September to November Monthly Reports

Hi,

The last few months of the year are when I really started to feel the effects of having little income. And the Canadian dollar kept falling. So I had to tighten my belt a bit more, so to speak.

Please note that as of September 2015, I began using a $1.35 USD-CAD rate.

September 2015

NAME JULY 31, 2013 SEPTEMBER 30, 2015
Mastercard $6,123 CAD $12,427 CAD
Visa $8,653 CAD $35 CAD
B-school loan $96,800 USD
($125,840 CAD)
$76,504 USD
($103,281 CAD)
Ontario Student Assistance Program (OSAP) loan $20,931 CAD $2,249 CAD
Student Line of Credit (LOC) $9,678 CAD $0
TOTAL $171,225 CAD $117,992 CAD

I reduced my CAD$ debt by $1611 , but since the CAD$ fell yet again and my US loan accumulated over $500 USD interest, my total loan balance went up. Depressing.

October 2015

NAME JULY 31, 2013 OCTOBER 31, 2015
Mastercard $6,123 CAD $11,977 CAD
Visa $8,653 CAD $0 CAD
B-school loan $96,800 USD
($125,840 CAD)
$76,940 USD
($103,869 CAD)
Ontario Student Assistance Program (OSAP) loan $20,931 CAD $1,719 CAD
Student Line of Credit (LOC) $9,678 CAD $0
TOTAL $171,225 CAD $117,565 CAD

In October, I paid off $1015 CAD of my Canadian debt, but again because of exchange rate and interest on my US$ loan, my total debt only went down by just a few hundred CAD dollars.

November 2015

NAME JULY 31, 2013 NOVEMBER 30, 2015
Mastercard $6,123 CAD $11,777 CAD
Visa $8,653 CAD $685 CAD
B-school loan $96,800 USD
($125,840 CAD)
$77,462 USD
($104,574 CAD)
Ontario Student Assistance Program (OSAP) loan $20,931 CAD $486 CAD
Student Line of Credit (LOC) $9,678 CAD $0
TOTAL $171,225 CAD $117,522 CAD

November was the same story as in October. Actually, it was worse…as my total balance was only down $43 CAD, although I poured in over $1400 CAD into debt…

I’m trying to focus on a bright side, anything: I only took home under $3000 CAD per month in income, so being able to put $1400 of it towards debt was not bad. Depressing though it was to the overall picture…

In my next post I will do my 2015 year end report.

Debt and Retirement

Hi all,

Today I woke up thinking about the future. The Canadian dollar keeps falling, my debt is going down but is still massive and I have not saved anything for retirement.

Ok, that last part is not entirely true. I have around $30K in assets. This contains cash, savings, TFSA savings and a $1,150 TFSA investment fund which I was proud to finally open a couple months ago. However, because of my current income situation, I am basically disregarding most of the amount I have saved, because I can easily see myself depleting the saved amount by a monthly average of $4K in the next 6 months, if things continue as is cash flow-wise.

Sad eeyore
Anyways, as I was saying, I have been thinking about my future. More specifically, I have been thinking about my lack of retirement savings.

Every time I think about retirement I think about finally starting to invest, to start that retirement savings train up. However, the thing that has always stopped me from turning the ignition is my debt. Even now, any gains made from my beginner investing in stocks and/or ETFs are likely to be less than the 8.13% interest rate on my high 5-figure US$ b-school loan. Also, the fees for a small-time novice investor like me are terrible.

However, I am 31 years old and self-employed. So, besides actually saving for a rainy month or few, I need to start saving for retirement. Properly. And that means dipping my toes in the investing water, in order to possibly pay off debt faster and mostly save more quickly for the future.

Unfortunately for me, one of the things business school confirmed was how much I dislike finance. I like accounting but hate finance. So my efforts in core finance classes were the bare minimum and I avoided finance electives like the plague. Well, unless they concerned venture capital and related topics. That I love! I am a techie after all so it would be bad to not care about venture capital. But besides VC stuff, most of what I learnt in finance classes has long since left my brain. Thus, whenever the thought strikes me to turn to investing to increase my net worth, I start regretting the fact that I don’t like finance at all. I usually then spend a ton of time reading investing sites and personal finance blogs to get tips for first time investors. This was the case today, and a couple months ago.

A couple months ago, I woke up with the same things on my mind as I did today. Two months ago, I decided to finally take the plunge. Or more like a little dip. I plopped $1,000 in a Tangerine TFSA Balanced Growth investment fund. The 3-year annualized return from it is 12.97%. I hope to pay off the remainder of my debt in 3 and a half years. If the fund continues as is or does better then I will come out ahead, even considering that investment money diverts from the b-school loan payments. If things end up a bit worse, I’m hoping it won’t be much worse than the 5-year fund return rate of 8.71%, which is still higher than my loan interest. And if things end up dismal, well you will understand my line of thinking about that in a couple sentences.

I also set up automatic monthly payments of $75 to the fund (today increased to $100).

In my mind, I could afford to risk losing the entire $1000 initial deposit and $100/mth is an amount I could also afford to lose if it ever came to it that I lost everything (Queen of Positive Thinking here, remember?). Today’s mind wandering into worrying-about-the-future got me thinking though that, instead of dumping 98% of my savings into savings accounts with no more than 1% interest, I should be putting more money in investing options. Even if I stick with a fund instead of doing my own thing, I am more likely to get a return greater than 1%.

At least 10% of my savings should go to investing!

So as a start, this upcoming year, if I ever start getting income again, I plan to put 10% of my savings into investing. I will start with the Tangerine Balanced Growth investment fund now and the Equity Growth one sometime in 2015, because they are tailor-built for lazy investors like me with assets under $50K. Then, maybe one day I will enter the world of self-managed investment portfolios.

EDIT: Thanks to reader ricodilello, I realized that it is better to put my money first into an RRSP, at least as it concerns paying off debt more quickly. As he highlighted in his comment on this post, if I put $5,500 in a TFSA fund and got a 10% return, I’d be looking at an extra $550/yr to pay down debt. However, if I put that same $5,500 in an RRSP savings account I would lower my taxes by over $1,500, which is basically the same as saying I’d get an extra $1,500 to pay toward debt. And if I went a step further and put that $5,500 in an RRSP investment fund then not only would I lower my taxes by $1,500 but I would also likely have a return, hopefully of at least $550 (10%).

Whatever the case though, all money invested will be untouchable. Separate and apart from an emergency fund. Once my money goes towards investing I will consider it dead to me, until retirement :).

sheepish smiling eeyore