March was a busy month. We got pre-approved for a mortgage and started checking out open houses, went on a week-long vacation, RD’s parents came into town, lost of visiting with friends, and we also started planning for our trip to Portugal in the fall (I created a rough budget which I’ll share later this month) as well as my family’s annual Blue Jays weekend in Seattle. All of these travel expenses will fall into April’s budget, which I’m not really looking forward to. :)
But I tried really hard to keep saving for my down payment as a top priority in March. We cut back on eating out in restaurants, when we were on vacation, we only went out to one restaurant and opted to cook the rest of our meals in the cabin (we didn’t even go to Tacofino!), and I bought the blazer that I wanted on eBay instead of in-store (which saved me about $100). Admittedly I didn’t need the blazer – or any new clothes, really – so I’m going to put myself on a shopping ban for the next 3 months (April-May-June) to see how that goes. The only thing I will allow myself to spend money on is repairing a pair of shoes (my Birkenstock sandals need to be resoled before I start wearing them every day during the summer). Spending money on clothing won’t make me happier, and will take me further away from my down payment goal.
As for how I did in March? I came in under budget, which I’m pleased about. Here are my numbers:
- Household – just a few dollars over budget spending on normal essentials like laundry detergent and cleaning supplies.
- Car & Transportation – replaced the battery on my car remote, and ended up paying for parking a few times.
Income and Savings:
This month I earned over $10,000 (which is definitely not normal for me), and was able to save 68.5% of my net income. And because of that bump in income, I was able to contribute a decent amount to my down payment fund. :)
For those that are wondering how I’m allocating my savings, the only savings I have automated is for retirement – because that will always be my number one financial goal. After that, every month I put $100-200 into a general savings account, and the rest goes into my down payment fund. I no longer contribute to my emergency fund (it has sat fully funded at $10,000 for the past few years).
- Current Down Payment Fund: $133,150 / $150,000 (+ $3,400)
March 2017 Goals:
- Rebrand GMBMFB. FAIL. I bought the theme and have started playing with it, but haven’t implemented it live. Soon.
- Cash out a portion of my corporate stock program. CHECK! I cashed out about $2,000 in corporate stock and added it into my EQ Bank account.
- Get pre-approved for a mortgage. CHECK! We’ve seen about 10-12 places and have really narrowed down exactly what we’re looking for.
- Figure out a good system to combining some of our finances. CHECK! We opened up a joint chequing account, and are ready to merge together our day-to-day finances. We discussed our current system and agreed that it’s working for us, so there’s no need to change it until we actually move.
Last weekend, our Realtor took us on an open house tour in our desired neighbourhood. We wanted to see in person what we could afford, and what we actually wanted in a future home. Because it’s fine to start jotting down a list of condo requirements, but it’s completely different to actually be in the space and figure out exactly what you want.
I mentioned on Twitter a few weeks ago that our mortgage broker said we’d be pre-approved for an $850k mortgage. We both have good jobs, no debt, and a nice down payment, but still I couldn’t help but be shocked. I thought it would be much lower considering I only got approved based on income from my full time job, and didn’t take into consideration my average freelance earnings over the last 3-4 years. In what world would anyone be able to pay a $3,700/month mortgage?
The rule of thumb is that the cost of a home should be no more than three times your gross household income – which would put us firmly in the $475-500k range, which felt a lot better.
So we settled on looking at places in the $400-500k range (which is just a step above entry-level in the Lower Mainland lol) and picked a list of places to look at.
The first Open House was for a 2 bed/2 bath condo listed at around $400k, and it absolutely shocked me. There were literally dozens (!!!) of people lined up to view it by the time we got there. No joke. They had to take people through in waves because we all couldn’t fit at the same time … and who knows how many saw it in the previous 2 hours of the Open House. After we saw it, my Realtor said the condo probably should have been listed at closer to $475k, and we found out later that it eventually sold for well over $500k. Okay… moving on.
After that one, we saw a mix of other condos – some in more “entry level” buildings, some that were used for rental income (one tenant just sat on the couch while we poked around … which was weird), a beautiful (but small) condo in a heritage building, and a nice warehouse conversion loft.
Here are some observations I took away from that day … most of them didn’t come as a huge shock, but it was interesting to see with my own eyes:
- There were a lot of young people with their parents. I don’t know if it’s because their parents were co-signing, gifting money, or if they just wanted their parents along, but I was definitely surprised.
- One of the listing Realtors commented that he was seeing a lot of activity from younger buyers because they’re wanting to take advantage of the BC Government’s Home Partnership program, which provides loans up to $37,500 (or up to 5% of the purchase price) which are interest-free and payment-free for the first 5 years.
- Most listings were going to multiple offers.
- Most listings were being sold above asking price.
- Since most people are getting priced out of the detached housing market here in Vancouver and the surrounding area, that’s putting a lot of pressure and competition on the condo market.
- Most condos seem to be selling within 7-10 days of being listed. FAST. Not at all like when I was buying my first home back in 2011.
Personally, I was a little turned off by how competitive the market is. I’m annoyed at how listings are purposely priced low in order to push the price tens of thousands of dollars above asking. I hate the idea of multiple offers and bidding wars. I hate how crowded and busy Open Houses are. And I hate that look of desperation I can see on the faces of prospective buyers.
But I also see how easily it can be to get carried away. Emotions get involved when it comes to buying a home, no matter how much you swear you’ll think and act logically … and when you’re faced with a decision to bid $5-10k more or risk losing your “dream home,” all of a sudden it doesn’t seem like such a big deal to slap some more debt onto your back … even though $5-10k could represent an entire year (or more) of savings.
I know that RD are lucky in that we can afford to buy exactly what we’re looking for, even in this over-heated market. But it doesn’t mean that we’re going to. Maybe we’ll end up buying this year, or maybe we’ll just keep watching the insanity from the sidelines.
I’ve always kept my finances separate from my significant other. This was in part because my past relationships just never got to the point where we needed (or wanted) to combine our money, but it also has to do with the fact that over the last 10 years, I’ve become fiercely independent when it comes to my finances.
Ten years ago, I was in a lot of debt. It was stressful and gave me a feeling of hopelessness – that I’d never be able to fend for myself because I was too much of a disaster – especially when I hit rock bottom and realized that I had to rely on someone else (my boyfriend at the time) to help me with bus fare. BUS FARE. I didn’t have money (in cash or credit) to get to work. I cringe just thinking about how horrible that was.
When I eventually started paying attention to my money, I promised myself that I’d never be back in that situation again. I worked hard at my finances, saved up enough money for a down payment on a townhouse, and built up a modest retirement portfolio. I also wanted to be seen as an equal financial contributor in every relationship I’ve been in, so I always insisted on paying for my fair share of everything, even if I made significantly less money than the person I was dating. I didn’t want to be seen as someone that a man has to take care of financially.
This mindset has had both positive and negative consequences, as you can imagine. The pros mostly stemmed from my own personal satisfaction that I’ve gotten to a stable place financially. It made me feel empowered! But some of the cons were that I never really considered someone as a long-term partner unless we were on somewhat similar financial terms, and I still have a hard time letting someone treat me to something as simple as dinner – I always have to make sure that I take care of the bill next time. So that it’s fair.
Earlier this week, RD and I got pre-approved for a mortgage (!). We aren’t actively looking, but we wanted to be ready just in case something amazing comes up. But one of the items that our mortgage broker wanted was a void cheque from the account we wanted our mortgage payments to come out of. So all of a sudden, this kinda–far-into-the-future-conversation of combining at least a portion of our finances was something we had to talk about now.
When we first moved in together, we were keeping track of our shared expenses and totaling them up at the end of the month. Then to make up the difference, an e-transfer would be made to the person who spent the most. It was a bit of a clumsy system because it meant we were each combing through a months’ worth of expenses to try and remember what was shared and what was personal. So for the past 3 or 4 months we’ve been using a joint (travel rewards) credit card. That has really helped because I just total up the expenses at the end of the month, and RD sends over his portion of the rent plus his half of the monthly expenses.
Over the past few months, we’ve gotten good at figuring out what expenses are shared and what are personal, so the next step is opening up a joint chequing account (which we did yesterday through Tangerine!) and linking our existing individual chequing accounts to it. We’ll still keep our own accounts because we both agree that maintaining financial independence is important, and will just transfer in a TBD amount of money into the shared account every time we get paid. :)
It’s both scary and exciting to incorporate shared finances into our relationship, and I imagine some tweaking to our system will happen along the way. For readers who also incorporate some sort of shared finances with their significant other, did you have any hiccups and modifications to make when you first started out?