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Entering the Foray of Personal Finance

Mrs. Sustainable PF agreed to marry me about two and a half years ago and we wed just over a year ago.  We determined that we needed to prioritize some important things in our lives which included choosing and buying a home together as the house we were living in was one I purchased shortly before meeting Mrs. Sustainable PF.  We fixed up our house and sold it while also finding and purchasing the house of our dreams. We also wanted to buy a new car, a Subaru Outback, which we purchased in the Summer of 2010.  Both of these activities took extraordinary research on my part.  I tend to be a bit obsessive compulsive about what I sink my teeth into.  In the late spring with our house being ready for market and our Outback purchase all lined up I turned my attention to our personal financial plan.  In retrospect I should have done this first as our personal finances should have been the most important of our 2010 goals.

Personal Finance Resources

personal finance book resource wealthy barberI mentioned being a bit compulsive so I hope the reader can understand how much I research things when I become interested in them.   I started my research by re-reading a copy of The Wealthy Barber by David Chilton that my Mother gave to me decades ago. I downed entire book one warm July day at Mrs. SPF’s parents house.  I quickly realized I should have picked this book back up 10 years ago prior to entering the work force when I really could have used the financial advice.  Ten years of compounding interest, lost!  I agree with all of Chilton’s suggestions regarding personal finance.  Save 10% off the top, utilize government savings programs such as RRSPs and Tax Free Savings Accounts, ensure you are insured, contribute to your pension if you are lucky enough to have an employer who provides one (we do), participate in home ownership and get wills for both of us.

I needed to learn more.  We are both gainfully employed in the public sector and we had come to realize we were not employing Chilton’s basic financial principles and that it was in our best interest change our financial habits.  I had mindlessly contributed to Mutual Funds for years and was in the process of re-purchasing our RRSPs that I had used to assist in the down payment for our first house under the First Time Home Buyers Plan.  So, I took to the Internet to learn more.

personal finance strategy couch potatoI now subscribe to 65 RSS feeds pertaining to personal finance, dividend investing and socially responsible finance.  I did mention I get a bit obsessive compulsive, right?  I started reading the Personal Finance sub-forum at redflagdeals.com but at the time I found there was far too much information and a lot of it contradictory.  So I decided to look for other sites that were the opinions and experiences of individuals and/or collaborators.  One of the first blogs I stumbled across was Frugal Trader’s Million Dollar Journey (MDG).  Fantastic site as many who read this post likely already know.  I then discovered the world of Exchange Traded Funds (ETF) and quickly surmised that my Mutual Fund days were at an end.  Who wants to pay a ridiculously high Management Expense Ratio (MER) when products are available that a Do It Yourselfer can purchase?  I found The Couch Potato investing strategy at MoneySense.ca and The Canadian Couch Potato and read through all of the articles posted by the writers for these sites.  I was sold, mostly.

Personal Finance Strategies

We decided that the couch potato strategy was one we wanted to use.  We would diversify the ETFs we intended to purchase between US Market, International Equity, Bonds and perhaps Real Estate Investment Trusts.  You’ll notice I did not mention Canadian Equities for our portfolio.  Why no Canadian equity here?  Two words: Smith Manoeuvre (SM). I discovered this strategy on MDG and really liked the idea of turning our non-tax deductible loan into a tax deductible loan while building a hefty portfolio.  Mrs. SPF saw the advantages of the SM as well so we decided we would leverage our Home Equity Line Of Credit (HELOC) to invest in dividend paying blue chip Canadian equities.

We decided we should pay off my student loans and a low interest personal loan sooner than later and this will be a priority for 2011 and 2012.  Guaranteed returns by paying off mortgage debt and these debts means more money available in our budget once these loans are gone.

We have applied for term life insurance although we are awaiting confirmation of coverage.  Our next step is to write our wills.  We will save 10% of our take home income and work toward maxing out our RRSP and TFSA account.  We will continue to increase our bi-weekly mortgage payments by 20% each year.  Once these items are in hand we will feel very comfortable in our journey to financial freedom!

8 thoughts on “Entering the Foray of Personal Finance

    1. Thanks CPP! With help from yourself and other bloggers i’ve really learned a LOT over the last 6 months. The wheel doesn’t always have to be re-adjusted after all – just tweeked to personal preference.

      Thanks for checking out our new site!

  1. I like your new webiste a lot. I am your RSS subscriber now! Have you joined the Yakezie challenge yet? Don’t wait and jump in. :-) It is a great place to be.

    1. Hi Aloysa! Thanks for subscribing. I haven’t seen our feed count increase yet, but hopefully it will soon. I believe we should have 5 followers but we’re only seeing 2!

      We haven’t joined the Yakezie challenge yet as we only launched last weekend! Apparently we need to blog for 6 months before being approved for the challenge.

  2. Subscribed! I love the sustainability angle that you’re bringing to the personal finance topic. Frugality and building wealth often go hand-in-hand, but it’s worth remembering that what’s cheapest is sometimes not what’s best for the earth.

    I’m just starting to explore ETFs myself and am a fellow lazy investor. I have a portfolio of ethical mutual funds, but would greatly appreciate any tips on finding ETFs that would be aligned with principles of sustainability and corporate social responsibility. How did you determine your ETF portfolio?

    Cheers.

    1. Hi Maxine, glad you found our site! We are happy people are liking how we approach our Personal Finances!
      ETFs are REALLY the way to go. You likely pay 2%-3.5% to have your mutual funds “managed” where ETFs will likely be closer to 0.5% fees. Over the only term they will save you a ton.

      We plan to discuss “ethical” (also termed socially responsible) ETFs and funds and the concept of SR in general. Let’s just say we find some of these funds problematic. A good place to start reading is our 1st or 2nd weekend reading where the Dividend Guy Blog had a 4 part series on Socially Responsible Investing (SRI). A good read and I commented a lot. We full plan to explore the topic further.

      While we do like ETFs, as I mentioned, they’re problematic (the term “best of industry” comes up a lot – so the “best” oil company can be included in an SR MF or ETF!!! which seems wrong to us). We’re also starting to invest in individual companies that we feel are much more SR than some in the MF/ETFs. e.g. MY on the NYSE (Chinese company that makes wind turbines! now we’ve lost some money on them unfortunately, but we feel they’re a good long term play as one of the top 10 chinese stocks trading on the NYSE).

      Anyhow – we’ll definitely explore these topics in greater detail this year – tune in!

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