Help on setting up a family budget, and help on sticking to it.

[blueeyetea]

@GoStumpy - you are pretty much borrowing money with your CC to have money in your bank account...this never made sense to me. People will say you need to have savings for emergencies but that's what a credit card is supposed to be for EMERGENCIES!

Get rid of your CC debt ASAP because im guessing the interest rate is probably ridiculous.

Making a bigger payment to a CC each month while leaving a savings' account empty is leaving yourself vulnerable to adding more debt (plus interest charges) when an emergency arises. Setting aside an emergency fund, which is true does delay the full repayment, is more sensible because, if an emergency arises, the debt isn't increased.

[AforceNinja]

Making a bigger payment to a CC each month while leaving a savings' account empty is leaving yourself vulnerable to adding more debt (plus interest charges) when an emergency arises. Setting aside an emergency fund, which is true does delay the full repayment, is more sensible because, if an emergency arises, the debt isn't increased.

What about the interest charges being added up on your CC while you have money laying around in a savings account for that emergency which may never come?

I don't understand why people are so worried about "havin' money in da bank" when they have CC debt which is destroying them with interest. Yes you might have 500$ in your savings but really its NEGATIVE $500 because you owe $1000 to your card..

Now in the OP's case, he has $7500 in CC debt. I'm not sure what his interest rate is but i'm sure he will be better off paying it off rather quick.

OK lets say this "emergency" arises. What do? I know, Drop the CC payment to the minimum of lets just say for fun...2.5% which is approx. 200$ (and this number will drop fast paying 800$ to the balance) Use the remaining $600 + $100 he his setting aside for saving. If he needs more he can use room in the CC.

-What did we learn today? Its not wise to Borrow money with your Credit Card in order to have some emergency savings. The role of a credit card to be used in the event of this emergency we keep talking about

[Abby5]

I use my credit card to earn credit. I only put what I can pay off every month on it. But every month I put something on it. They just keep raising the credit limit. I had to ask that they leave it at 12000. Not that I would ever need that amount but just in case This month I will put all the gas for the car on it. It is already in my budget

[GoStumpy]

To be honest, I agree with AforceNinja... I couldn't stand having savings earning 1-5% MAX while my CC is costing me 19.9%... so I withdrew my TFSA on Thursday & will apply that to my CC"s... (It was only $320 anyway) but every bit helps!

What I'm wondering now is, how long does the TFSA take to go into my account? It's tuesday now and nothing has happened yet :s

So far so good on the budget!!

[AforceNinja]

It shouldnt take more than 2-3 days...usually

I'm glad you used your head to figure out the logic instead of listening to financial advisers which make no sense most of the time

[GoStumpy]

What made it even easier, is knowing that once I am caught up, I will be increasing my contributions to TFSA & RRSP to $100/month each.. minimum.. I am currently doing $25/month to each!

So it won't take more than 3 months to re-contribute what I've taken out...

[AforceNinja]

Just make sure you dont go over your TFSA contribution room for this year, wait till January if that does happen

[GoStumpy]

Isn't the contribution limit $5000?

I've only put in $225 I think... unless you mean something else?

To hit the contribution limit I'd have to put in over $400/month, correct?

[AforceNinja]

Ahh yea the part where you wrote $230 slipped my mind.

Yes its 5000$ per year that you've had your TFSA so you should be fine

[GoStumpy]

A little update, I've been using YNAB instead of Gail's approach since the beginning of November, and I can't believe the progress I've made already!! We managed to get $400 further out of overdraft, paid $1100 to credit cards, saved money for Christmas, paid off a bunch of little things, got caught up on bills, etc... All in one month!!!

Needless to say, I am over the moon esctatic about YNAB (You Need A Budget) and what it does for personal finance, I wrote a separate thread about it:

http://forum.smartcanucks.ca/331172-...ftware-canada/

[blueeyetea]

GoStumpy, that's great that you were able to find a tool that helps you. Heading over to read your review right now.

[GoStumpy]

Well it's been over a month since an update, and boy oh boy am I still hooked

I've managed to pay for Christmas in cash, spend too much money at restaurants, yet still pay more debt than ever before & my bank account continues to grow! I can't believe it can be this easy, and enjoyable! We feel like we're spending smart, not cutting back...

This month alone I've put $700 towards my $1k mini emergency fund, it will be fully funded on my next paycheque. Then I will begin agressively attacking my debts with the Debt Snowball method... Here is my repayment schedule:



This means I can be completely debt-free including the mortgage by summer 2015!! That's the year after next!!!!!!!

Am I getting across how excited I am????

[momof5boys]

GoStumpy....love how you have a plan!

[wifey]

@GoStumpy - I believe in paying off your CC before putting money into savings. If you do save and have money on your CC at the same time, you are pretty much borrowing money with your CC to have money in your bank account...this never made sense to me. People will say you need to have savings for emergencies but that's what a credit card is supposed to be for EMERGENCIES!

Get rid of your CC debt ASAP because im guessing the interest rate is probably ridiculous.

I totally agree! I was fortunate to have a line of credit at 4.5%. I paid off all my credit cards with that and froze my cards in a block of ice in the freezer. I will never, ever charge them up again. It took almost three years to pay off that line of credit but its done and now we stick to a very strict budget. If we don't have the money, we do without. No more huge Christmas splurges, or vacations unless we have saved up for them first.

[Brynhilde]

I have made bad choices when it comes to saving and budgeting.. both of my parents are excellent at it and have taught me well but I have a lot of debt so I have no suggestions. Would you all agree that it would be best to pay off debt before saving? I find it extremely hard to save - aside from couponing - when I have Credit card bills, student loans to pay back. What have you more seasoned folks done when creating a budget and how have you stuck to it?