Net Worth Update

As of March 1st, my net worth was $144 958 (up 2.3% from $141 766). If I exclude house-related assets and liabilities, my net worth was $102 070 (up 3% from $99 141). All of this increase came from my investments, both registered and not.

Assets ($203 811, down 0.2% from $204 124)

• Bank Accounts $3 387 (down 45% from $6 158)
• Emergency Funds $480 (down 83% from $2 877)
• RRSP Accounts $67 515 (up 5.4% from $64 043)
• Non-Retirement Investments $33 176 (up 2.8% from $32 267)
• Home $98 430 (stable)

Liabilities ($58 156, down 6.3% from $62 044)

• Credit Cards $2 567 (down 57% from $5 936)
• Mortgage $55 543 (down 1% from $56 073)
• Line of Credit $0 (stable)

Ratios

• Debt / assets: 0.286 (down from 0.304)
• House value / total assets: 0.485 (up from 0.483)

Moved money from my emergency fund to my RRSP, to complete my contributions for 2010. Liquidities also moved down because I paid back my credit card bill where the car repairs and new computer for Princess.

I'm still very busy, moving to another new project at work. This is taking me a lot of energy, as I'm learning another new business domain and the delivery schedule is quite tight. I barely have time to update my spreadsheets, let alone blog about them. But things are going well! That's one good thing about dividend investments and DRiPs -- once they're set up they run themselves for the most part.

Future blog posts that I plan on doing: Recent Dividend Increases, and My Portfolio in Details (maybe split in a series of posts).

Net Worth Update

As of January 1st, my net worth was $141 897 (up 2.8% from $137 993). If I exclude house-related assets and liabilities, my net worth was $99 532 (up 3.8% from $95 888). However, the last payment for the windows has not been made yet, so the totals should actually be $2 500 lower. And December was a 3-payweek month, so this also boosted my assets. But the year 2010 has been a very good year. :o)

Assets ($204 124, up 3.5% from $197 251)

• Bank Accounts $8 132 (up 41% from $5 754)
• Emergency Funds $2 783 (up 3.9% from $2 678)
• RRSP Accounts $63 134 (up 4.6% from $60 361)
• Non-Retirement Investments $31 423 (up 3.3% from $30 411)
• Home $98 430 (stable)

Liabilities ($62 226, up 4.1% from $59 779)

• Credit Cards $6 076 (up 75% from $3 482)
• Mortgage $56 065 (down 0.4% from $56 324)
• Line of Credit $0 (stable)

Ratios

• Debt / assets: 0.305 (up from 0.303)
• House value / total assets: 0.482 (down from 0.498)

Just before the Holidays, there were some big unplanned expenses. First, my lady's car had some extensive repairs that needed to be done, which were a safety issue. She didn't have the cash on hand to pay for those, and was looking at a 9% financing to pay for it. So I offered to pay for the repairs and she'll pay me back. Similar story for her computer -- it had been troublesome for some time and key features began to fail, so we replaced to. Together, those two items cost about $3 000, which explains the spiking of the amount on my credit card. I'll pay this fully (out of available cash from my emergency fund) when the CC statement comes in.

If not for this, expenses for the Christmas would have been quite reasonable. Even with those, things are still running smoothly. It's good to have some margin of safety!

Credit Card Change Follow-Up

Last year, I switched my main credit card to MBNA's SmartCash credit card (see my post). At the time, I estimated that I would get back about $360 in cash for the first year (taking into account the sign-up bonus) and $288 for each year after that.

So I did a quick check-up on how much money I got back since signing up for the new card. By my calculation, I actually got closer to $400 back. Based on that, I can probably expect something like $300 every year, which is 50% more than what I was getting back with my old card.

Not bad at all.

Net Worth Update

As of December 1st, my net worth was $137 993 (up 0.9% from $136 763). If I exclude house-related assets and liabilities, my net worth was $95 888 (up 1% from $94 916). Things are slowing down for me as the end of the year arrives. A quick dip of the stock markets at the end of November had an impact there.

Assets ($197 251, up 1.46% from $194 419)

• Bank Accounts $5 754 (up 7.8% from $5 335)
• Emergency Funds $2 678 (up 4% from $2 575)
• RRSP Accounts $60 361 (up 0.5% from $60 061)
• Non-Retirement Investments $30 411 (down 0.8% from $30 643)
• Home $98 430 (stable)

Liabilities ($60 488, down 0.6% from $60 856)

• Credit Cards $3 482 (down 9.2% from $3 834)
• Mortgage $56 324 (down 0.4% from $56 583)
• Line of Credit $0 (stable)

Ratios

• Debt / assets: 0.303 (down from 0.307)
• House value / total assets: 0.498 (down from 0.499)

There has been a delay in replacing the planned windows, so this expense has not come through yet. It is not yet certain if the cheque will be cashed before the end of the year, either, so its impact may only be felt at the beginning of 2011.

Christmas shopping has also begun, so I expect a temporary rise in credit card debt. As usual, though, the balance of all my credit cards will be paid in full each month. It is simply that during the Christmas period, I spend a bit more money -- I'm not adding any long-term debt here, it is simply a question of cash-flow since almost all of my expenses go through my credit cards. I pay no interest at all, and collect the rewards.

Net Worth Update

As of August 1st, my net worth was $126 412 (up 5.6% from $119 661. If I exclude house-related assets and liabilities, my net worth was $85 336 (up 8.2% from $78 839). That's an amazing and unexpected increase, due to a combination of a 3-pay period month and a general the rise of the markets.

Assets ($187 623, up 3% from $182 169)

• Bank Accounts $4 466 (up 21% from $3 699)
• Emergency Funds $2 265 (up 28% from $1 763)
• RRSP Accounts $55 371 (up 4.6% from $52 936)
• Non-Retirement Investments $26 865 (up 7.8% from $24 911)
• Home $98 430 (up 2.2% from $96 330)

Liabilities ($61 211, down 2.1% from $62 508)

• Credit Cards $3 822 (down 20% from $4 790)
• Mortgage $57 353 (down 0.4% from $57 608)
• Line of Credit $0 (stable)

Ratios

• Debt / assets: 0.326 (down from 0.343)
• House value / total assets: 0.525 (down from 0.540)

I jusat realized that I had forgotten to report another increase to the estimated value of our house in May, as my insurer reassessment came in. The increase is $2 100 and was already taken into account for the value of my assets, but was not reported correctly on the corresponding line. I've made the adjustment starting this month.

My "debt reduction" drive has paid, since my credit cards are almost $1K lower than they were last month. I've closed one credit card that I had taken specifically for 0% financing of our mattress last year. A bad move, since that company had a $35 annual fee attached to it -- something that the salesperson failed to tell me at the time. I've black-listed that store for future purchse.

I moved back some money to my emergency fund to restore it to what it was in May. Last month I had mentioned moving some money to my daily bank account at the end of the month to pay back a credit card financing plan.

The shows I went to during the Summer festival were great. Santana was magical and Black Eyed Peas were awesome. :o)

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.

Net Worth Update

As of May 1st, my net worth was $76 057 (up 10% from $69 093). If I exclude house-related assets and liabilities, my net worth is $49 057 (up 11% from $44 188).

That's an amazing rebound of my net worth, bringing me back to par with my highest net worth reached last September (before the financial crisis that led to the current recession). About $2K of this was due to an increase in my house's value, but another $3.7K was due to the markets rebounding. The rest was debt reduction financed from my salary.

Assets ($140 259, up 4.4% from $134 358)

• Bank Accounts $4 038 (up 6.6% from $3 789)
• Emergency Funds $3 007 (up 0.6% from $2 990)
• RRSP Accounts $32 751 (up 9% from $30 018)
• Non-Registered Investments $12 290 (up 8.2% from $11 355)
• Home $88 050 (up 2.3% from $86 100)

Liabilities ($64 202, down 1.6% from $65 265)

• Credit Cards $3 034 (up 2% from $2 964)
• Mortgage $61 050 (down 0.2% from $54 867+$6 328)
• Line of Credit $0 (down 100% from $1 000)

My line of credit is now completely paid off, and the Heat Pump loan was combined with the mortgage (thus the two amounts added together). Spending remained reasonable, as showned by the fairly stable amount on my credit cards.

In May I will have some fairly large payments to be made for the house. The second half of this year's municipal taxes (about $1K), as well as another payment for the replaced windows (another $1K). We will also begin improving our back yard, so I expect more expenses there. So I expect lower liquidities at the end of the month, and possibly a lower net worth as well.

Net Worth Update

As of April 1st, my net worth was $69 093 (up 4.9% from $65 874). If I exclude house-related assets and liabilities, my net worth is $44 188 (up 7.4% from $41 149).

It feels good to have a positive month after all those negative months. Much of the increase was due to a comeback in the markets. Things have been much better on the debt side, as I paid back some of my line of credit and controlled spending more tightly on the credit cards. Let's see the details!

Assets ($134 358, up 0.3% from $133 989)

• Bank Accounts $3 789 (down 14% from $4 425)
• Emergency Funds $2990 (down 12% from $3 394)
• RRSP Accounts $30 018 (up 3.5% from $28 993)
• Non-Registered Investments $11 355 (up 5.8% from $10 728)
• Home $86 100 (stable)

Liabilities ($ 65 265, down 4.2% from $68 115)

• Credit Cards $2 964 (down 36% from $4 642)
• Mortgage $54 867 (down 0.2% from $54 989)
• Heat Pump Loan $6 328 (down 0.9% from $6 386)
• Line of Credit $1 000 (down 50% from $2 000)

So my bank accounts have come down from last month, partly due to planned expenses and partly from paying down half of my line of credit. The other big item was credit card debt, which went down substancially this month as a reined in spending. It shows too. so I'm happy with that.

My plan to concentrate on debt reduction for a couple of months is going well. I will keep doing that this month, but I expect May to be harder on liquidities, because of planned expenses for the house (second municipal tax payment and the last payment on the windows we replaced last fall).

Net Worth Update

As of March 1st, my net worth was $65 874 (down 3.8% from $68 441). If I exclude house-related assets and liabilities, my net worth is $41 149 (down 6.25% from $43 890).

It certainly felt that way. My investments keep melting as if was spring already, and with the large yearly expenses that I mentioned last month... Ouch! At the end of the month I added $2k to my RRSP account, and it simply looks as if it simply disappeared when you compare the current value with last month's.

So let's look at the detailed carnage.

Assets ($133 989, down 0.5% from $134 669)

• Bank Accounts $4 425 (up 11% from $3 990)
• Emergency Funds $3 394 (up 0.3% from $3 383)
• RRSP Accounts $28 993 (down 3.5% from $30 033)
• Non-Registered Investments $10 728 (down 3% from $11 058)
• Home $86 100 (stable)

Liabilities ($68 115, up 2.8% from $66 228)

• Credit Cards $4 642 (up 0.9% from $4 601)
• Mortgage $54 989 (down 0.2% from $55 110)
• Heat Pump Loan $6 386 (down 0.7% from $6 439)
• Line of Credit $2000 (up 100% from $0)

Although the cash in the bank accounts was higher, this was because of the planned expenses. A bit of that money is already gone, with more coming out next week. Liabilities have crept up this month, because the $2k I added to my RRSP account came from my line of credit. This is a very short-term move, which gave me the flexibility to contribute right before the limit for the fiscal year 2008. It also transformed a tax bill into a tax return. I plan on paying back this part of the line of credit with the next 3-4 months. Credit card debt was fairly stable but remained high. This was caused by some car repairs that were financed on the card.

For the next couple of months I will concentrate more on debt reduction than on investments. It now looks like the recession will be long and painful, so I will probably feel less stressed if my debt load is lower. And since we have some more renovations planned for this summer, less debt seems like a good idea.

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.

Update on CC Arbitrage Experiment

Yesterday, I received my first monthly statement for the credit card I used for my arbitrage experiment.

The good surprise was that I was charged no fee to use the balance transfer cheque. Whoo-hoo!

As I expected, I will have to do a minimum payment each month, which for this month is $105. This is not too bad, at 2.1% of the current balance.

I will pay this out of my regular income, as if I was putting money aside for investment. However, this means that if I had wanted to run this with no impact on my regular cash flow, I would have to put aside a part of the initial amount for these monthly payments. This could be segmented by 3-month periods (since ING Direct offers GICs for 90, 180 and 270 days).

The exact run-down of this, with a $1000 arbitrage for 12 months (to keep things simple and make it easy to multiply the amount), would be something like:

• Leave $62 in the regular savings account -- this will cover the first 3 monthly payments.
• Put $57 in a 90-day GIC -- to cover minimum payments for the next 3 months.
• Put $54 in a 180-day GIC -- minimum payments for months 7 to 9.
• Put $51 in a 270-day GIC -- for the last 3 minimum payments.
• Put $776 in a 1-year GIC -- this will be the final balance at the end.

All of this assumes that the minimum payment is based on the running balance of the account.

Of course, this would somewhat reduce the total interest gained for the arbitrage. But like I said, this would eliminate the impact of the arbitrage on my regular cash flow.

Impact of CC Arbitrage on Credit Score

Following my post on Credit Card Arbitrage two days ago, Esme (from Brown Eyed Girl and Money), asked a question:

"Do you know if this balance transfer will have a negative impact on credit rating?"

Since credit scores are a complex subject, I thought I'd write a seperate post to answer that question. I will only discuss the impact of using a balance transfer for credit card arbitrage. For more general information on credit scores, The Financial Blogger has a nice series of articles.

The credit score takes into account a number of things when looking at credit cards:

1. How many credit cards do you have? Obviously, opening a new credit card account increases this. This is not necessarily a bad thing, if you don't have many of them. This raised my number of cards from 3 to 4, which should not be negative considering my credit history.
2. What is the average age of your accounts? Opening a new account, however, will "dilute" your existing credit card accounts, so the impact will be negative. I've held two of my credit cards for a long time, while the third was recent. So I've effectively cut my average by half. I'm not sure how this will impact my score.
3. What is the total credit limit accross all account? This is another area where opening a new account has an impact. However, this is not necessarily negative. Before opening my new card, I had kept my total limit quite low (about $11,000), so the $11,000 limit they granted me of this card raised my total to $22,000. I think this is still reasonable, if a bit high for my personal tastes.
4. What percentage of your total limit are you using? That is the area where you can take the biggest hit on your credit score when using a balance transfer for arbitrage. If you open a new card and max it out right away, you will increase your utilization ratio substancially. Since this is an experiment, I kept the amount drawn from the new card low, at $5,000 out of a limit of $11,000 -- which is about 45% of the credit limit. I previously had a 50% utilization ratio, so it basically remained the same.

Now, I still expect to take a hit on my credit score. But since the next time I need to negociate a loan is about 18 months away (when I renew my mortgage), it will have time to recover.

CC Arbitrage Experiment - Update 1

In a previous article, I mentioned that I was starting an experiment in Credit Card Arbitrage. So here's an update on how things are proceeding.

On September 16th, I signed up for my new Citi card online. It took about 10 days before I received the card. They assigned me $11,000 credit limit.

There was no specific information about their 0% balance transfer offer in that mailing. However, when I called to activate the card, the agent asked me if I wante to do a balance transfer. His explanaiton were a bit confused, so I didn't sign up right away. I could only have transferred a balance from a current credit card anyway (a relatively low amount). And I don't want to give Citi the number for my other credit card anyway.

I few days later, I called again, this time specifically asking about the balance transfer offer. The agent was even more confusing. She first told me that the offer was free, and that it would be faster to do the transfer if I waited for the cheques. Then, when I specifically asked about the fees for using the transfer cheques, she mentioned that there might be a fee of 1% (she didn't sound confident, and the general documentation for the credit card indicated a 1.5% fee for using the cheques). She told me the package containing the cheques should arrive one week after the card itself did, so I decided to wait.

About 10 days after I received the card, I got a package containing cheques. However, the 0% balance transfer was not mentioned. Reading the small print carefully, I saw that the cheques would be treated as a cash advance. At this point, I was getting cold feet and decided not to go forward using those cheques.

Then, after another week, I received another package containing cheques. This time, it specifically mentioned the 0% balance transfer offer. The cheques mention that they are valid only until November 16th, and documentation provided with them mention that amounts withdrawn using those cheques will appear as "balance transfer" on my credit card statement.

Now, this is more like it. I wrote myself a $5,000 cheque that I have deposited in my account. As soon as it clears, I'll transfer it to my ING account to put it in a 4.25% 270-day GIC. This should give me about $160 in interest.

So even if there is a 1.5% charge associated with the cheque, I should still make about $85. Not much, considering the trouble. But this is an experiment meant to become more familiar with the process, so I wanted to reduce the risk even if it meant a smaller reward.

The lesson I learned until now is to be really careful and make sure the documentation is provided. Had I used the first batch of cheques, I would have been charged 1.5% for using the cheque, and this would have been a cash advance with the 19.9% interest charged from the moment the cheque was cashed in.

I will provide another update when I receive my first account statement. I expect to see that I have to make a minimum payment for my account, probably 2% of the total amount each month.

An Experiment in Credit Card Arbitrage

In recent weeks, I have been reading on credit card arbitrage. Basically, this is borrowing money using those 0% offers from credit cards on balance transfers, and using it to invest in a safe, fixed-term investment. At the end of the 0% offer, you pay back the money you borrowed and keep the interests you made on it. Since you are borrowing the money for free, even a 4% interest rate translates into free money.

So, I decided to do try this to see if it is worth the effort. So I signed in for a new credit card from Citibank, which is offering 0% interest on transfers until August 2008. I did this on September 16th. I am still waiting for the card and transfer cheques.

I will keep you posted on my progress on this experiment.