# My Plan..... I hope it'll work



## DanFo

My State of finances..Single no kids 32yrs old

House valued at 200K (47k left on mortgage)
savings 20K
RRSP 23K
TFSA 15K
TDW account 3800
db pension 

income 110K

Currently my plan is to eliminate my mortgage within the next two years (hate paying the bank interest) and then invest all the money into the RRSP contrib room i have not used yet (31K as of right now) My car will be paid for in the next month and I`ll send the payment money 600 a month from the car into the couch potato account in TDW....My overall goal is to retire no later then 55.

The TFSA is filled with 3 and 5 yr market linked gic`s ..I imagine I`ll continue laddering future contribs in the account indefinately unless they raise the limit higher then 5K a year

After i max out my RRSP room..I`m thinking of putting the money into div paying stocks as to my understanding it is favourable come tax time for someone in my tax bracket ...As a single high earner without kids I get very few tax adantages outside an rrsp and tfsa any advice in decreasing my tax liabilities is welcome

Hopefully when i check back on this post over the years I`ll have made some of the my goals! The advice and information gained by reading other`s situations and outcomes is a wealth of knowledge!


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## Four Pillars

The plan is excellent.

Why do you have GICs in your TFSA? Is that part of your emergency fund?


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## Henry

Putting Market Linked GICs in your TFSA makes sense. However, many Market Linked GICs have huge design flaws and funny clauses to hinder upside return. Market Linked GICs are more profitable for the bank than regular GICs. Also bank reps may have incentive to sell Market Linked GICs instead of regular GICs.

Using a conservative portfolio or stripped bonds and call options can expose one the same level of risk as Market Linked GICs. The fees will be lower and holdings and exposures will be more transparent.


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## DanFo

Pillars....I'm just starting out in investing in the markets.The TFSA GIC's were more of a safe place to park the cash..went with the market linked ones just because they had a minimum interest with the chance of higher returns which was better then the interest of cash sitting in the account..My savings account has the emergency cash.....My RRSP's are a half fixed / half stocks and i'm going to lean the potato (using td eseries for the simplicity) more towards the markets...and seek out some dividend stocks on the side but more so after the house payments are done..sucks paying high commission fees with small amounts to invest..though they drop a lot once you get enough in the account...at least the eseries have no fees other than the low MER. After the summer I'll probably throw more of the savings into the RRSP as well just waiting till i get some expenses paid up in next few months (insurance..prop taxes..roof reshingle)..

i'm going to use this thread and update the accounts year over year as a record to see how well I do each year compared to the previous one. Kept reading in the forums to post your goals as a motivator to achieving them...so here I am


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## OptsyEagle

A couple of years is not too long to wait, but with an income of $110K, you are missing out on a tremendous tax reduction by not using the RRSP. I know you don't like paying interest to the bank in the range of a few percentage points but how do you feel paying tax, in the range of 40 percentage points?


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## andrewf

^Agreed. Given where interest rates are now, you're probably better off contributing to your RRSP.


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## DanFo

perhaps I will tweak my plan a bit and invest more in the rrsvp and ramp the potato up later


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## the-royal-mail

Hi Dan, welcome to the forum. IMO I see nothing wrong with your plan. My usual opinion is to structure your finances in a tiered emergency plan, something you can easily do on paper with all the cash you've already saved. Take a bow. You don't need any lessons from us. You're doing exceptionally well for yourself.


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## DanFo

Royal..I just read your diary thread. In a way My savings account would be your tier one emergency fund....My checking(your tier 2/4) account handles all my day to day expenses plus unexpected expenses and my vacation funds...I never let it get below 5K and when it's over 10K I shuffle the money into other accounts... My TFSA/TDW and RRSP would be your tier 3 ...Since I have a good defined benifit pension and excellant benefits from work i shuffle a lot of the extra cash to the mortgage while i'm reading and understanding more about how to make my money work..The goal for me is to be financially sound even without the pension (it is a private company and who knows 22 years down the road)....As for claw backs in government benifits from making too much in retirement...I'd be fine with it... it just means I'm doing fairly well and there are others whom need it more.

I am fortunate enough to be able to do all this without any reduction in my standard of living..although i don't buy overly lavious things I do a lot travelling when the deals are good! (offseason specials for single traveller)

As for tracking it all...All the accounts are with Td and they're webpage paints a clear picture whats in all the accounts all at once ....i just keep track of what the bottom line is doing..My RRSP is with standard Life and it's been doing ok so no need moving all my eggs into one basket..though the bank keeps beggin me to switch it over P


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## DanFo

*My 2011 goal*

Alright...... after a bit of consideration , my goal for the end of the year is to sock away at least 15K...I've got a good start this year already though I will have a few extra expenses over the summer I think it should be achievable...As well By mid summer I am going to aim to bring my own food to work for lunches instead of buying the expensive cafe food at work....the food decision is more of a principle decision... they are charging way too much for simple cafeteria food...I've just been too lazy to prepare stuff ahead of time thus far.


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## DanFo

May is a crappy month for me.......I've lost a little of my motivation for now though It'll come back..I have most if not all of my yearly bills (insurances and such) set to come due every May so yee olde chequing account took a blow....but on a good note i'm over 2/3rds of my savings goal for the year so hopefully i'll just keep adding to the RRSP..decided to forgo heading out east this summer didn't look like i was going to get the time off work anyway and I have a few other things planned before year end anyhow. I've slowly started packing lunches for work and cooking more at home but old habits are slow to break...a little bit at a time I guess.  In the meantime 'll just continue educating myself....really been enjoying reading this forum and the various blogs of the members within ....there is an unending wealth of information out there.


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## Echo

@DanFo
2/3 to your savings goal is great considering we are less than half way through the year and your annual bills are about to be paid. I think you just need to be patient, you're not going to be a millionaire over night. Saving over $15k a year is no small feat.

As for your meals, have you checked out "The Big Cook"? http://www.thebigcook.com/

I haven't done it myself but I know of a few single folks who have done this and they love it.


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## DanFo

well I recieved my pin to go online and check out my pension info today....looks like if I retire at 53 (21 years from now  ) my pension is a little over 6K a month  .... that figure is already adjusted for inflation and assumes some basic assumptions about pay increases etc..Hopefully the company keeps things as is until then.


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## Financial Cents

@DanFo.

Overall, great plan. Sure, a few of us here might do a few things differently, but overall you've really got your act together. A round of applause to you.


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## DanFo

Thanks FC, I finally paid my car off last month and pretty much one month to the day my ABS light is now on....Brakes still work just no abs and my 4x4 system is pooched until i get it fixed (tone ring cracked I'm going to try and jb weld it instead of getting a new cv shaft..if it works great if not into the shop). On a good note I can burn some rubber finally!! I have got my savings goal for the year met already so the rest of the year I'll just keep doing the same and see where I am come December, I'm sure I'll find a few things to spend a bit of money on between now and then but it's looking like my savings rate at the end of year will be about 25-30% if I include my pension premiums.


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## DanFo

*End of the year summary*

Well looks like I'll have saved roughly 25% of my after tax income between my TFSA, RRSP, pension premiums, and my non-registered account this year. I'm hoping to do a little better next year but we'll see. My bi-weekly mortgage payments are dbl'd and I made a few lump sum payments through the year as well... so far giving me my best returns (4.5 %). 
This site is great for information, the people are very helpful for the most part and I find the different personalities on it interesting.
My biggest mistake this year I'd say was buying stocks with little investment capital and having the commissions/fees eat up most of/all of any profits (mostly bought before I discovered this site)..I'm going to stick to td efunds for now to build up some equity without commissions.


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## HaroldCrump

DanFo said:


> Well looks like I'll have saved roughly 25% of my after tax income between my TFSA, RRSP, pension premiums, and my non-registered account this year.


That is nothing to sneeze at...you should be proud of yourself.
You are probably ahead of majority of folks in terms of % of income saved.
I keep hearing figures like 1% to 3% is average savings rate.


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## steve41

HaroldCrump said:


> That is nothing to sneeze at...you should be proud of yourself.
> You are probably ahead of majority of folks in terms of % of income saved.
> I keep hearing figures like 1% to 3% is average savings rate.


Unless you actually run the numbers, you may never know if you are over-saving. Remember, there is a balance between saving and living well. Keep up the 25%, and who knows... your rotten kids may inherit a gazillion dollars. You may not want this.


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## DanFo

I would say with my current savings rate I don't go without. I travel quite a bit and money is almost never the reason why I choose not to do things. Having a little cash cushion gives me peace of mind and cuts down on the worry factor of the what if's.


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## peterk

Awesome job Dan. What line of work are you in if you don't mind my asking?


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## DanFo

process operator in an industrial plant


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## DanFo

One year later...

So over the last year I transfered my RRSP to a SDRSP, It's doing alright so far and I'm still contributing regularly to it. The MER's are a lot lower than what they were. I set it at 70% e-series funds and 10 % each in rei.un/util/financial etfs. I also starting investing some in my TFSA and the returns in that account are better so far, The contirbution room is maxed out but for now only 8K is in stocks, eventually i'll increase that. I had a decent tax return but spent it on redoing my roof. The mortgage should be slayed a year from now (22K left). As long as I don't get fired and the company stays afloat I'm on track to retire comfortably @ 53 though that's still 20 yrs into the future and a lot could happen between now and then.


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## DanFo

A little update, my RRSP and TFSA did fairly well last year. My non reg acct is down a bit but nothing i am going to worry about..live and learn. I'm hoping to go in and make the final payment on my mortgage next week (i'll only owe ~1000 on it). TFSA is maxed out for this year already..the RRSP should be maxed out in the not too distant future now that mortgage money will be freed up. Job's still going well. My Holidays were great and I starting dating a nice girl ..things are looking good for the future these days!


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## jamesbe

Wow congrats on the mortgage freedom. I'm looking forward to that day... in 15+ years


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## Plugging Along

Congrats on the mortgage or lack of, and I wish you the same success with the new gal.


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## DanFo

thanks for the well wishes!! it looks like i go in and meet with bank next week to finalize things..It'll be good to get it behind me...I'm sure something else will pop up to consume a lil of that money that was going to mortgage. The rrsp will be the priority but i have a db plan at work so for now so It's more of a gradual tax planning top up though it'll be fully funded soon enough since the contribution limit is reduced so much because of the pension. I'm just catching up from previous years when i wasn't maxing it out. I'l have to become a more savy investor I guess.


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## My Own Advisor

Awesome work on the mortgage man. We hope to be out of mortgage debt in another 9 years 

Continue to max out your TFSA and RRSP every year and you'll be in great shape in another 10 years from now.


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## Pennypincher

Yeaaahhhhh nice work on the mortgage!!! That is our goal in the next 16 months. The scary part now is that you HAVE to put your money in investments (unless you buy a rental property), which, in my opinion, is riskier.


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## DanFo

I go in friday to meet the bank lady. I'll update what the discharge fees are afterwards. I will be increasing my money to some of my investments (RRSP mostly) , however some changes in my life are going to require a little bit of the mortgage payment money for this year anyhow.


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## My Own Advisor

Nice work DanFo. 9 years for me to go...then the mortgage is dead.


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## DanFo

mortgage discharge fee at TD is $300....Mortgage is done!!!...though i might get a line of credit against the house i so i haven't discharged it yet..The bank will call me back in a few weeks to see what i want to do there.


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## Pigzfly

Woohoo! Many congratulations on that one.


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## DanFo

thanks!! Hasn't really hit home yet....probably take a few pays to sink in how much of a difference it makes..still feels good however.


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