Case Study: New Stache in Progress! Need advice / feedback

[VanStache]

OVERVIEW:

I currently work 60+ hours a week at a tech company. I want to get out of the rat race and start enjoying life a bit more, as my hours are a big problem. Really love the MMM blog, as I already agree with a lot of the principles and views of how little “things” mean. Once stepping stone would be to convince my wife of these lifestyle changes. I appreciate any help/advice you can give, so thanks in advance!

Status:  Married
Where: Canada Permanent Resident (US citizen but looking to get citizenship in Canada soon)
Age:  32
Dependents:  0 dependents


QUESTIONS:
* What type of lifestyle changes and/or advice on reducing total “expenses” do people have for Canada? I life in Vancouver, which is very expensive on average for Canada.
* What advice on starting Investments for someone living in Canada? Retirement plans? Where can I start?
* Any recommended blogs, books, etc. — especially for Canada.


INCOME/SAVINGS/INVESTMENTS
* Take Home Pay: $50,400 CAD (after taxes)
* Investments:  None
* Total Savings: $15,000 CAD in Savings account


ASSETS
* Car:  $2,500 (approx. value)
* Motorcycle:  $3,500 (approx. value)


DEBT
* Student Loans:  $21,000 USD (school was in US = $25,515 CAD)
* Rates average: 6.8% interest
* Original Loan:  $28,000 approx.
* Start date: October, 2010
* Averages Monthly Payment:  $500 CAD ($400 USD)
* Loan Time Period:  10 year plan (5 years remaining)


EXPENSES
* Student Loan Payment:  $500 CAD (min. Payment $207 USD)
* Apartment Rent:  $775
* Hydro:  $35
* Car Insurance:  $175
* Misc. Car Expenses:  $10
* Gas:  $80
* Internet/Cable:  $116
* Cell Phone:  $75
* Online Subscriptions:  $20
* Bank Fees:  $14.95 (checking)
* Groceries:  $400
* Household Expenses:  $20
* Clothing:  $20
* Dining Out / Alcohol:  $550
* Haircut:  $50

* Joint Savings per month:  $200
* Personal Savings per month:  $1,200


* TOTAL EXPENSES / per Month: $2,790.95
* TOTAL SAVINGS / per Month:  $1,400



LIFESTYLE CHANGES IN PROGRESS:

Transportation: Using bike to get around to work everyday
Savings:  Taking savings out of bank account first. Aiming to get $2,000 per month in personal savings

[Isriam]

cricketwireless.com will get you a phone with unlimited text/data (5gb 4g) for 35 a month.

kill your bank fees, go with ally.com and get .99% savings interest and checking with fully refundable atm fees.

your car insurance looks really high too.

[VanStache]

Thanks for the reply Isriam! Unfortunately I am living in Canada, so I do not have access to cricket wireless or  all.com. I will look into other similar options too.

[midweststache]

Are the below costs/liabilities/assets/income yours, combined with your fiancée's, or a combination of both? For instance, is your rent $775/month for just you? Will your fiancée move in with you after the wedding? How will marriage shift your costs? Given your financial outlook may shift markedly in the next few months (i.e. with marriage) it might be helpful to think about that as well. Below are my suggestions.

1. Put your loans in CAD, since that's what your income is in. It will better allow us to see how much debt you have in comparison to your salary.

2. You have a bike, a motorcycle, and a car? I would recommend selling the motorcycle and using the profit to pay toward your loans.

3. You're spending $950 on food. To be fair, this is my area of struggle too. Work on reducing your dining out to $200/month and your groceries to $300/month for starters.

4. Drop the cable. Shop for cheaper Internet.

5. Find a checking account without fees. I recommend CapitalOne360.

6. Start contributing to a company retirement plan or individual retirement plan. Do this ASAP (like, yesterday). If your company has any sort of match (I'm not familiar with RRSPs or TSPs in Canada), contribute at least that amount.

7. Why are you putting money in savings when your loans are at 6.8% interest? Are you saving for a down payment? For a replacement car? For your upcoming wedding? If you don't have a particular savings goal, I would recommend putting that money to debt.

[swick]

OVERVIEW:

I currently work 60+ hours a week at a tech company. I want to get out of the rat race and start enjoying life a bit more, as my hours are a big problem. Really love the MMM blog, as I already agree with a lot of the principles and views of how little “things” mean. Once stepping stone would be to convince my wife of these lifestyle changes. There are quite a few topics with some great advice on getting your spouse on board. A few to get you started:
http://forum.mrmoneymustache.com/ask-a-mustachian/any-recs-for-getting-my-spouse-on-board/

http://forum.mrmoneymustache.com/ask-a-mustachian/advice-for-getting-spouse-onboard

http://forum.mrmoneymustache.com/ask-a-mustachian/spouse-not-on-board-with-financial-independence



Status:  Married
Where: Canada Permanent Resident (US citizen but looking to get citizenship in Canada soon)
Age:  32
Dependents:  0 dependents


QUESTIONS:
* What type of lifestyle changes and/or advice on reducing total “expenses” do people have for Canada? I life in Vancouver, which is very expensive on average for Canada.
* What advice on starting Investments for someone living in Canada? Retirement plans? Where can I start? Canadian Couch Potato is the best primer for Canadian Index investing out there. http://canadiancouchpotato.com
* Any recommended blogs, books, etc. — especially for Canada. Zikoirs is a forum member who lives in Vancouver and lives very well and blogs about it. www.incomingassets.com


INCOME/SAVINGS/INVESTMENTS
* Gross Salary Wages: $70,000 CAD before taxes
* Take Home Pay: $50,400 CAD (after taxes)
* Investments:  None
* Total Savings: $20,000 CAD in Savings account


ASSETS
* Car:  $2,500 (approx. value)
* Motorcycle:  $3,500 (approx. value)


DEBT
* Student Loans:  $21,000 USD (school was in US)
* Rates average: 6.8% interest
* Original Loan:  $28,000 approx.
* Start date: October, 2010
* Averages Monthly Payment:  $500 CAD ($400 USD)
* Loan Time Period:  10 year plan (5 years remaining) <--- You need to really buckle down and pay off that debt, is there any chance of refinancing while you are still a US citizen? The interest rate is really hurting you.


EXPENSES
* Student Loan Payment:  $500 CAD (min. Payment $207 USD)
* Apartment Rent:  $775
* Hydro:  $35
* Car Insurance:  $175
* Misc. Car Expenses:  $10
* Gas:  $80
* Internet/Cable:  $116 <----cut cable until you SL debt is payed off!
* Cell Phone:  $75
* Online Subscriptions:  $20
* Bank Fees:  $14.95 (checking) <----You shouldn't have to pay bank fees - even in Canada. Consider moving to a different bank or an online option like Tangerine.
* Groceries:  $400
* Household Expenses:  $20
* Clothing:  $20
* Dining Out / Alcohol:  $550 <----cut down until you SL debt is payed off! This is low hanging fruit. There are TONS of free or low cost entertainment options in Vancouver. Are you eating out as a social activity or because you aren't meal planning properly? Figure it out and figure out alternatives. You are spending more on dining out and alcohol then you are on paying back your student loans
* Haircut:  $50

* Joint Savings:  $200
* Personal Savings:  $1,200


* TOTAL EXPENSES: $2,790.95
* TOTAL SAVINGS:  $1,400



LIFESTYLE CHANGES IN PROGRESS:

Transportation: Using bike to get around to work everyday <--- Awesome!
Savings:  Taking savings out of bank account first. Aiming to get $2,000 per month in personal savings
DiningOut/Alcohol: Now brewing own beer to reduce costs

[VanStache]

Hi Midwest,

Thanks for your reply. Here are my responses to what you listed out. Also, everything is just my expenses. The rent is what I pay only.

• That's a good idea. I'll update my loan amount in CAD with the current exchange rate now.
• Yes, I was thinking about selling the motorcycle as well. That's a tough one for me : ) , but debt comes first.
• Agreed, we're working out a budget.
• Cable is a bit of a pickle here in Canada, luckily my 3-year contract just ended so hopefully there's some other options
• I kept all my money in savings for two reasons:  (1) I do not know anything about investing, yet. (2) I wanted to make sure I have at least 6 months worth of savings as an emergency fun in case something happens with my job. I don't have any other assets and want to make sure I'm not left without any resources

[VanStache]

Something isn't adding up, because even with your overly spendy lifestyle ($550/month on dining and drinking out when you have a $21k loan?), your estimated expenses only add up to $33,480/year.  Where did the other nearly $17k/year go? The other $17k/year is listed in the personal and join savings, which then totals to the $50+ of actual take home pay.

Are you already living with your partner, or will you be able to reduce your portion of some of these costs when you move in together? Yes, we're living together already, those are just expenses out my own pocket.

Things that can immediately be reduced:

1)  Drinking and dining.  I know Vancouver is a great city for food/restaurants, but with your debt load spending $550/month is just ridiculous.  We budget $175/month for four people and I still feel that is extravagant.  Get the debt paid off and then you can think about treating yourself. Yes, I completely agree. And as food and craft beer enthusiasts this might be the hardest one. Time to stop complaining and start making some changes.

2)  Groceries.  Also extremely high for one person.   You can probably cut this in half with minimal effort.

3)  Cell phone.  Also seems very high.  One thing is that I work with web design, social media, etc. so a smartphone and good plan is a must for my career. I haven't been able to find a plan lower than $70 that works yet. Still on the search though.

6)  Bank fee.  Do Canadian banks not offer fee-free checking?  $15/month for the privilege of writing checks also seems ridiculously high to me. Most do not to my knowledge. Looking into online alternatives as others have mentioned here.

In terms of how to live cheaply in Vancouver, there are several awesome forum members who do this -- Zikoris and Jon Snow immediately come to mind.  Hopefully they will weigh in with local advice soon. Great! I will need to look them up!

[VanStache]

Thanks for the great links and advice Swick! Will definitely check out the MMM member that lives in Vancouver. My concern with the student loan is that it will cost an extra $5k+ with the canadian dollar being as long as it is. I was debating waiting to see if the dollar will go back up, then transferring everything into CAD to save that $5k+ and use it towards investing. Thoughts?

[VanStache]

Anyone have good recommendations for phone plans and home high speed internet in Vancouver, BC? Doesn't seem to be that many options besides Telus and Shaw.