new member

[alac1980]

hi there,

i'm a new member. just wanted to say hello, and give a quick blurb.

i'm 30 years old, and my husband is 35. we have two elementary school aged children.

we are currently employed as RNs, and earn a combined gross income of approximately $120,000, taking home approximately $5800/month.

our current financial situation looks like this.

mortgage + mortgage insurance $654 accelerated biweekly
house insurance $65 per month
car insurance $48 per month
student loans $395 (only mine is in repayment at present, this figure will double when his goes into repayment as well)
telephone, cable and internet $140 per month
cell phone $25 per month
heating oil $200 per month on a budget billing plan (pay 12 months per year rather than lump sum per oil tank fill up)
power $175 per month on a budget billing plan
banking fee $14 per month
gas $400 per month, subject to change depending on circumstances
groceries $400 per month using cash only

aside from our student loans, we have a $28,000 credit line that i'd like to pay off first. this was used for numerous family emergencies over the course of many years, as i didn't have a savings account to rely on. it has a 4% interest rate, whereas my student loan is currently interest free. we have no credit card debt. we have no car payment. we have no department store credit debt, or misc consumer debt.

currently, we do not have education savings plans for the kids, but i'd like to look into it in the near future, if finances allow.

our pension plans are paid through work, with employer-matched contributions. i do not have a separate retirement savings account, but would like to start one.

we are quite frugal with our money, buying children's clothing second hand, and limiting our spending otherwise. we buy only what is necessary, and our impulse buys are few and far between.

i look forward to learning more about debt reduction as i venture into the journey of repayment.

[Frugal]

It sounds like you are doing pretty well. Personally, the first thing I would do in that situation is pay down debt.

[adstalker]

You also need to look to the creation of an emergency fund. Preferably at least 6 month worth of your monthly expenses

[alac1980]

i do feel like i'm on the right track. thank you. and i agree, my debt needs to be reduced. because my student loan is interest free (and likely will be for a while - i am in canada where there are options to assist with repayment), my inkling is to pay off the line of credit because it is does not have a repayment term. it could linger on forever if i allowed it. our student loan repayment term is approximately 10 years. i'm one year into it. great. i'll have them paid off at 39 - just in time to send my OWN kids to college! haha.

my husband would like to get a second vehicle at some point this fall. this is something we need to discuss in further detail. if we go ahead with the purchase, i have set a budget of $300 per month and not a penny more for repayment, making sure that i find an interest free loan. there are plenty of dealerships that are offering this right now. it's the only way i'll purchase a second car. being debt free on my 2010 mazda is a huge relief. i'd hate to take on another large payment. i will admit that we are struggling greatly with one vehicle, so i see his point. we commute 40 minutes...in opposite directions.

regardless of what financial choices we make, i want to be sure that we have wiggle room for children's enrichment, like swimming lessons, friday night skating, 'staycations', etc. it's really important to me that we enjoy life. i have a hard time determining about how much money i should set aside for 'fun'.

after the above mentioned bills and commitments are paid, i am left remaining with approximately $2600 ($2300 if i go ahead and buy a second vehicle). i haven't started yet, but a portion of that will automatically go toward an emergency savings fund. i would like a second savings fund for non-emergencies that may arise. after that, i'd like to put a chunk toward that credit line. i'm having a hard time determining HOW MUCH of that i should put toward savings/credit line repayment/family fun and enrichment. what percentages do you suggest i follow?

[alac1980]

i do apologize that my comment posted twice. not sure what i did wrong.

[snafu]

alac Is your line of credit interest rate locked-in or will it increase if interest rates go up? While your employment is pretty secure, I am hoping you both have disability insurance as part of your employment benefits/deductions. Do you have any RRSP room?

Are you in a city with good public transportation? Is there any possibility of car pooling with a colleague for either yourself or DH? A 2nd car, even an inexpensive beater adds considerable expense in operations, maintenance, insurance, parking etc. Buying a new car [0%] means you take a huge hit on depreciation. Without a Down Payment you extend payments over 36 months[3 yrs] so there is more at play than merely monthly payment.

Americans are likely horrified by our food costs and utilities. Is there anything that can be dropped, negotiated down like land line if you both use cell phones? Prepaid cell phones with limited features? What no cost/low cost children's activities are available in your community? Some cities have free swim pools, inexpensive community assoc. skating lessons, tennis, badminton,soccer, baseball, dance class, group piano lessons, drama/theatre classes, and parks & rec. programs galore. I suggest you start by eeking out an emergency fund even starting by dumping change in a jar daily along with any cuts you can negotiate.

[bjl584]

i do apologize that my comment posted twice. not sure what i did wrong.

Fixed.

[BuckyBadger]

What is the "banking fee" for?

[alac1980]

hi snarfu! that's quite the name!

yes, our credit line interest rate is secure.

we both have disability insurance, thankfully. that's a huge weight off the shoulders. i can't imagine not having that security to fall back on because you never know what will happen. we have both short term illness and long term disability, both of which are employer paid for the most part (i pay about 5 bucks per paycheque).

i pay into the nurses's union pension, which is employer matched. if and when i decide to leave my employer for another, i can take it with me, as it is province wide. as for my own personal rrsp, i don't have one, and i don't really know how much i should put into one when i *do* open one. what is a decent amount to start with? is the idea that you retire with your full pension and then you can withdraw from your rrsp for 'extras' if you need it? like, say, if you decided you wanted to take an extra vacation one year and you didn't want to dig into regular pension money for it? i've never quite understood how to save separate from your pension (my father opted not to do this, and he's the only retired role model i have to go by).

we're in a city with excellent public transportation - but not for shift workers. we leave for work too early to catch a bus, and also too late to catch one home. as for carpooling with coworkers, we do that whenever we have shifts that overlap with neighborhood nurses (which unfortunately with shift work it isn't all that often that you have similar schedules). however, it's not work that's the issue, it's taking the kids out. transportation is not something i'm willing to sacrifice at this point because the kids are lacking in their abilities to participate in after school activities on account of not having transportation. if my husband is at work, for example, i am stuck at home with no car and no way to take them out. i feel like it's a no win situation. until now, we've been borrowing a second vehicle that belongs to my in laws whenever necessary, and we'll continue doing that for as long as we can without feeling like a burden to them. they've been so good & so helpful to us. i don't view vehicles in terms of depreciation and/or having paid too much for them in the first place. i look at them from a practical standpoint and what they have to offer my family in terms of ease and freedom.

we are very fortunate to live in a city that has a TON of inexpensive children's activities. we live in a culture rich society and there are many cheap/free things for families to do on a daily basis. getting them there, however, is an obstacle when the other partner is at work.

something that i'm really struggling with is deciding how much money i should have 'leftover' at the end of the month. after all is said and done and every single bill is paid and every savings account has a deposit made and groceries are in the cupboard, what is a decent amount for a family of four to have leftover for life's little treats? how much money does an average yet frugal family spend on entertainment, activities, outings, classes/lessons, clothing, etc. i have no idea how to budget for these things because they are not fixed expenses.

alac Is your line of credit interest rate locked-in or will it increase if interest rates go up? While your employment is pretty secure, I am hoping you both have disability insurance as part of your employment benefits/deductions. Do you have any RRSP room?

Are you in a city with good public transportation? Is there any possibility of car pooling with a colleague for either yourself or DH? A 2nd car, even an inexpensive beater adds considerable expense in operations, maintenance, insurance, parking etc. Buying a new car [0%] means you take a huge hit on depreciation. Without a Down Payment you extend payments over 36 months[3 yrs] so there is more at play than merely monthly payment.

Americans are likely horrified by our food costs and utilities. Is there anything that can be dropped, negotiated down like land line if you both use cell phones? Prepaid cell phones with limited features? What no cost/low cost children's activities are available in your community? Some cities have free swim pools, inexpensive community assoc. skating lessons, tennis, badminton,soccer, baseball, dance class, group piano lessons, drama/theatre classes, and parks & rec. programs galore. I suggest you start by eeking out an emergency fund even starting by dumping change in a jar daily along with any cuts you can negotiate.

[alac1980]

i pay a flat rate for unlimited withdrawals, deposits, linking between each of my accounts, cheques, etc. there are other plans that are cheaper (many are free), but do not offer as much flexibility for a family with multiple banking needs.

What is the "banking fee" for?

[snafu]

A RRSP is an immediate income tax deduction to be withdrawn as you wish after 65 y/o. The rules change but currently your Income tax Notice of Assessment lists your RRSP allowable with contributions invested as you choose to grow tax free until 65. After age 72, you must withdrawn a minimum 4% per year. Many Canadians use the sum of the tax deduction to fund their RRSP for the following year. The banks offer nearly commission free RRSP products and will drown you in information if you let them. Your library offers shelves full of books on retirement planning. Gordon Pape is best known of the 'talking heads.'

If you are in TO or it's suburbs, you and DKS can enjoy all the entertainment you like on public transportation without the nightmare/expense of parking. If you're in this city, you drive in unending traffic jams and pay for parking that is more expensive than NYC.

Budget: When we started, we divided all intermittent bills by 12 [months] and used previous year spending plus 4%. Can you look at what you spent last year for children's clothes? When DKs were young we divided the sum by 12 and set aside $$$$ for two major spends... before school started in fall and after Xmas sales since that mostly was when they grew. In our neighborhood the church sponsored kiddies clothes swaps were very popular and practical.

[esspweb192]

I agree with Frugal. First you must pay down your debts.

[Eric80]

It sounds like you are in very good situation, and maybe you should share more of what you do and dont do to save money as I find it very difficult.