Sunday, February 15, 2009

To Have and Have Not

There seem to be two schools of individual PF blog: full family expense and minimalist. I really like seeing other people's numbers posted, for reference. What expenses do they have? How much do things cost? What are people willing to pay for and cut back on? Where am I comparatively overspending?

I fall in the minimalist category. No mortgage, no car, no land line, no utilities. Realistically, my only fixed expense is rent ($550). My rent includes all utilities, furnishings, and access to wifi. Even my cell is pay-as-you-go. I walk everywhere, all seasons, catching a cab or the bus if necessary (maybe twice a month). I don't have cable or a TV. I'm subscribed to one magazine, $2 per month.

When I see car costs posted (payment, insurance, gas, repairs...) it blows my mind because I've never fronted that kind of cash. Ditto for the expense of running a household: mortgage, taxes, repairs, fluctuating utilities... whoa. Right now where I live I'm probably coming out ahead by not carrying a mortgage. The rent payment I make would only cover taxes, utilities and maintenance. I would be gaining "equity" in a home but: paying interest, carrying a non-deferrable expense, and locked into a property value that is likely to be volatile over the next few years. Further, I have no idea where I'm going to end up right now. I also haven't had to sink any cash into furniture or appliances and moving is simple and low cost as a result.

My only current financial goal is eliminating a consolidated loan incurred to pay for my second degree. I don't keep specific "funds" - emergency funds, travel funds, whatever - I just delegate the excess as necessary. Some months I make a heavy debt payment, other months I fund gifts or travel. I keep track of things in an old-school excel spreadsheet, relatively easily, more to monitor the status of my "accounts" - payments owed, payments owing. I kind of treat my finances like a small business, Fortuna Inc.

Really, I'm a lazy financial blogger.

Sometimes I wonder if I shouldn't be looking deeper into the oracle of money management. Maybe it would make sense to come up with specific accounts - representing specific goals - but at this point, does it matter?

(1) My taxation situation for the two years after grad is not deeply affected by contributing or not contributing to retirement funds, at least in any calculations I've pulled out, due to the level of credits I'm carrying against projected income

(2) Debt repayment gives me at least a 4% "return" annually, a better ROI than anyone else I know got this year. Further, eliminating it now avoids future rate fluctuations and increases control over my expenses. The banks are in a bad state, as a banker acquaintance of mine said recently "the industry is on it's knees" and I don't want to have any obligations to what I consider a desperate creditor

(3) It makes me happier to just have money available to do what I want, when I want it. The fact is, I'm not really a consumer and I doubt I will become one. Stuff doesn't do it for me. At the same time, I like the money to buy quality things when I need them. I like being able to afford to go where I please, eat what I like, and make choices based on my values.

I do know that around this time next year I'll need to have my post-debt (i.e. rest of my life) plan in place. I need to decide what to do with the excess I'll have on my cheques, beyond socking it away in a high interest TFSA. This is where I know it's going to get mucky.

No comments:

Post a Comment