Living Expenses
Not to clutter up the car thread anymore...
Struggle, difficult, worry, you can pick the antonym.
FTR I spend a fair amount of time on my finances and expenses. The family analyses they print in the paper and various magazines are some of my favourite reads. I think it is always good to make comparisons. I think the choices we make on how to live are largely personal but I also see lots of cases where people are over spending in areas where small changes that really don't affect quality of life, make a big difference in our annual expenses.
eg. when I totalled it up and found I was spending over $1100 a year just on booze, I decided to cut way back on that. I've got it down to about $450, which still seems insanely high. [this is where DrTyore snorts and thinks that what I spend a month]
I would add to Big Mike that anyone not contributing the max to RESPs for their kids is foolish. The gov't is giving away free money at 20%, which is the best return of your money you will ever get. How can you turn down free money? I would sacrifice anything in order to have enough to contribute to a RESP in order to get that free money. It is always easier to do it in small amounts early, rather than try and catch up late, plus you lose the effect of time and compounding, letting those small amounts grow into large amounts.
Also btw, I hope everyone has gone down to their bank and opened a TFSA (Tax free savings account). There is no reason not to. You have to put after tax money into the bank, why would you unnecessarily pay taxes again on the interest that money makes? If you struggle to contribute to RRSPs and have in the past find yourself having to withdraw from your RRSPs for rainy day things, then the TFSA is for you. There is no penalty to withdraw, unlike for RRSPs, and it never burns your contribution room, unlike RRSPs. Again, due to the penalties, I would sacrifice anything else before making a withdrawal from a RRSP. Because any interest earned in a TFSA is tax free, you can invest it the most conservative way possible and not have to worry about the heavy tax due on interest. It is almost perfect for these uncertain economic times. Ok even on the $5000 contribution you can make starting Jan. 1, you are not going to get rich but a dollar in my pocket is a hell of a lot better than .60 in my pocket and .40 in the governments.
Kristy_Sea wrote: »FTR, I never said 'struggled'
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Originally Posted by kristy
I can tell you that 100k/yr is not really enough
The point is that we often worried about money.
Struggle, difficult, worry, you can pick the antonym.
Kristy_Sea wrote: »off the top of my head:
mortgage+property tax: 1300
ok forgot property tax, so another $200
1100 on a 125k mortgage and you are doing something wrong, my numbers are accurate for a 165k mortgage, for a 125k mortgage @5.25% the monthly payments are $744
car: 250
insurance: car=300 (one accident, over 5 years old)
Insane, you've seen my cars, I'm paying $125 for BOTH, that's with collision
house: 55
rainy day: 200..how the hell do you EVER get to three months expenses saving 50 bucks a month?
By saving it, instead of spending it? Whatever, however you get there, eventually as Big Mike says, you get there and then this expense goes away.
food: 800
Gas:320
Dining out: 200 (100!?!..you take two kids and sit down somewhere once a month+ pizzax2 for that?) Pizza x2 = $30, you can go to Swiss Chalet and spend over $70 on one meal? Also try the Fabulous 50s Diner on 24. I've never been to a place where a kids meal cost more than $6, including drinks and dessert. Try also East Side Mario's, kids eat free on Sun.
800+200 = $1000 a month on food, again, that's insane and you don't eat meat.
Cable 60 +Phone 45 +internet 55
Acanac.net, that's enough said on your internet
Utilities gas 210 +hydro 80
Gas, way high, you've seen my house, it's $125 on equal billing, and I have a gas dryer and I get a credit back at the end of the year.
Vacations: 500/yr (2 weeks at the cottage)
outings: 12[(10+10+20+20adm)+(gas and food..40?)]
Clothes: $150
Your clothes are probably a lot higher. I'm amazed how pairs of shoes the kid goes through in a year.
add ons
personal $400 ($50/week x2 adults)
Woah! $4800 a year on money you can't even account for.
birthdays, hollidays and xmas 3k/year
household maintenance 100/mos
extra curricular, my daughter was taking riding lessons, karate and played softball 2400/yr
That's a choice. Obviously you can't do riding lessons through the city but they have tons of other things.
cell phone $40/month
If it's for emergencies then get a PAYG $10
my son is in karate and hockey and cub scouts about 700/yr
I'm going to use your numbers for resp/rrsp since my ex did all that stuff. (6600)
I'm at $62940 and we haven't talked about ripped sheets, new roofs (rainy day?), school supplies, OIL CHANGES, snow tires...and about a million other things.
Meh, I put the total cost of a car at $6k a year, you are at about 10k, but you have 3k in car payments and pay a stupid amount for insurance.
we're still ignoring all the random that costs money
FTR I spend a fair amount of time on my finances and expenses. The family analyses they print in the paper and various magazines are some of my favourite reads. I think it is always good to make comparisons. I think the choices we make on how to live are largely personal but I also see lots of cases where people are over spending in areas where small changes that really don't affect quality of life, make a big difference in our annual expenses.
eg. when I totalled it up and found I was spending over $1100 a year just on booze, I decided to cut way back on that. I've got it down to about $450, which still seems insanely high. [this is where DrTyore snorts and thinks that what I spend a month]
I would add to Big Mike that anyone not contributing the max to RESPs for their kids is foolish. The gov't is giving away free money at 20%, which is the best return of your money you will ever get. How can you turn down free money? I would sacrifice anything in order to have enough to contribute to a RESP in order to get that free money. It is always easier to do it in small amounts early, rather than try and catch up late, plus you lose the effect of time and compounding, letting those small amounts grow into large amounts.
Also btw, I hope everyone has gone down to their bank and opened a TFSA (Tax free savings account). There is no reason not to. You have to put after tax money into the bank, why would you unnecessarily pay taxes again on the interest that money makes? If you struggle to contribute to RRSPs and have in the past find yourself having to withdraw from your RRSPs for rainy day things, then the TFSA is for you. There is no penalty to withdraw, unlike for RRSPs, and it never burns your contribution room, unlike RRSPs. Again, due to the penalties, I would sacrifice anything else before making a withdrawal from a RRSP. Because any interest earned in a TFSA is tax free, you can invest it the most conservative way possible and not have to worry about the heavy tax due on interest. It is almost perfect for these uncertain economic times. Ok even on the $5000 contribution you can make starting Jan. 1, you are not going to get rich but a dollar in my pocket is a hell of a lot better than .60 in my pocket and .40 in the governments.
Comments
That said, I guess it's all a matter of opinion on what's reasonable and what's extravagant. IMO, you need to eat, but you don't need to eat out. $800/month for groceries sounds great, but we've been able to feed 5 kids well on ~$500/month until this year when we bumped it to $700/month (since ours kids eat way more than others there age, and we now have a teenager). Also, careful planning and research can really help to make your money go further (drive-ins are way cheaper than theaters, season passes purchased early are often comparable to single admissions and get you in all year, etc.). Anyway, I have yet to clear 6 figures, but my single income has covered what we consider important (both needs and wants) for my wife and 5 kids, including a 200k mortgage and having them all enrolled in a private school (until last year).
On a serious note (regardless of what you think is reasonable), I'd strongly recommend financial counseling (not RRSP type, but budgeting, etc.) for anyone who does have difficulty and lives month-to-month. Speaking from personal experience, it helped a lot, even though I always considered myself pretty smart and disciplined with money (I was a wee bit wrong
yah my RESPs have done wonders; with the 20% add on, I am probably still down 20% on top of that due to these great markets. Bearer coupons are a good way to save for your kids education.
I'm glad I didn't max out the RESPs over the last two years.
Personally I've divided it up 1/3 Money market, 1/3 bond, 1/3 Dividend Income (which is more conservative than a straight dividend fund). I rebalance every Christmas, which means selling some of the money market, which loses 0% and is up 2.82% on the year, and bond fund, up 2.8% and reinvesting it into the DI fund, which is down about 27%. Even with the dividend fund down, my risk is very low and balanced out.
my expenses are reasonable, I called about 10 different places for insurance, we needed a car, my thermostat was set at 20...and my bills were what they were. Personal included hair cuts, I NEVER clothes shopped for myself, I wore what I got for xmas/birthdays.. we had a few minor diet issues that cost a little more to grocery shop for (allergies etc) and one cell phone in a family of two adults and a pre-teen is pretty fair.
And most importantly, I had children because I felt that I was able to give them a decent life...if your little girl loves horses and you don't get her some access- you're a bad parent. Plain and simple.
If you find money to play poker and go out- but don't make sure your kids hit a museum or play or movie once a month, you're a bad parent.
If your children's enjoyment of their lives is the first place you cut....you guessed it..you are a bad parent.
aside from the absolute necessities (note: not the 'reasonable' list I've provided) it is kid's first...
if it isn't -you shouldn't have had kids at all
Daughter must be 18.
1) Put $5K into a stock TSFA ASAP, e.g., E*TRADE or TD e-Funds.
2) When the stock appreciates rapidly, sell the shares tax-free within the TSFA. Then withdraw all the funds out of the TSFA by December 2009, e.g., hopefully >$10K.
3) On Monday, January 4, 2010, re-contribute the full ~$10K withdrawal along with the usual $5K back into the stock TSFA.
4) Rinse and repeat
borrow $100,000 at 3.5%
invest all into BMO
BMO pays 9% in distributions a year.
end result is 5.5% return. That is assuming there is no appreciaton in the stock price. I would expect the Banks to increase about 10% a year as well from this point.
The distribution has never been cut in the history of the bank 150 years or so.
Best part is that interest rates should still be declining over the short term.
Did you just sleep through 2008 or what? Anyone who employed that strategy is now living in a cardboard box on the street..
Also.. Interest rates should still be declining? When you are at basically 0, how much lower do you think they're going to go? They're not to be negative..
In 2008 you would have to be an idiot to implore this startegies. A distribution of 4 to 5% with borrowing rates over 6% is a sure way to lose a ton of money. You might as well invest in CSBs. Good thing I was sleeping through 08 and taking advantage of the opportunity that has come up not in 09.
1) Interest rates are far from 0 in Canada and will come down more.
2) The banks have a license to print money in Canada
3) Huge placements in the banks over the past couple months have produced a huge bottom on these stocks and down side risk is minimal compared to the upside potential.
I will enjoy my box in 2009.
1) The Overnight rate is 2.25%.. At best, you are looking at 1% cut max. How many more cuts do you think there are left?
2) That license to print money stems from the 2.25% vs 3.5% Prime spread. Banks then make that 1.25% arb by getting as much money out to the people as possible. More money to the people means inflation. Once inflation goes outside the 2% target, the BoC will for forced to start RAISING rates.
3) It's either a huge bottom, a huge dead cat bounce or a huge flat-line.. you only know that by looking in the past, not the future.
Anyway, good luck with gambling your future on the idea that you are smarter than wallstreet. Don't you have children? Shouldn't you be a little more risk-adverse?
1) 1% is about accurate. I do not have a problem with another 1%
2) Banks make money on all kinds of spreads and services with the Prime spread being a part of that. The new TFSA will only add more services that they can cash in on. Inflation is not on any radar in the next 6 months. The BoC has a long way to go to catch up to the 9% dividend.
3) There is always a chance for stocks to decrease in price and it can happen but I feel that this is close to bottom so this strategy allows you to get 5% and a lot of growth with minimum downside rick.
4) this is far from gambling and well I am smarter then wall street. The problemis too many people are like fish and believe everything wall street will feed you. I heard the doom and gloom of gold 5 to 7 years ago. Nice call wall street.
I do have a 5 week year old daughter and my investments are pretty conservative.
Check back in 12 months and see how I did.
Don't get me wrong this is not without risk but over the next 12 months my call is 9% in dividends and 10 to 25% in stock appreciation so I will take it.
However re Blondefish I think it would be extremely damaging to invest in something that has the potential to drop in value inside your TFSA. You never get more than $5k in added funds per year and if the value of your investment drops inside the TFSA you will be trying to recover your losses. Losses are not taxable, you want investments inside the TFSA that will not drop in value and produce income that is taxable at the highest rate.
Again I think the TFSA has dual purposes.
1. You want investments that grow with time, produce interest income, and have virtually zero chance of loss. In the short term you won't get rich or be saving a lot on your taxes. In the long term as the effect of compounding kicks in, your TFSA will be a powerful vehicle for avoiding the tax man. Also as retirement looms, there is no requirement to withdraw the money on a schedule, as you are forced to do when you convert your RRSP to a RRIF.
2. In the short term your TFSA is the perfect place for your rainy day emergency fund money. If you have invested in conservative, money market type instruments or high interest savings accounts, you can access your money quickly, never have to worry about needing to access that money at a loss and yet pay no penalty for withdrawing the money, as you would if you were withdrawing early from your RRSP. Once you have made your withdrawal, you never lose that contribution room and can always put the money back again once your rainy day passes. However, with RRSPs, once the money is withdrawn, you lose that contribution room forever.
I have opened two TFSA's - one with PC and one with ING. I will post here Feb. 1 with the 1st month's returns. Since it is just the annual interest rate*$5000/12 I could just work it out but I'm lazy. Note that PC will also make an annual bonus interest payment as well that for me will come in on Jan. 1, 2010, so it is not the full return. I'm not looking to get rich off these accounts early on but as I said before it is a great place for your emergency fund money or to save for a major expense like a car purchase or home purchase, renovations etc. In the long term I will happily thumb my nose at the taxman as the tax free interest payments roll in.
blah blah, the rosy side is rosy.. The real question is if you are comfortable with being wrong and down abother 30-40%.
yes, I agree with the sentiments of herd menality.. but in previous downturns, the savings rate of the average joe was positive.. like say 5-10%.. today in the US it's like -3%.. meaning that consumer spending can't just bounce back.. we're going to have to wait out people learning to save again...
IE.. In todays world, you need cash to buy things... Answer me: Where is the money coming from? It's not from consumers anymore.. thats a huge shift..
and I already had an ING account. The PC is higher so when I decided to multi-account, I went there.
I believe PC is offering a higher rate to try and scoop a large portion of the TFSA business. I doubt it will last long and the rate will drop back to match all their other accounts. However, in general they have had a 3-5 point advantage over ING, which is why long term, most of my business will be with them.
I haven't found anything higher than PCF's 3.78% in the first year, and 3.8% after. Plus it is so convenient to withdraw in case you need to compared to trying to redeem a long-term GIC early or sell a bond in a brokerage TFSA.
I just opened a PCF TFSA account online and it took only seconds to get an account number and transfer $5K. I don't see a way to open one up for my wife online so it looks like I'll have to take her shopping to Superstore soon.
fyp
Right.. but instead of focusing on the tax free SAVINGS account aspect of it.. Think of your TFSA as an RRSP extension that you aren't going to be touching..
Of course it depends on your particular financial situation and need for liquidity, but I dont think locking in 3% (5000 * 0.03 is only $150 bucks a year) is an effective use of 5k of capital. Also remember that if you withdraw anything from a TFSA you have to wait until the next tax year to re-deposit the amount of withdrawl + the new 5k. So it doesn't behave like a chequing account or anything like that.
Counting your cat and pet rock as people is an effective technique for multi-accounting...now where is Fluffy's credit card - I need to do some shopping...
If, that in fact is HIS/HER real name.....
Milton Slim
qft!
PCF is 3.05 and ING bumped up to 3.00
ING $12.33
PC $12.07
Though curiously even though I requested the transfer before Jan.1, ING put the money in on Jan.1 so I got 31 days interest and PC didn't put the money in until Jan.2 for 30 days. So even though PC was supposed to be paying higher interest, I ended up with less money. I am guessing they planned it that way to appear to be better than ING, but knowing they would actually be paying less.
The difference between the two is that the TFSA is purchased in after-tax dollars while the RRSP is purchased in deferred-tax dollars. Since most people plan to be in a lower tax bracket when you withdraw from your RRSP, you would effectively be paying less tax with an RRSP.