This & That: Happy Happy Edition
Posted by Gail | Filed under This & That
C wrote: I am a single 23 year old [Australian] with a mortgage, an additional supplimentary loan and a car loan. I bought my house last year at the age of 22 on my own as I have a decent paying fulltime job working as a factory hand at a dairy factory. The job itself and the hours aren’t the best, but I can live with this because the money enables me to really enjoy and make the most of my life out of work, which is what is really important to me. I work 4 days on (12 hour shifts), then have 4 days off which is great!
Now….my problem is, I have the international travel bug…BAD!! Sadly I have realised over the years that it will not go away. Believe me, I’ve tried to ignore it! I have been to China, Hong Kong and Africa, and literally had the time of my life!! Travelling is important to me, especially now in my life as I am young and single with no children. I know while I have these loans I should not be going on expensive holidays, like back to Africa or to Canada or the US (as I would love to!). But I cannot give up on the idea completely so I feel stuck! I can’t find the balance. I don’t have any desire to travel my own country at this stage, even though it is obvious that it is the cheaper alternative. So, I decided to book a trip to Thailand in Feb, as it is a cheaper alternative for Australians being a little closer in distance. This trip will cost only 30% of what a trip to Africa or Canada would cost me so I am happier with that. But if you have any advice for me on this subject, that would be very much appreciated!
C, I think you are doing very well and have a sound plan in place in terms of getting rid of your “supplemental” loan and your car loan. As far as the travel bug goes, half the joy comes from the planning, and I think you can use this to help keep you excited about travelling even when you’re not. Since this is a big part of your life, you should also have a line on your budget which you use to accumulate the money you would use to travel. So if you like to take two trips a year and they add up to $4000 then you’d need to set aside $334 a month to make that happen. Pick your next trip, do the research, make a “travel poster” or a “travel guide” for yourself and enjoy the planning process as you save up the money to make the trip a reality. If you want to spend more than your budget currently allows, you could either find a way to make the extra money you need for this goal, or you could make a game of finding ways to travel that get you out and about for the least amount of money. You’re right that now’s the time to be doing this. Young, unentangled and with itchy feet, you should be taking full advantage of the opportunity to see the world. But there are dozens of different ways of doing this from getting involved with charities that operate around the world, to earn-as-you-go vacations. Get creative. Good luck, and keep up the good work and the great attitude!
Kim wrote: Hi Gail – My husband and I do not have a debt question – but more of a “balance” question. We have been married for 18 years and are in our early 40’s. We both worked full time for the first 12 years of our marriage and thanks to fertility now have 2 children (3 & 5), we have done everything “right” as far as we can tell – really being very disciplined and going without vacations, only have one vehicle etc. We have paid off 2 mortgages, have no loans, we have no credit card debt – use 1 or 2 but pay off every month in full (have never paid credit card interest). We have wills, life insurance, RESPS for both children, pensions, RRSP’s etc. Our “problem” is my husband has a job that takes him physically away for 6+ months of the year, and 5 months of the year he is on E.I. – his job pays anywhere between 45 – 65k per year plus his E.I. I gave up my full time job to provide stability for our children (I have just started working again – just PT – to keep my foot in the door – I may go back for more hours as the kids get older) Due to the sometimes big variance in my husband’s pay, it has become very difficult to create a budget- there is money coming – but I have to really juggle as there are months when there is nothing. As the kids are getting oder is getting harder and harder. It was so much easier when we “lived” on my steady pay and used his to pay off debt – we never used his money to really “live” on before. Any advice you can provide with how to get a balance back would really help – we are really gun shy about debt – but know we need to buy a larger vehicle, need to replace 18 year old appliances soon and we really want to start “having some fun” as we haven’t had a real vacation in 11 years. We feel that we have worked so hard, but that now all of our money is in our house so to speak – and that life is passing us by. We really want to give our kids a nice life…I have a wonderful husband and we really talk about all things including money – but he will not consider changing jobs – 25 years in, 5 generations before him…
Kim, you have done so well, you both should take a pat on the back. Ultimately, what you’re having to deal with now is something lots of people face: feast or famine income. Here’s how you do it.
1. You work out how much it takes to meet your basic needs. This is your “A” budget. When you bring any money home, it goes into your “Savings” account. Each month you transfer the money you need for your “A” budget into your chequing account. This will also tell you how much you’ll need for the whole year to make your life work. In the “feast” months, there will be a considerable amount left in the savings account every month. Don’t touch it. (Yes, it’ll mean a little more deferral, but just til you have the system down.) That “extra” money in the savings account is going to help you get through those “famine” months.
2. Once you’re good with this system, you make a second budget. This is your “B” budget and it includes things like vacations, and the planned spending money you need to set aside for future purchases, like those appliances. As soon as you know you have all the money in your savings account to meet your “A” budget needs, you transfer the extra money to another Savings Account — your B Savings Account — and this is where you accumulate the money to meet those B needs. Some people like to have a separate account for each savings pool. Hey, savings accounts are free so knock yourself out. Or you can pool it all together and just keep track of what’s what on paper. Whatever works for you.
Lee wrote: I became a widow at age 48 (1998)with three sons ages 8, 15, 16. Since that time I have educated myself ( undergraduate and master’s degree, more than doubled my income, made very major home repairs including a basement income apt. One son is a Rhodes Scholar with a Yale Law degree, the other is very successfully employed in a job he loves. My other son was failing out of high school ( he is brilliant) and with school overseas he excelled and I am now supporting him a London School of Economics ($$$$). He is very focused on his career and is doing extremely well ( lunches with Gordon Brown ect), great marks. I came from very challenging and humble beginnings so I am very proud of what I have accomplished. Now the scary news!!!! Although my house is worth >$800,000 and I have $300,000 in RSP I have a whopping $200,000 in LOC debt ( and climbing to support the million dollar baby at LSE)
I love my job, it is secure and I plan to work until I am 70. ( good health secure job) I am tortured by this debt although very proud of what we have done as a family. I don’t mind eventually selling my home and I have no other consumer debt. I am not a spender otherwise. How crazy am I Gail? According to your rules all my debt is good debt but I have so much of it! Certainly appreciate any word you have to offer.
Lee, you have done so well and have so much to be proud of. You don’t mention a mortgage, just the line of credit, and if this is all your debt, you’re doing fine. You could do a couple of things depending on what suits you best:
1. Roll the line to a mortgage on your house and set the amortization at 10 years to have it paid off by the time you retire,
2. Sell the house, pay off the line, and buy a smaller home mortgage free.
You need to find some way to relax, and if the debt is causing you stress it’s time to deal with it. Good on you for taking care of your boys. Now it’s time to take care of yourself.
Gail! I love you! Thanks to you my husband and I have eliminated over $40,000 in debt over the past year and are now debt free aside from our mortgage! The problem is now, i’m not exactly sure where to go with savings. I read a lot of things about investments, mutual funds, etc. and I have no idea if this is something we should be getting into, or not.
Currently we contribute to my husband’s RRSP, but not mine, since I have a government backed pension at 13% of my pre-tax salary. We contribute monthly to our children’s RESP. I currently have $10,000 in an account for a new car, to which I add $100 per month. Our emergency fund is only at around $3000 which is about 1.5 months of expenses, and I’m contributing $100 a month to that as well. I am also putting away a couple hundred dollars a month to a vacation/planned spending fund. My question is: Do you think that we are okay in our long term savings right now. I don’t feel the need to sacrifice in other areas for my RRSP right now since my pension is so high. But I’m not sure if we should be venturing into other investments other than RRSPs since I know nothing about them. and I will admit it, I don’t have enough time with working full time and raising two kids and being a wife to learn enough to handle it myself!
Melanie, if you are maxing out your hubby’s RRSP and have a pension plan at work you’re doing fine for the long term savings. The rest of your plan sounds good too, although I’d make building that emergency fund a priority, and make sure I have some money set aside for home maintenance… it’s only a matter of time. Have a great life! It sounds like you’re well on your way.
Katie wrote: I am 26yrs old. I just bought a condo. I have a roommate living with me. Things seem to be comfortable. I do not owe any money except for my mortgage and my car (which is 0% interest and will be paid for in a couple of years) I have a couple thousand in the bank that basically remains untouched. I am just beginning to put money away for emergencies and looking into RRSP’S. I really want to go back to school. I make about 2400/month net. Would it be foolish to be heading back to school. Realistically how much should I have saved. It was a big step for me to buy a car and especially the condo. I do not like oweing ANY money to anyone or anything…but clearly its unrealistic to work constantly and than pay for a condo up front. Should I wait a couple more years to return to school? I am afraid that if I wait I will never go back for the 4 yr program that I want to take. Gail, I want you to come live with me! Show me what to save! Thanks for your help
Katie girl, you can have anything you want if you do the right kind of planning. You’re doing so well right now, making sensible choices, taking things step by step, you should be proud. You can go back to school as soon as you figure out how you’re going to pay for it, and how you’re going to live while you’re in school. I have a section on my sites for students. Start here. You’ll have to answer questions like:
- How will I pay for school? Up front or with student loans? If up front, how much do I need to have saved?
- How will I live while I go to school? Work full-time plus? Part-time? Live off my savings? If so how much will I need?
- How long until I want to go back to school? Take how much you have saved and divide by the number of months until you want to go back to school and you’ll have how much you need to save each month.
April 21, 2010 at 9:07 am
Wow, it is so great to hear about people that are managing their finances so well. Your stories are a true inspiration to me to continue tackling my debt. You have proven to me there is a light at the end of tunnel. Thanks so much!
April 21, 2010 at 9:09 am
Gail you do GREAT work lady!!!
I love your This n That Editions because they are real life examples people are facing and needing advice and you give it to them and sometimes they are close to my own life..so its very helpful to my hubby and I who are on our way to debt freedom in the next 18 months..THANKS GAIL!!!
Keep up the wonderful work you do !
April 21, 2010 at 9:58 am
Love these stories! They inspire me to not buy more yarn (I do have a closet full), and put that money into my savings!
April 21, 2010 at 11:56 am
amazing! I love hearing about people that do well.
April 21, 2010 at 12:15 pm
I think C is on the right track. We are always so worried about our kids, and the most important thing imho that we can give them is love, and an education. The rest is up to them…
April 21, 2010 at 12:47 pm
I love the This and That edition, and I love to see that there are people that are doing everything “by the G-book”.
Gail, will you be interested in doing a show to promote good spending habits? I mean, yes, TILL DEBT is fun because a lot of people relate to it, Princess I am sure is going to be great to see how some spoil brats spent money, but what about a show where people LEARN how do manage money?
It could be special shows on Mortgages, Retirement, and regular real life. I would love to see something like that done by you.
In this way you will have a full circle…. how people got to debt (Till Debt), how people spent like crazy (Princess)… and how people should manage money from an early age (New-Amazing-Gail-Show).
BIG HUG TO YOU!
Emil
April 21, 2010 at 1:23 pm
This post puts positiveness in my day. I’m feeling under the weather with a bad cold thats been lasting about 10 days!!! But its like this few examples in Gail’s post brings me a bit of sunshine in my day. It cheers me up.
I’m really considering buying Gail’s new book; I own a woman of Independent Means and think this second book would be a nice addition in my collection.
April 21, 2010 at 1:52 pm
Sunshine…Get it…it is awesome!!
I am happy to report that as of a week ago, I have completely paid off my visa and my LOC. And now when I do put money on either my visa or our joint visa, I pay it off either by payday (paid every 2 weeks) or by month-end at very least!!
Thanks Gail, you ROCK!!!
April 21, 2010 at 1:58 pm
I also really enjoy reading the questions from real people. Putting your practical advice into context really makes me think in “practice” instead of just in “theory”.
Thank you!
April 21, 2010 at 2:07 pm
(sorry, a bit off topic)
AshB – have you discovered ravelry.com yet? I’m a part of the Western Canada Oddball Baby Blanket group that makes blankets (like a chain letter – work on a section, and pass it on!) for Foothills NICU in Calgary, Alberta. We are from all over BC and AB, but I know there are other similar groups out there.
You provide the yarn for your section, and pay to mail it to the next knitter. It’s a great yarn stash-buster and a chance to work try out stitches you don’t necessarily want to commit to an entire project.
Here’s the blog one of our members graciously manages: http://wcobbs.blogspot.com/
April 21, 2010 at 3:53 pm
Nanci-Jean, congratulations on paying off your Visa and LOC. What a great accomplishment. Enjoy the feeling!
April 21, 2010 at 6:58 pm
Sunshine – I just lent my bf Gail’s book yesterday because I won’t need to read it for a few weeks (7 days to due date). I felt happy to share it but I love to read bits and pieces to keep me motivated. In the fall my husband and I started taling about doing the Gail jar/budget stuff and Jan 1st started it. Then a few weeks later I bought the book. It has helped alot and the blog too! We have been able to stick to our debt repayment and actually have some savings. I now know that we will survive mat. leave without incurring more debt and actually sticking with our 3 year plan. 33 months to go and we are ahead of the game with bonuses that came a few weeks ago. We have actually talked with a financial planner on the Radio (650 in Vancouver) and will be meeting him to set out an actual retirement etc… plan.
All of this has been possible becauseof Gail and TDDUP. Or else we might have just kept up to our crazy spending and never gotten rid of our debt. Thank you!
April 21, 2010 at 7:10 pm
Overall these stories were really positive and encouraging.
I just have a problem with Kim’s comment. During the 5 months of collecting unemployment at the taxpayers expense perhaps her husband should be finding a job. UI is for unfortunate times when an individual is out of work, not a substantial portion of annual income each and every year.
April 22, 2010 at 6:04 pm
@Kingston
In some areas of Canada and in certains types of jobs (like the fish or forest or tourist industries), it is impossible to find work in the “off-season”. It is accepted, because these types of jobs are a necessity. In a simplified example, you wouldn’t want fishermen to leave those areas and leave those jobs, because then it would mean having no fish on the market. So, yes unemployment benefits are ment for unfortunate times, but also for certain sectors of the economy that function only part-time.
April 30, 2010 at 3:36 pm
@annick
I am aware of the existence of seasonal work. However off season income is the individual’s responsibility not that of the Canadian taxpayer. The income derived during the season of work should be apportioned to last until the next work period begins.