Another month has gone by already which means it's time to do a quick financial checkup.

Lets start with the markets.  It seems that the markets have stabilized and even on an uptrend.  I'm not sure how long this is going to last, but I'm not too worried as most of my money is in long term investments these days. 

In terms of spending, we kept it under control this month as most of our time was spent caring for the newborn baby.  The biggest expenses were perhaps diapers, groceries and other tidbits related to baby care.  For now, we have decided against cloth diapers mostly because of the convenience factor.  I can see the summer time getting a bit heavier on the credit card as we still need to do landscaping and other finishing touches around the house.  For the new readers out there, when I say that I'm going to use a credit card, I use it for the points/benefits.  I've never carried a credit card balance.

Income was another big issue this month.  As maternity/paternity government benefits take about 30 days to kick in, we went through the whole month on 50% of our regular salary (not including side business income).  I thought it would be a lot more stressful with the new baby and mortgage, but it's working out ok as we have reduced spending.  Cash gifts that we have received for the newborn have also helped. ;)

Assets: $574,450 (+0.65%)

• Cash: $4,500 (+0.00%)
• Savings: $ 37,000 (+4.52%)
• Registered/Retirement Investment Account: $ 52,500 (+5.00%)
• Pension: $ 22,350 (+0.00%)
• Non-Registered Investment Account: $18,300 (+1.67%)
• Smith Manoeuvre Investment Account: $25,300 (+1.20%)
• Investment Property: $ 124,500 (+0.00%)
• Principle Residence: $275,000 (+0.00%) (purchase price)
• Vehicles: $15,000 (2 vehicles) (-6.25%)

Liabilities: $279,520 (-0.38%)

• Investment Property Mortgage: $93,700 (-0.21%)
• Principle Residence Mortgage (readvanceable): $152,700 (-0.65%)
• HELOC balance: $25,120 (+0.48%)
• Other Liabilities: $8,000 (-0.00%)

Total Net Worth: ~$ 294,930 (+1.65%)

Started 2008 with Net Worth: $279,300

Year to Date Gain/Loss: +5.60%

My net worth gain up to this point, as compared to March 2007, seems to be on track.

Interested in seeing how my net worth has progressed up to this point?  Check out my history of net worth updates.

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Since the beginning of MDJ, I have talked about the Smith Manoeuvre. For those of you just joining us, The Smith Manoeuvre is a wealth strategy that utilizes a home equity loan to invest in income producing assets. The result is a tax deductible loan and portfolio that increases as you pay down your mortgage.

There are quite a few Smith Manoeuvre strategies out there. The plain jane SM strategy involves investing the small credit line increases into tax efficient mutual funds. For me, I’m doing a slight twist where I’m going to use the credit line increases to fund the investment loan, thus giving me a larger lump sum to start with. Along with that, I’m going to invest in purely strong dividend paying stocks which meets the CRA “income” requirement and giving me tax efficient income to boot.

The dividends will then be used to further pay down the mortgage. If this strategy works out, according to the Smith Manoeuvre Spreadsheet, I should have my $150k non-deductible mortgage paid off in under 10 years. At that time, hopefully my dividends will have grown to the point where they can service the underlying investment loan in addition to buying me steaks when I’m feeling carnivorous.

Onto the portfolio. With the markets in it’s current state, who knows where the financials are going. I’m a little bit on the nervous side, so I’ve been simply dabbling in stocks that appear cheap to me. As you can see from the portfolio below, it’s extremely overweight in financials. I plan to diversify into energies and utilities as they (hopefully) come down in price.

You might be thinking that I’m crazy for buying such small lots, but since I have a bunch of free trades to use up, why not?

Hopefully, these updates are interesting to you. If there is something that you would like added to the table above, let me know and I’ll see what I can do.

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I was doing my regular web money reading and came across an interesting article on MSN Money Central about marriage infidelity.  No, not that kind of infidelity, I'm talking about financial infidelity. 

What is financial infidelity? 

This is where one spouse in the relationship overspends without the other spouse knowing.  I can see this being a major problem if it happens often, especially if money is already tight.  According to divorce lawyers interviewed by MSN, they see more divorce cases lead by financial rather than sexual infidelity.

Some marriages never recover from that breach of trust, says Brandt, the lawyer. That's when they come to see her. "I get people at the end of the marriage when it's too late," says Brandt. "You have to start talking about these things before you even get into a marriage."

What's the solution? 

I believe that the key to avoid money related issues is through open communication about money.  Even with our most trusted partners, some of us still treat money as a taboo subject.

Here is what the MSN article suggests:

Brandt and others advise that the best way for couples to avoid this problem is for both partners to get actively involved in the finances. You don't both have to pay bills, but both partners must be aware of how much money they have and where it's going.

Couples should also have an agreement about how much they can spend using joint funds before they need to clear it with the spouse. Online banking makes it simple to periodically check for unusual withdrawals or changes in financial position. Don't leave financial management all up to one person, especially if that person has had spending problems in the past.

Money may seem like a secretly understood topic, but everyone has their own opinions/views.  In addition to the above, David Bach from Smart Couples Finish Rich teaches that the key to financial success between couples is to determine a common ground with regards to money.  He suggests to base family financial goals around values instead of monetary goals.

How do we handle purchases in our family?  I have to admit that I'm the family chief financial officer but all bigger purchases need to be agreed upon.  To give ourselves a little freedom, we each get some discretionary cash at the beginning of each month to spend on whatever we please without question. 

If you're in a relationship, how do you deal with purchases? Are you guilty of hiding purchases from your partner?

Photo Credit: hypertypos

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