Where the money went in 2010: Part 1 – Housing

I’m particularly excited to do a calendar year end wrap up, where my personal finances are concerned. If you’ve been around here for a while, you’ll know I’ve tracked my expenditures for years, but what I haven’t done consistently is actually budgeted (and followed it), nor have I kept with it for a full twelve months.

Like a kid going back to school who vows to keep their sneakers white and their notes neat, I often let this self-promise slip in the last half of the year. This year, however, I have to say my sneakers are still pretty clean and my notes, albeit not perfect, are quite good.

Over the next few days, I’ll be taking stock of where the money went. Like many of you, most of my money goes to housing.

For those of you who are Gail Vaz-Oxlade fans, you’ll know she recommends that about 35% of your money should go toward housing. (She also mentions these are guidelines, and one can be over or under in one area, and compensate in another). By her definition, housing means mortgage/rent, taxes, utilities, insurance and maintenance.

For this exercise, I will not include any housing fees for a rental property I own, I’ll only use my principle residence, in a groovy neighbourhood in Toronto.

Here’s the sobering number: $43,600, or 43% of my total spending this year.

Mortgage: $34,173. This was a couple hundred bucks more than I had budgeted. I have a total of three mortgage products on my home (no, not a second mortgage – it’s a long story). Two of those products are at a variable rate. When the Bank of Canada adjusted the overnight lending rate three times in 2010, my total mortgage payments were impacted. Still, my largest mortgage loan is at 2.15% (variable), and the second largest is fixed at 4.16%. I won’t complain.

I’m not expecting three increases from Mr. Carney in 2011, but who knows. I’ll sit in my non-financial expert armchair and say there’ll be one increase in 2011.

Taxes: $3995. Remarkably, this was a couple hundred dollars less than I had budgeted. Early in the year I asked for a reasssessment on my property, and I was granted one.

Utilities: $1977. This includes heat, hydro and garbage/water. My heating was a shockingly low $625 for the year. We had a warm winter, and didn’t have the heat set up as high. We wore more sweaters too!  The hydro came in at $795, which was much lower than the $1,150 I had budgeted for. Toronto Hydro introduced the “time-of-use” billing this year. and We really tried to do our laundry and run the dishwasher after 9 p.m. on weekdays, with the bulk of the laundry relegated to weekend tasks. Finally, we paid Toronto Utilities another $557 for garbage collection and water/sewage use. This was actually about $150 more than I had budgeted for. My eldest daughter moved in with us in August of 2009, and I likely didn’t have enough utility data to really assess how that may impact our water use (read: showers). I didn’t put too much water on the garden this year, but made good use of the rain barrel.  Mother Nature was also kind in this regard.

Home Insurance: $1142. This actually increased in 2010 – twice. That was the story just about anywhere I looked in 2010. Insurance rates are on the rise. I even read a few stories that suggested single people pay more for insurance because the presumption is the incomes are lower, therefore the necessary repairs may wait until a home is in a state of disrepair, and an increased risk for an insurance claim.

Maintenance: $2315. There weren’t a lot of major repairs for the house in 2010. I did replace the kitchen floor (only because my favourite contractor was available, and he only charged $335). It may not be the right spot to put this expenditure, but from January to September, I also had a housekeeper, once every other week.  She quit in September, and she hasn’t been replaced yet. She will be (I hope) in 2011. This was a big part of keeping me sane and also keeping me from thinking that I just worked all the time.  Other things in here are pretty mundane household things.

For the record, I have about $155K equity in my home. Toronto’s real estate market remains pretty hot in some neighbourhoods – mine is one of them. A home recently for sale on my street continued to enjoy a bidding war. I expect the same would happen if I put a sign on my front lawn. My home is appraised over $500K, and I totally get that’s a lot for a single mom with two kids. However, the past year has taught me I can hold onto it, if I can continue to stay gainfully employed. If something should happen to my income, at least I know that it wouldn’t linger on the market too long.

The other value in my home is that my girls can live here and still seek post-secondary education in Toronto, without the additional expense of residence and meal plans. With them both looking at another 4 or 5 years, that’s a lot of value to add to my thoughts about my home. Finally, my income is largely linked to my location. I’m attractive to my employer because of where I live (access to major services fast) and my part-time gig is possible because of my location.

Tomorrow – we’ll look at transportation!


4 responses to this post.

  1. Ouch on the mortgage! Good for you for getting your property tax reviewed. My mortgage isn’t that low of a rate and it’s variable as well, I’m jealous!


    • I know, the mortgage is a crippler. It was a big motivation for wanting to get out (and stay out) of debt. When interest rates go up, I’m taking a hit – hard. Better not be paying off debt as the rates creep up in the years to come.

      The interest rate was from 2007 (January) when the home was purchased. It has always been variable, and started off somewhere just sub 5%, I think. Then the rates just dropped, and dropped and dropped. It was a good time to take out a variable mortgage.

      Even if the rates rise dramatically between now and my renewal in 2010, I’ll still have had a better deal than a fixed rate. (And I doubt they will rise dramatically).

      The other advantage of my mortgage from 2007 is the way the interest rate is calculated differs from how a variable rate now is calculated. Either way, I really got a great deal then.

      Who knows what 2012 will bring!


      • I think the thing to do is be prepared so that if there was a rate hike, you could kind of cover it with a draw out of an emergency fund. I expect interest rates will go up in the future, but who knows when and by how much? I think the government will try and keep them down since there’s too many people who would be losing their houses if they didn’t.

      • Absolutely. The Girl Guides had it right when they chose the motto “be prepared”. We can’t go around with an expectation that they won’t change. You and I have been around long enough to see a pretty full cycle of interest rates. I worry about some of the twenty-somethings, who’ve only grown up with an awareness in this super-low rate world.

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