How to plan the perfect life. Okay – well maybe not so perfect

How to plan the perfect life. Okay – well maybe not so perfect

Series: In a Perfect World

In a perfect world, there would be a rule book for living in the modern era of the Western World. Growing up in North America is like living in a psychological war zone. Buy this. Pay that. This is your salary – wait ..no ..its actually 75% of what we actually told you. Go to school. No – go to school longer! Don’t have money? Go to work! Then take all that money you’re making and buy property. Oops – did we forget to teach you about credit? And so on and so on. It’s no wonder some of us feel as if we’ve gotten a bad deal. The complaints I hear most among adults when they’ve discovered a new secret to financial well being is not ‘I wish I had done that’ – but ‘ I wish someone had told me!’. There is nothing worse than being the last one to know.

So for those of us (the majority) who will spend most of our lives navigating the mean streets of corporate Canada – we should have a general set of life planning rules.

Rule #1. Complete your education while you are young. Whatever apprenticeship, post secondary education, entrepreneurship or training you mean to pursue is best done while you are young, vibrant, and still like people.

Rule #2. Invest in birth control and disease control measures – and take care of yourself. Stay away from too much liquor or drugs. There will always be potholes for your future earnings that spring up in these naïve years. These potholes are named, ‘child support payments’, lawyers fees, bail money, future high insurance premiums, pardon payments, rent, daycare fees, etc. Plus they sidetrack you from your goals. If you try your best and you still slip up – at least you can have pride in knowing you tried and you have a reason to pick yourself up and get back on track. Oh and learn about credit , and how to keep your score at a decent level. Just remember – it’s not a race to see how much you can get and how fast you can spend it.

Rule#3 Invest in a good mattress. Why? See Rule #5.

Rule#4 When you get your first legit gig – try to save as much as possible, and pay down whatever school debt you may have incurred. If you can’t live at home – get a room. Don’t waste your money renting if you don’t need the space, or have options (key point).

Rule #5 When you purchase your first home – keep your eye on the prize – home ownership. Have you ever calculated the interest paid over the average 25 year mortgage term? Yikes. If you can purchase your first home while living with your parents and rent it out until you are ready to take it over – do it! I met a man who had a balance of $8000.00 on his mortgage by the time he got married. Did he finance another home? No! He moved into his mortgage free home (he transferred the mortgage balance to a low interest credit line), and he and his wife had a stress free wedding and welcomed their first child months later. If he was to lose his job…who cares? If he or his wife wanted to stay home for a bit…– go to town! That is security right there.

If you are purchasing your first home with a partner, spend the first couple of years paying down the mortgage. For instance, if you had a mortgage of $200,000 (what you owe the bank after your down payment and other fees) at a rate of 5.6% you would pay $163,876.14 in interest over 25 years. Who approved that? I mean we can’t even claim that interest on our taxes – ridiculous! And they wonder why I don’t want to invest in RRSP’s for 25 years…hey buddy – why don’t go ask the bank for my retirement savings? How about that? Anyway – I digress. If you were to pay an extra $1000 per month for a total mortgage payment of $2500 per month, then you would pay your mortgage off in approx 8 years! Get 2 or 3 jobs if you have to – and get furniture that has been lightly used or bring your old stuff with you! You will need that comfortable bed after working for 12-14 hours a day. In order to pay that $2500/month you would need to bring in around a combined income of 80K (gross) per year which would give you $4673 in NET monthly revenue. That should not be too hard to come by if you are able to avoid the potholes mentioned in Rule #2 . For instance, when you have children that need to be picked up from daycare at 6 (even if childcare was free) – it makes it difficult to have a part time job.  With a et revenue of roughly 4,500 you should have enough money for land tax, insurance, utilities, transportation, food, communication and even a bit of savings! You can even manage to stay out of debt! I think manageable debt is a wonderful thing, and considering the inflated costs of school, houses and cars – well I think that’s enough debt for a lifetime – don’t you?

Rule #6: Know the difference between spending and investing. Buying 3 pairs of cheap shoes that you can only wear clubbing is spending. One pair of leather shoes that you can wear comfortably to work for at least three seasons,  is an investment.

Rule#7: Do not purchase anything you cannot afford to lose. You can plan and plan but you have to know when to change your mind. If it isn’t working out – sell it. Do not sit there and wait for the ship to sink – get on with plan B! A good way to waste half your life is to fight over property. When you die you don’t take it with you.

I’d like to think my daughter is going to become the next Gabrielle Union – and maybe the boredom of 9-5 life may not be a part of her future – but the reality is there can be GREAT pleasure living the life of the layman- if we just find a way that works for us.

Here’s me, the pot…talking to kettle, eh?

Live.Love.Laugh

Dee