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From home ownership to renting

I mentioned in a previous post that my housing situation has changed dramatically. In the summer I hinted at the idea of selling my house and moving into Vancouver to be closer to work, my friends, and where I spend most of my life. So back in August, I put my townhouse on the market just to see what would happen. There was a lot of interest, and finally I accepted an offer earlier this month. :)

That means I’m moving! But I’m not just moving into an apartment… I’m going to live out my small space living fantasy by renting out a laneway house in Vancouver. For those that are not from the Vancouver area and might be unfamiliar with laneway houses, these homes are typically built on a pre-existing lot (usually someone’s backyard). They are usually detached from the main house and open onto the back lane. My laneway house is a two-storey, two-bedroom house that measures about 685 sq.ft. It’s extremely cute, and I can’t begin to tell you how excited I am to live just a 10 min. drive to work, and within a few blocks of my favourite neighbourhood in Vancouver.

I had a short introduction into small space living in 2012, when I lived in a 215 sq.ft. apartment with a boyfriend for a year in Germany I don’t think I would want to live in a space that small long-term with another person (at least not that specific space – it did not function very well and there was no storage), but it definitely showed me that I can do with a lot less than what I have and still be completely happy. So now that there’s 685 sq.ft. for two people, it seems really doable.

With my new job, I will also be getting a modest bump in salary, which will increase my monthly saving amount. But I want to get right to the fun stuff – and that’s creating a new budget for a new living situation. :)

This is what my initial thoughts are for my new budget:

January 2016 Proposed Budget

A few things to note:

  • This is not a fair representation of home ownership vs. renting as I’m also going from living alone to living with somebody else. Creating this mock budget for the first time really made me realize how much more I was spending over the last 5 years living solo. Back in the summer, I did create another mock budget to see how much I’d save if I went from owning to renting as a single person ($400/month). So while this isn’t a truly fair representation, it doesn’t result in a *massive* difference in my budget living with someone vs. living solo.
  • My townhouse had rental restrictions. A lot of people suggested that I rent out my townhouse and move into the city. However, my building did not allow for rentals, so this just wasn’t an option for me.
  • Monthly rent on this house is $1,650. For a two bedroom in an extremely desirable area in Vancouver, this is quite reasonable, but definitely not the cheapest option out there.
  • We will be splitting the cost of utilities and internet. Electricity will go up a bit as we are heating a whole house, but that increase is offset by the fact that it’s now a shared expense. Renter’s insurance has been quoted at $30 per month.
  • I anticipate my monthly grocery budget will go down a little bit as I’ll have more time to prepare more meals from scratch.
  • Car insurance is not accurate – it will likely cost a bit more now that I live in Vancouver.
  • The cost of gas is cut in half now that my daily commute to work is 10 minutes instead of 45-60 minutes. :)

Related: Single? It’s costing you more than you think.)

As you can see, I *think* I’ll be able to slash over $700 from my budget each month without changing my lifestyle through variable expenses. Unless I’ve made some glaring error. This is a significant amount, and I am really excited about it. If you add to that my modest pay raise, and if I am vigilant in saving my savings, I could potentially put away an additional $1,000+ each month.

Are you getting a holiday bonus?

Do you get a year-end bonus from work around the holidays? I haven’t worked for a company that has given out annual bonuses for a while, but now I am, I’m faced with the problem of how I’m going to spend the money. A good problem to have. :) And while I’m tempted to spend it on a new laptop or a trip somewhere tropical, I know this small windfall will give me the opportunity to achieve a few financial goals I’ve been putting off.

Here are a couple smart ways I’ve spent my annual bonus in the past:

Pay off something

Do you have a small balance on your credit card, an outstanding medical bill, or are you six months away from making your final car payment? Using your bonus to pay off your bills will help lower your debt obligation – giving you more breathing room each month. When I was paying off my student loans, I would throw any extra money I had towards that debt, and was able to eliminate it a lot faster than I had originally anticipated.

Improve your home

This is a big one for me now that I’m a homeowner. I’m finding there’s always something that needs to be done, and often times I put it off until the last minute. But things that are barely working will break down eventually, and using the bonus money to get them fixed now will save me money in the future. I know that not only will these improvements make me happier hanging out at home, but it will likely also increase the value of my home in the process.

Start a side business

If you’ve been saving money to start a new business, or if you want to take your existing business to the next level, using your bonus is a great opportunity to invest your money into your future. I have definitely spent bonus money on improving my websites, office equipment, and buying hosting. And I have a couple of friends who have received bonuses and invested that money that into a real, legitimate side business. One used the money to buy supplies and launch a store on Etsy.com, where she makes anywhere from $300-500 in extra income each month. And the other friend was able to buy additional baking equipment, which allowed her to offer more items to her clients.

Buy insurance

Set the money aside for the next time your home or car insurance comes up for renewal. That way you won’t be scrambling to find the money when the time comes. I used to get a small bonus every year from one of the companies I worked for, and felt pretty triumphant when it came to renew my car insurance, and could pay for the entire year in cash. Small win, I know. But back then, it was a major accomplishment. :)

Pay for a financial advisor

A financial advisor will be able to help you develop a personal plan of attack, and provide the peace of mind knowing that you are working with a sound investment strategy – and that you are on your way to achieving all your financial goals. Look for a fee-for-service advisor – unlike other financial advisors who might charge a percentage of your income or by trade, a fee-for-service advisor charges a flat fee or an hourly rate for providing specific services.

This year, I’m leaning towards getting a plumber in to fix my sink, and then putting half into my TFSA, and the other half onto my mortgage.

If you are getting an annual bonus this year, what will you spend it on?

Building up my savings

Now that summer is over, I really want to focus on building up my non-retirement savings. Next year will likely be an expensive year for me, because I’d like to travel (already have a few places in mind), and I’d also like to put some money into my townhouse.

I haven’t created a budget yet because I don’t know where I want to go, and I don’t know exactly what I want to buy, but I do know I’ll need money for it. And since I’ve gotten into the habit of freely spending my money lately, I want to reign it in for the rest of the year.

The truth is, I don’t really need anything anyway. Whenever my family asks me what I want for my birthday or for Christmas this year, I can never come up with anything. Well, I want an iPhone 6, so I guess what I mean is I can never come up with anything realistic. :)

So here are my goals for the rest of the year:

  • No new clothes. I have enough to get me by. In fact, I should probably get rid of some of the stuff I don’t wear anymore!
  • No Starbucks. I’ve already been doing this one, and it will continue to the end of the year.
  • Pack my lunches more often. It’s about time management. I spend half my time at BF’s, and he’s not much of a lunch packer. So I need to figure this out for myself. Maybe it’s making an extra trip to the grocery store, or batch cooking and leaving a big tupperware of food in the fridge at work. Whatever it is, I need to figure it out.
  • No buying Kindle books. This is hard because I’m a fast reader, and I’m too impatient to wait for books to become available at the library. But I have a bunch of ebooks I haven’t read yet, and a few on my bookshelf as well. They should last me a few months at least.
  • Cook food at home. BF and I got into a habit during the summer of going to restaurants or grabbing take-out just so we could spend less time at home, and more time outside enjoying the summer. Now that the weather is coolling, I’m excited to roast vegetables, use my slow-cooker, and eat healthy meals at home.
  • Say no to things. If a friend suggests a restaurant that’s too expensive for me, or if there’s an activity I’m on the fence about, I’m going to say no and suggest something different.

Aside from these everyday ways to save money, I’m also thinking bigger. I’m going to try really hard to save 75% of my freelance income from now on, as well as all bonuses or raises I receive through work. Even though it’s going to be really tempting to upgrade my iPhone or get a new laptop, I know the money is better spent elsewhere. :)

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