The low cost of gas and our liberal government

When the price of gas was creeping up ever higher earlier this year, our government enjoyed an increase in tax revenue, as the tax they receive is based on a percentage of the overall price of the fuel. They could have provided us with relief by lowering those taxes and keeping their tax revenue stable, but they didn't; instead, they advised us to buy more fuel efficient cars, so I replaced my not-so-fuel-efficient Pontiac Grand Am GT with a fun and frugal brand new Nissan Micra SV. It's a brilliant little commuter, and an excellent choice for the frugal minded who still like to have some fun when driving. It's not just me; lately, I've been seeing gas sipping cars growing exponentially on our roads and highways: Honda Fit's, Nissan Versa's, Mitsubishi Mirage's, Hyundai Accent's, Ford Fiesta's, Chevrolet Spark's, in addition to hybrid and electric cars have exploded in numbers.

We listened to our government, and did what we were told. We're using much less gas and generating negligible amounts of pollution. As a result, the overall demand for petroleum has declined. When it came to electricity, rates went up when our demand dropped, but that's because this utility is a province-controlled monopoly. Not so with gas, and now we have gas prices that have not been seen in nearly 10 years. Hooray for us, our frugal choices should mean that we now have extra money to do things like take care of household debt, contribute to our retirement, or go out and have more fun by redistributing those savings back into the economy through theatre, restaurants, and other leisure oriented businesses. We Canadians should be able to reap the rewards of our collective frugality.

Not so fast! Our provincial leader, Kathleen Wynne, has announced that, since tax revenue has dropped due to low gas prices, her liberal party is exploring options to increase taxes on gasoline.

Now, one would think that government would have become more efficient over the past 10 years, but they have not. They have only become even more bloated and inefficient. This means that you and I will need to be ever-increasingly frugal in our choices just so government can continue wasting a lot of the money it gets. Waste in the form of gas plant cancellations. Waste in the form of two separate but very similar school boards. Waste in so many other ways, it would take several blog posts to go over them all. Someone voted them in, and it certainly wasn't me.

The provincial government of Ontario does not have our best interest in mind, so enjoy the low gas prices while you can. Just don't expect our government to make it easy to get ahead in life, unless you have a government job.

Happy holidays!

I admit, the reboot has been rather slow. Life's been busy. The good news is, I have a lot of things to write about, so 2015 will be a great year for Frugal Paul!

This is the time of year when a lot of us get into financial trouble buying presents for all the people we care about. That's why it's so critical to set a budget and stick to it. As difficult as that may seem, I recommend keeping the following in mind to help you stay on budget:

• Expensive gifts for people other than immediate family can make the recipient feel uncomfortable, which is probably not what you would want. Instead, purchase a bulk pack of inexpensive but nice quality gifts for those people. Holiday crackers are always a safe festive bet. Also consider discount books from places like Chapters, where there's plenty of good reads that cost less than $10. Multi-packs of items like decks of playing  cards can also make fun individual gifts.
• Go for quality, not quantity. Get to know the person you're shopping for. Are they a fan of a particular show? Sites like amazon.ca have lots of popular television show-related items in a wide range of prices. Remember, it means more to those you care about to show them how tuned in to them you are, rather than how much money you want to spend on them.
• If you're creative and have the time, why not make something for those you care about? I enjoy taking photographs and videos through the year of various family events, and some years I've brought it all together to create a DVD of memories. It's a gift paid for by my time and efforts throughout the year.
• Take your time when shopping. If you can't find just the right gift, then don't buy anything until you do. Spend more time getting to know the person you're buying for; talk to their friends and others who know them; you might find out something about them you never knew, and the perfect gift might come to mind. Buying a gift just for the sakes of buying a gift can often be a waste of money.
• Perhaps the person you're buying for is really nostalgic for a certain period. Nothing wrong with a used relic from that era that's still in great condition to bring a smile to their face!
• Sometimes there's a less expensive option; for example, the person may have expressed interest in an iPad, but they might be just as pleased with a low-priced Android tablet. Play it safe and get a gift receipt just in case, so if they really have their heart set on the more expensive option, at least you've contributed financially to their goal, creating a win-win situation.
• Thinking of getting someone a cell phone? Avoid the contracts at all costs, unless the recipient has explicitly expressed interest in this. Rather, find out who the recipient likes as a carrier, then get them an unlocked or prepaid phone for that carrier, and give the gift with no strings attached.

Keeping on budget is key to long-term happiness beyond the holidays, and giving gifts that really show you care rather than showing how much money you're willing to spend will make the holiday season a delight for everyone. I hope your holiday season is full of love and happiness, and if you can't have that, I hope it's at least free of regret and disappointment.

Frugal Paul reboot

It's been over a year since my last blog post here at Frugal Paul, as I explored other interests. However, as of late, I keep seeing stories come up in the media that I find demonstrate an incredible sense of entitlement and a complete lack of understanding the importance of keeping financial business in order. I am reminded of a much younger me.

I wasn't always frugal, and there was a time when I was terrible at managing my money. I didn't have much direction in life; I was working as a construction labourer here and there through the week, and worked as an overnight security guard at a local factory on the weekends. The factory wasn't in production during this time, but because there were huge boilers, they employed boiler room engineers to be in the boiler room around the clock. Usually after 3:00am, Gerry the boiler room engineer had completed his checks and everything was quiet in that sleepy town, so we'd pass the night having conversations about life. Gerry was around my father's age, but I could talk to him as a friend. I was becoming frustrated with always being broke and never seemed to make enough money. I brought this up to Gerry, about how unfair life was and explaining to him what I thought the problems were, when he told me I was living beyond my means.

At first, I was infuriated! I lived in the cheapest rent slum one-room apartment, I didn't own a car, I certainly wasn't buying nor eating the best foods, and it had been nearly two years since I had bought any new clothes. I was using an old Amiga 500 that didn't even have a hard drive and used a 2400 baud modem. I watched TV on a small black and white set. Then Gerry pointed out that I smoked, and that smoking was a rich person's habit that I couldn't afford. I couldn't believe what I was hearing; I should give up the one thing that brought me pleasure in life?

Finally, Gerry put it to me like this: Living beyond my means meant that I was spending more than I was earning. One way I could help this situation was to give up smoking. Another thing I could do was to increase my income. If I believed I had done everything possible to reduce my expenses, then I had to look for ways to increase my income.

I was already working 7 days a week, and when I wasn't working I was looking for work. I was good with computers, but I couldn't seem to get a good job. That's when Gerry told me that I need to prove to potential employers that I knew what I claimed. Gerry related to me his own story of being poor, finding a way with being frugal to become educated as a boiler room engineer and how he'd study while working at a low paying menial job, and how he succeeded in becoming who he wanted to be. Up until then, I had no idea that people lied on their resumes. It wasn't enough that I could tell an employer I could write computer programs, I had to have a diploma or certification of sorts from an accredited institution to back up my words to get a job as a computer programmer. Up until then, I thought of school as a place people went to learn new things, but using school to demonstrate skill and knowledge was a new concept.

That marked a big turning point in my life. That's when I realized I had to invest in myself and live a frugal lifestyle in order to live better and happier. I calculated the cost of going to college for 3 years and estimated the amount of student loan money I would need, then I compared what I was then earning to what the lowest paid computer programmer would be paid. It was a significant difference; I would easily double my annual earnings. If I continued with a frugal lifestyle, I would have the student loan paid off in just over a year. It was both amazing and empowering, and it really did work out.

I'm going to reboot this blog because it's clear to me that there are too many people who are just like I was, and I want to help them just as Gerry helped me all those years ago.

The folding bicycle experiment

When I discovered this folding bicycle on Costco's web site, my imagination exploded with all the benefits it could deliver. Folding bikes can be taken on rush hour GO trains, so I could ride this bike from Union station to my job instead of the subway; after seven weeks, the bike would pay for itself. I work in Toronto, the bike theft capital of the world, and being able to bring a folded bike to my job would provide great peace of mind. The exercise I'd get before and after work would be beneficial to my health. This folding bike could easily be stowed in the trunk of my car, allowing me to park in low-cost or free parking areas, using the bike to complete journeys into areas of expensive parking. It suddenly occurred to me that a folding bicycle was exactly what I needed to make my life better.

I ordered the bike on a Tuesday; it arrived on my doorstep on the following Friday. My first reaction when lifting this bike out of its cardboard box was that it was heavy. I'm talking bend-at-the-knees-when-lifting kind of heavy. Costco isn't exaggerating when they say this bike weighs over 40 pounds; with the exception of the wheels and a couple of clips, this bike is made from chromed and painted heavy steel. Even the fenders and chain guard are made of tin.

When unfolded, the dimensions between the seat, pedals, and handlebars of this bike are that of a full sized adult cruiser bicycle. At 6'4” and 220 lbs., it's important for me to have a bike that's big and strong enough, and with the seat post fully extended, this bike just barely fits. It's reasonably easy to find a comfortable riding position, as the seat incorporates chromed springs and generous padding and the handle bars have an ergonomic bend. In fact, given the price of $139, this bike comes remarkably well-equipped; besides the comfort grade seat, it also comes with a full reflector package, sturdy carrier, full fenders, full chain guard, a kickstand, and even a bell. These are usually options on comparably priced and even more expensive traditional bikes that, combined, can easily cost half of the price of this bike.

In spite of its heaviness, this bike is remarkably easy and comfortable to ride. There are six gears, and they're all geared low to provide sufficient options for just about any kind of hill, making the bike weight a non-issue while riding. The shifting is indexed, and my bike needed a minor adjustment after arriving to ensure the chain meshed with the appropriate cogs, which I did myself without the use of any tools as the dérailleur is a good Shimano. The unfortunate side effect of the gearing is that this bike doesn't go very fast. This bike would have been better with a significantly larger chain ring, as first gear is ridiculously low for the 20” wheel it's driving. As for the brakes, the front brake is a cheap side pull caliper, and the rear brake is a band brake. I had never used a band brake on a bike before, but my first impression was that it seemed adequate.

The bike rides solid enough, but there is some frame flex. I don't think this has to do with the hinge, but rather due to the lack of a top tube in the frame. Overall, the flex isn't any worse than what one might find in a typical steel frame women's cruiser. The 20 inch alloy wheels appear to have come off a kid's bike, which should come as no surprise given that Mongoose does a lot of business making bikes for kids. The tires are cheap, and the soft rubber is easily punctured, but other than that they are strong enough for my weight. It occurs to me that many of the components appear to have come from kids bikes. My guess is that Mongoose incorporated components from their mass produced kids bikes to keep the price low.

Time to unfold and set up takes me around 45 seconds. Time to fold the bike back down takes me around 30 seconds. When folded, there's nothing to keep the bike together. The optimal place to hold the bike while carrying it is just above the pedal crank on the seat post, but even still the handle bars want to flop out occasionally. I recommend a bungee strap to keep it together.

I tried this bike out for two weeks for my commute. I put it in the trunk of my car and drove to the train station, where I took the train every day to Union Station then rode the bike to my job, where I folded it up and stowed it at work. I then rode that bike back to Union station, rode the train back to my home city, put it in the trunk of my car, and drove home. When riding, I felt as though I was riding an adult-sized kids bike. I was certainly quicker than walkers, but people jogging were able to keep pace with me unless I cranked the pedals fast. I quickly ran out of gears even on slight inclines. When I did this to get some good speed out of the bike, I found the brakes faded awfully quickly, to the point of being scary. Towards the middle of the second week, I noticed a new pain developing in my back; it became clear to me that lugging over 40 pounds of bike along with my backpack was taking its toll. A folding bike this heavy wasn't meant to be carried any distance.

Once the “Gee Whiz” factor wore off, I realized that a cheap $99 department store mountain bike offered a better experience than this folding bike. Such a bike could be locked up at a train station and be largely ignored by bike thieves, and I could carry the tools necessary to perform regular basic maintenance in a small bag.

There doesn't appear to be any kind of carrying case for this bicycle offered by anyone anywhere, so this offers no real advantage over a full size bike for the airline traveller. For the compact car traveller on a budget, it might be suitable; it fits in my trunk comfortably with room to spare. Not quite enough for a second identical folding bike (unless I folded down the back seat), but certainly enough for anything I'd need for a week away from home.This bike is really meant for those condominium dwelling recreational cyclists who would like to bring a bicycle with them on their annual camping trip to putter around on the groomed camp ground trails. For a minimal investment, you have something that you can stow away in a closet, ready for the one or two times a year you'd want it. No need to worry about roof racks or carriers. 

No doubt about it; this is as cheap as it gets when it comes to folding bikes, but it's pretty clear why this bike is as cheap as it is. My advice to Mongoose is this: Put a larger chain ring on this bike to give it full sized bike gearing, give it decent brakes to accommodate  and drop the weight by 10 pounds by way of aluminium or plastic components. I can tell by this bike that you build decent quality products, but the kiddie bike gearing and fading brakes were huge disappointments.  As for me, I'll be sticking to full sized bikes from now on.

Bicycle: The Perfect Frugal Machine

Bicycles are, as far as I'm concerned, the most perfect mode of transportation ever invented. They offer, quite literally, a free ride. Consider that even walking has a cost associated with it, and then consider that cycling is up to five times more efficient than walking. Many often regard bicycles as toys for children and weekend warriors, but I discovered its utility as a young adult. Not quite ready to take on the financial responsibility of a car, I spent three month's worth of bus passes on a nice bike that became a reliable principle mode of transportation for a good three years, as I said goodbye to long bus stop waits, transfers, and general slowness from multiple stops and indirect routes. The money saved went towards my first car.

Today, my car has become a necessity. I don't apologize for owning a car, but my daily drive from Oshawa to Toronto has become so congested, I actually get home half an hour earlier if I take the GO train and TTC subway. It's not exactly cheap; using my Presto card, I pay $8.39 on each GO train trip, and $2.65 on each subway trip. That's $22.08 per day, or $88.32 per week for my typical 4 day work week. By contrast, I would pay $40 a week in gas and $32 a week in parking, totalling $72 if I took the car. Of course there's insurance and maintenance, but these are the costs of owning a car which I would pay regardless of whether or not I took public transit. I used to prefer to drive in because of the cost advantage, but now the traffic has become too much. I'm paying a $16 premium because I enjoy riding the train (I've always loved trains), I enjoy not dealing with the stress of crawling along the Don Valley Parkinglot...er, I mean Parkway, and I enjoy getting home a little sooner.

Last year, I brought my road bike to Union Station and kept it locked up there so that I could ride it to my job. At this time, my schedule required me to be in Toronto 5 days a week, so the savings quickly added up; $26.50 per week, $114.83 per month. More than the savings, I also benefited from the well-being that came from the nice bit of exercise before and after work.

This solution was not without its problems. Daily riding requires regular maintenance, but I could not take my bike on the train during peak periods. This meant that, if I did not catch a train home prior to 3:30pm, I had to wait until after 6:30pm. There was always the threat of theft or vandalism. Other than that, it was a fine solution for getting through downtown Toronto.

My next experiment was with the Bixi bike bicycle sharing system. In short, I'd pay $5 for 30 minutes of use. An annual subscription is a much better deal at $97 (plus tax), but I wanted to test the system out before committing. I soon discovered some unfortunate flaws. First, the bikes have three speeds, which are slow, slower, and even slower; presumably to accommodate for the weight of this heavy duty bike. One day, I arrived to find no bixi bikes available at my station, forcing me to walk to another station further away to get a bike. Another time, I arrived at my destination station with no place to put the bike, because all the spots were full. Once again, I had to go to a more distant stop. Then there's the liability; if something happens to the bike while I'm using it, I could be on the hook for up to $1,000. On the plus side, the bikes were easy to adjust and very comfortable to ride, and represent a great alternative for someone who doesn't get much physical activity in their daily routine who only need it to make short trips and don't want to bother with bike ownership. As for me, I wanted to explore other options.

After further contemplation, I considered a basic cruiser. A single speed bicycle with a coaster brake. Without gears or cables, I reasoned that such a bike wouldn't require much in the way of maintenance, and therefore I could leave it locked up at Union Station for extended periods of time. I started by checking Craigslist and Kijiji, only to find a lot of overpriced crap and tons of child bikes. I browsed various web sites, and decided to see what Costco had to offer. That's when I stumbled upon what might be the perfect bike for me: A folding bicycle.

A folding bicycle seems to be the perfect solution. I can take it with me on the train during rush hour, and bring it with me to my job, because it folds up and becomes small. That takes care of bringing it home for maintenance during rush hour whenever I need to, as well as eliminating the threat of theft and vandalism. At $139.99 plus tax ($158.99, shipping included), I would need to ride this bike in lieu of 60 subway rides, or 30 work days, or 7.5 weeks for this bike to pay for itself. It has full fenders, so I should be able to ride it when it rains. Costco has an excellent return policy, so if it turns out to be complete crap, I can return it for a full refund. I ordered it on Tuesday, and it arrived today. I can't wait to try this experiment out!

Fences and neighbours

I bought a new house in 2011. It was a fresh, new start for me and my family to start from scratch and turn it into the home we always wanted.

When it came to a fence, we knew what we didn't want: The pressure treated lumber fence that boxes in small city lots everywhere. It effectively turns a backyard into a self-imposed prison, where enjoying the backyard feels more like being boxed in yet another room. The backyard retreat that I wanted to escape to after a hard day's work became yet another institutional area where I got to cut grass, pull weeds, and stare blankly at the repetition of pressure treated lumber all around me. All of the work with none of the benefits. This isn't how humans are supposed to live. What made matters worse was when our previous neighbours decided to use the fence as a support for a huge privacy lattice (because the fence only created the illusion of privacy), which caught the wind like a giant sail and subsequently pushed a support post over, breaking the fence. As if that wasn't enough, they expected us to pay for half of the repairs for something that was clearly 100% their fault! I had enough. We sold and moved.

I knew what I really wanted: A cedar hedge. A cedar hedge creates the illusion of being out in nature, and delivers on privacy. They're more effective at blocking out sound, and provide a home for birds. When I was a little boy, the house we lived in was separated by a beautiful cedar hedge that grew very tall. I couldn't tell if we even had neighbours from our back yard, and when we went to visit them in their backyards, each of them felt as though they had their own little homes out in the country. That's the sanctuary I want after a hard day of work.

I spoke to the neighbour behind me, and to the neighbour to the west. Both agreed that cedars would be a beautiful way to delineate the properties. The neighbour to the east had reservations, and decided it was too early for them to decide on anything at that time. I did some research into the city by-laws regarding fences, and discovered by-law 77-97. According to this by-law, a property owner may construct and maintain a division fence, and have the adjoining owner "pay fifty percent (50%) of the basic cost or fifty percent (50%) of the actual cost, whichever is the lesser." This by-law goes so far as to define "Basic cost" as the cost of constructing, reconstructing, maintaining, or repairing a four foot high steel chain link fence. This restored my faith in the city to discover that the ugly, institutional pressure treated board fences are not recognized. I like chain link. I can live with chain link. Cedars grow up nicely through chain link. My wife and I agreed that we would either go half on a cedar hedge, or go half on a chain link.

On May 26, 2013, we were celebrating my son's birthday. There was a knock at the door, and it was my neighbours to the east. He told me that he decided he was going for a pressure treated lumber fence. He advised me that the contractor was pressuring him, and he wanted to know if I wanted to get my fence done as well. I reiterated what I had told him all along; that I felt such fences were detestable, and that I would be willing to split on a four foot high chain link or cedar hedge. He explained to me his plans to have a hot tub and wanting privacy. I told him he could do whatever he wanted on his property. Then he asked me if I'd share in the cost of the fence; I advised him that I would pay for, at best, 50% of a chain link fence built on the property line.

Two days later, the contractors came to set the posts in the post holes. My son, who was sick on Friday, stayed at home and told me about excessive noise banging on the side of the house. I looked outside and saw the ugly wall of pressure treated lumber down the east side of my property. I assumed he heard the banging that's normally heard when one is building a fence. We were not happy with it, but we reasoned that we could plant something along the fence that would eventually grow to hide it, and still have our cedars on the other two sides. My wife and I agreed that we would comply with the by-law requirements; we would get an estimate for 34 feet of chain link fence as per the minimum requirement outlined in the city by-law, and would write a cheque to our neighbour for that amount.

Imagine my surprise and dismay when I ventured to the side of my house on Sunday morning to discover a pressure treated board nailed to the beautiful brickwork of my home. I was shocked. I had no agreement with this contractor; I had not even spoke to the contractor, nor had my wife or son. I made it clear to my neighbour that I wanted nothing to do with such a fence. Why is this on my house? What makes a contractor think he has the right to do this to the house of someone whom he has no agreement with?

I'm guessing this is no mistake. I believe this is a high pressure tactic by this contractor to coerce me into paying for a fence that I do not want. I don't know this for certain; I haven't spoken with my neighbour nor the contractor about this. We're not sure how to proceed at this time, but I decided to start by writing this blog post to document both my original intentions and what has transpired for the public record.

These are my thoughts at the moment: While I fully intend on complying with the requirements of by-law 77-97, there is the issue of damage caused to the brick work at the side of my house. How much will that cost to restore to its original condition? My days are busy enough, I really didn't need this to add to an already full agenda. I will keep things posted her as I proceed with this mess.

UPDATE: I spoke to my neighbour, the contractor is "Playin in the dirt." They had their sign out on the lawn of a house up the street. Following is the e-mail I sent them:

I am the property owner of (my address) in Oshawa, Ontario. According to witnesses, you or one of your employees is responsible for affixing a pressure treated board on the east side of my house using screws that penetrate into the brick work. As you may not be aware, we have no prior agreement. Therefore, I formally request you cease and desist further activity on my property and explain how you plan to restore my brickwork to its original condition.

DIY Income Tax - Anyone can do it

How times have changed. When I started out in the workforce, I used to pay someone to do my income tax returns for me. When I went to college, someone introduced me to a free program that would do my taxes for me. I tried this MS-DOS based program out, and was impressed at how easy it was to use. I filed my own return that year, and had zero errors. Every year since then, I had used computer software to file my income tax returns with great success, even when I've had multiple sources of income, got married, and had a dependent. Recently I've tried different things, only to come full circle back to the free software solution.

The Accountant Experiment

A couple of years ago, I decided to try something different. I had some income from self-employment, which entailed some basic expenses I wanted to write off. I was real busy that year, so upon advice of a family member, I decided to let Katrina Morin and Associates take care of my income tax. I paid Katrina a premium of $200 up front, hoping it was money well spent and expecting her to discover some uncommon tax loopholes to improve my return. I ended up worse off than had I done the taxes myself. I got a return, my spouse had to pay, but the amount my spouse had to pay was greater than my return, which wasn't any different from any other year when I did the return myself with help from cheap tax software. What made it worse was that Katrina Morin and associates made a mistake on my filing, which cost me $26 in interest charges on the additional amount owed by the time the government got around to discovering her mistake - an interest charge I wouldn't have had to pay, since I always pay my taxes in full before the deadline. While her associate admitted that the mistake was entirely theirs, I've yet to be reimbursed the $26 in interest charges (note to self, write a letter to the local better business bureau). The following year, I bought the UFile software for $19.99 and did my and my spouse's income tax, error free. The Sunday afternoon I spent was definitely worth over $200 in savings.

What about companies that do income tax?

Every year, the kiosks for income tax processing spring up everywhere. MoneyMart has EasyTax, H&R Block ramps up their visibility, it seemed like a good time-saving idea until I recognized these for the mills they are. I imagine a team of underpaid people sitting in front of computers that are running a program essentially the same as the UFile or TurboTax software I could buy for $20 at a local store. Now I imagine that these people are not just doing my taxes that day, but as many tax returns as they possibly can. Odds are good that they'll process my return without any errors, but it's very likely it's going to be a rush job with minimal to no effort put into finding ways to maximize my return, unless the software is specifically designed to look for it. I don't even know who's going to see my financial information. Let's assume that there will be no difference between my return filed by EasyTax and one I've done myself with UFile. With EasyTax, if I get a return, I will pay them 15% on a return of $100-$300, and 5% on amounts in excess of $300. Doing the math, I will have paid them $58 on a $500 refund, and $83 on a $1,000 refund. If I'll get back less than $100 or owe money, they get to decide whether I'll have to pay them $29.99, $49.99, or $79.99, depending on how complex they believe the return is. Add in my spouse, that counts as another tax return. Of course, they won't do a tax return on someone who has income from self-employment; but UFile doesn't care. It'll handle self-employment income and expenses just fine, and the only people who see my financial information are me, my spouse, and the government clerk who processes the return (assuming it's not entirely automated).

To their credit, H&R Block offers their own DIY income tax software, called H&R Block At Home, which is competitively priced as of the time of this writing. I have no reason to believe it's any worse or better than the competition. Also, these services often provide the money up front, usually on the same day, for a refund, less their fees. Personally, I'd wait the few weeks it would take at most to see the refund, unless I absolutely needed the refund to pay off a balance where I had to pay exorbitant daily interest charges.

Back to free

It's unfortunately increasingly often I find myself needing to rediscover the truths I realized as a young adult, and free income tax solutions is another example of this. While researching which software package offered the greatest value for the 2012 income tax year, I happened across StudioTax. It's fortunate that I've found significant value in free software in the past; otherwise, I would have overlooked this little gem. I decided to give it the benefit of the doubt.

In less than an hour, I had completed my and my spouse's income tax return, at no cost to me except less than an hour of my time (including the time to download and install the software). We both have to pay, which means a minimum $60 if we had someone else do it for us. I'd say that was time well spent.

Why it's better to owe than to get a return

I often see people excited about getting an income tax return from the government. This seems like a strange thing to get excited about, when considering what an income tax return represents. In essence, an income tax return means I've paid the government too much in income tax over the past year, so now I get the amount I paid in excess over the year back in a lump sum payment, without interest. In other words, an income tax return is the government paying back an interest-free loan. On the other hand, if I owe money at income tax time, I didn't pay enough income tax to the government throughout the year. This means I got the interest-free loan from the government that I get to pay back in a lump sum.

How to do it

For a simple return, it couldn't be simpler. We each get a T4 slip from our respective employers. When I run the software, I'm asked some questions; it's essentially "Fill-in-the-blanks." I provide my name, address, social insurance number, as well as this information for my spouse. It steps me though the process, asking me the same questions a professional accountant would ask about things like dependents. After that, I fill in the numbers in the boxes for the respective T4 slips. Each box is numbered; it's a simple matter of making sure the amounts in the numbered boxes go in the same numbered boxes in the program. After that, it's done. I can Netfile or print it off and mail in my return. I bet a trained monkey could do it.

Conclusion

Doing my own taxes is a worthwhile endeavor that's become an annual tradition I recommend to anyone. It takes little to no time, and it helps me to better understand my money - how much of it I earn, how much I'm paying in taxes, and helps me to better manage my money. While I'm not qualified to provide any financial advice, I believe that at least attempting to do one's own income tax is an educational experience that's worth the effort, and software like StudioTax makes it simple.