Costs of a Home

A couple of weeks ago I spoke with a 23 year old, single young man who has been living with his parents for the past 18 months.  He was talking about saving up money for a down payment on a home.  He already has a pretty good idea about what mortgage payment he can afford.  He is buying a small house, with the hope of moving into a larger one in several years.

I threw him for a loop, though, when I asked him about property taxes and maintenance costs.  He had not thought about those costs.  He figured property taxes would be about $400, but when I told him to expect property taxes to be around $2,000 or more his jaw almost hit the floor.  He had no idea the taxes would be that high. 

There are always added costs to owning a home.  Here are a few I could think of:
Property Taxes - these always seem to be more than you thought, and they tend to increase pretty much every year, sometimes by several percent.  It often means having to put away $150 to $300 away each month to pay for them, a cost that can really add up.

Typical Wedding About $26,000

A little over a year ago I posted an article called The Cost of a Wedding.  The typical cost of a wedding in 2009 was $26,000, an amount high enough to make me look it a couple of times and shake my head in disbelief.   The Globe and Mail recently posted an article about a company that makes princess dresses for little girls at a cost of $1,600.  Anecdotally. I surveyed a few young ladies who graduated last year and the typical cost of their grad dress was about $1,000 plus another $200 for alterations.  I asked them if any of them have worn it since the grad ceremony and none of them have.

As Canadians start their Christmas shopping, I would encourage them all to think of this: is what you are buying for your friend or family going to be worth the price?  Will it last or be used more than once?

Sharing Banking Tips That Have Helped Me

About once a month someone asks me for a banking tip that will either make banking life easier or less expensive.  The following are a few of the things help me:

Online banking – This is a life saver.  I can pay my bills from home or the office at 7:00 in the morning or 11:00 at night.  It also lets me see all my transactions everyday, so I always know what is in my account.  The rare cheque that I write is scanned (front and back) so I can see online who it was to and for how much.  In addition to have this information readily available to me, it helps me be aware right away if any fraud is committed on my account.  By looking at my account a few times a week, I actually protect myself from fraud and would be able to spot something wrong right away.

The Cost Of A Wedding

The average wedding in Canada costs $26,000.

I know that as a rather frugal guy that many may disagree with me, but I believe that $26,000 may be a little too much to spend on one day.  I have been happily married for over 12 years now, and we had a fairly simple wedding, but we had a lot of friends and family celebrate it with us in a pretty simple setting.  Our total cost was under $4,000.  I have trouble picturing starting off married with the added debt of a super expensive wedding, or saddling any parents with those costs.  We had enough debt with student loans that we sure didn't need to add more to it.

But for those who are planning for the big weddings, the following 2 links can help you control and even reduce your costs.  Always remember that as important as that one day is, all the days after it are even more important.

Get Rich Slowly site
Canada.com article

Jerry

What does college and university cost?

We get this question quite a bit, especially in the fall when parents and grandparents are thinking about school.
The Edmonton Journal has a good article explaining the costs of education.  For 2009, the articles says that university tuition and books will cost about $6,500 a year, around $4,000 in personal costs, and another $11,000 for room and board if the student lives away form home.  These are general costs and will vary depending on the college and lifestyle.

http://www.canada.com/business/Post+secondary+costs/1971082/story.html

So that cost comes out to about $22,000 per year, and that's if the student lives moderately.  While there are Government Student Loans, and every financial institution has student loans (including us and our very good education loan), it's a lot better for the student to avoid all that debt by saving the money before school.  The best way to do that is through the Registered Education Savings Plan or RESP.

The basics of  RESPs are:

• You can open an RESP as soon as the child is born. 
• The money in the plan grows tax-free and the government offers special savings incentives (from 20% up to 40% depending on family income)
  
• When the child enters a qualified educational program at the post-secondary level, he or she can start drawing on the accumulated savings. 
• Only the child will pay taxes on the money he or she withdraws. Since many students have little or no other income, they usually don’t have to pay much, if any, tax when they withdraw money from their plan.

You can talk to one of our Member Service Representatives to find out more about RESPs or you can visit the following government website for more details about this very good program.
http://www.hrsdc.gc.ca/eng/learning/education_savings/index.shtml

Jerry