December 20, 2011

What About the Money?? Step 1

Step 1: Add up the monthly expenses! 
How much to leave behind?
The first step to anything is assessment. We had to take a look at our current situation, and also add up the expenses that will be continuing while we're away - turns out you can't quite throw it all overboard!
{Be excessive! This is no time to be shy – get it all on paper and exaggerate a bit}

1.       Decide how long you’re not going have any income
 We’re planning on having no income for a approximately 6 months

2.       Add up your ALL of your current monthly expenses: 
     We have lots, including mortgage payments, condo fees, utilities, entertainment, car, insurance and millions more.These are your ongoing current expenses. Adding up this number will help you develop a savings plan to get ready to go!
 **NOTE** For a GREAT way to manage your money online that’s fast, easy and FREE  check out Mint. It can download the last several months of your spending and categorize it for you– it's quite a wake up call!

3.       Decide what is going and what is staying:
a.       For us, we will be selling our house, returning our leased car, selling our owned van, selling most of our possessions.
b.      Things we we want to keep must fit in these categories:
                                                                           i.      Sentimental to us
                                                                         ii.      More expensive to replace than store (think – bedroom set)
                                                                        iii.      Fits in a 10x10 storage locker, and will be fine unheated

4.       Recalculate your new monthly expenses:
       Find out how much money you'll need AFTER you've sold your possessions. Since many of these will be sold BEFORE you leave, it will help you get a better idea on how your 'last-minute' savings will be, and will let you know a clearer number of what you need to leave behind.
a.       We have certain monthly payments that will not be removed upon our departure. Example including:
                                                                           i.      Student loan payments
                                                                         ii.      Debt payments
                                                                        iii.      Storage locker payments (more on this later)
                                                                       iv.      RRSP contributions (see we’re not young)
                                                                         v.      Life/Health insurance payments (again, we’re not young)
b.      Ex. Storage Locker $100/month x 6 months = $600!

For each of these expenses, we’ve set up automatic payment plans from our account. We need to leave behind enough in a lump sum to pay for these - talk to you bank or service providers to work on setting up direct payments if you don't have it already.

Now that we have a good summary of our financial situation at home...
we need to think about our financial situation while we're traveling! 

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