Milestones – Registered Education Savings Program

I really try and not look at our investments in this bear market because it doesn’t change any of our savings behaviours and it won’t make a lick of difference to stress myself out like that. HOWEVER, I got to thinking about the things we save for and I wondered, “what does tuition at a local university look like now?” Some quick googling later and I realized that we have enough education savings for both kids to each do a four year degree at a local university (even with our market losses).

What is really interesting is how the savings is divided. Half of that half of that savings happened in the past 3 years when we had more money to put away. The other half of it was mostly all done in the 9 years previous to that! When the Sprout was born we opened an RESP at a bank and started saving $80 a month – $40 for each child. It wasn’t a lot but it was all we had. On top of that, we asked family to contribute to the RESP for birthdays and Christmas. The kids were young, probably wouldn’t remember anything that they bought them but we figured that they would appreciate being able to go to post-secondary without debt. So for years we added all the cash they got to their savings – until they were older and wanted to use the money for other things, of course.

We still aren’t finished saving for them as they are only 12 and 14 now. It is nice to know that tiny amounts saved over long periods have got us to the point where they won’t have to worry about student loans for at least an undergraduate degree.

So if you are a young family and thinking of saving in an RESP but are worried that you don’t have a lot to contribute, remember that $40 a month + gifts from family essentially added up to half of a degree for her by the time my eldest was 14. Of course, as soon as we made more we invested more and that covered the other two years. The takeaway here is that small amounts invested over long periods add up to big gains. The difference between taking a student loan for two years vs. four years is also huge in terms of time it will take to pay it back. If they get scholarships, great – you have enough to help with grad school! If they decide to not go to post-secondary, great – it can be rolled into an RRSP (contribution room willing).

To learn more about the RESP, check out the Government of Canada website.

When it rains, it pours (in the laundry room)

Mr. Tucker has always had a tumultuous relationship with the appliances that came with our house. From my perspective, he has an overly inflated view of how well appliances should function in today’s age. In his view, if you pay that much for something, they should work flawlessly. Truth be told, we’re both partially right.

It started at our old house we replaced our 30-year-old top loader & dryer with an energy efficient Samsung washer & dryer. Within a year we had to call the appliance repair person who basically told us that they were garbage appliances. He came back thrice that year to fix something until finally Mr. Tucker just decided to completely replace the dryer.

Since we had previously had good experiences with Kenmore, the Sears brand, Mr. Tucker decided that we should buy that brand with one caveat: no technology! He wanted an old-school clicky dial and mechanical machine that wasn’t governed by microchips and touchscreens*. When he went to Sears (RIP *snif*) to buy one, the salesperson explained that while their machines had dials that clicked and felt like low-tech, old school versions, they still had microchips and were still riddled with technology. In fact, the chances of getting an appliance there that didn’t have a microchip in it was zero. Still, we bought the cheapest model and it went on to serve us well until we moved out of the house.

To be fair, the man who used to own The Mullet loved this house and put top-of-the-line appliances in. Some (like the Dacor gas range) work amazingly and other ones (the Frigidaire Gallery dishwasher and fridge) not so much. Overall though, the appliances have done us well over the past 5 years in the house. Still, all good things must come to an end and a few things have.

1 – Mr. Tucker gets furious with the ice maker in our refrigerator but it’s the cheap shelves that are the real issue for me. The glass shelves inside the fridge have started to crack their plastic holders, which is frustrating enough but all the door shelves have busted off too. The most exasperating part is that a door shelf is $100 – for like a 6″ x 15″ piece of plastic! That’s just bonkerstown.

2 – The wall oven died slowly over the course of the spring. In its defense, it was original to the house (built in 1962) so it didn’t owe anyone, anything. Avoiding the more common, inexpensive brands we ended up deciding to splurge on a low-tech, higher-quality Italian brand. The cost? Approximately $3000 with installation. Wall ovens are expensive though and a comparable common brand would have been $1500-$2300. We wanted to go with a quality product that would last though and hit the low-middle range of the higher quality products.

3 – Then as we waited for 3 weeks for the oven install, the dishwasher died. At some point we will have our appliance guy out to look at it but until then the kids are washing the dishes by hand. They keep asking when we will have a dishwasher again and Mr. Tucker replies, “But we already have two dishwashers!” He’s definitely in his Dad joke years.

4 – The seal on the clothes washing machine somehow became twisted and we had a small deluge in the laundry room. Thankfully, Mr. Tucker caught it in time & it was something he could fix. Still, after all the other appliance drama I think that was the last straw and had we had to ALSO replace the washer he probably would have just walked out into the woods, never to return.

When we were in the thick of all the appliance drama, one night I tried to explain that unlike previous generations – even our parent’s generation – we tend to have an overly-inflated view of how much free time we should have and how much time we should spend on life tasks. Previous generations did more home and garden maintenance than we do, and even 100 years ago the expectation that you would have any free time was not a given except for a few moments snatched here or there. Life was work from the time you got up until the time you went to sleep. But for those of us who are Gen X or younger, we tend to think of most things outside of our work hours as free time. We hire people to do a lot of the maintenance around the house that previous generations did themselves on the evenings and weekends. So when things break – as they most certainly do in the age of Planned Obsolescence – we get angry at having spent money on things that are costing us precious free time when they were designed to GIVE us more free time.

So maybe that is why we are reluctant to call the appliance repair person yet AGAIN to look at the dishwasher: the kids are washing the dishes and it is working well enough for us so why spend the money? We also made the decision to not replace the shelves in the fridge – although I did float the idea of making some out of wood. I guess the situation isn’t, “if it ain’t broke don’t fix it,” so much as it is, “if it’s broke – do we really need it?” and “if we really need it, can we spend the money on something that won’t break down soon?” My final thought on this is something we should all consider: have I RTFM** and maintained the appliance properly? Chances are, that’s where the issue started.

*Hilarious for a man who works in IT and who used to believe in technology’s power to change the world. As the great Ella Fitzgerald once said, “What a difference a day makes.”
**Read the fucking manual

The History of work & the fallout

On our flight back from Puerto Rico in March, I ended up watching a documentary on overwork. It’s a very basic overview on the issue but I found it a good primer. It’s only 50 minutes long and you can find it online here:



Until I was diagnosed in 2018 I ran a blog that was loosely based on early retirement. Even before that, I had a livejournal that was personal but that also discussed frugality and Simple Living. I think I was lucky in the fact that when I was 18 years old and poor as shit, I came across The Tightwad Gazette which led me to Your Money or Your life – the de facto standard on early retirement. Since then, it was my goal to work as little as possible, save as much as possible and hopefully be out of the rat race fairly early in life.

I mean, GOAL ACHIEVED! C’mon, you HAVE to laugh: the universe has a cruel sense of humour.

(I have already discussed this origin story in this post if you are interested in the long version)

Of course, I would have loved to have continued working and been able bodied for a long, long time but given that this wasn’t an option, being able to keep some semblance of a salary plus benefits was a close second. As Tyrion Lannister said, “If you’re going to be a cripple, be a rich cripple.” While I’m not rich, I am also not struggling which is a gift.

So once we adapted to this we started working on Mr. Tucker’s escape from work but then he changed his mind. Since then, he’s received a promotion with a substantial raise, which is great considering how much inflation we’ve seen lately (and our appliances are dropping like flies, which is a post in itself).

Still, I am still interested in the idea of early retirement and working less because I feel it’s something that our communities (and the society at large) as well as the environment need. I think it’s absolutely bonkerstown that we can’t figure out how to make permanent part-time work…work. It’s interesting to watch Canada move towards universal dental care in the next couple of years with universal pharma care maybe not far behind it. These stressors are what make people panic about not working full time even though if more people worked part time there would be more work for everyone. Of course, since it’s an employees market right now, there may be room to negotiate these better hours for people.

The pandemic has really shone a light on how much we are stuck on that idea of workplaces as factories. There has been a battle between employees and employers over the past two years and despite the success of WFH some people still want to go back to the office. Employees who’ve generally enjoyed their time and money back from not commuting, not buying food out, not buying work-related clothes would like keep some flexibility in working from home. Employers on the other hand are still stuck in this 9-to-5 panopticon office mentality where they feel everyone should “put in their time.” The problem is that studies have shown that for knowledge work, it’s mostly task-based, not time based and that not all hours of the day are productive ones. It seems to me that if you are getting paid for your education, experience and output, that it is completely backwards to treat the workday like a factory you have to punch in and out of.

Of course, the flipside is that a lot of knowledge workers work in tech and tech has a vested interest in you sitting at your desk for as long as possible. People lauded Google for supplying their employees with such benefits as free meals, in-house doctors, hair cuts, oil changes etc. but as a friend who worked there once said to me, “Do you know why they do that? Because if you need to go to an appointment, that is a couple of hours of you not going “ticky-ticky” on your keyboard for the company. It’s cheaper to provide these services to employees to ensure they aren’t away from their desks for too long.”

In Ontario, where I live, they treat knowledge work like factory work – with the exception that there is no overtime pay for certain workers: IT, law, accounting, medicine and the entertainment industry. Also of note, many manual labourers who work in agricultural settings such as growing mushrooms and various other plants and trees for the retail trade (which is usually piecemeal work done by labourers brought into Canada on agricultural visas). Oh, and of course teenagers. So I question the factory model of “putting in the hours” when it’s clear that the output should be the yardstick of successful work.

But watch the video. I found it interesting and I especially enjoyed David Frayne’s The Refusal of Work for more comprehensive introduction to work theories. My only wish is that he had explored more of the case studies in the second half of the book.

* * *

I ended up taking out some of the books written by the interviewees of this documentary as well. So far, I have received:

Team Human by Douglass Rushkoff.
The Refusal of Work by David Frayne.
McMindfulness by Ronald Purser (which I haven’t started yet).

I haven’t read anything by these folks also featured but will in the future:

– George Monbiot (whose website seems to have some interesting blog posts).
– Guy Standing who writes a lot on Universal Basic Income (UBI). A list of his books can be found on his website
– Jason Hickel who focuses on global inequality etc. website.
– I’ve seen a lot of Carl Honoré’s work because his books are pretty popular. His website.
– Faiza Shaheen has a book coming out in 2023 titled Know Your Place: how society sets us up to fail.
Grace Blakely who writes about leftist politics in books and for the New Statesman
– Bredan Burchell (who hasn’t really written anything recently but is a professor at Cambridge).

People I couldn’t find any info on:
– Margaret Anderson, University of Michigan

Making the decision to send my kid to private school

The Sprout has always struggled in school. In our previous school it was less apparent because it had measures in place to help kids as well as smaller classrooms due to a larger population. From the moment we moved four years ago however, the Sprout started to act up.

Of course, it was an incredibly trying time. We moved, the kids switched schools and then within a month I was diagnosed with PLS. It was an incredibly stressful time for all of us. At first Sprout had made a good friend and that made it ok for awhile but slowly both kids started to have a caustic relationship until it just ended. That unfortunately coincided with Sprout having challenges with the school, especially their teacher. We thought we had made some progress, they made new friends but we continued to have issues in the classroom.

The following year, Sprout changed classes and it was amazing. They were separated from the friend they had challenges with and were doing well in a classroom setting…until they had to reorganize the classes & Sprout was moved to a class with the previous year’s teacher. At the time I agreed to it but I failed to recognize how abrasive that teacher was and over time Sprout’s behaviour became more and more aggressive.

Then the pandemic happened.

Online school was a gift for Sprout. They did much better than they had in traditional school. Because we have terrible luck though, they were put in an online class with the former friend with whom they had the caustic relationship the previous year. There were some issues with online communication between them, with – if I am to be honest – Sprout being the aggressor who would get histrionic about things in the class chat that happened between them in the past. So near the end it was challenging but overall given the pandemic, it went well.

This year started off ok but over time it was clear that the classroom setting with the large number of kids wasn’t working for Sprout at all. The constantly had issues with behaviour and anxiety and were disruptive and aggressive. Don’t get me wrong: it wasn’t all their fault. Thirty kids in a classroom is a lot and I suspect the sheer numbers alone contributed. There were also some bullying issues that I feel went unresolved and allowed to continue. So following the advice of some of the learning specialists we had Sprout try anti-anxiety medication and we put them in therapy. Meanwhile, the school started testing Sprout for learning challenges. I don’t think they expected it but Sprout scored so high that they were forced to test them for the gifted program. Because nothing is ever easy for the Sprout either: their bully was also being tested at the same time. He did his utmost to undermine Sprout’s confidence at every turn telling them that they were too stupid & that they needed 100% or else they wouldn’t get in.

Sprout’s behaviour did get better with medication and therapy but not good enough. Also, it felt like their fate was sealed and that no matter what they did they couldn’t get out from under the branding of BAD STUDENT. I think the final straw for us was when they were suspended.
In order to understand my frustration, I need to add that my eldest child was also in that same class two years previously. During the Bean’s time there, she had an aggressive kid in her class who once told her at recess, “I am going to sexually assault you!” Of course, Bean took it to the teacher who told her that there was nothing that could be done because the teacher hadn’t been out there at recess and had not witnessed the incident. Nothing was done & the Bean only told me about the incident AFTER they left the school.

So when I got the notice that the Sprout was suspended you can imagine how furious I was to discover that Sprout was suspended about an alleged incident that happened off school property, as the kids were walking home from school. Apparently the other kid said something mean and the Sprout shoved her. Now, at no time did anyone ask the Sprout about the incident, it was just assumed that since they were the BAD KID that the other kid and their parent (who wasn’t even there) were right and that things happened exactly as they said. When I asked why the school could suspend a kid over something that happened off of school grounds I was given a song and dance about how it was their job to ensure the safety of kids blah blah blah.

To be fair, the learning support teacher is amazing. She worked really hard at trying to help the Sprout succeed and gave them a bunch of tools to help them calm down and work with their feelings when they got out of control. They even made sure to get external support in the form of Social Workers to help observe Sprout in the classroom (a fruitless effort, in my opinion, as people who are being watched are always on their best behaviour) and other tools they could use to manage their big feelings. In the end though, it was no match for large classroom sizes and an administration that was prone to misrepresenting situations. It became clear that the administration did not like the Sprout at all and the inconvenience of having them in the school was a constant source of frustration for them. On top of this, I learned that they were keeping Sprout in at recess as punishment (a terrible idea for a kid they know uses exercise to manage emotion, which just set them up for more failure) and putting their desk out in the hallway to deliberately ostracize them from the rest of the class. There are myriad examples I could pull out about the lies they’ve told (that I’ve caught them on – and I am sure many more I haven’t), how they’ve prioritized the sneaky wheels over actual fairness, and how Sprout was never able to get over their labelling them as a BAD KID so nothing actually got better even when they acted better. So all of this, plus what the eldest had experienced, we were thoroughly done & so we started to look at private school options.

Sprout is a challenge. That is definitely fair. But the behaviours that we see in school NEVER happen at home. Sprout is very rarely explosive and while they can be lazy, they aren’t violent at home or at their recreational activities. They also love learning and they love project-based tasks and I fear that keeping them in public school will just suck their love of learning out of them and lead to worse behaviour as they move into the most challenging years of their life. So we hope that a small school & a self-led learning program will help smooth over the rough edges that Sprout has experienced with the rote learning public school program. Of course, the flipside of this is that if this school doesn’t work out, we know for sure that it wasn’t environment and can work from there. But it is my fervent hope that these last eight weeks of school will see Sprout thriving in a less structured, learner-driven environment.

What breaks my heart is that I have always been a huge supporter of public education and I can’t help but think of Noam Chomsky’s quote, “That’s the standard technique of privatization: defund, make sure things don’t work, people get angry, you hand it over to private capital.” This applies to education in this province and it is super frustrating. On the other hand, do I let my kid suffer through this experience – maybe for the next six years – because I am supporting a system that keeps failing them? It is also not like we are rich but we are privileged enough to be able to swing this if we make cost-cutting a priority in other areas of our budget. I am acutely aware of this as well. In the end, I am choosing to try a different path for my kid in the hopes of giving them the support they need. Hopefully, this means that the resources they used will be freed up for a kid who doesn’t have the option to move out of the public school board. At least, that’s how I am justifying it to myself.

Harvest apple galette

I do plan to post all of the canning and preserving recipes here for posterity but since I am knee-deep into apple season I thought I would post a simple dessert recipe. Unlike a pie which requires shaping, a galette is a free form pie that is more rustic. Because I use butter in this recipe, expect the crust to not be as silky as a crust made with seed oils or lard. Butter makes it more crumbly but has a lovely taste comparatively.

Essentially, I have based my recipe on this Mixed berry galette recipe but because I wanted something easier, I took some shortcuts. Instead of 8 small galettes, I made one large one. I also adapted it for the stand mixer (can you tell that I am lazy?). Also, keeping with the rustic (read: lazy) theme, I don’t peel my apples. That way, I can whip this recipe up in about 20 minutes of hands-on time.

Sweet Shortcrust Pastry:

1 ½ cups all-purpose flour
¼ tsp fine sea salt
¼ cup granulated sugar
½ cup cold unsalted butter, cut into small cubes
1 large egg, lightly beaten
2 tbsp heavy (35%) cream

Add all of the dry ingredients into the bowl of the stand mixer. Using the paddle attachment, let the machine run on the lowest setting for 1 minute. Add the butter & continue to let the machine run on low for 1 minute & then switch to 3 until the mixture is well blended and the butter is the consistency of small peas. Add the egg and mix on low until incorporated then add the cream and run the machine until the pastry comes together. Wrap the dough and put in the fridge for ½ hour to let rest.

Filling:

4 cups of chopped apples
¼ cup of brown sugar
1 tbsp cornstarch
1 tbsp fresh lemon juice (about ½ of a lemon)
Grated zest from 1 small lemon (about 1 tbsp) – optional (but I like the zing it gives)

Add sugar, cornstarch & zest into a bowl and mix well. Toss in the apples & juice and mix well.

Assembly:

Roll out the crust to about 12 inches in diameter. Remember, this doesn’t have to be perfect so it’s ok if the edges are scraggly. I like to roll out the dough in between a Silpat and a piece of parchment paper with the finished product ended up on the parchment paper. Lift the parchment paper/dough onto a baking tray & center it. Take your apple mixture and pile it into the centre of the dough, leaving at least 2 inches around the outside. The juice from the apple mixture may leak over the dough, don’t worry about it. Start to fold up the edges of the dough around the apple mixture, working your way around the circle until it’s all folded up like a little basket. I find it helpful to lift the parchment paper up & over the apple mix as you work your way around the circle to let gravity help the dough roll over.

Bake in a preheated 350F oven for 30-35 minutes. Serve warm with ice cream or whipped cream.

It’s been a hot minute – what I am up to

WELP. The idea of writing consistently here this year as a New Year’s resolution didn’t happen. Still, I’ve not really spent a lot of time on social media this year and I have definitely kicked my facebook habit (and replaced about 50% of it with an Instagram habit – oops!). Of course, the pandemic is still out there pandemicking but the kids are back in school so that is nice. We had a great summer of outdoor socially distanced hangouts, and now we are settling in to have a lovely autumn full of fun fall activities. But first, maybe a roundup of what has happened in the past 6 months since I last wrote:

Cottaging on Manitoulin island: we have probably shut the door on camping/cottaging with the two other families. Since Sprout was 2, we’ve either Glamped in Quebec parks or we’ve rented cottages. This year we had a lovely week in Dominion Bay where the kids could run around, play games and go for long walks. My friend S did her yearly craft camp for the kids & there was woodburning, leaf painting & other projects completed. I mostly read, and we even headed out to an outdoor farmer’s market (a pandemic first for me!) where I bought cozy wool socks for me, rings made out of antique spoons for the kids, and a pepper grinder from a woodworker for Nick.

Unfortunately, during the pandemic there was a run on cottage rentals and even though we tried to book for next year early this summer, there was really nothing to be had that wasn’t $3000 a week – a bit steep. Also, our kids are much older now: Sprout is going to be 12 next year and the oldest kids will be 16 and will probably have jobs. It’s been a good run but it’s time to move on. Not all is lost though! More below!

Gardening: this was our garden’s second year & like the first year we kind of took the “set it and forget it” approach. Still, we got a lot out of it despite the chaos and have learned that we can probably sow an early spring garden, a summer garden & a fall garden. We did end up sowing a fall garden but a little later than I would have liked so who knows what will happen? Despite the cold, the tomatoes are still producing and the basil is going strong. Heck, some of our herbs – like lavender, coriander & dill – have re-seeded and are producing again. Since our goal is to bring those herbs inside for wintering under grow lights, I am happy to see it!

Hopefully we will get some cool weather crops before the snow flies! Then we will pull the dying plants, lay on our home made compost and let the beds winter. Otherwise, we have garlic to plant for next year before the winter sets in.

    Canning, preserving & gleaning: we did most of the things we had done last year that we had enjoyed,

– Horseradish dill pickles
– Tomato sauce
– Spicy dilly beans
– Strawberry and raspberry jam
– Sundried tomatoes

    Some new things,

– Both dill and sweet mustard relish (made when our cucumbers turned yellow)
– Red onion and beetroot chutney
– Marinated eggplant

    Some boozy things,

– We made Nocino from friend’s black walnuts
– We made a bachelor’s jam for Winter Solstice/Yule
– We are now trying our hand at plum wine from our friend’s plums

I am going to do an entire post on all of the things we did & some recipes sometime soon. What’s notable though is what we didn’t do: salsa or tomatillo salsa. We really weren’t going through it as quickly as I thought we would, so we focused on tomato sauce instead.

Money Mondays: this is still going strong! We’ve done sessions on a bunch of things such as the Disability Tax Credit, had a guest speaker to do a presentation on wills, and next week I am doing one on budgets.

Health: the good news is that the ALS clinic told me that I am doing well enough that I only have to come in once every two years! The nurse told me that this was the first time she’s heard the doctor tell someone that so I am pretty proud. Still, I could be doing more work on my health to be quite honest.

– Mr. Tucker and I are taking long walks (I bought a yellow tricycle, which is what I usually take) weekdays. We grab the dogs in the morning, walk Sprout to the end of the street, then we walk the Bean to her bus stop & then we head down to the river for a longer walk (or just through the neighbourhood on busy mornings). It’s been really good for us both to be forced to get up, washed, dressed and out the door. Otherwise we just lounge around the house in our jammies.
– I plan to do #folktober next month to work on my fine motor skills with painting. I bought some nice watercolour paints and I need to encourage myself to use them. Wish me luck!
– I need to clean out my knitting basket to make it more user-friendly. The Sprout reminded me that I said I would teach them to knit and I still haven’t. So again, in the interest of my fine motor neuron skills (and keeping my promise) I should pull that out again.
– My vitamin regimen has made my cycle much better and that in turn has also helped my spasticity.
– I haven’t had alcohol since October 28th, 2020.
– My skin has been just awful so yesterday I was tested for a bunch of things (celiac, thyroid) and my GP is making me appointments with two dermatologists, so we will see how that will play out. I figure this may be an ongoing saga for awhile as appointments are sparse due to the pandemic.

Finances: shockingly, Mr. Tucker has made the decision to work longer in order to put more money into some house-related projects. This means we’ve eased up on our intense budget and instead we are buying more things that bring us joy. For example, we are trying to rehire our old housecleaner again as we’ve decided that our weekends are probably not best spent arguing with the kids over chores. They both know how to clean an entire house so we’ve done our job here. They’ll still have chores, just less of them.

I have also increased our a> grocery budget; and b> our pocket money. We are still saving at an amazing rate but we aren’t as intense as we were for most of this year. We hit our prepayment amount for our mortgage & will contribute to Mr. Tucker’s retirement accounts (but to a lesser degree).

Instead we are also going to…

Travel: both near and far. When we were on Manitoulin Island this summer we made the decision that if cottages were going to be $3000 a week that we would be better off booking a trip down south instead. So that is what we have done. We have tentatively booked a vacation to Jamaica next winter (covid willing!). We booked our flights & house rentals but we did manage to get good cancellation policies so we will see where the world is at come winter.

We also have decided to treat the kids & take them to Canada’s Wonderland for the Halloween Haunt. We ended up buying season passes with another family in the hopes of going back for a couple of days next summer as well.

I would like to also do more things close to home such as heading to various Halloween-themed (outdoor) events in our area. After a year and a half of being stuck at home, I am eager to spread my social wings!

So that is about it for changes around here. Mostly my days are spent reading and parenting & watching shows or playing games as a family. I think we’ve turned a corner on covid – at least in our area of the world – so I hope that stays steady. Overall, life is pretty good.

RRSPs vs. TFSAs

We have a motley little group of people who get together for what we call Money Mondays. Last week I spent 8 hours doing the write-up below & accompanying deck. It isn’t edited & it’s meant to give an overall view, so it is very lean on details. However, I thought some people may enjoy it so I’m posting it below.

Having said that, I have also recently come across these three interesting articles on retirement, which I found super informative.

Running out of time before running out of money

Most retirees will never spend down their portfolio

Why retirees go broke

TFSAs vs. RRSPs

Basically, the way you should look at them is as if they were buckets. They are just holding places for where you put your money. On their own they are nothing – just places where you can stick money. If you put $100 in each of them today, you would have $100 in 20 years.

BUT, within the buckets you can hold almost any kind of investment: bonds, index or mutual funds, GICs, etc. (OBVZ not real estate) and the investments are allowed to grow tax-free within these buckets.

Lexicon issues

Part of the confusion surrounding these two (buckets) is the way the finance industry speaks about them. For example, “my RRSP made $1000 in interest last year” is technically correct but what it really means is, “the investments INSIDE my RRSP made $1000 in interest last year.” Some people think they can just stick money into the bucket and leave it. You can but you won’t make any interest on it. Unlike the low interest you may get in chequing and savings accounts, TFSAs and RRSPs generate ZERO interest on their own. You need to choose an investment to generate interest.

What the hell is a pre-tax dollar? The language around RRSPs is often confusing with many articles stating that you will “get half of the money back” when you contribute to an RRSP. That *can* be true – if you are a high-income earner – but it is generally much less than this.

A pre-tax dollar means that you can save money in an RRSP BEFORE the government taxes your salary. So if you make $55000 a year, and you put $6000 into an RRSP, the government treats your income as if you had made $49000 instead. So the government returns the taxes that you “overpaid” on that $6000 when you contributed to your RRSP.
With Group RRSP plans and Pensions, your Pay & Benefits department usually already adjusts your salary based on your contribution. So you get more in your pocket every pay but you won’t see as much of a “return.”

What the hell is an after-tax dollar? That is basically money from your NET pay. You’ve already been taxed on it.

Two notes

Tax brackets: If you will notice in the above example as well, an RRSP contribution can bring you down a tax bracket:

– On the first 0-$49020 the tax rate is 15%
– On the next $49020 to $98040 the tax rate is 20.5%
– By contributing to an RRSP, that (appx) $6000 is escaping the fate of being taxed at 20.5%

(we can discuss how progressive taxation works another time)

A note on pensions: You will notice that above I mentioned that Pay & Benefits departments usually reduces your tax-payable at the source when calculating how much tax to take off of your paycheque. That is because Pensions and RRSPs use the same contribution room calculations. So if in 2021 you contribute $20000 to a pension (if you are in the max RRSP category), you will only have $7830 left in contribution room should you decide to contribute to an RRSP. It’s all treated as retirement savings.

So how do I choose which one to contribute to?

The basic rule of thumb (I hate rules of thumb) is that if you make less than $50000 you should contribute to a TSFA and if you make more than $50000 you should contribute to an RRSP. But those rules only apply if you DON’T have a pension.

If you do have a pension? Likely, a TFSA (unless you want to retire early).
If you don’t have a pension? Ideally: both. If you can’t do both, RRSP.

The reason for this is that the RRSP is actually a TAX DEFERRAL PROGRAM. The way it works is that you contribute to your retirement during your high-earning years and receive a tax incentive to do so. Between now and retirement your nest egg will grow significantly & tax-free until you go to take it out. The logic is that when you retire your income will be reduced significantly so that when you take money out of your RRSPs you will be in a smaller tax bracket.

A very simplistic example

So let’s play with an example. Say you make $65000 a year and because you are super diligent and amazing and basically don’t exist, you max out your RRSP from the time you are a wee bairn with their first job. So you contribute the maximum – $11700 a year – until you are 65. Give yourself a pat on the back, you non-existent person you!

To make it easy for our example, we are going to assume that nothing changes (no raises, no tax bracket changes, market doesn’t crash etc.) but guaranteed all these things will change. Still, we put our money into index funds which make us a return of 5% a year, compounded for 25 years. So it looks like this:

$11700 x 5% with $11700 added every year and compounded over 25 years = $621353

Another rule of thumb (ugh) is that you need 70% of your working salary as your retirement salary. In the case of this example, that would be a gross income of $37310*.

So without getting into the niggly details, let’s assume that the government is going to give you $18000 a year** meaning that if you want to hit that $37310 amount you are going to have to take out $19310 from your RRSP. Luckily, you have it!

But the devil always gets his due, WHOMP WHOMP and you find yourself paying taxes on that $19310, which means you have to actually take out $22207 to pay off your $2897 tax bill.

Still, when you were working you had been paying 20.5% on any money you made over $49000 so you got a bit of a break there and you saved yourself 5.5% in taxes on the $11700 you put into your RRSPs, so it’s a minor win.

Still, even when the tax brackets don’t switch or the amounts are marginal-to-poor, the biggest boon is the ability to have your money grow and make money within the RRSP without paying capital gains on it***. Had you saved the $11700 a year and not invested, you would have $292500 – a far cry from the $621353 above!

*Wait! Why not $65000 x 70% = $45500?! Because I am calculating it on $53300 because that is what you were living on BEFORE as you had actually put $1170 into RRSPs every year: 65000 – 11700 = 53300.
**They won’t
***Capital gains are when you make money on something, 50% of the amount you made is added to your salary and taxed at that tax rate.

We’ll get to more on Pensions, TFSAs and taxes in a minute but wait, there’s more…

A note for Chicken Littles…

A lot of gums flap about how programs like CPP/OAS/GIS won’t be there or will be bankrupt when we go to retire. Honestly, CPP itself is in a pretty healthy state so far which is also why you are seeing the rates go up a lot. I love when I see old, cranky Conservatives go on about how THEY PAID INTO IT and how they want more but none of us really pays what we put in if we live to a ripe old age (some of us will die early and thems the breaks!). CPP is at its core a pyramid scheme so as long as people are working and paying, the longer it will exist.

Also, if these programs go POOF likely the entire economy – or maybe society itself – has collapsed and we’ll have bigger worries than this. I think the finance industry has a vested interest in convincing us to save more by convincing us we can’t rely on it.

Screw rules of thumb, a diatribe

So you aren’t – and I am certainly not – average. A friend and I have discussed our retirements together and she can’t see her expenses going down by 30% at all! So she will need to adjust for that shortfall.

In fact, this is the case for a lot of retirees who often travel, take up hobbies, help grandkids etc. Also, more and more people are heading into retirement with debt be it a mortgage or consumer debt so a reduction just isn’t feasible. We won’t even speak about disability or the price of an LTC!

Conversely, in my household we are spending a lot of money raising two kids as well as saving for their educations. When the girls leave so many of the categories in our budget will go down, from clothes to food to entertainment. Even still, our family is currently on an extremely tight budget for the next three years and we are saving over 50% of our income. What this tells us is that when Mr. Tucker retires, we can reduce our budget exponentially in a couple of different ways and still leave us a pretty good life.

So look at your situation and see if you fit into the industry’s perfect idea of a retiree, I bet you may not!

Choose your own adventure! I have a pension:

If you have a pension, you don’t want to have a HUGE RRSP (unless you plan to retire early but that is an ENTIRE presentation in itself). That is because pensions replace 70% of your income already and when you take money out of an RRSP that gets tacked onto your taxable amount. That’s not particularly bad if you want to take out a few thousand a year but once you hit 71, all hell breaks loose.

At 71 the government forces you to turn your RRSP into an RRIF. We can discuss those in detail at a later date but what is important to remember is that in a RRIF the government FORCES you to take out a percentage of the money every year. The amount increases the longer you live (you can see a chart here) from a 5.40% withdrawal rate at 72 to a 20% rate at 95 or older! So if you have a pension bringing in $60000 a year and you are 80 years old with a RRIF worth $600000, the government will force you to take out 6.82% of your RRIF bringing your taxable salary up to $100920! OUCH IN THE TAX PLACE!

So this is why it is recommended that people with pensions hit up the TFSAs first. If you were 18 before 2009 you have $75500 worth of lifetime contribution room and it goes up (appx) $6000 each year. The money still grows tax free from your investments in the TFSA bucket but the difference is that you aren’t taxed on the money when you take it out. So you won’t get fucked in the butthole by the forced RRIF withdrawal rules.

Different situations:
– It could be worthwhile to contribute to RRSPs as well, especially if you feel you want to top up that 30% that your pension doesn’t cover. I would do the math to figure out the TFSA vs. RRSP contribution amounts.
– If you have a common law partner without a pension, you can income split at 65. You can also split RRIF income so if your spouse made significantly less than you during your working life, spousal RRSPs or splitting RRSP/RRIFs may be right for you.
– If you plan to go to school in the future you may want to contribute to an RRSP to get the tax benefit and to take up to $20000 out for the Lifelong Learning Plan (LLP). The LLP can be used for you OR YOUR PARTNER. You have to pay it back within 10 years but it’s better than a loan.
– If you plan to buy a home and want to use the Home Buyers Plan (HBP). You have to be a first-time home buyer to use the HBP (there are exceptions such as disability) and you can take out $35000 and have to pay it back over 15 years. Again, good if you want to take the tax break and buy a home.

In both the above scenarios, even having $55000 to get an education and buy a home won’t drown you if you have to use an RRIF down the road so it may be a good idea to have some money in RRSPs even if you have a pension.

Choose your own adventure: I don’t have a pension & don’t make a lot of money:

The TFSA was really a program brought in to allow low income earners to save money and reap benefits that the high-income earners got with the RRSP. Since you don’t save a lot in taxes when you are a low income earner, the only real benefit of the RRSP before the TFSA came along was the lack of capital gains on what your investments made.

The TFSA works well because the amount you take out of it isn’t clawed back by the government programs. If your primary source of income is going to be CPP/GIS/OAS using TFSAs means that when you take out money without having your primary source of income reduced. When you use RRSPs, that changes your calculation of your yearly income thus reducing the amount from government programs.
Right now – let’s assume you have never contributed to a TFSA – if you were 18 in 2009, you have $75500 in contribution room in your TFSA. You will also get $6000 worth of room for the next 20 years. Assuming that you decide today to max out your TFSA by the time you are 65 and you are 40 now, you will need to contribute $9020 or $752 a month for the next 25 years. At the end of that 25 years at 5% compounded, you will have $479225.

I admit, that is really high for a low-income earner in after-tax dollars. But let’s do the math with various amounts:
$100 – $63729
$150 – $95593
$200 – $127458
$300 – $191186
It could also just look like you using your tax return to fund your retirement.

Choose your own adventure: I don’t have a pension but I make a good salary:

This is where RRSPs truly shine! You want to max that 18%, baby! Did you already do that? Let’s hit up that MOFO TFSA for some investment action! Honestly, you can’t really go wrong here. Just put all the money in all of the things, is your motto! I think it’s unrealistic to think you will have $33830 to max them all out but maybe you do? I don’t know your life!

Your situation is similar to the non-pension low-income earners except you probably have a more high-falutin’ lifestyle you will need to support. So you are better off taking the tax break now, having more money down the road, and accepting the clawback on government benefits.

The HBP and the LLP are both great programs that you should take advantage of if you want. A strong caveat that if you can both save for a house/education AND max out your RRSP you should do that. Losing 15 years of interest payments can really hurt the end result of your retirement strategy.

You can also pension-split RRSPs/RRIFs when you are 65 so it may be worthwhile to run the numbers on how to fund an RRSP. For example if the husband’s 18% is $20000 but the wife’s entitled to the maximum of $27830 and you only have $30000 the smarter thing would be to fund the higher-income earner from a tax perspective because you can income split down the road AND you are probably dodging the highest tax bracket.

Choose your own adventure: I don’t have a pension but my work has a group RRSP:

Max it out. It’s free money. Don’t ever say no to free money.

Most employer-sponsored plans have rules such as:

– Company will match 100% of your contributions up until 3% of your gross salary
– Company will then match 50% of your contributions up until another 3% of your gross

Honestly, it’s the best deal going. Turning it down is like saying no to a 4.5% pay raise.

So which is better TFSA or RRSP?

This argument has gone on forever with some people claiming that they are equal and some claiming that one is better than the other. I feel like it’s splitting hairs but here is a really long and complicated article detailing everything you need to know about TFSAs/RRSPs/OAS/CPP/GIS. Sadly, the answer is always: DO THE MATH.

At the end of the day just save something, anything, somewhere, hopefully in an investment that AT LEAST beats inflation.

One of my favourite quotes is “The best time to plant an oak tree was 20 years ago. The second best time to plant one is now.” If you are feeling overwhelmed and behind right now please don’t, you are not alone. At the end of the day doing something is always doing nothing and even if you don’t manage to get a million dollars in the bank would you rather be 65 with $100000 in the bank or 65 with nothing? It may not seem like a lot of money in the grand scheme but it is money that could dig you out of a very big hole if you need it!

Note: I use The Calculator Site but if you want to use your own, YMMV.

Northwestern researchers discover new protein to prevent & reverse damage in UMNs

The problem with having a rare disease is that almost no money goes towards research. With PLS it’s even more complicated by the fact that ALS – also a rare disease – tends to be the MND most likely to get research money. Of course, that is with good reason as ALS is a horrific disease that I would like to see cured as soon as possible. Unfortunately, even though it would be handy to have people with other UMN/LMN diseases grouped into ALS studies, rarely does that happen. I get it, but it is a bit demoralizing.

A group of researchers at Northwestern have done some research on UMNs leading to some interesting discoveries of late. One, they released a paper, Better understanding the neurobiology of primary lateral sclerosis which has a lot of great info about metabolism and mitochondria etc. The thing that really struck me though is that they posit that PLS is just ALS with some genetic or environmental thing preventing it from developing. I don’t know why that is really my important takeaway but it’s a question I get asked all the time.

Two, they released a second paper which has received a lot of hype (for good reason). Here is the Northwestern presser ALS neuron damage reversed with new compound. NU-9, a protein, seems to be well tolerated in mice models and will move forward with animal toxicology studies with human trials being about 1 – 2 years out. Still, Dr. Silverman – the man who engineered the compound – has started a drug company and hopefully there will be some movement soon.

The news is a welcome relief for many sufferers of MNDs and we are all super excited to see how quickly NU-9 can to human trials. As I joked on facebook, I will fly to Chicago every darn week if it means I can be included in them. Still, one of the researchers Dr. Hande Ozdinler cautions that the word “reverses” is a bit excessive. In their study the diseased neurons were still alive when they saw an improvement in them. So in that case the statement is correct. However, if the neurons are dead there is no evidence that this compound will bring them back to life. A better statement may be that it reverses the damage in diseased neurons, not dead ones. The mice studies also took place in a short period of time so there is no telling (yet!) how the compound works on subjects who have had an MND for a longer period of time. Also, probably people read the headlines and see “reverses” and they think that the compound “reverses” the disease itself. Unfortunately, there is no evidence that it cures the diseases themselves. It may very well be that this protein will be a drug you have to be on the rest of your life much like diabetics are on insulin.

Still, this is exciting news from the research community and I am looking forward to the further studies on NU-9. I am also curious if the “Right to Try” legislation will push the studies on this compound through a quicker process.
Here are two videos, the first one has Dr. Ozdinler discussing the research & the second is more of a snapshot social media promo video:

The best laid dental plans

When you set a goal – especially a financial goal – you need to leave some room for the unseen. In November when we had planned to save enough money so Mr. Tucker could retire in 2023 there is no way that we could foresee every disaster. Furnaces fail, cars die, and sometimes dental surgery must be had.

We discovered earlier this month that Mr. Tucker needs $8500 worth of dental surgery which will happen in two appointments next month. Since we both have benefits we submitted a preapproval and it looks like the maximum we will get back is $3000 from both plans. This leaves us on the hook for $5500. The surgery isn’t really optional if he wants to keep his teeth so we are definitely rolling with it. While it’s a (literal?) kick in the teeth, I am grateful that we can at least afford to have the procedure done.

Sunday morning is all about coffee and chats here at The Mullet so we ended up discussing our financial goals this morning (spoiler: we discuss goals a lot – financial and otherwise). In the end, we always have pretty tight goals but we are also flexible enough to change them when the need arises. Some people will encounter a blip in their plans and just throw their hands up and give in but that doesn’t solve the problem. The correct way to look at it is to see goalsetting and your budget as flexible and to adjust when necessary. Even the best saver can’t account for every financial blindside that they will experience but they can just shrug their shoulders, adjust their course, take the detour and then continue on their way.

This surgery will probably set us back from reaching our goals by a month given our current trajectory. Of course, more things will happen as well – both positive and negative: we will get a tax credit from the surgery but we also may have our furnace die (it’s from 2003 so I’d be stupid if I said we didn’t see it coming). Given our timeline of 3 years, a lot can happen between now and then.

So after our chat this morning I took another look at our budget and adjusted our activities and hobbies spending. As depressing as it is to think about, there probably won’t be summer camps, dragon boat paddling, or roller derby next year so I can remove these items temporarily and funnel the money into the dental surgery fund. My hope is that people will be vaccinated by autumn and life may return to some semblance of normal (or new normal – life has changed, that is for sure). But I also have a sneaking suspicion that this is an overly-optimistic view. Still, we can use the money we are saving now on the surgery instead of hoping that activities will happen again soon. Of course, if things do go better than the current outlook, I can be flexible to adjust for that, too.

You can only control so many parameters in your life so you do have to be flexible in order to reach your goals. Sure, it may take longer and cost more than you anticipated. It’s important to realize that we are lucky to be in a position to be able to take a hit like this, and that comes from having good financial planning skills previously. I just keep telling myself that it is a marathon and not a sprint. Even though it may not go 100% as planned, it will eventually happen as long as we stay on the path.

Pandemic Positives: lunch at home

Mr. Tucker has worked from home since the kids were little and back then I was a stay-at-home-parent. It used to be that I would take the kids to the YMCA when they were young, stick them in daycare for a couple of hours & then I would be able to work out and shower. Afterwards, I would take them to a drop in for pre-kindergarten kids that was run by the school board. All of this excitement and then we’d be home by noon where I would make lunch for everyone and then put the kids down for naptime.

Of course, when Sprout was around two I went back to work during the winter months. Bean was in kindergarten and Sprout went to a combo of nursery school/daycare until she hit kindergarten. So lunches together at home went to packed lunches* for the three of us while Mr. Tucker now made his own lunch. By the time they were 6 & 8 I was back at work all year round and that meant that brown back lunch was pretty much an every day thing.

One of the things that has been really great during the pandemic is home cooked lunches together every day. Sure, more often than not it is leftovers or soup & grilled cheese but it’s a nice change from what we used to do. I make the kids head out for a walk every day at lunch (rain or shine – and cold or snow) and while they are out, I whip up their lunch. Of course, at 10 & 12 they are more than capable of making their own food but I find it’s something I enjoy. When they come in we all sit at the table and chat while we eat.

Honestly, it’s just nice to break up the day this way. I want them to get a change of scenery (as small as it is) and have some structure instead of just sitting at their desks or staying inside all of the time. It’s also nice to have a mid-day chat to gauge how things are going at school. It reminds me of those busy days when I was mobile and the kids were young and how much time we used to spend together. It’s pretty nice.

Next year (vaccine willing) the Bean will be heading into a new school for her second year of junior high and will probably want more control over her lunches. The Sprout will also be heading into her last year of elementary school and it will be her last year as one of the oldest kids in the school. Teenagehood is approaching fast here and so even if everything has gone to hell in a handbasket in 2020 (and 2021 doesn’t look that great either) at least we do have a year of homecooked lunches together to look back on.

Honestly, we are heading into a year now and we are all cracking a bit at the seams. So looking at the little things that have positively come out of the pandemic keeps us all a little bit saner.

*Where I am there are no school lunch programs so everyone brown bags it. There is however, a breakfast program for kids who don’t get a nutritious breakfast at home. Bean came home one day and said, “I sure do love the free breakfast at school!” As it turns out she was eating Second Breakfast at school. I had to explain to her that she shouldn’t be taking that food and why they provide it.