Savvy Real Estate Series – Part 1: Should you sell your house yourself?

house-for-sale-by-ownerxsmall

Many money management blogs will focus on ways to save money by doing little things over a long period of time – things like meal prep, not buying coffee every day, budgeting for the holidays, shopping around for savings etc. And while those things are certainly important, I think its also important to consider areas where you can save a LOT of money in a short amount of time.

One of those things is by selling your home yourself and not using an agent to avoid having to fork over the commission.

This is something I’ve now done several times –  I’ve sold two homes and leased/rent several properties without using an agent and each time I’ve managed to do better than realtors had told me I’d get. So I decided to make a series of posts on this topic. I’ll start with this one – helping you determine if selling your house yourself is something you should do – and I’ll follow it with tips on selling your house as well as how to choose the best agent, if you decide selling your house yourself isn’t for you.

Why you should always look into selling your house yourself

In most countries, real estate agents charge a commission – i.e. a percentage of the sale price of your home – as their compensation for selling your house. In Canada, the buying and selling agent will typically charge 2.5% each – or 5% total. In New Zealand (where I’m currently living), only the selling agents get commission, and its typically 4.5% + GST.

Now this can amount to be a HUGE chunk of change. The average home in Canada now sells for about $475,000. This means that when you sell your house, you will have to pay the realtors $23,750 in commissions alone . Also, if the house you sell is your primary home, this money would also be free from capital gains tax, so it would be ALL yours to use as you please. That money could be used to pay off debt, beef up savings or a down payment for another home (so you don’t have to get as high a mortgage). And that is just the average – this number gets higher the more you sell your home for.

This leads me to another reason – many agents are just not that good, and in my opinion don’t really earn that generous commission. But it doesn’t take an idiot to do the math above and realize that if they are able to sell just a few houses in a year, it can effectively replace a 50 week, 9-5 salary – for significantly less work.

Granted, realtors don’t get to keep the entire commission (some goes to the brokerage, overhead costs, taxes etc) but in a hot market like we are currently experiencing where houses often sell within days of being listed, for ridiculous sums of money and no conditions, its no wonder that the number of real-estate agents is at an all time high. In what other profession can you take a quick course, have no post-secondary education and be licensed to work within a year, getting paid upwards of $20,000 per sale? Its no wonder that in Toronto alone, the number of licensed agents has doubled over the past ten years. As a result, there are a ton of inexperienced agents out there that really don’t know what they are doing any more than you do.

Another main driver for me was the fact that selling your home is work to you regardless if you use an agent or not. In most cases, YOU have to clean/tidy your home before showings or open homes, YOU need to organize your family to be elsewhere when these showings take place, YOU need to pay for staging, YOU choose who to sell to and where to compromise and YOU have to pay for a lawyer to deal with the legal stuff.

You should also some market research to know what to expect what your home will sell for – sometimes agents will low-ball a house just so they can sell it faster. For every $10,000 the agent gets $500 extra – it might not be worth the extra effort to a realtor to market a house for $10,000 or $20,000 more for a few hundred dollars but to the seller, that is a lot of money, especially if that is what it is worth and could sell for. So whether or not you use an agent, YOU should still know approximately what your home is worth. In sum, a lot of it is on you anyway, so shouldn’t YOU get some compensation for that?

However, selling your house yourself is still work – don’t kid yourself – there is a reason that there is a whole profession dedicated to selling houses. So I’ve developed a guideline to follow for  when it would make sense to do it yourself.

When to sell your house yourself:

  • You have time and are flexible. This is one of the main reasons I do it myself. I am a work-at-home mom and I was available to show my house at any time, on any day of the week. I’ve even had people ring the doorbell and asking to have a look because they knew they’d be dealing with the seller directly anyway and I was able to show it. No need to worry about a busy agent showing another client’s house or personal time and potentially losing a sale.
  • In a seller’s market. This is when house prices are on the rise and supply of houses is low. Basically, the situation right now in many big cities like Toronto or Vancouver or Auckland. Buyers have to be less picky and can’t put as many (or any) conditions on purchase, which pretty much guarantees you the sale if your home is in the location they want.
  • Your house is in an excellent location. There is a reason that “location, location, location” is the dogma of real estate. If your house is in a good location, even if its the worst house on the block, it will sell. And in a market like this? It will pretty much sell itself and will sell very quickly.
  • You aren’t easily offended. Look, buying real estate is a big deal for most people, so purchasers will be critical (in order to not seem too keen, because its easy to criticize when its not your home, people have different tastes etc) and it may be hard to hear someone mutter about the hideous curtains/wall colour you lovingly chose, renovations you’ve done etc. You can’t let it discourage you.
  • You have some business savvy/confidence and be a bit of a risk taker. A home sale is a business transaction at the end of the day. You need to know how to market your home, stage it and understand the market well enough to be able to negotiate effectively (I will do a post on tips to sell your home soon).
  • You are and can afford to be patient. Selling your home yourself will probably take longer than with an agent. Selling agents may avoid showing your house to potential clients (since they don’t get any commission), buyers themselves may not want to deal without agents and in general you will not be able to reach the same number of potential buyers that an agent can. It can get discouraging when you put in all this effort to get it ready only to have no or little interest after your first open home. But if you are able to give it some time, selling yourself may be a good idea. Remember, you can only have one buyer at the end of the day and chances are that if you are in a sought after area, you will have no problem finding interested buyers.

That all said, there are times when I would recommend using an agent.

When to use an agent:

  • You are just too busy and don’t have the flexibility to show the home whenever a potential buyer is interested, it really is in your best interest to use an agent.
  • In a buyer’s market. This is when there may be an abundance of houses or the market has cooled off for whatever reason and a realtor will potentially be better able to reach  a bigger network of interested buyers and be better able to help you negotiate. This is where an experienced agent is key.
  • Your property is very unique or difficult to sell. The easiest houses to sell are those that appeal to a larger group of people – that also means they are pretty conventional and in popular locatoins. But if your property is very unique – for example, its a luxury property, or has some unique features, or is in a less than desirable location – a good agent that specializes in that type of real estate would be good to use to make sure you are getting the best price.
  • You are not a natural negotiator and/or don’t like conflict. There are some people who are born sales people or negotiators and there are some who aren’t. The latter are the people who will mess up selling their own home and will be the horror stories that realtors will tell potential clients with glee. Like I mentioned before, selling by yourself is work and its not as easy as it looks.
  • You need to sell ASAP. If you have to move quickly, I’d recommend using an agent for sure. My approach to selling on my own involves having a timeline of how long I am willing to list without an agent before giving in and getting an agent and still making the timeline I want to have my house sold. If you don’t have the luxury to wait it out selling yourself, don’t do it.

Convinced yet? If so, stay tuned for my next post which will include tips on how to sell your home yourself!

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Stay at Home Jobs for Stay at Home Moms

Having a parent stay at home with the kids is a decision that many families will contemplate. One of the main factors in the ultimate decision is often whether or not that family can afford for one parent to stay at home (which I did a post on here).

And sometimes, all it takes to make it work is a bit of extra money – whether to pay for essential expenses or just to have for extras. So I thought I’d list out some ideas for jobs that a parent can do while staying at home with their child or children.

But before you get too excited, its important to be realistic. These are great ideas to earn a bit of extra money. Unfortunately, none of these are going to make you rich or replace your salary, especially if you were in a professional, post-university level type job.

The reality is that if you want to earn that kind of money, you can’t also take care of a child full time at the same time. You just can’t – either your job or your child or (most likely) both will suffer. And anyone or job offer that claims you can make thousands of dollars with little effort, little  time and no skills all from home is 100% a scam.

Some of the ideas I list below could potentially make you a lot of money, but will require the type of time and focus that an out of the home, full time job demands and you would have to make a choice to get childcare or forgo that potential. However, they are also the type of jobs that you can do on a small scale to make that few hundred dollars a month to give your family budget some breathing room.

1. Multi-level marketing

One job that a stay-at-home mom can easily swing is a MLM (multi-level marketing) type job. This is a job selling a product (make-up, jewellery, supplements etc) to friends, family and later a group of customers directly. Its a growing industry with MLM companies Stella & Dot, Arbonne, Avon, Scentscy and many, many more gaining a lot of prominence and respect. However, while an MLM job can definitely make you some money to add to the family coffers, this is definitely not a job that is right for everyone. I did a post on this, check it out here.

PROS CONS
Very flexible Often involves a large start-up cost, and costs can get out of control
Can be a lot of fun if you are a social person Once you exhaust “low hanging fruit”, new customers may be hard to find
You can get great products for a good deal To make a lot of money, you need to treat it like a full-time job

2. Etsy

If you are crafty, Etsy can be a great way to make some money. The key is to pick a specialty (i.e., if you are a great knitter, instead of having a knitting shop, perhaps concentrate on just one or two things) and focus on being really good at it.

I found this great article that goes into more detail on how to make money on Etsy.

PROS CONS
Very flexible Often involves a large start-up cost
Can lead to a great small business Lots of competition
Creative outlet It can take a while to make money while you build your reputation

3. Photography

Pretty much anyone with a decent camera can be a photographer. Obviously, you can’t become a professional photographer overnight and charge $5,000 a shoot, but with the countless courses available both online and at various community centres, blogs and websites, I really think anyone can learn enough “tricks” to be a decent photographer and make some extra money doing family portraits for Christmas or to take pictures at birthday parties.

PROS CONS
Easy to get started if you have a decent camera Lots of competition, may take a while to build portfolio and referrals
Good creative outlet Not very steady or regular
Could potentially earn a lot if you build good reputation Good equipment is expensive

4. Home day care

Of all stay-at-home mom jobs, this one has the potential to make the most steady money. The trade off is that you have to be home (so a lot of the SAHM lifestyle that is the reason that many moms/dads want will need to be sacrificed) and you are pretty much working all day caring for other kids as well as your own. However there are ways to have both –  I know one mom, for example, who only does before and after school care – her own kids are school aged so she just walks all the kids in her care to school in the morning (she lives just a block away) and picks them up after, but has the school hours to herself.

PROS CONS
Can make a decent amount of money Can’t just hang out with your own kid – need to focus on caring for other children (which can be overwhelming)
Can expense a lot of stuff you buy for your kids Not very flexible
Your child has playmates during the day Lots of licencing and regulatory requirements that need to be met

5. Home Baker

If you love baking/cooking and have a signature dessert or dish, you may want to see if any local cafes or restaurants would like to buy your goods on a regular basis. You could easily prepare the batter or do prep like chopping or measuring of ingredients in the evening after the kids are in be and then preparing early in the morning. A local coffee shop that I frequent hires a university student to makes these amazing salted caramel brownies for them – she makes one large batch everyday and delivers them in the morning when they open. It probably doesn’t pay her tuition but maybe pays for books! Another option would be to have a home bakery business – all you need is a Facebook page – and offer to make goods for special events.

PROS CONS
Fairly small time commitment Early mornings may be required to have everything ready for delivery
Small start up costs Won’t make you too much money on a small scale
Fairly flexible Highly dependent on your location

6. Blogging

Ok, I’ll be honest, this is a very difficult way to make money. So far, I’ve made a whopping $1.54 from Amazon Affiliates sales but this blog costs me $26 a year to maintain so I’m actually in the red (ironically), so its a good thing my only intention with this blog was for me to have a creative outlet and not to make money.

However, for those interested, the way bloggers make money is from Amazon affiliate sales (you recommend items that can be bought at Amazon that are linked back to your blog account and you get a commission), advertising revenue (which is dependent on your site traffic) and if you get good enough that people or other sites pay for you to write for them. While its a bit of a long shot, if you are a great writer and have a unique perspective on a popular topic to really make yourself stand out, you may be very successful.

PROS CONS
No start-up costs Can take a long time to many any money
Very flexible Requires a large time investment
Great creative outlet May be hard to come up with content

7. Dog walker

While you have a baby you can wear in a sling or carrier, this might be a good option to get some exercise and make a few dollars as well. Depending on the area, you could make a good $50 a day walking dogs. It gets complicated when you have to push a stroller or have a toddler that naps during prime dog walking times, but its something that pretty much anyone can do and can do immediately.

PROS CONS
Small time commitment and very flexible Not easy once you have a child that can’t be worn
No start up costs Location dependent for how much you can charge
Get exercise You will cap out on how much money you can make very quickly

8. Consulting

This is another area where you can potentially make a lot of money with a small-ish time commitment, however you need to be a subject matter expert or professional whose expertise is in demand. Again, though, any project you take on will likely need several consecutive hours of commitment so you may need to have a sitter or family member who would be willing to help out during those times.

PROS CONS
Can be a great way to make a lot of money in a short time Need to be a subject matter expert or lots of experience
Can pick and choose when you want to work More like a part time job (will need to put in several consequtive hours in a row when on a job)
Keeps your skills sharp in the event you want to return to work full time May end up taking up more time than you want to devote

30 Day Shred – Level 1 – First 10 Days

2014 was a great year for me. We did a lot of travelling (New Zealand to visit Jordan’s family, Poland for a friend’s wedding and a road-trip to the East Coast of Canada ), my youngest son finally started sleeping (thank you Good Night Sleep Site!), I got a makeover on the Marilyn Denis show (watch it here) and I turned 30.

But 2014 was also the year that I realized that its been awhile since I was really in shape and looked it. Sure, I was fairly active (its hard to be sedentary when your toddler learns how to walk!) and I even did the Toronto 1/2 Marathon in under 2 hours, but I just couldn’t shake that last 15 lbs that stubbornly refused to budge after the birth of my second son.

It was frustrating because after my first son was born, I lost the weight very quickly – within 8 months I was in my best shape ever, even though I gained over 50 lbs during my pregnancy.

I lost almost 50 lbs thanks to Weight Watchers, breastfeeding and running.

Pregnancy #1: I lost almost 50 lbs thanks to Weight Watchers, breastfeeding and running.

I wanted to feel good and look good. But with two kids and a husband that works very long hours, I knew that a gym wouldn’t be a realistic option for me. I’m not a big fan of the gym either. I much prefer the classes, but the ones I actually want to take never seem to be at a convenient time for me. Plus, gyms are EXPENSIVE and I’ve never been able to make them worth the cost (and you know me – things have to make sense financially for me to pursue them, haha).

I needed to figure out a way to do what I needed to do at home. Running was great in the warmer weather, but any fitness expert will tell you that strength training is equally, if not more, important as cardio.

So when I came across Nurse Loves Farmer’s post in December on how she got into shape doing Jillian Michaels’ 30 Day Shred, I was inspired – and bonus? I actually already HAD the DVD (I bought it at a discount store a few years ago for something like $5 and promptly forgot about it) and some hand weights, so there would be NO financial outlay!

I decided that I’ll start 2015 with a challenge to complete the 30 Day Shred by early February (I wanted to give myself a couple days buffer for rest days and illness).

30 Day Shred – Overview

The 30 Day Shred is made up of 20 minute exercises that comprise of strength training, cardio and ab work (with a warm up at the beginning and cool-down at the end). However, I’d budget about 30 minutes to factor in getting changed into workout gear, setting up the DVD etc. There are 3 levels, with level 1 being the easiest, so I decided to do 10 days at each level. All I needed were some hand weights (weight is not specified) and a mat.

Level 1

Even though this is the “easiest” level, its still a good work out, even for someone who is in moderately good shape already. I was very sore after my first session and even after the 10th session I was still doing the modified push-ups and sweating a lot.

I used 8 lbs weights, which I think is much heavier than most people use from what I’ve read but its all I had (a relic from a 6AM bootcamp I did a few years ago) so I decided to suck it up. I was able to use them for all the strength exercises except the lateral lunge and arm raise – for that I used these 1 lb ball weights that I got as part of a fitness package at some point (and let me tell you, even by day 10, those light weights were killing my arms!).

I quite liked this first level. The session just wizzes by as Jillian varies the exercises a lot and I always feel like I’m done in no time. It made it that much easier to be motivated to do them. I was able to do this level 10 days in a row but I’ll admit I felt a bit tired on day 7 and probably should have taken that day off. I’ll be taking a day off before starting Level 2 and will definitely take one mid-way through it.

My results so far

At the start of the program I weighed in at 160 lbs on the dot and weighed in at 158 lbs exactly 10 days later. I can feel my muscles developing and can especially see more definition in my arms and abs, though I’m not sure the pictures really reflect that. I still have some muffin top left (that is my #1 thing I want to get rid of!) but have high hopes that this will greatly diminish after the 30 days (in Sarah from Nurse Loves Farmer’s post I mentioned before, the last 5 days made the biggest impact).

I combined this program with a modified version of the Atkins diet (and have lost around 9 lbs since starting it in early December). I haven’t cut carbs completely but have, for now, cut bread, pasta, potatoes, rice and any type of baked good or junk food (well, with the occasional “cheat”). I’m actually eating much healthier over all since am eating way more veggies, some fruit but continue to drink a glass or two of wine 4-5 times a week. I’ll have to figure out how to add back some of those more “carby” carbs once I reach my goal weight, but I’ve realized that there will need to be a LOT more moderation involved than in the past. I just don’t have the metabolism to be able to eat those foods too often.

Anyway, without further a-do (is that how you spell that?), here are my before & after pictures from Day 1, Day 5 and Day 10!

 1/3 of the way there!

1/3 of the way there! I can see a little more definition in the abs – can you?

* I do want to mention that my Day 1 full body profile was taken some time in November when I weighed more than 160 (probably 167 or so). I didn’t think to do a full body pic until Day 5 but found that one which I took prior to starting my lower carb diet in December.

Is multi-level marketing right for you?

Network-Marketing-Companies

I recently did a post on whether or not one can afford to be a stay-at-home parent and I mentioned that one way would be for the parent staying at home to get a part time job or a MLM (multi-level marketing) sales job on the side.

Multi-level marking (or “network marketing” as its sometimes called) is a selling strategy used by some companies where their sales people are compensated by selling the company’s products via a commission as well as the sales of other salespeople that they recruit. While there has been some criticism of MLMs being “pyramid schemes”, many of these companies are truly legitimate and require you to sell at a consistent level (and providing coaching to your “downlines)” in order to be rewarded for their sales – so you can’t reach a certain level and then just coast. It has become a multi-billion dollar a year industry and there are new ones popping up all the time and joining the ranks of Avon, Mary Kay and Tupperware.

Lots of women are doing this. I know a Nurse Practitioner who is very high up at a children’s hospital who sells Arbonne. A friend of mine who sells Stella & Dot is also a Manager at a large consulting firm. I myself did it for two years as a sales rep for Stella & Dot (though officially sales reps are called “stylists”) and it was a great way to have some fun and make a bit of extra money – which was my goal. But being a business school graduate and CPA, I also knew what to do to make sure I didn’t lose money on it.

stella & dot stylist

However, before you call your Avon lady or Stella friend and ask how to sign up, there are some things you need to keep in mind in order to make sure this is right for you.

1.  You get out of it what you put into it

After hearing a recruiting speech, you may have visions of white MercedesPink Cadillacs or amazing vacations dancing in your head, but the truth is that success in a MLM job is directly related to the amount of effort (read: WORK) that you put into it. In reality, while you may be told that you “only” need to sell at two shows per month to make hundreds of dollars in commissions, or “only” need to recruit 1 person per month to qualify for all those extra incentives, the truth is that the people who make a lot of money in these companies are ones who treat it like a real job and put in the same number of hours that a “real” job would. Sometimes, this is a LOT of hours; they are constantly sourcing hosts for their parties, chatting up recruits and attending these sales shows.

2. Set realistic goals and expectations

My friend got me into Stella & Dot when she asked me to host a party. I checked out the website and really liked the jewellery, so I said sure. Then I had such a great time at the party (and loved getting some great freebies out of it), I thought it would be fun to do. I liked that it got me out of the house occasionally and I liked that I was getting some real sales experience. I also did “earn” quite a bit of free jewellery and enough money to treat myself to a nice pair of shoes or dinner out every month (on average). That was my goal though. I didn’t want to spend too much time, effort or money on it (especially the last part).

If your goal is to pay for your kids’ private school tuition or to pay off your mortgage in the next year or even replace your salary all the while being a full-time stay-at-home-mom, then you will be sorely disappointed. This is not the silver-bullet solution to making a ton of money while staying at home. Its a great option to earn a little extra on the side OR a potentially lucrative-ish full-time job if you are great at sales and want flexibility.

3. Treat it like a business

If you sign up to sell products for one of these companies and your goal is to make money (as opposed to feeding an accessory/skin-care habit with a discount which is a reason many people do it), you need to realize that this is a business and you need to treat it as such.

As a sales rep you will earn a commission on everything you sell plus a “bonus” based on whatever your “downline”/recruits sell. But this IS NOT profit or what you are really earning. You also need to spend money on membership fees, samples, shipping and taxes as well, which needs to be deducted from the commissions you earn.

So say you make on average $500/month in commissions (with Stella & Dot for example, this would require about $2,000 in personal sales). But you spent $1,500 on samples plus another $200 on fees (membership fee, website fee, shipping) when you started out. That means that you are not making a penny in profit until the 4th month of “work”. And in the meantime, the company may have released new products which you will be encouraged to buy.

Therefore it is very important that you set yourself a strict budget on how much you are willing to spend, both initially and every time new products are released. Make sure you keep your receipts for gas used to drive to and from parties, for coffee/lunch dates with your team or potential recruits and of course, for all samples or supplies you purchase to run your business. It also means you need to spend time on calling potential hostesses, working on your sales pitch and get to really know the product you are selling.

Its very, very easy to spend a TON of money on the samples that you “need” to get your business going and later to make sure what you have is fresh and up to date but it can quickly get out of hand and I know MANY, MANY people who are clearly losing money.

4. Remember, the company is making money off of YOU too

I signed up for a Facebook group for Stella & Dot when I was selling with them and there would often be disgruntled stylists complaining about how its “unfair” to pay more for shipping than customers or annoyed that the product credits they earned didn’t get them enough new samples or whatever.

I would often remind them that while we like to think we are employees of the company, we are in fact, a different level of customer as well. I, personally, was ok with this and understood that this is just the way it works. I know that when I bought samples at 50% off, they are still making profit margin on that. Otherwise, it would be a bad business model.

Another reason I wanted to mention this is  because I want to caution anyone doing this type of selling to remember that these products are not super amazing, unique, special or that better than other products sold in stores. They are consumer goods and they have great marketing campaigns, but you aren’t doing anyone a major favor by introducing them to these products. They may claim they are better for you than other products, or they are better quality or better value or whatever, but you need to take this with a grain of salt. Also, some are borderline unethical, especially anything to do with weight-loss, like this product (please don’t go into an MLM that requires you to prey on women who are already dealing with low self-esteem/body image issues just to make a few dollars).

Of course you need to like the products (heck, even LOVE the products) and like using them, because you shouldn’t be selling something you don’t like or believe in, but PLEASE don’t become brainwashed into thinking they are the be-all and end-all of all products.

For example, while I really like most of Stella & Dot’s jewellery and think that the quality is good, I don’t think it’s superior to a lot of similar stuff. Yes, I’ve had pieces wear incredibly well and some break after minimal use, I’ve had good and not so good interactions with their customer service (but on the whole, it was excellent) and there have been collections I loved and some I didn’t really like. Just like many other brands I like.

Similarly with the make-up and skin care companies like Arbonne. I like some of the products I’ve bought from them but some I wouldn’t buy again. I also don’t like how they focus their sales pitch entirely about what is NOT in their products vs what IS in them (but don’t get me wrong, it’s a good product and I know a lot of people who love it).

5. Its not as easy as it looks

Direct selling is hard. Its scary, even. You also need to develop a thick skin and resilience to the word “NO” – because you will hear it a LOT. On average, you will need to contact 10 people for every 1 that will agree to host a show. And a good chunk will chancel, sometimes on the day of. Then, you will need to remind your hostess that for every 4 people she invites, only 1 will come.

NO images

Its tough because if YOU really love the product, at first you will find it unimaginable that others don’t. You will find it uncomfortable to approach people to help you by hosting shows and after you tap out on the “low-hanging fruit” – ie. your family and friends, getting new business is not that easy.

You will have events where you sell nothing or very little. You will have months where you will sell nothing.

6. Do some research before you join

Even though it might be tempting to sign up right away (the consultant trying to recruit you may need to hit certain targets by end of month for example and may entice you with free products), make sure you are ready and really understand how the commission/pay structure works and if it works for YOU. One thing I really liked about Stella & Dot is that I got a straight commission on whatever I sold. If I sold $20 in jewellery, I got $5 in commission. If I sold $2,000 I got $500 and once I sold more than $2,300 the commission amount went up. I didn’t have to hit any targets or sales goals to keep earning commission and that worked really well with me because some months I just didn’t have the time to be able to do many (or any) shows. However, I know that some companies DO require a certain sales volume, so if you aren’t sure you can maintain it, don’t do it.

On the flip side, take the “horror stories” you read online with a grain of salt as well. I think some women join with unrealistic expectations or without considering how much money can really afford to invest in a business like this and are disappointed or feel “tricked” into joining. They like to point fingers and call it a scam, but in reality, like many investments, you need to do your research and need to be realistic about your potential outcomes.

7. Maternity leave & MLM aren’t a good idea

Now, I DID continue with my Stella & Dot venture while on maternity leave but sometimes I wish I hadn’t. First of all, you do need to declare all your income to Service Canada every two weeks (it can be a bit of a pain to determine what you are actually earning since the commissions you earn need to be netted against your expenses, but those don’t necessarily coincide with your commissions earnings), then they will deduct what you earn from your maternity leave benefit, which kind of defeats the purpose of the mat leave benefits. If you are earning good money though, it may not matter to you to lose your benefits, but I think for the majority of people doing MLM, its not worth it. One thing I do want to note is that the reason I continued was because I liked the social aspect of it – the parties gave me an excuse to dress up, put on make-up and have some fun.

At the moment, I’m still registered as a stylist, but as soon as my membership expires this August, I will be retiring from Stella & Dot. I had fun, but to be honest, I got a bit bored of it. It was a lot of fun while it lasted though and I would recommend it to many people.

Top 4 tips to be prepared for the worst

 

Will picture

I was chatting to my friend recently about a friend of hers who recently broke up with her long-term boyfriend.

“You know what she says one of the hardest things have been for her?” my friend asked me. “How much harder it is now for her financially. Now its not just that she is heartbroken, but she is heartbroken AND her living expenses pretty much doubled overnight.”

I’m not surprised at all. Whether or not your partner/spouse is the primary income earner or not, you are likely very dependent on their income to maintain your current lifestyle. And while I’m not suggesting that one should live so frugally that they could do without an income without breaking a sweat, I think that there are somethings that you should prepare for, especially when you are also a parent, if your spouse or partner died or became disabled.

Now, I’m not going to discuss how to prepare for a relationship breakdown or divorce in here – even though it was the inspiration for this post. I think there are ways to always be a bit prepared to be on your own, however not all marriages and relationships breakdown but EVERYONE dies at some point, so its good to be prepared for the sake of your family.

1. Get life insurance

If you are married or have children with someone, you AND your spouse NEED life and disability insurance. And not a ridiculous amount like I always seem to see on TV that would just barely cover the cost of a funeral, but a decent amount – at least enough to cover your mortgage and 10 years worth of other housing costs. Also, its better to get life insurance earlier rather than later – you will pay much lower premiums.

As a side note, I’d also caution against buying mortgage life insurance that your mortgage broker or banker will try to sell you when you get approved for your mortgage. All that will be covered is the mortgage BALANCE, not the amount you originally borrowed. The premiums are usually higher than regular term life insurance but they stay the same even as your mortgage balance decreases. So if you are paying $30 per month when you get your $300,000 mortgage, its still going to be $30 per month when your mortgage balance is $250,000. Also, because often the bank employees selling the mortgage insurance aren’t licensed, they may not recommend the correct type of insurance and the insurance company has the right to decide that you are NOT eligible, EVEN after you’ve been paying your insurance for years.

Please contact a licensed life insurance broker to discuss the right options for you.

2. Make/update your will

I’ll admit it – we only finally got around to making a will after my second son was born, over six years after getting married. We just kept putting it off and my husband just did NOT want to talk about it and told me to handle it and he would just sign it. But getting the will done was a huge weight off my shoulders.

I get it – there is something incredibly morbid about drafting a will – but we need to face the fact that we are ALL going to die at some point. And as parents, we need to make that our children will be taken care of as best as possible if the worst were to happen and that it is OUR version of what is best,and not what someone else’s version of best, is what is done.

Picking someone to be your child(ren)’s guardian is important. Don’t put that burden on your families to have to decide (or worse, fight over). Also, making a will forces you to think about how you want your children raised over the long term and how YOU would spend your money on them. For example, you may want money left for your children to be used for private school tuition or saved for university but unless you have a will that expressly states so, your children’s guardian may decide that the best use of your money is to use it for travelling around the world. It makes you think about how you want your children to inherit (everything at 18? Some at 25?) and picking trustees and executors (if you die before your children are adults, wouldn’t you want to make sure there is someone you trust and who is smart to manage their money until they are ready?).

Its also just good to make sure you and your spouse are on the same page about what you want for your children – because realistically, its more likely that you and your spouse will die at different times (as opposed to a tragic accident killing you both at the same time). For example, I’m Catholic and it is important to me that my children are raised Catholic and attend Catholic school. My husband isn’t Catholic but he knows this is important to me and promised to continue to raise our boys Catholic if something were to happen to me.

An added benefit to making a will is it gets you to list all those assets and organize your finances in one place.

If you already have a will, it’s good to update it every few years, especially after any new children are born, you obtain a valuable asset or something happens to your appointed guardians/trustees.

3. Have an income back up plan

One of the greatest things about our house is that we have a basement apartment in it – and its a huge comfort to know that if we really need to, we can always rent it out. I think every family could do with a back up income plan – whether its an asset that can be rented (like a basement apartment or cottage) or a skill that can be put to use. This is especially important for families that have a stay-at-home parent – that parent should try to either continue with some sort of education in the field they were in before choosing to stay at home or take courses in something that interests them so that if they do suddenly need to re-enter the workforce, they will be somewhat prepared. This is good too if the stay-at-home parent simply decides they want to return to work or if the working parent can’t for whatever reason (due to job loss, illness etc).

4. Have an emergency fund – and make sure you BOTH have access to it

You should already be contributing to an emergency fund through your budget, but I wanted to reinforce the importance of one in this post too. While in theory you may be covered for all costs of losing a loved one through insurance and wills etc, sometimes the process of getting your hands on those funds may take a while – especially as you or whoever will have to navigate through it all while dealing with grief.

That is why you AND your spouse (or someone you trust if you are a single parent) NEED to have easy access to your emergency fund – money there to help you through those tough days and weeks. Make sure the account is joint and you both know how to access it.

Hopefully these plans never have to be put to the  test or at least, not before your children are grown and able to care for themselves. But I truly believe that the test of whether or not someone is a good parent isn’t excelling at the easy things – like kissing away boo-boos or serving up made from scratch organic meals or buying thoughtful presents. Its also doing the hard and unpleasant things – like taking your kids to get their shots, disciplining bad behavior and drafting plans of what to do if you or your spouse die.

Can you afford to be a stay-at-home mom? 5 steps to see if you can.

my boys

Both times when I was pregnant with my boys, I used to visit internet forums where I could chat with other moms and moms-to-be. While we discussed many parenting (and many non-parenting) topics, one topic that dominated was whether or not to stay home after their babies were born.

Now, I’m not saying that all women should stay home and be stay-at-home moms. Some love their jobs and want to get back, some don’t want to lose their momentum in their careers and some just know they can’t afford not to. But all moms will want to take some time off after birth and many want to know how long that period can be – be it a month, a year or several years.

While in Canada we are entitled to a year of maternity leave and many can claim employment insurance benefits, it isn’t a given that everyone can afford to take this time off or if they should from a financial point of view.

So, if you are considering becoming a stay-at-home mom or already know this is something you want, this post is for you.

Step 1 – Update your budget as if you were a stay-at-home mom.

Like with all things financial, its all about the math. So the first thing you should do is delete or adjust the income of the parent that will be staying home from your budget (while I do refer to stay-at-home-MOM, I really mean “parent” since this also applies to dads who want to stay at home as well).

Kasia’s Basic Family Budget – updated template 

Step 2 – Analyze your budget

Next have a look at what this does to your housing and essential fixed cost allocation (so your rent/mortgage/property taxes/insurance). If this amount is now greater than 40%, you CANNOT afford to stay at home – at least not in the current home you are in – whether or not the amount you save on daycare is more than the income you were bringing in (I’ll do a post on this later – because unless you TRULY make a significant amount less than a reasonable daycare costs, this is very short-term thinking).

However, before you call your real estate agent, there are some things you should consider. Even if you are able to find a cheaper home, you need to factor in other costs associated with moving. And I don’t mean the moving truck and pizza and beer for the friends who help you move. But all the ongoing costs that you will incur because of living in a different location, (and not to mention the non-financial factors like amenities and quality of local schools etc).

For example, say your current rent is $1,500/month. You find a place thats $1,200/month and that amount puts you under the 40% threshold. However, you now need to get a second car because the new place doesn’t have public transit close by. Say that it will cost you $300 for a car payment and insurance. So essentially you are in the same financial position because your new car payment and insurance become essential costs.

If you are still under the 40% threshold when you delete your income, great. Now lets consider your other budgets. You have to be realistic. You can’t cut your grocery budget from $800/month to $500/month and expect to stick to it unless you drastically change the way and what you eat. Similarly with utilities – if someone is at home all day, heat, electrical and water will all go up.

Same goes for your “Life” budget. If you have barely any money left over for life, this isn’t reasonable. I constantly hear from moms who think that they can live for free (The library has free activities! The park is free!) but forget that their children will still need clothes and WILL persist in growing out of them, that they will want to play soccer and go to the movies. That birthdays, Christmas will still require presents, washing machines will break, and pets will need to go to the vet . Make sure that you have at least 15-20% of your after tax income available to you for Life.

Next, are you still able to save for the future? I recommend that 20% of your budget goes towards debt repayment and savings. And I feel like once you have children, it becomes THAT much more important to have a good safety net in place.

However, if you are just planning on taking a couple months off for maternity leave (or even the full year) and not making an RRSP contribution for a few months is what will help you pay the bills, I don’t think its a big deal. But if you plan to be a stay-at-home mom permanently, skimping on savings or debt repayment is completely irresponsible.

Step 3 – Make sure your partner is on board

Losing an income and reducing your budget, even if manageable, will require a change in lifestyle. You need to sit down with your partner and make sure that they are on board. You may think that cutting the gym membership, canceling cable and not taking any more vacations is a small price to pay for being able to stay home with your kids, but your partner may not, or at least may not in the long run. Make sure that this is a decision you are making TOGETHER and its not something that YOU want and THEY are giving you. You don’t want them to resent being in a tighter financial situation or the burden of being the single income earner because this will eat away at your relationship. And you don’t want to be in a position where they can hold it over your head with “I make the money, so I get the final say” on every decision going forward.

Step 4 – Start planning – and saving – now

If you run the numbers and it really looks like you won’t be able to afford to be a stay-at-home mom, don’t despair. This is still a possibility, it just may not be one right away. But the sooner you start planning (and saving) to take time off, the better.

Start brainstorming ideas  to still contribute financially – perhaps you can work part-time, get a direct sales job or do some free-lance work if you are able.

Also, look into seeing where you can cut costs. Can you reduce your insurance premiums? Lower your cell phone plan? Stop getting your hair highlighted? If it is important to you to stay home there are some easy sacrifices that you can make that won’t impact your life as much but can be the difference in making becoming a stay-at-home parent a reality.

If you are pregnant, try living on just one income plus what you expect to get while on maternity leave and bank the rest or use it to get the essentials for baby. Is it doable? Easier than you thought or downright impossible? If you have already had your baby or your child is older, do a trial run. See if you can live off one income.

Step 5 – Be flexible and be aware

Spending time with your children is a precious and really, a priceless thing. But the end of the day it is good to be aware of what a major life decision like becoming a stay-at-home mom really means. Some people are ok with going into debt in order to take the whole year of maternity leave. To be honest, I judge this less than someone who goes into debt to buy a luxury car, renovate their kitchen or go on an all-inclusive vacation. Just know what you are getting into and make a plan as to how you will manage it.

But also be open to some compromise. Maybe you can’t afford to be a stay-at-home mom until your kids are in school but maybe you can for their first two years of life. Maybe you can’t take the full year of maternity leave with your first child but perhaps if you plan accordingly, you can with your second.

Lastly, and this is something that I know from experience, whether you end up staying at home or not, remember its the quality of time and not the quantity of time that you spend with your children that really counts.