Blood in the Streets!

Yes, it certainly looks like there is blood in the streets. Yesterday the markets tanked. Is this the end of the world? Of course not.

Me, I freed up some cash in my RRSP by selling half of my Pepsi shares (I had a fairly large position) and I'm waiting to see what solid company will be most appealing. I believe we may not have reached the bottom yet, so I'm watching and analyzing companies.

I expect tomorrow's net worth update to show a drop in my assets, due to my investment accounts. That's ok, I'm in for the long term. At the end of the month, my net worth is not the most important thing. Cash flow is more important, because it means that I can continue to pay my debts, buy grocery, and add money to my investments.

Life is beautiful. :o)

Preparing for the TFSA - My GIC Ladder

In January, Canadians will be able to take advantage of a new investment venue, the TFSA (Tax Free Savings Account). Using a TFSA, we will be able to shelter up to $5000 a year, to grow without being subject to Canadian and provincial taxes. Unused contributions will be available in following years, and any money taken out of a TFSA will also be added back to the next year's contribution limit.

Personally, one of the things I plan on using the TFSA for will be my emergency fund. That way, I will no longer pay taxes on the interests received from that money.

Up to now, my emergency fund has been composed of a high-interest savings account, as well as a 1-year GIC ladder, with one step every month. If you are not familiar with the term, a GIC ladder is a number of GICs, each with the same length, but each made a certain lenght of time after the previous so that the all the GICs together cover the length of the ladder.

For example, my 1-year GIC ladder is composed of 12 GICs, each with a 1-year term. One is started in January, a second one in February, March, and so on. Whenever one of the GICs come to its term, the money is reinvested in another 1year GIC.

A ladder is useful to average out the interest rates available on GICs, and also guarantees that some money will flow out every months, should there be an emergency. If a big emergency requires money than 1 month's money, it is always possible to cash out of a GIC before its term, although doing so reduces the interest that will be paid on that money.

As January 2009 approaches, I have decided to stop reinvesting the money coming out of my ladder, so that I can put a bigger chunk of money into my TFSA right at the beginning of the year. Once the money is in the TFSA, I'll start a new GIC ladder in the TFSA.

Customer Service at Costco

Last weekend, I did some shopping at Costco. There was a $3 rebate using a coupon, and I was taking two of the items. I had previously asked whether I needed two coupons, and been told no, that that the cashier would simply scan the coupon twice.

While making my way to the exit, I noticed that the coupon had been applied only once. Turning back, I went to see the cashier, who redirected me to a customer service desk to get my rebate. I got my $3 back without any problem.

The amazing thing, however, happened yesterday. I got a phone call at home from Costco. They had noticed that I hadn't received the rebate twice, and were calling me to make sure I would receive it. I thanked the representative, and explained that I had noticed and gotten my money back before leaving the store.

What amazes me is that they have a process in place to make sure that each customer gets the rebates. Wow, talk about going the extra mile for the customer!

Net Worth Update

As of September 1st, my net worth is $75 601 (up 1.7% from $74 315). If I exclude house-related assets and liabilities, my net worth is $51 908 (up 2.2% from $50 791. A very good month, considering that we replaced the water heater this month, and that this expense was paid from my own cash flow (through my credit card) without any new financing. I had to pay for some unexpected urgent car repairs (not the ones I am planning to get done, those are still to come), but that too came from current cash flow (no financing).

Assets ($142 741, down 2.2% from $145 874)

• Bank Accounts $5 380 (up 5.2% from $5 114)
• Emergency Funds $2 720 (down 3.2% from $2 810)
• RRSP Accounts $37 800 (up 4.6% from $36 140)
• Non-Registered Investments $10 482 (up 6.7% from $9 825)
• Home $86 100 (stable)
• Arbitrage $0 (down 100% from $5 000)

Liabilities ($67 140, down 6.2% from $71 539)

• Credit Cards $4 108 (up 3.4% from $3 974)
• Student Loan $375 (down 41% from $635)
• Mortgage $55 706 (down 0.2% from $55 824)
• Heat Pump Loan $6 701 (down 0.7% from $6 751)
• Arbitrage $0 (down 100% from $4 131)

Both my assets and liabilities went down significantly this month, because of the end of my arbitrage experiment. A slight increase in credit card debt because of the car repairs and replacement of the water heater (I'm still paying down my credit cards completely every month, so no interest is paid on that debt). Kept adding money to my non-refistered investments, taking advantage of the down markets.