From a hard lesson to financial prudence - Page 2
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Thread: From a hard lesson to financial prudence

  1. #11
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    Quote Originally Posted by kcowan View Post
    Simplify, purify, stop unnecessary spending.
    I agree the OP needs only one chequing account, one HISA savings acccount (online bank* like Oaken or Zag or Motive or.... and linked to chequing), one TFSA, one RRSP and one joint account with g/f for common expenses that they agree too....and fund 50/50. Keep it simple to one or two HISA savings accounts only. Don't deny yourself completely but consider cutting back on trips (to one per year) and no more than one bar/date night per week until the debt is gone and the emergency fund is built up, e.g. 6 months of living expenses.

    * see https://www.highinterestsavings.ca/chart/ for some online bank HISA savings accounts. Don't necessarily pick the highest as they have the greatest chance of reducing their rates any time. Pick one 'in the pack' that you can count on through thick and thin. Ones like CDF (to become Motive in a week and a division of Canadian Western Bank), or Zag (tied to Desjardins) or Oaken (tied to Home Capital Group) might be good choices.


  2. #12
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    Thanks for the tips. It makes sense to simplify everything to lay a proper foundation. The reason I have multiple accounts is to help keep myself organized and disciplined. I find if I have one account with most of my money in it, I'm more apt to spend more. That's why my accounts are separated. Keeping my fun money and emergency funds in their own accounts helps alot with that. The Tangerine accounts have no fees, and the Bank 2 ones are pretty low. My total account fees added up to about $30 per month. But there's never any harm in paying fewer fees.

    Bank 1 is Scotiabank, Bank 2 is RBC, Bank 3 is Tangerine. Guess I could have just named them. I've been with Scotia the longest, then RBC and Tangerine.

    How does this sound?

    Scotiabank (Bank 1):

    - Keep chequing:, since my paychecks are sent there and it's the oldest account. This is $15.95 per month.
    - Close savings, since it's not being used. Account has no fee.
    - The Momentum Savings is attached to the debit card. It rounds up each purchase, puts the money in the account then every $50 is put int he TFSA. I could just close this one, since it doesn't do too much. Account has no fee.
    - Keep RRSP for future use
    - Close cash TFSA, since I use the Tangerine one now.

    RBC (Bank 2):

    - Close chequing account, move it to my no fee Tangerine chequing account. This is $14.95 per month.
    - Keep the savings account since it's the joint one with my girlfriend and has no fees. Account has no fee.

    Tangerine (Bank 3)
    - Keep chequing account as fun money. Account has no fee.
    - Use saving account for all emergency funds. Account has no fee.
    - Keep TFSA

    OR

    I could close the Tangerine savings account in favour of a higher interest savings account for my emergency funds. In the link AltaRed provided, I noticed Zag Bank's parent company is Western Financial Group which is the company my girlfriend works for. I've never heard of any of the other banks on the list otherwise.

    That'll leave me with an expense chequing account, an fun chequing account, joint savings, and emergency savings plus the RRSP and TFSA accounts. It savings me $15 per mont and it keeps it organized for me and helps to make sure I don't inadvertently spend my emergency money or expense money.

    In the last year or so, we've made pretty drastic cut backs and have been working hard to stick with a budget we put together. We just spent 4 days in Edmonton, using our accumulated vacation money to pay for the get away. We haven't taken a single trip for ourselves since we got together 3 years ago. Heck, before moving to Alberta I used to spent 150+ days a year fishing. Last year I spent exactly 3 days on the water. My $1000+ fun money has been 8+ months of saving a little here, a little there and Christmas/B-day gift money. I have serious buyer's aversion these days, and have been unable to spend money on myself, even if it's allocated to that. We eat out twice a month on average and keep it below $40 total each time.

    We also moved to a newer, nicer place last summer and it's actually saved us money. We save $250 per month on rent, and about 25% on our utility bill despite having to pay for water which we didn't at the old place. The older place actually is renting now for more than we had been paying and places like what we have now are renting for $600 or so more than we pay, so we found quite the score.

    I'm also going to be looking into seeing what I can do to reduce the insurance cost of my vehicle since it's 12 years old, and I feel that I need collision coverage on it.


    Here's another thought that came into my head. Would it make sense to pull the money money I've saved in my TFSA to pay down my debt, ? It would knock $1500 off my debt and saving me some interest, allowing me to have it all paid off a month or so earlier than projected. I don't like the idea of sacrificing savings (again...) to pay off debt, but if it makes more sense in the long run I'll do it.
    Last edited by OutofBounds; 2017-04-14 at 02:40 PM.

  3. #13
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    I would use your Tangerine personal checking account for your checking account needs, and ask your job to deposit your pay there.

    Create a Savings account at Tangerine for your fun money. you can have many savings account at Tangerine, it's no clutter if it helps you managing your money.

    Unlike credit cards, there is no benefit having a "oldest" checking account. Simply close the Scotia and RBC checking accounts... no need for them.

    _____

    The most important thing is realizing that you want to save more and having plans to increase savings / having less expenses.

    You can't change the past, you can only "improve" your future.

    You read many books, you have good bases, now is the time to save for goals such as downpayment / retirement.

    You can automate your savings for Fun and Vacation, but it's only deferred consumption, not long-term savings.

    _____

    For your line of credit, how much interest do you pay on it?

    I would keep your Tangerine Equity Funds Portfolio for now. Having long-term savings is an important step and you should not get into the habit of depleting them to pay your debt.
    Last edited by cashinstinct; 2017-04-16 at 08:15 PM.

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  5. #14
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    I'd only add that one should consider keeping some kind of an account at a bricks and mortar bank to handle things like bank drafts (when needed), or obtaining foreign currency (when needed). unless one can use a Scotiabank to get a Tangerine bank draft.

  6. #15
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    Quote Originally Posted by AltaRed View Post
    I'd only add that one should consider keeping some kind of an account at a bricks and mortar bank to handle things like bank drafts (when needed), or obtaining foreign currency (when needed). unless one can use a Scotiabank to get a Tangerine bank draft.
    Good point. he should not pay $16 per month for such privilege though

    Personally, I have a LOC at bricks and mortar bank, so it also serves that purpose.

  7. #16
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    Quote Originally Posted by cashinstinct View Post
    Good point. he should not pay $16 per month for such privilege though

    Personally, I have a LOC at bricks and mortar bank, so it also serves that purpose.
    For sure. The big banks have limited activity accounts that have minimal, or zero, fees. No one should need a 'covers everything' account.

  8. #17
    Senior Member kcowan's Avatar
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    Quote Originally Posted by AltaRed View Post
    or obtaining foreign currency (when needed).
    We use an FX store in our local plaza. Great rates and good supply. We got Croatian kuna, Turkish lira and Swiss francs without a callback!
    After our return, we switched them all back (except the coins).

  9. #18
    Senior Member m3s's Avatar
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    Quote Originally Posted by AltaRed View Post
    I'd only add that one should consider keeping some kind of an account at a bricks and mortar bank to handle things like bank drafts (when needed), or obtaining foreign currency (when needed). unless one can use a Scotiabank to get a Tangerine bank draft.
    I've held on to a TD bank account for almost a decade now waiting for the day this CMF advice holds true. Tangerine can mail a draft to my house, which is actually more convenient than having to drive downtown and find parking and wait in line with the senior citizens to have a CSR try to scam me into some insurance I don't need (presuming you have the foresight to order a draft 2 days in advance on the rare occasions you need one)

    As for foreign currency, you can walk into a brick and mortar in most any country to exchange cash but there are often better deals at negotiable exchange booths on the streets. Or just withdraw from an ATM - Every now and then I do a head to head comparison and Tangerine has always beaten the TD "preferred rate" (which is supposed to be a perk of their flagship account..) The main advantage of TD has been less foreign ATM fees..
    amat victoria curam

  10. #19
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    I almost always get my foreign cash from an ATM so on that point I agree with the above, but not everyone is willing to enter a foreign country without some foreign cash and the money changers (extortionists) at most money exchange storefronts (and especially in airports) are a ripoff. So yes, one does not need a brick and mortar bank for that purpose but most people still go that route. But if one does rely on an ATM, be sure to have at least 2 cards and 2 accounts to draw from to avoid an unpleasent surprise should one fail to execute.

    As for bank drafts, well, I suppose that depends on how often and how urgently one needs one. I know that for buying a vehicle, the dealer insisted on a bank draft AND a stamp and signature from the issuer on the draft AND a business card with a phone number so that the dealer can validate the bank draft. Bank drafts are counterfeited almost as much as certified cheques these days. Bank to bank wire transfers seem to be the only way to be certain of authenticity.

  11. #20
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    Umm, is it just me or do these numbers just not add up.

    You claim you "only" made 60k last year, I gather that is significantly less than you normally made in previous years. Your girlfriend makes about 2500/month.

    Your monthly expenses are about $700 on your visa for living expenses, a car payment, and, I gather, rent (half of which is yours).

    10% of your paycheque goes into chequing, yet you've only managed to save about $1100 after several months.

    If you lived on just your salary, you think you should be able to invest $2500/month but, by sharing expenses as you currently do, you're no where near saving your "half" of that.

    You seem to worry about the "fun" money and the "vacation" money enough to allocate for them, but you've got next to nothing allocated for "emergency" and not even a savings allocation for "future known maintenance".

    Now, considering the "average salary" in Canada is less than either of you make, and those families often have mortgages, kids, and other big expenses that come with getting older, I'd say you're missing the real problem here...

    From what I see, first you've got a spending problem. With the few expenses you listed, the numbers don't add up. Where dis all your money going?

    Second, you have a priority issue.your allocations seem to be all about the "here and now" (fun money, vacation money) and nothing really about the the future (retire at 55, getting married, buying house) things. Heck, instead of worrying about loss of job, chance of injury, unplanned pregnancy, you're worried about truck parts.

    Sure you may hate your job and need to "let loose" or "get away" to make it tolerable but you're an adult now...it may be time to start thinking ahead, biting the bullet and doing what is required so that you have some options in the future. Financial freedom comes at a cost, hen you have options to make changes.

    So far, you seem to be spending everything you've made and wanting to have extra on top, it's not going to happen. Most people who make money also make sacrifices. In the early days I didn't take vacations, I didn't go out a lot, I invested the money instead. Better yet, I invested in illiquid assets like my own company and real estate so I wasn't able to easily spend my gains either. in the end, I've got options that, on your current path, you'll never have.

    I think you need to find out where the money is going, then make some changes to where you're going to put it in the future. A few years of "pain" at your age can make a big difference in the long term...

    Just my two cents.

    I'm not JustAGuy (without spaces), or Donald, or <insert name here>.

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