Where to start from here?

[futballa]

Newbie here.

I am educated financially, and understand financial/personal planning on more than a basic level. but I still feel advise from an outside party is required.
A few details that will help shape how decisions are made:

-I just graduated from grad school in September and have been working 9 months (Age 30). I am looking for a new job as my company is shaky. Net worth at graduation point - ($20k)
- I got married in January - Net worth combined - $20k
-March - we find out wife has become pregnant. Due at end of December.
-Currently renting in Saskatoon. We are thinking of buying, but dont feel we have enough for something in the 250k range. And we dont feel it will be cost effective if we choose to move down the road. We are looking to potentially move to Toronto to be near parents in the next 12-18 months, But since we currently work in Saskatoon we are here, and will think accordingly.
-I have not had a chance to review finances. Wife not a fan of stock market and has not invested anything she has made. So this is my first shot at financial management with some sizeable funds.

This is our rough financial picture:
CASH - 12k total
chequing- 0.5k
cashsavings (bills/rent)-2k
emergency account cash- 3k (goal 6 month bare minimum living expense ~$10-12k)
travel account cash- 6k/yr rate 500/month
US funds cash- 4k

SAVINGS - 17K total
TFSA savings account - 4k
RRSP GICs - .5k
RRSP mutual fund - 8k
TFSA savings account - 4.5k

DEBT - 2k total
Loan 0% for 3 yrs - 2k

Vehicle - 3k

We have too much cash lying around and not enough invested. WIth the baby on the way, how should I allocate my cash? My company is wishy washy these days, so I am on the lookout for new work always to preserve my income.
The wife wants a new car with the baby, and also wants a bigger place. So expenses will rise, but we are reasonable and modest people. We will not buy things unnecessarily and think practically.

Should I tie up more of my free cash into stocks/mutual/index funds with such an unstable economy and bleak couple of years ahead.

This is my first venture into investing my own money.
things I am looking for are:

Emergency fund - how to invest it to have access of the cash yet have it grow? Cash deposits or GIC that are purchased in a fashion as to expire one after another every month so you can access to cash without paying fees and you are yielding some return on investment

Travel fund - how do you make money on this cash as you never know when you need it to purchase tickets or whatever? How to make money on this cash?

US FUnds - how do i invest US funds? I only need them when I go to the states, which is ???? How do we invest this cash?

TFSA - I am thinking 50-75% TFSA to be dividend stocks and set up as a DRIP.

RRSP - do I plan this for actual retirement, or do I consider that I will buy a house in 2-3 years and would probably use the first time home buyers plan.

lots of questions.
Should I just spend some money and see a financial planner/advisor? Would I go to the personal banking level, or the asset management level of retail banking?
I should probably also do self management eventually but I need a hand on where to start off.


Any help would be appreciated!

[snafu]

1st, with solid government and a healthy economy in oh so pretty Saskatoon, I'm guessing there is far more opportunity for advancement in Sask. than the craziness of TO [Ford is just one of a hundred issues]. Even if you're in the financial sector, TO is bending to the economic engine west.

2nd, wife is in hormone overload so keep say 'yes dear' but make decisions based on facts. A baby takes very little space and unless you're in an 'adult only' bldg., there is little reason to move. Babies don't need half the stuff they say and it can easily be bought as needed. I'm presuming DW is eligible for full maternity benefits. Much more practical to have mother-in-law fly to Saskatoon if her health allows.

3rd, babies do not need a brand new car! Will the current car allow the installation of type I [rear facing] safety seat? Does DW expect to return to the workforce when benefits cease?

I'm guessing you're both from Ont. with long term plans to return east. It's so expensive and disruptive to buy and sell a home you may as well wait until you've decided where to plant roots. Don't buy stuff you like well enough to ship across country - it's cheaper to sell up and re-buy unless it's a government paid move.

[snafu]

Part II
With current rates you have already discovered that CDs, Bonds, Money Market and cash savings are not paying enough to keep up with inflation. You are losing buying power every month. Life has risks, and we try our best to ameliorate them with knowledge + well thought out plans. All the banks and Mutual Funds offer free seminars and speakers who try to sway your views. BNN at 6 PM or 7 PM in Saskatoon every few nights is informative.

What is held in the two RRSPs? You are investing for the l-o-n-g term. You have a 35 year platform of contributions and at age 65 you do not totally cash out but expect to draw down at the government dictated range in 2048 or so. You need to create a plan that allows you to sleep at night without worrying about your money. I really like the high volume Exchange Traded Funds [ETFs] bought via Dollar Cost Averaging [DCA] a discount brokerage. You may be more comfortable with a group of low Management Expense Ratio [MERs] Mutual Funds [MF] likewise DCA. Personally, I 'd choose a plain Jane Index Fund, and a Dividend Fund, both Canadian & USA [USA is really tricky tax-wise even in our non taxable a/cs] When you're more comfortable add an International Fund.

Self directed plans allow you to change holdings without penalty. You are young and in a position to absorb higher levels of risk than someone 15 years from retirement. Oh, banks offer 'Advisors,' seemingly 'free' but they get a commission based on what they sell you. Some are more knowledgeable than others.

[ESMonitor]

You have plenty of cash in reserves. You don't have much debt, I would -

* go ahead and pay off your debt, loan and car note asap, before baby is born.

* set up Roth IRA's for both of yall via Vanguard, and start monthly allocation plan

* Put 12K of the cash leftover to the side for emergency fund, possibly put in CD.

* Live frugally in an apt and save up as much cash as you can until baby gets older towards school enrollment age, then you have money saved to make a solid down paymnt, get the house you want with a greater sense of peace about it and still have money to fall back on of needed.

* Move closer to your folks if you can.

* Give yourself a pat on the back. Your debt to assets ratio is really, really good for just starting out.

[futballa]

2nd, wife is in hormone overload so keep say 'yes dear' but make decisions based on facts. A baby take very little space and unless you're in an 'adult only' bldg., there is little reason to move. Babies don't need half the stuff they say and it can easily be bought as needed. I'm presuming DW is eligible for full maternity benefits. Much more practical to have mother-in-law fly to Saskatoon if her health allows.

We are totally practical and more 'minimalistic' so we feel we wont over buy for baby. As for flying family, we live in a one bedroom, so when our lease is up in early 2014, we will need 2 bedroom place. We live in a "luxury" apt, but pay for location as we walk to work. A 2 bedroom is almost 20% more, so we might have to move to a suburb for cheaper options, and increased safety. But also, we would have to start commuting which I despise.

3rd, babies do not need a brand new car! Will the current car allow the installation of type I [rear facing] safety seat? Does DW expect to return to the workforce when benefits cease?

We have a Accord coupe, so it is a little small. I also want something with AWD/ 4wheel for my wife to drive here, as she is only used to ontario driving. I am used to the snow driving, but definitely want the extra safety for baby's sake.
DW is expected to return to work after benefits end.

I'm guessing you're both from Ont. with long term plans to return east. It's so expensive and less disruptive to buy and sell a home you may as well wait until you've decided where to plant roots. Don't buy stuff you like well enough to ship across country - it's cheaper to sell up and re-buy unless it's a government paid move.

We are sort of 'minimalist' but not fully. we don't buy things we don't need. So we manage quite well with what we have in a one bedroom place. But moving is the major thing we holding is from buying a house. also the fact that prices are through the roof. We might be better off waiting a couple of years and see if there is a cool down in real estate market.

[futballa]

Part II
What is held in the two RRSPs? You are investing for the l-o-n-g term. You have a 35 year platform of contributions and at age 65 you do not totally cash out but expect to draw down at the government dictated range in 2048 or so. You need to create a plan that allows you to sleep at night without worrying about your money. I really like the high volume Exchange Traded Funds [ETFs] bought via Dollar Cost Averaging [DCA] a discount brokerage. You may be more comfortable with a group of low Management Expense Ratio [MERs] Mutual Funds [MF] likewise DCA. Personally, I 'd choose a plain Jane Index Fund, and a Dividend Fund, both Canadian & USA [USA is really tricky tax-wise even in our non taxable a/cs] When you're more comfortable add an International Fund.

.

It might be unrealistic, but I want to retire around 50, so I am really keen on putting away funds, and figure I am a medium/high risk tolerance, with about 20 years to save. I will try to work towards retirement in 50 years by not compromising on savings, and focusing on 20% savings (towards RRSP, tax free savings, emergency) rate based on monthly net income.

Self directed plans allow you to change holdings without penalty. You are young and in a position to absorb higher levels of risk than someone 15 years from retirement. Oh, banks offer 'Advisors,' seemingly 'free' but they get a commission based on what they sell you. Some are more knowledgeable than others.

As mentioned, I would like to retire in 20 years, but as I am young feel I could potentially afford the risk, and if I am not an my goal when I am approaching my target retirement, I can always push it out a couple of years. I dont know. I am really hoping I can manage to retire at 50, if I can focus on 20% savings. i am almost banging on the fact that make investments will yield an average of 4-5% after tax. This is a low return, but I think it is realistic with markets these days. Who knows the picture 10 or even 20 years down the road.

[Redraidernurse]

To buy this new car will you have to take on more debt? If you can sell the current car and buy a used car for the same cost as you sold the old car then do it. We also drive a small car, and fit 2 carseats in it and will need to fit a 3rd carseat in december. If you can avoid taking on more debt now, you will be able to save more for a home purchase sooner.

[futballa]

You have plenty of cash in reserves. You don't have much debt, I would -

* go ahead and pay off your debt, loan and car note asap, before baby is born.

should I also pay off that 0% loan? we are just thinking paying $75/month, and it will be gone in a few years. We would barely feel it. 0% is costing us nothing to hold on to it.

* set up Roth IRA's for both of yall via Vanguard, and start monthly allocation plan

I assume these are RRSP. We both have 1 setup. So we are putting towards it.

* Put 12K of the cash leftover to the side for emergency fund, possibly put in CD.

I guess I could have my emergency fund topped off and put away. I hope a CD would give me some sort of return that I want. I am thinking to setup up something like 6 Cash deposits for $2000 each, and each one maturing at the end of every 2 months; or 12 CD for $1000 each, and each maturing at the end of one month. This way I can always have access to cash in relative short notice.

* Live frugally in an apt and save up as much cash as you can until baby gets older towards school enrollment age, then you have money saved to make a solid down paymnt, get the house you want with a greater sense of peace about it and still have money to fall back on of needed.

. we are pretty frugal already. I use RFD lots and buy items when it is appropriate. Only buy quality for food items where it matters. We walk to work. Thinking about cutting the tube cord this summer. I just don't want the looming thought of a massive mortgage that I have to pay off for my whole life.

* Move closer to your folks if you can.

* Give yourself a pat on the back. Your debt to assets ratio is really, really good for just starting out.

Moving closer to home saves will make life funner, our families will be close, and we will have free day care. Child care when working is a massive cost. I would hate to make $400+ a month for someone who I don't fully trust to watch my child. Grandparents keep culture, morales etc in check when we have a family where both parents need to work.

As for just starting out.. That is just my married life. At 30 years old, I would have like to have been $100k further ahead ideally in savings. Most savings we started off with is all attributed to my DW and her hard work pre me in her life.

[futballa]

To buy this new car will you have to take on more debt? If you can sell the current car and buy a used car for the same cost as you sold the old car then do it. We also drive a small car, and fit 2 carseats in it and will need to fit a 3rd carseat in december. If you can avoid taking on more debt now, you will be able to save more for a home purchase sooner.

Yes I would definitely need to take on debt. I could probably do $5k down (I think that is pushing it though) and the rest would be financed. And I do not want to be paying 300-400/month for 4 years.

The thing with my current car is that it is paid off, $3k is its rough book value (my bad on its placement under debt). It is in good condition for its age and mileage. Living in a cold city, it is beneficial to have a spare car, especially when we are expecting a baby and will potentially no longer be living walking distance to both of our jobs.

If we move to another area of the city 1 or both may have to commute to work either public transit or vehicle. And we know life can be tough when we need the car and one is unavailable. If I can manage to keep the car without it being to much an expense, I would def keep it. Though one down side it is rough on gas, it looks great for a 14 year old car.

But yes, getting another vehicle I would either buy brand new (For warranty purposes) or close to new- 2 or 3 years old, but would want to purchase something where I can get extended warranty. I would be expecting to spend something around the $20-25k to expect something decent with AWD/4WD and that I can expect to use 5+ years before I start seeing major issues. Audi A4 comes to mind, but it is a little pricier, but does fit my style and needs. SUV's are major gas guzzlers and unnecessary for us. But yeah, its a tough decision.

My coupe is front wheel drive, coupe, no block heater (from Ontario), rebuilt tranny 100k ago (330k now). Works good, 400km to the tank of 55 gallons.

I will try out car seats in Fall and see how things fit and manage to facilitate our needs.

[sblatner]

Maybe I'm too conservative, but if my job were shaky and my wife was pregnant, I would keep all my money in cash for now - especially since you only have $12k. At least non-retirement funds. Surprise expenses come up when you have a baby.

Also, I wouldn't pay off the car loan - it is free money. We have a Mazda that is at 0%. We are taking as long as we can to pay off that loan!

[LivingAlmostLarge]

Audi A4 is crazy to buy it's small and not practical for a baby car. I have a ton of friends who traded that in for a subaru if you want AWD. You want small? Get an subaru impreza for AWD. And you don't need AWD in Sask, a Honda Accord 4 dr would be good enough.

Second I'd figure out where you are living before buying a car. 2 dr accord while not fun is manageable. We had a 2 dr ford focus when we had our first kid for 6 months then got a subaru outback. Not easy but doable.

[futballa]

Audi A4 is crazy to buy it's small and not practical for a baby car. I have a ton of friends who traded that in for a subaru if you want AWD. You want small? Get an subaru impreza for AWD. And you don't need AWD in Sask, a Honda Accord 4 dr would be good enough.

Second I'd figure out where you are living before buying a car. 2 dr accord while not fun is manageable. We had a 2 dr ford focus when we had our first kid for 6 months then got a subaru outback. Not easy but doable.

Yeah, the A4 was more of a desire if I had an option for a car that would suit me. But I definitely do not know how it applies to being practical for a little Baby.

But either way, I am thinking that 20-25k is what I could expect to pay for I would need. I think the coupe would be manageable, but my wife sees other wise. She is going through a difficult pregnancy, and therefore has back issues and is not keen on the idea of moving a seat forward, bending over and placing a baby in a back seat. She thinks it will be nightmarish, especially in the winters.

[LivingAlmostLarge]

$20-25k for a car what is your income? And I wouldn't buy until you know where you are going to live.

[futballa]

$20-25k for a car what is your income? And I wouldn't buy until you know where you are going to live.

We gross 100k as a couple.

[Redraidernurse]

I'm sure you've already thought about this, but when making your new budget after including your new car payment, don't forget to include daycare expenses. I know in some areas of the country they can be $1000+ a month for an infant.