My Best Investment

Back to school

I always get nostalgic this time of year.

Once upon a time, in a faraway land, I was a fretting teenager about to finish high school. While all the other girls were obsessing over prom and what college they were going to, my own world was crashing around me. My boyfriend dumped me two weeks before prom, leaving me dateless. That was also the year my father became chronically ill and was ordered to go on medical leave. There would be no college fund to support me. I was admitted to the university I had set my sights on, but I had no idea how I was going to afford it.

Humiliated and defeated, I opted to lowball my expectations on everything. I wouldn’t go to prom and I wouldn’t go to university. I had some great excuses to stop caring, so I leaned into them. My friends became my fairy godmothers. One took it upon herself to find me a date—she managed to set me up with a model/actor (or actor/model?). My other friend made me copy and study her year’s worth of notes for my Biology 12 exam, the most demanding subject I had to study for that year. Because of my friends’ clutch support, I was motivated to keep going.

With Starbucks’ chocolate covered coffee beans to keep me jacked, I crammed like a champ. I aced everything that counted and I finished with honours. My grad date, whom everyone ogled that night, turned out to be a seasoned partier. Instead of binge-drinking at a house party with the other grads after prom, my friends and I followed our dates to a rave in Vancouver’s Downtown Eastside where we danced until four in the morning. I took a cab home with my bestie as the sun was rising. I finished high school feeling like a rock star.

My next problem was going to be going to university. I got a job, but I couldn’t qualify for a student loan because the tax year prior to my dad’s medical leave stated he made a lot. The financial issue was moot as I didn’t even know what I was going to study, even if I could afford school. With no money and no clear ambition, it made no sense for me to go to study at all. I decided to take a gap year.

I continued to work. Without any goals to anchor me, I spent my money faster than it came in. I was living the Gen X dream buying beer, candy, and cigarettes, watching movies all day, wondering about the future. I’ve told this story many times before, and it’s because it was critical to everything I’ve ever done thereafter. My boss saw how much money I was quickly wasting after each payday. She gave me a talking to and told me how to start saving and investing. Her persuasive sisterly coercion got me going to the bank and getting started. Then after saving for a while, things changed. With money in the bank, I saw school as a possibility. Determined to go to law school, I reapplied to university.

I finished my bachelor’s in record time (thanks, Starbucks coffee beans!). By the end of it, though, I decided not to go to law school. With good financial habits and the benefit of going to university when it was still affordable, I graduated with no student debts. I traveled the world and lived overseas for a few years but came back to Canada. Even though my studies in humanities was never directly applicable to any line of work I sought, having a degree gave me better job options.

After ten years of drifting, I was still by definition a slacker, but at least I had savings. I brainstormed many possibilities on where I was headed next. I found I was most curious about opening a business. This led to my part-time studies in business school and eventually, further studies and pursuits in investing and the stock market.

Today, I am once again a student. I am deeply curious about how the stock market works on the inside. I know what it is to be a trader/investor, but what happens behind the curtain is what I really want to know next. I am currently enrolled with the Canadian Securities Institute, working towards my Certificate in Equity Trading & Sales. I don’t know exactly where studying this will take me; whether I trade for others or still just myself, I will always be a trader, only a more educated one.

Whether you achieve your career peak and hit your financial goals, learning should never stop. You can take courses or just read books that will help you develop in parts of your life that you feel need focus. In the long run, being dedicated to your personal and professional development really is the best investment.

Basic Guidelines to Debt Reduction

debt

Whether you’re trying to aggressively pay off your debts or saving for some big goal (like buying a home), the principles of money management are very similar. In many ways, the way you live your life may seem the same because the key to long-term success is more about establishing good ongoing habits and making them a part of your regular decision-making process. In other words, all goals involve a plan, some structure, discipline in practice, the determination to stay on track, and faith in the process.

If you have debts, you can’t successfully pay them down without accepting and following these fundamental guidelines:

Get rid of the high-interest debts first and avoid incurring this kind of debt ever again. 

When you make a loan payment, a big part of it goes to interest and rest goes to the principal amount that you borrowed. The higher the interest, the harder it is to pay off the borrowed amount. Paying off the high-interest debts first will mean paying less interest overall. Credit cards are typically the high-interest culprits. Once you pay off your credit cards, be sure to pay off the full balance each month going forward.

Consolidate your debts wisely.

You could reduce the high-interest debts by consolidating them into a low-interest loan such as a credit line with the bank. If you have student loans from the Canadian government, then you could be getting a tax credit back from the interest  portion of your repayment — you may want to hold off on consolidating them with your other debts and pay these off separately.

If you’re not able to get a low-interest credit line, then proceed to pay off the debt with the smallest balance first (of course, while paying the minimums on your other debts). Once that’s paid off, then pay off the next smallest balance and keep going until you slay the rest of them. Some credit cards offer very low to zero percent interest for a limited amount of time (usually a year). If it’s realistic to pay the full balance off within those time constraints, you could consider transferring your other debt balances to such credit cards for a service charge. But please remember…

Do not increase your debts.

Just because you transferred your credit card balances to lower-interest options doesn’t mean it’s time to go shopping again. If you can’t take your own debt takedown seriously, then you can’t expect others to take your goals seriously. If the temptation is too much to handle, cancel those cards. 

Cut your costs and spending every which way. 

You must be ruthless when it comes to reducing your bills and expenses. There are endless ways to cut costs, and the internet is full of budgeting tips. Paying off debts doesn’t mean enduring years of suffering. You can still have fun and reward yourself from time to time—you just have to spend wisely and get creative with low-budget options. I’ve created ‘Fun’ancial Tidbits to inspire wise spending and mindful money management. Additionally, it’s essential that you address any emotional spending habits that weaken your will (like gambling or a shopping addiction) because caving into these habits even just once will sabotage your efforts. 

Have a good, solid budget that you can work with.

Some periods will be tougher than others as you tackle your debt. “Loan Payments” is going to be a major part of your budget for a while. If your budget is complicated, overly ambitious, and not realistic, you could be setting yourself up for possible failure. You should overestimate your expenses as it’s easier to end up with a surplus than it is to get blindsided by an unexpected deficit. It’s also a good idea to forecast your budget ahead by a few months to factor in upcoming events, birthdays, holidays, annual expenses, etc. That way, you can get more strategic ahead of time by reducing your spending further or picking up extra work to make up the difference or to catch up faster.

Get professional assistance from reputable financial institutions. 

You might feel like your debt situation offers no hope. The folks at your bank are pros and have seen it all. If you’re shy about going in to talk to someone in person, you can call them for advice, and they often can provide service over the phone. They can advise you on your loan payment options and various strategies. These advisors can surprise you with helpful things you maybe never thought of. If you give them a chance to support you, you increase your chances of succeeding in paying off your debts.

Share your goals with your loved ones.

It’s understandable if you want to keep your financial woes a private matter; you either don’t want to stress others out or be judged by your problems. You might feel alone and get stressed out as you work hard to unburden yourself of debts. It’s nice to get emotional support from people who really care about you. With team support, you can share your stuff, exchange money-saving ideas, and have low-budget gatherings. Heck, you’ll probably find out who your real friends are!

The journey towards financial freedom can seem long and arduous. You have to know that there are many folks out there, just like you, who have worked through seemingly impossible situations to pay off their debts. They put their minds to it, created a plan, and learned a new set of money management skills that set them up for financial success later on. Overcoming a hurdle like this will give you the confidence and good habits to successfully tackle your future goals. 

YOU GOT THIS!