# Overwhelmed!!!



## mrkrsll (May 6, 2012)

This site has really helped me put my financial situation in perspective. I feel kinda overwhelmed and kinda scared for my financial future. I was reading a post by another member here and he posted his financial situation and got some great feedback. I would like to do the same with the hope of getting some advice and opinions.

I'm 30 years old and recently graduated from College. 
I came out of school owing 21k from student loans and 35k to my parents.
I am at a secure job making 50k /year. After taxes its $2929.98 /Month.
My fixed expenses including my loans repayments is $2306.00. Starting next month I am going to be able to save most if not all of the difference between my income and my expenses. That will be about $600 bucks a month. As of now I don't have any money saved and have no investments. I would like to talk to a financial planner, but its kinda intimidating seeing I only have 600 a month left over. That 600 a month is no guarantee either. If something were to go wrong with my car (Which I need for work) then my savings for the month would be 0!

Is there anything else I could be doing? 

Thanks


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## Butters (Apr 20, 2012)

I don't think you need a financial planner. Every extra hundred dollars you save, throw it towards the 21k loan that has interest. What rate btw?

Your payments will slowly lower and lower, and once your 21k loan is finished, its just mom and dad you have to repay at 0%(hopefully)

I almost feel as if you need to lower your expenses *edit or get a raise 

What are the majority of your expenses going to? rent? memberships? how is your lifestyle?


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## slacker (Mar 8, 2010)

You can learn to budget for irregular expenses like car repairs. Car repairs is one of those expected, but irregular expenses. You know it'll be a certain amount per year on average (say $600 / year), then just save $100 / month. I use ING (or Ally) because they allow me to create separate savings accounts to help me deal with irregular expenses.


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## mrkrsll (May 6, 2012)

SheaButters said:


> I don't think you need a financial planner. Every extra hundred dollars you save, throw it towards the 21k loan that has interest. What rate btw?
> 
> Your payments will slowly lower and lower, and once your 21k loan is finished, its just mom and dad you have to repay at 0%(hopefully)
> 
> ...


The 21k is an OSAP Loan @ 6%
The 35k which is actually closer to 40k was borrowed from my parents line of credit which I got a personal loan for. Its @ 7.5% for 5 years.

I live with my gf and 2 kids. She is currently in college and on osap as well. We split the bills down the middle minus my loan payments and gas for work.

Expenses:
Rent = 1000
Food = 500
Cable/Internet/Phones = 200
Utilities = 75
Gas = 500 (I drive 200km a day to work)
35k Loan = 800
21k Loan = 245
Car Insurance = Still under my parents for now. Just got a quote for 800 a month which is to much at this point.
Besides that I don't usually spend money unless I have to.


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## Plugging Along (Jan 3, 2011)

To me this almost a no brainer. Pay off your loans to your parents loc, especially since there is one deductible interest, then the osap. The question is how much out of the 600 do you put towards an emergency fund which it doesn't sound like you have.

Investing should should come after these goals.


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## Spudd (Oct 11, 2011)

If the expenses given in your breakdown are all divided by 2 for you except for the gas & loans, then your monthly spending is $2432 and your income is $2929, so you should have $497 per month left. But you have 2 kids, so don't you have kid-related expenses like toys, clothes, diapers, daycare? It seems pretty tight. 

Is $245 the minimum payment for the OSAP loan? I would suggest reducing the OSAP one to the minimum and focusing on the 35k one first since the interest rate is higher, and there's no tax break. 

Do you really need cable? Are your phones under contract? If your 2-3 year contract is up, you can go to pay as you go, which may save you a lot depending on your usage.


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## FrugalTrader (Oct 13, 2008)

I think that you are doing a good job of getting to cash flow positive. I would agree with another comment to pay off the highest interest rate debt first, your parents line of credit. I would also suggest moonlighting. I know you have two kids, but I think that you need to find ways to increase household income.


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## Potato (Apr 3, 2009)

mrkrsll said:


> Gas = 500 (I drive 200km a day to work)
> 
> Car Insurance = Still under my parents for now. Just got a quote for 800 a month which is too much at this point.


Wow, unfortunately a big part of the insurance cost is likely the amount of driving you do. Any way to cut that out? Move to the same city as your job, take the GO? Or if it's driving _around _for your job (e.g.: sales calls), should the company be paying for your gas and insurance?

Is the loan from your parents re-advancable? That is, if you pay them back with all your excess money, but end up needing it later, can you get it back? If so, then I think that's your best course of action right there.

Otherwise, you have to try to meet some split priorities: paying down the debt while also building up a savings cushion for irregular expenses such as car repairs. Also, if you're going to continue driving 50,000 km per year, you should think about replacing whatever it is you're driving that's getting you ~9L/100 km with a hybrid. You're putting on so many kilometers I'm tempted to say to go pick up a Prius before you pay off the OSAP -- as soon as the higher-rate debt is gone. In the meantime -- if you're not already -- look up some fuel saving driving tips.


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## mrkrsll (May 6, 2012)

Spudd said:


> If the expenses given in your breakdown are all divided by 2 for you except for the gas & loans, then your monthly spending is $2432 and your income is $2929, so you should have $497 per month left. But you have 2 kids, so don't you have kid-related expenses like toys, clothes, diapers, daycare? It seems pretty tight.
> 
> Is $245 the minimum payment for the OSAP loan? I would suggest reducing the OSAP one to the minimum and focusing on the 35k one first since the interest rate is higher, and there's no tax break.
> 
> Do you really need cable? Are your phones under contract? If your 2-3 year contract is up, you can go to pay as you go, which may save you a lot depending on your usage.


My girlfriend usually takes care of her kids expenses. I do what I can when I can. The bills are not excatlly 50/50 she takes care of most of the rent and I take care of the rest. 
$245 is the min montly payment, but I could have them drop it to $200 / month for the next 6 months.

Cable, 2 cell phones and internet for $200 is scutually pretty cheap. The cable is basic so the kids have something to watch. Internet is a must and communication is a must.


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## MoneyGal (Apr 24, 2009)

I can't get over the gas costs, although I fully recognize there may be valid reasons for living 100km away from work. 

However, just as a math experiment: given that you pay $500/month in gas costs but those expenses are paid with after-tax income, how much do you actually have to earn to pay $500 in gas every month? (As in: you have to earn the money, then pay tax on it, then buy the gas with what's left over.) So given that the marginal tax rate on $50K in income in Ontario is 31.15%, you have to earn ($500 * 31.15% = *$655.75*) in order to have $500 available to buy your gas every month. That's 16% of your annual (pre-tax) income!

Put another way: $500/month is 17% of your take-home pay. Finding a way to reduce that expense (either by having your employer pay it; structuring your employment so your transportation expenses are tax-deductible or tax-creditable; or lowering your transportation expenses - or some combination of all of the above) will be like getting a raise. 

Also: it's worth noting that your gas costs are just part of your transportation expenses. In addition to the gas, there's insurance (as you know), depreciation, and the value of your time. There's almost no circumstance in which someone earning $50K per year is going to have a $200/km non-deductible commute which is "worth it" financially, never mind the $800/month in insurance costs.


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## mrkrsll (May 6, 2012)

The GO is not an option for me. My office is about 125 km away. If I need to drive for work they do pay me 50 cents a km, but thats not to often. I think the gas milage I am getting is pretty good even though its a 2.4L 4 cylinder. 
The LOC that I used the money from is no longer there. I took out a personal bank loan to pay back my parents. That loan is @ 7.5%. Osap is @ 6%.
I want to have a cushion built up, so should I put off paying any extra into my loans until that is built up?


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## mrkrsll (May 6, 2012)

I do not pay insurace as of right now. I have the insurace in someone elses name for the time being.
I agree 500/month is a huge portion of my pay. I really dont see how I can cut that down. I sold my other car which was a v6 and bought this one which is much better on gas. I am pretty sure at this point my company would not pay any of my gas bill for my daily commute. 
How would I structure my employment so mytransportation expenses are tax-deductible or tax-creditable


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## MoneyGal (Apr 24, 2009)

Tax deductible = not going to happen if your transportation is just from your home to your place of work and back. If you have to drive 125km each way to a job, find a job that will compensate you somehow for this expense, typically by paying you more. Commissioned salespeople can deduct a portion of their transportation expenses, as mentioned above. 

Tax creditable = tax credits for transit passes.


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## MoneyGal (Apr 24, 2009)

Also. Not to be alarmist, but does your parents' insurance company know that you do not live under the same roof, and that you (it sounds like) purchased a car when you are not living under the same roof? Typically car insurance companies would allow you to remain on your parents' insurance as long as you are living under their roof, driving a car you purchased while living with them. And typically you can take that insurance with you if you take the same car once you move out. But once you are living separately and independently, and you are driving a vehicle you purchased while living separately and independently, unless you have fully disclosed all of this to the insurance company you may not actually be covered. Just make sure that your car insurance company knows your circumstances.


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## mrkrsll (May 6, 2012)

I just started my career with this company. There is great earning potential here for me (100k + / year)
Good jobs are hard to come by, but I am always looking. If something came up that offered me the same that I have now, but closer I would probably go there. The reality is I do not see that happening anytime soon.


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## MoneyGal (Apr 24, 2009)

Wait. Are you insured as an "occasional driver" on the car you are driving 200km per day? If yes, you had better hope you don't actually need insurance.


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## mrkrsll (May 6, 2012)

For the sake of me living this is the only way. No they dont know.


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## Spudd (Oct 11, 2011)

I think it would help you a lot to search for a job closer to home. If you could find a job paying the same but 10km away instead of 100km, it would save you a ton of money.


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## mrkrsll (May 6, 2012)

I agree. Finding a job that pays me the same might not be that difficult. Now finding one with the same earning potential might not be so easy. 
Sure I can save 500/month for now, but in 5 years looking back would it really be worth it?
Also when my gf is done schoool in 2 years we will be moving much closer to my work.


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## MoneyGal (Apr 24, 2009)

Well, just be aware you're making a bet with an uncertain payoff. The expenses you are incurring now are real and unavoidable, given how you've structured your life. The payoff of "higher earning potential" is speculative, as in: there's no guarantee you'll actually obtain higher earnings at this company than if you find a different job (possibly with less perceived "earning potential"), but which pays more now or costs you less now. 

Also, I suspect you actually don't have insurance coverage if you are in a car accident, so that's another risky bet. Whether or not your parents' car insurance policy would cover you in the case of an accident is unknown, but the insurer can void the policy - including your parents - given that you are not disclosing material information to them which would impact your coverage. The insurer will call this fraud, btw; as this is a form of "fronting" or "rate-jumping" as this practice is known in the insurance industry.


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## Maybe Later (Feb 19, 2011)

My $0.02:

Since you don't have ready access to cash in the event if something unfortunate happening (at least not that you've mentioned), then yes, establishing an emergency fund is important. Think about a high-interest savings account or TFSA. 

I would use a high interest TFSA for this, perhaps at an online institution for a better interest rate, but getting started is far more important that getting the best rate at this point.

I recognize that coming out of school there are compromises that need to be made with where you live and work (i.e. getting a job in your field), but now that you've established yourself, think about the sustainability. Do you plan on commuting that far long term? With kids and your gf in school there may be a very good reason to stay put, but when will she finish and where will you live? If a move is not in the cards then reducing your transportation costs and/or working closer to home might provide a real long term benefit. However, if this were to be for one or two more years (for example) and then she would be looking for work in her field it might make much more sense to defer that decision until later.

In either case I think if you ask these questions and come up with a plan, even write it down, then some of the feeling of being overwhelmed will go away. I will also suggest that when things start to feel on track that you start considering your credit history and that of your gf since she will be facing loan payments also. Being able to access credit on the best possible terms can be importan at this stage in life.


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## Maybe Later (Feb 19, 2011)

Also missed the last few posts while replying. The risk you're taking being essentially uninsured is not worth it. A minor fender bender and not only are you on the hook for that, but now you're not insured, can't get insurance at a reasonable rate and have lost your income because you can't commute to work.

Edit: Is $800 a month just for liability, or does that include collision? If the latter, get something that is both fuel efficient and affordable to insure.


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## mrkrsll (May 6, 2012)

Great advice. Thanks!!!!



Maybe Later said:


> My $0.02:
> 
> Since you don't have ready access to cash in the event if something unfortunate happening (at least not that you've mentioned), then yes, establishing an emergency fund is important. Think about a high-interest savings account or TFSA.
> 
> ...


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## Harp (Jul 18, 2012)

Just to branch-off regarding a high interest TFSA emergency fund- where would he go for something like this? 
Keep in mind that if the car's transmission went tommorrow (not to scare you but things do happen re: life), would he be able to access such funds right away in a TFSA? Or when U have your money in a TFSA do you have to wait like 3 days to get it?

I hear about the ING thing but then hear ppl say U can't get your $ immediately.


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## HaroldCrump (Jun 10, 2009)

mrkrsll, IMHO, you should forget about the TFSA, HISA etc. for a few mins. - you have far bigger issues to deal with.
I am referring to your insurance situation, which is a ticking time bomb.
Did you understand the risks outlined by Money.Gal above?

It is almost certain your parents' insurance company will deny any claims by, or against, you.
Are you aware of liability claims in the event of at-fault accidents?
Do you know what impact it can have on your financial situation?

Fix your insurance situation first.
I understand the driving situation is probably not easy to fix immediately - it is not easy to find a new job, not easy to move, etc.
But the insurance situation is fixable, even though the cost of the fix may be quite high.

You need to pick up the phone pronto and do two things - get your own auto insurance (esp. liability) and secondly, remove yourself from your parents' policy.
And when you do the first, be completely honest about your driving routine.

You should do this like this minute.
The TFSAs can be done later.


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## Barwelle (Feb 23, 2011)

A couple of suggestions that may be a bit of a stretch but worth considering if they are possible:

- Carpool to work. If any coworkers live on the way, maybe you could arrange to pick them up and drop them off, and they would contribute $X to your costs. Would help, even if it's just for the last 50km of your 125km commute. Or, if you live/work in bigger centers, check out carpooling websites and see if you can arrange something that way.

- Assuming you work 5 x 8hr days: would it be possible to switch to (and would you consider switching to) 4 x 10hr days? That's 20% less commuting time and expense, and you'd get a 3 day weekend all the time. It would take away time from the days you work, but overall in a week you'd have an extra 2 hours to yourself (or however long it takes you to make a round trip.)

Kudos to you on downsizing your vehicle. Friends of mine complain that they can't save money after gas, groceries, smokes :eek2: etc. Yet they go and trade in their late model small cars (in one example, a Mazda3) for a truck. Gotta love the Alberta Way. It's like choosing to smoke two packs a day instead of just one after being diagnosed with lung cancer. Some people just don't get it.


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## mrkrsll (May 6, 2012)

I had someone hit the back of me 2 months ago and the insurance compnay knew that I was driving. The claim went through and the insurnace compnay knew that I was driving the car. 


HaroldCrump said:


> mrkrsll, IMHO, you should forget about the TFSA, HISA etc. for a few mins. - you have far bigger issues to deal with.
> I am referring to your insurance situation, which is a ticking time bomb.
> Did you understand the risks outlined by Money.Gal above?
> 
> ...


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## Maybe Later (Feb 19, 2011)

HaroldCrump said:


> Fix your insurance situation first.
> 
> ...
> 
> ...


Completely agree.


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## Eclectic12 (Oct 20, 2010)

Harp said:


> Just to branch-off regarding a high interest TFSA emergency fund- where would he go for something like this?
> 
> ... would he be able to access such funds right away in a TFSA? Or when U have your money in a TFSA do you have to wait like 3 days to get it?
> 
> I hear about the ING thing but then hear ppl say U can't get your $ immediately.


I like the combination of both TFSA HISA and chequing account with the same financial institution, which keeps the delays at a minimum. So Presidents Choice Financial or ING are two places to start.

As for the delays reported, I believe the type of investment the TFSA money was put into rather than the TFSA itself is causing the bulk of any delays.

To illustrate, I have a Presidents Choice TFSA that is a HISA. Since this is cash on deposit, the main delay is that the TFSA to chequing account transfer must be "next business day", as per the account agreement/privileges. Then if needed quickly, an ATM withdrawal is cash in hand, or for larger amounts, a cheque can be written. So if I need money on Thursday, as long as I setup the transfer by Wednesday by 3pm - I can do an ATM withdrawal or write a cheque on Thursday.

For an ING customer that has a chequing account, an ING TFSA that is a HISA likely follows the same timelines. For an ING customer who is using the EFT to get the money over to their chequing account at another bank, I'm not sure how long that ING to other bank transfer takes.


If the TFSA money is invested in a stock on the other hand - then when the stock is sold, there will be a three day delay for the trade to settle before the transfer process can begin.


Bottom line is that if one wants to use a TFSA for emergency funds, the TFSA should be a HISA or equivalent and the withdrawal process reviewed for delays.


Cheers


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## Zoombie (Jan 10, 2012)

I'm the product of two commuter parents, so the 100+ km to work doesn't seem that strange to me, though of course driving economically will save you money. 
As for your insurance, is it possible to combine house/auto/etc insurance to get a better rate? I am asking because I am under 25, drive a little BMW, had one accident last year and pay MUCH less than you are currently paying for PL/PD, collision, glass and comprehensive (hail etc). (Through Meloche-monnex btw if I am allowed to say, and I'm not in Ontario). 

As for your other finances, keep looking at the little things that can add up, make a budget of EVERYTHING that you spent over the last 2 months to see where money is leaking to, and just keep paying the highest interest debt first. I would save a couple thousand as an emergence fund over the next 6months so that you can sleep a little easier at night as well. Good luck!


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## Maybe Later (Feb 19, 2011)

mrkrsll said:


> I had someone hit the back of me 2 months ago and the insurance compnay knew that I was driving. The claim went through and the insurnace compnay knew that I was driving the car.


Sure. Did they also know you've since finished school and no longer live in the same house? 

Not to put too fine a point on this, but you have multiple strangers that have identified this as a risk not worth taking. None of them gain anything from you taking their advice. You started this thread about finances and investing, this is an instance where the risk appears to be too great for the reward.

Flip it around. If someone were to offer you $800 a month to drive 1000+ km a week with no insurance coverage whatsoever and potentially millions in liability ... That's not a job I'd take


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## MoneyGal (Apr 24, 2009)

Insurance contracts are governed by the law of _uberrima fides_, or "utmost good faith." (Wikipedia definition: http://en.wikipedia.org/wiki/Uberrima_fides). This means that both parties have an obligation to deal in good faith with one another, by fully disclosing all material facts. 

If an insurer discovers that the insured has withheld material information from the insurer (defined as facts such that if they were known by the insurance company, then the insurance company either would not have issued the policy, or would have issued it with different conditions and terms, and most likely would have charged the customer higher premiums), they may declare the policy null as if it had never been issued. 

The practice of obtaining insurance in the name of a parent when the child is the primary driver is well-known to insurance companies, and is called "fronting." Instances of fronting are material misrepresentation (see above) and the company is entitled to rescind the policy. The way you can ensure you are not accused of fronting is to disclose all material facts to the insurance company - and if you are not sure what is material, then disclose all changes and let them decide.


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## mrkrsll (May 6, 2012)

I have a pretty clear understand about how it works. Thanks Money Gal


MoneyGal said:


> Insurance contracts are governed by the law of _uberrima fides_, or "utmost good faith." (Wikipedia definition: http://en.wikipedia.org/wiki/Uberrima_fides). This means that both parties have an obligation to deal in good faith with one another, by fully disclosing all material facts.
> 
> If an insurer discovers that the insured has withheld material information from the insurer (defined as facts such that if they were known by the insurance company, then the insurance company either would not have issued the policy, or would have issued it with different conditions and terms, and most likely would have charged the customer higher premiums), they may declare the policy null as if it had never been issued.
> 
> The practice of obtaining insurance in the name of a parent when the child is the primary driver is well-known to insurance companies, and is called "fronting." Instances of fronting are material misrepresentation (see above) and the company is entitled to rescind the policy. The way you can ensure you are not accused of fronting is to disclose all material facts to the insurance company - and if you are not sure what is material, then disclose all changes and let them decide.


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## mrkrsll (May 6, 2012)

I appreciate all the insurance advice as well as the law advice that pertains to the insurance.
Thanks everyone else for your views and comments in the other areas.


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## Plugging Along (Jan 3, 2011)

mrkrsll said:


> I had someone hit the back of me 2 months ago and the insurance compnay knew that I was driving. The claim went through and the insurnace compnay knew that I was driving the car.


The thing with this, is that your insurance company did not question who was driving because your were rear ended and the other person was a flat. They did to pay out,or recovered the money from the other person.

If you get in an accident which is your fault, then this feeling of being overwhelmed right now is nothing to how overwhelmed you will feel when ou are charged with driving with out insurance, have to pay out damages out of the money you don't have saved, cannot drive to work or get insurance in the long term. 

I don't believe this is a scare tactic, I rear ended a person while I was going less than 5km/hour. I literally rolled into him. There was hardly any damage on his Saturn, the police refused to come, and even told him that he didn't need damage sticker. I tried to settle outside of insurance. Ended up over $15k just on his side. I ended going through insurance as he calmed on going whiplash. Is this really worth it?

Also the guy that we rear ended (because the guy behind us hit us while we were stopped and knocked our vehicle forward)' ended p not getting anything and took off because he wasn't insured and cops were coming.


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## m3s (Apr 3, 2010)

mrkrsll said:


> I do not pay insurace as of right now. I have the insurace in someone elses name for the time being.


If you can't afford liability insurance in your own name on your own car, you can't afford to drive that specific car. Worst case scenario you could be bankrupted by a large claim which the insurance company will definitely investigate (this is absolutely a known insurance scam and probably #1 on their checklist) Bankruptcy probably sounds like getting off easy when you're in debt, but how to you expect to get to work then? Just saying it's too expensive under your name is no excuse. You can either reduce your coverage to 3rd party only and/or find a car model with lower insurance premiums. The first thing I do when shopping for a car is get insurance quotes on that year/model because the cost varies dramatically. For example many people buy a Honda Civic for the fuel mileage savings, and then pay far more on insurance because so many teenagers and street racers drive that model car. Being a young male, I have never been able to justify paying for full coverage insurance. I buy cars with cash that I could afford to replace myself if I destroy it at my own fault, this is a manageable risk that saves me a fortune. I always take fire and theft with the highest deductible that I can afford. If you can't afford the insurance payments or the risk of replacing the car yourself, then you need to downgrade your car. Unfortunately Ontario car insurance is a vicious train wreck catastrophe and partially due to these rampant insurance scams. This kind of irresponsibility ruins it for everyone else.

As for investing, paying off your student debt is a guaranteed 7% tax free rate of return. You won't find that kind of guaranteed tax free return in this market, it would take a fair amount of skill and luck just to break even with 7% after tax. It's not as exciting but paying off the debt first is easily the smarter thing to do. Putting it in a TFSA will get you 1 or 2% tax free by comparison. You should check the LOC limit stays the same as you pay it down, that way if the transmission goes in your car you can just pull some funds from back from it. That's the whole point of a LOC, it's flexible. Either way paying down the debts faster would be beneficial if you needed a new loan later. A couple years of of pain and the debt will be off your back but I wouldn't worry about investing for now.


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## slacker (Mar 8, 2010)

I don't see what the big deal is with not getting insurance. Not everyone can afford the high rate of insurance nowadays, and if you go long enough without insured, it's actually a better payoff.

For someone poor with nothing to lose, not getting insurance is the logical and economical move. If you get in an accident, just declare bankruptcy, and you are done.

This may seem strange to rich millionaires posters on this forum, who if they broke the rules, they'll have much to lose.


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## Barwelle (Feb 23, 2011)

If you're going to be driving, don't you have a social responsibility to be insured, at least enough to protect others on the road? I think it's more than just about breaking the law that says you must be insured.


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## blin10 (Jun 27, 2011)

slacker said:


> I don't see what the big deal is with not getting insurance. Not everyone can afford the high rate of insurance nowadays, and if you go long enough without insured, it's actually a better payoff.
> 
> For someone poor with nothing to lose, not getting insurance is the logical and economical move. If you get in an accident, just declare bankruptcy, and you are done.
> 
> This may seem strange to rich millionaires posters on this forum, who if they broke the rules, they'll have much to lose.


nothing to loose? he will not be able to get insurance for a long time since it will be considered fraud and will have sky high premiums, he will not be able to get paycheck for a while as well (unless it's under table some **** job), that's just two huge issues i can think of and i'm sure there are a lot more.. even if you're broke there's always something to loose, it's the "rich millionaires" as you mentioned the once who got nothing to loose, they get borrow a ton of money wire it out of the country, fly away and declare bankruptcy ... poor people got their life on the line so they got way more to loose


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## the-royal-mail (Dec 11, 2009)

mrkrsll, please stop quoting entire blocks of text. That is simply not necessary and causes unnecessary scrolling. We can follow along if we really need to, less the quoting.


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## m3s (Apr 3, 2010)

slacker said:


> I don't see what the big deal is with not getting insurance. Not everyone can afford the high rate of insurance nowadays, and if you go long enough without insured, it's actually a better payoff.
> 
> For someone poor with nothing to lose, not getting insurance is the logical and economical move. If you get in an accident, just declare bankruptcy, and you are done.
> 
> This may seem strange to rich millionaires posters on this forum, who if they broke the rules, they'll have much to lose.


It's against the law to drive without $500k/$1m liability coverage, in case you kill/maim/destroy somebody's life with your vehicle and have to pay for the damages.....

Are you referring to the mandatory liability insurance or full coverage insurance? I agree that full coverage is a huge waste if you are a reasonable driver, and I think people drive very lazy/dangerous now with the mentality that insurance will cover everything anyways. You have to have full coverage if the vehicle has a lein or if you would be financial ruined if the vehicle was destroyed at fault

Claiming there's nothing to lose is awfully naïve... how would he keep his job after the car is totalled/repo'd? The LOC is in his parents' name so he/them would still have to pay that anyways..


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## blin10 (Jun 27, 2011)

the-royal-mail said:


> mrkrsll, please stop quoting entire blocks of text. That is simply not necessary and causes unnecessary scrolling. We can follow along if we really need to, less the quoting.


why is it always such a big deal with quoting? you can't scroll down or something ? I even got a pm before with same thing, if people want to quote why can't they? it's easier understand to who people reply... jeeeez


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## Elbyron (Apr 3, 2009)

mode3sour said:


> As for investing, paying off your student debt is a guaranteed 7% tax free rate of return. You won't find that kind of guaranteed tax free return in this market, it would take a fair amount of skill and luck just to break even with 7% after tax. It's not as exciting but paying off the debt first is easily the smarter thing to do. Putting it in a TFSA will get you 1 or 2% tax free by comparison. You should check the LOC limit stays the same as you pay it down, that way if the transmission goes in your car you can just pull some funds from back from it. That's the whole point of a LOC, it's flexible. Either way paying down the debts faster would be beneficial if you needed a new loan later. A couple years of of pain and the debt will be off your back but I wouldn't worry about investing for now.


+1
Definitely pay off both debts before building an emergency fund - provided of course that the LOC lets you withdraw from it in case of an emergency. 

Also, you should ask the bank what kinds of deposits and withdrawals you can use it for. Sometimes you can use it exactly like a chequing account: have your paycheques deposited there and pay all bills out of it. The benefit of this setup is that every single dollar you earn immediately starts reducing the debt you owe up until the day you spend it. Take a look at your chequing account balance over a typical month, and calculate how much you would earn if that account paid you (tax free) interest at a 7.5% rate. That's how much you can save by using the LOC as your chequing. 
The downside is that it's harder to track your progress toward debt repayment. You'd have to monitor your expenses more carefully and use a spreadsheet or something to figure out how much of your pay goes to expenses and how much to repayment. Maybe this could be mitigated if the bank can break the LOC into sub-accounts, or take the credit limit and divide it among two accounts. The other possible drawback is the temptation to start withdrawing more than you're contributing. Once you get in the habit of paying for everything with your LOC, you need to be vigilant about tracking your expenses. Once you start overspending, it's a slippery slope into further debt!


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## Helianthus (Oct 19, 2010)

blin10 said:


> why is it always such a big deal with quoting? you can't scroll down or something ? I even got a pm before with same thing, if people want to quote why can't they? it's easier understand to who people reply... jeeeez


+1, the quote police shtick is ridiculous...


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## Plugging Along (Jan 3, 2011)

slacker said:


> I don't see what the big deal is with not getting insurance. Not everyone can afford the high rate of insurance nowadays, and if you go long enough without insured, it's actually a better payoff.
> 
> For someone poor with nothing to lose, not getting insurance is the logical and economical move. If you get in an accident, just declare bankruptcy, and you are done.
> 
> This may seem strange to rich millionaires posters on this forum, who if they broke the rules, they'll have much to lose.


I don't Even know where to begin on this thought. Insurance is not or the rich where ou have lots to lose, it's or thoses especially that can't afford to lose anything.

Not only is it against the law, is fraud, and irresponsible. Unless the OP is a homeless, loser who has no intent of ever having a future, which clearly he is not. By not having insurance he is gambling on not what he has now, but what he could have in the future. If he got into a serious enough accident, he could not only lose everything he has, and you say big deal, that's not much, but they could garnish his future wages. Didnt he say hat h ha a potential of $100k?

I just don't understand the logic of knowingly taking this risk.


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## Compounding1 (May 13, 2012)

mrkrsll said:


> The 21k is an OSAP Loan @ 6%
> The 35k which is actually closer to 40k was borrowed from my parents line of credit which I got a personal loan for. Its @ 7.5% for 5 years.
> 
> I live with my gf and 2 kids. She is currently in college and on osap as well. We split the bills down the middle minus my loan payments and gas for work.
> ...


You've already got a lot of good advice ITT regarding what to pay down, insurance etc. but I just want to point out that I think you could be spending much less than $500 a month on food. How often are you eating out? For a young couple with one being in school and 2 kids (not teenagers or anything) I think this could be a little lower.

Also, try calling your cable/internet provider and asking for a deal. More often than not they are willing to work with you to lower your bill and save you money and sometimes even give you extras. All you have to do is call them and say you're looking to save some money and you're wondering what they can do for you. It's that easy!

At this point I think every little bit of extra cash you can save or put towards debt is important and you should try doing.

BTW considering you're 30, $800 for your own insurance is crazy! I'm under 25, in Ontario, and I only pay $150 for my car which I own and is under my name. Make sure you shop around some more.


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## Toronto.gal (Jan 8, 2010)

Plugging Along said:


> 1. Not only is it against the law, is fraud, and irresponsible.
> 2. I just don't understand the logic of knowingly taking this risk.


1. All that and more.
2. Appropriate thread title at least.


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## MoneyGal (Apr 24, 2009)

It's facility insurance. He can't get voluntary coverage. The facility rates are set and non-negotiable. If you are rated out of voluntary coverage, you are looking at very high rates, like the OP quoted.


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## sags (May 15, 2010)

My son is 26 and is under our insurance coverage policy.

He has 10 years of accident free driving........but insurance only count the full G licence years, so he has about 8 years of claims free driving.

In 2011, he received 4 minor convictions. Speeding 15 kilometers over the posted limit, failure to come to a full stop (rolling stop at 4 way stop intersection), failure to produce proof of insurance (I had removed it to establish a windshield claim and forgot to put it back), and the nasty one........talking on a cellphone.

The results.......he is now rated a high risk driver and must get his own insurance for 4000 plus per year.

The insurance companies have happily accepted over 20,000 in premiums for him over the past 10 years, and never paid out a nickel.

It is all BS. The insurance companies can do whatever they want and charge whatever they want.

We need government run insurance in Ontario.

Government legislates the requirements for insurance and private business moves in to gouge consumers.

So much for privatization.


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## HaroldCrump (Jun 10, 2009)

Auto insurance in Ontario is one of the biggest scams being run by the govt.
It was bad enough, and then the McG administration brought in the new legislation in 2010 that raised everyone's premiums for same coverage by 20% or more.


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## m3s (Apr 3, 2010)

sags said:


> My son is 26 and is under our insurance coverage policy.
> 
> He has 10 years of accident free driving........but insurance only count the full G licence years, so he has about 8 years of claims free driving.
> 
> ...


Yup

When I was his age I moved to Québec with 10 years claims free driving experience (actually 12 if you count tractor/50cc) I had to start all over with a Probationary SAAQ licence, and when a Quebecois backed his massive jeep into my car I became a high risk because of 3 not-at-fault claims. Huge scams

Why is the price based on what colour my car is, how many doors it has, my school grades, relationship status or what I feed my cat for breakfast? It's blatant prejudice. In Europe they just ask how many HP and how many years of claims free driving experience. Those cash grab tickets don't affect your insurance in Europe either, because they have no implication on your defensive driving skills. The use of stop signs in NA is retarded as well but besides the point


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## the-royal-mail (Dec 11, 2009)

Agreed HC about the auto insurance. But rates have been increasing significantly for several years. I remember in 2003 or 04 they had a "general rate increase" despite the fact I had a good driving record. WTF. It would be interesting to graph these bogus rate increases along with company profits and overlay the two lines. I bet the trends will be matched. Gotta love the people who keep voting for this clown.


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## SteveO (Aug 6, 2012)

sags said:


> My son is 26 and is under our insurance coverage policy.
> 
> He has 10 years of accident free driving........but insurance only count the full G licence years, so he has about 8 years of claims free driving.
> 
> ...



That happened to me when I was younger, I had two or three speeding tickets, and they switched me to high risk. My advice to people is to fight their tickets. A few hundred dollars in paralegal fees sounds pretty good about now I imagine.

Also shop around. I was with state farm and they were going to jack up their prices big time (because I was high risk), I shopped around and found a broker that offered me insurance for not that much more than state farm was charing to begin with.

Good Luck


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## MoneyGal (Apr 24, 2009)

Uh, you should overlay the rate of increase in claims at the same time. 

Quoting from the Toronto Sun (gah, but no one could accuse me of a Liberal bias then, amirite?) 

"From 2004 to 2010 no fault injury claims in Ontario rose 28% but large claims are up 108%. Are we more fragile? Or is something else going on? Bodily injury claims costs --cases where lawsuits were started as a result of collisions-- are rapidly increasing even though there has been no increase in the number of accidents. These claims represent more than $2 billion in costs annually. What is the reason behind this?

Accident claim costs in Ontario are rising, while the number of collisions is declining. Think about that for moment. Where's the money going?"


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## Berubeland (Sep 6, 2009)

If you do the math on the insurance at $800 per month there is no point in him going to work in fact he's be -300 per month and this entire thread would be moot. 

I also certainly agree with the insurance/ticket tax grab issue. I drive a lot all over this city and as a consequence I'm more at risk of getting tickets. A few months ago I got nailed in a speed trap. It's retarded and the police officer giving me the ticket almost got nailed a few times by driver's going 90 km in a 50 zone. I was going 66. In any case it's almost impossible to get a speeding ticket during rush hour.

I pay $488 per month and both my cars are over 10 years old. I've had no accidents or claims for the last 10 years. Quebec was so much better for rates at the time I paid less per year than I pay per month now and I was 18...


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## Jaymac83 (Sep 23, 2012)

slacker said:


> I don't see what the big deal is with not getting insurance. Not everyone can afford the high rate of insurance nowadays, and if you go long enough without insured, it's actually a better payoff.
> 
> For someone poor with nothing to lose, not getting insurance is the logical and economical move. If you get in an accident, just declare bankruptcy, and you are done.
> 
> This may seem strange to rich millionaires posters on this forum, who if they broke the rules, they'll have much to lose.


FYI in Ontario its a mimimum $5000 fine for driving without insurance - Compulsory Automobile Insurance Act sec 2(1)(a).
Claiming bankruptcy does not apply to "Fines" they must be paid - and if you don't pay they suspend your license. 
Driving with a suspended license is costly as well and can land you in jail along with the fines for minimum 15 days for repeat offenders adding 15 days for each repeat offence.... you can clearly see this is a slippery slope. Hardly a risk he should be willing to take... Kind of hard to make money to pay off the debt when u add fines / jail time....


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## marina628 (Dec 14, 2010)

You have 24 hours to produce proof of insurance .In July my husband got 2 tickets same day in Scarborough one was 8km over the other was 10km over and it was on a main street.I can see them being picky during a a school district but I think they have to ticket more to meet their budget demands.Moneygal it could also be the cars involved in the accidents are more expensive ,just last Sunday we seen two SUV which had to be $50,000+ each destroyed on the 401 westbound lanes.Or something more Sinister can be going on.


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## marina628 (Dec 14, 2010)

BTW my husband didn't lose any points for these 2 tickets.As for the OP I can see the cell phone one being the biggest one.Before our daughter started driving we taught her to turn the cell off in the car ,At her age all the friends are texting everything and don't think the phone goes more than 2 minutes without a text.I know this does not help your situation ,I guess all you can do is consider getting a cheap car with liability only until he can rebuild his record.


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