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Thread: What to do with my $ after a consumer proposal?

  1. #1
    CaNewbie
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    First time posting on here. Been a lurker here and there though.

    Was wondering if anyone on here could offer some advice.

    I did a consumer proposal last summer and am about to pay off the balance completing the proposal. Now I'm not sure what to do with my finances. Here's my situation.

    38yrs old
    Married (wife doesn't have a steady income)
    Home (Toronto): renting $1200/mo.
    Work: 2 jobs combined $80k/yr. gross (expecting this to drop to $70k/yr when I quit the second job after Dec. 2015)
    Fixed expenses: approx. $370/mo.
    Other expenses: approx. $350/mo.
    No other debt.
    No car expenses.
    No savings other than $1000 in an RRSP. (put all my money into paying down debt.)

    My main concern now is saving to buy a home. However, with the real estate market so high in Toronto I'm not sure if renting + investing is the better option. Either way, because I did a consumer proposal, my credit rating is rock bottom and I've got about 3 years until that clears from my credit file (at least that's what I've been told).

    Good news is I don't have any debt. Bad news is I have nothing saved. So I'm literally starting over.

    My current plan right now is splitting my left over money into a Savings RRSP (to save for a down payment for a home) and a regular high interest personal savings account (for an emergency fund). I'm really not sure though if this is the way to go though. The situation with my wife's income is that she should be getting more steady/permanent work within the next year to two years (she's a supply teacher), but until then we're treating her income as extra savings towards a down payment for a home.

    As one could probably infer from my situation and age, I haven't been the best at managing my personal finances up till now.

    I'd very much appreciate any thoughts/advice anyone here can offer.
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  2. #2
    Smart Canuck
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    Well that is great to almost have it paid off-many younger( and even older folks) do not have a lot of experience and savvy with finances so to have recognized that and corrected it must feel wonderful. Kudos to you. Your expenses are quite low vs income which is good. You could also consider saving in a TFSA-you can take it out but must wait until the next calendar year to re-contribute. Of course this would need to be liquid savings-not locked in GIC's for eg. I think you are wise to rent with the market so high and your credit rating low right now. Good luck and if you need any common sense financial advice look at Gail Vaz Oxlade on line and read articles in Moneysense magazine on line or at the library.

  3. #3
    tightwad and proud of it! brunt's Avatar
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    Offhand, I would stress that home ownership is over emphasized.

    Yes, people who bought before made out well. But as you pointed out, real estate is overpriced right now. Pretty well by definition anyone who owns something that is overpriced did well if they bought it before it was overpriced. And those who buy when it is overpriced will not.

    I rented for years, paying considerably less in rent than I would have in interest and property tax. And that is before repairs, maintenance, insurance, and so on. Not to mention the amount of time required to do all of that. Renting is not throwing out money. I absolutely cringe whenever I hear somebody say that.

    Now that you are back on your feet, it is important that you 1) stay that way, and 2) start up your savings.

    My advice would be that pretty well 100% of the time owning costs more than people expect. In your current state, I would suggest that you not buy now, both for the state of your finances, and the state of the market itself.

    You have heard about investment diversification, no doubt. Well, you have little in savings, and are considering buying a house that probably costs at least $300,000 (I don't know for sure, but let's just work with that number). This would mean that you have a net worth of $1,000, and own a $300,000 house. This means that you have 30,000% of your assets in a single class.

    This is a very dangerous position into which to enter. Any sort of real estate turn down would work out very poorly, and without a savings backdrop, a leaky roof, crumbling basement, failed furnace, broken pipes could turn into a catastrophe.

    I wouldn't consider buying until you have a 20% down payment. And if you have no prayer of getting that together where you live, then I would suggest somewhere less expensive.

    House ownership is not a cure-all for a bad financial situation. Very often it can be the cause of one though.

  4. #4
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    It appears you are doing things well and on the right track for financial independence. The most important thing right now is not to get back into old habits, build up savings and plan for retirement. Mr Money Mustache (http://www.mrmoneymustache.com) is a good website/forums for financial independence minded folks. Read some of the articles and case studies on there for some great advice. Good Luck.
    MortgageQueen likes this.

  5. #5
    Smart Canuck frugal50's Avatar
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    why isn't your wife working?!
    she should contribute towards buying a house and paying the bills.
    You can't change other people. You can only change yourself"
    - H. H. Getter

    when we change our attitude, we change our lives





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    Quote Originally Posted by frugal50 View Post
    why isn't your wife working?!
    she should contribute towards buying a house and paying the bills.
    Did you read the whole post?!

    HUH? YOU DON'T DO SWAGBUCKS??? ARE YOU CRAZAY?!
    SIGN UP!!! SIGN UP!!!


  7. #7
    Savingloonies jenniferandcorban's Avatar
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    Quote Originally Posted by PoorBastrd View Post
    First time posting on here. Been a lurker here and there though.

    Was wondering if anyone on here could offer some advice.

    I did a consumer proposal last summer and am about to pay off the balance completing the proposal. Now I'm not sure what to do with my finances. Here's my situation.

    38yrs old
    Married (wife doesn't have a steady income)
    Home (Toronto): renting $1200/mo.
    Work: 2 jobs combined $80k/yr. gross (expecting this to drop to $70k/yr when I quit the second job after Dec. 2015)
    Fixed expenses: approx. $370/mo.
    Other expenses: approx. $350/mo.
    No other debt.
    No car expenses.
    No savings other than $1000 in an RRSP. (put all my money into paying down debt.)

    My main concern now is saving to buy a home. However, with the real estate market so high in Toronto I'm not sure if renting + investing is the better option. Either way, because I did a consumer proposal, my credit rating is rock bottom and I've got about 3 years until that clears from my credit file (at least that's what I've been told).

    Good news is I don't have any debt. Bad news is I have nothing saved. So I'm literally starting over.

    My current plan right now is splitting my left over money into a Savings RRSP (to save for a down payment for a home) and a regular high interest personal savings account (for an emergency fund). I'm really not sure though if this is the way to go though. The situation with my wife's income is that she should be getting more steady/permanent work within the next year to two years (she's a supply teacher), but until then we're treating her income as extra savings towards a down payment for a home.

    As one could probably infer from my situation and age, I haven't been the best at managing my personal finances up till now.

    I'd very much appreciate any thoughts/advice anyone here can offer.
    Everyone makes mistakes and most of the time when we are young and think we have all the time in the world!lol I have found in time we all need certain assurances.....and if we don't have a savings what else can we do to make certain our future is more secure?
    I am not the best Financial advisor but if I ever get sick or my son does I know I'm not going to be financially ruined because I can't work/extra bills to pay.

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