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affairesdepiasses

Monday: Silly Questions (self.personalfinancecanada)

submitted 2 years ago by affairesdepiasses to c/personalfinancecanada

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It’s Monday, the start of a new week.

Ask your embarrassing, silly, or worrisome questions. Come learn and discover without judgment.

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[–] CaptainFlintlockFinn 5 points 2 years ago (3 children)

I’m very nearly 39, we’ve got two kids (16 & 13). We rent a townhouse and there’s no possibility (barring some windfall ) of buying a house in the next 5 years for sure but maybe not for a longer time.

Just in the last ~4 months we’ve started making enough where we have a little left over at the end of the month. My partner will be going back to school to get a masters so that will probably go back to not much left over for the next ~3 years.

In a world that seems to get more expensive faster that we can make more money it doesn’t feel worth the extra stress to try and save right now.

If you find yourself in a similar situation how do you think about retirement or home ownership? Have you given up? I’m having a tough time stomaching the idea of living even tighter now so I can maybe have a retirement.

[–] affairesdepiasses 5 points 2 years ago* (last edited 2 years ago) (1 children)

home ownership?

I come from a family of renters: both my mother and father (separated) rented all their working life, and bought a home when their retirement came, because they decided to move to a place where real estate was cheaper. It didn't prevent them to have a great life.

about retirement

Are you an employee? If you are, you're already contributing to your retirement through CPP, so at least part of your needs are already taken care of. Is that sufficient? Probably not, but it'll still be there later when you need it.

I went through kind of the same situation a few years ago: my wife had a baby and wasn't eligible for EI after the birth, and then she decided to change career, so was back to studying for a while. It was hard, and quite tight, and we had to cut quite a bit on spending for a few years and didn't save much, but it was well worth it: she's now in a better situation she could have been before, and we organised our lives to live frugally enough to catch-up on our savings, so we now are in a good enough situation.

Do you have to live tighter now to save more? Maybe: you can run the math and decide if there are some things you can cut, reduce or replace without affecting your life too much.

But in the end, that's ok not to save if you're too tight. Just do your best to save what you can and to catch-up when you can!

[–] CaptainFlintlockFinn 3 points 2 years ago (1 children)

Appreciate the insight. I am an employee so you’re right, at least we’ve got that going for us (presuming the CPP is still a thing in 30 years).

It’s good to hear someone say it’s on not to save if there’s nothing to save. Seems like common sense but a lot of media makes it seem like we’re failures if we can’t save well. As if we can’t save because we’re spending badly when really we have old cars and high rent. I guess we could stop everything we do for fun (which isn’t excessive) but then what kind of a life is that?

[–] affairesdepiasses 4 points 2 years ago* (last edited 2 years ago) (1 children)

presuming the CPP is still a thing in 30 years

I wouldn't worry that much about that : The most recent triennial report by the Chief Actuary of Canada indicates that the CPP is sustainable over a 75-year projection period.

Based on our current knowledge, CPP running out of money is a myth.

I guess we could stop everything we do for fun (which isn’t excessive) but then what kind of a life is that?

Like everything, you don't have to stop completely: for example, for multiple reasons, we recently decided with my family to reduce our meat consumption, going with 2 vegetarian and 2 vegan days per week ; to go local for our vacations which is usually cheaper ; to change our habits to spend more time outside of our house, for example in local parks or at the library ; to priorise picnics to restaurants when going on outings for the summer... it has had some good impact on our finance while not negatively impacting our quality of life.

[–] CaptainFlintlockFinn 2 points 2 years ago (1 children)

Good news about the pension!

We’ve made a bunch of those kinds of changes too. It feels good but I’d rather not cut the cheap and cheerful stuff too. I don’t actually think it’ll come to that though.

[–] affairesdepiasses 1 points 2 years ago

Great, everything is going to be fine then!

Good luck!

[–] villasv 3 points 2 years ago* (last edited 2 years ago)

In a world that seems to get more expensive faster that we can make more money it doesn’t feel worth the extra stress to try and save right now. If you find yourself in a similar situation how do you think about retirement or home ownership? Have you given up? I’m having a tough time stomaching the idea of living even tighter now so I can maybe have a retirement.

To me, giving up on saving is simply not an option. Unless you're planing on dying, you will retire. Given that retirement is not a choice, so is saving for retirement because CPP is not enough to sustain my current standard of living.

That doesn't mean you have to tighten right now, because your partner is already making an investment in the form of education. When that's done you can evaluate if it makes sense to get back to investing in the regular kind of investments. Investing in your kids is also something, though be careful to not dump a world of expectations on them - too many people think of their kids as their retirement fund. But back to saving, in my humble and ill informed opinion, you can afford to do a tactical retreat for now and get back to saving later, but do get back to it even if it's only after your kids leave home.

I did give up on buying property in Vancouver. I'll probably buy something in a small town after I retire, like @Affaires de Piasses parents lol that's my kind of role model.

[–] MacroCyclo 1 points 2 years ago

You're right that inflation is beating wage growth this year, but most years it doesn't. So this year might be worse than average, but most years won't :)