I <3 PC Financial

I used to hate banks. You put your hard earned money into a chequing account at a bank and they pay you next to nothing. If you want to take your OWN money out, they’ll charge you a fee for using your debit card, when you withdraw money at an ATM, or if you write a cheque. Even if you do absolutely NOTHING, they will still charge you the monthly fee for holding your money for you. In turn, they take your money, and lend it to someone else and charge them a great interest rate. I hated them, but boy, I wish I could be them! And the service! Don’t get me started on the service; I seldom go to the bank for anything these days. I seriously considered investing in a safe and just holding my cash at home.

Along came PC Financial. It was like a dream come true. Free. Everything. Could anything be more glorious? Sign up at your friendly local superstore, and you can get set up with a chequing account and savings account. They’ll start you off with a 100 free cheques, and you can order more if you run out. I prefer banking online, so I am able to see my bank accounts online whenever I want, and transfer money effortlessly between my accounts. And the interest rate on their Interest Plus savings account is one of the highest in the market right now at 1.50% (I regularly check this to ensure my money is doing the best it can do). You can use your debit card as much as you want, for FREE of course, and as long as you withdraw cash from a CIBC ATM, this is also FREE.

Sounds too good to be true? There’s got to be a catch, right? As it is an online-based bank, they don’t actually have branches for you to go line up in. Some may feel more comfortable with a “real” bank, which I do have as well, but only as a way to fund my investment accounts. No monthly fee, and no additional charges are required if I deposit only once a month. Everything else, I use my PC.

A lot of people will ask “it’s only a couple bucks a month, what’s the big deal?” Everything adds up, whether you realize it or not. How often do you go through your bank statements to make sure everything adds up? To see the amount of bank charges you incur each month? This might be an interesting exercise for you to do (now that you have all your bank statements all organized and easily accessible!) How much are you paying in bank fees? According to PC’s website, you can save up to $200 a year. Is there ANYTHING else you would rather spend this money on? I don’t advocate spending NO money at all; I just like spending money on things I actually WANT to spend money on.

Let’s say we have $10K stashed away for our emergency fund. Some may choose to keep this in a chequing account to maintain a minimum balance so that their monthly fees will be waived. Let’s assume this money is untouched for a whole year. At the end of the year, if you had the money in a chequing account, you will have around $10K (assuming they don’t charge you money for not having any activity during the year) as most chequing accounts don’t earn interest. My money would sit in PC Financial’s Interest Plus Savings account, and I would have an extra $150 in my balance.

But wait! You’re comparing chequing accounts to savings accounts; that’s not fair! Yes, but if you don’t keep the minimum balance in your chequing account, you may end up paying up to $200 a year in fees which would barely be offset by the dismal interest rates you will receive in the main bank’s normal savings accounts.

Check out their website for more information: http://www.banking.pcfinancial.ca/a/products/chequingAccount.page?region=AB&language=en&signinop=

The handy link also allows you to sign up for their accounts as well.

So how much are you paying in monthly banking fees? How much money are you losing each month by not allocating it properly?

Now what?

I’m sure the weekend seemed like torture as you were all anxiously awaiting the next post. After all the background information, you must be highly anticipating the post that can get you started on your own journey towards financial freedom, right? (I can dream, can’t I?).

So, where does one start? Well, where are you financially? Are you spending more than you make? Are you saving enough for your dreams and retirement? It’s hard to answer without knowing where you are today.

Enter the net worth calculation. Simply put, it is a snapshot of where you stand financially at a specific date. To calculate your net worth, you sum up all your assets, and subtract all your liabilities.

Assets are everything you own that has economic value such as cash and savings accounts, retirement accounts, pension plans, houses, cars, etc.

Liabilities are what you owe, either to a bank or to another person. These things include credit card debt, student loans, car loans, mortgages, lines of credit, etc.

If this is the first time you are doing this calculation, realize that this number can be surprising. Even shocking to some. This is the first step for you to start to fully understand your current financial situation and if this number comes out very negative, it can be very disheartening. But don’t give up hope. No blame, no judgement. Everyone has to start somewhere, and you deserve props for taking the first step. You can continue being blissfully ignorant to your financial situation, but there will come a time where it will bite you in the ass. I guarantee it. No time like the present to start.

So go home and start collecting all the information you have to calculate your net worth. Bank statements, credit card statements, etc. Some of this information can be gathered online if you do any sort of online banking at all. Try to get the most recent information possible, but do not let this deter you from doing the exercise. An estimate is better than not doing anything at all.

Find attached a sample excel file you can use (Net worth). Add/delete your own categories as necessary. If excel scares you, write this down on a piece of paper. Whatever floats your boat.

Couple quick notes:
- I personally don’t include the value of my car in this calculation; it will continue to depreciate and it is hard to estimate what this is worth. Who knows, someone may decide to accelerate instead of braking and destroy your car tomorrow. We all know how well guys drive.
- For your house, I would use the purchase value as the asset value. You may want to increase this with inflation, but I would hesitate to use what you think your house is worth in today’s market. I err on the side of conservatism in the calculation of assets.

Don’t worry if this isn’t 100% complete. And you don’t have to show anyone this calculation. Well, your partner might want to know. Ideally, you would do this exercise together, but I’m sure there’s a hockey game on. Or Monday Night Football. Or Glee. Or… you get the idea.

If you have any questions about what other things should be included in assets or liabilities, please leave me a comment or fire me an email. If you get off your butt and actually DO this exercise, I would <3 to hear about it! If you want me to keep you accountable, post a comment saying you’re in, and I will check with you in a week to make sure you do this step. I find that when I actually tell someone else that I’m doing something, I’m much more likely to do it.

Now you know what the first step of your journey is.

So, what are YOU going to do about it?

What does “Retired” mean anyways?

You may have noticed that I don’t claim to be retired, but feel I am currently “retired.” Big difference, right? Huge! So, what does that mean anyways? It means that I don’t need a paycheque from a job right now to survive. To me, it means that I have enough in my savings for me to enjoy this lifestyle for a couple of years, but not for the rest of my life. “Boy, she must have a crap load of money to do that,” you may be thinking. I know some of you have more money than me. Some have less. I have no idea where I sit in comparison, but let’s say I’m about average. Everyone likes to believe they’re about average. Like people’s perception of their own driving skills. Everyone honestly believes they have above average driving skills. We all know how true THAT perception is. I <3 all my friends, but there are some where I have to say a little prayer before I jump into a car with them.

So how am I doing this and everyone else is slaving away at their 9 to 5s? The easy answer is that I have a good grasp on my monthly cash flow. In other words, I know exactly how much money I have and how much money I need each month to survive. Can you say that for your own situation? How do I do that? Easy, I have a budget. Yup, I can feel all your eyes glazing over and ready to jump ship. I know, I know, its too early to bring out the dreaded “B” word. Relationship suicide! Like dropping the “L” word too early in the dating process; it’s a disaster! But bear with me. Just let the “B” word swirl inside your head right now and that’s it. I’ll revisit it at another time. Just easing it in for now.

So, if you’re continuing on with me, thank you. We may have lost a few who jumped at the mention at the “B” word; hopefully they’ll come back and finish this off once they get over the initial shock! Some may think I’m being a bit silly in regards to the “B” word; have enough conversations about this in person and I assure you the response is not entirely exaggerated.

But I digress. So, knowing my cash flow helps me. For income coming in, I don’t have a monthly paycheque, but I have interest income, dividend income, and money from other sources such as money from my favourite credit card (oh yes, I said it. You heard correctly. My credit card pays ME for the honour of using it) and from people who are paying me to help them with their financial planning. But alas, it is not enough, so I have to dig into my savings to make up the difference.

Savings? What is that? When I quit my job, the rumour mill at the workplace was abuzz on what I was going to do; how will I survive? I MUST be moving home to live with my parents; I can’t POSSIBLY afford to live without a job. These comments were coming from executives who were making 6 figures easily a year, but they couldn’t fathom the thought of taking some time off? I was shocked! But this emphasizes the importance of saving and paying yourself first; topics I will cover in detail later on. And yes, your savings will grow faster if you are making a full-time wage and living at home. But I still paid rent at home. And yes, I know other people who have stayed at home but cannot afford to take a year off. Full disclosure required to appease a good friend of mine. You know who you are.

The next thing is debt. I have ZERO debt. Nothing. Nada. I owe nothing to anyone. I’ve been working since I was 13 to pay off my own education and to pay cash for my car. So this definitely helps with my cash flow each month. Am I against debt? Certain types. Mortgages are fine, although if you can pay cash for a house or condo, I salute you! I don’t believe in financing cars and advocate saving up enough to pay cash for your cars. And what about credit cards? The root of all evil if used incorrectly. But we’ll save that for another post.

What do you think? Should I be using “retired?” Or should I think of using another word? I don’t like the connotations with unemployed, cause it implies that I am currently looking for employment. And if I’m unemployed, then I should be able to collect EI (employment insurance)! Are you financially stable enough to take a year off? Have you even thought about the possibility?

I <3 Money!

Hanging out in big groups can be fun and exciting; you never know what kind of dynamic you will end up with. My word of advice; never choose Street Fighter characters if you end up playing charades! I do enjoy my group time, but I particularly cherish any one-on-one time I have with people. This is where I find I can learn the most about a person. It requires a bit of faith and a lot of trust to get to know someone, and I appreciate every opportunity I get to do this. During these conversations, I find that we can talk about anything. From crazy family members, to that person at work where you just want to smack across the head. Just a little bit. Just a little sting. Nothing illegal. Although that could be a family member too. Or your partner. We’ve talked about anything from hobbies, to relationships, to exchanging recipes that I fully intend to try. Someday. Honest! I’ve had conversations about people’s bathroom habits to intimate details about their sex lives. Some details I could probably do without, but it all comes with the territory. Being able to talk to me about anything and everything means just that.

Through all of this, an interesting pattern emerged. As open as most people are about every SINGLE aspect of their life, the one that closes them up is talking about money. Nothing causes more squirming then bringing up this subject. Do you know how hard it is to bring up this topic during a conversation? “So, how’s that budget of yours coming along this month?” Total mood killer. Why is this? Aside from the inherent un-sexiness of budgets of course.

When you think about money, what do you feel? Anxious? Scared? Stressed? Something you take for granted cause there’s enough in your accounts? Or that there’s still room on a credit card to take care of your expenses? Or does money stir up feelings of comfort and security inside? Money is such an intricate part of our lives, yet we hide details about it from everyone, sometimes even from our own partners! Whether you take for granted that your paycheques are coming in and your savings are growing, or you’re terrified of opening bank statements and credit card bills at the end of each month, it is important to sit down with yourself (and your partner!) and time to come clean and be honest. Everyone works so hard for their money day after day, and as a result, I believe money should bring a sense of security and freedom, rather than causing you anxiety and stress. Aren’t “Mondays” torture enough?

So what’s my relationship with money? For anyone who’s managed to bring up anything about money or personal finance or investment related during our conversations, you know that I CANNOT shut up about this. I <3 Money. Many of you may cringe at this. Are you even “allowed” to say that? Sounds… evil. Or something. You can say you <3 your house. <3 your car. <3 your Iphone. But you can’t say you <3 money. Seems odd to me personally. I <3 reading and learning anything and everything about it. I <3 the freedom that it can give you if it is handled properly. But I also understand the anxiety and stress that it can cause, and have personally witnessed how powerful it can be in destroying trust in relationships. So this is why I am doing this. I don’t know where this blog is heading, but I am hoping that I can help you become more aware of your own financial situation and relationship with money. For some, it can serve as a reference point and resource for all things related to money. For others, it may serve as a starting point to becoming more honest with yourself and how money is affecting your life. And for those who are just bored at work and want something to do to kill 5 minutes before the next EVER so productive meeting, I appreciate the traffic!

So, what is your relationship with money? What feelings does it stir up inside? Warm and fuzzy gooiness? Or panic and stress? Or something different entirely? If you’re not comfortable posting in the comment section (believe me, being this open and honest online is tough!), fire me a private email instead. Think of it as a money support group for my closest friends. And their friends. And their friends friends. Hey, I’m sure we all know each other in some way or another!

“Retired” by 30!

After a seemingly random conversation with a co-worker a year ago about how much money I would need to quit my job, I handed in my notice to my employer that I had been with for over 5 years. It was thrilling. It was terrifying. I had no idea where I was headed to next; no job prospects, no goals, no “five-year plan” in place to guide me. In a world where we are defined not by who we are, but by what we do during ‘9 to 5,’ it was tough to step away from the corporate world. I dreaded the “so, what are you doing these days?” question. I wasn’t working, but I didn’t feel unemployed; I wasn’t updating my resume nor was I looking for jobs. Instead, I was doing exactly what I want, when I wanted. So, from that day forward, I was “retired.”

Imagine a world where you didn’t have to be at work at 9; what would you do? (Aside from sleeping in, of course!) A lot of people can’t imagine this at all, they believe they would die of boredom from all that free time. I’ve spent a lot of time traveling; I’ve been to Montreal, Hawaii, Mexico, Shuswap and Vancouver. Definitely not something I could have done with my annual 3 weeks of vacation time. I’ve spent a lot of time learning about photography. I took a couple photography classes, did photo shoots for family and friends, as well as product shots for their websites. I entered my first photography contest, and won $1,000 for the ‘fan favourite’ category. I helped a friend with a video shoot for their music lessons. I’ve tried hot yoga, body surfing in Hawaii, and learned how to check and change brakes for a car. I’ve learned that DJ spinning is tough, especially after a few drinks, and am trying to learn to play the guitar. A friend is expecting a performance on the guitar in a month. A friend is going to be sorely disappointed. And I’ve read. With all the years I spent studying in school, and studying for my actuarial exams when I was working, reading for fun was a luxury I could not afford. So I read everything and anything I wanted. Since March, I have read over 50 books; I <3 my library card!

Sounds great, doesn’t it? A year to do whatever you want, whenever you want. In reality, not many can do this. There are bills to pay, mouths to feed.  During this past year, I’ve only had one person honestly ask me how I am “retired.” Some think I’m completely nuts not to be working; how could I not want to make money? Some think I’m lucky and things just fall in place for me. Some say they are jealous and wish they could do it too. But only one person asked how I did it. And I didn’t have a good answer for him at the time. I want him to ask me again; I’ll have a better answer now.

What would you do if you could take a year off right now? Would you love it? Would you hate it?