From a hard lesson to financial prudence
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  1. #1
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    From a hard lesson to financial prudence

    Well, I've been reading and learning a lot since I joined here, and I've got to say this forum has been a huge help. I feel it's time I kicked off my own Money Diary, partially for accountability and partiall to receive suggestions and input form the knowledgeable members on this forum.

    Bear with me, the first post will be the longest, to set the stage. I promise!!

    A bit about me, taken from one of my first posts here:

    I’m 28 years old. I’m a journeyman welder and last year I grossed right around $60,000 thanks to the crash in the Alberta economy. The previous good years however, allowed me to pay off all debt other than my vehicle. I’ve spent the last 1.5 - 2 years recovering from a pretty big mistake with regards to vehicles…

    I traded in a great vehicle that I had bought new and owned for 2 years for a piece of junk that was 2 years new and used for no good reason, regretted it almost instantly, plus it turned out to be a lemon and I poured money into it to to pay it down and sell this summer. I can elaborate on that story if anyone cares. LOL

    So now I’m trying to get my financial feet back under me with 3 main goals; 1. Rebuild the $10,000 savings I drained to get rid of my lemon vehicle (it had been my home downpayment money). 2. Build a comfortable emergency fund. 3. Develop a long term savings plan with retirement at 55 as my goal (because fishing is better than work).

    I'm common-law with my girlfriend, and other than a savings account for vacation money our finances are separate. They'll stay that way until marriage (which is likely in a year or two), and then they'll combine. Until then, this diary will be my finances alone.

    Another goal is to have a positive net worth by the end of the year. I've been knuckling down and putting nearly all of my money after bills etc onto paying off my vehicle, which is my only remaining debt. Once that's gone, my living expenses will total 50% or less of my net pay so I'll be able to set up an aggressive savings plan.

    My plan so far is to walk out of the regular work force at age 55. I intend to spent the next year and change clearing all debt, educating myself on finances and investing and building emergency savings and my home downpayment while slowly saving some for retirement. Once I turn 30, I should have a comfortable safety net and a decent downpayment built up. I then plan to spend my remaining 25 years until I hit 55 aggressively saving and investing so I can achieve my dream. I want to do all this, while still living and enjoying life as much as possible while living within my means

    Once debt free, I would like to keep my living expenses to 50% or less of my net income. After that, 30% will go into savings and 20% will be discretionary. I need to do some more calculations, but I'm hoping that will give me enough for retirement.

    I do have a few things up in the air right now, as I'm considering quitting my job to go back to school in order to find something I enjoy more. That would naturally be a financial hit, but I'm just gonna keep on my current path and see where life takes me. I'll adapt as needed if I go to school.

    Ok, here goes.

    This is as of April 12, 2017

    Current debt:

    Line of Credit: $8700 (this is my vehicle, I bought it for $15,000 last July)
    Visa Card: $676 (monthly groceries etc, plus some from a recent trip. Card is paid in full every month)

    Total debt: $9376

    Assets:

    Bank 1:

    Main chequing account: $42
    Savings account: $0.04
    Money master savings: $11
    RRSP: $210
    TFSA- cash: $34

    Bank 2:

    Emergency chequing: $10
    Emergency savings: $10
    TFSA - Tangerine Equity Funds Portfolio: $1510

    Bank 3:
    Chequing - fun money: $1100 (this is 10% of my paycheck after vacation pay and savings are deducted, i've been saving it for awhile)
    Savings - vacation fund, joint with girlfriend: $1200 (our vacation pay is paid out as a percentage of each cheque. We put it in this account right away so we can afford the occasional trip)

    Random cash on hand: $300

    Total assets: $4480


    Net worth: -$4896

    Foreseeable upcoming expenses:

    Required soon:
    Tires for vehicle: $1200 (needed ASAP)
    Timing belt and water pump for vehicle: $1200 (need within 4 months)

    Required soon-ish:
    Shocks for vehicle: $600 - $800 (need within 6-8 months)

    Required this year:
    Canopy for vehicle: $2000 - $3000


    Foreseeable incoming funds other than regular pay:

    Income tax return: $1500 - $2400



    Current state of my education:

    - Working through the "8 With Weight" reading list posted on this forum
    - Reading CanadianMoneyForum, MyOwnAdvisor, and Finiki
    - Following Money School on Youtube

    Books purchased and read:
    The Lazy Investor - 100%
    The Wealthy Barber - 100%
    The Wealthy Barber Returns - 100%
    The Value of simple - 20%
    The Intelligent Investor - 0%


    Pretty small potatoes compared to where some people around my age on this forum are. My vehicle debacle really set me back. I have a long ways to go to meet my lofty goal of fishing everyday after age 55. That said, I'm less than $5K in the red over all which isn't bad considering I work with people younger than me who are pushing $100K in the red on just a truck, trailer and quad...

    I'll try to update this every month or as significant changes occur. I'm more than open to suggestions and advice on how to organize and prioritize things, as well as ways to further my education.

    Last edited by OutofBounds; 2017-04-12 at 09:53 PM.

  2. #2
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    Hey OOB, you are bound to be further ahead than most folks your age! It sounds like you are on track, in the right frame of mind as many people never "get it" at all, their entire lives.

    Best of luck and I look forward to reading more about your journey. If you are really committed to it, you may find that FIRE occurs even earlier than you think.

  3. #3
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    This forum can be disheartening. It's really easy to read it and think everyone else will be a millionaire by 40. It really isn't like that in the world.

    On the plus side, you don't have a lot of debt. On the downside you basically don't have any assets (and half of what you do have is allocated to fun and vacation) I think you have a good plan in place, but is it realistic to get to a point where you are only spending 70% of your income, when you've been spending it all and more up until now?

    I think you are reading all of the right stuff in regards to finance. If you can stick to your plan, and get those savings growing I'm sure you'll do great!

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  5. #4
    Senior Member none's Avatar
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    Whether you like it or not you and your common law wife's finances are merged and have been ever since you became common law. It would be a prudent idea to write out a bench mark where you bother were when this occurred.

  6. #5
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    I think you can retire at 55 without going back to school...a good welder is worth 20 accountants. Try to specialize...alloy/underwater etc.

  7. #6
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    Quote Originally Posted by CalgaryPotato View Post
    This forum can be disheartening. It's really easy to read it and think everyone else will be a millionaire by 40. It really isn't like that in the world.

    On the plus side, you don't have a lot of debt. On the downside you basically don't have any assets (and half of what you do have is allocated to fun and vacation) I think you have a good plan in place, but is it realistic to get to a point where you are only spending 70% of your income, when you've been spending it all and more up until now?

    I think you are reading all of the right stuff in regards to finance. If you can stick to your plan, and get those savings growing I'm sure you'll do great!
    It's a very long and convoluted story about how I got to the point where I am. It begins way back in 2010, involves trade school, 2 moves, 2 provinces, trade school again, an unreliable roommate, inflated rent, 2 vehicle purchases, 2 more moves within this town, meeting my girlfriend/wife, and then running into a brick wall of reality. LOL.

    In a nutshell though, not including $600 per month truck payments for the last 4 years, I've managed to pay off about $30,000 in accumulated debt and interest, the majority of that being with in the last 18 months.

    That's the main reason my numbers look so pitiful. My living expenses currently amount to about 55% of my income. At the end of each pay period, after everything is paid anything left over (between $600 and $1200) is put against my debt. So I'm able to put betwen $1200 and $2400 per month into debt repayment depending what I get for overtime and how many days are in the pay periods. Hence the lack of money outside of fun and vacation. I never have an issue meeting my bills and certainly don't live anywhere near paycheck to paycheck. Once I get the debt gone, I'll easily be able to bank that $1200 - $2400 a month if I want.

    Quote Originally Posted by none View Post
    Whether you like it or not you and your common law wife's finances are merged and have been ever since you became common law. It would be a prudent idea to write out a bench mark where you bother were when this occurred.
    Very valid point. I'll have to talk with her about it. I'm not really sure where either of us were financially back then, but it wasn't very good. I'll look into it and discuss combining our finances. We've been together for 3 years at this point and things are looking better than ever between us. We have discussed living on my income and banking hers which would allow use to save about $2500 per month.

    Quote Originally Posted by Eder View Post
    I think you can retire at 55 without going back to school...a good welder is worth 20 accountants. Try to specialize...alloy/underwater etc.
    Therein lies the rub. I hate my job, as in I have to force myself out of bed in the morning just to go to work. It's not the environment (I get along with everyone at work, and the company isn't a bad one to work for), it's the work itself. I find it unfulfilling, mind-numbingly boring, and it simply isn't stimulating or interesting in the slightest. I got into it for the money, and nothing else. I really have no interest in welding, or working with metal. Never have, and once I leave the trade I doubt I'll pick up a stinger again for decades, if ever. It's affecting my home life to the point of ruining my Sundays because I don't want to go to work the next day.

    I'm not 100% sure what I'll end up doing but fire/rescue, EMS and law enforcement have all piqued my interest. All are very competitive though, so I want to go back to school for something in case none of those work out.

  8. #7
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    Hey OOB, glad you joined. Fellow Albertan here.

    Quote Originally Posted by OutofBounds View Post
    I'm common-law with my girlfriend, and other than a savings account for vacation money our finances are separate. They'll stay that way until marriage (which is likely in a year or two), and then they'll combine. Until then, this diary will be my finances alone.
    Quote Originally Posted by none View Post
    Whether you like it or not you and your common law wife's finances are merged and have been ever since you became common law. It would be a prudent idea to write out a bench mark where you bother were when this occurred.
    Quote Originally Posted by OutofBounds View Post
    Very valid point. I'll have to talk with her about it. I'm not really sure where either of us were financially back then, but it wasn't very good. I'll look into it and discuss combining our finances. We've been together for 3 years at this point and things are looking better than ever between us. We have discussed living on my income and banking hers which would allow use to save about $2500 per month.
    How did your very excellent first plan turn into such a disastrous plan in less than 24 hours on the forum??

    You finances are nowhere near merged, particularly if you own no house together, have no kids, share expenses, and she has a job. None lives in BC, they have wonky rules there and made-up words like "non marital spouse"

    Waiting until you decide to get married (and actually do it) is a great and simple plan.
    Living on all your income and saving all hers, while not married, living in Alberta, is precisely the steps you should take if you wish yourself to have zero money, and her to have all of the money, if you were to unfortunately separate...

    Putting all your available funds against your debt is a fantastic plan, you'll be stacking bills in no time if you keep socking away $1200-2400/month.

  9. #8
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    Quote Originally Posted by peterk View Post
    Hey OOB, glad you joined. Fellow Albertan here.







    How did your very excellent first plan turn into such a disastrous plan in less than 24 hours on the forum??

    You finances are nowhere near merged, particularly if you own no house together, have no kids, share expenses, and she has a job. None lives in BC, they have wonky rules there and made-up words like "non marital spouse"

    Waiting until you decide to get married (and actually do it) is a great and simple plan.
    Living on all your income and saving all hers, while not married, living in Alberta, is precisely the steps you should take if you wish yourself to have zero money, and her to have all of the money, if you were to unfortunately separate...

    Putting all your available funds against your debt is a fantastic plan, you'll be stacking bills in no time if you keep socking away $1200-2400/month.
    LOL, thanks for the heads up. Over dinner the girlfriend (wife...?) and I discussed it. We've agreed to keep our finances separate and pay off our individual debt and make our own savings for now. Her debt is under 5K. Once we actually get married, then we'll merge our finances. As it is, all our expenses are split right down the middle thus enabling us to free up money to pay down debt, so the status quo is working for now.

  10. #9
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    Quote Originally Posted by OutofBounds View Post
    I’m 28 years old. I’m a journeyman welder and last year I grossed right around $60,000 thanks to the crash in the Alberta economy. The previous good years however, allowed me to pay off all debt other than my vehicle. I’ve spent the last 1.5 - 2 years recovering from a pretty big mistake with regards to vehicles…

    I traded in a great vehicle that I had bought new and owned for 2 years for a piece of junk that was 2 years new and used for no good reason, regretted it almost instantly, plus it turned out to be a lemon and I poured money into it to to pay it down and sell this summer. I can elaborate on that story if anyone cares. LOL
    Don't worry, you certainly aren't the only late 20s guy in Alberta who regrets buying that truck/Camaro. Just for perspective, I am on the opposite "career path" as you - Engineering school, profession job, managed to save a fair bit of money working here in Alberta. But not a week goes by where I don't have the thought in my head "god damn I should have come to Alberta when I was 18 to be a welder", and I constantly want that Truck/Camaro, crave it... but I resist, possibly to my future regret and disappointment. "The grass is always greener on the other side", as they say.


    Ok, here goes.

    This is as of April 12, 2017

    Current debt:

    Line of Credit: $8700 (this is my vehicle, I bought it for $15,000 last July)
    Visa Card: $676 (monthly groceries etc, plus some from a recent trip. Card is paid in full every month)

    Total debt: $9376

    Assets:

    Bank 1:

    Main chequing account: $42
    Savings account: $0.04
    Money master savings: $11
    RRSP: $210
    TFSA- cash: $34

    Bank 2:

    Emergency chequing: $10
    Emergency savings: $10
    TFSA - Tangerine Equity Funds Portfolio: $1510

    Bank 3:
    Chequing - fun money: $1100 (this is 10% of my paycheck after vacation pay and savings are deducted, i've been saving it for awhile)
    Savings - vacation fund, joint with girlfriend: $1200 (our vacation pay is paid out as a percentage of each cheque. We put it in this account right away so we can afford the occasional trip)

    Random cash on hand: $300

    Total assets: $4480


    Net worth: -$4896

    Foreseeable upcoming expenses:

    Required soon:
    Tires for vehicle: $1200 (needed ASAP)
    Timing belt and water pump for vehicle: $1200 (need within 4 months)

    Required soon-ish:
    Shocks for vehicle: $600 - $800 (need within 6-8 months)

    Required this year:
    Canopy for vehicle: $2000 - $3000


    Foreseeable incoming funds other than regular pay:

    Income tax return: $1500 - $2400
    If I could suggest, you seem to have a lot of accounts, are any of them paying interest? I know a lot of people like to have separate accounts for different things (vacation, emergency, etc.) but if you are comfortable looking at a bank statement of an unallocated $10,000 without the overwhelming urge to spend it on something, it can be a lot simpler and more profitable just to keep a few accounts.

    I'd suggest:

    1 chequing with your primary bank
    1 Tangerine TFSA investment account
    1 Tangerine high interest savings account

    That's it.

    Your chequing to manage regular expenses and a small additional buffer for "emergency" and to keep a minimum balance (usually 2-5k) so that you don't pay bank fees. And your high interest savings for additional emergency and vacation funds... Then sock away whatever your feel comfortable with into the Tangerine investment account, with the intention of never touching that money again until retirement, or possibly to make a house purchase.

    Current state of my education:

    - Working through the "8 With Weight" reading list posted on this forum
    - Reading CanadianMoneyForum, MyOwnAdvisor, and Finiki
    - Following Money School on Youtube

    Books purchased and read:
    The Lazy Investor - 100%
    The Wealthy Barber - 100%
    The Wealthy Barber Returns - 100%
    The Value of simple - 20%
    The Intelligent Investor - 0%

    This is great, I've read a number of those too.

    I'd only say re: education. Don't sweat it or obsess. Understanding the basic asset classes (stocks, bonds, GICs, cash) and how they can be accessed by yourself (mutual funds, ETFs, direct investing with a discount broker, pensions) is good enough. 30 minutes/day of reading for a few weeks of the above, plus Canadian Couch Potato and you will be all set.

  11. #10
    Senior Member kcowan's Avatar
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    Simplify, purify, stop unnecessary spending.


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