Consumer debt paid Off… Now what?
I recently accomplished a major milestone, I paid off all my consumer debt! I made sure not to carry balances on my credit cards and not let debt get out of control. But I did use my credit lines to buy a car, help pay for a wedding, get renovations completed, and to prepare for a newborn. I had a small amount of college loan debt to finish off as well.
With parental leave coming to an end soon, I knew I would need to eliminate debt to be able to afford to have a parent continue to stay home to look after our son. To both pay off our debts and prepare for living on one income, I simply used the maternity leave and parental leave payments to reduce the debt. Since we were used to living without the extra money, we had to look at what we should do next, especially over the next couple of months while we still received the extra income.
The first thing we’ve done is open a TFSA with Tangerine (use this link for an Orange Key worth up to $50in bonuses and 2.4% interest for 6 months) to use as an emergency fund and for annual expenses like preparing for Christmas and life insurance. This will help ensure we won’t have to dip back into our credit lines when major expenses come up, whether it’s repairing our car or paying our property taxes.
The next thing I’m about to do is set up my child’s RESP. Delaying on this has been due as much to procrastination as it is to paying off our debts first. But now that we’re focused on putting some money aside, this is a good time to get it done. While I plan to set up a TD e-Series RESP, I recently found out that I’ll need to set up a GIC account as well in order to receive the Alberta Centennial Education Savings (ACES) grant.
After those savings accounts are set up and we get some money put away, the next thing we have to accomplish is paying down the mortgage, freeing up more HELOC room for investing through a Smith Manoeuvre.
Have any readers come to similar financial crossroads? What did you decide to do when looking at your financial situation and looking for the next goal you wanted to take on?