Annual income: $38,400 before tax
Debt: $3,500 in student loans; $4,000 in line of credit; $10,000 car loan; $20,000 to parents; $100,000 mortgage held by parents
What he does: civil servant, grocery store cashier
Where he lives: Gatineau
Top financial concern: “[Almost] everything I earn goes to paying off my debt”
Like many young Canadians, Harry is no stranger to debt. With an annual earnings of $38,400 and $37,500 in consumer, student and car debt, in addition to a $100,000 mortgage, the 28-year-old knows he has a long road ahead to pay off what he owes.
The global pandemic – for all its hardships – is helping him rein in his spending and chip away at that debt.
Harry used to vacation in Italy every two years, go on road trips to Mont-Tremblant in Quebec, and like many millennials, he frequently ate out at restaurants. “We used to go out for dim sum or secret chef’s tables,” he says.
“The pandemic gave me the right excuse to not go out,” says Harry, who confided that he feels relieved to not have to come up with reasons not to go out and spend money with his friends.
Last August, Harry finished a bachelor of arts degree at the University of Ottawa. He’s had an entry-level contract position with the government since 2017. That position brings in $2,400 a month. Harry spends his evenings and weekends augmenting that income with a part-time job as a cashier at a grocery store in Gatineau, where he lives.
This summer, Harry’s parents helped him buy a one-bedroom condo he shares with his boyfriend. He pays his parents $579.11 a month in mortgage payments, far less than the $1,600 a month in rent he used to pay for his previous place – an apartment in Ottawa.
He’s grateful to his parents, who have helped him financially with both his student debt and the condo purchase. “I’m actually able to build equity,” he says. “I would not be able to do it without them.”
Although Harry never expected it, he loves living in Gatineau, which is considerably cheaper than neighbouring Ottawa.
Now that he’s a homeowner, Harry has pared down his expenses. Forgoing a larger, more expensive vehicle, he drives a small second-hand Mitsubishi Mirage he bought for $10,000 a few years ago, buys groceries at No Frills and IGA, and cooks his meals at home.
He’s focused on paying off his debt: the $3,500 he owes in government student loans, as well as a $4,000 line of credit from the bank that he tapped to furnish his condo. He also owes his parents two sums: $20,000 for the remainder of his student debt and the $100,000 mortgage they took out for him.
Harry says that once he pays off the line of credit and his car loan, he will increase the payments to his parents. “[Almost] everything I earn goes to paying off my debt,” he says.
What money doesn’t go to paying off debt, Harry invests. He puts $100 a month in a Wealthsimple RRSP that’s invested in a exchange-traded fund, or ETF, that is 80-per-cent equity and 20-per-cent bonds.
Down the road, his goal is to sell the condo and upgrade to buying a house in Ottawa. He also plans to build an emergency fund. And once the COVID-19 pandemic is over, he would like to travel again. “I’m going to build my savings for a trip to Italy,” he says.
His typical monthly expenses:
$200 on line of credit. “I used my line of credit when I moved into my condo to cover the cost associated with the move and getting the place furnished/decorated. It’s [a total of] $4,000. I am someone that likes to nest so my personal space is important.”
$100 on debt repayment to parents. “I had an agreement when I graduated from university that my parents would cover my student debt.”
$579.11 on mortgage.
$60 on hydro.
$240 on condo fees. “My condo is 12 minutes from Ottawa in Gatineau.”
$30 on a parking spot.
$130.12 on municipal taxes.
$21.70 on property insurance.
$100 to RRSP. “I’m with Wealthsimple – it’s a growth ETF fund. I have $8,939.12. I have $50 that gets automatically invested every two weeks from my account on payday.”
$275 on car payment. “I bought a used small 2017 Mitsubishi Mirage to get groceries. It had 41,000 kilometres on it. It gets me from A to B.”
$67 on car insurance.
$125 on gas. “I work from home, but my commute to and from the grocery is 40 km, my parents live in Mont-Tremblant, and I try to visit two times a month. That’s roughly 500 km per month.”
$400 on groceries. “I try to keep my grocery within the $400 range including toiletries. I like to buy in bulk when salmon or pricier meats are on sale and keep them in my freezer. We shop at No Frills or IGA. We meal prep on Sundays.”
$200 on takeout. “We used to go out for dim sum or fried chicken. We don’t go the Uber Eats route – now I can’t imagine spending $30 on a salad.”
$75 on cannabis. “I replaced alcohol with weed as I don’t drink. I spend roughly $150 every 2½ months.”
$55 on cellphone. “I’m with Videotron.”
$70 on internet.
$15 on apps. “I have YouTube premium.”
$0 on clothing. “I’ve never been one to spend a lot of money on clothing. I’ve stuck with my current wardrobe for the last few years and don’t go shopping for clothes on a regular basis. When I do buy clothes, I’m big on Winners, HomeSense and Simon’s. I want to buy a winter jacket.”
$75 a year on dental. “I have health insurance and this is the minimum I’ve had to pay.”
$0 on gym fees. “I used to pay $120/month when I lived downtown for a boutique HIIT [high-intensity-interval-training] fitness studio. However, I have since equipped myself with an exercise mat, exercise ball and dumbbells. I work out in my office space and follow along on a free YouTuber plan.”
$0 on vacations. “At the moment, I have no vacations planned and we focus more on mini-road trips to my parents’ cottage or day outings.”
The name and some details may have been changed to protect the privacy of the person profiled. We want to thank him for sharing his story.
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