CANADIAN RSP SAVING....What I am trying...your thoughts

[voss16]

Hello,

Canadian here.  First time poster here. Long time reader.  I have been paying down some stupid debt from earlier years and was struggling to put money away each month into my RSP.  So for the last 18 days I have been waking up and logging into my online banking and transferring $10.00 a day into my RBC RSP Investing account. 

Yes, ultimately it is not a ton of savings  but it allows me to put a small amount away while paying some debt down  ( $3650 a year).

I started this to help create a habit.  I would love feedback on this and wonder if any of you have any other suggestions.

PS:  about 20 K in debt  and paying down $900 monthly

M

[Heckler]

Awesome.  I would first ( or better - simultaneously) attack your debt. It likely has a higher interest rate than your investments.

Can you automate the payments?  Maybe not $10 daily, but $70 weekly.

[voss16]

Heckler,

Thanks for the advice, I can auto do $70 weekly but I feel that me physically going in and transferring the $10 a day is allowing me to see even better what i am doing to have a better life.  $10 isn't much and although I could send it to debt I needed something to help me feel not so hopeless as I was hammering my debt.  I have found it motivating for me.

M

[plainjane]

I think the idea is a good one if it helps you be more mindful, but you should make sure that you are in a good place for fees and MER.  A lot of places will have a fee if you don't reach minimum account balances, plus a fee to buy your investments.  You might be (for example) better served by Tangerine Streetwise funds. 

[Stachey]

Make sure you check on your "tax taken off at source" records with your employer.

If you make regular contributions to an RRSP the government will take less tax off of your income but you have to make sure the right forms are filled out and filed with your employer. 

[voss16]

I have no fees, I am just transferring cash for now into my RSP DI account.  No minimums for fees etc.  Fees of course if I trade.  NO real hit to the finances doing this.

[voss16]

Stachey,

I have regular tax amounts taken off along with an additonal $63.48  per semi monthly check.  So in reality it could mean tax refund but I also have A pt JOB that I also have $50 extra per bi weekly check taken off towards taxes.

Long story short.  I have owed a crap ton in the past and don't wanna do that any more.  So I'd rather get a Tax Refund ot smack on my debt at the same time as saving along the way.

[Prairie Stash]

RBC pays 0% interest on DI accounts. Currently they pay 0.55% interest on savings accounts, a bit better place to stash it until you make a stock purchase, typically hold in savings and then transfer the lump sum over (plus interest).

Tangerine savings accounts pay 0.80%, slightly better. The TFSA GIC within the tangerine TFSA is even better for cash, 1 year GIC is 1.40%. I have used Tangerine to start out, I found the act of moving the money into a second (free) bank encouraged stronger savings. PC financial is pretty much the same, I like the tangerine sign up bonus.

TFSA is better than RSP for small amounts of money. The clawbacks you get, from an RRSP account, when its a smaller amount will destroy any tax benefits you get now. Without knowing your details, its a general rule that anyone earning less than $45k should stick to TFSA until its maxed. With more details we could optimize your savings, given that its slightly different in Canada.

My Orange key, if you think I've been helpful, is: 16794736S1  Feel free to message me for clarification, I understand the desire to get savings when you have debt, I was $35K in debt when I opened my ING account (ING sold out to become Tangerine).

[meghan88]

Stay the course and do what makes sense for your situation.  Debt repayment should be the priority.  You won't get reduced taxes from a TFSA but the income and capital gains you make in there will be sheltered.  Your RRSP contributions will reduce your annual taxes, and this might be more helpful to you at this point for debt repayment.

If you're looking for a place to park emergency funds, you might want to consider a high-interest savings account at EQ Bank or Alterna Bank.  Here's a link that might be useful for you:  https://www.highinterestsavings.ca/chart/

Good luck, and please keep us posted.  Remember, every little bit really helps.  When I met my SO 15 years ago he was 50K in debt, and now he has over 600K in net worth.  It CAN be done.

[voss16]

@Prairiestash.

I make $53 K a year.  My ultimate goal by Feb 28 is to have $4000 in RSP  ( bonus in Feb will go to it.)  This will give me a little back on a tax refund  to put on my debt.  I get that RBC does pay no interest but for me right now it is about trying to show some savings while conquering debt.  It'll be a long road but I am hammering the debt like crazy.  Once that is done I am gonna focus hard on Saving in my TFSA and my Direct Investing accounts.  I am using this forum as accountability in a sense to remind me I cna do this.  I love reading people's stories here :)

[Prairie Stash]

I understand the desire, its a great goal. In Canada his is my favorite tax resource:
http://www.taxtips.ca/
It contains all the useful information for DIY tax planning, including provincial breakdowns. $53K is above the threshold for RRSP, you are correct, depending on other deductions of course.

At tangerine you'll get everything RBC gives plus interest on your cash. When you want to purchase stocks (ETF) you transfer the money from Tangerine to RBC and make your purchase. Tangerine is terrible for buying Stocks, they are superior for cash accounts.

https://www.tangerine.ca/en/saving/savings-accounts/rsp-savings-account/index.html

You can do this, we're here to make it easier. By learning and developing strategies as you start out it becomes easier when you have larger accounts (this will happen soon, time flies quickly). I know the interest won't add up fast, its more about trying and learning from the experience. Think of it as a tutorial in dealing with a new bank, reading about it and doing it are very different.

Using tangerine has earned me $300 over the years, probably $50/hour of work setting up accounts and transferring cash. However using money shifting strategies has saved myself many thousands over all, it paid to become educated.

Just curious, do you pay bank fees? I use RBC and pay $0/month in fees by using the day to day banking package. Any expenses you cut could also go into your savings.

[human]

I kind of do the same thing. Except I transfer money to rrsp or tfsa every pay check. Over half my net pay check goes straight into one of those accounts. If I hold onto the money something seems to come up that "needs" money for. I now keep 100 dollars a week for food and shopping. This has really helped with socking away savings.

[voss16]

Thank you for the tips here, I will take a look.  I am now at $285.00 saved so far .... $25 of it was my starting point, the rest has been my $10 daily.  Seeing the small result is feeling good for me as I send big chunks against my debt.  It gives me hope. 

Thanks !

I understand the desire, its a great goal. In Canada his is my favorite tax resource:
http://www.taxtips.ca/
It contains all the useful information for DIY tax planning, including provincial breakdowns. $53K is above the threshold for RRSP, you are correct, depending on other deductions of course.

At tangerine you'll get everything RBC gives plus interest on your cash. When you want to purchase stocks (ETF) you transfer the money from Tangerine to RBC and make your purchase. Tangerine is terrible for buying Stocks, they are superior for cash accounts.

https://www.tangerine.ca/en/saving/savings-accounts/rsp-savings-account/index.html

You can do this, we're here to make it easier. By learning and developing strategies as you start out it becomes easier when you have larger accounts (this will happen soon, time flies quickly). I know the interest won't add up fast, its more about trying and learning from the experience. Think of it as a tutorial in dealing with a new bank, reading about it and doing it are very different.

Using tangerine has earned me $300 over the years, probably $50/hour of work setting up accounts and transferring cash. However using money shifting strategies has saved myself many thousands over all, it paid to become educated.

Just curious, do you pay bank fees? I use RBC and pay $0/month in fees by using the day to day banking package. Any expenses you cut could also go into your savings.

[voss16]

Human,

May I ask how you do it on $100 a week for food and shopping ?  How much to groceries ?  I keep adjusting my food budget and it is nuts some weeks.

Thanks !

I kind of do the same thing. Except I transfer money to rrsp or tfsa every pay check. Over half my net pay check goes straight into one of those accounts. If I hold onto the money something seems to come up that "needs" money for. I now keep 100 dollars a week for food and shopping. This has really helped with socking away savings.

[human]

This is just one person mind you, pasta (no name biggest bags), past sauce biggest cheapest jar I can find, bread on sale, cheapest fruit I can find (usually apples, bananas and/or oranges). Natural peanut butter and pick it up on sale. Nothing fancy. Not much of a veggies kind of guy but I still seem to be alive. For salads I stick to cheapest tomatoes I can find and cucumbers. If avocadoes are on sale I'll buy those. Not a lot of variety I'm afraid, I'm sure there's other ways to get there, but lentils and rice takes to long, I hate cooking.

This month I'm over budget, went out to bar/restaurant three times and picked up the complete tab once. Twice it was with coworkers from out of town, that happens once a year only.

[voss16]

Human,

Just saw this and yeah I can see how that would work.  I don't know if I can go that low but I am gonna try to lower my food costs a bit as I know I waste more than I need to.