My wife and I had big plans for 2020. I had recently quit my day job to pursue my financial planning and freelance writing career full-time. We were going to travel the world, with trips booked to Maui, Italy, the U.K., and Victoria. We also had financial goals – specifically to max out our RRSPs, top-up our TFSAs, and continue making the maximum contributions to our kids’ RESPs. Then the pandemic hit.

Covid-19 forced us all to re-think our plans for this year. Those who’ve been affected most by the pandemic have lost jobs, closed businesses, applied for government benefits, payment deferrals, and debt relief.

We’ve been fortunate in that I work from home and have continued to earn a stable income. I also received a large cash payout when I took the commuted value of my pension earlier this year.

So, while the first half of the year has gone anything but according to plan, we’ve been able to roll with it and stick to our financial goals. Here’s how:

Open multiple savings accounts

Juggling multiple financial priorities can be difficult, especially when each goal requires a different amount and a different timeline. And if your finances were affected by the pandemic then you want to make sure you carefully manage your spending and savings so you can meet both your short-term and long-term goals.

One way to manage multiple goals is to open a few different savings accounts, name them, and funnel money into each account so you know your obligations are covered. On Oaken Financial’s blog, my friend Barry Choi nicely explained how having multiple savings accounts has kept his finances on track.

By having multiple saving accounts, you can:

1. Manage joint expenses with your spouse
2. Still pursue your saving goals in the middle of this uncertainty
3. Get the most out of your accounts
4. Modify things as needed until things get back to normal.

With multiple savings accounts – especially free ones – it’s easy to keep tabs on all of those irregular or one-time expenses that come up every year. For example, we pay our home and auto insurance annually, and so I know I need to have around $1,200 in the “insurance” account every May, and another $1,800 or so in the account by August.

Most people have a main chequing account and then perhaps one savings account for emergencies. The problem with this approach is that unless you have a really good handle on your spending, including when those irregular expenses come up, it’s easy to miss something and end up going into overdraft or into credit card debt to cover the expenses you forgot about.

Now imagine the satisfaction when you set up and fund multiple accounts to cover your vacation, insurance, emergency fund, property taxes, and Christmas presents (for example). A quick transfer and your expenses are covered.

Have an emergency fund to protect your future

Speaking of emergency funds, now is a good time to talk about the importance of having one to protect against future risks, such as a job loss or severe reduction in hours. One-third of Canadians live paycheque-to-paycheque, according to a CPA Canada study, and don’t have funds available to cover an unexpected financial obligation.

Murphy’s law states that whatever can go wrong will go wrong, and that means even in the face of a global pandemic with unprecedented job loss and economic turmoil, there’s still a chance your car will break down, your hot water tank will need repair, or a pet will get sick or injured. Life happens.

Melonie Dixon, Vice President, Deposits, Oaken Financial says,

“The economic impact of the COVID-19 pandemic underscores the importance of having an emergency fund available to help deal with unforeseen situations. Should you face an unexpected expense or a disruption in income as so many are currently dealing with, an emergency fund can help get you through a difficult stretch.”

We recently noticed a line of discolouration on the upstairs ceiling and discovered that some shingles and capping had blown off the roof or had become damaged during a wind and rain storm (welcome to life in Lethbridge).

Wind or hail triggers an automatic $1,500 deductible on our home insurance policy but the quote for repair came in just under $1,000. It didn’t make sense to make an insurance claim and so we paid out of pocket for the roof repairs. That’s a textbook example of an unexpected financial obligation and something homeowners should be prepared for by having some emergency savings set aside.

Putting the expense on a credit card that you can’t pay in full should be a last resort. We’ve built up our emergency savings over the years and doubled down on it this year knowing I didn’t have the steady income from a day job coming in.

Our emergency savings is held at a high interest savings account at an online bank, which tend to pay much higher interest rates than the big banks. Oaken Financial, for example, has one of the highest savings account rates in Canada.

Having the savings in place gave us comfort going into 2020 as a full-time entrepreneur, and that savings made us feel even more at ease with our financial situation as the coronavirus crisis played out.

Rebuilding your savings

Of course, if you’re forced to dip into your emergency funds to get through a job loss or pay an unexpected bill it’s important to rebuild your savings and prepare for the next event.

Ms. Dixon agrees, saying with the degree of disruption many are facing right now, the priority at this time must be on protecting your family and staying healthy.

“But once we get through this crisis – and we will – rebuilding your emergency fund should be a top priority. As our recent experience shows, it’s impossible to know when the next emergency might come our way and having a reserve fund is one of the best things you can do to help safeguard your family,” said Ms. Dixon.

I’ve found one of the best ways to rebuild our savings is to take a closer look at our monthly expenses and find areas to trim costs.

Our spending habits have certainly changed, with most of us sheltering in place since the pandemic hit. The biggest change has been saving on transportation costs. One of our two vehicles is parked, and we were able to get some insurance savings on the reduced mileage. We’ve also saved on fuel – I’ve filled up the tank once in three months.

Here are some other ideas to save on your monthly bills, including reviewing your phone and cable packages. It’s not uncommon to be able to negotiate a better deal on these items. Just make sure to pass the savings along to yourself by topping up your emergency fund.

Looking for a better place to save? Please visit oaken.com to learn more about Oaken’s GICs and saving accounts.

Long time readers know that I’m passionate about earning and redeeming credit card rewards. It makes good sense to earn cash back or travel rewards on your everyday spending. Some of us may have even become slightly obsessive about maximizing the rewards on their spending – applying for multiple cards every year to take advantage of welcome bonuses and other deals.

One topic I don’t write about often is which rewards credit card is best. The answer depends so much on where you shop, what type of rewards you want to earn, and how you want to redeem your points. Your mileage may vary.

Plus, for several years, I tried to collect as many Aeroplan miles and Marriott Bonvoy points as I could to redeem for travel, which meant the best credit cards for my situation were unlikely to be suitable for the average consumer.

More importantly, the one credit card I did use for my everyday spending (when I wasn’t churning other cards) was no longer available for new applications – so telling people about it was a waste of time.

You see, I’ve used the Capital One Aspire Travel World Mastercard as my everyday card since 2012. It offered 2 reward miles per $1 spent on anything and then allowed cardholders to redeem those points by “erasing” a travel purchase off of their credit card statement. It came with a $120 annual fee, but that was mostly offset by a 10,000 miles anniversary bonus each year.

The Aspire Travel card rebranded as a “World Elite” Mastercard in 2015, but existing cardholders were grandfathered under their old agreement. Then, in 2017, Capital One closed the card to new applications, citing changes to interchange fees that, “made this product unsustainable.”

Surprisingly, existing cardholders continued to earn 2 miles per $1 spent anywhere and continued to receive the 10,000 bonus miles every year on their card anniversary. That has been better than any rewards credit card on the market for the past three years and so I’ve kept using it for everyday spending. 

The TL;DR version of this story is that I received a letter this week from Capital One stating that as of August 5, 2020 the card will only pay 1.5 miles on every dollar spent, and the 10,000 anniversary reward miles has been discontinued.

It’s time to compare rewards credit cards and see whether I need to make a change.

Rewards Credit Card Comparison

Any search for a new rewards credit card must start with an analysis of your own spending. Many cards offer point multipliers for categories such as groceries, gas, dining, or travel. 

Then there’s what I call the Costco effect. A Visa or American Express card may come with generous point multipliers for groceries, but that won’t help you if the majority of your grocery shopping is done at Costco, which only accepts Mastercard.

I examined our household budget and looked at our average monthly credit card spending (ignoring one-time expenses like house or auto insurance). I found we spent a total of $3,460 per month ($41,520 per year) in the following categories:

• Groceries: $1,600 – Save On Foods ($1,050), Costco ($375), No Frills ($175)
• Uncategorized / Other: $1,100
• Recurring bills: $450
• Dining out: $250
• Gas: $60

Armed with those numbers, I went to my go-to credit card comparison site – Credit Card Genius – to find the best everyday rewards credit card.

I like this site because I can input all of my spending by category to determine the ideal card for my shopping habits. Here’s what I found:

1. Scotia Momentum Visa Infinite
   • $120 annual fee
   • First year free
   • 4% cash back on groceries and recurring bills
   • $896 in annual rewards
2. American Express Cobalt Card
   • $120 annual fee
   • 30,000 point welcome bonus
   • 5x points on eats and drinks
   • $770 in annual rewards
3. Capital One Aspire Travel World Mastercard
   • $120 annual fee
   • 1.5 reward miles per $1 spent
   • $623 in annual rewards
4. RBC WestJet World Elite Mastercard
   • $119 annual fee
   • $250 WJD
   • Annual companion voucher
   • $623 in annual rewards
5. BMO World Elite Mastercard
   • $150 annual fee
   • 35,000 point welcome bonus
   • First year free
   • $611 in annual rewards
6. Tangerine World Mastercard
   • $0 annual fee
   • Two 2% money back categories
   • $587 in annual rewards
7. PC Financial World Elite Mastercard
   • $0 annual fee
   • 30 points per $1 spent at PC stores
   • $457 in annual rewards

I adjusted down my grocery spending for the Scotia Momentum Visa Infinite Card and American Express Cobalt Card since I can’t use them at Costco or No Frills. I also reduced my spending in dining, recurring bills, and general for the Cobalt card because Amex isn’t as widely accepted.

One more factor when choosing an everyday rewards credit card is to understand the net rewards (after fees) beyond the first year. How much will you receive once the welcome bonus expires and/or the annual fee kicks-in?

With all this in mind I concluded that the Scotia Momentum Visa Infinite Card will be my go-to rewards card for everyday spending after August 5. I also acknowledge that I’ll still need a Mastercard when I shop at Costco and No Frills. I already hold the RBC WestJet World Elite Mastercard and so I’ll use that one to earn 1.5% back on my spending at those locations.

I’m not interested in paying more in annual fees than necessary so I’ll cancel the Capital One card in the coming months. This change also spells the end for the Amex Cobalt Card – which I used to use for Save On Foods groceries and liquor store purchases but can’t justify carrying anymore.

This Week’s Recap:

Whew, thanks for staying with me through all of that.

This week I shared my biannual net worth update and checked in on my financial goals for 2020. I’m still moving the needle forward but it looks like I’ll end up short of my goal to reach $1M in net worth by the end of this year.

On day 45 of my Questrade saga I finally managed to open and activate my new corporate investment account and place a trade. Painful.

Day 44 and counting trying to open a corporate investment account w/ @Questrade. I have to think that dumber people than me with more complicated businesses have successfully opened an account in less time.

— Boomer and Echo (@BoomerandEcho) July 2, 2020

Weekend Reading:

Matthew Klint looks at why Air Canada continues to insist it has a legal right to deny refunds on cancelled flights.

The Credit Card Genius team posted an analysis of credit card trends and how consumer behaviour has changed during the pandemic.

Travel expert Barry Choi answers a popular question – should I travel right now?

Barry also guest posted on the Eat Sleep Breath FI blog and gave some travel hacking tips for families.

Morningstar’s Christine Benz, a former FIRE skeptic, shares why she now believes these people are actually onto something.

Des Odjick smartly shares her personal money system and how it flows from paycheque to funding necessities and short-and-long-term goals.

My Own Advisor’s Mark Seed takes a detailed look at how to determine your financial independence number.

Here’s a neat calculator from Rob Carrick – a pandemic power-savings tool designed to strengthen your finances in uncertain times.

The latest edition of SPENT looks at how quickly AirBnB has seen a rebound in bookings and revenue compared to hotels:

I’m sure this hits close to home for many parents: In the Covid-19 economy, you can have a kid or a job. You can’t have both.

Here’s how parents can help their adult children financially – without hurting themselves:

“Parents naturally want to help their kids, but they have to help themselves first,” says Dan Bortolotti, portfolio manager at PWL Capital Inc. in Toronto, who has talked parents out of helping their kids in the past.

“It’s not a value judgment,” Mr. Bortolotti says. “You might run out of money and you can’t sacrifice your own future for your kids’ future. Also, they have more time [to earn income]. You have to be careful that you don’t jeopardize your own future.”

Happy Go Money author Melissa Leong says boosting financial literacy in schools isn’t enough.

Confused about currencies? PWL Capital’s Justin Bender tries to make sense of your ETFs Loonie currency exposure in his latest CPM podcast.

Has Warren Buffett lost his touch? Yes, Nick Maggiulli argues, as the Oracle of Omaha (through Berkshire) has surprisingly underperformed the S&P 500 by 17% this year.

Speaking of underperformance, 2019 was another challenging year for active funds in Canada as 92% of them underperformed the index.

Finally, get ready for a long and fascinating read on how money forever changed us.

Have a great weekend, everyone!

It’s time for my biannual net worth update where I share all of the numbers on my quest to reach millionaire status by the end of this year. It’s not going to be easy, as the global pandemic has impacted everyone’s finances to some degree.

I want to start by acknowledging how incredibly fortunate we are to be in good health and have the ability to earn an income working from home. Despite the odd grumbling about home schooling and cancelled travel plans, we know how lucky we have it and are grateful every day.

Remember plans? We had plenty of them heading into 2020. After quitting my job back in December, we hoped to spend much of 2020 travelling around Europe, the U.K., and Victoria. We managed to squeeze in a trip to Maui for a week in February before travel restrictions were put in place indefinitely.  

As for our finances, well it’s been a year of transition. My wife and I originally planned to pay ourselves dividends from our online business. But then I had the opportunity to take the commuted value of my workplace pension, which came with a large cash payout. So, we shelved the dividend plan and decided to live off the pension payout for the remainder of the year.

I opened a locked in retirement account (LIRA) to house the remainder of the pension payout. I can’t touch this money until at least age 55 and it’s currently invested in the Vanguard All Equity ETF (VEQT).

The cash payout was more than we can spend this year and so I stuffed $30,000 into my TFSA to fully max it out for the first time since 2011. That felt good!

We also maxed out the small amount of available contribution room in both my wife’s and my RRSP.

How have my investments fared? Stock markets fell more than 30% in March, the fastest decline of that magnitude in history. But investments found a bottom on March 23 and have climbed steadily(ish) ever since. My RRSP is down 6.12% on the year while my TFSA is down 2%.

Finally, I opened a corporate investment account to start to invest excess business income beyond what we pay ourselves (nothing, this year) and beyond our operating float. I’ve included this new account in my net worth update to be completely transparent with how our finances are set up.

Now, let’s look at the numbers.

Net worth update: 2020 mid-year review

Total Assets – $1,070,597

• Chequing account – $5,000
• Savings account – $85,000
• (New) Corporate investment account – $30,000
• RRSP – $215,662
• (New) LIRA – $140,875
• Defined benefit pension plan – $0
• TFSA – $81,625
• RESP – $53,435
• Principal residence – $459,000

Total Liabilities – $194,261

• Mortgage – $194,261

Net worth – $876,336

You may have noticed the large amount of cash in our savings account right now (up from $35,000 in my last update). A good chunk of that is leftover from the cash portion of my pension payout and will be spent by the end of the year.

Now let’s answer a few questions about the way I calculate net worth:

Credit Cards, Banking, and Investments

We funnel all of our purchases onto a couple of different rewards credit cards to earn points on our everyday spending.

Our go-to card is the discontinued Capital One Aspire Travel World Elite MasterCard. We have a grandfathered version that pays 2% back on every purchase and comes with a 10,000-point bonus each year.

*Cardholders have received notice that the 10,000 bonus points have been axed and the 2% reward on spending will be reduced to 1.5%. In other words, time to find a new card.

Our secondary card is the Scotia Momentum Visa Infinite Card, which we use for non-Costco groceries and gas. Finally, we look for the best credit card sign-up bonuses and time our large annual spending (car and house insurance) around these offers.

Our joint chequing account is held at TD, along with our mortgage and kids’ RESPs. My wife has her own chequing and savings accounts at Tangerine. Our high interest savings account is held at EQ Bank, which pays 2% interest.

My RRSP and TFSA are held at the zero-commission trading platform Wealthsimple Trade. My LIRA is held at TD Direct, and the new corporate investment account is held at Questrade. My wife’s investments are held at Wealthsimple.

RRSP / LIRA / RESP

The right way to calculate net worth is to use the same formula consistently over time to help track and achieve your financial goals.

My preferred method is to list the current value of my RRSP, LIRA, and RESP plans rather than discounting their future value to account for taxes and distributions.

I consider a net worth statement to be a snapshot of your current financial picture, so when it comes time to draw from my RRSP/LIRA and distribute the RESP to my kids, my net worth will decrease accordingly.

Principal Residence

We bought our home in 2011 for $425,000 and developed our basement a few years later, increasing its value to $450,000. The next year I bumped up the market value by 2 percent (which is still less than its city-assessed value), but the local real estate market has since flattened – with nothing selling in our price range – and so I’ve left the value at $459,000 for the past three years.

Final thoughts

COVID-19 has certainly thrown a wrench into our plans and most likely killed any hope I had of reaching the million-dollar mark by the end of 2020. Still, this was always a stretch goal – something to strive for over the last 10 years. I won’t get kicked out of the personal finance blogger guild if it takes a few extra months to make it.

Again, we’re so fortunate to be able to get through this pandemic with a few mild annoyances while still improving our financial position. The same can’t be said for many other Canadians.

Have you managed to keep your finances on track in 2020? Let me know in the comments.