I am RateHub.ca`s Community Manager and resident mortgage blogger, but sometimes have difficulty `practising what I preach`. That is, I often report on personal finance practises, yet like many women out there, I have a shoe problem. Well, technically-speaking, it`s more like a shoe and bag and clothing problem, but let`s leave it at the shoe analogy for the purpose of this discussion.
Whereas my live-in partner routinely puts close to 1/3 of his paycheque (yes, 1/3!) towards our pending mortgage down payment, I can`t seem to muster the same commitment. I set out every month with the intention to save, but, time after time, flipping through the latest fashion glossy, I spot a pair that triggers my demise. The immediacy of my need for shoes takes over. If only I could visualize the long-term implications of my spending as easily as the shiny red soles on Monsieur Louboutins.
However, even my partner is not a `smart saver` when it comes to down payment sourcing. Sure, saving a fixed amount from every paycheque is a good start, but it isn`t the optimal savings tool available to first-time home buyers like us. We could, alternatively, be putting that money in an RRSP account, for instance. Canada`s RRSP Home Buyers` Plan (HBP) lets first-time home buyers withdraw up to $25,000 from RRSPs for a home purchase, tax-free.
Having no personal property to sell or monetary gifts to reap from friends or family, the HBP is our best available option. Still, setting up that RRSP, while a good idea in principle, has not been a priority thus far. The time has come for that to change. Here, RateHub readers, is my personal savings plan. Use it as an example, a pilot guide, or to hold against me, as is the nature of a public declaration.
1. I shall separate my down payment funds from my other savings. Specifically, I shall set up indivividual accounts for my down payment, general savings, and, of course, shoes.
2. I shall set up an RRSP and any funds in excess of the annual contribution limit will be placed in a secure high-interest savings account, Guaranteed Investment Certificate (GIC), or Canada Savings Bond (CSB).
In 2010, the annual RSSP contribution limit was the less of $22,000, 18% of your earned income from the previous year, or the remaining limit after any company sponsored pension plan contributions. If you do not reach your maximum contribution one year, you can carry the remaining portion forward to later years.Your unused contribution limit will be shown on your federal Notice of Assessment. 
3. I shall post decor clippings from Style at Home Magazine on my fridge as a daily reminder of my end-goal.
The first two points are sound strategies recognized by any financial advisor, but the last one is a personal visualization technique maybe not necessary for all. It may seem a little silly, but you have to do what works for you. Perhaps, in place of the decor clippings, you would post real estate listing printouts or nursery specs for that forthcoming family you are so desperately longing to start.
For men, the desire to own something substantial seems more innate or at least socially compelled: for what do men talk about if not to compare each other`s possessions? Women, on the other hand, may not experience the same urgency….
In all seriousness, though, it is not my intention to shame all women by lumping them in with Shopaholics Anonymous, but to acknowledge those out there who, genuinely, have similar budgeting concerns. Hopefully, this commentary can serve as a shoe gal`s guide to getting a mortgage.
– Kerri-Lynn, RateHub.ca Community Manager
$$ Tip: To ensure you get the best deal and save on shoes, now that you have a stringent budget and all, I highly recommend these discount shopping sites:
- Comparison shopping: www. shopstyle.com, www.polyvore.com
- Discount designer: www.outnet.com, www.yoox.com
- Deals-of-the-day: www.beyondtherack.com, www.hautelook.com
Source: RBC: http://www.rbcroyalbank.com/products/rrsp/rrsp-rules.html