Is Home Really So Sweet?

Home Sweet HomeSo I’ve been living in the same apartment for five years now. It’s not unusual for me to remain in the same place for that long if not longer, even though I did do more than my fair share of moving in my 20s. Indeed, in February 1995, I moved into my 6th apartment in Halifax since September 1987, but then I stayed in that place for 10 years and my 7th place was one storey down in the same building for the three years up to my move to Montréal. So, frankly, I haven’t given serious thought to moving from my current pad …until about a few weeks ago.

In September 2012, I wrote about how the old woman who’d been the super of the building for decades left. She was replaced by a middle-aged woman from Cape Breton who, I’m afraid, didn’t live up to expectations: this September, we learned that the owner hired a property management company and she was replaced by new supers a few weeks later. What’s more, for the last month, I’ve endured major noise as the apartment directly below me is being gutted and renovated.

That’s only one of the numerous projects that have been undertaken: the garage has been hosed down to an inch of its life, the front of the building has been landscaped, “emergency plumbing work” requiring the water supply to be turned off a whole day was completed, and minor repairs were done in my bathroom to stop water from leaking downstairs which, I’m told, has probably been happening but left unreported for years. What’s more, the west side of the building — fortunately I’m on the east side — has been plagued with a resurgence of bed bugs. The furnace will be replaced before winter and apartments are going to be renovated as the tenants vacate.

In the six weeks or so since the company took over, more work has been done to the building than in the five years I’ve been here. I spoke to the workmen on a few occasions and they’re clearly intrigued by what’s been happening (or, more precisely, not happening) around here because, as they put it, the whole place is in sad, sad shape. My bathroom is considered shot, but it’s difficult for them to gut it while someone is living here. I expect the rent will start going up considerably and, considering all the work that’s being put in, it’d be quite justified …except that it doesn’t look like I’ll be seeing much in the way of improvements in my own apartment. What the people at management companies like this one don’t get is that, except for real emergencies, tenants tend not to rock the boat even if they see things going south if it means the rent doesn’t go up, which mine hadn’t until last April.

As a result of all of this, I’ve been thinking that perhaps I should move. It’s ironic because things are finally looking up for this place and I had been thinking of doing some improvements of my own once out of debt as I am now. But now I’m wondering if it’s even worth it.

What’s discouraging, however, is looking at the cost of rent in Montréal these days. When I first started toying with the idea of moving here in ’99, rent was amazingly cheap; now the prices have caught up with other major Canadian cities (except Toronto and Vancouver which remain very expensive). It’s starting to look like the odds of my getting another two-bedroom around the price I’m paying now that’s not in a neighbourhood I’d feel isolated or unsafe are pretty slim. For roughly the same price, I’ll probably have to settle for a one-bedroom apartment, which I’ll consider provided that it’s large enough to create a comfortable yet separate area for my office and includes a garage space.

I find $1,000/month in rent paid by one person is getting to be a little bit much. Rent is not like a mortgage where you have something to show in the end. My rigorous approach to budgeting in the last two years has shown me that I can afford $1,000 and still put some money aside for emergencies. But I’m considering finally joining a savings-matching program for retirement contributions that my employer offers, so I’m worried the combination of the two will get me to cross that line where I’ll have no wriggle room left even though participating in such a program is a sound investment.

Should I consider moving in a part of town I wouldn’t like as much but where the rents are better? Should I consider getting a roommate? Neither option turns me on, and a huge part of me feels I shouldn’t have to be considering such options.

Indeed, Now What Do I Do?

Now What?Haven’t we all wondered what exactly a dog expects to do if it should catch the hubcap of a moving car? Of course, the answer is that the dog doesn’t know; it just feels compelled to run after the car.

This notion came to my mind last Thursday morning — October 17th — when I reached my financial milestone of complete debt elimination, except that I’m not totally clueless as to what I’m going to do next, but more about the order of my next milestones. However, without a doubt, reaching this point has been quite a ride.

After giving much thought during my three-week sick leave from work in September 2011 to the notion of when did I last feel content and in control of my life, I got up on Saturday, October 1, 2011, one week after returning to my job, and began working on a spreadsheet. Indeed, it occurred to me during the time I was putting everything about myself into question that one of my many bad decisions in the previous years had been not to pay attention to my finances, for I was very fortunate in that there seemed to always be enough money coming in to cover all the bills and simply glide by. Of course, having the bailiff show up at my door on the morning of my very first appointment with Lucy brought home that I wasn’t really doing such a great job at gliding by.

So, that October morning, I mustered up the courage to look at my accounts online to see how bad things were. I found just over $21K of debt which I immediately consolidated onto my line of credit, and tried to think of all the unusual expenses I would have to cover in the coming months, like weekly appointments with Lucy and the divorce. But then two questions popped into my mind.

  1. From March 2006 to August 2007, somehow I had managed to clear almost that much debt. Mind you, my monthly expenses are somewhat higher in Montréal than they were in Halifax back then, but not insurmountably higher. Why can’t I do that again? Have I allowed my list of wants to grow into my income?
  2. Why is it that, when someone is paid every two weeks, there really isn’t two “extra” paycheques per year?

That second question in particular is what brought me to think about cash flow for an entire year rather than month by month and Gail Vaz-Oxlade’s “magic jars” in which she gets people to put cash for a specific purpose (food, transportation, etc.). I combined and adapted those two notions by listing all my recurring expenses like rent, phone, insurance, steady debt repayment and so on, figuring out how much they each cost per year, and dividing each of those figures by 26 — the number of pay periods in one year. This exercise confirmed that I was very lucky to have more than enough money left over for food and vices, and with some trimming back here and there, I could put even more on debt repayment.

So, after resetting the counter at zero and figuring out my expected cash flow for the next two years, I implemented my plan starting with my paycheque of October 6, 2011. My best-case scenario, which included paying for my (failed) therapy to quit smoking and my divorce lawyer, projected total debt elimination by the beginning of 2014. “Best-case scenario” was the operative term; I hadn’t thought through vacation travel and couldn’t anticipate hefty fines, car breakdowns, or the need to buy new tires or dress clothes. However, I also assumed no salary increase, no extra pay for overtime or no better-than-expected year-end bonus, and no elimination or reduction of recurring expenses (e.g., getting rid of my land line in favour of a MagicJack, closing the account I no longer needed at my backup web host, closing dormant resold accounts with my web host that I’d simply left open for no good reason, etc.).

In the end, in precisely 743 days (or 2 years, 1 week and 5 days), I paid off just shy of $28.5K. To achieve this, though, I placed exactly one-third of all income during that time on debt reduction and I don’t recommend that anyone else do the same because, unlike myself, people have a life. I had lived below the poverty line for the 10 years prior to March 2006, which is how I got into debt in the first place, and my best gross income before that was one exceptional year in the early ’90s when I made a hair over $30K. In other words, I’m accustomed to getting only what I need and not what I want — within a few exceptions, of course, owning a car being one of them.

Now that’s not to say that I think I’m more virtuous than everyone else! I just think that most people, when they attain a level of financial security, quite naturally allow themselves to indulge more in what they want. I mean, despite appearances, I feel I’ve done quite a lot of that since 2006, at least by my standards. But just like a diet will fail if you’re depriving yourself to the point of always feeling hungry, an aggressive approach to debt elimination as the one I adopted is doomed if it makes you feel resentful for depriving yourself so much when you know there’s in fact enough income coming in that you shouldn’t be feeling deprived.

At any rate, now that my debt is finally at zero, I still have about two months left for my plan to be finalized, for now I have to refill the virtual “jars” from which I borrowed to get out of debt faster than anticipated. However, by New Year’s Day, I’ll have a few Ks of savings with which I can do whatever I want, which brings me to the dog chasing the hubcap. I know what’s first on my list: buying an extra week’s vacation for 2014, assuming my boss allows me to do so. As for the rest, well …that’s a topic for my next blog entry.