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Monthly Archives: July 2010

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Weekly Recap: Are You Relocating for a Job?

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I have recently been searching the web for a new job that is more flexible than my current 9-5 in the office.  I have been working in finance for 10 years and I love it.  But, now that I have started my own online based business I need some more flexibility in my day job.  I was just wondering if any of my fellow DINKS are also currently searching the market for a new job?

I am not necessarily hoping to make a career change; I would like to remain in the financial services industry. I am searching for something that is more flexible, so I can dedicate more hours to the growth of my online business.

Here are three major factors that are affecting my job hunt:

  1. Location.  I am currently searching for positions in Montreal (where I currently live), Toronto (my hometown), and New York City (my dream town).
  2. Money.  The annual salary is definitely a deciding factor in my search.  Although I do supplement my income from freelancing and my online business I still need a strong foundation from my full time job.
  3. Flexibility.  The hours of operation are very important to me right now.  I am thinking of going from financial planning to management.  This will increase the flexibility in my working hours; it will also allow me to occasionally work from home.

If you are currently searching for a new position or a new career what are the factors that will influence your decision to relocate? Is money the only important criteria? Or is location also a factor?

Some other factors that we should consider when deciding to relocate:

  1. Tax Rate including state tax, sales tax, and property tax
  2. The cost of living in that location
  3. Price of residential homes
  4. Potential job growth/opportunities in your industry
  5. Crime and Violence Rates
  6. Proximity to your family

Here are some links of cities that have a current hiring job market, as well as top cities to live in the United States:

And some great articles around the ‘net:

Along w/ carnivals we’ve participated in lately:

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(Photo by WoodlyWonderWorks)

Funding Our Parents’ Retirement

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My friend Rosemary is a lawyer, and up until very recently she was a DINK. Rosemary is now happily married with a one year old son.  One day we were discussing our parent’s retirement, since we are both at the age where the baby boomers that are our parents start to retire.

My father retired last June, and he couldn’t be happier.  Rosemary told me that her parents did not have any retirement savings and that she will be funding her parent’s retirement. Both of Rosemary’s parents are still currently working, they are both self employed. She does not have to worry about funding her parent’s retirement quite yet, but she may in the near future.

This conversation made me start thinking about my parents and their retirement.  Both of my parents will receive pensions from their employers, and starting at the age of sixty they will eligible for our Federal Pension Plan.  But, I thought to myself…Will that be enough?

Our parents come from a generation where kids and family were the priority.  They did not focus on saving money, and especially not saving for retirement.  We, on the other hand, have been taught from a very young age to start saving for retirement as early as possible.

Even $10 a week is a great start, every little bit counts and it will add up over time.  With the magic of compound interest over 25 to 35 years we will accumulate a nice retirement nest egg for ourselves.  But, if our parents have never contributed into their 401K and they don’t have any personal private savings, will an employer pension and government pension plan be enough to fund their retirement?

The concept of working to fund my parent’s retirement and not my own is a concept that I never really grasped until I spoke with my friend Rosemary.  As of right now my father is financially stable in his retirement but, what if he outlives his money.  The tables will be turned, and the child will now become the feeding hand to the former provider.  Some parents may feel that our financial contribution to their retirement is owed to them. They took care of us for the first forty years, so now it’s time for us to take care of them for the next forty.  I am not exactly sure how I feel about that.

My questions to you DINKS are… As young (and successful) professionals are we expected to pay for our parent’s retirement if they are not financially independent?

Does your retirement savings strategy include saving your parent’s retirement?

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(Photo by angela7dreams)

Online Businesses Make Money

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Whether you are thinking of making a career change into entrepreneurship, or you are looking for a hot new stock to buy, I suggest that we all start investing into online based companies.

The reason I say this is because generally the start up and monthly costs are lower than opening a physical business location.  When costs are lower, potential profit earnings can be higher.

If you are starting a new business I suggest that you start it online.  As the company grows and makes profit, you can open physical locations to attract more (and a different type of) clientele.  There are several benefits to opening a “virtual” or online company.

The first, and probably the most important factor when choosing which type of business to open, are the start up costs. This the total amount of money that you will need from out of pocket or from financing, to get the business up and running and off the ground.

As I was researching my start up costs and deciding whether I should obtain financing, look for investors, or use my own out of pocket money I was shocked at the amount of government grants that are available to assist new small business owners.  It is worth it to do some research and find government grants that are available in your business niche.

My Online Company

If you are a frequent reader of our DINKS blog you know that I recently started an online company.  I decided to use my own money for the business start up costs, since I didn’t want to have any initial debts related to the business.  Here are my start up costs and a quick rundown of my business budget.

  • Cost to Register a Corporation in Quebec      $700
  • Accountant Fee for Registration                    $150 (he is my friend)
  • Website Design/Development with SEO       $1000
  • 2500 Color Business Cards                          $125
  • New HP Laptop with Windows 7                  $1139
    Total Cost for My Online Business            $3114

Currently as I book contracts I keep 50% of my earnings in the business, I use 25% to grow the business through email marketing and print advertising, and I pay 25% out to myself to recover the initial start up costs.  As I do not hold any physical inventory and I do not pay rent for a physical location my monthly expenses are considerably low.

Once my initial costs are repaid I will use 50% for advertising/marketing and I will retain 50% in the company accounts. Eventually with time, I will retain 60% of my revenues in the company, spend 25% on business research and development, and (after the business is established and has made a name for itself) 15% for advertising/marketing.

When a new business is ready to expand a benefit of being incorporated is that the purchase of the new car or office space will become an expense for the company.  It will not be a personal expense out of your pocket.  If you want to buy a new condo and you work from home, you should finance it under the company.

The second major benefit of an online company is the potential it has to reach a much wider range of clients.  Your client and profit possibilities are unlimited when you are not restrained by space limitations.

The key to a successful business is a good account. So make some new friends.  Are any of our DINKS readers accountants?  If so, let us know. Maybe we can help you find some new clients.

Here are 3 great online businesses:

  1. Open an EBay Store. Buy mass quantities of goods at wholesale prices and sell them online individually at a huge profit.  The costs are low and you don’t need to pay for a physical retail location.  You will also reach out to the existing market of eBay clients.  Therefore, marketing costs could also be minimal.
  2. $9.95 Services. If you have a service to offer, then sell it for $9.95.  It is the absolute most popular price point.  How many times have you bought something that you don’t need because “It’s only $10?“
  3. Blogs. Start or Buy a Blog in your niche.  This is a great way to be creative, do what you love, and be self employed.  You will earn money through sponsorship and advertisers.  If you need some tips, just email our friend J.Money ;)

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(Photo by fensterbme)

Party, Party

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For two weeks and change I ventured across the pond to Merry Ole England for travel and a good friend’s wedding.  For one night while I was in London, I was to meet the bachelor party at a very hip London nightclub.

It was two hours before arriving that I found out that we were expected to contribute around 200 pounds (around 350 dollars) for each person’s share of table service.

I balked.

Talk about peer pressure.

Two discussions came up when I let the group know there was no way I could afford a 350 dollar tab for one night at a posh club where we might see Rihanna.  One such discussion was something I encountered before in comments on my Washington Post piece on haggling.  One of the guys said, as I finished explaining that I had budgeted for the trip and was sticking to it,   “Hey, you make more than anyone here, so you should be spending it, we’re doing it.”  This is a tough situation when you are out with friends, do you stick to your budget or to the group?  My assessment was that the night would soon be out of control (money-wise) as the party prowled for women (something that, being married carried little appeal to me).

Later, as the bravado was building in the party, I was taken to task again for my frugal ways.  “Big deals happen in places like this man.  You’ve got to look like you belong here, so spend some cash.”  Stepping back to observe the club, I saw many groups of men positioned in the same similar manner watching the ladies (exceptionally beautiful ladies) dance and gyrate.  The only people I saw who looked like they belonged there were the bartenders.  The rest were posturing.

When it comes to friends and nights out and money, I find frequently that my frugal, budgeting approach is at odds with a seat-of-the-pants (or something else) financing. It’s difficult to tell your friends “No, I just don’t have the money.”  It is ever more difficult when they think you do.

That night, I just stepped back and took some hazing as I sipped on one of two scotch drinks (40 dollars).  I did not mind.  The groom to be was having a good time.  The rest of the part had objectives that were dramatically different than mine.  Planning for a night out wasn’t something they considered, whereas I had planned and budgeted my two week trip based on what I knew before going on it (Had I known about the proposed expense of the night a month, rather than two hours in advance, I could have adjusted my budget, but alas.   They way those in the party handle money, which I’ll be talking about in an upcoming column, is quite different than mine.

Explaining to friends or loved ones respectfully that “you’re on a budget” is not embarrassing.  It may be a little uncomfortable at the time.  However, what I do know is that a day or so later, one of the guys told me that he hadn’t wanted to spend so much in the club, but didn’t know how to say no.

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(Photo by Sailor Coruscant)

Money is Relevant

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In the last two years my annual gross income has declined by 34%. Needless to say, I have made some adjustments in my spending habits and my monthly expenses. However, I am in a couple and therefore our household expenses have not changed too much. It is more my personal spending that has been cut.

When you are in a relationship and your income is cut, should your partner also feel the impact?

I know that a lot of people would be happy to make my salary, or in some cases (and more than should be) many people will be happy just to have a job.  Money and spending habits are relevant. Some of us wouldn’t blink an eye on spending $50. But if you only have $100 in your bank account, then $50 is a lot of money.

I keep hearing people say that the market and the economy will get better. I would like to know exactly when that will be!  If and when the market does recover, Will all of the people who are currently unemployed get their jobs back? Will all of the homes in foreclosure suddenly offer mortgages to their former owners? Of course I am hopeful, but that is just not reality. According to a recent article titled Jobs Gone Forever on CNN Money, they confirm that some jobs may not be returning when the market recovers.

It is said that the average person should spend approximately 30% of their net after tax income on housing and approximately 17% on their transportation costs. This includes insurance, gas, parking, financing and/or public transportation including taxi cabs.  Are you within the “norm”? I am not. I spend approximately 39% of my net after tax income on housing costs. I have recently been complaining about the cost of my 2007 Honda Civic.  So, it was no surprise to learn that my transportation costs are also higher than the average.  I currently spend 24% of my monthly net after tax income on my Honda and it’s associated costs such as insurance, gas, parking, and payments.

LizPulliam from MSN Money believes in a 50-30-20 Budget.  This budget allocates 50% of your net after tax income to “Must Haves”, 30% to “Wants”, and 20% to Savings and Debt Payments.

To increase savings capacity Richard Jenkins sticks to a 60/40 budget. He limits his essential spending such as housing, food, insurance, and bills to 60% of his monthly income that will free up 40% of his income into forced savings both registered and non registered.

Some people choose to buy a less expensive house in the suburbs with more square footage. I choose to live in a downtown apartment and therefore I am paying the price for my living situation.  As a DINK where do you and your spouse choose to spend your hard earned money? Take this Savy Spending Quiz on MSN Money to find out.

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(Photo by K@ja)

Weekly Recap: Balancing Our Bank Accounts

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Happy Friday DINKS! Today we are discussing the thing that holds our money for us…our Bank Accounts. How many of us pay Bank Fees? Did everyone raise their hand or nod their head? Now, how many of us hate paying Bank Account Fees?

As a bank employee I have one free account with unlimited monthly transactions as part of my employee benefits package.  However, my other accounts, such as my savings account, and my joint account with my Dad all have a monthly fee.

I am a bit paranoid about fraud on my bank accounts and my credit card (singular, my one credit card). I am so paranoid that I check and verify my previous day’s transactions every morning online before I take my shower.  In my line of work I see an unlimited amount of numbers every day.  If you combine this with my memory span of a goldfish, it is almost impossible for me to remember what transactions I did, and did not do.

Therefore, instead of waiting until it’s too late, I keep up to date on my account history to prevent fraud and also to ensure that I don’t surpass the amount of allowed transactions. You could say that I balance my bank account as my mother used to “balance her check book”.

My Dad’s personal financial motto is “If my bank has money, I have money.”  As we know I am not a huge fan of using credit. Therefore, this is the complete opposite of my own personal financial motto.  I like to know what is there. What came in and what went out…every single day! This is both for fraud prevention as well as money management reasons.

DINKS, my question to you is…Do you know what’s in Your Bank Account? Tell us about your monthly bank account fees. Maybe you have a plan that we should be on!

Have a great weekend :)

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(Photo By AlanCleaver)

Double Your Money and Make It Stack: Spending Your Bonus

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June 30 marked the official end of the first 6 months of 2010.  This means that some of us DINKS will be receiving our semi annual bonus very soon. 

What should I do with my sales bonus? It is a troubling question that I ask myself every June and every December when my bank account grows just a little bit more.  Of course I lose half of my gross bonus to taxes, but it still leaves me with a little something. 

Here are Five Great Ways to Spend Your Semi Annual or Annual Bonus. I have also included 3 Red Flags of What Not to Do With Your Newfound Cash Flow.

Helpful Hints on How to Spend Your Bonus:

  1. Pay Off Your Debts. Make a lump sum payment on your mortgage. Inquire with your financial institution because sometimes prepayments can be costly. Pay off a credit card. If you have a remaining balance that can be paid off in full from your bonus…Do it. Or if you have a large balance at a high interest rate, pay that off first.
  2. Contribute to your 401K or Your RRSP for our Canadian friends. Saving for retirement at a young age is a fantastic savings strategy because the money grows tax free over several years.  Compounded interest, dividends, and capital gains are always good investments.
  3. Take a Trip. It’s a good time to travel because prices are low.  You can get great deals on vacations because the tourism industry is hurting in this economic crisis. Booking online is a good idea.  Hotwire.com has recently been very successful for two of my coworkers.  Once you arrive and you check in, try to negotiate for a better room or a better view.
  4. Put ½ into Savings and Spend ½. I am a firm believer of the half/half rule.  You shouldn’t save everything because you may urn for some retail therapy.  However, on the other hand, you shouldn’t spend everything either because you will regret it later. You work hard for your money so enjoy it….just not too much.
  5. Upgrade Your Home. It is an expense that will become an investment later on.  Redecorating or upgrading even a single room, such as your kitchen, can substantially increase the value of your home.

What NOT to Do With Your Bonus:

  1. Spend It All on Material Goods. Spending a lot of money is like waking up from a one night stand with a hangover. You think to yourself “what the hell did I just do?” Remember that once the money is spent, you can never get it back.
  2. Lock it all up. I often suggest investing over the long term, as long as the investment goal permits to do so.  Often, but not always.  Too much of one thing is never a good thing.
  3. Put it into a Cash Savings Account. Letting money sit at an annual rate of approximitley1% is not a good idea.  Make a plan and invest in different options depending on your different goals. Diversify between registered and non registered investments, as well as interest, dividends, and capital gains.

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(Photo By RefractedMoments)

How to Know If Refinancing Is Worth It

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Mortgage Refinance - Dollar House

Wow! The average interest rate for a 30-year fixed-rate mortgage dropped to 4.74% in June. That historically low rate should pique your interest if you have a mortgage or are thinking about buying a home.

What is a Mortgage Refinance?

Refinancing is when you take out a new loan in order to pay off an existing loan balance. You basically swap out a higher-interest loan for a lower-interest one, which decreases the amount of interest you have to pay. That sounds easy enough, but of course, there’s a cost for doing a refinance. It seems like it takes a village to close a loan and everyone gets their cut. Fees go to the lender or mortgage broker, the property appraiser, the closing agent or attorney, the surveyor, the local government, and maybe more people, depending on where you live.

How to Qualify for a Mortgage Refinance

Each lender has different requirements for doing a refinance. Most will require that you have a certain percentage of equity in your property—typically 20%. Equity is the difference between what your home is worth and what you owe on it. For example, if your home is valued at $225,000 and you have a $200,000 mortgage, you have $25,000 in equity, which is 11% of the value.

Use the Home Affordable Refinance Program (HARP)

However, there’s help if you have too little equity or if you owe more than your home is worth. You may be eligible for the Home Affordable Refinance Program (HARP) if you meet some basic requirements:

1. Your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac
2. You’re current on your payments
3. Your mortgage balance doesn’t exceed 125% of your home’s value

Visit makinghomeaffordable.gov for full details and contact your lender about refinancing under this federal program.

How to Know If You Should Refinance

The trick to knowing if you should refinance is to find out from the lender exactly how much a refinance will cost and how long it’ll take you to break even on those costs. In other words, when do you move from being in the red to being in the black on the deal? If you pay for a refinance, but don’t keep the home long enough to cover the costs, you’ll lose money. But if you do keep the property beyond the financial break-even point (BEP), you’ll feel like a genius because you’ll save money in the long run! I’ll give you an example in a moment.

How to Figure a Refinance Break-Even Point

So how do you figure the financial break-even point on a refinance? It can be a little complicated, but don’t worry, there’s a great refinance calculator at dinkytown.com that can help you. Online calculators are not perfect; however, using a refinance calculator will show you how long you’d need to keep the property to recapture all your upfront closing costs, which is usually what most people want to know.

Example of How Much a Refinance Can Save You

Here’s an example of how much doing a refinance could save you. Let’s say you bought a home in June of 2007 when the going rate for a 30-year fixed rate mortgage was 6.5%. Here are the loan details:

Home cost:   $225,000
Down payment:  $ 25,000
Mortgage:   $200,000

Interest rate:   6.5%
Term:    30-year fixed rate
Monthly payment:  $ 1,264 (principal and interest only)

Now that you’ve been making payments for three years, your loan balance has decreased to approximately $193,000 and the prevailing mortgage rate has dropped to 4.74%. Let’s say the total closing costs for doing a refinance would be $5,000 and you have the cash to pay them up front:

SCENARIO #1
Mortgage balance:  $193,000
Interest rate:   4.74%
Term:    30-year fixed rate
New Monthly payment: $1,005 (principal and interest only)

Here’s another scenario where you don’t have the cash to pay the refinance closing costs upfront and you roll them into the new loan:

SCENARIO #2
Mortgage balance:  $198,000 ($193,000 + $5,000)
Interest rate:   4.74%
Term:    30-year fixed rate
New Monthly payment: $1,031 (principal and interest only)

If you rolled the closing costs into the new loan (scenario #2), your savings would be $233 ($1,264 – $1,031) per month, or $2,796 per year. So if you kept the home for two years, you would recoup a savings of $5,592, which is more than enough to offset what the refinance cost you ($5,000).

Or if you were able to pay the closing costs upfront (scenario #1), your savings would be $259 ($1,264 – $1,005) per month, or $3,108 per year, and keeping the property for just a year and a half would allow you to break even on the $5,000 closing costs.

Carefully Weigh Refinance Costs Against Savings

When the interest rate you’re paying is at least 1% higher than the current rate for your type of mortgage and you plan on keeping your home for a few years, it’s time to run the numbers. As I mentioned, it’s as simple as entering some information into an online refinance calculator. Be sure to carefully weigh all the costs of doing a refinance against the savings you expect to receive. A refinance can save you many thousands of dollars in interest over the life of a loan—and that’s money you could save for your emergency fund or invest for your retirement instead.

(Photo by The-Lane-Team)

Marrying Money

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prada bag girlLast week on my day off for our National holiday I watched a talk show that discussed Women Who Marry for Money.

I guess I always knew that this was a deal closing quality for some women. I mean, the concept of a housewife is not new. I guess I always thought that being a housewife was the man’s choice for the women. I never thought that the woman would choose to stay home on her own free will. This made me think…Is marrying for money a good financial strategy or bad financial planning?

Not working is something that we as DINKs could not understand since every day we hustle in the 9-5 grind.  I could not imagine having money on my list of criteria for a boyfriend. I have enough troubles getting my boyfriend Nick to marry me now, imagine if I added another criteria to the list.

The guest on the talk show was Elizabeth Ford who is the author of the book “Smart Girls Marry Money”. The philosophy of her book says that love and the honeymoon phase vary and fade; but in the end money will always be constant in the relationship. I agree that marriage should be an economic partnership, but I don’t agree that money should be criteria for the relationship.

In my lifetime I have been middle to upper class, totally broke, and now financially stable. I cannot stand people who ask for and expect handouts. I believe that financial wealth comes from hard work and learning from our mistakes….not from a ring and a cheque book.  I love a good success story and I respect people who work for their millions.  I also believe in hard work and the daily hustle because we can never have enough money.

Ladies (and gentlemen) let me ask you. When money is a quality that your future husband must possess, would you continue dating someone that you were not interested in just because they had a lot of money?

If you marry for money and not for love what happens when you get divorced and you need to get a job? Anyone who marries for money should have a backup plan. The backup plan should not be a divorce settlement.  If there is no Plan B people may stay in an unhappy relationship just because they have no other financial options.  In my opinion, this is very sad.

Since when did money become dating criteria? Am I jaded, or has it always been there?

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(Photo By Perfecto Insecto)

A DINK Sandwich

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hamburger faceLast week one of our readers posted a comment on our post titled “DINKS: Smart or Selfish?” .  It made me start thinking about our DINKS lifestyle and the generation gap between us and our parents.

On June 29 Kitty commented “Now, in the US kids normally don’t take care of their parents. But at least it’s somebody young who can maybe call you or help arrange for care when you are old. Even if not, it’s at least someone you could call.”

This statement is very true, and it is actually a discussion right now that I am having with my boyfriend Nick. I always thought that our hassle free DINK lifestyle would be thrown upside down by our kids.  Never in a million years did I think that our lifestyle could change because of our parents.

My father’s side of our family is eastern European.  Ukrainian, to be exact.  Although I am the second generation to be in Canada, my father still holds some old school values from “the old country”.  He is a strong believer in blood is thicker than water.  My father has an “eye for an eye” mentality when it comes to most things, but not to our family.  Regardless of the wrongs that other family members do to harm us, at the end of the day his advice is always to forgive them because “they are family.”  I can’t even count how many times I have heard my father say that.

My grandfather lived with my Dad and I until he passed away in November of 1998.  Now my only surviving grandparent is my grandmother on my mother’s side. She just recently moved into an elderly care facility because she needs assistance with her everyday tasks such as washing and getting dressed.  She also suffers from the early stages of dementia.

My boyfriend Nick who is European/African does not understand my mother’s choice to “commit” my grandmother into a senior care facility. His grandmother still lives with his Aunt and she will continue to do so until she passes on.  Similar to my family, the only surviving grandparent he has left is his grandmother on his mother’s side.  Nick comes from a culture where you always respect your elders, regardless of how old you are. His family also believes that you take care of your parents.  Elderly care facilities are not an option.

Many of us DINKS are in the, what we call, “sandwich generation.” It is the time of our lives when we are old enough to, and may be starting our own families.  While at the same time we may be living with, and/or caring for our parents.  We are sandwiched in between the older and younger generations.

This is something that we need to prepare for both mentally, as well as financially.  Feeding, housing, and clothing another person (especially one with special needs) can have a huge impact on your monthly budget. If you could afford it, would you invite your parents to live with you? Or would you fund their stay at an elderly care facility?

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(Photo By marnanel)

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