What is Going On?!

I don't know what it is.

Perhaps the moon is aligned with some other planet which is having a crazy effect on some wave somewhere but I have come across some strange and disturbing examples of how people are doing business.

As you know, D has been on the hunt for adequate insurance coverage for our vacation properties should they end up being rented out. Meanwhile I have been communicating with Realtors and private sellers in Newfoundland in anticipation of my trip out in April.

Yesterday, D got a quote from an insurance broker who told him that we could have coverage as of 1 minute past midnight even though he didn't require the address of our cottage nor did we receive a policy number or sign anything or even received an application for coverage....

Whereas I have been offered a waterfront home to buy with the closing of my choice and was encourage to not go through a lawyer so I could save money, that they would just fax me some papers to sign and it would be done. He expected that 3 pictures of the outside would suffice and that I would not want to see the inside, do a home inspection or a title search...

Also, I have found that some mls listings photos to be out of date and Realtors refusing to make any effort to update them even though they know I am an out of province buyer who is trying to narrow down a group of listings worth seeing in person. How can they market a property that is not accurate?! Would you buy a property that is supposed to be equipped with certain features after being told that what will be left to you won't be exactly what you see...

On a happier note, we have just checked in and selected our seats for our flights back out west tomorrow morning. I'm thinking that a bit of mountain air will help clear the cobwebs!

Playing Around with Various Scenarios

Lately, I've been busy re-vamping our main household spreadsheet to reflect the increased cash flow from the non payment of mortgage prepayment. What a mouthful!

Chris made this comment on my post relating to the dilemma:

"How about a compromise.

You keep saving money. Once you have enough to pay off the remaining mortgage, suggest that he let you pay for it, but that he puts that same payment away into savings instead of to the mortgage company.

That way, he'll still be paying the mortgage for the remaining 4-5 years, and you'll both save on interest.I do agree that it is most likely a pride issue, although my wife and I agree on the principle that it is a "common pot"."

Awesome suggestion. I've been looking at how to incorporate the idea. By the time I received the comment, I have made some massive changes to our spreadsheet.

I must admit, this debate has made some things a lot better. For example:

• We are able to have by the end of each year, enough to pay for our yearly trip to France (flights, spending money, apartment rental) and spring ski flights.
• By April of each year, we will have our BC taxes, ski seasons' passes and Christmas ski flights accounted for.
• What it means is a leaner, meaner, less cluttered spreadsheet and much more consistent cash flow throughout the year. We will be much less affected if my business goes down.
• The "working" accounts (home, car, properties, travel) will be topped back up to $5000 each at the end of each year.
• All the while saving on average $31260 per year for the next 5 years. I say 5 years because I am leaving the option of cutting back my work week at that point.
• I have also been able to negotiate a $4000 a year mortgage prepayment with D. That will have the effect of decreasing overall amortization to around 8 years. He is impressed with how much the increased cash flow can do to make our yearly routines easier.

That's the version today. I cannot guarantee that it will be in the same form tomorrow...so many ways to make things work... :)

Home Insurance

While I was on an insurance frame of mind yesterday, I took the opportunity to review our home insurance renewal. The premium is increasing by $170 a year. Not exactly sure why other than costs tend to go up each year. We are still insured for the same amounts.

So, I got back on the phone to ask about how much of a difference it would make if we were to increase our deductible as an exercise. Apparently, how much you are allowed to change is dependant on how your policy was underwritten?!

The broker has to type in a number to see if the "computer" will accept it. In our case, she tried inputting a $2000 deductible. It took it. We currently have a $1000 deductible.

We talked about the pros and cons about increasing deductibles for your house , ie.

• What type of damage would you file a claim for?
• Would you file for a broken window?
• I told her I would claim if a tree fell through the house or if it got flooded but other than that, I would replace my own window.

By the end of our conversation, I told her to go ahead with the increased deductible. We will be saving $16.12 a month from what we have been paying and $23.85 a month from what we were going to be paying.

An informal survey revealed one person we knew who has ever filed a home insurance claim. And that was for their house burning down. Do you know of many people who have submitted a claim?

Carnival of Personal Finance #193

I am long winded today but I can't forget this...

Broke Grad Student has posted today's Carnival -- YouTube Edition.

There are some funny videos in there between a really wide range of articles.

A Pretty Big Glitch

We start this week with a glitch. An insurance related one.

It turns out that our current homeowners' insurance policy for our properties is just that -- for personal use only.

Usually, when I have to speak with a broker about insurance, I'm on the phone for 45 mins or more.

So I got my tea ready and was braced for a barrage of questions this morning about who we are renting to, will there be pets, what are your renters' favorite colours etc etc.

Well, surprise, surprise, the conversation halted in under 2 minutes. Simply put. They do not offer that product nor will they defend us should something go wrong. You will have to find a different insurer completely.

I must admit, I was aghast. Of all the scenarios, I did not expect this one.

Our insurance is with a group insurer, the biggest one in the country for professionals in fact, but I guess in this case, that's not enough.

D is not giving up on his vacation rental dream. He is going to contact his friend, the insurance broker for advice and quotes.

Brain Tangle

Sometimes, OK, most times I put an unreasonable pressure on myself to come up with solutions to made up problems.

For example this Nfld property idea I have.

• My rules for the puzzle is that it must be paid within 9 years (used to be 5 when we were on the accelerated pay out plan) so that we can be totally debt free.
• It has to be funded out of my "dream" account thus not disturbing any other savings plans.
• All costs of running of the property has to be paid by me as it is my little pet project.
• What property can fit all of the above criteria?!

So that is what I've been tangling up my brain cells over. D thinks I'm out of my mind.

Magic Numbers

Do you have a Magic retirement number?

Does having to save 1 million dollars in order to retire apply to you?

What do you think of the safe 4% draw a year so that you never deplete you savings?

There is a new spreadsheet in our household designed to answer the above questions. What we would like to know is:

• Can I cut back my Fridays before the mortgage is done?
• When can we afford to not work at all?
• What difference does another 2-3 years of work really make?
• What if we liquidate 1 or 2 properties, does that make really early retirement (40's) possible?
• Which of us would like to work til mid 50's?

Right now, both of us want the option of cutting paid work out completely by early to mid 50's. I am always trying to push the envelope so I'm asking what about 40's? My mind thinks it would be cool to wrap my career up in another 10 years when I'm 47 yrs old.

By then, I ought to be skilled enough in other things that I can start a different business or move out west or out east and find something to do there. I think I will be ready for a change.

I've been on the hunt for things to learn/skills that would be marketable almost anywhere we would want to go.

Celebrate Good Times?

Do you celebrate "special" days or events?

I have a girlfriend who is a master at throwing together a party for anything or everything. She comes from a culture that does that. I've been to her birthday parties, post vacation slide show parties, summer solstice party, open house parties, anniversary party, grand unveiling parties etc, etc.

I, on the other hand, didn't grow up with such a custom so I am fascinated with the concept.

Growing up, it was birthdays, New Years and memorials of dead family members that took center stage each year. Birthday gifts ended after the age of 18.

As a couple, D and I started off having monthly anniversary celebrations (dessert out) of our first date. Once we decided that the extra calories weren't becoming, it became occasional. It has probably been almost 3 years since our last banana split.

Since we have been active in our retirement lifestyle shaping, we have opted not exchange gifts at all, as our life feels like one big gift anyways. Ditto for celebrating Valentine's day, Easter, St. Patrick's Day etc. etc.

As mentioned before, we still buy presents at Christmas for D's family as they are really into that but that's it each year.

Am I becoming a bump on the log? Or worse, am I getting boring?

Why Are You There?

This post was inspired by Celes who wrote "Are You Looking For A Relationship To Complete Yourself?" as a prelude to Valentine's Day.

I know a number of people who have rushed into relationships so that they can play the "role" of a girlfriend/boyfriend, which eventually leads to bride/groom, leading to mother/father.

I do believe there can be a lot pressure from societal images that push some to take on roles before they are really aware of what it means to them.

It is fun to put on a dream wedding, be the center of attention at bridal or baby showers put on for you... to buy that dream house with the 2 or 3 car garage... to be the first of your friends to be pregnant...

But love/attraction/chemistry aside, what are you really bringing to the table?

• Someone who is at peace with themself?
• Someone who has enough life experience to know that this is what they really want and am ready for?
• Someone who feels like they have something to offer?
• Someone who is happy with their life and want to share it and build on it with someone else?

Or is it more like:

• Someone who is lonely and afraid of being along?
• Someone who would like a "life" but don't know how to go about getting one on their own?
• Someone who doesn't want to work and want to be taken care of?
• Someone who want to have kids to compensate for their difficult childhood?
• Someone looking to escape from their life at home?

The most inspiring couples I know are ones where both persons are their own person and can function well independently.

• Often they have some separate interests so that there are sharing of ideas and passions.
• Each person is fabulous in their own right so that 1 + 1 = more than 2.
• They have chosen to be in a relationship to enhance who they already are.
• They have chosen to create and build a uniquely combined life where neither loses themselves in the process.

Ah, something to inspire to!

Another Old Tale

As promised last fall, I said I was going to write about a 2nd "weird" event that happened in Arizona that caused a life direction change. This time, the change related to a relationship.

W was 1 1/2 times my age. We got together quick and everything evolved very quickly. I was 26 yrs old and thought I knew "everything" about myself so I felt I was making the right decision getting involved with someone older.

W was charismatic, smart, people loved him and he would give you the shirt off his back. The problems began after he bought us a house and declared that we ought to have children 5 yrs sooner than we had discussed. That meant within 6 months of us knowing each other.

I said no, that was not part of the plan. I didn't go to school for so many years not to start building my practice. Subject was dropped and another one popped up. Travelling.

W had done quite a bit of travelling in his life and claimed to still be an avid traveller. But, he started refusing to go anywhere except Arizona. Why? I don't know. That didn't matter as much as his declaration that now we were engaged, I wasn't "allowed" to continuing travelling on my own. It didn't sit well then nor would now.

It wasn't until later that I learned about his need to "re-do" his life the way he felt it ought to have gone. He felt a lot of guilt over being an workaholic when his children were young and now wanted a chance to do it over properly. He wanted a stay at home wife. He wanted a quiet life at home with new children. He felt that if he was a good provider, he would be able to attract someone who would be happy fulfilling his needs.

His Needs? What about mine? It didn't matter. He eventually listened to me and backed off the kid thing and the travel thing but I was already feeling unsettled and uneasy inside. I need more than a nice house and someone to provide to feel fulfilled in a relationship.

Fast forward to the pivotal trip to Arizona.

We were signed up to do a half day white water kayaking excursion. Unbeknownst to the guide, a tree had fallen overnight blocking 3/4 of the river and creating a pretty dangerous current area as it was a blind and downhill turn leading up to it.

The team ahead of us hit the tree but managed to squeeze out of it as they took a broad turn into it. We took a close sharp turn and hit the tree right near the middle. The front part of the boat went under the trunk and W capsized and disappeared underwater despite having a life preserve on.

The current pulling down was very strong. I capsized and was hanging onto the tree trunk. When I saw him go under, I moved along the tree trunk towards him and my legs were forced forward by the current. I was pulled underwater.

Ironically, as I went under, W's foot managed to find a branch to push off of and he surfaced and saw me go under.

What happened was very strange but wonderful in a way. I was floating suspended underwater. I was able to look around me. It was so peaceful. The water was pale green but very clear and I felt like I was breathing normal!

When we talked about my being underwater, he said that he saw me just looking around, not panicking. I still don't know why I didn't choke from having water up my nose or why I felt like I was breathing. It's neat to think I may have had a little taste of what it's like to be a fish!

W pulled me out and as soon as I looked at him, I knew that I had already left my relationship with him. I "saw" him clearly for the first time.

I got out of the engagement and made plans to buy my own home shortly after we returned from the trip.

Needless to say, when D and I went to Arizona the first time, having heard of my 2 weird experiences, he was somewhat expecting that we'd hit something weird and we would be breaking up with him shortly after.

So when we landed in Phoenix, he told me that it was great knowing me!

You Just Never Know...

D is pretty confident that he can get the cottage up and running, ready to be rented in 2 weekends worth of work.

The 2 weekends I will be away, to be exact. He wants to manage this project completely by himself (though I make my opinions freely available...).

Since we've known each other, he has taken the role of my right hand man, literally. He is great with keeping things running. I like putting things in place but am not so good with the upkeep so I am excited to see what he comes up with.

He gave me a glimpse of the rental website. Looking good!

In the "it's a small world" category, Heather, who commented on my rental income post, whose full name is Heather Bayer, is the author of Renting Your Recreational Property for Profit. She also runs a cottage rental agency in Ontario.

We read her book a year ago or so! I pulled it out and re-read it. It's full of wise advice from seasoned cottage owners.

That goes to show ... You just never know who is reading your blog!

No More Negotiations

Here is a summary of some salient points from our recent "negotiation" regarding fast mortgage repayment vs. savings.

D's points are as follows:

• It is an issue of personal responsibility. He is able to and wants to do his part in a fair manner
• Our current net worth is being built more from debt repayment vs. actual savings. We need to do more actual savings. Net worth would be the same but we would have more liquidity.
• Our mortgages are 2.10% and 2.25% respectively with a 9 year or so end date. They are at great rates so we can afford to take more of an investing frame of mind and buy low.
• He did a spreed sheet projection showing what the difference would be if we paid off the mortgages in 5 years vs. investing the amounts for 9 years at very safe 3%, 4%, 5% rates of return. We do come out slightly ahead with investing.
• Should either one of us lose our jobs, it would be nice to have more money in the bank.
• Worse case, take the savings out in a few years and pay out the mortgage if for some reason things don't go well.

The project amount of pure savings (0% growth) over 9 years is $292400.

All in all, some convincing arguments, I must admit.

We are going to give savings a go for the rest of year and re-evaluate for 2010. That will give me a chance to see how difficult it may be for me to stare at a slowly declining debt amount. D feels seeing savings grow will offset that.

How We Met

I met D on a sort of a blind date.

I only had an old picture to go by but my sources were reputable. He didn't have much to go by either.

Not being a fan of having my picture taken, I didn't have much to choose from outside of my driver's licence photo (which was hideous!), passport photo (ditto) or a recent newspaper picture of the dance troupe I belonged to. I resorted to that.

He later told me that he thought it was a strange choice.

But he didn't yet know that I didn't own a digital camera (I still don't), I only had dial up Internet (the running joke was that I bragged about having unlimited dial up Internet from 6 am to 6pm), I didn't have a scanner so I had to go to Business Depot and pay them to scan it for me.

That led to him calling me a Luddite.

For our first date we went to my favorite dessert place. I decided that he might as well know right off the bat I like to eat so I ordered a banana split.

Our second date was at Starbucks whereby I politely asked him what type of mortgage he was getting for the house he recently bought.

His version was that he was grilled about the amortization, term and payment amounts of his mortgage and his retirement savings strategy. (I did not! I may have been a bit hyper as I don't drink coffee but ordered one that evening...)

I'm sure I broke all the "dating rules" out there but that was over 5 years ago and I love D more today than I thought I did back then. We are heading up to the cottage after work today.

Happy Valentine's Weekend Everyone!

What Would You Do?

We had a pretty serious money talk last night.

As mentioned on a previous post, D and I came together each with separate assets and finance structures. He sold his home, moved into what was my home and 1 1/2 yrs later, we bought what is currently our home.

From the sale of my home, I paid for half of our house right away. D has been paying off the remainder of the mortgage since then. Similar idea for the ski condo. Current amortization: 9 yrs 4 months.

Inspired by other bloggers like Death to the Mortgage, I drew up a new payment plan which involves me paying a good chunk of the yearly allowable prepayment to the mortgages so that we will be able to clear both in 5 years time.

The fly in the ointment...

D wants me to back off and respect the original agreement. If I do that, I will have a lot of money left over each month to put into savings, be able to cut out my Fridays sooner and retire sooner.

Because I am in the "common pot" frame of mine, I don't feel it is right but he feels I'm being pushy about it and that I've done my part, now let him do his. He has no grand plans for early retirement like I do and would like to retire by 55 but is OK with working til he is 60.

What would you do? I would like to see us mortgage free in 5 years, even if it may mean sacrificing 5 years of big savings.

Erma Bombeck

IF I HAD MY LIFE TO LIVE OVER - by Erma Bombeck (written after she found out she was dying from cancer).

• I would have gone to bed when I was sick instead of pretending the earth would go into a holding pattern if I weren't there for the day.
• I would have burned the pink candle sculpted like a rose before it melted in storage.
• I would have talked less and listened more.
• I would have invited friends over to dinner even if the carpet was stained, or the sofa faded.
• I would have eaten the popcorn in the 'good' living room and worried much less about the dirt when someone wanted to light a fire in the fireplace.
• I would have taken the time to listen to my grandfather ramble about his youth.
• I would have shared more of the responsibility carried by my husband.
• I would never have insisted the car windows be rolled up on a summer day because my hair had just been teased and sprayed.
• I would have sat on the lawn with my grass stains.
• I would have cried and laughed less while watching television and more while watching life.
• I would never have bought anything just because it was practical, wouldn't show soil, or was guaranteed to last a lifetime.
• Instead of wishing away nine months of pregnancy, I'd have cherished every moment and realized that the wonderment growing inside me was the only chance in life to assist God in a miracle.
• When my kids kissed me impetuously, I would never have said, 'Later. Now go get washed up for dinner.'
• There would have been more 'I love you's' More 'I'm sorry's.'
• But mostly, given another shot at life, I would seize every minute.look at it and really see it . . live it and never give it back. STOP SWEATING THE SMALL STUFF!!!
• Don't worry about who doesn't like you, who has more, or who's doing what Instead, let's cherish the relationships we have with those who do love us.

Crunching Numbers

Number and more numbers. That's what I've been looking at lately as I am in the process of reviewing various retirement and expense spreadsheets post market fallout.

Questions I would like answers for include:

• Can I really afford to eliminate Fridays as soon as we are debt free?
• How much retirement savings will I have then?
• What percentage of income will I have on a shortened work week?
• Can I still manage to save enough so that I don't have to work "forever"?
• Do I have a "magical" retirement number?
• At what age will I reach that mythical number?
• Will adding another property jeopardise current plans?
• What am I willing to give up in order to meet my goals?
• What is the current debt end date?

I have made so many little changes in the last 6 months, some in reaction to the markets, others from reading inspiring blogs. It's time to gather all of it and see what the whole picture looks like again.

Results!

My hydro and water bill finally came yesterday.

Since I've been manually turning on/off our hot water heater and washing dishes by hand again for the last month, I've been anxiously awaiting the results of our labors.

Well, it was positive. We saved $18.17 compared to last month.

Here's what the numbers look like.

Jan usage -- 34 days -- 468 kWh -- 14 kWh/day -- 9m3 water usage

Dec usage-- 29 days -- 600 kWh -- 21 kWh/day -- 12m3 water usage

Considering we were away for Christmas and New years it is a great result!

My goal was to see whether I could get our bill when we are home, similar to what it would be when we were away simply by making a couple of small changes. It looks like we definitely can.

D had read that timers on hot water heaters weren't worth the money and that dishwashers (ours is energy star rated) are more efficient and less costly than hand washing.

So our little experiment has paid off. Incidentally we found a hot water heater timer at our local hardware store for $60. We didn't buy it. I am fine with turning it on and off every other day.

Meal Planning

We've been making an increased effort to meal plan during the week. It didn't start so well because we realized we didn't know exactly what we had in the fridge and freezer. We would come up with menu ideas that we didn't have all the ingredients for!

So an inventory had to be done. With a list of everything perishable and frozen, it made the job much easier. We cook with what we have. The added bonus is being able to cross things off as we consume it which makes the creation of a grocery list all that much easier.

How was it it took us so long to figure this out? Who knows?!

Somewhere in my mind, I have this romantic notion that I would just decide what I feel like eating each day like I was living in a perfect market town or like I would do when I "live" in France a couple of weeks each year.

In my North American world, it isn't so available or easy. The cost of not being prepared, as many bloggers have mentioned and know, can be costly to the pocket book and to our health.

Carnival of Personal Development

There is a relatively new Carnival in Town!

Today, it is hosted by Someday Syndrome.

Check it out for some neat and different perspectives!

Smart Meters Are Here!

The cottage recently received a "Smart Meter" courtesy of our local power utility. I don't know if Canada is behind the times in introducing this technology but here is what it will mean for us:

• our electricity consumption will be recorded hour by hour through a wireless technology
• eventually we will be billed according to time-of-use rates
• you can take complete control of how much you wish to pay
• you can see just how much phantom power is really going on
• accurate bills, no more estimates
• there are low (4.0 cents/kWh), moderate (7.2 cents/kWh), and high rates (8.8 cents/kWh) to chose from
• according to the time-of-use graphs, the cheapest times to do laundry etc is on the weekends and holiday days, as well as between 10pm and 7am during the weekdays in the summer and winter.

I'm excited about this new change. As I don't plan to be doing laundry in the middle of the night, we will likely change to the weekends. I will also change when we switch the hot water heater on too. You may as well get into the habit now so when the program goes "live", the transition will be seamless.