# Oodles of student debt



## VoxPopuli

My wife and I just sold our house and moved to a different city. The sale proceeds should clear the bank on Monday. This seems like a logical time to get some feedback on our financial situation and to start a diary as we work towards our goals.

The basics:

My wife and I are both 30. No kids, two dogs. Children are in the not-too distant future plans; likely a year or two.

My wife makes $65,000 per year as a social worker. I currently make $50,000 per year as an articling student, and will be making somewhere between $65,000 and $80,000 as a first-year lawyer beginning in October 2012.

I took *way* too long to get through my schooling, and as a result we have a significant amount of student debt. Our current student debt picture looks like this:

Husband's student loan = $25,963.61 (5.5%, variable; effective rate = 4.675% after tax credit)
Wife's student loan = $19,990.34 (5.5%, variable; effective rate = 4.675% after tax credit)
Husband's Scotia professional student line of credit = $59,176.90 (4.25%, variable)

= $105,130.85

We also have the following other debt::

RBC LOC = $10,000 (6.99%)
Vehicle loan = $13,815.41 (7.29%)
Credit card = $6221.46 (1.99%)
Other credit cards (pay off in full each month), current balances are approximately $3200

= $33,236.87

The total is $138,367.72, with most of it at (currently) reasonable interest rates. The two worst rates are on the RBC LOC and the vehicle loan. My wife and I are currently deciding whether to pay those two off in full with the proceeds from the sale of our house, which I'll talk more about below.

Following the sale of our house, our assets look like this:

Wife's RRSP: $14,164.80
Wife's employer pension plan: $19,150.05
Wife's chequing account: $56,179.64
Husband's chequing account: $770.03
Husband's TFSA: $679.27
Wife's TFSA: $25.00 
Two vehicles worth approximately $17,000 combined
Household goods worth approximately $25,000

= 132,968.79


Our net worth is slightly negative even counting vehicles and household goods, and much more so when looking just at liquid assets. The good news is that we're a lot better at saving than you'd think by looking at our current financial picture. Over the last six months we've managed to pay down $14,467.93 in debt, while maintaining two houses, paying to fix up a home for sale then move it, and spending an average of $550/mo on gas driving between two cities.

I'll wait until we've had a full month in our new home before detailing our monthly expenses, since we dont know yet what our utilities will be or what our gas bill will look like with the new living arrangement. 

Our current take home pay each month is approximately $6700 (This should go higher when I get approval from the CRA to deduct additional income at the source for my built-up tuition and education credits). I expect that between debt repayment and savings, we will be adding $3000-$3500 per month to our net worth on average between now and October 2012. 

Here is the biggest financial decision we currently face: Once the cheque clears early next week and we pay our current credit card balances, we will have about $52,000 in cash that we can use several different ways. The key factor is that my wife and I want to buy another house once we've improved our financial situation a bit, probably in Spring 2013. Because of my education credits, the graduate tax rebate program in our province and our moving expenses, our tax refund will likely be north of $10,000 in Spring 2013, which is why we're looking at waiting until then to buy. 

The two options that we have been debating for the cash are:

#1) Pay off our two highest interest debts, the $10,000 RBC LOC (6.99%) and the $13,815.41 vehicle loan (7.29%). Place the remaining $28,000 or so into our TFSA accounts, in either a high-interest savings account or possible a conservative form of security. Save like crazy while paying just the standard payments on our remaining debts (all student debt).

#2) Keep those two debts, and throw the entire amount of cash into savings. Save like crazy while paying just the standard payments on our remaining debts (all student debt).


I estimate that a house will cost us approximately $400,000 (we live in a relatively expensive real estate area). I would really, really like to have 20% down when we buy, so that we can avoid CMHC insurance premiums. It is more likely that we could do this if we went with #2, but I'm strongly leaning towards #1, as I'm uncomfortable with the amount of debt we're currently carrying. 

There's obviously a strong argument for paying less than 20% down and attacking our debt more aggressively before interest rates inevitably rise, but I think my wife and I are on the same page that we'd like to have 20% down if at all possible. If nothing else, having the relatively short term goal of saving $80,000 plus closing costs is an easy one to get motivated for. I expect that many would suggest prioritizing debt repayment or retirement saving. There's a lot of validity to those arguments, but for reasons I can get further into if necessary we're comfortable with holding off for one more year on both.

Anyway, I'd love to hear thoughts on this decision, or on our finances in general (though it will probably be easier to do so after we get our monthly expenses nailed down this month) I'll be posting monthly net worth updates based on the info I'm already tracking.

Fire away.


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## JustAGuy

The earlier you pay off the debt, the less interest you pay and the sooner you are able to start actually accumulating wealth.... unless your TFSA interest is earning you more money than the interest on your loans it doesn't make sense to put the money there imo. I'm a proponent of living debt free.

From what I've seen in Toronto and Vancouver, $400k is reasonable for a house... but I'm not a supporter of buying houses... I haven't read anything that convinces me that owning a house is a financially good idea... There's not too much other advice I'd give... maybe not what you're looking for... and maybe someone else will chip in.


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## VoxPopuli

I agree that buying a house isn't always a great financial move. As a combined financial and lifestyle decision, though, it's the right decision for us. Just a question of when, and how much. Other people, in a similar situation but with different priorities, would likely do things very differently.



JustAGuy said:


> The earlier you pay off the debt, the less interest you pay and the sooner you are able to start actually accumulating wealth.... unless your TFSA interest is earning you more money than the interest on your loans it doesn't make sense to put the money there imo. I'm a proponent of living debt free.
> 
> From what I've seen in Toronto and Vancouver, $400k is reasonable for a house... but I'm not a supporter of buying houses... I haven't read anything that convinces me that owning a house is a financially good idea... There's not too much other advice I'd give... maybe not what you're looking for... and maybe someone else will chip in.


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## slacker

If I may sum:

Negatives:
- heavily indebted
- negative networth
- expecting a baby or two soon
- wants to go into even more debt to buy a house on the tail end of a hot housing market

Positives:
- double income
- your household income is expected to raise dramatically soon

The thing with real estate is that it's so emotional, and so personal. If you have a need for a house, then it's hard to argue otherwise. You have already alluded to personal circumstance that may compel you to purchase a house, even possibly without the 20% downpayment.

The cautious approach is to pay off all your debt, then save the 20% downpayment. But you know that already.

So how much risk are you willing to take? How confident are you with your career? your job securities? Economic outlook? Interest rate movements?

PS: I really truely hope that you're not trying to "rush in" before interest rate raises ...


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## the-royal-mail

1. figure out what you will need for your movers and other moving & setup expenses in new place and keep that amount of money aside
2. save the 20% to avoid CMHC and get set up in the new place
3. use all future extra money to pay off debts, focusing first on the highest interest and smallest loans (setup a spreadsheet to track all of this and measure your progress)
3. setup a future emergency savings plan

Note all of this will take several years (please do not seek instant gratification on this) and cost you a lot in interest. Facts of life that you can do very little about. I figure money spent going to school as you have done is one of the best investments you can make. The returns blow away most other returns you would get. I say well done, but now is the time to get busy on debt repayment AND on learning money management skills so that in the future you will be well-positioned to spend money that you have saved, rather than relying on debt to address your needs. 

Good luck.


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## Four Pillars

When you say "buy a 2nd house" - are you talking about buying a rental house in addition to your current house? Or will you sell the current house?

If it's an investment property, I think you need more than 20% down payment. Maybe 35%?

I don't really see anything wrong with your plans - you are big savers which is the main thing. You are pretty high on the debt risk meter (how much is your mortgage?), but that's your decision.


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## HaroldCrump

A quick note on your net worth calculations : if the purpose of the calculation is to determine how stable your financial condition is, then you cannot include the RRSP, pension, car, household articles etc.

The pension is probably locked in and inaccessible.
The RRSP is withdrawable, but not without a significant haircut in taxes.
You can't possibly sell your cars - how will you get around, get to work, etc.
You can't sell your essential household items either.

I see it as _
Wife's chequing account: $56,179.64
Husband's chequing account: $770.03
Husband's TFSA: $679.27
Wife's TFSA: $25.00 
_
Total of $57,653.94 

Your debt to accessible assets ratio is : 2.40 i.e. your debts are two-and-half times the current assets you have to pay it off.

What happened to the proceeds of the house sale (I'm assuming you sold for some profits).
Is that included in your calculations?


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## VoxPopuli

Yes, proceeds of house sale are now in wife's chequing account. Our net sale proceeds were 57,000 or so. As you note, our accessible assets are dwarfed by our debts. 

To clarify for some other responses, my wife and I owned a house until last week. We sold and are currently planning to rent for a year, give or take, while we stabilize our finances and to see if our local housing market cools off a little. We are definitely not looking to sneak in before rates start rising; I'll be happy when rates start to rise because I think it will remind our housing market that the current rates are an aberration, and prices could become more reasonable. 




HaroldCrump said:


> A quick note on your net worth calculations : if the purpose of the calculation is to determine how stable your financial condition is, then you cannot include the RRSP, pension, car, household articles etc.
> 
> The pension is probably locked in and inaccessible.
> The RRSP is withdrawable, but not without a significant haircut in taxes.
> You can't possibly sell your cars - how will you get around, get to work, etc.
> You can't sell your essential household items either.
> 
> I see it as _
> Wife's chequing account: $56,179.64
> Husband's chequing account: $770.03
> Husband's TFSA: $679.27
> Wife's TFSA: $25.00
> _
> Total of $57,653.94
> 
> Your debt to accessible assets ratio is : 2.40 i.e. your debts are two-and-half times the current assets you have to pay it off.
> 
> What happened to the proceeds of the house sale (I'm assuming you sold for some profits).
> Is that included in your calculations?


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## MoneyGal

Given your future earning power, I think your overall balance sheet looks very good. 

I'd totally forget about retirement saving right now. Your earning power is likely to rise faster than inflation. Go ahead and pay down debt - leave saving for later. Besides, your wife is already building retirement savings through her pension - that is enough for right now. 

I have one big question: are you thinking about buying a house which you could carry on one (your) income alone? If not, have you factored the cost of daycare into your affordability calculations? 

This hasn't ever been my personal situation, but I do know other moms who have wished they'd planned things differently when they bought a house that requires two salaries to afford, and then they had kids and couldn't afford to stay home with them, but also got killed on daycare costs for two kids in care. Two pre-school age kids will run you more than $2000/month (deductible from lower income-earner's salary) in my city. ...Just a thought. 

As for what you should do - you should do what you're most comfortable with, and that sounds like Option 1 for you. I can't recall what CHMC premiums run. Sometimes people borrow from a relative in order to avoid the CMHC premiums.


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## VoxPopuli

MoneyGal said:


> Given your future earning power, I think your overall balance sheet looks very good.
> 
> I'd totally forget about retirement saving right now. Your earning power is likely to rise faster than inflation. Go ahead and pay down debt - leave saving for later. Besides, your wife is already building retirement savings through her pension - that is enough for right now.
> 
> I have one big question: are you thinking about buying a house which you could carry on one (your) income alone? If not, have you factored the cost of daycare into your affordability calculations?
> 
> This hasn't ever been my personal situation, but I do know other moms who have wished they'd planned things differently when they bought a house that requires two salaries to afford, and then they had kids and couldn't afford to stay home with them, but also got killed on daycare costs for two kids in care. Two pre-school age kids will run you more than $2000/month (deductible from lower income-earner's salary) in my city. ...Just a thought.
> 
> As for what you should do - you should do what you're most comfortable with, and that sounds like Option 1 for you. I can't recall what CHMC premiums run. Sometimes people borrow from a relative in order to avoid the CMHC premiums.


Thanks, moneygal! 

CMHC premiums on a $400,000 house would be $4,000 if we were to put down anything between 15-20% on a $400,000 home. That obviously dwarfs the extra interest we'd be paying on the two debts if we were to put $23,000 into savings instead of paying off the RBC LOC and car loan. That said, I don't like the idea of having virtually all of our savings tied up in a house while still carrying so much variable-rate debt. I'm leaning towards paying down the two debts first, even if it delays our ability to purchase a house with 20% down.

CMHC claims on their website that the cost of the insurance premium is often made up by getting a better interest rate on the mortgage loan, but I believe we'll be competitive for the best rates regardless. Anyone have any info on whether having CMHC insurance will make a significant difference on the rate for borrowers who are putting down 20%? I haven't been able to find anything.


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## VoxPopuli

HaroldCrump said:


> A quick note on your net worth calculations : if the purpose of the calculation is to determine how stable your financial condition is, then you cannot include the RRSP, pension, car, household articles etc.
> 
> The pension is probably locked in and inaccessible.
> The RRSP is withdrawable, but not without a significant haircut in taxes.
> You can't possibly sell your cars - how will you get around, get to work, etc.
> You can't sell your essential household items either.
> 
> I see it as _
> Wife's chequing account: $56,179.64
> Husband's chequing account: $770.03
> Husband's TFSA: $679.27
> Wife's TFSA: $25.00
> _
> Total of $57,653.94
> 
> Your debt to accessible assets ratio is : 2.40 i.e. your debts are two-and-half times the current assets you have to pay it off.
> 
> What happened to the proceeds of the house sale (I'm assuming you sold for some profits).
> Is that included in your calculations?


I had another post responding to this and other comments, but it appears to have been lost in the ether. 

Yes, the proceeds from our house are basically the amount of my wife's chequing account. And you're right, we don't have much in terms of accesible assets. 

As to the other questions, we're currently renting and looking to buy a primary residence down the road, not a "second" house. I should have stated that more clearly...


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## marina628

I think paying off the couple debts will make you feel great and will probably make it easier if you can retire these couple debts.When we had multiple debts I tried to focused on the highest interest first but when i had many debts with very similar interest I tackled the lowest balance as each time I paid something off in full it really made me feel great.Banks seem more accepting of student loan debt than cars/credit cards so would be great if you can wait to buy a home until you have no debt except the student loan debt.


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## PMREdmonton

I was in a very similar situation as a graduating medical resident about 6 years ago but we didn't have your assets or your present income.

We owed $75K on my LOC at 5.5% interest.
We had no house proceeds, TFSA didn't exist and we had no money in the bank.
I made about $60K and my wife made about $20K but she was pregnant and about to leave the workforce permanently.

What we did have was a LOC of up to $200K so we had $125K available space.

We also knew my salary would increase to somewhere in the neighbourhood of $150-200K/yr on graduation which we figured was plenty to carrry the two of us.

We also wanted to buy a home worth about $400K.

What we ended up doing was borrowing in advance $100K from my LOC and put it in the bank to use for our downpayment. We claimed to the bank that the money was going to come from a loan from family and that we owed $175K on my LOC. The bank then assumed a salary for me of $150K as I was a graduating professional and approved us for a mortgage of up to $350K. So in combination with my downpayment we could go up to $450K but would be left with $525K debt and no assets other than the house.

So we did it the high risk way and used LOC to maximize the downpayment and avoid CMHC fees and then got by the skin of our teeth with the $25K left in LOC space to buy stuff for our baby and furnish our new place (we had been renters before so didn't have much furniture).

In retrospect I do think I took on too much risk and cut it too close with too little reserve in case of a mishap and this was not sound financial management. In the end it worked out fine as my income greatly exceeded expenses and my LOC (peaked at about $195K 3 months after my graduation) was paid off in about 2 years.

At the time I remember initially obsessing about saving every last little bit on the CMHC but in retrospect there was too much risk in my approach and I would have been better off with a smaller downpayment, more financial flexibility in case of mishap and more peace of mind and better nights sleep.

I would suggest that you reserve some of your liquid assets outside of your house. You can do this one of two ways - pay a smaller downpayment (say 10%) and then use the extra income you have to pay off the remainder of your loans starting with those that have a larger interest rate but always keeping 4 months expenses in the bank/liquid TFSA. 

The other way to do this would be to delay your house purchase by another year so you have more wiggle room. Then you should have time to earn money to pay off your debts, maximize your downpayment and maintain an adequate emergency fund. I really don't think you will miss out on much if you delay your purchase a year as housing will be flat over the next couple of years and may decrease as house:income ratio is out of whack and due for a correction. If you have saved up money you will be in the driver's seat of a buyer's market at that point.

If you decide for lifesytle reasons that you want to house earlier I would strongly encourage you to pursue a smaller downpayment and maintain a safety fund. It really won't make much difference to your financial endpoint 25 years from now whether you put down 10% or 20% and whether you pay off your credit cards now or in 6 months but I know at this stage of your life you are used to sweating over every dime. It really won't matter all that much once your income increases and you will chastise yourself for putting your financial well-being at risk by over-leveraging yourself at a tenuous point in your life with your new house and new baby and new job.

So my suggestion is set aside 10% for your downpayment and this will be your temporary safety fund.

Use your excess money to pay off your highest loans.

As you continue to save keep the money with your downpayment fund and work until you have an extra 5% for closing costs and then an extra 5% for furnishing your home. Now keep that money aside until you buy your home and it will be your emergency fund until you have saved up an emergency fund.

Now start saving a separate pile of money which is your safety fund with at least 3 months of expenses as your first fund will be depleted with the home purchase.

Now once those piles are complete use any excess money to pay down your debts.

I know if will be painful to pay interest on accounts when you have money sitting around but given your priorities of a new house I think this is the safest way for you to do it for you and your family. There is probably a cheaper way to do it where you pay off all your debts first, then save up the money for your 20% downpayment to avoid CMHC and buy your house and then use your freed up CC/LOC as your emergency fund but this strategy is fraught with peril for someone who is highly levered as they can be taken away from you at the drop of a hat making you a beggar in a possible future liquidity crunch which is not a position you want to be in.


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## canehdianman

I graduated with almost 100k in student loans. Three years later, my (then) girlfriend graduated with almost 100k in student loans. Both of us became lawyers. It's been 15 months since my (now) wife graduated and we are still paying off our loans. Mine will be done in October, hers... not sure when...

We also made the decision, while she was still in school, to buy a house. Prices were on a dip here in Calgary, and I was making 80k (going up consistently each year). My parents gifted me 15k for a downpayment, which, coupled with my savings got us to the 10% threshold (still requiring some CMHC). 

We bought a house for $372k in March 2010. Had zero savings and 150k in student loan debt at the time. In retrospect, it looked risky, but I knew my salary trajectory would be increases of 20-40% a year for a while and the wife was entering the workforce as an articling student and would be making a lot more once that was done.

Fast forward to today and I make 135k and my wife is on pace to make 100k this year (with a ton of writeoffs, likely the same take-home as I have). The inital plan was to maintain our student lifestyle as long as possible, but it has been hard to not spend a little on durable material goods. We have had to do some maintenance to the house and upgraded some of our furniture. However, given those incomes, I am convinced we will crush her debt in short order and then move onto filling up our TFSA/RRSP.

I never felt the need to have a safety net (mostly because my parents are well off and could help us out if needed), but the idea of money just sitting there doing nothing annoys me anyways.


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## VoxPopuli

Thanks for the last couple of responses. I replied, but my replies don't seem to be surviving the moderation process for some reason.

Will respond in detail tomorrow.


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## VoxPopuli

So we went ahead and paid off the RBC LOC ($10,000 at 6.99% interest) and all our credit card balances, including a 1.99% offer that would have expired at the end of the month. I transferred $20,000 into my wife's TFSA and put 15,000 of that into a "high-interest" savings account (1.1%) and $5000 into a Canadian index fund. We've also contacted the credit union that holds the vehicle loan about paying off the balance (approximately 13,800 at 7.29%).

A couple of decisions to make now:

1) We have a decision coming up about what to do with our second car. Our plates come due on May 9th, to the tune of $1300 for the year. I walk to work every day, but once every two weeks or so I need a vehicle to drive to Court. Right now my wife alternates weeks as the driver in a carpool arrangment. We only need a second car once a month or so, so it might make sense to eliminate our second vehicle. Will think on this.

2) We have a standing balance transfer offer on one of my wife's RBC Visas, for up to $6500 at 1.99% through February 13, 2012. We could take the full $6500 and put it against one of our student loans (effectively at 4.86%). Savings would be around $200 between now and next February. Will think on this as well.


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## PMREdmonton

I think most of your decisions above are very good - get rid of any high-interest debt you can deal with now.

I've used one of those 1.99% loans before and the deals are legit - just be super careful to pay off that loan a couple of weeks in advance so that you don't get dinged with a big charge at the end of the loan.

I would be careful about putting any money into the market that you want to use in the next couple of years. The markets have been very, very rocky and you could be risking a capital loss in the short-term of up to 40% as per market history. I really don't think you have a huge amount to gain by going into the market right now but I do see the potential for another market collapse as we are still arguably in a cyclical bull market inside of a secular bear market that many expect to last 3 to 8 more years.

The vehicle thing definitely makes sense if you rarely need both vehicles - it is a huge drain on one's finances to operate a vehicle.


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## MoneyGal

VoxPopuli said:


> We have a standing balance transfer offer on one of my wife's RBC Visas, for up to $6500 at 1.99% through February 13, 2012. We could take the full $6500 and put it against one of our student loans (effectively at 4.86%). Savings would be around $200 between now and next February. Will think on this as well.


Two cautions:

(1) You will be losing the tax credit on the student loan interest when you pay it off this way. This will reduce your savings by 15%*the interest otherwise paid in the calendar year. 

(2) Often balance transfers charge an additional up-front fee of 1% of the amount transferred - in this case, $65. 

If both of these conditions hold true your actual savings might be considerably less.


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## dsaljurator

If you're going to keep money in a high interest savings account, you should consider opening one at an institution that actually pays a bit more interest. for my wife and I that is currently CTFS, but there are other options. check out the chart here: http://www.highinterestsavings.ca/chart/


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## VoxPopuli

PMREdmonton said:


> I think most of your decisions above are very good - get rid of any high-interest debt you can deal with now.
> 
> I've used one of those 1.99% loans before and the deals are legit - just be super careful to pay off that loan a couple of weeks in advance so that you don't get dinged with a big charge at the end of the loan.
> 
> I would be careful about putting any money into the market that you want to use in the next couple of years. The markets have been very, very rocky and you could be risking a capital loss in the short-term of up to 40% as per market history. I really don't think you have a huge amount to gain by going into the market right now but I do see the potential for another market collapse as we are still arguably in a cyclical bull market inside of a secular bear market that many expect to last 3 to 8 more years.
> 
> The vehicle thing definitely makes sense if you rarely need both vehicles - it is a huge drain on one's finances to operate a vehicle.


Thanks. No doubt there's risk putting some of our money in to equities when we will likely need it again in the short term, but we've discussed it and we're okay with the risk. Right now we've got 20% of our "downpayment fund" in the index fund, with the rest in a high-interest savings account. That proportion will drop as we deposit new money into the savings account.



MoneyGal said:


> Two cautions:
> 
> (1) You will be losing the tax credit on the student loan interest when you pay it off this way. This will reduce your savings by 15%*the interest otherwise paid in the calendar year.
> 
> (2) Often balance transfers charge an additional up-front fee of 1% of the amount transferred - in this case, $65.
> 
> If both of these conditions hold true your actual savings might be considerably less.


Thanks, Moneygal. I'd taken the loss of tax savings into account- the nominal interest rate on the student loans is 5.25%, which becomes 4.67% if we get to use the full tax credit it provides. Still a decent gap between that and 1.99%. This particular offer does not have any balance transfer fee, though I have encountered those before with MBNA. 



dsaljurator said:


> If you're going to keep money in a high interest savings account, you should consider opening one at an institution that actually pays a bit more interest. for my wife and I that is currently CTFS, but there are other options. check out the chart here: http://www.highinterestsavings.ca/chart/


Thanks for the link. I'll have to do some research- my concerns are a) we'd need the ability to get money in easily via internet banking, and b) that the higher rates may not last.


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## VoxPopuli

Here are the end-of-month numbers for April. The sale of our former principal residence allowed us to retire the RBC LOC ($10,000 at 6.99%) and the vehicle loan ($13,815 at 7.29%). The balance of the sale proceeds went into our TFSA/savings accounts. We're now renting a house for $1000/mo and putting the substantial difference in housing costs into our savings. 

Student debt:
Husband Student loan: 25,759.13
Wife Student loan: 19,794.82
Professional student LOC: 58,740.03
= $104,293.98

Credit Cards:
Husband Visa: 194.95
Wife Visa: 300.30
= $495.25

Cash:
Wife High-Interest savings: 2501.28
Husband chequing: 2420.75
Wife chequing: 781.37
= $5703.40

Registered accounts:
RBC TFSA: 20,131.88
RBC RRSP: 14,118.95
Questrade TFSA: 679.27
Scotia TFSA: 25.00
Standard Life RRSP: 18,988.37
= $53,943.47


Net worth, excluding vehicles and household goods:
= -$45,132.46

I keep a detailed spreadsheet of all our balances, and use it to determine our month-to-month net worth change. That spreadsheet is currently on a laptop that may or not be dead, and I'm in the process of recovering the files. Until I get the spreadsheet I don't know our exact net worth change for April, but from memory I believe it's between $2500-$3000. When I get those numbers I'll post the month-over-month changes to the above balances. 

That number wil be significantly higher in the upcoming months. April had a few last expenses related to moving and keeping up two properties, and those are now done. Also, I recieved my letter of authority from CRA to decrease my income tax deducted at the source, meaning our take-home pay will be up more than $500/month. If we keep to our spending goals, we should be saving approximately $3000/mo while reducing our debts by approximately $800/mo between now and October, when I'm done articling.

We're still debating what to do about our second car. The registration is up May 9th, so we have to decide fairly quickly. I think the most likely scenario is that we avoid registering it for at least the summer months, then do some of the needed repairs and register it before winter. The repairs will probably eat up $1000-1500 of our savings at some point.


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## VoxPopuli

We socked away a good chunk of money in my TFSA this month, and if the stock markets had been flat we would have achieved our monthly goal of +$3800 in net worth. Unfortunately, the market downswing erased about $2500 between our retirement and TFSA accounts, meaning that overall our net worth only increased $1352.74 on the month. 

We've decided not to plate the second vehicle for now. We're trying to squeeze out another couple hundred dollars of savings this month to try and get back on schedule for our down payment savings goals. 

The numbers:

*Student debt:*
Husband Student loan: 25,557.61 (-201.52)
Wife Student loan: 19,601.63 (-193.19)
Professional student LOC: 57,630.32 (-1109.71)
= $102,789.56 (-$1504.42)

*Credit Cards:*
Husband Visa: 226.88 (+31.93)
Wife Visa: 387.42 (+87.12)
= $614.30 (+$119.05)

*Cash:*
Wife High-Interest savings: 2503.82 (+2.54)
Husband chequing: 322.44 (-2098.31)
Wife chequing: 1039.98 (+258.61)
= $3866.24 (-$1837.16)

*Registered accounts:*
RBC TFSA: 19,745.35 (-386.53)
RBC RRSP: 13,026.20 (-1092.75)
Questrade TFSA: 679.27 (no change)
Scotia TFSA: 4500.62 (+4475.62)
Standard Life RRSP: 17,796.56 (-1191.81)
= $55,748.00 (+$1804.53)


Net worth, excluding vehicles and household goods:
= -$43,789.62 (+1352.74)


----------



## Saniokca

VoxPopuli said:


> *Student debt:*
> Husband Student loan: 25,557.61 (-201.52)
> Wife Student loan: 19,601.63 (-193.19)
> Professional student LOC: 57,630.32 (-1109.71)
> = $102,789.56 (-$1504.42)
> 
> *Registered accounts:*
> RBC TFSA: 19,745.35 (-386.53)
> Questrade TFSA: 679.27 (no change)
> Scotia TFSA: 4500.62 (+4475.62)


You might have answered it already (and I missed it) but why aren't you taking most of your TFSA money and pay off some of the debt? If you didn't have your TFSA investments, would you borrow 25k to invest in the stock market? 

What are the interest rates on these loans/LoCs?


----------



## VoxPopuli

There are more details are in the first post, but we are saving for a down payment on a house. We will be looking to buy sometime in 2013. By saving up a 20% down payment we avoid CMHC fees, the amount of which dwarfs the interest that would be saved from paying off the loans with the same funds. 

The two student loans are at 5.5% (4.675% after the tax credit) and the student line of credit is at 4.25%. All three are variables rates.


----------



## VoxPopuli

After losing another laptop (and therefore my spreadsheets) it's been a couple of months since I've updated. Since my last monthly update on May 1st, we've been continuing to squirrel money away in savings for an eventual house down payment. Combined with an uptick in our RRSP accounts, we've erased nearly $14,000 of negative net worth in four months. 

While it will likely be a year before we buy a house, we're continuing to talk about our down payment plans. It's increasingly likely that we won't attempt to put 20% down (which would mean we couldn't pay down any debt other than continuing our regular monthly payments), but will instead put 10% down and pay down debt with the rest. This would mean we'd only need roughly $50,000 in savings for a down payment,closing costs, and some contingencies. Right now we have a little over $40,000.00 in our TFSAs and cash, meaning after we've saved up another $10,000 or so we'd start paying down debt instead. Nothing set in stone, just a conversation we continue to have. Anyway, here's the numbers:

*Student debt:*
Wife student loan: 19,013.81
Husband student loan: 25,147.86
Husband professional student line of credit: 56,305.73
= $100,467.40 (-$2,322.20 since May 1st)

*Credit Cards:*
Husband Mastercard: 285.56
Husband Visa: 127.18
= $412.74 (-$201.56 since May 1st)

*Cash:*
Wife high-interest savings: 3,008.83
Wife chequing: 2,690.75
Husband chequing: 2,100.12
= $7,799.70 (+$3,933.46 since May 1st)

*Registered accounts:*
RBC TFSA: 20,200.95
RBC RRSP: 13,782.30
Scotia TFSA: 10,038.11
Standard Life RRSP: 18,528.80
Questrade TFSA: 679.27
= $63,229.43 (+$7,481.43 since May 1st)

Net worth (excluding vehicles and household goods):
-$29,850.97 (+13,938.65 since May 1st)


----------



## Lephturn

On a technical note - please please back up your work! You can do it for free in the cloud.

Microsoft SkyDrive or Google Drive are completely free for I think 5 Gig or so - I have 25 Gig on SkyDrive because I've had it for so long. You may not be able to back up everything this way for free, but you can at least keep all of your documents in the cloud so if you lose a computer you don't lose all of your hard work.


----------



## VoxPopuli

Yeah, no question. It's just silly now to lose files to a bum hard drive when there's so many good options available. I use dropbox, but I'll check out the other options you mentioned.


----------



## VoxPopuli

It's been an expensive month, with lots of unexpected expenses. Some of those expenses will likely carry over into October. We were able to squeeze out just under $2,400.00 of net worth improvement.

*Cash: *
Actual Cash: 20.00
RBC HIS savings: 3,014.58
RBC chequing: 2,319.15
Scotia chequing: 938.98
= $6,292.71 ($-1,506.99)

*Credit Cards*
MBNA: 1474.83
Scotia visa: 21.23
= $1,496.06(+$1,083.32)

*Student Debt*
Wife SL: 18,814.16
Husband SL: 24,734.39
Husband PSLOC: 55,864.95
= $99,413.50 (-$1,053.90)

*Registered accounts:*
Wife TFSA: 20,496.60
Wife RRSP: 14,313.85
Scotia TFSA: 12,548.75
Standard Life: 19,106.94
Questrade: 679.27
= $67,145.41 (+$3,915.98)

= -$27,471.44 net worth (+$2,379.53)


----------



## VoxPopuli

As predicted, October was not a strong month, with a number of expenses cropping up. The good news is that my income should be headed significantly higher in the new year, as I switch to a percentage-based compensation system and establish a professional corporation. I'm hopeful that somewhere around April our net worth will cross into positive territory.


*Cash: *
Cash: 0.00
Uncashed cheques: $2,088.91
RBC HI savings: $3,014.58
RBC chequing: $1,242.11
Scotia chequing: $1,174.81
= $7,520.41 (+$1,227.70)

*Registered accounts:*
Wife TFSA: $20,538.36
Wife RRSP: $14,388.93
Scotia TFSA: $12,560.94
Standard Life: $19,346.85
Questrade: $679.27
= $67,514.35 (+$368.94)

*Credit Cards:*
MBNA: $1,414.61
Scotia visa: $26.13
Scotia Visa #2: $1,346.57
= $2,787.31 (+$1,291.25)

*Student Debt:*
Wife SL: $24,528.08
Husband SL: $18,616.45
Husband PSLOC: $55,396.59
= $98,541.12 (-$872.38)


= -$26,293.67 net worth (+$1,177.77 in October)


----------



## VoxPopuli

November saw a +$2,343 move for our net worth. This was despite negative months for our RRSPs/TFSAs, and another month of some unusual expenses, like my annual professional dues and insurance. December will of course see higher expenses for Christmas, so it will be interesting to see how the numbers come out.

I recently signed my contract with my employer, bumping up my salary to $60,000 per year plus a quarterly bonus based on my billings. I expect that this will come out to $75k or $80k annually. 

With the raise, our net take-home pay is about 7750/mo. 

I've been crunching the numbers as my wife and I talk about moving back to our home city, buying a house and having a baby. Moving back home would likely mean a small pay cut for me, and much higher housing costs (at least an additional $1000 or more above what we currently pay per month). A maternity leave would mean reduced income for my wife. 

On the one hand I feel like we're nowhere near financially secure enough to be increasing hour housing costs at the same time we're decreasing our incomes, but on the other hand hand we'll both be happier living close to family and friends, especially if we're starting a family. Some tough choices coming up.

*Cash: *
Cash: 0.00
Uncashed cheques: $2,815.44
RBC HI savings: $4,017.64
RBC chequing: $2,638.33
Scotia chequing: $13,248.20
= $ 22,719.61 (+$15,199.20)

*Registered accounts:*
Wife TFSA: $20,408.24
Wife RRSP: $14,154.98
Scotia TFSA: $0.00
Standard Life: $19,241.46
Questrade: $679.27
= $54,483.95 (-$13,030.40)

*Credit Cards:*
MBNA: $1,645.57
Scotia visa: $1,821.43
Scotia Visa #2: $0.00
= $3,467.00 (+$679.69)

*Student Debt:*
Wife SL: $18,415.01
Husband SL: $24,317.11
Husband PSLOC: $54,954.14
= $97,686.26 (-$854.86)


= -$23,949.70 net worth (+$2,343.97 in November)


----------



## VoxPopuli

Happy New Year!

We finished strongly in 2012, using my first quarterly bonus cheque to help add nearly $4,000 to our net worth despite Christmas-related expenses. This month also saw our total debt drop below $100k; a mini-milestone of sorts.

*Cash:*
Actual Cash: $100.00
Uncashed cheques: $500.00
RBC chequing: $1,112.83
RBC HI savings: $10,020.77
Scotia chequing: $9,983.90


Total Cash = $21,717.50 (-$1,002.11)

*Registered Accounts:*
RBC TFSA:	$20,653.81
RBC RRSP:	$14,466.19
Standard Life RSP: $19,563.35
Questrade TFSA: $679.27

Total Reg'd Accounts = $55,362.62 (+$868.67)


*Debt:*
Scotia Visa	: $272.10
MBNA Mastercard: $36.52
Husband Student Loan: $24,108.85
Wife Student loan: $18,215.43
Professional Student LOC: $54,494.22	

Total debt	= $97,127.12 (-$4,026.14)


NET WORTH:	-$20,047.00 (+$3,902.70 in December)


----------



## VoxPopuli

January was a very strong month, with a big bonus cheque coming in and some good growth in our registered accounts. We are definitely on track for our goal of crossing over into positive net worth territory by the end of March. 

*Cash:*
Actual Cash: $50.00
Uncashed cheques: $0.00
RBC chequing: $9,190.79
RBC HI savings: $5,033.47
Scotia chequing: $6,573.68

Total Cash = $20,847.94 (-$869.56)

*Registered Accounts:*
RBC TFSA:$26,383.89
RBC RRSP:$14,879.84
Standard Life RSP: $20,274.45
Questrade TFSA: $679.27

Total Reg'd Accounts = $62,217.45 (+$6,854.83)


*Debt:*
Scotia Visa: $9.44
MBNA Mastercard: $12.27
Husband Student Loan: $23,899.62
Wife Student loan: $18,017.63
Professional Student LOC: $	54,047.01

Total debt	= $95,985.97 (-$1,141.15)


NET WORTH:	-$12,920.58 (+$7,126.42 in January)


----------



## VoxPopuli

We managed to take a mini-vacation in February, which reduced the pace of our net worth improvement this month. Next month should include our tax returns and push us into positive net worth territory.

*Cash:*
Actual Cash: $50.00
Uncashed cheques: $1,610.53
RBC chequing: $11,884.79
RBC HI savings: $5,033.47
Scotia chequing: $4,620.68

Total Cash = $23,199.47 (+$2,351.53)

*Registered Accounts:*
RBC TFSA:$26,428.80
RBC RRSP:$14,960.58
Standard Life RSP: $20,506.12
Questrade TFSA: $679.27

Total Reg'd Accounts = $62,574.77 (+$357.32)


*Debt:*
Scotia Visa: $9.44
MBNA Mastercard: $1,326.04
Husband Student Loan: $23,678.61
Wife Student loan: $17,805.33
Professional Student LOC: $ 53,585.91

Total debt = $96,405.33 (+$419.36)


NET WORTH: -$10,631.09 (+$2,289.49 in February)


----------



## mind_business

When I first looked to see how well you're doing now compared to last April when you started this diary, it was obvious that you were quickly falling behind. So I read through your posts and saw that you removed both the vehicle and household goods from your asset list. phew 

So now I see that you're doing great ... awesomely actually!!! 

Back in April 2012 your networth (adjusted to remove the vehicle and HH goods) = -$47,399

Your networth today (a little less than 1 year later) = -$10,631

That's an increase of $36,768. Well done!!!

Breaking it down a bit farther, you've paid off $41,962 worth of debt, and you're assets have decreased slightly by $5,195. Very impressive!!! Most couples would have a hard time doing this in their 50's let alone in their early 30's.


----------



## VoxPopuli

Thanks! We are definitely proud of the progress we've made. We've worked hard this year and been very careful with our spending, and it's nice to see the numbers reflect that work. It's unlikely we'll be able to keep this pace up for too much longer, as soon enough there will be children, maternity leaves, and likely the purchase of a new home. But for now we're trying to make hay while the sun shines.


----------



## lonewolf

Voxipopli

Since you have a shortage of cash I would consider taking a path that would bring in lots of money. Such as trying to get a job on the oil fields for a year or 2 & let that money work well your still young then go back to what your doing now.

Only do it if you dont have the disapline to use the money wisely.


----------



## YYC

I don't agree with this advice. He has invested time and money into training for a career, better to focus on that and build his human capital in the industry he is qualified for.


----------



## none

lonewolf said:


> Voxipopli
> 
> Since you have a shortage of cash I would consider taking a path that would bring in lots of money. Such as trying to get a job on the oil fields for a year or 2 & let that money work well your still young then go back to what your doing now.


Gold star for worst advice ever.


----------



## VoxPopuli

lonewolf said:


> Voxipopli
> 
> Since you have a shortage of cash I would consider taking a path that would bring in lots of money. Such as trying to get a job on the oil fields for a year or 2 & let that money work well your still young then go back to what your doing now.
> 
> Only do it if you dont have the disapline to use the money wisely.


Maybe I'll become a rig hand some day in the future and make some real money, but I figure I should have a good backup plan in case the price of oil falls. It's probably worth sticking it out as a lawyer for a while so I have something to fall back on if the oilfield doesn't work out for me, right?


----------



## Pennypincher

Yep, stay lawyering VoxPopuli. Especially if you can stand it


----------



## VoxPopuli

April 2013 marks one year since I started this diary. Before I post the regular monthly update, here's the big picture of our progress from the last twelve months. 

Excluding vehicles and household goods, my wife and I have a current household net worth of $3,604.19. That may not sound like much, except that one year ago our net worth was minus $47,398.93. In other words, we improved our net worth by *$51,003.12* in the last twelve months.

While our index funds are up slightly since last year, it's safe to say that 95% or more of the net worth improvement came directly from either paying down debt or adding to our savings. Together we made about $120,000 before taxes during the last twelve months, and because of built-up tax credits and deductions we were able to take home about $100,000 of that. That means we were able to "save" roughly 50% of our take-home pay over a twelve month period (counting debt reduction as savings).


On April 1st, 2012 our balance sheet looked like this:


Cash: $56,949.67
Registered accounts: $34,019.12

*Total assets = $90,968.79*

Student debt: $105,130.85
Consumer debt: $33,236.87

*Total debt = 138,367.72*

*NET WORTH = -$47,398.93*



On April 1, 2013 our balance sheet will look like this:

Total Cash: $35,263.39
Total Reg'd Accounts: $62,591.11

*Total assets = 97,854.50*

Student debt: 94,180.91
Consumer Debt: 69.40

*Total debt = $94,250.31* 

*NET WORTH: $3,604.19* 



Last year at this time we had a car loan of more than $13,000 (at 7.29% interest), and $10,000 on a LOC (at 6.99%). We had a bunch more debt on credit cards with low promotional interest rates. In total, we had more than $33,000 in consumer debt. Shortly after April 2012 we paid off the LOC and vehicle loan, and we've been consumer debt-free ever since. 

We have combined monthly payments of about $1,250 on our Canada student loans and my professional student LOC. About $800 of that goes to principal, and with a couple of extra payments we've knocked nearly $11,000 off our student debt in the last twelve months.

Add it all up, and we've eliminated $44,117.41 worth of debt in the last twelve months.

When I posted one year ago we had just sold our house, so we had nearly $57,000 in cash sitting around (plus just over $700.00 in TFSAs). A big chunk of that cash went right away to paying off the consumer debt, but we've been stuffing money into savings and TFSAs since then, to the point where we now have $62,350.71 in cash and TFSA savings.

Add in some modest gains in our retirement accounts, and we've managed to increase our assets by $6,885.81 since April, 2012.

Even with our incomes increasing, we won't be able to duplicate this year's success any time soon. We're currently living in a very low cost-of-living area, but we expect to move sometime this year. We'll also be looking to buy a house when we move, with all the immediate and long-term expenses that brings. Sooner or later there will be children and maternity leaves. While our progress will inevitably slow, we wanted to make sure we got a real head start in our first year with both of us working. I'm happy we were able to achieve that goal.


----------



## VoxPopuli

Here's the regular monthly update for March. As expected, this was a huge month due to large tax refunds for both my wife and I. She got big tax deductions for moving in February 2012 and the associated costs of selling our house, while I had something like 50,000 in federal and provincial tuition tax credits save up from law school and undergrad. Our combined tax returns were nearly $12,000.

We're starting both a job hunt (for me) and a house hunt in our home city, where we'd like to move back later this year. We will more than likely buy a house when we move, meaning adding to savings for a down payment is still priority #1. Our cash/TFSA savings are now getting to the point where we could actually put down 20% on some homes, though we're thinking more and more about putting down 10% and getting a more expensive home that we won't outgrow. Decisions, decisions.


*Cash:*
Actual Cash: $20.00
Uncashed cheques: $0
RBC chequing: $20,902.51
RBC HI savings: $5,038.10
Scotia chequing: $9,302.78

Total Cash = $35,263.39 (+$12,063.92)

*Registered Accounts:*
RBC TFSA:$26,408.05
RBC RRSP:$14,923.27
Standard Life RSP: $20,580.52
Questrade TFSA: $679.27

Total Reg'd Accounts = $62,591.11 (+$357.32)


*Debt:*
Scotia Visa: $10.49
MBNA Mastercard: $58.91
Husband Student Loan: $23,467.43
Wife Student loan: $17,602.81
Professional Student LOC: $ 53,110.67

Total debt = $94,250.31 (-$2,155.02)


NET WORTH: $3,604.19 (+$14,235.28 in March)


----------



## My Own Advisor

Tough decisions, re: house but I'd wait until you have 20% AND the home you want. There is really no rush, rates are going anywhere and if you can save $44k (which is an amazing amount in one year), if you could do that again in another year, you'd have a solid downpayment.

If you could kill at least one if not 2 of 3 student loans before the house purchase, you won't be servicing at much debt and more of your income could go to mortgage (when you get it).

Continued good work saving.


----------



## VoxPopuli

My Own Advisor said:


> Tough decisions, re: house but I'd wait until you have 20% AND the home you want. There is really no rush, rates are going anywhere and if you can save $44k (which is an amazing amount in one year), if you could do that again in another year, you'd have a solid down payment.
> 
> If you could kill at least one if not 2 of 3 student loans before the house purchase, you won't be servicing at much debt and more of your income could go to mortgage (when you get it).
> 
> Continued good work saving.


I would absolutely love to wait until we are debt-free, have 20% down and can buy the home we want. I just don't see the financial benefits outweighing the 5-6 year wait it would require. 

We currently have $62,500 in cash and TFSAs. We currently have free cashflow of about $2,500/month to devote to savings or debt repayment, as long as we're in our current location. When we move (likely in a few months), our housing costs would go up by at least $1,000/mo, leaving us with $1,500/mo to add to savings or pay debt.

If we were to take ALL of our cash flow ($1,500/mo) and devote it to the student loans (on top of our minimum payments), then our two Canada student loans could be gone in ~21 months. The professional student line of credit could then be gone in another 15 months or so. 

So, if we threw all of our free cash into debt repayment, we could be debt-free in about three years. However, we'll likely have two maternity leaves in the next four years or so, which is going to reduce our ability to throw money against the debt. Let's call it four years to be debt-free, then.

In four years, we'll still have the same $62,500 in savings. Maybe a little more, if the index funds do well, but then again we'll be fighting inflation on the balance on the mean time. 

In order to buy us a house that will last us twenty years, we're probably looking at $400,000 to $450,000 in our home city. So we need to come up with another $17,500 to $27,500 to have a twenty percent down payment. We'll also need some more for closing costs and a modest emergency fund- better save up another $15,000 or so.

In order to save $32,500 to $42,500, we're likely looking at a year to two years. That's a total of five to six years from today.

Five to six years of trying to find and keep the right rental house, hoping the landlord doesn't jack up the rent or move in his cousin so that we have to move our young family (likely more than once). Five to six year after which we have virtually all our net worth tied up in housing, with no retirement savings for me at the age of 36 or 37. 

I certainly understand the financial benefits of waiting until we're debt free and have 20%, I just think that in our case they are outweighed by the benefits of buying sooner.


----------



## YYC

Just wondering how the transition to the oil patch is going? I assume you're all set up and making some "real money" by now?


----------



## Pigzfly

YYC said:


> Just wondering how the transition to the oil patch is going? I assume you're all set up and making some "real money" by now?


Teeehehe.

Well done on posting such a large increase in net worth/saving so much. Here's hoping that you can put another really solid year under your belts. That will take you a long long way to being debt free.

Any chance you could put up with a roommate or two for a year, once you buy a house? Just throwing it out there... my spouse vetoes this discussion every time, haha.


----------



## lonewolf

MoneyGal said:


> Given your future earning power, I think your overall balance sheet looks very good.
> 
> I'd totally forget about retirement saving right now. Your earning power is likely to rise faster than inflation. Go ahead and pay down debt - leave saving for later. Besides, your wife is already building retirement savings through her pension - that is enough for right now.
> 
> I have one big question: are you thinking about buying a house which you could carry on one (your) income alone? If not, have you factored the cost of daycare into your affordability calculations?
> 
> This hasn't ever been my personal situation, but I do know other moms who have wished they'd planned things differently when they bought a house that requires two salaries to afford, and then they had kids and couldn't afford to stay home with them, but also got killed on daycare costs for two kids in care. Two pre-school age kids will run you more than $2000/month (deductible from lower income-earner's salary) in my city. ...Just a thought.
> 
> As for what you should do - you should do what you're most comfortable with, and that sounds like Option 1 for you. I can't recall what CHMC premiums run. Sometimes people borrow from a relative in order to avoid the CMHC premiums.


 MoneyGal is
Canada's, Suzy Orman


----------



## VoxPopuli

YYC said:


> Just wondering how the transition to the oil patch is going? I assume you're all set up and making some "real money" by now?


My oil patch dreams remain on hold for now... 



Pigzfly said:


> Any chance you could put up with a roommate or two for a year, once you buy a house? Just throwing it out there... my spouse vetoes this discussion every time, haha.



I'm actually very interested in having roommates after we buy; we've lived with roommates for nearly ten years, up until about fifteen months ago. The two complicating factors will be 1) We have two noisy dogs; and 2) We will likely have a couple of babies around at some point. That limits our pool of potential roommates pretty heavily. We're getting to the age where there are few friends who are still looking to rent a room, and we've had bad results renting rooms to unknowns in the past. I love the idea of roommates for a year or two, I just think it would be tough to find candidates.


----------



## Young&Ambitious

Vox, what about getting a house with rental income potential via a seperate suite?


----------



## VoxPopuli

It's possible, but: 
a) a legal suite tends to add quite a bit to the price of the home, which would further squeeze our current cash situation; 
b) I'm not sure it really solves the noisy dog vs thin walls problem; 
c) the type of homes we're looking at rarely come with suites; and
d) We'd like to buy a house that will last us for the next 20 years (buying and selling houses is so bloody expensive). While the rental income would be nice now, I'm not sure we want to be dealing so closely with tenants for the next 20+ years.


----------



## VoxPopuli

One year since my last post seems like a pretty good time to do an update. 

Looking back through this thread, I'm happy to see that pretty much everything my wife and I were planning to do, we have since done. In the last twelve months we have moved back to our home town, bought a house, and have continued to pay down debt and/or save at a pretty healthy pace. 

Many of my early posts were about deciding whether to scratch and claw to get to a 20% down payment and avoid CMHC fees, or bite the bullet, put less down and get into a house we are happy with sooner. We eventually decided waiting for 20% was not going to be realistic for us. We have since bought a house ($425,000, of which we put 10% down) in summer 2013 that is more than enough house to raise a family in for the next twenty-plus years. We have absolutely no regrets about buying- We love the house and I certainly can't imagine renting for another couple of years, which we likely would have had to do. 

On that note, I also mused in earlier posts about the financial consequences of our starting a family. That's about to get more real, as my wife and I are now expecting our first child, coming this September. We're hoarding cash in the interim, as unfortunately my wife's job doesn't offer any top-up pay on top of EI benefits, which means close to $2000 less a month coming in each month she's on EI. My job does offer top-up pay, so we're seriously considering having me take a big chunk of the parental leave. Something to think about.

Our incomes have gone up as predicted- we made a combined $152,000 last year. My new public sector job was a slight pay cut, however (though a big boost in pension and benefits), and along with a maternity leave that will stretch into 2015, we won't see that level of income again until at least 2016 (or longer, if there's another maternity leave- a good possibility). While my wife is on maternity leave, we can likely do no better than treading water, i.e. paying our bills but accumulating any extra saving or paying down debt above the monthly payments. Fortunately, just by paying our standard monthly payments we reduce our debtload by about $1700/month (given current interest rates). Combine that with our defined-contribution pension accounts increasing by about $1400/month, and our net worth goes up around $3000/month even if we don't save anything extra.

Below you'll find the cold hard numbers. We added nearly $34,000 to our bottom line over the past twelve months. I think it's fair to say we did a little better saving-wise than even these numbers suggest; in the month that we moved into our new house, our net worth went down about $17,000(!). That number is made up of CMHC insurance premiums (now paid off), plus appraisal and legal fees, some moving costs and some new furniture. We also had one of our vehicles die on us this year, which meant paying $4250 in cash for another used vehicle. 

I feel as if we're on a pretty good track at this point. Obviously kids are about to throw a big wrench into things financially, but now we've got a solid house, several years of consistent results spending less than we make- usually far less- and good jobs that should produce steadily increasing incomes. 

To the numbers:

*Cash:*
Total Cash = $10,843

*Registered Accounts:*
Wife RRSP: $17,185
Wife Pension (RSP): $31,130
Wife Pension 2 (RSP): $2,157
Husband TFSA: $679
Husband Pension (RSP): $7,761

Total Reg'd Accounts = $58,913

*Real Estate:* 
Primary Residence: $425,000 (this is a realistic, even slightly conservative, net selling price)

*Debt:*
Scotia Visa: $90
MBNA Mastercard: $112
Husband Student Loan: $20,830
Wife Student loan: $6,914
Professional Student LOC: $ 47,462
Mortgage loan $382,058

Total non-mortgage debt = $75,410.29 (-$18,840.02 since April 1, 2013)
Total debt inc. mortgage = $457,469.25

NET WORTH: $37,287.11 (+$33,682.92 year-over-year)


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## getliquid

Social workers with short amount of experience makes 65K?!? why did I bother with my CA oh my.


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## james4beach

VoxPopuli said:


> we made a combined $152,000 last year.


Is that gross or net after taxes?

In any leveraged situation I always calculate these metrics (I did this quickly, may be wrong)
assets = 494.8k
net worth aka liquidation value = 37.3k
leverage as a ratio = 494.8 / 37.3 = *13:1*

This is on the high side, and I encourage you to keep working towards reducing your leverage. The problem with this amount of leverage is that it only takes a small drop in your asset values to suddenly put you under-water.

In your case, if your assets were to decline 8% in value, the asset side of your balance sheet would decline by 39.6k which would eliminate your positive net worth.


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## VoxPopuli

James,

The income # is gross. 

No disagreement here on our need to keep upping our net worth and reducing our debt. Some quick math tells me that we could bring your ratio down to 8:1 or so by the end of the year with some discipline.


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## VoxPopuli

Time for an annual update.

Another year, another big change. Our daughter was born in October and it's obviously turned our lives upside down, in a very good way. Financially, things are a little tighter with my wife on maternity leave, which means about $1500 less take-home per month. Plus a lot of first-baby expenses and RESP contributions. 

In total last year I made $84k and my wife made $55k pre-tax. We managed to continue the slow but steady paying down of debt while our retirement accounts edge up every month.

Here's where things sit as of April 1st, 2015:

*Assets:*

Cash: $6,449 (-$4,394 from one year ago today)
Registered Accounts: $81,186 (+$22,274 from one year ago)
Real estate: $425,000 (still a conservative net selling price, I just keep it the same from year to year)
Total assets: $512,636 (up $17,880 from one year ago)

*Debt:* 

Current balances on credit cards (paid off monthly): $2,623
Husband student loan: $18,040
Wife student loan: $635
Husband professional student line of credit: $41,557
Mortgage loan: $370,997

Total non-mortgage debt: $62,855 (down $12,555 from one year ago)
Total debt inc mortgage: $433,852 (down $23,617 from one year ago)

*Net worth:* $78,784 (up $41,497 from one year ago)

That's a total net worth improvement of $126,182 since we started deep in the hole in April 2012. We're happy with that progress, especially given all the life changes that have occurred in that time.


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