2008 marked the first time in my career that I started a new year without a hefty Christmas credit card bill hanging over my head. Thanks to my Freedom Account contributions, I was able to pay for all my holiday purchases with cash. In the past, my January bonus was always earmarked to paying off Christmas debt, but this year it actually ended up having no strings attached. I decided to defer most of it as an RRSP contribution, to boost my retirement savings and help this year's tax return. The tax refund, in return, will be used to pay down my revolving debt.
The feeling of actually being able to decide what to do with my bonus was very empowering. Basically, this is the first time I've received a bonus that was not spent in advance. It makes me see the bonus more as a financial "shot in the arm", and that makes me appreciate it more.
Even with this positive feeling, however, I've had to make a shift in my budgeting and cash flow with the start of the new year, given the renewed CPP and EI contributions. This is hardly an insurmountable obstacle, but it does require an adjustment, and this sort of adjustment inevitably comes with a little stress.
What occurred to me this morning, though, is the power that comes with having a fresh start. Last year, I started my financial makeover in May, and in eight months I was able to pay off $4,572 in revolving debt, establish a $1,000 Emergency Fund, and manage a cash-only Christmas. Just think what I can do when I'm starting a new year with my eyes wide open.
Whenever I start to feel stressed about sticking to my budget or keeping up my debt reduction, I'll think of how much better off I am starting 2008 than I have been in previous years, and realize that I've given myself the tools to get where I need to go.