Personal Finance

Brand New to Personal Finance - What do?

  • Last Updated:
  • Jan 28th, 2018 1:13 pm
[OP]
Newbie
Sep 26, 2016
3 posts

Brand New to Personal Finance - What do?

Hi everyone,

For all intents and purposes - let's say I'm brand new to personal finance. I'm 28 years old (going on 29), and have managed to reduce my student loans (double degree STEM) to $5.8K and have just north of $5K in my savings account, a car, and I'm renting. No debt otherwise. A few years ago, I ended up spending $40K on a business idea that I then abandoned due to unforeseen circumstances. I'm using YNAB to baseline my budget for the last year. I'm a data-driven guy. Historically, I've hopped from industry to industry in order to find out where my skill and passions are. I finally found it. Also, I hate having debt of any kind.

I'm working in sales, making $57.5K base, and commissions are just starting to kick in. I'm expecting to hit $100K by 30. I budgeted based on my lifestyle (which is quite minimalist) and have only one credit card that I RARELY use: PC Financial MasterCard. Banking with Simplii. In addition, we've started a sales consulting firm, and have a handful of clients - so things are picking up financially. I'll be moving into a new place with my girlfriend, so that's an additional $1.1K per month I can put towards some kind of investing.

I've never considered something like a cash-back credit card/even using the credit card to generate some benefits. I know very little about stocks, or RRSPS, Dividends etc. Where do you all recommend I get started?

My thoughts are currently: read the go-to investment books, perhaps find a course or mentor....I'm all ears. I've read some books that are US-specific, but Canada's a little bit different.

This year, I've made it a priority to understand finance, start taking it seriously, and dip into investing in order to finally start generating income. In addition, with the firm we've started, I can likely write some things off from a tax perspective. I don't totally understand that either.
10 replies
Deal Fanatic
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May 8, 2009
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Your post is a bit scattered. For tax write-off's, you'll likely find more info on tax threads here and in small business. For credit cards, there's a sub forum for that. Since you'll be pooling groceries, gas, and pre-auth payments with your girlfriend, you can start looking at CC's with annual fee. Else PC MasterCard is good. I know you said you rather stay away from debt, which is smart, but since you bank with Simplii, you should get a line of credit with them sooner than later. It's like a checking account with a massive overdraft limit at a reduced interest rate.

When you have some money to invest, check out the investments forums. Shopping for a condo or house? Check out real estate forum.

Your best bet would likely be to read threads in forums that interest you. Then ask questions about the topic in each thread if you have any.

Last note...since your student loan is low, grab an MBNA PP card. Do a balance transfer, and pay off the student loan. Then pay the PP card over a year. 1% upfront on the balance transfer, then 0% for 12 months. It'll likely improve your credit score as well,
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Member
Jun 10, 2013
433 posts
172 upvotes
For the investing side (once you patch up personal finances which is just simple math + discipline):

One good investing book for Canadians is Millionaire Teacher. Good one stop shop that has the mechanics (actual steps to take vs. just theory) written by a Canadian teacher that hit millionairedom at 40.

You'll then choose one of the discount brokers to access the exchanges, I use Questrade since I just buy ETFs (they're commission free)
http://www.moneysense.ca/canadas-best-o ... ison-tool/

You will then buy ETF index funds, couch potato is a good starter portfolio (and a good keeper for its simplicity):
http://canadiancouchpotato.com/wp-conte ... s-2017.pdf

Whenever you buy an ETF or a fund look for the MER (management expense ratio) - there will be a cost row. Choose your risk preference based on the returns and the maximum drawdown / standard deviation of returns. Something around 0.2 is acceptable. 1-2% can steal millions from you over a lifetime. Use indexes (I didn't and ruined myself financially in my 20s - I traded individual stocks, options, forex, futures etc...Nothing beats the simplicity and near certainty of an index fund (you'll find a lot of literature on this).

And last thing, no one will care more about your money than you. Trust yourself only, do your own research.

If you want more advanced portfolios created by prolific authors (this site will teach you about each asset class too if you click on it - long story short, US stocks are best):
https://portfoliocharts.com/portfolios/

Most importantly, start early (see table below), 10% is very feasible with an aggressive equity/stock index fund allocation with low fees (0.2 or less). Vanguard is a good reference company since they're a non-profit.
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[OP]
Newbie
Sep 26, 2016
3 posts
Thanks, this is a great start. I have a $5K line of credit through Simplii, but again, don't really use it. The MBNA PP card - it seems you're suggesting I use that to "house" my student loan by transferring it over. Can you explain the logic behind this decision? With the 1% upfront - I feel like I'm losing something here.
Member
Jun 10, 2013
433 posts
172 upvotes
You'll want a huge line of credit as soon as you can for the lowest interest rate possible. Banks will loan you money if you want to buy a car or a boat or something outlandish & extravagant that you don't need. When you're out of a job or business is doing bad, they won't even loan you $5 bucks for a sandwich to keep you alive...Get credit when times are flush so you can better survive financial winters. Line of credits don't charge anything if they're not being used but it's an immense store of liquidity/capital should you get into a pinch.
Deal Addict
Dec 12, 2009
3046 posts
1090 upvotes
Toronto
If you are eventually going to be investing, I'd hold off a bit.
Read the Wealthy Barber
Pay off your loan
Put away 3-6 months earnings into a TFSA as an initial emergency fund to possibly be used for other investments later.
Consider buying something to live in rather than rent.
By the time you have done that, you will have had time to learn more about investing.
Consider doing the CSC courses https://en.wikipedia.org/wiki/Canadian_ ... ies_Course for 2 reasons. 1 to have a better understanding of investments for yourself and 2 leave a door open to alternative sales opportunities. I know people that have done it solely for the purpose of investing in themselves and not easily falling prey to the investment industry.
Deal Addict
Jan 15, 2017
2149 posts
1478 upvotes
I agree with the other poster that you are a little scattered.

Before you start thinking of cash back credit cards and balance transfers - which is small stuff, I suggest you determine your future goals. Strategies are useless unless you have some sort of vision of where you want to be and how to get there.

From your OP, you alluded to some things that can help you:

1. Starting your own business. Is this something that you are serious about and can you see yourself fully self employed at some time? What are the risks and benefits of doing this?

2. Moving in with a girlfriend. Do you see yourself getting married soon or starting a family? Have you discussed money and financial goals with your girlfriend?

3. Debt. You seem to be debt averse. Why? How will this impact your choices moving forward?

4. Why invest? What is the ultimate goal of investing? Is it for retirement? Just to have money? Major purchase down the road? This is important as the opportunity cost of investing for tomorrow is not enjoying the money today.

These questions are just a start. It's a good exercise to try and imagine your life 5, 10 and 20 years from now. You are at a stage where people tend to accumulate a lot of things (house, car, furniture, children) that all cost a lot of money so it is important to have a clear understanding of how the next 5+ years will play out for you.
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May 8, 2009
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x7cr7x wrote:
Jan 27th, 2018 1:15 pm
Thanks, this is a great start. I have a $5K line of credit through Simplii, but again, don't really use it. The MBNA PP card - it seems you're suggesting I use that to "house" my student loan by transferring it over. Can you explain the logic behind this decision? With the 1% upfront - I feel like I'm losing something here.
Agreed with @Hobotrader. Get your Simplii LOC CL increased while life is good.

About MBNA PP, aren't you paying interest on your student loan now anyway?

Plus, if you apply via the ad-supported GCR (google "GCR"), you get a $60 gift card, that'll offset the 1% fee on a $6k loan. Point is, you'll save on interest, will probably boost your credit rating, and will leave you with available credit with MBNA. Those PP cards can do wonders when you carry any sort of balance.
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Sr. Member
Feb 26, 2017
990 posts
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x7cr7x wrote:
Jan 27th, 2018 12:04 pm

I'm working in sales, making $57.5K base, and commissions are just starting to kick in. I'm expecting to hit $100K by 30.
In sales, if you can live off of your base salary that will be one of best things you can do. You will be one of the few, as I see most people spending their commissions ahead of even getting paid for it :). Save your commissions/bonuses to invest in lump sums (It ads up really quickly).
[OP]
Newbie
Sep 26, 2016
3 posts
I'll call simply and get that LOC increased ASAP. Regarding the MBNA PP - I am paying very minimal interest on the student loan. I just checked the terms, and I'm at 5.95% Floating with a daily interest charge of $0.88. I've seen whispers of credit cards that give you 2-4% back on all spendings. That's like 2-4% back on "life". Is there a reason I want this card instead besides off-loading some of that interest?

I'm guessing the GCR means I've got to make an account, register with them etc. for that $60.00.


To the gentleman saying live off my base salary and invest the commission - that's exactly what I'm planning on doing. Since these are enterprise sales, and having worked there for nearly 9 months now - the commission is coming in. A few thousand per closed deal. Is it in my best interest to nix the student loan ASAP?
Sr. Member
Feb 26, 2017
990 posts
649 upvotes
x7cr7x wrote:
Jan 28th, 2018 1:01 pm

To the gentleman saying live off my base salary and invest the commission - that's exactly what I'm planning on doing. Since these are enterprise sales, and having worked there for nearly 9 months now - the commission is coming in. A few thousand per closed deal. Is it in my best interest to nix the student loan ASAP?
Getting rid of the student loan first is a good plan.

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