It has been quite the adventure the last few weeks. Between packing, unpacking, working overtime, figuring out the difference between broad and comprehensive insurance, and many other tasks we didn’t even know we needed to do – we have been overwhelmingly busy. Aside from the potential case of carpal tunnel (there are WAY more papers to sign than I expected), we’ve made it into our home relatively unscathed. And then decided to get a dog.

My, what adventures we have had so far. Tyler already broke something, but thankfully his dad knew how to fix his mistake. I came home one day and suddenly there was a Husky, Doberman, and Bordercollie in my yard, all at once. This is apparently, how you meet the new neighbours. Eccentric retired teachers, stay-at-home moms (now grandmoms), families who sit on the step and play guitar, and a gaggle of children who bike up and down our street. I feel like I’ve been put into another life almost overnight!

Before I jump headfirst into blogging before & afters, furniture steals, renos and improvements, and general lifestyle posts that are already flooding the internet, I thought I would get super gritty for a second. Yup, I’m going to talk about finances.

It seems to be the case that people in my age demographic (ie. Millennials), think that they can’t afford living on their own, much less owning property. There are tons of examples through tumblr and the interwebs. “How do you adult?” “Life goals: Tiny apartment with enough money to eat” and then the picture is of a girl lying in bed with Calvins and string lights. Posts like these seriously disturb me. I know each province/state/country has a whole different economic ecosystem, but from my experience, living on your own takes a lot of planning and smart choices. (Not spending your last $50 on a pair of underwear for your insta feed). It’s a commitment that should be taken seriously, because you’re kind of signing up for 20-30 years of bills. Which follows with a shit ton of equity and obviously still bills. Doesn’t sound as glamorous as I want it to.

When it comes to living independently, there are a TON of different opinions. “I have to live with my parents until I’m 30 so I can save a downpayment/pay for school/build my dream car…” Then there is the whole debate on Renting VS. Owning. People feel like it’s burning their money, financial advisors say you can come out ahead if you invest the difference between your rent and what home ownership would cost. In theory, this is a great idea. But most people have a difficult time managing their money, so what little they have left (if they have any) goes towards entertainment and experiences. Some feel that owning a house comes with too many bills to be productive, and too many responsibilities. In the end it comes down to what works for your lifestyle. Renting provides you a temporary, leased term. Usually for a year, with option to renew. Your rate can only grow by a certain percent (for instance, my rent went up $17 when I renewed).  You can choose where you live, and move whenever your term is up or find a subletter. You can rent an apartment, basement, whole house, and get friends in on it too, which definitely helps keep costs low. BUT, in the end, all you’re paying is someone else’s mortgage. Owning is a whole other ball game. Your mortgage is going towards your home’s equity. In Winnipeg, the two most popular options are condos or houses. Each have their merits, but I personally think condos end up being MORE of a hassle (throw in your regular mortgage, utilities with smaller square footage, conjoined buildings and potentially changing condo fees, etc.) With home ownership comes a lot of different bills from a lot of different places. After the down payment, mortgage, mortgage insurance/life insurance, house insurance, utilities, property taxes, lawyer fees, land transfer taxes… The works. It is A LOT to suddenly have to endure, which is why I am so glad I prepared myself early and had a chance at living independently WITHOUT a mortgage first.

Sounds confusing? It is! But that doesn’t make it impossible. It just means you have to do your homework. Let’s crunch some numbers here:

Living at home
$0-$500 household chores/bedtime schedule
Some of those living with their parents are not expected to contribute financially towards any cost of living. Sweet! This is great for school, but if you’re not attending post-secondary, it creates bad financial habits, unless you’re into saving money towards future goals. Not every dollar you earn is “fun money” when you’re on your own, which is why I’m glad I got used to paying rent at home.

$300-$1200 + damage deposit
Winnipeg is full of rentable living spaces. Apartments come in Bachelor ~$400-600 (bed, kitchen, bath) 1 Bedroom ~$700-900 (bed, kitchen, bath, living room) and 2-3 Bedroom ~$1000-1200. These are pretty loose numbers, and they vary greatly by location. Houses are rented out by floor, or sometimes by the entire house. This is when living with friends is great! When you all sign the lease together, ALL of you are responsible for payments. So if one friend dips, you’re forced to pay for their portion unless you all want to end up with bad credit and NEVER get your damage deposit back. Ask questions about utilities (some places include them in the rent), laundry (ensuite vs. in building), parking options, history of bedbugs, crime around the hood. Be aware that some places may lie, so get everything you agree to in writing (your lease agreement) and do not sign until you are comfortable with everything. Go and get content insurance ($120-200 a year). Remember to take photos of the place before you move in so you have evidence if they try to keep your deposit. If something goes wrong (lightbulbs out, shower not working), your landlord is responsible. If they don’t fix the issue, you are allowed to refuse paying rent until the issue gets solved. They cannot enter your suite without notifying you (or thinking you are dead). You can also dispute rent increases if you feel that nothing has been done to your building or suite that constitutes a rent increase. Any issues can be brought to the Rental Tenancies Board if it cannot be solved with your landlord or management company.

$1800-$???? + down payment
The first step to home ownership is being honest with yourself and who you are buying with. You need to know about combined income, debt, financial obligations (cell phone bill, car payment), and current financial lifestyle. Track your finances for a few months to get a pattern, and re-evaluate habits. A healthy financial outlook means you pay your bills on time (starting with the highest interest first), contribute a determined amount to savings every paycheque, and don’t spend outside your means. If you have debt, it is good debt (education, tools for your job, etc). Not $5000 of credit-card debit from bar nights that you have chosen to make minimum payments on. If you’re not at this place quite yet, don’t feel bad, but do realize it needs to change before you are ready to be responsible for a home. After you evaluate all of these things, you are ready to start moving towards your goal of home ownership.

1) Save your downpayment. Set goals. Work overtime, work two jobs. Whatever it takes, work towards it. In Canada, the minimum downpayment is 5% of your total house cost. But when you pay less than 20% down payment, you incur CMHC fees, which is extra money added onto your mortgage (so the bank has peace of mind), depending on the percent you put down. If you can, save that 20%! But for most, it is pretty unachievable in a first home. Don’t feel down. If you saved $40,000, would you put it all towards your house, or would you use some of it for furnishing, painting and renovations that need to be done in the first year? Also, keep in mind you should keep an extra, untouchable emergency fund for exactly that, emergencies. (3-6 months of your average cost of living).

2) Get pre-approved. Shop around for the best rate. In my experience, always go with credit unions. They offer lower rates than banks. Ours was at 2.49%  and when we looked at a bank it was 4.49%. When you have 6-digit debt, that makes a HUGE difference. Know that if you get pre-approved for $300,000, that does not mean that you should purchase a house for that amount. Your pre-approval amount will be at the top of your debit-income ratio. If you buy a $300,000 home, but spend half of your monthly earnings on your mortgage alone, that is not a healthy or achievable financial balance. There are two types of mortgages: Fixed rate locks in a rate for a certain number of years. Variable means your rate can change as the market changes. Currently, we are at an all time low for mortgage rates in Canada. Taking a gamble and hoping for an even lower percent with a variable mortgage might spell trouble. I find comfort in knowing that my mortgage will be EXACTLY the same for 5 years. After that, you get to renegotiate the rate. Lastly, amortization means the period of years you will pay the entirety of your debt. Most people opt for between 25-30. The longer the span, the more you pay in interest, which is essentially lighting your money on fire and tossing it to the wind. If you can, suck up an larger payment now, and pay less money overall. You can also make extra payments once per year or the period between the end of your fixed rate and the beginning of your new term.

3) Find a realtor. When you are not selling a home, a realtor works for you, for free. They make money on the sale of the home, from the seller. Choose someone you trust, as some realtors will only steer you in the direction of houses they are selling (they make double the money if they are the one listed on the for sale sign). They may also steer you away from com-free (real estate free sellers) homes, which means you could be missing out on your dream home! Knowing this, shop on your own. Go on and find houses in your area. Sending your real estate agent the links, and they will add them into homes you can go check out! If they’re not willing to do this, drop them. There are lots of great realtors out there that are willing to keep your needs in mind.

4) Explore. Go visit a house. Go visit 2. Or 200. Don’t settle for the first house that has crown moulding (it is surprisingly affordable to add yourself). Get your real estate agent to ask questions about electrical, plumbing, foundation, and all the other potential issues. Ask questions yourself, look in cupboards, under rugs, behind curtains. People often hide things they don’t want you to know about through home decor. Visit the area at different times of day, talk to neighbours if they’re around. Ask to see the homeowners property taxes, and regular utility bills so you can budget. Do your research, and then some. There are so many things you can and will miss, so it’s good to educate yourself through as many avenues as possible.

5) Look past decor. Walls can be painted. Curtains can be changed. Look for houses with good foundations (literally), shingles, windows, electrical/plumbing. Make sure that you love the layout, and consider the years you intend to spend here before you choose to move again. Consider schools in the area, how close amenities are, how long your commute to work will be. Get a home inspector on a home you are really set on, to make sure it is ready to sell.

6) Purchase. Once you find your home, there is a LOT of paperwork. Offer to purchase, changes, inclusions, exclusions. This is when you will be glad for your realtor – because doing it alone at this point is near impossible. You can negotiate almost everything. The seller is set on a price that is higher than you want? Tell them yes, but only IF they keep the washer and dryer with the house. Find a way to keep value in the home. There are a ton of things I could say on this topic but it feels like another blog post in itself.

7) Get your shit together. Thought you’re done now? Nope. not even close. This is a time where you need to ask a lot of questions and sign even more paperwork. Get in contact with a lawyer, and be prepared to pay between $2500-5000 in extra fees like Land Transfer Tax, and zoning fees. Finalize your mortgage with your lender. Get house insurance, mortgage insurance, life insurance. Know how far your house is from a fire hydrant. Book time off, and start packing. Again, a ton of detail I’m leaving out here.

8) Keys & Moving in. Once you pay your lawyer, they will release the keys to you and the house is yours. It’s an exciting time, but there are still a few things to keep in mind for moving day. Check to make sure all of the things promised with the sale of the house are still there. Some people play really dirty. Make sure everything still works the way it was advertised. If something isn’t to standard of your legal agreement, the previous homeowners are legally required to take care of it. Call in all of your meter readings, and sign up for utility bills.

In the end, your monthly expenses will be more, but since you did all the prep work you’re prepared to not have bar nights every weekend. Budget for surprises like broken windows or water heaters. You’ll rake leaves, but now it’s not because your mom is telling you to. It’s because you want to fill up those stupid halloween garbage bags that look like pumpkins. You’ll start pinteresting, and dream about pinteresting. Maybe you’ll get a dog way too soon, but you fell in love with him so you just had to. (Oops!). At the end of the day, it is such a great feeling to walk up the steps of my own damn house, rather than walk down a dingey hallway with flickering lights and numbered doors.

I’m sure I’ve missed a ton of things. If you have any questions or clarifications, let’s talk. I love learning how different people do life. I’m more than happy to share how I found my way here if it helps someone else get to the spot they want.