So now what?

Now that I am credit card debt free, I ought to make a plan for going forward.  I have already written my revised 2009 goals which included:

  1. Pay off my credit card
  2. Have a debt free Christmas
  3. Replenish my emergency fund to a minimum of $1,000 by the end of 2009
  4. Increase my total RRSP contributions to $3,000 by the end of 2009

You have probably noticed that I moved my tracking bars around to reflect the changes.  I'm going to save $500 for my Christmas Fund as a priority, and then work on replenishing my Emergency Fund and Increasing my RRSP contribution.  Some would say, I believe, that I should put funds towards my E-fund first.  I think however; that if I don't save for Christmas now - I will go back into debt.  It's a priority for me not to let that happen - and should a small emergency occur I can use they money earmarked for Christmas.

I am also considering taking out an RRSP loan - which I would love to hear thoughts on.  When we get closer to tax time, I'll write a more thorough post on that.

I am going to continue using the jars, however; I'm going to look at increasing my entertainment and food jar bi-weekly allotments.  I would like to let myself enjoy the next four months without any significant financial stressors or worry.

Right now, I am thinking that my big 2010 goal will be to pay off my two student loans.  Do you think paying off a little more then $8,000 in one year is doable, or should I make this a two year goal?  or - Should I play catch up with my RRSP's - there's a lot to think about and plan for in 2010, and it's only 3.5 months away.

I suppose I've put out a few random questions and thoughts - I'd love to hear feedback on any of it


  1. The debt free Christmas is definitely a good idea. I would vote for getting your EF up to $1000, as a small hedge against things that could happen.

    If you do not have a good pension plan (a la Gail's post this morning) then taking out a loan for that can be a good idea if you use your tax return to first pay off that loan.

  2. Congrats on becoming credit card debt free! You must be so relieved.

    Re: Student loans...You are lucky this is your only debt now! I know the feeling of just wanting to get rid of them but you might want to consider balancing how fast you want to pay off your loans with how important you rank the rest of your goals. The nice benefit of government student loans is that the interest is tax deductible. Are you on a floating or fixed rate?

    My Alberta Student loan is approx $3500 right now but the interest is 2.5% floating so I'm barely paying $7 in interest each month. Although I'd love to just have it paid off so I don't have to think about it anymore, I've figured it out that my extra funds are better put towards other things (RRSP's, mortgage, EF, etc..) right now. Of course I may have to change this strategy if/when interest rates go up.

    But if you need that peace of mind that you are paying off those loans quickly and it ranks top, go for it. We'll all be cheering for you along the way! :)

  3. Congrats on getting CC Debt Free! Saving for Christmas now is a definite. You have the ability to move that CC payment over to your other goals. though here's my question to you...how important is being completely debt free to you?

    I ask this because regardless of the tax breaks on the interest of the student loans, perhaps you could think about making a lump sum payment towards one of them at the end of the year, to knock the principle out and free up some funds for the next year. While I understand that many will say to leave these going for a while because of the tax deductions on the interest, why while you have the ability to, wouldn't you like to get out from under those as well.

    On the RRSP loan option - I've heard arguments for and against this. My question here is why would you willingly go into debt with borrowed money for your future just to max out your contribution room? I get the idea behind it - you'll have the max in your RRSP, but you'll have to pay that debt back. "Good debt" though it may be, it's still debt. Something else you'll have to give back to someone. On the other hand you'll end up with a huge return that you can drop back onto this debt, but you won't be able to get the full amount of the RRSP loan back from the government so you'll still have residual to pay back.

    Though, topping out your RRSP sounds great! I guess really, topping out now would be greatly beneficial if you can max out each year after this with a more manageable contribution.
    I look forward to hearing your thoughts as we get closer to tax time.

  4. I took out an RRSP loan a couple of years ago to max out my contributions. I ended up getting a $4500 refund! And paid off the loan in about 2 months. But I would only do this again if I had the means of repaying the loan as quickly again.


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