Comments on: This & That: RRSP Edition http://gailvazoxlade.com/blog/archives/1350 Mon, 21 May 2012 14:54:31 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Marie http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23735 Marie Tue, 19 Jan 2010 16:51:12 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23735 Julian: If you are catching up, you can use a regular RSP payment and fill out a T1213 form for reduction of taxes at source. That way, you can you your increase in your pay to pay up you high interest debt year-round instead of just waiting for the Spring. Julian:
If you are catching up, you can use a regular RSP payment and fill out a T1213 form for reduction of taxes at source. That way, you can you your increase in your pay to pay up you high interest debt year-round instead of just waiting for the Spring.

]]> By: Julian http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23733 Julian Tue, 19 Jan 2010 16:44:30 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23733 Hello everyone, I must say, I think that RRSP loans and lines of credit are a wonderful resource tool. For many of us, income and employment just wasn't stable in our 20s, and this means that catching up is the only way to move forward in our (in my case) 30s. I started a readvanceable rrsp loan a couple of years ago - generating huge tax refunds each year which I've used to pay of high interest debt. The rrsp loans themselves are at historically low interest rates (3.25) - hardly anything to worry about. Besides the tax savings and the debt retirement options they provide, they also help people build their credit. We've all heard that credit scores don't look kindly on those who only have credit cards in their portfolios - so loans or lines of credit that are rrsp make sense. Ideally, of course, we'd all do monthly payments, but sometimes loans are the best way to ensure you pay yourself first. Hello everyone,

I must say, I think that RRSP loans and lines of credit are a wonderful resource tool. For many of us, income and employment just wasn’t stable in our 20s, and this means that catching up is the only way to move forward in our (in my case) 30s.

I started a readvanceable rrsp loan a couple of years ago – generating huge tax refunds each year which I’ve used to pay of high interest debt. The rrsp loans themselves are at historically low interest rates (3.25) – hardly anything to worry about.

Besides the tax savings and the debt retirement options they provide, they also help people build their credit. We’ve all heard that credit scores don’t look kindly on those who only have credit cards in their portfolios – so loans or lines of credit that are rrsp make sense.

Ideally, of course, we’d all do monthly payments, but sometimes loans are the best way to ensure you pay yourself first.

]]> By: Susan http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23719 Susan Tue, 19 Jan 2010 15:00:32 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23719 A couple of points ~ as Ann points out, CRA now requires that RSP contributions made in the first 60 days be reported on the prior year tax return even if they are not claimed on that return. If you didn't do that, then you need to file an adjustment to update the return. ~ right on for those people with good pension plans and not contributing to RSPs. I have so many seniors that do not understand why they owe taxes because of everything being added together which pushes them into a higher tax bracket. Most pension plans can provide you with estimates of your income upon retirement. ~ another point that irritates me about the RSP ads is that some people (mainly sole proprietors) owe taxes at the end of the year and therefore will not receive a refund with which to pay back an RSP loan. You need to remember that the bank financial planner is also a salesperson. You need to think of them in that way. ~ for 2009, you want your combined family income to be below $160,000 (if you live in Ontario) because then you will qualify for the $1000 HST "bribe" the government will be sending out. If you income is slightly over that amount, use your RSPs to reduce your income in order to qualify for this FREE money. Susan A couple of points
~ as Ann points out, CRA now requires that RSP contributions made in the first 60 days be reported on the prior year tax return even if they are not claimed on that return. If you didn’t do that, then you need to file an adjustment to update the return.
~ right on for those people with good pension plans and not contributing to RSPs. I have so many seniors that do not understand why they owe taxes because of everything being added together which pushes them into a higher tax bracket. Most pension plans can provide you with estimates of your income upon retirement.
~ another point that irritates me about the RSP ads is that some people (mainly sole proprietors) owe taxes at the end of the year and therefore will not receive a refund with which to pay back an RSP loan. You need to remember that the bank financial planner is also a salesperson. You need to think of them in that way.
~ for 2009, you want your combined family income to be below $160,000 (if you live in Ontario) because then you will qualify for the $1000 HST “bribe” the government will be sending out. If you income is slightly over that amount, use your RSPs to reduce your income in order to qualify for this FREE money.

Susan

]]> By: Marie http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23529 Marie Sat, 16 Jan 2010 21:22:33 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23529 Stephanie: "My husband will be getting around $10,000 in a bonus this April. ... We were thinking of putting half in RRSP’s to save on the amount of taxes they will deduct" I forgot to remind you of one important thing: RSP contribution room. Check your last tax assessment, line A. Depending on the pension benefits of the position you may or may not have the room to put $5000 in your RSP. If you have no pension and already contribute to the max (and don't make too high of a gross income), you might be eligible for only $1800 extra contribution. So if possible to contribute, calculate 18% of the GROSS amount of the bonus. Once you get the bonus, calculate the after-tax amount received, subtract 18% of the gross (for your RSP), and then you will now how much $ is left. You might get another tax return because of the RSP contribution the following tax year (use that to pay off more debt). Stephanie:
“My husband will be getting around $10,000 in a bonus this April. … We were thinking of putting half in RRSP’s to save on the amount of taxes they will deduct”
I forgot to remind you of one important thing: RSP contribution room. Check your last tax assessment, line A. Depending on the pension benefits of the position you may or may not have the room to put $5000 in your RSP. If you have no pension and already contribute to the max (and don’t make too high of a gross income), you might be eligible for only $1800 extra contribution.
So if possible to contribute, calculate 18% of the GROSS amount of the bonus. Once you get the bonus, calculate the after-tax amount received, subtract 18% of the gross (for your RSP), and then you will now how much $ is left. You might get another tax return because of the RSP contribution the following tax year (use that to pay off more debt).

]]> By: Melissa http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23506 Melissa Sat, 16 Jan 2010 01:39:40 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23506 Oh, and I almost forgot. Thank you Gail for your wonderful advice Oh, and I almost forgot. Thank you Gail for your wonderful advice

]]> By: Melissa http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23505 Melissa Sat, 16 Jan 2010 01:38:41 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23505 I've made a simple list of "Money In" and "Money Out" and my budget works perfectly. I make the mortgage payment (accelerated), property tax payment, boat payment (accelerated )and car payment(accelerated). I put $50 biweekly into RRSP's (on top of the 6% of my gross income I contribute to my employer's retirement plan because they then put 3% of my income in). I put $100/month into my son's RESP because paying for his education is important to us. I've got $10 biweekly for fun money, $80 biweekly for house and car repairs and $5 biweekly for other emergency (k, it's a pittance but also offset by the house and car repair account). I also pay daycare costs. I have $40/wk for gas money and a coffee night out with the girls. I also pay the life and disability insurance. My bank accounts are nicknamed in online banking to keep me feeling good about seeing them grow and every penny of my money is accounted for. I have such a great feeling of liberation knowing my finances are well taken care of. Now I've just gotta worry about what my husband is doing....... ;) I’ve made a simple list of “Money In” and “Money Out” and my budget works perfectly. I make the mortgage payment (accelerated), property tax payment, boat payment (accelerated )and car payment(accelerated). I put $50 biweekly into RRSP’s (on top of the 6% of my gross income I contribute to my employer’s retirement plan because they then put 3% of my income in). I put $100/month into my son’s RESP because paying for his education is important to us. I’ve got $10 biweekly for fun money, $80 biweekly for house and car repairs and $5 biweekly for other emergency (k, it’s a pittance but also offset by the house and car repair account). I also pay daycare costs. I have $40/wk for gas money and a coffee night out with the girls. I also pay the life and disability insurance. My bank accounts are nicknamed in online banking to keep me feeling good about seeing them grow and every penny of my money is accounted for. I have such a great feeling of liberation knowing my finances are well taken care of. Now I’ve just gotta worry about what my husband is doing……. ;)

]]> By: joanne http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23464 joanne Fri, 15 Jan 2010 18:05:18 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23464 Michelle; check with your water/hydro and gas company (if applicable) - I would be willing to bet that they could do equal billing if you asked for it. Michelle; check with your water/hydro and gas company (if applicable) – I would be willing to bet that they could do equal billing if you asked for it.

]]> By: Michelle http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23463 Michelle Fri, 15 Jan 2010 17:58:14 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23463 Thanks Marie, I will revamp a bit as I go through the growing pains. Thankfully most payments are monthly (insurance, cable, etc) and don't vary much, but a bi-monthly and variable bill just drives me nuts (like water). Why can't they all just set up equal billing and then charge me an average instead of me having to figure out the average from my 5 years worth of xls files? :-) Kidding...I'm not really that lazy, and I have tracked my spending for 5 years diligently, just never tracked it in accordance with what was coming in as I was a contractor. Now as an employee, it's a whole new ball of wax, but it's good. Thanks Marie, I will revamp a bit as I go through the growing pains. Thankfully most payments are monthly (insurance, cable, etc) and don’t vary much, but a bi-monthly and variable bill just drives me nuts (like water). Why can’t they all just set up equal billing and then charge me an average instead of me having to figure out the average from my 5 years worth of xls files? :-) Kidding…I’m not really that lazy, and I have tracked my spending for 5 years diligently, just never tracked it in accordance with what was coming in as I was a contractor. Now as an employee, it’s a whole new ball of wax, but it’s good.

]]> By: Marie http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23366 Marie Fri, 15 Jan 2010 02:13:23 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23366 Michelle: A few tweaks in the budget during the first year is normal. Some during the first few months just to get the 'constant' numbers figured out and a few more for the things we forget about. You are learning a lot about where your money goes. My first budget dates to MANY years ago, yet I forget things everynow and then (my oops). That's why I need that list ( I did not used to have one). Use the next pay increase (if luck lets you have one) as your cushion. Good luck and hang in there! Michelle:
A few tweaks in the budget during the first year is normal. Some during the first few months just to get the ‘constant’ numbers figured out and a few more for the things we forget about. You are learning a lot about where your money goes. My first budget dates to MANY years ago, yet I forget things everynow and then (my oops). That’s why I need that list ( I did not used to have one). Use the next pay increase (if luck lets you have one) as your cushion.
Good luck and hang in there!

]]> By: Michelle http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23314 Michelle Thu, 14 Jan 2010 16:30:52 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23314 Thanks all for the advice...my budget is indeed allotting for 100% of my pay cheque, and I do have separate clothing and gifts/entertainment fund accounts along with my TSFA and regular account that has household bills, groceries, vehicle stuff, etc coming out. But in December I'd not built up enough for the ski lessons that we put the kids into, so that had to come from TSFA. Then Jan when the clothing budget had been restarted from scratch as we emptied it for school clothing and winter wear, my 15 year old boots gave up the ghost, so there's another $150 that went on the cc to be paid in full Feb when clothing account is back to $200 in it again. It's just the catch up that drives me bananas! I started the "real" fabulous Gail budget in late Aug/early Sept, but if you don't have the money built up in the month you need it (ie. winter coats for December had to be bought IN December as the kids' other coats were for mini-thems!), then you have no choice it seems but to use cc and pay off in the following month. I guess it's just the frustration of not having the 2-3% cushioned in my budget of non-spoken for cash for just these occasions, know what I mean? Like the school things that pop up for $10-$50 a shot that I forgot would come (milk, pizza, etc that yes, cost, but they save me 1-2 days per week of scrambling before work to figure out what to make my kids for lunch when they're sandwiched/leftovered out). K, whine is done. I will revamp said budget to leave some breathing room, and remain diligent about the debt repayment. It's fatiguing after multiple years of debt repayment, never mind the 3 year debt-fatigue Gail speaks of often! :-( Thanks all for the advice…my budget is indeed allotting for 100% of my pay cheque, and I do have separate clothing and gifts/entertainment fund accounts along with my TSFA and regular account that has household bills, groceries, vehicle stuff, etc coming out. But in December I’d not built up enough for the ski lessons that we put the kids into, so that had to come from TSFA. Then Jan when the clothing budget had been restarted from scratch as we emptied it for school clothing and winter wear, my 15 year old boots gave up the ghost, so there’s another $150 that went on the cc to be paid in full Feb when clothing account is back to $200 in it again. It’s just the catch up that drives me bananas! I started the “real” fabulous Gail budget in late Aug/early Sept, but if you don’t have the money built up in the month you need it (ie. winter coats for December had to be bought IN December as the kids’ other coats were for mini-thems!), then you have no choice it seems but to use cc and pay off in the following month.
I guess it’s just the frustration of not having the 2-3% cushioned in my budget of non-spoken for cash for just these occasions, know what I mean? Like the school things that pop up for $10-$50 a shot that I forgot would come (milk, pizza, etc that yes, cost, but they save me 1-2 days per week of scrambling before work to figure out what to make my kids for lunch when they’re sandwiched/leftovered out).
K, whine is done. I will revamp said budget to leave some breathing room, and remain diligent about the debt repayment. It’s fatiguing after multiple years of debt repayment, never mind the 3 year debt-fatigue Gail speaks of often! :-(

]]> By: joanne http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23284 joanne Thu, 14 Jan 2010 13:45:12 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23284 Ann; Thank you. That was the information that I needed. I will certainly mention it to our accountant that does our business and personal taxes. Ann; Thank you. That was the information that I needed. I will certainly mention it to our accountant that does our business and personal taxes.

]]> By: Ann http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23261 Ann Thu, 14 Jan 2010 04:10:30 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23261 Ladies, Way back when, receipts for RRSP contributions made during the first 60 days could be held and claimed the following tax year. Now, you must send in the tax receipts for the current tax year, but if you don't want to claim the deduction right away, you have to file a Schedule 7. The <a href="http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/trck-eng.html" rel="nofollow">CRA web site</a> explains it. Ladies,

Way back when, receipts for RRSP contributions made during the first 60 days could be held and claimed the following tax year. Now, you must send in the tax receipts for the current tax year, but if you don’t want to claim the deduction right away, you have to file a Schedule 7.

The CRA web site explains it.

]]> By: Catherine http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23253 Catherine Thu, 14 Jan 2010 01:12:03 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23253 @chubby bunny~ I was sending you good vibes right on 1400 hours! I'm going to print off this blog and give to hubby to read..... @chubby bunny~ I was sending you good vibes right on 1400 hours!
I’m going to print off this blog and give to hubby to read…..

]]> By: Anna http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23251 Anna Wed, 13 Jan 2010 23:57:15 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23251 @Ken H: I too enjoy reading MoneySense. It's one of my favourite magazines and it's nice that it's Canadian. The latest issue I read had an interesting article of the amount of money that you would need to retire depending on your lifestyle. For a couple that had always paid max CPP but never saved another cent - they would still receive about $30000 between the two of them from government plans. Enough for a very basic retirement. For a more moderate retirement (with no pension plan) - they estimated needing anywhere from $250 000 to $750 000. The premium retirement would need $1.75 million. Moneysense pointed out that government employees have the most lucrative pension plans. They may earn less while working, but they'll have more in retirement. It was an interesting article. ChubbyBunny: Hope everything went okay today. @Ken H: I too enjoy reading MoneySense. It’s one of my favourite magazines and it’s nice that it’s Canadian. The latest issue I read had an interesting article of the amount of money that you would need to retire depending on your lifestyle.

For a couple that had always paid max CPP but never saved another cent – they would still receive about $30000 between the two of them from government plans. Enough for a very basic retirement.

For a more moderate retirement (with no pension plan) – they estimated needing anywhere from $250 000 to $750 000.

The premium retirement would need $1.75 million.

Moneysense pointed out that government employees have the most lucrative pension plans. They may earn less while working, but they’ll have more in retirement.

It was an interesting article.

ChubbyBunny: Hope everything went okay today.

]]> By: Christy http://gailvazoxlade.com/blog/archives/1350/comment-page-1#comment-23249 Christy Wed, 13 Jan 2010 22:33:39 +0000 http://gailvazoxlade.com/blog/?p=1350#comment-23249 Marie, I think schedule 7 is only if you are reporting that you made contributions, but you are going to use them as deductions in that year. (You are going to carry them forward.) We have always used the deductions, so I have never filled one out. (Someone correct me if I'm wrong!) Marie,
I think schedule 7 is only if you are reporting that you made contributions, but you are going to use them as deductions in that year. (You are going to carry them forward.) We have always used the deductions, so I have never filled one out. (Someone correct me if I’m wrong!)

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