# Getting finances in order with a growing family...



## Paul77 (Jan 22, 2015)

Hello all,

I'm looking for some advice or pointers on how better to manage my income. It feels like I'm always running short on cash. To be honest, I'm not well educated in finances at all, hence the reason I starting reading the forums which is already helping 
I noticed many people on the forums are in great shape financially. I however was very silly in my younger days and was very foolish with my money. It took a long time to recover but I got there. I don't make a ton of money so I don't think I'll be out of debt until I'm old and grey, but, I still want the best for my family. 
My current situation is married with 2 kids under 5 yo. The holidays were bad on my pockets last year but my overall debts around $3500 (excluding mortgage) and income is steady. 

I decided a diary would be best to get things organized.

*ASSETS*
RRSP - $70000
TFSA - $12000 (savings for the kids)

*LIABILITIES*
LOC - $3500
CC - $500
Mortgage - $185000

This is what our monthly expenses look like with my wife's current maternity salary :upset:. I tried to break it down as much as possible and also added the income percentage of each expense.


*Income**(take home)* Hubby$3,680.00 (after RRSP and Health ins. deductions) Wifey$374.00 (maternity leave, usually $1400)  Total$4,054.00 ($5080 after maternity leave)  *Expenses* Home Mortgage$1,000.0024.7% School Tax$51.001.3% City Tax$208.005.1% Electricity$210.005.2% Internet/Phone/TV$94.00 (phone/int. = $64, cable = $302.3% Hot water tank$14.000.3% Alarm$28.000.7% Food/Pharmacy$550.00 :cower:13.6% Savings$200.004.9% Auto Car$400.009.9% Gas$300.007.4% Insurance$87.002.1% Hubby Life ins.$85.002.1% Cell phone$30.000.7% LOC playment$200.004.9% Wifey Life ins./RRSP$140.003.5% Cell phone$30.000.7% CC playment$50.001.2% Misc Gifts/Toys/Cloths/other$300.007.4%   Total Expenses$3,977.0098.1% Total Income$4,054.00  Whats left$77.00 ($1100 after maternity)   
<!--[if supportMisalignedColumns]-->
<!--[endif]-->
We started some money savings techniques that will hopefully help. Such as; price matching groceries, selling old toys and items, negotiated cell phone bills, movie night at home instead of restaurants, got a reduction on internet/phone bill. I'm also contemplating cutting the cable.
Also, we don’t spend the government checks we receive, they go straight to the kids savings accounts.

My biggest short term goal is to upgrade our home. We're a family of 4 living in a small 2 bedroom house. We love or home but have simply outgrown it quite a bit. With that being said, we're having difficulty deciding what to do;

*A* - Stick it out in our current home.
*B* - Purchase an affordable small 3 bedroom home to fit our current needs. With such a home I foresee us upgrading in another 5-10 years.
*C* - Stretch my dollar and purchase a larger home that we'll stay in for 15+ years.

My all ears for any suggestions, comments, ideas, or tips.

Thanks!


----------



## Spudd (Oct 11, 2011)

I'd suggest opening an RESP for the kids. That way you get a grant from the government which is a 20% bonus (I think...) on top of your own contributions. Better than using the TFSA. 

You might also want to do a spousal RRSP for your wife, that would reduce your income taxes now but in retirement it would be in her name so you would hopefully have more equal RRSPs so in withdrawal you can do better income splitting.


----------



## hboy43 (May 10, 2009)

Hi:

Hey, don't sell your self short re financial knowledge: You have a well organized and detailed understanding of your income and expenditures, and you have life insurance for both of you, as you should with 2 young children. Already I'd say you are in the top 25%.

I think you ought to hold on the house for now. With your wife on maternity leave, I just don't see how you can swing more mortgage. With some pain it should be manageable a few years yet until the oldest is say 10. How small is small? The guy across the road from where I used to live put 4 kids through 1000 SF house (plus basement). Is your situation any tighter than that? Maybe put up an 8x12 out building to store stuff in?

hboy43


----------



## rikk (May 28, 2012)

Might it make sense for your wife to withdraw some RSP, depending on the maternity leave taxable income for 2015, and pay off the LOC/CC, other expenses ...


----------



## Mortgage u/w (Feb 6, 2014)

My biggest concern with your situation is what is keeping your LOC and CC balance up when you are paying down $250 per month? Rather than pay monthly and a high interest, I recommend you cash in your TFSA and payoff the credit cards. Take the remaining TFSA and contribute to an RESP so you benefit from the federal grant (20%) and provincial grant (if any).

The next step is to figure out what you keep putting on credit. Go through the credit card statement and see where your money is going. You may realize that you have more expenses than you thought or find yourself spending on non-essential items thus potentially further reducing your expenses.

As for your home situation, I wouldn't budge before you remedy your situation. Taking on more debt with no savings is not a good idea.

Lastly, I recommend reviewing your life insurance payments. I don't know your medical history but if everyone is healthy, $225/mth seems hefty to me. You may have too much insurance. Review your needs with a financial planner.

Your in not so bad shape and I am glad you took the time to review and take charge of your finances. I'm confident you'll succeed at reaching your goals!


----------



## Plugging Along (Jan 3, 2011)

Good advice from others here.

Here are my random thoughts:
I agree, I don't think you in the position to upgrade your home yet. Not enough income, not enough savings.

Your groceries aren't too bad for a family of four. 

Your wife's rrsp, is something that can be deferred or use as a spousal instead, as she is on mat leave, so a lower deduction 

The $300 for toys, gifts, ect. That seems to be pretty high every month. This is where I would be reducing

Finally, have you budgeting for childcare and activities for when your wife returns to work?


----------



## Paul77 (Jan 22, 2015)

*corned beef*

Hi all, thanks for the informative replies. 

I may have left out a few important details. 

We want to upgrade the house not only for our family space, but also because my wife runs a home daycare. Today she's very limited in the number of children she can care for, however, the "business plan" was to get a larger house, hire a helper, and increase the number of children to bring in more revenue. 

The $300 a month also includes our family activities (ballet, hockey, etc...). But I will work on lowering this. 

I'm definitely leaning towards doing this,


> I recommend you cash in your TFSA and payoff the credit cards. Take the remaining TFSA and contribute to an RESP so you benefit from the federal grant (20%) and provincial grant (if any).


The LOC only got bad because my car died on me late last year...other than that we decided NOT to use the CCs anymore. :encouragement:


----------

