This is a guest blogging post by Julie Ali.

I have enough of it. But perhaps I write about money because I am interested in how money divides people. Rich people, or people with a lot
of money have something that poor people do not have. At its’ simplest level, the presence of money makes choices available.

And I am a fan of choices. I like to be able to decide if I can work or not. I would like to be able to eat and have shelter during my retirement years. I know that there is a finite amount of money in my future and that makes me afraid. This fear, propels me in my current life to pay down debt and this pay down of debt, to some extent decreases the money available for current usage and therefore for consumption. And if consumption is the primary measure of our success and enjoyment of life, then I guess, I am not as privileged as the rich people are. This understanding that I am not rich makes me wonder: “if I am not rich, am I poor?”

But everything inside me rebels against the label of poor. To be poor is to be status less. To be poor is to be empty of labels = middle class ones at least. To be poor is to lack choices and freedom. To be poor is to be no body.

If indeed, I am poor and a nobody in this society - is that really so bad? I am free to think, read and write. I am free to do what I want to do for
most of my day. If I am tired, I lay me down to rest. If I am hungry, I eat. I am on nobody’s schedule and nobody makes me do what I do not want to do. However, somebody is financing this way of life - my husband. Is it fair to him to ask him to pay his life energy for my freedom? I don’t think so. We both need to do our fair share. Just staying at home with the boys is not sufficient return for the freedom of being a SAHM. Work needs to fill some of the available spaces in my life.

The work I do has function, form and a fixed schedule. It serves some role in the motion of the great dinosaur of a university but one day, I dream, I will move out of clerical work and do something better. But what? What types of work are better? All work involves some indignity to the natural soul of a person. Work crushes humour, bleeds out a person’s rich and diverse character and creates in it’s place a bland Tapioca ONE PERSON who does little but mouth stock phrases and leap from one mothballed response to another. There is a strong desire in me to rebel in the work environment; to throw off the incessant humming of the telephone, the computer, the printer and the cash register. I feel sometimes that I am going mad in the dead zone of the office.

But it gives me money. This money I show to myself to make me go to work. This money I stuff into envelopes to pay down our mortgage. This money buys me.

So if work and money are buying me - my time -then the topic of money does have relevance. It has relevance because my time is precious, the amount of time I have is limited and unknown, while in contrast, work is endless and painful.

Julie Ali loves to write and is a stay at home mom of two elementary school boys.

This is a guest blogging post by Julie Ali.

I have been reading with great interest, recent articles on the Internet, about the question of whether a person should pay down debt or first, accumulate an emergency fund. The debt pay down drains cash from your pocket while the emergency fund builds it up for future life accidents. Both of these uses of money are important ones but I, insist on debt pay down FIRST.

Why do I do this? Well, first, I think the emergency fund is overrated; if you are a disciplined saver, you will always be able to hoard money in nooks and crannies. Thus, if you are disciplined, you will always have money or will be able to build up a store of money and so the emergency account is of less importance in your life.

If, on the other hand, you tend to be less disciplined or have a lower earning potential (i.e. sort of like my current condition where I earn slightly above minimum wages at casual jobs), then perhaps you do need an emergency fund of slightly more generous proportions. I mean, if you do have a tendency to buy gadgets, gizmos and doodads of every conceivable type in a slightly unrestrained manner, money in the emergency fund is a useful thing to have around (although it might be an even better strategy to refrain from the habit of McSpending in the first place).

I like to have an emergency fund that does double duty. I save money in it and designate this account in my brain as emergency fund money so that my brain automatically refrains from plundering this account, leaving it virginally intact. Then every six months, this account gets ravished (we’re getting a bit Harlequin romancish here) and we transfer the money collected there to the bottomless pit - which is our mortgage.

I am sure there are many people who do not have the same antipathy towards their mortgage as I do, and tend to treat this pit bull loan as poodle-like in nature. But we don’t. We know the pit bull loan for what it is and we want it chained and leased. In fact, we want it mercifully put to sleep.

Thus, with great suffering (well, I exaggerate), I gather every single dollar I can magnetically attract to the metal safe of our emergency fund and well, I imprison it. Sometimes, my husband will talk longingly of the projector he wishes to buy or the latest tool that has caught his fancy at our local Home Depot or RONA store.

Now this tool buying business is a pet peeve of mine so I must rant a bit about this area of a man’s character (i.e. I digress). Most men have this irresistible urge to harvest tools at the local farms of toolery that lie temptingly as far as the eye can see. Often there is a limpid eyed female clerk who is only too willing to assure the male section of our audience that their wives would be as thrilled as they are by the purchase of a $600 piece of metal that will sit collecting dust in the basement, shed or garage of their mutual property. The bedazzled hubbies take home the tool of their dreamings to their less than thrilled spouses who immediately ask the reasonable question of “what are you going to do with this tool?” Most men will respond enthusiastically, that they will fix up the house, build fences, cultivate land, raise gazeboes and in short, be modern pioneers. Ha! In reality, this newly purchased Mammoth will sit patiently with all the other dinosaur tools in the hotly contested storage areas of the home, usurping the rightful storage quarters of the wife. It is the duty of every wife to train her husband out of this strange fascination for tools; at the same time, it would be useful to ensure that he does not buy electronic products, computers, ugly baseball caps, pink and blue flowered ties and striped shirts of any vintage. In fact, it would be best if a wife accompanied her husband on every shopping expedition (oh, darn, there goes my hubby to the tool store again!).

So, as I was saying, my husband does like to talk about his tools and the projector, but with great suffering, I deny him his testosterone fuelled fantasy objects and utilize the funds for the more mundane task of paying down the mortgage. Sad for him but good for us all in the long run, since we, hopefully will pay off this debt in ten years and yet, at the same time, will still be able to enjoy life with a slightly lower standard of living. Debt pay down comes first in our family, followed by tool purchases and the emergency fund.

For many of us, the paying down of debt seems like a foolish thing to do when we could be investing it intelligently in other investment vehicles such as stocks, bonds, mutual funds and rental properties. I guess the investment advisers are all correct in this way of thinking and it would be wise to distribute your stream of money all over the parched investment lands that you survey. But for my family, I have decided to pay down the debt first. We do have RRSPs, we do have bonds, we do have stocks, mutual funds and other investment harlotry that we availed ourselves of. But in the end, what do I do? I pay down our debt.

If you have the skills to make money on the stock market, to intelligently float the cash you earn in the mutual fund tank of your choice – hooray for you. I have lost money in every arena except debt pay down. I am of course not counting the possible loss of the utility of the cash used to pay down the mortgage but I can live with this loss. What I can’t live with is that fact that every six months, my bank drags me back to the start line of my debt pay down by adding interest payments to my principal amount. If you enjoy this type of perversion, get an amortization schedule of your mortgage; once you see in cold hard cash how much money you are paying to your financial institution, then perhaps, it will become debt pay down FIRST for your family as well.

Julie Ali loves to write and is a stay at home mom of two elementary school boys.

This is a guest blogging post by Julie Ali.

It makes me laugh at all the articles in magazines, newspapers and on the Internet regarding how to make money on that last financial frontier - the ordinary citizen’s entry into rental house investment. These articles and the books that joyfully proclaim the good news about money for nothing (or almost nothing), suggest that anyone can make money by going out, buying a house, renovating it and renting it out to the multitudes of renters that are scouring the market for affordable housing. Who writes these articles anyway? And if they have made such a surplus of money and secured their own financial freedom, in this way, then why are they writing articles and books to make yet more money? In addition, if profiting from the rental house market were that easy, sort of like collecting eggs from quiescent broody chickens on a farm, then why isn’t every intelligent citizen putting all their financial eggs in the rental house basket?

The business of renting houses to people is not an easy, painless way of generating additional revenues. There is a rental cycle that is the diagrammatic opposite to the house buying cycle. When people are madly engaged in a love affair with the purchasing of their first, second or final upscale home, they turn their nose down at even the mere plebeian thought of dating a rental house. Even the sensible arrangement of renting for a few years in order to acquire a down payment for said house is refused. “Why should we make the landlord richer?” they sniff as they run to their local banking casino of choice and throw down their chips to lose a fortune on the turn of the mortgage interest wheel.

The siren call of no money down mortgages has pulverized the current rental market and houses are sitting on the market like sad old senior citizens, with their overgrown lawns, chipped paint and bowed fences. Some one has to pay the mortgage on the rental houses that stand like wallflowers, abandoned at the rental dance and that someone, will have to fork out his own cash to avoid foreclosure on his property. So in this rarely mentioned scenario, the rental property business is not generating cash flow but a cash deficit.

If this process continues long enough, it will bleed the financial blood right out of your body and put you in the morgue. Has anyone noticed that when a rental house has been sitting on the market for a while, that the “For Rent” sign stuck in the front lawn becomes a “For Sale” sign? There is a reason for this, people; most of us do not relish the prospect of the financial equivalent of the morgue - which is bankruptcy.

It is never easy to make money. It is even harder to make money on rental properties. Mind you, I only have one rental house so I’m no expert in the business. I’m just an average Jane who bought a house, lived in it, wanted to sell it several years later but couldn’t bear to sell it at a loss, and so, put the house up for rent. Almost a decade later, battle scarred and wounded, my husband and I, are almost at the end of our rental house rope. We have had a steady succession of tenants, most of them 3rd and 4th year University students who have marched through the house like a marauding army of Carpenter ants, decimating the interior and neglecting the exterior. Last year we put in almost $10,000 worth of renovations on the place. This year, we are faced with another hemorrhage of our “profits”, as the basement was flooded with the incredible rainfall experienced by many people in southern Alberta, Canada.

So if the returns are so poor, then why do we still keep the house? We are keeping the house until lightening strikes and the Alberta Children’s Hospital is completed in a few short years. This hospital is just a hop, skip and a jump away from our house. In other words, we are trying to time the sale of our house to coincide with a peak in the housing market for our community. This strategy may not work out as well as we hope since the Federal Government will be able to scoop up some of the increase in value (for the gains in the property’s value during the time the house was a rental property is taxable). But we still hope.

I reiterate this message: rental properties can KILL YOU financially. The only thing that saved our bacon was that I had put 50% of my house’s value as a down payment when I bought the house. This kept the mortgage payments at a survival level. In addition, we lived in the house for 6 years prior to renting it out and were able to put in our own labor into some renovations. Another factor that helped us out was that my husband is very handy and has the ability to fix the things that invariably broke on us. He did most of the renovations on the house last year in an amazingly short period of time.

It almost killed him but we were able to complete enough projects to get us back into the survival zone for the next few years. We still have ongoing projects to complete with the additional stress of commuting 3 hours from Edmonton to Calgary in order to do these tasks, but at least, the major projects (except for the basement woes) are now done. The only things we are unable to control are the appliance breakdowns, ongoing plumbing repairs, the appliance replacements (fridge, washer and the stove), the basement leaks and the garden messes. Of course, the exterior house painting still needs to get done, the garden is jungle like in its proportions and the tree in front is due for a biannual trimming by a professional arborist. Do these expenses give you an idea of how much money you can expect to make from a single rental property?

There are other aspects to the rental property business that are rarely mentioned. You spend a lot of your own personal time dealing with house maintenance, the search for tenants and checking references, the problems with tenants, inspections of the house and repair time. Besides the time factor there is a quality of life factor, this rental property business has had a cost to us in terms of the quality of our lives. We have had good tenants and we have had poor tenants. It is better to have no tenants at all than to have a tenant with an anger management problem, a substance abuse problem or a lack of responsibility problem. And working with tenants who are hostile for an extended period of time such as a year, is very taxing to one’s own sunny disposition and determination to be a nice person.

Are rental properties worth it? NO.

We went into the process with the single rental house that we had, rather naively and blindly and we are still in it rather less naively and still operating blindly. Would we do this again? No. It’s not the best way to make money. Rental properties may be an excellent passive way to earn surplus dollars for the many individuals who write those glowing articles on the Internet, but I certainly, have not found them to be the BEST way to earn money. A long stretch of time without a renter can be a killer since you still have to pay the mortgage and if you don’t have the contingency fund present to pay this mortgage, you will either have to sell the house or lose the house to the bank. These are very unpleasant situations to be in and in contrast, if you merely work at a job and deposit part of your savings in a bank account in a disciplined fashion, you never have to be in these unpleasant situations.

In fact, you are free to enjoy your summer vacations rather than do what my husband and I do every summer: unclog toilets, weed a jungle in the front and back gardens, hire a construction company to fix the basement leak, call in the arborist to cut our trees for another $400 or so, paint the exterior of the house, put in sod and the other millions of tasks that are the rewards of rental home ownership. Think about this business before you jump in: what would YOU rather be doing? Going to the mountains in Jasper with your family and sprinting up the zigzag path up Mount Robson in British Columbia or fixing a toilet? I certainly hope it is not the latter.

Julie Ali loves to write and is a stay at home mom of two elementary school boys.

This is a guest blogging post by Julie Ali.

One of the main reasons that we fail to become financially literate is a lack of financial awareness; by this I mean the conscious understanding of why we spend money. Of course we have a rudimentary idea of why we spend money: we spend money to live - for food, shelter, apparel and work.

But do we really know the other motives for our spending? Why do we spend beyond these essential needs? I believe we spend to make ourselves feel good, to feel that we are acceptable by the peer group of our choice and to alleviate boredom. The fact is for most of us, much of life can be down right tedious, boring, horrible or cruel. Nothing takes the sting out of criticism by the boss or a day spent in the vacuity of mindless toil as a new purchase (at least for some of us).

(read full article…)

This is a guest blogging post by Julie Ali.

Unlike socially unacceptable addictions such as smoking nicotine, television viewing is seen as being relatively innocuous in nature. Most parents will plop their children in front of a television screen unaware of the fatal consequences of this act. I, myself, considered the telly to be educational at best, and a great free babysitter, at worst. This state of happy coexistence lasted until about 5 years ago, when I threw out the television and committed the whole family to a telly free treatment program.

Initially, the children and the hubby were not pleased. They were negatively addicted to the idiot box and considered that I was punishing them for being male. My brother and his family were aghast at this rebellion and wondered how the children were going to survive and prosper. Several pitying comments from other relatives and friends followed but I was obdurate and persistent: the television was a drug and we would not be pushing it anymore.

5 years later, the children (and the hubby) have survived the trauma of television lumpectomy and although, they tenderly massage the scar from the surgery in their memories - they have made peace with the surgeon. It has even been a growing experience for them. They have had to find other ways to fill in the holes in their day. They have had to play, write, draw, surf the Internet and even, horror of horrors - to read books. They have had time to visit friends, bike, swim in a swimming club on an almost daily basis, go to playgrounds, search for bug matter in the backyard, visit their grandparents, study and be bored.

An added bonus, is that we are not greeted with a chorus of “I want that, I really, really want that” for every new toy, movie and gadget that is advertised on the telly. Coupled with a refusal to take the children shopping (unless it is for their September clothes and shoes), the excision of the tumor of the television has saved us piles of money. Try it in your home. Don’t try to wean yourself off the telly - just throw it out. And while you are doing this surgery, throw out the Gameboy as well (and let me know how you do it - that is the next drug on my agenda).

Julie Ali loves to write and is a stay at home mom of two elementary school boys.