Hi everyone, I'm new to the forum. I've been reading MMM's website for about a week now. It's really been speaking to me that I don't have to work until I'm 65. It's not something I ever thought was even possible. That said, I'd like to lay out my financial picture and ask for your advice on how to get there. Please don't hold back. I know I've made some mistakes but I'm willing to fix them. I don't know how far I'm willing to go but if you can give me some suggestions I'll try to follow them.
I'm 26 years old and single. I graduated with a health professional diploma in early 2011 but was unable to find a job until late 2011. In between that time I lived off my credit card and racked up $10000 debt in addition to the $19000 I had taken out from my RRSPs under the Life Long Learn Plan to pay for college. I had no other savings other than that $19000 in RRSPs. I have to start paying back that money to my RRSPs, interest-free, over a period of 10 years beginning in 2013 (I have to pay 10% each year but can pay more if I want to).
Since working I have been able to eradicate my credit card debt and am proudly carrying $0 on it. I use it like a debit card; I will never carry a balance again and I transfer money from my cheqing account to the credit card a few minutes after I use it so it truly acts like a debit card (I use a no-fee chequing account of course!).
To get the job I have now, I had to move from one province to another. I didn't have a car so I stupidly bought a new one. I had bought a used car years before and had nothing but problems with it. It soured my thinking toward the opinion that I "needed" a new car that would be reliable since I would be completely on my own in a new province away from family and friends. I ended up agreeing to much more than I wanted to spend at the dealership because I needed a car within a week because my start date at my new job was a week from my interview (I tried for more time but they were desperate to have me and I didn't want to make a poor impression). The interest rate is 1.9%; the total cost of the car is $26~, I make biweekly payments and I'm down to $23~.
Instead of waiting to pay back my RRSPs, ever since I finished paying off the credit card, I've been aggressively putting money back to my RRSPs. I try for $1000-1500 a month and as of right now I've repaid $4500 of the $19000.
I am full-time employed and do shiftwork. My net pay is anywhere from $3500-4400/month although lately with new hires I haven't been offered any extra shifts so I'll be making $3500/month from now on with an occasional bump every couple of months of $500, sometimes more but it's not something I will count on, it will just be extra cash I put to debt or savings.
Here is my monthly budget.
Rent: $1000 (ridiculous, I know, but it's a 5 minute walk to work, includes heat+water, in a city with the lowest vacancy rate in the country)
Car Payment: $314, twice a year I pay $470 because it's biweekly)
Car Insurance: $111
Cell Phone: $72 (yes, it's a smartphone and I'm locked into the contract until August)
Gym: $61 (1 year contract left. Hoping to sell it, probably will have to do it at sale)
Internet: $58 (bill includes netflix)
Groceries: $600 (this includes eating out/toiletries/anything I buy at the grocery store)
Gas & Fuel: $50 (I have been driving 1400 km round trip to friends/family every 4-6 months which increases the budget)
Power: $20-60
Laundry: $20
Movies: $40
Here are my assets:
$4500 in RRSPs
$5500 in emergency fund TFSA
$1000 in travel fund (there won't be any travel for a good long while until I get debt-free)
Here is my current plan of attack: I am expecting to receive quite a large tax refund in April to wipe out the rest of my obligation to my RRSPs and then put the remainder to my car and be extremely aggressive in paying down my car.
I plan to move back to my original city in 6-10 months to be closer to family/friends and also will receive a substantial pay increase when I get a job there (their union has the highest wages in Canada for my profession).
So at the end of all this: what needs to be changed? My budgeting? My goal to even pay off my car (that is, should I sell it? my plan is to drive it until it dies). Any and all comments or questions to clarify matters welcome.