I have been in both contemplating and calculating modes lately. I realized I have come a long way financially, since my old days of being in denial about my monetary
It took 2 major events to really galvanize me into action: realizing I had hit 25K of consumer debt & student loans and becoming a home owner. These did not happen simultaneously.
When I bought my first condo in 2013, I became house rich but also cash poor. Pretty much all my savings went towards the down-payment and closing costs. On top of that, I had to spend an extra $ 1 400 to replace 2 appliances that died within 3 weeks of me moving in. And, I still had debt to pay off….yikes!
But, I did it.
No, it was not always easy, and yes, I also had a little help from the sale of my first condo. That being said, only a tiny portion of the proceeds went towards my savings. Most of them were used to buy my current condo and pay-off my consolidation loan.
Before I start explaining how I accomplished this, let me clarify and be honest on a couple of points:
- 850% is a big percentage. However, in 2013, the balance of my various savings ‘vehicles was very low. I did not become a millionaire.
- As indicated above, the majority of the proceeds from the sale of my condo is not included in that figure.
I drastically increased my income
This is the number one reason I was able to increase my savings while paying-off debt and being a home owner. If you were hoping for a get-rich-quickly scheme, sorry to disappoint you! Only a very few personal finance blogs insist on this, but earning more is actually the best way to achieve your goals and dreams.
I didn’t buy too much house
Living in the Lower Mainland, I had to adjust my expectations. Owning in the city Vancouver will never be a possibility, and I am fine with it. That being said, with the amount that my mortgage broker qualified me for, I could have bought a bigger place. I didn’t, as my housing costs would have been way too high. Right now, they are sitting at 34% of my net income.
i didn’t buy too much car
Quite frankly, I don’t understand people spending an astronomical amount of money on a depreciating asset. A car looses value the moment it leaves the dealership. I also don’t understand people trading-in cars every 2 or 3 years thus staying trapped in a perpetual monthly payment cycle. Did I mention anything about people taking on 7-8 year long car loans? Or rolling old car loans into a new one, therefore owning more than the vehicle is worth?
My subcompact car will be paid off in 13 months. I plan on keeping it for at least 5 to 7 years afterwards.
I was -and still am-very disciplined
I always pay myself first. I have automatic withdrawals from my chequing account to both my TFSA and RRSP aligned with each paycheck. I am paid on bi-weekly basis, meaning I receive 26 paychecks per year instead of 24. Over the last 4 years, I was also blessed with work bonuses and tax refunds. I have reinvested the huge majority of these easy financial boosters. Many times, I was tempted to blow these away. I am glad I didn’t.
But wait, what about your other expenses?
You might ask. It is a legitimate question. I definitely do my best to keep them at reasonable levels. That being said, with all the above points, I don’t sweat that much over them.
It was not always easy to simultaneously save and pay-off debt and pay for regular expenses. But, I am proof it is doable. Now I am almost debt free, I feel like the best is yet to come, financially speaking.