Hello,
Long time reader first time poster. Before getting to the nitty gritty I would like to send a big thank you to MMM and the entire community for the good work you guys are doing. The feeling I experienced of having the weight of the world lifted off of my shoulders simply through reading through your common sense approach to finances was life changing. Thank you all once again.
All right, here is my situation:
Income:
$48,000/year salary (me) + $21,600 (wife) = $69, 600. Although technically I am self-employed, I work with my father in the construction consulting industry. My one man operation brings in about $100,000/year of which I pay myself the above mentioned amount. My wife works full time at a day care centre and is going to school part-time to increase her qualifications.
Current expenses:
Miscellaneous household spending – $600/ month, includes allowances, clothing, entertainment, hobbies, eating out, pharmacy, household items, health & beauty
Groceries - $185
Cable - $0
Internet - $0 (business write-off)
Cars/Transportation – $0 (we have 1 car which is paid for by my business and I also pay for my wife’s metros through my business)
Mortgage – $1500/month, paying 4.15% right now. I know it’s a terrible rate however due to the fact that I applied for a mortgage as a small business owner my bank wouldn't give me one and I had to go with a third party lender for a year’s time until I am deemed less of a risk by my bank at which point I can get a more competitive rate. I can re-apply in March 2015.
Utilities - $40/month hydro bill. (Other utilities included in condo property management fees which is included in mortgage)
School Loan – $0 for me. My wife is in college at the moment which costs us approximately $2,500/year (paid in full, no loan) = $210/month
Health Care – $0 (Canadians)
Debt - $500/month loan repayment to my mom. She lent me $15,000 to help with my down payment. I have paid about $10,000 back so far at 0% interest
Total Spending: About $1035/month or $3035 (including mortgage & mom re-payment)
Assets:
Home equity: About $75k on a $250k condo
Investments (RRSP,TFSA etc) - $0
Cash: $5k in the bank
Car: 2012 GMC Terrain. Purchased through my business at 0% financing. Not my most brilliant move but this was pre-mustache.
Specific Question(s):
After soaking in the ethos of MMM and plotting my timeline to ER it became very apparent that I am quite a ways away. However it got me thinking of possible strategies going forward to maximize my time and moneys. This is what I came up with: save for another year or so until I can make a 20% down payment on a home. Unfortunately I live in a location with an extremely over inflated housing market, Toronto, Canada. This then led me to my next thought: My grandmother has been holding on to her excessively large home for the past 3 years since my grandfather passed away for irrational reasoning which is starting to really put the squeeze on her own finances. I approached her the other day and discussed having her sell her home, putting the $400,000 or so she stands to make into a conservative, dividend paying index fund and helping me make the down payment on a modest home which she could then live in with my wife and I (contingent upon us finding the perfect home with move-in ready basement apartment, separate entrance etc etc). She would then pay me rent out of her monthly dividend and live comfortably on the rest. All the while I would be able to hold on to my current condo, rent it out and use it as my savings account.
What do the mustacheans have to say?