I Did Something Crazy…

Finance Financial Paid Account Payment Money Pay

Getting out of debt is hard, but it’s doable… I know this because I’ve done it now several times over.

The first time I got in over my head, I took out a loan to pay it off, and then I buckled down and paid the loan off. It took me two years.

The second time, with a lot more debt, I did the same. Three years later, I was again debt-free. So, of course, I turned right around and dug myself another hole, not quite as deep… but, still… I spent a year-and-a-half paying it down for a third time, without any loans – just old-fashioned stubbornness.

So then, just for good measure (or out of sheer stupidity), I did all of that one more time: dig a deep hole, panic, smarten up a little bit, pay it all down, and take years to do it…

And then…

Yup.

Did it again.

Dig. Panic. Pay. Swear to myself never to dig another hole.

So, I’ve pretty much mastered getting out of debt. I just have to train myself to stay out of it.

This time around (#5!!!!!), I bailed myself out all at once with a crazy idea. Are you ready for this?

I cashed out my Registered Retirement Savings Plan (RRSP).

I took a hit and lost a couple of grand for closing it out 15 years early, and I’ll be paying a lot more income tax for the 2017 tax year than I’d like.

But…

There wasn’t a lot in there and the gains sucked. I had stopped paying into it years ago upon discovering that the yearly tax savings didn’t do a lot to help the finances of a person like myself, living on minimum wage.

RRSPs are designed to be a tax haven for people who earn enough money annually that the savings at tax time make a bigger difference, and their plans earn waaaay more money because higher earners can sock more into them on a yearly basis. They have more money to invest, and they are entitled to feed a bigger percentage to an RRSP, as well.

RRSPs are also designed for those folks that expect to earn quite a bit less in retirement than they did during their working years.

When I learned this, I was disgusted with the idea of continuing to squirrel away several thousand of my hard-earned dollars annually for a really very crappy return. I could use that “extra” money to pay down debt, after all, right? So, I quit paying into it and my already-paid-in money sat there for decades, earning its really very crappy return.

Meanwhile, I continued to max out my credit cards and then pay them down… max ’em out and pay ’em down… over and over and over (and over and over), while also paying monstrously high interest fees. On a big ticket item like a couch or a washing machine, I likely paid the value of the brand-spanking new purchase three times over.

So I decided to take my early buy-out penalty and my kick in the teeth next tax time. I’m preparing for it. Since I had been spending about $500 a month toward debt, that $500 will now be split and be put away against that tax hit as well as my “Pre-Paid Living Account” (more on Pre-Paid Living in upcoming articles).

Will I stop using my credit cards, though? Weeellllll…..

I will not be carrying a balance. If I don’t have the cash in my checking account to pay for something, then I won’t be using a credit card to purchase it, but some things – important things – are set to “autopilot payment” through a credit card, and that works for me. The bill is automatically paid, I get a notice in my email, and then I go to my online banking site and pay the balance.

Now.

For realz, this time.

5th time is the charm. 😉

I WON! I WON!

Mission Accomplished!
Mission Accomplished!

For the first time EVER, I completed the 52 Week Money Challenge! You can see in the left sidebar that my meter is back down to a measly $3… but that only gives me a great feeling of relief; my last payment to my Money Challenge account in December of 2015 was $103. That’s a bit of a tough go when I make minimum wage, believe me.

I did it, though! I’m REALLY proud of myself, too!

Did you take the money challenge with me in 2015? Will you take it with me this year?

It works like this: Week 1: you pay $1 into a separate savings account (or a jar, a sock in your dresser drawer, under your mattress…) – I put mine into a high-interest tax-free savings account, where it sat there looking very, very small. Actually I put $3 in there on the first payday of January 2015, since I’m paid on a bi-weekly basis. The reason it worked out to $3 is that on Week 2 you add a dollar… and then on Week 3, you save $4… etc. etc.

At the end of 52 weeks, if you’ve been keeping up your promise to pay yourself, you’ll have a whopping $1373 in that account, not including any interest you’ve accrued. I know it doesn’t sound like all that much to save in a year – but it’s $1373 that I didn’t have earning interest at this time last year (and I have a really neat plan for that money, believe me!).

I actually have $1,389.28 in that account. I started out with $10 already in there, as I had originally planned on putting $10 from every paycheck away, just to see if I could do it. My savings habits have been habitually DISMAL for my entire life – I had failed the Money Challenge for the two years previous, before I even got to February, but I decided to give it one last go, using this blog as an accountability tool. Turned out, I didn’t update very often – but I kept putting money in that account every single payday… even when I was laid off in the middle of January 2015 (I kind of had to play catch up after I finally found work two and a half months later, but I DID catch up).

The rest of the money in that account is $6.20 worth of interest – again not much, but it will grow exponentially as my balance grows – I plan to use the same account and the high interest will begin to be worth it as my balance gets up there.

That’s not all I’ve been doing with my money during 2015 – I’ll be giving more detail in future posts as to where my money really goes as well as how my “Prepaid Living Plans” are working out. I have several resolutions this year – one being updating this space on a more regular basis – at least with a weekly “Accountability Post”. It’s hard to prove I’m serious about my Shoestring Budget when I rarely update, isn’t it?

Anyway – I really hope you’ll join me in the 2016 52 Week Money Challenge. If *I* can do it, ANYBODY can!

The Simple Dollar has come up with 6 Ways to Hack the 52-Week Money Challenge that you may want to check out!

Tangerine Bank and Your Savings Goals…

Tangerine-Orange-KeyOpen an Account using my Orange Key and receive a $50* Bonus!

I want you to experience Forward Bankingâ„¢ with Tangerine. You can save on fees, earn great interest, enjoy cash Bonuses and take charge of your money.

Open a Tangerine Account – any type of Account – by March 31, 2015 with a minimum deposit of $100 using my Orange Key (16991567S1) and earn a $50 Bonus*. Plus, get an additional $25 Bonus** when you set up an Automatic Savings Program (ASP) into a Tangerine Savings Account with a minimum $100 per month for 6 continuous months! Simply set the amount and frequency you want to save and the ASP moves your money into your Savings Account automatically.

My Orange Key is: 16991567S1

All you need to do is enter my Orange Key when you are opening your Account on tangerine.ca. Or visit Tangerine to learn more and start saving today!

I’m working on the referral for the U.S. version – will update when info is available.

Budget Is a Bad Word…

money31Nobody likes that word. Budgets hurt. They’re limiting. They make us feel poor.

They’re necessary.

If you’re in debt right now, the reason you are is that you didn’t write a budget BEFORE you started cranking up those credit card balances.

If you’re in debt, and don’t have a clue how to start getting out of that hole, CONSIDER THIS. It’s one of the steps I took to get out of debt.

If you’re newly out of debt, you need a budget to KEEP yourself out of debt. It’s not that you can never use a credit card again – you just have to change your mindset about what money and cards ARE to your budget.

They are not a way to have it now and pay for it later – that’s how you got into debt in the first place. Money and credit cards are TOOLS. They help you budget your income so you can get AHEAD.

Unless you want to be right back into debt hell again in short order, it’s time to change your spending habits. Follow these steps along with me, and before long, you will be pre-paying next year’s expenses with this year’s income, and you won’t feel deprived.

You’ll feel relieved.