New Years -- Resolve, Restart, Refocus

I love New Years. And not just because I met my husband on New Years Eve, 2002. (awesome!) I love what this time of year represents. It's a time of transition for me; I'm trying to right my financial ship, I'm trying to branch out in other directions away from my chosen career, and I'm trying to simplify things at home by cleaning, recycling and getting rid of clutter. It's all lofty ambitions and pie-in-the-sky, or is it?
Regardless of one's circumstances, and the journey a person is taking, it's of great benefit to pause once in awhile and take note of one's progress (or lack thereof!). For some people, it's time to start something new, set a goal.
And, really, that's the thing. In order to achieve some measure of success, you have to set a goal for yourself. Not something too fuzzy like "look better", "organize my house" or "meet people". A goal ideally is specific and quantifiable. It's also a good idea to make a goal achievable. Give yourself a timeline, set the goal, and reach for it. For example, I want to completely pay off my balance (say, $500) on credit card X in 6 months. To make it achievable, divide the payment into 6 equal installments, set up the payments automatically on your online banking software, and voila, goal achieved. (Of course, you need to stop using this credit card completely or hide it in an ice cream tub in the freezer!) Once a small goal is set, and achieved, then it makes it easier and more desirable to set another goal, and the success bandwagon is in motion!

 There are a number of items on my to-do list for 2011. First thing is to pay off my credit card with the highest interest rate, and lowest balance. (interest rate, almost 19.5%, balance around $800). I am waiting for a freelancer paycheque (around $350) to pay off the first chunk of that debt. Then, I will pay another $100 monthly until it's paid off. Should be less than 6 months. Then, I will be cancelling that card (interest rate too high anyway), and keeping just the one main credit card with the under 6% balance, but much higher balance. That's going to be the next hurdle to clear, will take a bit longer. but it's still achievable. I will have to do up a formal budget in the next few days and see what my cash flow will look like in the coming months. 

Perseverance is not a long race; it is many short races one after the other.
Walter Elliot
 

Clutter--The Hurdle to be cleared on the way to Financial Health

I was up late last night watching Hoarders (whoa!) and I was just amazed at the damage caused by the clutter in one`s life. In this particular episode, the featured hoarder (Susan) had over 5000 dolls crammed in her house. The house was rendered unusable by the amount of clutter (primarily dolls). After the house was finally decluttered, the sale of the dolls yielded Susan over $1000. It really got me to thinking what role clutter takes in one`s life and how important it is to conquer it.
I have to admit that while I am not a hoarder (nowhere near it, actually), I certainly need a bit of help to get organized and clear my home of clutter. I came from a household where my late mother was habitually clean and organized and my father was fairly tidy himself. I tended toward being a bit less organized, and need frequent prodding to keep my room clean. When I moved away from home, and without any one to monitor my situation, I started becoming a bit cluttered and disorganized. The clutter had a detrimental effect on me, psychologically, spiritually and financially.

Fast forward to present. I am (finally) in a home I can call my own, with an office that my husband and I share. When we moved here, there was literally an avalanche of papers, magazines, documents and items clogging this area. It took nearly a whole weekend, and a huge bag of shredding later, the paperwork was reduced to a manageable level. My husband purchased two filing cabinets, and we proceeded to start putting things in labeled hanging files. And so this system has more or less worked (for him), I still am struggling with what I should keep, and what I should toss. But I clearly know that this has an impact on my financial health, and it's something I am definitely working to improve.

Why declutter?
1. The most obvious reason? You'll feel better, physically (less things around to accumulate dust, therefore cleaner air!), psychologically and spiritually. It is freeing, liberating, exhilarating to inhabit a space free of clutter and debris. You can clear your mind, breathe deeply, and enjoy the space you inhabit. You don't have to fret about where you are going to store a new purchase!

2. It has a truly detrimental effect on your financial well-being. What happens when you are dealing with a mound of papers stashed in some random corner? Bills get misplaced, and therefore get unpaid, or paid late, dinging your credit score in the process. Receipts which are needed for your yearly tax return are MIA resulting in an inaccurate (and potentially costly!) tax bill at the end of the year.

3. It's the vital first step in any good financial plan! You have to start by knowing what exactly your financial situation is--that means having pay stubs, credit card statements, banking statements, insurance invoices and other vital documents within arm's reach. Outlining a budget (an important first step towards managing expenses) requires that you know what money is going into and out of your bank account. All these statements need to readily available and accessible by you!

Planning for the 2011 Holiday Season

So we're (barely) keeping our heads above water this holiday season thanks to the use of rewards points to buy some Christmas gifts and a couple other fortunate circumstances (a small inheritance and having a 1 year old for whom I don't have to buy an airline ticket when we fly to the US for Christmas). However, as much I have been scrambling this holiday season trying to keep costs under control, it has made me think that I want to try and budget for next year starting immediately. Next year, my one year old son will be 2 years old, and he will no longer be able to fly free. So that means we will need approximately $1000 to fly our family of four to the US to visit my husband's family. That's a significant amount of money to spend each December, in addition to buying presents for everyone. However, because it's a predictable expense, it makes sense to try and set aside the money each month. So, to that end, I set up a high-interest savings account (HISA) with Ally. Ally's HISA has one of the highest interest rates (2.00% compounded daily) of the banks I researched. Most of the big banks offer just above 1%, and other online banks pay approximately 1.5%. I like the idea of the online banks mainly because it's a safe place to park your money as you are working towards a goal, and the money is not easily accessed (reduces temptation!).

The goal is to try and sock away approximately $100/monthly out of my regular pay cheques. It may or may not be feasible to put this money away each month. When my tax return comes in (May), I will try to put a chunk of cash ($500?) into the HISA to help me achieve my goal. Hopefully, this was greatly reduce the financial crunch next year, as our expenses and debt payments will continue be significant factors until February of 2012.

Shopping mission: Accomplished!

I began this week with my bank account perilously close to zero. I had precisely $200 left until payday (Friday). I had a few things to get for our upcoming U.S. Thanksgiving celebration on Thursday. I made the decision to go to Costco to get some of these things. What I did was this: make a list, and withdraw the $200 cash and vow to exit that store with at least some of that money left.
Costco can be a real minefield for the cash strapped. When I first started shopping there, I used to blow $300-$400 each time, and rarely examined the costs too carefully. Now, I always go there with a list, and I am more diligent about checking the unit costs. My experience has showed me that while there are definitely some good deals at Costco, other things are not so differently priced as your average big box store. I also find that you have to be able to dodge the diversions, the things that they keep on the ends of the aisles which often turn out to be impulse purchases.
So I brought my list, my cash, and my Blackberry to do some quick calculations in the aisles. I felt a bit weird doing the calculator thing in the store, but it was a good idea! I found myself well under budget ($110) and was able to get a couple of the optional items on my list. Total cost: $180. I walked out with a measly $20 until payday, which still isn't great, but my shopping mission was accomplished.

fallout of job insecurity

It has been awhile since I last blogged and in the meantime, my profession has undergone some massive funding cuts and more cuts are slated to come. At the moment, the cuts have not drastically affected my bottom line, which is good. I still am full-time (40 hrs/wk) and I am still able to get the odd bit of contract work, although the rates for contractors have gone down. My overall outlook is relatively unchanged. We are still have a boatload of consumer debt, which consumes much of my thoughts. I still have little money for any frivolous expenditures. So my current spending will continue to remain unchanged for the time being.