# Early 30's - On the right track?



## Brownstein (Jan 26, 2011)

Wanted to throw my situation into the mix as I started to get serious about my finances 3 years ago (when I turned 30). It is a bit out of my comfort zone to throw my situation out there but I think it is a necessary step both for peace of mind as well as ensuring I am on the right path.

Me and my Wife are both 33 with 2 kids (2.5 and 9 mnths).

Income:
Salary: Me $70K Military, Wife: $30K Disability
Benefits: $257/mnth UCCB/Child tax credit

*Assets:
*
Federal DB plan: 8 years to go till 40%, but will most likely do 12 yrs + 1 day for 50% or even a total of 35 yrs for 70%.

Home Equity: $140K

08 Honda Odyssey EX-L - not sure $30K (Fully paid)

Spousal RRSP: $10.6K TD couch potata with e-series funds @ $500/month
25% - CDN Bonds
25% - CDN Index
25% - US Index
25% - Int'l Index

My RRSP's: $6300 CIBC garbage fund setup when I was early 20's, in process of switching it to my TDW account and trying out some dividends.
$690 - TD US Index - currency neutral (book value $900) setup by my dad 10 years ago, haven't touched it.

Wife RRSP: $4.9K RRSP Savings account (doing nothing, wants it moved over to TD and put to better use, suggestions?)

My TFSA - $2800 PC Financial - going to be used to payback my pension as I am just finishing up 8.5 months of parental leave.

Wife TFSA - $2400 PC financial - setup for our girls @ $300/month. Plan on moving this over to TD and setting up a similar Couch potato portfolio to our spousal RRSP. We decided against an RESP because we want to have this money available for them for whatever comes up (braces, weddings, school, house downpayment, etc). I am open to convincing of an RESP though.

*Liabilities*:
My LOC: $12.8K paying off @ $1500/month - these were costs associated with our recent move as we bought a new house and we went a little crazy with some fun purchases, we just want to pay it off ASAP.

Mortgage: $146K @ 2.44%, 4.5 yrs left of 5 yr term. pymnts are $1228/month. When our LOC is paid off, we plan on paying that $1500 per month on our mortgage (20% prepayment privelage). I plan to be mortgage free within 6 years. Even better if I can do it before my term is up.

*Notes*:
We have a household budget setup through a combination of mint.com and my Wife really likes using the Gail Vaz-Oxlade jar system for groceries and other things. We have fine tuned our system over the last 3 years and aside from our move throwing us off a bit, we are quite content with how it is now.

When the mortgage is paid off, I plan on taking the $900 or so from the payment as well as the $1500 extra and kicking our investment portfolio into overdrive.

We could potentially move every 4 years or so, ending up back in Victoria for instance could double the cost of a comparable house (in NS now). Having our current mortgage paid off will help greatly in that area.

My Wife's income is not guaranteed, she could receive it until 65 or until the insurance company decides to cease paying her for whatever reason. This should not happen as she cannot work in her current state but it is somewhat unsettling to know it could disappear.

I think that is pretty much it, I would appreciate others thoughts on our situation.


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

Congrats on taking control of your financial house. Have you read many of the existing threads here at CMF? There are hundreds of threads here and I would encourage you to search and check through them for nuggets of info that will be helpful to you.

Anyway, I don't see anything in your post about an emergency savings plan. What is your plan for this? Do you have money saved to allow your household to survive for 6-12 months unaided if one or both becomes unemployed? I always recommend that this type of savings plan take priority above all else.


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## I'm Howard (Oct 13, 2010)

Almost impossible to do fine planning when with the Military because of the possibility of being transferred and associated housing costs.

Personally, I would take a hard look at Owning versus Renting due to the possibilty of moves, it may be cost effective to rent and to use the savings to ramp up your programme.?

Military Pay is not the best in the world so to plan for a comfortable retirement is difficult, but you are at least planning and you deserve kudos for that.


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## Brownstein (Jan 26, 2011)

I have been scouring this forum for the last few weeks, picking up what I can. 

We don't have an emergency savings plan. I agree that it would be great to have one. My job is secure and my Wife's income for the time being is not going anywhere so I think once the LOC is paid we will build up an emerg savings before blasting away at the mortgage.

We are staying in the housing market for sure, I have owned since 2003 and have made huge returns on the various houses I have owned and subsequently sold due to being transferred (we were very bad with money early on and used profits from houses to pay off debt). The military covers all costs associated with move, everything from the movers and moving van to real estate commissions and property inspections, EVERYTHING. realtor commissions on my last place was somewhere in the neighbourhood of $12K that I did not have to pay - these are all non-taxable benefits as well.

If I have $300K in equity built up before I move I will be comfortable buying a place in the $500K range in Victoria (for example). Plus, I would receive an extra ~$900 or so per month for cost of living allowances in Victoria.

As for the pay, there are definitely higher paying jobs out there but the experiences you live are hard to put a number on. I couldn't really imagine doing anything else. There are other benefits that most people don't realize either such as full medical/dental, full fitness centres, and numerous free activities and events held on the bases across Canada.

Edit: Just wanted to add that I realize it was just good timing to make what I did on real estate and I do not expect those sort of gains in the future, I will be happy to break even.


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## I'm Howard (Oct 13, 2010)

I did not realise all those costs were covered, plus C.O.A, but don't expect much from RE going foreward as we head back towards 10% Mortgages.

We have a friend who is a Base Commander, He is getting MBA courtesy Canadian Tax Payer.


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## marina628 (Dec 14, 2010)

My brother spent 4 years in Afghanistan so I have no problems with my tax dollars going to support the military.He retired in 2007 after 31 years in service and now works full time security out in Alberta for an Oil Company.Too bad we could not send all the people who abuse the welfare to Afghanistan for a few months.I have a feeling they would get their asses out there and find a job when they got back home.

My brother also owned all through his career but spent most of his time in Trenton in later years.He sold in his last couple years as he was 8 months in Afghanistan and only 4 months home.

As for your wife's disability ,I collected disability for 15 years then negotiated a lump sum tax free settlement .It was a win/win for both of us. My adjuster told me they had a cap on what they would pay regardless of the savings so I refused my first offer in 2002 and and waited 5 years then got the same offer in 2007 which I could afford to take.

The only thing I think you should consider is the RESP .


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## m3s (Apr 3, 2010)

Brownstein said:


> As for the pay, there are definitely higher paying jobs out there but the experiences you live are hard to put a number on. I couldn't really imagine doing anything else. There are other benefits that most people don't realize either such as full medical/dental, full fitness centres, and numerous free activities and events held on the bases across Canada.
> 
> Edit: Just wanted to add that I realize it was just good timing to make what I did on real estate and I do not expect those sort of gains in the future, I will be happy to break even.



+1

There are way too many mis conceptions out there about the Canadian military as seen in this thread. People watch too much Hollywood movies and seem to jump to conclusions

Besides all RE expenses being paid, you also have home equity protection, so if the market tanks the downside is covered to an extent.. I would just reevaluate the situation when you move but I doubt renting in Victoria is cheap either. The military is a great place to work if you can hack it, and I don't just mean infantry. There are lots of great jobs if you can think on your feet and handle the pressure. I can't imagine doing anything else myself, and I'll happily take my mediocre salary over a higher one in the GTA

Personally I don't see any need to have an emergency fund either. If the Liberals decide to slash back again they still have to train me for civilian employment, and I'm also working on a paid MBA. I just keep a LOC available for emergencies

Moving from the garbage funds to the index funds is your best move imo, and the only advice I offer to co workers. I would also suggest tracking your net worth as moving complicates things. That really cleared up the picture for me and let me know what track I was on


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## Brownstein (Jan 26, 2011)

Thanks mode, my garbage fund is the CIBC managed growth portfolio, I will await everyone's thoughts on that one but as far as I am concerned it is just a high fee MF that has not performed very well. I do not predict its performance to surpass it's fees at this point but what do you all think? Is the couch potato the better way to go?

Ps. I am aircrew but don't hold it against me mode.


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## I'm Howard (Oct 13, 2010)

Long Term, it is hard to beat MDY, the U.S Midcap Index, it seems to beat anything I compare it to.

RBC Pecious Metals, 10% of holdings, this is one Fund I gladly pay the MER, they earn it.

An aside, being married to an Air Force Brat, those constant moves do have a long term effect, especially when it ccomes to wanting roots and forming long term relationships.

Wife's Dad retired, Demon Squadron, worked with the Corps until He was almost 75.


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## m3s (Apr 3, 2010)

Brownstein said:


> Thanks mode, my garbage fund is the CIBC managed growth portfolio, I will await everyone's thoughts on that one but as far as I am concerned it is just a high fee MF that has not performed very well. I do not predict its performance to surpass it's fees at this point but what do you all think? Is the couch potato the better way to go?
> 
> Ps. I am aircrew but don't hold it against me mode.


I think the general consensus on this forum is that couch potato > MF in most cases. Paying a % based fee is fine at first but as your portfolio grows, lower % fee makes a difference. They take that fee whether the market is good or bad. If anyone asks I recommend Canadian Capitalist's sleepy portfolio, although with a pension you may not need 25% bonds as an anchor imo

Anyways what you invest in is minor details besides being diversified. As long as you are saving money (net worth growing) you are on the right track imo. Make a couch potato and forget, unless you enjoy tracking stocks. I wouldn't even rush to pay off the mortgage myself with such a dirt low rate, I would instead put that extra money towards TFSA or RESP (then again if your kids follow your footsteps they may have paid education)

I'm aircrew as well btw




I'm Howard said:


> An aside, being married to an Air Force Brat, those constant moves do have a long term effect, especially when it ccomes to wanting roots and forming long term relationships.
> 
> Wife's Dad retired, Demon Squadron, worked with the Corps until He was almost 75.



Air Force is great when you're young and like I said it's not for everyone. I can get a 40% DB when I'm 37 so I think your first post couldn't be further from the truth. Of course everybody thinks they are underpaid and if you say so to my face I will not argue, so it doesn't really matter who you know. Things most certainly have improved since your father-in-law's time, just like many work industries I would think. There is a seriously effort now to mitigate the strain on families, but of course this is the downside for those who don't want to see the world, be it nothing to do with retirement planning


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