Updated: Feb 26, 2021
In an effort to build a community of curiosity, empowerment and growth around personal finances, I’ve written this blog entry to share my money mistakes and lessons so that you know you’re not alone. We are all working on something, we’ve all made mistakes, and it is out of our mistakes that the most beautiful lessons and growth always come. I want to preface this all by saying, I am a Canadian CPA, a former CFO and accountant who has supported many corporations and not-for-profits in the last couple decades at managing their financial systems and results, and now I help people do this. But first, I made a lot of mistakes.
Back in 1998, I landed my first job in downtown Toronto at a big 5 accounting firm making a whopping $32k per year. I refused to do the sensible thing and live with my parents in the suburbs for a year to save money and rent. At the time, the thought of taking a commuter train for two hours a day, and having to go home every day at 25 years old to my parent's house, was a non-starter for me. Naturally, I decided to live with a college friend in one of the trendiest neighbourhoods in the city. Trendiest = at a premium. I could barely afford the rent. If my memory serves me right, my take home was about $2k per month. I was saving nothing, and my rent was $600 plus utilities, and that was just my rent! I still had to get to work. Eat. Buy business clothes so I can appear professional, and try to find some joy in one of the priciest cities in the country.
On top of all of that, I had a car which I really didn't need - living (literally) behind a subway station. I also had a $100/month gym membership by my office, as this seemed the only way I had any chance of fitting a workout into my new life as a professional city slicker. Obviously, I got a cell phone because they were a new necessity. And to top it off, I was tempted daily by the underground mall under my office where I could find expensive treasures targeting all of the six-figure making bankers, on a daily basis! As 20-something’s do, I was out drinking and eating at bars two to three times a week as well.
All of this added up to my money not going very far. I was trying to live life as a high roller on less than $70 a day! So this is where I befriended Visa and MasterCard, until my paycheque caught up with my "high rolling" lifestyle. This took about seven years.
Fast forward to being 32 years old. Everyone around me was buying condos and houses in the booming Toronto real estate market. In retrospect, I wish I'd stretched more at this age and bought a couple condos...based on how the real estate market has performed in the last 15 years. But I digress. So with this mounting pressure, and starting to make a better salary, I did start to get conscious of getting my (money) sh*% together. I was now in my 30s and needed to GROW UP! I figured the easiest way to get into the real estate market at the time was to purchase a pre-construction condo. Especially since I didn't have a down payment. Buying pre-construction would give me the time to get out of debt, and save for a down payment. I believe by this time, I had managed to convince a bank to give me a line of credit at a lower interest rate (sorry Visa!) and I proceeded to pay off my credit card completely with the line of credit. This seemed like a small interest savings win!
At the time, I was dating a very sensible accountant who had his (money) sh&* together, and he agreed to lend me (or allow me access to his secured line of credit rates) roughly $60,000! I'm still surprised he agreed to this. I took the golden opportunity to clean myself up at a discount, pay down my $10,000 of lifestyle debt and have the $50,000 required down payment for my first piece of real estate. I fondly refer to this as the “reverse downpayment”. I borrowed to make a down payment on a condo!
Eventually, the sensible accountant and I amicably split. Luckily, my parent's bailed me out and lent me the remaining balance owing so that I could pay my ex-boyfriend off and we could split cleanly. Within 2 years, I had just shy of 25% for a down payment and no credit card debt for the first time in at least 7 years! This was a turning point in my money story. I vowed I would never carry a balance on a credit card again. Not even for one month. And I haven't! Now, that doesn’t mean I haven't had months where I've spent beyond my limits - life happens. I do it with awareness and utilize the access to cheaper credit that is secured against my house for the overages, and more importantly, they do not become systemic balances. I adjust my spending in coming months to get back into the black!
Now comes a real life confession from a 40+ year old. I didn't have an emergency fund until the summer of 2020! Yes you read that correctly. 45-year old accountant - no emergency fund. It took a pandemic, global border closures, no flights, nowhere to go, no eating out, and no commuting, for me to save three months of salary in an account for an emergency. Finally. Now I can practice what I preach. Full disclosure, I didn't have an emergency fund, but I have been saving consistently in my RRSP for at least 15 years. So I had savings, just not accessible savings for an emergency. I knew full well, that I should have one, there just never seemed to be a time that I could commit to making that sacrifice. I justified it to myself that it was fine because I had cheap secured credit from my house. This is definitely an approach, but I do not recommend that you try this one at home!
So all to say, we have all made mistakes. At the end of the day, none of us were taught in school how to adult and manage finances! We were taught, what seems to me, like a bunch of useless concepts that would never apply in everyday life, like the pythagorean theorem! So do not worry if you’ve made mistakes and you’re not feeling overly confident about your current financial house. The important part is that you move forward and make changes, and know that there is a whole community of people here to support you, and who are living or have lived your experience. I hope that by sharing my story, as someone that now supports people to build good financial systems that it will inspire you to take a step.
Much love, gratitude and money.