Saving for a cottage

The Shaws’ dream of buying a cottage within the next seven years is within their reach, say our experts. But is this family prepared to make the prescribed financial changes to make it happen? “We agree with the strategy of ‘pay yourself first,’” says Suzanne, adding that since her return to work last September, the couple has managed to save $1,500 in emergency funds, she has resumed investing through her employer’s RRSP matching program, and Callum’s RRSP is back on their radar. The experts’ advice, Suzanne says, “helped to solidify in our minds what is important to us, and that is our family commitment. That may come at the expense of material things. Maybe a cottage isn’t in our future in seven years. Maybe it is in twelve years—but it is possible, and we are still young.”

Getting to the cottage: the savings plan

Can the Shaws plan to vacation on their own piece of lakefront by 2016, and still be in good financial health? Yes, say our experts, if they follow this plan:

What they should save every month

For home maintenance and future improvements or repairs – 400

For emergencies and Suzanne’s next maternity leave – 500 (when the fund totals $18,000 and Suzanne’s leave is over, they should direct-deposit this into a Tax-Free Savings Account for their cottage down payment)

For RRSPs – 600

TOTAL: $1,500

Where they can find the money

By cutting back on groceries and restaurant meals – 700

By earning more after-tax income – 500 (a home-based business for Suzanne, extra shifts for Callum)

By applying what remains after paying their current expenses – 422

TOTAL: $1,622

How the numbers add up

Assets

Cash – 4,166

RRSPs

Suzanne – 14,275

Callum – 3,657

Non-registered investments – 2,890

Home – 340,000

Suzanne’s car – 16,000

Callum’s motorcycle – 8,500

Furniture, jewellery, collectible – 10,000

TOTAL ASSETS: $399,488

Liabilities

Mortgage – 254,680

Loan on Callum’s motorcycle – 7,500

TOTAL LIABILITIES: $262,180

Net Worth

(assets minus liabilities) $137,308

Monthly Net Income

Suzanne – 3,048

Callum – 3,033

TOTAL monthly NET INCOME: $6,081

Monthly Expenses

Mortgage and property tax – 1,947

Insurance

Home, car, and motorcycle – 285

Life and health – 92

Utilities – 375

Cable, Internet, phones – 280

Child care – 435

Credit-card debt – 0

Transportation

Gas for Suzanne’s car – 250

Callum’s truck (employer-provided) – 0

Callum’s motorcycle loan – 145

Groceries, restaurant meals – 1,500

Entertainment – 150

Clothes, gifts – 200

TOTAL monthly EXPENSES: $5,659