Please help! RRSPs and credit card debt

Definitely lose that 28%!! The basic equation is what you make v. what you pay. It's doubtful you'll make a 28% annualized return. Even if the market doubles by Feb 2011, you lose. Pay off the highest interest cost, first. All you do with the 28% balance is lose 28% a year. Then think about the student loan.

If you can't get a line of credit (try a credit counseling agency to at least lower the rate to something half way reasonable!), then sell the fund and pay off the debt. Pay everything to get rid of the 28%!! Take on a second job! The RRSP limit contribution is cumulative, so you can focus on making more money and contribute more in later years, and it will still be tax deductible.

You haven't looked at any statements in 2 years? Paying attention to details is the first step to getting your financial life in order. Yes - pay off 28% credit card debt in full, and stop racking up that kind of debt. Joe

Plan B. You are making an immediate 28% on your money by using it to pay off your credit card debt.

I have, but I didn't see anything that made me think the account type was not what I had asked for. It wasn't until I went to the bank and asked for receipts for my RRSP contributions that I realized what had happened. You are right though, if I had been paying closer attention I would not have let my financial situation get so dire.

Thank you everybody for the advice. It all seems so straightforward now!

And after you have followed all the good advice, go back and make more inquiries about the actions of that drone. You might somewhow help others avoid mistakes. Think of it as community service.

Royal Bank or RBC have a policy of moving their everyday branch advisors around 24-30 months from branch to branch. Because RBC are so big you could stop this "drone" from advancing furthur if you can file a complaint.

My girlfriend had a similar expierence with Royal Bank a few years ago when she though she was contributing to a RSP but was instead contributing into a taxable account. She did not understand how to read her statements, at least until she met me. She got audited twice by Revenue Canada in one year when the "error" was noticed in the second audit. Royal bank or RBC have never paid her a cent back and she has sinced moved on and let bygones be bygones.

Corrections were made by the way still using RBC funds. This is not a reflection on Royal Bank as a whole as they have a number of low costs fund index beating options. Mistakes happen.

On 2009-02-10 15:27:38 -0800, "The Henchman"

So I sold my mutual fund and paid off about half of my credit card balance. I figure that with my 2007 and 2008 tax refunds (both of them filed this year) and by leading a more reasonable lifestyle I'll be able to pay off the rest before summer.

I considered calling the local credit counselling agency, but after reading their website I wasn't sure what they could do for me. I have already started using GnuCash to track my finances and follow a budget. I can't scare my creditors into reducing my interest by threatening to declare bankruptcy, because I have a job and am I not going to declare bankruptcy. I think the only thing the credit counselling agency could do for me is reassure me that I'm on the right path.

While I was at the bank I was advised to apply for a consolidation loan at 17.5% interest, and also to open one of those new tax free savings accounts. I said no to both. I think it just seems dumb to apply for a loan at 14.5% above prime. And if I am selling off my investment to pay my debts, why should I be starting another investment right now?

I also tried to get more information about why I ended up with a taxable mutual fund when I had asked for an RRSP. The best answer I could get was that some RBC financial advisors use the term "RSP- matic" to refer to any automatic payments, no matter what type of account the payments are made towards. Maybe this was a contributing factor? I have no documented proof that I was actually trying to start an RRSP. I'm not going to file a formal complaint. I'm upset that my tax refund would have been double if I had been contributing to an RRSP, but right now I just want to move on.

Can anybody recommend a good "How To" book for novice Canadian investors? This was the last time I will ever ask the bank for financial advice.

Thanks again, everybody.

Try:

http://www.f> Can anybody recommend a good "How To" book for novice Canadian

A FRUGUAL choice would be the local public library. There is a specific Canadian version book from the "For Dummies" people that explores budgeting, taxes and investing that I learned the basics from. I am also a fan of Suze Orman's books although she is american, she answers everday questions about money, just don't pay attention to her tax advice.

Mostly get out some books that teach you to budget and "pay yourself first". It's a public library so the books are free for you to use and reuse so take notes and save your book money for your debt repayment plan. Learn how to set small goals first and learn what success at achieving those goals tastes like before making lofty goals like being a millionaire at so and so age.

A good suggestion is to subscribe to some Canadian blogs that can help you with your overall financial health. Million Dollar Journey and Nerd money and wheresdoesallmymoneygo.com and Money Gardener are all good Canadian bloggers that update their diary everyday about the struggles and the success of building wealth, one dollar at a time. Many of these sites have forums where you can ask questions and advice and they will not shun you for being in debt or for making mistakes. Participation is free, that's why I suggest them and from there you will be exposed into a world of wonderful advice and reasearch and ideas.

"The Henchman" questions about money, just don't pay attention to her tax advice.

My advice would be not pay attention to Suze Orman, period. In 1999, her advice was "buy high, sell higher". I've sort of lost interest in her since then, so don't know what she might have been saying the last few years. However, I did hear her last night tell people to sell now, that it doesn't matter whether stocks will go up from here or not, they've already lost the money, so they might as well cash out. This, by the way, was advice to a fellow in his early 50s saving for retirement, and then the same advice to someone whose child would be starting college in 2 years.

Elizabeth Richardson

If this is true, I would be disappointed in her.

-HW "Skip" Weldon Columbia, SC

I watch her show each week on CNBC, and I haven't seen her give any advice like that.

Brian

This was on CNN. I'd never spend time watching her on purpose.

Elizabeth Richardson

Well, all I can say is that she has a weekly show and has discussed this situation many times. She has repeatedly advised people NOT to pull money out that is already in the market. She has advised people to not dump a lot of new funds in at this time, but to dollar-cost-average it in.

I did not see the show you mention, but what you report is inconsistent with her general run of advice.

Brian

Hi Elizabeth. You have given some good posts and responses in this forum in the past years and I want to thank you for that.

The Suze Orman book I have is called the Road to Wealth. I recommended it because it is a Question and Answer type book of the most common questions she is asked: Stuff like what is involved in divorce, how to file bankruptcy, how to write a will, when and when not to buy illiness insurance or life insurance, custody of children, power of atterny etc etc. She answerers questions the OP can get help on like how to write a savings plan, what is FICO, how to share finances when living with your lover.

It is not a book about timing stock or bond funds but she does explain how to purchases these sorts of instrutments. I have found it a very useful tool in dealing with everyday money issues. But she is by no means the only author to offer this type of book.

I don't know about her television show. I don't think it's in Canada. I didn't know she had one. I thought she only did radio.

The dangers of scams, ripoffs, miseading sales practices, etc., are somewhat greater in Canada than in the USA. Regulation of securities markets is lax. Be careful before you invest in any financial product, especially one promoted by a sales person. Constantly keep in mind the standard advice that, if it seems too good to be true, it probably is.

It is doubly important in Canada to do a lot of research and ask a lot of questions before leaping into anything. A lot of the trouble comes from the fact that securities regulation is a provincial responsibility, and there is no overall federal regulation like in the USA. So there is patchwork of different regulations in different provinces, and criminals and scamsters take advantage of that fact. The Vancouver, BC, area where I live, is rightly called the stock fraud capital of North America. Be careful and good luck.