Author Topic: Please critique my budget, take two! (And a 1-year update)  (Read 3519 times)

Cecil

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Please critique my budget, take two! (And a 1-year update)
« on: February 24, 2014, 09:32:30 PM »
Hey all! After finding MMM almost exactly a year ago, I posted a thread here looking for advice. At the time, I expressed worry that I wouldn't be able to hit my long-time early retirement goal of 40, and got some unexpectedly awesome ideas from all you wise people. So, I thought I'd update everyone, and see if I can snag any more helpful tips.

My wife and I started last year with a monthly spend of about $4200 and a savings rate in the 40%s. In the 12 months since then, we spent just over $33k ($2800/month), and had a savings rate of 65%. I'm amazed! I couldn't even find $500 to cut out of the $4200 budget, and with your help we were able to slice it by a third!

So... round two anyone?

We are both 29 and live in Vancouver, Canada. We earn about $100k after taxes, and as an engineer I have a solid upward curve in the next 5 years or so. We live in a 2 bedroom condo that we own, no kids. The plan is to start trying for kids and buy a townhouse (~$500k, I know) in the next 2 years.

Assets
Condo - $240,000
My RRSP - $122,000
Her RRSP - $18,000
My TFSA - $51,000
Her TFSA - $40,000
Her defined benefit pension (actuarial value) - ~$25,000
Taxable investments - $11,000
Car - $5,000
Total - $512,000

Debts
Mortgage - $159,000 @ 2.2%.

Net - $353,000

Like I mentioned above, our goals are to try for a kid in the next couple of years, buy a townhouse which will probably run $500k for a 3 bedroom + office, 1600-1800 sqft. We also want to do a lengthy backpacking trip or two before then (~$5k).

Between all sources of income, we expect to make about $100,000 this year.

Now the fun part. :)

Expenses
Mortgage interest - $290
Strata fees - $195
Property tax - $65
House insurance - $35

Groceries - $460
We shop around, buy in bulk on sale, and don't eat a lot of meat. We spend about $100/month on dairy, $150 on fruits/veg, $50 on meat, and $150 on everything else.
Food away from home - $130
Usually a couple dinners out, and maybe a pub meal with friends once a month.
Alcohol - $60

Gas - $155
She drives to work since she doesn't have a fixed location. Gas is $1.30/litre ($5.50/gal)
Car insurance - $90
Liability only. Yeah.
Car repairs - $100
Only spent $400 last year, and most of that was tires. Something is bound to go this year.
Bus passes - $90
I take the bus to work - I tried biking but there are brutal 15% grade hills and I can't hack it.

Internet - $70
Shaw's cheap-o plan
Electricity - $55
Includes heat. Keeping the thermostat to 15 degrees all winter helped.

Household "stuff" - $200
She's a photog, so much of this is lenses and a recent computer upgrade.
Travel - $200
Mostly ski trips and camping trips.
Gifts - $75
Averaged over the whole year, including Christmas.
Entertainment - $90
Clothing - $50

Total - $2410.

So... anything stand out? Where do the facepunches land? Now that I've hedonically adapted down, what's the next step?

Eggman111

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Re: Please critique my budget, take two! (And a 1-year update)
« Reply #1 on: February 24, 2014, 11:20:10 PM »
Hi Cecil!

My wife and I are also in the Vancouver area, so I thought I'd give your budget a look. I'm also an engineer, just a bit younger, and I'm starting to look at my expenses and really start saving. I'm guessing you're not in Vancouver itself based on the real estate values you gave, unless things have gone way down from when I last looked.

Anyway, down to the numbers:
Under housing, your insurance sounds high for a condo. I personally pay about $17/mo with TD Meloche Monnex for condo insurance on a similar place. Maybe try shopping around. Also, as an engineer, you may qualify for an APEGBC discount. Your university alumni association might also have a discounted rate.

For groceries,  do you shop at Costco? Is that what you mean by "bulk"? Also, how close are you to the US border? Our dairy number is much lower, but we are just a few minutes away from the US and we have Nexus. Even based on Canadian prices, your dairy number sounds high.
Restaurants could definitely come down, but this is up you as to how much enjoyment you get from it. We have started cutting back on that - trying for $75/month down from a level close to yours. The first month was difficult, but after getting used to it I find it makes the times eating out more special.
Is that Alcohol number for out or in? If its out, you can easily save money by having friends over and drinks at home. Ours is mostly in, and I count it as part of groceries. Our combined groceries and alcohol number is $400-$450 depending on the month so far.

Nexus comes in handy for gas prices as well (under $4/gal even with the exchange rate - I find it's usually about 20% cheaper), but again, this may not be worth it for you depending on what city you're in.
$1200/year for car repairs sounds high. My dad conservatively goes with $1000/year for a 20+ year-old vehicle. A $5000 car should be much newer than that and shouldn't need nearly as many repairs. I don't see why you should need more than $50/month. Besides, you are saving plenty of money that you could redirect if you had a real emergency.
Good for you for taking transit! If that cost is for one, I didn't realize Translink was so expensive. I know some workplaces offer discounted transit passes. Have you looked into that?

Internet sounds a bit high - $70/month for the cheapest plan? No home phone or cable with that? Maybe look at Telus and/or threaten to leave and see what kind of deal you can get.
Electricity is about where we are at. Not bad.

"Stuff" categories... this is where you can really cut back. How much stuff do you need? Ask yourself if you really need future large purchases, comparison shop, buy used, etc. The latest gadget always sounds nice, but there are things like our tablet that just sits around 90% of the time. It sounds like you've done your big spending recently, so you shouldn't need to continue this indefinitely.
Travel - have fun with this one! I say you've earned it with your high savings rate.
Gifts - not too bad, but you can do better. We are trying for about $20/month for Christmas (so $240 at Christmas, which we successfully did this past year), plus $20/month for birthdays/other gifts. One thing that helped this year at Christmas was that my wife's family did "home-made" Christmas where we had a budget of $10 for supplies and then we made the gifts ourselves. Since your wife likes photography, maybe she can offer to do portraits for people in lieu of gifts (just a thought - feel free to be much more creative than that!)
Entertainment - again, could go lower since we have so many things around us to entertain, but if this goes along with travel it may be money well-spent. You may just want to look at where it's going and make sure it's really things that are giving you great memories.
Clothing - that's where we are at, and I think that's a good number

Overall, congratulations on getting your savings rate so much higher! I'm glad to hear there are others in a supposedly expensive area being able to save over 50%.
What do you think?

Cecil

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Re: Please critique my budget, take two! (And a 1-year update)
« Reply #2 on: February 25, 2014, 08:49:26 AM »
Wow, thanks for all the advice!

Quote
I'm guessing you're not in Vancouver itself based on the real estate values you gave, unless things have gone way down from when I last looked.

No, we are in a suburb.

Quote
Under housing, your insurance sounds high for a condo. I personally pay about $17/mo with TD Meloche Monnex for condo insurance on a similar place.

Interesting. I hadn't considered that. We use BCAA for contents insurance, and pay $410/year. I'll shop around this week.

Quote
For groceries,  do you shop at Costco? Is that what you mean by "bulk"? Also, how close are you to the US border? Our dairy number is much lower, but we are just a few minutes away from the US and we have Nexus. Even based on Canadian prices, your dairy number sounds high.

We do shop at Costco occasionally, but found the prices aren't *that* much lower. The border is a bit of trip, though we do go down when we visit friends who are close. Dairy works out to about $4 for milk, $8 for cheese, $3 for eggs, and $6 for yogurt - weekly.

Quote
Restaurants could definitely come down, but this is up you as to how much enjoyment you get from it. We have started cutting back on that - trying for $75/month down from a level close to yours. The first month was difficult, but after getting used to it I find it makes the times eating out more special.

Good to know. I'll run it past the wife. :)

Quote
Is that Alcohol number for out or in? If its out, you can easily save money by having friends over and drinks at home. Ours is mostly in, and I count it as part of groceries. Our combined groceries and alcohol number is $400-$450 depending on the month so far.

That's entirely in. "Out" alcohol I count under restaurants. We could just drink less, I know, but this isn't something I'm willing to give up. Hmm, now I sound like a complainypants.

Quote
Nexus comes in handy for gas prices as well (under $4/gal even with the exchange rate - I find it's usually about 20% cheaper), but again, this may not be worth it for you depending on what city you're in.
$1200/year for car repairs sounds high. My dad conservatively goes with $1000/year for a 20+ year-old vehicle. A $5000 car should be much newer than that and shouldn't need nearly as many repairs. I don't see why you should need more than $50/month. Besides, you are saving plenty of money that you could redirect if you had a real emergency.

Yeah, like I said above I fill up whenever I'm close to the line, but we live far enough that it doesn't make sense to go down all the time. I pulled the number for repairs out of thin air - I like your numbers better! :)

> Good for you for taking transit! If that cost is for one, I didn't realize Translink was so expensive. I know some workplaces offer discounted transit passes. Have you looked into that?

Yeah. This is one-zone, one person. I have friends who commute 3 zones, and they pay $170/month/person. The discounted employee pass is gone as of Jan 1 this year.

Quote
Internet sounds a bit high - $70/month for the cheapest plan? No home phone or cable with that? Maybe look at Telus and/or threaten to leave and see what kind of deal you can get.

Yeah. http://www.shaw.ca/internet/plans/ . The lowest one is $55 and it's unusably slow for us. The next one up is a big bump in upload speed, and it's $60. I might call them and threaten to leave though, good idea. They keep calling me and offering full cable for $5/mo which I turn down.

Quote
How much stuff do you need? Ask yourself if you really need future large purchases, comparison shop, buy used, etc. The latest gadget always sounds nice, but there are things like our tablet that just sits around 90% of the time. It sounds like you've done your big spending recently, so you shouldn't need to continue this indefinitely.

You should have seen our budget last year! My wife's camera gear all comes off Craigslist now. Hmm, let's see the big stuff we bought in the last year - A laptop for her (photo editing, necessary), two lenses off CL, a new phone to replace her crazy old one, and then $1000 of other stuff, including things like laundry, drycleaning, household supplies... Will definitely think more about how to cut back here, but I'm hoping we are well stocked on the tech front for the next couple of years.

Quote
We are trying for about $20/month for Christmas (so $240 at Christmas, which we successfully did this past year), plus $20/month for birthdays/other gifts.

I think agreeing upon a number in advance is a good idea. We said last year we were going to "cut back" without setting a specific number, and woke up Christmas morning with my wife's parents to a pile. Like, a giant pile of stuff. Which was a bit smaller than last year's pile.


Shropskr

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Re: Please critique my budget, take two! (And a 1-year update)
« Reply #3 on: February 25, 2014, 01:34:12 PM »
For the commute have you thought of putting an electric motor on your bike?  I live in Seattle and ride a cargo bike often with my two kids on back 100 lbs of weight between them.  And we have hills.  I could not do it without my motor.  It's a good one not a cheapo.

Cecil

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Re: Please critique my budget, take two! (And a 1-year update)
« Reply #4 on: February 25, 2014, 01:54:23 PM »
serpentstooth, wow, thanks for all the info! I'll have to save that and have a read through later.

Shropskr, no, good idea. What should I be looking for and how much can I expect to pay?

Ziggurat

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Re: Please critique my budget, take two! (And a 1-year update)
« Reply #5 on: February 25, 2014, 06:46:52 PM »
For the commute have you thought of putting an electric motor on your bike?  I live in Seattle and ride a cargo bike often with my two kids on back 100 lbs of weight between them.  And we have hills.  I could not do it without my motor.  It's a good one not a cheapo.

+1.  And one of the best businesses in the world for all things ebike is in Vancouver: http://ebikes.ca (Grin Technologies).  I've bought a number of things from them - excellent service.  Not always the cheapest, though.  A great lower-cost source I've also bought from is EM3EV (http://www.emissions-free.com/store/).  To add a kit to your existing bike will probably be in the range of $300 for basic kit with motor, plus ~$300 for battery and charger, but it can vary widely.  I've been very happy with a 350 Watt geared motor.  See http://endless-sphere.com/forums for all the DIY help you could ever ask for, but keep in mind most there are into much higher power levels than you need for a little help up the hills.

EDIT: also keep an eye on kijiji/craiglist -- I've occasionally seen good ebike deals on there for much less.  Only go go for lithium batteries though. Avoid lead-acid -- much too heavy.
« Last Edit: February 25, 2014, 06:49:30 PM by Ziggurat »