I was reading a blip on Instagram this morning. Apparently me and my generation are the reason young people can never afford a house. Oh yeah, and the Democrats. The poster was American so I guess as a Canadian that would be the Liberals or NDP. As I delved into the scary world of “comments” it became even more apparent that we have destroyed the world and we are all selfish leaving nothing for the next generations. It became quite heated. Lots of anger out there between the generations, both accusing the others of not working hard. Normally I don’t care that much but it seems that people love to throw around numbers that don’t entirely reflect reality. At least not my reality. It seems the generic view of how easy things were when I was young is based on my yearly wage versus the cost of my home. So I set out to calculate this for myself.
The year was 1989 and we were living with two children in an 800 square foot apartment. There were two bedrooms but the smallest had only room for a twin bed and a dresser. The master bedroom held our bed, a crib, a mini deep freeze, a bench press with a barbell, two dressers and a sewing machine. Everything was pressed against the walls and there was a small corridor between our bed and the stuff. It was time to move. My first home was $92,000. The asking price was $105,000. We offered $92 K they came back with a counter of $99 K. We countered with $92 K. We had made it very clear to the realtor that this was all we were willing to pay. They countered with $95 K and we told the realtor we were no longer interested. The realtor offered to forego part of his commission as he was double ending the sale and we got the house for $92 K. It was a 1964 bungalow with the original hardwood floors and green shag carpeting. The basement was finished in the early 1970’s and the decor was hideous. It smelled like mildew and of the four rooms only two had vents from the furnace so it was bitterly cold in two of the rooms. Wind whistled through the original windows and we taped over all of the window openings in an attempt to keep the cold out.
When we bought this house we were fortunate to put 25% down on the house and avoided CMHC costs which insure your purchase against default. So the down payment was $25,000. First off keep in mind that I had only been out of school for 4 years and I had been paying off student loans during that time period. Although I had borrowed close to $40,000, after grants and scholarships I had to pay back $18,000. Since the interest charged at the time was based on an average of the second quarter prime, my interest rate was 12.75%. The 1980’s were brutal. The first six months after graduation were interest free and the payments started on the first of the seventh month. It took me a couple of months to find a job and my take home paycheque was $800 per month. I had been receiving baby bonus money from the government since my first child was born. My first cheque was $16 per month. I never spent them. They went directly into savings. So just before the first payment was due, we took what savings we had along with our daughters $1800 baby bonus money and put every penny against the loan. This included $3000 that had been in trust for me after a great uncle died a few years prior, as well as $2000 from my father in laws estate. After 8 months of putting my entire paycheque toward the loan, we borrowed $5000 from my mother in law at 6% interest and paid her monthly until it was paid off. This took a year. So now we were dead ass broke but completely out of debt. Time to start over.
Since we were used to putting so much onto a loan, we decided to start saving the $500 per month. We were doing a little better with raises and such so we felt we could breath. Then baby number two came along. The savings didn’t suffer because we took our oldest out of daycare while I was home on my four month maternity leave. Still broke but saving. I ended up getting a different job which paid better but now we had two kids in daycare. So my Mom started to babysit for us for the same price as the daycare and we managed to still save each month. But the mornigns were easier as she came to our home. It became apparent that we needed to move and we started to talk about buying a house. My father asked us how much more money we thought we would spend a month in a house as opposed to the apartment. We calculated our costs and thought it would work out to around an extra $500 per month. So he suggested we try and save that extra $500 per month for a year. Over and above the money we were already saving. At the end of the year we would know we could handle it and we would also have an extra $6000. So thats what we did. That was a very tough year but we saved $900 a month for 12 months. $10,800 added to the $6500 we had managed to put away before the second baby. Well the government was handing out $4000 interest free loans to first time home buyers so we applied for that. We found the house we wanted and started dealing. Now it wasn’t our dream home. In fact it was horrible. But it was in the neighbourhood where we had rented for six years and on a very quiet street two blocks from our daughters school. We were still short funds but my Dad gifted is $5000 which brought our nest egg to $26,300. Enough for the down payment of $25,000 and the $800 legal fees. We moved into the new place, got our damage deposit back and were broke once again. We had $500 in our savings account but we had a house and we were happy. Our mortgage payments in the beginning were bearable but we were paying 12% interest. Once we paid for all of the fixed costs plus babysitting we were left with $1,000 a month for food, clothes, entertainment and all else. My kids wore homemade clothes or clothes from value village. We kept saving and threw as much against the mortgage as we could. Eventually rates came down and we renewed at the lowest rate for years always betting the short term rates would stay low.
Now to put our income into perspective my first job after years of education was $975 per month. That works out to $6.09 per hour. Compare that to minimum wage at the time, which was $4 per hour. So all that time in school gave me a couple of bucks per hour. Yippee. By the time we bought the house I had skyrocketed to $1400 per month. After taxes and paying my Mom I brought home $600 a month. My hubby started low in the oil industry as a summer student and so even with raises he was far below what the industry standards were. When we bought the first house we were pulling in around $42,000. Together. So yes our wages were 45% of the cost of our house. Two incomes. So today a comparable house in my neighbourhood would be around $375,000. So a two income family would be making around $169,000 if we are making a comparison here. Redone homes here do go for well over half a million but we bought an all original, nothing new, ugly house. One thousand square foot bungalow. One bathroom on the main floor. So everything was 25 years old. The house was ugly, the yard was ugly, and it was cold and musty.
I still live in this house. Over 35 years we replaced all of the windows on the main floor and in the basement. We stripped the stucco and added two inched of foam insulation to the house all around the outside. Sealed with tyvek our home became very energy efficient and warm. We installed a gas fireplace in the living room. We built a bathroom in the basement. Interior doors were replaced. The kitchen was replaced twice. We replace the roof twice and resided the house with vinyl siding. Twice. The hardwood floors were sanded and refinished twice and all casings and baseboards were update and replaced. Twice. Outside we built a cement retaining wall in the back to level the sloping yard. We have replaced the fence twice over the years. A large deck was built and after thirty years it was replaced. A front deck was built and later replaced as the elements demanded. Landscaping and gardening was done by us and it has been an ongoing joy to putter and create beauty with nature. Garage doors were replaced. A pergola was built. A cantilever was added to make room in the dining room for our buffet. I have spent thousands on rocks to create gardens and walkways. Electrical panel was updated and electricity was added to the garage. Entire flooring was replaced through out the basement, kitchen and bathroom. Plumbing was also updated throughout the years. In the next year or two I plan on having solar panels installed. The list goes on and on. As a homeowner we are responsible for our upkeep and we also spend to modernize our homes. I estimate that my house has cost between $175,000 and $200,000 over the last 35 years. My little 1000 square foot bungalow is warm cozy and I love it.
We never aimed to have bigger and better. We stayed within our means. We saved and paid cash for vehicles to avoid car loans. My truck is 2005 with 385,000 km. My car is 2003. I am on my 6th cell phone in 34 years. My furniture is old but comfy. I’ve bought material to have it recovered. The last new outfit I bought was for my husbands funeral almost 4 years ago. Value village second hand is my go to store. My home is currently worth around $550,000. Yes that is a far cry from where I started but the home itself is a far cry from where it started. My husband and I were never big on travel. A couple of large trips over the years and summer road or motorbike trips. Camping was our life in the beginning until we bought a cabin. By the way, we lost that fully furnished 800 square foot cabin in a flood in 2013. It was under water for three weeks. Completely destroyed. Insurance paid us $1000. For food replacement. The land was leased and insurance didn’t cover overland flooding. We had 16 summers there which were wonderful so we can’t begrudge the loss. The memories are truly wonderful.
The bottom line is this. Being a baby boomer wasn’t all roses and sunshine. We made choices then as young people do now. Life got better for my husband and I as we grew older. But we also lived through some harder times. My husband lost 40% of his RRSP when the tech bubble burst in the early 2000’s. Shit happens. I live on my RRSP money. We invested always. And if we didn’t have the cash, we got a short term loan to top us the RRSP before tax time. But mainly our choices in life were simple. My husband used to say we were so lucky the Joneses never moved into our neighbourhood. No one to keep up with. Throughout the years I often wondered why so many of our friends could live so large while we made more money. Now I understand. In the end I have big shoulders. I can take the comments from the young folks who blame me and my generation for their woes. I have learned a few things along the way. You can have so much in your life but often something has to give. You can’t have it all no matter what you’ve been told. Becoming an adult means learning to prioritize. What will you sacrifice to follow your dreams? Or in this case, to own a home. Life was pretty hard way back when because we started out so poor. But we truly enjoyed small pleasures. And in the end we kept thinking like we were poor. It was the best lesson we learned in life.
Things I've learned since I thought I knew everything... 