# Financial Jouney, engage!



## emdoug (Apr 22, 2016)

Hi everyone, been a lurker for quite a while and decided to make an account and get feedback on my current plan and situation. Plan on posting an update on the first of each month. I'm a 24 year old who makes $37,245 before tax. I started on my debt free journey in August 2015 and since then have paid down $8,000 of my Line of Credit.

Assets
Chequing:$124.75
Saving:$396.00
Joint Account:$448.07
RDSP:$10,994.47 
Car: $5,000.00
*Total:$16,963.29*

The money in the RDSP is invested in:
Savings Deposit: $5,715.40
RBC Selected Balanced: $3,111.33
RBS Selected Aggressive Growth: $1,042.80
RBC Canadian Dividend: $1,084.13

Liabilities
Line of Credit:$7,000.00
Private Student Loans:$14,113.04
OSAP: $8070.71
Credit Card:$409.18
*Total:$29,592.93*

Net Worth: ($12,629.64)

Monthly Spending
RDSP: $117.08
Private Student Loans: $157.11
OSAP: $107.00
Insurance: $166.01
Line of Credit Interest: ~$50
Saving: $300.00
Credit Card Payment: $450.00
Line of Credit Payment: $1,100.00
*Total:$2,447.20*

My monthly take home pay is $2,351.50 I also make additional income from art, on average it is about $250 per month but can be as high as $600+ or as low as $50 so any money earned from art is put directly on the line of credit.

The current goal is to power pay down the Line of Credit because the interest rate is 9.29% and at this rate I am scheduled to have it to $0 by October 2016. After the LOC is paid off in full, the next debt to tackle is OSAP. I will be upping the monthly payments to $275 per month.

*November 2016 we will be moving into our first house, and money formerly going to LOC will be put towards mortgage and utilities. ($1,088.48/month)* We will be renting one of the bedrooms to my brother for $400/month +1/3 of utilities so this should allow us to build up an emergency fund or put it towards extra principal payments.

I put all of my purchases on my Shoppers Drug Mart Mastercard and redeem the points every 3 months for $400.00+ worth of items at SDM. I usually stock up on things we will need for our house and food staples, which come November will reduce some of our new home costs.

I'd love any advice, or suggestions that everyone has.


----------



## BoringInvestor (Sep 12, 2013)

Best of luck on your financial journey!


----------



## nobleea (Oct 11, 2013)

emdoug said:


> Hi everyone, been a lurker for quite a while and decided to make an account and get feedback on my current plan and situation.


You mention 'we' a lot, but nothing in here about your mate. Do they work? contribute to the finances? Are you common law, married?

If at all possible, I would avoid Shoppers. It's just really really expensive, even with the points. If there's a Superstore or one of their other brands nearby, get a PC mastercard instead and collect their points. You'll probably be 20-35% ahead in terms of spending less to get the same and having more bang for your buck with the points.

What's the rate on the private student loan vs OSAP? Is OSAP interest not tax deductible?


----------



## emdoug (Apr 22, 2016)

nobleea said:


> You mention 'we' a lot, but nothing in here about your mate. Do they work? contribute to the finances? Are you common law, married?
> 
> If at all possible, I would avoid Shoppers. It's just really really expensive, even with the points. If there's a Superstore or one of their other brands nearby, get a PC mastercard instead and collect their points. You'll probably be 20-35% ahead in terms of spending less to get the same and having more bang for your buck with the points.
> 
> What's the rate on the private student loan vs OSAP? Is OSAP interest not tax deductible?



We is me and my boyfriend, he works and grosses $58,000 he has his own debts which we keep separate but we did just recently open a joint account for the mortgage and other house expenses.

I don't really buy anything from Shoppers other than diabetic supplies which is a cheque sent to be quarterly for $600 worth of supplies from the government so I purchase them on 20x the points day earning me at least 120,000 points quarterly. I also use the card to buy all my prescriptions upfront on bonus points days and then submit them for reimbursement. 

Interest rates on the loans are:
OSAP: 5.20%
Private: 4.75%
Interest is tax deductible, so I guess it would make more sense to pay the private loans down first, thanks!


----------



## 0xCC (Jan 5, 2012)

You are referring to an R*D*SP, do you actually mean to be referring to that instead of an R*R*SP?
RDSP = Registered Disability Savings Plan
RRSP = Registered Retirement Savings Plan

These are different things and if you have an RDSP it seems like you are also eligible for some other tax breaks which could impact your situation a little bit.


----------



## emdoug (Apr 22, 2016)

0xCC said:


> You are referring to an R*D*SP, do you actually mean to be referring to that instead of an R*R*SP?
> RDSP = Registered Disability Savings Plan
> RRSP = Registered Retirement Savings Plan
> 
> These are different things and if you have an RDSP it seems like you are also eligible for some other tax breaks which could impact your situation a little bit.


Yes I have rDsp, I'm a type 1 diabetic and applied for it last year and was approved from 2005-2015 retroactively


----------



## 0xCC (Jan 5, 2012)

Okay, I don't know the details of an RDSP but it looks like you get some grant money based on how much you put in and you also maybe get an extra bit based on your income. Then when you want to start withdrawing the is a cap on how much you can withdraw per year. However, withdrawals don't count for some income tests (like OAS clawback and GST/HST rebates). There seems to be a $200k lifetime contribution cap also. And contributions are pre-tax and I assume that withdrawals are taxed but that part isn't totally clear to me.

Anyway, it seems like it probably makes sense to make contributions to the RDSP to make sure you maximize the government grant/bond parts.

As I said in your retirement thread you should probably consider not buying any more of those RBC funds and you should consider a couch potato strategy. www.canadiancouchpotato.com for details. You can probably start with the Tangerine funds (and again, PM me for an Orange Key if you don't already have a Tangerine account and we will both get a little bonus if you open an account).

See your retirement thread for an overview of my story. If I had to do it over again there are a few things I would change.

First, I would have put more money into my RRSP (RDSP in your case) making sure to also contribute any tax benefit from the contributions as well. This means that if you are in the 20% tax bracket and you can carve $500/year out of your take home pay to make registered contributions then when you get your tax refund in April or May $100 (20% of 500) should also go into the registered account in addition to the other $500 you put in that year.

Second, I would have followed a couch potato strategy from day one with probably either monthly or quarterly contributions based on how big the trading fees were as a percentage of the contributions (trying to keep the fees under 1%-2% of the contributions).

Third, (and this one would be really hard to figure out at the time) I would try to really understand which of my managers really had a reasonable chance of offering good opportunities in the future if I was able to impress them in the present. This basically boils down to playing the corporate game well.


----------



## NorthKC (Apr 1, 2013)

0xCC said:


> And contributions are pre-tax and I assume that withdrawals are taxed but that part isn't totally clear to me.
> 
> 
> First, I would have put more money into my RRSP (RDSP in your case) making sure to also contribute any tax benefit from the contributions as well. This means that if you are in the 20% tax bracket and you can carve $500/year out of your take home pay to make registered contributions then when you get your tax refund in April or May $100 (20% of 500) should also go into the registered account in addition to the other $500 you put in that year.


Contributions to RDSP are made with after-tax dollars so at time of withdrawal, it is based on combination of contribution, grants, and interest/capital gains/etc. So a portion of the withdrawal will be tax-free as it is your contribution while rest is taxed. This is a similar set-up to RESP withdrawals.

RDSP has a maximum annual grant of $10,500 so if there are carry-back room, OP can contribute up to $4,500 for 3 years worth if applicable. Good news is that OP has up to 10 years of catching up since 2008 so 2018 is when the last catch-up can be made for 2008. Keep in mind that OP must contribute to this year's amount first before catching up. 

Emdoug, it's not a bad set-up. I've noticed that you don't really have much of a short-term savings. Given that you will be buying a house with your partner, it would not be a bad idea to set up an emergency/curveball fund. Also, OSAP gives you flexibility when it comes to debt repayment so if you run into issues of not having a job, you can apply for hold payment or something like that (forgot the terminology) whereas you don't have that flexibility with the LOC/private loans so focus on those loans for sure.

Good luck on your journey!


----------



## 0xCC (Jan 5, 2012)

Thanks for clarifying the RDSP contribution tax treatment, NorthKC. Anything I have said about RDSPs should be verified because I am not very familiar with them.


----------



## emdoug (Apr 22, 2016)

Assets
Chequing:$134.98 *+7.58%*
Saving:$396.00 *+0%*
Joint Account:$748.00 *+40.10%*
RDSP:$11,526.72 *+4.62%*
Car: $4,900.00 *-2.04%*
Total:$17,705.70 *+4.19%*


 Liabilities
Line of Credit:$5,825.00 *-20.19%*
Private Student Loans:$13,910.00 *-1.46%*
OSAP: $7,946.43 *-1.56%*
Credit Card:$404.00 *-1.28%*
Total:$28,085.43 *+5.37%*

Net Worth: ($10,379.73) *+21.68%*

 Monthly Spending
RDSP: $117.08
Private Student Loans: $157.11
OSAP: $107.00
Insurance: $158.00 *Reduced!*
Line of Credit Interest: ~$50
Saving: $300.00
Credit Card Payment: $450.00
Line of Credit Payment: $1,100.00
Total:$2,447.20

This month was a good one! Made ~500 from selling art which was put to the line of credit.


----------

