Case Study: Overall plans and Ed goals

[jmomcc]

I basically want our plan critiqued. We are just now, really thinking about our long term goals.

Life Situation: Myself and my wife. I'm 33, she is 29. We live in Ontario.

Gross Salary/Wages: 40k for my wife

Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance: None

Other Ordinary Income: 40k for me - I'm self employed currently

Taxes: She has already paid taxes - going by a tax calculator it would come to about $6k for last year. I will owe roughly $9.5k in a lump sum and after this year I will pay quarterly if I remain self employed.

Current expenses: Rent (incl utilities) - $900; Groceries - $500; entertainment incl eating out - $400; Gas - $160; Dog - $150; internet - $50; Phone - $65 (I use speakout and only pay around $15 a month.) misc - $150

Total: $2375 and I'm going to add another $500 because I probably went low on some of those $2875

Expected 2017 expenses: Dog surgery - $4k; Wife's braces - $4k; Trip for wedding - $2k.

Assets: Car - 2011 Corolla bought for cash 2 years ago ($11k at the time) - it has 135000 km on it and is in pretty good nick

Liabilities: No debts
 
Savings She has about 30k in her checking. I have 30k in mine (accounting for money going to the tax man) and we have 60k in a joint run of the mill savings account. 120k total.

Specific Question(s):

Basically, my wife and I could be in worse shape but we could also be in better. She is naturally frugal and I could have saved ALOT more in my twenties when I was working overseas in Korea. I had friends who saved 20k a year there whereas I came to canada with around 30k after 9 years which was less than ideal. Most of our savings are wedding gifts. I have got a lot better but now we have to really kick it into gear.

We played around with a compound interest calculator and realized that if we can save at 50% of our net income (roughly 30k), for 5 years and then after that 50k a year for 15 years assuming that would be 50% of our combined income, we would have roughly 1.7 million in the bank. firecalc gives us a 94% chance at a 4% withdrawal rate. We will go with a TD E Series Canadian Couch Potato portfolio.

Does this seem like a realistic plan?

We don't have any plans to have kids and we would rent until then. We would rent because we live in southern ontario and houses are god damn expensive. We also like living in the city. If there is some kind of housing crash, we might buy (although our portfolio would also prob take a hit) but it is not a priority. We would buy a house somewhere cheaper when we retire - or just keep renting.

The main question is this however. We are assuming a jump in salary. For my wife that is true. She just finished her first contract and her next gig should pay closer to $50k and she will progress from there.


For me not so much. I'm a technical writer and I have a graduate certificate (massive waste of money) but I struggled to make 40k last year and most of that earning was because of the favorable exchange rate (I worked through upwork). Also, my clients could fall off at any time... and I don't like the work. It's not that it is boring.. I can handle boring. I miss being in a team and I want to do things rather than document them.

I'm considering going back to school for 3 years through a local advanced diploma in network systems and security - with one year paid coop. It would cost around 20k total for 3 years. That is a lot of money, especially as it essentially puts us back a year in our plan. However, I think it is more likely I could have a higher paid job and I would get paid for one year of co op.

Do you think it is worth it to go back to school or is the cost to high? What do you think of our plan in general?


Edit: We will also have pretty decent inheritances coming our way but I didn't count that or pension as part of the calculation-

[Laura33]

I'm considering going back to school for 3 years through a local advanced diploma in network systems and security - with one year paid coop. It would cost around 20k total for 3 years. That is a lot of money, especially as it essentially puts us back a year in our plan. However, I think it is more likely I could have a higher paid job and I would get paid for one year of co op.

Do you think it is worth it to go back to school or is the cost to high? What do you think of our plan in general?

What's the basis for the "thinking"? 

$20K is an awesome investment if it is going to significantly improve your salary, and if the field is one in which you can happily work for the next X years.  But a lot of people spend a lot of money on degrees that they "think" will make them more marketable in a chosen field and then graduate and find out, eh, not so much.  So I'd do more research first -- what's your target job, how many companies are actively hiring for that job in your target market, what are typical starting salaries and subsequent raises, how long will it take you to make back both the cost of the degree and the lost $40K from the years you weren't working, etc.  If that research allows you to replace the bolded text with "I am confident that the degree will get me a stable and significantly higher-paid job," I'd say go for it -- the short-term hit will more than pay for itself in the end. 

But I'd also suggest tightening up the budget for those school years, though, so you can live comfortably on just her salary -- it's one thing to take $20K out of savings to pay for your school; it's another to take out another $20K to cover living expenses for those years when you're not getting paid.

[jmomcc]

It seems to be an in demand job and growing. You are right, though. I need to do a lot more research.

[Laura33]

It seems to be an in demand job and growing. You are right, though. I need to do a lot more research.

And just to be clear, I didn't mean that in a snotty, "wth are you thinking" way -- I meant that as "do some more research to see if you are right."  :-)

[jmomcc]

It seems to be an in demand job and growing. You are right, though. I need to do a lot more research.

And just to be clear, I didn't mean that in a snotty, "wth are you thinking" way -- I meant that as "do some more research to see if you are right."  :-)

haha one of my new year's resolutions is to take things people say at face value, so I assumed you were being nice and helpful :) The great thing about this resolution is that it almost always right and causes very little stress.

One of my weaknesses is not researching and just asking for answers. I needed the reminder, so thanks.