer it was to run outside. Excited for it to warm up.


Anonymous said...

Great post! You know how Jen and Cat do special beauty/fashion posts - well - you should do weekly money posts to share your tips with us all!

Lainey said...

Hey, my parents were complete idiots about money, but I do okay with it, I think. :o) So it's not all in how you're raised!

I get sooo mad when people complain that they are broke, but they have the latest gadgets and technology, have a car with a big car payment, buy more house than they can really afford just because the bank will let them, etc. When I paid off my car and told my Dad, he said, "Oh! Now you'll have to buy a new car!" I wanted to smack him through the phone!

Charlotte said...

Nicely written! I think this is a subject that is so important that we don't discuss often enough. My parents weren't dumb with money but they were poor. The advantage is that I grew up working hard and paying for everything myself - a trait I still have;)

Tiffa said...

I also love money talk and I totally agree with everything you have said! I have student loans... A LOT of them! But I paid off a lot in my first year out of school and still pay more than the minimum. At this rate, I should be done in 2-3 yrs. (4 yrs for a $60,000 student loan is not bad!). HOWEVER, I have also been contributing to RRSPs(about $300/month and my workplace matches $100 per month). It's nice to see your money grow and since it comes out auto from my paycheck, I never miss it! I don't understand people without RRSPs. It took me 8 months in the workplace before I started, but it was the best move I've ever made. It took a while to convince the fiance to start one, but he has... and although he contributes much less than I do, you have to start somewhere!

I'm just glad to hear there are people level-headed on this issue. It is frustrating sometimes when my friends from school are blowing their money on all these things that I don't have... but in a few years when my loan is paid off I will be laughing! I'll be laughing even MORE when I can retire 10-15 years before them :P

Jen said...

You know, some people are very funny about money!! And I have no issues talking about it!!! I was raised by people who have ZERO savings (well my mom didn't but my dad did) and living with my husband has made ALL the difference for me!! He really knows his stuff!!!

We always buy most things with Cash...and we buy GICs and have opened a tax free savings account...I like my money to go UP even if it's only a little (I am NOT a gambler) therefore I don't love mutual funds and RRSPs, etc.

It sounds like you are very smart with your money!

Cat_82 said...

Wow! You're awesome with money...I wish I was as informed as you are!

Thanks for your comment today about my eyebrows...I giggled when I read it because my eyebrows are super blond and sparse! I fill them in with a brow corrector to make it look like I have them! I'm glad you appreciate the importance of the brow, as they are the 'frame' of the face!!

Every Gym's Nightmare said...

i used to be a financial associate, which i think was the best experience persoanlly as opposed to professionally. It taught me how to save for retirement. I have an IRA and a brokerage account which feels great to deposit into. My friends think im nuts, but I love socking money away and watching it grow.

and i cant WAIT for my tax refund!

Kelly Turner

eurydice said...

i love money. i wish i had more of it and i wish i knew more about it. my mom is really smart so she tells me what to do and i do it. like that tax free savings account and buying the max rrsp to get money back at tax time. i think i'm in good shape despite my employment situation. it's not like i'm not working or anything... i'm just not in my "career"