Trying to unf***k my finances, need advice

[2corinthians1114]

I lost everything during Covid and made some really dumb financial mistakes in the last couple years. Over the past year I’ve been making strides to get my finances on track, but needs some advice.

1) I have $3700 sitting in an RRSP with work. I owe Money Mart (yup I’m an idiot) $3800 on an LOC I took out in 2021 I took out to by cryptocurrency (yes I’m that stupid) the value of which went to $0 shortly after. The LOC has a 49% APR, I’m paying about $180 a month on that debt and barely putting a dent on it. Although I’ve got my spending and budgeting under control this debt looms over me. I’m thinking about withdrawing my RRSP and paying the capital gains and clearing out the LOC and closing it. Am I wrong to assume the loss from paying tax on it and the long term interest gains lost is out-weighed by the money I’m haemorrhaging to a payday lender?

2) I get a secured credit card from Capital One for $1000 to help build good credit, with a $68 annual fee, it’s always maxed out. I went to close it and get the $500 I paid to secure it to put towards this debt or my remaining student loan that’s sitting around $3800 (that I haven’t paid in a year because they aren’t charging interest and it’s not reported to the credit bureau and I’m really fucking broke). I feel like my credit is kinda screwed anyways and I’d rather just get out of debt and build up my savings before I get a credit card. I only make min payments. Is there any advantage to keeping it?

3) On top of that I borrowed $3800 from my parents that I need to pay down more aggressively for peace of mind at family dinners but they are cool with waiting until I get the debts above under control.

Any advice for the very dumb person I am will be appreciated, even if you just roast me.

 

[minders0486]

@2corinthians1114 Call money mentors. The RRSP isn't doing Jack for you against 49apr so I'd drain that and get the loan down, them maybe look at a balance transfer for the rest.

 

[2corinthians1114]

@minders0486 Thanks, that’s exactly what I was thinking!

 

[oudia]

@2corinthians1114 Student loans DO report missed payments to the credit bureau.

 

[2corinthians1114]

@oudia Thank you I didn’t know that!

 

[eunice583]

@2corinthians1114 Like everything in life there's an easy way and there is a hard way. Easy way is to take out the RRSP and pay it off, hard way is to go out and grind out that 3800 from side gigs. The RRSP you take out will come back to haunt you next year when you pay your taxes.

A couple years ago when I needed money bad I went to do ubereats after I get off from my 9-5. I would often do a couple hours of ubereats and doordash delivery after work. It was pretty casual but the goal I had was to make an extra 1k per month. I did it for a few months, then stopped.

 

[johndw]

@eunice583 The $3800 is nothing compared to the 49% APR

 

[alexandriaisburning]

@johndw Agree do rrsp. $5k can appreciate significantly in a lifetime, but it wouldn't be life changing. The most important thing is to get back in balance to allow to start saving consistently again. These are small debts in the big picture so op income is probably not huge, meaning very little taxes will be paid on the rrsp.

The most important thing is to understand exactly how you got there. You mentioned two sources of debt that didn't include crypto I assume (credit card and parents). Setup a budget or atleast understand your expenses and income coming in. Try to remove as many of the recurrent payments you have, or see how to reduce them. Getting out of debt is just one side of the puzzle. Once you understand that you will be in a much better position.

The 49% debt you need to get rid of asap, it should be illegal. Makes me sad seeing that this is allowed. The rest figure out the spending and saving side of your finances and make a plan to pay off your parent and student load while you get your saving back on track.

 

[lc0582]

@2corinthians1114 Tbh you’re not that bad off. It’s only like $10k in overall debt, it may seem daunting but there are people way way worse off. And if mom and dad are cool I’d focus on all the expense debt first in order from most expensive to least. I’d knock out the money mart LOC with RRSP. Some may not agree but those money mart loans are death to your cash flow. You’ll pay in income tax hit next year but so be it. Knock out the credit card asap or at the very least make minimum payments so builds up that credit score. Then student loan. And finally family, just make sure to be extra nice to them

 

[choccywoccy]

@lc0582 If you decide to use your rrsp to pay money mart. Contact them first and say something like "hey, I'm really close to a bankruptcy. I don't want to not pay what I owe, but i dont have that much. What would you accept as a cash out payment?". This was suggested to me a little while back by a money advisor. Since it never hurts to ask. I was able to pay about 60% of the loan back and it was called even. Just get the paperwork to show that the loan is satisfied just in case it shows up later on your credit report etc.

 

[mcbrideusa]

@choccywoccy Agreed. Negotiate with them. The MoneyMart loan is unsecured. If you don’t pay, they have no course other than collections and wrecking your credit score. If they put you into collections, they’ll recover 10 cents from the collection agency. If you go into personal bankruptcy, the lender will have nothing to recover from. But this would wreck your credit score as well. Negotiate hard with them now.

 

[johndw]

@choccywoccy So you suggest lying. People should learn to pay the bills they accumulate.

 

[choccywoccy]

@johndw It is not lying if he struggling to pay and no one knows the future. I went through a hard time as a single mom, then the company I worked for shut the doors without notice. Due to the flooded job loss it was really hard tp find work. When I found new work it was less money. It was negotiate with creditors or go bankrupt. I paid back as much as possible while living off beans/rice and pb and j.

 

[johndw]

@choccywoccy Everyone is struggling though. You suggest taking the easy way out, many people who do, continue to repeat the same mistakes.

 

[choccywoccy]

@johndw Not true and it wasn't easy way out. It was ask to see if he can pay what he can, vs not paying at all. The way I read, was that he had rrsp, but after the deductions he wouldn't quite have enough to cover the whole payment. Especially when the creditor is charging nearly 50% interest and makes it impossible. I've never made my mistake again and thankfully I was able to put myself into the situation where iob loss isn't catastrophic anymore.

 

[johndw]

@choccywoccy Pay what you can? Yeah live within your means. Don’t spend money that you don’t have.

 

[mimi]

@2corinthians1114 A good suggestion is watch some Ramsey show videos online. I know he is from US but his videos helped me a lot. You look it up online his show is called financial freedom. Hope you will be debt free soon.

One thing i realized from your statement why you are so concerned about your savings when you have debt. Clear everything you have first because you are paying intrest on them.

Then depending on your situation save money for emergency funds for 6-8 months.

Then savings.

 

[agent23]

@2corinthians1114 What’s your income? You can easily solve all this by making more(yes I’m making it sound easy, but it’s also the easiest way)

 

[2corinthians1114]

@agent23 I’m getting 47k at work give or take. I’m actually starting a business, it’s the line of work that I did before Covid when I was self employed, I work in the live events industry and Covid ruined me which is why I’m in this mess. Reason I’d like to clear out my debt asap is I’m under a lot of stress, and debts are one less thing to stress about and self financing most of it and need as much cashflow as possible. That being said I just partnered with a wealthy investor who likes my business and hustle so I should be making good money within a year or so once everything is off the ground.

 

[thankujesus]

@2corinthians1114 I hate to say it, and it sucks, but doubling your hours or getting a 2nd job, you could be done with all this in a few months.

I worked 70hr a week and manage to get everything under control in two months with similar debt as yours.