Author Topic: Case Study - Any improvements to suggest?  (Read 2010 times)


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Case Study - Any improvements to suggest?
« on: September 06, 2016, 08:23:47 AM »
Getting started on MMM! I've always had this way of thinking, but only know found a website to put it in words. This is how I have been managing my things, please let me know if you think there are things I could improve on. Thanks!

Life Situation: 23, living with partner. Since we are not married, I prefer to consider only my savings, and split the house value (bought 1 year ago) between the 2 of us. Living in Québec, Canada. We don't have kids, and are not planning to for at least 3-4 years.

Gross Salary/Wages: I work as a dietitian in a hospital. About 46-48K (got a raise in August). My salary is on a scale that only goes up with time, regardless of performance. Can expect to be at 70-75K in 10 years.

Gross Pay : 1850$ per 2 weeks
Tax : 340$
Pension : 235$
Other stuff : union dues, health insurance : 130$
Net pay : 1150$ per 2 weeks

PARTNER : net income is about 1400$ per 2 weeks. We separate expenses 50%/50%, so he covers his half in the checking account.

Other Ordinary Income: No side hustle for the moment. Used to get 4K per year in interest, but I have changed up my investments (used to be all-GIC).

House : value of 250K (Owned with Partner, so considering 50% of value as mine)
Car : value of 10K
Checking accounts : about 3K
Savings accounts : 2K emergency fund, 2K shared emergency fund
Tax-free GIC #1 : 36K at 4%
GIC # 2: 6500 at 4%
GIC # 3 : 56.5K at 2.5%        I am in the process of putting this into index funds.
Investments : index funds at 33% CAN/33% US/33% World market.     Average MER is 0.4%. I currently have 27K in those accounts.

I have no money in RRSP (retirement savings, tax-deferred) because I consider that my income is still a bit too low to be Worth it, and I am thinking to start using my contributions once I get to 55K + income. About 20K unused contributions.

TOTAL : 268K

Mortgage : 195K at 2.69% : payments of 600$ per 2 weeks (accelerated, set to be paid off in 15 years).
No auto debt.
No credit card debt. Paid off in full every month.
Shared expenses are paid off a joint checking account. Partner has no debt as well, other than mortgage.

TOTAL : 97.5 K

NET WORTH : 170.5 K

EXPENSES (monthly):
Mortgage : 1200$ per month, about 400$ of this is interest
Property taxes : 300$
House Insurance : 60$
Auto (gas, insurance, permit) : 100$
Groceries : 300$
Restaurant : 100$
Hydro (electricity, water is free) : 200$. We are expecting this to be reduced to 130-150$ at our next annual revision (in 2 weeks).
Internet : 30$
Cell Phone :40$
Dietitian License : 55$
Gifts (Christmas, birthdays) : 50$
Home Improvement : 150$
Shopping (including clothes, house stuff, toiletries): 100$.
Travel : 300$ budgeted. Probably closer to 400$ though.
TOTAL : 2900$ shared, 100$ mine

So, my part for the month is 1550$. With my net pay of 2300$, this leaves me 750$ for savings. Current allocation is 200$ for emergency fund (currently has 2K), the rest goes to investing in index funds. Gives me an allocation of 32.6% to savings.

Planned Savings :
- Electricity : As mentionned earlier, I am expecting this to go down. We are on a monthly pre-set payment based on the previous owner's usage. In the past year, we have used up about 1400$ out of the 2400$ paid. We are expecting a revision in about 1-2 weeks, which should drop down our payments to 130-150$, as well as leave us with a 1000$ credit.

- Groceries : Although I budget 300$, we are closer to 250$ when I am watching it more carefully.

- Restaurants : Our average is actually 70$. We rarely go out just me and my Partner. However, his family likes it very much, even if we try to steer them more towards eating in. I am working to get this down to 50$ max.

- Shopping : I am not a shopper, and neither is my Partner. We have spent about 50$ on clothes in the past year. This accounts for all kinds of purchase for the house, ex new sheets (ours were ripped), drapes, table and chairs, hose, garden Tools, storage... We went from our parents' houses to this house, so we had some furniture, but had a  lot of ''other'' to buy. Got most of it used off Kijiji though. This expense should go down, now that we are all settled in.

- Car : I have a 2010 Honda Civic. This was bought at a very favorable price from my parents, and I am not interested in selling it. I do the regular maintenance on it, fill up the tank about once a month (I work 3km from home, biking it right now, driving in the winter), and it is in excellent shape. Has about 40K miles on it.

- Travel : My Achille's heel. I have to look into travel hacking, however it is a bit hard to find cards at my income level, and considering I don't have an extensive credit history.

Do you have any improvements to suggest? I am always looking for ways to get our spending down, I would like to get my savings rate up to 40%, but I'm not quite sure how this is possible without cutting down on travel. Perhaps a side hustle? I'm not very creative, but I'm looking at options.

Should I change my allotment? I'm aiming to get 30% cash/70% stocks. I am currently 81% cash/19% stocks, but should get to 35% cash/65% stocks by the end of the year, when I will have liquidated my GIC (56.5 K) to the investment fund instead.

Thanks a lot!

Mother Fussbudget

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Re: Case Study - Any improvements to suggest?
« Reply #1 on: September 09, 2016, 01:46:41 PM »
You should start saving into the tax-deferred 401k-like tax-deferred retirement plan available to you.  At least save up to the company match (if any).  Employer match $$ are "FREE FUTURE $$" that grow through the power of compound interest between now and your FIRE date.  Every $1 saved tax deferred for retirement reduces your income tax burden by $1.

Just.  Start.  Saving.  Tax-Deferred.  If not, you'll facepunch yourself when you're older. 
Start small - try $50/month, and see how that impacts your budget. 
If it's painless, move to $100/month the next month, and move up your savings $100 monthly from there. 
Treat it like a personal financial 'science experiment', and you'll quickly find your tax-deferred savings 'comfort zone'. 
Stop upping your contribution before the remaining budget $$'s are too little to get-thru-the-month.
I wish I had max'ed out my 401K contributions MUCH SOONER - I only ever contributed to the employer match (6% or 10%).  I could *afford* to max my tax-deferred retirement plan contribution by the time I was in my early-30's, but didn't start maxing contributions until I turned 50.  Opportunity cost of 15+ years of savings.... gone.