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paycheque project

With an interest rate of prime plus 0.5 percentage points, James is paying $890 a month to reduce the $150,000 line of credit debt

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Paycheque Project is a non-judgmental look at how young adults in Canada are spending their money.

Name, age: James*, 32

Annual income: $124,300

Debt: $150,000 HELOC

Savings: $3,500 in savings account; $57,000 in TFSA; $80,000 in RRSP; $35,000 in dividend fund; $116,000 in other non-registered investments

What he does: Engineer

Where he lives: Calgary

Top financial concern: “Eventually I’d like to buy a house but hold onto the condo and rent it out. Long-term I’d like to have enough money to live a comfortable retirement.”

James enjoys a stable lifestyle, despite the boom and bust nature of his work. A chemical engineer employed in Alberta’s oil and gas sector, he’s been with the same company for the past six years. In that time, he’s bought a condo, accumulated $291,500 in savings and travelled to Europe, Asia and South America. He has a defined-benefit pension plan and gets an annual bonus of 13 per cent of his salary.

“My mom is a chartered accountant and my dad is a chartered financial analyst so there was no shortage of fiscal training in my household growing up,” he says. His parents have also provided him with financial support, giving him $450,000 to buy a $540,000 condo in Calgary in 2013. He paid down the $90,000 mortgage over the past four years.

At the same time, James borrowed $150,000 through a home equity line of credit. He used some of those funds as “play money” to buy stocks – a strategy he knows is risky. He invested in crypto, tech and dividend stocks, which did not do well during last year’s market downturn.

“I got a little liberal with a line of credit – my one goal is to pay that down,” he says. With an interest rate of prime plus 0.5 percentage points, he’s paying $890 a month to reduce the debt. “All of my investments are down right now but I’m sure that in the next four to six years they’ll rebound to some degree.” He says that in a worst-case scenario, such as being laid off, he would sell his investments and repay the line of credit.

At the urging of his parents, James contributes to a registered retirement savings plan, which, invested in mutual funds, currently sits at $80,000. He says that he primarily uses the RRSP to lower his taxable income. He maxes out all of his tax-free savings account contributions. “I’m looking for diverse, stable growth in my RRSP and TFSA,” he says. He also has $30,000 in a dividend fund, money he invested when a previous employer paid him what he was owed in a pension plan.

James wants to buy a detached property. “Eventually I’d like to buy a house but hold onto the condo and rent it out,” he says. “Whether that remains a viable financial goal remains to be seen.”

And he’s counting on his DB plan and his RRSPs for security in his golden years. “Long-term I’d like to have enough money to live a comfortable retirement,” he says.

His typical monthly expenses:

Investment and savings: $2,390

$667 to TFSA. “I make sure to top up my TFSA. I invest through RBC’s direct investing platform – some is in Canadian dividend stocks, some in a company that makes small nuclear reactors and crypto investments.”

$333 to RRSP. “My RRSPs are in mutual funds.”

$500 to investments. “These are non-registered investments: video game stocks, crypto ETFs, Microsoft and RBC stock.”

$890 to home equity line of credit. “I got a little liberal with that.”

Household and transportation: $1,710

$0 to mortgage. “I paid down my mortgage in four years.”

$550 to condo fees. “I bought my condo preconstruction in late 2013 and took possession in 2016. It’s a two-bedroom, two-bathroom unit with an office. It’s 850 square feet and has a gym and garden.”

$83 to property insurance.

$261 to property tax.

$92 to houseware items.

$163 on car insurance. “I have a 2009 Subaru WRX hatchback – I bought it in 2015. My girlfriend drives it a lot more than I do.”

$103 on gas. “I’m considering getting an electric car.”

$75 on car repairs. “My brother is a mechanic.”

$142 on transportation. “I live downtown. I use Uber and cabs.”

$56 on cellphone.

$100 for internet. “I’m with Telus. It’s a bit expensive as I game a fair bit. I play Halo, Overwatch or Shooters on XBox – or Mario and Zelda on Nintendo.”

$85 on Netflix. “This includes all media subscriptions such as Disney+, Spotify, GamePass, YouTube Premium, Nebula, Patreon and The Globe.”

Food and drink: $955

$253 on groceries. “That’s my share of the groceries. We shop at Safeway or Superstore. I go through a lot of celery. We try to eat 75-per-cent vegetarian: chickpeas, rice, lentils, black beans.”

$425 on eating out. “We eat out once a week and once a weekend. We like Asian, Moroccan and Indian food, burgers and pizza. We don’t spend any more than $60 at a time.”

$244 on alcohol. “I like a highball, a gin and tonic or whisky sours. We have whisky, rye, bourbon and Scotch. We try to make a lot of cocktails at home.”

$33 on coffee, tea. “Sometimes it’s Tims and sometimes it’s a nicer place.”

Miscellaneous: $1,588

$60 on clothing. “I’m not a fast fashion guy. I like gaming T-shirts. "

$13 on haircuts. “I get a $50 haircut three times a year.”

$14 to fitness app. “It’s the seven-minute workout – it’s a circuit workout. I can do it in a hotel room.”

$30 on sports. “I’ve been skiing since I was 5. We do three weekend ski trips per season to places like Lake Louise or Revelstoke.”

$8 on cannabis. “It’s mostly edibles.”

$135 on dental.

$33 on medical prescriptions. “I need a pair of prescription glasses and sunglasses once every two years.”

$10 on gifts.

$5 on books. “I usually get Indigo gift cards for my birthday or Christmas so I don’t normally budget for this.”

$174 on entertainment. “These are movies, concerts or other outings.”

$140 on hobbies. “This includes skiing, electronics, game purchases and photography software.”

$262 on miscellaneous items. “This includes dry cleaning, drugstore purchases, etc.”

$86 on donations. “I make donations to Wikipedia, my local food bank and the BC Children’s Hospital.”

$618 on vacations. “I try to travel internationally a few months a year. We’ll do a family vacation to Hawaii. My parents have a place in Palm Springs.”

Total: $6643

*Some details may be changed to protect the privacy of the person profiled. We want to thank him for sharing his story. Are you a millennial or Gen Z who would like to participate in a Paycheque Project? Send us an e-mail.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

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