Wednesday, January 2, 2008

small cuts to fixed costs

As mentioned my wife is currently on maternity leave as we are expecting our first child very soon. Here in Ontario, Canada my wife is entitled to 50 weeks of paid employment insurance benefits. The benefit works out to about $369 / week after taxes, as she is entitled to the maximum benefit as per her normal salary which is well over $40,000 annually.

We are already seeing some reduced living (fixed) costs because of our new situation:
  • Auto Insurance - We informed our insurance broker of the fact that my wife is now off work, so she will not be commuting her usual 25km each way to work. Due to this change our insurance rate for that particular vehicle was dropped 17%, or $204 per year because the car is now on the policy as not travelling to work each day, which requires many less kilometers of insurance. This reduction in our fixed expenses would be roughly the equivalent of me getting a raise in employment income of about $300 per year before tax.
  • Auto Fuel - While my wife was employed, our combined monthly gasoline bill was coming in at about $250 - $300. Now that she is on maternity leave, I am expecting the same bill to come in much closer to $150 per month. This should equate to a savings of about $1,500 after tax dollars per year. For us to bring home the equivalent benefit of this savings in employment income I would probably need a raise of about $2,150 per year before tax.

All told, these two small travel related cost savers are tantamount to me obtaining a raise of $2,450 annually, or $204 / month.

4 comments:

Thicken My Wallet said...

Good tip on the auto insurance! I would have never thought of that.

Jake said...

Canada rocks. The US health system is broken and it seems no one cares.

Good move on the insurance. I wouldn't have though of that.

Canadian Dollars said...

With Oil at $100 a barrel now I applaud your move to save money on your automotive needs. I used to drive to work when I used to work in the suburbs but now choose the better way and ride the transit to work.

As they say, every little bit counts.

Anonymous said...

My wife went on mat leave 2 years ago with our first kid and we saved about $120/yr in MB on our car insurance swap.