Why I won’t be making an RRSP contribution for 2014

I’m a big fan of RRSP’s as an investment vehicle for Canadians. An RRSP is a fantastic way to decrease your tax bill and grow your investments tax-free, at least until you are ready to withdraw the money. I’m a firm believer that anyone who is paying a marginal tax rate of more than 26% (income greater than $44000 here in Saskatchewan) and has some money that they can safely put somewhere they won’t be able to touch it for awhile should be contributing to an RRSP.

Now after saying all that though, I’m still not going to be claiming an RRSP contribution for 2014. Here’s why..

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Why I hate having extra money in my chequing account

I always try to keep just enough money in my chequing account to cover my next months rent and whatever I currently have owing on my credit cards. If I have any more money then that in my account it drives me crazy. You might be thinking I’m a bit off at this point, why would having too much money in your account ever be a problem? Let me explain.

Treating your dollars like employees

If you haven’t read The Richest Man in Babylon, I highly recommend it, it is a bit dated (published in the 1920s) but the parables still hold today. Many of the parables in the book talk about how you should think about your money as employees who you can put to work and use to make even more money. Whenever I look at money sitting in my chequing account earning 0.05% interest I can’t help but feel indignant about how lazy my employees are being. There is literally no excuse for them not to be working harder and making me more money then they are. I would much rather have them toiling away in the stock market, or at the very least in my high interest savings account at Peoples Trust (currently returning 2.5%). The harder my money is working the happier I am.

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Important Tax Dates For 2015

Any of you ever visited the CRA website? It is an impossible tangle of confusing pages with strange wording and missing or out of date content. I was going through it today to try and find various tax dates for 2015 and the information I needed was scattered across a number of pages so I decided to consolidate the info in a table here for a bit easier access. This is far from a complete list of all tax dates but it should cover the basics most people need. If I’m missing any thing or you notice any mistakes please let me know in the comments.

January 2, 2015 First day you can contribute to your TFSA or an RESP for the 2015 tax year
Early February Paper copies of the 2014 General Income Tax and Benefit packages become available from your local post office
February 9, 2015 First day you can use NETFILE
March 2, 2015 Deadline for contributions to an RRSP for the 2014 tax year
March 3, 2015 First income tax instalment due
April 30, 2015 Last day to file your personal income taxes for 2014 tax year (except for self-employed workers and their partners)
Payment is due for anyone who owes money on their tax return
June 6, 2015 Second income tax instalment due
June 15, 2015 Personal income tax returns are due for self-employed workers and their partners
September 9, 2015 Third income tax instalment due
December 15, 2015 Fourth tax instalment due
December 31, 2015 Last day you can contribute to your RRSP if you turned 71 in 2015

Information sources for this post

How I made $76.92 in 45 minutes by listening

I enjoy getting paid, especially for something that takes very little effort and is interesting or informative in some fashion. This last week I was paid $67.57 in pre-tax dollars to listen to a thirty minute sales pitch. Here is how it happened and even more important why I did it.


Promotions are my favourite!

RBC is currently having a promotion where they will give you a prepaid $50 VISA for setting up and appointment, bringing in a copy of your last bank statement and discussing their banking services with them. (RBC Statement Challenge)

When I saw this promotion I happily visited their website, quickly scheduled an appointment through their online chat support and printed off a copy of my statement. On the day my appointment was scheduled I walked to the branch and spent thirty minutes being told about the various services RBC has to offer by a very nice, and professional account manager. I am actually very happy with my current banking situation, although I do actually like to keep on top of what various banks are offering by way of services and fees. I considered it a good use of time even without the financial incentive. After the meeting I was given my $50 VISA and was on my way home. Now most of you will have noticed that $50 does not equal the $76.92 I mentioned in the title, let me explain.

Before tax dollars

It all comes down to how I like to think about any money I make or spend. Whenever I get anytime of extra non-taxable income like this I like to calculate how much money I would have to make at my job to have earned the same amount of money that I could spend/invest. I work full-time in Saskatchewan and have a marginal tax rate of 35% *. This means that to earn the extra $50 by working I would have to actually make the equivalent of $76.92. If I was making $20/hour (I’m not telling you how much I actually make ;)) I would have had to work 3.83 hours to have made as much money as I made in 45 minutes. I don’t know about you but that feels like a pretty good use of my time to me!

Never to busy for a good deal

I’m often surprised at how many people I know would turn up their nose at doing something like this with the excuse that they are far too busy or important to waste their time like this. I have a hard time imagining myself ever being to busy or wealthy enough to not jump at a chance to trade 45 minutes of my time for $76.92. This offer is a great opportunity not only to find out what services RBC offers but also make a little cash at the same time!

Definitions for this post

Marginal Tax Rate *
Your marginal tax rate is the amount of tax paid on any additional dollar of income. So for every additional taxable dollar I earn from work, investments, etc. I will pay $0.35 in income tax.