Confession: 2011 was my worst year for contributing to the RRSP I opened in 2007. I’m not sure any of you will be surprised by that, considering my current financial situation, but it hurts to admit nonetheless.
In the past, I used to contribute $100 monthly. Even that didn’t always feel like enough but it helped me put away $1,200 per year (which was really my only savings). When I moved to Toronto last February, I had no idea if I was going to find a job or not, but I still wanted to contribute so I lowered my contributions to $50 monthly.
You all know how that story goes. I did not find a job in Toronto and, instead, came home 3 months later completely maxed out. I continued making my puny $50 contributions for the rest of 2011, while living at home and paying off huge chunks of debt. I wanted to contribute more but getting out of debt was my top priority.
In the end, $50 x 12 months = $600. That’s all I contributed to my RRSPs in the 2011 tax season. But the worst part is that I can only write-off $450 of that.Why? Because I paid for the rest of my education using the Lifelong Learning Program (LLP).
The LLP lets you pull from your RRSPs tax-free, to pay for post-secondary tuition. This is the reason I’m going to graduate with $0 in student debt. But, when you use the LLP, you cannot claim any contributions made 90 days before the date you pulled your money out. For me, that’s $150 I can’t write-off this year.
So, my 2011 contribution was only $450. That’s half a month’s rent!
2012 is not going to be a repeat of 2011. I’ve already changed my contributions from $50 monthly to $50 bi-weekly and, when my credit card is paid off, I plan on making that $75 or $100 bi-weekly before the year is over. And can you imagine how much I’ll be able to contribute when my other loans are paid off!? Ok, I’ll stop daydreaming…
Did you contribute to RRSPs this year? If not, you still have 10 days to do so!