I had an interesting conversation with BF the other day, when I confessed that I often stress about money. Like, on a daily basis. And it got even worse when I lost my job in February.
No matter how many times I run the numbers on retirement, or go through my budget, I always have this sinking feeling that what I’m doing isn’t enough. But you know what? It is enough. This recent unemployment stint has been my third in an 8 year career. And each time, I’ve come out of it with a better job, and a more positive attitude. Sure, my finances have taken a few setbacks over the years, but losing out on 2 months of RRSP contributions isn’t going to affect my retirement. Worrying about every dollar I make/spend, and over-analyzing how I’m going to advance my career is not productive and just leads to stress and anxiety.
It took me a while to realize that it wasn’t the money that I was specifically stressed out about, it was what that money represented. To me, having money means the opportunity to save money. And saved money means having a good future, being able to provide for my family, and living out my retirement without worrying about money. Not having money, or not having the amount of money I perceive to be acceptable causes instant alarm bells and panic. Like when I lose a job, or when I think I might be stuck career-wise.
Reading Preet Banerjee’s book, “Stop Over-Thinking Your Money!” has actually really helped. Deep down, I know all I need to do is keep it simple; spend less than I earn, carry no high interest debt, avoid lifestyle inflation, etc. So if I know what I need to do, and for the most part, I’m doing it, why am I always freaking out?
I often refer back to an article I read a while ago to calm me down. In this article, it said that happiness is a $75,000 salary. It says that while happiness doesn’t seem to have an impact on your day to day mood, it definitely impacts the feelings you have about the way your life is going. And it’s true. The article always reminds me that I should be grateful for what I have. Because overall, I am really satisfied with my quality of life. I’m able to save for retirement, travel, pay my mortgage, and have fun at the same time. I have an amazing boyfriend, and friends and family to count on.
Truthfully, if I never make more than I’m making right now (adjusted for inflation of course), I would be okay with that. Sure, I’d like to earn more (and I hope that I do), but I don’t see my quality of life improving at all. It would just stay the same, and I would be happy. :)
So I’m going to consciously try not to stress out about money on a day-to-day basis. There is no need for it, and I’ve proven that to myself over and over again. I really will achieve all of the financial goals I want for myself. It just takes time. And patience is one of the best qualities to have in life.
Do you ever stress out about money? How do you cope with that stress?
Note: this post is brought to you by my good friends over at H&R Block!
Most people aspire to own their own home, but the financial burden holds many back. Luckily, there are revenue opportunities and tax breaks that take some of the sting out of those mortgage payments.
Buying your first home
The First Time Homebuyers Credit was created to help more Canadians to purchase homes. The credit is not based on the amount you actually spent. It’s a flat $5,000 amount which provides $750 in tax savings. And you can split the credit with your spouse or have one partner claim the entire amount.
If you have not owned a home in the previous four years, you qualify. The same is true of your married or common-law partner. And you also qualify if your spouse or common-law partner owns a home but you have not lived in it while you were in that relationship. This means one partner may qualify, even if the other does not.
You need to have documentation proving the home purchase in case the Canada Revenue Agency requests it, but it is not submitted with your return.
The Home Buyers Plan can also help. First-time purchasers can borrow up to $25,000 from their RRSPs to help with the down payment. You are allowed to pay the money back over 15 years. Failure to make repayments means the withdrawal is considered income and you will be taxed on the amount.
Selling your home
When you sell your principal residence, all the capital gain is tax exempt. If you sell a vacation property which you cannot designate as a principal residence, you will owe capital gains tax.
A principal residence is one you occupied at some time during the year. It does not have to be the home in which you spent the most time, so you may designate a cottage, for example. Only one property can be claimed as your principal residence, and only one can be selected per family unit.
If your land is larger than 0.5 hectares, the excess portion will usually not be covered by the exemption. In certain circumstances, the government may make an exception. There are also provisions for changing a rental property to a principal residence, or vice versa. See the CRA’s Principal Residence page for any forms you need.
Renting your home
Becoming a landlord—either by investing in a rental property or renting an apartment in your house—can provide welcome revenue, but it does have to be reported to the CRA.
For a rental property, you may claim expenses like mortgage interest, property taxes, insurance, utilities, condo fees, and repairs and maintenance. Expenses that cannot be claimed include repairs or renovations performed prior to renting a space. These costs are capital expenditures and will reduce your capital gain when you sell the property. The same is true of capital improvements you make after renting the property. There are also rules around claiming rental-related travel expenses. Details are here.
Those who rent units in their principal residence must pay capital gains on the portion being rented when the property is sold. A basement apartment that takes up 20 per cent of the square footage of a home results in a capital gain on 20 per cent of the sale price. However, if the space you are renting is not a self-contained dwelling, the capital gain will be covered by your principal residence exemption.
You can also claim some expenses when renting a room in your home. First, calculate the area used exclusively by the lodger and then claim the corresponding percentage of your related expenses. Second, you may be able to claim some expenses for shared spaces, based on factors including availability or the number of persons sharing the room. Three family members plus one lodger could result in a claim of 25 per cent for the use of shared areas.
If you need help preparing your tax return, consider an online program like H&R Block’s Tax Software (www.hrblock.ca), which will identify your tax situation and calculate deductions or credits as you go. Or if you would rather leave it to an expert, drop by an H&R Block office. A tax professional will even review your previous returns for free.
No Spend Day!
$160 Passport Canada
$14.19 Nuba Restaurant
$18.06 Pearl Hot Pot
$17.19 BC Liquor Store
$36.11 Pearl Hot Pot
$9.45 Thierry Cafe
Freelance Income: $0
Expenses: - $293.44
TOTAL: - $293.44
This was an extremely social week for me. Thursday I went out for lunch with Nic, and then had dinner with a couple of girlfriends at one of my favourite places in Vancouver. Whenever we meet up (which happens to be about once a month), we always end up at Pearl Hot Pot. In fact, I talk about it so much that BF wanted me to take him there over the weekend. :) Friday we had another couple over for dinner and drinks, and on Sunday we walked around town, stopped in for a couple of macarons at Thierry, and watched the hockey game with my sister’s BF.
It was nice to relax during my last few days off, and I appreciated all of the company for sure. :) My bank account, however, did not like me that much this week.