Canadian Money Forum banner
1 - 20 of 118 Posts

·
Registered
Joined
·
325 Posts
Discussion Starter · #1 ·
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
 

·
Registered
Joined
·
325 Posts
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!
 

·
Registered
Joined
·
325 Posts
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.
 

·
Registered
Joined
·
325 Posts
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!
 

·
Registered
Joined
·
325 Posts
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.
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #21 ·
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.
Yes, opened a TFSA to use as an emergency fund. We'll be contributing $50/week to it. This money will not be put towards any debt repayment etc. It's really just to be used if something really bad happens.
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #24 ·
A number of good thoughts and recommendations. I have only one additional comment on expenses. $282/month ($3384 per annum) seems a lot for insurance for 2 vehicles even if both are listed as commuter vehicles and one as a work vehicle. May be a region specific issue, but a thought to shop around for perhaps $200-500 savings there.
Yes, unfortunately I've got the cheapest possible insurance. In Manitoba, auto insurance is public, so MPI (Manitoba Public Insurance) basically does whatever they want with insurance rates, and you're stuck with it. There's no competition. I've even got my vehicle listed as "pleasure use" which means I'm not allowed to drive to work more than 4 times a month with it (saves about $30/month). Every year I go without a claim, I go up a "driver safety level", which usually gives me an additional 2-5% savings the following year. Unfortunately, MPI has recently been raising the rates each year at a higher rate than the annual safety discount you get. It's a little ridiculous. You go up a safety level, but still pay more the following year.
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #28 ·
If I were you I wouldn't focus so much on cutting back "unnecessary" expenses. It doesn't sound like you're living extravagantly by any means and you still wanna live a decent life with your wife. Getting rid of the rental condo sounds like a good idea.

I bet a lot of people would jump at your setup. Unlimited OT at a decent paying job and a crash pad nearby? That's how you pay off debt without impacting your family. Especially if you're gone for days at a time anyway... it wouldn't impact them whatsoever unless you start spending more time away from home than usual.

Very true! I'm definitely thankful to have a decent combined income with stable work. Getting rid of the condo will relieve some stress and give me an extra $175/month.

Just got credit card #2 paid off and cancelled as well as picking up 17.5 hrs of OT!
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #29 ·
I opened a TFSA, where I am putting $100/month away. Over the next year, it will be worth over $1000 and I won't touch it unless there's an emergency. We also opened a high interest savings account, where we are putting away $200/month. This will just be general savings for random things we might want to save up to buy down the road. We will try to always keep over $1000 in that account. Also opened an RRSP where I will contribute $100/month in order to pay off my HBP installments and help my tax return.

Next month, we will get over $1000 more than our budgeted income, because I have been picking up OT. I plan to keep doing a minimum of 12 hrs/month of OT(did 17.5 this month) in order to build up some savings and pay off our debt more rapidly.

I realize that saving money in accounts with lower interest return than the cost of interest on the LOC doesn't make a lot of sense. It's just a mental thing for me. I want to only spend money from now on that I have in hand saved up. I find it's way easier to spend money on a line of credit than it is to spend money you have. So even though it doesn't make logical sense, I think it will be worth it just in the sense that it will make me more frugal.
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #33 ·
Alright, here is my first monthly update!

Overall, it was a good month. I failed to budget for the fact that there were three biweekly SUV payment in December, instead of two. We went about $100 over budget on Christmas gifts, but we were way under budget for restaurants, entertainment and a few other variable budgets.

December Income
$10 124 (including $1600 from selling my boat)

December Spending
Fixed Expenses:
$5673 - Over original budget due to 3rd SUV payment and quarterly water bill that I forgot to budget initially

Variable Expenses:
$1671

Total spending - $7344
I also paid off Credit Card #2 completely and closed the account.

I did 17.5 hours of OT which will be paid to me on my mid Januay pay cheque. I expect I will be able to do at least 20 hrs of OT in January.

January Outlook:
Income:
At least $8545, maybe a couple hundred more.
Fixed Spending:
$5211
Variable Spending:
$1605
Total Spending: $6817

I reduced the gift, restaurants, entertainment and alcohol budgets.

Should have at least $1728 left over for credit card repayment.
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #34 ·
An update on accounts:

Liabilities
Condo Mortgage: $136 178
House Mortgage: $235 780
SUV Loan: $27 583
Car Loan: $5300
Wife Student Loan: $6000
Student LOC: $8023
LOC: $49 500
Credit Card: $2400

Total Liabilities $470 764

Assets
Chequing Account: $1616
Non Registered Work Savings Account: $7500
TFSA (work savings plan): $500
LIRA: $15 000
Condo: $155 000
House: $270 000
Total Assets $449 616

Net Worth: $(21 148)

I didn't include the value of our two vehicles as assets this time. I plan on selling my motorcycle in the Spring, and expect to get about $2500 for it. One thing I'm proud of is how fast we are shredding credit card debt. We have cut our spending way back, and have paid off and cancelled one credit card, and have nearly cut the last one in half. I expect by next month, it will be paid off. My Wife and I are doing more free activities around the city like going for more walks in the park with the dog, playing games at home etc.

Another thing I have been doing is going through all of our excess crap in the basement that will never be used again, and putting things for sale on kijiji. It's freeing up a lot of space in our house, and giving a few hundred extra dollars to pay off the credit card. It's also helping to keep me in the mindset of only buying things that are going to be useful in our every day lives. I don't want any more items that are going to sit in the basement for eternity.
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #36 ·
I'll give an update on accounts by mid month, but here's a recap on January's spendings/earnings.

Income: $8770 Net
Spending: $6595 (budgeted spending was $6817)
We made $2175 more than we spent.

Breakdown of spending:
Fixed Expenses: $5244
Variable Expenses: $1351

We were able to scrape $250 off of our variable spending budget. One thing I noticed is that because we almost completely stopped eating out, we are having to buy slightly more groceries as a result. With that being said, it would have been very hard to meet our $400 grocery budget. We spent $487 on groceries in January, while still managing to eat quite well (although a lot of repetitive meals, cooking in big batches for leftovers etc.) I expect to have our last remaining credit card paid off in full by mid month.

Next month, I expect the following for our budget:
Income: $8545 (Give our take a couple hundred)
Fixed Spending: $5211
Variable Spending: $2000 (hopefully less)
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #39 · (Edited)
Update on accounts:
Liabilities
Condo Mortgage: $135 750
House Mortgage: $235 119
Wife Student Loan: $5900
SUV Loan: $27 136
Car Loan: $5000
Student LOC: $7970
LOC: $49 200
Credit Card: $200

Assets
Chequing Account: $1400
Savings Account: $250
Non Registered Work Savings Account: $7600
TFSA (Work savings plan): $2100
LIRA: $15 300
Condo: $155 000
House: $270 000
RRSP: $100
TFSA: $150

Net Worth : ($14355)

An increase of $6793 since last month. I don't expect next month to be quite as fruitful, as I am starting to feel burnt out from all the overtime, and I have been away from home a little too much the last few weeks. It is definitely nice to see the results of our hard work though. If we can keep it up for another year or so, we should start to notice some dramatic results. Thanks for following!
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #40 · (Edited)
Well, February was a fairly productive month. Managed to get the credit card completely paid off, and got quite a bit of OT pay. As for the current outlook - We are about to go on a vacation to Mexico in a couple of weeks, but going to try to spend as little as possible while there. We booked our room and paid for it for 5 nights about 4 months ago (before we were really passionate about getting back on track). I am able to get flights very cheap, so hopefully we can get away without spending too much. If we could go back in time, we wouldn't have booked this vacation.

I am starting a course at work next week, where assuming I am successful in the training, I will get about an 80% raise. If all goes well, I will be starting in that position in May or June.

Also, because of my foolish lack of RRSP planning throughout the year, I owe about $2500 in income taxes. This is because I live in Manitoba where taxes are fairly high, and I work in a province where taxes are low, and the payroll department deducted taxes based on the tax rate in the province I work in. Also, this is from my rental property. This year, I will plan my RRSP contributions accordingly so I don't take a hit next year. Thankfully, the money I have in my non-registered account through my work savings plan will have been vested for a year, and I will be able to take about $2500 from that account to pay my taxes.

Anyways, here's where things are at:
February Net Income: $8918

Fixed Expenses: $5234
Variable Expenses: $1217
Total Spending: $6451
Original Budget: $6731
= $280 under budget

Income of $8918- Expenses of $6451 = We made $2467 more than we spent.

Accounts:

Liabilities:
Wife student loan: $5000
Student LOC: $7915
House Mortgage: $234 406
Condo Mortgage: $135 287
LOC: $49 100
Car Loan: $4720
SUV Loan: $26 689
Credit Card: $0
Total Liabilities: $463 597

Assets:
Chequing Account: $1410
Savings Account: $453
TFSA: $200
RRSP: $250
RRSPL: $15 459
Work non-registered, RRSP and TFSA combined value: $9886
House: $270 000
Condo: $155 000
Total Assets: $452 658

Net Worth: ($10 939), an increase of $3416 since last month.

Projections for March:
Budgeted Income: $7550
Budgeted Spending: $7310

This budget includes a $300 limit for spending in Mexico, as well as our airfare, however, I'm optimistic we can do it much cheaper.

Thanks for following!
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #41 · (Edited)
Hi Everyone,
It's been quite a while since I posted an update. Things have been hectic lately. I recently passed some pretty substantial training, and have been awarded a promotion, which includes a 78% raise. I'm very thankful for that, as it will help me get this debt paid off way faster, and with this new position, there is even more opportunity for overtime. The trick for me is going to be to stay focused on putting the extra money towards debt repayment, while keeping our spending to a minimum, and avoid spending this extra money.

Last month was quite costly, as I had to pay $2500 in income tax. I work in Alberta, but live in Manitoba. My employer deducts Alberta levels of income tax from my pay cheque, but taxes in Manitoba are quite a bit higher than in Alberta. This year, I will be smarter, and contribute more to my RRSP's to avoid the tax hit next year. I currently have my motorcycle listed for sale, and am hoping to get about $2500 for it. Also, I renewed the term on my condo mortgage, as the tenants chose to renew their lease for another year. I got a good rate of 2.96% for 3 years on it. Hopefully the value of the property will go up in that time. While I was renegotiating my renewal, I was able to get the bank to stop paying the property tax on my behalf. This gives me an extra $165/month. This is good, because the bank over-estimated my property tax significantly last year, so when I renewed my mortgage, the bank cut me a cheque for the property tax money that I over-paid to them.

One thing I am wondering if anyone can give me some advice, is which debt I should pay off first? I will have about $4000 of extra cash around the end of the month (after paying all bills and credit card). The LOC is the highest interest, but I could pay off my car loan (which is 0% interest), and that would free up an extra $283/month to put towards paying off the LOC. Would it make sense to do that? Or should I just put that $4000 on the LOC right away, and keep making the $283 monthly payments on the car until it's paid off in September 2020? Thanks!

Here is an update on where we're at:

Assets:
Chequing Account: $4311
Savings: $104
RRSP: $250
TFSA: $100
RRSPL: $15 976
Work non-registered/TFSA/RRSP combined: $17 030
House: $270 000
Condo: $155 000
Total Assets: $462 771

Liabilities:
Wife Student Loan: $4700
Student LOC: $7719
House Mortgage: $233 060
Condo Mortgage: $134 414
LOC: $49 200
Car Loan: $4154
SUV Loan: $25 346
Credit Card: $1841 (I pay it off in full every month)
Total Liabilities: $460 434

Net Worth: $2337 (finally in the green!)
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #45 ·
In Manitoba, you can't just choose not to renew the tenant's lease. You are legally required to offer them a lease renewal 3 months before the end of the existing lease. If you don't, then the lease automatically renews on a month-month basis. The only way you can get your property back is if you decide to move back into the place yourself, you sell it and the buyer is going to move in, or you are going to perform major renovations (in which case, once the renovations are complete, you are required to let them move back into the place).

I figured to try selling it with them still living there would be a huge pain, considering how slow the Winnipeg condo market is in the first place.

I was able to get the bank to stop taking about $165/monthly for my property tax, so I am no longer giving the bank an interest free loan with that money at least, so I just pay $1800 in a lump sum payment to the city for my property tax each year. I am increasing the rent each year as well.



If the LOC is still anywhere near 7% (as you said aways back), I'd pay it first. Paying $4,000 on it will start saving 7% on that amount right away.
Agree completely if interest rate remotely approaches 7%. There is a huge amount of debt there to retire. Do the highest interest rate first.

Added later: If I recall correctly, your rental property was not cash flow positive if you included all costs. Why would you have not put it up for sale about 3 months before tenant lease was up, rather than carry it 'cash in red' for another year? Why do you assume it will go up in value over this next year?
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #47 ·
Thank you! That's good advice! My mortgage is not due for renewal for another 2 years yet, so I will keep that in mind. With my new position, I will be taking home about an extra $2000/month (not including OT), and I plan on putting pretty much all of that money towards debt repayment. So I'm hoping to be able to quickly chop down this mountain of debt.


Congratulations on decreasing your debt by almost 15K since you started this thread. You are moving in the right direction and that's awesome. One thought is when is your mortgage due? If it's soon you might be able to add the higher interest debt to the mortgage and lower the interest rate. If you do that reduce the LOC to a very small amount. LOC are to easy to use and can be dangerous if you are not careful. Make sure that you can make Principal payments anytime. Banks have lots of different mortgage products and it's worth the conversation. Don't rush into this. The best thing to do is develop good money habits and it looks like you're moving in that direction.
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #49 ·
Those are good points. Perhaps I will look at selling the property next Spring. I'm currently paying off about $5500/year in mortgage principal on the rental property. However, yes, on a monthly basis, I am down about $170/month with all expenses added up. I am increasing the rent by the maximum allowable amount each year, so that monthly loss is slowly shrinking.

Yes, lesson definitely learned! My goal is to pay off about $25 000 of the LOC over the next 12 months. Perhaps more, but I know $25 000 is doable. 12 months is somewhat of a long time, so I've split that goal up into quarters. So by the end of August, my goal is to have about $7000 paid off. Try to get the balance down to $42 000 by the end of August. I'll just keep focused on my goals one quarter at a time, and watch this mountain of debt slowly crumble.

You are going to have to do that eventually if your tenants never decide to leave. Are you prepared to be cash flow negative until perhaps 2025? When do you stop the bleeding? I only did cursory mental math in my head from your numbers on the opening page of this thread, but it seems you have to be in the red by hundreds of dollars per month (mortgage, condo fee, property taxes, property insurance, repairs). The condo market could actually get worse.

Landlords sell properties on an ongoing basis all the time. I don't know anything about Winterpeg, but I would sell it when 'timing' is right rather than when the lease expires and hoping the tenants won't renew.

P.S. I'd never be a landlord in a province where I cannot terminate the lease upon completion of the term. Well, actually, I'd never be a landlord at all.

P.P.S I second Gruff's encouragement on good progress! You are coming out of what was a pretty big hole. Lesson learned?
 

·
Registered
Joined
·
325 Posts
Discussion Starter · #50 ·
Alright, so a small update. I switched our banking to Tangerine, and will save $11/month in fees. Also, the chequing account/savings account have a higher interest (still very low, but better than nothing I suppose). I also made a $3300 lump sum payment on my LOC, which felt great. Yesterday, I had a $190 unexpected vehicle repair, but that's life I suppose. Two wheel studs broke off, so didn't have much of a choice in getting it fixed. Thankfully it didn't end worse. I also spent $240 on a new weed whacker, after my cheap, low quality one bit the dust. It was on sale, and came with a 2-year warranty at least. It's a STIHL, so hopefully it will last for many years. I have a $1900 property tax payment coming up, and a $100 speeding ticket (which was originally $250, that I got back in December for going 12 km/h over the limit. I got it reduced to $100, and got the due date extended until the end of June). Otherwise, things are going well, and I expect to be able to continue paying off about $1600/month off my LOC, if I don't do any OT. Any OT I pick up will go directly to the LOC, to try to get it paid off as quickly as possible.
 
1 - 20 of 118 Posts
Top