CIBC Finance expert Jamie Golombek helps a viewer organize and prioritize their financial records.

Money Makeover

The problem: Tiffany, 27, a new wife and mother wants to set up an RESP for her four-month-old daughter. But as a budget-virgin, she’s not sure where to get the money from.

The goal: To put $2,500 a year into an RESP in order to qualify for the Canada Education Savings grant.

The plan: After going through Tiffany’s budget, CIBC Personal Finance Expert Jamie Golombek highlighted three key areas where Tiffany can save hundreds of dollars a month, freeing up the money she needs for her daughter’s RESP.

Credit Card Debt

Like many Canadians, Tiffany had maxed out her credit card and was only paying the minimum payment each month. With an annual interest rate of 25%, Tiffany was paying on average $120 a month just in interest charges. That’s $1,440 a year just in credit card interest charges, and more than half of what Tiffany needs to put toward the RESP each each. Jamie’s solution is to pay down this credit card debt as soon as possible. Once the debt is cleared, Tiffany should pay her card in full each month, avoiding interest charges.

Late fees

Tiffany and her husband have a very relaxed system for paying household bills: they get paid when the couple remembers. This works for the most part, but the occasional bill gets left behind and the couple ends up paying late fees. This can add up over time and it’s money Tiffany shouldn’t have to pay. Ever. Jamie’s advice is to look at the past three months worth of household bills. Figure out the average payment on each bill and set aside enough money each month to cover those bills. Then, set up an automatic payment system to ensure each bill is paid in full, on time, every month.

Cash

Tiffany’s budget had roughly $350 worth of purchases unaccounted for (mostly cash). It’s really difficult to analyze your budget if you don’t have the full picture of how you’re spending your money. Any time you use cash, write it down. Then you’ll know where to cut from your budget.