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Your first financial plan

We all start somewhere, and the two steps below will give you a foundation to build on. Once you've completed this we would be happy to discuss your next steps. For now, let's walk before we run.

Step 1: Eliminate consumer debt

This isn't your mortgage, and it isn't your car loan or student loan. This is what you are carrying on credit cards and perhaps a line of credit. Another way to think of it is debt that is linked to more than one thing. Your mortgage, for example, is linked to your home, while credit card debt is typically linked to multiple purchases: stuff from Amazon, concert tickets, eating out, and so on. The first step in building your first plan is paying off this debt, and making sure it never comes back.

There are two popular approaches:

  1. Debt Snowball: Focus all your efforts on the smallest debt you have. Once that is paid off, focus on the next smallest, and so on. This approach is grounded in behavioural psychology, using the very human desire to experience quick wins to increase your likelihood of sticking with the program.

  2. Interest Minimizer: Focus all your efforts on the debt with the highest interest rate. Once that is eliminated, move to the debt with the next highest interest rate, and so on. This approach puts mathematical correctness ahead of behavioural consistency, but if that helps you stick with the program we support your choice.

Step 2: Accumulate $20K in a TFSA

With the debt(s) eliminated, you can redirect the payments you were making into building your savings. Open a Tax-Free Savings Account (TFSA) and start building your emergency fund. Don't worry about what to invest in for the moment. Keep it all in cash. 

Further Reading

If you are looking for more, we suggest:

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