Friday, 31 August 2012

Living on less - how to prioritize

Obviously, these last few years have been difficult economic times for everyone. We weren't hit nearly as hard here in Canada as our friends to the south - actually, I don't know a single person who lost their job or home or anything like that - but it's been enough to make us think.

The biggest change I noticed was the change in mortgage rules - banks are just a little less eager to extend absurd amounts of credit after what happened in the States; but I can't honestly say I believe that's a bad thing. Why should people qualify for a mortgage with no money upfront? If you can't save enough for a downpayment on a home, perhaps you shouldn't be buying a home. I have about a half-dozen friends in that position: they bought a home beyond their means (well, just barely within their means assuming nothing ever has to be done and there are no disasters or emergencies or unforseen whatevers...which really just doesn't happen in real life) with next to nothing down and are now stuck with such an enormous monthly payment they can't afford anything else - no new furniture or renos for the house, no vacations, no evenings out or little treats. I have been that house-poor, and it's not a nice way to live. Then there are those with the house beyond their means who do still renovate and vacation and have nice little nights out fairly frequently. How do they manage this? Credit.

I despise credit. Oh, I understand it's a necessary evil - you can't book a hotel room without a credit card, if you want to register your kids for a sought-after space in a sport or swimming lesson you need a credit card to book online the moment registration opens or you're out of luck - but I simply don't believe in using credit to buy things that you couldn't otherwise afford. If you don't have the cash in the bank for it right now, you shouldn't be able to buy it.

We have one credit card between the two of us and we keep its limit low. We don't use the card for anything other than those credit-required scenarios, and we pay it off immediately. If there's something we want for the house or a family vacation we want to take, you know what we do? We save up. Crazy, antiquated notion, I know. But it keeps us within budget, it keeps us from being awake at night worrying about money, and it saves us having to make monthly payments to God-knows-how-many creditors of sixty-five dollars here and three hundred dollars there until all our disposable income is eaten up. Our only debt is what we have left on our mortgage. I know so many people stuck in the credit repayment cycle, and all for what? A slightly bigger house? A fancier car? The biggest TV they can find, the highest-end appliances, a week in Cancun? Not worth it, in my opinion.

Our home is small. We live in a townhome - a three bedroom townhome for the five of us. This was a choice we made. We chose our house very carefully. Having moved so many times since buying my first house a dozen years ago or so, I've learned what I like and don't like in a home, what's important and what doesn't really matter in the long run. To me - to us - how the neighbourhood feels is very important. Neighbourhood matters. Neighbours matter. The view matters, the backyard matters. Certain aspects of the basic layout need to be there - it needs to feel homey, and it's simply not practical to undertake moving a staircase or something like that if the layout really doesn't work - but everything else about the inside of the house can be made to fit your wants and needs, if not right away then eventually. So we settled on our priorites, and went to work finding a home that met those priorities. And we found it, within our budget, here in Pleasantville.

It's absolutely perfect. Teeny-tiny, but everything we want and everything we need. Our two oldest boys share a bedroom - they absolutely wouldn't have it any other way. All three bedrooms are fairly small, but more than enough room for what we need. The basement is finished and has a walk-out to the backyard, making it feel more like part of the rest of the house than the average basement. It's the playroom right now, filled wall-to-wall and floor-to-ceiling with the kids' toys. Possibly the funnest room ever. The main floor is cozy and warm with just enough room for what we need, and no more - there is no separate dining room for formal entertaining, our dining area is our dining area and there's just the one; there is no home office or library or random extra room for a home gym or piano or anything. But our backyard is to die for, we back onto a park, and the view from our windows is nothing but green. Our neighbourhood is the stuff of fifties small-town happy-family-fantasy. This, for us, was perfect, what we knew would make us happy, what we knew would keep us happy, and was exactly what we wanted for our children to grow up in. And, we could afford it. Would it have been nice to have a fourth bedroom? Absolutely. As the children grow, we will probably have to renovate, adding an extra bedroom in the basement or a small home office. But would it have been worth the squeeze on our pockets to shell out the extra money for the not-absolutely-necessary space? No way.

We have a priority list for our lives, as well. Mommy being an at-home, hands-on Mommy is number one. Spending a lot of family time and taking the kids to the zoo, the Science Centre, the fairs & festivals, all those traditions that are so important to us - those are big. Our annual trip to Disney World is a must. The kids need to be able to participate in all the sports and extra-curricular activities they want, and their education funds are set in stone. And if we want to go out for the occasional dinner or take the kids to a movie or spend a sunny summer afternoon on a patio we want to be able to do that without feeling like it's an unnecessary expense. A big home, brand-new car, fancy furniture and lots of new clothes and accessories are not anywhere on the list.

How do we do it?

Well, I am fortunate enough that I can be a stay-at-home Mom and still earn an income. I own a small fitness company. Once my oldest two were school-age and before I went on maternity leave with my youngest (from which I never returned...) I taught the majority of classes myself. As both the business owner and the staff, I earned quite a healthy salary; now that I am paying another instructor to teach classes at the facility, my income is reduced, but still reasonable - and I only work about three hours a week, all from home. I know that not everyone can do this and I am lucky beyond words.

We still had to make sacrifices, though, in order to continue to live the way we wanted on a reduced income. Because I am at home myself, we are obviously saving a fortune in daycare. Since the school, parks, shopping and banks are all within walking distance, we only need one car, saving not only the cost of the car but the insurance, maintenance and gas as well. Because I don't work out of the house anymore, my wardrobe budget is minimal. And with just these few savings we've cut out the difference in income between before Baby and after and we are able to afford all those little luxuries that make us feel rich.

I am able to drop off and pick up the boys from school every day. By the time most parents are getting home from work and picking up their kids from daycare, we've already meandered home and discussed their days, done homework and reading, gone for a bike ride or to the park, played soccer and sandbox in the backyard or chalk and bubbles on the driveway, and dinner is on the stove. That's why Mommy being home is our very first priority - that's a lot of hours out of the kids' lives that I'd otherwise be missing while someone else raised them.

And because we have no debt eating away at our monthly budget and a nice small mortgage payment we are able to save everything that's left over at the end of the month to spend on treats and luxuries like nights out and nice dinners and family vacations and our many, many "traditions" and day trips. I feel like the richest person in the world and haven't lost a moment's sleep to money troubles in years (of course, with three children, I'm not really getting all that much sleep to begin with...) and that's simply because we were able to figure out our priorities and stick to them.

The problem so many people have is that with no priorities in place, everything becomes a priority, and there simply is not enough money for everything. Choices have to be made - and as long as it's your choice, it'll be a choice you'll be happy with.

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