Metro's Money Makeover - how to save and pay down debt

Metro’s finance guru Lesley-Anne Scorgie has only 10 weeks left to tackle Annick and Yolanda's largest financial burdens and teach them to allocate resources.

The challenge: Metro’s finance guru Lesley-Anne Scorgie has 10 weeks left to get Annick, 24, and Yolanda, 27, to change their spending behaviours and build a nest egg while meeting their financial obligations. This week we focus on Annick.Annick immigrated to Canada in 2010, finished her undergraduate degree in Energy Management at the University of Calgary, and now works as a property management administrator making $35,000 per year. She’s on a mission to crush her consumer debt within six months and save a $25,000 down payment through her RRSP over the next five years.The story: When Annick arrived to Canada from the Democratic Republic of Congo (DRC), she had high financial hopes. But today she joins thousands of underemployed new graduates in Alberta’s tough economy. Compared to the DRC, “Life isn’t much better here. Canadians use loans to pay for just about everything. Then they can’t afford anything,” says Annick.Weighted down by credit card balances and student loans, Annick recently qualified for repayment assistance through Canada Student Loans, buying her six months of low principle payments of $150 per month. She took another drastic financial step, applying for rent relief through her landlord. This request would reduce her monthly rent to $1,200 from $1,400. She splits this cost with her roommate.The lesson: It’s hard to see the light at the end of the tunnel of debt, but Annick’s going to use the 60/60/60 plan. Every 60 days she will eliminate another debt, starting with her loans from friends and family because those are loaded with financial and personal anxiety. She’ll use money from her second job, $450 per month, to eliminate those quickly.She’ll then move on to her taxes followed by her credit cards. While implementing the 60/60/60 plan, she’ll continue to make regular minimum payments on every loan.A common myth is that Annick can’t save money while paying off her debt. But, we’ve discussed the benefits of using her employer’s RRSP matching program, So she’s signed up for a personal contribution of $100 per month and her employer kicks in a $50 match — free money! When Annick becomes debt free in five years, she’ll have a nest egg she can use for a down payment or retirement.

A surprise: Annick worked extra hours at her second job in December and was paid double her hourly rate of $17. She applied that ‘extra’ money to her furniture loan.Next week: Yolanda learns there is such a thing as being too frugal! She is depriving herself of the small things in life that would make her happy, and must learn to build herself a “pillow” and stick to a budget so she doesn’t binge shop.Published by Metro News February 1st, 2016: http://www.metronews.ca/life/money/2016/01/31/metro-money-makeover-put-money-aside-while-paying-down-debt.html