Joan and Tom Remick* have a wish list: dining room furniture, adult furniture for the living room (it's now a makeshift playroom), a personal computer and a newer car (their 1986 Ford Mustang has little life left in it). Extravagant? Not by a long shot, and yet, like so many other families, they don't know how they're going to get the money together to turn that wish list into reality.
While Joan and Tom are miles ahead of other couples (they are mortgage-free at the age of 31!), it is an achievement that has cost them in many ways, they say. “I have aged a lot to come to this point,” says Joan. “We have exhausted all our resources and are starting from scratch.” Achieving the amazing goal of paying off their mortgage early has left them in a financial crunch: they have a lot of priorities and little cash. More importantly, perhaps, Joan wants to “start living.”
She and Tom have two children – Annie, 5, and Ryan, 3 – a home in Mississauga, Ont., and two cars. Married six years, they were able to take their first-ever vacation this past summer after the mortgage was paid: they rented a cottage for a week in Muskoka, Ont. But, like most people, they don't really keep track of where their money goes. “I always know how much we have in our chequing account,” says Tom, “so I can head Joan off before her debit card gets rejected at the checkout line.” Still, says Joan, “Even though we're both very good with our money, I don't want to live my life like a stickler, having to count every penny.”
When Joan says she and Tom are very good with their money, she isn't kidding. They met as teenagers working at a local grocery store and, unlike so many of their friends, both tucked away their money, put themselves through school and built up a healthy down payment for their first home, which they bought at age 25.
In fact, their first mortgage was just $80,000. They recently paid off the $50,000 mortgage they took out on their second home, thanks in part to Tom, who works in the transportation industry, taking on extra shifts at work – and some good luck. While all of the sacrifices they made over the years helped them get where they are – making do with no living room or dining room furniture, no major outings, no eating out with friends and no shiny new cars – they also happened to be in the right house at the right time. “We were able to sell our first home at a huge profit, pocket $65,000 and put that toward this house,” says Tom. “The market was hot, and we came out ahead.”
Although they have leapt over a huge hurdle, Joan and Tom feel that their finances are strained. “We have a car that's on its last legs, so it will have to be replaced,” says a frustrated Joan. “I just spent $1,000 on root canals. I want to put the kids into different activities. It all adds up.” Tom is now the sole provider for the family, pulling in $54,000 a year.
The first year they were married, both worked full time and earned a combined income of more than $100,000. Once Annie was born, however, Joan made the decision to stay home – a decision that was not in the game plan. “I planned to go back and had booked my nursing shifts, but the night before I broke down and called in to say I wouldn't be returning,” says Joan. That meant they had to make do on one income. “I took every shift I could get,” says Tom. While Joan plans to return to the workforce within the next three years, she doesn't want to go back to nursing. “I'm not sure what I want to do yet but, whatever it is, I know I will have to go to school for some sort of training,” she says. Cha-ching, cha-ching.
But Joan and Tom got a nice surprise this year when they filed their income tax. Due to a clerical error, Tom had been taxed as a single individual rather than as someone who supported a family; this has been adjusted, and this year his income
tax will drop, so they will get about $200 extra to keep each month. As well, he'll have a sizable tax refund when he files his income tax return next year.
Joan and Tom have very specific goals, but they're not quite sure how to achieve them, so we asked two financial advisers who deal with these situations every day for their expert advice on how to turn their wish list into reality.
* Names have been changed
