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Tuesday, August 8, 2023

Using my Savings to Chip Away my Margin Account Debt

I've spent the last couple of days in New Brunswick. Thanks to my remote work setup, the flexibility to leave Montreal for New Brunswick whenever I please is incredibly convenient. However, a small oversight caught me off guard. The day before my departure from Montreal, the weather was so warm that I opted not to pack any jackets or warm clothing. My intention was to travel light, allowing me to bring back a maximum of my New Brunswick belongings. I was quite pleased with my minimalist approach.

Yet, reality hit when I arrived in New Brunswick. August's weather here isn't all sunshine and roses, unlike my expectations. This realization led to a spontaneous shopping spree. To my surprise, I hadn't even packed a pair of sneakers. Fortunately, my mom and I wear the same shoe size, providing a solution. The scenario led to a lighthearted moment at Reitmans, where the associate found my explanation for purchasing a new wardrobe quite amusing.

In my defense, everything I bought was on sale, easing the financial aspect of my impromptu shopping adventure. Lesson learned: while my intentions to travel light were commendable, sometimes practicality and the weather forecast should strike a balance.

Witness it firsthand: Autumn is gradually making its presence felt in New Brunswick! In certain areas, it's evident that the leaves have begun to shift hues. The chilly nights are contributing to this transformation.

The housing crisis is an undeniable reality, far from being mere fake news. At present, my elderly parents find themselves unable to sell their house due to the scarcity of available apartments. This critical issue extends beyond the borders of my hometown, affecting the entire province and even resonating beyond. Canada is indeed grappling with a widespread housing crisis. Fortunately, my parents can still manage their property for the time being. While I'm still planning to relocate my belongings from New Brunswick to Montreal, the predicament that once loomed large is gradually easing, but I still want to bring my stuff back with me to Montreal.

After discussing this matter at length, I took a significant step: I decided to utilize a substantial portion of the money I had stashed away in my bank account—essentially my dormant savings—to whittle down my margin debt. This move caused my debt to dwindle from a precise $36,228.71 to $29,680.79. Crossing the threshold into the sub-30k range brings a somewhat sense of accomplishment, rendering the debt more feasible to manage.

Achieving this feat required tapping into funds within my TFSA portfolio—specifically those generated from dividend distributions over my margin. I stretched my financial limits to their utmost to accomplish this endeavor. Typically, I systematically reinvest dividends earned within my TFSA portfolio. However, for a noble cause, I deemed it wise to channel the dividend income from my TFSA towards chipping away at my margin account debt, all the while preferring to refrain from selling any of my investments in the current climate.

And there you have it: the conclusion is crystal clear—I'm officially in a cash crunch. Trust me, I'm eagerly marking off the days until my paycheck arrives this upcoming Friday! With my margin debt currently resting at $29,680.79, I'm setting my sights on the ambitious goal of reducing it to around $20,000 by the close of 2023. While no walk in the park, it's a challenge I'm prepared to face head-on, thanks in part to the support of my dividend income.

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