September 2008 Questions & Answers

 


If my husband brings in $834.29/week, what I have set up basically is that in the first week of that paycheque, it goes directly to bills and food or should the grocery bill be every week? That also includes his carton of smokes which I really think that could contribute to other things than going up in a puff of bloody smoke. Honestly, how should the food bill be? At the end of the month I want to save the last 2 cheques which sums up $1668.58. But like I wrote, food bill. Oy! I'd like your jars pls. lol!

Charlene

Charlene, it doesn’t matter if you do the food weekly or every two weeks. And tell the bugger I send to say he’s wasting his money and he’s going to DIE!

 

Hi Gail. Love your show - my question is about GIC's. We have a building block GIC where we put in $300.00 every 2 weeks. when it matures we stick it in a cashable GIC, then when tax time rolls around I put it in a RRSP (yet another GIC). I won’t put it in a RRSP right away in case something would happen and we need extra money. As of now, we almost have 110,000 in RRSP GIC's at 5% interest. I always thought that 5% interest was a nice safe bet but now I keep reading that it should be 8%. Am I a fool to be doing what I am doing? I am 40, my husband is 43. Our mortgage is fully paid off and I just bought my first new car ever so we are paying that off 300.00 per month for 5 years. My old SUV was a gas guzzler. I like to play everything really safe. Hope to hear from you soon.

Name withheld

You are not a fool. It sounds to me like you have a good strategy. And if you like to play things safe, then the GIC is the thing. I think GICs are running at just under 5% right now, so if you can get 5%, you’re doing fine. Smile, and stop doubting the strategy that’s working for YOU!

 

My husband and I have 3 credit cards with a combined debt of $16,000.00. We were thinking of cancelling two of the cards while we're trying to pay them off. Will it hurt our credit rating (which is excellent), if we cancel them before paying them off in full. I think it would be easier to get them paid off if we couldn't use them once we put payments on them. Thanks for your help.

Name withheld     
   

You can’t “cancel” your credit cards before they are paid off. But you can slice them up into itty-bitty, teeny-weeny pieces so you can’t use them!  

 

Hi Gail! We are in the process of reworking our budget to evaluate how many hours per week I would need to work when I return from a maternity leave. My husband is a student so my income is the most consistent as he only receives a small stipend and a quarterly scholarship. We are faithful budget followers and try to live on cash as much as possible but we are in a crunch over the next three years as my husband finishes school and completes post-doctoral work (at slave wages). We have run up a small debt of $15k. My questions are these:

1. We are renewing our mortgage and are thinking about paying off approx $10k in debt understanding that at our next renegotiation we will both be full-time earners and can put in a lump sum payment of $10k. Does this make sense financially?

2. How do I account for childcare on my budget? Does it fall under Life (i.e. 15%)? Childcare is currently as big as our monthly mortgage payment. Thank you for your time!

Name withheld

If you have the room on your mortgage, pay off the full $15K. That's better, particularly if you have a strategy and commitment to principal prepayments down the road. As for child care costs, yes, they come under life. But now you won't have any "debt repayment" so you can add the 15% that would go to that to your LIFE category. I know it's expensive. But, that's LIFE!

 

If we had a spare $100/month to put into an RRSP where our employer adds an additional 50%, would we be better off putting the $100 toward the RRSP plan or paying down a credit card debt?

Name withheld     
   

I’m not sure since there’s info missing like how much debt and at what interest rates. However, all things being equal, you have to save, and an RRSP is the best way to do that, and a savings-matching program is like winning the lottery. Does that help?

 

We are working hard to pay off consumer debt. Is it unwise to pay more than the 15% a month you recommend? What we are trying to do is pay off most the debt in one year which would put the payment at 32% of our income rather than the 15%. There are two good reasons for this. One is that one of us has gone back to school to complete a Masters. The other wants to make a career change that will reduce income drastically. Cheers, the two of us (by the way, married for 19 years):

Patricia & James    
    

If you can afford to pay more without it forcing you to use your credit for essentials (yes, I've seen people do this), then I say PAY MORE!


Hi Gail, Love your show. I plan on pursuing a career in financial planning/counselling so you are one of my mentors. I feel that I have a good grasp on my finances; however, I am newly engaged and feel myself overlooking my budget for our upcoming nuptuals. Do you have any advice on wedding budgets or how to prioritize the wedding spending? I know you can give it to me straight. Thanks, from a prospective bridezilla

Name withheld

I just did an interview this afternoon with a bride magazine on this. You should have been here. My rules for weddings:

You can't spend it if you don't already have the money sitting in the bank. I know it's your special day. So plan for it. Going into a marriage with newly minted wedding debt is STUPID.

Prioritize. What's the most important thing(s) for you. If the flowers are important, would you give up the photography? If the dress is the be-all-and-end-all, would you give up the limo?

Remember, it's one day for the wedding and the rest of your life in the marriage so don't do and say horrible things to your soon-to-be partner in the heat of the moment.

Are you spending gobs of money to prove something to someone? If so, don't. You and your partner are the only two people that are important in this.

You can use my Wedding Budget Worksheet to help with the budget.


We are not deeply in debt, yet.  We have a LOC which we have actually been using on an everyday basis.  I am at the point where I don't know what is actual income.  I need to know how to set the bank account up so that only true money is used and the debt is going down.  I am not the only one with the debit card.

Name withheld  
      

Move your bank account to a place where the line of credit isn’t. Then just live off your bank account, paying down the line (more than just the interest) until it’s repaid. Do it NOW before things get worse. The fact that you’re not deeply in debt is good. The fact that you’re using your Line of a daily basis is VERY VERY BAD. Cut up whichever cards are giving you access to the line.


I was wondering if you have any information posted on your site about how deposit insurance works and how much it covers.  I have heard the figure 100,000 dollars but I am not sure if this is per person, per family, per bank, etc. Thanks again for your time, your help and your wisdom!    

Happy Autumn!  Tiffany        

Tiffany:  It’s $100,000 per registration by institution so an individual account in one bank is covered separately from a joint account in the same bank, and is covered separately from an RRSP in the same bank. Deposits must be in Canadian currency and payable in Canada. CDIC covers savings and chequing accounts, term deposits, RRSPs, RRIFs, money orders and drafts, and travelers cheques. Term deposits must be repayable no later than five years from the date of deposit. The Canadian Deposit Insurance Corporation (CDIC) has a website that’ll give you all the info you need at www.cdic.ca. There’s a calculator you can use to see what may or may not be covered.