I took a vacation day today, mid-week three weeks before Christmas, hoping I could avoid the crowds at the mall. Not so. And I shouldn’t be surprised, based on the results of a survey I heard on the radio last week.

The survey, conducted by Visa Canada, suggests each British Columbian will spend an average $917 on Christmas presents this year. Think about that for a second…if the survey is even close, couples will spend more than $1,800 on presents.

No wonder the malls were packed. That’s a lot of cash to spend in just a few short weeks.

I’d really like to know if this even in the ballpark. I expect to spend $600 tops. That includes a couple of family birthdays within two weeks of Christmas…and giving Santa an assist with goodies for my son…and maybe a present for myself. Of course, I could just be cheap.

Doing a quick Internet search about Christmas and spending, I stumbled upon a truly frightening story. In the UK, it is estimated that 4.2 million credit card holders are still paying off last year’s Christmas debts.
Further, the article says folks in the 30 to 50 age group tend to take on average three-and-a-half months to pay their Christmas debts.

This blog is kind of rambling and in an attempt to wrap it up, be careful out there. Know you budget and stick to it. And have a Merry Christmas.

There’s rarely a truly ‘right’ answer to our financial quandries. My hope for my clients (and Kat is not currently a client, for the record) is that over time they obtain an increasing detachment from their finances, ie., not operating out of fear or compulsion, but instead with an element of zen.

By that I mean, making grounded, savvy, thoughtful decisions.

Sometimes the journey can take us on circuitous routes.

If I understand Kat’s finances correctly, her investments have been outgrowing her debt. Because of that, I wish Kat could take only the bare minimum out of her investments — in a few years, her investments may have far outpaced her debt level. Withdrawing is diminishing the goose that is laying the golden eggs.
Could options include:
1. Simply taking out the amount needed for education and shrugging off the debt for now, knowing that in three years or even less will be the time to deal more aggressively with the debt?
OR
2. Taking out enough both for the education and enough to cover the minimum monthly debt-interest payments, so that the cash flow eases up a little?
OR
3. taking out some investments from the rrsp, and reinvesting in … don’t faint … an income trust for a year or two? NOTE: I am NOT a financial planner so this is not official advice, simply kicking around an idea. Income trusts have plummeted so significantly that many offer yields that totally outstrip debt interest rates. Since we have 4 years before the axe falls, and Kat just needs a year or two, she could then sell them way before the 4 year deadline, and presumably get nearly as much as she paid for them, and put the money back in the RRSP. Again, I’m tossing this out there just to get the creative juices going. Any readers out there have other suggestions? (note, a second job is not an option. Kat has a fulltime career plus evening classes plus a couple small extra income gigs already)

Back to the heart of the matter. At the end of the day, if paying off the debt using RRSP savings is going to give Kat the breathing space and clear mind to focus on her studies, and engage with her money from a sense of freedom, that is, for Kat, in this situation, the right thing to do.

Forget the number crunching.

Sometimes it’s about doing what you gotta do.

So, I’ve checked into the LLP (Lifelong Learning Program) to see if money for my education can be withdrawn from my RRSPs and then later paid back. As I thought, it won’t work for me because you must be a full-time student to qualify. One can only be a part-time student if you have met disability requirements, which I don’t.

In this day & age, educational institutions need to recognize that more & more students educate themselves p/t while working f/t out of financial necessity. If I had the means to stop working & go to school f/t, I absolutely would have. In a heartbeat. As a self-supporting person with no other resources on which to draw, that simply wasn’t possible. I cast a wide net when I embarked on my latest education, hoping to find ways to avoid further debt while not giving up my retirement savings. But as I said in my last blog, in each instance, I was expected to cash out my RRSPs to pay for my education. Which said to me: I can either choose a future or a present. Not both. What’s ridiculous is that debt payments from my f/t salary were never factored into the equation for grant/scholarship eligibility. My net income was considered without regard for my monthly expenses. When all was said and done, I exhausted all the routes and came to the conclusion that I’d hold onto my RRSPs and just incur the debt since it is an investment in my future. I reached that conclusion because education is one of those items that qualify as “good debt” - in other words, justifiable debt.

Regardless, I still experience fear increasing my debt load because the reality is, I still have to find the money to make the payments. So in all of the research and discussion I conducted over the past two weeks, I’ve come to some rather surprising decisions. Once I started thinking about only needing $2000 to finish my current educational qualification and how that’s not a significant dent in my RRSPs ultimately, I started to consider surrendering enough of my RRSPs to eliminate my debt completely.

I began to really think about what a holding pattern I’ve been in financially for the last 3 years with my debt load more or less remaining stable - shrinking some but then growing back to the about the same amount…I get it down a few grand then it creeps up again and hovers. The debt is really taking its toll emotionally. I live in relatively constant state of fear and frustration because of it. The root of it comes from years spent in precarious financial circumstances as a young child, watching my parents mismanage money. My mother died at a very young age with a great deal of debt and made no financial provision to pay for it. There was no money for my future or my sister’s. That has significantly altered the course of my life in more ways than one. Now my own debt load is really preventing me from getting where I want to go financially. It’s by no means huge debt - but it’s significant enough that it robs me of lifestyle and savings and future investments/assets - because I just can’t seem to get ahead! And holy cow am I EVER tired of it!!!

For 3 years I have made shifts in thinking that have allowed me to eliminate all credit cards but one, consolidate all my debt into my low interest line of credit & develop new financial habits. I have followed the philosophy that has been taught to me that debt is part of my life and I acknowledge it and allow it to be there because I am also holding assets that are growing, so I am actually ahead of the game. However, the debt I hold is preventing me from: contributing further to my RRSPs (or making other investments), travelling, educating myself, and having a significant sum of savings (3-6 months of expenses set aside for emergencies?! Lucky if I have 3 days!) so that should an emergency arise, I’m not incurring further debt.

I’m at the point where I feel that by eliminating my debt using a portion of my RRSPs (about 1/4 of my total holdings to clear the debt) I can turn a financial corner in my life. The money going into debt payment can be used to invest for the long term, have savings for the short term, educate myself and travel. All vital things that I currently cannot begin to imagine happening with this debt in place because there simply is no financial breathing room. I had to address my fear that “I could end up in debt again!” But I did this by recognizing that have developed skills and support systems that were never in place in my life previously. And I have written goals, vision and commitment to getting where I want to go. In every other way since I arrived in BC - physically, career-wise, relationship-wise, emotionally, spiritually I am headed where I want to be going. The last piece of the puzzle is financial.

So now is the time. Nancy has me doing a visualization 2x/day before I withdraw money from my RRSPs. I’m still looking at options of how this will unfold. But I am committed to my money serving ME and not the other way around. And while it would be ideal not to destroy the goose the lays the golden egg, ultimately, it won’t disappear entirely. And I’ve concluded that the peace of mind and possibility to truly push through to the next level financially will be one of the best gifts I could ever give myself. Who knew? This may be my best Christmas ever!