Intentions for the next 12 months

As I sit here at home fresh from a shower, with a brief lay in bed and taking it easy during my last 3 days in Edmonton, I seriously think about the next 12 months… as I mentioned on my last blog. I’ve been going to the gym very heavily these days, to take advantage of the extra time I have before I’m doing my 84-100 hour workweeks again. One of my new favourite workouts is the side plank. It is a painful one, but I find it very effective for the abs. They don’t show so much when I’m standing though, so I will drop a bit more weight, as necessary.

In summary, as mentioned previously, by the time I’m 22-23 I’d like to be in a Porsche, my house, and have my Power Engineering or trade underway, with their priority in reverse order. Though I expect it to be a very rough road, and careful planning of my finances and habits would be paramount to successfully reaching this objective.

For starting a trade, or getting into PE, the major struggles would be:

– Getting indentured, which is near impossible unless you find a good company to trust you enough to take you on, or know of someone

– PE is highly competitive; I already failed to get in 4 times. Also even once you are in, acquiring the steam time is also a primary barrier, and even if successful, may have to take a significant pay cut

– PE from my research usually revolves around 7/7, 14/14, 6/6, or similar rotations… you will only work half the year. Though the hourly wages are respectable, only working half the year may hamper how much you’ll make

– PE apparently is becoming heavily saturated, so Electrician may offer more stability. However this is just an assumption based on rumours and word of mouth

– PE would require leaving work and going to school, causing a disruption in income

– Starting a trade would involve some drop in income, but if you remained up north for higher wages and 12+ hour days, it may be possible to minimize income drop until 2nd or 3rd year status is obtained. Going to school for a bit too also will cause income loss

 

Buying a house is perhaps one of the largest financial decisions one will make in his/her lifetime, and is nothing to be scoffed at. My credit, though damaged from last winter from misunderstanding and poor decisions, is still sufficient to get a mortgage, so I am not so worried about that. However, there are other concerns:

– Downpayment. At 5%, for a decent newer 3-bedroom house, I am anticipating $20000-30000 required (this is in line with the approximate mortgage amount I currently qualify for)

– Liquidity. A home is not a particularly liquid asset; once the decision is made I am stuck with the responsibility with some time to come. I do not have a career, nor my education back in UBC complete, so it is questionable where I’ll end up. However, in all of Canada Edmonton is probably one of the best locations to purchase a home

– Tenants. Troublesome tenants, especially ones who don’t pay rent, may cause problems

– Basement suite. I would prefer to have a house with one, that way if desirable in the future, I can have the whole upstairs to myself if I like and collect rental income from a separated suite. However based on my window shopping these are not particularly common

– Location. I like Edmonton so far… but will I and want to be here for a long time?

– Savings to absorb sudden financial hits, such as vacanties and work seasonality/loss. A good 6 month buffer would involve easily approx. $30000 in liquid assets/cash sitting around. Gathering this amount within a year, as well as the downpayment amount, is possible but will be difficult. There is also the possibility of sudden required home repairs. I could get a home equity line of credit, but it will take some time to build up a considerable amount of that

 

Lastly, to get one of my favourite cars, with financing- for a $70k loan at 4.9%, this is about $1300/month with no balloon payment on a 5-year term.  $50k is more manageable, at about $940.  In the oil patch those amounts are very easy to earn, and having an extra roommate will make it even easier- however, it is a steep price to pay for entertainment, and will make further career manuevers even more difficult. Though some say that you only live once…

I expect my net income to hover around the $2000/week mark for some time; perhaps probably for the next couple years, unless I pull a miracle somehow. Getting into the 40% tax bracket will mitigate much of any realistic raise I get above my current wage. Even with luck if I am able to find a much higher wage with tremendous overtime opportunities, the higher bracket will eat the extra money. I’d need to work 100 hour weeks to even earn a few hundred more in a week.

It is difficult to predict how much money I will have by next Spring, as work seasonality will dramatically affect income. In the next 6 weeks, providing I stay busy, I should get $12k net cash, though this will be used to pay down my debt levels first ($10k; $2k expenses) and to build a semi-buffer. October may be a slow month; on a somewhat optimistic scale, net of expenses I may only save $1000-2000, working for approx. 1/2 – 2/3 of the month. With a great stream of luck, maybe $2-3k. The winter season is when it really gets busy, and with 5 months of work, working 3/4 of each month, I should be able to net $30k; bank $15k. With some more optimism, possibly $20k.

Based on these predictions, by next Spring a house downpayment should be no problem, with the $10k I previously paid down available in the form of debt just in case. However, when work slows down in the spring, this is when I may be forced to do something else to prevent too much of an income drop. It is difficult to predict how much money I’d then make from April – August (4-5 months)- I may break even, or I may make money. And this period will perhaps determine whether I’ll be successful in paying myself through PE (if I get in) and getting the Porsche. However, having the house will allow me to build home equity, which will possibly produce an additional buffer with a line of credit.

And then there is one more consideration: how my stock trading goes.