One millennial's entirely half-baked
attempt to save half of her income.

It turns out, saving 50% is bigger than just one blog post. So here we are.

1
Can I Afford The Average House in Ottawa?
2
In Defense of the Fun Budget
3
How To Choose The Right Robo-Advisor For You
4
This Millennial Plans on Retiring. Here’s How.
5
5 Things I Wish Someone Told Me (About Money) As A New Grad
6
That Time I Finally Switched My Car Insurance

Can I Afford The Average House in Ottawa?

 

can-i-afford-the-average-house-in-ottawa

I have a house-hunting problem.

Even though The Boyfriend and I are years away from buying a place, I can’t seem to kick the weekly habit of checking out the new listings in our neighbourhood. I’ve even dragged him to some open houses in our price range, “just to see!”

Sometimes, as I scroll through the listings, I’ll be like “Hey, let’s just live here!” The listing on my screen is invariably a gorgeous, ridiculously expensive house that looks like something out of a movie, with marble counters and a three-car-garage and two acres of yard.

It’s a joke, because of course we can’t afford to spend $1,000,000 on a house.

That seems like a pretty reasonable statement – we can’t afford a million dollar house – because we’re two millennials who haven’t won the lottery. But it only seems reasonable because we live in Ottawa.

You’d be forgiven for forgetting that there are housing markets in Canada outside of Vancouver and Toronto, because they get all the press – and rightfully so, they are hideously expensive. Articles like this one from Rob Carrick feature couples who aren’t that different than The Boyfriend and me, and yet they’re looking at houses that are almost double our maximum budget, because Toronto.

Lowest Rates took a look at the hard numbers behind keeping the detached-housing dream alive in Toronto, and to an Ottawa resident who has the luxury of ignoring downpayment rule changes that impact houses priced over $500,000, it’s shocking.

The Detached Dream — GTA Edition by LowestRates.ca

The Detached Dream: GTA Edition

They reached out to me to see if I could share a bit of what this picture looks like in Ottawa, and again, as someone who has a serious MLS problem, I was all over it.

Especially because when I heard the average house price in Toronto might hit $1,000,000 in the not-too-distant future, I almost wept.

I did some digging, and according to the Ottawa Real Estate Board, the average residential house price in Ottawa as of May 2016 was $403,603 (that’s as opposed to condos, which rang in at an average price of $261,017.) I don’t know what that’ll be in a year, but I think we can all safely assume it won’t jump up to $1,000,000.

So I took a look at what that means for potentially buying a house in Ottawa, on some of the same variables that Lowest Rates looked at for Toronto.

Minimum Downpayment

If I was going to buy an average house in Ottawa, I’d be dodging all the new down payment rules, because I’d be buying a house that’s under $500,000. I would only have to put 5% down, which on a $403,603 house, is $20,180.15.

Now, would I ever buy a house with only 5% down? Not a chance, but that’s an opinion for another post. For now, let’s just assume we stick with the minimum, and do math things from there.

Closing Costs

Closing costs in Ottawa are a bit different too, because we don’t have Toronto’s municipal land transfer tax to worry about. That said, we’ve still got a fair amount of closing costs to budget for: provincial land transfer tax, CMHC insurance, admin costs and life-happens moving costs.

Provincial land transfer tax: $4,547.06
Pretty simple: if you’re in Ontario, you have to pay land transfer taxes. You can calculate what they would be here.

CMHC insurance: $13,803.19
This.

This is why I don’t think you should only put down 5% on a house. If you put down $20,180.15, and then you get charged an extra $13,805.19, you effectively have $6,374.96 in equity on your house – that’s 1.6% of the original purchase price.

But again – that’s a rant for another post. This is not the end of my opinions about 5% down payments. You can calculate potential CMHC premiums here.

Admin costs: $2,000
This is everything from home inspections to lawyer’s fees, and yes, they come up. Budget accordingly!

Life-happens moving costs: $3,000
Maybe it’s a new couch, maybe it’s paint to freshen up the house, maybe it’s lawn care equipment, but I’m just going to put it out there: I’m factoring this into my budget for a new house. I have no illusions that I’ll be able to move and not find some kind of unavoidable purchases involved (especially the paint thing. I am all about fresh paint to make a space feel like home.)

Mortgage Rates

As much as I am not about that squeezing-things-into-your-monthly-budget life, mortgage rates have one of the biggest impacts on whether or not you can afford your house, because they directly impact your monthly payment.

If you’re buying today, you’re basically winning the mortgage-rate lottery, because rates are low af. That said, they will go up again someday (probably) so let’s take a look at what your monthly payment would be on the average Ottawa house using a few different rates.

  • The average 5-year fixed rate from LowestRates.ca is 2.34%, which on that average Ottawa house with a 5% downpayment, gives you a $1,748 monthly payment.
  • Keeping everything constant, but using the average rate from 2014, which was 2.97%, you’d be looking at $1,874 each month – a $126 difference.

It just goes to show you that what seems like a fairly minor difference can make a big impact on your monthly budget, which is why you should always compare rates. It’s not the only thing that matters when choosing a mortgage, but it’s definitely worth knowing your options.

That $126 difference? Yeah, it’s $7,560 over a 5-year mortgage term.

Yikes.

So… Can I Afford The Average House in Ottawa?

The general rule of thumb I like to use for “is this housing situation affordable” is whether I can cover all my housing expenses on 30% of my take-home pay (you can check what that is for you using the One-Minute Budget, in – obviously – less than 60 seconds.)

The CMHC guidelines give you a bit more wiggle room, recommending your housing costs ring in at no more than 32% of your gross income, and to calculate that, they add up your principal and interest payments (i.e. your mortgage payment), your property taxes and your heating bill.

For this average house in Ottawa, here’s what that number looks like annually.

Mortgage payments: $20,976

Property Tax: $4,036.03 (1% of purchase price, approximately)

Heating: $1800 (going with Lowest Rates’ estimate, because ¯\_(ツ)_/¯)

You’d ring in at $26,812.03 in annual house costs, which using the CMHC affordability guidelines means you’d need an annual income of $116,000 to handle the housing payment.

And even though I’m conservative like nobody’s business when it comes to affordability, my 30% of take-home pay rule only puts you at about $126,000 a year, pre-tax. (Although OK, fair, that is a $10K difference and nothing to sneeze at.)

At the end of the day, the question Lowest Rates posed in the infographic was whether or not the dream of a detached home is still within reach. In Toronto – especially if prices top $1,000,000 and trigger a 20% downpayment – it’s a little iffy, but in Ottawa?

I’m going to say it’s more doable.

But like, please don’t come drive up the Ottawa prices all at once, OK Toronto? We don’t have a basketball team, and it’s very cold here, I swear. You wouldn’t like it.

I’d love to hear from other people on this one, Ottawa or not! Do you think homes in your area are affordable? How did you figure out how much house you could afford?

This post was a collaboration between me and Lowest Rates, but as usual – and obviously from the ridiculous stories – all opinions are mine!

In Defense of the Fun Budget

in-defence-of-the-fun-budget

There’s this thing that happens when people find out I blog about money.

It goes something like this.

“Oh my god, I’m so bad at money – I spend so much on _______.”

That blank can be a lot of things, from craft beer to restaurants to clothes to a dog (ahem, hi. Me and my bonkers-expensive dog will just stay quiet on this one.) No matter what that blank is, there’s one constant: it is always, invariably, something that person really likes having in their life.

Maybe even loves.

So they spend money on it, and then they hear personal finance blog and the Guilt Monster pops up with a reminder that

“Oh my god, you spent money on a thing you like. That’s bad, and you should feel bad about it.”

And all I want to do is punch that Guilt Monster right in the face. Because, shocking personal finance truth:

You can be great with money and still spend money on things that make you happy.

In fact, if you’re not spending anything at all on things that make you happy, I’d argue that you aren’t doing money right in the first place.

Here’s exactly how you can keep spending money on things you love, and be a money rockstar at the same time: set a fun budget. Put aside a specific amount of money in your monthly plan, every month, that you get to spend on whatever you want, guilt-free.

Man, that was easy, eh?

If you want a quick guideline on how much you should be putting into your fun budget every month, check out the One-Minute Budget – all you need to do is put in the number on your paycheque, and it’ll give you a rough idea of how much fun money you can spend every month. (Seriously, it’s that easy.)

It’s that easy, and it’s also that worth it, because here’s just some of the benefits I’ve experienced now that I have a fun budget baked into my monthly spending.

You Know How Much You Can Spend On _______ Every Month

Whatever your blank is, you’ve now got a clear guideline on how much you can spend on it.

Maybe it’s computers, and your budget will allow for a new game every month, but not necessarily a new computer. Maybe it’s shoes, and you can buy a nice new pair of shoes once a month, but not a new pair of Louboutins (because omg that’s not a pair of shoes, it’s a mortgage payment.)

It doesn’t matter what it is, because in every single category of things that people like, there are really bonkers expensive options, and then there are options that you can enjoy every month. Your fun budget helps you figure out which ones are which.

You Can Find Ways To Enjoy Things Strategically

I love books. Like, l-o-v-e them. Do I still read them? All the time. Do I still budget $50 a month to buy new books from Amazon? Nope.

I realized that my enjoyment of books is exactly the same whether I own them or not, and that the library is a readily available source of free books. That one decision gives me an extra $50 every month to spend on date night or new clothes or patio beers with friends – all things that are much harder to get for free.

I might be cute, but I’m not get-drinks-for-free cute.

You Get a Clear Picture of Your Priorities

When you have a set amount of fun money, yes, you will have to make some choices during the month if you’re going to stay within that budget. You can have the restaurant meals, guilt-free, but maybe you can’t also have the subscription box or the stack of new books or the mini-vacation.

As you make those decisions, you’ll be more and more aware of how much you’re really enjoying the things you’re buying, if only because you know you could be buying something else with the money. You can’t help but notice which types of spending add the most happiness to your life when you’re aware of it, and you’ll start to prioritize those things.

In that way, literally, a fun budget will increase your overall happiness.

You Can Banish the Guilt Monster

If you’re on my email list, you’ve heard this already, but I bought An Expensive Thing last week: a day planner that retails for $75. Before tax. (That’s it in the post photo – isn’t it fancy?!)

That’s crazy, right? I’m a personal finance blogger and I spent $75 + tax on something I 100% do not need. But – and this is the beauty of the fun budget – I wanted it.

I had been using that day planner’s free printables to keep myself organized, and they had a huge impact on how I thought about my day and how productive I’ve been. So I wanted to buy the full version when it came out – and I did.

Guilt-free, because I scaled a little bit back on other fun spending this month.

That’s the real key to balancing “being awesome at money” and “spending on the things you love.”

When you set a fun budget as part of your monthly spending, you’re giving yourself permission to do whatever you want with that money – but only that money. You’re balancing your wants with your needs and your long term goals, because you’re taking care of those in other parts of your budget.

This strategy is also the only way to consistently hit your goals month after month, by the way, because trying to cut everything fun out of your life is a recipe for budget disaster.

It’d be like telling yourself you can never eat carbs again. You might do really well for two months, but month three? Let’s just say you might find yourself staring down the biggest bowl of pasta anyone’s ever seen.

I speak from personal experience here.

So seriously, friends: please give yourself a fun budget, and enjoy the hell out of every dollar in it. Stop feeling so guilty for spending that makes your life great. If it’s not compromising your money goals and your ability to take care of your needs, it’s actually one of the best things you can do with your money.

Do you set aside a specific amount of guilt-free spending money every month? Have you experienced any of the same benefits I have because of it – or additional ones I forgot to include? Let me know in the comments!

How To Choose The Right Robo-Advisor For You

how to choose the right robo-advisor

As I’ve mentioned before, I did not do a whole lot of homework before choosing a robo-advisor.

Literally, I googled “robo-advisor for Canadians,” liked Wealthsimple, and invested.

This is a classic Des-shows-you-how-not-to-do-things moment in personal finance, like the time I bought auto insurance, the time I picked my credit cards, and the time I tried to save an emergency fund. But, unlike those times, there isn’t really a good story behind it, so let’s focus on what you should consider when you’re choosing a robo-advisor, shall we?

The basic concept of a robo-advisor is that you’re taking a passive approach to investing. You want to invest your money in the market as a whole, in a balanced way, for a low cost. You’re not into picking stocks and trying to beat the market, because honestly, who even has the time.

(Plus, dying of laughter over here, even Jim Cramer hasn’t beat the market over the past ten years. Dude literally has a TV show about stock picking.)

So how do you choose the right robo-advisor for you, if they all take this approach? Two ways.

Cost, and investment options.

These are the things I would look at if I were choosing a robo-advisor again today.

How Much Will A Robo-Advisor Cost?

Personal finance truth: you should ALWAYS know how much things cost, investments very much included.

How much a robo-advisor costs is by and large driven by one thing: how much money you have in your portfolio. Luckily, you probably have a good idea of how much that is, so you can figure out pretty quickly how much each platform will cost you.

Take a peek at your savings accounts, and get a ballpark number of how much money you want to put into the stock market.

See: What You Need To Know Before You Start Investing

If you have…. Less than $5K

Some of the math is easy, since some major platforms have minimum account sizes. Less than $5000 to invest? BMO Smartfolio isn’t for you, because that’s their minimum account size. Nest Wealth and Questtrade Portfolio IQ aren’t your best options either, since their fees are pretty steep on low balances, when you dig into the percentages. That said, Wealthsimple has no management fees for accounts under $5000 (and no minimum account size!)

If you have… More than $500K

If you’re rocking a portfolio of $500K, things flip around for you (and also, you go Glen Coco.) At that size, NestWealth is one of your most competitive options, with fees of $80 a month, versus Wealthsimple at $165 a month.

This will be a fun problem to have someday, I think.

What If You’re Somewhere In The Middle?

For me – yes, I’mma hit you with some numbers here! – my portfolio is hovering around the $20K mark if you add up my TFSA and RRSP balances. Here’s what I would pay at some of those advisors if I were with them each year.

Nest Wealth ~$370
($20 a month, max of $100 in trading fees per year, and an average of 0.15% ETF costs.)

Wealthsimple ~$122
($6 per month, and an average of 0.25% ETF costs)

ModernAdvisor ~$150
($100 per year, and an average of 0.25% ETF costs)

Questrade Portfolio IQ ~$214
($11.67 per month, and 0.37% ETF costs)

BMO Smartfolio ~$190
($11.67 per month, and an average of 0.25% ETF costs)

The other factor to pay attention to, when it comes to pricing, is additional fees. Robo-advisors might have charges for things like not contributing a certain amount each year, executing trades or withdrawing your money. These type of things vary greatly between companies, and their likelihood is pretty dependent on how you want to use the accounts.

My best advice? Reach out to a robo-advisor you’re considering and ask them if you’re unclear on how additional fees might apply to your situation. It turns out, there are real people who would love to help you behind these so-called robots.

I’m sure they’d be stoked to hear from you.

What kind of investments do you want?

Ok, let’s be clear: this is me, human who returned every investment book she’s ever checked out of the library unread. So I’m not about to drop some hardcore “here’s what you need to invest in now” truth bombs.

This is about feelings. (Well, kind of.)

There are things in the world I feel strongly about, and have taken pretty public stances about. I’m pretty sure after this Medium post, no bread manufacturer is ever going to hire me, and that’s OK. I don’t want your vegetable bread money anyways.

I also don’t really want money from companies that are ruining the planet, or companies that are deeply bad to people. Easy enough to manage in terms of who I personally work for, but way harder to manage when it comes to who my money works for – ie. who I invest my money with.

That’s the thing with ETFs: they buy the market, and that market can include companies you might not want to touch with a ten foot pole.

While I haven’t found a way to exclude bread from my portfolio, I did switch all of my investments over to Wealthsimple’s socially responsible investing options as soon as they became available. That means I’m no longer investing in companies with bad track records on a broad measure of social responsibility – which includes things like not destroying the earth.

It’s becoming a popular option for robo-advisors to offer – I blame those awful millennials and how much they “care about the world” – and Wealthsimple and ModernAdvisor both currently offer socially responsible investing options.

For me, the moderately higher fees associated with an SRI portfolio (0.25% to 0.4% ETF fees, instead of 0.2% to 0.3%) are totally worth it, but going back to the how-much-does-it-cost part of things, it’s a factor you’ll want to consider.

So Which Robo-Advisor is Right For You?

I mean, who even knows dude. It depends!

I will say that, for me, given my current portfolio size and investment preferences, Wealthsimple is the best fit, which is why I’m so confident recommending it to other millennial friends who are getting started with investing (especially with that $50 bonus offer they have on right now!) And if you did go and read that post I wrote about bread, you’ll know I feel pretty strongly about only promoting products I believe in, haha.

I’ll also say that if you know how much money you want to invest, you’ve compared the pricing of different services, and you’re comfortable with the investment options they offer – you probably know the answer for yourself at this point.

And if you’re rocking a $500K+ portfolio, high freaking fives.

Are you using a robo-advisor right now? If yes, what made you decide to choose that one – and do you have any other advice for selecting a robo-advisor to people who haven’t taken the plunge? If no – why not?

Image credit: Pink Pot

This Millennial Plans on Retiring. Here’s How.

millennial-retirement-plan

Listen.

Retirement is a touchy subject. Like, genuinely, deeply touchy.

Anytime it’s brought up in polite company (thanks to me, the bull in the conversational china shop. I don’t know why I keep getting invited to things, you all should know better by now) there are a few classic reactions.

The most frequent one?

“I’m never going to retire.”

Seriously, I have heard this from literally everyone who has ever spoken to me about money, in various degrees of joking tones.

There are all sorts of underlying things at play here, because it’s never just about not retiring. It can be pessimism about the future, it can be fear of not saving enough, it can be disappointment in how the market has treated you, it can be a genuine ‘I love my job’ or it can be about a million other things.

But can I just say what I want to say every single time this comes up?

You are almost definitely going to retire.

Yes, fellow millennials, you too.

You need to plan for it, no matter what you believe about the future of work or building a career you don’t have to retire from. You especially need to plan for it if your beliefs skew more towards the I’m-never-going-to-be-able-to-afford-it side of things.

Maybe you’ll do it later – much later, even – than your parents did, and the chances are good that unless you work for a government, you’ll be doing it without a pension.

But I find it very hard to believe that you and I and all our friends are going to work until we literally die on the job. When you really think about that, it seems crazy. Especially because hi, your health may have seriously different ideas about that plan.

This might be just as crazy, but I plan on retiring someday. Maybe I’ll be over 70, but dammit, I’m going to retire. And here’s what I’m doing now to make that happen (someday.)

I promise it’s not rocket science.

Putting money aside regularly

I save money, every month, and it’s totally automated. Every time I get paid, money just magically disappears into my Wealthsimple account.

If you’re looking to figure out how much you should be putting aside every month, the rule I go by is to aim for 10% of your salary (yes, 10% of your pre-tax income – that was a hard one for me to hear if we’re being perfectly honest.)

Factoring it into other big life decisions

There are far too many major life choices that happen in the first decade of being an adult. You choose post-secondary education, you choose your first few jobs, the city you’re going to live in, romantic partners, whether or not to have a pet, and the list just keeps going.

Seriously. It’s a lot.

But every time I’ve made a big decision, even if it wasn’t at the front of my mind, my retirement savings factored into it (which sounds like just about the most boring thing ever, again if I’m being really honest. Seriously do not know why people still invite me to parties.)

It’s not like I’m sitting there thinking about whether or not my new apartment is going to ruin my life 45 years from now, but I am calculating my budget based on the assumption that I’m always saving something for retirement. Since that’s a given, every other decision has to shift to accommodate that.

The same goes for all future decisions, including buying a house someday. If 10% of your income is locked away, with no possibility of being touched for anything other than retirement, you need to buy a house you can afford on the remaining 90%.

Be nice to your future self, and keep them in mind when you make these kinds of choices.

Not leaving it in a savings account

The best reminder of why I don’t leave my money sitting in cash anymore came via a comment from Our Next Life on my post about what you need to know before you start investing.

They oh-so-wisely reminded me that leaving your money in a savings account is a guaranteed way to lose money.

I know what you’re thinking – isn’t the stock market supposed to be the risky bet?

Think about this. Most savings accounts will pay you somewhere in the neighbourhood of 1% interest over the long term, if you disregard promotional rates that don’t last. Inflation in most years hovers around 2%.

So every year that you keep your money in a savings account, it’s losing about 1% in purchasing power. What does that really mean?

Example time!
*cue jazz hands, they make finance stuff way more fun*

Let’s say that 30 years ago, in 1986, you had $100. (I definitely didn’t, because I wasn’t alive yet, but just go with it.) Thanks to inflation, by 2016 you’d need $197.07 to buy the exact same things that $100 would have bought you back in the 80s.

If you put that $100 in a savings account earning 1% of interest for that time, you’d have… $134.78.

You lost $62.29 in buying power.

But if you had invested that money, and gotten the average market returns over the exact same 30-year period, you’d have $447.00. And yes, some of the years in between, you would have lost money. But overall, if you had kept your money in the market, you came out ahead – because you had a chance to.

That’s why I invest my money, even if it took me way too long to get started. It’s also why I’m a big fan of Wealthsimple, and buying the market as a whole – not picking stocks. Also, given the sheer number of investment books I haven’t read… I just don’t care enough to pick stocks. Luckily, I can still invest – thanks, roboadvisors!

If you want to get started, Wealthsimple has a great promotion going right now where they’ll give Half Banked readers $50 – just for signing up and funding your account.

That’s going to be like $451.39 in 30 years, if you include dividends (which Wealthsimple very conveniently reinvests for you without you having to do anything at all.)

wealthsimple-ad

At the end of the day, if you do these three things – put money aside regularly, factor “retire someday” into your other life choices, and invest your money – you will retire.

Yes, even though the media is all about that doom-and-gloom life when it comes to talking about retirement for millennials.

Ignore the media. Plan to take care of future you, and save your future employer the hassle of finding you keeled over at your desk. I hear the paperwork is just horrendous.

Are you planning to retire someday? Or do you think that retirement is an outdated concept or unattainable? I’d love to hear from both sides of the fence on this one! (Especially from my incredible early-retirement friends!)

PS. Wondering where I got those numbers? Here’s where I got the inflation rate, here’s where I got the historical market returns (including and excluding dividends) and here’s the calculator I used for compound interest calculations.

5 Things I Wish Someone Told Me (About Money) As A New Grad

money-for-new-grads

It’s that time of year, friends.

Graduation time – at least for university and college students, anyways. (High school, I don’t know what to tell you, you’ve got like two months left. Sorry.)

This time of year always feels like a checkpoint to me – it reminds me of the always-fun adventure of figuring out this whole adulting thing on my own for the first time as a newly minted grad.

In honour of that, here are the five things that would have made my life a lot easier if I had known them in those fresh new grad days when I was, in all honesty, probably more stressed out than I ever have been since.

1. Breathe – You Have Time

You are likely making the lowest salary of your career right now. So as much as you need to be responsible with it, and live within your means, and all that jazz – be gentle with yourself.

It can be really stressful when you think about all the things you want to do, and accomplish, and pay for in some way, shape or form. Maybe it’s travel, or retirement savings, or a wedding, or a house, but for now, take a deep breath.

You have time. You will get there. Don’t kill yourself trying to reach all of those goals at the same time. Give yourself some breathing room.

See also: Yes, You Can Survive on an Entry-Level Salary

2. Avoid Lifestyle Inflation

It’s really – really – tempting to let newfound income go to your head. And fun story, this applies just as much to any eventual raises as it does to the transition from student to earning-an-actual-income.

But barring a few really significant raises you might score in your life, the jump from being a student to earning a full-time income is one of the biggest jumps in income you’ll probably experience.

So just be aware of how you’re reacting to the transition, and try to avoid going nuts on the lifestyle inflation front. To do that…

Pay attention to the recurring payments you’re adding to your life. When you join a fancy gym, or take on a new subscription, or commit to a weekly class, or add a daily latte to your life, just be aware of it – and watch out for how they add up. I am a great example of how quickly these kind of things can get out of hand, because when I went to look at my monthly recurring payments, I ended up saving over $1000 by cancelling services I didn’t even need.

Focus on the big three: housing, transportation and food. The best decision I ever made was to rent the same kind of apartment as a new grad that I did as a student – all but falling down, appliances from the 1950s, no laundry, with roommates. It was the only way I was going to be able to spend less than 30% of my income on housing costs as a new grad, and to be honest? I loved that place. Granite countertops and a shiny one-bedroom in a hot neighbourhood can wait. (I still don’t live like that, in case anyone is wondering.)

And for the love of all things money, don’t lease a brand-new luxury car, especially if you can get by with public transportation.

Save something for your mid-life crisis.

Make sure you allocate money to savings. The best way to safeguard against levelling up to a lifestyle you really can’t afford is to make sure you’re putting aside a portion of your money towards your savings goals. Start with a small emergency fund, and build towards other goals from there – if you ever get fired or end up between contract jobs, an emergency fund will make it way, way better.

Even if you’re spending the rest of your money, that buffer going into savings is the best way to make sure you’re not living beyond your means.

And pay off your credit card. Every month.

Yes, every month.

3. Be Realistic About Your Salary

Yes, you might be making a ton more money than you ever have before, but be careful. Just because it’s more than you’ve ever been used to before, doesn’t mean that you necessarily know what kind of lifestyle it can really support.

$40K feels like a lot when you’re used to funding an entire school year on less than $10K, but when you’re making big decisions – like where to live, and how you’ll get around – make sure that you’re not overshooting what your salary can realistically support.

A great way to check is to do a quick One-Minute Budget. It’s a (free!) 60-second way to see how your income breaks down based on popular budget ratios – like only spending 30% of your income on housing, for example.

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Honestly, I wish I had a tool like this when I got my first paycheque – if only to tell me I was probably being too aggressive with my savings goals on such a teeny income, and maybe to relax a little.

It’s also adjustable, so you can move the ratios around to suit your priorities, from buying really great food to paying down debt aggressively. But as you do that, you’ll see other categories have to drop, which is the best budgeting lesson I’ve ever learned.

You can’t afford everything, but you can afford some things.

Make sure they’re the ones that matter to you.

4. Side Hustles Are Your Friend

For me, the most stressful thing about transitioning from being a student to earning a full time income was that my income was – all of a sudden – totally set for the month. There were a set number of dollars that were mine to spend, and when they were gone, they were gone.

It turns out, this doesn’t have to be true.

I wish I had someone shake me by the shoulders and tell me

“You can make more money if you want to.”

Because it’s true. Just because you have a full time job, it doesn’t mean you’re in any way above picking up a few part-time shifts, or even better, starting up your own side hustle or business.

I’m not going to get into too much detail here, because there are about a billion great side hustle articles out there on the internet. But seriously – if you’re in any way as stressed as I was about balancing your full-time income with all of your goals, you can earn more money.

It’s an option, and one I wish I had taken more seriously when I graduated.

5. Don’t Stress About What Other People Are Doing

I had a fun realization the other day.

My monthly spending – the total amount of money that goes out the door to fund my housing, my car, The Dog, and general life expenses (ahem patio beers) – is hovering only a few hundred dollars below my total take-home pay at my first job.  

I remember hearing stories of people who made salaries that about the same as mine, who had pets and cars and patio beers and apartments that they didn’t share with roommates (and that had appliances from this century.) All I could think at the time was,

“How? How on earth can you afford all of that?”

And now I get it.

They could afford it because they were spending all of their money.

They certainly weren’t saving as much as I was, and being really strict with themselves to accomplish it. I know, because now, my monthly spending to afford those things is in some months, exactly what I was taking home at my first job monthly.

So I could have – technically – supported the lifestyle I have now with that new-grad salary. But when I got fired, I wouldn’t have had the emergency fund that made everything so much better. I also wouldn’t have been able to buy Little Car outright when I moved to the suburbs, and I certainly wouldn’t have the retirement savings and investments I have right now.

Those were the right choices for me, then and now, even given how much I worried about it. And, if I’m being perfectly honest, how much I envied my peers who didn’t worry about it.

If I could go back, I’d tell myself that I would accomplish the things I really wanted (mostly, getting a dog) in time, and not to worry how fast or slow everyone else was getting there.

I’d tell myself to just focus on taking the steps that were available to me at the time, and enjoy – or at least tolerate – the process.

I’d also tell myself to focus on what my priorities were, and to let everyone else figure out theirs.

But then again, I’d also go around telling everyone I knew to start an emergency fund yesterday, and how much to save in it… So maybe they can figure out everything after that on their own.

And I’d probably also remind them one more time that the One-Minute Budget is the best thing you can do for your money in under 60 seconds, and that you can get it right here.

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What advice would you give yourself if you could go back in time to when you had newly graduated? (I know at least a few new grads who may end up reading this post, so assume that your advice will actually reach the right eyeballs!)

That Time I Finally Switched My Car Insurance

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In the grand tradition of taking forever and a day to actually do the money things I know I should be doing (I’m looking at you, investing) I have a story for you today, of the grand saga that has been switching my car insurance.

Ok, that might be overstating it, but oh man. It feels like forever.

And you know what they say about money – it’s really just about feelings, right?

I’ve done the reviewing-my-recurring-purchases thing, and the comparing-my-car-insurance thing, but the one thing I haven’t done is the actually-switching-my-insurance-provider thing.

When I sat down to review my car insurance and get quotes to compare a few months ago, I found out that my rate was… how shall I put this gently… not even close to competitive. So I knew that this year was the year.

The year I switch car insurance providers.

In an effort to avoid cancellation fees, I waited until the fateful day when my insurance renewal documents showed up in the mail. I had hope: maybe my renewal rate would actually drop since I had been a loyal, accident-free customer for a few years!

Maybe this was my year!

It was not my year, friends.

My rate went down all of $2.00 a month, so it was back to rate comparisons for me.

I went back to LowestRates.ca and put in my relevant info to get yet another quote. (I’m not kidding that I’ve done the quote process, and the follow up email process, with them about ten times. When I finally called them to move ahead with buying insurance, it must have been like Ahab and the whale.)

True to every time I’ve ever compared rates, my current car insurance was way higher than even the top five quotes. So I procrastinated for about two weeks, and then – finally – called up LowestRates and committed to making this my year.

The year I get a better car insurance rate.

No one ever accused me of having boring goals, you guys.

The insurance broker who picked up my call – hi Nolan! – was awesome on the phone, and in about 15 minutes he had confirmed the quote, made sure I was getting the best rate for my particular set of skills (aka installing snow tires, which is 100% not a skill I possess, but The Boyfriend sure does) and ran me through a list of the entirely ridiculous but also necessary insurance questions that they need to ask.

My hands-down favourite:

“Will you be using the vehicle to transport explosives on a regular basis?”

“Oh sure Nolan, all the time.”

Please. I wish I was that cool.

We had a good laugh though, because by the time we got to that part of the process we had already joked about the kinds of answers he must get on a daily basis.

I remember my customer service days, and I didn’t even get to ask people probing questions about how they use their cars.

Once the phone call was over, I only had two tasks: take a picture of my snow tires on my car, and take a picture of my car’s VIN.

Snow tires? No problem.

VIN? Well… let me just say that this is probably the hardest and most confusing task I’ve been assigned all year, to my complete horror and dismay.

“Take a photo of text on your car.”

That should not be that hard. However, it was apparently beyond my car-insurance-buying skill set, because for the life of me I couldn’t figure it out.

First, I sent poor Nolan a photo of some other, random numbers and letters that I found on my car. Was that the VIN?

Of course it wasn’t.

This isn’t that kind of story.

He replied (very kindly) that good try, but no. Kind of like one of those Roll Up The Rim cups that tells you to play again, but the prize is insurance.

So I shelved my pride and Google “where to find VIN on Toyota Yaris.” Poor Little Car, this is probably the most attention I’ve paid to her in years.

Google was a totally misleading liar, and told me to look inside the engine to find the VIN. Let me just tell you, this is not where you find a car’s VIN, and you should just trust the insurance broker who keeps telling you (very patiently) that it should be clearly marked on the windshield.

Well, a few more weeks has passed now, triggered by my total embarrassment and avoidance of how bad I am at finding a simple number on my car.

At this point, we’ve arrived at  6AM on Sunday morning, the day that I’m set to fly out to Vegas, and The Boyfriend reminds me that I really need to get that photo of the VIN and send it to Nolan, because my old insurance is renewing in about a week.

I wish I could say that I buckled down, found the VIN and lived happily ever after with newfound knowledge of my car and confidence in my abilities.

Again, this is not that kind of story.

In real life, I turned to The Boyfriend with a look of pure panic and said

“BUT I CAN’T FIND THE VIN!”

He took pity on me, and went to the garage armed with my advice to look in the engine, and came back upstairs a few minutes later, having found the VIN.

Three guesses where he found it.

Oh, that’s right.

It was on the windshield.

Where Nolan told me it would be.

Because of course it was.


 

To wrap up this tale of “Desirae, learn how to adult already,” at the end of the day I did get new insurance, and I have officially chopped a solid $25 off of my monthly bill. That was partially accounted for by changing providers, and partially accounted for by my comfort in raising my deductible – thanks, emergency fund!

I will say, too, that after getting a new quote with my higher deductible, I sent an email to my previous broker, asking them what the impact of raising my deductible would be on my existing policy.

It worked out to about a $4/month difference. They made the choice pretty easy for me, I have to say.

If you haven’t reviewed your insurance rates lately – for cars, homes, disability, your hair, whatever, I don’t judge – I would strongly suggest it, in line with my “do your own research, always, for everything” personal finance mantra.

You might have a great rate, but then again – like me – you might not. And if you never check, you’ll never know.

And you’ll never have the sheer pleasure of your car making you feel like an idiot because you can’t find a simple freaking number on the windshield I mean it is made of glass this should not be that hard.

Sorry.

Compare your insurance rates.

Because I’m all about transparency, I feel like I need to point out that this is not a sponsored post, or affiliated with LowestRates in any way. I just genuinely used them to get me through this totally easy but seemingly hard thing, and Nolan was genuinely hilarious and more patient than I reasonably could have expected.

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