by Pam on September 2, 2010
As I have written before, it is important for all of us to have some funds set aside in case of emergency. If your vehicle breaks down or you find yourself out of work for a while, you do not want to have to use your retirement savings. There are key reasons why you should not even consider your RRSP as your emergency funds.
First, you get penalized for withdrawing. You pay withholding tax to the government when you first make your withdrawal.
Second, you have to pay more tax at the end of the year on the amount you withdraw, depending upon your income tax bracket.
Third, there are other negative impacts as well, including the fact that you lose that RRSP contribution room permanently. So as you can see withdrawing from your RRSP is expensive.
To prevent ever having to make an RRSP withdrawal before retirement, consider putting some money aside every payday and using either a Tax Free Savings Account or even just a regular savings account that still pays you some interest. This way you have the flexibility to make RRSP contributions with excess savings before the deadline without putting you in the position of touching your RRSP prematurely. (Build your emergency funds until you have three to six months of living expenses and then any money above that can be used for your RRSP in the event that nothing comes up throughout the year.)
Before putting money into your RRSP, make a mental note that this money no longer exists to you until you retire. It is not back up savings. Don’t even include your RRSP balance when you calculate how much money you have. It’s best if you forget about it, because there is no point in contributing to your RRSP if you intend to use it as emergency funds. It just doesn’t make financial sense.
by Pam on August 31, 2010
Do you ever get tired of worrying about money and wish that you could just live without it? Well, a man by the name of Mark Boyle has done just that. Since 2008 he has managed to live what he calls a moneyless lifestyle. He grows his own food, lives in a small trailer, and bathes in a nearby stream. He claims he has never been happier and more content in his life. He also says he is much healthier and more fit now.
Wow! Who would have thought that anyone could survive these days without even attempting to earn money? Although Mark’s lifestyle is definitely not for everyone, I can definitely see the appeal of living like him, at least for a short period of time. But for many people this lifestyle is not feasible due to their existing responsibilities and ambitions. That being said, it doesn’t mean we can’t still be carefree to a certain extent.
[click to read…]
by Pam on August 29, 2010
There are a lot of ways you can save money when you travel. My husband and I generally camp whenever possible as it has been a cheap way for us to get to see a lot of places. However, some friends of ours recently introduced us to an organization called Mennonite Your Way. They had gone to the U.S. for a vacation and they stayed with people who open up their homes to travelers. Not only did they save a lot of money by not having to stay in hotels, but they also had the opportunity to meet a lot of new people.
Mennonite Your Way is not strictly for Mennonites, in case you were wondering. According to their website, it’s a hospitality network for Christians. They have created a directory of over 1700 hosts in approximately 60 countries and for a donation you can get a copy of the directory. Then, you can contact the hosts located in your area of travel and make arrangements with them directly. The whole purpose is to encourage fellowship with folks from all over the world. On top of that, it makes traveling a whole lot cheaper as well.
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by Pam on August 27, 2010
We recently switched our phone company in order to save money. In the past we have used Vonage, and for quite a while it worked really well for us and it was inexpensive compared to other phone companies offering service in our area. Unfortunately, as time went on we found that the quality of our phone connection deteriorated and we also started paying more for our monthly phone bill.
So, we decided to try out magicJack. We bought the device at Future Shop for $55 including tax. It is really easy to set up, as all you have to do is plug the device into a USB port on your computer. (You need a broadband Internet connection to use the service.) Then you can either just talk through your computer, or, you can connect the phone cord directly to your regular phone. We found that we get a better quality connection using the phone, and of course, it’s way more convenient, too. However, when we are on the road, if we bring our laptop along, we could technically use our phone service, too, as long as we have access to the Internet. This means we wouldn’t have to use our cell phone and we could avoid expensive roaming charges.
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by Pam on August 25, 2010
I recently read an interesting article on globeinvestor.com that talks about how the value of a dollar changes depending on what life stage you are in. For example, as a child, you would have cherished one dollar as if it was an entire fortune, but at different times in your life, you will likely value it differently. The main point of the article is to set up a strategy so that you are making the best use of your money throughout your life.
For people who struggle all their lives to make ends meet, the value of the dollar will likely be fairly consistent through all life stages, however, for those who have enough money to cover all the bills without a lot of stress, it appears that the value of a dollar becomes less meaningful especially when one is older. According to the article, “… it often becomes clear that the precious dollar of today is better spent than saved for the future, when it will be of much less personal value”.
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by Pam on August 23, 2010
Life seems to be a bit of a balancing act. We need to make sure that we are enjoying the here and now, without neglecting to save for our future. Although none of us are guaranteed another day, we live in anticipation of waking up every morning and carrying on as usual. So although we need to plan ahead, it is just as important that we make sure to live a little in the present, too.
This is something I really struggle with sometimes. I get so carried away with saving for future goals like travel, our next vacation, and retirement, that I do not often let myself spend money on the things I enjoy right now. I make a lot of sacrifices, which I anticipate will pay off in the long run, but again, who is to say that I will still be here tomorrow? That being said, I do not expect my personality will change that much. I will likely be just as frugal as before, most of the time, but I am going to make myself enjoy my money a bit more while I have it.
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by Pam on August 21, 2010
Are you an employee? If so, it’s very important that you understand all the benefits that come alongside your salary or wage. As an employee, especially if you work for a large company, you may be surprised at just how many benefits you may be overlooking. In order to ensure that you are taking full advantage of all your benefits, request benefits information from your employer and read through the material carefully.
If you are lucky, your employer will be willing to match contributions you make up to a certain percentage into your RRSP. If this is the case, be sure to open an RRSP through your company’s group plan as soon as you are eligible to receive the free money. If you already have an RRSP set up outside of your work, consider diverting the contributions over to your work plan where you are eligible for the benefits and use your other RRSP only if you want to contribute over and above what the company will match.
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