Monday, October 12, 2009

Chapter One: Be Prepared!

In December of 2008, only nine days before Christmas, Sun Media chopped 600 jobs. A day or two later Pierre Karl Peladeau (PKP) sent out his annual Christmas message. His Merry Christmas wish was, shall we say, in the PKP tradition of his dysfunctional season's greetings.

Read what Canadian Entrepreneur said about his 2007 message, the one that many computers throughout the media chain were mercifully unable to play. (Quebecor originally posted his 2007 message but has since taken it down.)

Despite the layoff, I had a fine Christmas. You see, Sun Media, The London Free Press human resources department and the LFP union all worked together to assemble a fine buyout package. At age 61 and some months, I was retired.

Claiming my company pension and CPP payments three and a half years shy of my 65th birthday cut my Free Press pension by more than 17 percent and my CPP by about 21 percent. These cuts hurt but I was prepared. Three years earlier I had taken control of my pension plan, set goals, met them and felt confident that I could survive without The London Free Press.

I will be the first to admit that the cash buyout was generous and greatly appreciated. And having a retirement plan in place meant that I did not have to sit down and calculate whether or not my wife and I could survive on the buyout package. My computer already had the answer — and it was yes!

Preparing for Retirement  
Everyone should have a simple household budget. Like most of what I do, my method of  tracking my money follows the KISS rule — Keep It Simple Stupid. Let's be honest here, if it is not kept simple, it simply won't be used. Right?

1. Prepare a household budge using a spreadsheet. At the end of this chapter I have supplied a spreadsheet to get you started.

2. At the the beginning of the year enter your estimates of your monthly expenses.

3. As the year unfolds, near the beginning of each new month, enter the true expense numbers from the previous month, over-writing your estimates.

The problem almost everyone runs into is being unable to retain every receipt for correct entry. Most find keeping every grocery store receipt for a month impossible; I certainly do.

I get around the receipt problem by charging everything that I possibly can — everything. My wife and I spend less than $100 in cash a month. When my Master Card monthly bill arrives, I enter the amounts into my spreadsheet.

I use a Canadian Tire Master Card, and because I charge so much, I get a rebate on all my credit card purchases of two percent in Canadian Tire money. At the time of writing, GM still offers a Visa card that allows you to accumulate funds toward the purchase of your next GM car. I'm sure if you look around you can find a card which will make sense for you. (I saved thousands on the purchase of my Pontiac and other GM cars that I have driven over the years.)

The caveat is obvious. Do not charge more than you can comfortably pay. Once a month you wipe the credit card slate clean. Never, and I mean never, pay interest to a credit card company.

For instance, when my wife and I installed wood flooring in our home, we charged it. We earned about $240 in Canadian Tire credits and by keeping our money in the bank an extra month, we earned about $26 from a high-interest savings account.

You can either make your own spreadsheet using Google Docs or Excel or you can downloads one from the Internet for free. Here is a popular one from Google Docs. 

Google Docs - Family Budget Spreadsheet

Some tips on using a spreadsheet
Spreadsheets are incredibly popular and for good reason — they are great number crunchers. That said, there are some tricks to getting the most from your spreadsheet.
  • If you have a repeating expense, say a car payment, enter the payment in the first cell, the January cell. Then click on the cell. You'll get a heavy blue outline with a square, or handle, in the bottom right corner. Move the cursor to the handle and drag the heavy rectangle all the way from January to December. This will copy the January information into the cells for all twelve months.
  • To change the width of cells, touch the cursor to the line separating cells in the alphabetically labelled row at the top of the page. The cursor changes to a double ended horizontal arrow. Depress the mouse button and slide the line to a new position.
  • The above trick works if you must change the height of cells, just use the column of numerically labelled cells on the left side of the page.
  • If there are rows you will not use, say you do not have children, remove these rows by clicking on the row and going to Edit -> Delete Row. Make sure the row number shown is correct and delete the row.
  • Do not delete any columns.
  • You can modify the words in a cell by double-clicking on the cell.
  • I selected all the calculated cells, went to Format -> Change Colour With Rules and using the pulldown menu set the cells to display their results in red if the results were less than zero. Being retired, I do have some red cells.
  • The really neat thing about the Family Budget Planner spreadsheet available from Google Docs is that you can export it to your hard drive as an Excel spreadsheet. This is important for later chapters.
I use a Dell computer running Windows. My computer came with Excel and I believe most Windows computers have Excel. If you are running a Mac, you may have to jerry-rig something on your own. It is not that difficult, especially on a Mac.

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