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So just last month I made my final payment on my personal line of credit. This debt was accumulated through living outside of my means and has taken me 4 years to pay off. Now I’m trying to figure out what is the best approach for reaching my financial goals with the money which I no longer have to use for debt repayment. I'm 28 years old and make roughly $65,000 a year plus a small bonus. I contribute 4% to my company pension every pay and my employer matches 4.25%, current balance on the pension is about $12,000 . RRSP I contribute 6% every pay and employer matches 3% of pay, current balance is about $7,000 and contribution room of roughly $50,000. I have never previously contributed to a TFSA therefore my contribution room for 2014 is $31,000.

I currently have an amazing deal with a friend in which I live rent free in his basement suite. The house is given to him by his employer, and in exchange for living in his basement I just have to help out occasionally. Because of this I am able to now save an average of $1,500 a month, some months are more, some months less as until now I didn’t have any savings for things like new tires.

My financial goals are as follows and are not in order of importance to me:

• Save up for a down payment for a house. I live in Calgary area so this is a bit daunting. I am thinking of using the RRSP First Time Home Buyers Plan for part of this. I do not have a set time period to get into the housing market at present. Mostly because I feel the market in Calgary is overpriced and I don’t see the value of the homes being this high. Also, as I’m currently not in the market, I’m hopeful with the rise of interest rates in the future those individuals who maxed themselves out will cause the market to decrease even slightly and allow me to enter at a reasonable point.
• Establish an emergency fund. I feel $15,000 or roughly 3 months gross pay is good for now which would likely be saved in a high interest TFSA at 3% with Peoples Trust with the exception of below. I do still have the line of credit open with $17,500 available but don’t believe relying on this as an emergency fund is a good idea.
• Save $3,000 to maintain this as a balance in my bank account to waive the $12.95/ month fee. I have been with this bank since I was a young kid and feel that there will be a benefit in the future to being with a “brick and mortar” institution. This $3,000 would be considered in the balance of my emergency fund.
• Open a TD e-series TFSA account to complement my pension and RRSP’s. Investing in Index Funds.

From now until the end of the year I will be able to save roughly $15,000. I know my first goal is going to be saving the $3,000 to waive my bank fees every month, and I should be able to achieve this by July 1st . After this I need to save a minimum of $1,000 to open a high interest TFSA with people trust. Due to my best friend having his stag in Las Vegas in July ($1,200), and my pay being semimonthly, I project that I will have $2,400 to deposit and open the account August 15th.

My questions are therefore

1. Should I be building my emergency fund exclusively first? Or should I use the freed up money to contribute to multiple things at once like emergency fund, TFSA for retirement, and possibly additional RRSP contributions once I have enough saved to open the TFSA with Peoples Trust. I’m conscious of the effect of compounding for my retirement and savings so I’m worried I am losing out if I don’t.
2. Is my plan so far a good one?

All comments and suggestions are welcome.

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