Only seven more days of RRSP season left... a time to assess our finances and plan for the upcoming year...
Today, the Vanier Institute of the Family released a report indicating the Canadian household debt has hit the six- figure mark: an average at the end of 2010 of $100,879. Also, a debt to income ratio at a record 1.50! That means for every tax free dollar a Canadian household earns, they spend a $1.50. The big 3 monkeys: mortgage, personal loans, and credit cards. For those with mortgages, the average debt came in at $171,500.
This news got me thinking about where our household money was going and with noticing our utilities were on the rise yet again as were our taxes, it is time to take another look at our monthly expenses and where we might have to cut back as we haven't assessed it in detail since 2003.
In 1997, my fiancee and I decided when we purchased our home, we had to be frugal; because of the instability of my steamfitter trade (seasonal construction or maintenance), we had planned to keep our monthly costs down enough so that my would-be spouse could afford all the bills by herself or I can afford all bills while collecting Unemployment Insurance payments until I found another job which pretty much was the same amount as her gross pay in 1997.
Mortgage- $480 per month conventional; no CMHC with over 25% down payment.
Northwestern Utilities- bills fluctuated between $11.00 to $88.00 (winter); $37.00 average for natural gas.
Edmonton Power/ Aqualta- $62.00 average for electricity, water and drainage.
Videotron- $27.47 for cable- basic plus and multi-service plan.
Telus- $21.00 for phone services not including long distance.
Property Tax- $136.04
Home Insurance- $30.17 same exact plan I have now.
Life Insurance- $18.00 for the bank's pay your mortgage off if someone dies insurance.
Bank Fees- $9.00
Car Insurance- $75.00 for 1 vehicle PLPD.
Alberta Health Care- $34.00 per month for family plan
Gym Membership- $22.45 at Club Fit.
Groceries- $75 per week including gasoline. There was only 2 of us back then and price at the pump was 29.9 cents per litre!
Grand total in 1997: $910.13 without groceries. $1210.13 +/- $200 with groceries and gasoline as we did grocery shopping less often and ate out more. Back then, mortgage payments and all bills came to around $1000 per month. The $413 per week pre-tax from UI more than covered those costs plus groceries which we to this day have an unlimited budget for and saving up for a wedding!
It will be interesting to see if we could afford to live today on that same budget just in case I was to be suddenly unemployed for any length of time.
And so: 2011 bills...
Enmax (Jan.) $295.22 electricity and natural gas. On the high side as December had a good cold spell; average $245.00 with more gas in winters and more electricity used in summer to balance out.
Epcor (Jan.) $117.75 water and waste mgmt. drainage; on the high side again. Average is $82.00...
Shaw (same monthly) $78.70 digital cable plus HD pkg.
Telus (same mthly) $86.87 telephone pkg with High Speed ADSL; Telus has announced a $2.00 increase coming in March...
Property Taxes- $213.21 no interest paid directly to the City.
Life insurance- $29.87
Auto Insurance- Morgex- 2 vehicles $89.90; $million liability on both.
Car Payments -NIL
Bank Fees- $32.90 incl. Safety Deposit Box
Cellular Phone service- $93.25 iPhone plus wife's phone plus iPad 3G
AHC- NIL no more Albera Health Care Premiums!!!
Gym Membership- $41.98 at World Health Club
Groceries- Averages about $400 per week including gasoline. $1600 per month.
Misc.- Hockey, tuition, sports activities for the boys- approximately $2000 per year.
Grand Total: $1073.93 +/- $100 for cost fluctuations without groceries. $2673.93 with a good cart-full at Costco or Superstore and weekly gas. +/- $100 for stocking up weeks or don't need much this time weeks....
The maximum EI benefit in 2011 is $468 per week pre-tax. After taxes, every 2 weeks, I would probably get just over $800; hence that wouldn't go very far with the bills we have today without cutting at least $1000 per month out of our monthly expenses. YIKES!!
Luckily I still have a job and it is good to see where the money is going... if the economy turns for the worst, cable would go, replacing phone service with VOIP, gym membership gone, halving of car insurance to 1 vehicle, and a closer look what's in our shopping cart would whittle that $1000 away hopefully.
First Priority: We are spending $1922.80 more per month now than we did 14 years ago! $643.80 not including groceries and gas and taking into account we have no mortgage payment anymore. Getting some of that back will be the first priority. If we keep spending the way we are now, it costs us $32,087.16 plus $2000.00 for sports. Add annual vacation at $5000.00...totalling $39,087.16 without going out, ordering in,etc. Something's gotta give!
Second Priority: taking a good look at our grocery list... it will grow over time with 3 boys in the house so now's the time to analyze the necessity of the items in our cart and collect receipts for outside expenses like eating out, entertainment, etc. Thing is, when has anyone walked into Costco and walked out without a $300.00 tab???
Third Priority: 2012 TFSAs, RESPs, RRSPs, and savings... to maximize these, I would need $10,000 for the TFSAs, $7500 for the RESPs, and $5000 for the RRSP: totalling $22,500 per year. And personal savings goal of $10,000 this year...
Misc: Need new shingles and outside doors with screens...expecting costs to be $10,000.00; flooring for bedrooms and new drawers..$2000.00
$83,587.16 of already taxed money needed for 2011 if we don't adjust some spending habits...
Not looking good in accomplishing these goals unless I head to Ft. McMurray.... may have to opt out on maximizing the RESPs and installing new doors.... and the wife was asking for a kitchen reno soon... okay..I'm a wee bit taken back by the number now considering we have no long term debt like credit cards and personal loans... looking for the defibrillator...
In part 2, I will take a closer look at our monthly bills excluding groceries and gasoline like those Statscan guys do with their monthly CPI looks... to see how much of the increased spending since 1997 is actually inflation or additions to our standard of living or just wasteful spending we're not aware of... TO BE CONTINUED...