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!

Here I sit at a local coffee shop writing my semi-monthly blog submission on a screaming-hot, gleaming, brand-new laptop. This thing is a serious piece of technological bling and it should serve me well for a couple of years.

In my fiscally conservative way, this was an easy purchase to make (although the purchase has been in the works for almost a year). I’m not sure if this is a guy thing, but I love toys, electronic or otherwise.

Therefore, I live by a couple of rules that serve to keep me out of financial hot water when it comes to toy acquisition.

Rule number one: research, research and more research. This serves a couple of purposes including a check to slow me down from making rash decision and to make sure I get the toy that best suits my needs for the money on hand.
It also surprises me how many planned purchases drop off the list after being left to age a while. And keep in mind, the research phase is fun.

Rule number two: have the cash on hand. No credit and no debt for toys.
That way one is free to enjoy the toy rather than how to pay for it. Toys are important. But housing, food and raising a child are essential. All purchases must be ranked appropriately.

Rule number three: only when the first two rules are met to the letter can one make the purchase.

That happened yesterday and I’m a happy camper. Next up? Christmas.

Cheers,

Jack

Oy. So much to think about between Jack’s blog and the Financial Planner’s comment!

I don’t have a will (nor do I have dependents) but I do have financial assets and personal property that would need to be disposed of in the event of my death. I suspect a Do-it-Yourself kit would actually suffice in my circumstances. I’ve looked into this in a cursory way before but need to do some real research here…add it to the list!

As for the LLP, I do have RRSPs & looked into it when I started school, but my program either isn’t qualified or there was some glitch about not being in school frequently enough (I do one course at a time while I work full-time, not 2 or 3 at once), but I can’t actually recall what the stumbling block was. So now I’m going to look into it again - who knows, maybe something has changed since I first checked?

When I started this phase of my education, I applied for the only scholarship I could find that I was qualified for, checked into the LLP, hunted down all sorts of options but at one turn or another, no help was available. Basically I either earn “too much” income (ha!), don’t go to school “enough”, or my investments disqualify me. So basically, I don’t earn enough to afford school without going into debt (ironic since I’m already paying off debt - which is where much of my “too much” income goes!). In other words, I’m expected to cash in my RRSPs (since as far as I know I don’t qualify for the LLP to simply draw from and then replace them) and give up what savings I’ve managed to put away for my future.

Because the education I’m gaining doesn’t guarantee a high return of income, I’m not willing to let go of my future in case the earning potential doesn’t make it worthwhile to have surrended those RRSPs. It feels like a big gamble to me. Those RRSPs are secure and are earning well. I’ve already surrendered part of my investments to manage debt in having made my career change (taking a significant pay cut) and moving to this province. For now, I prefer to incur debt and pay it off rather than let money that has been compounding for 10 years be used to pay for education costs. I’m interested to hear some feedback from either our resident financial planner or from the Coach about whether I’m being ultraconservative…it’s just what feels good to me intuitively, but maybe it’s not the best financial decision? Honestly, I dunno.

I’ll get on that LLP to see exactly what the problem was so I can explain the situation here. I’m sure others are in this boat and it would be good to brainstorm some solutions for those of us trying to find money to pay for education while paying off debt, trying to invest (long-term) and save (short-term) and still have some semblance of lifestyle. That’s a lot of financial balls to juggle and it’s no easy feat!

Jack: The will to write a will

Several months ago I wrote about finding myself studying ceiling tiles from an emergency room stretcher as my body was wired into a variety of machines that, to quote Monty Python, go ping.

At that time, I declared my intention to get my posthumous financial life in order while I still have a say. I’m assuming I still have a good four decades in front of me, but the ER visit was a reminder that things don’t always go as planned. (Why is it so difficult to acknowledge there is always a possibility we may not live to see another day.)

So, last night I started chatting with a lawyer to get the ball rolling.
Because I have a ten-year-old son, I want the will to pass whatever tests it would need to go through following a untimely demise, so my assets would be applied to his needs as quickly as possible. That’s why I’m not leaning towards the do-it-yourself version.

This is all very new to me and I know a few big decision will need to be made about trusts and estate planning. I do the a term-life insurance plan that would payout to my former wife should I pop-off. I know that she would use the funds for raising the lad. I also have my RRSP and pension plan set to go to my son.

I need to figure out the rest, including how to pay for a funeral (employer
insurance) and what to do with all of my stuff. And little things like when does my son get the cash and how can he use it.

I’m open to comments and suggestions if you have any. Nancy will pass them along. And I plan to let you know a little of what I learn as I move through this process.

This is for Kat’s education plans and putting them on a credit card.

Don’t know if Kat has set aside RRSPs for herself; if not, then don’t read further.

If Kat has contributed to her RRSPs, then there is a program called, the Lifelong Learning Program (LLP), which is an exception granted by CRA (Canada Revenue) that allows us to withdraw a sum of money without getting a tax-ding for a “qualified” education program. Not only is this withdrawal interest-free and has no withholdings upon withdrawal, but it’s also tax-free, and you can put it back into your RRSP without losing the precious room available. RRSPs are not only for retirement or the first-time Home Buyer’s Plan. For basic guidance, the maximum amount that you can withdraw is $20,000, there is an annual limit of $10,000. There is no limit on the number of times you can participate in the plan over your lifetime. What’s more? You have 10 years to repay it back, 1/10th per year. Worst case, if you don’t pay it back, it becomes part of your taxable income in the year. For the finer details, go to: RRSP Lifelong Learning

So, last blog I committed to writing out more goals to move myself along financially. On reflection with that last blog, I realized I wasn’t only living in option 3 “patience” but had also been skating along for the last 5 years in option 2 “staying in the same income bracket & hoping that somehow life would get easier”. An optimistic approach to be sure, but certainly not a proactive one. And I realize I’ve been using that strategy for a good part of my working life. There are times when sitting still *is* called for. At some point it is also important to assess the effectiveness of that strategy and determine the next course of action. In my case it was/is not a very effective method for getting ahead financially.

Having made a career change to an entirely different industry after nearly two decades, I’ve been in a period of growth and cultivation for the past 3 years. I couldn’t simply turn around and do what I ultimately wanted to, it’s taken some preparatory ground work. Needing to work within the constraints of the contract under which our company works for an outside agency, overcoming the obstacle of educational requirements needed to reach my desired position and simply putting in time to gain experience in the field have all been essential to reaching my goals. The trick, however, is not to fall into complacency in the cultivation process. I now have to step up the efforts again to ensure that I’m not waiting patiently….for nothing to happen.

So that’s why I accepted a challenge to move myself along in this process and write out my strategies for getting where I want to go:

I have set a date for completion of my current education which will qualify me to obtain the work I seek both with my current employer and by obtaining contracts in my own self-employed capacity.

I have also set dates by which I will be earning a certain salary doing the desired work within the company. I have set a date to assess whether I can reasonably meet that goal or if due to reasons beyond my own control (limitations of our contract), I will need to invoke a backup strategy to increase my income. I have created that strategy and a date by which to invoke it if necessary. It won’t take me away from work and an employer that I love, but it will hopefully shift things to make my life more financially manageable and allow me to stop feeling “stuck” due to circumstances beyond my/our control.

I have committed to a small and manageable automatic savings plan between now and my next pay raise, and further, have committed to resuming contributions to my RRSPs to begin with my next pay raise (about 6 months). I have also created a strategy to eliminate one of my monthly expenses and potentially even earn a small amount of income at the same time. I have until the end of the year to enact the plan or let go of the convenience that I am paying for and re-direct that money to somewhere its needed more.

It wasn’t as hard to do this goal setting as I thought it would be. It still feels scary to set goals and fear I won’t be able to reach them. I’m choosing to put my faith in intention and trust that by committing myself to the plan I’ve designed, the Universe will conspire to make it happen!

In response to Coach’s Comments from 2 posts ago (”Cruel Words”) - the old song goes, “you’ve got to be cruel to be kind, in the right measure”…I must confess, I really didn’t perceive those words as cruel. Rather, I saw them as an honest reflection of a situation which is somewhat Catch 22. I have done as much as I can do right now without compromising my values and lifestyle, or rushing to change my job for a bigger paycheque while trading off things which ultimately matter more than money. But money is important - I can’t deny that, it’s definitely been the root of fear and frustration I’ve been experiencing much of my adult life. I’m aware of what needs to happen for bigger changes and indeed, apparently - for the time being at least - I’m committed to option 3, patience! Problem is, I’ve spent a lot of my adult life in that place and it’s often a difficult place to be.

In an effort to remain proactive about achieving my life goals and not merely settle into the default position of complacency (so easy to do when things are going “ok” in life), I was challenged yet again to commit to paper a vision for my future. So I’m working on writing it all down. Deciding what the negotiables and non-negotiables are and a reasonable timeline in which to accomplish my various goals. It’s hard and scary! Like Jack, I’m not a consumer. I don’t need or want a lot of material possessions, have no desire to own a home (a cabin or cottage one day perhaps, but don’t need home ownership in the city) I don’t have children or other people to consider in my spending habits. I do want to be able