Home Reno Tax Credit Warning

Posted by Canadian Dream on August 14, 2009

So with all this spending on home improvement from that Home Renovation Tax Credit I’m surprised I haven’t seen much of anyone point out the obvious on the fine print on the TV ads.  It hasn’t been approved by parliament yet, so in fact it doesn’t exist officially yet on the books in the Canada Revenue Agency.

So if you are spending money on home improvements you should be aware that if there is a fall election that tax credit might not ever see the light of day on your tax form next year.  From the federal government’s point of view it’s fairly damn sneaky, get a stimulus to the economy without spending a dime of public funds.

After all if we see a government change they can also blame the fact it just go lost in the transition and the books were worse they they thought so they can’t give you the tax credit.  With record spending you know they are going to have to cut back somewhere and this is an obvious candidate.  It will carry some political backwash, but in terms of pissing people off this is easier to do than raising income tax.

To date I don’t think I’ve spent $1000 yet on home reno’s this year, so I doubt I would even use the tax credit.  It’s not that I don’t trust the government, but rather I didn’t have much planned during the time of the credit.  The hardwood was already bought prior to the credit and I’m waiting to do the kitchen reno until likely next year at the earliest (I like to save up some money prior to starting a project).

So have you been doing renovations expecting a tax credit?

Money Thoughts

Posted by Canadian Dream on August 13, 2009

It strikes me as interesting the more I’ve learned about money the less I think about it.  It’s sort of a odd learning curve at first when you start learning you suck up information like a vacuum and keep thinking about what you have read after the article or book is done.  Yet after a while your brain becomes so saturated in the same concepts repackaged in different ways that I have stopped paying attention as much.  Also as you change you lifestyle and finances to match up frankly there is a lot less work to be done on it, so hence my thoughts have been drifting steadily away from money.

So after a while, I’m just accepted the reality.  Yes I will retire early, likely in my 40′s sometime.  When that happens depends on many things, so don’t get upset trying to determine the exact day.  The decade is really all that is required for now and the year when I get closer.  In the mean time I have a lot more life to learn about and explore other than money.

So in the mean time I’ve been reading steadily less PF blogs.  I’ve been signing out different books from the library and expanding my reading horizon.  I’m also wondering what to do with this blog.  I’m at this moment losing interest in it, but at the same time I still enjoy the writing and interaction with people.  So do I just post less, or bring on another blogger, or perhaps some other solution.   I don’t know.

I’ve also progressively learned that money as numbers is actually fairly meaningless.  For example, at this moment I make between $75,ooo to $80,000 per year.  Does you knowing that change much of anything?  No, not really.  People are over protective of their numbers not realizing that your income is only one page of the book.  It hardly tells anyone anything about you.  Saving percentages are also equally meaningless without knowing the related income number.  For example, I much more impressed with someone saving 5% of their pay at $20,000/year versus saving 20% at $100,000 a year.

So that’s my random thoughts for the day on money.  What are some of your random thoughts right now?

Massive Changes to Retire Early

Posted by Canadian Dream on August 12, 2009

Ok, I live a fairly good middle class existence.  Granted I’m a bit lower of the bill than most people, but overall I still have a nice house, a flat screen TV, car and some nice clothes.  Generally I blend in fairly damn good with the neighbours other than I really don’t care to spend money on things they care about more than I do.

Yet if you are desperate to retire as early as possible you have to accept the fact to achieve a very low spending rate some of the core elements of a middle class life likely need to go out the window.  Here are a few potentially huge cost  saving ideas.

1. Housing.  Let’s face it this is you biggest expense, so being careful here can save tons of cash.  Consider either sharing living space with someone (ie: share an apartment/condo or rent out the basement of your house) or buying a very small house to begin with or do both.  Housing prices are fundamentally tied to the amount of square feet you owe so buy as small as you can handle and save the expense and the mortgage interest, not to mention property taxes.  Hell you might even want to consider a trailer. Potential savings: $250 to $1000/month.
2. Transportation.  Cars are bottomless pits of money, so if you can get by without one you could be saving a large amount of cash flow.  Also consider having a bike for the nice weather and public transit for the not so nice weather.  You might also want to look at car sharing.  Potential savings: $100 to 400/month.
3. Food.  Meat is good tasting, but expensive to base a diet on.  Even if you cut you meat eating in half that is a fair amount of savings.  Also consider stop buying as much pre-fabricated food as possible and dropping your cheese consumption to a minimum.  Think eating more vegetarian than anything else.  Potential savings: $100 to 500/month.
4. Booze.  Skip this entirely or reduce it to a few times a year or perhaps limit yourself to brewing your own.  Another idea is to never buy booze when you are out for dinner.  Potential savings $50 to 100/month.
5. Hobbies/Entertainment.  You hobbies should ideally have a zero cost/almost no cost or better yet turn a profit.  Your entertainment ideal would cost you almost nothing like having people over for supper or borrowing a movie from the library.  Eating out would be a rare treat.  Potential savings: $200 to $400/month.

So if you add them all up you can reduce your monthly spending anywhere from $700 to $2400 which would represent a retirement saving reduction of approximately $210,000 to $720,000 (using the 4% rule).  So yes, being different and not living the standard life does care some serious benefits when it comes to early retirement planning.

Now you just have to figure out which if any of these changes you would like to make to your own life.  I suggest if you are going to do any of them try living in a smaller house.  It’s a bigger cost savings and has the nice benefit of you can’t buy as much stuff to fill the house with.  So your savings even are higher than what I put in for a range.

If you have another idea please share with a comment.  Also note I just guessed on the range of savings based on previous experience with other people’s spending habits.