Wednesday, October 14, 2009

New Credit Card

Last spring, the sponsor of my main credit card announced that it was increasing the annual fees from $20 to $30. This is an optional fee to raise the cash-back incentive from 0.5% to 1%, which made plenty of sense when I signed up for it years ago. I had already been thinking for a while about switching to a less costly credit card (there are now plenty of no-fee cash-back cards out there), but at the time it was only $20 a year, so laziness had won out. The increase pushed me over, but as other things happened, I did not follow through on this and the anniversary of my account passed, and I was billed $30 for the annual fees.

So this summer I called the company and asked them to reduce the fees. The agent told me they couldn't do that. I told her that I thought the fees were getting too high and I was thinking about moving my money elsewhere, so what were she suggesting to keep me with them? She proposed removing the option so to avoid paying the fees. This didn't make sense to me,since that would mean reducing the amount of cash I would receive back. I told her so, and asked again whether she could offer me something to keep me with them. To no avail. The conversation ended with me letting her know that the company was leaving me no other choice than to move my business to a different company.

Things went on unchanged for another couple of months. There were a few alternatives, but none were good enough to immediately grab my attention -- I had some time before I cut my current card lose. I had previously read about MBNA's Smart Cash credit card, which seemed the most interesting to me (3% back on grocery and gas, 1% on everything else, no annual fees). Only thing that bugged me was that this card was only being offered to existing clients, which I was not. I could have signed for another card with MBNA and then asked to be switched over, but that seemed a lot of hassle. So time passed.

About two weeks ago, I read a post from Million Dollar Journey about the new Scotia Momentum Cash Back Visa. This led me to read a thread on Red Flag Deals about the MBNA Smart Cash. And, wonder of wonders, apparently they had just announced that the card was now offered to new clients as well! I read everything that I could about the card, to make sure I wouldn't get dinged with unexpected fees. (There are no annual fees, but be aware that there are many other fees hidden away for non-purchase uses of the card -- balance transfers, fund advances, using the cheques, late payments, etc.) However, none of these were relevant to how I use my credit cards, so everything looked like a great deal to me. So I signed up for the card.

I received the card yesterday (it took only 12 days since signing up online). Activated it right away. (Told the agent that no, I don't want the balance protection. No, no need for a second card. Just activating, thank you.) So I now have my new card.

As a sign-up bonus, I will be getting 5% cash back on grocery and gas for the first 6 months (instead of the normal 3%). The maximum eligible amount in grocery and gas is $600 per month.

I usually spent about $1200 to $1500 per month using my main credit card. Of this amount, about $500 to $700 is for grocery and gas. With my previous card, I was getting just a bit less than $200 a year, and I had to pay the annual fees. With the new card, I should get about $216 back during the first 6 months; after that, I should get about $288 a year. What this cost me: 2 hours to document myself about the card, 15 minutes to sign up, 10 minutes to activate it.

That's what I call a deal.

Tuesday, October 6, 2009

Municipal Assessment Roll

We just received the new municipal assessment roll for our house, and the value is going up from $126K to $153K. That's a 21% increase and a bit less than I expected (apparently the average for Quebec City is about 30%).

An increase in the value of our house is both good and bad. In the short term, it is bad since it means we will be paying more taxes every year (it remains to be seen how much -- we will only know in January).

In the long term, it is good, since it means that our house is worth more. The day we sell (even though that's far in the future), we will recover the money we spent to buy it and some more. The important thing here is that the value of our house should at least keep up with inflation, so that we don't end up with less purchasing power.

But overall, this revision of the assessment is neither good nor bad news.

It will, however, have a fairly big impact on my net worth, since the value of my part of the house has just gone up by a few thousand dollars. Only half of the increase will be reflected in my net worth, since I use the average between the municipal assessment and my insurer's rebuild cost to determine the value of the house.

Still, that means an $8K increase to my net worth. Based on my latest estimates, this should be enough to push my net worth over the $100K milestone. Nice!

Friday, October 2, 2009

DRiP: Pengrowth Cuts Distributions

Pengrowth has announced a 30% reduction of their distribution starting on November 16, as a result of changes to its "value creation strategy".

I own a few trust units of the company in my DRiP portfolio, where it holds a very smal place. This is the third time in less than a year that this income trust has reduced its monthly distributions:
  • From $0.225 to $0.17 starting January 15, 2009;
  • From $0.17 to $0.10 starting March 16, 2009; and now
  • From $0.10 to $0.07 starting November 16, 2009.

So in a year, unitholders have seen their distributions decrease by almost 70%.

On the one hand, I can't say that I'm happy about this, even though this will have only a small impact on my portfolio. It is still a reduction of $12 to my dividends for next year.

On the other hand, I can't blame the board for finally looking to the long-term well-being of the company and its unitholders. I had not been putting much money into that company, and this confirms that it will remain only a small part of my portfolio.

Net Worth Update

As of October 1st, my net worth was $91 013 (up 4.7% from $86 909). If I exclude house-related assets and liabilities, my net worth was $62 822 (up 6.5% from $58 963). Another month with significant updraft in the equity markets. Spending was fairly stable, although some items that are usually paid cash were put on the credit card. The end result is a wash, since I end up with more cash in my account but stable liabilities (which usually go down month after month). All told, this was a great month for my finances.

Assets ($155 973, up 2.7% from $151 903)
  • Bank Accounts $6 457 (up 33% from $4 849)
  • Emergency Funds $2 038 (down 24% from $2 697)
  • RRSP Accounts $40 993 (up 6.7% from $38 418)
  • Non-Registered Investments $18 231 (up 6.7% from $17 094)
  • Home $88 050 (stable)

Liabilities ($64 960, down slightly from $64 994)

  • Credit Cards $4 902 (up 4.2% from $4 706)
  • Mortgage $59 859 (down 0.4% from $60 105)
  • Line of Credit $0 (stable)


  • Debt / assets: 0.417 (down from 0.428)
  • House value / total assets: 0.565 (down from 0.580)

I moved some money from my emergency funds to my bank account, in order to pay for the repairs to the chimney (estimated to $1 350). There were some delays on the work (due to rain), so the money will be paid out only in October.

Both my registered and unregistered investments went up significantly again this month, while the credit cards went up a little bit. (Remember that the amount on my credit cards is either 0% financings or the current balance that gets paid every month. So it is all non-interest bearing debt.)

I also sent in the papers to open a TD Waterhouse brokerage account (for the equity side of my TFSA). I also did the same for a new credit card to replace my current one. More on these later.