How the Hutches got Hitched, Part 1: The Engagement

I believe my frugal streak is innate. It’s always there, even when it comes to getting married.  I laugh at how it was even there when I feel like the story really starts, 8 months before Mr. Hutch actually popped the question.

It was New Year’s eve, 2008. I had the most cheap-tastic date night planned for Mr. Hutch and I. We took the bus (free that night!) to a lovely Irish pub in one of Victoria’s most beautiful heritage buildings downtown. I usually think of this place as a bit of a tourist trap (by virtue of its location, and its overpriced drinks) but the Mr. and I were flush with gift cards that I had earned on travel points. We headed there early in the evening and had a wonderful meal and a few drinks, and left before the beginning of their “New Years Eve” party started (I think around 10pm), thereby saving ourselves the $25 cover charge. I seriously still pride myself on this lovely date that cost zero dollars.

We rang in the new year quietly at home, just the two of us. At midnight, I asked Mr. Hutch what he hoped for in the upcoming year. I was utterly shocked when he answered, “I’m going to marry you in 2009”. Yes, we may have already bought our house together, and marriage was probably a foregone conclusion, but still, I was speechless and incredibly touched.

This is where, to my own surprise, I turned into a raging girl. I am not one for jewellery, and before this point would have said I had no interest in a diamond ring. That all changed. Suddenly, I was on the hunt for an engagement ring. Mr. Hutch and I looked around, and I pointed out a few that I liked and left it to my Mr.-to-be to make the final pick. 

In August, Mr. Hutch and I took our summer vacation on one of the incredibly idyllic local islands. We rode our bikes to the beach one night with a bottle of champagne to watch the sunset. I was pretty sure what was coming. But what I didn’t see coming was the sweetest way I think a man could ask a woman to be his wife (sniff). I’m obviously biased now because of its special place in my heart, but man, Savary Island is incredible.

Mr. Hutch had chosen an exceptionally beautiful, if not unique, art-deco style dinner ring. I say that because I noticed later that the same ring was selling at a different jewellery store than from where he had purchased it. For a lower price. So I went in there and asked for them to price match, which they did, to the tune of a couple hundred bucks if I recall.

So there you have it. I may have been about to become a blushing bride, but still I had no shame.

Mrs. Hutch's Sweet New Cell Phone Plan

I've had something in the neighborhood of 4 or 5 cell phone numbers in the last 7 years. I was a holdout for a long time, and was one of the last people I know to actually get a cell phone. I thought not having once gave me some kind of street cred. Eventually, it just made me an outcast. Have you ever realized that no one meets at a a pre-arranged time and place anymore?

My last phone was a blackberry for work. I ditched my own phone just paid for any personal calls I made over and above the monthly corporate plan, which was never much. That worked just fine for me, and was incredibly cheap. But when I went on my maternity leave in 2010, I threw that phone out my driver's side window at the office as I sped away from the building. Figuratively speaking. I took the bus back then.

I honestly didn't want to get a phone of my own while I was on maternity leave. But Mr. Hutch, ever the pragmatist, insisted. Something about going into premature labour with the twins. I relented.

Me: "Hi, I need a phone. I really like those flip-phones."

Phone Guy: "Uh, they don't make flip-phones anymore."

I got the closest thing to a flip-phone that I could, and told Phone Guy to sign me up for the most basic plan he had. No fancy stuff, thank you. I got a one year contract for $20/month, but ended up adding a texting plan for another $15. With taxes and fees it came in at around $40-$45 a month, not really an amount that I enjoyed paying.

Fast forward sixteen months and I was back at work with a new blackberry and yet another new number. As tempting as it was to ditch my own phone and go back to just paying for personal calls on my work phone, I just didn't want to inform every one of my contacts of yet another change in number. So I kept paying more than was necessary to keep my own phone. But a couple of months ago, while surfing through the internal employee website, I came the awesome corporate reates for  personal cell phones offered through my employer.

Here's what I got:

I went with the most basic plan of $13.50 per month. This gives me free evenings and weekends, free local calls any time to any phone on the same carrier (which includes Mr. Hutch), free unlimited incoming text messages and 1500 outgoing text messages (which for me, might as well be unlimted). I get no weekday minutes, but that suits me just fine as I'm usually sitting right beside my landline at work during that time anyway. Any calls I do make during the weekdays are only 4 cents per minute, so the very few daytime call that I do make do not add up to much. I also got the $35 activation fee waived, and a $50 credit to my bill (that's like three months free!). PLUS, because I was already a client of this carrier and not tied into a contract (I was just going month to month following the expiration of my one-year contract) I was eligible for a free super-fancy Samsung smartphone. Granted, it has no data plan, but at least I look cool in front of my friends. Just kidding! I have no friends.

Not only that, but I use it to record my mustachian meal plans in the calendar. Next stop: financial independence!

Net Rental Income: $600 per month

So, what was the net result of all this work putting in a rental suite? We took on a bigger mortgage, have had to up our house insurance and will be paying more for hydroelectic. But we get to collect monthly rent cheques. But we have to pay tax on that income. But wait, there are tax deductions we'll get too...

So where does that leave us? By my calculation we're clearing about $600 per month. Here's my breakdown:

Monthly Cost                    Pre-Suite          Post-Suite

Mortgage + Prop Tax       $1768              $2332
House Insurance               $86                  $103
Van Payment                    $338                $0
Hydro (electricity)             $118                $218 (est)
Water                               $30                  $42 (est)
    - Rental Income (net -   $0                    $959
    accounts for income

    tax and deductions)

Total                                $2337             $1736

Net Profit: $601

Now, out of this monthly profit of $600 will have to come any upkeep/repairs to the suite and any months that the unit sits vacant. In our market, there is a general vacancy rate of 1.5%, which means we can expect an average loss of $200 per year due to vacancy, or about $17 per month. Since the suite is brand new, I think it's reasonable that our repair costs will be fairly low in the short term.

I think we didn't do too badly!

Financial Update: October 2012

There have been lots of financial happenings around casa Hutch since I last posted. I've attempted to sum it up a few times but it just felt like things were too unsettled yet to log a post.  It's high time I put metaphorical pen to paper though and laid out where we're at.

First of all, the suite is DONE. Done and rented, yo. In just a few days our tenants will be moving in and monthly rent cheques in the amount of $1100 will start to flow. Awesome.

Second, the renovation has been fully financed with the equity in our home. Our mortgage now stands at $452,000 at 3.29%, bringing our monthly payment including property taxed to just over $2300. Ouch.

Third, we used some of that equity to pay out our car loan, to the tune of $8500. Both vehicles we now own free and clear. That feels pretty good, and we're no longer make the $340 payment every month.

Fourth, we have managed to pay down a big chunk of our line of credit and the balance stands at around $6000. Paying this remaining balance is now priority number one. I'm hoping to do it in about 4-5 months.

That brings me to my fifth point. I made a pretty major executive decision yesterday and shut down our biweekly RRSP contributions. Where previously we had been socking away $867 per month between the two of us, we will now be directing that towards the afore-mentioned line of credit debt. Because we're paying 5.75% interest, I'm willing to take the hit on retirement contributions in the short-term. Once the line of credit is paid off, we'll restart the RRSP contributions, hopefully at a higher amount.

And that is where I'm going next. Now that our financial situation has settled down and Mr. Hutch is back to his regular full-time gig, I can start some serious planning for the future. I have a (free) consultation with a fee-only financial planner in a couple of weeks. I've got a handle on where we stand financially and now I need an idea of where we want to go, and a map of how we're going to get there.

There's going to be lots more to write about in the coming weeks and months.

Cake!

This really has nothing to do with anything, but I made this cake and holy crap, it was amazing!

Beating The 50% Rule

Our rental suite is so close to being done. It's been a pretty long slog, particularly for Mr. Hutch. We have only a few things left on the to-do list: hanging closet doors, building a few shelving units, hanging the towel holders in the bathroom. Finishing-type stuff.

There is an aptly-named theory in real estate investing (The 50% Rule) that states that your monthly mortgage payment (principle + interest) on any rental unit should be no more than 50% of the monthly rent you receive. In our expensive city, there is no way this is achievable by buying new properties. But by building a rental suite within our existing home, we blew The 50% Rule out of the water.

So how about some numbers? We've got a few outstanding payments to make, but all told we should be in to this sucker for just north of $70,000. We added approximately $500 to our monthly mortgage payment in order to finance the building of our suite, but we expect to collect somewhere in the neighborhood of $1300 per month, plus we will enjoy some decent tax deductions. A pretty decent trade-off if you ask us, especially if you measure it by The 50% Rule.

Do I Wish I Had Done Things Differently?

Mr. Hutch and I are walking a pretty fine financial line these days, due to financing the building of our rental suite with the equity in our home. I found myself thinking the other day about my financial past and what I might have done differently had I known then what I know now.

I know. Like grey hair and back pain, this is sure sign that I am old.

When I was 23 and in my final year of university, my father died suddenly. My brother and I inherited a significant amount of money. This had a huge effect on my life for the next few years, and the consequences of the decisions I made then are still with me today.

The first thing I did with the money was probably smart: I paid off my student loan. With one cheque, my $12,000 debt was gone. It was my first and only payment on the loan. The enormity of this did not escape me at the time. I felt very fortunate on the one hand to be able to do this, and yet that it was at the expense of having my father meant it was bittersweet.

I had a bit of bad luck when I graduated university. I was all set to start working for one of my favorite professors in his lab. Just before I began though the job fell through, and along with it my reason to move into the apartment I had just rented downtown. On the upside, I suddenly found myself with no commitments and lots of cash in the bank. An enviable position to be in.

This is where I wonder if I could have made some better choices. I moved back home to mom, and basically had the kind of summer you have before you start your first job (which for me was 10 years earlier). I had a couple of other friends who were recent university graduates and in the same boat as me. We dubbed ourselves "team unemployed", and we made the most of that summer. We camped, we swam, we stayed at one guy's parent's summer home in the Gulf Islands. We drank beer and sat in the sun and watched seals swim in the harbour below. It was pretty great, and I still think of that summer fondly. One smart financial move I made at that time was to invest with a developer friend and build a spec house with my brother. We sold that house for a profit of around $20,000, without really lifting a finger. Not doing that several more times is one regret I have. I did look for work in my chosen field of wildlife biology all that summer though. Jobs were notoriously hard to come by in my field at that time, especially ones that paid more than a pittance. I was apparently "this close" to landing what sounded like an amazing job with a well-respected research institute in Ontario. Had I been chosen for that job and had I picked up and moved across the country that summer, I wonder how different my life would be now? Would I have met Mr. Hutch, had the Hutchlings? Would I have found my way back to the west coast, where my heart is? I'll never know the answers to these questions of course, but I have to imagine I wouldn't be where I am now.

After that summer turned to fall and still no biology job was forthcoming, I took a few internships in the hopes of beefing up my resume and eventually landing a paying job in my field. My inheritance subsidized a trip to New Zealand to study bottlenose dolphins that fall and winter (with a side trip to Fiji tagged onto the end of the internship) and a stint around home banding hummingbirds in the spring. Later that year I took off to Africa, Australia and Indonesia to travel for a while. When I returned, I took a position banding migratory songbirds in Oregon. All of these were incredible experiences, and I don't regret any of them. Had I not inherited that money, I wouldn't have been in the position to take these no- or low-paying, yet incredible jobs or take the trip that was purely for pleasure.

In fact, it was that final job in Oregon that sort of set me on the path that led me back to Victoria, and to my life today. I loved fieldwork, and intended to keep trying to make a go of becoming a professional biologist. Until one day when a realization came to me, crystal clear. I can picture now in my mind exactly where I was (walking along a trail beside a stream towards one of my mist nets), what I was wearing (pink tanktop, cargos, binoculars) and how the sun was shining directly overhead. And suddenly I just knew, without a doubt: this wasn't the life for me. It had a lot to do with my boss that summer, who lived and breathed ornithology and didn't care if he ever did anything else. He was willing to live in his car or couchsurf, going from short-term seasonal contract to short-term seasonal contract. And meeting him, I just knew that I didn't have that in me. I wanted a relationship someday, and to put down roots somewhere. I really just wanted to sleep in a bed that belonged to me, something I hadn't done at that point for a long time. I decided then and there that I would move back to Victoria at the end of that summer and try a new track.

I took a bit of a winding path once I was back in Victoria, but eventually it led to the decent-enough paying government job I have today. I put the final chunk of my inheritance down on a house with my brother and sister-in-law. That proved to be a pretty fateful decision as it was because of that house that I met the then-single tradesman named Mr. Hutch. I even made a tidy profit when they bought me out so that Mr. Hutch and I could buy the house we live in today.

So really, there not much point in wishing I had done things differently. Sure, I could have invested the money smarter or begun building my real estate empire. But oh did I have fun. I saw a good chunk of the world, grew up a bit. I still don't really know what I want to do with my life, but I'm happy with where I am and what I have. I think my father would be pleased to see what he afforded me.

Having Twins: Double Blessing or Financial Death Knell?

Parents of twins are constantly bombarded with comments from strangers. One that Mr. Hutch and I get fairly often is, "Hey, two for the price of one!". I used to respond to this comment the same as any other: with a smile, maybe a polite laugh or a lighthearted reply. Secretly though, I would seethe. And the last time someone said it to me, I gave a different reply. I said, "no actually, it's two for the price of two". Because it is. At least two, emotionally maybe even closer to three is what I was thinking.

Having two babies at once is not the same thing as having two babies consecutively. I don't care if your kids are nine and a half months apart. It's not "basically" the same as twins. Nope. No way. There are a lot of reasons why this is true, and the financial aspect is not insignificant. At first blush, it might not seem that having two children at once would have much more financial impact than having two a year or more apart. But I want to run some numbers.

First off, the Hutchlings were born very premature. I had them at 29 weeks and 5 days, and even then only by the skin of my teeth. Apparently I was very close to having them at just over 27 weeks, though I didn't know that until well after they were born. V spent 56 days in the NICU, N spent 68. Luckily I live in a socially progressive country with universal healthcare so there was no tab to be paid upon their discharge. Had they been born elsewhere (looks southward) that would have been one hefty bill. My very quick research led me to a figure of $3000 per day for the average NICU stay for a premature infant, or a total cost of about $400,000 for infants born at 28 weeks, not including surgeries. At $3000 per day, that would be $168,000 for V and $204,000 for N. Quite likely more as their stay was not "average". They spent a good portion of their stay in the level 3 NICU (requiring the most care and money), before progressing through level 2 and then level 1 (least care and money). Plus N had one surgery so who knows what that cost. I honestly don't know how insurance systems work in places without universal healthcare so I don't know what portion of that (if any) would have to be paid by the parents. Regardless, any portion of that would have to be significant. So far though, we're at $0, on par with any other parent in this country.

Secondly, there are all kinds of things that we needed two of. When you have kids one at a time, you can save a lot of stuff from the first to use for the second. Not us. Now, we certainly don't believe in having two of everything and we try to get by with the minimum. Some things are unavoidable however. We have a double stroller ($800), two cribs ($140 each), double the cloth diapers ($300 for 12, we have 24), two rear-facing car seats ($230 each) and two front-facing car seats ($72 each), two highchairs ($40 each), two portable playpens for when we visit the nanas (the cheapest one was $40, I think). I think it's safe to say that we spent over a thousand dollars more than we would have for only one.

Next is the daycare. As I mentioned, we spend around $16,000 a year on daycare for both Hutchlings. Yes, parents of two children born apart still have to pay for daycare for each child, albeit staggered. On paper it looks the same. But parents who have their second child before their first has gone to school get a break on daycare, assuming they take a year of maternity leave for their second (as would have been the case for me) and they don't send their eldest child to daycare for that year.  We can assume then that pulling one kid out of daycare while on maternity leave with the other saves $8000. This is a tricky one though, as whether that is a benefit or not depends on what mama is bringing home while on maternity leave. I have a relatively generous benefit package in this regard and so brought home about 78% of my salary in my year of maternity leave. That translated to about $12,000 less than a year in which I was working. So for me, taking only one year of maternity leave for two children actually looks like a financial benefit, to the tune of $4000. My situation is more complicated than that, though. I qualified for some extra maternity leave benefits for the period that the Hutchlings were in hospital. This extra leave paid about $5500 less than an equivalent period of salary. So the fact that I had two, and that having two was probably the reason why I had them ten weeks early, means any financial benefit I got by essentially serving my maternity leaves concurrently rather than consecutively evaporated, and then some ($1500 some).

One theme that I imagine will run through the Hutchlings upbringing is that they will always need roughly the same things at roughly the same time. Summer camps, sports fees, University. On paper it's no different than two kids needing those same things a few years apart, but somehow the financial hit just feels harder when you have to pay twice as much at one time.Of course there are some savings that go with having twins. In fact, I got two-for-one at a playgroup I brought them to this week. I saved nine bucks!

All in all, I think it's safe to say that having twins is more expensive than having two kids separately. But I never have to give birth ever again, and in my book, that's priceless.

How Did We Decide To Renovate?

We took a long time reaching our decision to add a rental suite to our home. Having an income suite in your home is pretty common in our city, especially for first-time buyers. Real estate is so expensive here that many people simply can't afford to buy a home without one.

Yet when Mr. Hutch and I bought this house, our first together, we were particularly happy to not have to be landlords. My brother and sister-in-law had done it, and we'd seen them have to deal with some major headaches (a basement suite that flooded with backed-up sewage while they were on holiday in Europe, for instance). We Hutches looked at each other and said, "glad we don't have to deal with that shit!".

Sigh, we were so young and stupid.

Fast-forward four years and two kids: it was suddenly apparent that our cute little house wasn't going to cut it much longer. We started discussing our options.

The first was to sell our house and buy a new one that was better suited for our family. We had a couple of realtors come by and give us an estimate of the market value of our house. They were pretty much in agreement: one came in at $470,000-$480,000 and the other at $475,000 to $485,000. Using a valuation of $475,000, I ran some numbers. I figured that if we sold our house at that price, once we paid the realtor's commission, paid out our line of credit, our mortgage and other various fees, we'd walk away with around $80,000. We agreed that to buy a new house with the kind of space we wanted, we were looking at paying at least $550,000. Once we paid property transfer tax on a house at that price, we would have only about $70,000 to put down. That's a high-ratio mortgage, so cue the extra CMHC insurance premiums (to the tune of nearly $10,000). That meant a mortgage of around $500,000. I think I vomited then. If I recall, my exact words were, "no f***ing way am I taking on a mortgage of a half-a-mil". Never mind that a house in that price range was still going to need work. That option died a pretty quick death soon after.

The next option was to price out finishing our basement. We brought in the big guns to give us an estimate; the kind of company that specializes in basement renovations and have all kinds of fancy ideas about digging them out, raising them up, pouring new foundations and the like. They told us that to get our basement structurally sound, to able to start building something would cost around $80,000. Again: I think I vomited.

I remember those being some pretty dark days. I felt totally trapped by our home. It was made doubly worse by the fact that I blamed myself. It was me who really pushed to buy this house, and for no better reason that I thought it was pretty. Now we had no viable options to get out and raise our family in the kind of home that we had hoped.

Some time passed and we decided to get a second, and even a third, opinion. We have a couple of friends who are contractors and both told us we could do something with our basement for less than the first company estimated. It wouldn't have ceilings quite as high, or as much usable square footage, but it would still work. One estimated we could finish a suite for around $70,000 and the other said we could do it for closer to $50,000 or $60,000. While still a lot of money, we figured these were numbers we could manage. Turns out the first contractor friend was just about spot on. At the end of all this, we will have sunk around $70,000 into the basement, and the additional workshop Mr. Hutch built in the backyard to house all his tools and things that could no longer live in the basement.

So did we make the right decision? I'm still not really sure. At the end of the day though, we own a house in a neighborhood that we love. We'll have some extra income for as long as we decide to rent out the suite. And having uncovered nearly every square inch of this place, we feel safe knowing that we've found and fixed all the problems. We wouldn't have that confidence in a new place, even if it had been renovated by someone else. Which probably wouldn't have happened anyway. We couldn't have afforded a home that had already been renovated!

So whether it was the right choice or not, we feel like we made a great decision for our family.

Renovation and Financial Update

Mr. Hutch and I are on the home stretch with our rental suite. The drywall is up and is being mudded and taped this week. Next week it will be painted and then we can lay the flooring. After that we can install the kitchen and bathroom fixtures and button up all the finishing work. We may just reach our deadline of the end of this month.

We're also on the home stretch financially. We financed this renovation by remortgaging our home and pulling out our equity. We knew all along that the amount we could access would make a really good dent in our renovation, but it wouldn't fund the whole thing. The plan was to remortgage again once everything was complete, in effect accessing the equity we'd just added to our home by building the suite.

We're now at the point where the total bill for all the work left to be done outweighs the cash we have on hand. It's not the most comfortable spot to be in. We're playing the long game though, and trying to keep everything in perspective. We chose to put ourselves in this risky position but we're banking on a big payoff, long-term.

Before we started this renovation, our house was appraised at $513,000. Now we have to cross our fingers that the new appraisal will come in at $560,000 in order to get the equity we need to pay the final bill. We'll have sunk in the neighborhood of $70,000 into this renovation, so on paper it seems like it should work. But it's a risk. In reality, I'm not sure we would have got $513,000 for our house had we decided to sell it. Just the same, I don't know that we'd get $560,000 for it now that it has a suite. It's a game though, the appraisal business. It's has an aspect of correlation to market values but at the end of the day, it's just someone's opinion. And opinions can be subjective. We'll just have to wait and see where the final numbers fall. 

Will This Be Our Forever Home?

I don't think there's one square inch of our home that Mr. Hutch has not had his hands on. Consequently, he has a different sort of emotional attachment to this house than I do. Don't get me wrong, I love our home. When we first walked through it when it was for sale, I took one step inside and decided that I we should buy it. I still don't know if buying this house was a good decision. We ended up sinking a lot of money into it to fix so much bullshit that the various owners over the last century have done to it. Regardless, it's our home now and once the basment is completed, there should literally be nothing left to do for a good while. We're here now, and we're here for the long haul.

Problem is, I can see us outgrowing the space. I'm all for living simply, and with less. I don't want lots of space and lots of rooms that I have to spend lots of time cleaning. But I have visions of literally stuffing two teenaged boys into our tiny second bedroom, arms and legs sticking out of the door. And really, don't teenaged boys deserve a bit of privacy?

One option in the future is to take over our basement suite. Each of the boys can have their own bedroom, plus their own bathroom and rec room space. This would require a third renovation, however. There is currently no interior staircase between our two floors. We'd have to find a way to tag on a staircase, probably to the back of the house where there is currently a deck. It wouldn't be cheap or easy, and would require a variance from the city. I don't know that's it worth the money, or the hassle.

Mr. Hutch has come up with a second option. He said to me recently that he will never sell this house, now that he's spent so much of his time and our money getting it up to standard. He's also called in a lot of favours from his tradesman friends and he can't see letting it go. His idea is to keep our current home as a two-unit rental property and we buy another home for our family.  I like this idea, but I don't know if we can swing it financially.

To buy a new home, we'd be looking at a $100,000 down payment minimum, and quite possibly a good deal more than that. In order to save that amount, I have considered stopping our monthly RRSP contributions and instead putting that money (plus a bit more - courtesy of the basement suite) aside in a short-term low-risk investment. After five years we could have around $60,000. We also could consider remortgaging our current home to the maximum, or 80% of it's value. Depending on the value of the house in five years I figure this could give us at least another $50,000 but maybe $75,000. I think I'm being realistic with these numbers.

Assuming the 2-unit rental carries itself, i.e. the rental income from the two units pays the mortgage, taxes and leaves a bit left over for repairs (which we expect to be minimal for the forseeable future), I think this could be a sound investment. Even if we do have to drop money into it every month, it could still be worth is as we'll end up with a paid-off home in 25 years. We then have the option to keep the second home as a rental and reap the monthly income in retirement, or sell the sucker and add to our nest egg. It's anyone's guess what the house will be worth in 25 years.

I'd love to hear some feedback on this plan. This is just the way I look at it, but I know others will have a different take on it. What do you think?

Mrs. Hutch’s Home Economics: Using IUDs as Birth Control For Fun and Profit

A few years ago, for personal reasons, I decided to switch up my method of birth control. I had been on the same pill since I was sixteen years old and needed a change. Mr. Hutch and I were in a committed, monogamous relationship and we didn’t intend on starting our family for a few more years. After weighing my options I decided to take an IUD out for a spin.

Now, an IUD is a pretty big commitment. Saying I took one “out for a spin” is pretty flippant. It’s not something that you can easily get rid of if you decide that it isn’t for you. Ideally, you want to keep that sucker in there for at least 5 years, maybe even 7. So I talked to my doctor and did a fair bit of reading before deciding to go ahead. My doctor didn’t “do” IUD insertions, so I had to have that bit done at my local sexual health clinic (for all you old-timers, we used to call it Planned Parenthood). Being the sexual-health police that they are, the clinic imposed a mandatory “counselling” session. It was kind of annoying but I just told them my deal and really, it was fine.

There are two kinds of IUDs: ones made of copper that release no hormones and ones made of plastic that release the same hormone(s) as in birth control pills, but at a much smaller dose. I chose the hormone-releasing type and that, my friends, is where the “for fun and profit” part began. I don’t remember my reasons for choosing the hormone-releasing IUD. I’d imagine it may have seemed more bullet-proof as the hormones inhibit ovulation while the copper IUDs do not. I admit this is an entirely invalid point on which to base one’s decision because both types are equally effective at preventing pregnancy. Whatever the reasons, my decision to go with the hormone-releasing IUD was about to unleash a whole lot of unintended awesome on my life.

The happiest side effect of the hormonal IUD (aside from not getting pregnant) is that I have NEVER had a period while using it. Granted, I had the thing removed after about two years when Mr. Hutch and I decided to start trying for Hutchlings - a bit sooner than we originally planned - so I had a couple of periods before getting pregnant. But as soon as I got the all-clear from my doctor following their birth I had a new one rigged up. Again, I haven’t had a period since. Two periods in the last four years. Life changing.

Ladies, consider for a moment how different life would be if you never got your period. No mood swings, no bloat, no cramps, no headaches, no blood leaking out of your vagina for the better part of a week that needs to be continually mopped up! I’m telling you: AWESOME. Every day is just as carefree as the last, and I’m as emotionally balanced as one could expect a mother of 18 month-old twins to be. This must be what being a man feels like (in a good way). I’m not kidding, this is what I call fun. I’m guessing Mr. Hutch would agree.

Now for the profit:  IUDs run around $300 but like I said, they are intended to last for a minimum of 5 years. My extended health plan covers all forms of birth control so the upfront cost, while significant, doesn’t factor for me. $300 over five years works out to only five bucks a month, less than any birth control pills I know of. Stretch your IUD for 7 years, which my doctor says is perfectly fine to do, and you’ve saved even more. Now add in the fact that you are no longer buying tampons, pads, diva cups or any other method of clean-up. No more Advil or Tylenol for cramps. Your drugstore budget just went through the floor!

Disclaimer: Obviously, I’m a fan but I’m no doctor. Don’t take my advice when choosing your method of birth control. Explore your options with a qualified medical professional.

What Should We Do With All That Rental Income?

Progress continues on our two-bedroom rental suite. We’ve turned the corner on demolition and repair and are on to construction. As I type, walls are being erected. It’s exciting. One of my favorite pastimes lately is deciding what to do with the extra cash flow once the suite is rented. It involves lists, charts, spreadsheets and calculators. I love it.

We expect to get somewhere in the neighborhood of $1200-$1400 a month in rent from the suite. We’ll also be able to claim some tax deductions (which of course we’ll include in our T1213 form every year) which I’d estimate will add maybe another $200 per month. So we’ll effectively add another $1400-$1600 to our income every month. I can’t wait.

Now for the downside. Here’s all of our debt:

1. Car loan: balance is about $9000, interest rate fixed at 6.89%

2.  Line of Credit: currently no balance, but there will definitely be one by the time the rental suite is finished. I think we’ll be lucky if we end up with a balance of less than $25,000. Interest is variable at Prime + 2.75%, or 5.75% today

3.  Income Tax Arrears: I owe about $4000 to the government in income tax. This is a one-off situation and is related to my recent maternity leave. I have worked out a payment plan that will have it paid off in seven months. Interest rate is fixed at 5%

4.  Mortgage: we just refinanced in June 2012 in order to fund this renovation. We owe $410,000 at a fixed rate of 3.29% and if we follow our current schedule, it will be paid in about 26 years.

Obviously, paying down any and all of these debts is an option. I have other ideas for the money too though. Mr. Hutch and I currently put away $400 every two weeks into our RRSPs. Right now we’re buying mutual funds but I want to change that. Hopefully that will be the subject of a new post in the near future. We also put aside $100 into an RESP every month for the Hutchlings. I want to increase our contributions to both the RRSP and RESP. We’d also like to save for a new vehicle for Mr. Hutch, and maybe the odd family vacation (nothing extravagant).

I think we’ll do a combination of the following:

1.  Pay off the car loan. It’s pretty obvious to me that this has to go as a top priority. It’s essentially like getting a guaranteed 6.89% return and that is hard to beat. Once we’re no longer making payments, we’ll also have an additional $338 per month to direct towards our other goals.

2.  Increase our RESP contributions. The government matches contributions 20% up to a maximum of $500 per year, per child. That is one sweet deal. We could contribute $416 per month for both Hutchlings before we max out the government contributions. I’d like to get close to that.

3. Pay down the line of credit. Again, we’re not going to find anything close to a guaranteed 5.75% return anywhere else these days. Depending on how much our balance is once the renovation is complete, I’d even like to pay off the car loan with the line of credit and then focus on paying down the line of credit. I’d only consider that though if we can roll in the car loan and still have a good cushion left.

4. Increase our RRSP contributions. From what I understand, I can be fairly confident in assuming an average return of around 6-8% for our investments, but of course this carries a degree of risk. It could be more, it could be less. Of course, the more we contribute to our RRSPs, the bigger the tax return. Or tax “keep”, I should call it.

5. Increase our mortgage payments. I’m going to resist the urge to be too aggressive on this. A guaranteed 3.29% return is okay, but our money is probably going to work harder for us elsewhere (like our RRSPs). I’d like to pay it down only to the extent that it is gone by the time we want to retire (much earlier than 65 if all goes according to plan).

6. Save for a new truck, some family vacations and other rainy day-type stuff. Because this is short-term, this will probably go into a high-interest savings account TFSA that earns 1.2%.

So there you have it, the start of a plan. I’ll let you know how it all goes down once that rental income starts rolling in.

How Mrs. Hutch Sticks it to the Taxman

Any parent will tell you that raising children is the hardest job in the world. Any parent who isn’t medicated, anyway. And it’s true, you put up with a lot.  Sure you get to enjoy the world’s sweetest slobbery kisses, but those kisses only go so far. That smear of shit on the wall still isn’t going to clean itself, you know what I mean?

But there is one big fat juicy reward that goes with parenting: tax breaks. Mr. Hutch and I pay an honest-to-god saint to take care of the Hutchlings so that we can work at apparently more important jobs. We gladly hand them over to her with $65 every weekday (we get a $5 break per day because there are two of them – totally makes carrying two babies at once worth it).  $65 a day, 5 days a week, 48 weeks of the year, plus a $200 deposit for the remaining four weeks, works out to nearly $16,000. Ouch. But, because of some previous government’s infinite wisdom, those 16 Gs are tax deductible in Canada. Assuming a marginal tax rate of 29.7%, we’d get $4752 back on our tax return. That is, if we were stupid.

You see, I’d rather not give the government my money in the first place only to have them return it to me, interest-free, next April. I have better things to do with it right now. Luckily, there is a way to do just that. The Canada Revenue Agency will allow you to not have the income tax withheld from your paycheque on the amount of your tax-deductions. In the Hutch family, this means RRSP contributions as well as child care expenses (we just stick with these two and don’t factor in other minor deductions like tools for Mr. Hutch or charitable contributions). If you or your employer contribute to a pension plan, they essentially do this already.

It’s called the T1213 Request to Reduce Tax Deductions at Source for Year(s) ____. Print it from the CRA’s website and mail it in. If you can’t print for some reason they’ll even mail you a few copies if you ask. Once your request is approved, you’ll get a letter instructing your employer to stop withholding income tax on whatever amount is warranted in your situation. 

Since we started doing this my bi-weekly paycheques increased by a couple hundred bucks. Pretty sweet, if you ask me. And it makes that monthly cheque to the daycare a bit easier to swallow knowing that my "refund" is already in the bank. And it's not going anywhere until I say so.

Mrs. Hutch’s Home Economics: Breastfeeding for $9.38 per month*

Just this morning, I found myself in an interesting position.  It’s one that I don’t have a lot of experience with, but that has certainly been more frequent since I had children: being on the receiving end of judgement.

This particular judgement was of the fact that I still breastfeed the Hutchlings at 18 months old.  It’s generally only once a day, after their bath in the evening, unless they are sick or on an airplane or in some equally traumatizing place. N, in particular, is a boob-monster. I’m pretty sure he would like nothing better than to sleep all night, every night, while nursing.  We never did the family-bed thing, mostly for the logistical factors that come with twins, so it’s not like he ever had the opportunity.

Curiously, I have found that this particular judgment has only ever come from people who are a generation older than me. It has even come from within my own family. The person who said this to me today did so, I believe, with the best of intentions. She is of the mind that weaning the Hutchlings will make them more independent. I agree that independence can and should be encouraged at this age, but I’m not convinced that denying them the breast will accomplish it.

We all know that breastfeeding saves money over formula feeding. When the Hutchlings first came home from the NICU, my nurse and lactation consultant told my husband that at the end of their first year, he was to take me on a week-long holiday to a very expensive resort on the coast. She claimed I would have saved us about $6000 by breastfeeding twins that long. I have no idea if that figure is accurate. I will say though that I ate so much more in those early days when I was a milk-machine that I may have eroded a good portion of those savings with a higher grocery bill.  Who knows?

We also all know that many women who formula feed don’t do so by choice. I want to be clear that I was very lucky in that I had professional help in the form of a lactation consultant, and with that help I was able to produce enough milk for both the Hutchlings, and then some. Learning to breastfeed two premature infants was not easy though. Many people in those early days expressed surprise that I was doing it. I’m not sure if it was because I was physiologically able to, or that I was choosing to. I guess I could have given up but honestly, the thought never crossed my mind. In some ways it may have been easier, but in many ways it wouldn’t have. The thought of washing all those bottles alone would have made it out of the question for me.

So, in answer to the comment from this morning: I’m not going to stop breastfeeding. I can’t see any good reason to. Heck, if it replaced one cup of cow’s milk, I saved $0.31 today.

*Where we live, 4 litres of cow’s milk is $5. 250ml per day is $0.3125, or $9.375 per month.

What does Mrs. Hutch do for cash?

What don’t I do for cash? I think I’ll explain that statement in a future post. For now, I work for our provincial government in a job that is “good enough”. It allows me a good degree of flexibility and autonomy (worth a lot, in my book), and decent enough pay for what I do. It generally isn’t taxing, physically or mentally. Though not my dream job in any sense, I feel it’s an okay choice for now and offers some stability while Mr. Hutch pursues his self-employment dream.  I don’t see myself in this job forever, and I’m even beginning to think I may not spend the balance of my career in government. That’s new.

Lately, I’ve been secretly wondering if there will be a place for me beside Mr. Hutch one day, helping him to run his empire.

What does Mr. Hutch do for cash?

I married a man with many redeeming qualities. Not the least of which is his handiness. Mr. Hutch is a tradesman. Here’s a hot tip for everyone out there: you can do much, much worse than marrying someone in the trades. I love Mr. Hutch for many reasons. But when we had one two-month old Hutchling still in the NICU and one two-month old Hutchling at home and our roof started to leak, I loved him just a little bit more for not being a pencil-pusher.

As I mentioned, we are (well, he is) building a secondary rental suite in our basement. Mr. Hutch is currently on hiatus from being a journeyman worker-bee and is working on our renovation. We figure it makes more sense for him to do it than is does to pay someone else.

Once the renovation is complete and all buttoned-up with paying tenants, Mr. Hutch hopes to go into business for himself. This is very exciting to me, and I imagine it will provide a wealth of blog material in the future.

Who are the 4 Hutches?

Mr. Hutch and I are just a couple of kids living the dream.  Wait! One of us turned 40 this year (read: not me). I guess we’re not really kids anymore.  Heck, can you still be kids when you’ve got two of them yourselves?  That’s right, the Hutchlings, N and V, arrived just a little over 9 months after our wedding.  Apparently we’re very efficient at reproducing.

We’ve lived in our 1906 Victorian for four years and in that time Mr. Hutch has renovated almost every square inch of that sucker.  I mean literally top (a new roof last year) to bottom (just poured new foundation footings last week).  We are currently immersed in a full-on basement renovation in which we are building a secondary rental suite.  I mentioned we live in one of Canada’s most expensive cities, right?  Hutchlings that come by the pair aren’t cheap.

I tend to geek our over our family’s finances. I have a lot of dreams for us. I have spreadsheets, plans and more spreadsheets and plans. I’m always thinking of how to get ahead in this expensive city, and at this expensive stage of our lives. Hence this blog: I figured I might as well get it out so that it isn’t rattling around so much in my head. Yeah, we’ll see.

4 Hutches is about a family.  Follow us as we chronicle our financial journey living in one of Canada's most expensive cities.