Sorry this has turned into a novel… much thanks to anyone who actually reads it all and comments
Hi, I am a 32 year old Canadian, single. About 6 month ago I woke up to my crazy-ass consumer driven lifestyle realized I was overspending by much more than I earn. I consolidated all my debt in to one loan plus car loan and have been working on cutting spending and expenses. I discovered MMM about a month ago and started dreaming of retiring early. I am a long way off from that, but maybe it’s not completely out of reach?
Income:
Net about 5,700/month including regular wage and northern allowance.
Current expenses: 5371/month
I live in a high cost of living area, so comparing $$ to 'South' they might seem crazy
Monthly breakdown:
958 - Mortgage @ 3.2% - still owe about 186K. My house is a bit large for me (a double wide trailer – built 2008), but honestly when I was looking it was cheaper than any of the two bedroom houses I was looking at. I even looked at a single-wide that was older than my house but asking price was higher. I bought from an acquaintance that was looking to leave town quickly.
153 - House Insurance
200 - Property tax
74 - Municipal services (water/garbage)
470 - heat (This is averaged throughout the year - I have a programmable thermostat and at night temp is 15C, during day when no one is home 14C and when people are home evening weekends it's 18C. This is in an arctic climate -40 in winter is normal. (This cost has almost doubled since I moved into my house because of increased rates)
150 – Power
110 – Home phone/internet (Not a lot of options for internet, and no ‘unbundled’ internet basically it’s TV and Internet or home phone and internet, I chose home phone because reliability/speed of internet is better than cable or satellite can do).
14 – banking fees
65 – cell phone (no data, not really any other options of providers, unlike in the states)
456 – Stupid car loan @ 5%, but will be done in Aug 2015 – It is a jeep patriot, I do need 4x4 so feel it’s better than a truck
80 – Gas – this is down a lot from before because I started driving less – this is one tank of gas a month ($1.79/liter)
140 – Other Transportation costs – car insurance, registration, maintenance
963 –Loan @ 5.75% – guess my hair is on fire. This is the regular payment. It was a 5 year loan but I’ve already made a bunch of extra payments to work on getting it down, about 42K left.
200 – I’ve been putting this amount aside in an Tangerine saving account for home repairs/renovations. I’m not sure about this one, should I cut down on this and put it somewhere else (loans/RRSP)? I want to put a wood pellet stove in (would be about 6K), have lots of projects that would make the house nicer but not necessary (new flooring) and some that are going to be necessary soon (one of the tubs is cracking, I repaired with fiberglass kit but eventually will need to replace tub, I need to stain the deck)
200 – RRSP – Tangerine Funds. (Might not be the most optimal fund, but easiest because I can do it all online. )This is low, I’m not close to maxing it out, I have about 28K of contribution room
100 – RESP- for my nieces and nephews ( 5 of them total – I was hoping to up it to 125 for 25 each now that the baby is born)
450 - Travel – I know, my hair is on fire but I live in an isolated town, much of my family lives far away, I need to have this for my mental health - This is a lot lower than previous spending and I’m going to lay off the international travel until I can afford it. This is budgeted on two trips ‘south’ a year, as I can also clam two trips a year on my tax return.
100 – Emergency savings – I have about $1000 in a Tangerine account so far, currently building that a bit
10 – Clothing – again some might think that with my hair on fire that this should be 0 but I’m currently losing weight (30lbs in last 6 months, slowly but surely) I am setting this aside so that between this and selling my old clothing I will be able to keep myself in clothing that fits in the future.
125 – Gifts/stuff/hobbies – I know my hair is on fire but I budgeted this to pay for my hobbies and gifts – I’m trying reduce cost of gifts (ie homemade). I know that I should try to cut this down, but I tend to be pretty generous with gifts and am fighting the spending demons.
25 – Gym membership
300 – Food – I don’t eat out often anymore, but if I do it would be included in this, I’ve cut this a lot. This low for the cost of food in my area, I think.
8.00 – Netflix
20 – Charity – this is relatively lower than what I was spending before, I do donate my time and even with my hair on fire I think this is pretty reasonable, and tax deductible
Expected ER expenses: I expect my retirement cost to be significantly lower than current because I plan on moving to a lower cost of living area. I’m guessing 28K plus housing.
Specific Question(s):
Discussion on things to cut until loan paid off welcome and expected. I will read all suggestions but will need to be convinced. This already seems to be a tight budget compared to my (over) spending before.
My expenses are pretty crazy right now, but $1419 is stupid debt repayment. The question is the extra money, should I continue to throw it at the loan? Or should I work on my RRSP (RRSP would reduce taxes)?
I also get some overtime a year on top of my base, it varies a lot year to year, and I probably will get a chuck back from government in April (I know stupid interest free loan). Should I throw these extra payments at loan or RRSP?
Goals are to kill the debt and max out my RRSP. Once that is done then I might work on the mortgage but I don’t know if eventually I should look at other investments outside of my RRSP, but I think that is a several years down the road.
Retirement:
I have 7 years of pensionable service so far in my job. I have good days and bad days at work but generally have a great job. My job is super secure, it’s near impossible to be fired and based on my position and seniority extremely unlikely I would be laid off.
I'm under one of the largest pension in the country. I feel ok counting on my pension. I can get un-reduced benefits at 60.
So I can basically count on my full living expenses being covered after I am 60, because I plan on moving to a lower cost of living area when I retire. Naturally I would like an emergency fund, however.
How to I calculate how much I need to retire early with consideration of my pension? Do I just take my living expenses/ year and times by number of years before 60 I want to retire and ignore all the 4% etc. things because I am counting on my pension?
Potential for more income:
I had a roommate but she is moving this month. I am an anti-social introvert. I am going to really miss my roommate, she never complained about how cold I kept the house, has lots of outside activities that kept her out of the house, has a boyfriend which meant he stayed over but also mean that she actually was only home about 4 nights/week. My budget above is without a roommate, with a roommate that is as equally easy-going I would have about $600/month extra. Problem is finding someone I can live with and has no problem with slippers and sweaters inside in the winter and doesn't have other things that would increase my expenses like a car that they need to plug in or something like that.