Love my TFSA! In the past year the investments within have netted me a 200% gain. Hoping that in another year I can use a portion of it's balance to settle a few of those debts that I incurred during surgery.

Well... many people are coming to the site looking for information... so i thought I would give them an update on the TFSA Tax free savings interest rates.

I'm going to have to look closer at some of these plans... many of them come with a bunch of disclaimers.

Using the TFSA for interest is a waste of TFSA space.

I just built and posted a new table of TFSA Tax free savings rates

http://www.canadian-money-advisor.ca/interest-rates/canadian-tfsa-tax-free-savings-accounts.html

I will update probably once per month., or sooner if there is a change.

Hey Vitzbitz,

That's a great story. I'm glad you talked about it.

You took the time to find places where you can cut back without suffering and are now receiving the benefits.

Everybody should know this stuff!! Thanks!

For the bulk of my adult life I have lived paycheque to paycheque. My credit card balances usually hovered just below their credit limits, and I would pay them down specifically to make major purchases I had planned. My margin for any emergencies was razor thin and any problem became a crisis almost by default.

With the birth of my daughter four years ago came a change in my perspective. While skating the last few days until payday was fine when it was just me in the equation it was no good at all with a baby girl in the picture. Prior to the birth of my daughter my wife was the fiscally responsible one in the relationship, after it was me that started pinching pennies.

I recognized my own shortcomings. I ALWAYS spent what I had available. I would spend precisely what I had left over after bills (I would keep a mental bank balance of pending bill payments and spend the "surplus"), but this obviously leaves NOTHING left over when the next paycheque arrives.

Knowing this I set out to trick myself. I set up my ING Direct account to do automatic biweekly deductions of $50-100 on payday (I found with their automated system that if I set up the automated savings plan to withdraw money on the day BEFORE payday the money will actually be withdrawn the morning my paycheque is deposited - as a consequence I never really see that money in my primary account).

I still spend the "surplus" but now my savings are being treated like a bill payment, and not like spending money.

Next I set up another no-fee/high-interest account and had it do the same (your mileage may vary, but I found by keeping my savings accounts balances low I wasn't as tempted to spend my money. It felt like I didn't REALLY have much put away - again tricking myself into saving and not spending).

http://www.ingdirect.ca/

I do prefer ING Direct for this sort of thing because it allows you to set up multiple accounts and you can assign them names based on their purpose (for example mine are labelled "Emergency Fund", "Car Repairs" and "Big TV"), as I'm trying to budget for larger expenditures that are inevitably going to crop up down the road. ING is also more user friendly, and you can increase/decrease/cancel your automated savings based on circumstances (I tend to contribute more mid-month and less at the end of the month as other bills are due - it's important that I be able to change the automated savings so that I'm not forced to borrow money from my credit cards or savings simply because I put too much into savings).

Finally, in the spirit of motivation I made it a rule that as my savings grew I was putting approximately 15% of my savings into my own "slush fund" that I can spend any way I chose. It's probably another trick, as I haven't spent it yet, but I do while away time pondering how I am going to spend that money.

I guess the biggest trick to this is getting started and then staying motivated. When we started I remember thinking that it was taking forever for our money to grow, and I had to make a specific effort to NOT review the savings account. After three months of automated savings it had grown into a reasonable chunk of change.

Later it was difficult not to invade the savings for each and every "minor" problem that arose. I made it a rule that the fund was for genuine emergencies. Careless budgeting was not an emergency, shiny consumer electronics are not an emergency, a shopping spree was not an emergency.

Finally, I cut out my frivolous spending and contributed that money to savings each paycheque. Smoking? Quit and $150 a month goes to savings. Tim Hortons Coffee? It was three a day, now it's one and $50 a month into the savings account. Lunch out at work? I always pack a lunch now, $50 into the savings account. That's $250 a month right there, $3,000 a year.

I guess I'm just a cheap SOB, but I'm sleeping a lot easier at night knowing that those minor bumps in life won't derail us.