I’m 51 my wife a few years younger, our son is a teenager. We have saved more than the $750k, paid cash for our house, and put aside $100k for our son’s University education. My wife has a defined Pension Plan, and our monthly expenses on our house, true overhead is only $850. That is heat, hydro, taxes, insurance the fixed monthly costs.

Formula you ask? Don’t borrow money, don’t go in debt and live within your means. Canadians feel entitled to have all the stuff right away. That’s not the way it works in reality. Unless, you want to service debt. Oh, we aren’t Dr’s or Lawyer’s if that’s what you are thinking. We are typical wage earners in Canada. Lived in an apartment until we could pay cash for our house. At the same time we lived large, traveled everywhere, did all that before having a child. Here’s my advice – DON”T BORROW MONEY! LIVE WITHIN YOUR MEANS! If you have to borrow money to buy something that just tells you that you can’t afford it.

Actually your extra payment options for your mortgage depend on which bank you are with and their particular options. My bank allows me up to 15% of my mortgage value in lump sum payments at any time during the year. Some other banks I know only allow you to do that once a calender year so read the fine print on your mortgage agreement or ask your bank about what options you have.

Tim

Forgive my ignorance but I wasn’t aware you could just dump extra cash into your mortgage whenever you felt like it…

Sorry I don’t mean to be conflicting, but when you cut a 1000 word article down to 750 some things get lost. I will try to clear things up.

Actually the $3800 isn’t the accelerated mortgage payment. It is the total savings after the mortgage is paid off. The $15,000 is the regular payments and then I’m doing a bunch of double up and lump sum payments to shove as much money as I can at the mortgage for the next two years.

The $40,000 expenses includes the regular mortgage payment of $15,000 so I only need about $25,000 in other expenses for a year. So $25,000 plus $45,600 is about $69,600 and tax and that is basically my income.

I hope that helps, if not please let me know.
Tim

You say you have an $88, 000 mortgage you intend to have paid off by early 2013, well it’s the end of 2010 so that leaves you about 2 years to pay off almost $90, 000. Yet you make a bunch of conflicting statements such as:

“This seems enough given that I spend about $40,000 a year now, which includes $15,000 a year for regular mortgage payments.” This $15, 000 number makes sense because you have paid $60, 000 in the past 4 years.

You also say you have an accelerated mortgage payment of $3800 a month, or $45, 600 per year.

So you’re either paying $15, 000 per year, or $45, 600 per year in mortgage, I don’t know which one.

If $15, 000, how do you plan to pay of a $90, 000 mortgage in 2 years? if $45, 600 how do you estimate your TOTAL spending at $40, 000 when your mortgage alone is more than that?

Oh too funny. I didn’t realize you meant depreciation, insurance and gas with your $3000/year. I’m actually close to that amount in my budget (~$2800/year), but I’ve got it filed differently. That $1000/year is depreciation ONLY. Ok, we are closer than I thought with our thinking. Thanks for pointing that out.

As to education I might help out around their education as they go through school, but more than likely more indirectly. I want them to have some responsibility for some of the costs, but I will help out with little things like their first grocery bill of the year. I’m not worried about the status deficit since university typically has such a wide spread of economic backgrounds from kids who are barely covering the costs with loans and jobs to the trust fund kids who drink their tuition in the first month and need to ask for more money.

Thanks for the discussion. It has been interesting.
Tim

Thanks for your comment. I agree I will likely shift some things around as I go along. Also my plan doesn’t include any raises for me beyond inflation. So as the years go along I will start generating a surplus to fund some additional activities and experiences for my family.

As to the soup comment. I do actually invest some money in farm fresh eggs and fresh veggies from the farmer’s market. I’ve converted over the majority of my garden to a strawberry patch this year since I knew I won’t have much time over the summer to work in the garden.

Thanks for the advice and take care.
Tim

I congratulate you on your approach to spending and saving and I’m quite certain you will be quite comfortable financially as you age. Eight years ago, I was your age, married with 2 very young children. A significant difference is I live in an expensive suburb of Toronto. My wife and I have always been very good at saving money, which is a good thing. However, you know what they say about too much of a good thing. As the children grew older (they are both under 10 today)we had to decide whether we would give them experiences or stick to our strict saving plans. Experiences are expensive: ballet, swimming, karate, figure skating, skiing for daughter; piano, bowling, baseball, skiing for my son; Disney world; The Lion King; the Toronto Symphony Children’s Series; Blue Jay game. Seem like a lot of experiences, but my kids are among the least programmed kids in their peer groups. To see my daughter excel in ballet or listen to my son play a beautiful piece on his piano is priceless. My son has a knack for computers; there is a wonderful computer summer camp for kids where children learn robotics, animation, and programming; cost $450/week. My daughter is such a natural swimmer, she has been asked to swim for the local swim club; not sure about the cost, but it won’t be cheap. These are the choices you will have to make as your children get older.

The second point I wanted to mention; in one Star article you mentioned you saved money buying mushroom soup. My question is why on earth would you be buying canned mushroom soup? You’re buying processed soup that is high in fat, salt and god knows what else. Spend more money on good quality food for you and your family. That means hormone free, antibiotic free meats, free range eggs, and certain organic fruits and vegetables. I know you mentioned your love to garden so you probably have a wonderful supply of healthy veges.

Once again, I think you are doing a good thing by watching your spending and this will give you more time to be a good father, husband and community member. Just giving a few suggestions from someone who very much follows your same path, but just a touch older. Good luck.