Money. This is my money story. Or the start of it. It’s a little embarrassing. I have, however, begun to turn things around. I’ll tell you how.
I was never interested in money. I wasn’t the kid who saved allowances, worked three jobs, or purchased a mutual fund at 15. I was the kid who painted houses for an entire summer at 18 in order to buy an America Fender Telecaster (Cherry Red) then take out a loan to buy my textbooks.
I never thought about money. I know this is a privilege. I understand that this is a result of coming from a middle class family. My parents were teachers, and though I never felt “rich” growing up, I also never felt in need. My parents never really talked about money. If I ever asked how much money we had, and I may have, the answer would have been “enough”.
So that’s all the money I ever wanted. Enough.
Luckily, I have it, or at least, I had it. I’m also a teacher, and in Canada teachers make enough money. So, what’s enough? Enough to pay back my $28 000 (+ interest) student loan five years after graduation. Enough to get me through my 20’s – rent a apartment in Vancouver, pay my bills, go on a few trips, buy a motorcycle (…or 3), even put a little bit away every month into an RRSP that held a Managed Mutual Fund. Though if you asked me, until about a month ago, I wouldn’t have been able to tell you the difference between an RRSP and a Mutual Fund. Just that that’s where my money was. That was enough.
Until I decided to go back to school. The estimate for my graduate studies is close to $20 000, and I didn’t have $20 000 saved when I signed up. Damn. Not enough anymore.
At first, I scrimped and saved for my first few semesters of tuition. But it wasn’t sustainable, I just didn’t make enough (not true, actually, I just didn’t know how to save at the time). So I went to the bank and asked for help.
My Big Brick and Mortar Canadian Bank financial advisor looked at my accounts. I needed to come up with about $2000 in a week in order to stay in my grad program. I thought about loans, though the though sickened me, I didn’t know what else to do.
Good news! I had a TFSA. What’s that I wondered? Didn’t matter, I had one, and there was about $1500 in it. I must have opened it years ago, but I don’t remember doing it. I played it cool. “Oh, yeah, well I wasn’t sure if I should take money out of my TFSA…” (The sound of one man bullshitting. I had no idea what those four letters even meant.)
“You’re might be right, actually.” Said Woody, my randomly assigned advisor. “But you have an RRSP, and you can take money out of it tax free with the Lifelong Learning Plan.”
“Totally tax free? That’s great” I tried to sound excited. Why would I be taxed on my own money? I pay my taxes, why would the government get any more? I didn’t get it. I do now.
“Yeah, we can get you your $2000 in a few days. Not a problem.”
“That’s great. I didn’t know about that program. Let’s do it.” What am I doing? Is this legit? If I knew anything at all about the RRSP, is that you don’t take money out. You leave it in. It’s better if you leave it in. Why? I didn’t know.
But I signed the papers, got the money, paid the tuition, and went back to eating dinners out four nights a week. Usually Sushi. Often “The good sushi place” because why not? I had the Lifelong Learning Plan!
Not three month later, I was back at the bank asking to withdraw another $2000 from my RRSP.
“No Problem!” said Lin. My new randomly assigned Big Canadian Bank financial advisor told me. “Just sign the papers for the 10% holding tax and we’ll get you your money.”
“…Ok…no problem” Holding tax? What’s this? Did Woody forget something? Do I owe taxes now? Is Lin wrong. I let her start the paper work, while I sweated though my ignorance and fear of not knowing.
Finally, I got up the courage to speak up. “Um. I had thought there wasn’t supposed to be tax if I’m using the money to pay tuition…?” Lin paused in her work.
“This is for Lifelong Learning?” She asked, a little obviously pissed off.
“Yeah, I told you I was in school. I thought you knew” That should have been enough, right? Lin paused, shrugged, and shredded everything she had just printed off without saying anything. She glanced behind me through the window at the line of people waiting to see her.
“I’ll have to start the paperwork again.”
And I got the money, tax free. Nice. That was January.
But I felt like an idiot. What if I hadn’t spoken up? What if I hadn’t met Woody? Where would I be right now? Probably with more loans, maybe in debt, who knows.
I didn’t like this feeling. This I really don’t know anything about this and I really should feeing. Before grad school, I never needed to know. I could pay my bills and that was enough. I was spoiled, really. Now, I felt terrible. I have multiple degrees but absolutely no knowledge of what to do with my finances, or how they even worked. Not ok.
So, because this is the year of the U-Turn, I decided that as long as I’m getting my health in order, I’ll get my finances in order as well. I’ll figure it out. I’ll learn about personal finance.
God, this was going to be boring. So I put it off. Of course.
Then, not three weeks later, a teacher on my staff was giving away a bunch of old books she didn’t want to store any longer. I picked up a Murakami, a Douglas Coupland, and a Ken Follett. Excellent score.
On the bottom of the pile was another book that wouldn’t have held my attention at any other time of my life, but because I had resolved to fix my money, Dave Chilton’s The Wealthy Barber Returns stared up at me as if my own guilt and procrastination had found shape and form.
So I took it home, and while my wife was cooking dinner (we share this responsibility), I opened it up, dreading the inevitable boredom of the next hour or so until dinner was ready.
And I couldn’t put it down. I finished the book that night. It was a wonderful read that taught me two very important lessons;
- Dave Chilton is not a barber, and
- Personal finance can be really very simple
I’ll probably review the book at a later date, but let’s start by saying that if you haven’t read it, you should.
After reading Dave’s book, and a few more like it, I have total understanding of my family’s finances. I know what the letters RRSP and TFSA mean, and how these accounts work. I understand better how to save, prioritize spending, and plan for the future. I’ve made changes that will benefit my family long term, and you can too!
I look forward to sharing all that I’ve learned, but this post is long enough as it is. I’ll just leave you with this – one night’s worth of reading has already made my family much richer. Not a bad investment.