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After a few bumps, big dreams still within reach for mid-30s couple

Heather and Darcy, at 35, are determined to forge ahead with building a family.

Dave Chan/The Globe and Mail

When they first wrote to Financial Facelift in 2012, Heather and Darcy had left Toronto and moved back home, lured by Darcy's offer of a good government job. They were both 31. The move brought them closer to their family and friends.

By the fall of 2012, they were settled in new jobs and ready to start a new page in their lives together, Heather wrote in an e-mail at the time. Together, they were bringing in about $105,000 a year. Their goals were to buy their first home in a year or two and set aside $60,000 to adopt a couple of children.

Well, things didn't turn out as planned. Life intervened, dealing out dollops of stress and sadness, from job loss to illness in the extended family. On the bright side, they bought a house within their budget that they enjoy. While they racked up unexpected costs, almost all of their non-mortgage debt has been repaid.

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Now, bruised financially but determined to forge ahead with building a family, Heather and Darcy, at 35, are struggling to regain their footing. When they took a much-needed holiday a year or so ago, they borrowed the money but have since paid it back.

"Life happens, and it changes your perspective on what is important," Heather said in a telephone interview. "We try to keep things light with a good balance between living now and for the future."

Heather's work is more precarious than she had hoped and she is thinking of forming her own consulting company. She figures she could bring in $80,000 to $100,000 eventually but she's hesitant about taking the leap. For now, both are contributing to government pension plans.

Back in 2012, the couple had asked the planner, Ross McShane of McLarty & Co. in Ottawa, for a roadmap.

In drawing up his plan, Mr. McShane assumed they would pay $300,000 for their home – they paid $307,000 – and put $60,000, or 20 per cent, down. He also suggested they take advantage of the federal Home Buyers' Plan, which would allow them to withdraw $25,000 each from their registered retirement savings plans. They did so, and Heather has since repaid her portion. Darcy still has a bit to go.

"We really valued the advice we got," Heather says. "It was great as a young couple starting out to make sure we were on track. We got a lot out of it."

When they went house shopping, they were careful. "Soon after we bought, one of us was unemployed, so it's good we based our mortgage on one salary," Heather says now. "It would have put us in a stressful situation."

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They have begun saving in their tax-free savings account for adoption costs but are far short of their goal. Heather is trying not to feel anxious. "We might be 40 before we have our first kid," she says, "but we'll just go with the flow."

The way things looked in 2012, the financial planner figured they would have at least $35,000 saved by now toward adoption costs, more than enough for one child. They could draw on their line of credit to cover any shortfall when they adopted a second child, Mr. McShane said at the time. Now it looks like they might have to borrow for both.

"We may be able to borrow money but we have to pay it back," Heather says. "The idea of taking out a line of credit is overwhelming. We only make a certain amount of money and there's not a lot left over."

They wonder: Given our situation, would the planner's advice change if our goals are still more or less the same?

"We have big dreams but it's hard to see how we can get to where we need to go," Heather says. "It feels like we're doing okay but we're all over the place."

We asked Mr. McShane to take a look at Heather and Darcy's situation today.

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Darcy and Heather should talk to the bank about renegotiating their mortgage, Mr. McShane said in an interview. They are paying 2.89 per cent for a five-year loan. "They should be able to refinance at a lower rate today," he said. They might also be able to extend the amortization. "This could free up cash flow."

If their house has risen in value, as it likely has, they could consider adding the required funds to the mortgage to cover some of the adoption costs, the planner says. "I am not opposed to them borrowing."

Otherwise, Mr. McShane's advice is the same: "They should focus on their short-term goals and ignore saving for retirement at this stage," he says.

"Any surplus cash should be applied against their non-mortgage debt rather than a TFSA," he adds. "However, they will need to make sure they can access the necessary credit when the time comes to adopt."

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