A new career, a new office

Last weekend, I cleaned out my office.  

Wait, I should back up. Many of you know that when I moved, I had plans of starting my own business. This did not come to fruition for a few reasons, and I ended up looking for full-time work instead. Although I am armed with a great education and experience in my field, finding work was not so easy. I felt the impact of the recession first hand and have spent the last 7 months unemployed.  But I was the busiest unemployed person you could find, constantly applying for jobs, meeting with everyone in my field I could, and often working pro-bono for them, just to get a foot in the door. All the networking and volunteering I’ve done has actually led to something new.  Bit by bit, I am starting my own business - beginning with freelance consulting work. I know there is potential on the horizon for a new small business idea to turn into a reality as I’m already seeing a lot of interest from people in the community.  Actually, lots of communities. I will be vague about it for now, but I am excited about the plethora of opportunities that I think this fall and winter will bring. 

So, I need to make some changes. Changes to the way I budget, changes to my financial plans in general, and changes to my financial record keeping. I have to think a lot about how to budget and make spending/saving plans without a consistent income. I have to keep careful records for tax purposes. I have to find a good way of organizing my time.  And I have to budget my time, and keep track of my time so I know what projects are paying me a good return on my investment, and also so that I know when I deserve to have a break (when I manage my own time I tend to feel as though I should always be working, and I want to be able to say - “I’ve worked X hours this week, so I deserve to take Sunday off”.)

First things first, I reorganized my office. Er, that is, I organized my office.

Here’s the before picture - how embarrassing! The entire desk had turned into a “do it later” dumping ground over the last couple of months.

After: Much better! And I’ve managed to keep it perfectly organized all week. 

(Can you spot Gail?)

By the way, cats *love* it when you do this kind of reorganizing. Everything is a game.

I’d also been keeping some packaging materials around thinking that they would come in handy for reorganizing, and they did! For example, I discovered that boxes containing cotton swabs are actually perfect for storing delicate paint brushes.

Do you work from home? Are you self-employed? How do you keep organized?

Give monthly & save

Now that the holiday season has passed, it’s easy to forget about others and focus on our own troubles.  But with the economic recession in full swing, it’s important that we make charitable giving a priority.

A great way to do this is by making monthly donations instead of giving a lump sum at year end.  Giving this way has multiple benefits for you and the organization.  

Here are the top six reasons to give monthly donations.

1. It helps the charity to budget.  Imagine you are drafting your own budget: would it be easier to have a monthly salary, or simply hope for a bonus in December?

2. It is easier for most of us to part with $10 or $20 every month than give a lump sum of $120 or $240 at one time. 

3. If you don’t give monthly, it’s easy to forget to do it completely. If you don’t give monthly but have a philanthropic goal in mind, you will need to put the month away in a savings account each month or simply cross your fingers and hope you will have something left over.  The reality is, you might dip in to those savings or simply forget to give.  Monthly giving will ensure you will reach your charitable goals.

4. You can easily set-up automatic payments so that you don’t need to think about it.

5. You can cancel any time, so if you just can’t afford to give anymore, a quick email is all it takes.

And my personal favourite…

6. Pay less tax throughout the year! On Gail Vaz-Oxlade’s post, “Tax refunds are not your friends” she explains that by filling out a government form (Form T1213) and giving it to your employer, you can reduce the amount of income tax off your paycheque every month, instead of waiting all year for your refund.  Squawkfox gives step-by-step instructions on how to use this form (it’s easy) and also shows just how fast those savings add up when you throw compound interest into the mix. So put those savings in a high yield interest account or add it to your TFSA and you’ll be earning interest on that refund all year round. 

Do you give to charity monthly? Why or why not?

How to avoid getting kneed in the package at tax time

Tax time is approaching!  Here are some great links on learning how to pay less tax.

If you are a small business owner, read these strategies to reduce your income tax from About.com:

8 Small Business Tax Strategies to Reduce Income Tax

Check out my other posts on tax-savings by Saver Queen:

Tax-Free Savings: Who’s got the best rate?  

The Top Ten List 

How to beat student poverty 

Giving back wisely 

To learn more about what you can deduct, go straight to the source:

General Tax & Benefit Guide, 2008 - Deductions. 

Read Gail Vaz-Oxlade’s post on how to pay less tax all year long:

Tax refunds are not your friend

Here’s to avoiding that “knee in the package!”

Tax-free savings: who’s got the best rate?

Have you opened your Tax-Free Savings Account yet?

As I’m sure most of you are already aware, you can now open up a tax-free savings account with any major bank and contribute up to $5000 each year; you never pay tax on the interest you earn.  The TFSA can hold cash, securities, mutual funds, GICs and Bonds.  If you do not contribute your full amount  you can increase your contribution the next year.  So if you can only contribute $2000 this year, next year you can contribute $8000.

And TFSA’s do not affect eligibility for any kind of federal inc0me-tested benefit.

Red Flag Deals has plenty of information on the subject, including an article called, ‘TFSA: Take Advantage of a New Tax Haven - Another Way to Add To Retirement Income And Plan for Emergencies” By Bennett Gold LLP, Chartered Accountants.

They have also provided a nifty comparison chart to see who has the best rate. 

Although you should do your own research before opening an account, here is a quick summary:

The Tax-Free Savings Account Winners & Losers

Best  Second Best rate: PC Financial - 3.05%.  2.55%

PC has a no-fee account, which means it’s free to open the account or transfer money in or out, with one exception: there is a $50 fee to transfer the money to another institution.  

Second First place: ING - 3.00%

It’s is about on par with PC Financial.  They are offering a bonus interest of 13% on your first $100 if you deposit before the end of this month.  This equals $13 - not enough incentive to open an account there, in my opinion, but they have a good rate and no fees - not even a transfer fee. 

Highest rate: CTFS: - 3.50%

But this interest rate only lasts until March 30th, at which point the interest rate drops to 2.50%. The comparison chart at Red Flag Deals shows 3.75% until March 30th but this was not consistent with my research.

Similarly, HSBC is currently offering a rate of 3.50% but this is only until March 16th, at which point the rate also becomes 2.50%  (Once again, the comparison chart at Red Flag showed 3.75%.)

Since you will be theoretically keeping your tax-free savings in the account over the long-term in order for your compound interest to work its magic, the bonus 1% interest on $5000 or less over the course of a couple of months is pretty meaningless, and will not compare to earning more over a longer period of time.  My humble opinion is to pick the best rate for the institution that is going to meet your needs for the long-term and not to get suckered into initial “bonus interest” specials that are kind of fly-traps for bargain hunters.

 Runner’s Up: CIBC and BMO - 2.50%

They each have a rate of 3.00% percent.  BMO has no transfer out fee and a $50 minimum; CIBC has a $100 transfer out fee and a $25 minimum.

The worst: Scotiabank - 1.75% - eeyuk!  RBC and TD have rates at 2.50%.

Remember that interest rates can change, so it’s important to pick a financial institution that meets your needs for the long-term and not get jerked around by special bonuses.  Look carefully for hidden fees before making a decision. 

The bottom line is that the TFSA is a great way to save (or invest) your money.  It’s not tax-deductible though, so they will not replace RRSPs.  If you are interested in more ways to reduce your taxes check out some of my earlier posts where I provided tips on how to do so:

The Top Ten List - number nine has a few strategies on how to save on taxes.

How to beat student poverty - see tip number 13 for a few ideas of what you can claim.

Giving back wisely - although the 2008 is over, here are a few ways to tax-efficient ways of giving that you can consider for next year.

General Tax & Benefit Guide, 2008 - Deductions.  Go straight to the source - here is a list of all deductions you might be eligible to claim from the CRA.

*UPDATE*  As mentioned by Sally, PC has now dropped to 2.55% making ING the winner. (Thanks, Sally!)

How to Beat Student Poverty

Some tips to beat the student debt blues:

1. Apply for Scholarships, Bursaries and Grants. The very best way to earn money as a student besides getting a part time job is to apply for scholarships.  If you are a winning candidate, it will be the best investment of time you will ever make. I spent several days applying for a SSHRC grant and it was hard work.  I had to deal with seething criticism from a professor who was, in retrospect, kind enough to edit my work and improve my proposal.  But for a grant that was worth $27,500 it was probably the most I will ever be paid for about a weeks’ worth of work.  Research all possible scholarships before going to university - research the ones your university offers but also check the internet. Many corporations or local organizations offer scholarship opportunities. During my last year in highschool, I applied to everything under the sun, and it paid off. Aim especially for the ones that are renewable.

2. Plan ahead. Your success in receiving scholarships may depend on the work you do before applying.  Be aware of this as a highschool student and as an undergraduate.  You never know if you will want to go to grad school, so leave yourself the opportunity.  Take every opportunity to publish, attend conferences, give presentations, keep your grades up, and do some volunteering or extra-curricular activities on the side.  It will pay off.

3. Take advantage of your benefits while you can!  As soon as you graduate, you are likely no longer eligable to receive any of the medical or dental benefits your university offers.  So take advantage of them while you can!  Shortly after I graduated, I met with my dentist and realized I had literally of thousands of dollars worth of dental surgery of me, and I was not yet employed.  I also had to deal with a chronic back problem and shelled out hundreds of dollars for osteopathic and chiropractic work. Even if you find employment right away, there is often a 3-month probationary period before you become eligible for your benefits.  

4. Seek out the student-friendly network of health practitioners if you are not fully covered for dental, chiropractic, massage or physiotherapy. They give students highly discounted rates. For example, if you are a grad student at the University of Waterloo, you can visit a chiropractor listed under the Chiropractic Network, and pay only $5 a visit. ($40 for an initial visit but $25 after that - and the student health plan will reimburse you for $20 per visit.)

5. Proctor as many exams as you can!  No one likes to do this, but you should take advantage of the opportunity. After all, you’ll make a good hourly wage, just for walking around a classroom and trying to look scary. 

6. Take advantage of your school gym - and enjoy yoga, pilates and all kinds of sports activities for cheap.  It’s far more economical to use your school facilities than buy a membership at another gym.

7. Milk your student card.  Ask everywhere you can if they give student discounts.  Many shops and restaurants will do this, even if they don’t advertise it.  And check the expiration date on your student card - it may expire months, or even years, after you graduate.

8. Don’t pre-drink.  Everyone “pre-drinks” before they go out as an effort to save money and it fails every time.  Why? Because you get drunk faster, and enter the bar with your inhibitions already lowered.  The more you drink, the faster you drink.  All you care about that point is having fun - the cost be damned!  If you go to the bar while sober, you’re more likely to sip slowly on a few drinks and head home.

9.Eat for free - This is a really funny post on how to get free food as a student!

10. Follow the other tips here at Saver Queen. Take your bike, walk or take public transit, take your lunch to school and bring a travel mug and water bottle with you. Keep snacks and drinks at your desk if you have an office. If you go out with friends for coffee between classes, just go for the chat and avoid buying stuff just for the sake of having a break.  

11. Take the minimum number of years to complete your degree. Work hard, and you will graduate sooner.  Slack off and you can add thousands of dollars to student debt load, just for being lazy.  Get focused, ask for help if you need it, buckle down and study. 

12. Buy Apple products online at the apple store for education or at your university store when you buy Apple products. You will save $100 off your laptop!

13. Claim all your expenses on your taxes including tuition, books, research expenses (this includes your computer, books, travel and equipment) and interest on your student loans.  If you aren’t earning enough income to make these deductions now, you can use them later.

The Top Ten List

Lately I’ve been focusing on providing recipes or small crafts that promote frugality, but today I thought I’d focus on the really big money savers: The Top Ten things you can do that will reduce your expenses - fast. 

1. Sell your car.  Instead, rely on public transportation, car-pool, use a bicycle and when you need to, rent a car.  Calculate the annual cost of your car payment, insurance, repairs, parking, and parking tickets (we often forget that one!) Surprised with the amount you come up with?  Ask yourself, is it really worth it?  If you choose not to get rid of your car completely, simply cut back.  For example, two of my colleagues at work live relatively close to each other, so they take turns each week driving each other to work.  This literally cuts in half the cost of parking, gas, not to mention the miles they put on the car commuting each day.

2.  Avoid eating out in restaurants and take your lunch to work.  Since “$10 is the new $5 lunch” you could be spending nearly $3200 a year on lunch (after tax).  Compare that to the cost of eating up leftovers or preparing sandwiches, and you’re looking at serious savings.  And that’s just lunch - if you eat out twice a week at an average of $25 a dinner, you’re spending an additional $3200, (again after factoring in taxes).  That’s savings of $6400 a year!  Stock your desk with snacks, bring your lunch, and eat at home.

3. Avoid buying some of the most highly marked up products around - coffee, water, pop, and beer. Take your own coffee to work in a travel mug, buy a reusable, good quality water bottle, buy pop by the case when it’s on sale and bring it to work with you (or go without) and avoid buying beer whenever you can. Sound trivial?  If you buy a coffee in the morning, a pop with your lunch, and another coffee in the afternoon, you could be spending about $850 a year - and that’s a modest figure, assuming each beverage is costing you $1.50 each, including tax. If you buy a pop at a restaurant, or visit a higher end cafe like Starbucks, you could potentially double that amount.

4. Avoid stores, avoid spending.  We are incredibly affected by the power of suggestion.  I personally have noticed a substantial drop in my own spending ever since I moved to the Beaches, which means that instead of walking down Queen Street West or through the Eaton Centre to get home after work, I get straight on the streetcar and get dropped off practically at my doorstep.  If you avoid the stores, you won’t be tempted. 

5. Switch grocery stores. If you live in Ontario, shop at No Frills, Price Chopper or Food Basics and avoid the higher priced stores, especially Dominion and IGA.  You’ll notice a substantial drop in your grocery bill.

6. Shop wisely and consciously.  Plan your meals (and other purchases) using flyers, sales, coupons and in-season-items.  Buy generic brands and always look at the unit cost before making a purchase.  Don’t wait until you’re in the grocery store to figure out what you need.  Plan ahead, and make strategic shopping decisions. And if you sign up with President’s Choice no-fee-banking, you earn points that give you oodles of free groceries.

7. Cancel your cable, phone, and internet.  Yes, you really can do that.  We cancelled our cable and subscribed to a newsgroup.  Now we download our favourite shows (or watch them for free on websites such as Slice and HGTV online.) You can also rent movies for $4 from itunes (and no late charges!) We also cancelled our landline since we use our cell phones. Using Skype is another option for those of you making long-distance phone calls. Finally, you can split the cost of the internet with a neighbour, if you live in an apartment.  If you’re spending $175 a month on these purchases you could save $2100 over the course of a year.  If you don’t want to cancel completely, call and ask for a bargain.  Threaten to change companies if you must.  I’ve seen my bills significantly reduced through effective bargaining methods.  And don’t let that early cancellation fee frighten you - the savings might still be worth it.  You’ll have to do the math to find out.

8.  Consider moving. It might sound extreme, but we saved $500 a month by moving from downtown to the Beaches (the east end) - and we get to enjoy the pleasures of the beach!  We have slightly higher expenses (increased transportation costs, for instance) but we are also less tempted to eat out and go shopping, and more inclined to take a moonlight run by the lake, and we are saving $6000 a year.

9. Pay less tax. Many deductible expenses are hidden in the CRA’s Tax and Benefit Guide.  Did you know, for example, that you can deduct moving expenses (when you move to be closer to work or to a new job or school), the interest on your student loans, the cost of your tuition, education and textbooks, public transit passes, medical and dental expenses, donations and gifts (this includes gifts in kind such as canned goods).  If you haven’t done this in the past, you can carry over at least some of these benefits.

10. Avoid Bank Fees and Interest. Overdraft, credit card interest, cash-advances, visiting ATMs that are not your home branch, and simply paying regular bank fees - this is all money “down the toilet” as Gail Vax-Oxlade would say!  If you carry a monthly balance, reduce your interest rate.  Call the credit card company and ask them to reduce your rate, or switch to a lower interest card and make a balance transfer, and switch to a no-fee-banking account like President’s Choice or ING.