# How To Get Started?



## michika (Apr 20, 2009)

I'll admit it, I'm lost, and I need some help, but am having a really hard time finding help.

I'm a recent grad. I have some (less the 10K) debt from that adventure. I have a house (with a mortgage), and I have a paycheck. I contribute to my own RSPs, just held in a high interest savings account for now. I do not have any work related benefits, just the check.

I've tried a few times to talk with a financial planner prior to purchasing my house, and I was always turned away because I didn't have enough cash to invest. Now I have less cash given the purchase of my house, and I can't get any help now either.

I've optimized my mortgage the best I can by increasing the frequency of payments, which is all I can do for the short term. I would like to eventually put additional lump sum payments on the principal in the future, as well as increase the payment amounts.

My question is what is it that I should be doing? I do my very best to put away funds from every check into a savings account, and emergency fund, and my RSP savings account. I eventually think I'd like to try my hand at some stocks, but I still need to research the process and gain a much better understanding.

Help? I'm lost!


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## CanadianCapitalist (Mar 31, 2009)

michika said:


> My question is what is it that I should be doing? I do my very best to put away funds from every check into a savings account, and emergency fund, and my RSP savings account. I eventually think I'd like to try my hand at some stocks, but I still need to research the process and gain a much better understanding.


I think you are off to a great start. I'd suggest starting off with a few books to help you started with your investing adventure.

*Recommended Reading*

Personally, I've concluded that stock picking isn't my thing. These days I'm mostly a passive investor... I talk about this constantly on the blog  Good luck!


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## michika (Apr 20, 2009)

I just find my savings aren't growing just sitting there right now. Plus I'm highly unsure if just leaving my RSP savings sitting around is beneficial to me in the long run?

I check out the list and I've either read, or have a portion of the suggested titles waiting to be read. I'll take a look around for a few more at the library and see if that helps. Thank you.


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## FrugalTrader (Oct 13, 2008)

michika said:


> I'll admit it, I'm lost, and I need some help, but am having a really hard time finding help.
> 
> I'm a recent grad. I have some (less the 10K) debt from that adventure. I have a house (with a mortgage), and I have a paycheck. I contribute to my own RSPs, just held in a high interest savings account for now. I do not have any work related benefits, just the check.
> 
> ...


Ok, lets hear more about you. What are your financial goals? By when?

By the sounds of it, you are doing pretty good for a new grad!


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## michika (Apr 20, 2009)

Some goals

1) Get out of debt - I have a plan for my and my partners debt and if we get it together we'll be debt free by the end of 2010, or possibly early 2011. My partner has considerably more debt after choosing to buy a brand new vehicle, and some reckless spending before we met, he also brings home 2-3x what I do. However we allocate our money to our joint bills based on a percentage. We keep our money separate because we both know that he needs to be on an allowance and doesn't have the self control required not to touch money sitting in an account earmarked for something else.
2) Pay off the mortgage - I have to complete #1 to get to this one.
3) Go back to school - Really all I need for this goal is the cash, and it works out to be about 3-5K per year depending on my prefered coarse load. I work my schooling around my job.
4) I would like to semi-retire in my 40s. I'm 24 now. I have no clue how to figure out how much I need. We are not having kids, so that is something I do not have to budget or plan for
5) I want a sense of long-term financial security. I lived paycheck to paycheck in University. I paid everything myself, but it was really hard. We have more money now that I'm done, but just having an emergency fund set aside is not enough.
6) I also want to educate myself on these things, nobody is going to save my money, or make these decisions for me. I need to learn how to educate myself about money beyond budgets, savings, my mortgage, and credit cards.


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## FrugalTrader (Oct 13, 2008)

michika said:


> Some goals
> 
> 1) Get out of debt - I have a plan for my and my partners debt and if we get it together we'll be debt free by the end of 2010, or possibly early 2011. My partner has considerably more debt after choosing to buy a brand new vehicle, and some reckless spending before we met, he also brings home 2-3x what I do. However we allocate our money to our joint bills based on a percentage. We keep our money separate because we both know that he needs to be on an allowance and doesn't have the self control required not to touch money sitting in an account earmarked for something else.
> 2) Pay off the mortgage - I have to complete #1 to get to this one.
> ...


Sounds like you guys have your budget created and saving a good portion of your income. One important factor for us is the amount we save on an ongoing basis. It allowed us to pay off all of our debt in a short period of time.

After your debt is paid off, you will want to look into investing within your RRSP/TFSA/non-registered. For beginners, I would suggest that you start with research on index investing and asset allocation (my beginner article on self directed RRSP'S). 

In addition, it sounds like your partner is in a high tax bracket. The higher the tax bracket, the larger the advantage of contributing to an RRSP.

Feel free to keep asking specific questions, lots of knowledge on this forum to learn from.


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## Jon Chevreau (Apr 4, 2009)

See also thread 12 steps to Financial Independence. Get out of debt using the tips in the Frugality forum here. Take your employer up on its offer of a pension plan, if applicable. Start TFSA for emergency funds, max out RRSP if you're in the top tax bracket. Get a financial plan and set your target for financial independence, or what I call Findependence Day. 

Far be it from me to add my own book to the recommended reading list but several more neutral reviewers at Chapters Indigo seem to think it may help:

http://www.chapters.indigo.ca/books...nathan-Chevreau/9780981110400-AllReviews.html


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## michika (Apr 20, 2009)

FrugalTrader said:


> Sounds like you guys have your budget created and saving a good portion of your income. One important factor for us is the amount we save on an ongoing basis. It allowed us to pay off all of our debt in a short period of time.
> 
> Feel free to keep asking specific questions, lots of knowledge on this forum to learn from.


Can you elaborate more on this one? Tentatively I have about 40%-45% of my net income earmarked for our joint savings, and my RSP. However I'm just in the process of rebuilding my emergency savings after an unfortunate set-back, but I'll be back on track in a couple of weeks, so all in all its just a minor set-back.

Yes my partner is in a significantly higher bracket then myself. He has started contributing to his RSP, and is being matched by his company. The downside is that he can only change the amount he contributes per check once a year. Next year we're hoping to triple the number once his debt is gone. 

You're book is actually in the mail to me right now Jon! Someone sent it to me as an early birthday gift!

Can someone also explain to me how when I calculate my net worth do I work in my house? Do I subtract the annual city estimate from what is owing on my mortgage to get that number?

I am very appreciative of all the help and knowledge here. I think this forum is a fantastic idea. I love that my age and gender isn't a barrier.


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## mfd (Apr 3, 2009)

michika said:


> Can someone also explain to me how when I calculate my net worth do I work in my house? Do I subtract the annual city estimate from what is owing on my mortgage to get that number?



House value goes under assets. Your mortgage goes under liabilities. Every time you make a mortgage payment subtract the portion of your payment that goes towards principle from your mortgage value.

eg

House value = $400,000

Mortgage= $200,000

Monthly payment = $1000 ( $400 is interest, $600 is principal)

Outstanding mortgage: $200,000 - $600= $199,400

Net worth: $400,000 - $199,400 = $200,600

The only thing up for debate is whether you should track the changes in the value of your home. Opinions vary. For me I don't think its worth the time. I have the value set to what I paid for my condo and I deal with what happens when I go to sell it.


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## Rickson9 (Apr 9, 2009)

michika said:


> My question is what is it that I should be doing?
> 
> Help? I'm lost!


You should be reading a wide variety of personal finance books.


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## FrugalTrader (Oct 13, 2008)

michika said:


> Can you elaborate more on this one? Tentatively I have about 40%-45% of my net income earmarked for our joint savings, and my RSP. However I'm just in the process of rebuilding my emergency savings after an unfortunate set-back, but I'll be back on track in a couple of weeks, so all in all its just a minor set-back.
> 
> Yes my partner is in a significantly higher bracket then myself. He has started contributing to his RSP, and is being matched by his company. The downside is that he can only change the amount he contributes per check once a year. Next year we're hoping to triple the number once his debt is gone.
> 
> ...


If you are saving 40-45% of your income, then you are well ahead of most. Keep it up! For us, we put away a certain percentage per paycheck, along with banking any pay raises/tax refunds or other bonus money.

Here are more details on how to calculate your net worth.

If you're interested, I would even suggest that you start a financial diary in the money diary forum. That way, you are publicly accountable (but still anonymous) for your financial goals. I find that posting my monthly net worth update on MDJ keeps me on my toes, so it may help you as well.


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## michika (Apr 20, 2009)

Okay well I think I've got my net worth calculated, but I think my house has severely skewed the numbers. I'll leave it in for now, but I've highlighted it just to remind myself why my numbers look so high.

We had a fantastic opportunity to purchase our house last year. Its the "ugly house" on the street because we lack professional landscaping, and the interior isn't inlaid with gold. So we purchased for well below the neighbourhood average and our mortgage is small in comparison to others around us, but it still feels huge to us.

The plan I have now is to better formulate my debt repayment plan. I'm going to write it out in one single place and keep it there rather then re-writing it from memory on scrap pieces of paper all the time.

I checked out all the suggested titles at the library. Most were out, have a wait list, or are not available. I put those I could on hold for myself, and those I couldn't access I'm going to take a look around online later on and see what my options are.

I guess then the next step is just to execute my above plan and see how it all goes! First step seems to be the Money Diary forum.


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