Let’s Talk Money

Moving to Canada costs money, lots of money. So far we have spent $3,800 USD for the both of us, without counting the $7,000 USD in lawyer fees, and we haven’t even moved there yet. We still have to pay for travel expenses and apartment deposits, among other things.  We also had to prove to Canada that we have had at least $15,312 CAD ($12,300 CAD for single) in the bank for a period of 6 months in order to be eligible for Express Entry. In short, you are going to need some cash.

But don’t feel discouraged. Although it might seem difficult at first, I really think that with a good budget and some discipline anyone can get there. Before deciding to move to Canada we had some credit card debt, a car loan with negative equity (we owed more than the car was worth), and very modest savings. Between the two of us we were saving an average of $2,000 a month. Now one year later we have no debt, we are saving an average of $4,000 a month and have one year’s worth of our salary in a savings account.

Below, I have outlined the recipe we used to get our finances in order. It worked for us and I think it might work for you, too.

1. Know where you stand: What good is a map if you don’t know where you are?

Do you know where your money goes? How many credit card accounts do you have? Do you know how much you are spending a month on restaurants? How about on transportation?  We sure didn’t. But you will need to know all of this if you are going to create an effective budget. For us the solution was getting a “mint” account. This website/app lets you see all of your accounts in one place, create budgets, and track your spending. Be prepared to be shocked by what you find!

2. Set your goals: What good is a map if you don’t know where you want to go?

One great feature about mint is that it lets you set goals and then calculates how much you need to save a month in order to reach them, and it also helps you track your progress. So set your goals! Be aggressive, but realistic. Below is a screenshot of what goals look like in mint.

3. Create a budget: This is your map, follow it!

After you set your goals you will use them in calculating your budget. Mint is also very helpful in this aspect, as it will let you set your budget by category and it updates in realtime.

This is what your formula should look like each month.

Budgeted Expenses = Monthly income – Goals

So if my goal is to save $1,200 a month and my monthly income is $3,000, that means that my budget for monthly expenses is $1,800.

If you are like us, the “budgeted expenses” is likely going to be a lot lower than what you are used to spending. This is where the hard part comes in. Your objective will be to make this number work. Below are some suggestions on where you can cut spending, but don’t limit your self to these, go out and do some research of your own.

4. Cut the fat, and then cut some more: This is where my cool map analogy ends… Sorry guys

Once you know where your money is going and you have goals set, it is time to start cutting spending. Be ruthless, remember that you are not living under normal circumstances, you are doing something extraordinary and it will require extraordinary actions and sacrifices. Keep your goals in mind and remember that this will not last forever.

Below are some examples of where we were able to save the most money. But don’t stop here, make sure you question every single expense. Get creative!

  • Housing: We were able to save $300 a month just by moving to a cheaper apartment. While looking for a new apartment make sure you take into account lease terms — if you plan to move to Canada in 10 months you shouldn’t be signing leases for 18 months. Remember it can be expensive to break leases early, so timing will play a big role. Also take into account location. We were able to save a lot of money on transportation by living close to a train stop.
  • Transportation: At the beginning we had two cars, one was paid in full and the other one wasn’t. We were able to save about $400 a month by selling the car with the loan. Not only did we save money on the loan payment but also on the full coverage insurance. The reason we were able to do this was because we moved closer to my husband’s job so that he could take public transportation to and from work. Therefore, this might take a little more planning, but it is well worth the hassle. I would also like to mention that the car we sold had negative equity, so we had to pay to sell it. However, the savings were well worth the initial expense. Always do the math.
  • Utilities/TV/Internet/Insurance: Downgrade and shop around. You will be surprised how much you can save by just asking for a better price.
  • No shopping: You have no place in a mall. Just don’t go, remember you have a mission. Everything you need you already own. Repeat with me: “Everything I need I already own”. Obviously this excludes food shopping, but while we are on the subject, consider grocery shopping at a cheaper store. Also, coupons are your friends, and so is chicken.
  • Do some research: There are tons of great ideas out there for free. Maybe start here: https://www.daveramsey.com/blog/ways-to-get-out-of-debt

5. Tackle your debt

First of all, there is no rule anywhere that says you have to be debt free to move to Canada. When you are requesting letters from your bank to submit as proof of funds (see step 2) they are required to list any outstanding debt; however, you most likely don’t have your debt in the same bank you have your savings account.

With that being said, you probably don’t want debt hanging over your head when you move to Canada, especially not “stupid” debt. I consider “stupid debt” to be car loans and credit card debt. This debt severely hinders your ability to save money, especially because it usually carries very high interest rates, and is, for the most part, unnecessary.

We took the band-aid approach with our debt, and made it our priority to pay it all off as fast as humanly possible. We did the math and it was simply the best financial decision. Obviously, this only worked for us because our debt was relatively small. I know that if you have large student loans this is simply not a possibility. But if you have a lot of debt my suggestion would be to try to tackle your “stupid debt” first.

Warning: Remember that you must keep a certain balance in your savings account for 6 months, so make sure you do not compromise that in order to pay down debt.

6. Moving your money to Canada

Great! So now that I am “rich” what is the best way to move my money to Canada? How do you transfer 401k funds to Canada? Can you keep a stock brokerage account in the U.S. and manage it from Canada? Good questions! Unfortunately, I don’t have these answers yet, so if you do please share with me! Once we actually get to this step in our journey I will share with you guys what we learned, so we will leave all these for another post.

5/27/18 update: Hi, we have since moved our money to Canada. Find out how we did it here.

Hi guys! Sorry I hadn’t posted in a while, I had been sitting on this one for a while but just hadn’t had time to proof read it. Life has been a little crazy lately. We finally have a move date, it is February 16! It is fast approaching so I have been keeping busy trying to sell all our stuff on Craigslist, getting our car winterized (we are driving there), buying arctic parkas, and just spending some time with family before the move. Anyhow, just wanted to give you guys a quick update on where we are.

Stay warm,

-D 

2 thoughts on “Let’s Talk Money”

  1. Thank you for the post. It’s really eye opening, in a good way, how expensive the process can become. Your post really helped me gain some perspective and show me I have stuff to work on still.

    A little over a month to go! How exciting! Happy for you.

Leave a Reply

Your email address will not be published. Required fields are marked *