Ratchet It Up a Little

I bit the bullet today and increased my retirement contributions.

For those of you who aren’t Canadian, in Canada we have two deductions that are taken off our pay stubs in addition to standard income tax: CPP (Canada Pension Plan) and EI (Employment Insurance). Both of these have annual maximums, so if you’ve contributed the maximum in a given year, your employer stops making these deductions and your take home pay increases. This usually happens for me around September.

The higher net pay is awesome when it happens, but it kind of sucks when the new year rolls around and you have to start paying them again. After the pre-Christmas spending frenzy, I was more than a little concerned that I would have difficulties readjusting to my reduced pay in the new year. After a test run on the last pay period, I’m happy to report that it hasn’t been the case.

Last pay period really was a test since my pay was quite possibly the lowest it will be all year. Not only have the CPP and EI payments started up again, I also committed myself to making a $20 biweekly donation to the food bank, and I had a $50 payroll deduction for entry to a work based social event. Despite this, I still managed to pay my bills and put a reasonable chunk of money aside into my TFSA.

So, knowing it was manageable, I upped my biweekly contributions another $70 bringing my automatic pension deductions up to 10%.

I suppose that lower pay cheque earlier this month isn’t the lowest my net pay will be this year *facepalm*

One resolution down, 6 more to go.

Has anyone else started tackling their goals yet this year?

Recommended Reading : Rethinking the Emergency Fund

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17 thoughts on “Ratchet It Up a Little

  1. I totally hear ya about net pay going down. Since I became permenant in October, my net pay has been going down and down. 1st to start pension contributions, 2nd to cover insured benefits, and now 3rd to purchase a pension buyback. I’m making less – net – now than when I was in a lower job category. Time to cut the spending!

    As for NY resolutions, some are going better than others (to be expected). Financially things are going well but as for diet and exercise, yeah, not so good.

  2. What about increasing the retirement contributions for the amount of EI once you stop paying EI/CPP? That way, you won’t even notice the “extra” money!

    I really wish they would spread them out more throughout the year, but I’ve mostly gotten used to the uneven pay periods throughout the year. I mean, January is the lowest paycheck of the year since it has all deductions, then in April, I get my raise and healthcare deductions change up/down, May is bonus month #1, sometime between July and October I stop paying the extra taxes, November is bonus month #2, and December is when the last dribble goes into retirement for the year, so it’s usually a bit more of a paycheck, plus by then, I’ve estimated my taxes better and adjust how much income tax is taken off (either more or less). My ‘budget’ is much less than the lowest month and so what it turns into is different amounts going to savings each month and I’m okay with that, so long as I hit/exceed my overall goals for the year.

    • That’s an option, though to be honest I usually use the extra money towards Christmas presents and wardrobe/household purchases that I put off earlier in the year.

      That’s a lot of variation throughout the year in your pay! My raises and bonuses aren’t guaranteed, so I don’t expect to receive them every year. Last year I did receive a small raise, but no one in the company received a bonus. This year I’m crossing my fingers to receive both, but I’ve already mentally squirrelled them away for different purposes (straight to the pension contributions for the raise, paying for the trip to my sister’s wedding for the bonus).

  3. My pay hasn’t changed at all come January because I swear our payroll guy is a dufus. It might bite me in the butt come tax time next year, but I know I will be getting refunds for the next six years, so it will all equal out in the long run.

    Honestly, I cannot handle how easy this guys job is, yet he messes it up on a monthly basis in some way or another.

    • That sucks that your payroll can’t keep its job straight :(

      I’m guessing the refunds are due to tuition credits? I have a little extra taken off my pay every pay period, so hopefully I’ll never be in the position of having to pay taxes again.

      • Well, partly due to tuition credits. But since I live in a less well-to-do province, the provincial government is trying to entice graduates to stay here rather than flock to the West. It doesn’t really work – it just rewards people who happen – it isn’t really enough of a monetary incentive to keep people here.

    • I’m hoping that’s the case! I’m thinking once I’ve sold my house I’ll ramp it right up to 18%, because my household costs will be lower. If it doesn’t sell for a while then I’ll just bump it up $50 or so every few months. Then I can focus on putting my savings contributions straight into my TFSA for a couple years.

  4. Oh yea, my first paycheque on the 15th hurt. The last one of 2013 was nearly $200 more than the first one of 2014! Major ouch. But it’s still enough to tackle my savings goals… if I don’t travel, lol. I’m starting to think I set the bar a little too high this year…

    • Ditto!

      I’ve put a pretty reasonable amount of money away this month, but I don’t know how long I’ll be able to keep that pace up for while still carrying my own household costs. We’ll see how it goes. Better to come close to a high bar than to fall short of a low one :)

  5. Yep. I felt the drop too. No goals in sight so far but possibly in February…
    One thing I do have to do which is not a goal is also the opposite of yours. I actually plan to contribute less to my RRSPs this year. I’ve actually been contributing too much last year and at this point I’ll be penalized.

  6. Pingback: Month End Recap – January 2014 | Tales from the Trenches

  7. Pingback: Payroll Issues. - Financial Diffraction

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