Welcome to the 424th Edition of the Carnival of Personal Finance!
If you’re new to this blog, welcome! My name is Cassie and I’ve been blogging about personal finance for about three years now. While I’ve learned a thing or two along the way, I’m by no means an expert. In fact, I’m just digging my toes back in on the investing front right now, so hosting this carnival and reading some of the great submissions I received has been an absolutely invaluable experience. My personal favourites have been highlighted in bold, so if you’re running short on time by all means check these ones out first!
I bought my house three and a half years ago, and like many first time home owners I bit off a little more than I could chew. Quite frankly, I bought too much house. I had been carting a lot of junk from rental to rental in the past, and I honestly thought I needed the space. I was wrong, and I should have spent more time looking at the numbers. That’s one of the reasons why I liked Emily’s post on choosing a home size so much. I admire that she crunched the numbers in trying to decide between a 1, 2 or 3 bedroom place. I wish I had a sounding board for the subject back then who could have talked me out of a three bedroom space, but sadly I didn’t.
Long story short, I ended up with a whack load of debt, and I dug myself into a deep hole fast! Big Cajun Man posted a great quote he found about how using credit pulls expected future earnings into the present in his post on Simple Financial Ideas. It’s such a simple, straight forward idea, and yet I was a complete train wreck on the subject. I pulled expected (and sometimes unrealized) future earnings into the present to pay for things I didn’t need, or sometimes even want.
My savings rate was
absolutely abysmal non-existant. If Reach Financial Independence had asked me where my savings rate was taking me, I would probably laughed (crying inside) and told them nowhere fast. I couldn’t find $10 a week to save, but I could apparently find $10 for lattes… I should have taken Adam Hagerman’s advice and tried marketing savings to myself. I probably would have convinced myself to start saving earlier if I had.
I can’t say I’ve ever complained about free money, but it also didn’t find its way to me as quickly as I would have liked it to. I had one credit card, and it wasn’t exactly flush with free rewards options. Especially not ones that would have paid me $800 in cash and rewards flights over the course of the year! To be fair I don’t think a rewards card would have been beneficial for me at the time, because my card spent more time on ice in the freezer than it did in my wallet. It’s an interesting concept to consider now, but I think I still have a ways to go before I could pull something like that off.
For the time being, I’m working on keeping myself out of debt, while building up a small stash of cash and getting back into investing. It hasn’t been a quick process. Fortunately I have been able to put some money away for retirement over the years, and I have a couple accounts as a result of working for more than one employer. One of the things this has allowed me to do is play with my asset allocation and watch the outcome. As Save and Conquer notes in their post, one way to divvy up the allocation is to hold your age as a percentage in bonds. This allows your investments to gradually become less risky as you age. I’ve been playing with this a little in my accounts. My RRSP account carries approximately 30% in bonds, while my TFSA is sitting closer to 25%. The post discusses the tax efficiency of different products in different accounts, which being an American post unfortunately didn’t help me directly, but it did remind me that this is an important subject that I should learn more about as I learn about investing. I want more of my money to stay with me!
My TFSA is sitting with a much smaller balance than my RRSP, but that’s because I just started contributing to it again. One of the things I did in my TFSA is start using ETFs, since some trading platforms are brushing their commissions aside for these particular products. I am excited to see what happens with the emerging markets. It’s more volatile, but also has a lot of potential for growth. Being young, with a long term investing horizon, this seems like a reasonable time of my life to dabble in it (with a little bit of money).
Eventually though, I would like to move back into individual dividend paying stocks. I still have a lot to learn, and not necessarily a clue of where to start, so the Frequently Asked Questions post by Dividend Growth Investor seemed like a great place to do exactly that! Again, the tax information is American, but the vast majority of the information is applicable across all borders. I’m hoping that by the time I do retire, my accounts will be generating enough reasonably passive income that I won’t have to worry about the fact that most savings accounts and other secure financial products are paying next to nothing in interest, which brings a whole new slew of issues to the retirement table.
More than anything else though, I hope that I can put myself in a position where I’m financially secure well before I decide to retire. While I wouldn’t say there’s anything wrong with my cubicle, I would like to be able to jump on opportunities as they arrive, rather than being a slave to my pay cheque. As it stands, I’m pretty shackled.
Everyone else out there, what’s your story? How do you invest your money, and how did you get started? Do you follow a specific investing philosophy, or did you come up with one on your own?