Like most things, when there’s an abundance of something (supply) and it’s availability at premium condition is shortlived…it’s a buyer’s market. Fruit season in BC means plentiful varieties of fruit such as raspberries, blueberries, plums, apples to pears to name a few. The issue for many of us city folk is how to store it when it’s readily available. Some fruits freeze easily and well while others require more effort. How many pounds of blueberries fit in your fridge freezer?

If you’re out of space in your freezer, how about your cupboards? Is canning and jam making a lost art? I’m going to give it a try this summer with peaches..make jam that is. A friend made some last year and it has inspired me to give it a whirl. I’ll let you know how it goes.

In the ‘olden days’ and in the ‘country’ cold storage (root cellars and cold rooms) were a great place to keep apples, pears and root vegetables crunchy and flavourful while nowadays few of us have such a thing in our home. I remember ‘helping’ to can cherries and pears, shelling, blanching and freezing peas, filling jars with the ingredients to make pickles and storing endless boxes of apples in the cold room. They all tasted pretty good over the winter.

These things take time and usually I’m exhausted by 8 pm in the evening but I’m determined to make the effort this summer. There are two reasons for me to try my hand at jam:

• I will know exactly where the fruit came from and how it was prepared
• I know that what I will pay for peaches now while they’re in season is a fraction of the cost at any other time of the year and they like peach jam!

I’ve signed on the dotted line to reduce my ‘work’ week to 60% = 3 days per week. With two  kids in elementary school we wanted to find better balance in our lives so that we weren’t quite so frazzled by Friday. The idea sounded good but it took a little bit of figuring to understand the impact on our budget. More to the point…could we still balance our budget with less income?

Everyone’s situation is different but here are the things we considered:

• Child care expenses would decrease although not by the same amount as my income
• Could I make up the reduced income in other ways?
• Would the change affect benefits and insurance coverages?
• Would we still meet our financial goals? (This was a big one because we wondered whether the relief now would jeopardize our long term travel plans, retirement, kids’ education or current lifestyle?)

Many of these questions could be answered with some math or a little research. The tricky part was putting a value on being able to pick up the kids from school twice a week and being less frazzled by Friday (I’m sure the kids will appreciate a less ‘snapish’ mom). I suspect that we will not regret our decision one bit!

Mortgage rates were 9 to 12% when I started working at the bank in the early 90’s! They went up slightly before coming down and they’ve been so low for so long, I cringe at the thought of what higher rates will do to mortgage payments. Depending how much of a mortgage you have, an increase of .25% will increase your monthly payments by $140. That doesn’t seem so bad until rates go up by .5%, 1% or 2%. Do you expect your monthly, after tax income to rise in parallel? If so, then it won’t feel so tight but if it won’t….ouch!

That’s the bad news. The good news is that you have a couple options to explore:

• How long is your rate and term set for? Can you increase your payments now to take advantage of repaying the mortgage faster? That way there will be less to calculate interest on when it comes up for renewal and a rate increase won’t be quite so painful.
• Are you due to renew soon and if so, will your bank hold a rate for you or can you do an early renewal? Sometimes paying a small penalty now to extend a low rate for a longer term is worthwhile.
• Does your bank offer options such as blend and extend? This is where your current rate is blended with the rate of a longer term (prorating the terms) without any penalty. Essentially you still benefit from the lower rate of your current term and then pay the rate of the extended term. This is a way of securing today’s rates for a longer term because the big question is…what will they be when your mortgage is up for renewal? Doubtful they will go back down.

At the end of the day, a small increase in rates is not worth losing sleep over but if you know how long you will stay in your home without any moves or changes and you want a fixed mortgage payment at an amount you know you can afford, then matching the term to these objectives is the key.

For most of us who own a home, mortgage payments are are greatest monthly expense and of us who live in the Lower Mainland, mortgage payments can eat up a disproportionate amount of our income compared to other expenses.  

The first thing to do is gather some information:

• What is your current mortgage rate and term (for how long will you have this rate)?
• Using a Mortgage Calculator – What would you payments be if the rate increased by 2%? 4%?
• What will your lender confirm for you in terms of a longer term and rate?
• Is there penalty (and any other cost) associated with making the change? If so, what is the total cost?
• Based on the change, what will your new payments be?

Having this information will help you to understand the impact on your current expenses and future expenses.This is key as typically income doesn’t rise at the same rate as rates and mortgage payments are made with after tax dollars!

Next post will note some ideas you can discuss with your lender to ensure you’re informed of any options available to you.

I am often bewildered when I receive our credit card bill each month. Why is it so high? Why are we not on or under budget (ha ha!)? In reality, I know I’ve done a good job with our financial plan and budget and the only category that we have trouble with is ‘entertainment and other’. And, no, I’m not piling everything into that category! There are a couple reasons:

• There are two of us dabbling into Entertainment and Other
• Life is busy, we both work and don’t often keep track of the treats or little things to make our week easier
• We go out for coffee too much!

 It may seem overwhelming but it doesn’t have to be complicated. Even if you don’t have a formal budget, you probably have a dollar amount in your mind for certain categories. Most budget categories are fixed or regular monthly spending such as housing, food, transportation, bills, loans and savings. The key categories requiring some spending discipline may include:

• Holidays and weekends away
• Recreation
• Entertainment (including eating out)
• Clothing
• Interests and hobbies

Some of these can be budgeted and ‘saved’ for each month as you may spend on them irregularly (once every few months) and the ‘save before you spend’ plan works well. Other things like discretionary entertainment spending are more difficult to control within your budget amount….unfortunately cash might be the most disciplined method for these. Take out the weekly budget in cash, put it in your wallet and it’s much easier to manage. When it’s gone, it’s gone!

This may well be the case but before you think about setting a new one, ask yourself a couple questions.

• When was the last time you did your budget?
• When was the last time you looked at it?
• Do you compare your actual income and expenses to the ones in your budget?
• Have you experienced any life events that impact your income or expenses?
• Have you reviewed your life/financial goals and updated your budget accordingly?

A budget is one component of your overall financial plan which is typically driven by your goals. It is a vehicle, that if designed and used properly can help you achieve the lifestyle you desire.

Those are the keys:

• It is current
• You use it (check your actual income and expenses against planned)
• Your budget includes components to help you realize your goals

Do you still need a new budget?

It’s that time of year again, yard work (if you have a yard) and property taxes. Vancouver, like many other places bills property taxes for the beginning of July…a whopping bill and that’s after the advance payment made in February!

The bill arrived yesterday and because our bank collects and pays the property taxes on our behalf I went on-line to claim the Home Owner Grant. At the same time I checked our mortgage property tax account to ensure there would be enough money to pay the bill. I’m not sure what caught my eye but I noticed that the amount billed in February was $20 less than the amount paid by the bank! An ‘8’ instead of a ‘6’. Imagine my surprise when I investigated and learned that the City of Vancouver charges a $20 administration fee because the bank pays the property taxes on our behalf! I’m not sure when this started but I do know that it doesn’t feel fair.

I will pay the bills myself in the future…I know that lots of people might say that my time is worth more than $40 (2 bills x $20 each) but it irks me.

Moral of the story…..review your bills!

We look forward to summer…a lot. Blue skies, sunshine and vacation. Here are some ideas to have a fun summer without blowing the budget:

Activities:

• Purchase a multi-day or multi-use pass
• Parks and community centers
• Discount programs (on-line, coupon books)
• DYI rather than a tour

Accommodation:

• Book far in advance
• Purchase in advance
• Pre-pay
• Discounts through memberships (BCAA)
• Purchase last minute (on-line)
• Camping
• Hostels (they have private rooms too!)
• House exchange
• Share with friends

Transportation:

• Travel on Tuesday, Wednesday or Thursday
• Purchase last minute

With a little bit of planning to answer what, when, how and how much you will have a solid plan. You will have  fond summer memories without dreading the bills.

The weather in Vancouver last week was stellar to say the least but this week I hear there’s snow on the Coquihalla! We took the snow tires off weeks ago. I am working under the premise that summer weather is on the way and here to stay. On that note, it’s time to take a look at the calendar and make some plans. We do this for a few reasons:

• We are planners
• Coordinating with others over the summer months can be tricky
• Time off work = limited flexibility = booking ahead
• The little matter of budget

We have a ‘vacation fund’ but to be honest, regular deposits may be ‘deferred’ if we’ve overspent on other things through the year. Invariably, what’s in the fund plus what will make its way into the fund between now and the holidays will be the budget. And then, there’s matching the ‘budget’ to the plans. Rather than curbing our plans, we typically curb our spending in other areas to be able to take the summer holidays that we want which we are able to do if check our plans against our budget ahead of time…..like now!

Next post will be on some ideas to still have fun while being mindful of your budget.

Do you expect a tax refund? What will you do with it?

It may not be a lot of money but a little can go a long way, especially if you have a plan!

How about splitting it between a couple of things? A little for you, some to savings and some to pay down debt? As well as increasing your bottom line by paying down a debt or putting some aside for the future there are additional benefits to these 2 strategies.

• Less money owing = less interest charged and debts paid off sooner = more cash to you.
• More money saved = more interest earned and if in a RSP = less tax paid in 2013.