Financial Complexity

Categories Personal Finance

I feel a great need to decrease financial complexity. I am sure there are others who feel the same way. It is this uncomfortable feeling that you are not on top of things. I have never been one who could multitask effectively. They say women can multitask better than men but I simply do not work that way. I will often take the simpler way to do anything even if I lose a bit of money doing things that way. I believe that I have gone on about not wanting further hassles in my life already.

Too Many Bank Accounts

I use one credit union for most of my business and personal accounts. I have used this credit union since I first started my practice. However, Tangerine offers great rates for savings account at times and this has enticed me to open an account with them over the years. So here are all the accounts.

Credit Union

  1. Medical Inc
  2. Hold Co1
  3. Hold Co2- for the office unit
  4. Trust
  5. Personal

Tangerine

  1. Hold Co1 (x)
  2. Mine
  3. Hubby (x)

That is 8 accounts. I need to start deleting some and I am marking an (x) on those ones I plan on closing down. In fact, if this works well, I may simply cancel all my Tangerine accounts.

I have two bank accounts that have automatic payments, the med inc and the personal account. This way, I only need to review in detail two accounts each month and scan totals on the rest.

I try to automate everything in my accounts. My good friend reminded me that I could set up payments to CRA in advance in my bank account. That has helped a ton since I had been logging in each month to pay taxes. One of the most important autopay is for your credit card balances in full every month. I have never missed a payment since setting this up years ago.

Investment Accounts

MDM

  1. Med Inc- US
    1. Brk.B
    2. Amgen
  2. Hold Co- US
    1. Brk.b
  3. Hold Co- Cdn
    1. ETF’s- plan for 60%
      1. VCN 25%
      2. XAW 75%
    2. GIC’s- 40%
  4. RRSP- mine
    1. GIC’s
  5. RRSP- hubby
    1. GIC’s

Questrade

  1. TFSA- mine
    1. VGRO
  2. TFSA- hubby
    1. VGRO

I am perfectly fine with my current investment accounts. I am a total DIY investor. I follow the Couch Potato Portfolio and the Canadian Portfolio Manager. I will hold 3 ETF’s – VCN, XAW & VGRO. And that’s it. Amgen and Berkshire were acquired years ago and I do not want to trigger any further capital gains tax this year. I had sold the rest of my individual equities last April to prepare for the simplified ETF versions going forward. If I can’t control the public equities market, I might as well make it easier for myself.

Too Many Corporate Entities

I started a new Hold Co to buy the office unit. But I need to speak to my accountant to stop this extra Hold Co. He mentioned that it would avoid some property transfer tax I believe. But with all the ongoing accounting and legal costs, I may simply transfer the office unit back into my original Hold Co. and pay whatever taxes exist on this.

When we first started our practices in the mid 1990’s, we had two corporate accounts. It did not take long for us to realize how much work we would need to generate to keep both accounts working maximally. I am thankful we decided to have only one Medical Inc account. I knew we would be tempted to maximize the amounts to take advantage of the favorable corporate tax rates. And that would mean working way more than would have been healthy. We knew enough about our own proclivities to know that that would have been disastrous to our well being. That is the one guiding principle that has served us well as a two physician family. We often challenged ourselves to define what was enough for us.

Extra Credit Cards

  1. Corporate Visa with Aeroplan points- yearly fee
  2. Personal Visa with Cash back- no fee
  3. Mastercard- because Costco does not take Visa!!!!!

I have an ongoing dream that Costco will allow me to use my Visa. Needing to get the Mastercard is a royal pain since this is the only place I use the card. If Costco will start offering delivery of their regular warehouse items,my dream version of Costco would be complete.

No Travel Hacking

Travel hacking is where folks apply for multiple credit cards to receive significant sign up travel points. It is apparent that this would be something that I can not do. I have researched this but came to the conclusion that managing my current bank and investment accounts are enough of a hassle. I leave money on the table all the time so it would be a waste of effort for me to travel hack. Furthermore, I prefer nature and camping so that is already extremely affordable. I told my husband that if he wants to pursue travel hacking, he will have to track all those spreadsheets himself.

I believe my accounts likely mirror many physicians who have CCPC’s. I was beginning to get confused with all my accounts. I am getting tired of wasting money and effort setting up legal entities to minimize taxation. And the government has been moving the bar. I need to start simplifying all this. I am just getting started crawling down the rabbit hole on this one.

This blogging has been wonderful in forcing me to put my plans in writing. This will help me stay on track. I am simply a physician who is trying to make her financial life easier. I would like it run like a well oiled machine with minimal need to organize it.

Please leave any suggestions for simpler options you may have found.

3 thoughts on “Financial Complexity

  1. Hi Dr. MB,

    I tried credit card travel hacking in the past, but realized that the promotion rewards in Canada are not as lucrative as in the States. For me, the rewards were not worth the effort and time (i.e. spreadsheet) to keep track of all the credit cards. Also, your credit score takes a hit when you travel hack. In real estate investing you have to be mindful of your credit score when you apply for mortgages.

    1. I just use Aeroplan with my Visa. We don’t even use all those points. I already get confused with the stuff I need to get done at times.

      Plus I love camping and travel hacking doesn’t help with that. I’m going to Yosemite next month. So excited!!

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