Posted by Canadian Dream on March 17, 2010
A big free cash flow into the house I have to admit is very nice. Our goals seem that much closer when you are pushing through the mortgage at a break neck speed. Actually we are doing it so fast that we decided that any extra cash flow into the house would be used for fun stuff. So this has resulted with my wife is having a bit of problem, which to be honest I think most people would like to have. She has to pick a new client for the daycare where money really isn’t an issue.
Therefore as she does interviews and looks for parents that seem nice and will have a similar parenting style to our own. Yet more importantly she watches the interaction between our kids and theirs. If the kids play well together the odds of getting accepted increase hugely. Yet now she has run into a problem. She likes two families and their kids a lot, but their care requirements are different. One option is two kids three days a week, the other would be one kid for five days a week.
I think in an attempt to find some difference between the two cases we discussed the money side of the equation, which at one point I summed it up nicely “Depending on how soon you want to renovate the kitchen, you would pick one over the other.” Her response was “I don’t really care about renovating the kitchen that much. I’ve lived with it for almost four years, what’s another couple of years?” Then at that moment a thought stuck me: this is the kind of discussion you have when you are financially independent.
Our basic needs are covered and we are making fine progress to our goals so any extra money is just that extra money. If we want to do something that is nice to have, like renovate the kitchen, we can do it. Yet we also have the luxury of letting my wife choose to work less if she wants.
In the end, this just proved to me an interesting point. I think we are the right kind of people to retire early or be financially independent. We consider money in our decisions but we are not driven by it. Happiness is usually a more important factor.
Has anyone else been in this situation where you were picking a choice not really based on money for a small business? What did you choose? Perhaps you can help my wife with her decision by telling your story.
Posted by Dave on March 16, 2010
This Sunday is my one-year anniversary. I am not the easiest person to be around, so I’m glad my wife hasn’t changed her mind (yet). Looking back at the past year, it didn’t really seem like a lot happened (other then the wedding and honeymoon in Cuba) that was different than any other year, but there were a couple of milestones that I thought I would highlight:
We as a couple became debt-free, other than our mortgage:
I haven’t carried debt of any kind for the past 5 years, since I paid off the last of my $25,000 in student loans. My new (or as I like to say “current”) wife however had not read the same personal finance books that I had (or any at all) and had not received any financial advice from her family growing up. Until we got engaged, we really didn’t talk about money all that much, I assumed that she had some debt (as most people do), but not a whole lot. I was a little freaked out when I found out (after some coaxing) that the total debt was close to $20,000 – about half on a credit card at 19% and the other half on a department store credit card at 26%! At the time, I didn’t really know what I was getting into, but after some discussion about spending and debt repayment, she was able to pay off her entire debt (on top of saving for our wedding) in about a year and a half. As of this week, she not only has no debt, but she has over $3,000 in savings – something I don’t think she’d ever really even thought about, let alone knew how to do. Money-wise, she is a lot less stressed – there’s just a lot less to worry about, although her new spending involves a lot less new clothes (a downside to watching what you spend).
We bought our first house together:
I had, up to the day I bought our house, never really thought I would be a homeowner. Owning and having to look after a house had never really appealed to me. Being a home-owner was very important to my wife (although apparently it had to be a specific sized house), and I warmed up to the idea, eventually. Together, we have learned to do many new things that I don’t think I had ever really put any thought into before, like laying floor, wiring lights, painting, fitting trim around the house – we have also taken on the most debt that we probably ever will. While the home improvement portion of owning a house is interesting and exciting, the paying off of the mortgage is daunting and boring.
So, those are the two main money things that I got up to in my first year of marriage. Although the debt that I “discovered” was a bit of a shock, my spouse was able to (independently) pay it all off, and at the same time learn some personal finance fundamentals.
Did anyone else have any surprises like this when they got married? How did you resolve it?
Posted by Canadian Dream on March 15, 2010
Out of curiosity I looked into if there are forecasts for EI rates for the next few years and the results are not exactly encouraging. First there was this recent forecast which projected the maximum increase ($0.15/year) until 2015, which actually tracks fairly closely to this older but more detailed forecast (see chart 2 on page 3).
Overall the numbers will looks something like this (rate per $100 of earnings):
- 2010/11 – $1.73
- 2011/12 – $1.88
- 2012/13 – $2.03
- 2013/14 – $2.18
- 2014/15 – $2.33
So we are looking roughly at a 35% increase over the next four years and this according to our government is not a tax but rather a premium increase. Which since it looks like my total EI deduction will easily be in excess of $1000/year when the current maximum is just under $750 doesn’t provide much comfort for me. For employers, by the way, the matching rate is just 1.4 times the above numbers.
Overall expect to pay more for EI for many years to come. The only good news in the longer term is if unemployment goes down we should see those premiums come back down by 2017 or so. So at least I should see some lower rates before I plan to retire in 2023, I hope at least.
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Filed Under: Tax
