Metro Money Makeover: How far two women came in three months of financial coaching

The results? Financial success comes to those who work for it.

 Twelve weeks ago Annick, 24 and from Calgary, and Yolanda, 27, from Mississauga, took on the Metro Money Makeover challenge to transform their finances. Both young women rolled up their sleeves to get financially fit and reach new money milestones by crushing debt and saving thousands.The results? Financial success comes to those who work for it and Annick and Yolanda have done just that. After their 12-week financial transformation, I’m confident they’re on track to financial independence which makes me the proudest money coach in Canada.Join the conversation #MetroMoneyMakeover @LesleyScorgie.AnnickWhen Annick arrived in Calgary in 2010 from the Democratic Republic of Congo she had high expectations of a powerful Canadian education in energy management, a great job in a strong economy and dreams of home ownership by age 25.But the cloud of student loans, high cost of living and few career prospects upon graduation due to disastrously low commodity prices crushed her finances. Further reducing her net worth were a few financial missteps — credit card balances from too many shoe and furniture purchases.Annick and I have worked almost exclusively on the reduction of her consumer debt. Our target date for her consumer debt-freedom was July 2016, but she beat that by a long shot! Just two weeks ago she triumphed over it with the help of a tax refund totaling $2,780.The consumer debt reduction strategy we used for Annick was the 60/60/60 plan where every 60 days Annick eliminated another debt. Using between $750 and $900 per month of her cash flow from her nine to five job plus a part-time gig, we focused first on paying her loans to friends and family, which were causing her tremendous stress, followed by her expensive credit card balances.When her tax refund was deposited, she paid out all remaining balances.Today, Annick is left with a $58,200 student loan and a small, but growing, group RRSP through her work (her employer matches her contributions 50 per cent).The next 12 monthsAnnick must be careful not to slip back into old habits of overspending and instead focus on her goals of:• Building an emergency fund (one year)• Earning a better income (one to two years)• Growing a down payment (three years)Annick’s long-term financial goals require short-term trade-offs.So if she wants her dreams badly enough, she’ll swap concert tickets and car payments for contributions to her TFSA and RRSP.The resultsWhen we met in December 2015, Annick’s net worth was ($62,450).In 12 weeks, she’s eliminated her credit card balances and loans to friends and family for a net worth improvement of $5,300 to ($57,150).Net worthAssetsTFSA            50RRSP        1,000Total Assets    $1,050LiabilitiesStudent Loan        58,200Total Liabilities    $58,200Net worth   ($57,150)

YolandaIn my first meeting with Yolanda she clearly demonstrated a high ability to save money. But, the reason she wasn’t seeing any progress on her money was because she was using her TFSA and RRSP like a bank account; draining the balances whenever vet bills or trips came up. Yolanda’s challenge came down to learning to budget for her short-term needs (some unexpected), while continuing to save towards her long-term goal of owning a home through her TFSA and RRSP. We crunched the numbers of her income and expenses — the two components that make up a budget — and identified three other financial areas requiring attention.First, though she’s very good at living within her means, Yolanda is underpaid. Yes, she loves her communications job at a well known charity, but the big question is how much? Her low income is compromising her ability to save for her goals.Second, she needed to establish a financial “buffer” account which could be used to pay for unexpected expenses that traditionally would cause her to raid her TFSA and RRSP. She now contributes to that account regularly.Third, Yolanda is incredibly financially generous. But, her contributions to helping children in underdeveloped countries and tithes to her church were getting larger and larger by the month. Today she follows the 10 per cent rule and gives a bit more of her time volunteering.Because of Yolanda’s insatiable desire to own a home, she made the critical decision to move back home with her mother, allowing her to save more aggressively for a down payment.“This entire journey into the bowels of my finances has really opened my eyes. Now I really know how much I give, how much I save, how much I make, and how much I lack.“It’s great to know my numbers. I also find myself talking with friends and family about the benefits of budgeting and possibly giving back. But the one lesson I’ve learned: everything is a trade off!” Yolanda said.The next 12 monthsYolanda’s number one financial priority is saving $30,000 for a down payment and closing costs. Her goal is:Home ownership (three years). To make this a reality, she’ll need to tuck away between $800 and $900 per month for the next three years.This means living like a lean mean frugal machine.So, Yolanda may also want to consider trading her job that she loves in the non-profit sector for one that pays 35 per cent more money or getting her “side-hustle” on and secure a second job.The resultsSince December 2015, Yolanda has improved her net worth by $3,575 by setting up bi-weekly contributions to her savings account, pension, TFSA and RRSP. Her net worth is now $7,875.Net worthAssets  Savings         325Pension         5,000TFSA             1,300RRSP            1,250Total Assets    $7,875LiabilitiesVISA                0Total Liabilities    $7,875Net worth   $7,875Published April 10th, 2016 by Metro News.