I moved to my current city in the fall of 2013 and bought the house that I currently live in. I had saved aggressively for more than 6 years for my down payment, and the feeling of owning, (a portion of), my own home was everything I had hoped. For the next 2 years or so I found myself spending a fair bit of money doing upgrades, despite having bought a brand new house. I paved the driveway within days of moving in, spent thousands on having good quality blinds put up on the windows, upgraded the heating system in the main living area from electric baseboard to heat pumps within the first year, and I recently added another heat pump system to keep the basement comfortable and dry year round. These costs added up quickly, and once my savings were deducted and locked away in my TFSA and RRSP, there wasn't a significant amount of money left over at the end of the month.
As time passed, I became eligible for extra pay at work, and received raises each year as I gained more seniority in my department. These pay increases lead to increases to my savings, and allowed me the freedom to spend more on myself, travelling, and spending on my hobbies, family and friends. As my house became more and more what I had dreamed of over the years, the list of things to do around the house diminished. As I write this, I have only 1 major project left to complete, and the money for it is already set aside safely in a Tangerine Savings Account as I discussed
HERE. This left me with a budget where a significant amount of money was being set aside for projects around the house, and the realization that my list was gone. It was time for me to re-evaluate what it was I wanted for the future.
For the next few weeks I opened up my budget almost daily and considered how to best make use of my newly freed up cash flow. I considered spending money on just about anything you can imagine, and spent may hours online searching the internet for suggestions on how to get the most happiness out of my disposable income. What I eventually realized was I needed to look at what my priorities are in life, instead of looking for individual line items, or specific "toys" I could buy at the store. This realization lead me to where I am now. My budget has been rejigged, and there is now significantly more money going into my travel budget. What I've also come to realize is I have pretty lofty goals for travel, and if I plan on achieving them, I'd better have a plan for my vacation days! I've also redirected some of these extra funds towards paying off my mortgage. This will reduce the interest I will pay on the duration of the mortgage, and let me pay off the mortgage prior to my first chance at retirement in about 14.5 years. By splitting my money, and working towards both a short term goal, and my adding more to my long term retirement goal, I feel like I've struck the right balance between living now and saving for the future.
Although I've talked a lot in this post about the "extra" money I ended up, this is a useful exercise for everyone, regardless of your current financial situation. In the next few days I'll be publishing a post entitled "Financial Checkups", where I'll be discussing an exercise we all should carry out on a regular basis. I'll go into more detail on what types of questions to ask yourself, when you should re-evaluate your budget and your goals, and what the final product should look like.
