Family Planning and Frugality, or Why I’m in Love with my Mirena

FP and frugality

One of the best things I have done in recent memory is get an IUD. I am almost embarrassed to admit it, but a pretty significant part of deciding to get the Mirena was because my doctor made a strong case about how much financial sense it makes to get an IUD.

Damn, doc. You’re making a financial argument? He really knew his audience.

I would never advocate that anyone select a family planning method based on frugality. My friends, family members, and I have all gone through countless switches of birth control pill brands, migrated over to the ring or the patch when faced with unholy side effects, and yea some of that shit is expensive. If ever there were a part of life where I think it is okay to splurge, I would argue it is contraception. Like buy the good condoms. Really.tumblr_ntx3u7lhrT1qk7scno1_500.gif

That being said, I was a grad student of limited means when my doctor made this financial argument. I also knew that my health insurance would be lapsing once I defended my thesis and I had no idea when I would have health insurance again. Don’t misunderstand me, there were many other compelling reasons for me to get an IUD. It was a decision that made a lot of sense for me. I won’t delve into those reasons in great detail but if you’re curious, the financial argument went something like this:

The Mirena costs about $410 in Ontario.

My student health insurance paid half. Okay we are down to $205.

All doctors’ appointments including the insertion and the follow-up visit were free of charge. Thank you, Canada.

It should be noted that the Mirena lasts a minimum of five years. Doc pointed out that even with insurance, I was currently spending about $10/month on the most generic garbage birth control pills on the market, accompanied by a host of horrifying side effects.  Being a woman is awesome.

Using that method of contraception, assuming I had insurance coverage the entire time (which I wouldn’t) would bring me to a grand total of $600 over five years. That’s also assuming I didn’t break down along the way and switch to a better (*ahem* more expensive) method along the way, which I absolutely would have.  So $600 is a very conservative estimate of what five years of hormonal contraception actually costs.

Also, periods are expensive. Doc informed me that half of women with Mirena do not get their periods anymore. I know that it is bizarre-o and maybe a little scary for many a woman, but I cannot tell you what a joy it is to live sans period. It has also effectively stalled my need for tampons for five years. I don’t hate that, and money is just one small reason. But since we’re talking numbers, the Huffington Post estimated that Canadian women spend about $65 per year on tampons and pads (also conservative, me thinks). Over five years, this totals $329. So let’s break this down:

Scenario A Scenario B
Method of Contraception Birth control pills Mirena hormonal IUD
5-Year Contraception Expenses $600 $205
5-Year Period Expenses $329 $0
Grand Total $929 $205
Monthly Cost $15.48 $3.50

In Scenario A where I continued to use my same nonsense birth control pills with the added fun of still getting my period, the grand total for five years of maintaining my highly desired childfree status would have cost $929. Never a cost more worth it, in my opinion, but hey, that’s still some cash. It breaks down to a monthly reproductive health cost of $15.48.

In Scenario B, where I got the Mirena, the grand total for five years of sweet childfree living is $205. All of this cost is front-loaded, which can make it a pretty big expense at the time of insertion. Also, the insertion is not exactly a walk in the park. BUT you are then worry-free for five or more years, and the monthly cost of my reproductive health needs is now averaging $3.50 per month.

An added bonus: Doc tells me that the scientific literature is now suggesting Mirena is good for 6 years, which would bring the cost down to a cool $2.84 per month.

Back to the bottom line. We are talking about a difference in roughly $12 per month and I know that. This is not the make or break line in my budget. But as with many other things, the value added shines through in other, more subtle ways.

For instance, the Mirena has reduced my chances of experiencing an unintended pregnancy in the next five years. You cannot put a price tag on peace of mind. The sheer peace the IUD has afforded me by making it less likely that I will have to deal with the emotional, psychological, and physical tolls of becoming pregnant when I don’t want to be is pretty wonderful.  

And suppose I were faced with an unplanned pregnancy. I am proud to say that abortion is a covered procedure in Canada and women do not have to pay out-of-pocket for it, so there would not be direct financial impacts associated with that decision for me. But I am privileged to say that. The average cost of a first-trimester abortion in the US is about 470 USD – and that was back in 2009. It is even more expensive in other parts of the world.

And while about half of all unplanned pregnancies will be terminated, half of all women who encounter an unintended pregnancy will carry the pregnancy to term.  Many of these women will decide to parent.  That comes with massive financial implications. You know, to the tune of a quarter of a million dollars.

So while getting the Mirena was kind of about frugality initially, that has just been a small bonus. It has actually provided so much value to my life in other ways. It is providing great confidence and comfort when it comes to some of the biggest financial decisions I will ever make – if and when to have children.

So, thanks Mirena. I initially got you to help me save a few bucks a month, but you have done a whole lot more for me.

Have any of you made a decision based on frugality, and ended up getting a whole lot more out of that decision than you even hoped? Or have you made a frugal decision and ended up totally regretting it?  Let me know in the comments!

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How to pay off $7,000 of student loans in 7 months

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I hit an important financial milestone about a month ago. In early May I made a hefty transfer of $1000 toward my student loan, and this payment pushed my student loan balance comfortably below $10,000.  That means I have paid off $7,041 of debt in 7 months.

While getting my loan balance into 4-digit territory is an important milestone, I almost didn’t feel like it was totally worthy of celebration because I have totally been here before.

Let’s rewind three years.  By early 2014, I had spent the last four years working overseas and, even though I was making it rain just about everywhere except my savings accounts, I was still smart enough to be throwing money at my student loans.

I managed to get the balance of my student loans from my undergraduate degree to around $3,000. I was this close to getting it paid off in its entirety…

…and then I went to grad school. And guess who took out more student loans? This girl.

It has been crazy frustrating to be shackled with piles of debt again, but I am coming at it with a few more years of financial mistakes wisdom under my belt this time.

And I am paying back my loans on a pretty normal income. I do make a good living. Full disclosure, it is higher than the median individual income in Canada. But I do not have the luxury of earning six figures (or let’s be honest, anywhere remotely close to that). I do not have the benefit of having a high-earning partner, or living at home with my partners, or one of myriad factors that often help people destroy massive, intimidating sums of debt super quickly.

I toyed with my budget so many times, trying to figure out how to find hundreds of extra dollars that just didn’t seem to exist. I simply did not have the disposable income to make huge payments toward my debt every month.

Or so I thought. Since going into repayment last November, I have averaged just over $1000 per month toward my debt. Seem crazy? It might be, but I think it can be replicated if you are tenacious and have sexy dreams about getting rid of these monthly payments for good.

Let’s walk through a few of the ways I did it.

HOW I DID IT

Upped my minimum monthly payment immediately.

In Canada, the federal and provincial government wants you to pay back your loan for the next 9.5 years. No freaking way. I am getting this thing gone in a couple years, and you can too.

Go up your monthly minimum payment, even if it’s only by $20. Pay a little more than you have to. Your framework of how much you can really manage to pay back every month will slowly start to shift, and you may find that you can even throw a little extra at it every now and then. When I changed my monthly payment to $500, it was a stretch for my budget. I really wondered whether I would be able to make it work for more than a couple months, and I thought I would have to lower it back down again to $400 or less. As it turns out, I have not only been able to put $500 toward my debt every month but way more. Rock on.

Side-hustled my face off.

Side hustling is an effin grind. I know some people love their side hustles. I do not. I have about four of them, and they are all okay. I freelance write, I grade standardized exams, I write standardized test exam questions, and I also do contract-based research. P.S. I also spend about ten hours a day getting to and working at my day job. Suffice it to say, I do not have a lot of free time. This is not my first choice, but this is a compromise I am willing to make for right now to get this debt gone. With my side hustle funds coming in at $2,824 in 2017 thus far, they are a huge part of the reason I have been so successful with my debt repayment.

Did not buy a car.

This one was a killer. In case you had any illusions about Canadian winters, walking and taking public transportation to work through a six-month-long Ottawa winter is no joke. It involved multiple layers of pants and navigating over mountain-like snowbanks. It also means that what could be a 15-minute commute in a car is a 45-60 minute commute by public transit.

Needless to say, there were many moments I was desperate to buy a car. That bus ride to and from work certainly gave me plenty of time to daydream about car ownership.

But not buying a car is the reason that my transportation expenses average a mere 6.6% of my monthly expenses. That frees up a lot of extra room that would simply not be possible as a car owner.

Used my money for other things, too.

We all know the story about so-and-so who paid off a bazillion dollars of debt in 17 seconds, but that’s just not my jam. Those stories are amazing and inspiring and have played a major role in my personal debt repayment journey. But there are so many other things I want to be doing with my money right now, too. Listen, I haven’t just been paying off my loans and buying boxed wine over the last seven months. I have also:

-Contributed to my retirement fund.That’s right, I’ve transferred about $1,500 to my retirement account in seven months. This is less than impressive to many folks. For someone who did not HAVE a retirement account until seven months ago, I am unreasonably happy with myself about this.

-Built up my emergency fund. Yes, I have all the mixed feelings about my emergency fund. But there are some possibly imminent changes coming up in my life, including a potentially expensive move to Vancouver…and mother of God, I am so glad I have suffocated my spendy side for the last seven months and not run off to Cuba with this money. My current and future self, especially any future version of me living in Vancouver, are already thanking me.

-Built up a travel fund of $800. To appease my aforementioned travel beast, I have also been tossing some extra moolah into a travel fund. There are lots of potential trips on the horizon and it feels so awesome to know that when the time comes to charge a plane ticket or a hotel stay, I’ve got it covered.

-Saved $700 toward a new laptop. The one I am currently tapping away on makes legitimate crunching noises. If anyone else has had this happen with a 6.5-year-old Macbook, please let me know what my future holds. In any case, my baby is hanging on for now but it’s just a matter of time.

-Traveled.  I have lived in a bunch of different countries, and traveled to even more. Traveling is a huge part of my life and I knew it would be integral to continue prioritizing this even as I paid down debt. In the last seven months, I have covered Washington DC, Kuala Lumpur, Malaysia, and also made the rounds to the more local but lovely cities of Toronto, Winnipeg, and Quebec City.

Indulged in good beer, cottage weekends, and nights out. Cause you gotta enjoy life.  Nobody here is saying that you have to live like a recluse to pay down debt quickly.

 

Taking charge and paying down my student loans has been difficult. It has been all-consuming at times; I even went so far as to say that it has affected my relationship with my partner. So I hope you take my last point to heart and are using your money for other stuff, too.  Be kind to yourself, your family, your partner on your debt repayment journey. It will get paid off eventually.  

gotye

How are you doing with your debt repayment? Have you been able to pay it down quicker than you imagined or is slow and steady winning the race? Let me know what’s working for you in the comments!

Do I Really Need a TFSA? (YES) but also some things you need to know.

TFSA

The tax-free savings account (TFSA) is a freaking unicorn of an account that the Canadian government introduced in 2009. Similar to the Roth IRA for Americans, this account allows you to contribute up to $5,500 per year and any interest you earn inside this account will not be taxed. I am such a fangirl for the TFSA that I can actually save you from reading the rest of this post: if you do not have a TFSA, you need to go open one NOW.  I think the vast majority of Canadians can benefit from having one. So let’s dig into this a little bit more:

What is a TFSA?

Welcome to the most poorly named account ever created. TFSA is a total misnomer and it should be treated as more of an investment account than a savings account. Because the big win with a TFSA is that you do not pay taxes on the money when you withdraw it like you would with an RRSP.

Tell me more, you say? Gladly.

Here are key takeaways about the TFSA:

They can also do all the things with your money!

I think the biggest mistake people make with the TFSA is that they deposit money into it as if it is a regular savings account.  Just like an RRSP, you can invest your money in a TFSA into all kinds of fun things like index funds and GICs.  Please please please invest the money in your TFSA, and you will see why this is important in my next point –>

They are tax-sheltered!

What does that mean? All that beautiful money that accumulates inside of your TFSA…it’s ALL yours. Unlike the RRSP, the TFSA is not tax-deferred but it is tax-sheltered. Meaning? You have to pay tax on your money on the way in but not on the way out.

In essence, the government has agreed that if you make a buttload of cash on the investments in your TFSA, they will not tax you on those gains. If that money was sitting in a regular account, you better believe they are taxing a minimum of 10% on those earnings.

Do you want to earn a lot of interest over many years and then not give the government any of it? I know I do.

What does this look like? You invest $10,000 in a TFSA and leave it alone for ten years. Assuming a 7% annual return, you have $19,671 in that account at the end of ten years. You do not have to pay taxes on that $9,671 of earnings. Freakin A.

 

You can take the money out whenever you need it!

Holy sh*t, this may not sound like a big deal but the fact that you can withdraw money from this account whenever you want is a HUGE deal. Unlike an RRSP where you face serious penalties for withdrawing before the age of 65 (except in a couple specific circumstances), you can pull the money from your TFSA to pay cash for a car. Put a down payment on your house. Go to Burning Man. Whatevs.

I am not saying you SHOULD do that, but it is nice to have an account alternative to the RRSP that is way more flexible and can be used for a variety of short and long-term savings goals.

In fact, I treat one of my TFSAs (I have two) as my emergency fund. Money in your TFSA can be withdrawn anytime and you can actually get your hands on it within 24-48 hours, making it kind of great for an emergency fund. My emergency fund earns 1.95% interest and is nice and accessible if/when I really need it.

The only catch: if you have hit your total contribution limit (i.e. $52,000) and you withdraw money from your TFSA, you cannot re-contribute that dollar amount until the next calendar year.

 

You can contribute up to $5,500 a year!

Since its inception in 2009, the government has given $5,500 of contribution room to the TFSA each year (with the exception of 2015, where they jacked it up to $10,000). If you have never contributed a dime, the contribution room rolls over.

That means for anybody who was 18 or older in 2009 and has been a resident of Canada that whole time – you have a whopping $52,000 of contribution room in your TFSA!

If you have been a non-resident of Canada during that time, I highly suggest you check your contribution online at cra-arc.gc.ca. For instance, my contribution room is $35,500 (which lol, as if I’m running right up against that limit). If you want to know more, check out my recent post about how else your finances will be impacted when you move abroad.

 

This is great and everything…but which accounts should I have?

Totally with you. I opened a TFSA in 2009 because my mom told me to.

And remember how I only opened an RRSP through work six months ago because someone handed me a bunch of paperwork to fill out and then I magically had an RRSP? I had no idea if I actually needed one or not. So how do you know where to send your dollars each month?

Some key things to help you decide:

Are you an average to high-income earner?

The cut-off is somewhat arbitrary but if you make more than $40,000 a year, it makes a lot of sense to put money toward an RRSP.   Especially if you are a high-income earner (think 200K+), the tax savings are too good to pass up. You will get back almost half of the money you would normally be paying in taxes (i.e. if you contributed up to the limit of $24,930, you save about $12,000 in taxes). 

Will you have a lower income in retirement than you do now?

For most of us, that’s a big PROBABLY. If you are one of the few remaining humans in Canada that still has a defined benefit pension plan, then you need to think about if that income paired with your investments would actually lead to you having more cashflow in retirement than you do now. If that is the case, a TFSA can be a great option.

Do you plan on retiring early?

This account is absolute gold if you are working toward financial independence at a young age. If you have max out your TFSA today, that account will have matured to over $100,000 in the next ten years – assuming you do not contribute another dollar in that time. Unlike your RRSP (and 401(K) for Americans), which you have to sit around and wait to access, you can tap your TFSA anytime in early retirement.

 

I hope that cleared up some of the nonsense around RRSPs and TFSAs. I know, it is still a bit of a mindf*ck trying to figure out where you should be saving your money. The bottom line is that it is better to get started with something than to do nothing at all for your future.

I think just about everybody can use a TFSA. If you have a lower income and an RRSP doesn’t make sense, then you definitely should have one! If you max out your RRSP, you probably have some extra cash that you can invest and the TFSA is a perfect vehicle for that. For most of us, this account is a winner and I highly encourage you to check out Wealthsimple if you are looking at getting started with a TFSA online.

So tell me: how are you doing with your investment and retirement planning?  How do you decide how much money to allocate to your designated retirement account (RRSP/401(K)) and how much money to invest through other avenues like the TFSA, Roth, or HSA?  Let me know in the comments!

Taking on the 1% Challenge: Increase your savings rate little by little

savingsrate1

One of the most remarkable things about the personal finance blogosphere is the number of crazy inspiring people who are banking half or more of their income.

A savings rate of 50% or more sounds absolutely insane to most people. I literally – and I don’t use the word literally lightly – did not know this was even possible six months ago.

My former savings strategy? If I had leftover money at the end of the month (and I usually didn’t), I would throw said leftover money into a regular savings account. More often than not, I would withdraw it a couple weeks or months later to pay for a vacation or something else equal parts awesome and ridiculous.

If you feel like reading more about my story, you will quickly understand why I am 29 and didn’t have a dime in savings until very recently.

Why is savings rate so important and so talked about in the personal finance community?  

For Financially Independent Retire Early (FIRE) folks, this magical percentage is one of the best indicators of when you will reach financial independence. Someone who can save 50% of their income would be able to retire after about 17 years of working. Amp up that savings rate even more and you can cut years off your projected retirement date. If that sounds pretty great to you, join the club.

For those not striving for early retirement, savings rate is still instrumental for financial wellbeing.

Your savings rate is arguably the most important aspect of building wealth.

Simply put, your savings rate is the percentage of your take-home income that you save. This counts money going toward your retirement, investment accounts, or regular savings. Some folks also include debt repayment. I am totally in this camp since paying off your debt increases your net worth.

If you are anything like me (i.e. a non-financial expert or seasoned personal finance blogger), you probably have no idea what your savings rate is.

That’s totally okay. I never actually sat down to calculate my own savings rate, either. Until today.

Despite coming to appreciate the significance of this value, I never calculated it. Because one of the most intimidating & jealousy-inducing things about the personal finance blogosphere is the number of crazy inspiring people who are banking half or more of their income!  I knew I didn’t measure up, and I felt irresponsible and unworthy. Why wasn’t I too saving 50% or more of my income? I didn’t know why, I just knew I wasn’t saving “a good enough” amount.

[Sidebar: if this is you right now, do yourself a favour and check out this post on HalfBanked where Des explains the real truth of how she is able to save half her income.]

So I didn’t want to calculate the number. I fell back into an old diehard habit – ignore the numbers you don’t like, pretend they don’t exist.

Except that they do exist. Those numbers are real, whether you choose to acknowledge them or not. Those numbers are real, and they can actually help you.

Figuring out my savings rate is a real first step to know if I’m on track to hit any of my life and financial goals in the next year. The next five years. The next twenty years.

So I sat down this morning with a cup of coffee and my Excel spreadsheet where I track every dollar that I earn, spend, and save. I calculated my savings rate from the last few months.

And holy shit, I am doing better than I thought!

My monthly savings rate is 29%. I thought I was hovering closer to 20-25% but it looks like the automated “send money to different bank accounts at the beginning of the month” strategy is actually paying off. This savings rate does include debt repayment, since I am still paying down a good chunk of student loan debt. Thank you, seven years of postsecondary education, thank you.

29% is good. Actually I think it’s pretty great.  It was also a nice surprise when I realized I did not include my employer contributions in the initial calculation.   When I do include it (as part of both my savings and income), my savings rate jumps nicely into 30-something percent territory.

Even so, I know I can do a little better.  I would love to pay down my loans more aggressively and see the number in my investment account creep up a little faster.

So I am revisiting an old challenge from Paula at Afford Anything                                                   (http://affordanything.com/2014/12/17/take-the-one-percent-challenge/) for the next six months. All you have to do is save an additional 1% of your take-home income with each passing month. What does this look like for me?

March – 30%

April – 31%

May – 32%

June – 33%

July – 34%

August – 35%

The beauty of this is that it is so achievable. There is no way I can ramp up my savings to 50% overnight. But finding an extra 1% a month?  For average earners, that’s somewhere between $20-50/month.

If you haven’t calculated your savings rate, I highly encourage you to do it now. It is so motivating and I can’t wait to bump my number up a few percent. Having this knowledge can be intimidating. It can be downright scary. But it is one of the best ways of knowing where you are at and where you need to go.

Calculating your Savings Rate

  1. Tally up the money you save in a given month:

Monthly savings = Your retirement contributions + employer contributions + tax-sheltered investment account contributions + regular savings/investments contributions + any debt repayment 

  1. Find your monthly income after taxes (basically whatever shows up in your bank account every month):

Monthly income = Gross monthly income – taxes + employer contributions

(sidenote: you do not have to include employer contributions, but if you do, include it in both your savings and your income!)

  1. Take #1, divide it by #2, and multiply by 100. Bingo – that’s your savings rate.

(Monthly savings / Monthly income ) x 100 = Savings Rate %

If you do the math and your number is where you want it to be, awesome (and for real, tell me your secrets in the comments).

If it’s not, how do you feel about taking on the 1% challenge? Is that something you would be willing to try?  How are you doing with your savings rate in general, and what have been your best strategies for increasing your savings rate?  Let me know in the comments!

Emergency Fund: Essential or Overrated?

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I have a love-hate relationship with my emergency fund.

Some days, it feels oh so good to have that money stockpiled away, knowing that if something, anything happened, I would be okay. By the next morning, I am so frustrated with the snails-pace progress of my other financial goals that I want to immediately ditch any more contributions to my EF.  I think it might be time to do just that – even though I do not have 3-6 months of living expenses set aside.

Big or small, the personal finance world overwhelmingly advocates the importance of the emergency fund. I totally get that. Life happens. Shit happens. Emergency funds help.

Suze Orman recommends making minimum payments on your debt until you have 8 months of living expenses stashed away (Whaaaa?).  Dave Ramsey, on the other hand, suggests building a baby emergency fund ($1000), tackling your debt, and then building your 3-6 months of expenses emergency fund.  Gotta say, I’m with Dave on this one (although I actually think $1000 could be a little low, depending on your life circumstances).

So this goes back to the question of how essential is an emergency fund and how much do you really need?  Some PF bloggers argue that 3-8 months of living expenses in an emergency fund is not necessary for everyone and may be considered a lost opportunity since you could be investing that money instead of holding cash. I read these posts and they make my heart skip a beat. Like I really love these posts. A personal favourite that rethinks the emergency fund comes from Green Swan in “Rainy Day, Rainy Month or Rainy Year“.

Because 6-8 months of living expenses saved in a chequing account sounds bananas to me.  Some people really thrive on having this safety net. Yet I feel like a small part of me dies when I see important dollars getting funneled into that EF account every month only to sit there (I know, I know, that’s the whole point).  This begs the question:

Do I actually need to keep building my emergency fund right now?  

I think continuing to build my emergency fund right now is totally overrated, and here’s why:

  • I have no children or pets.
  • I have a (relatively) stable job. This, of course, always comes with some degree of uncertainty, but I work for a well-funded non-governmental organization. My chances of getting laid off are virtually nil and chances of getting fired also minimal.
  • I do not own a car.
  • I do not own any property.
  • I live in Canada, where medical emergencies are still a thing but our tax dollars pay for them.

And the current status of my emergency fund? $1770.87.

The money is stashed in a high-interest savings account, earning 1.95% interest. I have been sending about $100/month to this account to slowly build it.

I also have a small chunk of change invested in a tax-free savings account, which can be accessed anytime without penalty, as well as separate savings accounts for big household purchases, etc.

My main rationale for not continuing to build my emergency fund right now is that I am still paying down my student loans. Even with my debt, I was initially jazzed to see my emergency fund accumulating, but it’s hard to feel that joy when I am getting nailed with student loan interest every day. Don’t get me wrong – it is very comforting to know that I do have something set aside for an emergency, and I think everybody should have some kind of emergency fund.

But since potential emergencies in my world don’t include car repairs, pet surgery, or fixing the leaky roof on my non-existent house, my emergency potential simply seems much lower than the average bear.  I would hazard a guess that I am not the only Millenial in a situation like this, either.

What do you think – are big cushy emergency funds always essential or are they sometimes be overrated?  I think I am ready to stop building mine right now – how are you doing with yours?

How to crush your financial goals on a not-for-profit salary

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So I have this weird thing where I seem to not pick very lucrative career paths. I am a former teacher. I currently work in the not-for-profit sector. Both of these fields can be enormously rewarding and interesting, and I have loved both of these career trajectories for so many reasons:

  • They are different every day (this is really important for my restless brain syndrome).
  • They are creative.
  • You work with other people, and you sometimes even get to help them (to this day, teaching kids and teenagers is one of the things that has made me feel most accomplished).
  • There is always room for growth and professional development.

Not-for-profit work can be many things. As the name suggests, however, it is not known for being super profitable.

And I am totally okay with that. I have come to realize that money is not a huge motivator for me. I need some of it, I want a little more of it…but then I’m pretty much good. Rolling into six-figure territory was never a huge priority for me when I was building my life and making career decisions. Although that mindset is slowly shifting (cause let’s be honest, I would not complain about making more money), I am very happy working in the non-profit world.

Since entering the personal finance realm, however, I have been faced with a lot of stark realizations about my finances. Many of these revolve around my income bracket.

And I have been faced with the inevitable question:

Can I make my financial goals happen on my modest income?

Answer: duh, obviously.

Having a not-for-profit salary is no excuse for not killing it in your financial life. But there are a few things that may help you along the way to manage both your expectations and your more limited means:

Reap the rewards of those sweet, sweet benefits.

Salary may be a limiting factor for a lot of not-for-profits, but you know what often isn’t? The benefits package.

One of my employers more than doubled my pension contributions. Amazing.

I have also negotiated for my benefits to start right away, and not after the typical three-month probation period. This added thousands of additional dollars to my pension, and provided me with much-needed health insurance during those three months.

Added bonus: NGOs seem to rock vacation time, flexible work arrangements, and a host of other things that will make your work life way more awesome.

Be realistic about potential for salary growth and plan accordingly

You can make a good living in the not-for-profit sector. Many NGOs do offer salaries that are competitive – they just may not be able to scale in the way that you see in other (read: corporate) industries. Can you eventually earn a six-figure salary working at an NGO? For sure. But the not-for-profit world is generally going to compensate a similar skill set at a much lower rate than the corporate world. Check out this tidbit from Canadian Charity Law when it comes to paying CEOs:

“Even so, charities tend to pay less than private sector firms for similar competencies. For example, the charities in our study pay a median total compensation of roughly $150,000, compared to median salaries at S&P 500 companies of $1 million, excluding bonus packages and stock options that drive the median compensation up to $6.6 million.”

Overall, my advice is to be realistic about salary potential. Think carefully about your current role and your future career trajectory in the not-for-profit arena. Can you move up, and when and how would you be able to do that? Where will your salary max out? Some jobs are just never going to pay more than 50K a year. Are you okay with that? If you are, awesome! But if you’re not, you need to map your career accordingly.

Build the appropriate skill sets that make you competitive for moving up and working as a senior program officer or in an upper-management position at a larger NGO. Consider what areas of the non-profit world (e.g. fundraising) may be more profitable if this is something that is important to you.

You should still negotiate your salary.

It is already difficult to ask for more money when negotiating in a corporate environment. But I felt superrrr awkward asking for more money from an NGO. At the end of the day, though, you are providing a valuable skill set that deserves to be compensated fairly. I had to remind myself this about forty thousand times when I made a counter offer.

But it worked for me, and it can work for you too.

salary_negotiation_infographic_1450px_042915Be ready to side hustle.

But you already knew this was coming! Yes, yes you did. But the thing is, I didn’t. Until pretty recently, I really thought my 9-to-5 was the end of the road. I was too exhausted at the end of a workday, and I “deserved” to be able to relax (i.e. lounge around watching Netflix) every night.

In fact, working outside of work could be the very thing that separates me from just getting by every month and actually achieving financial wellness.  

I do make a good living at my current job. But supplementing it with an extra $5-10,000 a year?

That bump is what I need to make my financial goals happen, unless I want to be ridiculously frugal (which, I just can’t).

The great news is that education and not-for-profit work already set you up for some potentially lucrative (and enjoyable!) side hustles. You already have valuable and in-demand skills – if you decide you want to make extra money with it, there is no reason you can’t.

Here are some awesome things in both fields you can do to add some extra to your bottom line every month:

  • Coaching.
  • Tutoring.
  • Facilitating PD workshops/online courses for other educators.
  • Proctoring/invigilating exams.
  • Grading exams/assessments.
  • Passage/item writing.
  • Consulting.
  • Researching.
  • Freelance writing.

And finally, the single best thing you can do if you want to make it on a not-for-profit salary:

Track your spending and live within your means.

Most people are terrible at doing this, regardless of their income bracket.

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So beat out the rest by making an annual budget, using Mint, having a spending journal, ditching your credit cards (or all of the above!) – whatever it is you need to spend less than you earn.

Not-for-profit work can be beyond amazing, and there is no reason that you cannot destroy all your financial goals on a not-for-profit salary.

Is anyone else working in the non-profit sector (or another “traditionally underpaid” career)? What have you done to chart a successful career path?

Why is personal finance so scary?

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I feel like many conversations about money I have had with friends, colleagues, and family members get stonewalled pretty quickly.

It’s just too much for people to handle.

There are too many things to figure out, to learn. For the love of God, why are there so many acronyms?

More importantly, there are too many things to decide.

I owe a big part of my financial awakening to Ramit Sethi’s “I Will Teach You To Be Rich.” I read it in the summer of 2015 (on a trip to Italy that I really couldn’t afford LOL). It took me another year and a half and a re-read in the fall of 2016 for some of the big takeaways from the book to really sink in.

In it, Ramit breaks down why most people are bad with money and it really comes down to our inability to make decisions. Decision fatigue is real. It’s why some pretty awesome people wear the same thing every day.

We don’t even want to pick our outfits in the morning. So learning about stock portfolios, GICs, dividends, tax-free accounts? It’s a lot.

Here’s a for instance for you.  I used to be totally crippled by this big, scary word: investment. I didn’t know how to get started; I didn’t know where to put my money, or much money I needed to begin investing. Do I have to pick stocks? Do I have to pay fees for this? Can I do this through my regular bank? What is a mutual fund?

So what do most people do when faced with an absurd number of questions?

Nothing. They do nothing at all.

That’s exactly what I did.  I never bothered trying to navigate the world of investing – I just got overwhelmed and gave up before I even began.

But doing nothing is one of your worst moves. Inaction is still a choice. In IWTYTBR, Ramit argues: “It’s more important to get started than to spend an exhaustive amount of time researching.”

If you do something, if you act, if you decide to be proactive with your finances, even if you don’t know everything about finance  (and you won’t) – you are still two steps ahead of 90% of people around you.

I am the furthest thing from an investment expert. But I am now an investor. Do I pick individual stocks? God no. But you don’t have to! (and many would argue that you really shouldn’t).

I think the biggest reason Ramit’s IWTYTBR made such an impact on me was because someone was finally speaking my language.

Somebody was finally articulating in a real way this challenge that we all face: deciding what to do with your money each and every day. And it can be overwhelming.

So start small. There is definitely something you could be doing differently with your finances.

Maybe you know that you should be saving for retirement, but have just been too freaked out to figure out how to do it. Maybe you tried investing, but you had a bad run-in with a broker or local bank associate, and then you just never revisited it. Maybe you have no idea what you’re spending your money on (hands up if you’re guilty…I am so so guilty).

It all gets very scary if you have to do everything all at once…but you don’t.  You just have to get started. Could you:

  • Spend 15 minutes reading about what an RRSP/401K is to help you figure out if you need one?
  • Take 10 minutes to set up an automated monthly transfer into a savings account, even if it’s only $20 or $50 a month?
  • Google an online budget or spending tracker (or steal one from the many amazing PF bloggers who graciously share theirs), and commit to tracking your spending for a week or a month?

Baby steps are okay.

But not making any decisions at all?  I did that for my entire twenties, and it didn’t turn out awesome.

So pick your thing. Work at that one thing. Learn about it. Get started. Make a decision, even if it’s not the perfect decision. You got this. Just remember:

“The single most important factor to getting rich is getting started, not being the smartest person in the room.” – Ramit Sethi, IWTYTBR

A Year of Financial Firsts: Those 2017 Goals

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2017 has already been a financially noteworthy year for me.

Why? Because this is the first year of my life that I have set financial goals. I mean, who has time for financial goals when you’re busy throwing your next paycheck at a week-long trip to the south of Thailand?

When I was 25, I would have awkwardly shrugged if anybody had asked me how much money I planned on saving that year (which nobody did, ever). RRSP? The acronym alone was enough to make me shudder.   And if my conversations with my co-Millenials tell me anything, I know I’m not alone here.

As I started digging a little more into the PF community, I realized that money is like everything else in life. You don’t need to have everything figured out right off the bat. You just need some basics and more importantly, if you want to make things happen, you actually have to set some goals. Crazy that.

So I did. In early January, I thought really long and hard, not just about what I wanted to see in my accounts at the year end, but what the journey would look like. What would make this time different? It’s not like I had never tried to get my financial act together before. I had, and failed many times. What would suddenly making saving and budgeting compelling to me – compelling enough to actually do it for the whole year (and beyond)?

I thought about other areas of my life where I have been successful. I lost 30 lbs. about seven years ago and have since kept it off. In fact, I never worried too much about gaining it back. Sure, I continue to count calories here and there and go to the gym on a semi-regular basis. But I realized why I was successful in getting – and keeping – that weight off. I never wanted to give up chocolate or wine when I was losing weight (uh, obviously). So I didn’t.

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For real.

I set reasonable, attainable goals. Things I was actually willing to make myself do for more than a couple weeks. Goals can be ambitious, sure – and if you look around the personal finance community, you will find people who are making absolutely magical things happen – but you have to make sure you are actually going to swallow the pill you prescribe yourself for more than a week.

With that in mind, I developed my three financial goals for 2017:

 

Goal #1: Track every dollar I spend – for the entire year.

To PF vets, this might seem like no biggy. But this is HUGE for me. I can’t tell you the number of times I’ve tried to “make a budget.” This is seriously deserving of air quotes because they were such half-hearted attempts. I would always hang in there for a couple weeks, and then one of three things would happen:

  • Life.  Life would happen. Stress, fatigue, or unexpected commitments would inevitably arise. Suddenly, jotting down my expenses for the day seemed not so important.
  • Boredom. Tracking can just be sooo boring. I was usually attempting it pen-and-paper style and wow, there were few things I hated more than that little notebook.  I just didn’t wannnnaaa.
  • Fear.  So much this. One or two weeks into my spending diet, I would make a purchase that would knock my monthly budget out of whack. I would freak out, go into complete denial, not write it down in my little tracker – and then never track anything ever again.

So how was a former binge-money tracker going to actually pull off this goal for the year? Answer: I developed an amazing, colour-coded, totally inspired Excel spreadsheet. I know, inspired and spreadsheet do not belong in the same sentence but bear with me for a second.

It’s colourful. And it has all the automatically summing cells.

It just so happens I have to Excel my way through work every day so I’ve actually picked up a few handy tricks. I finally devised a spreadsheet that I knew I could fill out in less than 30 seconds every day, and that would automatically tally all my spending – not only for the month, but the year. I told you – amazing, right?

Not only that, but being able to see how my daily expenses would look in the big picture of months and years – and affect my larger financial goals – now that is something that is actually interesting to me! I am definitely a big-picture person so this was a huge win. January got me off to a great start – I have tracked every penny in 2017 so far and I am now mildly obsessed with my beautiful, colourful spreadsheet.

 

Goal #2: Outdo the “average” Millenial

Okay okay, I know comparison is the thief of joy, but a little competition never hurt. The average Millenial has a net worth of $10,400. Plain and simple, I want to exceed this before the end of 2017. Given that I have a small mountain of debt from my graduate degree, this will take some work, but it is definitely within reach.

If I achieve this, it would also represent the first time in my adult life that my net worth is in the black.

 

Goal #3: Add an additional source of income

Although this may be a mistake, I haven’t quantified this particular goal. I have no set amount that I want to earn in addition to my regular income. My regular income is sufficient to meet my monthly budget needs, pay down debt, and save. But I am so over being in debt and would love to pay it down more aggressively while throwing some extra dollars at my investment account.

I have some good prospects and a handful of leads for extra income that I’ll get into in another post. 2017 is really about developing them and making additional income streams part of my mindset for attaining financial well-being. There are limits to my frugality so a big part of making it rain to me is figuring out how to channel my skills to make additional income outside my day-to-day.

 

I am pumped about these three goals and I am so excited about how my January has gone. What goals have you set for 2017 and how has the first month of the year treated you?

Making a financial comeback after a decade of full-blown Millenial YOLO-ing

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The main reason I started this blog was to develop some personal accountability around my finances – I need to confess some of my greatest financial missteps and track my progress as a recovering financial flake. A second aim of the blog, however, is to further the conversation about some of the damaging narratives regarding Millenials, money, career, and lifestyle that continue to be perpetuated. The reason I think this Millenial sociocultural dynamic is so compelling and warrants more attention is because I completely fell into the trap.

It’s this “30 is the new 20” philosophy that makes your twenties seem like a write-off decade where you shouldn’t preoccupy yourself with menial tasks such as building a solid career or saving for retirement. You should travel, volunteer, hook up with countless people, soulsearch, and wander aimlessly for as long as you can – you’ll have time to adult later!

Imagine my surprise when I stumbled across this TedTalk and Dr. Meg Jay schooled me on how 30 is not, in fact, the new 20: https://www.youtube.com/watch?v=vhhgI4tSMwc

That was a tough pill to swallow since I only found out about all this at age 29…gah.

So why do I need some financial accountability in my life? Confession time: I went full-on Millenial Mode for the last decade. After finishing not one, but two university degrees (man, those pieces of paper are expensive), I ran off to live abroad at 23 and spent almost every disposable dollar I had on travel, food, drink, parties, and adventure.  Then I went back and got another degree!

What was my rationale? You only live once. Weekend in Paris? You only live once. Countless happy hours at rooftop bars? You only live once. Obscene gym membership at the most expensive hotel&spa in the city? It’s good for me – and you only live once.

Before YOLO was even a thing, it was my catch-all for feeling okay about recklessly spending every dime I had. And just about everyone (I am so guilty of this) feeds into it. What are some things I heard on repeat during my six years of travel and work abroad?

“Better do it now while you still can!”

“Better do it now before you _______________(get married/have kids/settle down)!”

“This is what your twenties are for.”

“Your twenties don’t even matter! Your thirties are the new twenties!”

“What if you die tomorrow? Live life to the fullest.”

Ugh. It makes me cringe a little just reading it back. What makes me cringe even more is that I was often the one saying these things to others! I drank the Kool-Aid and I really believed your twenties were a decade that didn’t matter much, financially or otherwise. What I have only started to learn is that this narrative can be super destructive. Your twenties do matter, and in hindsight, I wish there had been more of a balance during that part of my life. Life is meant to be enjoyed. Adventure and travel are rewarding. But so are financial stability, meaningful relationships, and a fulfilling career.

I loved my carefree twenties so much and I don’t regret them. But I think I could have still enjoyed them and not used “being in my twenties” as a license to be irresponsible and wasteful. The cold, hard truth is that my twenties plunged me into horrible financial patterns that I am only now starting to escape.

This blog will document my road to financial awesomeness, and hopefully provide others with some insights and inspiration to take charge of their own financial lives by reading about some of my big f*ck-ups. Even though my twenties were a bit of a financial disaster, it’s never too late to take the reins and get it together.

The time is nigh – let’s make it rain, people.