I saw this story in the news today and had to create an account to share it with all of you:
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/debt-doubts-cast-a-shadow-for-this-professional-couple-with-five-kids/article22496585/Its not just the situation that they are in, its also the "professional" advice that they are given that is out to lunch.
here is a breakdown of their budget:
Client Situation:
The people: Eric, 41, Ilsa, 39, and their five children.
The problem: Can they afford the lifestyle they’ve chosen and the $1-million price tag to build a new home?
The plan: Either they run up a big deficit over the years or Eric earns more money by working a second day a week in the clinic. Eric gets some insurance right away.
The payoff: A road map to a stable and secure financial plan.
Monthly net income: $25,000
Assets: Cash in bank $6,000; his RRSP $180,000; residential building lot $1.1-million. Total: $1,286,000
Monthly disbursements: Mortgage $3,800; property tax (both properties) $1,000; utilities $490; insurance $90; maintenance, garden $190; transportation $800; groceries $2,000; clothing $520; children’s activities $1,000; tuition $5,400; summer camp $600; child care $2,800; gifts, charitable $320; vacation, travel $2,000; dining, entertainment $200; sports, hobbies $200; miscellaneous (furniture, toys) $400; health insurance $50; cellphones $220; telecom, Internet $80; RRSP $3,000; professional associations $500. Total: $25,660.
Liabilities: Mortgage $800,000 at 2.6 per cent