Personal Finance Spring Cleaning: Savings edition

Keep Out of Debt

You said it, random rock.

Sooooo, as you may recall I recently finished paying off my student loan debt, a chore that took me 10.5 years from start to finish. (I signed my life away September 2003 and finally said farewell to the debt in March 2014.) Now, a good month after my final debt repayment (also a month of some splurging!), I’m finally ready to make some changes to get my finances back on track, it’s also almost May so it’s an appropriate time to do some personal finance spring cleaning!

Goal #1 – Increase my RRSP savings

When I graduated from university, the first financial worry in my mind was my student loan, nothing else. I was 22 and couldn’t see beyond this GIANT number that hung over my head. But after a few years of slogging away, one really great conversation with my dad inspired me to put away about $50 a month for retirement. It’s not much, but it was the first step to really taking control of my finances, and when I started REALLY paying off my loans, I tripled down and increased my RRSP contribution to $150.

Now that my loan is finito, I’m going to increase the payments to a minimum of $250 a month ($150 work plan and $100 to my personal RRSP because my employer does not match contributions) and eventually more, depending on our move.

Minimum Balance by December 31, 2014: $6,000

Goal #2 – Start recontributing to my TFSA

In December 2013, I withdrew about $3,000 from my TFSA which was operating as my emergency fund. I took this money out to apply it to my student loan so I could be debt-free 3-4 months faster, as I was suffering from some major debt fatigue and a bit of depression. Making this decision helped speed up the process and helped me become debt-free just in time to make some other decisions in my life (i.e. potentially moving, saving for a house, etc.) But after I withdrew that money, my TFSA had a measly $725 left. 🙁

My goal moving forward is to put at least $250 per month into this account to build it back up over time. I already contributed $250 in April so this plan is underway.

Minimum Balance by December 31, 2014: $3,000

Goal #3 – Vacation Fund

For the past two years I’ve contributed $50 a month in a vacation fund with my partner to ensure we’re able to take advantage of opportunities and travel. We emptied it last year for London and then again this winter for our anniversary trip to Quebec City. I’m aiming to increase this to at least $75.

Minimum Balance by December 31, 2014: $600 (At least, of how much I contribute, since this gets depleted every few months.)

Counting my money
So these are very conservative estimates, but percentage wise I’ll be saving over 26% of my take-home income and will have a net-worth of at least $10,000 by the end of this calendar year, that’s a HUGE difference from where I was just a year ago. According to my guru Gail Vax Oxlade, you should be putting 10% of your monthly take-home on savings, and 15% on debt, so now that I’m debt-free it’s time to up that to 25% savings. I think this is especially important now because I don’t have additional costs related to family or housing, so even though it’s less than what I might make in a few years, it’ll go a long way.

Are you making any financial changes this spring?

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