062: The Low-Income Path to FI | Pastor Chris

A commonly-held FI myth is that you need to earn a high income to reach financial independence. In this interview, Pastor Chris busts that myth wide open. He shares how he and his wife make the most of their low income, are paying off their debt… yet are still able to aim for FI!

We hope you enjoy his whirlwind journey into personal finance—from $68,000 in debt to getting on the path to FI, side hustles and so much more! Pastor Chris shows that creativity, perseverance and plain old hard work can go far, even if you’re starting below zero.

Thanks again to listener Alexi, who volunteered to edit the transcripts for our show notes. We’re so grateful for your help, Alexi!

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Money Mechanic
Welcome to Explore FI Canada, where we investigate the financial independence topics important to you. Join us as we learn how to optimize our lives, save money and invest for our future. We’ll go coast to coast interviewing experts and chatting with Canadians about their inspirational FI journeys.

Chrissy
PolicyMe is Canada’s easiest way to buy life insurance. In about 15 minutes, you’ll receive a free no obligation quote, and an instant decision. Plus, most people won’t require a medical exam. Visit exploreficanada.ca/policyme to get your quote today.

Money Mechanic
Alright, it’s Money Mechanic again with you Welcome back, Chrissy. Here we are.

Chrissy
Yes, we are. We are back with our first guest of the season. It’s exciting.

Money Mechanic
It is exciting. We’ve already had dropped that first episode with a contest we’ve done a little FI School and now we’ve got our first guest. And you know what’s awesome is we’ve always said that we’re happy to have our listeners reach out and share their interesting stories because I think we can you and I can sit here and talk about FI all day long. And we can talk about what all the other bloggers and podcasters talk about. But that just doesn’t get down to the feeling of what actual Canadians are doing, or should be doing or learning from our peers. Right? I mean, that really is what I enjoy about this journey is learning from our peers and what other people are doing, and how this FI journey is just an individual journey. And it’s inspiring to hear from different stories. What are your thoughts?

Chrissy
Yeah, I agree. And I love to show the Internet Retirement Police that there are regular people who are not bloggers and not podcasters who can reach FI and they’re doing it all the time. Every day. There’s regular people out there who are able to accomplish this without any blog or podcast income, even though that’s a myth anyway, we all know we make pretty much nothing.

Money Mechanic
Yeah, well, we’ve got our guest today is Chris from Halifax and Chris is 32. And he’s got some side hustles we’re gonna talk about which is pretty cool. But he’s also I think proof positive for the fact that I’ve always said that the FI journey impacts your life and makes positive changes right away, right when you start, you don’t have to wait the 10 or 15 or 20 years to get your FI number. The changes happen right away. So without further ado, Chris from Halifax Welcome to Explore FI Canada. We’re excited to hear your story.

Chris
Thank you. So happy to be here. Finally, after listening to your podcast for the last year or so it’s great to actually meet you two.

Chrissy
Yeah, it’s nice that you reached out and we love your story, and we’re excited to share with our listeners is quite unique. And maybe you can get us started about back in your 20s. How are your finances when you were in your younger years?

Chris
Well, I can’t tell you because I never looked at them. I was in many ways a typical university student not really making very much money enough to pay rent, took out some student line of credit from the bank in order to pay for my tuition, which really wasn’t super high. In retrospect, I definitely could have worked and paid for my tuition as I went. But I didn’t really know how to handle money. I didn’t really understand interest rates on credit cards, which were maxed out pretty much all the time. And to top it off. When I graduated University, one of the defining parts of my story is I work in the religious sector. And so my income wasn’t super high. And so I was loving the work that I was doing. I was having a lot of fun traveling and visiting with friends in my 20s. But I barely ever looked at a credit card statement of bank statement. I just knew when my overdraft limit ran out, I had to stop spending money for two weeks until the next paycheck came. So I was in a pretty precarious spot financially just always kind of like hopping from one two week paycheck to the next two week paycheck, paying the minimum amount on my loans that I had to.

Chrissy
So you mentioned that in this time you accumulated some personal debt. So can you tell us was it credit card debt or student loans? What was it?

Chris
Well, I didn’t really have enough money to buy anything. And so my credit card limit, which they kept extending, I thought I must be really good at handling our credit card. But in retrospect, I think the credit card companies loved me because they kept getting my interest payments. I had that pretty much maxed out, probably around $12,000 eventually. And then I wanted to buy a car but I didn’t have any money. And so I thought how do people buy cars? So I went to the bank and I said I need a car loan and here’s what I want to buy and they said well, we don’t actually give car loans for anything under $5,000 but we can give you a personal loan for whatever it was $3,500 so they gave me that loan. They gave me a second loan for I think I was I just went and applied for another one because I had some personal expenses that came up and so I knew that the bank was good for giving me another few $1,000’s so probably at my peak, my student line of credit was $32,000 and then my personal loans from the bank and Credit Card loan was another $20,000 on top of that, and then I ended up getting married and I inherited a little bit more debt, though my wife was a lot better at managing her finances than I was.

Money Mechanic
Yeah, we’re not talking that long ago here we’re talking this is kind of around the 2016 2017 time. And that is a lot of personal debt to have accumulated while you were in your 20s. And at that time, it just felt normal, right? And I think that’s what happens a lot now is life cost money, and it costs money to go to school. So you come up with some debt. And then, you know, things kind of add up. And not many of us I definitely wasn’t in my 20s was good at tracking that and understanding the position you’re putting yourself in. You met your wife, you mentioned in 2017. You were both away working. And she’s American, you’re Canadian, you said she’s a little bit better with debt than you. Why is that? What made her better?

Chris
Quite a bit better. So when she was in high school, just rummaging through her parents library, she found a Dave Ramsey book. And I know Dave Ramsey in the FI community is a controversial figure. And we can talk about that more. But what he did was he really set her on a path of hating debt. And in America, a lot of the schools are much more expensive. And so she wasn’t able to escape with no student loans. But her loan amounts were less than mine, even though, geez her University must have cost four or five times as much. And so by the time she graduated, she had some student loans, but she actually knew how to live within her means when she was especially in grad school, because both of us are undergrad and graduate school trained. And she tells me stories of the kind of budget that she lived on and eating, you know, cabbage and chili and all these incredible, her food budget was like $150 for the month at a maximum in grad school, meanwhile on the pubs and going to restaurants. Yeah, living it up.

Money Mechanic
So do you think that Dave Ramsey book I know who Dave Ramsey is, of course, and I know that he is very vocal about debt, and he’s got a bit of a strategy to pay that off. Did you read the book after her? Did she give it to you? Has she given you the rundown on that, can you speak to what Dave Ramsey’s program is as far as his thoughts and what you should be doing with that?

Chris
Yeah, sure. So I did end up reading the book. But first, I listened to the podcast. And actually, this was after we were married. We got married in June of 2019, and went on our honeymoon, and went on an incredible cruise, spend a lot of money had a great time, totally unrestricted. And we the cruise ship landed and we got in the car and started driving back to Halifax where we live. And she said, I think we should listen to this Dave Ramsey podcast and that’s the first I’ve never really encountered him. And his general philosophy is he has these baby steps, you focus on one step at a time to get your whole finances in order and he really deals with people in financial emergencies, which is why he was a good fit. For me, the first step was save $1,000 for an emergency fund, which wasn’t very easy to have $1,000 extra in my account. The next step is really the core of the whole Dave Ramsey system and it’s pay all of your debt except for a mortgage, so any personal debt, student debt, any debt that you have you pay. You pay off your debt in order of the smallest amount to the largest amount so I had a $1,000 loan left I had a $3000 to $7000 and then my big one was like 20,000 and I looked at that and I had a credit card debt that was about $12,000 and that one was very high interest. And I thought to myself, I really feel like that’s the one I should be focusing on because the more I can eliminate the debt with the high interest the better the long term impact is, but Dave disagrees and I’ll give him a little bit of a concession here he says you need to get rid of the low ones because you need the motivation along the way to really feel the momentum picking up, so when I have my $50 payment for my lowest debt then I can apply that to the larger ones. So mathematically, we can kind of run the numbers and figure out this doesn’t make sense but he always says you didn’t get into debt because of a math problem. It’s a habits problem and a behavior problem.

Chrissy
And I’ve actually heard people who suggest starting with his method which is called the snowball method because it’s going from smaller than rolls bigger and bigger but they say start with that but then when you’ve got enough motivation going you switch to the avalanche method which is starting with the biggest, the highest interest rate and then going from there

Chris
That’s right, I’m you know I don’t know if it’s really a motivation question, early on it is but motivation can’t last you know, we’re in a two plus year debt payment journey and motivation can’t carry you for that long. But what it did was it established really solid habits for us to look at our budget really critically cut out what we could put everything against debt that we could and then once we had sufficiently built these habits that became the norm for our life, then we we did start to look at are there some debts, we should prioritize before others now we got a little lucky, because our highest interest debt wasn’t the highest amount either. So we were able to knock off the credit card debt, before we had to focus on the student loans and the student line of credit. But so we didn’t really have to break the Dave Ramsey rules too much, which was good, because we just needed something, anything to commit to as a family and have clarity about together.

Money Mechanic
Yeah, I’m kind of I’m on the fence for that one. And I think you spoke well to that, Chris, because I would have argued definitely in the past, that the mathematical was the reason that I would have gone with, but I think, after doing the show for a few years, and all the people that we talked to, I realized that that psychological part of it may be is just that is the difference is getting the wins in early, it’s the low hanging fruit that make the changes that does, maybe not, like you said, give you the motivation, but it gives you some early wins, right? And it’s like, okay, I can do this, I can succeed, right? It gives you the confidence. And that’s the same thing with investing, right? Small confidence building.

Chrissy
Yeah, I wonder if it’s because a lot of his audience is people who have not had success with money in maybe their whole life. And if you’re not winning right away, it may feel like it’s yet another tried and failed attempt at fixing your finances. So it does make sense. Psychology is powerful.

Chris
Yeah. Now we did break one Dave Ramsey rule. He’s really intense. He says, Stop all retirement saving while you’re in baby step two, because you’re in a hair on fire emergency. And I just could not bring myself to stop my RRSP contributions because my workplace was matching dollar for dollar up to a certain percent of our income. I said, that’s a 100% return on investment. And so we did decide to keep that. But that was a real discussion we had if we’re going to do Dave, do we do everything that he recommends? So Dave, if you’re listening to this, thanks for everything you did for me, but I did break your rule.

Money Mechanic
Well, getting started and you’re definitely you got going on the right path. Now let’s just jump back a little bit here to just before we got married, you guys both found work in Halifax. So I do want to ask you a couple questions about having a spouse from the US we’ll get there as well. But just from curiosity, in the religious sector, what kind of wages are you looking at? Now? What was it when you entered? What is your potential earnings? We don’t need to go into you know, exact numbers. But just as a general idea of your combined level of income in the future is going to be sort of thing?

Chris
Sure, that’s good question. There’s a lot of different jobs, and different denominations have different standards. And some jobs are at schools or other supporting organizations. So early on, I was around high 20s. And low 30s, when I just got started. And as a 23 year old, I was just happy to make any money at all. And you kind of went in with a missionary mindset because it was really meaningful work for me personally. But I think when I left, my first job I was making around 32, I just kind of raised above that low 30s would be really low for this for this sector. I’ve applied for jobs at a variety of places, and the location matters a lot. But the highest one that I’ve seen as an entry level position, and this was for a person with a lot of education was about $60,000 a year. And that’s someone who’s got experience, probably 10 years experience in the field and also a master’s degree. So the high end of this sector is pretty low. Generally, you probably can make more than that. But especially in Halifax, which is a smaller city, if it’s a lower cost of living area, I would be impressed to make it a lot above, you know, the $50,000 – $60,000 year area, and I’m certainly not there at this time. However, there’s other benefits to working in the religious sector that I can speak to as well. And one key one is certain religious workers have access to the clergy status. How do they call the clergy residential tax deduction. clergy residents, tax deduction. That’s a mouthful.

Money Mechanic
Yeah. Oh, well, because we have the simplest tax code in the world here, right? No, tell us about this I like tax deductions.

Chris
So in, especially historically, your housing would be included in your placement for your church. And so they would give you a lower income to accommodate for the fact that your housing may be included on site of the church. But the tax code had to expand to allow for circumstances where people who work in the religious sector own homes or rent places or rent from the church. And so essentially what it does is you are able to deduct a portion of your income according to what you spend for your residence. And so, I believe up to 30% of your income depending on your rent price, or there’s a different calculation for if you own your home is deducted from your income. So, for instance, if somebody is making $50,000 a year, I think they could deduct probably up to $17,000, or whatever 1/3 of your income is, or the actual cost of your rent and utilities, whichever is lower. And so that is a significant deduction to lower your income, and lower your taxes and give you access to greater government benefits, such as the child benefit, Canada child benefit, because the lower your income is, the greater the child benefit you receive is. I know you’ve had guest talk about that before on the podcast. And so that’s the major advantage to working in the religious sector. And this doesn’t apply to everybody, there are a lot of really difficult to interpret government regulations around what pastoral work is, and which denominations are maybe able to offer it. And so you have to really look into that and see, do I qualify, it’s really for front facing pastoral work. And so my work is with the public and with individuals and in leadership and mentorship roles and a role of spiritual guidance. And so I’m the boots on the ground in the pastoral world in a lot of ways.

Chrissy
Okay, so you, you qualify because you’re, as you say, your front facing you’re, you’re directly working with the public.

Chris
Yes, and anyone who’s working in religious world who’s maybe listening to this, you’d have to, this is a complex tax situation that you really would have to talk to somebody to get more information about. But thankfully, the HR, my work is really good and was able to describe and explain it to me and helped me to sort it out with my own personal taxes.

Chrissy
And now just to clarify a bit more about the tax credit or deduction,

Chris
Deduction

Chrissy
Deduction, okay, so did you mention if mortgages qualify if it’s just the interest or the whole payment, or the only rent that you can deduct?

Chris
You know, I should have looked more into it. I’m a renter, so I haven’t looked into the the mortgage or what portions of the mortgage qualify, but there is a whole section in the tax code that deals with religious workers who are home owners and so I imagine there would be a similar deduction, it probably would be based on your income at that point, because it’s either income based or based on the amount you pay and for me, those are similar numbers. So I’m, when I’m crunching the numbers, they always end up really close. So at that point, I imagine it would be just 30% of your income.

Chrissy
That sounds huge, it really helps a lot to lower income it, I’m sure it doesn’t totally make up for the lower income that you earn, but it certainly helps. And as you mentioned, if you are a parent and working in the religious sector, you you could really benefit from the CCB, the Canada Child Benefit.

Chris
Yeah, and we really are benefiting from that because we just welcomed our son just over a year ago. And so that’s one of the really big benefits is that the child benefit is more generous and actually, I double check today the child benefit you get the maximum benefit if your income is as a family, not lower than $32,000. So $32,000 is that magic threshold for the child benefit to get the maximum amount that you can get and so for a religious worker, they could very easily deduct their income to a level especially when you consider charitable contributions and other you know RRSP contributions that you could get your deductions down to the level where you’re making that $32,000 of taxable income to get the maximum child benefit and that’s one of my goals is to every year and get my income just to the right level to get the maximum child benefit.

Money Mechanic
I know where you’re coming from I don’t know if I want 100% support this because you know well I think in Chris’s situation it probably works well he doesn’t have a huge runway for super high income right but there are going to be other listeners that are like well I don’t know if I should keep my income super low or maybe it makes sense to get retrained or get more education you know, if you’ve got chances to increase your income that’s going to be one of your faster ways to FI than relying on you know, or keeping your income low enough for government benefits but in your situation I can see how it works you’re you’re kind of in that you know, middle area of earnings and it’s perfect if you can manipulate the numbers to your advantage and make it all work out then that makes sense right?

Chris
Well, here’s another way of thinking about it is that the way that the child benefit scales is so you make $10 above the minimum of $32,000 and whatever. For every dollar you make above $32,000 your benefit is decreased by seven cents. And so for every dollar above I’m losing 7% return on my money and that’s increased the more kids you have so for every dollar that you’re you increase above 3$2000 if you have two kids, I think it’s 13 and a half cents and you have three kids, that’s 19 cents. So if I put one more dollar into my RRSP, for instance, I get the return that comes with my investment plus an automatic say I had three kids 19% return on my money that year. Do you like doing spreadsheet? I have a lot of spreadsheets. Started with fantasy football, and now it’s become net worth tracking.

Money Mechanic
Okay, that’s awesome. Well, let’s pivot back a little bit. We know that you were introduced to Dave Ramsey by your wife driving back from your expensive wedding. Let’s just put it in the notes here. That’s an expensive wedding. And at the time, you’re in debt, and you’re having this big fancy wedding. But anyway, that’s in the past. Now, you said that you kept doing research because you like you mentioned with Dave Ramsey, you didn’t feel like it was all super optimized. You wanted to keep some RRSP investments and this and that. So how did you find FI What was your first introduction to that, for the FIRE community?

Chris
You know, I try to think back to what I found, and it must have been a blog post on the Choose FI American group. I did have a friend introduced me to Mr. Money Mustache a number of years ago, and he tried to get me into you need a budget, but neither one of those stuck but I was really impressed when I was in the FI community reading and listening and Mr. Money Mustache kind of popped up again in my life. So I think I was it was probably when I was trying to Google “Is Dave Ramsey’s method mathematically sound?” And eventually I found the podcast and one of the immediate things for the Choose FI podcast that’s stuck that struck with me, that struck me was they have an episode on the travel rewards. And because we do a lot of travel internationally, I started getting interested in credit card churning. Now I’m not really a credit card churner, but I respect that people do that. But I did want to find what the best credit card is that will give us the greatest return. And that’s another area where I break Dave Ramsey’s rule. So once again, Dave, very sorry about that.

Money Mechanic
That’s right. He doesn’t like you having credit cards does he?

Chris
No, but we put every dollar we spend that we can on a credit card.

Chrissy
It just makes sense. Why not? You’re gonna spend it anyway.

Chris
From there I just got deeper and deeper in the FI world and found all these little optimizations and part of its budget, part of its reduced spending, creative ways to be frugal, DIY elements, fixing things at home, building things myself, kind of going a little bit more minimalistic with our purchases, but you can only decrease your spending so much. I’m pretty happy with how much we’ve decreased our spending. The item I’m most proud of is on Choose FI in the US, they always talk about the $2 threshold for a meal per person that they shoot for. We’ve more or less hit that in Canada, which is really challenging, especially in Halifax. But if you ever heard of the Flashfood app, that is my best friend, I bet there are months where 50% of my grocery bills are funneled through the Flashfood app. So I’m like a hawk with that stuff.

Money Mechanic
I hope you used Chrissy’s referral code off Eat Sleep Breathe FI, free plug for you there Chrissy!

Chrissy
Yeah, it’s an awesome app.

Money Mechanic
I’m disappointed with Flashfood because it’s I just don’t have enough stores close to me. But yeah, Chrissy, you use it a lot don’t you?

Chrissy
Yeah, yeah, my family uses it a lot too. My dad, he bike rides everywhere. He bike rides to all the stores that are near him some are far away, and he’ll still go just to pick up. He eats almost exclusively from Flashfood. It’s crazy.

Chris
That’s amazing. I’m a biker too. And there’s a lot of stores near me. And that was another FI thing is why I wanted to be healthier. I had a gym membership. But it wasn’t, you know, it wasn’t working for me, let’s just say. But then once I started getting into flash food, and I live really close to work. And I wanted to optimize our gas bill and our car payment so I started biking a lot and that helps too.

Chrissy
It sounds like you worked really hard once you discovered FI to really optimize all your expenses, including selling a second car you mentioned that quite a large shift in your lifestyle and how did you come to that decision?

Chris
Well, we had two cars and one I was really sick of repairing it all the time. Seems like I mean no I didn’t know Money Mechanic I couldn’t drop my car off at your garage or anything like that.

Money Mechanic
Let’s keep that quiet too. I already get enough calls.

Chris
And we live really close to where I work which was really nice. And we decided just pull the plug and sell this car and be done with it. No insurance payments, no repairs, and figured there’s a carshare service in Halifax that I could become a part of and they just charge you I think it was like $12 a month or $2 a month plus however much you use it and for the few times that I did need a car if I needed to go visit some churches as part of my work or if my wife had the car and I needed to get somewhere that I could use the car share service and so for quite a long time before I got into biking I did use it pretty regularly. Actually as much as I ever wanted, and I worked out the my average car cost, and that includes fuel and insurance was $89 a month over two and a half years. And so that was way less than I was paying even just for insurance on my car and being in the city helped a lot. And I know that this is probably another topic that’s difficult. People talk about geo arbitrage and moving to a place that has lower living expenses. And we definitely could live in a part of Nova Scotia that has lower living expenses. But when we add up all the benefits of living in a higher cost of living area, even access to flash food, being able to bike to work, having parks nearby, being able to walk to the grocery store to the drugstore, I think I would easily spend more on rent in a location that really fits with our lifestyle and lets us optimize other things. Rather than move out to a suburb or have to get into a car every day if I want to go somewhere.

Chrissy
Well, you know what’s interesting, I have an interview series on my blog, interviewing people about their essential expenses. And what was completely unexpected to me was that higher cost of living areas tend to actually have a lot of lower expenses for everything outside of housing. So while housing is a lot more expensive, your groceries are cheaper, you have more access to different kinds of services. And for instance, insurance might be a little bit more, but you’re able to get rid of one car because there’s a lot more public transportation. So it’s surprising that it ends up being that sometimes outside of housing, the all the other expenses add up to quite a bit more when you live in more remote areas.

Chris
Yeah, and we feel that exactly. And we got lucky in the apartment that we got when we got married, but we wouldn’t trade it almost for anything. We see lower cost apartments come up and people recommend them to us. But I think we’re in other areas saving up to $1,000 a month because of taking advantage of where we live.

Chrissy
Yeah, that’s wonderful. So I think the next step in your journey was developing a debt pay down plan. And so we’ll go into that, but first, we’re going to take a quick little break for our sponsor for the show.

Money Mechanic
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Money Mechanic
Alright, welcome back. We are talking with Chris from Halifax and I really want to know what’s going on with all that debt you racked up, you brought it up earlier in the show, and your wife hit you upside the head with the Dave Ramsey book. And then you listen to podcasts. And you still have some debt. Let us know how much that was. And we’re talking here the story is, this is back in the beginning of 2020. You came up with your debt repayment plan. What does that look like? And what are your projections for paying it off?

Chris
Yes, it was June 2019, actually, that we got into Dave Ramsey, and immediately got home and tallied up all of our debt and the spreadsheets and got a great little chart for the fridge to kind of keep us motivated. And we figured we had $68,000 of debt. Some of that Canadian most of it quite a significant chunk also was an American dollars. And we decided for simplicity of our own life, we weren’t going to do any currency conversion or anything like that. We just wanted to look at that one number, we knew that we had a plan. And the original goal was what if we could knock this thing off in 24 months. So we live in a higher cost of living part of Halifax and so our rent is not insignificant. And without getting you know too revealing about the numbers, our combined income was not significantly more than $68,000. So we knew we had a big task ahead of us even with the deductions we mentioned. So the first year, we pushed hard and we didn’t have a kid at that time. And so there were certain expenses that are unavoidable now that we didn’t have and it was really like pushing a boulder up a mountain a little bit. We had those high interest payments, I believe the first month we paid $420 in interest that was the that was the baseline that we’re paying monthly. Now you don’t see those payments because they’re all baked into the debt prices themselves. But we were paying $420 monthly on interest. And now I think our interest is well I won’t jump ahead of myself too much. We started eliminating the debts, the lowest ones first one at a time. And we were able to get rid of our first one about a month and a half in which just felt awesome. What didn’t feel awesome was going to the bank because they make it about as complex as possible to close these loans sometimes. And we just slowly were able to eliminate two or three until he got to the credit card debt, which was I think, started $11,000 or so. And that one took us quite a long time. So I’m glad that we got those early wins because we spent the big chunk of the next year knocking off our credit card debt. And so we’ve gotten to a point now where we’ve just consistently hammered away at it, when we had our son, we had to take a pause for a couple of months. And there’s a lot of financial adjustments and maternal leave that come into play because we’re getting a reduced salary. But at this point, we we’ve past 24 months, we’re about 26 months in, but our goal is to eliminate the debt. By the end of 2021, we’ve got about $14,000 left. So in just over two years, we’ve eliminated almost 50, maybe just over $50,000, something to that effect.

Money Mechanic
Amazing. Congratulations, that is so amazing.

Chris
Thank you. And what makes me more proud is I just shared before the podcast started, we crossed the negative net worth calculator about six months ago. So we’ve been tracking our net worth as well as our debt, because we didn’t cease our retirement planning. So we kept and now I’m directing those myself, I did get them away from the financial advisors, and I’m doing self directed retirement accounts. But that was one of our first celebrations was when our net worth crossed zero about 16 months ago. And it’s climbed significantly, it’s unbelievable to see once you get some momentum behind growing interest, it’s really incredible how fast that seems to climb.

Chrissy
Well, I think that was a really smart choice that you didn’t stop the RRSP contributions because you were getting the matching, I mean, that, you’d just be giving up free money, really that that was a really smart choice.

Chris
Yeah, that’s the way that we looked at it, we knew that it would really help our debt to get more money against it. But we also knew that there would come a moment where it feels like we’re throwing away money because we don’t see it monthly. But now that we see the chart climbing in the green more and more every month, even on months when we don’t have extra income coming in or when, you know, once my wife’s leave was done, but she wasn’t back to work for another month that our net worth continued to climb. It was pretty, pretty gratifying and felt pretty good.

Chrissy
Now, are you comfortable sharing what percent of your income is going towards debt pay down? Like I just want to get a sense of how lean you’re living? And how tight it is to be able to pay down your debt this quickly?

Chris
Yeah, it’s it’s tricky to, it’s tricky to identify because, well, we have some side hustles that we can talk about in a minute now. But we typically have started putting at least $2,000 a month against debt very, very consistently. And so that would be it must be 35 to 40%, almost of our income. So that’s gonna feel pretty good to get back.

Chrissy
Yeah, yeah. Yeah. To put towards your investments instead.

Money Mechanic
Yeah. So will you roll that it straight into investments? Or are you finding that you’re, you know, living, frugal to the point where you’d like to have a little bit of that back? And have you thought about how much you keep putting in, as far as, you know, a target for investments monthly?

Chris
Yeah, we, we feel like once we started, you know, having growing our family with our first kid, there were certain areas where we had to stop being as frugal as we were. And that’s completely natural when you have a family. That being said, when we’ve finished paying our debt, we don’t really have any desire to slow down. And we feel like we’re at a level that’s sustainable for quality of life. We’ll probably go on a vacation, that will be a pause. And we’ll probably I think one thing we said is, what if we went to a restaurant every week for a couple months? Wouldn’t that just be incredible? So our big splurge is let’s go to a restaurant once a week. But even that, we think we’re going to be able to continue to roll our money towards our investment accounts. And I’m pretty excited to start seeing those things grow.

Money Mechanic
You well, you’ll see them grow fast.

Chrissy
Yeah, yeah. So you mentioned you moved your investments to Wealthsimple, and all into index funds. And was that a big transition for you as well, to have to learn how to do that yourself.

Chris
You know, investing was really interesting. So my father in law gave us a little money for an investment account, because I think he really enjoys it. And before that, I wasn’t doing any self directed investments or any investments of any kind. So we got this little trading account that we opened up. And I just was really impressed at how simple it was. And just that little bit of money that I had, was enough to kind of get my hands on it and experience it for the first time. And I felt like I was throwing money away. By doing with high fee funds that were too complex to understand that I think the funds that I was in previously through my employer pension. Good luck ever understanding how they were allocating anything, and I really felt convinced that I needed to start doing more self directed. So I was having such a positive experience, I ended up talking about half dozen of my friends into this doing an investment contest with me. But mostly the goal was to give us a sandbox to experiment and play with What does investing look like? How do you do it? How do you trade? What is a trade? What’s a capital gain? What’s a capital loss, just really small amounts of money to practice and get some experience with it. So for me, moving to index funds, or ETFs, has been really simple. And maybe I did it just the right time. All of my investing really started in January of 2020. So before the pandemic, but of course, we’ve had quite a good Bull Run recently, because my investments, now I say this, knowing that I’m gonna get a slap in the face as soon as there’s any kind of market downturn, because I’m way too confident, because all my investments are up, you know, 50%-60% since the start date, because I started in 2020.

Chrissy
Now you said you started January 2020. So right at the beginning of your investing journey in March, you took a big hit, like how did that feel as a new investor?

Chris
You know, that was hard to weather emotionally. But I also was able to invest in some pretty opportune stocks that had dropped 80% or so and so it rather than discouraged me, it probably gave me a little bit too much confidence to take a couple aggressive investments and bounce back to quickly. So I’m still waiting to get that slap in the face from the market to convince me to let go of any of my creative side investments and focus exclusively on index funds. But it hasn’t come yet. But the vast majority of what I do.

Chrissy
It doesn’t matter, you’re farther along, you just end up like someone on the show. Dabbled in all kinds of things.

Money Mechanic
Are you saying, is that me when you say that?

Chrissy
I don’t know.

Money Mechanic
Yeah it might be.

Chris
I’m not into options yet, but probably 5% to 10% of what I have is in purely fun stocks, speculative stocks, the travel sector, which hasn’t bounced back, a little bit of cryptocurrency, but about 90%. of what I do is in the typical global equity, Canadian equity, those sorts of things.

Money Mechanic
Yep. Perfect. That’s what, but everybody should have that core in there for sure. Yeah, I like that. I like the idea of a little investors group with your friends, because one of the things that’s really helped me along the journey, well, of course, during the podcast is amazing help, because I feel like I have to learn so much to be able to present it properly. But it’s having a couple friends that you can talk through these things with and and even if it’s just buying ETFs, just saying, Do you like XEQT? Or do you like VEQT? and just having a little bit of a discussion about it, right? Because it can be so bland and boring to have to sit there and read about it yourself and not really get any feedback. And even though there’s some great, you know, social media groups and things like that, sitting with a buddy that you trust, or family, friends, or whoever it is, a sibling, and just being able to talk about it, I think helps a lot. It gives you a lot of confidence today, okay, well, you know, there’s, how’s it go, there’s confidence in numbers, right? With two people might not be doing the right thing, but we’re doing it together. So that’s good. I like that. I like the little group.

Chrissy
So I want to just quickly touch on the RESP, because we’ve still got quite a bit to cover in your story. And we don’t want to miss out. So the RESP, we’ve talked about it talked about at length on this show. But one of the things that we didn’t really mention in the other episodes was the lower income grant that, grants, actually, there’s two different grants that you could receive when you’re able, when you have a lower income, we’re able to keep your income lower. Can you mention those two separate grants that you could get?

Chris
Yeah, absolutely. So we are putting a lot right now into individual investments for things like this, because we are laser focused on debt. But I knew that I had to at least start the RESP because we were going to get a lot of, you know, kickback from the government. So the government will match, I think it’s you can put in $2,500 a year, and they’ll match 20%, which is I guess $500. And that’s standard for everybody. And the amount they contribute over the lifetime has a maximum, I think it’s $7,200. And that probably is going to happen in 15 years. But for those in the lower income, the government gives you the same amount over the lifetime, but they give it to you sooner. So if your income, I think the threshold, someone’s gonna have to Google that’s out there. But I think the thresholds $49,000 for lower income to get an additional 10% thrown in in terms of the government match. And I think if your incomes higher than that, but below a certain number, they’ll throw in an extra 5%. So in fact, what that means is when I put in, you know, whatever I put in, the government will put in 30% this year rather than 20%. And as investors we know, the sooner you get that money in the account to grow, the better. That’s the RESP

Chrissy
That’s the Additional CESG.

Chris
Additional CESG savings grant. Yeah. So on top of that, there’s also the Canada Learning Bond. And thankfully, we do this with Questrade, they take care of all the applications automatically for your account. The Canada learnings, bond is a one time so for low income, the first year you qualify for it, the government gives you $500. And then every year subsequent to that you qualify for it, they give you an additional $100. So these aren’t huge amounts of money. That being said, I’d rather have $500 growing for 20 years, then not have it growing for 20 years. And so those are, I guess, the government’s matching, when you include those probably, I don’t know, 31%-32% of your contributions. And so that’s we’ve just started really to put money in that. And we’re not putting significant amounts. But we did get enough to get at least the Canada learning bond and to get some matches this year. And we look forward to focusing more on that in the future. That’s one of the areas we haven’t really decided on once we finish paying off debt, do we start to get the full match for the RESP? Or is it more beneficial to focus on other areas? Make sure we got our income low enough to hit that CCP? Those are the kind of, well, you know, I’m gonna have a lot of spreadsheets with those numbers in about eight months.

Money Mechanic
Awesome.

Chris
Yeah well, thank you for sharing that. Because I think there are some members of our audience who could benefit especially part of our audience will reach FIRE at a very young age, and they will be able to keep their income low enough to qualify for some of these extra benefits. And maybe there are audience members also who are in a lower income and are able to access those grants as well.

Money Mechanic
Now, considering your income level, you’ve taken it upon yourself this year, to get into doing some side hustles. Let’s just let’s dig into that a little bit here. Before we close out, you said you’re able to start two businesses, which is pretty awesome. Tell us about those. What are you doing?

Chris
Okay, well, the first one really came naturally, because I already was biking, I already was on the road in downtown Halifax and I knew that Uber Eats was in Halifax. And so I just thought, maybe I’ll make you know, five or 10 bucks here or there picking up food for Uber Eats. And so I signed up for the platform, and I got ready to go and I bought a thermal backpack to put food in. And I started just biking and delivering food, and there was a lot of demand. So let’s just use today as a for instance, today I left for work 10 minutes early, because I got an Uber Eats request. It was from a restaurant in my neighborhood towards the downtown core where I work and so it added eight minutes to my commute. Then at lunch, I have an hour for lunch. And I typically take 45 minutes to do some Uber Eats deliveries because I work right in the downtown core. And I can make sometimes $30 in a 45 minute lunch break delivering food today was a little slower, I only made 15 or so. And then after work, my wife picked up our son and then she was on our way home and I knew I had a few minutes. So I added about 20 or 30 minutes to my commute and did three UberEATS deliveries on the way home. And so it really doesn’t significantly impact my day I’m still traveling to and from work and I’m $40 richer today. So typically I can make probably $150 regularly doing Uber Eats and getting some exercise as well. I’ll go with a couple evenings if I have availability and sometimes on Sundays, or on Saturdays and weekends, but I’ve made regularly about $500 a month because these things really add up, I my goal one month was to pay our whole rent and I didn’t quite make it.

Chrissy
That’s fun!

Chris
But I’ve made up to eight or $900 a month delivering for Uber Eats. And you know I’m going to talk about tax deductions now because there are those too for bike couriers. One, the value of the bike is for the business and so I can deduct that as well as any purchases I make, helmet, delivery bag, any little small purchases, bike repairs, which is essential. So those are all deductible. But the real nice one is bike couriers in Canada are able to deduct $23, which represents the cost of the additional groceries needed as fuel for every eight hours that they bike.

Chrissy
I never knew this. I read that in your notes to us. I’m like, What is this?

Money Mechanic
I know like what is he talking about? I get to deduct $23 for groceries. What’s he talking about?

Chrissy
It’s human fuel!

Chris
In 2006 some bike courier had gone to the Tax Court and made his case that I need this many calories and in order to do that I need to spend this much money. And so it was $16 or $17 for the longest time, so when I started that’s what the deduction was but this year they upgraded it to $23 that I can deduct from food for every eight hours I bike and Uber conveniently logs my biking time right in the app.

Chrissy
I’m gonna ask you like yeah, how do you track that? okay.

Chris
So every week, I get my earnings report and I put in my spreadsheet how many hours I biked that weekend. I think my typical biking is eight to 12 hours in a week. And so I think I’ve got $600 or $650 or $700, I can deduct from my income for groceries for that

Chrissy
Good for you. And I follow a blogger, his blog is Financial Panther. And he also delivered does deliveries and pickups on bike and he said, that is the most optimized way to be a delivery person. Because in a car, you’re paying for fuel, you’re paying for insurance, and you have to get extra insurance when you’re a driver as well. And you also have to find parking. And in the downtown core, it’s a nightmare. And you just waste so much time circling the block, just trying to find parking. So on a bike, you’re way more nimble, and you’re getting exercise. So you’ve done it the right way,

Chris
Yeah you can even go down one way streets in the other direction. Don’t tell anyone I told you that.

Money Mechanic
Well, and this just rolls back to the point that we were talking about earlier that maybe living in a higher cost of living area if it fits your lifestyle and what you want. It does it provides you with opportunities like this to right? cause you’re living in a downtown core of Halifax you can be that Uber Eats rider on your bike right?

Chrissy
You can’t do that in the suburbs.

Money Mechanic
Yeah that’s really interesting. That’s a great one. I love the $23 deduction for groceries. I’ve never heard of that in Canada before. So you heard it here first on Explore FI Canada.

Chris
Now I have to put the caveat. I just started this in March. So I haven’t experienced the tax season doing this. We’ll see if I run into any problems. But my tax person is pretty confident.

Money Mechanic
Well, that’s good. Yeah, we don’t want to hear about one of our listeners getting or presented being audited for bike expenses. Okay, now, so funny thing you mentioned taxes, because your second business that you started, it’s going to have some implications, while they all have implications on your taxes, but you’re gonna have there’s some complications there. So what’s the other one that you’re doing?

Chris
This one’s definitely more complicated, which is why I’m grateful to have a tax person. But so the story is, we’re Dave Ramsey folks, so we don’t take debt anymore. And so we started saving up for a new car, well, a used car, because we knew that when our car died, we were not going to finance a new one, we were going to pay cash for it. So we’ve got this old 2006 Ford Focus, which is honestly it should have died already. Because of the miles on it.

Money Mechanic
Whoa whoa whoa, old? both my cars are older than that.

Chris
Again, you’re Money Mechanic, you probably can maintain them a little bit better than I can. So this Ford Focus, we presumed was going to die a year and a half ago. And that’s when we started putting away money because we wanted to be able to buy a new car, used, with cash. And so we saved up $5,000 because we knew we could get something reliable with that amount of money. We’re still in our debt payment journey. So we’re not going to splurge we’re gonna get something just to get us from point A to point B. Okay, so the car doesn’t die. And I’ve got this money sitting there in a savings account for six months. And I love to optimize and this is not making me money. And so I need to do something with this money to make money. And I talked to my wife and I said, so there’s this, this service called Turo. And it’s like Airbnb. But for cars. I said, What if we buy our second car now? And as long as we make enough money back from this to pay for the insurance, it’ll be a net positive. And so she said, Alright, let’s give it a shot. It’s pretty low risk. The only risk is additional insurance until our old car dies. So I buy this 2014 Chevy Cruze. Totally normal plain sedan. Nothing fancy actually some dings and dents. And we listed on Turo now, I want to say here this summer for tourism was probably a lot busier than most summers are going to be for tourism. So I don’t want to take I don’t want to read into how successful we’ve been this summer for the future. And there was also a historic rental car shortage that’s happening in North America. I think that hertz and enterprise I’ve had to sell a lot of their cars to stay solvent. But anyway, we got this car we listed on Turo. Turo is very new in Canada. It’s all over the United States, but people don’t know about here yet. And I think it’s the only company of its kind that’s allowed to operate in Canada. And boy, I never see my car anymore because it’s always rented out

Chrissy
Now who rents on Turo what kind of people are renting in Halifax?

Chris
So I get some locals who are people who like me decided they didn’t need a car and sold it and if they want to go to the beach or it goes to some historic lighthouses or do a little touring, they can just rent a car for the day. That for June and July was the majority of my rentals was one, two, three day trips with locals. But I’ve now had three rentals one in July, one in August one in September, which were at least two weeks long people who are flying in who are looking for rental car and I guess they found Turo probably by Googling rental cars and seeing what comes up. So I’ve had you know 15-20 trips now people all over Canada, as well as a lot of locals. Generally were undercutting rental car prices quite a bit. But I’ve also been able to raise my prices significantly as the season went on. Because in August in particular, there was not a rental car to be had. And so at this point, I’ve had the car for four months, and it’s already made back 75% of what I purchased it for, which is just remarkable. Now Wow, we got to talk about our deductions because uh, all costs associated with this are deductible, for instance, car washing supplies and other things, car repairs, that kind of stuff. But also, and I am looking forward to tax season because I was talking to my tax accountant. And she said that things like the depreciation of the cars as well, there are some formulas to account for that as well as the purchase price of the car. So Turo keeps a log of how many kilometers are driven. And so sometimes at the end of the year, I’ll have to do some calculation of what percentage of the use was personal use, and what percentage of the use was for the business. So we’re, jury’s out on what the tax implications of that are going to be. But I think we’re going to see a pretty good number of deductions related to that.

Chrissy
Only someone in the FI community would say I’m looking forward to tax season

Money Mechanic
Yeah. So I just want to get it, I’ve I know what Turo is I was going to use Turo when I’ve before when we were allowed to go down in the States. And I know kind of how it works. But just from your point of view, do you do you have to become a sole proprietor with basically a number company for GST? And do you get monthly cash flow from Turo for your rentals? Or, you know, how does it just not going too deep into this. I just sort of curious how that looks.

Chris
Yeah, I don’t have any kind of registered business or sole proprietor at this time. But I think after you add three cars, it’s recommended that you do register in a different way. Or maybe there’s an income threshold, the payments come in, typically three days after a booking has completed. So they’re really coming throughout the course of the month, I’ll get, if I have a lot of bookings, I’ll have eight to 12 times that it’s automatically deposited into my bank account. And so it’s, it’s really been unique, I am interested in adding a car or two for next summer. But I want to see what the winter looks like first, before I can financially do anything.

Money Mechanic
Yeah, you’re gonna have a slow winter, you’re going to be carrying that asset, well depreciating asset over the winter. So that’s really cool. I love it. I love that these are your side hustles that you’re engaging in. And you know what, it’s one of those things where both of those take a little bit of work from you. Right? The ride your bike round gives you the exercise benefits and the deductions, the Turo I’m sure you need to do some tracking and paying attention to it and staying on top of it, getting the car cleaned and things like that and getting it serviced. But you know what, if you want to earn extra income, you’ve got to put some work into it. But you know, it can definitely be worth it. Right?

Chris
Yeah, and both are flexible. So I can I can do my primary job, no problem, and really commit to that without feeling distracted, which is really important to me. And those things can happen on the side. They’re flexible. And really they’re just net benefit right now.

Money Mechanic
Awesome. Chrissy, well, the kind of save the best for last, didn’t we?

Chrissy
Yeah, we did. We really did that. Now this, this part is really interesting. You’ve been through quite a bit of ups and downs in your journey, but this most recent twist in your story, it’s pretty difficult. He tells more about how your summer was.

Chris
Yeah, so I would say all these other things we’ve talked about, they get me fired up. They’re really interesting investing, saving, debt payment. Those are on the surface level. And we had a little bit of a family emergency this summer. And this was what cemented the FI path for me really the benefits that gave us so we had, my wife is not from Canada. So the nature of her visa can be sometimes a little precarious. And we did have a situation where the renewal was denied. And we were surprised by a letter from the Canadian government, essentially, well, I like to say they asked us to take a government mandated vacation out of the country. And this led to an enormous amount of uncertainty. What’s our work situation going to be like? What country are we going to be allowed to live in, everything is interrupted, where’s our income going to come from? We’ve got, you know, an infant. And so that adds a lot of complexities. And we had to stop thinking about all these other additional elements and really handle the emergency of dealing with international travel during a pandemic, as well as immigration and visa issues again, during a pandemic. And we felt like the bottom had really fallen out of our entire life. We have some very generous friends and family to support us and we’re really grateful for that. But at the end of the day, once we were able to come back to Canada and we’re able to get the appropriate visas to have a stable life here again, and we’re in a good shape again, we kind of exited that crisis, and barely had a blip on our finances. And that’s not important to me for the net worth being green in any particular month, but what it means is, we were able to not panic about finances and direct the panic towards the other parts of our life that needed it, and come back and kind of come back into our life. And even less than a month after getting back, write another check to pay off and close another loan for multiple 1000s of dollars. And so the FI journey for us, we’re only two years in, we’re focusing on debt, we’re building a little bit of a cushion, but the tricks and the tips and the optimization and the habit and lifestyle change that we’ve made because of discovering FI and personal finance, and I’ll throw Dave Ramsey in there, allowed us to weather and come through a really like a once in a lifetime kind of family emergency completely unscathed. And that’s the kind of freedom that we need to have in terms of our relationship with money, and that I just feel so blessed, and so grateful to be able to have in my life.

Chrissy
Yeah, this is the same kind of sentiment that’s echoed by so many of our guests like throughout this pandemic, that freedom and the security that FI provides. It’s just it’s priceless. And it starts as Money Mechanic said at the beginning, it starts right from the the beginning of your journey, it doesn’t have to be right when you when you reach full FI, it can start from when you change your mindset towards this way of life. It really is it’s a lifestyle. It’s not just a tactic. It’s really a lifestyle and a mindset shift. And it can free you from so much stress and so much worry, being able to have your finances lined up and optimized this way.

Chris
It’s interesting, because in a lot of ways, this whole journey is about money. But ultimately, what we’re going for here is not about money. It’s about having the freedom to live the kind of life that I feel called to live and invest in my family and take care of them. And so optimizing and getting in a good stable place financially and recovering from $68,000 of debt and living paycheck to paycheck meant that when we had a two month emergency, none of it was about money. And that was a gift that I’ll hold on to for the rest of my life.

Money Mechanic
That’s amazing. I don’t know if I can add anything to that. That’s so fantastic. Okay, so summing everything up. What you just did very well. What’s your target? What’s the long term outlook here?

Chris
Now this is an interesting question, because I don’t think I have as stable of a retirement date and goal as most people in the FI community,

Money Mechanic
well, I won’t hold you to it.

Chris
So when we first started discussing the kind of changes that we were going to make, because of FI, we did it mostly thinking about the, you know, the next few years of getting out of debt, that FI would help us to optimize in order to accomplish our debt free journey. And retirement early wasn’t really a key part of that goal. And part of it is that we really love our work, we find a lot of meaning in it. We think that is something we could do for a long time. And now that our family’s growing, our mindset has shifted a little bit. So if I had to put what my FI goal is, I would say, before my son is out of high school, I would love to be able to work less and for work to be optional. I’d love to be there in the morning, take time to exercise, maybe work 10 to three, maybe do some consulting or contracting work. And then also be there to spend time with with him at the end of the day. And hopefully some more kids as our family grows and not be stressed about money on the weekend. So I can really invest in family life and life with my wife so that we don’t have to wait till we’re retired to live like retired people.

Money Mechanic
I love it. That’s an awesome goal to have. And I just can’t congratulate you enough on what you’ve already accomplished in a relatively short timeframe. I’m talking like three, four or five years here you’ve made some huge transitions. And yeah, just my congratulations to you and I know you’re gonna continue your success moving forward.

Chris
Well, thank you so much. I look forward to filling you in sometime in the future when we’re ready to take the plunge on coast FI or barista FI or wherever we are.

Chrissy
Our July episode where we had a Where are you now? Where are they now? with T and with Megan that a lot of people really enjoyed that. So yeah, that’s a great idea. We’d love to have you back on and thank you for reaching out and sharing your story. It was fascinating, and I think very inspiring.

Chris
Well, thanks for this opportunity. It’s been a big part of our family life and our journey and hopefully this will you know, bless some other people who maybe think I’m not a software engineer, can I actually improve my financial status?

Chrissy
Yeah, I love it. It’s a unique story, and I’m Glad we could share it.

Money Mechanic
Thanks Chris. We will catch all you listeners again on the next episode of Explore FI Canada.


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2 Replies to “062: The Low-Income Path to FI | Pastor Chris”

  1. I really enjoyed this episode! The conversation flowed well and it’s inspiring to hear about a path to FI with a lower income.

    1. Hi Christie—thanks for the lovely comment! We really enjoyed our conversation with Chris and are glad to hear others did too.

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