Between getting married and working on an article about how to get married without breaking the bank, I've missed the past couple of deadlines. Bad Neil Bad! So tonight, since my wedding article isn't ready yet, a quick one about this year's one-time only home renovation tax credit.

Most Canadians have probably encountered some ad or another trumpeting this tax credit. The basics of it are that any renovation work done on your home qualifies for a federal tax credit - this could bring up to $1350 back into your pocket. I was looking into this as it may be an incentive to get my act together on replacing some doors and window coverings around the house that I've been thinking need to be done.

What Qualifies?

In order for an expense to qualify, it must be work done to a residence which could be claimed as a primary residence (apparently cottages count). If you rent a portion of your home, only work done to non-rental portions qualify. You can, however deduct expenses to rental areas against your rental income, like you've always been able to.

Amounts over $1000 but less than $10,000 are deductible. As with most tax credits, you get 15% of the "face value" back when you file your return. In order to qualify, the expense must be incurred between January 27, 2009 and February 1, 2010, and can't be payments for agreements you'd already signed before January 27. Claim all expenses on your 2009 return, since you won't get another chance in 2010. Reasonable backup is required, such as a contractor invoice with GST number, describing the work done. Cash only contractors are unlikely to provide this information, particularly the GST number, since the whole point of going cash only is to avoid taxes. That kind of spending doesn't qualify for the credit.

The most complicated thing is what kind of work qualifies. The defining characteristic of "renovation" under the tax credit is that the value of your upgrade would be reduced if you moved it from one house to another. Custom blinds count, while standardized blinds you picked up at home depot don't. A new kitchen counts, but stock hanging cupboards do not. And yes, my doors do qualify even if they are stock because they wouldn't realistically be removed from the house.

You May Already Qualify

The big surprise for me was that I already qualify for this tax credit, even though I haven't done any work yet. This is because my primary residence is a condo, and my condo corp has done some extensive renovations of common areas. According to the CRA website, I'm allowed to claim my portion of eligible expenses - that would be my split by unit factor, in my case 5.21%. So the government already owes me $85 - ($30,000x5.21%-1000)x15%. It also means that for everything that I spend before the end of the year, I'll get a 15% rebate come March.

If you live in a condo or coop, make sure to ask your board for a record of their renovation expenses this year. It's worth money in your pocket.

Spend Money to Make Money

This isn't likely to make you any money. Most research shows that no home renovations increase your home's value more than they cost. The credit may make some of the ones that come close - such as building a deck - viable, but it's pretty marginal at best. Don't renovate your house just because the government is pitching in a few extra dollars. However, do consider moving forward renovation plans to take advantage of the credit while it lasts.

Articles and blogs about saving money like to point out ways we "waste money." Money is only wasted when you don't make a conscious decision to spend it. Everything else is about getting value for your money. Maybe a pair of jeans really is worth $200 to you? The problem is that value is such a subjective concept, it's kind of hard to blog about, so it doesn't get much digital ink.

How do you decide value? Well, it's really an art form, there aren't really set rules.

Comparison Shopping

First things first - compare to other options. This is the basic shopping around approach. If you can buy the exact same product through a different retailer, and the price is lower, then all else being equal the more expensive one is poor value. But other things are rarely equal. The cheaper store may be further away, thus requiring extra investment of time and fuel to get the discount. In some cases, you may place higher value on supporting local business, so you're willing to pay more knowing that the staff are higher paid and the profit will stay in your community. You may have ethical issues with how the prices are lowered in the cheaper stores - I refuse to shop at Walmart because of how their treat their employees and suppliers. It's hard to put a dollar value on these things, but they are important factors in getting value for your money.

Quality

Then there's quality questions. I'm currently looking into an all-inclusive vacation for my upcoming honeymoon. It'll be the first one I've ever taken, so I'm spending a lot of time determining what's worth paying for and what's really important to me. The cheapest options are in Cancun or Varadero, both massively built up resort areas where I'd be unlikely to see a local person who is not employed by the hotel. But smaller resort areas - where there are maybe a half dozen hotels at most - are only a couple hundred dollars more, which is probably worth it to me. Likewise, I'm willing to pay more for adult-only, smaller number of rooms, and good snorkeling access. All of these things increase the quality of the product, and so are worth extra money.

With physical purchases, quality is often less subjective. A department store bike sold for $100-$300 won't stand up to the amount of riding a $800 bike will. If you ride regularly, it's likely the department store bike will have to be replaced every year or two, whereas the expensive bike should last a decade or more. This makes the direct financial cost of a cheap bike higher than an expensive bike, so long as you're going to use it. The same thing comes into play when buying computers, power tools or clothing - going cheap now usually means having to replace it sooner. Even food...it costs more to shop at the farmers market, but fresh produce picked ripe tastes better than commercial produce picked 2 weeks ago and shipped. That's worth something.

Where it fits

What's this purchase going to do for you. This is the biggest, and most subjective value calculation. If you're buying something that you're going to use a lot for years to come, spending thousands of dollars isn't unreasonable. But if you're replacing say, an old car, the calculation isn't so clear. What do you get out of buying the new car? Is what you get worth the price you're paying?

I can't make that decision for you, and neither should any other blogger. The end message of this post is that to make the decision, don't just spend the money blindly.

For American readers - this article deals with Canadian retirement savings vehicles. The same broad principles apply to the Roth vs Traditional debate, but the specifics of tax law are, naturally, different.

This year, the government of Canada added a new type of savings account to the arsenal of ways to reduce - or at least manage - your taxes. The Tax Free Savings Account lets you deposit up to $5000 per year and enjoy the full benefits of your investment growth, no taxes to pay. Having more options is usually a good thing, and this is no exception, but there's a lot of confusion about whether this is a better or worse option than putting your savings in an RRSP. This being investing we're talking about, there's not going to be a right and wrong answer. It all depends on your situation. So with that, a summary below on how to choose.

A recent comment on popular personal finance blog, Bad Money Advice, got me thinking about the many seemingly sensible things that are nonetheless false. This particular comment advises using incandescent bulbs in winter to save on your heating bill - by increasing your electricity bill.

Incandescent bulbs are not efficient at lighting, but they are very very efficient heaters. And since they heat surfaces instead of the air, they are actually more efficient than many other kinds of heaters.

Every been skiing when its 20 degrees, but you feel warm because the sun in shining brightly? Its a bit like that…

CFLs are fine in the summer… but in the winter replace them with incandescent bulbs to reduce overall electricity consumption.

The premise - that using compact fluorescent lights that efficiently turn electricity into light will increase your heating bill during cold weather - is probably on some level right. We are reducing the total heat generated through non-furnace means in the house. But the question here is whether the increased costs in heating outweigh the decreased costs in electricity.

The bicycle is a beautiful thing. It's the single most energy efficient form of transportation ever invented. It can take you across town in a similar amount of time to a car (factoring in that the car will spend much of the trip stopped in traffic), and provide the exercise that most people are lacking in their daily lives. I ride mine every weekday in the summer - my target is commuting 5 days per week for 6 months, and 3 days per week for another 3 months - and I love it. But I've found that buying cycling gear has been getting expensive. So I've been wondering, is this form of commuting actually saving me money.

You spent $150 on WHAT!

One part of my job is processing expenses for employees of my company. As some people work from home, they'll send in their internet bill for reimbursement, which is often the same as their cable bill. I'm stunned when I see the numbers. Some bills, once you add up the premium cable package and the pay per view, can run $150 per month, not including the internet. As someone who might spend an average $10 or $15 in a month on TV, this seems pretty much unbelievable. I haven't had cable for years, and I don't miss it.

Here's my reasoning why. I was already paying for high speed internet, the purveyor of nearly unlimited entertainment at minimal cost. My cable bill was about $50/month, half of that because the only channel that I felt was worth having - Discovery - was in a premium package. I found I wasn't watching much, mostly Mythbusters, and reruns of That '70s Show that were on while I was cooking dinner. It just didn't seem like $50 worth of entertainment in a month.

Of course, I still like to watch TV sometimes, but I can get that from the internet, too. I'm not talking about illegal downloads, but cheap or free sources of commercial TV shows and movies that are completely above board.

Where does it all go?

This is the fundamental question at the heart of managing your money. Most people - even the most responsible ones - suffer what I call "leakage." That money that gets spent but you don't seem to remember where, or what you actually got for it. It's my belief that before you can do any of the other good things in money management - budgeting, cutting expenses, paying off debt, or establishing an emergency fund - you need to know what you are actually doing with your money. That way you can find where your leakage is going, and then set a realistic budget that you can really stick to.

Traditionally, this kind of tracking has been done by hand. The more accounting-oriented might have actually kept a ledger, while most people just kept tabs by balancing their cheque book. Of course, most business was done in cash, so it also used to be much harder to track each item spent, but, since you couldn't just run into the negative in tight moments, it was also harder to get into trouble. Computers have made life so much easier, and there is now a huge number of programs out there that will help you do this. I have put together a list of programs that I am aware of, something to suit every price range.

Starting Up

Now that you have software to manage your money, where to start. The basics are pretty straighforward:

• Set up your accounts
• decide how to categorize your expenses
• set up scheduled transactions for your predictable expenses
• begin entering every transaction

My system for managing money centres around tracking expenses using computer software. There are, of course, several software packages available, but which to choose. Here is a list of software that is currently available, along with details on price. Reviews will be provided...eventually. If you know of any that are missing, please contact me and they will be added.

The central goal behind this website is to teach a basic, simple system for managing your personal finance.  A system that anyone can implement, and that will make a difference in how you live your life, without the diet effect.  The diet effect, which applies both to money and to eating, is what happens when you try to just cut off all your impulse buys - or comfort food - and then quickly give up when you give into an urge or two.

To that end, I have developed a five step program for money management.  Each step builds on the last, and by the end of the program, you will have an excellent idea of your total financial picture, and a clear path to meeting your goals.

Step 1 - Tracking Your Spending

Before you can set a budget, you need an idea of what you are currently spending.  In this step, we will set up a basic home accounting system.  While I am now an accountant, this is a system that I have been using since I was a teenager, long before I had any formal accounting education.  You don't even have to be good at math - that's why we have computers.

This is the core of managing your money.  If you get no further, learning to track your spending will still help you, by telling you where you might be "leaking" money - spending money without even realizing you're spending it.