Wednesday, August 20, 2008

Received the Electrician Bill

Last week, when we replaced the water heater, I had to call in an electrician to replace the cabling and connect it.

Well, I received the bill on Monday, and the $185 bill was pretty much in the range I expected ($150-$200).

So the total cost for replacing the water heater was $1 085. That may seem fairly expensive, but you have to remember that it will be good for a minimum of 12 years, which means $90 per year. If it lasts 1.5 times the duration of the warranty, that cost goes down to $60 per year.

By comparison, the cheaper water heater would have cost about $300 less while being good for a minimum of 6 years. That's $130 per year on the warranty's time, and $87 per year if it lasted 1.5 times the warranty.

I believe it's one of those times were buying high-quality was worthwhile. Would you agree or disagreee?

Tuesday, August 19, 2008

Conclusion of the Credit Card Arbitrage Experiment

In September last year, I started an experiment in credit card arbitrage. Yesterday I received my last statement for the credit card I used to run the experiment.

In early August, as soon as the GIC came to an end, I used the money to pay back the credit card. I didn't wait for them to send me that last statement, because I was worried that they would begin accruing interest as soon as the interest-free period ended.

So here I am, with the credit card paid back in full. I got $160 in interest from the experiment, and invested about 2-3 hours total. Not bad.

Only thing that will be left to do is cancel the credit card I used for the experiment.

Would I do this again? Probably not. As I mentioned before, credit card arbitrage can have an impact on your credit score. Not a big impact, but I think that running this repeatedly could have a cumulative effect, and I'm not willing to run this risk since my mortgage is due to be renewed next year.

To really make it worth my while, I would need to raise the amount borrowed over $10-20K. Which is too risky for me. Still, that was a good learning experience.

Friday, August 8, 2008

Replaced the Water Heater

Last weekend, we had a bad surprise as we found out that the water heater was leaking. It looked like it had been leaking for a couple of days, for a fairly large area of the unfinished part of the basement's floor was wet. Fortunately, the leak wasn't lagre or there would have been damage. As it is, I only had to clean up and throw away a couple of cardboard boxes.

But we had to replace the water heater. So we went shopping. We decided to go with a top-quality water heater from GE, because of the better insulation (which means better energy concumption) and longer warranty (12 years). The difference in price between top-quality and entry-level quality for a 60-gallon water heater is only about $200-300. Installation fees are the same. They last twice as long, minimum, so the difference in price was worth it, on our opinion.

On top of that, we used the seller's installation service. It was similar in price to another quote we got on the service, and by taking it we automatically extended the warranty to lifetime.

One bad surprise I got was that we had to replace the cabling for the water heater, because the old electrical cabling was not adequate (no ground). That meant calling an electrician, which proved to be tough for a short-notice call. I had to make quite a few calls to get that done on the same day.

Cost of the water heater (including installation): $900.
Cost of the electrician: unknown (they will send me a bill by mail). I estimate this will be about $150-200.

The water heater was paid using my credit card. If necessary, I will draw from the home line of credit to pay this when my credit card statement comes in next month, but I will try to avoid doing this if possible.

Friday, August 1, 2008

Net Worth Update

As of August 1st, my net worth is $74 315 (up 3.1% from $72 069). If I exclude house-related assets and liabilities, my net worth is $50 791 (up 4.3% from $48 713). This is another good month, although to be honest a good part of the increase was due to the fact that this was a month with three pay-days. The car repairs are still to come, as are the home renovations. Those expenses will probably show up only in September's update.

Assets ($145 874, up 1.6% from $143 608)
  • Bank Accounts $5 114 (up 2.5% from $4 989)
  • Emergency Funds $2 810 (up 8% from $2 600)
  • RRSP Accounts $36 140 (down slightly from $36 149)
  • Non-Registered Investments $9 825 (up 15% from $8 553)
  • Home $86 100 (stable)
  • Arbitrage $5 000 (stable)

Liabilities ($71 539, stable)

  • Credit Cards $3 974 (up 14% from $3 474)
  • Student Loan $635 (down 29% from $894)
  • Mortgage $55 824 (down 0.2% from $55 941)
  • Heat Pump Loan $6 751 (down 0.7% from $6 803)
  • Arbitrage $4 131 (down 2.1% from $4 219)

Increase in credit card debt completely balanced other debt payments this month, which resulted in stable liabilities. However, since I don't carry any interest-bearing balance, this will go down next month. My cash reserve was again higher, in advance of the expenses for the car repairs and home renovations. On the other hand, my RRSPs were stable despite adding money to them, but my non-registered investments performed well, so that's a wash!