I rarely refer to videos on this blog but this one is just the  epitome of my feelings towards the media. I suggest you go see it now and get back to my post afterwards:

Some Bull Sh$t is going on

What is the link between personal finance and this video? The Media are totally sick, always looking for something to say. They remind me of my 2 year old; on a daily basis during supper, while my older son is telling us what he did at the daycare, the little one is trying all the tricks in the world to get attention and the right to speak. Therefore, she says “Daddyyyyyy?”, she makes weird noises, taps on her dish or makes bubble with her milk. When she finally gets an annoyed look in her direction, she smiles and says something like “I’ve been to the daycare today”.

The Media act the same way: they make a huge deal on just about everything.  Offering coverage with experts, testimonials and projects on the rest just to get our attention. But in the end, they just don’t have much to say and the news is not that big.

It touches our personal finance in the sense that the  Media affects our beliefs as consumers, as investors and as homeowners (or should I say mortgage-tied-homeowners?).

Remember the 2008 economic crunch? They were telling us that it was the end of capitalism. Economists, financial analysts, finance gurus and all the other “experts” were shown on the big screen to tell us that we will be losing our job, that our economy was sick and that this time, it wasn’t a recession as usual. Did you Canadian Banks profit over the past 2 weeks? They all beat the market expectation except for RBC. Quite impressive for the supposedly post-capitalism era, isn’t?

Now we are moving to a different story for the past 6 months: the inevitable (huge) raise of interest rates. Since Australia moved up their daily interest rate back in Autumn 2009, we have heard, read and seen all those experts telling us that the wave will surely hit us in the face. They pull out housing boom graphs to show us how bad the housing bubble will burst in our face. Yet, so far, the Bank of Canada is still saying that they won’t touch the interest rate until June 2010 and while inflation is still under pretty good control, our dollar is getting stronger and stronger compared to the US dollar. Prime rate 4% at the end of the year anyone?

I’ve always wondered if the Media were creating or reporting on the crisis… 2008 economic crunch, H1N1 and now the interest rate in Canada… I’m curious to see who will be right this time

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One of the things I hate most in life is taxes… Yeah I know, I am a “numbers guy”, I work in a financial institution so I should not hate tax season. But the fact is that filing income tax is so boring I am whithering away while gathering my tax paperwork.

2009-2010 income tax deadline: April 30^th 2010

Now that the RRSP season has ended as of March 1^st, it is time to gather all your paperwork to file your income tax report. When is the deadline? End of April! So you better get to work fast

Don’t wait until the deadline; this could be costly

The problem with income tax reporting is that nobody likes it (besides the accountants). And I guess this is how the Government makes so much money from us even though they offer many tax deductions and tax shelters. Most of us gather a few papers and quickly put them in an envelope for an accountant or we key it into tax filing software (remember my 2009 quicktax review?).

This is why you have to start gathering your stuff right away; in order to make sure you have everything and that you have gathered all the proof that will result in a tax credit or deduction.

Speaking of which; what is the difference between a tax credit and a tax deduction?

I guess that you thought they were synonyms, right? Well before you get to the income tax deadline, you better read the rest of this post:

Non-Refundable Tax Credit

A Non-refundable tax credit is an amount that reduces your taxes owed. Therefore, you won’t get money back if you have more tax credits than taxes owed.

The tax credit is calculated as followed: amount claimed x lowest federal rate (province will also give an additional tax credit depending on where you live). Therefore, if you have spent $500 in your children’s activity (maximum allowed as tax credit in 2009), you will get a tax credit of $500 * 15% = $75.

So the non-refundable tax credit is a good thing but will always be worth less than a tax deduction if you make a lot of money.

Among the most popular tax credits you can find:

-         tax credit for donation

-         tax credit on home renovation

-         child amount tax credit

But for all the non-refundable tax credits, I suggest you go visit TaxTips.ca non-refundable tax credit table.

Tax deduction

I really like the concept of tax deduction as you deduct the amount from your income. Which means that you are actually deducting taxes according to your marginal tax rate.

Therefore, if I take back my example with an amount of $500:

If you made an RRSP contribution of $500 and your marginal tax rate is 25% (on federal tax only), you will get $125 back. The great part is that considering most provinces, your combined (provincial and federal) marginal tax rate will be around 35%-40% if you are making over 50K. Then, your tax deduction could reach $200 at a 40% tax rate.

Here is a quick list of popular tax deductions:

-         RRSP contribution

-         Interest expenses

-         Child care expenses

Here’s is tax deduction quick list found at Taxtips.ca

As you can see, it is important to gather all your paperwork leading to your non-refundable tax credits and tax deductions before the income tax deadline of April 30^th 2010. This could save you a lot of money!

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Life is full of irony! While my retirement goal is to stop being part of the rat race by 35, we see more and more people working pass the “normal” age of retirement of 65. I must admit that most of us will define themselves according to our job:

“Hello Mike, nice to meet you, tell me, what are you doing in life?”

A)   I am me.

B)   I am a father.

C)   I am a passionate man who loves watching hockey, playing golf, blogging, play soccer with my son and making pony tails to my little girl, and.. and.. bla blab la…

D) I am a financial planner / web entrepreneur

I can tell that most people will answer “D”. So if we define ourselves according to our job, what do we become if we quit working?

75 is the new 55

I don’t know if you remember this advertising campaign by London Life but I really liked it!

Many baby boomers dreamed about freedom 55. However, now they have reached this age, they realize they are in a much better shape than their parents or grand parents, that they are at the peak of their career (or close to be) and…. That they still have a mortgage!

Not so long ago, reaching the age of 65 meant that you had not much longer to live. Therefore, retiring at 55 while you are still able to get into a plane to travel down south (forget about backpack trips ) seemed logical. Now, we know that most people will live till 80…85… and probably 90! My own 2 grandmothers are still alive and they are 88 et 89. The worst part is that they are “top shape”; one of them take the plane twice a year, the other one only takes half a pill per day.

Retiring at 55 brings a lot of problems

Funny enough, retiring so young can bring it loads of problems:

#1 Money

.

How can you finance 35 years of retirement if you have start working at 30 and start saving at 45 once the kids are old enough and that your mortgage payment is not struggling you to death anymore. Unless you have a bullet proof pension plan, you will need more than 1M$ in cash at 55 if you want to retire.

#2 Society disconnections

.

As I mentioned before, we all fine a great part of our life in our job. If we don’t have it, what will we become? Stats show that several young retirees go back to work or fall into a small depression 12 months after they left.

#3 Economic issues

.

Having to finance your own retirement is one thing, but the “system” still needs 55 years-old workers. Who will finance the Government pension? The healthcare system? Our schools? For one of the very first time on this blog (and in my life in general), I am talking about a left wing idea. But seriously, if we want our kids to grow in the great country that we know as Canada today, we better keep working and pay our taxes… sigh… it still feel awkward to see those words written by my fingers

#4 Too many people golfing!

.

Hey boomers! Think about us! If you all quit at 55, how can I be able to have a place on a golf court! You must stay at work while I can enjoy life

Your take: When do you want to retire?

As I mentioned previously, my goal is to end the rat race sooner than later, however I don’t think I will stop paying taxes and make money that early. But what about you? When do you want to retire? Do you think you will be able to retire at 55? 65? Or never?

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As is the case at the beginning of each month, I publish my net worth and how it changed over the past 30 days. So here we go:

ASSETS:

DEBTS:

TOTAL NET WORTH: $111,813 (+3.1%)

Another month, another payment

While I don’t think I will be able keep up this pace, I was able to give my parents another $2,000 payments in February. We were able to withdraw money from our business so it didn’t hurt my budget too much. I am now down to $26,000 due in November 2010 (including upcoming interest). Since my current plan will lead me to have about $15,000 at this time, I am getting closer to my goal!

I don’t expect much growth in March

This month won’t be a big month in terms of net worth. My best friend is getting married at the beginning of April so a few expenses (wedding gifts, bachelor’s party, hotel room) are going to seriously hit my budget during the next 30 days. Oh well, we’ll try to work harder so it doesn’t show too much

But There Is Great News coming

As you can see, I do not update the value of my house nor my company shares from month to month. I personally think it is not fair to update it monthly as it is only a perception based on a few metrics. However, I know that both my house and company shares are secretly going up .

The housing market is really good in this beginning of the year in my neighbourhood and I feel that I will be able to grow the value of my house by at least 5% at the end of the year. This autumn, I am seriously considering having an appraisal done to refinance and get what I am missing to pay back my parents at that point.

As for my company shares, I had previously estimated a valuation of roughly 2 years of gross income. Since I own half of the company, this means 30K. However, if we keep the pace we are on right now, we should be able to reach the $50K mark in gross income (or more!) with our websites at the end of the year (yeah, yeah, I know, we are only at the beginning of March ). In this specific case, I will evaluate my shares twice a year (in June and December) in order to avoid an artificial boost for nothing. I will also base the valuation on the past 12 months and not forecasted income until the end of the year.

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I thought of finishing the week with a good news; the QuickTax Software Winners! About a week ago, I have reviewed the Canadian tax filling software and also announced the QuickTax giveaway. So here are the winners:

-  Craig

- Norman

I’ll be contacting you by email and ship you over your free copy! For those who didn’t win, make sure to have a optimal way to fill your tax this year. If you don’t, QuickTax offer great software starting at $29.99.

Some good read for the weekend:

I have just finished my RRSP season. The official season ended on this Monday on March 1^st but the rest of the week was also hard since we had to take care of all the postponed meetings and tasks we couldn’t do during the last week. In a way, I really like this season of the year as I can have a good idea of what my bonus will be at this point. After 4 months done in my financial year, I have done about 100% of my numbers. Now it’s time to take some rest and get after the 200% mark!

Speaking of taking time off, I’ll take the weekend off so here are some great reads for this weekend:

Get China ETF stock picks @ Intelligent Speculator

How to start an online business @ Four Pillars

Note on 2010 Federal Budget @ Canadian Capitalist

Financial lessons learned from hiking @ Canadian Finance Blog

Co-signing for your child, a good idea? @ Million Dollar Journey

3 new dividend stocks in The Dividend Guy’s portfolio

How to make a budget @ Squawk Fox

Follow your passions to make money @ Studenomics

Technical analysis trading @ ABC’s of investing

Best MBA for your bucks @ Ending the rat race

Life and finance lessons from the Olympics @ Thicken my Wallet

Top 10 common tax filling mistakes @ Financial Highway

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