Can You Invest When You’re in Debt?

office-620822_640Who doesn’t have debt? If you don’t, then consider yourself extremely lucky. You are a rare breed in today’s world, because so many of us are struggling with debts; some of us more than others.

Yet a big question that a lot of people have is whether or not they can invest when they’re still in debt. So, is that even a possibility? We may be able to help you find out as we provide some insight into how some people choose to use their money in the investment versus debt payment battle.

So Many Choices, So Little Funds

If you’re like most people, you have lots of things you want to do with money, but you have very limited funds. When you are faced with debt, but you still want to do some investing, then you need to decide a few key things. Weigh your options and determine whether you are more interested in maintaining a good credit score, or whether you would like to benefit from compound interest. By categorizing your indebted accounts in order of highest to lowest interest rates, you can see which ones are most pressing and which are lower priority. That may help you determine whether you would like to work on paying off the debts, or whether you would prefer to make minimal payments while making some investments.

Don’t Forget Your 401(k)

Sometimes, people get so caught up with their debt accounts and investment options, that they totally disregard their 401(k) plan. In many cases, individuals can pull out a certain amount of money that their employer will have to match. That can actually end up saving you time in the long run, even though you may not be able to pay off all of your debt in as little time as you first thought. In fact, speaking of paying off that debt, you should sit down (with a financial planner if necessary) and calculate an expected time frame for getting that debt cleared away. It all depends on the amount of debt you have, how big your monthly payments are, as well as interest rates and type of debt. It’s always best to have as clear a picture as you can before you jump into any financial decision.

Analyze Your Actual Situation

It’s sometimes very easy for people to turn a blind eye and just pretend that the debt’s not that bad, or worse – not even there at all. Yet it is imperative that you get real with yourself and determine just how bad the debt is. Lay out all of the information in front of you and check out the individual interest rates, how much you need to pay each month just to maintain that debt amount, as well as how long you can foresee the debt being in existence. You should also take a look at your monthly expenses (car, rent, food, etc.) and see if there are any areas where you can cut costs.

Life and Money Updates


My favorite summer sunsets are at the cottage.

It’s been a while since I’ve done one of these since I stopped doing the monthly debt repayment updates.

Not much as changed (no change is good sometimes!). We ended up experiencing a little lapse in insurance coverage these last few months as Mike’s employer switched providers at the end of the year and forgot few people- us included. It was stressful but so glad we had the emergency fund if (and when) we needed it. Thankfully it’s all figured out now and we’re now in the process or seeing if we’re going to be reimbursed for what we did buy upfront.

We’re still in the process of saving to buy a second car, aiming for end of July. It will be so nice to not have to scramble to get picked up somewhere and rush off to the soccer field like a maniac twice a week. Mike will soon be able to just take Maria to the field and I’ll get there when I can after work.

Buying the second car has me really thinking about where we want to move, something we plan on doing in next two years. I totally understand the whole higher living expenses to be in a downtown urban core/ no need for second car (or even one car in some cases) but quite honestly I have no desire to live in the city. I would happily live in the middle of the country with cows in my yard if it didn’t mean driving an hour to dance class every week. We’ve settled on the suburbs…just not sure which one. I think next year we’ll spend time starting to check open houses out to clarify our wants and needs when we go to put our house on the market.

The other thing we have been saving for was a shed. Our house has no real external storage so my one small storage room is so full I can’t even walk around with a laundry basket in hand. Our summer tires are stored at my sister-in-laws garage, our lawn mower too…our snowblower is under a huge camping tarp and we have three bikes in my house. The house came with a shed but it was dilapidated so we ripped it down and have missed it every day since. This was a good expense though since I know it will help when we go to sell. We also got a smokin’ deal (of course). It was regular $1100 for a sided gable 8’x10′ shed and we got it for $698 everything down to the roofing nails were included. For the cost of a lunch out we had Mikes coworker pick everything up and deliver it across town to our house too! Now we just need to recruit a little man (and woman) power to help assemble it in next week or two.

We’re starting to plan our summer and very much looking forward to it. It will be a low-key summer since we went away in March. We’re taking a few long weekends to go to the family cottage and one weekend camping at a national park in a neighboring province. We splurged with this camping trip though, instead of bringing our tent we rented an oTentik which is essentially a permanent canvas tent with beds a full propane BBq is also included which is an added bonus. We’re also planning on taking in an airshow which is always fun.

How is everyone else doing? Also, can someone please explain to me why we must pay tax on a used car when the tax was paid when the car was purchased new?! Isn’t that double dipping by the government?! So annoying.

4 Signs You’re Not Ready to Buy a House

Source: Free Digital Photos

Source: Free Digital Photos

The world will have you believe that homeownership is something everyone should strive for. Advertisements make it seem deceivingly easy too- like anyone and everyone can, and should, do it. Some even go as far as to question your personal choices if you’re not doing it, ”all the cool kids are doing it”- kind of tactics. The thing is though, homeownership is not for everyone. The reasons will differ for everyone but there are a few universal rules that everyone can follow and help them decide if they’re ready.

You Don’t Have a Budget

If you’re not currently budgeting, and don’t have any sweet clue the kind of money that flows in and out of your bank account on a monthly basis, you need to figure this out before you look into taking on a mortgage. A terrifying thing happens when you let the bank tell you what you can ”afford”- you’ll likely end up way over your head. If we listed to the bank when we went a few years ago about what we can afford according to them we’d be in one hell of a situation! We’d never be able to pay our debt off that’s for sure. We knew our budget well enough to know what kind of mortgage we would be comfortable carrying. Get used to managing your money before taking on such a huge commitment!

You Need to Borrow Money for a Downpayment

If you can’t come up with your own downpayment you likely can’t afford to take care of your finances and home. Saving for a downpayment is a good demonstration of financial maturity. Make sure you consider all extra closing costs too and don’t leave yourself short.

If you’re gifted the money, but have good financial know-how that’s different from being unable to have the control to save the money required to buy a home.

You’re Income is Unstable

If you have an income that’s unstable you should not be considering buying a home. Wait until you’re in a stable financial situation before embarking on homeownership. If your income varies greatly wait until it either stables out or until you can afford a major down payment to offset the mortgage payment.

You Have Consumer Debt

Do not buy a house until you get your debt under control, especially consumer debt. If you have credit card debt work on that first before saving for a downpayment. If you have a budget you should be able to work out a payment plan and have an idea about when you’ll be debt free and how long it ill take you to save for a downpayment.

Owning a home can be a great investment when the timing is right and you have your finances under control. Don’t let advertising rush you into doing something too soon though or you may come to regret it!

Do you have any regrets with your first home purchase?

Things That Made Me Shake My Head While Working as a Cashier

When I was in highschool I got a job working as a cashier at the same drugstore my mom worked at. She was the local pharmacist and the front store manager was frustrated with immature and flaky employees so they finally broke the ”no family members” rule and hired me knowing my reliability and maturity (or maybe it was the fact that they could track my mom down pretty easily if I started slacking?).

I actually loved this job. It had sweet hours (never worked later than 7pm on weekends) and I was making almost $2.00 more per hour than the current minimum wage. Something I grew to love from this job was working with the public. I know it’s not for everyone but I really enjoyed getting to know the regulars and even the drama queens that would come in. In the almost five years I was there I experienced a few insane recurring moments that made me shake my head though like…

Coming in with a well-overdue utilities bill and buying lotto instead.

Our store used to take a few utilities payments for the bank and I will never forget the time a lady came in with a hugely overdue power bill. It was something like $2,000. She had a handful of cash with her looking to pay the bill down, probably at least $1,000 in bills. Thinking I was about to take a sizeable payment from her I called my supervisor to take the cash to the safe….

Instead she makes a $200 payment on her bill and gives me another $400 to buy LOTTO TICKETS. I certainly couldn’t say anything, I was a 16 year old kid working the cash but needless to say my mind was blown. I totally get that people can fall behind on their bills but how in good conscience could she drop double the amount on lotto instead?

The pop consumption, and money spent on it.

Pop (or soda as you Americans like to call it ;)) isn’t cheap. At least not where we live. If it’s not on sale, you’re looking at $2.00+ per large (name brand) bottle. When it does go one sale you’re looking at $1.25/bottle- still isn’t cheap considering we live in an area with good, safe and free water. Don’t get me wrong, I get that people have their vices and enjoy different things, what got me were the people who would come in, always complaining about not having enough money and spending at least $10-$15 every time pop was on sale to stock up. Even if you bought spring water it’s still ringing in at 1/3 the price, not on sale.

People who leave their change behind.

I understand people who tip but I would never tip the cashier who rang in my stuff, yet people did it all the time. A penny or two, I get walking away from, but some people would come in, usually in a rush, spend $3.00, throw a $5 bill at me and run out the door. I’d always try to get them their money but 90% of the time they’d say ”keep it”. It didn’t just happen once it happened all the time. Maybe it was the small store, I don’t know, but I couldn’t believe the money people would just walk away from. There was one very notorious man who we started a ”change envelope” for. He was in all the time telling us to keep the change but when it went from $0.05 to like $2.00 quite frequently, we’d throw it in the envelope and give it to him. He’d always take the cash (usually $10+) and buy us treats but we felt a little less guilty. How do people walk away from their change so frequently?

Working in customer service will certainly open your eyes to many things, little did I know many years ago I was actually picking up a few early personal finance lessons…

What have you learned working in customer service?

We Took a Vacation and Stayed on Budget!

wp-1459390559166.jpgEarlier this week we arrived home from our first vacation in many years. Not only was this our first time away in a while, it was the first time we’ve been away without kiddo. We had a great time and managed to stay on budget too!

The trip planning process started over a year ago. Nashville wasn’t the original destination but for a few different reasons that was where we ended up and we had a blast. I had been before but was many years ago and experiencing Nashville as a child, versus adult was much different, we all loved it.

A big reason for our trip was going to a hockey game, all other details were planned around our timeline and the game. For a five day trip we managed to squeeze a lot out of what Nashville had to offer. We all left feeling satisfied, like we had really ”done” the city.

There were a total of six of us traveling. Traveling as a group helped. We overall had more saving by splitting the cost 3 ways (couples) than we would have if it had just been the two of us even when you consider smaller accommodations and transport.

As nice as it would have been to unwind in one of Nashville’s beautiful downtown hotels, it was not happening. It would have cost us a small fortune to stay there. Instead we opted to use AirBNB (my first, but definitely not my last experience). We rented an entire house for the 5 days and cost each couple the equivalent of one night at one of these fancy hotels. We all loved having a home to come back to every day. We had our own (big) rooms, bathroom, full kitchen and laundry. It was great and very much our ‘traveling style’ in terms of comfort. I loved it. The location was only a 5 minute ride from downtown too.

Another area we saved in was transportation. We briefly toyed with the idea of renting a car but in the end decided we’d all rather just rely on Uber which was well established in the city. I freaking love Uber. It is, arguably one of the best apps and services I have ever used. It’s not well established really anywhere here in Canada but I can pretty much guarantee we’ll continue using it while traveling. We went everywhere in Uber from the airport to the Grand ‘ol Opry (which was a decent distance away from us). In 5 days we only spent a total of $150 (Canadian) in Uber rides, for $25 per person it was well worth getting picked up and dropped off basically wherever we wanted. I should add that we were strategic in using our ”1st free ride” with Uber among four of us for the longest hauls (two poor souls are on Blackberry and can’t access Uber app). I also can’t really put a price on the experience with the Uber drivers we met. Everyone was so nice and helpful.

We had some savings on food an alcohol as we did buy groceries and cook breakfast/have snacks at home every day. We’d have a larger breakfast at the house and a late lunch/early dinner out every day instead of three square meals which saved on overall meal expenses.

Lack of shopping also helped. This was never a ”shopping trip” especially with the poor Canadian dollar but the few things we did buy were good deals. I ended up buying a watch (something I’ve been looking at for a while) at a 50% off sale (which ended up being more than 50% off!). Retails at the stores here for $125.00 CND, after the discounts, I paid $35 USD, even with dollar conversion it’s still a good deal for a quality watch with a warranty. One of the best purchases I’ve made in a while.

There were a few splurges (like a stretch limo airport pickup and tour of the city as a surprise birthday gift to hubby) but we were very conscious in where our money went and enjoyed everything. Nashville was a great city and we can’t wait to go back some day!

How do you decide where to save/splurge while on vacation?

Don’t Buy a Home Unless It Is Your Most Important Financial Goal

Source: Free Digital Photos

Source: Free Digital Photos

Here’s something no real estate agent is going to tell you. Owning a home is hard work. It really sucks not being able to call your landlord/mom/dad/whoever when something happens to your home that you need help with. Homeownership is wrapped up in this perfect little, tantalizing package. You know those surprise bags you can get at the dollar store? The ones you pay for, in full, without really knowing what’s inside? It’s kind of crazy when you think about it, but that’s exactly what homeownership is like. You sort through the pile, find a bag that you think is exactly what you want and only after you pay for it do you know what you’re really in for.

There is some disclosure with the purchase of a home but even things that aren’t necessarily a deal-breaking problem, might be an issue for you and your family. For instance the entry way of my home is fine. There is nothing wrong with it but I hate it. Loath might be a better word. There is no room, and even our small family of three has a hard time managing (forget it if guests come over). The entry way hasn’t changed since we bought the house but it wasn’t until we lived in the house a while did we realize it was an issue.

There are so many things to consider before jumping into homeownership, and I really think if you want it to be a successful endeavor, you should wait until you can make homeownership your main financial goal.

Do your homework. When you’re done, do more.

I’m the first to admit we jumped the gun when we purchased our current home. We didn’t do enough homework and didn’t have enough resources to draw from. None of our friends owned homes yet, Hubby grew up in military housing and my childhood home was an old, old, cottage property which my parents (attempted) to renovate into a family home (it had charming qualities like no proper closets and I didn’t have any light fixture in my bedroom).

We really didn’t have much to base our search on. There were a few things like access to public transit, general neighborhood and that every room must have a proper light (only half kidding), but overall we didn’t spend enough time looking at homes, walking through them and really figuring out what we liked and didn’t like. Especially because we didn’t have enough confidants to help us, we should have done more ourselves. I feel like we were in such a rush to just get into a home we overlooked many, now non-negotiable, things.

When your finances are in order you re-evaluate everything, including the house you choose to live in, what’s important, and what you can really afford. We let money dictate way too much of the purchase of our house and in doing so we gave up on some major non-negotiable items which we regret and now have to wait for in our next home.

Enlist good people to help you

The experts we did rely on, in hindsight, were totally useless.

We felt nothing but pressure to just buy from our mortgage broker. He was scaring us with statistics about increasing mortgage rates and why we needed to decide ASAP (for the record, rates continues to decline, almost 1% within the year following). He was a family member of someone we knew, so I don’t know if he is normally that casual/useless with all clients but he didn’t offer near enough direction when it came to the financial side of things.

Our real estate agent was a super nice guy but again, did not do half of what I now would have expected from him and his expertise. This was partly our ”fault” too since we had very little direction to give him. Because we didn’t really know what we wanted, or needed, I’m sure it was challenging to him too, but I also think because we were so lost in the process he should have stepped up and offered more insight… that was his job wasn’t it?

Be choosy in who you add to your professional team of experts they can make the world of difference.

Homeownership is not all its made up to be.

There is nothing wrong with renting. In fact there are many perks and sometimes I wish we were still renters. Where we’re at now, with a kid who is also soon to start school, owning a home is easier, but before she was born it was a total waste of money in my opinion. In our case, there are very few rentals in the areas we would live with a kid and I’ve done the math- our current living situation (with a relatively cheap mortgage and low associated costs) is cheaper than renting something (that would suit our needs) by about $200* per month. Living in a cheap neighborhood (ie ghetto) for a family sized apartment is NOT happening, even if it meant we were saving like $500 per month.

Like I said, homeownership is hard. It downright sucks sometimes. Especially when the other goals in your life are more important to you. When you have financial goals that are more important than owning a home it’s hard to care for the home the way you should. Right now for us, paying off debt, and then getting a good start on retirement savings, are more important than owning a home and that reflects in the home sometimes. We really need new front door but if I’m being honest, it’s probably not going to happen until it near falls off because it’s not our main priority.

Unfortunately for us, we didn’t get our finances in order until after we embarked on the homeownership journey so we now have to deal. Hindsight is 20/20, and we should have waited.

How was your initial homeownership experience?

*$200 month-to-month cheaper. In the end probably about the same as renting a nice family sized apartment when you consider crap like buying doors, gas for lawn mowers and all the other ”things” that come with owning your own property.

What Bad Habits Do You Have That Effect Your Spending?

Source: Free Digital Photos

Source: Free Digital Photos

The other day I caught myself in a store, alone.

It’s a rare occurrence that I shop alone since 99% of the time my daughter and/or husband is with me but for whatever reason I ended up in the store solo. I can’t remember what I went in for, but before I knew it, I had migrated to where the clothing section was and found myself in the change room trying on a few things.


I definitely didn’t go to shop for me. I went there to buy something for dinner. I didn’t need the sweater, coat or pants I had tried on, so why was I wasting my time.

I put everything back on the hangers and walked out but continued to think about what just happened.

I’m not normally one to dwell on stuff, but picking up random clothes (as if I had anticipated to buy them) and wasting time (<<another rarity for me, especially kid free) by analyzing them in a mirror was out of character for me. Then it occurred to me what happened.

Before I went into the store, I had logged onto my store app which is where I am able to track the points we collect through their in-house point system. I was checking to see if any of the things I actually needed were any of my personal ”bonus offers” before I bought them which is when I saw one of the offers was for clothing purchases. The deal was but something like ”X bonus points when you spend X dollars”…

I don’t remember consciously acknowledging the sale but it obviously went into my little brain because before I knew it I was looking at clothes.

Though logging on the app wasn’t necessarily a ”bad habit” it was one habit of many that I have that effect my spending habits weather I realize it at the time or not. I know I’m not alone so here are a few other habits you may have that could sway how much you spend, whether you planned to or not…

Look at the flyers/weekly sales

I used to do this every week. Since the time I was little it was something I looked forward to doing. The day the flyers arrived at our house, I would open them up, put them in the order I liked to read (from the crappy ones down to my favorite store) and set aside a chunk of time to look at every page, sometimes multiple times. I’ve only gotten out of this habit in the last two years really, partly because of how I shop now, but mostly because I acknowledge that it encourages me to find things to spend money on.

There always were, and always will be, things in the flyers I want to buy, but can’t, or just won’t. Sometimes, simply seeing things provokes me to go to stores I normally wouldn’t and inevitably spend money, so I stopped.

Subscribing to e-mail subscriptions

This is something I stopped a long tome ago because I know how dangerous it can be.

You walk into a store, buy something, they ask for your email address and the next days that follow you’re bombarded with ”specials” and ”sales” that tempt you to spend more. Unsubscribe!

Window shop

Again, something I stopped. Why walk around lusting for things that I shouldn’t buy. Unless you need a specific item, stay away from stores and malls!

Always have your wallet on you

I try and get out for a walk during my lunch break. I always used have my wallet on me and it would often navigate me to a store, where, more times than not, I’d spend money. Since I’m just trying to get out of the office and there was nothing I possibly needed, this was dumb so I stopped. At first it felt kind of weird, then sort of liberating to be moneyless. Going for a walk with no intention beyond walking to and from work was now more peaceful.

Humans are creatures of habit, good and bad, recognizing the bad ones will benefit you and your budget!

What habits do you/did you have that effected your budget?

Can It Literally Pay to Be Nice?

cuba room

Free room upgrade. A better view than the pool!

I deal with all types of people at work and have many years worth of customer service behind me. I can’t say for sure, since it’s all I know, but I also think gaining an early maturity from a single parent house forced a certain personality growth. I relate to people. I empathize. I sympathize. From all this I’d like to think I’m a pretty nice person.

I don’t think I’m nicer than most but I will admit there are some downright a**holes in the world who leave a damper on those around them. I don’t think when I do ”nice” things (which to me are very natural, like holding a door for someone), that I am doing something another person wouldn’t do, but yet my ”nice” actions seem to pay off in many different ways and it got me thinking, can it (literally) pay to be a nice person?

Being nice has gotten me…

Free upgrades

A few years ago we went to Cuba. Before we left I called the hotel to see if it would be possible to upgrade our room, for free. We had originally paid for a pool view room but were interested in the ocean or garden view rooms which were about $50 more per night. I had a nice conversation with the lady on the phone and after a few minutes, she put me on hold to check the status of the other rooms. A few minutes later she came back on the line confirming we would get the free room upgrade and wished us well on our vacation.

While some may say this was luck, or that it happens all the time in the world of travel, I have to argue had I been an a**hole when calling or just showed up on the resort demanding a change, there’s a good possibility nothing would have been done.

Free Services

A few years ago I called my local phone/internet/cable provider to have a friendly conversation about package options. We also were looking at cancelling our land line since we never use it. I ended up have a long conversation with a lady about our kids since we both had little ones at home. Long story short, without me even having the opportunity to inquire about anything yet, she put me on hold, came back and asked if I was interested in saving $40 a month on our current package if we kept our landline. Seeing as how the landline was only costing us $15 per month (the savings I was going after), it was a pretty good deal. She explained she has had heard too many horror stories about little kids needing to make emergency phone calls and not being able to access the phone option on most modern day smart phones. At the end of the conversation she thanked me for the ”talk”, it was nice to talk to someone ”not so hostile” (as I imagine a lot pf people can be when demanding looking to find savings on their services).

Gift cards

This past summer my sister-in-law and I went together to get new cell phones. An opportunity arose to attend the grande opening of a local store and receive a good deal on a new phone. When we got there, it was crazy busy. A local radio station was there and the week before a new product had been unveiled, it was chaos. We knew what we might have been in for when we decided to go, so were patient. Most of the people who were in there though, were being quite rude to the employees who were working hard to meet everyone’s demands. We waited, and when it was our turn, made sure we let him know we weren’t in a rush and that we understood the situation he was in. It took some time to pick out our phones, change our rate plans and switch both our phones and information over. This whole time my three year old was with us, also behaving quite well. They thanked us for being so nice and understanding and gave us both a gift card for a local coffee shop and Maria three of the stuffed animals they had displayed around the store to play with- something that wasn’t part of the weekend deal.

Free treats

On a much simpler level, I have received many free coffees (or other small treats) for simply for offering to run errands during my lunch break. Not that I usually get much of a break but when I do I try and leave the office. I usually just go for a walk but when I leave I always offer the receptionists (who have a hard time stepping away from the patients and phones), to take care of anything they may need too like stop at the post office or drop x-rays off at one of the specialists office we refer to. It is by no means out of my way and gives them one less thing to do. It isn’t necessarily part of my job but it’s a simple task that I know makes their life much easier so I offer to help when I can. In turn they often offer to buy me a coffee or show up at work with a special little treat just for me and I know it’s because, quite honestly, I’m a little (but big) help to them.

Obviously you shouldn’t be a nice person just to get free stuff in life, and nothing you do should ever be disingenuous, but I think I can confidently say that it can, in fact, pay to be a nice  person in more ways than one 😉

Has being a nice person ever ”paid off”, literally?

Why I’m Researching a Vacation We Can’t Afford

Our view from inside Neusweinstein in Germany. Worth every penny.

Our view from inside the Neusweinstein castle in Germany. Worth every penny.

I would rather take one amazing, life changing trip every 10 years then smaller, cheaper vacations for the nine previous years. Some people have the itch to get away all the time but I don’t. I’m a homebody and have no problem exploring our own little corner of the world. I enjoy simple things in life such as camping and mini road trips.

That doesn’t mean we don’t enjoy vacations though. When we get away, like really away, we want to go all-out. For our honeymoon we went to Germany and France for almost two weeks and it was amazing. Needless to say, we’re in no position to do anything like that now. I’m talking taking ten days to three weeks off work, kind of vacation. One we talk about for years and years to come.

Our current position in life, not just financial, doesn’t allow us to drop everything for a long duration of time and get away. For example we want to take our next big trip with our daughter but want her to be old enough to really understand what we’re doing and have more independence. I’m not interested in spending money for a four year old to follow her parents around for a few weeks, I want her to be able to appreciate and explore as well.

Realistically, given everything, especially finances, we’re five to six years away from taking our next big family trip but that doesn’t mean we’re not actively making plans. We haven’t decided indefinitely where or when we’ll go but we’re not letting the fact that we still have debt stop us from dreaming of where we will be in five years.

Planning a trip we really want, but can’t yet afford, gives us drive.

Obviously we want to get out of debt. While we’re not seeking early retirement or to be millionaires in our forties, we want to experience life beyond debt and we need to establish a plan for what kind of life we want to have, for us this includes travel. Though I’ve sort of given up on creating defined goals, our overall goal of debt freedom hasn’t gone away and the reasons why we want to get out of debt have never changed.

For us, we may not have many exact plans beyond whats on meal plan for tomorrow or how much money we’ll have to put towards debt on payday, but one thing is for sure, our debt isn’t going to deter our dreams of travel, if anything they will enforce our desire to travel and push up to reach other goals faster.

What motivates you to reach your goals?

10 Statistics You Probably Didn’t Know about RRSPs

picRegistered Retirement Savings Plans, or RRSPs, can be a great way for Canadians to save for retirement, and the tax benefits convince many to invest in one.  With RRSP season coming to a close after the February 29th contribution deadline, let us examine some information about RRSPs from studies conducted by BMO Financial Group.

RRSP Contribution Levels for the 2015 Tax Year

  • Since 2014, there has been a 12% decrease in the number of Canadians contributing to their RRSP.
  • However, Canadians contributed an average of $4,117 this year, which has increased from $3,737 in 2015 and $3,518 in 2014.
  • Almost half (42%) said market volatility played no role in their decision to contribute while 37% said that it did. 19% said they contributed more because of it and18% contributed less due to those same fluctuations in the market.
  • For those not contributing to RRSPs, the top reasons include: not having enough money (37%, compared with 38% last year), other expenses took precedence (29%, up from 25% last year), other types of investments were used, i.e. a TFSA (16%, down from 21% last year).
  • Those expecting to receive a tax refund from the Canada Revenue Agency after making an RRSP contribution will do so in four ways: Save or invest the money (33%, down from 34% in 2015); Pay down a mortgage (16%, compared to 15% last year); Complete home renovations (14%, compared to 13% last year); Or use it toward travel or leisure items (13%, up slightly from 11% last year).

To help Canadians save for retirement and build their wealth, BMO Investments Inc. offers BMO SelectTrust™ Portfolios and BMO ETF Portfolios. The Portfolios are professionally managed and designed to fit different investment styles and risk levels, which allows clients to choose a portfolio that is best suited to their individual investment goals.

RRSP Withdrawals Before Retirement

  • Approximately one third of Canadians have prematurely withdrawn funds from their RRSPs.
  • The average amount withdrawn from RRSPs before retirement is just under $16,000.00.
  • Some of the main reasons for a withdrawal of funds from RRSPs include purchasing a home, paying off debt, paying living expenses, and covering unexpected emergencies.
  • Although about one third of those who withdraw funds prematurely have paid it back, one fourth do not believe they will be able to do so.
  • Most of those who have withdrawn funds early (84%) did so only as a last resort.

So what are the alternatives?

Consider starting a savings account or emergency fund to avoid withdrawing funds from your RRSP. Look into the possibility of borrowing from your RRSP and paying it back, but consider carefully the penalties you could incur before you do. Lastly, only withdraw funds from RRSPs if you have no other options.

Do you contribute to an RRSP? Would you ever withdraw funds early? What alternatives to RRSPs do you use to save money?