# From a hard lesson to financial prudence



## OutofBounds (Dec 7, 2016)

Well, I've been reading and learning a lot since I joined here, and I've got to say this forum has been a huge help. I feel it's time I kicked off my own Money Diary, partially for accountability and partiall to receive suggestions and input form the knowledgeable members on this forum. 

Bear with me, the first post will be the longest, to set the stage. I promise!!

A bit about me, taken from one of my first posts here:

I’m 28 years old. I’m a journeyman welder and last year I grossed right around $60,000 thanks to the crash in the Alberta economy. The previous good years however, allowed me to pay off all debt other than my vehicle. I’ve spent the last 1.5 - 2 years recovering from a pretty big mistake with regards to vehicles…

I traded in a great vehicle that I had bought new and owned for 2 years for a piece of junk that was 2 years new and used for no good reason, regretted it almost instantly, plus it turned out to be a lemon and I poured money into it to to pay it down and sell this summer. I can elaborate on that story if anyone cares. LOL

So now I’m trying to get my financial feet back under me with 3 main goals; 1. Rebuild the $10,000 savings I drained to get rid of my lemon vehicle (it had been my home downpayment money). 2. Build a comfortable emergency fund. 3. Develop a long term savings plan with retirement at 55 as my goal (because fishing is better than work). 

I'm common-law with my girlfriend, and other than a savings account for vacation money our finances are separate. They'll stay that way until marriage (which is likely in a year or two), and then they'll combine. Until then, this diary will be my finances alone. 

Another goal is to have a positive net worth by the end of the year. I've been knuckling down and putting nearly all of my money after bills etc onto paying off my vehicle, which is my only remaining debt. Once that's gone, my living expenses will total 50% or less of my net pay so I'll be able to set up an aggressive savings plan.

My plan so far is to walk out of the regular work force at age 55. I intend to spent the next year and change clearing all debt, educating myself on finances and investing and building emergency savings and my home downpayment while slowly saving some for retirement. Once I turn 30, I should have a comfortable safety net and a decent downpayment built up. I then plan to spend my remaining 25 years until I hit 55 aggressively saving and investing so I can achieve my dream. I want to do all this, while still living and enjoying life as much as possible while living within my means 

Once debt free, I would like to keep my living expenses to 50% or less of my net income. After that, 30% will go into savings and 20% will be discretionary. I need to do some more calculations, but I'm hoping that will give me enough for retirement. 

I do have a few things up in the air right now, as I'm considering quitting my job to go back to school in order to find something I enjoy more. That would naturally be a financial hit, but I'm just gonna keep on my current path and see where life takes me. I'll adapt as needed if I go to school. 

Ok, here goes. 

This is as of *April 12, 2017*

*Current debt: *

Line of Credit: *$8700* (this is my vehicle, I bought it for $15,000 last July)
Visa Card: *$676* (monthly groceries etc, plus some from a recent trip. Card is paid in full every month)

*Total debt: $9376*

*Assets:*

Bank 1:

Main chequing account: *$42 *
Savings account: *$0.04*
Money master savings: *$11*
RRSP: *$210*
TFSA- cash: *$34*

Bank 2:

Emergency chequing: *$10*
Emergency savings: *$10*
TFSA - Tangerine Equity Funds Portfolio: *$1510*

Bank 3:
Chequing - fun money: *$1100 *(this is 10% of my paycheck after vacation pay and savings are deducted, i've been saving it for awhile)
Savings - vacation fund, joint with girlfriend: *$1200 *(our vacation pay is paid out as a percentage of each cheque. We put it in this account right away so we can afford the occasional trip)

Random cash on hand: *$300* 

*Total assets: $4480*


*Net worth: -$4896*

Foreseeable upcoming expenses:

Required soon:
Tires for vehicle: $1200 (needed ASAP)
Timing belt and water pump for vehicle: $1200 (need within 4 months)

Required soon-ish:
Shocks for vehicle: $600 - $800 (need within 6-8 months)

Required this year:
Canopy for vehicle: $2000 - $3000


Foreseeable incoming funds other than regular pay:

Income tax return: $1500 - $2400



Current state of my education:

- Working through the "8 With Weight" reading list posted on this forum
- Reading CanadianMoneyForum, MyOwnAdvisor, and Finiki
- Following Money School on Youtube

Books purchased and read: 
The Lazy Investor - 100%
The Wealthy Barber - 100%
The Wealthy Barber Returns - 100%
The Value of simple - 20%
The Intelligent Investor - 0%


Pretty small potatoes compared to where some people around my age on this forum are. My vehicle debacle really set me back. I have a long ways to go to meet my lofty goal of fishing everyday after age 55. That said, I'm less than $5K in the red over all which isn't bad considering I work with people younger than me who are pushing $100K in the red on just a truck, trailer and quad...

I'll try to update this every month or as significant changes occur. I'm more than open to suggestions and advice on how to organize and prioritize things, as well as ways to further my education.


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## Dilbert (Nov 20, 2016)

Hey OOB, you are bound to be further ahead than most folks your age! It sounds like you are on track, in the right frame of mind as many people never "get it" at all, their entire lives. 

Best of luck and I look forward to reading more about your journey. If you are really committed to it, you may find that FIRE occurs even earlier than you think.


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## CalgaryPotato (Mar 7, 2015)

This forum can be disheartening. It's really easy to read it and think everyone else will be a millionaire by 40. It really isn't like that in the world.

On the plus side, you don't have a lot of debt. On the downside you basically don't have any assets (and half of what you do have is allocated to fun and vacation) I think you have a good plan in place, but is it realistic to get to a point where you are only spending 70% of your income, when you've been spending it all and more up until now?

I think you are reading all of the right stuff in regards to finance. If you can stick to your plan, and get those savings growing I'm sure you'll do great!


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## none (Jan 15, 2013)

Whether you like it or not you and your common law wife's finances are merged and have been ever since you became common law. It would be a prudent idea to write out a bench mark where you bother were when this occurred.


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## Eder (Feb 16, 2011)

I think you can retire at 55 without going back to school...a good welder is worth 20 accountants. Try to specialize...alloy/underwater etc.


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## OutofBounds (Dec 7, 2016)

CalgaryPotato said:


> This forum can be disheartening. It's really easy to read it and think everyone else will be a millionaire by 40. It really isn't like that in the world.
> 
> On the plus side, you don't have a lot of debt. On the downside you basically don't have any assets (and half of what you do have is allocated to fun and vacation) I think you have a good plan in place, but is it realistic to get to a point where you are only spending 70% of your income, when you've been spending it all and more up until now?
> 
> I think you are reading all of the right stuff in regards to finance. If you can stick to your plan, and get those savings growing I'm sure you'll do great!


It's a very long and convoluted story about how I got to the point where I am. It begins way back in 2010, involves trade school, 2 moves, 2 provinces, trade school again, an unreliable roommate, inflated rent, 2 vehicle purchases, 2 more moves within this town, meeting my girlfriend/wife, and then running into a brick wall of reality. LOL. 

In a nutshell though, not including $600 per month truck payments for the last 4 years, I've managed to pay off about $30,000 in accumulated debt and interest, the majority of that being with in the last 18 months.

That's the main reason my numbers look so pitiful. My living expenses currently amount to about 55% of my income. At the end of each pay period, after everything is paid anything left over (between $600 and $1200) is put against my debt. So I'm able to put betwen $1200 and $2400 per month into debt repayment depending what I get for overtime and how many days are in the pay periods. Hence the lack of money outside of fun and vacation. I never have an issue meeting my bills and certainly don't live anywhere near paycheck to paycheck. Once I get the debt gone, I'll easily be able to bank that $1200 - $2400 a month if I want.



none said:


> Whether you like it or not you and your common law wife's finances are merged and have been ever since you became common law. It would be a prudent idea to write out a bench mark where you bother were when this occurred.


Very valid point. I'll have to talk with her about it. I'm not really sure where either of us were financially back then, but it wasn't very good. I'll look into it and discuss combining our finances. We've been together for 3 years at this point and things are looking better than ever between us. We have discussed living on my income and banking hers which would allow use to save about $2500 per month. 



Eder said:


> I think you can retire at 55 without going back to school...a good welder is worth 20 accountants. Try to specialize...alloy/underwater etc.


Therein lies the rub. I hate my job, as in I have to force myself out of bed in the morning just to go to work. It's not the environment (I get along with everyone at work, and the company isn't a bad one to work for), it's the work itself. I find it unfulfilling, mind-numbingly boring, and it simply isn't stimulating or interesting in the slightest. I got into it for the money, and nothing else. I really have no interest in welding, or working with metal. Never have, and once I leave the trade I doubt I'll pick up a stinger again for decades, if ever. It's affecting my home life to the point of ruining my Sundays because I don't want to go to work the next day. 

I'm not 100% sure what I'll end up doing but fire/rescue, EMS and law enforcement have all piqued my interest. All are very competitive though, so I want to go back to school for something in case none of those work out.


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## peterk (May 16, 2010)

Hey OOB, glad you joined. Fellow Albertan here.



OutofBounds said:


> I'm common-law with my girlfriend, and other than a savings account for vacation money our finances are separate. They'll stay that way until marriage (which is likely in a year or two), and then they'll combine. Until then, this diary will be my finances alone.





none said:


> Whether you like it or not you and your common law wife's finances are merged and have been ever since you became common law. It would be a prudent idea to write out a bench mark where you bother were when this occurred.





OutofBounds said:


> Very valid point. I'll have to talk with her about it. I'm not really sure where either of us were financially back then, but it wasn't very good. I'll look into it and discuss combining our finances. We've been together for 3 years at this point and things are looking better than ever between us. We have discussed living on my income and banking hers which would allow use to save about $2500 per month.


How did your very excellent first plan turn into such a disastrous plan in less than 24 hours on the forum?? :cool2:

You finances are nowhere near merged, particularly if you own no house together, have no kids, share expenses, and she has a job. None lives in BC, they have wonky rules there and made-up words like "non marital spouse"

Waiting until you decide to get married (and actually do it) is a great and simple plan.
Living on all your income and saving all hers, while not married, living in Alberta, is precisely the steps you should take if you wish yourself to have zero money, and her to have all of the money, if you were to unfortunately separate...

Putting all your available funds against your debt is a fantastic plan, you'll be stacking bills in no time if you keep socking away $1200-2400/month.


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## OutofBounds (Dec 7, 2016)

peterk said:


> Hey OOB, glad you joined. Fellow Albertan here.
> 
> 
> 
> ...


LOL, thanks for the heads up. Over dinner the girlfriend (wife...?) and I discussed it. We've agreed to keep our finances separate and pay off our individual debt and make our own savings for now. Her debt is under 5K. Once we actually get married, then we'll merge our finances. As it is, all our expenses are split right down the middle thus enabling us to free up money to pay down debt, so the status quo is working for now.


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## peterk (May 16, 2010)

OutofBounds said:


> I’m 28 years old. I’m a journeyman welder and last year I grossed right around $60,000 thanks to the crash in the Alberta economy. The previous good years however, allowed me to pay off all debt other than my vehicle. I’ve spent the last 1.5 - 2 years recovering from a pretty big mistake with regards to vehicles…
> 
> I traded in a great vehicle that I had bought new and owned for 2 years for a piece of junk that was 2 years new and used for no good reason, regretted it almost instantly, plus it turned out to be a lemon and I poured money into it to to pay it down and sell this summer. I can elaborate on that story if anyone cares. LOL


Don't worry, you certainly aren't the only late 20s guy in Alberta who regrets buying that truck/Camaro. Just for perspective, I am on the opposite "career path" as you - Engineering school, profession job, managed to save a fair bit of money working here in Alberta. But not a week goes by where I don't have the thought in my head "god damn I should have come to Alberta when I was 18 to be a welder", and I constantly want that Truck/Camaro, crave it... but I resist, possibly to my future regret and disappointment. "The grass is always greener on the other side", as they say.




> Ok, here goes.
> 
> This is as of *April 12, 2017*
> 
> ...


If I could suggest, you seem to have a lot of accounts, are any of them paying interest? I know a lot of people like to have separate accounts for different things (vacation, emergency, etc.) but if you are comfortable looking at a bank statement of an unallocated $10,000 without the overwhelming urge to spend it on something, it can be a lot simpler and more profitable just to keep a few accounts.

I'd suggest:

1 chequing with your primary bank
1 Tangerine TFSA investment account
1 Tangerine high interest savings account

That's it.

Your chequing to manage regular expenses and a small additional buffer for "emergency" and to keep a minimum balance (usually 2-5k) so that you don't pay bank fees. And your high interest savings for additional emergency and vacation funds... Then sock away whatever your feel comfortable with into the Tangerine investment account, with the intention of never touching that money again until retirement, or possibly to make a house purchase.



> Current state of my education:
> 
> - Working through the "8 With Weight" reading list posted on this forum
> - Reading CanadianMoneyForum, MyOwnAdvisor, and Finiki
> ...



This is great, I've read a number of those too.

I'd only say re: education. Don't sweat it or obsess. Understanding the basic asset classes (stocks, bonds, GICs, cash) and how they can be accessed by yourself (mutual funds, ETFs, direct investing with a discount broker, pensions) is good enough. 30 minutes/day of reading for a few weeks of the above, plus Canadian Couch Potato and you will be all set.


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## kcowan (Jul 1, 2010)

Simplify, purify, stop unnecessary spending.


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## AltaRed (Jun 8, 2009)

kcowan said:


> 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.


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## OutofBounds (Dec 7, 2016)

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.


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## cashinstinct (Apr 4, 2009)

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.


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## AltaRed (Jun 8, 2009)

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.


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## cashinstinct (Apr 4, 2009)

AltaRed said:


> 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.


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## AltaRed (Jun 8, 2009)

cashinstinct said:


> 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.


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## kcowan (Jul 1, 2010)

AltaRed said:


> 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).


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## m3s (Apr 3, 2010)

AltaRed said:


> 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..


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## AltaRed (Jun 8, 2009)

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.


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## Just a Guy (Mar 27, 2012)

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.


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## AltaRed (Jun 8, 2009)

^ +1. The OP appears to have a spending problem and by his own admission, a discipline problem because he operates numerous accounts to keep his hands off the cash. He should work on that issue and until he does, he probably needs to maintain multiple accounts (as per his own admission). I wouldn't be so quick to consolidate as suggested by many posters, given that situation. He may need a money coach to help him (maybe both) develop new habits over the course of 1-2 years. Some austerity now is the treatment necessary to develop those habits, but not so severe that he will fall off the wagon. Only the OP knows himself, so I don't think strangers on a forum can be any more helpful.


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## m3s (Apr 3, 2010)

Yea never change money in an airport.. The xe app has a neat feature to calculate the fx fee % and the airports are extortionate. My typical modus operandi when arriving to an exotic airport is to walk up to the departures level and nab a cab as they drop someone off in order to avoid the touts in the arrivals area, the cabby will also love you for saving them from a long lineup as well.. and just ask them to stop at an ATM on the way.. my immediate next stop will be to get a local sim so I can hail an Uber or equivalent next time and pay with Visa. I prefer to pay some ATM fees than to walk around with $$$ in my underwear.


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## OutofBounds (Dec 7, 2016)

I'll quote Just a Guy, but try to answer some of the other things brought up:

- I didn't know I could open more than one savings account at Tangerine. I like the idea of having everything centralized, so I'll look into moving everything over. I'm not sure if I need to maintain an account at Scotia to keep my Visa..?

- Foreign currency exchange isn't even on my radar. I've left the country once in the last 10 years, and have no plans to leave in the forseeable future though I do want to travel some day. Trips like that are planned long in advance for me, so the quick access tocurrency exchange isn't something I need.

- The only bank draft I've ever used was when I paid off my last vehicle. So that's also not something I need regularly.

- Interest on the line of credit is prime + 4%.



Just a Guy said:


> 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.
> 
> ...


3 of the last 5 years were spent paying off debt accrued by poor spending, lay offs, unemployment and trade school. The last 2 years were spent paying off a stupid decision I made when it came to buying a truck. 

2015 was a great year and I paid off all debt outside of my truck, roughly $14,000. 

In July 2016, I had $12,000 in savings and owed $34,000 on a truck I foolishly bought in 2014, and it was in the shop more than it was on the road. It had less than 70,000kms on it and was becoming more and more unreliable. I also realized how stupid I was for getting myself deep in debt for a vehicle. I drained the savings and paid down the truck, then sold it. That tapped me right out, and it was good to be debt free but I needed reliable transportation so I bought my current 12 year old truck with my line of credit.

I had been paying about $600 per month on the LOC and trying to save in my TFSA. However, based on reading here and one of my first threads on this board I made the decision to put all savings on hold until the LOC is paid off. i also had to put about $2000 into the truck in maintenance items the previous owner neglected to do. For the last couple months, I've been putting 90% of all money money left over after the bills are paid onto the LOC (the paycheck I got on Friday allowed me to put $1000 on it, once some bills come out, I'll probably put another $600+ down). 

That's why it seems like I'm spending everything. In reality, the money is all going to debt repayment so I can have that LOC paid off ASAP.My monthly expenses, not including paying the LOC off are right around $1600 per month. I average $3800 or so net per month, give or take a few hundred. 

Once the LOC is paid off, I intend to aggressively save up emergency expenses since the industry I work is very up and down so there's no certainty or stability. It's something I should have been doing from the day I moved to AB, but that's in the past. 

Priorities right now are pay off LOC. The fun and vacation allocations amount to about $300 per month, combined. Once the LOC is gone, the savings will be built up quickly. I haven't spent more than $100 on myself since spring last year, since to spend the fun money I do have makes me feel guilty and I can't bring myself to do it. Vacations...well, we just spent 4 days in Edmonton. That's the first vacation we've taken in the 3 years we've been together and the first I've had in 5 years. We used less than half the money we'd been putting into our joint account. 

The reason I'm looking at "truck parts" is it's normal maintenance: my tires are cracked, leaking and the treads are about 80% done. The timing belt and water pump is required service if you want avoid potentially blowing the engine. The shocks can be delayed a bit, but do need to be done. At 140,000kms and 12 years old, they're starting to get soft.

So, in a nutshell I'm living on 50% or less of my take home pay, putting roughly 40% against my debt, and keeping 10% for myself (which I can't bring myself to spend anyways...) all the while trying to respond to the curveballs life keeps throwing at me. 




I'll be getting $2300 back from my tax return. I had planned to buy tires and do the timing belt and water pump on the truck with the money. Now I'm second guessing my plan. It seems as though I should either put that money onto the LOC or into emergency savings and run the risk of driving with worn out tires or just use my winter tires all summer and push back the timing belt job, rolling the dice on whether it'll go before I get it done or not...


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## kcowan (Jul 1, 2010)

AltaRed said:


> 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.


While the airports are a rip-off for FX, The Toronto Star disagrees that the 2.5% vig at foreign ATMs is the cheapest. They specifically recommend Kantor, Knightbridge and the Canadian Snowbird Association.
FX Rates
More ways to get low FX rates
Of course, the fact that banks bury 2.5% in their rate in certainly misleading to most consumers. But numerous people have done the math to prove that paying Chase 1% on cash advances on their noFX CC is cheaper than using foreign ATMs by doing side-by-side transactions with their debit cards.


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## AltaRed (Jun 8, 2009)

I've never had that kind of vig charged at foreign ATMs so the practice must vary depending on institution (I use Scotia ATMs for CAD or Wells Fargo ATMs for USD). And I only have to change the amount of cash I really need.


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## Just a Guy (Mar 27, 2012)

Okay, now it sounds like you're debt paranoid. You're willing to risk your life to get out of debt, that's not healthy either. 

Debt is a tool, used wisely it can make great things, used poorly and you can kill yourself. 

What will you do when you buy a house? Are you going to be sleepless and paranoid until it's paid off? Learn the difference between good debt, required debt, and bad debt.


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## OutofBounds (Dec 7, 2016)

Just a Guy said:


> Okay, now it sounds like you're debt paranoid. You're willing to risk your life to get out of debt, that's not healthy either.
> 
> Debt is a tool, used wisely it can make great things, used poorly and you can kill yourself.
> 
> What will you do when you buy a house? Are you going to be sleepless and paranoid until it's paid off? Learn the difference between good debt, required debt, and bad debt.


You're absolutely right that I'm a little paranoid of debt. I've been taught all my life that debt other than a mortgage is bad debt, especially debt on a vehicle which mine is. I'm not willing to risk my life to pay it off, but I do need to work on convincing myself that paying for the required maintenance shouldn't be postponed in order to pay off the debt sooner. That extra month or so of interest really isn't worth the potential for major repair bills down the road.


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## Just a Guy (Mar 27, 2012)

Simple solution to that is to calculate the actual interest you pay in a month and see if your life is worth more than that. 

You'll notice that I said there were three kinds of debt...

Good debt - the kind that makes you money, most people don't have much of this but examples would be a rental property, business debt (within reason), and leveraged investing. 

Required debt - fairly common, this kind of debt allows you to buy things you can't always afford right away but you still "need". Examples of this would be a house mortgage, a car loan (assuming you get a reliable car and not a Lamborghini) and unexpected emergencies which may come up. Many people tend to abuse the amount of this kind of debt by buying too big or fancy then trying to justify it. 

Bad debt - money for the "wants" in life like a skidoo, boat, ATV, fancy furniture, toys, drinks, vacations, etc. Things you can do without but may not want to.

If you need a vehicle to make money, ie your job, then that isn't bad debt. Buying a top of the line lemon is bad debt. Buying a reliable vehicle and keeping it maintained is a required debt. Your life, and potentially mine is on the line here.taking an extra month or two to pay it off, as long as you pay it off, isn't worth dying or killing someone else for.


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## kcowan (Jul 1, 2010)

AltaRed said:


> I've never had that kind of vig charged at foreign ATMs so the practice must vary depending on institution (I use Scotia ATMs for CAD or Wells Fargo ATMs for USD). And I only have to change the amount of cash I really need.


As I stated:


> Of course, the fact that banks bury 2.5% in their rate in certainly misleading to most consumers.


As I said, we have done side-by-side transactions on noFX CCs and Debit and the difference in FX rate is exactly 2.5%. Just trying to save you some money AR!

When you spend 6 months in a foreign land, those FX charges add up!


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## OutofBounds (Dec 7, 2016)

All right, it's been about a month. Update time. 

I've taken some of the suggestions from this thread and begun slowly implementing them. The main one is I'm in the process of moving everything under pretty much one umbrella as it were by having Tangerine take over most of my accounts. I've got a chequing account and savings accounts set up there for individual designations. 

I still need to talk to Scotiabank about how closing my accounts will affect my LOC, Visa and RRSPs. I simply haven't had time this month to deal with it. 

I've also backed off on being so hard core on paying off the debt. It's tough for me, but I realize I still need to put money into emergency savings to minimize racking up debt again if something happens. I'll be putting $500 per month into that until I have at least $6000 saved up which is roughly 3 months expenses for me. Then I'll continue to put a couple hundred a month into it to keep building that buffer. I also want to keep up with the discipline of saving for my retirement as leaving the work force is very important to me. I've set up auto-savings into my TFSA of $300 per month so at least something is going there. 

Finally, I'll be budgeting for future vehicle maintenance and repairs (my truck has less than 150,000kms on it but is 12 years old). I have yet to decide on an amount to put into this monthly. I did however use my income tax return to get the tires done on my truck.

Current debt: 

Line of Credit: *$7800 *
Visa Card: *$0 * (paid off last month's expenses today)

Total debt: $7800

Assets:

Bank 1:

Main chequing account: *$1700 *
Savings account: *$0.04*
Money master savings: *$10.06*
RRSP: *$202.40*
TFSA- cash: *$47.92*

Bank 2:

Chequing: *$10*
Emergency savings: *$500*
TFSA - Tangerine Equity Funds Portfolio: *$1570* (next $150 deposit to be on the 17th)

Bank 3:
Chequing - fun money: *$1280 *
Savings - vacation fund, joint with girlfriend: *$570* (We took a trip to Edmonton last month)
Random cash on hand: *$300 *

Total assets: $6189


Net worth: -$1613


Current state of my education: *I've had alot on my plate this month, and my head's been filled with distractions. I had to take a bit of a break from the heavy reading so I only read a chapter or two of The Intelligent Investor*

- Working through the "8 With Weight" reading list posted on this forum
- Reading CanadianMoneyForum, MyOwnAdvisor, and Finiki
- Following Money School on Youtube

Books purchased and read: 
The Lazy Investor - 100%
The Wealthy Barber - 100%
The Wealthy Barber Returns - 100%
The Value of simple - 20%
The Intelligent Investor - 5%



I feel that it was pretty good progress this month overall. The middle of the month always looks strong, as most of my bills come out on the first paycheck. The money in my chequing account will go to pay day to day expenses until next payday when everything left over will be put down on the line of credit. Based on past months, I should be able to put $1000 down then.


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## OutofBounds (Dec 7, 2016)

Next update. 

I've made a few changes this month. I've begun centralizing my finances to Tangerine. I've moved my fun money over and have have opened a savings account for my vacation pay. I also opened a savings account for vehicle savings to save for future repairs or unexpected expenses related to my vehicle. I added a savings account for a home downpayment, but I'll start filling that up once my debt is gone. 

I still need to move my RRSP's over go Tangerine, especially as I hear that the company I work for my start RRSP matching. I'll take advantage of "free" money any day. I also need to finalize the move to Tangerine by moving my payroll deposits and bill payments over as well. I just haven't had time to do that this month, since I've been working alot of overtime. I also still need to talk to Scotiabank about what happens with my LOC and Visa if I close my chequing account. 

I'll be closing my accounts at RBC (fun and joint vacation fund at this point). 

I also got a raise this month, so all extra money from that and the overtime I've been working will be put towards my debt and then into savings. I'm working out a budget right now where I should be able to live on 50 - 60% of my income and bank the rest. 

Oh, and I bought a mountain bike with my fun money hence the major drop there. I used to ride competitively and with work sucking my soul out, I need something to get my head straight again. Getting back on the bike has been very therapeutic. I consider that an investment in health. LOL

Current debt: 

Line of Credit: *$6500*
Visa Card: *$150*

Total debt: $6650

Assets:

Bank 1:

Main chequing account: *$1200 *
Savings account: *$0.04*
Money master savings: *$8.46*
RRSP: *$202.40*
TFSA- cash: *$54*

Bank 2:

Chequing: *$10*
Emergency savings: *$760*
Fun Money - *$420*
Vehicle Savings - *$210* 
Vacation Savings - *220* 
Downpayment Savings - *10* 
TFSA - Tangerine Equity Funds Portfolio: *$2000*

Bank 3:
Chequing: *$15 *
Savings - vacation fund, joint with girlfriend: *$570*
Random cash on hand: *$65*

Total assets: $5744.90


Net worth: -$906


Current state of my education: *Been working so much, I haven't had time to read anything.*

- Working through the "8 With Weight" reading list posted on this forum
- Reading CanadianMoneyForum, MyOwnAdvisor, and Finiki
- Following Money School on Youtube

Books purchased and read: 
The Lazy Investor - 100%
The Wealthy Barber - 100%
The Wealthy Barber Returns - 100%
The Value of simple - 20%
The Intelligent Investor - 5%


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## OutofBounds (Dec 7, 2016)

It's been a very long time since I've updated this. Life got in the way and I've been battling some personal demons. I'm still in that fight and my future is uncertain at this point but I'm making progress on my finances. 

My day to day banking has been moved to Tangerine completely. I've converted my original main chequing account to a savings account with no fees. I keep that bank simply for the line of credit and Visa card as well as a cash TFSA which right now is unused. 

My employer kicked of an RSP matching program, so I'm maxing that out at 4% of my gross income. By coincidence that account was placed with my 3rd bank, so I've kept that bank as well though it's not being used for anything other than the RSP matching program. The RSP account is in their equivalent of Tangerine's Equity Growth Portfolio

I've also opened a RSP account with Tangerine to add to increase my RSP savings.

The biggest news though is....I'M OFFICIALLY DEBT FREE!!!!!! :victorious:

Current debt: 

Line of Credit: $0
Visa Card: $0

Total debt: $0

Assets:

Bank 1:

Main chequing account: *$5*
Savings account: *$0.04*
Money master savings: *$6.54*
RRSP: Transfered to Tangerine
TFSA- cash: *$2.67*

Bank 2:

Chequing: *$1700*
Emergency savings: *$0* - drained in October but set up an ASP to put $200 per month in
Fun Money -* $0*
Vehicle Savings - *$500* - ASP set up for $100 per month
Vacation Savings - *$50*
Downpayment Savings - *$0* - ASP set up for $400 per month
TFSA - Tangerine Equity Growth Portfolio: *$1300* - ASP set up for $300 per month
RSP - Tangerine Equity Growth Portfolio: *$1000* - ASP set up for $100 per month

Bank 3:
Chequing: *$15 *
Savings - vacation fund, joint with girlfriend: *$0*
RSP - *$1000* - employer matched 4% of my gross. Invested in their equivalent of Tangerine's Equity Growth Portfolio.

Random cash on hand: *$10*

Total assets: *$5584.26*


Net worth: *$5584.26*


Current state of my education: I've picked away at The Intelligent Investor but with everyone going on in my life, reading hasn't been a priority. 

- Working through the "8 With Weight" reading list posted on this forum
- Reading CanadianMoneyForum, MyOwnAdvisor, and Finiki
- Following Money School on Youtube

Books purchased and read: 
The Lazy Investor - 100%
The Wealthy Barber - 100%
The Wealthy Barber Returns - 100%
The Value of simple - 20%
The Intelligent Investor - 6%


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## lonewolf :) (Sep 13, 2016)

I never read all 4 pages. Though based on the first 2 the first thing I would do is sell the truck, buy an economy car unless public transit works also ditch the banks & use a credit union.


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## OutofBounds (Dec 7, 2016)

Alot changed after page 2. 

Not sure why I would sell a paid for, reliable truck that meets all my needs in favour of an economy car that meets none of my needs and which if bought used in my area for under $5000 would be beat to hell and unreliable or I'd have to buy newer used and finance one. My truck costs me around $300 per month insurance and fuel combined. 

Public transit is trash in my city and doesn't go to my workplace anyways. Nevermind the mental health aspect. I'd rather pay $300 per month and own a vehicle than have to deal with the stress of public transit. 

I haven't been to credit unions in years. What do they offer that banks don't? All my accounts are no-fee accounts now. Maybe I could get a better interest rate on my LOC but since i'm not using it now why bother worrying about it?


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## Holland (Apr 24, 2016)

Looks like you are making good progress! 

For your education section, have you looked into Audible at all? I am not generally a big fan of reading so I listen to audio books most of the time. The intelligent investor is on audible, along with a bunch of other famous finance/investing books.


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## OutofBounds (Dec 7, 2016)

Holland said:


> Looks like you are making good progress!
> 
> For your education section, have you looked into Audible at all? I am not generally a big fan of reading so I listen to audio books most of the time. The intelligent investor is on audible, along with a bunch of other famous finance/investing books.


Thanks! 

Audiobooks are a great suggestion. I listen to them often on road trips. I've looked into Audible but I'd rather save the monthly cost at this point (last I looked it was $15 per month or so?). I plan on checking the local library to see what they have for audio books and failing that I'm sure I could find them online somewhere.


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