# My Money Diary



## cookieseven (Mar 3, 2014)

I'm newly practicing physician who has incorporated. My education was a long journey, and I've accumulated some debt along the way. I'm still very much just figuring things out, but I'm hoping to use this diary to track my debt repayment, and, after that, investment progress. I'm also hoping to stay accountable and resist further lifestyle creep, as I can attest that it's already happening based on my tracked my expenses over the past few months. 

Here's where things are at currently...

Business:
$45K in cash
Owes me $4K for business expense reimbursement

Personal:
$45K cash
$13K mutual funds
$65K on student LOC


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## cookieseven (Mar 3, 2014)

Couple of Notes:

30s, married, no kids and don't want them.
Spouse has no income which is why I incorporated. Will probably get back into the workforce eventually, but it depends on the economy. This isn't a stressor to us as, frankly, it's kind of nice having a stay-at-home spouse and they are enjoying being one.
Renting and fairly happy with the situation, though rent is pricey ($1900/mo). I'd like to buy one day, but I'm not in a hurry (which is good because a condo in our preferred neighborhood would set us back $700-900K).
We own a 2007 model vehicle. It is currently in ok shape and I'd like to keep it for now, but I may replace it early it's requiring really pricey repairs before 2-3 more years.

I've been tracking our personal spending for two months, and we averaged $8500/month. Roughly $3000 of that is fixed (including rent), and the remaining $5500 includes a lot of frivolity on my part (spouse spends virtually nothing). The first step is awareness, right? I'm not ready to put myself on a budget... yet.


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## mordko (Jan 23, 2016)

$5500 of frivolity on a monthly basis does seem a tad on the high side. Budgeting could be a good idea as whatever you save in early years is very important to a wealthy retirement. You may want to consider using mint.com. It will tell you where the most savings can be achieved; also helps to set clear savings targets.

Which mutual funds are you using? Canadian mutual funds tend to have the highest fees in the world. And they charge these fees on the total value of the fund every single year. It's taking a huge chunk out of peoples portfolios. In some cases retirees lose half of the total value to these charges.

There are different paths to success. Here is one: http://canadiancouchpotato.com/couch-potato-faq/


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## cookieseven (Mar 3, 2014)

mordko said:


> $5500 of frivolity on a monthly basis does seem a tad on the high side. Budgeting could be a good idea as whatever you save in early years is very important to a wealthy retirement. You may want to consider using mint.com. It will tell you where the most savings can be achieved; also helps to set clear savings targets.
> 
> Which mutual funds are you using? Canadian mutual funds tend to have the highest fees in the world. And they charge these fees on the total value of the fund every single year. It's taking a huge chunk out of peoples portfolios. In some cases retirees lose half of the total value to these charges.


Thanks for the response! I've been using something similar to Mint to record/track my personal and business expenses and it's been very enlightening (and how I identified my frivolous spending). My food spending is definitely out of control; we eat at home 4 nights a week, but spend way too much eating out most of the other nights. It's not that we're too lazy or disorganized to cook the other nights, it's that we (well... me especially) love dining out -- it's like entertainment. But, I'm trying to keep in mind that if we cook one more night a week we'd save ~$400 a month. I'm also trying to cut down on the lattes at work but my success has not been great since the Christmas beverages came out at Starbucks.

My mutual funds are actually e-series funds in a TFSA. I invested $8000 c.2012 based on a Canadian Couch Potato model portfolio. Then I set it... and literally forgot about it (ie, I have not rebalanced or contributed since then). I need to rectify this, but I'd like to get my entire portfolio in order first and have a strategy for contributing to the TFSA, RRSP, and investing within the corporation to maximize tax efficiency. A lot depends on how much and how (dividends vs. salary) I pay myself going forward. I'm thinking about it and will surely be reaching out for advice here, but focusing money I pull out of the PC on the LOC for now.


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## mordko (Jan 23, 2016)

Cookieseven, yeah $1200 a month on eating out is certainly something to think about.

E-series is great for a small portfolio.

I found it's good to read a few books on the subject of personal finance and investment. Then pick the ideas you like and write your personal savings and investment policy. Define principles - what you are trying to achieve, timeline, how much you save, how you invest, how you are going to monitor, rebalance, etc. Then stick to it.


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## My Own Advisor (Sep 24, 2012)

Good for you, to work hard, and get a good job; incorporate. Well done.

I would think about your plan before products. I can appreciate you want to start investing, but as you have already figured out - so much depends on how much and how often (dividends vs. salary) you pay yourself going forward.

I think once you come up with a plan, even a high-level one, then you can consider how to max out TFSA and RRSP, set up a spousal RRSP, etc. and get things rolling....

Good luck and keep us posted on the forum!


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## cookieseven (Mar 3, 2014)

@mordko - Do you have any specific books you'd recommend? I'm quite confident I want to pursue passive investing via a Couch Potato strategy. The issues arising from the CCPC are what confuses me the most, and I've found it hard to find sufficient information to develop any philosophy. I guess my situation is a hybrid of small business and personal finance... and trying to find the best way to bridge the two. I'm aware the budget this spring may shake things up a bit, though, so maybe it's good I haven't settled on any solid plan yet.

@My Own Advisor Thanks! I will be meeting with my accountant to work out a plan for paying myself starting in the new year. After [what I anticipate we will set for] payroll, corporate taxes, and overhead, it looks like I'll be retaining about $10K/month in the PC (my annual earnings are pre-defined). If I use the upcoming several months to plan, I should have accumulated a decent pot to start investing with by the summer. But, as always, surprises can happen so we'll see where things go.


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## cookieseven (Mar 3, 2014)

*December Snapshot*

So it's been just over a month. Here's where things are at.

*Goal Snapshot:*
1. Financial education:
-I purchased some books to read (Wealthing like Rabbits, Stop Overthinking Your Money, and an introduction to ETFs). Goal is to actually read one of them over the next month. Which one should I start with?
-I've been searching for education that includes people with CCPCs without luck (see also point #3)

2. Get organized:
-I continued tracking my spending, which has lead to awareness for payroll planning, but not much spending restraint. We ate out less at first, but then indulged a lot while out of town on vacation. January should be a bit better as I've got to go on a diet after that vacation  But I also want to get away somewhere warm for a week during February, so... yeah.
-I need to cancel a couple of credit cards in the next month that are just taking up space in my wallet and aren't among my oldest credit cards.

3. Planning for the future (short & long-term):
-I need to meet with an accountant to plan my payroll/dividend strategy going for 2017. Based on spending patterns I think I'd about $12K/month ($9K for life and $3K for debt repayment).
-I emailed a few fee-only financial planners over the last month, but had no luck finding any experienced with CCPC clients. I'm reluctant to reach out to MD Financial, as I have zero interest in buying their products, but I might end up there.


*Financial Snapshot:*
Business:
$48K cash (excludes cash sequestered for CRA)
Owes me $4-7K for expenses, depending on which external reimbursements materialize.

Personal:
$28K cash (excludes cash sequestered for CRA)
$13K mutual funds TFSA
$64K on student LOC
$16K owed on credit cards (will be paid off entirely, but included for completeness of the snapshot; balance includes some business expenses to be reimbursed)


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## mordko (Jan 23, 2016)

Sorry Cookie, didn't see your question...

A few good books on investing:

1. The Intelligent Investor by Benjamin Graham - investor’s Bible on value investing. 

This is not easy reading. Old but just as relevant today. Wouldn't pick as your first read. Still... There is a lot of stuff going on around us which makes me think: this wouldn't have happened to this poor guy had he read Graham. 

2. The Value of Simple by John Robertson - a neat summary explaining Couch Potato strategy and money management in the Canadian context. You might not learn much; it's really for beginners.

3. Global Asset Allocation by Mel Faber - really neat little book and a good read. Whichever way you split your assets, index investing provides similar results (and beats stock pickers). All weather, couch potato, a bunch of other diversified portfolios... All the same outcome. Reading this may save you hours of consideration whether you need 10 or 11% of a particular asset. 

4. Your Money and Your Brain by Jason Zweig - an awesome book by Jason Zweig, explaining why investors behave irrationally and how to fight it. This is a must read; will help you stay the course and explain what 99% of people around you are doing and why.

5. http://canadiancouchpotato.com/ You already found it.

6. The Intelligent Asset Allocator by William Bernstein - another classic but much easier to read than Graham. You might find it particularly interesting. The author was a doctor by education; he provides a cool explanation why doctors and engineers are bad at investing. 

7. A Random Walk Down Wall Street - I haven’t read it; it's next on my list. Highly recommended by knowledgeable people.

8. The Little Book of Common Sense Investing – John Bogle - another one on the “to do” list.

Even if you do Couch Potato, which is simple and does not require a lot of time or knowledge, it's still good to know the theory. With talking heads all around you, with temptations and fears which you will feel over time, it's good to understand what is going on with your money.


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## gladaki (Feb 23, 2014)

i read Graham but I still ended up taking some decisions which is against whatever is in this book
It was a expensive lesson but learned it.


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## mordko (Jan 23, 2016)

Gladaki, then read "your money and your brain"


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## kostya (Jul 26, 2016)

Cookieseven, congrats on the first steps to identify budgeting issues and to be proactive to learn about investments. 

The excesive discretionary spending (5500 p/m) is definitely something that should be a priority, but it sounds that at this point you are not really committed to change that. Learning about personal finance and investments is definitely a step forward and will make you more aware on the effects of overspending in long-term. 

Setting some major long-term goals should help to make the budget more of a priority. This way, giving up on pleasant, but not important things will make more sense. Another thing, you can often have fun even when you spend less, especially when you do it in educated way, rather than simply buying into the percieved "best in the category". For example, take cars. Auto enthusiasts love DRIVING cars. Instead of getting 130K porsche, many buy 30K miatta and enjoy it no less. The key is the driving experience, not the price and power of the car. I hope this kind of analogy makes sense. In other words, pay attention to your valuation principles.

Thank you for posting your diary!


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