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Hi Everyone,

First time posting here. I'm not in the worst possible financial situation, but I have a fair amount of debt that I want to get paid off as quickly as possible, and allow myself and Wife to reach financial freedom as quickly as possible. This is mostly a motivational thread for myself that I'm posting in order to hold myself to account, hear advice from all of you, and also track my progress as time goes by. In my budget, you will notice there are some pretty frivolous spending categories (alcohol&bars, restaurants, entertainment etc....I created this budget based on what we have normally spent per month up until now. I realize this is not great, and we are trying not to spend nearly that amount of money this month. We will adjust these budgeted figures as time goes on. All extra money will be put towards paying off these two credit cards as fast as possible. I will be cancelling the $1400 credit card once that's paid off, and my Wife and I will just share the one remaining credit card account. Once the credit cards are paid off, we will pay off my Wife's student loan, followed by my student LOC, since the balances on these two loans are relatively low and could be paid off fairly quickly. I do get lump sum bonuses from work about 3 times a year, which I have not factored into my budgeted revenue. Those bonuses will be put directly towards debt repayment. I'm also assured a substantial increase in pay this coming April, and will maintain this same budget, while putting extra earned money towards debt repayment. We plan to sell our rental property in the Summer. There can be arguments made back and forth about the pros and cons of having a rental property, but in my case, I can pick up 2 days of OT at work, and make the same amount of extra money a month as what my monthly net gains are from owning the rental property. Less headaches, and I can get liquid cash rather than having it tied up in property.

Also not budgeted in my planned revenues is my savings plan through work. They match 10% of my gross income every pay cheque, and I can withdraw that money after holding it in the account for one year. I currently have $7500 in a non registered savings account, and the remainder of contributions will be going into a TFSA. I plan to withdraw quarterly (about $2000 every 3 months), and all of this money will go directly towards debt repayment.

The car loan will be paid off September 2020, and the SUV loan will be paid off September, 2023. I realize new vehicles are a terrible investment.....It's just a choice we're living with, and hopefully these vehicles will last us a very long time.

Thanks for following! I will provide updates monthly, and I look forward to hearing your advice!

First, I will start with my assets and liabilities, and then give a breakdown of my planned budget.

I have a motorcycle worth about $2500 which I plan to sell in the Spring and put that money straight towards paying off debt. I just sold my old boat for $1600, and put that $1600 straight on one of the credit cards.

Assets:
House - Worth $290 000
Rental Property - Worth about $155 000
Car - Worth $11 000
SUV - Worth $30 000
Non registered savings account - $7500 (funds not accessible for another year, as it is locked in for a minimum one year in my savings plan through work)
Locked In RRSP from previous job - $16 000 (I have transferred these funds to my personal bank into a self directed RRSP, and plan to invest this money in ETF's long term)

Total Assets: $509 500

Liabilities:
Wife's Student Loan - $5000 Interest 4.95%
My Student LOC - $8074 Interest 5.45%
Line of Credit (used it to make some substantial renovations to the house) - $50 000 Interest 7%
Car Loan - $5660 Interest 0%
SUV Loan - $28 029 Interest 0.9%
House Mortgage - $236 000 Interest 2.64%
Rental Property Mortgage - $136 606 Interest 2.94%
Credit Card #1 - $4500 Interest around 19%
Credit Card #2 - $1400 Interest around 19%

Total Liabilities: $475 269

Assets - Liabilities = $34 231

Income
Monthly net household income from work: $6580/month
Monthly revenue from rental property: $1265/month
Total Monthly income: $7845/month

Fixed Expenses
Auto Insurance - $282/month for both vehicles
Car payments - $750/month
Internet - $75/month
Mobile Phone - $136/month for both of us
Loan repayments - $609/month ($120/month for Wife's student loan, $89 for my student line of credit, $400/month for general line of credit)
Housing - $2765/month ($1420 house mortgage, $920 rental property mortgage, $423 rental property condo fees)
Bank Fee - $10.50/month
Home Insurance - $85/month
Crash pad - $250/month (I work in a city away from home quite a bit)
Utilities - $306

Total Fixed expenses: $5268.50

Variable Expenses Budget
Fuel - $170/month
Auto Service - $50/month
Entertainment - $250/month
Alcohol and Bars - $160/month
Restaurants - $200/month
Groceries - $400/month
Gifts - $145 (mainly just for the month of December)
Pharmacy - $40/month
Home Supplies - $100/month
Hair - $20/month
Pet Food/Supplies - $60/month
Clothing - $100/month
Hobbies - $100/month
Travel - $150/month

Total Variable Expenses Budget: $1945

Total Budgeted Monthly Expenses: $7213/month
Income - Expenses = $632/month left over for savings and debt repayment
 

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Welcome to the forum! I think looking at your current spending patterns, as you've done, is great as a starting point.

Is the "crash pad" something like a room in an apartment or shared house, a place to occasionally sleep at?

Ignoring the rental property expenses (since you plan on selling that), it looks like you and your wife currently spend around $5871/month or $70,452/year
 

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Well, your rental property is costing you money every month without factoring in taxes, maintenance and vacancy, so selling it is a good idea. Hopefully the market in your area is better than most of Canada right now and you’ll be able to sell it early next year.
 

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There are lots of online bank (Simplii, EQ, Motive, Tangerine) who offers no fee banking. Why would you pay $10.50 monthly? Little drops of water make the mighty ocean…
 

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caution: this will sound a bit draconian ... but imho you have way too much debt!

it looks like you've already hit the debt recognition wall though. It's clear you've taken the first steps to get the family/couple debts under control & you've formed an excellent plan. Makes me wonder if posting a diary thread here is another way to reinforce the anti-debt campaign going forward. If so, welcome! we will cheer you on as best we can

first, re the assets: it's customary to not include vehicles or other personal property in asset lists. Some parties don't even include their real estate. In your case, subtracting the vehicles' estimated value tips you into the red, ie on paper there would be no net worth at all.

obviously the first debts to trim are the credit cards. Looking over your budget, there are 3 items that could easily be trimmed: entertainment $250, bars $160, restaurants $200. That's $610 per month, or a grand total of $7320 per annum. How painful would it be to cut that in half?

might it be less painful to eliminate 2 out of the three totally on a rotating basis, ie this month you could do entertainment but no bars or restos, next month you could do restos but no bars or entertainment, etc. This rotating feature could save you roughly $4000-5000 per annum.

it would likely increase the household grocery/beer/wine bill somewhat but the total effect over time should be negligible when compared to the savings achieved. As for entertainment, there are plenty of zero-cost sports & cultural events in every canadian municipality for your two-month tours of duty going cold turkey, check em out!
 

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I would replace the SUV with a cheaper economy car get a set of rims from a wrecker put snow tires on it for winter. Auto service seems high get oil changes @ Walmart & do not use the dealership for service. If economy car you buy is not worth much take off collision plus make sure you get the cheapest car insurance & double check every year if still the best deal. Agree with JAG, SC & HP
 

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I think by cutting back some spending (especially on entertainment & going out) and selling that rental property, you can get into good shape. I agree with everyone above.

Your overall scenario looks promising. Not counting the rental property, you have a household net income of $6580/mo and you're spending $5870/mo. This is good news... you're spending less than you make.

So while you currently are able to save about 8K a year, I think that by reducing debt and trimming your spending a bit, you can easily get to 12K annual net savings. In just 7 or 8 years you could see your net worth rise by 100K as a result!
 

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Discussion Starter #8
Thanks for all the replies, everyone! This is definitely very motivating! As soon as my tenants move out, I plan to sell the rental property. Hopefully I can get a reasonable price for it. As for the entertainment, bars, restaurant budgets....we are on track to spend way less than that this month, so I look forward to revamping the budget next month! With the money saved in these categories, I plan to completely pay off and cancel credit card #2 this month.

As for the SUV, I admit it was a slightly unnecessary purchase, but we plan on having kids soon, my Wife loves it, she drives a lot on the highway in lousy winter conditions, and it is just way safer than the old vehicle she was driving. I do tire changes etc. myself, and hopefully it will last us a long time.

As for the crash pad....I spend 2-3, sometimes 4+ nights in this city away from home, so it saves me money not having to get hotels. I also take the bus to and from the crash pad, rather than uber/taxi.

Another thing too is that there is almost unlimited overtime for me, so I will try to do about 8 hrs OT/month and put that money straight towards debt repayment. I've also started contributing $50/month to a high inrerest savings account, just to start boosting my liquid cash a little bit.

Thanks for all the tips, and I look forward to sharing an update on Jan 1st!
 

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As for the crash pad....I spend 2-3, sometimes 4+ nights in this city away from home, so it saves me money not having to get hotels. I also take the bus to and from the crash pad, rather than uber/taxi.
I'm intrigued by the crash pad and might be able to use something like that myself when I'm hopping between cities. Can you share any tips on how to find this? Yours appears to be cheaper than a standard apartment. Do you use motels? Air B&B?
 

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TAnother thing too is that there is almost unlimited overtime for me, so I will try to do about 8 hrs OT/month and put that money straight towards debt repayment. I've also started contributing $50/month to a high inrerest savings account, just to start boosting my liquid cash a little bit.
If overtime is almost unlimited, why not do more than 8 hours a month? Even for a short period of time...perhaps long enough to clear the CC debt?

I remember working ridiculous overtime (20+ hours a week...and I'm not suggesting you do that much) for a while a few years ago, and although I had no CC debt, my goal was to pay off the last $10k on my mortgage and be debt free. The mortgage was low enough that the monthly interest was negligible, but getting rid of that last payment was very satisfying.
 

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If overtime is almost unlimited, why not do more than 8 hours a month? Even for a short period of time...perhaps long enough to clear the CC debt?

I remember working ridiculous overtime (20+ hours a week...and I'm not suggesting you do that much) for a while a few years ago, and although I had no CC debt, my goal was to pay off the last $10k on my mortgage and be debt free. The mortgage was low enough that the monthly interest was negligible, but getting rid of that last payment was very satisfying.
Indeed. Why not work 8hr+ OT per week instead of per month, for a few months? I would consider paying off the credit cards enough of an emergency to work excessive hours until paid.

Ditching the 2nd house and SUV sounds like a great idea, buying another cheap 10k car in its place Honestly, and it might just be me, but vehicle safety, including winter tires, is an excess luxury that is not even close to mandatory IMO (except in quebec lol). Just drive slower. A modern sedan car with modern traction control, modern airbags and bumpers, and modern all-seasons is I'm sure much safer than the cars we rode in as children 20 years ago, whether they had the winter tires of the day or not.

Lastly, with the 2nd mortgage and credit cards gone, and maybe the huge SUV loan gone too (but maybe not), I wonder if you'd qualify for a better rate on a Home equity line of credit at around ~5% to replace that 50K at 7% ?

All in all it's great to hear that another young Canadian is working to become financially responsible and will soon start having kids.
 

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It would not surprise me if you added up the cost of winter tires & compared it to the money spent from not having winter tires. More money would be spent by not having winter tires i.e., lost wages, increased insurance costs, repair bill or having to buy a new car. Plus your other tires last longer.
 

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Honestly, and it might just be me, but vehicle safety, including winter tires, is an excess luxury that is not even close to mandatory IMO (except in quebec lol). Just drive slower. A modern sedan car with modern traction control, modern airbags and bumpers, and modern all-seasons is I'm sure much safer than the cars we rode in as children 20 years ago, whether they had the winter tires of the day or not.
Traction control doesn't make all season rubber grip better on ice, and since the OP changes tires himself then the only cost for winter tires is for the rims because the tire wear is spread out over 2 sets of tires rather than 1 set. The traction advantage of winter tires is well documented and is not a place to try to save money.
 

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Discussion Starter #14
Lots of great discussion here. Thanks everyone! With the SUV....I understand it is a luxury, but it's the only real possession my Wife has, she loves it, and she's not really into any expensive hobbies, and she never really spends money on herself. I'm just thankful she's 100% on board with this whole budgeting plan. She spun out in the Winter and was almost involved in a very serious car accident when the weather was bad while driving our older car. When that happened, I basically said screw that, and we got an SUV with all wheel drive and winter tires. She drives about 30 minutes on a highway in the prairies each way to and from work, where the wind can get really strong and winter conditions can be brutal. Again, I realize lots of people do that drive in small, older cars. There are also a lot of people who die in car accidents on that highway...It's just one of those things. I was paranoid about her safety after that incident in our older car. She feels much safer now, and to me, that's worth a fortune.

I sold my old boat which was a big step for me last week, and put that money on credit card #2. I will have credit card #2 completely paid off and cancelled by Friday! All of our Christmas shopping is done now, and we were able to stick to the $145 budget for gifts for our whole family. We only spent $20-$25 on each person that we got gifts for. I am going to phone the bank today where my LOC is held, and try to negotiate a lower interest rate. I'll let you know how it goes!

So far this month, we have spent $0 on Entertainment, and $18 on restaurants. I'm expecting that we will have at least $300 more left over than what we budgeted for. The following months should be even better, since we don't have Christmas to worry about etc.

That was a good point about the overtime! With the nature of my work, there are certain rules pertaining to how long I have to be off work between each work period, so it's not really possible to pick up 8 hrs OT/week, but I could probably do 12/hrs month instead of 8, which would give me a good amount of extra money.
 

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Don't completely decimate your entertainment budget...you still have to live. It's no fun saving if you can't enjoy yourself on occasion. Just be selective and choose low cost entertainment.

Your auto loan interest rates are so low that it makes no sense to pay them off quickly but lowering the LOC interest rate will help. My LOC is prime + 1%, so yours at 7% seems high.

It's a small expense, but can you reduce the cell phone plans? You're paying almost $70 a month for each phone.
 

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Discussion Starter #16 (Edited)
Don't completely decimate your entertainment budget...you still have to live. It's no fun saving if you can't enjoy yourself on occasion. Just be selective and choose low cost entertainment.

Your auto loan interest rates are so low that it makes no sense to pay them off quickly but lowering the LOC interest rate will help. My LOC is prime + 1%, so yours at 7% seems high.

It's a small expense, but can you reduce the cell phone plans? You're paying almost $70 a month for each phone.
Very good point! You definitely have to live a little. Can't let budgeting take over my life. For this month, I budgeted $250 for entertainment, since it's Christmas, and my friends/family may want to do some activities over the holidays. So far, we've spent $0 on entertainment this month, and I'm expecting it to for sure be less than $150 by the end of the month. I'm thinking going forward from January, I will reduce this budget to $125, and see how that goes. We've started doing things that are free entertainment. I make my own beer and wine at home. We are about to bottle 23 litres of beer, and 23 litres of wine this week. This should allow us to not buy anything from the liquor store, and also be able to just have friends over for board games, etc. My Wife and I have also enjoyed cooking together at home this month. We've been enjoying some nice meals for low cost, and actually prefer this over eating out at restaurants.

As for the cell phones, we are definitely looking into this! I travel all over the country for work, so it's important to have a nationwide plan, and this pricing is about a 20% corporate discount. When I go to renew the phone contracts, we can get an additional 10% off, since our phones will be already paid off. I will look at reducing out data coverage though and see how much cheaper I can get the bill, since my Wife and I almost always have access to wifi.

I just got back from a bank appointment. The bank I do my personal banking with (RBC) might be able to take my LOC from BMO, and give me a lower interest rate. I also just got off the phone with BMO, and they are going to make an application for a lower interest rate. They said I should hear back in 1-2 business days. The lady at RBC said that if I opt for a secured LOC, they may be able to get me as low as prime +1%, which would be 4.95%.

As soon as my credit cards are paid off, I will most likely increase my payments on the LOC from $400/month to $600, as well as taking any excess money I earn from OT etc. and just putting it directly towards debt repayment. I've also come up with a plan to just save up a bit of emergency cash in a TFSA. I'm going to put $50/week into the TFSA, and just make sure I don't touch it. I will also be able to start withdrawing from my savings plan at work (none of it is locked in, or in an RRSP, so no penalty for withdrawal) starting in May. I plan to withdraw quarterly, and this will be an extra $2000+ every 3 months, which I will put directly towards dept repayment. I also get 3 bonuses/year, each of which is not part of my budget, and I will just treat as "found money", and will also be put directly towards dept repayment.

Also, my Wife and I both downloaded this app called "Mint", where we have a detailed run-down of our budget and spending (it's linked to our bank account/credit cards). My Wife and I both share the same Mint account, and every time we purchase something, we go into the app, and put the purchase under one of the budget categories. It's definitely helping to keep us motivated and looking for new ways to be frugal!

I'm looking forward to what I will have to share in this thread over the coming months/years!
 

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It would not surprise me if you added up the cost of winter tires & compared it to the money spent from not having winter tires. More money would be spent by not having winter tires i.e., lost wages, increased insurance costs, repair bill or having to buy a new car. Plus your other tires last longer.
Traction control doesn't make all season rubber grip better on ice, and since the OP changes tires himself then the only cost for winter tires is for the rims because the tire wear is spread out over 2 sets of tires rather than 1 set. The traction advantage of winter tires is well documented and is not a place to try to save money.
Great list of only the positives.

Though, insurance savings is minimal. Lost wages (you mean from the wreck?) How about lost wages every six month to change the tires or pay someone to do it?
Storage? Sure if you are already living somewhere large. Apartment folk have no place for tires. Probably better not to pay for a new house just to store tires.
More expensive than all seasons. There is no way it costs less to maintain two sets of tires and change twice a year instead of just running one set all the time.
And traction control improves the performance of all tires. My point being that modern cars are super safe already, and we all made it here just fine in those old unsafe cars.

We've been driving on all-seasons in northern Alberta for 5+ years and all is well (knocks on wood). At first I was like you guys and thought she was crazy (her car) but I grew into it and it's hardly a concern anymore. The ABS kicks in at a moderate rate maybe twice per year and allows you to feel the limit of where the tire grip is.

I'm not saying that winters aren't better, just that they aren't some miracle improvement to safety or life necessity, and that they come at a cost and a hassle. Perhaps if someone is concerned with saving money and paying off credit cards, winter tires aren't something that they need, like food or rent, which is how many people think of winters, especially parents.

Anyways I'm sure Fisherman already has winters, and I'm not recommending he gets rid of them now. :p
 

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Great list of only the positives.

Though, insurance savings is minimal. Lost wages (you mean from the wreck?) How about lost wages every six month to change the tires or pay someone to do it?
Storage? Sure if you are already living somewhere large. Apartment folk have no place for tires. Probably better not to pay for a new house just to store tires.
More expensive than all seasons. There is no way it costs less to maintain two sets of tires and change twice a year instead of just running one set all the time.
The OP previously stated that he changes his own tires. He also owns a house so the cost to change and store tires is $0. If he lived in an apartment with no storage and didn't change the tires himself it would be a different story.

He also stated that his wife has 1 hour daily highway commute on the prairies...skimping on winters is foolish under those conditions. I have driven in 40 prairie winters and would never do so without winter tires.
 

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great progress in a nothing of time!

but we could already see from the first post that you had taken the all-important first step, which was to face up to the debt & Deal With It.

hope you`ll be patient while your profile morphs gently from red into green. Then you`ll be saving in earnest. Did you say you`d put your first $50 into a TFSA? good idea, those TFSAs. In a future chapter your wife should have one too.
 

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Discussion Starter #20
I'm intrigued by the crash pad and might be able to use something like that myself when I'm hopping between cities. Can you share any tips on how to find this? Yours appears to be cheaper than a standard apartment. Do you use motels? Air B&B?
It's not something I use for various cities, it's the same location in one particular city that I am based out of for work. The person basically rents out bunks in each room of their rental property for transient tenants like myself. I pay them $250/month, and I get my own bed in a room. I can come and go as I please, use the kitchen, laundry etc. There are 2 beds in the room I stay in. I've never seen the other person who has the other bed in the room. There's a floor to ceiling divider between the two beds, so there's a reasonably level of privacy.
 
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