In 2011, we managed to save $14,572.80. This works out to 12.2% of all money coming into our lives. It does include both the amount saved for RRSPs and the extra we socked away for buying this house and just in case emergencies. I think this number is a lot higher than most Canadian’s savings.

I also know that if this was paid towards debt it would have put many people in a really good place. If you are trying to get out of debt could you imagine how far $14,000 would go? Personally in past years when we were trying to get out of debt, This was would have been a pretty typical amount we would have knocked out debt down by in a year. Now it is nice to see that we haven’t gone over board and are still saving something.

Our car insurance and content insurance on our apartment has dropped. Of course that happened with the changes that insurance was allowed to make so I probably have less coverage. But at least I’m not paying as much. We also saw a reduction in spending in our Phone/Internet/TV bills by $282.60. We cut our Christmas spending in half with a reduction of spending by $2,480.56. Last year it was sort of out of control.

While I highlighted in the ugly and the bad sections of this report on last year all the categories we has to work on due to overspending or irresponsible spending, It is nice to know where we managed to still keep costs under control.

The final good thing that I can report on is our liquid net worth. How this figure is made up is to take everything we have that has a simple dollar figure assigned to it and add it all up, and subtract all the liabilities. For example, bank accounts, investments, credit cards, mortgage are all things that have an easy to read dollar figure on them, they are included. Things like a house, furniture, clothing are all assets that are very difficult to pin down a value on so they are not included. That said our liquid net worth rose by 17.8% last year.

Our Net worth, which includes everything rose as well, climbing 11.5%. according to our balance sheet we are worth more today then we were at the start of 2011. I’d love to see that number even higher, but with the economy stagnant at the moment, one of the only ways I’m going to get it to climb is by spending less than we make. That is after all the only way to truly build wealth.

That concludes my report on how we did in 2011. What were some of your better moments in that year? How did you do financially? I will be back as soon as I finish up moving to this new house this weekend. At least it is a mild winter.

Last year there were exactly 52 Mondays. This is important because our Jar money comes out on a Monday. I want to talk about that Jar money closely today. Typically we take out $315 each and every Monday. Here are the Jars and how that breaks done:

• Groceries – $100
• Jason – $40
• My wife – $40
• Dinner – $40
• Gasoline – $65
• Laundry – $10
• Church – $20

If I have that right then that should add up to $315. Now If we take those numbers above and multiply them out for the entire year we will see that we get some pretty big numbers. using my handy-dandy calculator with the “times 52″ button built-in I get these wonderful numbers:

• Groceries – $5,200
• Jason – $2,080
• My wife – $2,080
• Dinner – $2,080
• Gasoline – $3,380
• Laundry – $520
• Church – $1,040

This is what we should have spent in each category for the year. Well when I bring up the budget for last year and look at the numbers, I realize that we might have been over in most if not all categories. Here is the actual spending in those categories:

• Groceries – $6,291.54
• Jason – $2,017.26
• My wife – $1,847.91
• Dinner – $4,841.31
• Gasoline – $4,105.19
• Laundry – $490.00
• Church – $1,000.00

The category that shocked me the most was my allowance. I thought I’d be way over. The dinner out category also shocked me with it being a total of 132.75% over budget. I think we have found a very ugly number. Gasoline and groceries were both over budget but I think I’m going to stop here.

That dinner out number has put me into shock. Tomorrow, if I recover, we will look at the good side of last year.

Why did I ignore that section?

If I had watched that section more closely over the last year I would have been able to catch when things started going out of whack. So how out of whack were things? Rent for one, has only gone up over the years we have rented, yet this past year it only accounted for 8.1% of our spending. Said another way $9,768.68 was spent on rent and that was only 8.1% of all the spending we did in that year.

The largest amount of spending has been on an expense I can’t really talk about. Needless to say that most of that spending is covered by an insurance company, so it is a rather moot point and not something we can cut back on anyways. That spending was 16.3% of all our spending.

Here is the ugly part, my hobby. I spent the year acquiring stuff I needed for the various competitions I wanted to enter. That resulted in a lot of spending, $13,336.53 is a pretty big number. I blew that acquiring stuff that I needed. It was 11.1% of our expenses last year. The second biggest spending category was my hobby

Had I looked at that overview page and browsed the categories section for even a few minutes last year I would have seen how out of whack everything was and could have changed to compensate somewhat. The damage is done and last year is over. Looking forward my goal is to drop spending in that category down to 5% or lower of total expenses.

That was ugly. Tomorrow the bad.

• Liquid Net Worth at Start of Year: $104,512.52
• Liquid Net Worth at End of Year: $121,560.57
• Change in Liquid Net Worth: +16.31%
• Net Worth at End of Year: $136,860.57
• Percentage of Expected Net Worth: 73.01%
• Debt Payments Made: $0

Before we go to far let’s define some terms. The liquid net worth is the accounts we have that we can change from mutual funds and bonds into cash. it also includes any cash accounts we have. Basically all of our investments where we get a statement each month showing a dollar figure stating what that investment is worth are included. We do not include things like jewelry or the car. While I could probably sell them off easily, it is harder to guess how many dollars I would get for assets like that.

Net worth therefore is everything we own. All the accounts we have and all the stuff we have. Naturally it is should always be higher than the liquid net worth. Next year when we get the mortgage I will be including the mortgage in the liquid net worth because it is a dollar amount that is easy to read off. The house won’t be in the liquid net worth and therefore things will be a little wacky at first.

Now what in the world is Expected Net Worth? I got this term from a book I read once. I forget which one it was. How it is calculated is you take your gross annual income and you multiply by your age. The number you get you then divide by ten. To find the percentage of expected net worth you take your net worth and divide by your expected net worth and multiply by one hundred. If you are above 100% you are a very good saver. If you are below 100% you are not a good saver. At lease this was according to the authors of this book. When I started writing this blog I was at 49.75% of my expected net worth. I am now at 73.01%. I expect to have this number continue to increase over the coming years.

I have more to discuss on how we did this year. That will come in future posts. For now I will just let the numbers sit there and stew. Tomorrow I’ll start with the ugly and it is ugly.

• Net Worth at End of Month: $136,860.57
• Net Worth Change: -$2,685.15
  
• Working Income for the Month: $4,764.62
• RRSP Contributions: $300
• Year to Date RRSP Contributions: $9,814.29
• Freedom Fund Contributions: $300.00
• Year to Date Freedom Fund Contributions: $4,758.51
• Tax-Free Savings Account Contributions: $0
• Last Year’s Net Worth at this time: $117,312.52
• Change in Net Worth: +$19,548.05 or 16.67%

Once again our net worth shrank. Yes, we ended the year 16.67% above where we were for last month, but this is our second consecutive month with net worth shrinkage. Does that mean we are in a recession? The definition of a recession is 2 consecutive quarters of negative growth. I’ve had 2 months of negative growth, I really don’t wish to endure another 4 months in order to say that my finances are recessionary.

The big question is what causes net worth to go down? There are two simple ways your net worth will go down over a given period of time. The first is spending more than you made in that same period of time. If you made $5,000 over a given period of time and yet spent $10,000 over the same period of time, your net worth will have gone down by $5,000. Spending more than you make is a sure-fire way to decrease your net worth.

This even applies if you saved up for something. Think about it. Save $10,000 for that vacation you’ve always wanted and then you take that vacation. The $10,000 was adding to your net worth while you were saving it up but once you spend it on something that is not an asset like a vacation, it is removed from the balance sheet and your net worth shrinks.

The other way your net worth shrinks is when your investments go down in value. While I do have investments, I don’t have enough of investments that this affects me more than the first method of reducing one’s net worth. My investments will continue to go up and down and this will have an effect on my bottom line, however till I start to have a larger amount of investments, I will continue to be effected many by our spending.

So what caused our net worth decrease this year? Well for one, we spent big time on Christmas, and since most of those gifts weren’t to each other, they removed net worth with them. The end result was a decrease in our net worth. I’m not worried about this. There are assets we got for Christmas that aren’t included in the balance sheet yet. For example my wife got a nice Coach purse, and I got a tablet that I’ve wanted for a bit.

In other numbers our RRSPs kept plugging along at a nice stable pace. We almost made the goal of contributing $10,000 this year. We didn’t but $9,800 is hopefully above the national average, which is a number I have to look up. We ended the year up well above where we were at this time and hopefully next year we will become more budget conscience and get even further ahead.

• Net Worth at End of Month: $139,545.72
• Net Worth Change: -$3,438.25
  
• Working Income for the Month: $3,832.27
• RRSP Contributions: $300
• Year to Date RRSP Contributions: $9,514.29
• Freedom Fund Contributions: $300.00
• Year to Date Freedom Fund Contributions: $4,458.51
• Tax-Free Savings Account Contributions: $0
• Last Year’s Net Worth at this time: $122,698.60
• Change in Net Worth: +$16,847.12 or 13.73%

Well there is a big red number that I made big and red and bold in that statement above. In the same month in 2010, our month to month net worth tracking also dropped. Last year it dropped by over $5,000. this year it dropped by $3,400. Not as big a drop. However there is really no concern on my part about this drop since I know entirely why the drop happened.

STOP THE PRESSES!!!

I’m not concerned by a drop of over $3,400??? Have I gone mad? Have I started living the “high-life” as a big time gambler? Have I watched the markets tank so badly that it doesn’t concern me anymore? Maybe I’ve become numb to the idea of losing money. Or maybe that drop in net worth is less than the deposit cheque we submitted when we bought the house.

The value of the house, and the corresponding mortgage, have not been taken into account in this report. This is because the house hasn’t closed yet. That won’t happen till January. However, the deposit cheque has been cashed and since that money is out of my control at the moment, it is not part of my net worth.

So if I factor out for that cheque, we actually made a slight gain in our net worth, and that I can be happy with. How did everyone else do in November?

I am beginning to realize that we have more stuff then we really needed. We have stuff we have never used. We have stuff we have used once and we have stuff that is seldom used. We even have stuff in boxes from the last time we moved and never even unpacked them. Should we be moving them again? Should they just be discarded?

My grand theory on moving is that if you move and have boxes left over from a previous move still unpacked, then it was stuff you didn’t really want or care about and it should get tossed. There really is no sense in just moving stuff over and over again, without unpacking it and enjoying it. I’m not sure how well this theory is going to go over with my wife. To top it all off, half of our new house, at least, is going to be empty when we get all our stuff into it.

We don’t have enough stuff to fill the new house and I’m talking reducing what we currently own by getting rid of stuff that we don’t need, and don’t use. Does anyone have any good minimalist websites out there? good articles on purging your stuff? I sure could use them.

The truth is I’m done looking for a house because we have got an agreement to purchase a house. This place doesn’t need renovations right away. it fits our needs for number of bedrooms and kitchen layout and main floor laundry. There is no need to carry stuff up and down stairs because it is a bungalow. Sure there are some stairs due to it being a raised bungalow, but there isn’t a need to climb stairs to get to the bedrooms or climb down them in the morning to get to the kitchen.

The house is perfect for our needs.

we were pre-approved for a $280,000 mortgage. The offer that was accepted was $265,000. I now have a whirlwind of the next 2 weeks as I go through the process of getting a lawyer, a home inspection and an accessibility inspection done and signed off on before the 25th of November. I also have to finalize financing. Sure I was Pre-approved, but now is the time to become approved.

It will be a 30 year mortgage, a few more years than I would like, so I’m going to take a day or two to further outline the numbers once I have them more in hand. The ultimate goal is to get this house paid off as quickly as possible.

This site’s name is Out of Debt Help. I’ve been debt free for well over a year, we might have been debt free for close to 2 years now, I’m not sure. $28,000 is the largest debt I’ve ever had. This debt is going to eclipse that. Sure I’m entering into the purchase of this house without any consumer debt in my hands. Once I know all the numbers the goal will be to layout a plan and sink my teeth into this debt monster.

Another day, another debt monster to slay.

From the time a house came on the market to the time we were shown it was only 6 hours. By the time this post goes live at 8 AM the listing will only be 18 hours old. We want this house and we want it bad. It is listed for less than our maximum budget. It is move in ready.

A raised bungalow with three bedrooms main floor, a bathroom and a main floor laundry room. Int he basement there are two additional bedrooms and another bathroom. The garage has entrances to both the kitchen and the basement, and the doors line up on top of each other so that if I wish to put in an elevator I can. with a stop at the kitchen level, the basement and the garage level this place seems perfect.

I am trying to get my ducks in a row so that tonight we can make an offer on this place. Wish us luck.

The Allowance

For this next tool I strongly recommend Gail Vaz-Oxlade’s jar system. When my wife and I were getting out of debt we placed ourselves on a strict allowance of $20 a week cash. That was a pretty small allowance. Since getting out of debt we are each rocking an allowance of $40 a week. Even when trying to get out of debt, you still need to have some play money. Trust me on this. I tried to get out of debt without any fun money and being cooped up in the house with nothing to do eventually leads to some heavy overspending.

It is better to have that pressure relief valve in the budget then let it all build up and BOOM! more debt. So what can you spend this allowance on? Whatever you want. But you can’t spend more than the weekly limit you set for yourself, unless you save up a few weeks allowance to do so. The benefit of this is you are teaching yourself to save, even if it just $5 of your allowance each week to buy that $100 item you had your eye on. After 20 weeks you get a reward for saving so diligently.

Give the allowance a try and see how putting a pressure relief valve in your budget might help you from going out and blowing the budget out of the water with a crazy overspending spree.