I used to feature case studies on Saturdays. For the next few months, however, I am not working with any clients in order to focus on settling into my new job and my new life up here in Yellowknife.
In lieu, I thought it would be interesting and fun to take questions, and give my thoughts on my Saturday posts. If you have a money question or an issue, please e-mail me at (my first name) AT (your money by design – all one word) DOT commercial (abbreviated). I will take great care in obscuring your identity. Consider it no-charge, lite money-coaching!
This week’s question is from S, from the west coast.
Q: Who would I talk to about when to w/d from my RRSps to help with debt or liquidate assets? or If a 2nd job would be necessary? Is that a debt counselor or an Accountant or a Financial Planner?
A: The first thing to know is there is no real right answer. Obviously, if at all possible, leave your RRSPs intact – so sacrosanct are they, that RRSPs can’t be touched if an individual goes through bankruptcy (with limited exceptions).
Regarding who to talk to, if you have relationships to any professionals you mentioned (Accountant, FP, debt counsellor), by all means have an informal conversation about it. I would also include a money coach in the mix. I have a couple names in your geographic area I can give you (e-mail me). Ultimately, it is always your own judgement call. After getting other people’s ideas and opinions, its time for you to sit down alone with a tea, a pencil and paper, and write out all your options. Take some time (several days, minimum) to let your ideas settle, then make your decision.
Here are a couple of my own thoughts:
Regarding RRSPs / 2nd job:
1. RRSPs Here’s the thing with taking money out of your RRSPs. It will give a measure of immediate relief, and may then free you up to get some financial issues sorted out. But typically, people have a yo-yo relationship with debt (rack it up, panic, pay it down, repeat). It would be a shame to plunder your RRSPs only to find yourself in a similar situation again two or three years down the road. The much harder work, and ultimately more productive work, is to look at the underlying factors that created the issue, and address those.
2. 2nd Job By taking a second job rather than an RRSP withdrawal you accomplish two things: 1. You increase your net worth (extra money to reduce debt, rather than diminishing your assets) and 2. You open more doors for yourself. It could be that the second job would lead to a career that enables you to meet your needs in a way your current career does not. It could connect you to more people who in turn could open more opportunities to you.
Debt comes and it goes, S. Good for you for asking the question and putting yourself in the driver’s seat. Pop by again once you’ve made your decision, and let us know how things play out for you.
Readers: have you ever either taken a second job or used your RRSPs to pay off debt? What was the long term result?