Thinking about money stresses me out. When people hear about my worries, they always ask me why. My only response is, "Why doesn't it stress you out?"
Everyone wants to improve their situation. I constantly hear talk about buying houses, driving nice cars and futuristic toys. These are coming from friends that are in worse financial situations than the one I am in. Friends who are either in school, have recently graduated or have lower paying jobs than I do. I don't mean to be a Debby Downer; but I am having a tough time meeting my goals, why do others constantly dream bigger and bigger than I do?
For me, my worries revolve around my inability to buy a house. Even though I do not want anything big or fancy, the task of scrounging up the money for a decent sized down payment on a place I want is monumental. To alleviate those concerns, I have decided on a three year plan.
My goal is a down payment of 25% of my total mortgage. At the current rate at which I save, I will reach this goal in approximately three years. All it requires of me is to save a little more aggressively than before and have absolutely no leniency regarding my savings. (I used to "borrow" from myself if I couldn't make a bill payment.)
This plan has huge benefits for me. It removes a cloud of confusion over my head. No longer do I think, "I can't have it now? When is it ever going to happen?" I know exactly when it'll happen and that peace of mind, that control over the future is something that does wonders for my mental health.
It gives me three more years with my parents. As much as I complain, I love my parents and I know my mom hates the idea of me moving out. Three years is plenty of time for my parents to get sick of me and for them to drive me insane. By then, there'll be an epic falling out and there will be no choice but to move out.
It puts me on a budget. Now, I start to reconsider every time I spend money. It's not like I was throwing it away, but now I'll ask myself a second time if I really want to go out for dinner before I blindly commit myself. Every toy I consider buying, I ask myself yet again if I really get the enjoyment I paid for.
Finally, I hope that being on a plan, I can stop thinking about buying a house. I hope I can put my worries behind me.
I'm curious. I've set my savings target as 50% of post-tax income, with an acknowledgent that I'll probably only achieve 30-40% in reality. That's including RRSPs. What target do you or others you know of use?
ReplyDeleteCurrently, I get taxed ~30% and I save roughly 60% of my net income. It's not a goal, it's a reality because it's automatically transferred into my savings account. So, if I make X gross income, I am saving X*0.4. Currently, I do not contribute anything to my RRSPs. (I know I should but thinking about that gives me a head ache as well.)
ReplyDeleteAn additional point I forgot to mention is that, since I know my purchase is three years away, it means the money I have now can be invested in long term, non-liquid (re: higher return) investments. For example, my TFSA account has $5000 invested for five years. When it matures it will have earned over $1000. That's 1/5 of the original investment!! Tax free!!
Living with my parents helped me to save enough for a car. (My car fund is now going towards my wedding. I'm now afraid of cars anyway. :| )
ReplyDeleteI make a spreadsheet of everything I buy: an expenditure report. It helps me see where my money is going and how much I have left in my set budget, month after month. Food takes out a big chunk. Every few months, it is clothes. I try not to go over the budget, but I'm usually happy if I have enough after bills at the end to contribute to my RRSP and put away at least $500 into my regular savings account. I should probably consider a % of my net income instead of flat amounts.
I am not nearly diligent enough to keep a spreadsheet of the amount of money I spend. I buy food from the food courts downstairs at work two or three times a day. That amount of entry gets incredibly tedious.
ReplyDeleteWhy are you afraid of cars? Was it after watching Transformers?
Let's just say that I had a driving lesson gone bad.
ReplyDelete