That’s exactly the 3 words I thought when I pulled out my assets and liabilities last week to write this post. In the span of a single month, I dropped my net worth by $9,000… how can I lose 9K within 1 month?!? OMG!
When a big movement in your net worth occurs, you need to find out what happened!
I knew that this wasn’t going to be a nice month since I was taking my vacation right after writing my latest net worth statement but I didn’t expect to see such a dramatic change in my personal finances… as I didn’t expect to go to New York for my birthday the same month either!
So Where Does all My Money Go? (that’s also the title of a great blog authored by Preet 😉 ).
First there was my vacation when we went to Virginia Beach,
then there were both municipal and school taxes,
then there was a crazy weekend in NYC for my birthday (I turned 30 ;-D ),
then there was the tire that blew on the highway the day I got back from vacation,
then there was another great supper at an expensive restaurant for my birthday with friends,
then there were “back to school” expenses for my 2 kids,
then there was private daycare for my youngest one as we want her to play with other kids her age to be ready for school next year,
then there was the market dropping like a rock…
all right, so out of all the reasons describing why I feel poorer there is only one reason that was out of my control: the stock market and its mood swings! As for the rest, I have no excuses. I just hit a bigger wall this time as everything happened during the same month. Maybe I needed this to finally put some action behind my words. This is when I decided to take my finances in hand… with real moves!
#1 Review my insurance coverage
Believe it or not, you can’t trust anyone. And when I say “anyone”, I also mean the people that you can trust… in fact, you can’t really trust them ;-). When I took my term insurance 3 years ago, I knew my needs and I knew what kind of product I was looking for. That’s one of the main advantages of being a financial planner ;-). However, I don’t know much about insurance pricing and I should have shopped around. Instead, I trusted my wife’s cousin… big mistake!
When I reviewed my insurance coverage this month and realized that I could get $500,000 more in coverage while paying $30/month less (without counting the fact that I am 3 years older than when I first signed my insurance policy!). So, the tip of the day: shop around once every 2-3 years for your insurance coverage and you’ll probably discover a few bucks hidden under the mattress!
#2 Drop my electricity bill
When I moved in last year, I was on a monthly plan at $300/month. Even though I have a big house, I didn’t expect to see my bill go so high. During past 12 months, I’ve been working on dropping this bill down and having a small monthly plan. I got my electricity spending reduced to $250 per month for the upcoming year. So this is an extra $50/month in my pocket!
#3 Restaurants are my Arch Enemies!
When I need to cut down on something to make some room for my budget, I know exactly where to look: restaurants! I really, really, REALLY enjoy food. This is why I always end-up going to good restaurants and picking among the most costly plates. On top of that, I’m a bit lazy when it comes down to cooking over the weekend. I have a bad tendency of ordering pizza or chicken on an almost regular basis…
For the past 2 weeks, I’ve made some modifications in my habits. #1 I didn’t go to the restaurant at all. #2 I cooked instead of ordering unhealthy food! Last Friday, I cooked duck and made a shrimp risotto. Instead of paying more than $100 in a restaurant to have the same thing, we had everything done for less than $30!
Communication is the key!
When you are getting a little bit tight in your budget, you might have the reflex to keep it to yourself and without discussing this with your spouse. For example, I’m the only one working and managing the finances at home. On top of that, I know that my wife is a bit insecure about money. I used to tell her that everything is fine all the time but now, I had to tell her that we need to slow down at least for a few months.
It wasn’t fun to tell her that we need to slow down but I obviously need to get my spending under control. The days where I can only spend and never look back are over. I’m still in a pretty good financial situation, but I’ve been running from one excess to another lately. This has to stop. Since we can easily save $500 per month in restaurant and activities, we’ll adjust to that for a few months and see how it goes.
The good news is that I can always count on my bonus to pay off some debts… but here again, this is a habit I should quit along the way. I should be able to live with my main income and put the bonus aside.
So here are my assets and liabilities! (you’ll notice that my RRSP account grew by 9K but it’s because I took at 10K loan to invest in the market dip… the leverage loan is currently breaking even but the rest of my investments had suffered the wrath of the market!).
CHECKING ACCOUNT $1 000 $1 000 0,0%
$6 867 $2 395 -65,1%
RRSP ACCOUNT $21 453 $30 441 41,9%
PENSION PLAN $20 218 $20 218 0,0%
HOME $345 640 $345 640 0,0%
COMPANY SHARES $98 000 $98 000 0,0%
MAZDA TRIBUTE $19 964 $19 530 -2,2%
MAZDA RX-8 $7 600 $7 200 -5,3%
TOTAL $520 742 $524 424 0,7%
CREDIT CARD $18 684 $20 721 10,9%
LINE OF CREDIT $19 677 $19 912 1,2%
HELOC $262 836 $264 309 0,6%
CAR LOAN $19 964 $19 530 -2,2%
Personal Loan $11 874 $11 666 -1,8%
RRSP loan $- $10 000 N/A
TOTAL $333 035 $346 138 3,9%
Total Net worth: $178,286 (-5%!)
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