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Sunday, June 18, 2023

Navigating Debt and Expenses: A Journey Towards Financial Freedom

I hope you haven't encountered any issues with TD's recent difficulties regarding direct deposits and other matters. Speaking from my own experience, I didn't bother checking my bank account for my pay because I knew that discovering it missing would have caused unnecessary distress, even considering TD's ongoing problem. However, I did verify it yesterday and happily received my paycheck, confirming that everything is now in order. Rest assured, things are back on track.

In my perspective, it's essential to acknowledge that such issues can potentially arise with any financial institution. It's important to address any imaginative scenarios that may have crossed your mind: situations where you can't access your funds, your cards aren't functioning, inability to withdraw money from ATMs, payment rejections using credit or banking cards, unexplained disappearance of funds from your account, difficulties with e-transfers or direct deposits as seen recently, and even the threat of cyberattacks. While there's no need to panic, it's prudent to recognize that any of these scenarios could potentially occur.

To safeguard yourself against these unforeseen circumstances that are beyond your control, it's advisable to have some cash on hand. While it may not be ideal, I won't disclose the exact amount I keep, but I recommend having a reasonable stash of several hundred dollars in $20 bills and some $10 bills. This way, you'll have a backup in case of emergencies.

Almost a year ago, on July 7, 2022, you may recall the significant Rogers outage that left millions without internet and cellular services. This outage had far-reaching effects, impacting government services, payment systems, and even emergency services like 911. One of the major issues during the Rogers outage was the disruption of payment systems. While I don't recall if credit cards were still functional at that time, using Interac was certainly not possible.

In addition to keeping cash on hand, I maintain multiple banking accounts with different institutions as a precautionary measure. I allocate a portion of my savings across these accounts, prioritizing accessibility over potential interest gains. This way, I ensure that I have funds readily available when needed.

This month of June is an exciting one as it brings three paychecks, which is always a welcome occurrence. While I haven't made any recent new investments, I have focused on reducing my margin debt due to the current interest rate of 8.25% on my margin account. I've significantly paid down my margin debt, which now stands at $37,921.01. Although it remains a substantial amount, it's far from where I once was. In the past, when interest rates were lower, my margin debt had surpassed $100,000. While I don't take pride in that fact, it serves to highlight that I had utilized margin and benefited from it. However, the increased interest rates have changed the landscape, limiting my financial freedom. I can no longer make unrestricted decisions with my money. Although this higher interest rate keeps me grounded, it's not necessarily a negative outcome.

I am approaching my 43rd birthday, and as I grow older, I find myself longing to eliminate my margin debt. While I do declare the interest earned on that margin as a financial fee on my tax income, the returns are not substantial. Therefore, the urgency to pay off my margin debt persists, despite any reluctance I may have. Currently, I can only afford to make a $200 payment towards my margin account, primarily due to unexpected expenses like two recent dentist appointments, which cost me over $760 out of pocket. There is a possibility that I may require jaw surgery in the future, although nothing is certain at this point. Health professionals diligently perform their duties, but being of Acadian descent comes with certain genetic peculiarities, including some visible defects. Unfortunately, the issue with my jaw falls into this category of uncertainties. In various aspects of my life, I tend to be fortunate in my misfortunes, and my jaw situation is just another example. Hopefully, it turns out to be nothing significant, but I am still required to pay $450 for a necessary medical procedure, which is completely unacceptable. Fortunately, apart from a mild case of asthma, I don't have any major health problems.

It's not a tragic situation, but my initial plan was to make a $1,000 payment towards my margin debt instead of the smaller $200 payment, which brings it down to $37,721. I believe I can reduce this debt further to $27,000 by the end of the year, with the possibility of paying off the remaining balance in 2024. This would make me debt-free just in time for my 45th birthday in... 2025. My primary focus now is to diligently pay off my margin account debt while cutting down on expenses.

Since my arrival in Montreal, I have spent a considerable amount of money. After spending a couple of months in New Brunswick, I indulged in some shopping, dining out, and various activities upon my return to Montreal. I recently made a payment of over $2,000 on my credit card, but I had anticipated these expenses when I came back. Additionally, now that I live alone, I no longer share the grocery bill with my old folks. I must admit I like the calmness of my apartment. When I am at home, it's like we are 10 people living together always so noisy and full of life, while we are just 3. I must admit, I miss them from time to time.

Wednesday, June 7, 2023

The Story of Dollarama's Strawberry Jam

You would already know this if you had the privilege of following me on Twitter: For the first time in a very long time, I significantly paid down my margin debt! My margin debt now stands at $37,938. I have the Bank of Canada to thank for that! Starting probably tomorrow, the interest rate on my margin account debt will be 8.25%, which is quite high. Every year, I declare the interest earned as financial fees on my taxes, but I don't get back much. My salary isn't super high, and it's challenging to receive a substantial return due to overtime and dividend income. In 2022, my income reached $80k. It will probably be less in 2023, around $70k or close to it. But even at that salary, its hard to get something back from the taxes.

Anyway, I eventually came to the conclusion that I should reduce that margin debt. It would make more sense, especially since I am getting "older." Eventually, being debt-free would be nice. I just can't remember the last time my margin debt was lower than $40k. You can check my collection of little debt reports by clicking on my "debt situation" label. There are over 130 posts with that label. I also have another $6k that I could use to make a payment on my margin debt, which comes from some savings. I don't consider selling stocks to pay off my margin at this time.

Following TMX Group Limited (X) stock split announcement, I decided to invest in a few additional shares of X for my TFSA and RRSP portfolios. I may invest again in a few shares of TMX within my TFSA, as I still have contribution room left. I believe TMX Group Limited (X) can be an interesting long-term investment that may yield an annual return exceeding 8%, or 8.25% if you prefer. It's difficult for me to pay down my margin debt while keeping an eye on TMX, but sometimes, there are opportunities that are worth it.

For the past couple of days in Montreal, the weather has been cold, and there is heavy smog in the air. I think it's fortunate that the weather is cold, as it makes the smog more tolerable. I have a mild case of asthma and only have an old inhaler that my father gave me a long time ago. My throat was killing me before my work meeting this afternoon, but when I kept quiet, I felt alright, haha. Apart from that, I'm not suffering from the surrounding smog. We received rain this evening, which should help. Even with the rain, Montreal is still beautiful.

Now that I am back in Montreal, I am trying to control my expenses. Currently, I really want to get a haircut, even though I had one shortly before leaving New Brunswick. I also want to get some highlights to cover up the few white hairs that unfortunately stand out under the bathroom lightbulbs. I can afford it, but at the same time, if I want to invest in a few more shares of TMX Group Limited (X), the money needs to come from somewhere, and it definitely can't come from my margin anymore! The good old days when I could use my margin money to invest whenever I wanted are gone. I don't have the same freedom as before, and it's a little sad. I feel crushed and pushed down by the system, and I hate it.

Today, Dollarama announced some very good profits, which comes as no surprise. With this inflation, consumers are seeking cheaper options, and Dollarama is one of them. Usually, I only shop at Dollarama for my cleaning supplies, but recently, I've expanded my purchases to include food. I bought bread, some noodles (why not?), and strawberry jam...

In New Brunswick, that's the jam that my old folks usually buy. So it really made me laugh when I recently bought that same strawberry jam for myself. But the fun stops right there. Dollarama's strawberry jam is very high in sugar; I don't recommend it.

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