How Pinterest Helped Shape My Next Goal
Looking at my Pinterest boards last week, I realized I have three boards dedicated to my dream homes (four if you count a board of the farm I would buy if I won the lottery). Only one other topic has an equal number of boards and that is food. But I could care less about beauty or fashion, and it wasn’t until last week that I looked at my boards for what they really were: digital visions of things I want to experience in my lifetime.
I’ve always wanted a house of my own. I have vivid childhood memories of drawing up floor plans of my parents house and rearranging all of the furniture in it. I was addicted to interior design blogs, long before personal finance (I know, big surprise). Heck, $2,000 of my debt came from buying all new furniture to make my apartment what it is today. But I’ve never seriously considered saving for a place to call my own. Until now.
Continuing with the energy I’ve put into trusting my gut instincts and following my dreams, I know that now is the perfect time for me to start saving. It’s going to take a few years but my tentative goal is to buy something before I’m 30. I don’t have any credit card debt to worry about, so nothing major is holding me back. Other than deciding which tool I want to use to save. Here’s where I need a little help from my Canadian friends…
How did you save for your first home? I’ve been thinking about using the Home Buyer’s Plan, which would allow me to withdraw up to $25,000 from my RRSPs tax-free. I like this option for two reasons: 1) it would force me to save money in a place where I couldn’t easily access it, and 2) it should have a higher growth rate than something like a TFSA (tax-free savings account). The only thing I don’t like about it is that RRSPs are obviously meant for your retirement, which this isn’t.
I haven’t worked out the exact numbers of how much I’ll be able to save yet, but $300/month should be doable right now. Every few months, I will reassess how my savings is affecting my budget and see what I can shuffle around to increase it. I’ll never be able to afford what I’ve pinned to those three boards but I can definitely get myself into the market!
Have you ever paid attention to the things you pin on Pinterest?
Our downpayment savings are in an Ally account. We’re currently getting a decent interest rate (1.8%) and it’s in a separate account so I don’t see it every day. It’s a direct deposit as well, so I don’t even have to think about it!
I pay attention to my pinning stream…right now it’s all DIY stuff for my new house, a few months ago it was all wedding all the time. I think buying a house would be a great idea, or at least starting to save for one so that you can move forward with that idea down the road. I’m a ways away from home ownership so I look forward to reading about your experiences.
The thing to remember with using the RRSP option is that you have to pay it back. It is a loan, and would mean your monthly payments would be your mortgage(etc) plus RRSP pay back. If you have come this far with debt it might be worth using a TFSA with a moderate (but safe) rate of return. Then when you buy your place you aren’t owning anything other than your mortgage payment. I bought a place and used a line of credit to reno it (stupid girl!). I found it near impossible to pay my mortgage AND the line of credit down too.
I know I’d have to pay it back! But even if I took out $25,000, I would only need to contribute $140/month for 15 years, to pay it back. I wouldn’t buy, if it meant I couldn’t afford to continue contributing.
I don’t know if you will get a better rate in an RRSP than a TFSA. The designation just refers to the rules not the actual nature of the account = my RRSP savings account and my TFSA savings account at ING both have the same interest rate. My mutual funds are similar too. Just the vehicle differs, but the return is essentially the same.
On Pinterest I pin a lot of inspirational quotes and recipes =) I love life and food haha it’s pretty accurate. I pin virtually nothing about a home, so I think you’re right that Pinterest can reflect our values.
As mentioned above, RRSPs and TFSAs don’t dictate your return, they are accounts that can hold any kind of investment (mutual funds, savings accounts GICs, etc.). As such, you would get the same return if you invested in the same products in each of these accounts. I recommend that you max out your TFSA each year (including previous years if those contributions weren’t made) and then contribute to your RRSP. In TFSAs the investments grow tax free, in RRSPs you get a tax deduction on the contribution. When it comes time to buy the house, start with your TFSA money and then see if you need to borrow from your RRSP.
I’ll definitely look into maxing out my TFSAs next year and then pulling the rest from RRSPs. Thanks, Lisa!
I went the RRSP route when I bought my place. It sucks watching your balance plummet after working so hard to build it up, but you are required to pay it back over time (15 years, not counting your first year in your house). One nice thing about doing it this way is you can accelerate your savings by focussing on the RRSPs, saving your income tax return from it in another account (TFSA?), and then using both come down payment time.
As for Pinterest, yeah, I’ve definitely used it to reflect on myself, the things I like and my personal style. I’ve actually been using it to help direct my clothes shopping. Rather than buying the same type of thing over and over, I’ve been using Pinterest to help identify what items I need to help pull looks together.
I was about to get RRSPs but was told that since my income is not very high, it might be wise to get a TFSA, wait till tax time to find out if I’m already getting a full return due to education credits, THEN transferring my savings into the RRSP if it will get me a rebate. This way you can accumulate RRSP room for the years when you make more and will benefit more from it. That’s just me though!
I can’t get into Pinterest but I’m glad it’s serving as inspiration for you! Similar to a vision board I guess – something I’ve been meaning to get around to.
Lately I’ve been pinning wedding stuff and fitness stuff in an effort to stay focused on my goals of pulling off one gorgeous wedding and making fitness a priority. I’d like to think of pins on pinterest as little movers and shakers to get me going! Owning a home is a goal of mine too… I don’t know if owning in vancouver is realistic, but we’re thinking we should just keep saving so if and when we move from the big city we have some money to buy property in our price range
Movers and shakers! I like that.
I was thinking of using my RRSP to eventually use for a down-payment but I also like the idea of using it strictly for retirement savings and never touching it. My goal is to also by something, most likely a condo if I stay in Vancouver, before I’m 30, so I guess we’ll see where I’m at in a few years. Those places are gorgeous on your Pinterest btw!
I used the HBP myself although individual circumstance plays a big part in the decision. I had started saving towards my RRSP at 18 and at 28 I was nowhere near retiring so it only made sense to buy the house if the option was available. All through my 20s I was already set up to pay a monthly amount directly to my RRSP. I made sure when I borrowed the amount to buy my house that the required monthly repayment to my RRSP did not exceed what I was already paying monthly. So presently every month I make a payment to my RRSP but technically I am just repaying what I borrowed. It does put me 10-15 years behind on my RRSP savings but I could be 10-15 years behind in getting to the housing market instead, it was a toss of the dice for me (isn’t that sound financial advice? lol). Should my situation change for the better I will increase my RRSP contribution amount and either use it to pay back the borrowed amount sooner or I will use that additional money as an opportunity to continue contributing to my RRSP and use it for the tax breaks that RRSPs provide.
I am also notorious for stashing money in many places with different intentions in mind. I had a cushion of $3k in a TFSA, my reason was so that I had some playing money for paint, blinds, new bathroom sink, a couch that fit my living room, etc after I moved in.
I used the HBP to buy my first house, but TFSA weren’t available then. If I were to do it all over again, I think I’d probably still go the HBP route, but just be aware you do have to either a) pay it back, or b) take it as income on your income tax over 15 years and pay tax on that amount.
I’m currently saving money in my RRSP to buy my first home…hopefully sometime next year
The way look at it is that I’m saving for something imediate but since I have to pay it back I’m also saving for my future. Most young people aren’t always thinking about retirement but this will make start much earlier then most so I’m looking at it as a win win!! Hope this helps!
My bf and I are planning on saving for our downpayment in our RRSPs and using the HBP. I like that I’m basically “killing two birds with one stone” by saving for both one in place. I don’t mind having to repay it back because it just comes off of what I would normally be contributing that year anyway so we won’t really feel the effect of paying it back as an extra bill.
I saved for my house via TFSAs and other investments. My reasoning was simply to keep my retirement savings and house savings separate so I could save for both without having to worry about paying myself back later.
I go through phases with my pinning…but I usually end up pinning food. Guess that shows my one true love.
Sometimes I notice that my pins go back and forth between recipes, chocolate, and getting fit. So there’s a bit of “doing and undoing” going on there!
I’m really psyched for your house goal! I don’t have any account advice since I don’t understand all the options in Canada
But good luck!
I’m 26 and I purchased my first home 2 years ago. I dropped $18 000 worth of debt in 3 years.
I started with the RRSP route but when TFSAs popped up, I started that instead.
The RRSP route works well in 2 ways – you get a tax break on what you contributed each year, thereby knocking your tax owed down (and if you contribute enough to drop you into a lower tax bracket, a very nice refund) as well as withdrawing up to $25 000.
HOWEVER
RRSPs must be repaid in future years.
I decided that I would have gotten enough back in income tax refunds to be worth a chunk of it, but not all. The rest I definitely went with TFSAs.