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Hey Goo3 I agree with you man if you dont know how to budget our money and make sacrifices.. it doesnt matter how much u make u can make.. $80, 000/ year and still complain its not enough.. if u dont know how to budget my parents earned close to min. wage and bought 2 houses. they sacrificed a lot. |
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I agree with him. I know of some people who make average wage yet can still carry a decent life, but there are also people who have 6 figure income with that lavish lifestyle but how much of that assets are in debt. I just turned 26 and only now have I learned that you don't upgrade your lifestyle just because its within your means to afford it. |
"don't upgrade your lifestyle just because its within your means to afford it." Intelligent. If every credit card had this message in the back, haha. |
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lol 1 income labour job wouldn't even cover property taxes, let alone mortgage, let alone leave enough to save up for a mortgage, or 2 kids... |
Personally, as a Chinese Canadian, I think I admire East Indians the most when it comes to financial planning. One of my good friends from High School, his house had 5 families living together, so they had like 12 people paying the mortgage together. I really laugh at my friends who rent pimping pads and are left with nothing later on. |
yeah Noir exactly what i mean of course theres a limit Quasi-> there are financial sacrifices depends to what extent u say times are different..but back then... it was also different for them as well some are fresh immigrants.. they cant speak english and they can still manage to buy a house |
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I wish I could find that many people to live in a house. I keep bringing it up to family and friends, and everyone just laughs. Meanwhile I can think of at least a dozen friends or family that are drowning in debt and really really could use a drastic cut in living expenses. |
Sure it was different for them, homes cost a fraction of what they do now compared to the average income. Most of those new immigrants bring money with them that allows them to buy a house. |
i m not talkn about the rich ass immigrants im talkn bout ur parents who farmed and ate rice with soya sauce those ppl worked hard like bulls and as for u quasi u have a career choice compared to immigrants they dont pretty sure ur income aint half bad eh? |
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the morgage on a house in van today would be what. $6000 / month? (1 mill over 25 years) + another 500+ a month for tax, water, power, gas, insurance. so $6500 a month just for the house. no food, no clothes, no TV, no phone etc. min wage is 1400 a month full time? -taxes probably like 1200. you're only 5 grand a month short in todays dollars for the house. and you won't be eating anything. |
ok mr. accountant ur making use of ur education wat im trying to say is that yes before everything was cheaper but given the circumstances the immigrants HAD they came here with nothing... no english either and now they own a house and raise children. now that u can ...read and write..and look ur accounting skills are amazing u can look for a job thats more than minimum but the houses here have tripled with an OK income.and sacrifice..its possible of course "OK income" is different for everyone else u have options b/c of education here im not saying if u work at mcd u can own a house but with AVG income yes its possible u understand where i m coming from? maybe u go out to eat a lot..that is why that is y dont understand wut im trying to say |
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The point is that IS NOT POSSIBLE in today's world in the lower mainland. What your parents did back in the day cannot be done today no matter how hard some sacrifices at least not on a minimal income. Now if they get a better paying job the sky is is the limit. |
yes thanks ill tell my parents that.. appreciate it yeah i know its impossible.. i never disagreed with that but regarding bout the post earlier bout the dude earning 50K and gf earning 30K like..they are complaining.. that they hardly get by some ppl who earn less..can do it..ya know? |
Alot of people in Vancouver are surprisingly thrifty, despite what media portrays of $300 jeans, $100/person cuisine dinner in trendier parts of town. Sure you see the ballers in SL55's and the Aston Martins, but reality is Canada's tax rates are so high that it supports a M-shaped society like most modernized nations. (think of standard deviation of a normally distributed population) http://en.wikipedia.org/wiki/M-shape_Society Let's break down your budget for a typical couple in their mid-to-late 20's. This will be long so bear with me. Let's take a couple of typical clients from my banking days. Husband is a pretty standard middle of the road sales manager types at $50k + bonus with a wife that's a stable school teacher $45k + pension. Let's make it a even $100k before taxes with bonus. Now takes a gander at our lovely tax rates. http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html Federal you're charged: Quote:
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12115 x 22% = $2665.3 Total = $8348.05 Fed Taxes 35016 x 5.24% = 1834.84 14984 x 7.98% = 1195.72 Total = $3030.56 Provincial Taxes TOTAL TAX on $50k/yr salary = $11378.61 $50000 - 11378.61 = $38621.39 real dollars in your pocket end of day On roughly $50k/year income you're left with $38621.39 real dollars in your pocket end of day **And I haven't even factored in Unemployment Insurance (UI) and CPP collected by employers directly from pay. Lovely eh? _____________________________________ Now suppose they want to buy a house. Banks are heavily risk averse (can you blame them these days?) so they only allow you to pay a max of 32% your gross income towards your house (assuming less than 35% down, in which case if you have $200k+ cash to throw around, this may not concern you much) Going by Gross Debt Ratio of most major FI's at 32% / 40% Total Debt Ratio for mortgages we have: 100k / 12 = $8333.33/month gross income 32% x 8333 = 2666$ can go towards mortgage + property tax + condo fee + heating/gas Realistically property tax is about $2000 a year or $167/month Condo fee = another $200 Heating/Gas could be as much as $100/month in some areas Totals to $467/month Which means only a NET $2199 can go towards the mortgage At roughly 6% interest rate over LIFE of mortgage (35 years amortization), this couple can approx borrow $400,000. CMHC and high ratio insurance ($20k+ one time fee) and their downpayment aside, $400,000 is about a 700 sq foot apartment in edge of downtown or about a 1200 townhouse in Richmond. _______ Keep in mind that's just affording the house. No food, family expenses, electricity, cell phone, house maintenance, etc etc. At $38621/dollar after tax per person ($50k/per yr income each), that comes to roughly $6400 after tax dollars pers month - mortgage/prop tax/elec bills $2666 - cell phone $100/two - food $600 - electricity - $100 - tv - $100 - student loans and credit cards - $1500+ (esp those with $30k+ in student loans and various bills) - transportation - ICBC is another $200/month + car payments / incidental mechanic tune ups, etc etc etc You'd be surprised how fast miscellaneous fees add up. Seems like alot of people dont' realize how expensive it is to live in Vancouver (or by yourself!) It's a longwinded way of saying.. $22/hour may not seem as high as you think, especially when you have outliers in stats like Canaccord CEO and various other high power CEO's grossing $11M a year, skewing the data dramatically for the normal folks. (see National Post article.) |
damn i need to make more!! |
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a large reason why housing prices are increasing comes from foreignors - expecially those from Mainland China, and south korea. That have large pools of money and buy homes. Also include the factor of crazy construction and high paying infrustructre related jobs allowing people to have higher wages and a good resource based economy. And on top of this you got the rich guys gettting richer because they are buying and flipping properties in the last 3 years. This has caused prices to come up soo high. its finally falling the last 3 months. |
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Nicely written. It's worst in the east, where economy is soo bad over there. They just reported GDP numbers and we're close to a recession. |
very informative post Rev.. good job |
Nice post Rev. Do you guys think the expensive living here is only going to get worse or better? |
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Ehhh... thats some what true.. I honestly will probably live with my parents for a longggg time.. just for the fact id rather take care of them in my house rather then them living alone. ( Hey man they take care of me for the first half of my life, ill do it for there last half :( ) |
Excellent analysis Rev. Just some other thoughts about your example: -a lot of couples have some sort of downpayment. Lets just say they rented an East Side basement (about 600 sq ft) for 24 months @ $1000 rent to save for a downpayment. Savings using your example would be: ($2666 - $1000) x 24 months = $39,984 this could be $63,984 if they lived at their parents house paying zero rent - at $100k/yr income, a lot of banks would let you borrow a little more (possibly as high as $550k, depending on credit scores, # of years of work, assets, etc). If you add the $39,984 downpayment calculation above, then the house / condo value will be $590k -using your mortgage/prop tax/elec bills $2666 / $400k mortgage x $550k mortgage, that turns into $3666 a month Now how are they going to afford an extra $1000/ month compared to Rev's example? SACRIFICES (this part is probably what the previous poster's where talking about, the chinese parents) 1) FOOD: pack lunch to work, make dinner at home dont eat out (food bill should be $400/mo instead of $600/mo) Savings of $200 2) LOANS: cover it with your line of credit and pay it slowly in the beginning (monthly interest / min payment on on $30k = $200) Savings of $1300+ 3) CAR. Some dont need a vehicle depending on location (ie downtown) a) ultimate sacrifice = walk / cycle to work or transit ($70/ea / month bus pass) b) buy a cheap car (under $8k and avoid monthly payments on newer cars) Theres much more to list.......but thats not that bad where a couple can save for 2 years and ending up with a $590k place. ** if they want to get more levered, you can try to convince the bank to throw in rental income, where you rent out the basement / part of the house out. The rental income will offset the higher mortgage, possibily allowing an additional $100k to the budget = $590k + $100K = $690k Of course this whole example is pushing the limits of doing all you can to be able to afford a place in Vancouver. Assumption here is that you will make more money in the future, making your daily life a bit better, possibly allowing you to eat at a fancy restaurant once a month LOL |
When do you have to start paying back the bank? 550k is a lot! |
Moving to Kelowna or Kamloops has become a popular choice for alot of people in the Lower Mainland. |
Wetordry: Good reply! Truth is it's very difficult to budget that much and discipline to such a fixed budget... but those who manage will come out on top eventually. I'm sure many of us are in similar situations on RS.net - especially given the mentality that $100k+/yr for 2 people should be ballin' out of control - this post if anything is a reminder it probably isn't, in Vancouver at least : ) Note re: rental income - most banks won't accept you get cash $900 from renting out your basement as it may not be taxable income, etc that show up on T4/T1 General. In most cases this only applies if you're going for 25%-30% down type mortgages where you're essentially basing it on self-declared income... idea here is if you can afford that much your chance of default drops along with the risks to the bank (see subprime mess - zero down + self declared income = lose) raygunpk: mortgages is like financing a car, except for houses. Payments are generally weekly, biweekly, monthly, semi-monthly. Thanks for the feedback guys, glad it helped some people! |
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