Author Topic: New Budget, New Town, New Job  (Read 3322 times)

Buxlo122

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New Budget, New Town, New Job
« on: January 11, 2014, 10:04:14 PM »
Hey Guys I have just moved to Toronto after doing some traveling. I read the entire Money Mustache blog while traveling and was excited to implement some of his suggestions once we started to settle down again.

Here is a copy of my draft budget below. Please let me know of any suggestions you guys would like to make.


Budget - Monthly
   
Net Income Lou            4,240
Net Income Jess           1,644
Total Income                5,884
   
Total Target Spending   4,111
   
Total Saving                   1,772
   
   
Fixed Expenses   
Rent                                  1,195
Internet                                 40
Hydro (Power)                        40
Car Insurance                      162
Gym                                     160
Rainy Day Fund                    167
Travel Fund                          417
                                          2,181
   
Joint Discretionary   
Grocery                               433
Petrol                                    87
Entertainment & Other       217
                                          737
   
Individual Discretionary   
Lou Cell phone                        39
Jess Cell phone                       39
Lou                                      558
Jess                                     558
                                         1,194
   
Total Expenses                    4,111

Mlkmn

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Re: New Budget, New Town, New Job
« Reply #1 on: January 12, 2014, 06:26:53 AM »
Congrats on the move and awesome that you have no debt!

Right now you plan to save 30% of your income.  30% is a good start, but I think you could easily be saving over 50%.

You realize you are spending almost $2000 a year to go to the gym, or $1000 per person. You could buy a used bench and free weights and run/bike outside for a lot less. Or p90x/insanity for 1/20th of that and both use it together.

Over $1000 a month for discretionary spending? Over $6000 each over the year. I am not sure what you are buying, but that is on top of your entertainment and travel funds. I suggest trimming this down to closer to $50 a month, $100 max. That way stuff requires you to save up over multiple months and you find out if you actually need something or are having stuff-itis.

I assume the travel budget is for going on holiday/vacation and not for business. $5000 a year to travel is impressive. I would totally be budgeting that if I was FI. I am going to assume you aren't, so unless you go on holiday every month, I say lower it to around $150-200 a month. There are so many places to visit that do not require lots of money.

You could also lower your entertainment budget and find inexpensive/free things to do.

Also, is car insurance really that expensive in Canada? I pay $500 a year for two vehicles with two drivers in a major city in the US. You are paying almost $2000. I would probably go carless if I had to pay that, specially since Toronto has mass transit.

$1000 Discretionary
$160 Gym
$217 Travel
$51 Entertainment
$1428 Total extra saving

1428+1772=3200

3200/5884 = 54%

If you lower your car insurance down you will save even more!


Buxlo122

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Re: New Budget, New Town, New Job
« Reply #2 on: January 12, 2014, 09:44:04 PM »
Thanks Mlkmn

Just reviewed the GYM expense and it was a typo it should of been $100pm rather than $160. While it is a luxury, I am afraid it has to stay otherwise my girlfirend will kill me. Still the correction of that typo bumps up my savings rate at least on paper.

The travel portion of the budget is high but is also somewhat temporary. We are 2-3 years away from having kids so want to be able to do some overseas travel.

I was being a bit of a wussy pants with the discretionary spending category. There is bit of a safety margin built into this category. I was going to revise it once I could look at our spending habits and make positive changes. I have decided to move this from 558pm to 433pm (150pw to 100pw). I will look at revising it lower again in the future but this will be a good starting point.

Car insurance in Canada is stupidly expensive. It will come down in time as our driving history becomes more established (approx 1/2 what it is now in three years time). Would love to go carless but have family outside of Toronto that we need to be able to visit :(

The changes above take us from 30% to 35% saving rate.

BPA

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Re: New Budget, New Town, New Job
« Reply #3 on: January 13, 2014, 04:38:15 AM »
35% might be what you are saving as a couple, but is your spouse on board with this?

She spends a lot while making little.  You could be setting yourself up for failure or discord if she has spendier expectations than you do. 




Mlkmn

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Re: New Budget, New Town, New Job
« Reply #4 on: January 13, 2014, 08:25:44 AM »
Does the gym have an option where you pay for one membership but can pay a little bit more for guests that have to go with the member? If you only go together then that might save you money. The LA Fitness gyms here have that so you can pay around $35 a month and be able to bring two people with you. Also if it is a deal breaker to have it, go negotiate with them paying up front for a year for large discount.

Also, this gym better have a hot tub and a pool to make this even close to worth it. :)


TrMama

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Re: New Budget, New Town, New Job
« Reply #5 on: January 13, 2014, 10:36:19 AM »
You must be driving a pretty nice car for the insurance to cost $162/mo. My advice, sell it and buy an older car. Once you've done that, and have enough saved up to replace it if it gets totalled, cancel the comprehensive and collision portion of the insurance.  You may also be able to get a discount if you don't use it for commuting.

I'm Canadian, living in a decent sized city, and this is what I've done. 2006 Corolla (standard, with some body damage) that's only worth about $6K. Insured for recreation use only (I commute by bike), with max liability, high deductible and no collision or comprehensive.

Note : Recreation use only still allows me to use it to commute to work 6 days/mo.

Your grocery budget could also probably be trimmed. I feed a family of 4 for just over $500/mo.

Buxlo122

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Re: New Budget, New Town, New Job
« Reply #6 on: January 13, 2014, 05:24:29 PM »
35% might be what you are saving as a couple, but is your spouse on board with this?

She spends a lot while making little.  You could be setting yourself up for failure or discord if she has spendier expectations than you do.

She has just finishing up her co-op for university and will then be moving into a professional position. Hopefully she will be getting an extra $16000 after tax per year.

She was spendier when she was younger but is getting more frugal with age. The MMM plan will give us extra motivation, plan and a goal to work for.

Buxlo122

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Re: New Budget, New Town, New Job
« Reply #7 on: January 13, 2014, 05:25:38 PM »
Does the gym have an option where you pay for one membership but can pay a little bit more for guests that have to go with the member? If you only go together then that might save you money. The LA Fitness gyms here have that so you can pay around $35 a month and be able to bring two people with you. Also if it is a deal breaker to have it, go negotiate with them paying up front for a year for large discount.

Also, this gym better have a hot tub and a pool to make this even close to worth it. :)

We have not signed up for the GYM yet so will be looking for a good deal. Will see if they have a bring a friend option.

Buxlo122

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Re: New Budget, New Town, New Job
« Reply #8 on: January 13, 2014, 05:40:32 PM »
You must be driving a pretty nice car for the insurance to cost $162/mo. My advice, sell it and buy an older car. Once you've done that, and have enough saved up to replace it if it gets totalled, cancel the comprehensive and collision portion of the insurance.  You may also be able to get a discount if you don't use it for commuting.

I'm Canadian, living in a decent sized city, and this is what I've done. 2006 Corolla (standard, with some body damage) that's only worth about $6K. Insured for recreation use only (I commute by bike), with max liability, high deductible and no collision or comprehensive.

Note : Recreation use only still allows me to use it to commute to work 6 days/mo.

Your grocery budget could also probably be trimmed. I feed a family of 4 for just over $500/mo.

I see your 2006 Corolla and raise you a low kms 2004 Hyundai Accent ($3200).

I wish the reason why my insurance was so high was because of a high value car. The reason why it is so high is because I am new to Canada therefore have no driving history. The good news is it will drop as I prove that I am not a bad driver.

mikaty

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Re: New Budget, New Town, New Job
« Reply #9 on: January 14, 2014, 05:55:39 AM »
Car insurance in Canada is stupidly expensive. It will come down in time as our driving history becomes more established (approx 1/2 what it is now in three years time). Would love to go carless but have family outside of Toronto that we need to be able to visit :(

Hi,

Not from Canada so just wondering - do you need to be insured to establish your driving history?  And how often do you visit your family outside of Toronto - if it's infrequent would it make sense to hire a car for those trips?  Would your girlfriend be able to get a better insurance rate (or is she also new to Canada?)

BPA

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Re: New Budget, New Town, New Job
« Reply #10 on: January 14, 2014, 11:48:26 AM »
35% might be what you are saving as a couple, but is your spouse on board with this?

She spends a lot while making little.  You could be setting yourself up for failure or discord if she has spendier expectations than you do.

She has just finishing up her co-op for university and will then be moving into a professional position. Hopefully she will be getting an extra $16000 after tax per year.

She was spendier when she was younger but is getting more frugal with age. The MMM plan will give us extra motivation, plan and a goal to work for.

Good to know.  The right mindset is at least as important as good numbers.

Buxlo122

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Re: New Budget, New Town, New Job
« Reply #11 on: January 14, 2014, 08:02:41 PM »
Car insurance in Canada is stupidly expensive. It will come down in time as our driving history becomes more established (approx 1/2 what it is now in three years time). Would love to go carless but have family outside of Toronto that we need to be able to visit :(

Hi,

Not from Canada so just wondering - do you need to be insured to establish your driving history?  And how often do you visit your family outside of Toronto - if it's infrequent would it make sense to hire a car for those trips?  Would your girlfriend be able to get a better insurance rate (or is she also new to Canada?)

You need to be insured to establish you driving history (insurance claim history).

We are insured under my girlfriend at the mo because she does have some history. However she has been out of the country for so long it has almost disappeared.

Hiring a car could be an option but I think it would cost about the same or a bit more. We will see how our driving habits change over the next year or so.

BPA

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Re: New Budget, New Town, New Job
« Reply #12 on: January 14, 2014, 08:27:14 PM »
Car insurance in Canada is stupidly expensive. It will come down in time as our driving history becomes more established (approx 1/2 what it is now in three years time). Would love to go carless but have family outside of Toronto that we need to be able to visit :(

Hi,

Not from Canada so just wondering - do you need to be insured to establish your driving history?  And how often do you visit your family outside of Toronto - if it's infrequent would it make sense to hire a car for those trips?  Would your girlfriend be able to get a better insurance rate (or is she also new to Canada?)

You need to be insured to establish you driving history (insurance claim history).

We are insured under my girlfriend at the mo because she does have some history. However she has been out of the country for so long it has almost disappeared.

Hiring a car could be an option but I think it would cost about the same or a bit more. We will see how our driving habits change over the next year or so.

Not sure what area of Toronto you are living in, but I found public transit a lot more convenient than car commuting.  I worked in North York, went to school downtown, and lived at Bloor and Islington.