Grab your coffee this is weekend reads and the subject that what could go wrong will go wrong when you own a home and you drive some older vehicles.
Got emergency fund? Got squirrels?
It was 1 year ago that I left my full time job. Of course that means that I also left my pay cheque behind as well. We entered this new life stage with an emergency fund in place. That’s a financial planning staple; clear your debts and build up that emergency fund. The rule of thumb is that you hold 3 months to 6 months of total spending needs in a savings account. You need those monies readily available for the emergencies that have a habit of showing up with too much regularity. If you can make some interest on that emergency fund, sure that’s a bonus but these are certainly not long term growth funds. We’re looking for liquidity and a savings boost.
You might head off to a Simplii Financial or Tangerine or EQ.
Canadian Robo Advisor Wealth Simple also offers a higher interest savings account that comes with an interesting spare change roundup feature. That savings account currently pays 2% interest.
How we put that emergency fund to the test.
Soon after I said goodbye to my pay cheque, we said hello to troubles in the greenhouse kitchen, those squirrels will show up later in Round 2 of the adventures on the roof. I had noticed that the rain water was not flowing properly off of our greenhouse kitchen roof and into the eavestrough. When I tried to fix it up, I noticed that the wood frame was was soft, like mush. The wood had rotted. We had hired a friend of the family to lay new shingles on that roof several years ago. Improper installation = need for an entirely new roof and fascia and eavestroughs. The tab was a few thousand dollars.
Round 2 for greenhouse kitchen wars – enter the squirrels. While we used a highly recommended builder and specialist for the rebuild (they did an amazing job), a family of red squirrels found it quite easy to chew through part of the plastic cap on the roof vent. They set up home in the greenhouse kitchen area. While they could not get into the house, we could hear them running around and being very industrious.
Squirrel eviction notice = $400.
Ford = Found On Roadside Dead
And yes, then there are the vehicles. My semi retirement stage has included considerable time at Scarborough Auto and also Degroots Auto. Me and Sammy, the owner of Scarborough Auto, are now best of buds. We see a lot of each other. I know the mechanic quite well. We’ve been on so many test drives I feel like we’ve done a cross Canada tour together.
My wife and I don’t like debt, but driving 2 older vehicles has not been much of a money saver and it has certainly been more of a hassle. Our 2009 Ford Flex has over 250,000 kms on the ticker, the 2010 Hyundai Sonata has that beat travelling some 260,000 kms to date. I can look at the recent bills for each and see $900, $400, $600, $1,100, $550, etc. etc.
I give. We give. This week we leased a new 2019 Toyota Rav 4. Sorry Sammy, it was nice to know ya.
The strategy moving forward is to do a perpetual lease with Toyota vehicles (best built vehicles on planet). We will hopefully always have 1 vehicle that is potentially 100% worry free. That was the case previously when we were loyal Toyota owners. We hope we get a repeat. A car payment will be a permanent part of the picture.
We’ll pay $400 per month, but the vehicle(s) should not eat into our emergency fund.
We will kick the Ford Flex to the curb. That was a wonderful and spacious and comfortable trip car for so many years. We had many family baseball and hockey tournament trips and vacations with our kids. We’ll miss that ride, but not the recent bills and headaches.
We’ll spend the additional $1000 that is required to get the Sonata in shape, it needs some front end work and new all season tires. But that car has been mostly reliable. It will not need to do much over the next 3-4 years as we prepare to become a 1-car ‘family’.
Lesson: driving vehicles past the 225,000 km range is too much of a hassle and not necessarily much of a money saver.
At least I’ve got my new deck.
I also gave up on trying to patch and repair my deck. The wood was old and I was continually making repairs, replacing boards and rebuilding flower boxes and more. We hired a ‘deck guy’ and he took away the old deck and had it rebuilt to the same specifications using the existing joists and frame.
Cost = around $5000.
Other emergency fund needs? We had some basement flooding just previous to my June 2018 semi retirement date. The carpet was ruined. Not yet replaced. We needed a new water heater. The kitchen cupboards and drawers need fixing or replacing. We need new windows here and there. The front door needs replacing. The front steps need to be rebuilt. They are flagstone and that wears out easily over time. My repair efforts on that front are more than wanting. Our central air conditioner is not working as well as it should this Summer.
Don’t skimp on your emergency fund.
As you can see from all of the above, and as many of you already know, life’s financial surprises can add up. Financial planners are not being overly cautious when they suggest an emergency fund that might be in that range of $30,000-$50,000. Some may require even more.
I really like this post with financial planner Owen Winkelmolen lending a hand on myownadvisor – Age 60, retirement on a lower income – can I do it?
Boomer and Echo is busy as per usual, this week Benjamin Felix offered a guest post with Renting in Retirement and Jonathan Chevreau delivered a thoughtful post on What I’ve Learned So Far In Retirement.
Milliondollarjourney the retirement theme with Starting to Invest Later in Life Can Still Result in a Comfortable Retirement. I had also penned on that subject for Tangerine with Playing Catch Up With Your Retirement Portfolio.
And for MoneySense Dan Bortolotti answers Can you use the Couch Potato strategy to build a dividend-paying portfolio? Of course, Cut The Crap Investing will have a different answer to that. Investors can read and decide as we say on Seeking Alpha.
And speaking of SA, this week I offered Retirees, Don’t Say No When The Market Offers You a Nice Bonus. And on this site, Cut The Crap Investing – One Year Later.
Thanks for reading. Please have yourself a wonderful and safe long weekend.
Disclosure: Tangerine is an affiliate link. If you decide to go that route you can also use my Orange Key code 32968172S1 for an additional ‘reciprocal bonus’. For more on me and disclosures, click here.