Within a nine-month span, my wife and I had to deal with paying for two of the biggest one-time expenses we’ll likely ever have. First was our wedding (including rings and honeymoon) and the second was coming up with the down payment for our new home.
The Wedding
We were lucky enough to get some help from our parents, as well as some cash gifts (we didn’t need much of the usual linens and kitchenware). While this was still a big expense, we managed to find ways to save.
We did not pay full price for any item or service. For example, my crafty wife put together beautiful handmade centerpieces, while we found a way to score a completely free tuxedo rental.
The Down Payment
When it came down to the down payment, we wanted to make sure we could put 20% down.
By paying 20% down, we got the best mortgage rates available and avoided having to pay CMHC insurance. A large amount of our down payment came from the sale of my townhouse, which had experienced a nice gain in Edmonton’s hot real estate market.
The Lesson
What makes these expenses similar? We had to decide whether to save in advance or to use our line of credit.
In both cases, we saved as much as possible in advance; though, if we were better prepared, we would saved even sooner. We found that there were many last-minute wedding expenses that we had to charge onto our credit line. The same happened when we prepared to move into our new house. We had to turn to our credit to cover inspections, lawyer fees and moving expenses.
We have paid off those debts, but we realize it would have been much smarter to save more in advance, and have an emergency fund for the expenses we didn’t see coming.
Tom Drake is the owner and head writer behind Canadian Finance Blog and also works as a financial analyst for a major retailer. Tom and his wife Amanda welcomed their beautiful baby boy Christian in October of 2009. To read more of Tom’s posts, subscribe to Canadian Finance Blog’s RSS feed and follow @CanadianFinance on Twitter.