# Approaching 40 - Starting to Plan...



## P$nnyPincher (Feb 4, 2011)

Discovered you guys a few weeks ago and have been scouring with interest at all the great information and advice. As a result am really keen to pay down the mortgage, just not quite sure realistically how long that could take – which is where you come in (please)!
So, in true forum fashion here are the crucial details…

37 year old couple, no kids (or will there be). Joint income of 123K (51+72) basic and usually another 40k in commission on the higher salary.

Mortgage – 298k, starting 3rd year of a 5 year 3.75% term, we recently upped our payments by 20% (the maximum we are allowed by the bank) which seems to be going towards the capital. Payments are $1200 bi weekly. Equity in the property is at least 250K.

No consumer debt and 18k on LOC on which $1200 of my salary is paid to bi-weekly but occasionally we have to borrow a bit back. Try to live solely on the larger salary.

We have been in Canada for 5 years and only just opened RRSP’s this past year and have added about 9k between us with room of about 80k left and have about 4k in a TFSA. Also have the equivalent of about 50k locked in pensions in the UK and don’t really think about them or include them in our calculations and look forward to a nice surprise in 20 or so years! Have toyed with the idea of bringing them here but at the current FX rate it would be foolish, if we ever get back to a decent level may think about it again.

We are going through the ‘where does all our money go?’ stage at the moment and are tracking our spending as we feel we could/should be saving/investing more than we do but never seem to have much left at the end of the month. We are neither extravagant nor frugal with our spending really just trying to live within our means. As mentioned I am getting quite keen on the idea of paying off our mortgage as I can’t get my head around the idea of borrowing to top up our RRSPs, or based on the above information does anyone have a better idea? If I have omitted any pertinent details just let me know.

In Summary;

Liabilities	
298k Mortgage	
18k LOC	

Assets
250k Equity 
9k RRSP
4k TFSA
15k 2 cars (2003 & 2005)

Income
163K


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## Plugging Along (Jan 3, 2011)

Based on your income, I would question if you are really as frugal as you think. This may be where you do a better job of tracking where your money is going. If you are just living off the higher salary, then you should have a lot more in saving from the lower one. 

You didn't mention how much your LOC interst % was. My first thoughts would pay that off even faster if you can. 

I noticed that you did not have a lot in savings or an emergency savings. After you pay of your LOC, I would then put aside some money for emergencies. $4K will not last you very long with your mortgage. After you'v done that, then look at your RRSPs.


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## P$nnyPincher (Feb 4, 2011)

Some clarification...

We had an expensive past 18months (new roof, new furnace, new flooring and car repairs, health issues and lots of medical expenses to claim this year).

Joint salary has only been over 100k for 2 years and only recently starting putting one salary to the LOC. Rate is prime I think.

We are hoping that we won't have any big costs this for the next couple of years so want to start paying down and increasing savings - just want to work out the best ratio.


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## Jon_Snow (May 20, 2009)

When I saw what your net worth was in relation to your income, I thought you might be in a spot of overspending trouble... but taking into account that your live in the housing bubble known as Vancouver (so do I), and that your high income has only been for a couple of years, I think you are doing okay.

With your current income I would also urge you build up some cash savings... just in case.


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## P$nnyPincher (Feb 4, 2011)

I am very conscious that we don't really have any liquid cash for the emergency fund - will be looking to try and max out TFSAs over the coming months.

How best can I calculate the years required to pay off the mortgage at the current rates? Shall I just ask the bank? It seems likely that rates will rise but can I dream that they won't...!

Next challenge will be to start to learn about managing better any funds that are in RSP and TFSA, but one step at a time.


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## P$nnyPincher (Feb 4, 2011)

Update - found a great app that is helping with a budget for the first time in my life! If I stick to it (!) my LOC will be gone by November and then we can start building up our savings.

Am grateful for the amount of knowledge that is available on this site, we all have the same issues and queries which is very heartening - don't feel like such a freak now!!


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## bbsj (Aug 26, 2010)

The only suggestion I can give is to focus on your careers, and everything else will fall in its place. Of course, you should use websites like this to maximize your financial well being, but still the career comes first. Even Warren Buffet said that one's career is the most important investment.


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## Cal (Jun 17, 2009)

P$nnyPincher said:


> We are neither extravagant nor frugal with our spending really just trying to live within our means.


To save some money, you will have to live below your means.

Also...can you make the mortgage payments weekly insteadof bi. I know it doesn't sound like much, but it will make a difference too.

You are on your way, at least you are thinking about his stuff now.

Once you get rid of the LOC you have to start making an emergency fund...as well as working on not being so house rich, investment poor.


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## the-royal-mail (Dec 11, 2009)

Cal said:


> To save some money, you will have to live below your means.
> Once you get rid of the LOC you have to start making an emergency fund...as well as working on not being so house rich, investment poor.


100% agreed with these two statements.


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## Rico (Jan 27, 2011)

Cal said:


> Also...can you make the mortgage payments weekly instead of bi. I know it doesn't sound like much, but it will make a difference too.


On our own mortgage, we do accelerated weekly payments (payment every Friday). When I toyed around with the mortgage payment calculator I discovered that bi-weekly accelerated (payment every 2 weeks . . . not 2 payments/month) is the exact same payment/interest amount. Paying a double payment every two weeks is the same as 1 payment every week. So, bi-weekly/weekly may not matter. It does matter over monthly though. And accelerated matters over not (of course).

Accelerated bi-weekly (or weekly) with a 20% up-payment is very decent.


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