Boris' debt is gone!

Congratulations to Boris!

He has paid off his $650 credit card debt!

I know it doesn't sound like a lot but it kind of was.

Ever since Boris and I started sharing our money, we gave each other an allowance. While I've always had an easy time staying within my allowance, he has not.

Usually, once a year, we would look at his credit card balance (which I don't see normally) and he would be about $800 in the hole. That's when we usually bail him out with our savings or tax refund.

This time, he decided that he didn't want to be bailed out and wanted to do it on his own. I am so proud of him.

So let's all give Boris a round of applause!

Another flat!

In the last year we've had 3 flat tires. That's right. 3.

This past weekend we received our third flat. bah!

The good news is that I am now super fast at changing flat tires and could totally do it on my own.

The bad new is that we have to fix another stupid flat!

You would think we have bad tires or something but the tire people keep saying that they are still good and we've just had a bit of bad luck.

Likely tonight or tomorrow night we'll take it in to hopefully get it patched and put back on. If I remember correctly it was under $30 so the damage to my wallet is minimal.

I just hope the fourth tire doesn't go next.

RRSP limit for 2010

Today, I received my "Notice of Assessment" from the CRA. For 2010, I can contribute $3,348 towards my RRSP. At the moment, I contribute $200 per bi-weekly cheque. I've been paid 8 times for a total of $1,600. So, that means I can only contribute $1,748 towards my RRSP for the rest of the year. With 18 paycheques left to go, I am going to drop my contributions to $100 per week and the final RRSP contribution at the end of the year will only be $48. That way, I use up every last penny of my RRSP contribution room. How exciting!

So, what will I be doing with my other $100? You know, since I am dropping my payments from $200 bi-weekly to $100, I will have to decide what to do with that money. I had 2 potential options:

1) Increase my emergency fund contributions or

2) Add it to Boris' RRSPs as he has a large amount of unused contribution room ($24,457).

I've decided to go with option 2. I think we will get more bang for our buck in the contribution room. Plus, we already have a plan in place for emergency fund contributions so it's not like we are ignoring that.

I hope to catch up on Boris' contribution room in the next 2 to 3 years so he can be in the same situation as me. It sure would be nice!

Tax refund part 4

I got my tax refund!

It finally arrived in my chequing account (we do direct deposit). I am doing exactly as I promised. I've even moved the money around already.

It sure feels nice to have some "cushion" money in our Alberta condo account as well as paying down some of the HELOC and you know...spending some on fun stuff like vacation and furniture.

So exciting!

Now, I can't wait to see the results in paper where I find out my RRSP limit as this will be my first year where I will most definitely go over my limit if I'm not careful.

What a great way to start the week!

Cheap flight

I haven't been back to Alberta (well not my hometown) since Christmas. When we first moved to BC, I sort of promised myself to make it back "home" twice per year. This year, I am planning on going back in November but that was it. So, I've been watching the flights and waiting for a good deal to come along. I had almost given up.

Then, on Wednesday this week I noticed that WestJet was having a good sale. Normally, I buy a return ticket on a regular seat sale for $300 to $350. This time I was able to get a return ticket for $236.51. Not bad.

So, family (that's you Wendy) and friends, I will be coming home from June 9 to June 13.

A bonus is that this falls on my flex day at work so I'm only taking one day as a vacation day.

Yay!

p.s. feel free to give me welcome home presents Wendy!

Unexpected gift

Who has the best husband? Oh right...I do! Boris rules.

After a fairly exhausting soccer game I come home to find Boris sitting quite innocently with a smile. He told me to shower quickly.

Then, he gave me an ipod touch! How awesome is that?

It's not my birthday, anniversary or anything. He said he just wanted to get me something nice.

He is so sweet.

And he shopped smart, bought used and got a deal but it's still under warranty! I love my new gift. I'm uploading stuff onto it now so I'll let you know how it works.

Also, I have to say that gifts like this are possible thanks to our gift accounts. We put $35 per paycheque into a gift account (1 for each of us) so when we want/need to buy a gift for each other...we can!

Sports cost money

It's true. I've only played one game of soccer this season and I'm already spending money. Namely on shoes.

After game #1 I thought my feet were dying. They were in so much pain that I am still walking a bit odd 3 days later. It's probably due to my poor fitting shoes. You see, there are very few women's soccer cleats out there and the last time I bought soccer shoes (4 years ago or so) they didn't have ANY in my size so I ended up buying men's shoes. I've never been thrilled them but they've never hurt me as bad as this past game.

So, long story short, I needed some new shoes. This weekend we went off to the old reliable Sportchek. Luckily they had shoes for me! Then, Boris realizes that since the golf season has begun he is a bit short on supplies. In the end we purchased:

Shoes: $69.99

Golf gloves: $19.99

Golf tees: $7.99

Golf balls: $19.99

The total (including taxes) was $132.12.

Then, the cashier told us that since we spent over $100 we got a free $20 gift card for another visit! I guess this is part of their spring sale but we didn't even know it was going on.

Then, as we were walking away Boris found another $20 gift card that somebody else must have dropped! As there was nobody around and no name on the card...we took it! So that's $40 free!

So, then I remembered that Boris needed some swimming goggles so he can swim with me again so we used up one of the cards for goggles ($20.15).

I still have $20 left. Not a bad deal for stuff we would have purchased anyways. :)

Refund!

A while back I complained about my professional association fees but I failed to mention Boris' fees. Boris also belongs to a professional association that legally he must be a member of in order to practice his profession. (btw, why do they call it "practicing" when they are doing the work?). His fees this year were $380.

It's a hefty sum but we can claim it on taxes and I believe his association is worth it. They help make sure his profession is taken seriously and valued. So, I don't mind paying for his. It makes sense.

Then today, I checked his pay stub and guess what...his fantastic employer has covered $200 of that! Sweet! I will quite happily put that money into our planned spending account which is where I took the money out of in the first place to pay for our fees.

Yay for employers with benefits!

Lights are important

About 3 weeks ago, my workplace moved to a different office building. Next door in fact. The reasons why are convoluted and not exactly clear so let's just agree that we moved. so be it.

I moved from an office to a cubicle. Oh the dreaded cubicle. I don't feel too badly for myself though because we all went to cubicles. At least I wasn't being picked on or anything. That's besides the point.

I moved to a cubicle area where there are 8 of us. Our cubicles are quite large with 5'6 walls. It's really not too bad. Yes, it's noisy and hard to concentrate but I assume that I will eventually figure that out.

The problem is the lights.

Remember a while back I talked about how I suffer from migraines? Well, as a result of this office move I now know what my "trigger" is. Fluorescent lights. I have learned that fluorescent lights flicker so quickly that we can't actually see the flicker. However, my brain knows it is going on.

You see, in my old office I had special "full spectrum" lights that are intended to mimic natural daylight and were put there because the woman who had the office before me suffered from migraines. And what do you know...they worked for me.

Now, the cubicle area has fluorescent lights. After headaches everyday and migraines every week for the last few weeks I began to ask for my special lights to be installed. Want to know the response I got?

No

Apparently the lights are too expensive so I was denied. Well, after taking sick time and contacting the occupational health and safety group I began to get some attention. I had to have a meeting with the OH&S consultant about my migraines, the triggers, and what will make it better. She then had to talk to my boss about how to accommodate me (btw, he has always supported the new lights but was denied by the upper executives). Then, she submits her report to the executive.

Within 24 hours I had new lights above my pod and new desk lamps. The result, my headaches are waaaay better. I still ended up getting a headache at the end of the day so they've now requested that all the lights in the pod area get replaced. As I no longer have a ceiling, all those lights in the area are still getting to me.

Seriously...a few bucks for new lights would make my life and my work life much better. This in turn, makes me more productive at work. Why on earth would they fight this so hard? I just don't get it. I've been in pain and without a life for the last 3 weeks and I've had enough.

And no, I don't know how much these lights cost but they can't be worth the pain I've been in.

Scrapbooking

I got married approximately 2.5 years ago. At the time, Boris and I bought these beautiful albums with the intention of making 2 wedding scrapbooks (1 for the wedding itself and 1 for a guestbook with photos taken at the wedding). Well, 2.5 years later and I still had the albums with boxes of items I might use to create the albums.

Of course, I was totally overwhelmed with the 72 pages per book, the hundred and hundreds of photos to organize, and of course an overall concept for the albums. Never having scrapbooked before, I didn't even know where to begin.

Then, bam! An idea hit me that was simple but good. So, over the past weekend Boris and I scrap booked. Yep, we did it together. He even made the front cover page. I learned a few things that many of you may already know. Either way, I'll share.

1. Scrapbooking takes a loooong time! I had a simple idea but once you cut the paper, glue the paper, select the photos, organize, make the intro page...whew. hours upon hours upon hours of time.
2. Scrapbooking is expensive! We already had the albums so that was a sunk cost, as were the photos. So, all we bought was the paper and glue (we even had a paper cutter on hand). In the end it cost us $170! AND, the paper was 40% off! AND it was only for 1 of the books! True, we didn't use all the supplies so the remaining stuff will get used in the next book making book number 2 cheaper (I hope).

Expensive hobby but man does it look good. I love my new album! However, with the time and money requirements for this little hobby I think I'll save it for those very very special albums that only happen once every 2.5 years. lol

Do you scrapbook? Did I pay too much? Am I totally crazy?

What did you do to my car???

You won't believe what happened.

When we bought our little 2008 Pontiac Wave last year (used) the dealership threw in a few free oil changes. yay! So, a few days ago we decided to take the car in for an oil change. Free and needed. So, we parked the car in their lot, handed over our keys, and they said to come back in 2 hours.

We go and kill some time but after an hour we get bored and wander back hoping it's finished early.

We get to the counter and the cashier pulls us aside and says, "we need to talk". I was so worried that there was something seriously wrong with our car and it was going to be expensive. Boy, was I wrong!

Turns out, when the employee went to move our car in for an oil change...they got confused or didn't know how to drive a standard or who knows what...all I know is...

They drove my car into a chain link fence!!!!!

Can you believe it?

But, no harm done. They kept the car for a few days to get some body work done and now it's so pretty. No more scuffs or anything. I suppose it's probably better than it was before.

Anything like that happen to you before?

Rental is struggling...

So, apparently the Alberta market is not being very kind to rentals. Not even mine, which by the way is super duper fantastic! Let me provide you with a description:

• 850 sq feet
• 5th floor of a 20 floor building
• hardwood floors (not laminate!)
• stainless steel appliances: microwave, dishwasher, fridge, oven, bbq (natural gas hook up)
• white appliance: apartment size deep freeze, washer, dryer
• 2 bedrooms
• 1 bathroom
• 2 walk in closets
• large storage room
• corner unit
• 1 secured parking space
• downtown, near a university and rapid transit (train)
• building has a gym and bike storage

All for the low low price of $1,400 a month (including water and heat).

What? Too much for you? Apparently it is for others too. So, my management company has asked if I would be willing to throw in some rental incentives. The main one she suggested is one month free for signing a 1 year lease. Would that sway you as a renter?

I'm going to give a try. 11 month's of rent is better than 10 or fewer right?

Long term I plan to put a backsplash in the kitchen and repaint. But that's a year or two away still.

If you have suggestions throw em at me!

Defined Contribution Pension Plan

So, what is a defined contribution pension plan? Well, it's pretty much the exact opposite of the defined benefit pension plan. Essentially, you have a set amount that you contribute to a pension plan or RRSP or stock or whatever. The idea is that you contribute a pre determined amount and when you retire you get however much money you have saved & invested over the years.

If your investments have done well or you retire when the economy is booming then you may actually fare better than if it was a defined benefit pension plan. However, if the economy is in the tank and so are your investments...well, you may have to work longer or adjust your expectations for retirement. So, this way is obviously riskier than a defined benefit pension plan.

Companies tend to like this plan better because it's ultimately not their problem how well or poorly the investments do. They put in their share to help you for retirement but they take no responsibility for how well the plan has done.

So, I'll give you an example. This is for my husbands plan, which is defined contribution. I hope you remember my YMPE discussion from the other day because it's used here too.

Let's say Boris earns $70,000 per year. He will contribute:

• 4.2% up to the YMPE
• 5.75% above the YMPE

This works out like this:

• 4.2% x $46,300 (YMPE) = $1,944.60
• 5.75% x $23,700 = $1,362.75
• Total contributed: $3,307.35

Then, his employer will match this exactly for a grand total of $6,614.70.

So, where does this money go?

Into an RRSP plan! So, Boris had to decide what he wanted to invest in. He decided to go with a mutual fund that is "aggressive" but not to the extreme. Then, he had to decide where his employer's portion would go. He went with a mix of "aggressive" and "growth".

This is great. This will put a good dent into his RRSP limit each year plus we are supplementing that on our own.

I still don't think it's quite as good as a defined benefit pension plan like my own but hey...it's something!

Do you have a pension plan? Does it matter to you?

Pension Plan choice

After yesterday's post, you should have a good idea of how a defined benefit pension plan works. Now, I am hoping you can help me make a good decision. Here is the situation:

When I lived in Alberta, I belonged to an employer with a defined benefit pension plan for just over 4 years. Then I moved to British Columbia. In BC, I also work for a company with a defined pension plan. They are not the same plan but they allow me to bring my prior years in Alberta and have them count as "years of service". Remember that's a very important piece of me getting to my "85 factor".

So, I requested my years of service transfer....BUT....

there is always a "but"....

it's going to cost me.

Essentially, they calculate my prior 4 years based on my current salary. Well, let me tell you. I make approximately $75,000 in BC but when I first started in Alberta I was making $37,000. This means that my first few years of lower paid employment isn't enough. They want me to make up the difference for each and every year. My choice is:

1. Pay $27,010.95 and get my full 4.3 years recognized, OR
2. Pay nothing and only get 2.3 years of service recognized?

I've already decided I am not moving back to Alberta so not transferring the years isn't an option for me (well, I've decided it isn't).

So, would you pay the money or not?

I am thinking not. It's waaaaay too much for me to handle. This means that I will have to work an extra 2 years at the end of my career to get my full pension benefits.

To me, this really highlights just how expensive a defined benefit pension plan is. If you have one you should hold on!

What would you do?

Defined Benefit Pension Plan

You may have heard HR folks toss around terms like Defined Contribution Pension Plan or Defined Benefit Pension Plan or even referred to as a DC or DB pension plan. Are you confused as to what they are or how they actually work?

I know when I first started working I understood the general idea of what a pension was and why I might want one but I didn't really understand how it all worked. So, when I got my first job that had a pension plan, I started to notice that people kept talking about how lucky we were to have a defined benefit pension plan. A what? So, began to figure it out. I would say that while I am not an expert, I do understand the basics of what goes into a pension plan and I thought I would share.

Today, I'm going to go into defined benefit pension plans.

In short, these are literally what they sound like. They are pension plans where you know in advance how much money you will get when you retire. Get it? A "defined benefit"...as in...you know how much you will get.

So how does it work?

Oh, what a complicated question. I'll try to keep this simple.

I will begin with the deductions. Every paycheque I receive already has my pension contribution taken off of it. With a defined benefit pension plan, you do not get to decide how much money they will take from you. Instead, it's based on how much you make. They take:

• 7.78% of my salary up to the YMPE; and,
• 9.28% of my salary above the YMPE.

My employer puts in:

• 8.78% of my salary up to the YMPE; and,
• 10.28% of my salary above the YMPE.

What the heck is the YMPE you ask? It is "the maximum salary upon which Canada Pension Plan contributions are made, as set by the federal government" which for 2009 is $46,300. I don't understand how the YMPE is set so please don't ask. ;) To explain further, I will give an example. If I make $75,000 here is how much I would contribute:

• $46,300 x 7.78% = 3,602.14
• $28,700 x 9.28% = 2,663.36
• For a total of $6,625.50 per year or $240.98 per 2 week cheque.

My employer would contribute:

• $46,300 x 8.78% = $4,065.14
• $28,700 x 10.28% = $2,950.36
• For a total of $7,015.50 per year or $269.83 per 2 week cheque.

When you add my portion plus my employer portion that's a grand total of $13,641 per year!

That's a lot of money. Unfortunately, they can and do raise it every once in a while when the funds get low.

So, how much will I get when I retire? Well, it's based on a formula. The formula will vary depending on each pension plan but often it will look like this:

• 2% x (average of highest 5 years salary) x (years of service)

By "highest 5 years of salary" they actually mean that. They take the highest 5 years salary you made in your entire career with the company and they average it. Often, this will be your last 5 years but it doesn't necessarily have to be that way. It's any 5 years that are your highest (not necessarily consecutive years).

The years of service sounds pretty straight forward too right? It mostly is. How many years did you work for the company? That's the number...mostly. Of course, they base it on full-time contributing years. So, if you worked half time for 2 years it will actually only count for 1. If you took a maternity leave year and you didn't contribute for that year (it's usually an option due to the reduced salary) then they won't count that year as "service".

Anyways, here is an example. Let's say my highest average salary was $75,000 and I worked for the company for 26 years. The formula would be:

• 2% x $75,000 x 26 = $39,000

In this situation, I would have a pension of $39,000 per year, each year, until I die. Of course...there are a few catches.

You can only work for up to 35 years and have them count. If you are crazy and work for 40 years, they don't care. They only go up to 35. Also, if you retire early your pension is reduced by 5% per year you retire early.

The way they figure out if you can retire is by seeing if you reach your "85 factor" (or a different number for different plans). The 85 factor is a combination of age and years of service. Basically, if the two don't add up to 85 then you are facing a reduced pension. You can either work longer or wait until you are older to start taking your contributions.

And of course, legally, you cannot take any pension money until age 55.

whew. confused yet?

As you can see, a defined benefit pension plan costs alot of money. The problem is that I am guaranteed a certain payout based on my years of service, salary, and age upon retire. In other words, regardless of how well my money is invested, I get what I am paid for. This can obviously be very expensive if the economy isn't doing well and the investments are not performing as expected.

As an employee, I love this plan. I am a very cautious person and I like knowing exactly what I am going to get. It is generous but I put in my fair share too. I also like it because I don't have to worry about choosing the right investments or anything like that. I can trust that my pension plan is run by competent people who are way better at this stuff than me. I can rest easy.

Any questions?

Tomorrow, I am going to go a bit further into defined benefit pension plans and ask your opinion on a decision I must make very soon...

Sorry about the disappearing act!

I guess I've been slightly absent lately. Don't worry, I have not forgotten you!

Actually, with all my snowboarding going on I've simply been too tired! Plus, when I get back from a weekend away it seems like I have too much going on at home. Laundry, grocery shopping, etc. Honestly, I've sort of been putting my snowboarding ahead of everything else.

Good news (or bad depending on how you look at it) is that my snowboarding is nearly over for the year. I have 2 more days of passes that are already paid for so after that my season is over. I'm sad it is almost finished as I've had a great year. However, I'm also looking forward to my life returning to normal.

Next week, I plan to write about some pension issues for myself and for Boris. So, if you are interested in defined benefit pension plans, defined contribution pension plans, or simply how the heck do pension plans work...well check in and you'll find out. Please keep in mind that I only understand how these plans work from a plan members point of view and as always, will be my opinion only.