We are now discussing the possibility of having a daycare at home. My wife could take care of our two children and get four more. This solution was brought up by several readers since the very beginning of this project. Back then, it was not possible because it was not creating enough income. Since I was able to increase my revenue, start a company and decrease our expenses, we can now reconsider this option.

This will be a two part posts where I will write down the pros and cons of having a daycare at home. Since I’m a positive person, I’ll start with the pros:

The project is financially viable

This was the very first reason why I reconsider having a daycare at home. Without enough revenue, there was no reason to make all those changes. Since we don’t need the daycare to generate $1,500 a month anymore, we can easily use this income to maintain our lifestyle.

My wife could stay at home

This was definitely an important point. It is not the perfect situation (you’ll see with my second post!), but at least, she will be spending more times with our two children. They won’t have to wake up a 5:30 in the morning and rush to work. Our life would be a lot smoother.

It gives us the opportunity of renovating our basement

In order to be able to offer a quality environment to the other children, we would have to renovate our basement. At the same time, I will put a third bathroom and finish my home theater. Which guy would spit on a brand new room for his home theater? After all, Hockey just started and my Canadiens will surely go far in the playoff this year!

We could use the tax system to help us out

Remember my post on how to use taxes with a company? By shifting my wife income to company income, we will be able to deduct several things and therefore reduce her declared income significantly. She will pay fewer taxes and we will benefit from more government allocations since they are based on our family income.

Even though it is very tempting to put all expenses on the company’s back, it is important that you deal with an accountant for this part. The last thing we want is to do something illegal and have to pay thousand in taxes and charges in a few years! Anyway, you don’t need to go this route to save money on taxes. The government is allowing several type of expenses which are more than enough.

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What was done

I tried a lot of things to save money first. A dollar saved, is 2 dollars made. Since I am calculating the $1,500 in net income, saving money was quite productive.

I first look at my financial situation. By restructuring our debts, I was able to save a couple hundred bucks. We basically consolidate what was left of our car loan into our mortgage. While decreasing the payments, it was surely increasing the amount of interest to be paid overtime. Still, having my wife with my children at home is priceless so it’s not a thousand dollar in interest that scared me.

Then, I looked at my insurance. I was able to save by consolidating my insurance (car and home) at the same place. I got a 2 year contract and increase the amount I have to pay in case of a declaration.

I also resisted to buying another car. By having one car, we can save a lot of money. We also made a few changes in the house so we can drop our energy bill by about $15.

On the income side, I changed job back in February. While this was giving me a very small raise for now, the bonus perspective over a few years is great. Therefore, this switch should bring more money on the table over the long run.

I also created an alternative source of income throughout a web site company. I will start receiving about $400 in dividend every month pretty soon.

What didn’t help

All my effort to increase my income over the past years also got a bad side effect. In fact, my government children allocations were decreased by about $200 a month. While having two children were increasing my overall budget, the government was giving less since “I am making enough” on my own.

The grocery bill keeps increasing since the price of oil is kicking us in the teeth day after day. We had to increase our monthly budget by about another $100. There is not much I can do on grocery since we are buying healthy stuff most of the time. I can’t cut on good food.

The Final Result

After all my calculation an effort, I was able to generate a net income of $700 a month. It is quite a deception and it was quite hard to admit to my wife. It is never fun to fail. While this is definitely not enough to achieve my goal (I’m only at 50%), it is still more money in our pocket in the meantime.

I will continue to work on my side projects and look for other ways to save money. Therefore, I have no other choice but to give myself another year to get to my ultimate goal: generating $1,500 a month.

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I was quite happy to put a few extra bucks in my monthly budget and look at my $1,500 project. For those who just joined, I am trying to create extra cash flow in the amount of $1,500 in order to cover my wife’s income so she can stay home and take care of the kids. By the way, this is a decision we both made knowing all the sacrifices it occurs.

Since my last update in January, I was missing roughly $1,200 to get to my goal of $1,500. While not being impressive, that $300 was created in only three months. The problem is that I was running out of ideas after that. This is where I made the choice of changing job by keeping the same based salary but with higher expectation in term of bonus. I obviously can’t take into consideration future bonuses since I am new in this industry and the amount could really fluctuate from years to years.

We have been making progress in term of children clothes and other expenses related to our children (my son does not wear diapers anymore and the little one started drinking regular milk). I didn’t count everything so I was quite happy to see the end result.

Unfortunately, at the same time, we received our children allocation update for the upcoming year. Since we made more money last year than the previous years, the government is cutting down on my allocations based on the fact that I am making too much. We are never making too much money

On top of that, I had to review my gasoline expense since the oil barrel keeps going up! I used to put $50 a week and we are now at $60.

So basically, my raise and my new frugal habits only helped us to maintain our budget after the cuts from the government and the increase of the price of gas.

But there is still hope!

The web company I recently created is already making money online with a few website and we should be able to withdraw $300 per month each (me and my partner) shortly. That would be a great step in creating passive income. I would be happy if we could get $500 a month each at the end of this year. I would be half way to my main goal of $1,500. A good bonus and I could be set ;-D

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Even though we might be running out of time, I am still confident that we will be able to change our financial situation over the current year.

I recently restructured my debts through my property. I knew that my house increased in value and I wanted to benefit from the equity sleeping in it. With the recent increase of my HELOC, I was able to pay off my personal loan and a small computer loan.

By doing so, I was aware that I was now amortizing my debts over 25 years instead of the 48 months remaining on my previous financial obligations. Therefore, the smart thing to do was to increase my monthly payment on my HELOC in order to pay off my entire debt before the prescribed 25 years that we usually do for a mortgage. So I increased my payment in order to pay off my property in 18 years. Technically, my Smith Manoeuvre investments should compensate for the total amount owing on my property way before that.

We actually hired a housecleaning lady that comes once a month for $50. While this does not help us at all to achieve our $1,500 project, it helps giving us more time an energy to spend in family or even to work on different projects (like blogging ).

In the end, we were able to create $209 since we started this project in September. I am pretty happy about the results as I had to include the extra expense related to the house cleaning lady ($50). We are now down to find another $1,291 in order to achieve our goal. While this is still a big chunk of money, we have other ideas in mind. I am fairly confident that we should be able to go over $500 in cash flow by the end of April. I just need to get some stuff done before I can write about the good news J. Let’s just say for now that my internet project seems to pick-up.

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While I failed to reduce my dinning out budget and to go to the gym three times a week for the month of December, I will certainly go back to my good habits in 2008!

A new project that I am starting

I do not have a completely new project for 2008. However, I am confirming one that has been building up for the past 12 months. Since November 2006, I am taking care of TheFinancialBlogger.com and in 2008 I will start up other internet project with one of my friend. It’s been a year that my friend and I looking at several internet opportunities and it is now the time to get serious. After all, I have about 9 months left to achieve my $1,500 project. Therefore, we will include TFB within this bigger project and hopefully make something nice out of it.

Projects that are already in the move

My most important project is definitely to offer my wife to stay at home at the end of 2008. She is technically going back to work in September 2008 so it leaves me with only 9 months to accomplish this task. I am trying to reduce my financial obligations and my regular expenses while increasing my income through different ways.

I hope that my second project, my MBA will help to contribute in term of income. Unfortunately, I think it will not really affect my situation until I have completed the program which will be in 2009. Nonetheless, it will surely help me out at one point or another.

TheFinancialBlogger.com should become a bigger blog in 2008 as I plan to put more effort into it. I am very proud of what I did in the last 6 months but I also know that sky is the limit when you are talking about blogging. Since finance remains one of my main passions, I do believe that I will be able to transmit it through this blog. When I look at other blogs in the blogosphere, I realize that there is more than enough space for another one

I also have another goal for 2008 that is completely aside finance and it is being better at golfing. I really love this game but it is hard to play consistently. Since my brother-in-law is an amazing golfer, I will surely spend more time with him!

Now I have to leave, I have to go to the gym and get back to my normal schedule! I hope that 2008 will be a great year for all of you. Be happy and prosper!

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