# Dilbert's numbers



## dilbert789 (Apr 20, 2010)

28
Married
1 child

When we're both working, around $115k/yr combined before tax
*~213k[updated:5/19/2011]*~216k[updated:9/23/2010] ~$220k left on mortgage, house valued somewhere around $260,000.
~$25k in RRSP's after we used 20k to build the house.
*~6500[updated:5/19/2011]*~$-9k consumer debt, currently on a 0% interest card till next summer. 
*~14k[updated:5/19/2011]*~15k[updated: 9/23/2010]~$-19k left on wife's car loan... 
~$6000 value in a Civic

So I was doing nicely on racking up my RRSP's and savings, was told we'd be on layoff for 3 weeks. Built a $6000 deck on our house, and it was 6months... So that took me back quite a bit. We have no rainy day savings, and my wife likes to shop... 

Thanks it for now.

How do you think I'm doing? What would you recommend?


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## Wealthy1Day (Aug 30, 2009)

The layoff was supposed to be 3 weeks and it got stretched to 6 months?? That would set ya back a bit. Are you back working?

I would hold off on any further big expenditures unless they're baby-related and focus on your debt. Good job on reducing the interest on your consumer debt to 0%, but don't lose focus on paying it off. Assuming your wife's car loan is at a low interest rate too. Keep making those payments and focus on reducing the consumer debt even though it's currently at 0%. Next summer, you want your money to go towards diapers instead of interest.

The wife likes to shop, you say? Focus on paying off your debt and then celebrate between the two of you once a month. Perhaps you can establish a monthly milestone. When this happens then maybe the two of you will be more cognizant of your spending and have increased rewarding feelings than increased spending. Both of you might be able to have your cake and eat it too.


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

I see two major red flags here:

1. no rainy day savings
2. $9K of consumer debt

$9K is a tremendous amount of money. One of the things we don't do enough of around here at CMF is asking WHY this debt was allowed to occur. And then, how to prevent it from recoccuring. In other words, is it justifiable? Is it sustainable?

What I'm saying (more generally, not just aimed at the OP in this case) is that we need to focus more on plugging the leak before it becomes a leak (by being responsible spenders and managers of our own money), rather than always focusing on mopping up the water (which is what debt repayment is). One should come before the other IMO.

Any plan to establish rainy day savings, perhaps in TFSA?


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## Cal (Jun 17, 2009)

I don't personally count vehicles in net worth.

I would work on paying down the debt, then the mortgage and/or rrsps depending upon where you sit on that issue.

How many years is the mortgage amortized over?

And at least open a TFSA to use for a rainy day/emergency fund, in the event of another layoff.

And congrats on the almost new born!


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## dilbert789 (Apr 20, 2010)

Thanks for the replies, 

Wealthy1Day - Yes, the layoff was supposed to be 3 weeks, that was almost up and was told, another week or two. Then another 2 weeks, and another 2 weeks... When it's 2 weeks at a time you don't even realize how much time has gone by. I ended up getting a new job with another company with a bit of a raise, if I had stayed it would have been over a year now. 

A lot of the debt (9k) came from my wife's credit cards, which I've convinced her to not carry with her anymore to help her grasp the $ in vs $ out concept... I think I've said "We don't need $10 soap." multiple times. Between this and the fact that we keep the same lifestyle but had literally half our income, it added up quickly. 

The car loan is at 8.5% interest, so that's not great either. Mortgage was done for 35yrs but paying weekly drops it to like 28 years left and I bump the payments a bit once and a while.

I do have a small savings account that I've used to sock away $50 a week for the last several months, I pushed 1k from that into an ETF (CDZ) which has now gone down in value as I bought before Greece happened.


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## MoneyGal (Apr 24, 2009)

It isn't $10 soap that will kill your budget: it's the lack of a budget. You can't make gains unless you and your wife agree about spending. And her spending may well include $10 soap, just like yours includes $200 a month on CDZ. 

Ramit at IWillTeachYouToBeRich.com actually just did a big post about this recently. I'm not as hardcore as Ramit, but I agree with a lot of what he has to say in that post. The soap is just a symbol of something you think is expensive that your wife thinks is justifiable. There's nothing inherently wrong with $10 soap!

If you were looking for advice, which I think you are, I'd say you might want to actually draw up a budget (and include some "fun money" or some amount for which neither of you has to account to the other) and then monitor how well you stick to it. Hint: this conversation is going to get amplified when you have a baby, because baby spending decisions are ALWAYS emotional. 

What works is getting an agreement in place, and then sticking to it - or refocusing and getting back on track (or a different, new track) when you don't stick to it. 

Good luck! I hope you let us know when the baby is born.


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## Spidey (May 11, 2009)

dilbert789 said:


> 27
> Married
> 1 child due any day
> 
> ...


I think that you've got to take some drastic steps immediately. Your baby is due any day, your EI is about to run out and your wife is about to go on maternity leave. Unless you are hired in the near term, here is what I would personally be considering:

- No more consumer debt. This is going to be difficult with a new baby coming along, especially with the tendency of new parents to think that anything less than top-of-the-line purchases are equivalent to child abuse. There are many top quality clothes, furniture and toys that you can get second-hand for a fraction of the price of new. Baby clothes are often in near new condition because of the rapid growth rate of babies. Just be sure that any furniture or car seats meet current safety regulations. You will be doing your child more favors by being as financially stable as possible over dressing him/her in the latest fashions.

- I would consider cutting any expenses that are not absolutely necessary. Cell phones (unless required for your wife's job), most meals out, all unnecessary purchases, perhaps even cable TV (or at least switch to the most basic package). Look for alternative low-cost entertainment - library DVDs and books, making use of public parks and community entertainment, beaches, etc. Check out books on frugal living at the library.

- Your wife will have to be home at least during the first few months, but if no job looks forthcoming, and if your wife earns a reasonable salary, I would suggest that you consider becoming the stay-at-home parent for a year or two. Your wife will be able to write you off on her taxes and your family income level may be such that you get fairly decent CTB payments and GST rebate cheques. If your work calls you back, you can then consider daycare.

-You will have to calculate what effect it may have on CTB and your wife's tax deduction (there is a government calculator), but if your EI has run out and you have no income, I would consider withdrawing the RRSP and paying off the consumer debt and perhaps paying down the car loan. This will free up the extra income you've been putting towards those payments and you should pay minimal tax on the RRSP since you have no income. It may be counter-productive to withdraw all of it, but you could just withdraw the portion that would not trigger significant taxes.

- If no jobs look immediately forthcoming, I would consider selling one of the vehicles and directing the proceeds towards your debt. Not only will you receive cash to pay down the loans, you will also be relieved of insurance, maintenance payments and other expenses. You can always buy another car when you are rehired. 

I hope that you are rehired and most of these suggestions are not necessary, but if not, these are the things I would be doing.


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

Sure.

But again, I ask the OP what his PLAN is to PREVENT a recurrence of this type of consumer debt. Putting a plan in place to pay it off is great (and obviously essential), but amounts to mopping up water after a spill. This situation is a very typical life scenario and the OP will learn nothing if they only focus on paying off the debt. I'm not seeing an acknowledgement of the real problem that lead to the current situation, much less trying to prevent it from recurring.

Also, a rainy day fund would have protected you from having to raid your badly-needed retirement money as well as having to make all the sacrifices mentioned above.

Otherwise I agree with spidey and moneygal.


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## dilbert789 (Apr 20, 2010)

I did end up getting a job with another company so I've been back to work now for about 6 months. 

I have made up a budget and I've been using Mint.com to try to track our spending to see if we are actually tracking to our budget. In reality a budget is only as good as how closely you follow it! Through tracking every transaction I've found area's that we hadn't put anything down for on our budget, like house supplies. 

I understand that the $10 soap on it's own isn't the only issue. I truly believe it's the $10 soap, and the 5 $20 shirts, and the $40 pair of pants and the ____ that are bought every week on a credit card that becomes hard to track and we don't really get a good handle on how much is spent. It becomes even harder when non grocery items are bought at the grocery store and now your grocery budget gets blown because of a couple shirts...


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## MoneyGal (Apr 24, 2009)

Damn those grocers! It's their fault. 

Seriously, tracking spending is really tedious. But you don't need to track it if you just...don't spend it!


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## dilbert789 (Apr 20, 2010)

MoneyGal said:


> Damn those grocers! It's their fault.
> 
> Seriously, tracking spending is really tedious. But you don't need to track it if you just...don't spend it!


I attempt to do that! I think one of the reasons that I feel I need to track everything really tightly is to really see where the money is going. I hope to either use this to help me curb my wife's spending some and to get her to see more of where the money is going or to point out the areas that we really need to cut back on.


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## MoneyGal (Apr 24, 2009)

Well, tracking is one part of it. But like I said earlier, I really believe that forming an agreement about how you want to spend and what your financial goals is a necessary first step. Otherwise, I worry that your wife will just feel as though you are undermining her. 

I just read an article in a retirement income journal the other day that included this exchange:

_*How do you handle your own money?*

Personally, I re-examined my household spending. I didn't get as carried away as some during the boom, but I've tried to be even more cautious since then. For instance, the other day, when I was still having my first morning cup of coffee, a woman walked up the back steps of my deck. She shook my hand and said, ‘I'm here for the dogs.’ My wife, unbeknownst to me, had signed up for a dog-walking service. I cut that frivolity out._

Whether or not dog-walking is frivolous is not, to me, the point. When I read that I thought, I would not to be that man's wife, mocked for her spending choices (and seriously, how much could dog-walking actually cost in the larger scheme of things?) in a national magazine. 

This example just smacks of "I am right and my free-spending wife is wrong" to me...when I honestly think it could be re-phrased as "I do such a poor job of managing my personal world that I don't know how my wife is spending money and I don't agree with her choices, but I haven't made sufficient attempts to enroll her in my way of thinking so that SHE agrees, and instead I'm going to play this out in print." Ya know?


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## dilbert789 (Apr 20, 2010)

MoneyGal - I completely agree. Money problems cause enough issues in a relationship and having your partner critique every purchase you make is demeaning and 'parent like' which probably won't be good. 

In the budget that we setup we wrote down what we thought expenses were and what our incomes are. Then using a ratio of income we each would pay a certain amount into the common pot and all bills would be paid from that. So if the ratio of my take home to her take home is 60:40 then I pay 60% of the bills and she pays 40%, the rest each have to spend as they wish. 

The problem that I've ran into is that we put in 10% of our income over and above all bills to go into the joint pot to pay off the debt we currently have and build up savings. However at the end of the month, the pot's not growing near the rate it should be which means we're spending more than we thought we were. This is where the $10 soap comes in, if she bought the $10 soap out of 'her spending money' then whatever, that's fine I don't care. This is the same as if I buy a compressor out of my spending money she doesn't care. But when she buys the $10 soap over the $3 soap out of the joint account it starts to take away from the other things that we both value. The $10 soap is just a small example, if it was just soap there wouldn't be an issue. The problem is the $10 soap, the $15 shirt for the dog, the $40 in dog toys that he destroys in minutes that all come out of the joint account.


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## Four Pillars (Apr 5, 2009)

@MoneyGal - the dog-walking is a funny example. I'd like to know who does the dog walking before judging - although I suspect it is the wife. 

Dilbert - Sounds like a tough situation. What is your wife's reaction when you talk about the spending? Have you two clearly set out a budget ie how much money you get for specific items (or blow money)?

Maybe another approach is to set goals first. IE if you can save $1,000 per month then maybe put $800 into the mortgage/rrsp etc and the other $200 can go into a vacation fund?


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## MoneyGal (Apr 24, 2009)

OK! I'm glad that you are not thinking (I don't think) that I'm criticizing you! (Phew...what a sentence.)

This is a classic "pay yourself first" problem. You can set up all kinds of structures so that when the money runs out...it runs out. An easy to implement one (but hard to live with!) is to just stop using cards. 

OK, and now my judgement: WTF $40 in dog toys!? All right...it's out of my system now...


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## dilbert789 (Apr 20, 2010)

MoneyGal said:


> OK! I'm glad that you are not thinking (I don't think) that I'm criticizing you! (Phew...what a sentence.)
> 
> This is a classic "pay yourself first" problem. You can set up all kinds of structures so that when the money runs out...it runs out. An easy to implement one (but hard to live with!) is to just stop using cards.
> 
> OK, and now my judgement: WTF $40 in dog toys!? All right...it's out of my system now...


In how I setup the budget I was trying to implement a 'pay the joint first' method so that our joint bills were at least covered along with the savings chunk. Then anything left over in your own account is your spending money. 

What didn't cross my mind (and caused me to just smack myself in the head for not thinking of it) is to then take out the 10% immediately from the joint account and put that into our joint savings account. This way the joint account that we over spend out of will bottom out, and we won't be constantly chewing into the money that we should be saving. This savings will then go to pay the debt back when it comes due, and this will help create an emergency fund after that is paid back. 

The best solutions are often the simplest!

We have a 70lb Lab-poodle cross that already costs like $120 / mth on average between food and the occasional vet bill... So $40 in toys makes me cry...


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## dilbert789 (Apr 20, 2010)

Update Sept 2 2010:

Mortgage is now like 
$217,000 @ 5.4% (same rate)
Car loan has been converted into a LOC at almost half the interest rate, 
$19,000 on that. (4.75% p+2)
$ 8,900 on the 0% card, few months left to go on that free ride.


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## DavidJD (Sep 27, 2009)

I think that you are on a precarious footing - financially at least. I think that should be pointed out and that your situation could spiral into greater debt and strain on your relationship. New parents have their own strain, broke or loaded, its a lot of work.

I think the old 'pay yourself first' policy is needed. EVERY cheque you receive, cut 10% off the GROSS and sock it onto your consumer debt. I would do this on your wife's mat-leave cheques too. Call you credit card companies, tell them you are stuggling and offer to pay off XX cents on the dollar - they may take you up on if they think you may declare bankruptcy or some other drastic measure. Cut them up if you are not certain you can practice the discipline you need with these cards. Either way this is priority #1 in my opinion. If you can live with one less car (I do, with two kids and both wife and i working) you should. 

Being new parents is also expensive. If you have friends and family who have recently had kids, there could be plenty of handy me downs or things to borrow. I am returning tons of stuff or selling car seats and highchairs etc online for a fraction of the cost new. It is clutter to me, still useful and in good condition, and selling it for 20% of the price is reasonable. Some couples have this attitude of "we want only new things for OUR baby". This is actually quite ridiculous. Garage sales too - start buying things you WILL NEED now. Books and toys etc.

As an aside, energy drinks for me are making up the new 'Latte Factor' and I need to be mindful of this. You and your wife probably serveral 'soaps' that you could live with out that would add up to a significant savings.

I think you are treating your situation seriously. Good luck.


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## steve41 (Apr 18, 2009)

I worked it out, and it appears you are just fine.... if you carry on with your current spending, loan pmts etc.... you will have amassed a net worth of $5Million by the time you retire. This is based on a current salary of $200,000 BTW.

(this is my not-so-subtle way of saying that, without the basics... salary, age, age of retirement, current savings, loans...etc, this is a somewhat futile exercise)


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## DavidJD (Sep 27, 2009)

dilbert789 said:


> When we're both working, around $100k/yr combined before tax


This appears to be $50K Gross per person...

Anyone should be okay with $200K/year.


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## dilbert789 (Apr 20, 2010)

DavidJD said:


> This appears to be $50K Gross per person...
> 
> Anyone should be okay with $200K/year.


The 100k was before tax(Gross) not after(net), its actually closer to 120 but to me before tax $ do not matter. What matters is how much I get actually deposited my net. When we're both working it's about 78/yr after tax(net). With my wife on mat leave we're about 10k lower after tax. 

There are lots of items that we could defiantly do without, we spend a large amount of money on food, probably 600 a month for the two of us. In the past we've been able to chew through any debt we've had pretty quickly, in the range of 1000-1500/mth so if we can continue with that route it should help out quite a bit. Between the original post and the update we also found out that I was off on the car loan by about $2000(too low), bought some sliding pantry shelves for our kitchen($650 don't ask...) and paid my wife's tuition for night school - $1400. Also there is about $1500 waiting to clear to get dumped on the LOC. My goal is to drop the LOC till it has enough room to put the 0% card onto it when it expires, then split any money between paying it off further and the mortgage(which is a higher rate). When the mortgage is up for renewal we should be able to move the standard LOC to a HELOC for an even lower rate than it is now. 

The trick that I find works best is to pull money out of the joint account immediately and put that towards the debt. I also have a $ limit for our joint account, whatever is over $1500, goes onto the debt.


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## DavidJD (Sep 27, 2009)

Your attention is certainly focussed on the situation. Very soon you will enjoy the feeling of significantly less debt.

Think about ditching a car. My neighbour has one child and converted his garage into a recording studio. I asked what he was going to do with his car, especially in the winter. His answer was, "What car?" Turns out he had sold his vehicle the year before and got a credit card that paid the insurance on rental vehicles. His wife takes a bus to get to her office and he works from home. Sometiimes a cab ride is needed. They rent a car almost every weekend for shopping etc. He brags about his new car (different model every week or so) and it is spotless and brings it back dirty. He does it so often he is a regular, only minutes to sign and leave with his car/truck/van and the car drop off is only a few seconds too - tosses the keys in the slot. anytime. He also keeps coupons and watches for special offerings. He gave me an outline of what his car actually cost (and depreciated) and compared to what he spent on cabs, bus and rentals. He definately was saving cash and preferred this way.

Point is - if he can make do with NO car, you could explore only having one.

As childish a treatment it is, that Gail Oxlade woman does give the best advice on saving and quitting the overspending. Her show is absolutely identical every episode. Same advice different couple. However dull, completely correct and easy to adopt. (cutting cards, using cash in jars etc) I trust myself to keep cash in my wallet and have discipline with my cards, if I didn't I would be using cash in jars too.


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## Four Pillars (Apr 5, 2009)

The one car/two car issue is very dependent on a number of factors. Desire to cut back might not be enough.

If you live in a place where public trans is not that great and both partners work - 1 car might not cut it.

My family only has one car, but I certainly don't think that's any kind of achievement - for our situation it's a no brainer. We wouldn't use a 2nd car even if we had one (unless of course it was some kind of Ferrari - then I would start driving to work) 

Til Debt Do Us Part is awful - really stupid people, although a lot of them learn a lot. I wish I could get myself to stop watching it.


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## steve41 (Apr 18, 2009)

This paying off loan quickly stuff is a bit misleading. Not because carrying debt is a good thing... because it isn't. It is more to the fact that in the scheme of things, paying off a loan quickly or slowly doesn't effect the big picture all that much. (as long as the interest rate on the loan is within spitting distance of the rate you are earning on your investments)

For instance, for a 40 yrold, earning 75K, with a 100K 6% mortgage and 200K in his RRSP-earning 5%, paying off his mortgage over 10 years instead of 20 years will affect his aftertax lifestyle (over the next 55 years) to the tune of $44598 - $44510, or $1.70 a week. Hardly something to obsess over.


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## Larry6417 (Jan 27, 2010)

steve41 said:


> For instance, for a 40 yrold, earning 75K, with a 100K 6% mortgage and 200K in his RRSP-earning 5%, paying off his mortgage over 10 years instead of 20 years will affect his aftertax lifestyle (over the next 55 years) to the tune of $44598 - $44510, or  $1.70 a week. Hardly something to obsess over.


I disagree. The debt is something to worry about. The OP has already told us he has a "stock-like" career i.e. volatile with periods of minimal cash flow. In that circumstance, a rainy-day cushion is more important than with someone who has a very stable cash flow. If you're in a hole, the first thing to do is to stop digging. However, both partners should be willing to sacrifice some of their "frills."

I also doubt that most people consider their after-tax income over the next 55 tears when making financial decisions. The most important question for the OP is: what is the value of being debt-free? Given his volatile job and the fact that his wife won't be working for a while, being debt-free (or having less debt) is very important.


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## dilbert789 (Apr 20, 2010)

My job isn't so much 'stock market like' with up's and downs. I was employed full time with plenty of OT when wanted for 4+ years before I was laid off. The reason was basically a perfect storm of a major customer that I dealt with that decided to put all work on hold, and the rest of the company is quite reliant on the economy. If companies aren't selling product, they don't buy new or upgrade their machines and production lines. If it was only one of those it wouldn't have been an issue, however both at the same time. 

Along with the single car idea, it's not going to happen. We both work about 20min away from home in opposite directions and asking my wife to give up a vehicle while she is on mat. leave is like sticking her on an island by herself for a year. This would result in WAY more headaches than keeping the car. Besides the fact that I'd have to sell this one and buy another in 10mths...


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