Author Topic: A Kinda Interesting Financial Situation...  (Read 2597 times)

misstache

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A Kinda Interesting Financial Situation...
« on: April 20, 2013, 12:51:20 AM »
I'd love anyone's thoughts/advice on my situation...

I am a citizen in the US and live in Canada. I have reasonably bad credit (mid 600s) in the US, and no credit history or score at all in Canada. In total my net worth is about negative $25,000. In short, up until the last year, I've been very bad with how I handle my money.

These days I read MMM, use YNAB to track my spending and stick to a budget and am well on my way to living on my last months expenses for the first time in my life. I am starting to feel better about my spending habits, and also reading books about finances, etc. I've been changing my thought patterns about money, too.

I'm trying to get on a good foot here, and become financially responsible to myself and those I owe money to.

Last year, working in Canada, I made just over $8000 ish total in the whole year. I was not working for part of that time because I had moved locations and was trying to find new work at my new spot. So, well below poverty line, but also still meeting my daily expenses, just not meeting my paying-off-my-debt-or-starting-to-save-much expenses.

Here are a couple things interesting about my debt:

My BA student loan debt (around $16,000) qualifies, because of my very low income, for Income-Based Repayment, which means that assuming I get approved, my payment would be zero for the next 25 years, and the loan would be being paid off with assistance from the government, unless my income goes up. When my income goes up, I'd start repaying in accordance with how much more I was making again.
Because I had previously made poor choices, I defaulted on my credit card in the states. I owe less than $5000 on it, and it no longer is accumulating interest. I have been living paycheck to paycheck, and have not been able to pay it back regularly, but have paid back small chunks here and there.
There is another education loan debt, which no one from that school EVER has contacted me about since 2000 or 2001. A couple years ago was the last time I checked on it, and it somehow was not accumulating interest either, compounding or otherwise.
The remainder of the debt I owe is to my mother, and she is not charging me interest, either.

Now, about my income and expenses:

I work 5 jobs, but each of them is very part time, so I already enjoy the lots-of-time-to-LIVE benefits that someone semi-retired would. On average, between all the jobs I work about 12 hours a week, perhaps. Most of those jobs pay $20/hour. One pays $15/hr and one $25/hr. Let's assume I make about $900 a month. Sometimes a bit more, sometimes a bit less.
The job market sucks where I live, but I love it here, and my daily expenses are very low. Once I started changing my spending habits, it is becoming very easy to have leftover money at the end of the month. My current rent is $250, I get free internet, hot water, electricity. I pay phone, propane, and for firewood. I get free health insurance from the Canadian government. And where I happen to live, there are no places to spend money on anything, except food and housing. My food costs are usually about the same as my rent, because food is expensive to buy here. In the summer it is a lot cheaper because I eat out of my garden. Basically no places to eat out, either. Just a Farmer's market once a week and a bakery.
I'm about to move, and my rent will probably be only around $125 starting in June.

So if we say my rent is $125, plus $250 in food, and where I'm moving will have some propane, internet, and phone costs, but no electricity (off the grid), hot water, or likely any firewood costs. Let's assume my generic monthly expenses are around $450. I also have the very likely possibility that I could get another job soon, which would bring my hours up to about 22/week, and my pay up to about $1500 a month.

I basically have no savings at all, and am just starting to learn about investment options.

There is also the decent possibility that I might get a chunk of money (maybe as much as $16,000) because of a car accident I was in last year. It was entirely the other driver's fault (hence the potential money coming my way), and my medical expenses for that crash were paid by the insurance already. If I were getting some money, and it is hard to say how much or when, it would likely not be until later this year or next.

Also, another point worth mentioning: all of my debt is in USD and all of my income in CAD. (And nope, I did not move here to flee from my own bad financial decisions. The creditors still have my current contact info.)

What would you do if you were in my shoes?

In what order would you put money away towards paying-off-debts (and in what order?), investing, emergency fund, retirement, saving for a house?

What about building credit in Canada and fixing my credit score in the US (though the Canada credit score is more important, probably, since I definitely do want to buy property here at some point, whereas buying property in the states is a less certain desire)?

What about investing? I've never invested any money before, and something like Betterment seems like a good way for me to start, but is it worth it since I'd have to do that in Canadian-->US dollar transfers? Could I use that to my advantage if I only move my money over to my US account when the exchange rate is semi-decent for me then, maybe possible to do when the exchange rate is very similar and fluctuates just up or down with regularity?

Okay, that's a lot of questions for you all! Thanks for any help!



gooki

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Re: A Kinda Interesting Financial Situation...
« Reply #1 on: April 20, 2013, 02:43:47 AM »
I would split your excess income like so.

50% debt repayment.
- First pay back family.
- Then the BA student loan.

50% investment.
- First get an emergency fund. Somewhere between 2000 and 5000 dollars should be sufficient.
- Then explore your investment options. Keep diversified.

misstache

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Re: A Kinda Interesting Financial Situation...
« Reply #2 on: April 20, 2013, 10:23:56 AM »
Thanks, Gooki!

It's nice to get some feedback. I appreciate it. :)