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.