Personal Finance

how is my budget?

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  • Feb 27th, 2012 1:36 pm
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Newbie
Apr 12, 2010
29 posts
6 upvotes
mb

how is my budget?

hey guys, so Im in pretty bad debt and paying off a TD consolidation debt (14.7%) $7000 and a MNBA 0% $6000. My consolidation was $13000 altogether but since getting the mnba i paid almost half.

so I get paid $550/wk and my spendings are:

Rent and utilities: $500-600/mth
Cell phone: $70/mth
Bus: $60/mth
$100/week to MBNA automatically
$73/week for the TD loan
$75/week for spending (food/entertainment). I find i only spend $50 since i brown bag my lunch and it helps my gf works every other weekend limiting my spending.
I don't own a vehicle and I bus to work.

so I have about $478 per month left plus $25/week if i don't spend my spending money. Should I put any into my savings acct? or put half towards the TD loan?
18 replies
Deal Addict
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Sep 26, 2007
3960 posts
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SC
why wouldn't you make the minimum payments to your mbna card..which is 0%
and focus on the td debt?

you need to keep some cash in case you need to make purchases. do not use your mbna card to make any purchases unless its 0% on purchases as well.
but i would focus on trying to pay off that 14.7% debt...
"We don't have a soul... We are a soul. We have a body." ~C.S Lewis
Deal Addict
Nov 15, 2010
2043 posts
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Ottawa
You should put all your extra money towards the TD loan because it's interest rate is higher than the MBNA card and way higher than any savings account will pay.
Deal Expert
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Nov 2, 2003
17117 posts
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i'm too lazy to do the actual math... but you're actually paying close to 7% across the two cards. 15% on one and 0% on the other one.

if i were you, i would aim to consolidate the two onto one. i'm not sure what you meant by "your consolidation was $13000 but you paid off half". if you had already consolidated, why do you still have TD.

anyways, call mbna and see if they would bump credit limit by $7000 to transfer the TD debt onto MBNA and make one monthly payment at 0% interest. I doubt they will go for this but this is the first shot.

if they deny, see if they would do a $7000 3% for you.

if they still deny, offer to give up your 0% and do all $13000 on a new 3% (or anything lower than 7%) as that will save you money and improve your cashflow over time. and they would actually make money on you.

if all else fails, then resort to paying minimum on MBNA and as much as you can (without leaving yourself $0) on the TD.

as for your thread title question "how is your budget?" I do not approve of you spending $70 on a cell phone each month or budgeting $50 or $75 a week on food/entertainment.

when you are in debt, it's because in the past you consumed your future cashflow (which is your present cashflow) so that's why you have to rough it out for now.

drop the data on your cell phone and get down to under $40 a month for cell phone. if you're bored on the bus, get a book on personal finance / wealth management and read that. this frees up $30 each month.

reduce your weekly food/entertainment expenses to under $50. this frees up $100+ each month

in theory you could have an additional $150 to pay off your debts each month. that is $1800 a year.


the other thing you didn't mention is why you have so much debt. i hope it's because you borrowed and invested and those investments aren't paying off yet but eventually would. if you are in so much debt because you consumed it or the investments failed and you aren't going to get your money back, the sooner you work to pay those debts off, the sooner you can enjoy life again. this is the modern day's version of jail. you're not physically confined in a closed space, but you might as well be, because you're restricted by your ability to spend any money left over from paying your debts.
Newbie
Apr 12, 2010
29 posts
6 upvotes
mb
actng wrote: i'm too lazy to do the actual math... but you're actually paying close to 7% across the two cards. 15% on one and 0% on the other one.

if i were you, i would aim to consolidate the two onto one. i'm not sure what you meant by "your consolidation was $13000 but you paid off half". if you had already consolidated, why do you still have TD.

anyways, call mbna and see if they would bump credit limit by $7000 to transfer the TD debt onto MBNA and make one monthly payment at 0% interest. I doubt they will go for this but this is the first shot.

if they deny, see if they would do a $7000 3% for you.

if they still deny, offer to give up your 0% and do all $13000 on a new 3% (or anything lower than 7%) as that will save you money and improve your cashflow over time. and they would actually make money on you.

if all else fails, then resort to paying minimum on MBNA and as much as you can (without leaving yourself $0) on the TD.

as for your thread title question "how is your budget?" I do not approve of you spending $70 on a cell phone each month or budgeting $50 or $75 a week on food/entertainment.

when you are in debt, it's because in the past you consumed your future cashflow (which is your present cashflow) so that's why you have to rough it out for now.

drop the data on your cell phone and get down to under $40 a month for cell phone. if you're bored on the bus, get a book on personal finance / wealth management and read that. this frees up $30 each month.

reduce your weekly food/entertainment expenses to under $50. this frees up $100+ each month

in theory you could have an additional $150 to pay off your debts each month. that is $1800 a year.


the other thing you didn't mention is why you have so much debt. i hope it's because you borrowed and invested and those investments aren't paying off yet but eventually would. if you are in so much debt because you consumed it or the investments failed and you aren't going to get your money back, the sooner you work to pay those debts off, the sooner you can enjoy life again. this is the modern day's version of jail. you're not physically confined in a closed space, but you might as well be, because you're restricted by your ability to spend any money left over from paying your debts.

I had my TD loan at 13k, but I applied for the MBNA 0% in hoping to get atleast 10k approved, but I only got 7.5k. So i transfered 7000 to my td acct and requested to do a lump sump payment of 7k towards my loan.

my contract is done in May and will be switching to pay as you go.

my debt is from a few things and the first is school. I didn't finish what I was taking in university because I wasn't interested in the field anymore. That probably is 70% of my debt. The rest was high risk investment that failed, and just being stupid with credit card.
Newbie
Apr 12, 2010
29 posts
6 upvotes
mb
xlfe wrote: why wouldn't you make the minimum payments to your mbna card..which is 0%
and focus on the td debt?

you need to keep some cash in case you need to make purchases. do not use your mbna card to make any purchases unless its 0% on purchases as well.
but i would focus on trying to pay off that 14.7% debt...
eiad77 wrote: You should put all your extra money towards the TD loan because it's interest rate is higher than the MBNA card and way higher than any savings account will pay.
I cut up the 0% mbna card. So i should pay the min payment per month and use the rest to up the payment on my TD? IF i don't pay the MBNA on time the interest jumps to %20?
Deal Addict
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Sep 26, 2007
3960 posts
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SC
pekpek wrote: I cut up the 0% mbna card. So i should pay the min payment per month and use the rest to up the payment on my TD? IF i don't pay the MBNA on time the interest jumps to %20?

yes you want to focus paying back td debt because it has a higher rate at the same time making sure you don't miss any minimum payments on your mbna card.

if you miss payments that will not be good for your credit score and you would lose any promotional interest rate on your card. so if your card has a regular rate of 20% then it would go back to that aswell when the promotion expires.
"We don't have a soul... We are a soul. We have a body." ~C.S Lewis
Deal Addict
Jun 27, 2005
1071 posts
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Toronto, ON
Looks good - the only thing I'd try to reduce is the $70/month phone plan. That's a lot and there are many options out there to get that lower.
Deal Guru
User avatar
Jul 7, 2007
10983 posts
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pekpek wrote: hey guys, so Im in pretty bad debt and paying off a TD consolidation debt (14.7%) $7000 and a MNBA 0% $6000. My consolidation was $13000 altogether but since getting the mnba i paid almost half.

so I get paid $550/wk and my spendings are:

Rent and utilities: $500-600/mth
Cell phone: $70/mth
Bus: $60/mth
$100/week to MBNA automatically
$73/week for the TD loan
$75/week for spending (food/entertainment). I find i only spend $50 since i brown bag my lunch and it helps my gf works every other weekend limiting my spending.
I don't own a vehicle and I bus to work.

so I have about $478 per month left plus $25/week if i don't spend my spending money. Should I put any into my savings acct? or put half towards the TD loan?

my or my, reminds me a lot about the "am I pretty or ugly" youtube videos.

spending looks fine, but I'm seeing a lot of flaws.

1... where is the saving? I know you are focusing on debt payment, but never hurt to have some money set aside for yourself.

2... how did you even get that high of debt? considering you only spent 75 dollars a week on food and entertainment?

3... i kinda wonders what you eat. Do you make your girlfriend pay the other 50% of food? ;)

4... I say half your extra money should go to debt, and another half going partly to RRSP and partly to TFSA, at your income and TDSR, there's no reason why you shouldn't max your RRSP.
Deal Expert
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Nov 15, 2004
21786 posts
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Toronto
OP, when does the interest-free portion of the MBNA balance transfer expire? If you don't pay off the whole amount by then they'll charge you interest from day 1 on the whole amount. I'd focus entirely on that until it's gone and pay the minimum on your TD loan. If you can miss out on however many months of 19% interest by paying it before the deadline, do it.
Jr. Member
Nov 28, 2010
171 posts
39 upvotes
pekpek wrote: hey guys, so Im in pretty bad debt and paying off a TD consolidation debt (14.7%) $7000 and a MNBA 0% $6000. My consolidation was $13000 altogether but since getting the mnba i paid almost half.

so I get paid $550/wk and my spendings are:

Rent and utilities: $500-600/mth
Cell phone: $70/mth
Bus: $60/mth
$100/week to MBNA automatically
$73/week for the TD loan
$75/week for spending (food/entertainment). I find i only spend $50 since i brown bag my lunch and it helps my gf works every other weekend limiting my spending.
I don't own a vehicle and I bus to work.

so I have about $478 per month left plus $25/week if i don't spend my spending money. Should I put any into my savings acct? or put half towards the TD loan?

Hi pekpek. It's Chris from TD. Great to see you're looking at paying out your debt. It's not always easy, but you'll have more financial freedom in the long run. We have a couple of tips for you that will hopefully help:

Tip #1: Increase the frequency of your payments - One of the best ways to decrease your debt and to reduce your interest costs is to increase the frequency of your payments. Not only will you pay less in interest, but you will pay off your debt faster. Available options for loan payments are monthly, semi-monthly, bi-weekly, rapid bi-weekly, weekly and rapid weekly. The rapid options affectively equal one extra payment per year, by increasing the regularly bi-weekly and weekly payment (depending on the option you choose). You can also make lump-sum payments anytime you wish through EasyWeb, EasyLine or at any branch.

Tip #2: Pay off your most expensive debt first- This is not the debt with the highest balance, but the one with the highest interest rate.
Once you've paid off the most expensive debt, apply the same payment amount to the second debt listed. Continue to follow this strategy until you have worked through the list.
However, don't ignore your other debts...continue to pay at least the minimum on these.

If you need any advice, we're always here to help. Please give EasyLine at call at 1-866-222-3456, available 24/7. Have a great day and best wishes on your goals :) ^CT
Newbie
Apr 12, 2010
29 posts
6 upvotes
mb
2heaven wrote: Looks good - the only thing I'd try to reduce is the $70/month phone plan. That's a lot and there are many options out there to get that lower.

My contract is done in May 2012 and I will be switching to pay as you go.
kingofwale wrote: my or my, reminds me a lot about the "am I pretty or ugly" youtube videos.

spending looks fine, but I'm seeing a lot of flaws.

1... where is the saving? I know you are focusing on debt payment, but never hurt to have some money set aside for yourself.

2... how did you even get that high of debt? considering you only spent 75 dollars a week on food and entertainment?

3... i kinda wonders what you eat. Do you make your girlfriend pay the other 50% of food? ;)

4... I say half your extra money should go to debt, and another half going partly to RRSP and partly to TFSA, at your income and TDSR, there's no reason why you shouldn't max your RRSP.
1. I have about 3000 in savings with TD GIC 5 years. I have another year left.

2. my debt is from a few things and the first is school. I didn't finish what I was taking in university because I wasn't interested in the field anymore. That probably is 70% of my debt. The rest was high risk investment that failed, and just being stupid with credit card.

3. She works every other weekend rotation so I save every other weekend lol. When we do go out we take turns paying.

4. I do have a TFSA account with pcfinancial but I don't use it, I'm pretty uneducated with tfsa and RRSP. I should set up an appt to talk to someone at TD regarding RRSP/TFSA next week.

Piro21 wrote: OP, when does the interest-free portion of the MBNA balance transfer expire? If you don't pay off the whole amount by then they'll charge you interest from day 1 on the whole amount. I'd focus entirely on that until it's gone and pay the minimum on your TD loan. If you can miss out on however many months of 19% interest by paying it before the deadline, do it.

I got the 0% mbna this past December 2011 and expires april 16th 2013. So my balance now it $6100 to date.

I appreciate all the feedback given and your time to read my post.
Deal Addict
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May 28, 2009
1543 posts
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Ottawa
maybe the OP is paying more on the mbna since if he cant finish off the loan it would be more than the TD rate. on the MBNA 0% thread a poster claims that he was able to apply for a new round of financing with an existing balance with mbna. then again other factors could be at play as well like credit rating, income etc.

I know every $ counts but I would still keep the data on the phone (cancel internet maybe) and use it to tether. as long as youre not downloading movies youre never gonna reach the 6Gb (assuming you have 6Gb) limit.

if youre low income a TFSA maybe and higher income RRSP maybe. (pls correct me if i am wrong). Good luck OP.
Deal Addict
Oct 4, 2009
3590 posts
2953 upvotes
Montreal
pekpek wrote: 1. I have about 3000 in savings with TD GIC 5 years. I have another year left.
Wow, what's the rate? Can it be redeemed and if so, at what reduced rate? TD must love you lending them money at x% and borrowing it back at 14.7%. Depending on the early redemption penalty it might make sense to cash it in to pay off part of your loan.
4. I do have a TFSA account with pcfinancial but I don't use it, I'm pretty uneducated with tfsa and RRSP. I should set up an appt to talk to someone at TD regarding RRSP/TFSA next week.
Forget about investing until your high interest debts are paid off. That includes your 0% loan that resets at 19% if not paid by the due date. You should pay the min to MBNA and pay off the TD loan aggressively until it is gone. Then save up in a HISA TFSA for the purpose of paying off MBNA just before the deadline. You can not afford to miss this deadline no matter what. If you haven't saved up enough by the deadline just get another loan. You will never get anywhere paying such insanely high interest rates.

Once all these debts are paid off, start saving 3-6 months of expenses in an emergency fund to avoid having to go into debt again when life throws you a curveball.
Sr. Member
Feb 7, 2012
639 posts
148 upvotes
SCARBOROUGH
TD_Canada wrote: Hi pekpek. It's Chris from TD. Great to see you're looking at paying out your debt. It's not always easy, but you'll have more financial freedom in the long run. We have a couple of tips for you that will hopefully help:
...
If you need any advice, we're always here to help. Please give EasyLine at call at 1-866-222-3456, available 24/7. Have a great day and best wishes on your goals :) ^CT

If you really want to help the OP give him a break on the interest rate. Something around 8% would be much more reasonable.
Newbie
Apr 12, 2010
29 posts
6 upvotes
mb
everylittlecent wrote: maybe the OP is paying more on the mbna since if he cant finish off the loan it would be more than the TD rate. on the MBNA 0% thread a poster claims that he was able to apply for a new round of financing with an existing balance with mbna. then again other factors could be at play as well like credit rating, income etc.

I know every $ counts but I would still keep the data on the phone (cancel internet maybe) and use it to tether. as long as youre not downloading movies youre never gonna reach the 6Gb (assuming you have 6Gb) limit.

if youre low income a TFSA maybe and higher income RRSP maybe. (pls correct me if i am wrong). Good luck OP.
Yeah that is my reason why I want to pay the mbna off. Maybe I can wait until my GIC term is over and take it out to pay the MBNA *IF* I do minimum payments. I would have to double check when the term is over.
S5 wrote: Wow, what's the rate? Can it be redeemed and if so, at what reduced rate? TD must love you lending them money at x% and borrowing it back at 14.7%. Depending on the early redemption penalty it might make sense to cash it in to pay off part of your loan.


Forget about investing until your high interest debts are paid off. That includes your 0% loan that resets at 19% if not paid by the due date. You should pay the min to MBNA and pay off the TD loan aggressively until it is gone. Then save up in a HISA TFSA for the purpose of paying off MBNA just before the deadline. You can not afford to miss this deadline no matter what. If you haven't saved up enough by the deadline just get another loan. You will never get anywhere paying such insanely high interest rates.

Once all these debts are paid off, start saving 3-6 months of expenses in an emergency fund to avoid having to go into debt again when life throws you a curveball.

It's 1.45% and I am kicking myself now. I will double check if there is a redemption penalty.
Sr. Member
Feb 7, 2012
639 posts
148 upvotes
SCARBOROUGH
pekpek wrote: 4. I do have a TFSA account with pcfinancial but I don't use it, I'm pretty uneducated with tfsa and RRSP. I should set up an appt to talk to someone at TD regarding RRSP/TFSA next week.

Pay down your high interest debt first and then worry about RRSP.

Forget about TD for savings. They never pay enough interest on guaranteed investment to offset the inflation. Browse the Personal Finance forum on RFD and you will find many better saving options.
Deal Addict
Jun 9, 2003
4646 posts
746 upvotes
As others have noted, as far as your budget goes, $70/month seems quite high. Are you locked into a bad contract?
Deal Guru
User avatar
Jul 7, 2007
10983 posts
2915 upvotes
pekpek wrote: My contract is done in May 2012 and I will be switching to pay as you go.



1. I have about 3000 in savings with TD GIC 5 years. I have another year left.

2. my debt is from a few things and the first is school. I didn't finish what I was taking in university because I wasn't interested in the field anymore. That probably is 70% of my debt. The rest was high risk investment that failed, and just being stupid with credit card.

3. She works every other weekend rotation so I save every other weekend lol. When we do go out we take turns paying.

4. I do have a TFSA account with pcfinancial but I don't use it, I'm pretty uneducated with tfsa and RRSP. I should set up an appt to talk to someone at TD regarding RRSP/TFSA next week.




I got the 0% mbna this past December 2011 and expires april 16th 2013. So my balance now it $6100 to date.

I appreciate all the feedback given and your time to read my post.

Might be able to get out of the GIC by declaring it "Financial Hardship", might not get much interest out of it, at least you won't be paying 14% and earning 2.5% for next year or so.

RRSP will help you get more back from the government in terms of the tax you paid. base on your info, you might get up to 30%... i.e. if you put 2000 dollars into RRSP, you might get 600 dollars back from government... (talk to your accountant)

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