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paycheque project

Sarah is working with a financial planner and hopes to have $1.3-million when she retires

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Name, age: Sarah, 39

Annual income: $48,000 salary plus $28,800 from rental income

Debt: $164,199 in mortgages; $5,600 on credit card

Savings: $1,500 in savings account; $37,690 in TFSA; $40,400 in RRSP

What she does: Civil servant

Where she lives: Northern B.C.

Top financial concern: “I’d like to retire well before 68. I’d like to have $1.3-million in savings when I retire.”

In 2011, Sarah was facing a life-changing decision. She had a graduate degree but no job prospects in the northern Ontario city of Sault Ste. Marie. But a public-service job had come up, one that would allow her to use her community development skills.

She decided to take the plunge, uprooting her life and moving 3,400 kilometres to a northern B.C. town five hours north of Kamloops. “It was a huge move,” Sarah said. “But it had been such a struggle to get decent employment.”

Twelve years later, Sarah doesn’t regret her decision, despite bouts of homesickness. She is now married and lives with her husband and two-year-old daughter in a three-bedroom house they bought six years ago for $200,000.

Securing a daycare spot in a small town has been difficult, so Sarah’s husband stays home with their daughter while she’s at work. During the winter, her husband works weekends at a ski hill.

Sarah says they rely on the $900 a month they get from renting the basement of their home. “It’s like having a second earner in the home.” They also collect $1,500 in rental income from another house they bought five years ago for $100,000 in a foreclosure sale. The collective mortgage on both properties is $164,199, so their mortgage payments are $1,000 a month.

Sarah spends $6,000 a year on renovations to the properties, both to improve them and to lower her tax bill.

She says the cost of living in her town isn’t high – she spends $600 a month on groceries and $100 a month on diapers and items for her daughter. The main expenses are the family’s two vehicles – a 2008 Toyota Tacoma, which pulls a trailer the couple uses to go camping, and a 2017 Hyundai Tucson.

For the next month, Sarah’s goal is to pay off her credit card bill of $5,600 – the result of a recent vacation, as well as hundreds in vet bills for her ailing 11-year-old black Labrador retriever. “There are no TFSA contributions right now as I’m focused on paying off my credit card,” she said.

She would like to visit the Sault, but airfare is too expensive at the moment – $2,300 to $3,000. She says she’s thought about moving back to Ontario at some point. “I would like to be closer to my parents,” she said.

Over the long term, she is working with a financial planner on her retirement. As a government worker, she will have a public-service pension and has saved $40,400 in her RRSP. “My goal is to have $1.3-million in savings when I retire.”

Her typical monthly expenses:

Investment and savings: $167

$0 to TFSA. “I’m not contributing now as I have to pay off my credit card debt. When I pay it off I’ll put in $800 a month.”

$167 to RRSP. “It’s in ETFs.”

Household and transportation: $2,521

$1,000 to mortgages. “We bought our house six years ago for $200,000. It’s seven minutes from downtown. We have a vegetable garden in our backyard. We also have a home we bought in a foreclosure.”

$139 to property insurance.

$210 to property tax.

$500 to renovations. “If I can show we did repairs to the properties, that lowers the taxes I have to pay.”

$0 to car payment. “I have a 2017 Hyundai Tucson. It will need $2,000 in work to repair the struts – but not yet. We also have a 2008 Toyota Tacoma.”

$200 on gas. “Gas is $1.75 a litre.”

$85 on car insurance.

$167 on car repairs.

$25 on trailer insurance. “We go camping.”

$80 on internet.

$10 on Netflix. “We’re watching Beef – it’s about a woman involved in a road rage accident.”

$5 on apps.

$100 for child expenses. “This includes things like diapers and the odd brownie and coffee with my daughter at her favourite café.”

Food and drink: $780

$600 on groceries. “We have a Safeway nearby and a Save-On Foods. I buy Cook Tonight meals.”

$120 on eating out. “We don’t go out a lot. We got pizza this past week – and my daughter loves cheeseburgers.”

$60 on alcohol. “We did a dry February. But I do enjoy a bottle of wine here and there.”

Miscellaneous: $1,080

$0 on daycare. “My husband stays home as we can’t find daycare.”

$70 on cellphones.

$30 on clothing. “I buy mostly second-hand. I also buy from the consignment store down the street – I spent $60 on a new spring wardrobe.”

$500 on pet. “She’s a black lab with cancer. I had a $900 vet bill a couple of weeks ago. She eats a lot and I’m making her food.”

$10 on haircuts and cosmetic procedures. “I get my hair cut every six months.”

$60 on cannabis.

$0 on sports. “We go to the community centre and we ride bikes.”

$35 to charitable donations. “It used to be more but I’m paying down my credit card debt. I donate to the Red Cross and the UN Population Fund.”

$375 to vacations. “I’ve just started travelling again. I saved a lot of WestJet dollars during the pandemic so I was able to score two return tickets to Vancouver for under $200 recently.”

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

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