Author Topic: Reader Case Study - Living on One Income  (Read 4008 times)

Callie

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Reader Case Study - Living on One Income
« on: September 09, 2016, 02:37:00 PM »
Life Situation:

For the past four years my husband and I (both 27) have held stable teaching jobs in an isolated community in Canada. I recently left my job to go back to my home town where we recently purchased a town home. My husband is still teaching in the community as to provide us with stable income.

Teaching jobs are difficult to come by in my town and I will have to wait 1-2 months to interview for a substitute teacher position but due to my experience I should be able to gain employment with the local school district on an on-call basis. In the meantime I have part time employment 10-15 hours a week.

Our only debt is our townhome that we bought 2 months ago for $338 800 with 25% down ($84 700) at a rate of 2.49% (5 year fixed rate mortgage)

We have two paid off vehicles – 2009 Toyota Tacoma and a 2013 Honda Fit.

Salary/Wages: $3810/month

Husband’s net pay: $3,560/ month
My part time job: $13/hour paid every two weeks approximately $250/month net

Assets: Total: $475 895

House: $340 000
Chequing Account: $1000
Savings Account: $33 500
Husband RRSP $42 545
My RRSP $58 850

Liabilities: Total: $ 253 623


Mortgage: $253 623 at 2.49%

Retirement Savings: $400/month

Husband’s employer matches his contribution into a Group RPP - $470/month including employer’s contribution
We each put $200/month into an RRSP

Current Monthly Expenses: $3409

Mortgage $1001 (about $500 interest)
Strata $173
Property Taxes $200
Home Insurance $54
Life Insurance $76
Utilities (Gas/Electricity) $170
Phone $90
Internet $150
Groceries $400
Pets $200
Car Insurance $250
Gas $80
Travel $60
Furniture $ 55 (new house trying to slowly put money aside to finish furnishing it)
 Miscellaneous $50
“Fun” Money $400 ($200 each covers individual spending – clothing, haircuts, hobbies etc.) 

We made this budget because we wanted to make sure we could live on one income while I was between jobs, however it kill me that we are spending $3409/month and only saving $400 for retirement!

So my questions are

1)   Is there anything glaringly obvious that we have over budgeted for and should cut/decrease to increase our retirement savings? – keep in mind we are living apart and paying double for some utilities

2)   We plan on sticking to this budget even once I am employed so what should be do with my income once I start receiving it? As I will be working on call it will be difficult to know exactly how much I will be paid each month.
« Last Edit: September 09, 2016, 02:38:32 PM by Callie »

LivlongnProsper

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Re: Reader Case Study - Living on One Income
« Reply #1 on: September 09, 2016, 03:13:20 PM »
Congratulations on having no debt other than the mortgage.
I have a few questions:
Does your husband plan on keeping his job and living apart from you and if so why did you quit your job and move? What is the longer term plan?
How far from your husbands work is the townhouse?
The reason I ask is because as you said some higher expenses are based on you living apart.
Phone service should be able to be cut in half- shop around, republic wireless is popular around here.
$200 a month seems steep for pets.
There are many on here that will say fun money and travel could always be reduced.
You have a large portion of your net worth in a savings account earning very little. Do you consider this your emergency fund? Consider putting some of that in something that will earn more for you.

Callie

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Re: Reader Case Study - Living on One Income
« Reply #2 on: September 09, 2016, 03:38:46 PM »
I quit my job after I was given an ultimatum from my management that I could not accept. However, these jobs were never meant to be long term but rather an opportunity to gain experience in our field.

My husband and I wanted to move back to our home town and thought it would be best that one of us leave and gain employment and then the other could follow instead of both of us being unemployed and search for jobs at the same time. Also our home town is 2 days drive from where we were working.

The large savings account has a years worth of mortgage payments as well as 6 months living expenses that we may have to use when my husband leaves his job next year, therefore we need it to be accessible. Any suggestions on places to put that money considering we will probably need it in about a year?


marty998

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Re: Reader Case Study - Living on One Income
« Reply #3 on: September 09, 2016, 04:33:42 PM »
Car insurance and internet oh my god.

Your husband is working half a day each week just to pay for those 2 items.

Is your husband also paying rent to stay somewhere since you are in separate households at the moment? I can't see that expense listed...


SoftwareGoddess

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Re: Reader Case Study - Living on One Income
« Reply #4 on: September 09, 2016, 04:47:53 PM »
The large savings account has a years worth of mortgage payments as well as 6 months living expenses that we may have to use when my husband leaves his job next year, therefore we need it to be accessible. Any suggestions on places to put that money considering we will probably need it in about a year?

I don't see any TFSAs in your list of assets; do you have room there to park your money? Since you'll need it in about a year, it doesn't really make sense to put it in the market. But you could buy GICs and at least earn the interest tax-free.

clarkfan1979

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Re: Reader Case Study - Living on One Income
« Reply #5 on: September 10, 2016, 01:34:31 AM »
Where is the expense for the husbands housing?

Could he move to the hometown and get a random job? Maybe he could substitute teach and get a second job to make ends meet. It seems like it would make more sense to do that so you get eliminate the second housing expense.

ltt

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Re: Reader Case Study - Living on One Income
« Reply #6 on: September 10, 2016, 06:43:02 AM »
Car insurance seems very high for the two of you.  What is your deductible?  Seeing that you live in a more isolated community versus a big city, I would think it should cost no more than $100 per month.   

Life insurance--do you have a term policy?  Is your husband getting life insurance through work?  Tell us more about this.

Phone--tell us more.  Is it a landline, cell phones?


Callie

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Re: Reader Case Study - Living on One Income
« Reply #7 on: September 10, 2016, 09:38:11 AM »
My husband doesn't have to pay rent where he is living since the accommodations are provided by the employer.  I know it was mentioned that my husband leave his job, however, he has signed a contract till the end of the year so that isn't an option. Also it is really difficult to find teachers to work in this community so he would never leave mid-year which would negatively impact the kids.

Car insurance is a tough one since we live in British Columbia and ICBC has a monopoly here so everyone has to pay the rates they set. However since many of you are shocked at the price I pay I will look into the possibility of getting basic insurance through ICBC and then any extra through a private insurer.

The life insurance expense is actually life insurance and disability insurance because we could not afford the mortgage on just my income. We bought a 10 year term that will have the option to extend to 30 if required. Our policies are for 500,000 each.

As for phones my husband has a landline for $35/month and my cell phone is $55/month. I have my cell phone plan through Telus since a friend gave me one of their old phones, however, maybe the free phone isn't worth paying the higher monthly price. I am not on a contract (I hate contracts) so I can switch. If I switched plans I would need unlimited evenings and weekends nation wide so I can talk with my husband.  We talk almost every night so I think I would burn through pay as you go minutes very quickly.

Thank you SoftwareGoddess for mentioning GIC's. I thought it wouldn’t be worth it to put my money in there since the interest rates are low but I didn’t realize how low the interest rates on my savings account were (0.4%)! I will be moving money into a TFSA and buy GIC's with my emergency fund.

meandmyfamily

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Re: Reader Case Study - Living on One Income
« Reply #8 on: September 10, 2016, 09:13:56 PM »
The $400 a month fun money is very high.  I would cut that to almost nothing and put the rest in retirement.

calimom

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Re: Reader Case Study - Living on One Income
« Reply #9 on: September 10, 2016, 10:27:18 PM »
You guys have really great savings and low debt for your ages, congrats. What was the purpose of your home purchase/move? It seems as though it would have made sense for you to stay with him with your well paying teaching job as opposed to creating mortgage debt/small income with your move.

Pets, car insurance and cell phones seem freakishly high. You other expenses seem pretty much in line. Good luck and hope all works in whatever direction you want this to go.

minimalistgamer

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Re: Reader Case Study - Living on One Income
« Reply #10 on: September 10, 2016, 11:11:34 PM »
As everyone in the thread has pointed out, the two things that struck to me as high are the car insurance and internet. You might look into ways to minimize that, especially the internet. Downgrading to a lower speed package is always an option.

alewpanda

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Re: Reader Case Study - Living on One Income
« Reply #11 on: September 11, 2016, 09:02:21 PM »
Perhaps laws are different in Canada, but holy cow is your insurance high on your vehicles!  In the US, a paid off car only NEEDS liability....is there a way to cut down on the amount of coverage?

I would consider anything more than bare minimum furniture unnecessary until you are both in the hometown and employed again.  55.00 could get you a used table and chairs (or new camp chairs and tv trays), add a bed (which I assume you already have), and maybe a used or hand me down couch, and you a pretty golden until you are all gainfully employed again.

Lower fun money amounts and lower internet speeds/or ask for a special rate.  (We call in every time our "discount" expires to get a new discount applied...they will lower prices to keep your business)  Also, can't his landline go away?  Who needs a land line AND a cell phone for one person?