# Got ourselves in a rut, welcoming suggestions to climb out.



## tskyyc (Apr 13, 2016)

New member, first post. I've lurked around the site before signing up and it seems like a good group. I'm hoping to get some objective straight talk on my situation. 

Bio:

34 years old, married, 2 young children (5 and 3). Living in Alberta and hit pretty hard by the oil crash. Wife and I were both working until about a year and a half ago with the kids in full time daycare... decided that it didn't make sense anymore and wife quit to stay home with the kids. Her earnings didn't justify the cost (financially and in terms of quality of life) of daycare.... and my income was enough to cover everything and still leave room for some savings. Paycheques started to shrink and money started going out faster than it was coming in. Quite honestly we got a bit reckless for most of last year. I sold things to stay ahead... my 2 motorcycles, gym equipment, other nice stuff we didn't need anymore. Ultimately over the space of 18 months we went from a ~250k household income to ~150k and our spending habits didn't take an equivalent drop. 

So now I'm sitting with about $35k of credit card debt. It's not quite a desperate situation but I do feel I need to do something drastic. 

Wife is taking on some part time work and finding other ways to bring in a bit of extra money. We've cleaned up our spending habits and we're sticking to a budget but it's too tight. In an ideal month with no surprise costs (scratch this month off, just got a $3k kids dental bill and $500 furnace replacement :frown we would be left with about $1000 for debt repayment. And that's with zero savings contribution. So I feel like I need to do something drastic or the debt will continue to build... and I've been told by my employer to expect a change in my pay structure (meaning less) in the next 3 months. There are a couple other areas we could cut costs but we're talking marginal savings. 

Some figures:

Home equity of about $100k
RRSP holdings of about $100k
Rental townhouse equity of about $35k
RESP worth $25k

$35k credit card debt is about 7000 on a mastercard @19.99APR and $28k on a maxed credit line @6.00APR so I'm paying $250 a month just to carry that. 

The options I'm considering are as follows:

1. sell the rental property. It would be sold at a loss so I wouldn't pay any capital gains. In fact I could probably write off a decent amount. The rent just SLIGHTLY covers the ownership costs and leaves me with about $150 a month in revenue which is really quickly erased if there's a maintenance issue or busted appliance, etc. I really want to avoid this option because we look at our rental as a retirement nest egg or cash cow in the distant future. If I sell it I won't be able to get another one. Not any time soon. Really hoping I can hang on to it. 

2. remortgage the rental property. There's about 16 months left on the current term. The interest rate would go down. It's currently at 3.09APR and I can definitely get better. Assuming the bank would approve the higher balance or that we see eye to eye on the value, this could work but it just means it'll take longer for it to ever be a viable revenue property. We're fortunate enough now to have impeccable tenants but if and when they leave, we'd potentially have to be prepared to carry the cost of it for a few months or worse, deal with bad tenants. We've been spoiled in that sense. 

3. withdraw from the RRSP. A big setback to the retirement plans but the money isn't working very hard for me these days. 

We're leaning toward option 3. Am I missing something obvious here? Am I crazy?

Thanks for reading and thanks for your feedback and ideas.


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## Moneytoo (Mar 26, 2014)

tskyyc said:


> Ultimately over the space of 18 months we went from a ~250k household income to ~150k and our spending habits didn't take an equivalent drop.
> 
> So now I'm sitting with about $35k of credit card debt. It's not quite a desperate situation but I do feel I need to do something drastic.














> 3. withdraw from the RRSP. A big setback to the retirement plans but the money isn't working very hard for me these days.
> 
> We're leaning toward option 3. Am I missing something obvious here? Am I crazy?


Garth often recommends it for those in a rut:

"And you can, of course. The idea is simple – invest in an RRSP during years when you are working, then cash it in when you’re laid off, fired, incarcerated, pregnant or on sabbatical. The money taken from an RRSP is added to your taxable income in the year of the withdrawal, just as it’s deducted from income in the year you contribute. So if you put $10,000 in while in the 40% tax bracket, you get a fat refund, but if you withdraw when you’re unemployed you probably don’t have to pay it back. Ever.

Maybe you never plan on losing your job or having a baby, but such things happen to most people. Those who socked away money in an RRSP when working ended up paying less tax and then had a pile of money to access when the paycheques stopped. If withdrawals are done in small amounts (under $5,000), the withholding tax is minimal (10%, or 5% in Quebec) and can be recouped on the next tax return."

http://www.greaterfool.ca/2015/02/06/plan-b-3/

I would recommend reading his blog (sorry, just couldn't resist teasing you a bit )


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## nobleea (Oct 11, 2013)

I'm at a loss to understand how if you sell the rental property (at a loss) you won't be able to get another one anytime soon. There's always a good property to be had if you're patient. And if there isn't, maybe it's not a good time to buy a rental. I would for sure sell the rental. You're probably losing money on it if you take a 5 year look at it.

There's not enough here in terms of expenses information to help you out. With 150K income and only one person working, there should be absolutely no issue in thriving in Calgary.


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## Spudd (Oct 11, 2011)

I agree with nobleea. The rental doesn't seem to be making you any money, but you will probably need to pay realtor fees/lawyer fees when you do, plus a mortgage discharge fee, so you might not make very much money in the end. 

I would personally take out a HELOC and pay off the credit cards with that, then buckle down on reducing expenses and pay off the HELOC ASAP. I am sure with an income of 150k there are places you can cut.

Some examples off the top of my head:
- eliminate cellphones or at least get a bare-bones plan 
- eliminate cable, get rabbit ears and Netflix
- use Teksavvy or another alternate internet provider. Make sure you don't have more bandwidth/speed than you actually need. 
- shop at discount supermarkets (No Frills, Food Basics, Freshco) and shop based on the loss leaders
- eliminate a second car. Your wife can drive you to work and pick you up afterwards if the bus isn't a good option.
- buy clothes at thrift stores


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## Jaberwock (Aug 22, 2012)

Most families of four can manage perfectly well on half your income. Take another look at your budget, and see what else you can cut.

Do you have enough home equity to qualify for a Home equity credit line, rates are around 3.25%? Use that to pay off the credit cards.

Selling the rental property won't help much, the 35k equity will be eaten up by selling costs. Remortgaging might help, depends on the terms of your existing mortgage and the equity you have. You could be hit with penalties for early repayment, and mortgage insurance costs if you don't have at least 25% equity.

You could take 7k from your RRSP to pay off the high interest card, and you would be able to pay it back before the end of the year, so no tax implications. You will lose some contribution room, but not a big deal. 

Open a spousal rsp, then if you get into a bind like this in the future, you can take the money out as her income rather than yours, and pay much less tax, providing the money stays in for 3 years or more.

Don't worry, there are many who are worse off than you. At 34 you have lots of time to turn things around. At your age, I had five kids and we managed fine.


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## Mukhang pera (Feb 26, 2016)

I agree, at least in part, with nobleea and spudd. 

With the sparse info available about actual recurring expenses, it sounds like you should be doing okay, as nobleea suggests. Your wife is going to seek employment. Good. It will help, even if part-time. Spudd has provided some other ideas.

Where I depart from the others (and probably from a number who will yet add to this thread) my nose says keep the rental. That may be, again, because we do not have a whole lot of facts. However, it is likely that you devoted some time and effort to finding it, you chose it, it cost money to get in and get it running, it now works well, you know the property and its warts, but you don't have a big cash flow. If, as you say, you can refinance at a better rate, probably good to do so, depending on attendant costs. If you dump it, you'll likely pay a commission and other costs to get out and then, when you look to buy back in, you'll face the startup costs again, with a property with which you are unfamiliar and perhaps you'll be buying into a stronger (read more expensive) market than the one you'll be selling into. The rental might look like a marginal proposition now, but in 10 years you will probably be glad you persevered. Long ago I learned the maxim: "You always buy land; you never sell land." It has served me quite well. Looking back on the times I failed to observe it, it's a matter of regret. Even the worst property I have ever owned I would still do well with today. Selling the rental might make more sense if, looking at it objectively, you now realize it was a poor choice and it will never be a stellar performer, whether in terms of income or likely capital appreciation.


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## atrp2biz (Sep 22, 2010)

This sounds like a cash flow problem. The rental property should be relatively cash flow neutral so no need to make a rash decision on that property. The net monthly income should be close to $9000 per month. I'm somewhat at a loss as to where this money goes. Sharing your monthly budget in detail would help facilitate the discussion.


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## mordko (Jan 23, 2016)

I am with Jaberwock ^^. Go to the bank ASAP and get that credit line. 

Then balance your budget further; consider downsizing. If you are struggling with the current interest rates you'll have bigger problems when they go up. 

Rental property... Now might not be the best time to sell but you might have to wait a long time before the price recovers. Keep that in mind.


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## sags (May 15, 2010)

Sell the house and the rental and pay off the debt.

Invest in laddered GICs and rent accomodations.

Wait for the big crash and buy a new home and rental for half the price.


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## tskyyc (Apr 13, 2016)

Thanks for the feedback. Definitely didn't expect to get any pity. LOL. 

I'll post up my expenses later when I've got some time.

Thanks again


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## DividendLuvr (Mar 5, 2014)

Definitely need to see your budget in full to assess cash flow issues and determine where adjustments can be made.


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## Plugging Along (Jan 3, 2011)

As others have said, hold off on major decisions such as selling the place. Real estate is softening in calgary and Airdrie, so selling now might not be a great time. 

Posting all your expenses will be helpful.


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## Karlhungus (Oct 4, 2013)

Read Mr. money mustache. All money problems will be solved.


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## camrich (Apr 14, 2016)

Karlhungus said:


> Read Mr. money mustache. All money problems will be solved.


Totally agree here, so helpful!!!


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## tskyyc (Apr 13, 2016)

Ok, my exorbitant expenses..... Just let me zip up my flame suit...

Sorry, didn't paste well from excel

Monthly Revenue	

Minimum net pay	8400
Rent from condo	1550
total 9950


Monthly Expenses	

Life Insurance	36
Gym Memberships	57
Property Taxes	450
Condo fee	209
Pre School Fees	530
RESP Contribution	100
Car lease payments	832
Home Mortgage	2300
Rental Mortgage	1160
Car and home insurance	267
Utilities	450
Loan Interest	240
groceries and household	1600
netflix google play and spotify	28
gas	120
drycleaning	80
cell phones	240
tv and internet	135
medications	60
haircuts 80
car maintenance and wash	60
coffee	
dining, drinking	
babysitting	
shopping	
debt repayment or savings	
vacation 
family entertainment	

Total	9034


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## none (Jan 15, 2013)

tskyyc said:


> Ok, my exorbitant expenses..... Just let me zip up my flame suit...
> \
> haircuts 80
> 
> Total	9034


Here's your problem.. Go bald - EVERYBODY. That's $1000 a year!


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## mordko (Jan 23, 2016)

The fundamental problem is that you borrowed too much. Mortgages+Condo fee+Car lease are killing you. You have to reduce these, no way around it. 

Do you have a fixed rate mortgage or variable? At what rate and how long for? 

Also... Your groceries bill appears to be too high. There must be a cheaper place to buy groceries from.


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## Plugging Along (Jan 3, 2011)

I think there is a lot of opportunity to cut down. It may only seem like $5 or $10 here and there, but that seems to add to over $9000

One thing I would consider is consolidating your loans... IF you plan to become disciplined. you could get a line of credit for cheaper, but ONLY do this if you have your spending habits under control, which you don't.

Here is my line by line review, I also have two kids and live in a more expensive city than Airdrie

Life Insurance 36 - For how much? 
Gym Memberships 57 - How often do you go
Pre School Fees 530
RESP Contribution 100
Car lease payments 832 - This is really high, you may want to see if you can consolidate, and stop buying cars you cannot afford. 
Home Mortgage 2300 - You have an expensive house for Airdrie, look at refinancing to a lower rate
Rental Mortgage 1160 - Keep this for now
Loan Interest 240
groceries and household 1600 - This is really high. If you are eating out, stop. For a family of 4, you should be able to do it under $1000 for a really liberal budget, I could do $800 for 5 people and we eat very well.
netflix google play and spotify 28
gas 120
drycleaning 80 - Maybe it time to get some Dryel, why so much in dry cleaning, what do you wear? 
cell phones 240 - Check of another plan, we pay about $140 for 3 cell phones and data
tv and internet 135 - Do you need TV and Netflix, and everything else. You could get this down to under $100 
haircuts 80 - This is really high, how often are you and your spouse going? 
car maintenance and wash 60 - Start hand washing your car. 
coffee - Start bringing in your own
*dining, drinking *- You are dining and drinking your future away
babysitting - Maybe cut, and see if you can get a babysittying share. 
* shopping* - same as above
debt repayment or savings - please put some numbers
*vacation - 
family entertainment *

You need decide what is important to you and focus your spending and savings. You seem to be spending every where, houses, vehicles, entertainment, food, dining, vacation, etc. You so have a discussion with your wife and see what things are important. When your two kids are getting ready to go off to whatever post secondary, do you think they are going to say 'Thanks mom and dad for driving me around in such nice cars, and taking me to such restaurants, it's was totally worth it and I don't mind now that I will have to borrow a ton money for school.'. 

What ever you deciding to spend your money on, just make sure it's worth it.


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## tskyyc (Apr 13, 2016)

mordko said:


> The fundamental problem is that you borrowed too much. Mortgages+Condo fee+Car lease are killing you. You have to reduce these, no way around it.
> 
> Do you have a fixed rate mortgage or variable? At what rate and how long for? How soon
> 
> Also... Your groceries bill appears to be too high. There must be cheaper place to by groceries from.


1. That's definitely the big one. At the time I took on this debt it was well within my means. It's not anymore. 

2. fixed rate. Just renewed our home at 2.54APR. Rental is at 3.09 fixed, matures 8/2017

3. The 1600 isn't all groceries. That's all household. Food, supplements, kids clothes, makeup, shampoo, etc etc. That's basically our walmart, superstore, costco bill. We do look for cheap groceries. Walmart store brand for most stuff. The only really pricey thing is fresh fruit for the kids


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## tskyyc (Apr 13, 2016)

Plugging Along said:


> I think there is a lot of opportunity to cut down. It may only seem like $5 or $10 here and there, but that seems to add to over $9000
> 
> One thing I would consider is consolidating your loans... IF you plan to become disciplined. you could get a line of credit for cheaper, but ONLY do this if you have your spending habits under control, which you don't. _Good point. _
> 
> ...


The other missing part is other potential earnings. If my wife can bring in even an extra 5-600 a month it would help a lot.


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## mordko (Jan 23, 2016)

tskyyc said:


> 1. That's definitely the big one. At the time I took on this debt it was well within my means. It's not anymore.
> 
> 2. fixed rate. Just renewed our home at 2.54APR. Rental is at 3.09 fixed, matures 8/2017
> 
> 3. The 1600 isn't all groceries. That's all household. Food, supplements, kids clothes, makeup, shampoo, etc etc. That's basically our walmart, superstore, costco bill. We do look for cheap groceries. Walmart store brand for most stuff. The only really pricey thing is fresh fruit for the kids


OK... Your expenditures are not outrageous. Sure, you can save a few bucks by not dry cleaning, buying cheaper fruit, drinking less coffee and cutting on the phone bill. Then something will come up and you'll be in trouble again. Too close for comfort, particularly if income is going south. 

So, you need to do all of these little things but if I were in this position, I would start with cutting debt repayments:

- Get the bank to provide you with a credit line ASAP and kill the credit card debt. 
- Get rid of the rental. Its not working. Also carries a risk of unanticipated expenditure. What if interest rates go up in 2017? Like they are at historic lows right now... You'll be screwed. 
- See if you can put your car lease on the market for someone else to assume your lease. If you do manage to get rid of that lease don't do that again. Find a cheap second hand car with a reasonable insurance. 
- Leave RRSP savings alone but don't contribute until your finances recover. 
- Going forward keep focusing on minimizing expenditure and put every cent you save into repaying your mortgage. Don't invest until the mortgage is at a much more manageable level. You also need to build up a bit of cash reserve to get you by in an emergency. 

That's what I would do... Another option is to consider moving to a cheaper place but if your kids are going to school its not always easy.


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## mordko (Jan 23, 2016)

And yes - if your wife can bring a few $s it would help a lot, but I would still cut down the debt. Its way too high and interest rates can go up while employment income isn't always 100% reliable.


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## mordko (Jan 23, 2016)

Note that right now over 45% of your income goes straight out of the door to service debt repayment. That's never going to be sustainable. Maximum debt to income ratio should be 35% (according to the Consolidated Credit Counseling Services of Canada) but I wouldn't want more than 25% for myself.


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## tskyyc (Apr 13, 2016)

mordko said:


> Note that right now over 45% of your income goes straight out of the door to service debt repayment. That's never going to be sustainable. Maximum debt to income ratio should be 35% (according to the Consolidated Credit Counseling Services of Canada) but I wouldn't want more than 25% for myself.


It's definitely out of whack. 18 months ago I was well within that 25-35% but those big paycheques are history. 

Your point about the unanticipated expenditure on the rental is what keeps me up at night. The rent is just enough to cover but if I have to fix something or carry the mortgage for a few months I'm in trouble. I hate the idea of getting rid of it because of the potential upside 15-20 years from now but it may not be realistic at this point.


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## mordko (Jan 23, 2016)

tskyyc said:


> It's definitely out of whack. 18 months ago I was well within that 25-35% but those big paycheques are history.
> 
> Your point about the unanticipated expenditure on the rental is what keeps me up at night. The rent is just enough to cover but if I have to fix something or carry the mortgage for a few months I'm in trouble. I hate the idea of getting rid of it because of the potential upside 15-20 years from now but it may not be realistic at this point.


Yep. And then you may not find anyone to rent it of you for a while if your current client decides to leave... I would get rid of it. Once you are on top of your debt and have 30k or so savings, start investing and you will build up your retirement fund in no time.


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## nobleea (Oct 11, 2013)

tskyyc said:


> It's definitely out of whack. 18 months ago I was well within that 25-35% but those big paycheques are history.
> 
> Your point about the unanticipated expenditure on the rental is what keeps me up at night. The rent is just enough to cover but if I have to fix something or carry the mortgage for a few months I'm in trouble. I hate the idea of getting rid of it because of the potential upside 15-20 years from now but it may not be realistic at this point.


What are you referring to potential upside? Do you mean when the mortgage is paid off? You don't have much equity in it, so it wasn't a fantastic deal. Which means you can probably buy another one in 2, 5 years when your finances turn around if you're so set on it. If you're getting 1550/mo from your condo, it should have a value of 170K tops, preferably less.


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## My Own Advisor (Sep 24, 2012)

Agreed with other comments...

1. Get HELOC, consolidate debt, kill high fee credit card debt.
2. Slowly chip away at HELOC by suspending all RRSP, TFSA or any other "savings".
3. Look to cut back on all other expenses, especially any travel and discretionary spending (i.e., new clothes).


That would be a solid start. Sorry to hear of your troubles.


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## mordko (Jan 23, 2016)

@ tskyyc:

It does not seem like it now but what happened to you is a good thing. 

What you did was leverage yourself very heavily to invest (e.g. condo and RRSP) and spend (e.g. car). That's always a high risk strategy because your probability of having to repay debt is 100% while the probability of investments achieving substantial gains is quite a bit less than that. One of the risks materialized (partial loss of income) but it could have been something else. A lot of people do this, particularly in the current low interest environment but that does not make it a good strategy. 

You got a wake up call and you are dealing with the problem now before it's too late. Whether your income recovers or not, your finances will be just fine once you act. The logical time to lose sleep would have been 5 years ago as you were borrowing and investing at the peak of the market. Once you start acting to cut your debt you should sleep like a baby. 

It all happened just in time for you to correct the course but right now the risk is there so try to reduce time at risk by acting right away. 

Good luck.


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## nobleea (Oct 11, 2013)

You mentioned you spend $120 a month on gas. I assume this is gas for the cars since you mention utilities separately. You also mention that you each drive 2000km a month. That would be an average of about 80mpg for each car, so something doesn't jive.


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## Jaberwock (Aug 22, 2012)

Reducing the amortization period on your first mortgage may have seemed like a good idea at the time, but it is coming back to bite you. In fact, you are paying off a 2.45% loan with cash that you could be using to pay off your 19% credit card debt.

Go back to your mortgage company and see if they will allow you to set your amortization period back to where it was. Use the extra cash to pay down other debt, and don't accelerate payment on the mortgage until you have paid off all the other debt and built up an cash cushion for emergencies.

The rental condo is not doing anything for or against your cash flow. If the thought of having unexpected expenses, or losing your tenant is a source of worry for you, then sell the condo. If you can live with the risk, then keep the condo.

Cancel the TV, get a lower priced contract on your cell phone, trim your grocery bills, let your hair grow a bit longer before you have it cut, and get yourself a cheaper car when your current lease expires (or before if you can). 

Is the $500/month that you are spending on pre-school really necessary when you wife doesn't work? Pre-school is just expensive babysitting.


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## tskyyc (Apr 13, 2016)

nobleea said:


> You mentioned you spend $120 a month on gas. I assume this is gas for the cars since you mention utilities separately. You also mention that you each drive 2000km a month. That would be an average of about 80mpg for each car, so something doesn't jive.


good observation. My company pays for my gas so the $120 is strictly what my wife burns.


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## Nerd Investor (Nov 3, 2015)

Jaberwock said:


> Reducing the amortization period on your first mortgage may have seemed like a good idea at the time, but it is coming back to bite you. In fact, you are paying off a 2.45% loan with cash that you could be using to pay off your 19% credit card debt.
> 
> Go back to your mortgage company and see if they will allow you to set your amortization period back to where it was. Use the extra cash to pay down other debt, and don't accelerate payment on the mortgage until you have paid off all the other debt and built up an cash cushion for emergencies.
> 
> ...


These are the things that jumped out at me as well. Extending the amortization period would be ideal, another option might be a "payment vacation" which some banks offer. Basically stop payments for a few months. This would let you hammer down that credit card debt. And yes, the pre-school threw me off a bit. I thought the point of your wife not working was to avoid child care costs? I get that preschool is nice for social interaction. Would your wife ever entertain the idea of keeping your children home all day and even watching a couple of other children? It would cut out the preschool costs, bring in some extra income, and your children would still get to interact socially with others.


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## tskyyc (Apr 13, 2016)

Nerd Investor said:


> These are the things that jumped out at me as well. Extending the amortization period would be ideal, another option might be a "payment vacation" which some banks offer. Basically stop payments for a few months. This would let you hammer down that credit card debt. And yes, the pre-school threw me off a bit. I thought the point of your wife not working was to avoid child care costs? I get that preschool is nice for social interaction. Would your wife ever entertain the idea of keeping your children home all day and even watching a couple of other children? It would cut out the preschool costs, bring in some extra income, and your children would still get to interact socially with others.


We discussed this very thing last night. There are only 2 more months left in the school year and pre-school is truly a glorified day care. The thought behind enrolling them was to prepare them for school early and build some social skills with other kids. But at this point it probably isn't necessary.

edit: When we enrolled them I thought that the cost was tax deductible which I've now learned that it isn't... Not in our situation anyway.


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## tskyyc (Apr 13, 2016)

Jaberwock said:


> The rental condo is not doing anything for or against your cash flow. If the thought of having unexpected expenses, or losing your tenant is a source of worry for you, then sell the condo. If you can live with the risk, then keep the condo.


I just renewed my tenants for another 1 year lease. So I'll live with the risk for 1 more year and address it again then. Perhaps by that time the market will have recovered a bit and it might make more sense to sell. 


> get yourself a cheaper car when your current lease expires (or before if you can).
> .


I work in the car business so changing cars and getting out of leases is pretty easy for me. I could trade my car for a cheaper one today and cut that cost by $150 a month. It would be another lease but I wouldn't carry any negative equity and I could get out cleanly if I had to.


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## Spudd (Oct 11, 2011)

tskyyc said:


> I work in the car business so changing cars and getting out of leases is pretty easy for me. I could trade my car for a cheaper one today and cut that cost by $150 a month. It would be another lease but I wouldn't carry any negative equity and I could get out cleanly if I had to.


DOOOO ITTTTTT.

I also agree with the people who said you should see if you can raise the amortization on your mortgage again. 

And, I can't really buy that $1600 is all necessary expenses for groceries/household. That just seems excessively high. Ask your wife to start tracking this on a detailed level for a few months so you can see if there are any low-hanging fruit there.


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## tskyyc (Apr 13, 2016)

Made an appointment for the 27th with my financial planner. I want to look at consolidation options. Either a HELOC or remortgage one of my properties. Maybe explore early renewal of my rental mortgage. Maybe I could get that payment down to improve cash flow while extending the amort. of my home along with a HELOC or whatever. I'll see what kind of advice he gives me.


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## CalgaryPotato (Mar 7, 2015)

#1) Your rental isn't making you any money right now.
#2) What is the long term viability of a rental in Calgary? We are in the middle of nowhere, with no real reason to be this big except for oil. I'm hoping things can stay reasonable until I retire, but I'm not sure if the Calgary real estate market is what I'd want for a nest egg. It's a crappy place to retire too, many people will be retiring over the next few years to somewhere warmer, closer to family, etc. It's a work city, so unless the work bounces back and stay's consistent we could someday be Detroit.
3) Not trying to be mean or anything, this is an expensive city, but you make a lot of money as a family. If you can't figure out a way to stay in budget, you are doing something very wrong. While your ~250K of net worth is impressive for your age, when you consider the amount you were making prior to the crash, it's probably low. 
4) Get that $35K off your credit card, and rolled into some of your other debt somehow, or some kind of a line of credit, someone with your net worth, shouldn't have a hard time getting better interest than a credit card.
5) Remember that your kids will be in school full time soon, that'll make it easier for your wife to get back into full or part time employment.


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