This is where your finance takes place

Before I start, I do have to mention that my post ” Am I Waking Up or Am I Falling Into a Bigger Dream? ” is feature in the 110th Carnival of Personal Finance hosted by Fat Pitchs Financials. This carnival is well hosted with clear layout and categories. Congratulation to Fat Pitcher

Retirement. This word evokes several feelings inside each of us. We have the classic thoughts of driving our dream car (bright red M3 in my case!) over a sunny highway along California’s Pacific Ocean’s west coast (I’ve been there, trust me, it is worth the trip!) to go golfing of sit down and relax in your condo by the sea. Who is dreaming of eating Kraft Diner with a Bud Light in front of the Price is Right (Re-Edited HD version of course!) in a small apartment downtown? Nobody of course. However, I have very sad news for you, it will happen for some of us. In a perspective to avoid this situation and actually by my Bmer sooner than later, I am trying to pull out a retirement plan. I will surely change it over time, but still, this is my first thoughts on the subject. Your comments and suggestion are welcome on this topic.

I thought I would give where I am at so you can understand where I want to go with my plan. I am 25 and my wife is 26. We already are lucky parents of a 2 years old boy and expecting an addition to our family by the end of the month. We are making in the range from 60K to 100K combined incomes. We recently bought a house for 255K but surely worth 285K by now. Three properties are presently for sale on my street, they are all asking a little bit more than 300K, so I take 285K as a conservative price. Since we had to liquidate most of our registered and non registered assets to buy our piece of paradise, we have left about 8K in non registered and 10K in registered investments.

We don’t have many debts besides our mortgage, a personal loan and money owed to relatives. The personal loan was used to buy a car and to finance a part of our cash down on our property. I really wanted to have 25% cash down so I could setup an HELOC and start a Smith Manoeuvre. We use our credit cards for every single purchase. However, we have a golden rule to pay the bill at the end of the month, no matter what’s written in the envelope. It requires more discipline but it will surely pay some good trips with all the points we are making on these cards! Our net worth is established somewhere from 60K to 100K as well. The reason why I am not making exact figures is the following: you are not my banker so you do not need to know the full truth. The range will give you a good idea of where are we at right now and should be sufficient to establish my retirement goals in this series.

Income wise, we might run into a bit of a struggle as my wife will be on maternity leave for the next year. Her income will drop to 70% for the first 20 weeks and then will go down to 50% for the next 32 weeks. Barely enough to pay my internet access so I can continue blogging! We plan on decreasing our life style level for the time being. In addition to that, having two small kids at home will not encourage us to spend much money in activities outside the house. We will surely too busy feeding them or sleeping whenever we have a chance!

I also have a solid pension plan. If I happen to work there long enough (considering that our generation is supposed to switch jobs every 5 years or so), I will get 2% of my last 5 years average salary per year worked for my employer. Therefore, I should get a pretty decent income without counting on my RRSP (IRA for our US readers) and other savings. I started contributing to this pension plan a year ago.

So this is basically my financial situation for now. Do not be shy to ask any questions as I am preparing the next post of this series. Cheers!