Saturday, March 15, 2014

Lessons from Project Management - Multitasking

The Cult of Multitasking

Multitasking - Helping You Get MORE things Unfinished

My wife loves multitasking, many others out there seem to as well. There's this idea that by doing only one thing at a time, you're really not being as productive as you could be. In reality, multitasking just ensures you finish tasks later, and have more things partially finished than if you focused on completing one task at a time.

Let's use an example, say you are organizing your home and you have four areas that need organizing, the: living room, bathroom, garage and kitchen. Let's say each area takes 4 days worth of effort. Below is a Gannt chart that shows progress over time for two different people completing the same set of four tasks.

Dave, starts one room, focuses on it completely, and then moves to the next.
Dodo, splits his/her time across all four rooms equally, spending 25% of each day working on each room.

As you can see, after 8 days in, Dave has finished two areas while Dodo hasn't finished anything. Dodo doesn't get anything finished until 16 days have passed.

While this is a simple example, there are a few things it doesn't factor in that make multitasking even worse. If you're working on something, don't you find it takes some initial mental energy as well as time to get back into it? In our simple example, we haven't factored in that Dodo has to walk to each of the four areas, everyday! David has to go only go into one area, and has 1/4 of the travel time Dodo does.

In the real world there are also consequences to things taking too long, a simple example (and something that caught me recently) is library books. If you take out multiple books, read them simultaneously, but can't finish all of them before they have to go back you are out of luck.

Multi-Tasking + Procrastination = Never ever get anything finished!

Whenever you start something new, it's exciting, it's (by definition) new, you're engaged and happy to work on it. As time passes, you may grow bored, or less interested and spend less and less time. It's easy to procrastinate and switch to another task, but maybe you'll never switch back? You can justify to yourself that you're "busy", because you're working on something else. The above simple example assumes that Dodo can keep interested in organizing all four rooms, for 16 straight days. What happens if the Dodo can't? Instead Dodo partially finishes each room, before moving to new areas of the house, leaving a trail of partially finished work.

Taking Action! Stop the scourge of Multi-Tasking

Being reminded of this in a PM course, finding more than a few blog posts that weren't finished, and having to return several library books unfinished, has galvanized me to stop multi-tasking.

My aim is to divide my personal tasks into two categories: maintenance, and development.

Maintenance tasks are things like doing dishes, cooking, cleaning, socializing and emailing. These are tasks that need to be done on a regular basis, and can't be put off for long periods without negative consequences. If the dishes aren't done, the house will be a mess and my wife will file legal action. If I don't cook breakfast daily, I'll be hungry, etc.

Development tasks are things which can be put off and for me area tasks like reading, writing blog entries, working on a PM course, writing an app, home improvement, misc-hobbies, etc. These tasks are not critically time sensitive.

From now on, any time I spent on "Development" tasks, will be completely focused on one item, until that item is completely done or there is no possible way to continue working on it. For example, if for my course I complete my portion of a group assignment and send it off for editing, then I may switch to another task. However, if I start reading a book, I will not do anything else until that book is completely finished.

We'll see how this works, but after focusing on tidying up a group assignment, and getting this blog finished (even when tired after working late on Friday, and wanting to procrastinate and start a new book), I already feel like I'm completing more than I was before.

Saturday, March 1, 2014

We Are All Richer Through Trade - Trading With Friends and Family

Source: de:Eygentliche Beschreibung aller Stände auff Erden, hoher und nidriger, geistlicher und weltlicher, aller Künsten, Handwercken und Händeln ..." from Jost Amman and Hans Sachs /Frankfurt am Main / 1568 / thanks to
Early Trade - (Image is in the Public Domain)

One of the core tenets of economics, is everyone is richer through voluntary trade. Trade allows for more choices, if two parties agree to trade, they are doing so because it benefits both of them.

I've posted before on here about Kijiji being a way to make money and ensure items can be re-used. Some of you may not be interested in selling online to a stranger due to perceived hassel, or safety concerns. Wouldn't you have no problem selling, or giving away, items to your friends? Isn't it much better that someone in your family or friends gets an item rather than it goes in the garbage? Or to a thrift shop?

The couch in my living room, came from a friend who needed to get rid of it to clear some space. I traded a case of beer for the couch, and we were both happy to make the trade. If I hadn't have happened to callup this old friend, he would've thrown the couch in the trash.

What ways are there to facilitate more trade between friends? Is this something that you are doing? Or anyone is doing? What about between co-workers? Your workplace is somewhere where tens to thousands of people head to everday, isn't there a chance you can trade items with these people, without any extra transportation required? You bring a DVD to work, they trade you for another.

If you already have items on Kijiji or Craig's List, sending your friends a link to all your items would be one option.

Alternatively, sharing photo's of items you no longer want in a Google Drive spreadsheet or Flickr photo site. Does a broadcast on Facebook work?

What about services? If you don't want to cut your own lawn, wouldn't it make more sense to poll your friends and family first? What about transportation to the airport? Or a math tutor for your kids? You may think your friends and family aren't interested, but perhaps they would be? Your friends and family would only take the trade if it made sense, but by never presenting the trade you never know what missed internal trading opportunities there are between friends and family.

The number of trade opportunities with friends that have by chance worked out (see couch example) makes me wonder how many other opportunities are missed out on. I'd really love to hear if anyone has formalized this among co-workers, friends of family and how well it's done.

Sunday, February 16, 2014

A Taxing Issue - Income Splitting

Income Taxes Are Probably Your Single Largest Expense - Do you have any idea how they work?

This article will be written with a Canadian slant, but some of these principles may apply in other countries. This information is also provided for entertainment purposes only, I am not an accountant or a lawyer. This is general information, and does not constitute specific advise to you.

Do you think of yourself as a diligent shopper? Do you shop around for the best deal when buying home electronics? Do you consult gas station websites before filling up? Do you search for coupon codes before buying things online? Do you use look at flyers and use coupons when buying groceries? Are you someone who "never pays full retail" and is proud of it?

You may be doing all of these things, but completely failing to try to save any money on your largest expense, income tax.

Current and previous year Canadian tax rates are listed here. For those who don't know how taxes work, you are taxed at different rates depending on how much money you earn. Everyone is given a basic credit, to offset these taxes, and there are additional credits for children, etc.

Using a simple calculator, assuming only the basic exemption applies, living in Ontario, here are some estimated taxes:

IncomeIncome TaxAverage Tax RatesMarginal Tax Rate
$40,000 $5,892 15%24%
$60,000 $11,873 20%31%
$80,000 $18,300 23%35%
$100,000 $26,600 27%43%

If you were a business, would you ignore an expense this large? Given the dollars involved, isn't it worth reading at least one tax book or finance blog (written by an accountant)?

OK, So This Is Worth Looking At - What is Income Splitting?

Before we get into this, if you're single, you can ignore this. I do promise to write more tax tips, some that might apply to singles.

As you can see from the table above, the more money you earn,  the higher percentage tax you pay. The "Marginal Tax Rate" is the rate of tax you pay the next dollar you earn. So, in our example, if you earn $100,000 in Ontario, and you earn an extra $1, that $1 is subject to 43% tax (so earning $1 only gives you $0.57 to take home).

If you're married, or in a common law relationship, whoever earns the most money is paying the most taxes and has a higher marginal tax rate.Where this really matters, is if you can arrange any extra income (such as investments) to be taxed in the hands of the lower income person. The difference between investments being taxed at 43% or 24% is significant. This obviously comes more into play with a household that has a $100,000 earner, and a $20,000 earner than a household with two $30,000 earners, but it's unlikely both spouses earn exactly the same income.

So Why Can't I just Write A Cheque To My Spouse?

Because this is such a great way to reduce tax, the government has laws called "attribution rules", which prevent this. If you earn money, and give it to your spouse to invest, then YOU (who earned it) must pay the tax on the investment income. This also applies if your earned income comes into a joint account, and your spouse happens to draw from that account to invest.

There are also rules that relate to giving your children money, and who pays the tax on income it earns.

This is Too Complicated

I agree, if you've read this far, congratulations. Between some of the different strategies on taxation, etc., this does get kind of crazy. So I'll try to keep this simple. This post should give you some ideas, but you should definitely do some further reading on your own.

The good news is, some of the best ways to legally split income are very simple.

Steps For Higher Income Earner:

Strategy 1: Max Out Tax Free Savings Account

Higher earner maxes out the contribution to a TFSA.

Before looking at other strategies, if you don't have a TFSA (Tax Free Savings Account) you should immediately go out and get one. The government allows you to setup investments, earn income on them and PAY NO TAX. There are limits to how much you can contribute into these separate accounts, but this type of account is a winner, and also simplifies the number of forms and receipts you need to have during tax time.

Savings: This type of account actually reduces the need to split, since the higher income earner can contribute $5,500 (as of 2014) into an investment account that earns no tax.

Strategy 2: Max Out Spouses' Tax Free Savings Account 

Higher earner contributes to spouses' TFSA.

As discussed earlier, if you give money to your spouse and they earn income from it, then you (who earned the money) must pay the tax on the income. This does not apply with a Tax Free Savings Account, since there is no tax earned on the money invested.

To avoid confusion, and potential tax implications, I wrote a cheque to my wife, which she deposited directly into the TFSA. This way, there is no doubt which money from me, went where.

Savings: Allows you to shield $5,500 (or so) per year from tax.

Strategy 3: Pay ALL Expenses From Higher Income Earner FIRST

Our family has successfully been doing this since marriage. Doing this doesn't require anything fancy, or talking to a lawyer or accountant or anything, but this does require a great deal of trust with your spouse, which hopefully you have already! Whoever is in the higher tax bracket pays absolutely everything, including discretionary expenses. If there are additional expenses, the lower income earner starts paying them only after the higher income earner is out of money.

I am in the higher bracket, so I pay all expenses. To make tracking things easier, we are both paid into our own separate accounts. While we did make these both joint (to make the money accessible to both of us in the event of one of us dying).

If it takes all of one income, and some of another to cover expenses, you can still execute this, just have the higher income earner pay all their money to expenses FIRST, and the lower income earner hopefully has something leftover for savings. If you have no money leftover for savings, you're on a treadmill you'll never get off...

Savings: Allows investments to be taxed at the lower spouse tax rate, rather than higher spouse tax rate

Strategy 4: Spousal RRSP

The government allows you to contribute to your spouses retirement savings. The investment grows under your spouses' name and when withdrawn, is taxed in your spouses' name.

We have setup a spousal account, and I have stopped contributing to my own account. I personally have some worries that when it comes time to remove the money from the account, the government will have raised taxes . Garth Turner, a financial writer and former Finance Minster, has some excellent points about pitfalls with an RRSP.  For this reason, I've listed it later. Many banks and investment advisors are always pushing RRSP's, it's really important for you to understand how taxes work yourself, and then you can see what really makes sense for you and what doesn't.

You can read about some of Garth Turner's reasons in favour of RRSP's here.

For my own household, being able to have income taxed across both of us in the future versus tax singly in my hands now is advantageous.

Savings: As much as 18% of income (up to a maximum) of higher earner is instead split 50/50 (ideally) between the two of you and taxed later.

Strategy 5: Talk To A Professional

If you've still go too much money in the hands of one family member, then you need professional help.


What may make sense for you, may not be what I've written. Perhaps your employer matches RRSP contributions, in that case you would definitely want to take advantage of that. Perhaps you have a workplace pension, or a pension from your union. This can change strategy as well.

Different types of investments may go up or down, but understanding tax rules is guaranteed to pay off. For the amount of money you may be paying in taxes, shouldn't you have some idea how it works? and how best to (legally) reduce your taxes?