Saturday, November 3, 2007

An overview of our financial goals

The current situation: My husband and I are in our early thirties. We own a modest home with a fairly low interest rate mortgage (5.3%), which will need to be refinanced in about 3.5 years. We have no consumer debt, apart from two credit cards (one with each of us as the primary) which are fully paid off every month. I have a small student loan on which I’m currently paying the minimum. My husband has a larger student loan which is due to start being repaid this month. I have a small investment account. We both have RRSPs started, but there is plenty of unused contribution room. We have $5000 saved up in case of emergency in a high-yield savings account, along with $2000 in another account which was originally going to be spent on buying me a nice ring for our tenth anniversary, but which I think will be better spent getting ready for the baby. I’m ever the pragmatist.

(Let’s not discuss the TV for my husband which had already been paid for when the second line on the test turned pink, except to say that it’s big, it’s flat, it’s highly defined, and, yes, I’m enjoying watching it too. Hockey season has started. We’re suddenly very popular. Must be my glowing personality which has of course been enhanced by fatigue, morning sickness, and hormonal mood swings.)

Moving on...

Our combined gross income is just over $100,000 a year, though that's only been true for about 3 months. We’re in decent financial shape overall, but it could be better. We have the money to pay our bills, but I’ve occasionally forgotten to pay one for a month or two, which leads to embarrassing red letters in the mail, and no doubt a ding to the credit rating.

The desired future situation: We’ve paid off the student loans. We’ve maximized our RRSP contributions. We’ve increased our emergency funds to at least three months income. We’re paying off the mortgage early. We’re contributing $2000 a year to RESPs for our child(ren).

How do we get from here to there, you ask?

Excellent question.

Our net worth as of October 31st, 2007 is:


Well, at least it’s positive. But I’d like it to get it much higher.

In order to do so, this month I’m making the following adjustments.
1) Learn to stay on top of the bills. No more forgetting to pay the hydro man. He gets cranky, charges insane ‘late payment’ fees, and threatens to make it very dark indeed.
2) $50 will automatically be sent to each of our RRSPs every two weeks. This won’t be enough to catch up, but it’ll get us started.
3) $100 will automatically be sent to the emergency fund (for the ole ‘my car and furnace broke down on the same day’ conundrums) once a month.
4) $100 will automatically be sent to the general savings account (for cribs and diapers and supplementing the parental leave) once a month.
5) I’ll increase payment on my student loan from $50 to $250 a month.
6) Payments will start on my husband’s student loan. Joy!

This will undoubtedly be a gradual process.

On a side note: I live in Canada. Most of the stuff I post on this blog will apply most directly to other Canadians, although people in other developed countries should find most things familiar.

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