Blog Anniversary: 5 years

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5 years ago, I published my very first post on the Money Savvy Blog. Its title was the cost of eating-out.  5 years and 181 posts later, my view on this particular topic hasn’t changed. When convenience becomes a daily necessity, it will derail most financial plans. I still refuse to pay for these by the way.

A number of things has changed in my life in 5 years. I became consumer-debt free, traded houses, switched to part-time work and decided to obtain an MBA. This one thing, however, hasn’t changed.

As for the topic of Personal Finance, my overall perspective has drastically shifted. I realized Financial literacy alone wasn’t enough, that some of the advice dispensed out there was way too generic, if not downright judgemental. It is not all about avocado toasts and lattes. It is more about focusing on the big picture and increasing income. There are Financial killers way more potent than lifestyle inflation. And, oh, living in the suburbs isn’t necessarily cheaper; and sometimes renting is the better option.

There are a few topics, however, on which my perspective hasn’t changed. I don’t see any change happening in the foreseeable future. Debt will always be debt; whether good or bad, it still needs to be paid off. The necessity of an emergency fund is not up for debate, regardless of how it is structured. A line of credit is not an emergency fund per se. While saving for the kids’ post-secondary education is not a requirement, saving for retirement is. To do so, becoming proficient in investing is a good start.

Last but not least, net worth has nothing to do with self-worth. It is also OK not to be into F.I.R.E. In the grand scheme of things, health is more important, as well as being grateful. Happiness can’t be bought on any stock exchange.

To conclude, here are the 5 most read posts for each year I have been blogging.

The value of time

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I recently received shocking news.  An acquaintance of mine passed away after a 3-year battle with cancer. She was 35. Although I hadn’t seen her in a long time, her untimely death still upset me.

It immediately got me thinking about what I would do if my doctor told me I had less than 5 years to live.  How I would spend my time and with whom.

The value of time is both an economic and financial concept. Most of us are regularly paid for our time, whether as an employee or a freelancer/entrepreneur. If we invest our money, we also receive various payments on it, over a period of time. Said period can be very long.

There are a few things I definitely like about the concept of time in itself.

TIME DOES NOT DISCRIMINATE

It doesn’t care about your gender, the color of your skin, your age, your background or your feelings.

TIME IS EQUAL

Everyone has 24 hrs of it, every single day. Yes, the amount of money we have , what we do or our health will significantly  impact how we use our time. But in its core concept, we all have the same amount of it on a daily basis.

ONCE IT IS GONE, IT IS REALLY GONE

Unlike, you are straight from Outlander, you can’t have time back. Time is only moving forward. We have less of it, as each day passes.

The reminder of these key concepts makes how we value our time – and to some extent our money- crucial.

I believe most of us -myself included- do not value our time correctly. How much of it do we waste on a daily basis? How easily do we do it?

It goes from the most simple matters such as TV binge-watching , random, endless web surfing or social media trolling to more complex ones such as these:

  • Procrastination and indecision
  • Hanging-out with negative people or with people who are wrong for you
  • Staying in a relationship that does not fulfill you
  • Staying in a job you hate
  • Constant complaining
  • Gossiping
  • Waiting for something to happen
  • Solving other people’s problems
  • Doing other people’s jobs
  • Engaging in illegal activities of any kind

I took a long look at the above list and am certainly guilty of engaging in several of these activities. Is that really what I want to do with my time?  Definitely not!

The most important though is what I am going to do to rectify the situation.

Ultimately, wasting time is really unhealthy and leads to an unproductive and unhappy life.

Too bad it usually takes a dramatic event to realize this….

 

Forgot to file your taxes, now what?

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If you are an employee, the deadline to file your taxes with Canada Revenue Agency was April 30th. If you are self-employed, you have until June 17th to file….but if you owe you had to pay by April 30th.

If you happen to not have filed your taxes by April 30th, you may be wondering what you should do next. Let’s take a look, but first a reminder.

INCOME TAXES ARE LEGAL IN CANADA

Just in case you thought otherwise. It has been so since 1917 when the War Tax Act was first introduced. The act was modified in 1948 to become the Income Tax Act.

Now this is out of the way, here what you need to do if you didn’t file your taxes.

file, whether you owe or not, whether you earned or not

Even if the deadline has passed, you can always file your taxes. Start by doing just that.

It is always a good idea to file, even if you don’t owe money to the government or haven’t earned any money. There are 3 reasons for this:

  1. Qualification for a number of government programs is based on reported income, such as the GST/HST rebate or the Canada Child Care Benefit. If you are not reporting your income, both eligibility and amount for these types of benefits can’t be assessed.
  2. Tax refunds are not automatic. As long as your taxes are not filed, your tax refund will not be released, if you happen to be eligible for one.
  3. Notice of Assessment: if you want to borrow a large amount of money, such as a mortgage, lenders will ask for this document.

if you owe money

You really need to file….and pay what you owe. If you don’t, CRA will come after you at some point. You will also be assessed penalties and interests. They start at 5% of the balance owing plus 1% per month until it is fully paid. The 1% interests compound daily!

If you are a repeat offender, you could be assessed a penalty called “repeated failure to report income”. It currently sits at 20% of the most recent income amount you should have reported. Ouch!

what if you haven’t filed for several years 

Yep. That happens. If this applies to you, you will need to be a bit more proactive.

I suggest you contact CRA and see if its Voluntary Disclosure program could help you. This program will only work if CRA has not already contacted you in regards to your back taxes. If you qualify for the program, you will avoid further prosecution. Penalties will still apply.

Of course, you should file as soon possible! H&R Block and TurboTax can help you file taxes going back several years. You can file them online.

don’t expect your tax problems to go away

This is particulalrly true if you owe the government. The agency can be very aggressive and has a lot of means at its disposal to collect, including freezing your bank accounts, putting liens on properties and/or garnish wages.

The best way to avoid the above ordeal is simply to file your taxes on time. If on one occasion you are unable to do so, don’t let it become the norm. After all, “in this world nothing can be said to be certain, except death and taxes”. Benjamin Franklin (1789). 

Opportunity cost

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If you are a reader of the blog, you know I decided to obtain an MBA. I have been studying for almost a year now.

Last September, an opportunity came across to study for a semester on the Malaysian campus of my university. After careful budgeting, I decided to accept it.

I have been in Malaysia since January, and it has been a bliss! To get the financials out of the way, the semester is all paid for. It was paid by my personal savings as well as an insurance settlement. I would also like to add that I don’t have any consumer debt, which made it easier as well.

In total, I spent a little over $22K. Since becoming consumer-debt free, retirement has been front and center on my mind.

I had been thinking about transferring $ 20K to my RRSP. Well, it is not going to happen. At least not yet. Why? Because I chose to go to Malaysia instead.

OPPORTUNITY COST

This post is totally related to a concept that I am currently studying in Economics: opportunity cost. It is defined as ” the benefit that is missed or given up when an investor, individual or business chooses one alternative over another”.

In my case, the opportunity cost is the benefits foregone by not contributing to my RRSP. These are: big contribution that would most likely have triggered a bigger tax refund; tax refund that I could have put back in my RRSP; additional dividends and interests; long-term compounding on the latter.

OPPORTUNITY COST IS NOT JUST FINANCIAL

Being a PF blogger, I obviously had to talk about the monetary side. But there are other aspects to opportunity cost, such as time, pleasure or usage.

To go back to my own example, the benefits of going to Malaysia outweigh the opportunity cost of not contributing to my RRSP, including in the long-term.

The truth is that I hadn’t been doing well or feeling well for some time. Last year was difficult. It was the culmination of a few years of growing dissatisfaction with my life. I felt very stuck with no idea of how to unstuck. I was also plagued with health issues.

I needed a substantial change, but not necessarily a drastic one either.  I needed to step-out of my comfort zone for an extended period of time. Being in Malaysia definitely brought me that and much more. My health issues are gone, primarily because my lifestyle here is very different from my lifestyle Canada. I intend to bring it  back with me, as much as possible.

I have a totally different perspective on my life, on Canada and on myself. Contributing to my RRSP would not have given me any of the above…..

FINAL WORD

Opportunity cost happens to all of us on a daily basis. Most of us are probably unaware of it. We all make choices. There is always an opportunity cost behind our decisions, no matter how trivial these decisions are.

 

 

 

 

 

Handling a no-fault car accident in BC

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Please note I am not a lawyer. This post is based on my personal experience only.

If you are in BC and thinking about hiring a lawyer to assist you with your claim, I recommend Prezler Law. This is not a sponsored post. 

Also note this post is specific to British-Columbia and may not be applicable elsewhere. 

A couple of months ago, I settled with ICBC regarding a car accident I was involved in back in October 2017, and for which I was not responsible. I sustained injuries.

In British-Columbia, basic coverage with ICBC is mandatory for all drivers. A couple of other insurers provide optional/additional coverage, but most drivers are insured solely by ICBC.  I am no exception.

Here are the key take-aways from my personal experience.

YOUR INSURER IS NOT YOUR FRIEND

I mentioned this several times, but insurance companies are not charities. Their goal is to make money. When a driver is found to be not-at-fault in a crash, said driver becomes a liability for the insurer.

The goal of the insurance company is to minimize the potential liability by closing the case as fast as possible, and at the lowest cost possible.

LAWYER-UP

Assessing the dollar value of personal injuries is a complex process, even for specialists. If you are not a specialist, chances are you won’t know how much to claim, but also what you can claim.

Most people think they can only ask for lost wages and medical expenses. Did you know you can also claim for pain and suffering, other out-of-pocket expenses, future income, future care costs, legal fees and interests to name a few?

Having a lawyer will also ensure you don’t miss any deadlines and fill-in the required paperwork. ICBC has no obligation of informing its customers on both these points….so it doesn’t.

In British-Columbia, you have 2 years to start legal action. If you want to claim injuries, you also need to fill-in additional paperwork. There is a deadline for this as well. The process is not automatic.

DON’T RUSH TO SETTLE

It can be tempting to receive some cash a few weeks after an accident. This is counter-productive and could actually be very detrimental depending on your injuries.

The best time to settle is when you are back to the level you were at prior to the accident, i.e. when you are healed or feeling much better that you are able to do your usual activities. I waited for 7 months before telling my lawyer I was ready to settle. This was the point my life was back to “almost normal”.

DUTY TO MITIGATE

Sorry for the legalese! This simply means you have an obligation to do whatever it takes to treat your injuries and get better.

This is the most critical part of any personal injury claim. Listen to your doctor, take your medication, go to physiotherapy, take time off work, hire a cleaning service…etc…etc.

If you have extended health coverage, use it. In British Columbia, ICBC is considered a “secondary insurer”, meaning the crown corporation is under no obligation to pay you any medical benefits until you have exhausted your other options.

BEWARE OF THE INFLATED/FRAUDULENT CLAIM

I don’t mean to sound lecturing here -maybe I actually do-, but if you are not actually injured, do not claim injury.

ICBC has reported a deficit of $ 860 millions for their fiscal year so far. Since it is the only insurer in BC, it means all drivers are paying for that deficit in the form of premium hikes. …

 

Life update and musings

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I am aware I haven’t blogged that much lately. Actually, I haven’t blogged much at all this year, with a total of 18 posts, including this one. I guess 2018 was a little bit complicated and full of changes for me. The first half was actually not that great.

CAR ACCIDENT AND INNER QUESTIONING 

In October 2017, I was involved in a minor car accident that resulted in whiplash and soft tissue injuries. Said injuries lingered for over 6 months. This period was difficult, both physically and mentally.

On top of this, I started resenting my full-time job like never before. The only silver lining with this accident is that it really put my current life into perspective. I realized I had been putting off a lot of items, and that it was no longer sustainable.

FIRST WAVE OF CHANGES

I also realized I wanted more out of my life. “More” however is still proving elusive to define. I am working on it. Career-wise, I narrowed a path down to 2 options that I am really interested in. To do so, I decided to obtain an MBA.

Subsequent to this, working full-time was no longer doable or sustainable. Initially, I had given my resignation. After further discussions with my boss, I decided to stay on a part-time basis.

To cope financially, I refinanced my mortgage and leveraged against my condo. I had personal savings as well, but leveraging gave me more options. I don’t regret doing it.

Since then, I have seen drastic improvements in my life, particularly health-wise. I am feeling much better. I am finally taking better care of myself and addressing issues.

There are still a few key aspects of my life that are not satisfying and that I need to spend time on. But, I don’t want to make any rash -or rush!- decisions.

More changes are coming to my life and 2019 has the potential to be a powerful year for me. I can’t wait!

THE FUTURE OF THE MONEY SAVVY BLOG

This leaves me with the future of this blog. To be honest, I am undecided at this stage. One of the things I want to do is definitely being more offline. Maintaining an online presence is exhausting, as well as time-consuming.

I don’t know when the next blog post will be. I simply have more important priorities to take care of at the moment.  I am totally fine with that. Thank you for reading my posts and visiting my blog over the years.

When to sell your stocks

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I sold some stocks recently. Not only I didn’t loose any money, but I actually made some. If you have been reading the news, you are aware the markets are in correction territory, a.k.a. bearish. It resulted in massive sell-offs across the globe.

A BEAR MARKET IS NOT A REASON TO SELL YOUR STOCKS

Bear markets are actually pretty normal. They should be expected. The twist here, is that we are no longer used to them. We have been in the longest bull market in history. Most of us have forgotten what the bear looks and feels like.

That being said, there are definitely valid reasons to sell your stocks. Here are a few of them.

you need the money; your stocks are all you have

Yep. Shit happens. If your cash is depleted, your credit cards maxed-out and you are in a dire situation, then sell away.

If you are not at this stage, consider using cash, liquidating term-deposits or selling your bonds before selling your stocks, particulalrly if the markets are bearish.

your stocks have served their purpose

When buying stocks, one should always have an objective. Whether short or long-term or for speculation or diversification, your stocks should always have a purpose. Once achieved, your stocks have no reason to be in your portfolio anymore.

you experience major life changes 

You loose your job; you go through a divorce or you are nearing retirement. These types of change may require rebalancing your portfolio to a more conservative allocation.

your risk tolerance is drastically lower

A major life change and ageing will lower your risk tolerance.

I always say it is important that your portfolio be in line with your risk tolerance. Most of us have a lower tolerance than we initially claim. Case in point with the recent mass sell-offs….

ONE OF YOUR STOCKS IS CONSISTENTLY UNDERPERFORMING

We all make mistakes, including with our investments. A stock has been in your portfolio for some time, and it is just not picking up when similar stocks are rocking the market.

When the market becomes bearish, your stock becomes worse when similar ones weather the turmoil. Time to sell!

MY CASE

As I mentioned above, I recently sold some stocks. These stocks were in my TFSA for a few years.

They were part of my emergency fund. Yes, you are reading correctly. Back then EQ Bank and Tangerine had not launched their high-interest savings accounts. The majority of banks was offering peanuts in term of interests.

I have had major life changes recently, with more coming. I needed to rebalance the allocation of my emergency fund. So, I sold some stocks. I made money despite the bear market. I sold stocks that triggered a capital gain. I still have 20% of stocks in my portfolio.

 

 

Tips to ask for a pay raise

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A few decades of life experience has taught me that, for the most part, if you want to obtain something, you have to ask for it -besides working for it-. This is particularly true when it comes to pay raises.

Unless you are a government employee or work for a large corporation, it is unlikely your employer will regularly review – and increase-your salary. Most businesses don’t have any procedure in place when it comes to this topic.

In not asking, not only you will not receive, but you will leave thousands of dollars on the table; guaranteed.

KNOW YOUR ACCOMPLISHMENTS

Your manager is probably very busy and doesn’t have time to keep track of everything you do for your employer. This is your job to do this. The worst thing you can do is justifying your request by talking about  how your personal expenses have increased or how you need to save for retirement.

Show how you add value to the company instead, with a focus on the bottom line. Also highlight areas that are above your job responsibilities. Knowing your accomplishments will help you address objections.

KNOW YOUR MARKET

Before approaching your boss, you should do research on what people with your profile are paid in your industry and in your city. Your sources need to be credible. Many professional associations publish yearly guides and reports. Use them if you can.

KNOW YOUR TIMING

Timing counts when asking for a raise. Try to align your request around the company’s financial trajectory. Year-ends could be a good time, as your employer is most likely preparing its budget. You may also wait for your annual review.

Avoid asking for a raise at a high-stress period. Schedule a face-to-face meeting.

KNOW YOUR AUDIENCE

Ultimately, asking for a raise is a business transaction. If you tell your employer how much you love your job or how you don’t want to leave, you are already leaving money behind.

You want to remain positive while at the same time make it clear you are aware your services are so valuable you would be an asset to any company who would hire you. It is not about burning bridges or being arrogant. Ultimately, it is about knowing your worth.

KNOW YOUR OPTIONS

Depending on your employer, you may not be able to obtain your desired raise for a variety of reasons. Salary is not the only thing you can negotiate. Everything is negotiable!

You could ask for a bonus, more vacation, for opportunities to work from home, for tuition assistance etc…. Benefits are also important and they can make a huge difference in your life.

If all fails, you may want to think about whether you want to stay or look for another job. Regardless of your decision or how disappointed you feel, remain professional.

FINAL WORD

It took me some time to master the basics of asking for a raise at work. This process is daunting for most people, but perhaps more for women.

The ability to negotiate our salaries is important. Our level of income will largely dictates our lifestyles.

 

 

Why I don’t really blog about my own finances

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A lot of fellow PF bloggers share their most intimate financial details online. How much debt they have, their net worth, their spending, their income….you name it, it is out there.

While I did share my debt amount, and how I repaid for it, I chose not to share many details on my finances , and here is why.

privacy concerns

Once you share something online, regardless of what it is, there is no way to get it back. No matter how hard you try, it will stay online.

I am of the opinion people don’t need to know everything about my finances, whether they are complete strangers , friends or acquaintances.

unhealthy comparisons

Society in general, and the PF community in particular, is using net worth as a measure of self worth. The 2 are actually not related.

If you are not killing your monster debt in less than 2 years, something is inherently wrong with you! Or if you haven’t saved a million by the time you are 25 , you are bad with money. If you are bad with money, you are probably bad with other things as well.

Does the above sound familiar? I bet reading about it wasn’t really helpful. It may even have made you feel bad.

Our own story is unique. We all have different lives. Knowing so-and-so paid x amount of debt or saved x amount of money won’ really do anything for us, at an individual level.

not a financial planner or advisor

A lot of PF bloggers have lists and spreadsheets of all their investments on their blog. Some of them even talk about their “top stocks” or favorite ETFs. I previously mentioned the majority of PF bloggers have no formal qualifications or certifications in Financial Planning.

I won’t be one of these bloggers anytime soon. I believe there is a level of personal responsibility when advertising or promoting financial products to complete strangers you don’t know anything about.

Final word

My blog is to share my passion for personal finances, but not necessarily to share everything about my own personal finances or my life.

I consider my blog to be a peephole into my life, but definitely not the complete picture. There is so much more to me than the contents of my blog….but I choose to keep it offline.

Could your cosmetics be bad for you?

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Most people are concerned about their food intake. A lot is written and said about what we should be eating, what we should avoid, what is “good”, what is “bad” etc..etc…

But, what about the stuff we put on our bodies, namely moisturizer, soap, shampoo, make-up?

Because it is for sale doesn’t necessary mean it is good for you or safe.

LOOSEY-GOOSEY REGULATIONS

Shocking? I know. In North America, regulations are minimal and losely enforced. I have lived here for 12 years and I have yet to hear about a beauty product being recalled because it was deemed unsafe.

Yet, a lot of cosmetics contain components that shouldn’t be in there in the first place. These components are well-known to cause allergies and act as hormone-disruptors.

I recently did a mass clean-up of my bathroom cabinets, after educating myself about some dangers of our everyday cosmetics. Here are some tips.

LESS IS MORE

Cosmetics companies are very good at convincing us we “need” one product for each part of our bodies. We “need” day-cream, night-cream, lip balm, make-up remover, hand-cream, foot-cream, body lotion, eye-cream, neck-cream….the list is endless.

This is simply not true. Using too many products will be ineffective and will result in an “overload” on your skin. It will also increase the risk of allergic reaction. Not to mention the strain on your bank account.

You can replace all of the above by coconut oil, which is 100% natural and way cheaper. Both your skin and your wallet will thank you.

THE FEWER INGREDIENTS THE BETTER

Have you noticed the sheer number of ingredients on many beauty products? The more ingredients, the more processed the product is. Chances it contains “scary stuff” that shouldn’t go anywhere near your skin.

It is also best to choose a product that does not have an extended shelf-life, ideally it should be between 6 months and 1 year.

INGREDIENTS TO AVOID

Unless you are a chemist, the list of ingredients in your beauty products most likely sounds like a foreign language to you. Here is what to avoid:

  • BHT & BHA: hormone-disruptors; possible carcinogens. Banned in Europe, not in Canada.
  • DEA ingredients: allergens
  • Phthalates: whether as a single word or chain ones. Hormonal disruptors; potential cause of birth defects.
  • Formaldehyde: allergen; carcinogen
  • Parabens: whether as a single word or chain words. Hormone- disruptors.
  • Fragrance/Parfum: companies are not required to disclose the composition of fragrance/parfum. Allergen. Possible hormonal disruptors.
  • PEGs: carcinogen
  • Petrolatum (petroleum): Allergen; carcinogen
  • Siloxanes: hormonal disruptors
  • Triclosan and triclocarban: these are like pesticides. Yikes! Disrupt thyroid function.

If you want to use safe cosmetics – I bet you do!-, you can check EWG Skin Deep.