2018 Annual Review

Back in October, I posted an article outlining my financial goals and objectives for 2018. In that article I committed to posting a year-end wrap-up outlining my successes, failures, and progress in achieving those goals with my final post of 2018.

And since today is the final Saturday of 2018, it’s time for that review.

The primary reason that I committed myself to doing this was to establish and maintain an added layer of accountability I want this blog to bring to my management of my personal and family finances.

As I outlined in the October post, I follow a process similar to that of one of my favourite writers, Chris Guillebeau (author of the blog The Art of Non-Conformity, books like The $100 Start Up and Side Hustle, and host of the podcast Side Hustle School).

While reading Chris’ blog many years ago, I learned about his process of conducting an annual review and making plans for the coming year. I started loosely following a similar process, taking a few hours over the course of a couple of weeks in December to review how the outgoing year had gone and make plans for the year ahead.

Over the years I’ve refined my version of this process and have arrived at five categories of goals and objectives that I focus my attention on: Family, Finances, Health, Personal, and Professional.

Today’s post is a look back on 2018, while next week’s post will focus on what I hope to achieve in 2019. Since the focus of this website is intended to largely be on the financial impacts we encounter as parents, I’m only going to focus on that category in these posts.

To recap, my goals for 2018 were as follows:

  1. Contribute $2,500 to each child’s RESP.
  2. Increase my RRSP contributions by 10%.
  3. Put $2,000 in my TFSA.
  4. Maintain our mortgage prepayment plan.
  5. Reduce discretionary spending by 10% (both personal and family).

So how did I do? All told, not bad at all!

  1. Contribute $2,500 to each child’s RESP. ACHIEVED!

The Canadian government offers very generous grants as an incentive for saving for a child’s post-secondary education. 20% of annual contributions to an eligible RESP are matched to a maximum of $500 per child.

If you can show me another investment that will earn an automatic 20% return, I’d love to hear about it!

FM and I are firm believers in the value of an education and we want to do our part to ensure our kids have the opportunity to pursue college or university studies in the future. So maximizing the government grants became an absolute no-brainer financial priority the moment we entered parenthood.

This year we were able to achieve our goal of getting the maximum amount into the Family RESP account I set up, turning our $5,000 contribution into a $6,000 balance toward our kids’ continued educations.

You’re welcome children!

Aside: if you’re a parent and you’re not familiar with the ins and outs of RESPs, Gail Vaz Oxlade’s Saving for School is a great (and very affordable) resource!

  1. Increase my RRSP contributions by 10%. FAILED

Last year I managed to get $5,200 into my RRSP, so this year’s target was $5,720.

When FM went on maternity leave in April, we hit the pause button on our usual automated RRSP contributions. The intent was to ride out the year, push as much as we could into our high-interest savings account, and make lump sum deposits into each of our RRSPs from that balance at the year if we could.

Unfortunately, we ran into some rather large, completely unexpected expenses this year (mat-leaves are a great time for those, right?) and I ended up contributing less than $1,000.

In hindsight, this was a poorly thought-out goal. At the time I set it, I must have thought it was achievable, otherwise I wouldn’t have included it. That, or my math was simply horrendous and/or not double-checked, which is entirely possible.

Because we also reduced our adult allowances to account for the lower income inherent to maternity leaves, I would have been hard-pressed to match last year’s contributions, let alone increase them by 10%, even without the unexpected expenses we encountered this year. Lesson learned.

  1. Put $2,000 in my TFSA. ACHIEVED!

While I typically prioritize RRSP contributions in an effort to use up all of the remaining available space, when it became apparent that the RRSP contribution goal was unattainable, I focused my attention on achieving this objective rather than failing at both. This shift in my attention allowed me to achieve this goal of contributing $2,000 back in September, though I didn’t get anything more than that set aside.

  1. Maintain our mortgage prepayment plan. ACHIEVED!

We’ve been as aggressive as we can afford to be in paying off our mortgage since it’s the single biggest obstacle in our pursuit of financial independence.

In 2017, we paid the maximum of 25% on top of our regular accelerated bi-weekly payments, plus another $100 in lump sum payments on the principle every two weeks.

Not only did we maintain that pace in 2018, but we upped the lump sum payments on the principle by another $25 per bi-weekly payment!

  1. Reduce discretionary spending by 10% (both personal and joint/family). ACHIEVED on the personal side, FAILED on the family side.

“Kids are expensive” is part of the tagline of this blog for a reason. I’m constantly looking for ways to cut down on our costs, but even the best of efforts and intentions couldn’t get the bills down this year on the family spending end of things. In the end our spending went up very marginally (<2%), which is something of a feat in and of itself, considering we had a second child to tend to for the majority of the year. But the goal was a 10% reduction, and we didn’t come close to that, so we got a failing grade.

On the plus side, I did manage to keep the spending of my adult allowance in check this year, coming in at nearly $300 less per month than I had in 2017. I attribute this largely to the fact that with two kids occupying most of my non-working waking hours, I simply didn’t have an opportunity to spend this year. I missed both my usual May long-weekend fishing trip, and my annual November sports trip with my buddies this year in order to be at home with FM and the kids. I also didn’t spend a lot of time – and therefore money – on my hobby of collecting hockey memorabilia and cards (I’m an overgrown child, I know). Add those things up and a significant decrease in spending was a sure thing.

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So when I tally it up at the end of the year, I achieved 3.5 out of my five goals and objectives. When I consider how much things can change over the course of twelve months and how unpredictable parenthood/adulthood/life-in-general can be, I’m quite pleased with this achievement.

I’ve already established what I plan to tackle in 2019 in each of the five categories that I focus on. Next Saturday, I’ll post my five financial goals and objectives for the year.

Do you set specific goals (financial or otherwise) for yourself each year? How did you do in 2018? And what about conducting an annual review – is that something you do as well?

Let me know by posting a comment, shooting me an email at frugalfatherblog@gmail.com, or by connecting on social media on Twitter, Facebook, or Instagram.

Until next week, thanks for reading!

Frugal Father

A Frugal Family Christmas Dinner

One of my favourite parts of the holiday season is the delicious food that I get to eat when doing the rounds of the various family events that FM and I attend – now with kids in tow.

My preference for holiday meals is pretty straightforward. My favourite dishes are the traditional staples of turkey, stuffing, cranberry sauce, carrots, mashed potatoes with gravy, and a seasonal desert.

Lucky for me, those are available at pretty much every one of the three or four dinners we end up attending each holiday season! And somehow, I never get tired of eating those things and the piles of leftovers that usually come with them.

Though we’ve never hosted a Christmas dinner for our extended family, it’s something I would love to do in the future.

For years, the numbers nerd in me has been curious about the costs of putting together such a meal (usually for 8 adults).

I felt like much of what’s included in the typical holiday meal that I enjoy is actually pretty affordable. But that was really just anecdotal opinion based on what I recalled seeing in the grocery store, not on any documented evidence.

So this week, I did some digging to prepare myself for what I’m up against when FM and I finally take our turn at providing the meal.

The results really aren’t all that bad.

Based on the information in this week’s grocery store flyers, I’ve concluded that by using a little price-matching effort and ingenuity, I could comfortably create my favourite holiday meal for myself and seven others for just $29.48!

That works out to only $3.69 per person, and doesn’t account for the fact that I’d likely end up with leftovers for at least a couple of meals.

For those interested in knowing how it can be accomplished at such a relatively low cost, here’s a series of recipes I’d follow (loosely/with modifications), along with the shopping list of ingredients to pull them off.

Dish Ingredients Price
Turkey stuffed with lemon, onions, and rosemary 1 6 kg. (13 lb.) Turkey $15 (Wal-Mart)
1 lemon $0.99 (Zehrs)
2 medium onions $0.30 ($1.47 for a 3 lb. bag of 10 onions at Wal-Mart)
3 sprigs fresh rosemary $0.60 ($1.97 for a package of 10 at No Frills)
Mashed Potatoes 12 medium potatoes $0.60 ($1.97 for a 10 lb. bag of ~40 potatoes at No Frills)
2 tablespoons (~30g) cream cheese $0.30 ($2.47 for a 250 g package at Wal-Mart)
2 tablespoons (~30g) margarine $0.06 ($0.94 for a 454 g package at Wal-Mart)
1/2 cup (0.12 L) of milk $0.18 ($5.99 for 4L at Wal-Mart)
Steamed Carrots 3 pounds $1.47 (Wal-Mart)
Stuffing 2 boxes $1.74 ($0.87 per box at Wal-Mart)
Gravy 2 packets $1.98 ($0.99 at Fresh Co., price matched at Wal-Mart)
Cranberry Sauce 1 can $1.27 (Wal-Mart)
Candy Cane Ice Cream 1 carton $4.99 (No Frills)

TOTAL GROCERY BILL  

$42.23

TOTAL MEAL COST  

$29.48

PER PERSON MEAL COST  

$3.69

And there you have it: a nice, big, delicious meal for eight people for just $3.69 a head! Aside form the turkey and the Candy Cane Ice Cream for desert (a childhood favourite that has been a must-have on my Christmas food list for decades), everything else is incredibly cheap. Those two items alone account for more than half of the meal cost, but even then, they’re not breaking the bank.

Writing this article and creating the menu above has me even more excited to one day host a big holiday meal for our family. In fact, it’s already led to discussions with FM about when we might be doing just that!

What’s your favourite holiday meal? How do you keep costs in line when you’re doing the cooking? Let me know by getting in touch by leaving a comment, emailing me at frugalfatherblog@gmail.com, or connecting on social media on Twitter, Facebook, and Instagram.

This will be my last post before Christmas, so I want to wish you and yours a very happy holiday as well. I hope that it’s filled with great people, good times, and delicious food and drink!

Until next week, thanks for reading!

Frugal Father

Christmas for the Kids: How We’ve Kept Costs Down

Christmas is just 10 short days away and for once it my life it appears that I won’t be out fighting the crowds on December 23rd and 24th in a desperate attempt to find a last-minute gift.

Free time is in short supply with two kids in our lives, so FM made sure we got started with our holiday shopping nice and early this year. And when I say early, I mean a few months worth of a head start.

The early start meant an early finish, which is making for a relaxing lead-up to what becomes a hectic time of year for our family.

Adding to the relaxation is the knowledge that a pretty simple approach to our gift shopping also mitigated the impact to our bank account.

As parents, it can be easy to go overboard on spending for your kids at Christmas. No matter your financial means, we all want our kids to have the most enjoyable holiday we can provide them with. All too often, that results in buying more than is necessary, more than we ought to, and more than we can afford.

It doesn’t have to be that way. By sticking to some pretty basic principles things, we still managed to get our kids things they’re going to get use out of, enjoy, and make memories with this holiday season.

Here are four things we did that can help you keep costs down too!

 

1. Set a limit and stick to it.

 

This is by far the most important element of keeping costs down on your gift shopping. Years of monitoring our income and expenses through the cash-flow forecast spreadsheets that I develop for our finances each year has given me a very good idea of what we can realistically afford as the holidays approach.

Using that information, FM and I arrive at a number that we’re comfortable with spending and stick to it without compromise. If it can’t fit within the number, it doesn’t get bought. End of story.

 

2. Buy gifts well in advance of the holidays.

 

With our hard-cap spending number set, it’s time to go bargain hunting. As semi-savvy shoppers (by our standards), we’ve come to realize that the best sales aren’t exclusively available around the holiday season. Not only that, but the items we think would make good gifts for the kids might not be available as the hoards rush out and clear the shelves.

So rather than cramming all of our shopping into a small window of time and potentially ending up disappointed and frustrated, we keep an eye out for sales and special things that can be given as Christmas gifts from late-summer through early-winter and stash those items away for the holidays.

The key is to diligently keep track of what you’ve spent, remember everything that’s been tucked away, and remember where exactly it’s been tucked so you can find it for Christmas!

 

3. Realize that new to them is as good as brand new.

 

One of the big things I’ve noticed in my early years of parenthood is that kids really couldn’t care less about where things come from.

Our son is just as happy to put on a Paw Patrol t-shirt that’s a hand-me-down from a cousin as he is to wear the brand new one he got from a grandparent for his birthday. Same goes for things we find at the local “second hand” store (I used quotes on “second-hand” because we frequently find previously-owned, but never used toys and clothing at the store we usually go to).

Just because it may have been owned by someone else doesn’t mean it won’t get plenty of more use and love from our kids, so why not re-purpose some of it as a special gift?

 

4. Buy at dollar stores – a goldmine of cheap finds!

 

Once a wasteland of cheap junk, dollar stores can now be a fantastic source of quality items at deeply discounted prices. We find this to be especially true for the activities our toddler currently loves, namely colouring books, sticker albums, and painting sets.

We spend hours and hours each week on these type of items and have found the best source of them to be the two dollar stores in close proximity to our homes. They tend to have a massive selection that almost always features our kids’ favourite animals, interests, and cartoon characters. We often discover the exact same products at bigger name stores for 100%-400% more money. Craziness!

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Despite having a second child in the mix this holiday season, keeping the things listed above top-of-mind while getting gifts for the kids has helped keep our costs down and allowed us to complete our shopping weeks ahead of the big day.  

There will be no debt hangover in the New Year, no buyer’s remorse, no second-guessing if we could really afford it. We found our comfortable number, stuck to it, and are all set for a fantastic Christmas with our kids!

How do you keep your costs down with your holiday gift-giving? Do you use any of the four things I outlined? Do you have other methods that keep you on track? Let me know your approach by emailing frugalfatherblog@gmail.com, leaving a comment, or by getting in touch on Facebook, Twitter, or Instagram.

Until next week, thanks for reading!

Frugal Father

Accommodating for Childcare Costs

Last week I talked about the process I go through to develop our annual cash-flow forecasts.

In the past there weren’t may significant changes from year to year, but that has certainly changed since our kids arrived on the scene.

First and foremost, there have been some major fluctuations in our family’s net income due to a pair of maternity leaves for FM and parental leaves for yours truly.

On the spending side, there’s been a noticeable uptick in our average monthly credit card bill each year. This is largely due to the fact that trips to the grocery and department stores now include all sorts of kid-related purchases (i.e. baby food, diapers, cleaning products) we weren’t incurring before becoming parents.

Shortly before our daughter arrived, we switched from my driven-into-the-ground, small sedan to a more family-friendly mode of transportation in the form of a van. That switch came with the first vehicle loan we’ve had on the books in years.

And of course, there’s childcare costs.

Those of you who have had this expense added to your finances will know that it’s one of, if not the most significant new costs you’ll have to accommodate for as a parent. So far that has certainly been the case for us.

And that expense is set to increase in 2019.

It’s hard for me to believe, but in just over four months, we’ll be sending two kids off to day care as FM’s second maternity leave comes to an end. The increased income that will come with FM going back to work will be great, but it also means our childcare costs will be going up by 100%.

Based on what I mapped out in our cash-flow forecast, we’re looking at a grand total of just over $11,500 in childcare costs in 2019. That will jump to over $13,000 in 2020 when both kids attend for the entire year. That’s basically the equivalent of our minimum required mortgage payments for the year!

For a relatively new parent, those are some scary numbers when you realize that they were non-existent prior to having kids.

While those numbers may be scary to me, what CTV News found a lot of Canadians are paying for child care must border on terrifying for other folks. Sending two kids to day care full time in Toronto would cost us upwards of $35,000 based on the average numbers!

We’re the first to admit that we’re incredibly fortunate when it comes to the daycare situation we find ourselves in.

We were able to secure a spot for our son at a home day care provider within walking distance of our home. The rates are very affordable when compared to the other home day care providers we looked at and are a fraction of what private childcare centres quoted us.

Our daycare provider is also incredibly flexible, offering what amounts to a “pay for use” approach as opposed to the fixed daily costs that would have applied at the other providers, regardless of whether our child(ren) attended that day or not. This has allowed us to have the kids’ grandparents come over on Mondays to look after them, providing some important bonding time amongst our extended family and reducing our childcare bill in the process.

While adding childcare expenses to our financial planning certainly hasn’t been without its challenges and adjustments, the convenience and affordability of our daycare situation have been incredible.

Our son loves getting to spend his days playing with his “fwends”, our parents get to spend some quality time with their BLANK, and we have the comfort of knowing our kids will be well cared for at all times at what amounts to a reasonable cost when you consider the comparables.

How does our childcare situation compare to yours? How do you accommodate for childcare expenses in your financial and family plans? Leave a comment below or share your thoughts with me on Twitter, Facebook, Instagram, or by email at frugalfatherblog@gmail.com.

Until next time, thanks for reading!

Frugal Father

Developing our Annual Cash-Flow Forecasts

In my post about My Personal Finance Guiding Principles from a few weeks ago, I made note of the fact that I use a cash-flow approach to managing our annual financial planning as opposed to a more traditional, categorized, formal budget.

I usually get the process underway in early October so I can maintain at least a quarterly outlook on the future state of our bank accounts. This year, life seemed to catch up with me and I didn’t get started until the beginning of November. A growing family, new and more responsibilities at my new(ish) job, writing for this blog, and any number of other things all conspired against my regular financial planning routine it would seem!

For my cash-flow spreadsheets, I don’t break things out by categories like transportation, groceries, gifts, and so on. Instead, I input all of the debits and credits that I know my bank accounts will likely encounter over the course of the year. The debits are based on known paycheque figures and the credits are arrived at by utilizing years worth of data on bill payments to provide a realistic estimate for the year ahead.

Once all of the figures have been put into the spreadsheet, I use a simple formula to figure out what our bank balance will be on any given day of the year after each deposit or payment.

From there, I look at the high and low points of the projected balance throughout the year and determine when we can bump up or will need to draw from our separate, high-interest savings account.

Lastly, I determine a reasonable figure for our monthly ‘adult allowance’, input that number at the beginning of each month, and update the movement of money in and out of our savings account to maintain the minimum balance our bank requires to eliminate the fees on our chequing account.

And that’s about it! At the end of the process, I have a spreadsheet that gives me a snapshot of what any point in the coming year might look like for our chequing account.

I repeat the process for my personal account (where my adult allowance goes). That spreadsheet is much simpler because there’s no recurring bill payments or bi-weekly pay periods to account for, just a monthly deposit on the debit side, and my investment purchases, the occasional cash withdrawal, and credit card payments on the other.

What I love about this process is that there are rarely any surprises over the course of the year. I have a pretty good idea right now what my bank accounts will look like on this date next year. Any time we have an expense come our way (even those that are large and/or unexpected), it’s simple to check the numbers, figure how it works into things, and update the spreadsheet to reflect that.

Email alert about an upcoming utility bill payment being due? Open the file, update the cost, see the projection. Credit card bill coming due? Open the file, update the cost, see the projection. Fridge breaks down and needs replacing (this just happened to us a couple of weeks ago)? Open the file, figure out what we can afford, update the numbers.

It’s as simple as that.

As easy as this process has become for me after years of use, I’ll readily admit that this probably isn’t an approach for everyone. It’s fairly manual. It doesn’t allow me to know precisely what I typically spend on groceries, for example. It requires regular monitoring (I check and update it almost daily). And at times it can be very time-consuming.

But it’s what works best for me. And really, isn’t that the important thing with so many aspects of our lives? Do what works best for you!

Developing, tracking, and monitoring my cash-flow spreadsheets keeps me in tune with our current state of affairs, keeps our financial health front-of-mind, eliminates guesswork, and results in a comfort level with our money that no other system I’ve tried has provided me.

So until I find something that works better for my particular situation, I’ll carry on with this process and stay comfortable with my finances!

Do you develop a budget each year? Do you follow a traditional approach, something that sounds like what I do, or something else entirely? Let me know by leaving a comment, connecting on Facebook, Twitter, or Instagram or by emailing me at frugalfatherblog@gmail.com.

Until next weekend, thanks for reading!

Frugal Father