Julie and Seth Gregson want to save $75,000 in two years so they can buy a bigger home.
The current situation
Julie Gregson, a 35-year-old stay-at-home mom, dreams of moving into the Sundance Lake area of Calgary. She wants a bigger house with more room for her four children, Jarom, 6, Hannah, 4, Sam, 3 and Deacon, 6 months. “I love hanging out in Sundance Lake with the kids,” she says. “The beach is amazing.” Her husband Seth, a 34-year-old electrician, adds that he likes the fact that there are three schools in the area.
The Gregsons figure that if they sell their current home, they’ll pocket $125,000. But the four-bedroom houses they’re eyeing cost $525,000, so their goal is to save an additional $75,000 in two years so they can put down a hefty $200,000 down payment in 2013.
To come up with the money, Seth can work overtime or Julie can take on a two-year consulting contract for the oil and gas industry. She could work from home part-time, and nearby family members could help with child care. The couple is also building up $1,000 a month in equity in their home and saving $500 a month. They’re considering suspending their monthly $161 RESP contributions for a while, and maybe skipping their monthly date night too. “We’re open to all suggestions,” says Julie.
According to Jason Heath, a financial planner with E.E.S. Financial in Markham, Ont., the couple is on track to reach their goal. They’re already saving $500 a month, and the equity they’re building in their home by paying down the mortgage will net them an added $24,000 when they sell. “Those things alone will give them $36,000 in two years.”
To fund the shortfall, the Gregsons have a number of options. Some generate more income, others result in lower expenses. The way Heath sees it, the best way to come up with the remaining $39,000 would be to put the RESP contributions on hold for two years (a $3,864 savings) while Julie takes on the contract job ($40,959 after taxes). These two strategies will net them $80,823 in two years—more than their goal. The extra $5,000 gives them wiggle room. “Date night is the last thing I would give up,” says Heath. “That’s time they need for themselves.”
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