Been lurking for a while.
Currently there is a $6,743 per year hole between our income and bills. ($561.92 per mo). Last year I made a base salary of $119k and this year my salary declined to $86k from taking a new job. The new job is within walking distance so I lost a 2-hour daily commute.When we financed our mortgages it was under our assumed previous income so we went fairly aggressive on the payments to get out of debt sooner. The idea was that once we paid of one mortgage we would redirect the same payment amount to pay down the next one.
The Stats:
Life Situation: Age 32, Married, Three kids 2, 4, 6, from Canada and spouse is staying at home.
Gross Salary/Wages: $86,274 Single income
Individual amounts of each Pre-tax deduction: CCP, EI, Work ins. included with taxes
Other Ordinary Income: Child Credit Benefit(CCB) $711x12= $8,532
Qualified Dividends & Long Term Capital Gains: Currently averaging 6.53% yield ($8,752 ish) and gains of $12,814 ish less loan interest of -$1,550 - $2,218 = $17,798
Rental Income, Actual Expenses, and Depreciation: House 1 Rent = $1,300*12= $15,600, House 2 Rent = $1,100*12=$13,200 Total Rent $28,800 Less exp $5,210 Tax less interest $8,040 nets $15,550
Both homes are in good repair so maintenance is minimal. Currently we have not been depreciating the homes.
Adjusted Gross Income: $86,274+$17,798+$15,550 = $119,622 (CCB Is not taxable)
Taxes: Federal, Provincial (included pretax deductions from above here): 32.48% or $38,853
Subtotal: $89,301
Current expenses (Budgeted):
House 1 $ 16,847 $ 1,403.96
House 2 $ 9,987 $ 832.26
House 3 $ 0 $ 0
Home $ 24,509 $ 2,042.39
Mort Subt $ 51,343 $ 4,278.60
H Tax $ 11,520 $ 960.00
H Ins x 4 $ 2,371 $ 197.58
C Ins x 2 $ 1,380 $ 115.00
Gas $ 600 $ 50.00
Pension $ 8,694 $ 724.53
Food $ 4,200 $ 350.00
Phone $ 900 $ 75.00
Internet $ 924 $ 77.00
Debt Pmt $ 4,651 $ 387.55
Electricity $ 1,236 $ 103.00
Nat. Gas $1,608 $134.00
Water $ 1,200 $ 100.00
Netflix $ 168 $ 13.99
Shopping $ 2,016 $ 168.00
Eating out $ 600 $ 50.00
Kids Activ. $ 2,412 $ 201.00
Misc $ 221 $ 18.42
$ 96,044 $ 8,003.68
We average very close to this number with the categories adjusting slightly each month. (April was $7,074 but March was $9,332 as a result of five weekly mortgage payments instead of four; expenses have been pretty steady for last two years). On the pension my employer matches another $6,955.49 per year but money there is locked up til 2036. Fund averages 6.2% return per year.
For mortgage payments:
House Princ Int Tax Act WK Tot
Home 2.80% $ 311.72 $ 159.60 $ 100.50 $ 571.82
House 1 2.75% $ 104.39 $ 87.67 $ 53.72 $ 245.78
House 2 2.59% $ 257.04 $ 66.95 $ 46.49 $ 370.48
Owe $295,796.27 on home paid off in 14.8 yrs, $165,566.25 on House 1 paid off in 22.2 yrs and $133,907.58 on House 2 paid off in 8.94 yrs. They all can be renegotiated in 2021.
Expected ER expenses: None, Canadian
Assets:
Home: Paid $362,500
House 1: Paid $174,900
House 2: Paid $235,000
House 3: Paid $22,000
Bank Acc: $59.67 $1318.27+$24,620.00+1,536.49=$27,474.76 from Margin Acc/TFSA transfer + Did some landscaping last weekend $4,049.81
Pension: $51,585.46$52,079.51
Margin account: $25,087.67 net equity$3,999.67 - Options contracts -expire between now and Jan 2019 -No Leverage
TFSA: $1,916.25$306.24
RRSP: $66,107.69$65,535.38
Truck: $5,000
Van: $3,600
Trailers/Equipment: $10,000
Subtotal: $957,756.74$962,395.56 $ 938,970.61
Liabilities:
Home: $ 295,769.27$ 295,455.99
House 1: $ 165,566.25$ 165,461.12
House 2: $ 133,907.58$ 133,649.56
House 3: $ 0
LOC 6.7% int only pmt: $16,100 $16,300 $0.00
RRSP Loan 2.7%: $56,770.54 $56,509.06 PMT of $387.55 / mo 15 yr term
Credit Card: $2,122.00 $2,423.29 $826.29 (Clear this balance every month)
Family Loan: $5,000 (Pay back whenever possible no interest) $0.00
Subtotal: $674,974.16 $674,799.02 $651,902.02
Net Worth: $ 282,782.58$287,596.54 $287,068.59
Discussed Side Hustles:
• Side Business – Have some equipment 1-2 weekends per month for 5 months @ $500 per day = $5,000 potential
• Exchange Hosting: $500 per mo x 10 mo = $5,000 potential
• Finish Basement at House 2, Cost estimated at $12,300: Increase rent $400 per mo = $4,800 potential
• Demo house # 3 and build new – Cost estimated at $280k, would tie up spare time for 8 months, and could bring in approximately $2,400 in rent / mo
• Renovate house # 3 – Cost estimated at about $85k, would tie up most spare time for 3 months, Could bring in approximately $1,000 in rent / mo
Specific Question(s):
1. Any general advice on how to approach our finances differently?
2. Best way to tackle our debt to hit goal: Retire in ten years (set at 31)? Re-financing debt?
3. In nine years the first mortgage is paid off, should we switch rent towards investing or debt?
4. I have $55k ish in TFSA room and $27k in spousal RRSP room. Theoretically I should be able to get a similar term to the RRSP loan. Should I take out another loan and invest it?
5. Any thoughts/discussion on side projects or budget are welcome.
6. Can we retire in 10 years?