Reader Case Study - Newlywed Mustachians; are we on the right path?

[KelStache]

Hello everyone, thank you in advance for reading my case study! Quick intro, I'm KelStache and me and my new husband have been MMM readers for about 1.5 years now.  We've made lots of changes thanks to this website, and now that we're in a better place we want to make sure we're on the right path!  I'm 24 and my husband is 25 living in downtown *city* Alberta, Canada with 2 roomates.  I have a business degree and work an office-type job (16 months now) and my husband is a nurse (very recently graduated / working).  Both of us walk to work, but we do have a paid-off 10 year old car.

Future: In about 1-2 years we want to move to BC to be closer to family and own a few acres of land (this is our dream). We are saving for a downpayment (plan to purchase land with family and build a yurt or tiny house for ourselves- our budget is $200K for our portion of the land and $50K for building). We're also starting to think about babies (if things work out we're wanting 2) and I would like to stay at home, possibly making side income through caring for other kids, selling produce from our land, maybe Air BnB, and selling my pottery. While we want to retire early-ish we mostly just want to be able to have our own land and live simply & happily. Nursing prospects in this new town are great, and although he would take a $1.50/hour paycut, the cost of living is lower.

Gross Salary/Wages: Me: $52,000 plus bonus (~$2k) Husband: varies as he is a casual worker, current estimate is ~$60,000.

Pre-tax deductions: I put the max 3% salary into a pension plan (employer matched) and 5% into my RRSP. Currently nothing for my husband - no benefits since he's casual but we will open him an RRSP, probably through Questrade, in January. 

Adjusted Gross Income: After the above, tax, and benefits (husband is on my employer benefits) I get paid $1,350 bi-weekly.  Still figuring out husband's regular earnings.

Taxes: Federal and Provincial taxes are taken off our paychecks.  I got a tax return last year since husband was a student but this will change now that we're both working.

Current expenses:

Monthly, tracked on Mint:
Rent: $800 (includes utilities and parking)
Groceries: $550
Auto (gas, insurance, registration, average repairs and maintenance): $250
Restaurant: $150
Entertainment: $120 (concerts, park passes, gardening supplies, massages, sporting events...)
Fitness: $75 (yoga for me, rock climbing for husband)
Bills: $50 (cell-phones and internet)
Other: $120 (this varies monthly, but it usually gifts, clothes, personal care, medical/dental expenses, charity, etc.)
Travel Savings: $400/month
TOTAL: $2,515

I've only been out of school for 16 months, but most of our extra money has gone towards investing and our recent wedding ($10K).  Our plan now is to put extras towards investing and getting the downpayment fund to $20,000 (10%) then start putting some money into a "new" car fund.

Assets:
My TFSA (TD e-series): $19,000
Husbands TFSA (TD e-series): $18,500
My Pension and RRSP through work: $7,800
Downpayment savings: $10,000
Vacation savings (honeymoon this winter): $5,000
Emergency fund: $2,000 cash and a low-interest line of credit to be used if needed
Old car

Liabilities:
Student loans:
Provincial: $23,800 (interest rate is floating prime rate)
Federal $5,400 (interest rate is floating prime rate + 2.5%)
--We will make minimum payments (10 year payback) on the provincial loans starting in February when they start accruing interest.  If interest rates rise above 5% this will become the priority over investing.
--$4,000 of the federal loan will be forgiven after 12 months of working at our new town in BC through the rural nursing program, so we will pay minimums unless our plans / situation changes.

I would love to get any recommendations from you guys about our current situation, and thoughts about our future plans.  We are completely open to suggestions and facepunches! Thank you all!

[Bracken_Joy]

It looks like you guys are in a pretty fantastic place, with a bright future!

I think the biggest thing right now is breaking down the numbers for your big goals. Since the student loans aren't currently priority (and yay for loan forgiveness!), then it looks like the big question becomes the numbers for the BC land/home and the cost of kids and staying home.

Do you know the timeline for kids?

Be sure you look into loans for building. It may be different up north, but down here loans for land and new construction generally are higher rates and require a larger down payment than standard mortgages.

[KelStache]

It looks like you guys are in a pretty fantastic place, with a bright future!

I think the biggest thing right now is breaking down the numbers for your big goals. Since the student loans aren't currently priority (and yay for loan forgiveness!), then it looks like the big question becomes the numbers for the BC land/home and the cost of kids and staying home.

Do you know the timeline for kids?

Be sure you look into loans for building. It may be different up north, but down here loans for land and new construction generally are higher rates and require a larger down payment than standard mortgages.

Thank you for your feedback!

For the timeline on kids this might be a bit tricky- either I need to find a new job in BC paying about the same salary so that I can get full maternity leave benefits when we do have a kid (55% of average insurable weekly earnings, up to a maximum amount. In 2016, the maximum yearly insurable earnings amount is $50,800.) Based on my research so far this may be tough, as there aren't many jobs in my field where we want to move, and if I take a lower position I lose out on quite a bit of pay.
The second option is to start trying to get pregnant in the near-ish future, and have the baby in Alberta, then move to BC (I am still eligible for the maternity benefits if I move to BC after the birth).

Thank you for the heads up on land/new construction loans. We may be able to by-pass this by buying land with a small home on it already (we are looking at buying the property with my parents and they would prefer there is already a home on the property) but this is definitely something to look into further.

One advantage of moving is that full-time work would basically be guaranteed for my husband in a field he loves, which means a steady paycheck. I think food costs would go down if I stayed home (gardening and I love cooking and DIY) but our "rent" category would go up as well. I will need to look more into the mortgages and home ownership calculators to determine a more solid understanding of our future expenses. Hopefully we could keep baby expenses quite low- healthcare is free, we have relatives for hand-me-downs, cloth diapers, and we love thrift stores :) Thank you!

[Bracken_Joy]

As for expenses, it depends on how aggressive you guys want to be with savings. You could easily cut down restaurants, entertainment, and probably even groceries. Fitness too if you were really committed. It just depends how lean you want to go, and how aggressively you want to pursue your goals.

[KelStache]

As for expenses, it depends on how aggressive you guys want to be with savings. You could easily cut down restaurants, entertainment, and probably even groceries. Fitness too if you were really committed. It just depends how lean you want to go, and how aggressively you want to pursue your goals.

Yes, thank you. We are thinking that groceries/restaurants is our next target. We eat a *lot* of fresh produce and like going out with friends, so this is a pretty spendy area for us (it includes alcohol as well which tends to be expensive craft beers...). We recently started meal planning and batch cooking once a week, and we've invited friends over a few times now rather than going out. Restaurants include our weekly coffee shop date (~$10/week) so last weekend I made pumpkin spice lattes on the stove and we went for a nature walk with our thermoses instead :) We're getting there!

We want to be fairly aggressive with savings over the next year or two since we know how important that is for future compounding, especially since our savings will slow down when we have a baby. It will be comforting if we can amass a good amount of retirement savings by that point.