[Canada] Budget and how to proceed

[catlady]

Hi all,

I need a bit of help evaluating our budget and how/ where to create our accounts. Any advice would be appreciated. Please note that we are just starting our investment journey and also SO is a bit resistant to huge budget changes so my target is to start gently trimming the expenses to reduce drama.

Topic Title: I need help with our budget and investing account strategies.

Life Situation: Married filing jointly (mid/late 30’s), 1 dependent (1.5 yr, OAD).  Live near Montreal, Canada. We are recent Eastern European immigrants (came to Canada in 2017), the journey and the down payment for our house wiped our savings. Also this year we had some huge expenses:
8.5K for a thermo pump
11.3K for a new roof
14K to pay off the remaining of car (I know super dumb decision, 32K for a shitty Audi... Anyway a lesson learned lol)
So now we are at square one again...
Our goal is not to retire early but to be FI, meaning if we get fired at 58y I don't want to stress to find another job.
No other debts besides the house.

Gross Salary/Wages: $125,000 + bonus but not guaranteed (80K me / 45K SO). I am a developer and SO is maintenance.

Assets:
My RRSP through my employer: $6500 (Employer match 5% so I am maxing with 5% from my salary)
So RRSP: $2450
Emmergency fund: $2130

Taxes: 25.3% SO, 31.3% me

Take Home Salary/Wages: $84K (this is after my 5% contribution to the employer RRSP)

Current expenses:
Groceries              800
Baby (clothes, toys)   100 ( we have no friends with babies, so hands me down are not an option, I try to buy second hand but it's not going so well.. If sb from Quebec is reading heeaaaaaalp)
Mortgage                   2140 ( house taxes are included here)
Daycare                   175 (Quebec has subsides daycare so this is why it's so cheap)
Car SAAQ payments   25
Gas                          400
Car insurance          121.4
Home insurance          121.7
Vacation                  300
Electricity                  336.57
Internet                  92
Phone                  45
Home renovation       100
Car maintenance   100
RESP                           222
RRSP                   100
Misc                      300
= 5478.67
Left with 921.33 to be saved :/

Mortgage: Balance 312,399.80 at 3.19% bought 2018

Specific Question(s):

SO is looking for a new job that would reduce the gas and the car maintenance costs. Currently it's not going so well because of COVID and probably will be a lost cause for this year but who knows. I will also look for a new job next year to try to bump my salary a bit more. Any ideas for our budget will be appreciated.

Number one priority is rebuilding our emergency fund and stop TOUCHING IT.

I am so overwhelmed with where to open our TFSA accounts and what to do with SO RRSP (currently just sitting there without any investment). I would really like to not manage it myself because I am really weird and if I have to take that responsibility I would not be able to sleep so self managed robo advisor maybe? we are considering WeathSimple (with balanced portfolios). But I am freaking out due to the fact that I read that the robo advisors are still early stage and I don't want to lose our savings. Babe's RESP is with WeathBar because they support QESI. Zero idea where to keep our emergency fund. Help  :/

[marty998]

Hi! Welcome to the forums.

You have a lot going on, and perhaps it's good to step back and have a look at some obvious things which you are probably already aware of. The good news is you're both still young and have time to "win the game" so to speak.

1) You recognise you need some savings. You are one paycheque away from not being able to pay your mortgage. That scares me a little bit - especially since you have a little one. Build up an emergency fund of 3 months of expenses or about $15,000. Number one priority as you have said.

2) You spend the same amount of money each month to insure a car (worth $32,000?) that you do a house (worth 15x that?). Unfortunate reality... but I find that interesting. Goes to show what a burden owning a car is as opposed to other assets. You can't exactly drop car insurance entirely, but see if you can negotiate the premium, or if your insurer has the option to lower the premium if you pay a higher excess/deductible.

3) Conventional advice here is to sell the $32k clown car and buy a low price used car like a Toyota. They don't look flash but they last forever.

4) Your internet costs seem high(?)

5) Electricity costs... assume this is as high as it is for heating in cold Canadian winters? Won't tell you to turn up the temperature but again, you should explore if you are getting the best deal out there.

6) Do you have any hobbies or things that you do for fun? What do they cost? Do you budget for medical expenses such as dental bills?

[catlady]

Hey thanks for your reply ^^
1. Yeah we had a 32K in the begging of the year saved (since last year) but we spent for renovations (roof + heating) and to finish paying off the car, So the first priority is building that back up 2K down 13K to go :D
2. Now that you mention it, it is weird. I had calls with 5 diff insurance agencies and this was the best price for both. The audi is a 2 way insurance so maybe this is the reason :/
3. This is my dream but currently SO will fight me to the death so not an option until our savings and future looks better and I can present my case better.
4.  Yeah I am looking to changing the provider. But currently the best offer I found is 10$ lower  and 20mbit less so it's a bit concerning.
5. Yes and also our thermo pump was down and we were using only the furnace so in theory this winter we should have lower costs. Also our house is 2000 sq ft so there is also that :/
6. Yes I have my home lab, this is why the high speed internet :D and the hardware is already bought so no additional costs :D. SO is the misc expenses he is buying stuff for the yard. We  are not going out almost ever. Dental bills just cleaning which after the insurance is 32$ so I didn;t include it. No other health concerns.

We would like to also downsize in the future but currently the market is crazy even in our corner :|

ETA: currently it;s really hard I had to fight for us to not get another car after paying that one so we are one step at a time...

[Freedomin5]

For baby clothes and toys, have you tried Craigslist or Freecycle? Also, are there garage sales in your neighborhood or is that not happening at the moment because of COVID? I grew up in Toronto, and we used to go garage-saling every Saturday morning in the summer.

[catlady]

For baby clothes and toys, have you tried Craigslist or Freecycle? Also, are there garage sales in your neighborhood or is that not happening at the moment because of COVID? I grew up in Toronto, and we used to go garage-saling every Saturday morning in the summer.

Thanks for your suggestions!

Oh wow I didn't know Freecycle exists I'll check it out. Also will check Craigslist. I have been using Varagesale which is supposed to be quite popular but the bulk of the clothes are either unrealistically expensive or basically give me 10$ to throw my junk. But I just now bought 2 autumn jackets for 5$ so I just need to be more vigilant.

We used to have garage sales 2 times an year (May and September) but they are cancelled this year :/ Last year we bought babe's toys  Fromm garage sales. I am so jealous you had them every weekend.

ETA: Freecycle is not available in Quebec 😭

[winterladyincanada]

Hello,

My first post here, i wander around the forum for a year but i never got a account.. discover mmm last year.. i never wrote because I feel that i'm a really junior mustachian and have a lot of unmustachian aspect in my life. (house, pool, best dog in the world) So for every mustache thing, I think the other member have more experience than me! but as I live in Quebec too, I might have some tips for you. Sorry for my bad english! french here..


1 - Your electricity bill seem high, even with our famous winter. but i think you will see a big difference this winter with the thermo-pump. Be careful not to use it during the very very cold day as it may used it prematurely. It is not suppose to be running around -20 celcius. (you can look on your thermopump for specific)
I got a huge non mustachian house of 2000 feet too and a pool, (we bought it before MMM but stick with it because we love it) it cost us around 150 per month. Have you check the program renoclimat on hydro-quebec? if you want too invest in isolation, a technician come and check specifically your house, make some recommandation and you can have a credit for the renovation you do. ( be aware that Sometime if it's only small projet it is not usefull to use this program)

the first thing easy to fix is isolation in the roof. If it is not enought, it's instant money during winter.
(ex: cellulose is very cheap but it tap with year, after a certain amount of year it is usefull to add some isolation. we did it ourself when we bough the house and rent a blower at home depot but there are company who can do it for you)

and every small furniture you don't use, unplug them. it make a difference. (we only keep the espresso machine plug.. oupsss... too much love of coffee here!)

2 - god! the gas! do you have 2 very big car? or maybe you have a lot of commute time around montreal, witch is very commum in this city... I feel you... gas is very expensive in canada so this is why small car are still popular in quebec. (even if american big car is slowly invading us! and stupid pick-up that are far most too popular) in the used market you will have more choice of small car (fit, golf, matrix, mazda 3 etc)

4- cell phone : I am with Fizz. you can check them up. ( 30 $ per month... )You cannot have a person on the phone, everything is on the internet but it work great. They have internet service but I didn't do the move yet with them for internet because we use a lot of data for netflix (no cable here)
for internet, we have videotron, more easy for us to negociate when they level up the bill. (70 per month ,taxe included)

5- in quebec I think you will have more success with Kijiji for used item (and sometime marketplace with facebook). Check the french annonce, most of people don't traduce their thing. (use google traduce if french is a problem but as you live in montreal is must be ok) My boyfriend sold his old bike in 2 day on kijiji (yeah I know, not mustachian but it was for a better one that he also buy used..)

6- for the tsfa (celi in french, i will use the word celi just because i don't want to make mistake, I became very confuse with the acronym in english sorry). It depend of the bank you use. Normaly it is very easy to call your bank, take a appointment at the bank and open a self-manage account. (it is call "compte de courtage" in french)(I am with desjardins, I open a account with disnat and use their app on my mobile phone. not everybank have a app, I find it usefull but a lot of people don't like desjardin for courtage and use other platform. it's a personnal choice) I use desjardins only because it was more simple to stay at the same bank for everything. It is only a matter of simplicity.. It is very easy to buy vanguard or ishare or anything a share in one compagny if you want (but very unmustachian!)  Every bank have their option. (ex banque royale . But it is more easy to do the first move when you have somebody to show you. Personaly, I open my CELI account (years before I discover MMM, so i got unmustachian thing in that but it was ok for me) and it took me 5 month to have the gut to buy anything. It is paralysing at the begining but it became fun, i assure you! Just be carefull because is there is no action in your account for more than 6 month, some bank can charge fee.

I will leave you:  http://retraite101.com/quelle-est-la-meilleure-plateforme-de-courtage/ (in french sorry)

with covid, maybe you will have to do everything on the phone!

again, I am sorry for the bad english and the french link....

[catlady]

Merci pour les réponses, vraiment utiles pour moi. Mon Français est loin d'être impeccable mais j'essaie de pratiquer et de m'améliorer. C'était génial de recevoir un conseil de qqn du Québec

1. I'll check it out, I believe it should switch automatically to the furnace at a certain temperature but I need to validate. Thanks for the heads up! I had 0 idea about the roof isolation we just changed the shingles this year and that was it, we need to see if we can improve that. We had an inspection from reno-climat and we should get back around 650$ for changing the thermo-pump (woot woot!).
I can relate about the coffee :D
2. Our commute is huge :( SO is 54km one way and mine is 34km one way again. He is also required to move between facilities, which they are supposed to be covering the gas for. It is better now that I wfh and I am looking to move to permanent wfh, but I still put it in our budget. SO is looking for a job closer to home but it's not going that great :/ 
4. We are also with Videotron, we tried negotiating but they just tried to pitch us the new Helix :/ Any tips on how to try again without moving to Helix? We wanted to move to teksavvy but they just bumped their prices so...
5. Thanks for the Kijiji tip, everybody has been pitching me Varagesale so I totally forgot about it :|
6. I will check the link ^^ I am a bit of a scary pants and constantly run around freaking out :D But as you say every begging is hard.

Merci bcp!

[SunnyDays]

Definitely open a TFSA account.  You and your SO should each have at least 2 years worth of contributions you can make.  You can use this for your savings account - maybe put a bit into a variable account for immediate access if needed, and invest the rest within that account.  You should also consider your RRSP contributions more closely.  The rule of thumb is that if you expect to have a larger retirement income, money is better put into TFSAs or other investments.  RRSPs work best for those who will have a minimal amount of money at retirement.

[sixwings]

For where to open your TFSA, you have a few options.

1) Wealthsimple robo advisors - these are super easy and low stress, wealthsimple is protected under the canadian investor protection fund. If wealthsimple went broke you would still own the shares under your name. I have a friend who uses wealthsimple as her invesment platform, she's just getting started in investing with about 30k with them. She likes it as it's really easy and is set it and forget it investing. My brother has a very large portfolio and uses wealthsimple on a limited basis to compare. He said it basically tracks market indexes. Fees are generally .4-.6% of the portfolio.

2) Do it yourself - this is what I do. I use Questrade as a discount brokerage account to do it. I have RRSP, TFSA and investment accounts for both my wife and myself. I have a very simple 3 etf portfolio, however it's very easy to have a single asset allocation etf that would meet your requirements. you could just buy vgro/xgro, they are invested globally and are designed to be your one stop shop to track the global indexes. Fees are .2% and would get a similar return to wealthsimple. I do this, I hold VGRO and 2 other ETFs, my overall fees are .15%. Every 2 weeks I deposit money into my questrade accounts and buy the etfs. takes about 5 minutes and saves me several hundred dollars a month so it's a good return and is simple enough. Questrade is also protected by CIPF. Its a bit finicky at peak trading times but that's fine for someone who just wants to buy indexes, ETFs are also free to buy. All the banks have platforms similar to questrade but they are more expensive as they will charge commission every time you make a purchase and that can add up quickly. scotia's itrade is probably the cheapest.

Basically, your money is safe with either one (other than market fluctuations obviously), wealthsimple is really really easy but more expensive. It's a good intro to investing while you research and read more. doing it yourself is cheaper and will similar returns but is a little more hassle. If you really want peace of mind scotia's itrade isnt too bad.

generally here are some great resources for the canadian investor;
https://canadiancouchpotato.com/
This is a great resource with model portfolios of what to buy and in what % for index investors who just want to set it and forget it. it also recommends vgro/xgro for beginners. lots of good info there and the podcasts are quite good.

also;
https://www.finiki.org/wiki/Main_Page

great website with lots of info and definitions for varying investment products like asset allocation etfs.

good luck!

[catlady]

For where to open your TFSA, you have a few options.

1) Wealthsimple robo advisors - these are super easy and low stress, wealthsimple is protected under the canadian investor protection fund. If wealthsimple went broke you would still own the shares under your name. I have a friend who uses wealthsimple as her invesment platform, she's just getting started in investing with about 30k with them. She likes it as it's really easy and is set it and forget it investing. My brother has a very large portfolio and uses wealthsimple on a limited basis to compare. He said it basically tracks market indexes. Fees are generally .4-.6% of the portfolio.

2) Do it yourself - this is what I do. I use Questrade as a discount brokerage account to do it. I have RRSP, TFSA and investment accounts for both my wife and myself. I have a very simple 3 etf portfolio, however it's very easy to have a single asset allocation etf that would meet your requirements. you could just buy vgro/xgro, they are invested globally and are designed to be your one stop shop to track the global indexes. Fees are .2% and would get a similar return to wealthsimple. I do this, I hold VGRO and 2 other ETFs, my overall fees are .15%. Every 2 weeks I deposit money into my questrade accounts and buy the etfs. takes about 5 minutes and saves me several hundred dollars a month so it's a good return and is simple enough. Questrade is also protected by CIPF. Its a bit finicky at peak trading times but that's fine for someone who just wants to buy indexes, ETFs are also free to buy. All the banks have platforms similar to questrade but they are more expensive as they will charge commission every time you make a purchase and that can add up quickly. scotia's itrade is probably the cheapest.

Basically, your money is safe with either one (other than market fluctuations obviously), wealthsimple is really really easy but more expensive. It's a good intro to investing while you research and read more. doing it yourself is cheaper and will similar returns but is a little more hassle. If you really want peace of mind scotia's itrade isnt too bad.

generally here are some great resources for the canadian investor;
https://canadiancouchpotato.com/
This is a great resource with model portfolios of what to buy and in what % for index investors who just want to set it and forget it. it also recommends vgro/xgro for beginners. lots of good info there and the podcasts are quite good.

also;
https://www.finiki.org/wiki/Main_Page

great website with lots of info and definitions for varying investment products like asset allocation etfs.

good luck!

Wow thanks for the answer!  For now we will open a WealthSimple and maybe move to Questrade once we feel more comfortable.

[TrMama]

Welcome! We lived in Quebec City for several years 10 years ago. There were so many things I loved about living in Quebec.

One argument against the Audi is that it's a "fancy" car. However, being fancy won't protect it from rusting out just as fast as a cheaper car. I would sell it asap while it's still worth something and replace it with a cheaper car. The salt and potholed roads in QC are very hard on cars. They don't last very long there.

Since you're new to Canada your RSP and TFSA accounts are still pretty small. At this early stage it's important to pick a bank that either has no, or very low fees otherwise they have too much of an impact. Roboadvisors aren't terribly useful until your balances are higher so don't worry about that for at least a few more years. Questrade and Tangerine are both good options. They're also both online, so you don't even have to go anywhere. In your shoes, I'd go with Questrade and then pick a basic portfolio from The Canadian Couch Potato blog.

When we lived in QC the most popular buy and sell site was LesPac.com. Kijiji was also used, but less popular. Hopefully this advice is still valid ;-) You could also check Facebook buy and sell groups. I also bought some kids clothes from thrift shops, but this was pretty hit or miss. Although I was usually able to find nice winter outerwear for the kids.

For toys, we were able to join a toy library. It was only $30/year and that let us check out several toys each week. It was a fabulous way to keep the kids entertained for practically no money. Every once in a while they'd love a toy so much I'd buy them the same thing, but it was nice to know ahead of time they'd actually really like it. Also kept the clutter in the house down to a reasonable level.

The other thing that stuck out to me in your budget is the amount you're spending on food. When we lived in QC I was able to save quite a bit by paying attention to the grocery sales and shopping at the cheaper chains. Maxi was one of the cheapest ones around, although they're often not very nice looking inside. I also bought produce from a local greengrocer (Fruiterie 440). You can use the Flipp app to quickly check out all the flyers in your area and make a list based on what's on sale. Just be careful to only buy things you'll actually eat. Meal planning is another great way to save money on groceries.

[Le North Dreamer]

PTF as I am also from Quebec (south shore of Montreal and eastern townships) and about to have a kid.

Welcome/bienvenu to the forums, you'll find a ton of useful info in here, although you have to keep in mind the important differences between the US and Canadian landscapes (tax-free accounts, drawdown rules, OAS/QPP, health care system, etc.). The good thing is that we have a lot of Canadians on the forum so you can find similar case studies and canadian-oriented content.

+1 to everything sixwings mentioned.  It will be key for you to have a better understanding of what you'll be investing in and throught which type of accounts (RRSP, TFSA, RESP, taxable, etc).

As you seem a bit unconfortable in managing your investments, tangerine would be a good place to start as they offer one-fund solutions that are automatically rebalanced. This comes with a 1% fees thought. As TriMama said, questrade/other online brokers will become a better option down the road as you'll get more bang for the buck because of the lower fees of maintaining ETFs (couchpotato style). Im personally using Virtuals Brokers and had no issues so far.

For the rest, cut expenses wherever you can and feel that it will not deprive you of your hapiness. If you haven't  done it yet, read through MMM's blog posts and ask yourself if your purchases  are realy worth it for your future self. My SO and I are high earning professionals and i would never ever think about buying a luxury car, even used - we are driving 2 paid-for 2010 and 2015 cars. Insurance is lower on top of costing less upfront. This all means more money invested and producing.

Cheers mate!

[catlady]

Thanks for all the replies \o/ Yeah I'm still combing through all the information. It's getting better and better lol. For now I definitely will not manage the investment accounts myself because it will give ne nightmares. On the plus side I'm getting my SO on board more and more so I'm pretty happy about it.
@TrMama I actually found a toy library near us which I had no idea existed so thanks for that.
We are working on optimizing the food budget and are checking the promotions in the publisac. As an added bonus baby plays with them for an hour tearing everything and making a mess lol
Also getting the hang of the second hand buying and selling baby stuff.
Still a lot of work left but it's a good start