This & That: Link Love Edition
Posted by Gail | Filed under This & That
B Wrote: My wife and I really enjoys watching both Till Debt Do Us Part and Princess….They are a great reminder on how important it is to maintain vigilance and discipline when it comes to spending and finance. But more importantly, it’s inspiring to see when people actually get it and have their lives completely turned around because of it. Keep up the good work and hope there will be many more episodes to come. As for our situation: My wife and I are seriously considering starting a family….ideally 2 children. I’m 37 and she’s 28. Financially, I believe that we are off to a great start. I am very fortunate to have married a super saver like myself. We bring in around 120K, have zero debt, and were able to buy our new house (500K) without a mortgage. Aside from that, we also have 150K in RRSPs, mutual funds, and GIC, 15K in TFSA, and 7K in checking/saving. We agree that having separate accounts works best for us, but uses a joint account for house expenses only (taxes, hydro/gas, TV, internet, phone, groceries).
We did the online budget worksheet on your site and was pleasantly surprised that our housing expenses only account for 15% of our income (the no mortgage really helped), and that we have over 50% leftover for savings.
Now onto my question, I would like to start a budget including a baby maybe two. I know that our income will drop while our expenses increase during that period. We visited a couple of friends who has small children and were astonished at the amount of “stuff” you could buy for your kids. What I would like to know is, what is a reasonable yet realistic budget when having a baby? Everything from RESP to daycare, to diapers, clothes, furniture, and toys. We would not want to be kid poor, and would like to be able to continue building up our savings.
Gail Says: There are so many costs that are variable that it’s hard to have an “average” for this. Will Mommy breastfeed? For how long? Formula is obviously more expensive. Babies can move to cow’s milk at age 1. Will you buy regular (my choice) or organic (way more expensive)? Will you use cloth or disposable diapers? Will you buy new or second hand? Will you get stuff from family and friends who have already had babies or are giving gifts?
Don’t get sucked into buying crap you really don’t need. People swear by diaper genies and I met one couple who had 3, one for each floor of their house. Ridiculous! Put them in the garbage and take the garbage out! Will you use a change table (I never did) or will you throw a change pad on the bed (on the couch, on the floor) and change baby where it’s convenient.
Some baby stuff is invaluable: baby swings! Some baby stuff is just STUFF (wipe warmers). But everyone has to make their own choices based on what they think is important and what’s not.
Here’s a link to a calculator that covers just about everything you can think of: http://www.babycenter.com/baby-cost-calculator. Feel free to put zeros where your first thought is “seriously?”
Since loads of people buy stuff then don’t need it any more, post a request for items on local parenting sites or on Craigslist.ca to see what you can turn up.
Here’s a link to a government website you’ll find useful: http://www.servicecanada.gc.ca/eng/lifeevents/baby.shtml
And here are a couple of articles from my website:
As for the RESP question, you should aim to put away enough to maximize the amount you get in grant money from the government. Save $2,500 a year and the government will give you an additional $500 (to a maximum of $7,200 over baby’s lifetime). That’s an immediate 20% return on your money.
A Wrote: I’m trying to find a digital version of your book “It’s Your Money” so that I may put it on my Kindle. Do you know where I can find one?
Gail Says: Here’s the response from my publisher:
Yes—it’s up on Amazon.com (the amazon.ca website doesn’t host ebooks, odd as that is).
Ashley should be able to find it directly through her Kindle.
L Wrote: Thank you for offering to send me the information. I watch your shows (Til Debt Do Us Part & Princess) religiously and it is very refreshing to see an honest, no non-sense approach towards personal finance. If you ever want to do a show on helping people set up their financial future, kind of like a step 2 after debt is paid off, I would LOVE to participate. Thanks again for the information and for being a great resource.
Gail Says: Service Canada http://www.servicecanada.gc.ca/eng/isp/common/cricinfo.shtml
has an online service that can help you estimate your OAS and CPP benefits. It takes about 30 minutes to use the calculator all the way through to the end, but if you only want your CPP estimate, that’ll happen faster. You’ll need a copy of your CPP Statement of Contributions, which you can also get online from Service Canada: http://www.servicecanada.gc.ca/eng/isp/common/proceed/socinfo.shtml.
S Wrote: I was first introduced to you when I finished university and bought A Woman of Independent Means over 10 years ago! I just finished reading Debt – Free Forever and I think it has finally clicked! I kept trying to make the budget balance with way too much excess and not enough to my debt repayment…I was so afraid that I couldn’t “live” if I did the snowballing approach but it turns out I can! I do have some extra at the end of the month in the budget approximately $200 do you recommend that I put that toward the debt or into the emergency fund? Thanks so much for inspiring me to finally get my head out of my a$$ and dealing with my debt! It is a lot but I am dedicated to getting it out of my life forever!
Gail Says: I’d use it to get that emergency fund to a healthy point first, then to the debt. BTW, have you considered a Curveball Account so that when small things pop up — not exactly “emergencies” — you don’t through your whole budget off track? Think about it.
S Wrote: Thank you for the quick reply. I will put the excess in the emergency fund, which makes total sense. What exactly is the curveball account and how much % wise should I be allocating to this account?
Gail Says: Read this… http://gailvazoxlade.com/blog/archives/2257 It’s not a percentage, just an amount you build and keep as a pressure valve.
C Wrote: I have been watching you on TV for a while now and it always amazed me that people could be in so much financial trouble. That was until it started happening to my mom.
My mom has been struggling with her finances for years, but always assured myself and my sister that everything was fine. That she was fine. Recently my mom has been diagnosed with cancer and she has been losing her time at work. She is self employed as a house cleaner and when the cancer gets her down, she can’t work. If she can’t work, she doesn’t make money and if she doesn’t make money, she can’t pay her bills.
As a family, we recently sat down and spoke to my mom about her finances. Trying to get some information from her and trying to provide her with information as to how we can start getting her out of debt. Sell the house, pay off the credit cards, get her onto assisted living, disability, etc. She wanted no part of the conversation. She said that we were ganging up on her and turning against her. All I want to do is help my mom and get her back on the right track.
As of right now, this is the information I received from her with regards to her debt load:
- Overdraft account – $14,000
- Visa – $12,000
- Line of Credit – $10,000
That right there is $36,000 in debt. Plus her mortgage which we think is around $170,000 which comes up for renewal in November and her car which is about $11,000.
She is classified as high risk (obviously) and I recently found out that she had to sign on a 1-year mortgage at 5% in order to keep her mortgage but I have a feeling that once it comes up for renewal in a few months, they won’t renew her. And if they don’t renew her, what happens? Where does the house go? Where does she go?
Gail, if you have any advice on how I am to go about this with my mom, please tell me. I don’t know if she will give me access to her accounts to see what the numbers truly are. I am afraid that I will have to take legal action to become the guardian of the property as I truly feel that she does not understand the severity of this.
Gail Says: I’m not sure what you mean you’ll have to take legal action to become the guardian of the property. Are you prepared to declare your mother incapable of managing her own life? Will you assume full responsibility for her at that point? Clearly your mom needs help, but declaring her incapable of managing her own finances is a big step. I don’t have enough info to be able to give you guidance specifically. I don’t know what she makes as an income, and I don’t know how much she has in assets (her home etc.). If she cannot manage the debt she has, you should probably take her to a bankruptcy trustee and let them walk her through her options. If you’re in the Toronto area, Doug Hoyes is a good guy: http://www.hoyes.com/bankruptcy-toronto.htm.