Consumer debt paid Off… Now what?
My wife and I recently accomplished a major milestone, we paid off all of our consumer debt! We made sure not to carry balances on our credit cards and we didn’t let our debt get out of control. But we did use our credit lines to buy a car, help pay for our wedding, get renovations completed, and to prepare for our newborn. We both had a small amount of college loan debt to finish off as well.
With my wife’s parental leave coming to an end soon, we knew we would need to eliminate our debt to be able to afford for her to continue to stay home to look after our son. To both pay off our debts and prepare for living on one income, we simply used the maternity leave and parental leave payments to reduce our 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 receive 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 we’re about to do is set up our 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?