In my last update I focused mostly on the progress I was making with Debt Elimination, in this update, I am also going to tell you about my Savings and Retirement Planning.
There are always differing opinions on finish the debt elimination, emergency savings, retirement savings and the order to do them all in and I hope to talk more about that in the coming months. For now, I’ll just tell you about what I decided.
Since at the time, all my debt was rolled into one small no interest payment, I choose to do both, debt elimination and savings together. I started simply with a savings account!
Get your first $1000 for your emergency fund.
Again lots of different opinions on what to do next and the bottom line is always “what is going to work for you and your future plans?”
Here is where the debt elimination is at:
August 2015 – Here is where I sat:
- Personal loans: $10,000
- Proposal: $21,000
August 2016 – one year I am here: (paid $7160)
- Personal loans: $3,500
- Proposal: $14,400
March 2017 – 18 months (paid $5600)
- Personal loans: $0
- Proposal: $12,300 ($300/m +$70 insurance)
Savings: Come here my pretties!
I started with my regular savings account, over a few months I put in $1000. Really this is my “opps” account. Opps I forgot my insurance, opps I had a dentist appointment, things like that.
Canada Savings Bonds, this is offered through work, automated savings plan! Always good to pick something that is automated and you don’t have to think about. It takes one or two pay periods to adjust to the lower amount, but very doable.
I also have a pension plan at work, I have only been here for a short time, so it is not much but will all add to the bigger picture in 25 years.
I then moved on to a RSP savings account, the benefits of being tax deferred BUT easily enough to get to if I REALLY needed the money.
At the end of the year, I made some more changes. I move6225
d money from my RSP Savings into a RSP Income Fund and I moved money from my Canadian Savings Bonds to a Tax Freee Savings Account Income Fund. All RSP money will be funneled through the RSP savings account, that way I only have to worry about one place for my Tax forms and there is no confusion.
I also opened a Sask Pension, this is available to anyone and is managed similar to a mutual fund and paid out like the Canadian Pension Plan. RSP money is will be divided between Savings, Income Fund and Sask Pension.
The biggest thing for me right now is to remain flexible, there are things on the horizon that will take extra cash, like the official divorce.
This is where savings is now: (1-5 are automated bi-weekly)
- Emergency Fund $1000
- pretty much always here, if I use some, I always fill it back up to 1k. if there is extra, I move it over to RSP savings.
- RSP Savings $1600
- This only makes .80% so I will be moving this to either RSP Income Fund or Sask Pension
- Canadian Savings Bonds $800
- This is a stupid low-interest rate, barely worth having, I think of this more as short term savings. It is automatically deducted from my pay cheque and would take 3-5 retrieve.
- TFSA Income Fund $1700
- We are allowed a specific amount per year and this is accumulative, I am currently WAY under what I am allowed.
- Sask Pension $25
- Just started this month, you can add up to $2500 directly and transfer up to $10,000 RSP, it is not an additional RSP amount, you can only transfer from another RSP account.
- RSP Income Fund $2000
- This was moved from Canadian Savings Bond and RSP savings at the end of the year, in hopes of a greater return.
Total: $6225 – holy crap!
I was sorta depressed about how little progress I was making until I added it all up, not too bad.
There is also a Travel fund, we throw a few extra bucks a week in there and we use it only when we are traveling or for travel related items, there was about $1000, we spent it on a lovely trip to Vancouver Island AND a Truck Tent for more camping trips.
You may be asking why so many accounts? I am still am LOL
- Partly it is from taking super small safe steps!
- Partly because I am still learning.
- Partly it is testing to see how one of the other would work – for example, CSB doesn’t make anything and is not worth it to me – I only keep it now as it is automated savings.
As I learn more, as I get more comfortable with taking actions and as I am feeling more confident that I am successfully building my financial foundation, I am able to make better decisions. I suspect that over the next few years this will change again. I will go into more detail about what each account is why I picked it at the time and what the pros/cons are in upcoming articles.
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More Debt, oh my
I did decide to take on more debt. Again lots of different opinions about this one. All life needs balance and the last 18 months has been a lot of personal healing. I know myself well enough to know that if I don’t take the time to get back to nature that I will not be successful at staying in the city and ensuring everything is taken care of, I need more balance! So I bought a car. Used, great shape, great gas mileage…. but bad interest rate. Since I am in the middle of the proposal still, I had to deal with interest rates higher than normal.
I, of course, have a plan. I plan to pay off the car in the next year. I took great effort to get a payment that I could easily afford, including the car insurance and fuel. I paid for a warranty so I do not have the same trouble as I had with my last “truck” adventure and the blown engine. I did ensure that I got an open loan, meaning I can make extra payments or pay it off at any time with no penalties and all extra payments go directly to the principle so that I will pay less interest as I make payments. Any and all extra money that I have will be put towards paying off the car loan in the next 9-12 months.
Soooo all totaled in the last 18 months, I have paid debt and started my retirement savings to the tune of $19000 ($18985 to be exact), okay that is not so bad!! Do I think that I can tighten up YES! and I will be working on increasing my income to make even more progress! There is still a lot of work to do in the next 25 years to be set up for retirement!
The plan for the next 6 months, proposal (+insurrance) payments, Automated Savings across all accounts (roughly $550/monthly) and all extra gets thrown at the car.