Summer Vacations in Canada… Because it Rocks and our Dollar Sucks

Let’s face it, our dollar really sucks right now. I, like most other Canadians, will not be making a trip across the border any time soon (and I probably won’t be jetting off to Europe, either). With the Canadian dollar at a low that hasn’t been seen for more than a decade, it’s time to consider the benefits of a local holiday.

There are so many beautiful places to visit in this country. I am ashamed to say that I haven’t been to very many of the gorgeous areas usually recommended by travel shows or news articles. I hope to change that this year by exploring more of Canada. I’m looking forward to taking advantage of holidaying in our own backyard.

For my American friends, this is a fantastic time to explore the Great White North. It’s like getting everything on your trip at 30% off!

national-park-856316_1280Whether you are looking for mountains, oceans, prairies, or lakes, Canada has it covered. Rough Guides has a comprehensive list of places you might want to visit, including suggested itineraries. Frommer’s also has a list that includes some places and activities that may not have been on your radar for a summer vacation (iceberg hunt, anyone?). One of the best ways to find the hidden gems in Canada is to speak to family and friends. Personally, I am looking forward to a trip to the East Coast in the next few years to visit all the little towns a friend that grew up there has described to me.

You don’t have to go far for a fantastic vacation. Staying in Canada can allow you to appreciate the wealth of beautiful places our country has to offer, and also help you save money and even travel time (depending on where you go… it’s a pretty big country!). If you have a week or so to spend in your destination, utilizing services like Airbnb or booking a cabin or hotel room with a kitchenette can also cut down on expenses. You’ll also avoid paying fees to change currencies. That’s always really annoyed me!

For those of you that just can’t give up the big, traditional summer vacation, the Globe and Mail has some suggestions for cost-effective destinations for Canadian travellers, including Asia and Eastern Europe.

Are you going on vacation in your home country this summer? What are you most excited to see?

 

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5 Ideas to Help You Save $100 This Week

Life gets in the way sometimes, and this can mean unexpected expenses – a surprise lunch out with a friend, an extra stop at the grocery store because you have nothing for dinner, filling up on gas because you didn’t realize that you don’t have enough gas to last the week… It happens to the best of us.penny-164543_1280

I am trying to be a bit more mindful of my weekly spending lately. I’ve figured I can shave about $100 per week off my usual habits by making a few small changes. This doesn’t mean I’m not going out, or that I won’t buy a coffee – it means that I will plan ahead and figure out easy alternatives to my plans that still let me enjoy the company of my friends or my hobbies, all while spending less money.

  1. Bring lunch instead of buying it.
    I work in the middle of the city, and there are so. many. options. for lunch that it is very easy to avoid putting in the effort of preparing something the night before. My usual habit right now is purchasing lunch (or breakfast…) 2-3 times per week.
    Savings: Approximately $10 per day x 3 days = $30
  2. Suggest a walking date instead of a coffee date.
    I go on 2-3 coffee dates with friends each week. This week I am going to suggest that we go for a walk instead, and I’ll leave my wallet in my office too. Alternatively, bring your own tea or coffee in a travel mug and meet somewhere like the park to catch up without spending money.
    Savings: $5 per coffee (I like Starbucks, okay?) x 3 dates = $15
  3. Go out for Happy Hour instead of a meal.
    In an upcoming post, I’ll share my favourite local places to go for Happy Hour. You’ll still get to go out with your friends, but you’ll cut your bill in half by taking advantage of Happy Hour specials.
    Savings: $35 for a full meal vs. $15 for 1 small dish, a drink, GST, and tip = $20
  4. Stay in.
    If you like to go out with your significant other for a night at the movies, consider having an “at home” date night this week. Pop a bowl of popcorn, watch a movie or a TV show on DVD, and have a cuddle on the couch.
    Savings: $13.25 x 2 = $26.50
  5. Have a “clean out the pantry” meal.
    Instead of picking up something on the way home from work, shop from your own pantry. There are so many things you can make with a few simple ingredients – I like taco bowls the best when we are doing this (leftover meat – or leave it out for a vegetarian meal, black beans, corn, rice, peppers, and avocado). An added bonus of shopping in your own kitchen is that you aren’t tempted to pick up other things at the store – things you don’t necessarily need. You can use the Ingredient Chef for ideas for dinners that use what you have on hand!
    Savings: $10+ or whatever you’d spend at the grocery store on dinner

It may not sound like much – in fact, now that I have written out my plan for the week, I think it sounds very achievable – but you can save you over $100 per week just by making a few simple changes to your habits.

Of course, not every week will present you with the same opportunities to save money. You’ll have to get creative. Don’t lose sight of the fact that it all counts… skipping a coffee here and there may not seem like much, but added to the rest of your savings that week, it can make a difference!

What other ideas do you have for saving $100 this week?

Avoiding the “House Poor” Trap When Buying Your First House

Congratulations! You’re ready to move out of your rental property (or your parents’ basement) and purchase your first house. I bet you’re really excited, and you should be – buying our first house was one of the most exciting, stressful, and rewarding things we’ve ever done.

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It is easy to get caught up in this excitement, though. With Canadian interest rates being so low at the moment, and down payments as low as 5%, why wouldn’t you take advantage of this great opportunity to get on the property ladder with a big, beautiful house?

I’ll give you one good reason: so you can avoid being “house poor” for the next twenty-five years.

Statistics Canada defines being “house poor” as spending more than 30% of your income on housing costs (e.g., mortgage, property taxes, and utilities). The surprising thing about this figure is that it is calculated pre-tax. As this article by the Financial Post points out, this can be confusing due to our graduated tax system: one earner with a large salary will have a smaller take-home pay than two earners with average salaries.

My housing costs are approximately 27% of my gross pay. Our bank offered us over $100,000 more than we spent on our house – if we had taken it, I’d have been “house poor” faster than I could sign the paperwork. Even now I’m pretty close to that threshold. I would be spending more each month than I would be comfortable with, and my husband and I would not have had the extra funds to put towards a renovation on the house we bought, as well as a wedding, all in the same year.

I am seeing the increase in the “house poor” population everywhere. I’ve reached the age where friends are getting married, having kids, and buying houses – big, fancy, brand new houses. And while these people might not realize it yet, the squeeze they feel on their finances will still hurt after the next pay raise, and the raise after that. Property taxes will increase, bills will increase, and mortgage rates may also increase. And there’s only one reason for this pain: they bought more house than they could afford.

My advice to you, as someone who figured out what they could afford recently and is living with that decision, is to ignore Statistics Canada’s figure of 30% of your gross pay – this percentage really means nothing if you have a bunch of other expenses that also need to be paid in the short term (e.g., a car loan or student loans). Additionally, it seems stupid to me that people should be figuring out what they can afford based on gross pay. Use your net (i.e., after tax) pay to figure out what you are comfortable spending on housing costs. These numbers are not about annual averages or percentage points or spending the same as everyone else – it’s about your financial well being and the life you want to be able to afford to live once all of your mandatory bills are covered.

Figure out, first, how much of your income you are willing to spend on your home minus the mortgage, each month. If you have other, more pressing loans with higher interest rates, take the payments you wish to make on those each month out of your net pay figure. Then determine what you think maintaining your home might cost. Consider electricity, water, property taxes, Internet… ask your friends and family what they pay in the area you are looking to buy.

Great, you say, I still have plenty left to throw at a mortgage payment. I can afford one kick-ass house with all this money!

But you haven’t taken into account the fact that you also have to live on this amount. What about food? Transporation? Even if you already own your car, you’ll still have to pay for gas and insurance. Dinners out with friends? Cell phone bills? All of these things need to be considered too.

Give yourself a reasonably generous living allowance based on your current spending habits. Maybe you think you will cut down on meals out once you buy a house, but even if the money you set aside isn’t used for that, it will still probably be used for something. Owning a house always comes with sudden financial surprises – you’ll need to be prepared.

Each financial situation is different. If you currently have a $200-a-month Starbucks habit and buy a new pair of shoes every time you go to the mall, it is not reasonable to expect that you will give this up just because you have a mortgage. What is most likely to happen is that you fall further into debt, using a credit card to finance the shoes, and end up living far beyond your means. This is an awful position to be in, and makes you poor poor, not just house poor.

Okay, so now you’ve given yourself a living allowance, and also set aside some money for other (e.g., RRSP/TFSA) contributions. You are a responsible adult – savings of some kind should be a mandatory chunk of each paycheque.

What’s left?

That’s what you can afford to spend on a bi-weekly or monthly mortgage payment.

Why do I recommend doing the calculation this way? Because your mortgage payment is based on the amount you borrow from the bank and your interest rate. Figuring out all of your other expenses first means you can be pretty confident that the money you’re willing to spend on a mortgage isn’t going to put you in the red. Mortgage calculators produce a number based on your monthly or annual salary and don’t take into account other necessary expenses like loan repayments and how much managing a home in your area actually costs.

Too many people jump into a mortgage with little to no idea how they are going to make the payments work with their income. “The bank seems to think we can afford it, so obviously we can,” they say. “Renting is just throwing money away – we should buy instead. It will work itself out.” And sure, I see the point about buying vs. renting, but sometimes comfortably renting can be a better choice if the numbers just don’t add up in favour of buying.

We crunched numbers like crazy before we purchased our house. We figured out that we could quite comfortably handle a mortgage of a certain size, regardless of what the bank actually offered. And that is the biggest lesson I learned throughout this entire process – just because it is offered to you, doesn’t mean you have to use the full amount the bank is willing to hand over. Sure, I dreamed of a beautiful house overlooking the river with quartz countertops and a hot tub like anyone else, but when you can’t make ends meet each month, you can’t eat a hot tub (or quartz countertops, for that matter).

Buying a house is a very fun and rewarding experience, and there is nothing quite like looking around at your four walls and knowing that you are no longer padding your landlord’s pockets. A house should be treated as an asset in your portfolio – an affordable asset, that will hopefully appreciate over time, and that you can enjoy living in while you have it. If you buy an affordable house now, you’ll be setting yourself up to buy the bigger, beautiful house of your dreams – if that’s what you want – in the future… when you can actually afford it.