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On Thursday my husband will get in our car and drive to university for the first time in almost ten years. He’s excited and a little bit nervous. He hasn’t had to worry about deadlines and papers in nearly a decade it’s going to take some time to adjust. But one aspect of school that he won’t have to worry about is how we’re going to pay for it.

His lack of worry isn’t because we saved up thousands of dollars to pay for his schooling in cash. I wish that was the case, but we spent all of 2017 paying off our Subaru Crosstrek, which left precious little time to save for upgrading his education, especially since said education will clock in at a cool $16,550 or so.

His lack of worry also isn’t because he applied for student loans. Nova Scotia Student Assistance is currently offering 0% interest loans to students for post secondary education, which would have been a great way to finance his education (who doesn’t love 0% interest?) – if he’d qualified. Unfortunately, my income is too high, and our financial assets are too numerous to qualify. When he inputted our information into the prequalifying calculator, it spit out a big fat $0.

No, my husband isn’t worrying about how we’re going to afford his education because we are using the Lifelong Learning Plan (LLP) to pay his tuition.

What is the Lifelong Learning Plan?

If you’re like me, the LLP is something that has been at the periphery of your consciousness for a while. I knew that it had to do with borrowing money from your Registered Retiremnt Savings Plan (RRSP) to pay for school, but that’s as far as my knowledge went until about six months ago. Here are the details in a nutshell:

The LLP allows you to withdraw money from your RRSP to finance full-time training or education for yourself, your spouse, or your common-law partner. You can withdraw up to $10,000 per calendar year, for a maximum of $20,000.

To participate in the LLP the student (in this case my husband) must be enrolled in a full-time program. The program must be considered a qualifying educational program, and the educational institution must be on their designated list. The RRSP owner (in this case, me) must be a resident of Canada. You can use the LLP as many times as you want over your lifetime, but you have to bring your repayment balance back to zero each time.

Since I have about $32,000 in my RRSP right now, this became the perfect source of funds to finance his education. The best time to save money is when you don’t need it, and that couldn’t be truer now.

The best time to save money is when you don't need to, and that couldn't be truer now.Click To Tweet How to Apply for the Lifelong Learning Plan

Applying for the Lifelong Learning Plan was very straightforward. The only thing you need is the Form RC96 – Request to Withdraw Funds From an RRSP. You have to fill out this form for each withdrawl. You are responsible for filling out Part 1, and your RRSP issuer fills out Part 2. Part 1 requires some basic information including social insurance numbers, and the RRSP account number that you want to withdraw from.

Once I had Part 1 filled out (I chose the maximum of $10,000 to withdraw), I needed to send the form to my RRSP issuer to fill out Part 2 and process the form. In my case, I keep my RRSPs with Tangerine. A quick call to their helpline yielded an email address to send the form to (tangerineinvestmentfunds@tangerine.ca). The whole process was so simple it felt suspect – it couldn’t really be that easy to use money from my RRSP for continuing education, could it?

I emailed the form and, sure enough, five business days later, $10,000 appeared in my chequing account. Boom.

What Can I Use My Lifelong Learning Plan Money For?

The LLP is very flexible. You don’t need to use the money specifically for tuition, you can use it for anything. Once the funds are released, they are yours to do with what you will. You could use the money to pay your tuition, to fund your child’s daycare while you are at school, or even pay rent.

In our case, a little over half of the $10,000 was deposited into a high-interest savings account with EQ Bank. Yielding 2.30% interest, this is the best place for any money I don’t need right away. I kept $4,137 to pay the first semester’s tuition. We’ll use the rest of the money to pay the second semester’s tuition, but in the meantime it’s going to chill with EQ Bank and earn interest.

How to Repay the Lifelong Learning Plan

You don’t need to repay the LLP right away. In fact, you don’t need to make any repayments until two years after the government of Canada determines you are no longer a student. Once you enter the repayment period, you need to pay off one tenth of the balance every year until it is paid in full.

So, for example, if you borrowed the full $20,000, you would have to pay back $2,000 per year starting two full years after you graduate.

To make your repayments, all you have to do is contribute to your RRSP. When it comes time to file your taxes for that year, you’ll declare the portion of your RRSP contributions to go towards your LLP repayment.

How We’re Going to Repay the Lifelong Learning Plan

In our case, I don’t love the fact that using the LLP is going to decimate our retirement savings, so repaying the amounts that I borrowed as soon as my husband is graduated and earning an income will be priority one. I’m not sure whether I’ll declare all of the RRSP contributions as LLP repayments and just be done with the repayment process or just let those RRSP contributions ride to reduce my taxable income.

What I do know is that there is no way I’ll make it through the two year grace period without repaying the $20,000 in full. Repaying it as quickly as possible will reduce the amount of compound interest we miss out on by taking this money out of the stock market and investing in my husband’s education instead.

Have you used the Lifelong Learning Plan? Why or why not? I want to know!

Photo by Chris Benson

The post How to Use the Lifelong Learning Plan to Avoid Debt appeared first on My Alternate Life.

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Last week I put the finishing touches on my emergency fund. After raiding it to pay off my car loan, it’s finally back up to the $10,000 mark that I prefer. Which is good, because I’m going to need it over the next 16 months. My husband is going back to school.

That’s right, in two weeks, we’ll be a one income household while my husband upgrades his education.

While this is the first time you’re hearing about this, my husband’s journey to return to postsecondary education began last summer. Since then it’s been a series of applications and references, some waiting, and a whole lot of research on my part. We found out he was accepted in March, for a program beginning at the end of May.

I’m so excited for my husband to go back to school because I want him to be the best he can be, but of course this does present some financial challenges. As soon as he received his acceptance letter (or, let’s be honest, before) I flew into action with my budgeting spreadsheets to figure out how the hell we were going to:

  • Pay the tuition
  • Live on one income for 16 months

I’ll go into the details briefly here, and then explore each point in depth in subsequent posts.

First, the tuition. The purchase of our home in 2016 (and subsequent renovations) and then the purchase of a car (and subsequent payoff) in 2017 means we aren’t exactly cash flush. We don’t have cash in the bank for the tuition.

When I realized there was no way we’d be able to pay the tuition with cash my mind immediately went to provincial student loans, which are interest free during the education period. I’m debt adverse, but I’m not 0% interest debt averse.

Unfortunately, Nova Scotia Student Assistance have determined that we also make too much money and have too many assets to qualify for interest-free student loans, so we needed to look at other options.

Using the Lifelong Learning Plan

We don’t have the cash for tuition, but we do have the money, in my Registered Retirement Plan (RRSP). So I’ll be using the Lifelong Learning Plan to withdraw money from my RRSP to pay for the tuition. The LLP allows you to withdraw $10,000 per year for post secondary education, up to a maximum of $20,000.

I plan to withdraw the maximum amount, use that money to pay for the tuition, and then pay the money back to my RRSP as soon as possible once my husband is back in the workforce. This short loan to myself will minimize the effect of missing out on compound interest while also avoiding additional debt.

Living on One Income

As anyone who has gone back to school as an adult can tell you, tuition is only half of the money equation. The other half is managing household finances when one of the earners is out of comission. Living on one income is not easy, especially if you’ve set up your lifestyle to require both incomes to survive.

Fortunately, that’s where our frugal lifestyle will benefit us. Right now my husband and I do not live on 100% of our income. Without factoring in my freelance income, we live on about 60% of our income, the rest goes to savings or non essential spending like travel or home renovations.

If you include my freelance income, that number drops to about 48%. That means we only need a little less than half of what we are bringing to pay our mortgage and insurance, put gas in the car, buy groceries and feed our pets.

But that’s with two incomes and a solid freelance writing habit. Without my husband’s income, it’s a little tighter.

First, with just my full-time job and not including freelance income, we’ll have a budget deficit of $153 per month for only essential spending. That deficit can easily be covered by our emergency fund.

If you include my projected freelance income (which I hate to do because freelance is so unpredictable), we’ll have a budget surplus of $1,546 per month. That means, barring catestrophic car failure or home repairs, we should come out of this 16 month stint unscathed, and we might have a decent start on repaying the RRSP.

I’ll go into both the LLP and the budgeting details in later posts, but for now suffice to say that the next 16 months are going to be interesting.

FAQs

This life change is going to have a huge impact on us, and I’m sure you have a lot of questions. Here are some of the questions I am not going to answer, because I respect my husband’s privacy as much as he respects my need to share everything about our money on the internet.

  • What is your husband going back to school for?
  • How much will he earn when he re-enters the workforce?
  • What is the labour market like for said workforce?
  • What job was he doing before?
  • How much did he earn before?
  • What is the expected ROI on his degree?

Please don’t ask, because I’m not going to answer. Just trust that this is me we’re talking about, and I wouldn’t have encouraged him to pursue an educational upgrade that I didn’t believe would yield a positive return on our investment.

Have you or your spouse returned to school as an adult? How did you pay for it? I want to know!

Photo by Brodie Vissers

The post That Time My Husband Went Back to University appeared first on My Alternate Life.

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April is gone, and May is upon us. Spring finally feels like its underway, and the grass is finally growing in my backyard – and so are the weeds.

April would have been a decent month for me except for one thing – taxes. I had to pay almost $5,000 in taxes this year because of the freelance money I earned on the side. All in all, my side hustles brought in about 50% of my gross full-time income, so a $5,000 tax bill isn’t the end of the world. I’m glad to have earned that money, and I’m happy that I put enough away in a savings account to pay the taxes.

But still, ouch. That was expensive, and not good for my net worth. Let’s look at how my net worth decreased in April.

(If I say “my” below, I mean “our” because my husband and I have combined finances, including retirement savings.)

Not pretty. Let’s dig into it.

Net Worth: $115,995 (-1%)

In April my net worth decreased by $1,657, or around 1%. This was entirely due to paying my taxes. Aside from that, I actually had a decent month. I earned over half of my gross income from freelancing, the markets performed well, and we were able to add money to the emergency fund. We also spent money to improve the house (my office is finally coming together) and property.

Let’s break it down this month:

Liabilities Consumer Debt: $0

We have no debt on our line of credit, and no debt on our credit cards except for work expenses, for which I’ll be reimbursed. I’m pretty diligent about paying off our purchases every month and earning cashback rewards with our credit card.

Car Loan: $0

This will be the last month I keep the car loan section here. I paid off our $18,500 car loan at the end of 2017, so it’s time to move on.

Mortgage: $235,642 (-0.27%)

My regular monthly mortgage payment is $1,089, which uncovers about $630 in equity every month. I’m not in a hurry to pay down my mortgage right now because my mortgage interest rate is just 2.29%, but I have to admit that I’m a little impatient to see my mortgage equity bump over the $50,000 mark – which should happen this month!

Assets Home: $285,000

I bought my home in July 2016 for $270,000. The home hadn’t been maintained properly for several years, and it was in need of a bunch of relatively inexpensive upgrades. As a result, the homeowner opted to sell the home for less than it was worth rather than negotiate and coordinate all of the work to be completed pre-sale.

We’ve been steadily ticking off every last flagged item on the home inspector’s report, and in July of 2017 I contacted my real estate agent who let us know we could sell our home today for $285,000, or $15,000 more than we paid. I’m excited to see how this number changes for our next update in 2018.

Car: $20,098

According to Canadian Black Book, my 2014 Subaru Crosstrek is worth $20,098. I’ll update the value once a year in January. Some people don’t include their car in their net worth updates because they “need it” and while I do need a car in my life, I don’t need a $20,000 car. If I needed to, I could sell this car and buy a beater.

Retirement Savings: $32,763 (+3%)

Every month I send $600 to this account, and the past few months have been disappointing. This month turned things around though, and it is a delight to log in and see more money in my account that the day before. I use Tangerine Investment Funds for both my RRSP and TFSA.

TFSA Investments: $3,317 (+2%)

Every month I contribute 10% of my freelance income towards my TFSA. This account is my emergency fund on top of my emergency fund, my early mortgage payoff fund, and my early retirement fund.

Emergency Fund: $9,043 (+7%)

Building up my emergency fund is my current financial goal and where I’m throwing a decent portion of my income every month. I’m slowly rebuilding my emergency fund; I had borrowed money from it to pay off my car loan. With any luck, I’ll reach my $10,000 goal for this account within a few months.

Other Money

If you’re doing the math, you know that there is some unexplained money in my net worth. I’ll tell you where that money is: in my planned spending account for taxes, mortgage payments, gas, the internet, etc.

My “Other Money” accounts took a massive hit this month because I withdrew a chunk to pay off taxes. In fact, by massive hit, I mean 74% drop. Ouch. As I earn more money going forward this year, these accounts will build back up, but still, that hurts.

Previous Net Worth Updates

Here are my previous net worth updates, along with my age for reference:

2017 (Age 27)

This time last year my net worth was $88,332 ($27,000 less than today) and I’d just managed to increase it by almost $4,000 the month before. My husband and I were deep into our backyard renovations and were diligently paying off our car, which had a remaining balance of $13,600. Our mortgage sat at $243,243, and we had $25,000 saved for retirement. My TFSA investment account was still a baby at $1,300, and our emergency fund was fully funded at $10,000.

2016 (Age 26)

In 2016 I had a very respectable net worth for a 26-year-old. I was sitting at $53,000. $15,000 of that was in my retirement savings and $25,000 made up my blooming house down payment fund. I was still living in my third-floor apartment and had recently returned from Mardi Gras in New Orleans. I also had a newly minted New Car Fund with $292 in it. Little did I know that after trying to save for a new car for 20 months I would only end up with about $700 saved, thanks to a litany of car repairs in my future.

2015 (Age 25)

On May 1st, 2015, I had a net worth of $30,305. I had started saving for a home in earnest, and my house fund was sitting at $2,938. My retirement account was nearing the $10,000 mark, and I had a tiny bit of debt from booking a trip to New Orleans.

2014 (Age 24)

On May 1st, 2014 I was still living in New Brunswick. I had a nice little net worth of $17,599 and was working on building up my emergency fund to $10,000. My RRSP was teeny-tiny at just $2,827.

2013 (Age 23)

In 2013, I was madly preparing for the most frugal wedding on the planet. I had $11,470 in debt, mostly car loans, and a barely positive net worth of $1,760. I had no real savings beyond money for the wedding, and I still lived in a 400 square foot cottage in the country.

You can read all of my net worth updates here; those early ones are pretty hilarious.

The post May 1st Net Worth Update! appeared first on My Alternate Life.

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The day I’ve been waiting for has finally arrived! The sun, which has been weakly shining for weeks, has finally gained enough strength to make it feel like Spring outside. I’ve been hard at work cleaning out our backyard and prepping it to be our summer oasis, and at the end of a day of gardening, there’s nothing I look forward to more than a cold beer (or the landscaping and the beer usually happen concurrently).

One of the appealing features of Halifax is the lively craft brewing scene. I literally have two breweries, a cidery, a distillery, and an independent beer store within a fifteen-minute walk of my house. Unfortunately, as delicious as these various beer are, they’re also expensive, and my budget does not have enough room to indulge in these local purveyors’ wares as much as I’d like.

A reasonable person would just not drink if they couldn’t afford it, but I’m a Maritimer, and beer is kind of a regional pastime here. So instead of spending hundreds of dollars per year on beer, we brew it ourselves for a fraction of the cost.

Brewing Beer to Save Money

First, math!

Beer in Nova Scotia is expensive. According to the Nova Scotia Liquor Commission, a six pack of my favourite beer, Boxing Rock’s Hunky Dory Pale Ale costs $14.50 plus a 15% HST, or $16.67 total, which equals about $8.33 per liter. While we don’t drink as much as we used to, if there was no other alcohol in the house it would be easy for two of us to polish off two six packs per week.

Extrapolating out over 52 weeks, and an innocent penchant for beer could cost us $866.84 per year. If you included parties, special events, camping, etc., that total would probably be even higher.

My husband and I have been making alcohol at home for a long time. We started out making wine back in 2009 (and even made all of the table wine for our wedding) so taking the leap to beer wasn’t a huge jump. Brewing beer ourselves did require a slew of new equipment.

We needed to buy all of the equipment to get started, and we also had grand plans to keg our beer instead of bottle it. That required the purchase of two kegs, two taps, and line sets. We also needed a tank of carbon dioxide to carbonate the beer. All in all, the start-up costs were around $500.

The beer kits themselves cost money too, a typical beer kit costs in the range of $40 – $50 and yields 23 liters of beer, for a price of about $1.95 per liter.

Finally, the kegerator, which is a refrigerator that we use to keep the kegs cold. You could use a small mini fridge and a “picnic” tap which requires you to open the door to pour yourself a cold one. We took things a little further and retrofitted a stand-up refrigerator to have lines exiting the side of the fridge and connecting to two taps mounted on the wall. It’s a more efficient way to do it, but it does require you to hack apart a refrigerator. The fridge we used was in the basement and came with the house, so there was no upfront cost there.

The kegs inside the refrigerator in our basement. The C02 tank is behind them out of sight.

Our taps.

Below you can see our complete set-up in our basement. On the far left, you can see the refrigerator peaking out past the wall. Next to that are the two taps, and on the right are two glass carboys filled with two different types of beer.

So far we’ve made about ten batches (the best being an Oatmeal stout – the perfect winter beer) for an average cost of $4.13 per liter. That cost will decrease as we amortize the start-up cost over more batches. In a few years, we’ll get the cost down as low as $1.95 per liter, which means we’ll have saved about 75% on our beer costs. Brewing beer does save money!

Washing, Mixing, Bottling, Kegging

The most significant downside to making beer ourselves is that it’s a lot of work. My husband must sterilize the carboys, fermentors, kegs, lines, taps, and bottles before every use. We use kits that do not require any boiling, just mix the ingredients, stir well, and wait. Sometimes there are additional ingredients that my husband needs to add at specific times (like hops), and we use a calendar specifically to keep track of the process.

The beer is ready to bottle or keg in about three weeks. At that point, my husband pours 20 liters into the keg, which is put under high pressure for three to five days to carbonate the beer, and then turned down to serving pressure.

The remaining three liters is bottled using our stash of reusable swing-top bottles. This beer is carbonated using priming sugar sprinkled into the bottom of each bottle. The bottles are more convenient for travel, and it’s always interesting to taste how the bottles age differently than the keg.

The kegging/bottling process.

Is It Worth It?

For two beer aficionados, brewing beer to save money is definitely worthwhile. My husband likes the brewing process, so the many hours he spends in our basement making this beer is not considered labour. If he hated it, it might be less worthwhile.

The downside to my husband actually loving his beer brewing hobby is that, like all hobbies, it’s enjoyable to upgrade your skills and equipment. My husband will occasionally splurge on upgrades, but he pays for them from his personal spending allowance, so it doesn’t directly impact our finances, but it would be easy for him to get swept up in the homebrewing scene and spend a lot of money upgrading our current equipment. These upgrades would wipe out any cost savings.

Fortunately, my husband is more frugal than I am, so I don’t have to worry about him overspending.

Overall, brewing beer ourselves has become an excellent way to enjoy a cold beverage on a hot day, without blowing our grocery and entertainment budget to do so.

The final product.

Do you make anything at home? I want to know!

Photo Credit: Adam Wilson

The post How to Brew Beer at Home and Save Money appeared first on My Alternate Life.

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Raise your hand if you’ve tried to become debt free and failed.

You aren’t alone. In fact, you’re with the majority of Canadians who try, time and again, to finally pay off their debt and fail at it over and over.

So many people fail at their debt payoff, but why?

Is it because they’re lazy and entitled? Because they can’t get their shit together? Because they don’t want it bad enough or aren’t disciplined enough?

No, no, no, no, and no.

It’s because they don’t have the right tools to pay off their debt.

Picture this for me.

You’ve been holding onto that student loan debt until you finally get that job that will allow you to prioritize debt repayment. It took about five years longer than you expected (and you racked up a little credit card debt along the way) but now you are finally in a position to prioritize your debt.

You set up a budget, you restrict your lifestyle, and you make a plan to slay your debt in under two years.

Six months later, you are sick of your budget (it’s too restrictive), you’ve only been able to reduce your total debt load by a few thousand dollars, and the whole thing seems like a pointless endeavour, especially since you seem to be the only one of your peers making debt a priority.

So you give up.

Of course you do! Why would you keep doing something that is so restrictive if you don’t see any real results?

But you are getting results, you just aren’t measuring the right metrics, so it’s hard to see them.

You need to measure more than just your total debt load. You need a spreadsheet or tool that is going to accurately predict how long it will take you to pay off your debt, that’s the real motivator. Your debt free date.

When I first started paying off my debt, I searched the internet high and low for a spreadsheet or tool that let me accurately forecast my debt free date. While there are some decent basic tools out there, they always fell short in a few fundamental ways.

Multiple Payments

When I first started paying off my student loan and car loan, I searched for a spreadsheet or tool that could handle a non-linear payment schedule. I wanted a tool that could factor in future raises, extra freelance income, and income tax returns, forecasting years into the future.

That debt repayment spreadsheet or tool did not exist.

Multiple Debts

Second, most spreadsheets and tools only allow you to plan for one debt, while most Canadians have at least two – if not three or four – debts to contend with. It doesn’t take much to rack up that number of debts. A student loan, car loan, and a little bit of credit card debt and boom. Three debts to contend with at once.

I had multiple debts to pay off when I was paying down my student loan debt, while simultaneously making the minimum payments on my car loan. I wanted a spreadsheet that would show me how long it would take to be free of both debts, not just one.

That debt repayment spreadsheet or tool did not exist.

A Debt Free Date

Finally, I wanted a tool that wouldn’t just tell me how long it would take to become debt free. I wanted an actual date. I wanted it to show me I would be debt free by September 2018. Then, I wanted my extra payments to move that debt free date closer. I wanted to see that if I made an extra $1,000 payment from my income tax refund, my debt free date would move from September 2018 to July 2018.

Because that, my friends, is damn motivating.

But, again, as far as I could find, that debt repayment spreadsheet or tool did not exist.

So I made one.

When I was $38,000 in debt, what I really needed was a spreadsheet that could:

  • Accommodate a fluctuating payment schedule
  • Forecast for two different debts being paid off simultaneously
  • Allow me to shift my resources to debt #2 when debt #1 was paid off
  • Forecast a realistic debt free date that evolved as my payments increased

The spreadsheet I made does all of that. It’s the spreadsheet that I used to pay off $38,000 in two years, and I dusted it off again in 2017 to help me pay off my $18,500 car loan in 12 months.

It just works, and you can download it for free.

What You’ll Get

When you download this spreadsheet, you’ll get the excel file with room for two debts, plus a step-by-step guide explaining how to customize the spreadsheet for your needs.

When you fill in your information about your debts, you’ll be able to see the dollar value of the interest your debts are accumulating every month, your projected debt free date, and a running tally of your total debt payoff.

You’ll be able to factor in extra income, raises, and bonuses to see how they affect your debt free date, and most importantly, you’ll finally have a roadmap showing you how your debt repayment is going to play out.

So what are you waiting for? That debt isn’t going to pay itself off.

The post Destroy Your Debt with this Spreadsheet (I Did) appeared first on My Alternate Life.

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When it comes to handling money as a couple, there are as many approaches as there are types of relationships. Some people maintain their independance, while others essentially evolve into the same person, becoming so similar that you’re sure one day they’ll show up as a single blob, having totally morphed into one another. Neither is necessarily happier or better off, and both strategies work.

It’s the same story when it comes to how couples manage money. Some keep their finances totally separate, while others completely combine everything, 100% of the time.

These are opposite ends of the spectrum, but the reality is that most couples fall somewhere in the middle, sharing most of their money, setting goals together, and working towards them together.

My husband and I are one such couple. We take a hybrid approach to managing money. Our monthly budget, savings goals, and RRSP contributions are planned for together. We shop for groceries, buy furniture, pay off debt and renovate, all with money that is funneled into our joint savings accounts.

But our finances aren’t 100% combined. When it comes to spending money on ourselves, we still prefer to have some autonomy. I don’t want to have to consult my husband if I want to purchase a new pair of jeans, I want to just do it.

That’s where allowances come in. Spending allowances have allowed us to combine our finances while keeping a little bit of financial autonomy.

How Personal Spending Allowances Work

It’s pretty simple: we each get $100 per month that we spend on whatever we want, no questions asked. We use this money for personal spending, like clothing, grooming, or drinks out with friends solo. The money is literally kept separate from our other finances. I keep mine in a chequing account, and my husband has an account at our local credit union. We can save up the money for something special (I’ve been eyeing a new chair for my office) or spend it every week on useless purchases like takeout. It’s entirely up to the individual.

Extra Paycheques are Fair Game

On top of the regular $100 per month, we also get to keep our individual “extra paycheques”. Extra paycheques are based on the concept that we are both paid weekly, and our budget is based on four paycheques per month. Every once in awhile we’ll have five paychques in a month.

When this happens, each party gets to keep whatever portion of the paycheque is not needed for bills, which usually adds up to a few hundred extra dollars every few months.

Incentivizing Extra Earnings

Finally, on top of the $100 per month, plus the extra few hundred every few months, we also get to keep whatever we earn over and above our full time employment. That means when my husband works overtime or picks up a shift working on a landscaping crew, he gets do whatever he wants with that money. Usually we both choose to split our extra earnings between personal spending and reaching our financial goals.

On my end, that means every dollar I earn from my side hustle is mine to do with as I see fit. This wasn’t a big deal when I was earning only a few dollars here and there, but last year I earned almost $25,000 from my side hustle, so that is a lot of earning power that I have exclusive authority over.

Freedom Dampens Resentment

Our decision to give each other complete control over what happens to our extra earnings stems from the idea that extreme restriction breeds resentment. Essentially, what’s the point of working extra hours and earning extra money if every cent of it is snapped up and sent to our financial goals. Instead, we have control over our money and can choose to use it for good.

For example, I have complete control over what happens to my freelance income, which amounts to an average of $2,000 per month. While I could blow that money on a bomb office setup or a solo trip to Paris, here’s what I actually do with it:

  • 30% goes to taxes
  • 10% goes into my TFSA
  • 10% goes to into my personal spending account
  • 50% goes towards our financial goals

Last year, a huge portion of my freelance income went towards our big joint financial goal: pay off our car. Because of my contributions, we were able to do that in just one year. That was my choice, and I’m happy to send my hard earned money towards our financial goals. Nine times out of ten, my husband also dedicates a portion of his extra earnings towards our financial goals, even though he is not obligated to do so.

This type of voluntary commitment to our goals helps us both feel that we are proactively working towards our goals, instead of just having our budget dictate where all of our money goes. Plus, we each get to keep some money for ourselves, to spend how we want, when we want.

A Long Period of Adjustment

It wasn’t always this way. When we first combined our finances, there was a painful period of adjustment. After years of having exclusive control over my money (besides bills), I had to deal with someone else’s imput on where my money should go.

When we combined finances, suddenly both of our paycheques were being funneled into a joint chequing account, where it was divied up and poof, just a few days after it appeared, it was gone to various bills and goals. It was easy to feel like we were working towards nothing, and having to ask each other about every extra dollar spent became tiresome and restrictive.

Using personal spending allowances gives us freedom with our extra income, and it’s is a much better fit. We both work towards mutually agreed upon goals, but the personal spending allowances give us freedom to control some money ourselves. It’s a good compromise for us, and it encourages us to jointly stretch and achieve our goals.

How do you handle money in your family? Does everything you earn go into the communal pot? Do you only contribute enough to cover bills and the rest stays separate? I want to know!

The post Money and Relationships: Personal Spending Allowances appeared first on My Alternate Life.

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Happy April! It’s hard to believe that this time last year I was cleaning up after my husband’s 30th birthday blowout, planning my backyard renovation and booking flights for my trip to New York in May. This year looks like it’s going to be full of new challenges and fun stuff here on the blog. I can’t wait.

March was an ok month for me. My net worth did improve a little, and while I’ve been doing a lot of side hustling this month, almost none of the billed invoices have been paid out yet. I also completed my taxes with H&R Block and found out I owe a lot of money to the government. I have it in the bank (I always save 30% of my freelance income), and it’s not due until April 30th, but it’s still a pretty big downer.

Here’s how my net worth faired in February:

(If I say “my” below, I mean “our” because my husband and I have combined finances, including retirement savings.)

Let’s have a look at each section and how they faired this month:

Net Worth: $117,652 (+2%)

My net worth increased by 2%, or about $2,400 this month, which puts me back to where I was at about the end of January. Let’s look at what went up, and what went down this month:

Liabilities Consumer Debt: $0

I recently switched over to a cash-back credit card, but I’m very diligently paying it off every week. I know that may seem excessive to some people, but I get paid weekly, so it works for me.

Car Loan: $0

I paid off my $18,500 car loan at the end of 2017, but I’ll keep this on here for a few months just because it feels good to see that big old zero there.

Mortgage: $236,282 (-0.27%)

My regular monthly mortgage payment is $1,089, which uncovers about $630 in equity every month. I’m not in a hurry to pay down my mortgage right now because my mortgage interest rate is just 2.29%, but I have to admit that I’m a little impatient to see my mortgage equity bump over the $50,000 mark. That should happen in May at the rate we’re going.

Assets Home: $285,000

I bought my home in July 2016 for $270,000. The home hadn’t been maintained properly for several years, and it was in need of a bunch of relatively inexpensive upgrades. As a result, the homeowner opted to sell the home for less than it was worth rather than negotiate and coordinate all of the work to be completed pre-sale.

We’ve been steadily ticking off every last flagged item on the home inspector’s report, and in July I contacted my real estate agent who let us know we could sell our home today for $285,000, or $15,000 more than we paid.

Car: $20,098

This amount is how much my Subaru Crosstrek is worth according to Canadian Black Book. Some people don’t include their car in their net worth updates because they “need it” and while I do need a car in my life, I don’t need a $20,000 car. If I needed to, I could sell this car and buy a beater.

Retirement Savings: $31,746 (+1%)

I throw $600 into this account every month, but the past few months have not been kind to those contributions. This account only grew by $423 this month, for a net loss. Good thing I’m not going to need this money anytime soon.

TFSA Investments: $3,240 (+6%)

Every month I contribute 10% of my freelance income towards my TFSA. This account is my emergency fund on top of my emergency fund, my early mortgage payoff fund, and my early retirement fund.

Emergency Fund: $8,433 (+11%)

Building up my emergency fund is my current financial goal and where I’m throwing a decent portion of my income every month. I’m slowly rebuilding my emergency fund; I had borrowed money from it to pay off my car loan. With any luck, I’ll reach my $10,000 goal for this account within a few months.

Other Money

If you’re doing the math, you know that there is some unexplained money in my net worth. I’ll tell you where that money is: in my planned spending account for taxes, mortgage payments, gas, the internet, etc.

Previous Net Worth Updates

Here are my previous net worth updates, along with my age for reference.

2017 (Age 27)

This time last year I had a net worth of $83,858, or $34,000 less than it is today. I still owed $14,904 on my car loan and had just made a big payment using my income tax refund. I owed $243,869 on my mortgage, meaning I’m uncovering about $6,000 per year in equity on that baby before appreciation. My retirement savings sat at $24,000, my TFSA was starting to bloom at $1,000, and I had $2,400 earmarked for renovations.

2016 (Age 26)

Two years ago I had a net worth of $50,471 and was doing a little happy dance for finally crossing that $50,000 threshold. A significant portion of that net worth was tied up in my house fund, which was sitting at $22,894. Most of the rest of my net worth was tied up in my emergency fund and my retirement savings.

2015 (Age 25)

In 2015, my husband and I were adjusting to being a two-income household as he celebrated one month at his new job. Our net worth had only decreased slightly during his period of unemployment and sat at $27,000. Our retirement savings was nearing the $9,000 mark, and we had just booked our trip to Mardi Gras for February 2016.

2014 (Age 24)

In 2014 my finances were in pretty good shape. I had a pretty solid net worth of $14,301. That was made up of a baby-sized RRSP ($2,310), a stable emergency fund ($6,177) and my travel fund ($1,632). I had no debt, and my blog had just turned two years old.

2013 (Age 23)

April 2013 was a big month for me. I had just made a $5,600 payment on my debt thanks to a significant income tax refund. This payment brought my debt to $12,508 owing. I still distinctly remember making that payment because it got me so pumped about debt repayment. Paying big chunks like that is an excellent technique to keep up your enthusiasm for paying off debt. This large payment meant April two years ago was the first time I’d achieve a positive net worth, squeaking by the mark with $690.

You can read all of my net worth updates here; those early ones are pretty hilarious.

The post April 1st New Worth Update! appeared first on My Alternate Life.

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It’s been over a year since I signed up for an $18,500 car loan. Since then I’ve rolled through so many emotions regarding this debt – because debt is an emotional thing. It shapes our lives, and it ties itself to our net worth and our self-worth. For me, it’s an incredibly public thing that opens me up to scrutiny.

Our attitudes towards our debts are not static, they’re ever-changing. At some point, you’ll attack your debt with unbridled enthusiasm, and at another point, you’ll feel resigned to be in debt forever. Our feelings towards our debts are usually tied to the remaining balance and our time to debt freedom. Now that I’ve finally paid off this particular debt, I’ve gone through every stage. I’ve gone through the phases before, and for me, they’re the same as they were three years ago when I was paying off my $40,000 student loan/car loan debt.

Stage 1: Acceptance

The final stage of grief is acceptance. When you have debt, it’s the first. You see, very few people buy a car, or a house, or take on thousands of dollars in credit card debt with the intent to immediately pay it off. Most of us muddle along for a year or two, content with making minimum payments before realizing how negatively this debt is affecting our finances.

This was the case when I was paying off my car loan this year. While I never made the minimum payments, I did muddle along making $1,000 payments for about the first six months. I was comfortable with the approximately two-year timeline to become debt free. I thought I would pay off my car in two years and that would be that. Of course, we know that’s not what happened because I quickly progressed to the next stage:

Stage 2: Fed Up

Everyone who eventually becomes debt free (and many who don’t) eventually reach the point where they are just fed the fuck up with their debts. They’re fed up with the minimum payments, the massive portion of their paycheque that’s going towards servicing the debt, and the boatloads of interest they’re paying every month.

I reached this point in June 2017, about six months into the debt repayment process. I was dutifully paying off my debt every month, sending about $1,000 per month or so towards my car loan and paying around $50 per month in interest. I eventually got to a point where I was just fed up with this debt and its effect on my finances. I wasn’t able to adequately save for the things I wanted to do like renovate my house, yet despite a considerable chunk of my money going towards this debt, I was still miles away from paying it off.

When you reach this critical breaking point, the debt becomes too much, and it’s time to make a plan to pay it off.

Stage 3: Enthusiasm

Once you decide you are going to pay off your debt once and for all, it’s like a veil lifts. The sky is bluer and the sun is brighter. You’ve got a plan, and you are going to be debt free! This is the stage where you’re doing your calculations, making your projections, and arriving on a debt free date. This is the point in debt repayment where you send every last penny towards your debt, and you feel damn good doing it. Fantasies about what you’ll do with all of that money once you’re debt free will cloud your vision, and you’ll make plans for that magical life after debt.

As a veteran debt slayer, I dusted off my old spreadsheet back in June and made some projections. If I threw everything I had at my remaining $11,500 debt, I’d be debt free by the end of 2017.

Stage 4: Utter Disgust

After I got my act together and started aggressively paying off my debt, I happily threw everything I had at my loan for several months. But around October 2017, I started looking at my debt with disgust. I’d made so much progress (my loan sat at around $5,200 at this point), yet the finish line was still so far away.

It was at this point that I became disgusted with my debt. To me, my car loan was like that house guest that lingers far past when the other guests have left. Why are you still here?? was all I could think.

When you reach this point in your debt repayment journey, it will be tempting to give up. It will be appealing to think that you’ve made enough progress, you’ve made a big enough dent, that now is the time to stop. Don’t give in to those feelings. Stick to the plan; you’ll get there.

Stage 5: Desperation

The last few thousand dollars in a debt repayment journey are both the easiest and the hardest. You’re so close to being debt free that you can almost taste the beer you’re going to buy yourself in celebration. You’ll start hunting through your savings accounts looking for something – anything – extra to throw at your debt so you can become debt free a little bit sooner.

This happened to me in November of 2017. I still had $3,450 owing on my car loan, and I was so over it. I decided that it would be ok to raid my emergency fund and use those savings to pay off the car loan by the end of 2017. I did it, and it felt great. At that point, I was so sick of paying off debt that throwing money into savings seemed so much better than paying off debt.

I paid off my car loan at the end of December in 2017, and I was finally able to feel the sweet relief that comes with debt freedom. It felt great. I finally felt free of that annoying monthly commitment that was eating into my income every month, and I was ready to start making plans for 2018.

If you’ve been trying to pay off your debt, but you keep getting stuck on one of these stages, know that you are not alone. So many Canadians start and stop their debt repayment journey without ever reaching the finish line.

If you need an extra boost to finish paying off your debt, try downloading my free debt repayment spreadsheet below. Sometimes all you need is to see the numbers laid out, and that’s motivation enough to keep going.

The post The 5 Stages of Debt Repayment appeared first on My Alternate Life.

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This post is sponsored by Capital One Canada. Thank you for supporting the brands that support this blog.

What happens when someone steals your credit card information, really?

Does someone withdraw a bunch of cash from your credit card and disappear into the night?

Do they use your information to take out a loan in your name?

Or do they steal your identity completely, get a new birth certificate printed and live life as you?

I think that last one only happens in the movies.

The truth is, according to a recent study by Capital One Canada, only 71% of Canadians are aware of the impact of identity theft on their finances, and only 53% of us are taking some of the recommended steps to prevent it from happening. Those numbers aren’t nearly high enough in my opinion, so in honour of Fraud Prevention Month, I’m doing my part to share best practices around protecting yourself from identity theft.

The bad thing about Canadians and identity theft is that we, as a group, don’t know enough about it and we aren’t doing enough to stop it.

The good news is, protecting yourself from identity theft is just a matter of implementing habits and practices that, once they become second nature to you, have very little impact on your everyday life.

Many of us are already doing the obvious things like protecting our P.I.N. numbers (88% of us do this) and regularly checking our bank accounts and credit cards (76% of us do this). But in the online age, there are a few other best practices that you can implement to make yourself an unappetizing target to fraudsters.

Here are three things you can do today to protect yourself from credit card fraud:

Checklist for Fraud Prevention
  • Take Advantage of Built-In Fraud Prevention Features: Many credit cards now have fraud detection features built in, but you often have to download the app or sign up online to opt-in to these features. Some examples include two-way fraud alerts via text message, push notifications on your phone, or large purchase notifications.
  • Report Fraud Right Away: If you lose your credit card, your first call should be to your bank or credit card provider. Advise them that you’ve lost your card, and they’ll enact their fraud prevention measures to prevent anyone from making fraudulent purchases with your credit card. They’ll also send you a replacement credit card, so your life can get back to normal as soon as possible.
  • Monitor Your Credit Score: Did you know that if someone tries to open a new loan account in your name and defaults on it, your credit score will drop? The rise of free credit tools like Credit Keeper from Capital One (available to select Capital One customers) has made it easier than ever to monitor your credit score and ensure that no one is using your personal information for nefarious credit

Those are the big ones, but there are other measures you can take to protect yourself. Capital One Canada has a great resource page and a video packed with information on how to protect your credit card information from fraudsters; it’s worth a read.

The Bottom Line

No one wants their identity stolen. It’s a hassle, it can mess with your credit score for a long time, and it could keep you from achieving major financial milestones like purchasing a house or car. The downside is so huge that you can’t afford not to take Fraud Prevention Month seriously. If you haven’t take the steps above, there has never been a better time to do so.

Photo Credit: freestocks.org

The post Keeping Your Digital Information Safe in the Tech Era appeared first on My Alternate Life.

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This post is sponsored by H&R Block Canada, but the views expressed are entirely my own. Thank you for supporting the brands that support this blog.

It’s that time of year again – cue ominous music – tax season.

Filing taxes online in Canada is not the most comfortable experience, there’s always that niggling little bit of uncertainty that you aren’t doing it right. Combine this with the fact that you’re submitting documents to the government and the result is most of us either pay the pros to do it or find a system we are comfortable with and cling to it like it’s the holy grail of tax software.

At least that’s what I’ve done. I have always been brand loyal when it comes to filing my taxes online.

It all started several years ago when my parents informed me that they weren’t filing my taxes for me this year. In a panic, I picked a tax software at random, and that’s what I’ve used ever since. It wasn’t the best selection process, but it’s worked so far.

So when H&R Block Canada approached me with the opportunity to not only prepare my taxes using the H&R Block Online Tax Software but also have my return reviewed by an expert, I jumped at the chance to see what else was out there.

In a nutshell? It couldn’t have been easier.

Quick Facts
  • You can file either online or in-person
  • There are different pricing tiers for different needs
  • Small businesses are supported
  • Optional: have an expert review your return
In-Person or Online

H&R Block Canada offers you the option to file your return online or in-person. I opted for online because I’m a busy person and the idea of braving Halifax’s ridiculous winter snow/rain weather to take my tax documents to someone in-person was not appealing. But if you’re the kind of person who prefers to have your taxes done by an actual human being, that is an option.

The online interface was easy and intuitive to use. You are guided through a series of preliminary questions to determine how complicated your return will be before the software offers you choices between which filing option to choose (I ended up with the assistance option because I was filing with my husband and I have business income as a sole proprietor). At any time you can hit the back button and correct any mistakes.

Importing Data from Canada Revenue Agency

First off, if you don’t have your My Account set up through the Canada Revenue Agency, do that now.

No seriously, right now. It will make your life so much easier at tax time.

H&R Block’s software lets you import data from the CRA including key pieces of information like your RRSP contribution limits, whether you took part in the Home Buyers’ Plan and your T4’s and T5’s. Always double check to make sure this information is correct, and make sure that you add any missing information. For example, some of my T5’s were missing, but they give you the option to add them in manually.

Preparing Taxes as a Freelance Writer

The thing that makes my taxes a little bit complicated is that I earn money as a sole proprietor, and I need to declare that on my taxes. I also have expenses to claim. I was a little nervous about using H&R Block’s software for this because this is the part of my return where I always feel like I might be making a mistake. It’s not just taking numbers from your T4 and putting them in the right boxes on the software; these are numbers I calculated myself after a year of tracking my income and saving receipts.

Thankfully, once I entered the business income section of the software, it was all very straightforward. All of the categories lined up as they should, the Capital Cost Allowance (CCA)  was easy to calculate, and whenever I ran across a term I didn’t know right off the bat, a quick Google set me straight.

H&R Block’s Expert Review

I decided to use H&R Block’s Expert Review system because I’ve never had a pro look at my taxes before. Having an expert look everything over helped me make sure all of my entries were on the up and up. I also took this opportunity to blurt out some of my burning tax questions. Booking the appointment was easy, I chose from several time slots available, and Cathy called me, and we went through the return together.

I’m now 100% confident I didn’t leave any money on the table, and I’m also confident that my taxes are filed 100% correctly. You rock, Cathy!

H&R Block Pricing

Regarding pricing, H&R Block is very similar to other online software options out there, if a bit less expensive. Here are the pricing options for 2018:

Online:

  • Basic: FREE for singles and couples
  • Assistance: $15.99 per return for singles or $25.99 for couples
  • Protection: $25.99 per return for singles or $40.99 for couples

*Prices subject to change at any time

Here’s an overview of the options and what they offer.

As I mentioned, I ended up choosing the assistance option because it offered everything I needed like auto-filling my return, a year over year tax summary, and the “helpful hints” section which suggested a few things I’d forgotten. It doesn’t include phone support or audit protection like the protection plan, but for me, that would’ve been overkill.

For the Expert Review, I had the option to choose between a 20-minute and 40-minute session. Since I only had a few questions, I chose the 20-minute session which costs $29.99.

If you like the idea of filing in person (hey, to each their own) basic returns start at $69.99 plus a filing fee.

Getting Your Money

H&R Block uses NETFILE like all of the reputable tax software companies out there. I have direct deposit set up through the CRA, so I’ll receive my money in about six working days. Well – my husband will receive a refund of exactly $36 – I have to pay this year. That’s the downside of earning money on the side; my days of massive income tax refunds are sadly over.

All in all, I would recommend H&R Block to anyone who is filing their taxes online. The interface is slick, the expert review feature is awesome – especially for anyone who is nervous about filing online – and it was overall a great experience. I might even have permanently changed my brand loyalty.

The post H&R Block’s Expert Review System Takes the Uncertainty Out of Taxes appeared first on My Alternate Life.

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