Couple earning $450,000 a year writes into financial help column complaining about expenses

Dec 19 2017, 1:37 pm

In a city where complaints on affordability sound off almost every wall, homelessness is a major unsolved issue and home prices keep booming, the last thing we’d expect to read in a financial help column would be a plea from a couple earning a combined income of $450,000 while working two days a week.

But alas, the woes of the wealthy are indeed serious enough to warrant professional help. In case you were wondering, we’re referring to a recent “Financial Facelift” advice column published in the Globe and Mail on Friday.

The article, titled “Debt doubts cast shadow for professional couple with five kids,” shares the predicament of Eric, a doctor, and Ilsa, a dentist, and their five children, a Vancouver-area family afraid of going into debt to maintain their lifestyle.

According to the Globe and Mail, the couple is “living rent free in a relative’s house (they pay taxes, utilities and upkeep)” while Eric works one day a week in a medical clinic and one day a week teaching at a university. Isla is currently on maternity leave. They are currently making $360,000 a year income, but when Isla returns to work that will increase to $450,000. All their children will go to private school and the family hopes to hire a live-in nanny.

However, in an edit to the Globe’s column, the author notes that though Eric works two days a week, “the doctor has clarified in saying he works up to 80 hours many weeks through longer working hours and extra days and hours both in medicine and teaching.”

They own a $1.1 million lot which they are hoping to build on, but worry they cannot afford to build a house “large enough for their family and a live-in nanny.” They have a $800,000 mortgage on this property with 2.5 per cent interest.

Fortunately for them, their parents are willing to offer a home equity line of credit for $1 million to help them build the home, but the couple still risks living beyond their means.

The Globe’s financial expert, Warren MacKenzie, principal at HighView Financial Group in Toronto, suggests Eric make the sacrifice and work one more day a week. “If Eric is willing to work one more day a week in the clinic, they can live within their means and still afford to build the new home using a HELOC with the parents’ home as security,” he says.

This would increase his yearly take to $500,000, plus Isla’s annual income of $150,000.

The couple has $6,000 in the bank, an RRSP of $180,000 and a $1.1 million property asset, totalling $1,286,000 in assets.

While the family earns about $25,000 a month, they spend more than that. The Globe lists their biggest monthly expenses as $3,800 for mortgage, $5,450 for private school tuition, $2,800 for child care, $2,000 for travel or vacation and $3,000 into their RRSP. In total, they spend $25,660 per month.

If you’re perplexed by this couple’s financial situation, you’re not the only one. This just makes us think, if this family can’t make ends meet in Vancouver, who can?

Do have any financial tips for this struggling family?

Featured Image: Debt via Shutterstock