There’s few things quite as exciting as seeing an automatic payroll deposit in your account that’s higher than you expected.   I haven’t been on a traditional payroll for a few years so had forgotten how awesome it is to get a ~ 7% raise mid-year.

If you’re wondering when you’ll reach the the max annual employee contributions – on CPP the max is $2,306.70 and the max on EI is $839.97 in 2012.

OUCH!  The American maximum SSI tax is a little more painful than Canada’s with the maximum calculated on up to $110,100 in salary.  Much harder to get a mid-year raise there!

Anyway, there’s an extra $1,000+ a month to go into savings – apart from last month where I spent most of it on a couple of weeks of sleep-over camp for the little guy this summer (he thought it was too pricy but I insisted - I’ll just work more those weeks that he’s gone – and as a contractor, I get paid 1.5 OT – woot!  Or bank it…)   It’s just nice that it didn’t affect the regular “pay yourself first” savings.

A few interesting tidbits about CPP:

• the maximum payout (in 2012) is $986.67
• you have to work 40 YEARS to get the max payout (oops, guess I won’t get there)
• the average payout is about 50% of the maximum or $527.96 (maybe get there)

Here’s a couple of good articles on retirement and savings and why you don’t have to save as much as you think:

Early retirement:  55 and clout

Retirement:  A number you’ll love

So what do you do with your “raise”?  Spend it? Save it?  Pay off debt?  Or a bit of everything?

Did you know that usury was actually illegal at one point?

My son is charging interest… to his coworkers… like a payday loan.  That’s better than anything I could make in the market.

According to wikipedia, back in the day (and we’re talking another century):

Moneylending during this period was largely a matter of private loans advanced to persons short of cash, whether persistently in debt or temporarily until the next harvest.

This week alone, he’s:

• charged one friend co-worker 12.5% for a $200 payday loan
• had to remind another co-worker that in fact, they aren’t “even” from the $40 he loaned him last week (this guy is an “every-second-pay-day-loaner” – except beer appears to be more important – dude’s like twice his age)
• also got a friend a job through re-jigging her resume to amplify her accomplishments – she paid for dinner!
• drove the temp workers home for an extra $20 – Yaris = great gas mileage

OK, he still does extravagantly generous things like “pay for the table” with his friends, brings all the booze and fixings for a party and buys me wonderful gifts that I’d never get for myself for every occasion.

But he is losing his socialism tendencies of feeling sorry for and somehow responsible for every Tom, Dick and Jane that complains about being broke on a regular basis.  I think choosing to work 70+ hours a week while seeing others not make that choice for the last 8 months has toughened him up.

He’s reaching the same point that I am – that we’re making or have made enough this year and maybe it’s time to scale it back a bit in 2012.

After all, the world could end in 2012 – couldn’t it?

Sometimes I feel a little jealous of the “pay off the mortgage” people – First Gen American, the Grumpies, Canadian Dream, Move to Portugal…

I used to be one of those people.  Instead I have an emergency account on steroids because back when I was pregnant with my youngest – and in debt – and sort of not feeling well – all my money was tied up in my house.  I couldn’t refinance because I’d been self employed, my income had gone down, and (the big thing) couldn’t collect the Accounts Receivable two big assholes clients owed… and by the time I woke up and faced reality, I was a little too pregnant to look for a job.

Maybe that part about pregnant job-seekers isn’t true since I never even tried.  Should upload a picture of me at the time on wikipedia in the “learned helplessness” wiki.

Anyway, I felt lost, alone and like such a loser – and didn’t know what to do.  Pretty much like this post from Single Mom Survives where she writes about declaring bankruptcy.

So I sold the little house that I really loved to pay off my debts and start all over again.  It still annoys me that I felt that was my only option since I would have been mortgage free by the time I was 40 if I hadn’t.  Oh well.

On tinyhabits.com, BJ Fogg writes:

Only three things will change behavior in the long term:

Option A. Have an epiphany
Option B. Change your context (what surrounds you)
Option C. Take baby steps

The thing with those epiphanies is that it usually means something bad has happened that you’ve been ignoring or avoiding dealing with for a long time and life has to hit you over the head with a sledgehammer for you to wake up.

So here’s where I admit that I made a mistake on choosing this job.  I don’t like it.  Not at all.  But I’m not feeling stuck there because of needing the money since I’ve socked enough away in the last 3 months to get by on for the rest of the year and then some.  I’m feeling stuck because my boss and friend says things like “I’m so happy you’re here.  Everything’s going so much more smoothly, blah blah blah.”

Fortunately I’ve grown up enough to know that even though I don’t like this job doesn’t mean that I’d hate ALL jobs.  (I used to think like that when I was younger – sort of like those “credit cards are evil” people – freeze them – apparently high fructose corn syrup works.)  But I am learning to be very, very careful when you work with friends since this is the second time I’ve made a mistake (both were contract jobs thankfully).

That’s the purpose behind the saving – to buy myself time to find something that’s more right for me.  To change my context…  I really wish I didn’t like my friend so much…

Just like I used to write in a journal to figure things out, now I write here and maybe some people read it and maybe they learn a little bit about how to live (or how not to live) their own lives through watching me pee on the electric fence once in awhile and live to tell about it.

And maybe I will learn too.

Like remembering how much I looked forward to having my house paid off way back when.

So is over-spending.  But I won’t get into that here.

I had a question from a reader asking what my Myers Briggs type is – and it’s INTJ.

Despite the rarity of that personality type (aren’t we all such special snowflakes though?), there’s been some anecdotal surveys that determined that INTJ’s are overly represented amongst the early financially independent crowd.  As are ISTJ’s – but I suspect that those ISTJ’s might come from a government background and have pensions.  Government systems are too inefficient for INTJ’s to be happy working in that environment.

Some say that the prime characteristic of INTJ’s is that they have to get something finished or accomplished every day.  This isn’t really true but it’s close.

INTJ’s generally need to feel closure and adore systems.  They have a goal in mind and they will deprive themselves (but it won’t feel like deprivation to them), work insane amounts of hours, and basically do anything necessary to reach that goal.  But not a tiny bit more than necessary.  To them, doing the unnecessary is redundant and a sign of failure in their system.

How to spot an INTJ-written PF blog:

• They may want to “die broke” – that’s the ultimate in a perfect plan.  They may even do some kind of analysis on exactly when that “die” part is going to occur – like a life expectancy calculator.  Thinking about dying doesn’t really bother them either and they may even want to control how and when that’s going to happen – which seems to be when they feel like they’d no longer be useful.
• They may talk about how great it is to have kids that are older, or often don’t have children at all – INTJ’s value independence a lot.  I have one kid that’s also an INTJ (he was SO easy to raise) and one that’s an E*TJ.  (Here’s a test for kids.  And here’s a book about raising kids according to the MBTI.)  The E*TJ talks a lot, builds things that have no purpose and wants to be with me all the time and I’m not sure what the point of that is sometimes.  But because there’s enough of a feeling parent in there somewhere, I’ve learned how to give him what he needs so he leaves me alone to read (and to make him happy).  Or I hide in the bathroom and him and the extroverted dog wait outside the door.  Weird.
• They’ll give you (what they see as) the “gift” of information and (usually) won’t ramble about themselves and what they did on a daily basis a lot.  This is because they don’t really live in the present as much as they live in the future.  The information is to know how to have a better future and to improve their systems for living, not for its own sake.
• They may seem to occasionally contradict themselves without warning.  But if they do, it’s something they’ve been thinking about a lot, they just need to work out how it plays out as a whole system.
• They probably won’t travel a lot and if they do, they won’t pack a lot and the things they do pack should serve a variety of purposes.  My INTJ son and I were having a drink one day on the back deck and determined that many INTJ’s travel in their minds via what they read so they don’t really need to experience things first hand.   Plus most INTJ’s know that there’s a pattern in the world and if you really want to experience a different culture, you don’t need to travel half way across the world to do that when there’s people vastly different from you across town – or even next door.  It’s just a more efficient way to learn about those people – if you pay attention, they might give you tips about how to improve your systems after all.  But the best place to find these different people is in the library.
• They hate repeating themselves.  If they told you something once, they don’t expect to have to ever say it again.  So most of them won’t write very often.
• Traffic metrics are kind of meaningless to them.  They don’t want 100,000 readers or 50,000 comments – that’s too overwhelming to those introverts.  They want 1 or 100 readers who have truly benefited from their systems.
• They may come off as argumentative or cranky or way too blunt.  Their feelings aren’t easily hurt so they forget how they can come across to others.  I hit backspace and cancel a lot.  And sometimes I don’t and come across as a complete beyotch.
• Many (not all) of them seem to have a problem with giving to charity.  I think this is due to a couple of things:  (a) possible lack of feeling for other people, and (b) seeing most charities as having inefficient systems.  So they’d feel like their money isn’t going to good use – and that’s crazy-making for an INTJ.
• They’ll feel annoyed at themselves that they’ve lost track of what their post is supposed to be about…

So what about over-saving?

Saving money for the sake of saving money – ie. money hoarding is anathema to INTJ’s.  There’s no purpose or utility in saving money that you’re never going to use.  And INTJ’s will have that amount calculated out to a very fine degree – but being as realistic as possible since there’s no utility in being overly pessimistic or optimistic either.  But being them, they’ll probably set a reasonable target and then challenge themselves by trying to beat it to see just how efficient they can be.

Well.  I must not be very INTJ-ish today if it took 1000 words to say what could have been said in a paragraph.

We don’t pay taxes. Only the little people pay taxes…

~ Leona Helmsley – hotelier and crazy narcissist…

Taxes are the higher-earning frugal employee’s nightmare.  Spending can be controlled in every category except for taxes when you’re an employee.

If I were to stay working at my contract job for a full year – which I’m not going to – I calculated that I would pay $69,198.74 in TAXES!   That’s considerably more than I spend in a year.  It makes me throw up in my mouth a little to think of it.

So I whined to my son about the evils of a progressive tax system.

He has no sympathy for me.

Actually, I don’t have any sympathy for me either.

I don’t mind paying taxes and kind of look at it as donations to society.  Maybe that’s a Canadian semi-socialist-even-if-you-vote-conservative thing.   But man!  That’s a whole lotta donations!

Sometimes I wonder,,,  who’s contributing more to society – the person who donates 10% of a $40,000 income – or the person who’s paying $69,198.74 (but who’s counting) in taxes every year?

So why do I still feel a little guilty at earning “too much“?

“For they gave according to their means, as I can testify, and beyond their means, of their own accord.”  – some bible verse that I don’t know off the top of my head

Best site for looking and drooling at other people’s renovation projects:  thsgardenweb

Lots of investing tools can be found here:  Drip Investing

Allocation for dividend growth investors over at Seeking Alpha.

The British Psychology Society’s article on Thinking about our hourly wage stops us from smelling the roses.

The College Payoff – in depth study on the payoff of staying in school.  The payoff is big.

Moneysense Top 100 Retirement Stocks

MSN Money’s fun and easy little retirement calculator.

NYT’s Buy vs. rent calculator – the usual high price you pay for being a nomad.

ESP Planner calculator (where it was confirmed that I’m trying to save too much)

Michael Neill’s “Does God want us to be rich?“   I think Babci’s God at least doesn’t want us to be poor.

And the hilarious stuff from Cracked.com:

5 Things Nobody Tells You About Being Poor and

6 Things Rich People Need to Stop Saying

I’ve been thinking a lot lately about how in control people are over their financial lives and whether it’s even possible for some people to change.  I’ve seen a dramatic change in my oldest son’s behavior with money once he committed to a compelling goal to pursue.  That can be explained by neuroscience – that the brain doesn’t seem to be able to think of long term consequences until it matures fully in the early 20′s.  So don’t give up on your kids if they seem flaky.

But what about people with impulsive spending issues?  How much free will do we even have?  Can you train yourself over time to conquer these kinds of behaviors or habits or are you fighting a losing battle?

In Incognito:  The Secret Lives of the Brain – David Eagleman’s book seems to say that people don’t have as much control as you’d think.  Next read is V.S. Ramachandran’s The Tell Tale Brain:  A Neuroscientist’s Quest for What Makes Us Human.

Only $9.28 for the kindle version and apparently I’m still too impulsive to resist clicking “buy now”.

Welcome New York Times readers!  For regular readers, here’s the NYT article that talks about the Person Under the Stairs (aka my son who lives in the basement):

Rules for When Your Child Moves Home

Here’s the stages of learning myself and my kid had to go through to learn about money since it wasn’t a talent that came naturally to either of us :

The Money Learning Curve

OK now that that’s out of the way, let’s talk about one of the aspects of retirement:  the “right” time to retire when you have kids.  For most people, that will dovetail nicely with when their kids are adults.  For the early retirement crowd who’s checking out 10-20 years earlier than regular people, it might not.

It’s a conundrum.

On the one hand, some subset of society (the mother guilt subset) says that it’s a good thing to maximize your time with kids, so work part time – or less – while your kids are young.  (Note that I usually get a free pass on the mother guilt thing because I’m – you know – a single parent, and have no choice but to work – except when I do.  But even then I get a free pass because everyone knows single parents are all poor.)

On the other hand, when the kids are grown up and independent, you can travel when you want.  Hello?!? – cheap airfares at offtimes!   You can do things in the evening like join book clubs or scrabble clubs or go to the gym – guilt free!  I had a year of that kind of freedom before my youngest son came along and it really was all kinds of awesome.  Knowing me, I’d also want to be going out for dinner with or cooking for my kids, but anyhoo…

Lately I’ve been thinking very hard about when to officially retire.  For real this time.  And I’m starting to think that when the kids are gone (or at least the little one has grown up) is the best time.  Because my kids don’t seem to be the leaving type – (and I like having them around). 

Here’s why I should wait to retire – and we’re talking 53-55 or so here:

If I’ve got to be home or in one place anyway because I have a kid in school, why not be working?

I don’t think it’s a good thing to shuffle school age kids around and disrupt their lives and friendships.  YMMV if you homeschool.  The last trip we took earlier this month, my 11 y.o. got a week’s worth of homework to do – on a cruise!  (And one of the teachers laid a big ole guilt trip on me for taking him out of school for 4 days.   I wonder if Robert got a lecture from his kids’ teachers on taking his kids out of school on his recent cruise…)

The decade(s) of the 40′s – 50′s is a HUGE money making decade.  Deliberately lowering your income during this period is, let’s face it, kind of dumb.

The older I get, the more patient I’m getting.  I’m not sure if that’s a good thing or a bad thing.  So I wonder if I’m destined for the 55 y.o. plan.   I don’t have a significant other that can pick up the kid slack while I gallivant around the world in more or less than 80 days.  And truly, I don’t even like traveling even though I’ve done a lot of it.  But I’m not sure if I don’t like traveling or if I just don’t like traveling *only* with children.   Maybe mom needs a trip of her own now and then.

I hope I’ll know at some point that it’s time to pull the plug.   In the meantime, I’ll keep on trucking and saving 50% of whatever I make for that future self.

I hope she’s not as indecisive as I am.

What say you?  Wait until the kids are independent (or you hope they are)?  Or be home more during the formative years? 

What if the formative years for a career conflict with the formative years of your children?  What then?  And what are the “formative years” anyway?  And why does it change depending upon how old your kids are or what stage your career is at?  What’s up with that?

My friend Mel has a very full life.  She runs a great homeschooling blog, has written a novel, homeschools SIX! kids, has a great marriage, a great body and loads of friends that she spends a lot of time with.

Every day we use the site idonethis.com to write to each other the list of things we accomplished that day.  She has a list of a bazillion things every day that she’s done.  Mine goes kind of like this:

• meetings (average 5 or so a day)
• some work project
• shoveled the sidewalk – even the driveway if I’m overachieving!
• evening routine
• walked the dog

Yay me.

High expectations in personal finance

Then you look at the speed that some people can get out of debt, save for retirement or pay their mortgages off and want to move as fast as them but you can’t because the harsh reality is that you just don’t earn enough, or you’re not married and pulling in two incomes, or they have no kids, or…  Just like my time is a limited resource nowadays, for most people money is a limited resource too.

So sometimes we give up and don’t do anything at all with the limited resources we have. We save nothing instead of the $50 a month we could be saving or putting towards our debt.

The only way out is to increase the resource – or give ourselves permission to move a lot more slowly and pat ourselves on the back for that slow progress towards our goals.  Because it’s all we can do.  Without slowly killing ourselves anyway.

Sometimes – when I’m not feeling sorry for myself – I even get sort of angry or jealous or some kind of weird mix of emotions that I don’t understand – at those people who can do so much with their time.  Until I remind myself that I chose this demanding job, I chose to never get married, I chose to raise my kids on my own, I chose a high energy dog, I chose this fixer upper house rather than a low maintenance apartment or townhouse.

And maybe I should learn to make better choices.

In the last few years I’ve had half a dozen different contract jobs ranging from corporate tax work (ugh) to budgeting (twice!) to winding down companies (love it) to bankruptcy work (fascinating but sad) to financial statement work (high pressure).

Most people don’t want to do contract work because it involves a fair amount of uncertainty and no security.  You don’t know from one year or month to the next if you’ll be working or not.  You generally don’t know how long a contract will be for (most go longer than planned).  There’s no time off for paid vacations so it’s hard to justify taking time off during a contract when you could be out of work for quite some time in the future and when you’re sick, you don’t get paid.  And there’s no benefits.

For the most part, your rate has to encompass all of the above downsides.    In the last few years, I’ve charged out from anywhere between $85-$150 / hour.  That’s pretty standard for my profession.  And I’m “experienced” (aka old).

It’s been quite easy for me to get work these last few years, much of that having to do with an economy that’s still doing fairly well where I live.

Here’s a few tips for people who are interested in moving to this kind of work:

1. Make friends wherever you work – a lot of friends.  You don’t have to be some kind of social butterfly, going out for drinks or lattes with coworkers every day.  Just be easy to work with and outstandingly helpful to others.  Make sure you have really good relationships with the people that are actually doing the hiring and you’ll never have to send out a resume again.
2. Let people know that you’re looking before you actually need a job.   And don’t be shy about asking.   This last contract took 7 months from when I first heard about it to when they actually got the go-ahead to hire me.
3. Be a generalist if you can.  Over the last 25+ years, I’ve done anything and everything it’s possible to do in my field.  This widens the possibility of what I can do in the future.  People want to hire someone who’s actually done the job before that they’re hiring for.  This is especially true with contract work since they don’t expect to have to train you.  You’re expected to hit the ground running and be a major self-starter – usually because you get no direction and often have no real “boss”.  You may make more money in some fields as a specialist but the downside is that you may not be able to pick up work as easily.
4. Go to contracting agencies if you have to but be aware that your charge out rate will be lower than what you can probably get on your own.  Most agencies will charge anywhere from 20-50% over your billing rate.  I’ve only gone through one agency and that was my lowest paying contract by quite a bit.
5. Really try not to let a good contract go – even if you have to work two jobs at one time to do it.  I did that for over a year and don’t regret it even though it took a lot out of me.  I didn’t let either of them down but both were flexible enough to allow me to hop in between them to some extent.
6. Build up a really big emergency fund.  I’d say it should be double what your average employee’s e-fund should be or at least 2 years of living (frugal but reasonable) expenses.
7. If you’re just starting out in your field, get a lot of experience in many different areas and with a variety of companies, even if you have to job hop to do it.

I’m sure there’s a lot of tips I haven’t covered above.  The trick to contract work really isn’t much different than what you have to do to get a regular job.  A lot of people get into it because they’re unable to find a regular job, not as a regular lifestyle like I have.  If you’re the type that gets bored (like I do) six months or a year into a new job after you’ve learned everything, then contracting is probably right for you.

You just have to be able to handle the uncertainty – both financially and mentally.

My son’s friends are frustrating me.

Some borrow money – and don’t pay it back.  Some let him pay for them whenever they go somewhere.  I admire his generosity, but…

Most are just actively trying to talk him out of pursuing his goals – to work less and save less.  I don’t get it.

Your 20′s is when you usually leave some people behind.   Although it’s sad, it’s probably a good thing.

My son puts in 70+ hours a week across 3 jobs.  In the last 3 months, he’s had 2 days off, one of which was Christmas Day.  I think he slept for about 14 hours.

He gave one of his friends the Christmas gift of forgiving a $150 loan (that’s the cost of one of his university textbooks!) that he made to her about 6 months ago.   The chick has an iphone (and he doesn’t), a 2 bedroom apartment (and refuses to get a roommate) and puts in less than half the hours he does.  She calls him lucky and herself unlucky.

Yup, lucky.