Tuesday, 3 January 2017

On the Homefront

We are slowly adjusting to "real life" after the haze of Christmas holidays. I really crave my routine when it is upset by things like holidays and vacations. Although the rest and visiting is great, I can't help but allow my diet and exercise to eventually slide. I did much better this year than most. Through it all I managed most evenings to do at least 10 minutes on the elliptical trainer to combat the bloat. At many of the potluck and family meals I was able to fill my plate half full with vegetables. It really did help prevent my feeling lousy and gaining a bunch of weight (3 lbs at last check).

I am slow to get a budget done. My mind is full of ideas and happy intentions but I feel like there won't actually be time to do any fancy spreadsheets or write a great post about it. Basically, the plan is pay off the camper by end of summer.

When the camper is paid off, the monthly over payments will be applied to the new truck until it is paid off. Then, the mortgage. Being mortgage free would mean we can relax and Husband doesn't have to travel far and wide working. We could afford for him to have a lower paying, local job and be home every night and do normal things like coach hockey and ball and get groceries for me ;) I could work, too, and with a double income (though probably still lower than what he makes now) we could still live comfortably and save for a decent if not adventurous retirement. These are all the plans that are rolling around in my mind. But first, the camper.

Husband has a company and I pay him out of the company account. I try to maintain the company account balance at a certain amount which includes several months worth of company expenses (money for taxes, insurances, truck payments) plus several months pay for him personally. Of course, if he is off work for any amount of time the money very quickly depletes and we revert to what I call a bare-bones budget. After years and years of doing this I don't lose sleep (as often) and I have learned to have faith that we will always get by one way or the other. I recognize that not everyone is so lucky and I can empathize with the stress they must be under. While it might sound good to have "several months" saved up, it is my goal to have a year's worth of money saved, both for ourselves and the company. An accessible way for us to save, personally, is to consistently move money into our Tax-Free Savings Accounts (a financial goal from last year was to get Husband set up with a TFSA, which I did).

Because the company is taxed at a much lower rate than we are personally, it makes more sense to leave as much money as possible in the company account and invest it from there (corporate investment account). One of my financial goals last year was to set up a corporate investment account that I could move money into when it felt safe to do so. I am very proud to say that I managed two such payments of a decent size last year.

So to clarify what all of this means, I pay Husband as little as possible because as soon as that money comes to him personally he is taxed on it at a rate of 30-35% (guessing). As long as it is in the company account, I can access it if need be but pay lower taxes (possibly around 13%? I'm hopeless with numbers). So rather than paying him lots and letting it sit in our savings account, more money is left untouched in the company account. When it rises above my magic number, I skim that off into the investment account.

Investing money from the company account into the corporate investment account rather than into our own savings and TFSA, RRSPs etc means we save on company taxes and aren't taxed personally at the higher rate. But out of our own personal money we are still contributing to Registered Education Savings Plans for our kids, each of us has RRSPs, plus our own investment portfolios (another goal was having Husband set up with personal investments in 2016. I'm starting to feel like I did pretty good last year!).

So, back to the camper.

My challenge is to hone my household budget down as strictly as possible so that I can still make a number of sizable over payments on our camper without paying Husband more out of the company account (and paying more in tax).

Since I already pay us fairly closely to what our expenses are, there won't be a pile of wiggle room but that is the challenge. Saving on groceries and reducing our discretionary spending, cutting the satellite dish come spring, doing some side jobs personally, all of this will contribute towards our goal of paying the camper off ASAP. Because of the interest. And because I am uncomfortable having more than one loan (besides our mortgage) at a time.

It is important for me to note that from the monthly amount I pay Husband I also need to save for birthdays, Christmas, 2 small vacations, skating and/or hockey as J has declared he wants to try hockey next year. I drive an 8 year old truck which will need replacing eventually. We have property taxes and home insurance due in the spring. Basically, there are a lot of things to save for. Even just writing this out has convinced me to make time to do up a proper budget to keep it all straight.

I do find this all a bit overwhelming. Without steady work we would go from possibly paying something off to, instead, being relieved that we are even able to make regular payments while paying the interest, saving less, and doing without the extras. And that could easily happen. BUT. And this is a huge BUT. Having the singular goal of paying that camper off by the fall of 2017 gives me the incentive to save more. Resist temptation. Eschew splurging on non-essentials. Get creative about making money on the side. Trade. Barter. Borrow.

I think I will leave you now and go sit down with a very sharp pencil and start combing through statements. I am sure that I can find ways to cut our spending and reach our new 2017 goals. I plan to do this by:

1) Menu-planning to save on groceries
2) Reduce fees and service charges if possible
3) Make more money on the side (future post on this subject!)
4) Have No Spending Days Weeks Months
5) Use cash back air miles and PC points to have at least one month's free groceries (put that month's grocery money towards camper)
6) Get very creative planning our family vacations to minimize spending while maximizing fun
7) Purge and sell unnecessary and unwanted belongings
8) Use cash and gift cards that we have on hand
9) Make it do or do without!











4 comments:

  1. Oh I liked this post! I love when people have a financial plan and it all starts to come together :-)

    And let's go camper payoff! You can do this Jill!!
    ~ Pru

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    1. Thanks Pru! We are certainly going to try!

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  2. Use it up, wear it out! I love the no spend month - have been thinking about a personalized iteration of the idea for myself. You and I have a lot of the same goals on our list this year, I think. I'm excited to celebrate your progress with you - keep us posted!

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    1. Thank you Kirsten! I love reading how others are making out with cutting spending and enjoying the simple things!

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