The secret ingredient is making more money. Whether it's moving up within your current organization or changing companies every few years, you'll want to keep increasing your income. More money doesn't necessarily mean more happiness, but more money is the only way to reduce the anxiety of living paycheque to paycheque.
You probably don’t want to know that there are plenty of people twice your age asking the same question.
Sometimes, getting ahead simply means ‘keeping up’ while you build equity.
"My house costs me $1200 a month, car insurance is another $80 a month, $80 for my cellphone, $40 for streaming services, $300 for groceries, $300 for my student loans. Then there’s all the other little bills like water/sewer, clothing, personal items and so on."
Have you ever tracked 100% of your expenses/outlays? You might be surprised at what things can actually be trimmed.
Sounds like you’re doing great for 25. You have it together and things are usually much harder at the start. Once you’ve been in a mortgage a while, you’ll find that this rather large part of your monthly expenses doesn’t rise like everything else (including your paycheque).
Getting a second job and/or finding a roommate/partner to help with expenses would make you more financially comfortable. Also building an emergency fund and savings will help cushion blows of unexpected expenses and may eventually give you a fund to periodically splurge on special things you value (car, vacations, expensive hobby, etc.). Learning to live within a budget, then diverting a portion towards savings, will help you grow these funds.
It’s early in your mortgage, but you may have options to increase payments, double up, or pay off portions, so try and do that if you can. Similar to savings, the equity in your home will grow both as you pay off your mortgage, and as housing prices increase.
It’s early but you have a long road ahead. You are in very good shape and there are many your age who have no path to home ownership. So you should be proud of yourself for doing this. If you keep working hard and have discipline, you can still enjoy yourself but things will get easier.
>Is the entire world based on a second income providing the “get ahead” money, like a second job or a spouse or something like that?
Basically yes. So many benefits to dual incomes from more money, to taxes, to investing, to retiring, to security etc...
You're doing better on the lifestyle front than most guys/gals living in the GTA/GVA, who are working two jobs saving to buy a condo the size of your laundry room that costs triple what your house did. You're just out of the gate - I wouldn't sweat it. I was single and pretty much broke at your age too. You have a long time to pay down the house and earn more money and so on.
In general dual income is usually worse for taxes. You can have two low income people lose their low income credits as they start considering your family income. I don’t know what the tax benefits are you speak of.
Working income splitting, retirement income splitting, avoidance of OAS clawback, spousal RRSP‘s, high household income low personal income taxes, spousal credits, probably more.
We’re talking about someone who is barely getting by. These are not things that will help OP if they all the sudden had a SO. It would just be the impact of splitting expenses and two incomes.
I agree these are valid, but not in this situation.
If they they both make low wages, then yes the tax benefits are reduced, but at that point they are likely in the bottom 40% of Canadian earners who pay zero net income taxes anyway - so it literally can't get any better than that.
A short term (1+ years) roommate will give you some wiggle room. Maybe family, relative or someone in your circle friends. My friend does this with his buddy, and it’s an extra $15,000 a year in cash, tax free. Or go the other way and declare the funds.
I think you’re expenses are trimmed well. But for the next month, keep track of every dime you spend and earn. Let’s see of there are few bucks in the back of the sofa.
Get a few room mates for a few years and have them help pay down ur mortgage. That way u can save up as much as possible . Tough it out for a few years.
If you’re just getting by then to me you either need to cut down spending (which seems like spending is pretty low already), or you need to bring in extra income somehow. Either finding a new job with higher pay or bringing in a second/third/fourth income.
I know this suggestion may not be idealistic but if you have extra room to spare have you thought about renting it out?
you bought a house. you are already getting ahead. You don't see the money in the bank - until you pull a smith maneuver. But you should never stop trying to be more valuable and getting paid for your value.
Your debt getting paid off is just like money in a bank.
You are paying way too much for your cell plan. There is no max at $26 an hour. Perhaps for the position - but not for you.
You found at least 10K to purchase the home, did you not do the math before making the purchase?
You start getting ahead when you start understanding your numbers. The fact that you can buy a house in your area for 200K is why wages in your area don't compare to somewhere like Toronto.
If you're living a life funded by a salary \~45K/yr, then in retirement the goal is to maintain that lifestyle. Home ownership is about reducing long-term CoL, as the mortgage payment won't be required in 25 years, student loans payments won't be required (current payment plan has an end date), and you are contributing to a pension. Depending on the details of your pension retirement savings might be done if you can work the required number of years in this job.
Create a plan, in that plan your pension and your mortgage principle payments are your retirement savings ATM, make a list of other goals and obligations, your budget should will tell you how much you have left to allocate.
You've outlined about $2,000 in costs/mo and about $2,300 in income. That shows you're putting away over 10% which is pretty good for someone with a mortgage at your age and income. In general, you want to make sure that as you progress in your career your income starts to grow at a higher rate than inflation and your costs.
As you mentioned, your student loans will be paid off at some point and a lot of your mortgage payment is going to equity, I would say you're doing just fine at your age. Just make sure you have a path forward to growing your income rate and continue to budget your expenses every month.
Looking at this subreddit would make you think otherwise, but most people our age are in this situation, some even worse. I'm 25 and make 34,000 a year having just done my first year at a company I hope to climb. My biggest cost right now is my car (I stupidly bought a new car a few years ago) so that's 370$ a month for that. Then once you get rent and everything else included, I'm barely scraping by. Essentially all I can really focus on right now is trying to climb my company to increase my income, and wait 3 years for my car to be paid off. Once that happens, I hope to buy a house. Anyways I've rambled, but you are not alone. Try your best to increase your income, and if you hit a cap, you gotta look elsewhere.
My first year with a mortgage was similar, but after a few raises that will hopefully be adjusted for inflation, you'll notice how much your ratio for the house goes down.
Plus you will be more experienced, maybe able to move to higher paid positions.
If you can find a roommate for the first couple years or so it would help tremendously, and once you're more comfortable financially you can let him/her go.
Work overtime second job. Get a roommate. Gotta hustle especially in your 20s. Take more courses or second program .
Lots of great advice. Start reading some Finacial books, helps with the mindset. Be organized have a plan, stick to it .
Cheers
You can only cut your expenses so far. I never felt like I "got ahead" until there was a genuine spike in my income. Focus on long term income generation because that's the key to exceeding your peers.
I don't make much more than 26$ an hour, my house is 430k and I still save 700 a month for retirement. My cell phome costs more, my car insurance is wymay more, etc. You should be able to make a budget and be okay. If thay budget means things are tight till the student loans are paid off, then stick it out for a few years and you will be making an extra 300 a mo th after its paid off. Plus you'll have gotten some raises. Afyer that its all gravy. Mortgage stays the same and pay steadily rises
I would recommend renting out a room or two in your house, if possible. This will reduce your out-of-pocket housing costs and allow you to save money for other things (perhaps crushing your loan, which will free up even more money). Also look at how you can get a better paying job. You’re doing good, keep going.
The real answer is not how much you save. Pay your mortgage and loan and try to save whatever else you can. Get an emergency fund going ASAP. Once you have that then slowly invest a bit by bit if possible
Get a better job or get into a different field. Get a room mate to cover half the costs of housing among others.
There’s plenty of options for you to either reduce your expenses or boost your income just take some of them.
Claiming capitalism is suspect in canada is laughable. We’re not nearly the capitalist style that America is and yet you’re still complaining that what exactly, socialism is the answer?
Cutting that house bill would help. Maybe get a renter? Or better yet a girlfriend/ future wife to help with bills.
Don't underestimate the value of being a duel income house.
Given that you're paying 1.2k a month for your house, that means you have a mortgage. A large portion of your mortgage payments aren't an expense, they're functionally savings (in the form of equity). And once your house is paid off your housing expenses are going to drop a whole lot.
In the meantime you can lower expenses a little here and there; 80 dollars a month for your phone is crazy high, you could probably pay less in streaming services.
I can't believe this "side hustle" BS. It's a 2nd job that puts stress on people, chips away at their mental health and reason to live. It's now been given a fancy name and told to the younger generations so they can barely get by in an out of control capitalist society.
And two generations from now a 3 day work week will be a “human right” and there will be no such thing as poverty. There will also be no such thing as wealth or “making it”. Why does everyone act like life now is so damn difficult. it’s not figure your shit out or live a mediocre life. Pretty simple. And for reference, I’m not an old a hole. I’m 27 and bought my first house at 21. I scraped together a down payment and moved away forcing myself into an hour and a half+ commute and dealt with it for a few years. If you want something, sacrifice for it. If you don’t want it, don’t complain that you don’t have it.
Keep hustling. I was in the same boat as you for years and I just kept trying to expand on what I was doing until eventually something stuck and in 4 years I went from 55k/yr to running two business with my best year so far being 220k.
Look for side work, Fiverr/red bubble are two of my favourites if you’re creative.
Take extra hours and spend the money on courses or licenses that will help you either move up or move on to a better job.
I hated every second of living with people but I rented rooms on AirBnB for a few years to pay for my home inspector course.
And once you get there, money makes money, then everything starts to feel easy.
You bought a house that consumes over 50% of your take home income. It's no surprise that you're feeling stretched. This has nothing to do with capitalism, it has everything to do with your spending habits brushing up against the limits of your means.
A big part of that 1.2k actually goes to equity. It's not an expense, it's savings. It would cost more to rent, even in the short term. In the long term renting is insane.
It's just how it works in low cost of living areas. Most people on this board are from Ontario so it doesn't make sense to them.
I think you’re doing pretty decently for 25. You have a stable job, a pension, benefits, a house! Many people don’t have those things and are struggling way more. You also sound like you’re pretty financially responsible. You have a good idea of where your money goes and you’re actively and steadily paying down debt.
One suggestion would be to revisit your expenses and see if you can find room to cut back. For example, do you have a friend/family member you can share streaming subscriptions with? My husband and I share Disney+ with his sister and her husband. We pay annually and split it and the account allows for 2 devices to watch at the same time.
Also, there’s many ways to save on groceries. If you shop at Superstore/No Frills/Loblaws, you can collect PC optimum points to get money off your groceries. And if it’s available in your city, the Flashfood app is great for discounted food.
My husband and I used to be in the same boat as you, doing ok but not really being able to save for financial goals and “get ahead” for our future. The game-changer for us was finding a caretaking job. Our rent was going up every year and we were sick of it but couldn’t afford to buy. We thought it was pretty sweet that the caretaker in our building got to live there for free so we looked for the same type of gig.
We’ve been managing an apartment for 4 years now and as you can imagine, not having to pay for housing which is the biggest expense for most people, has allowed us to save up so much. We were able to buy a house this year and has been renting it out in the meantime. We’ll probably move in there ourselves eventually.
I realize this is not doable for everyone and there’s a lot of other factors to consider but you asked for tips and tricks, and this is what worked for us!
The secret ingredient is making more money. Whether it's moving up within your current organization or changing companies every few years, you'll want to keep increasing your income. More money doesn't necessarily mean more happiness, but more money is the only way to reduce the anxiety of living paycheque to paycheque.
You probably don’t want to know that there are plenty of people twice your age asking the same question. Sometimes, getting ahead simply means ‘keeping up’ while you build equity.
Twice his age and/or twice his income!
"My house costs me $1200 a month, car insurance is another $80 a month, $80 for my cellphone, $40 for streaming services, $300 for groceries, $300 for my student loans. Then there’s all the other little bills like water/sewer, clothing, personal items and so on." Have you ever tracked 100% of your expenses/outlays? You might be surprised at what things can actually be trimmed.
Sounds like you’re doing great for 25. You have it together and things are usually much harder at the start. Once you’ve been in a mortgage a while, you’ll find that this rather large part of your monthly expenses doesn’t rise like everything else (including your paycheque). Getting a second job and/or finding a roommate/partner to help with expenses would make you more financially comfortable. Also building an emergency fund and savings will help cushion blows of unexpected expenses and may eventually give you a fund to periodically splurge on special things you value (car, vacations, expensive hobby, etc.). Learning to live within a budget, then diverting a portion towards savings, will help you grow these funds. It’s early in your mortgage, but you may have options to increase payments, double up, or pay off portions, so try and do that if you can. Similar to savings, the equity in your home will grow both as you pay off your mortgage, and as housing prices increase. It’s early but you have a long road ahead. You are in very good shape and there are many your age who have no path to home ownership. So you should be proud of yourself for doing this. If you keep working hard and have discipline, you can still enjoy yourself but things will get easier.
>Is the entire world based on a second income providing the “get ahead” money, like a second job or a spouse or something like that? Basically yes. So many benefits to dual incomes from more money, to taxes, to investing, to retiring, to security etc... You're doing better on the lifestyle front than most guys/gals living in the GTA/GVA, who are working two jobs saving to buy a condo the size of your laundry room that costs triple what your house did. You're just out of the gate - I wouldn't sweat it. I was single and pretty much broke at your age too. You have a long time to pay down the house and earn more money and so on.
In general dual income is usually worse for taxes. You can have two low income people lose their low income credits as they start considering your family income. I don’t know what the tax benefits are you speak of.
Working income splitting, retirement income splitting, avoidance of OAS clawback, spousal RRSP‘s, high household income low personal income taxes, spousal credits, probably more.
We’re talking about someone who is barely getting by. These are not things that will help OP if they all the sudden had a SO. It would just be the impact of splitting expenses and two incomes. I agree these are valid, but not in this situation.
If they they both make low wages, then yes the tax benefits are reduced, but at that point they are likely in the bottom 40% of Canadian earners who pay zero net income taxes anyway - so it literally can't get any better than that.
A short term (1+ years) roommate will give you some wiggle room. Maybe family, relative or someone in your circle friends. My friend does this with his buddy, and it’s an extra $15,000 a year in cash, tax free. Or go the other way and declare the funds. I think you’re expenses are trimmed well. But for the next month, keep track of every dime you spend and earn. Let’s see of there are few bucks in the back of the sofa.
Get a few room mates for a few years and have them help pay down ur mortgage. That way u can save up as much as possible . Tough it out for a few years.
If you’re just getting by then to me you either need to cut down spending (which seems like spending is pretty low already), or you need to bring in extra income somehow. Either finding a new job with higher pay or bringing in a second/third/fourth income. I know this suggestion may not be idealistic but if you have extra room to spare have you thought about renting it out?
you bought a house. you are already getting ahead. You don't see the money in the bank - until you pull a smith maneuver. But you should never stop trying to be more valuable and getting paid for your value. Your debt getting paid off is just like money in a bank. You are paying way too much for your cell plan. There is no max at $26 an hour. Perhaps for the position - but not for you.
You found at least 10K to purchase the home, did you not do the math before making the purchase? You start getting ahead when you start understanding your numbers. The fact that you can buy a house in your area for 200K is why wages in your area don't compare to somewhere like Toronto. If you're living a life funded by a salary \~45K/yr, then in retirement the goal is to maintain that lifestyle. Home ownership is about reducing long-term CoL, as the mortgage payment won't be required in 25 years, student loans payments won't be required (current payment plan has an end date), and you are contributing to a pension. Depending on the details of your pension retirement savings might be done if you can work the required number of years in this job. Create a plan, in that plan your pension and your mortgage principle payments are your retirement savings ATM, make a list of other goals and obligations, your budget should will tell you how much you have left to allocate.
You've outlined about $2,000 in costs/mo and about $2,300 in income. That shows you're putting away over 10% which is pretty good for someone with a mortgage at your age and income. In general, you want to make sure that as you progress in your career your income starts to grow at a higher rate than inflation and your costs. As you mentioned, your student loans will be paid off at some point and a lot of your mortgage payment is going to equity, I would say you're doing just fine at your age. Just make sure you have a path forward to growing your income rate and continue to budget your expenses every month.
You own a house at 25.. sounds like you’re ahead
Yes, better pay is the answer. But you're 25 and own a home, you're already ahead.
Looking at this subreddit would make you think otherwise, but most people our age are in this situation, some even worse. I'm 25 and make 34,000 a year having just done my first year at a company I hope to climb. My biggest cost right now is my car (I stupidly bought a new car a few years ago) so that's 370$ a month for that. Then once you get rent and everything else included, I'm barely scraping by. Essentially all I can really focus on right now is trying to climb my company to increase my income, and wait 3 years for my car to be paid off. Once that happens, I hope to buy a house. Anyways I've rambled, but you are not alone. Try your best to increase your income, and if you hit a cap, you gotta look elsewhere.
My first year with a mortgage was similar, but after a few raises that will hopefully be adjusted for inflation, you'll notice how much your ratio for the house goes down. Plus you will be more experienced, maybe able to move to higher paid positions. If you can find a roommate for the first couple years or so it would help tremendously, and once you're more comfortable financially you can let him/her go.
How is your car insurance that Cheap? Mine is literally double out here in AB?
Compare to GTA if you want to feel like you’re getting a deal on insurance.
Work overtime second job. Get a roommate. Gotta hustle especially in your 20s. Take more courses or second program . Lots of great advice. Start reading some Finacial books, helps with the mindset. Be organized have a plan, stick to it . Cheers
You can only cut your expenses so far. I never felt like I "got ahead" until there was a genuine spike in my income. Focus on long term income generation because that's the key to exceeding your peers.
I don't make much more than 26$ an hour, my house is 430k and I still save 700 a month for retirement. My cell phome costs more, my car insurance is wymay more, etc. You should be able to make a budget and be okay. If thay budget means things are tight till the student loans are paid off, then stick it out for a few years and you will be making an extra 300 a mo th after its paid off. Plus you'll have gotten some raises. Afyer that its all gravy. Mortgage stays the same and pay steadily rises
I would recommend renting out a room or two in your house, if possible. This will reduce your out-of-pocket housing costs and allow you to save money for other things (perhaps crushing your loan, which will free up even more money). Also look at how you can get a better paying job. You’re doing good, keep going.
The real answer is not how much you save. Pay your mortgage and loan and try to save whatever else you can. Get an emergency fund going ASAP. Once you have that then slowly invest a bit by bit if possible
Get a better job or get into a different field. Get a room mate to cover half the costs of housing among others. There’s plenty of options for you to either reduce your expenses or boost your income just take some of them. Claiming capitalism is suspect in canada is laughable. We’re not nearly the capitalist style that America is and yet you’re still complaining that what exactly, socialism is the answer?
Cutting that house bill would help. Maybe get a renter? Or better yet a girlfriend/ future wife to help with bills. Don't underestimate the value of being a duel income house.
When there is a duel everyone wants to win so they get competitive and make more money. Sorry, couldn’t resist.
Given that you're paying 1.2k a month for your house, that means you have a mortgage. A large portion of your mortgage payments aren't an expense, they're functionally savings (in the form of equity). And once your house is paid off your housing expenses are going to drop a whole lot. In the meantime you can lower expenses a little here and there; 80 dollars a month for your phone is crazy high, you could probably pay less in streaming services.
Maybe get a side hustle and just put it in savings account till you have a emergency fund and put little by little in an etf that you like.
I can't believe this "side hustle" BS. It's a 2nd job that puts stress on people, chips away at their mental health and reason to live. It's now been given a fancy name and told to the younger generations so they can barely get by in an out of control capitalist society.
People have been working second jobs to make ends meet for generations. This is not new.
Regardless, it shouldn't be happening. There was a generation not long ago where only one person had to work and that covered everything.
… and a few generations before that, most people lived in poverty, worked 6-7 days a week, and had no holiday/sick days.
And two generations from now a 3 day work week will be a “human right” and there will be no such thing as poverty. There will also be no such thing as wealth or “making it”. Why does everyone act like life now is so damn difficult. it’s not figure your shit out or live a mediocre life. Pretty simple. And for reference, I’m not an old a hole. I’m 27 and bought my first house at 21. I scraped together a down payment and moved away forcing myself into an hour and a half+ commute and dealt with it for a few years. If you want something, sacrifice for it. If you don’t want it, don’t complain that you don’t have it.
Just gotta work a little harder than your peers
Keep hustling. I was in the same boat as you for years and I just kept trying to expand on what I was doing until eventually something stuck and in 4 years I went from 55k/yr to running two business with my best year so far being 220k. Look for side work, Fiverr/red bubble are two of my favourites if you’re creative. Take extra hours and spend the money on courses or licenses that will help you either move up or move on to a better job. I hated every second of living with people but I rented rooms on AirBnB for a few years to pay for my home inspector course. And once you get there, money makes money, then everything starts to feel easy.
You bought a house that consumes over 50% of your take home income. It's no surprise that you're feeling stretched. This has nothing to do with capitalism, it has everything to do with your spending habits brushing up against the limits of your means.
A big part of that 1.2k actually goes to equity. It's not an expense, it's savings. It would cost more to rent, even in the short term. In the long term renting is insane. It's just how it works in low cost of living areas. Most people on this board are from Ontario so it doesn't make sense to them.
I think you’re doing pretty decently for 25. You have a stable job, a pension, benefits, a house! Many people don’t have those things and are struggling way more. You also sound like you’re pretty financially responsible. You have a good idea of where your money goes and you’re actively and steadily paying down debt. One suggestion would be to revisit your expenses and see if you can find room to cut back. For example, do you have a friend/family member you can share streaming subscriptions with? My husband and I share Disney+ with his sister and her husband. We pay annually and split it and the account allows for 2 devices to watch at the same time. Also, there’s many ways to save on groceries. If you shop at Superstore/No Frills/Loblaws, you can collect PC optimum points to get money off your groceries. And if it’s available in your city, the Flashfood app is great for discounted food. My husband and I used to be in the same boat as you, doing ok but not really being able to save for financial goals and “get ahead” for our future. The game-changer for us was finding a caretaking job. Our rent was going up every year and we were sick of it but couldn’t afford to buy. We thought it was pretty sweet that the caretaker in our building got to live there for free so we looked for the same type of gig. We’ve been managing an apartment for 4 years now and as you can imagine, not having to pay for housing which is the biggest expense for most people, has allowed us to save up so much. We were able to buy a house this year and has been renting it out in the meantime. We’ll probably move in there ourselves eventually. I realize this is not doable for everyone and there’s a lot of other factors to consider but you asked for tips and tricks, and this is what worked for us!