December Goals Update

1. Add $279.50 to any one of my RRSP accounts. This will round up my contributions for the year to a full $1200. $195 / $279.50.
2. Add $100 to the Emergency fund. Slow and steady wins the race. Done.
3. Add $50 to the Emergency Essential Expenses Account. $5 added.
4. Set aside $400 for the new van payment.
5. Pay $200 toward Income Tax owing. $50 paid.
6. Get $1000 RSP loan from bank. Applied, I think.?
7. Open TFSA account at CIBC for accelerating van payments and adding to house down payment fund. Done.
8. Get credit report and score so that I can do yearly update. Bank is getting this for me.
9. Add DD2's account to my 'bill list' to do online transfers for her savings account. Done.
10. Pay off $79  $231.76 owing on credit card by due date, Dec. 20/12. Paid $50.

I met with my rep at the bank this week to apply for the RRSP loan. I could just make a $1000 contribution, but I want to do it as a loan for a couple of reasons; the bank has a promotion going on that if you have three of the qualifing products, you get a reduction in bank fees across all your accounts - the only one I don't have already is a mortgage or loan, so I opted for the loan. Tax reduction is self-explanatory, and saving for retirement/home down payment are bonuses. :)

I also opened a TFSA account with CIBC so that I could set money aside as a buffer for the van payments. However, using my online banking, I am not easily able to transfer money to this account, so I will have to check to see how I am able to do that.

I'm only $84.50 away from my yearly RRSP contribution goal that I set for myself so long ago. I want to hit this goal in the worst way!

I'm adding to many of our savings accounts now while I am able to. There is already $100 in the account for Christmas 2013. The emergency fund has been added to. I've put money in both of the kids bank accounts. Money is set aside for upcoming auto maintenance and licencing. Vacation account has a little something to get that one started. I've increased the monthly contribution amount for the kids RESPs.

I also paid some bills before I went shopping. Oh shopping, how I love thee. But that's a whole post for a different day.

December Mini-Goals

Here are some things I'd like to accomplish financially to round out 2012.

December Mini-Goals, 2012

1. Add $279.50 to any one of my RRSP accounts. This will round up my contributions for the year to a full $1200.
2. Add $100 to the Emergency fund. Slow and steady wins the race.
3. Add $50 to the Emergency Essential Expenses Account.
4. Set aside $400 for the new van payment.
5. Pay $200 toward Income Tax owing.
6. Get $1000 RSP loan from bank.
7. Open TFSA account at CIBC for accelerating van payments and adding to house down payment fund.
8. Get credit report and score so that I can do yearly update.
9. Add DD2's account to my 'bill list' to do online transfers for her savings account.
10. Pay off $79 owing on credit card by due date, Dec. 20/12.

Notes:

1. Must keep adding to my RRSP. I have no company pension available to me when I will be ready to retire, so I have to do this for future me.
2. I can focus on the emergency Fund now with other things off my plate now.
3. This is our 'Life Backup Plan' if Hubby or I were to lose a steady source of income. It needs to have a lot more money in it.
4. Yes, we bought a new van. It's pretty, and beautiful, and shiny and new. And expensive.  And necessary. No regrets.
5. I will get this bill down every month and pay it off. I'm aiming for 2013 year end.
6. For credit history improvement purposes. I know I can borrow this amount and pay off within a year. :)
7. Already done. :)
8. In the works.
9. Need to do this so I can transfer her monthly allowance to her own account.
10. Start the new year off without any CC debt. :)

Do you have any goals for December?

Coming Back and New Goals

I have missed the blogging community greatly. I felt like I was part of something, and then I was missing out on the friendship and sharing. But it had to be done. I had so much to say, but I was under wraps for awhile (self-imposed). I know me. I have trouble keeping my mouth shut, lol. But now, I can talk a little more freely about what has been happening.

The big news is that the company I work for has opened an office location right here in London. I'm still working part-time hours, and if all goes well, I should be out from under my probationary period in the next week or so. This will enable me to serve my client families more efficiently.

My goals for working with this company are to become a full-time employee, to gain status as a managing director, and eventually be able to 'buy-in' as silent ( Ha- who am I kidding? I'm never silent!) partner for this location.

In anticipation of major changes ahead in the next few years, I'm forging forward with personal and financial goals also.

Toward the beginning of the year, I opened yet another RRSP account at my bank. I put a small deposit in, and left it be. No further deposits to date. After thinking about it for a time, I realised that I could use this account as my 'Home Down payment Fund'. Using  the Home Buyers Plan, I can 'borrow' my own money from my RRSP, up to $25,000 toward the purchase of a home. Meanwhile, any deposits I make will count toward my RRSP contributions for that year, giving me a small break on the amount of tax I will owe.

Still with me this far? Good.

I will still have to 'pay that money back', but since it's mine, there won't be any outrageous interest fees associated with it (at least none that I am aware of). Just a repayment schedule that the government defines.

So off to the bank I went, and signed a paper to say that they could take $25 per pay out of my chequing and put into the 'House RRSP Fund'. I know it will take me a hundred years or so to save up a down payment at that rate, but it's a starting point, ya know?

Seeing as I've hit the big 4-0, I've been thinking lots and lots about where my life is headed, where I am right now, and where I want to be in the future. I want to have a home of our very own, however modest it may be. I want to have money in the bank should the day ever come that I want to semi-retire. (I'm pretty sure if I ever fully retire, it will be due to health reasons only.) I'm putting away money to help partially pay for my kids post-secondary educations. Our debt is almost gone...Can you say U-RAH to that!!!! We've finally gotten that consumer debt monster down to something manageable.

On the other side of the coin, it looks like we will be shopping for a newer vehicle this year. Well, we have been looking for awhile, and I have absolutely nothing saved up for a new van, but we will need to replace it I think. A van is vital to my employment, so hopefully we can get a good deal on a 1 or 2 year old used one. I'm hoping for a Dodge Grand Caravan with Stow-N-Go seating, but we will see. I will not be taking out another 7 year long, $28,000 car loan, that's for sure.

One of these days, I will get around to updating my reading list. I've read a ton of books over the last little while, which has certainly helped my keep my shopping habit under control. Speaking of shopping, I'm working at the couponing again to keep our grocery costs down with budget limits. I think this is the first May in the last 5 years that we have stuff in the pantry, cupboards and freezer and I don't feel like an unfit parent. I'm anticipating what we will need over a given period and stocking up (not extreme couponer style) some of the things that we regularly use when its on sale.
I'm feeling good about life these days. I hope it lasts.

What are you feeling good about today?

Are You Talking To Me?

" You cannot save $10,000 until you have $1,000. You cannot save $1,000 until you save $100. You cannot save $100 until you save $10. Getting from where you are now to where you want to be requires that you do something differently. Do you have the guts to change?" - Gail Vaz - Oxlade

I was flipping through Debt Free Forever to find the answer to a question posed by Sam. In just reading a couple of paragraphs, I was amazed at the amount of inspiration I was getting by reading just a wee little bit. I always hear her voice in my head when I'm reading something she has written, so that part didn't surprise me.

What did surprise me was that it felt like an epiphany. Gail was reaching through the internet, via Sam's question, that made me grab her book so she could speak directly to me.

And I hear you loud and clear, Gail!

In two days time, I will begin a new chapter of my Life Journey, that starts with some of my most ambitious savings and financials goals of my life. (See page entitled 2012 financial Goals.) To truly focus on putting together all the skills I have acquired in the past couple of years, and to focus on attaining my goals. To have some money to retire on one day. To have some money to give my kids when they venture off to college. To find some balance in my life, financial and otherwise.

Here's to the first $1 of the first $10 of the first $100 of the second $1,000 of my first $10,000. Here's to taking control of my money and my life.

My RRSP Strategy for 2012

A couple of weeks ago, I mentioned that I was looking at the idea of a RRSP Catch up Loan to assist me with some tax benefits. I received a comment that they were a very, very bad idea. I'm not one to jump to conclusions, so I took this under advisement and did some research. Of course, I turned to Gail's blog.

Borrowing more money while you still have debt is never a good idea. Borrowing money to invest for the long term has some benefits, but not enough for me to consider it at this point.

Borrowing to contribute to an RRSP only makes sense if you’re in the highest tax bracket AND you can pay off the loan within one year WHILE making monthly contributions to your current year’s RRSP. ~ Gail

So what's a gal to do? I get that borrowing the twenty something thousand dollars in contribution room I have available is not really an option for. Sure, I could borrow it and pay it back within a year, but my cash flow will take a huge hit, and I just can't live like that, nor can I expect my family to.

Taking on too much debt for the sake of some other objective is a sure way to mess up your cash flow and rob you of sleep. ~ Gail

I value my sleep too much. I don't do enough of it as it is. The sense of peace I have knowing that I am doing the best I can financially is not something I'm willing to give up either.

The most important part of my financial well being is to find balance. Saving for the long term takes time and discipline. Time I have. Discipline, not so much. But I'm getting better.

If you want to catch up your RRSP unused contribution room, trim back on your expenses or make enough extra money to sock away what you want. Don’t borrow it. ~ Gail

Oddly enough, I can hear her voice saying this directly to me. It's like she's right here in the room with me, telling me not to be a dummy, and that there is a better way to do this.

On Gail's advice, I will not be taking out an RRSP loan, catch-up or otherwise. My goal for 2012 will be to put $2500 into my RRSP, or $208 per month. That's the maximum amount of loan repayment monthly that I would be comfortable making. OK, maybe a little outside my comfort zone, but whatever. If for some crazy reason I am unable to make that 'loan' payment in a given month, my credit history won't go to hell in a hand basket and I won't be getting any nasty phone calls from the bank. It would mean that I would just have to deposit that much more the following month. I'll have no interest costs with this method, and all my money will be working for me right from the get go.

I feel like I'm behind the eight ball with my retirement contributions. I may very well be. But if I don't start somewhere, I will never be able to retire, and that is just not an option. With how much I've contributed to CPP as a self-employed person, and no pension to speak of, when I'm 65, I'll be eligible for about $32 per month. Lol!

Aim to set aside 10% of your net income every year until you retire. ~ Gail

The thing with RRSPs is that they market them to make you feel like you aren't contributing enough, and that without the help of financial institutions, you have no hope in hell of ever accumulating the astronomical cash projections that they say you need to have. This puts people in one of two mindsets. They either fall for the hype and take out 20 year RRSP loans without ever really getting ahead, or they give up hope of ever retiring comfortably, and choose to ignore the situation.

I'm choosing neither. I will forge my own path, by making contributions on my own schedule that will take into account that my income fluctuates greatly. I have goal number in mind for 2012, and I will make sure I hit that goal at all costs. I'm working on all our financial goals for 2012, so adding this in will be another part of the budgeting process for us.

What's your retirement savings strategy? Do you have RRSPs or have you ever used a RRSP catch up loan? I'd love to hear about your experiences with this.

Are You Saving for Retirement?

Here in Canada, we are fortunate to have a fantastic registration program known as the RRSP, or Registered Retirement Savings Plan.

Unfortunately, lots and losta people have almost no idea what they are talking about when it comes to their retirement savings.

"Hey Eboo! I just invested in an RRSP!"

Me: "Um. No you didn't. You invested in a savings account, GIC, mutual fund, etc. and registered it."

I have understood the basics of RRSPs since I first heard about them, thanks to a swell guy named Dave F. who took the time to explain it properly to me.

When we head into that time of year when the financial institutions start flogging their RRSP products (read loans), you should have a basic understanding of how it works before you even give them the opportunity to confuse you. Because they will.

Here is a great article that my hero and financial Sham-Wow, Gail Vaz - Oxlade wrote on her blog to help explain it in the simplest of terms. Please take a minute to go read it, and tomorrow, I will post more on the RRSP and how to use it to your advantage.

Starting RRSPs in Your 40s

I'm not quite 40 yet, but it's so close, I can see the glow from the candles on my 40th birthday cupcake! For all sorts of reasons I have never, until recently, contributed to my RRSP.
Why, you may ask?
Well, when I was younger, the thought of retiring someday never crossed my mind.
In my 20s, I hardly worked some years, and was trying to hard to make ends meet with my pitiful income. Back then I thought I had lots of time to save for my retirement.
In my early 30s, same thing. I thought I had lots and lots of time. I was upgrading my schooling, and then embarking on a new career. I was married at the time to a man who had a fantastic pension, and I believed he would look after me in my golden years. Exciting stuff! Retirement was far from exciting, it was for old people.
To tell the truth, for the last 5 years or so, I have been deluding myself by saying that I will likely work well into my 70s. No early retirement for this girl! And although that may actually have to happen, I don't really want it to.
Now, a couple months shy of 39, I'm looking at things in a whole new light.

Several months ago, I realized how old I was getting. Not that almost 39 is old, but the length of time I have left to save and invest for my retirement is getting shorter and shorter. I'm a grandmother now, and I don't think that I want to be working into my 70s. I may want to spend some of that time with my grandchildren, the one that's already here and the ones that will come in the future.

It got me thinking about how I planned to pay bills if I was no longer working.

My CPP contributions are an absolute pittance. If I were to compare them to someone of comparable age who works as an employee full-time, the differences are amazing. The number of years I've been contributing to CPP is also laughable.  I don't remember ever getting a statement from CPP, but I'm sure if I looked at it, it would look like the statement of a person in their early twenties, who has just started their career. You can view and print a copy of your Canada Pension Plan Statement of contributions here .

Likely Old Age Security would also be available to me, and the Guaranteed Income Supplement, if my CPP was my only source of income during retirement. That means I would be dependant on the Government of Canada and my current husband, to provide me with any income during my retirement years.

I don't like that idea so much. Hubby is more than willing to provide for me with what he has available to work with. But if my only contribution to our retirement income is CPP and OAS benefits, we're screwed. I don't want to be eating Spam and never doing anything, or going anywhere because we can't afford it.

The single most important thing that I took from Gail Vaz-Oxlade's book, Never Too Late, is that you MUST SAVE! Saving is a habit that must be formed, no matter how little money you begin with. "If you've never set a penny aside, making just a small commitment today can make a huge difference to your financial future". The important thing is to Start.

My financial goal for my RRSP this year is to have set aside $3600. I decided not to go the route of trying to decide how much money I will need in my retirement years, and guessing as to how long I will live, guessing at the rate of inflation over the next decade or two, and multiplying it by some crazy formula that requires a Master's Degree in order to come up with some insane amount of money that I will need to have accumulated by age 65. I don't want to set myself up for failure or scare myself into doing nothing. I want to be able to see what I can do with what I have.

My largest asset to my retirement is my ability to earn an income, now, in the next 26 years, and maybe even for awhile after that. This is what I need to utilise to my full advantage in order for a decent retirement. The money I will have amassed at that point may have to last a long, long time, as I plan on living forever. Just kidding! Every year between now and then, if I can focus more on saving and less on spending, I should be able to come up with something fairly decent, even if it isn't The Magic Million or three.

To get my $3600 this year, I will have to make 144 deposits of $25. I have already made 5, so I have 139 left to go. I have a direct deposit set up to deduct $25 per month from my account automatically, which brings it down to 129 deposits. In late Spring and early summer, I will likely be able to contribute the bulk of these deposits over a couple of months, and then just keep the automatic deduction do the rest. It's not the best game plan, but it's what I have right now. I'm trying to build the HABIT of saving while pushing the edges of my comfort zone a little farther, setting the stage for more dramatic deposits over the next few years.

I may never hit the crazy insane number that a retirement calculator will tell me that I have to amass by retirement time. I may never even use up all my unused RRSP contribution room. What I do know is that every dollar I set aside now is one less that I will have to cut out of my post-retirement budget. I know that having a comfortable retirement will be the result of choices we make today and tomorrow.