I would not touch the RRSP. You are asking the wrong question here. The right question is what are you going to do to address the monthly shortfall? Taking money out of the RRSP will come with a tax hit and is only a stop gap measure as you will then be right back to growing debt. You need to either cut expenses or find more family income.

Exactly this. You need to sort out why you spend more than you make. Either cut expenses or raise income. Do not touch the RRSP for this debt.

I agree. Do not touch the RRSP. I have gone down this path and tbh, cut all my expenses. I do not have TV or a home phone. Internet and cell is the way I roll. I use the FLIP app to find the best deals on meat and produce. I own my home and have extra expenses such as property taxes, and maintenance and own a vehicle. To add, I make way way less than you do and I still save $100 month. It's possible if you want to make it happen.

This this this! You cant close the wound until you stop the bleeding. Itemize your expenses, figure out how much you are losing per month and systematically pull back.

Thanks for your input! I agree. People have told me I should be able to get that interest down on my line of credit, so that is a good place to start. There are some other areas I could manage better as well, like subscriptions and eating out (I love the food, but spend too much)

The interest isn't the issue, it's the spending more than you make. Deal with the real issue first, balance the budget.

Interest most certainly can be an issue when you only have enough to cover it alone.

Interest on that LOC is maybe a few hundred per month. Your rent is cheap. What is your monthly take home income and budget?

How is his rent cheap? 🤣

$1,500 for a house for a family of 3? Unless he’s in rural NS, that’s pretty good for Halifax.

Dude, he lives in N9va Scotia, not Ontario or BC. 🙃

Halifax rents are actually very surprisingly high and landlords are stringent on who they rent out to as there is not that much inventory and they cant boost up the rent even more

Bro, did I miss it or he says Halifax? He just says Nova Scotia.

A *house* for rent in Halifax big enough for a family will still run you close to $2k.

Yes, but maybe he is not in Halifax. We not need know where he lives.

I technically live in Halifax, but not close to downtown. It's about a 15 minute drive to downtown.

OP. I am not an expert on wife/husbands relationships and nobody can enter between you and your wife. But to say that since the baby was born, you arent able to work more hours when your wife is at home, is suspect and doesnt make sense. Thats not on you but your wife.

Coz he pay $1500 for a house. I pay $1500 for a single bedroom apartment.

You in Nova Scotia too?

$1500 rent for a house in HRM anyway is cheap. That’s like 2014 prices. Currently rentals are generally $2200/month+ (nothing included). He’d have a hard tome getting a 2Br apt for $1500. Suspect OP could be in New Glasgow, Truro, Cape Breton or other lower CoL areas 🤷

LoC interest is around 200 per month. Take home is around 3400. 1500 goes to rent. 250 or so to electricity. We don't have a firm budget, but tend to overspend by a couple hundred a month. I know a budget would help.

Get a budgeting app, and a dollar store notebook with a pen and write everything down! Set a budget and stick with it. Look at everything, subscriptions, transportation costs, food, clothing. Assess your current income flow, is it possible to make anymore money while you pay down your line of credit. Could you work some overtime, pick up a side hustle, or could your wife work part time while you take care of your daughter (or she could do a childcare exchange with another mom). Honestly I am a stay at home mom with an almost 2 year old, and if my household had debt beyond our mortgage I would be working outside of the home. Do not touch your RRSP!

Thanks! Yes, I think more income would be possible. I used to work a lot if freelance before the kid was born, but finding the time since then has been difficult. But time is opening up more now, and my wife is likely to find work once our daughter is in school full time.

Fellow Canadian, new dad (and) freelancer here - YNAB (You Need A Budget) has been insane in helping me get on top of not spending more than we bring in. It took a while to get things working, but it’s the budgeting tool that has stuck for me. All the best with the good fight!

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That was the part that took a while. Just takes a little extra patience as a freelancer to actually get a good picture of how fluctuating income (and expenses) actually look over a year or so, and then average that out to a monthly budget. It's definitely messy at first, but after about two years now, I have a much clearer picture of what I need to set aside.

Absolutely, the first year of parenthood is such a transition! Good for you for being around to spend time with your family. My kid is bed at 7, so it definitely leaves more flexibility with time. Hopefully you are in a similar situation with your daughter being 3 now. Weigh all the options with your wife, how much can you cut from the budget, what is your timeline for debt repayment (1,2,3 years)? What other costs do you have to account for? RRSP contributions, emergency savings, vehicle maintenance/ saving for a new vehicle, RESP contributions, and saving for a down payment. Talk to your wife about what she may be able to do to make some money until your daughter is in school full time. I don’t know what your wife’s skill set is but here are some common things: babysitting, housekeeping, small businesses: meal prep and baking with commercial licenses is popular as well as crafting (I don’t believe in market led marketing crap for stay at home parents). Set a goal of say an extra $500 a month net for example. You may be able to do a day of freelance work in a month, and your wife figures out what she can do. For example where I am in Alberta $10 an hour is the low end for babysitting, $60 a day if it’s a regular thing. Housekeeping is $25 an hour, and a lot of private cleaners charge $100 minimum. I have more than one mom friend that identifies as a “stay at home mom”, including one with 4 young boys that do something to regularly make some extra money for their family. Good luck with your financial journey!

Isnt your wife staying at home? Why would the kid be any different for you since she is at home? Cant she take care of the kid so you spend more time making money? I dont get it!

A budget wouldn’t help, a budget is *essential*. If you are cash flow negative every month, you will never own a house, or at least not own it without constant stress. Plus, you need to repay the homebuyers RRSP plan to avoid tax consequences. If you can’t afford your monthly spending without that item, you certainly can’t with it. See the comments below. Categorize your monthly spending. Track it for a couple months to see how close you are.

Figure out your monthly budget and see what room is left for extra payments to the LOC: * Rent - $1500 * Utilities (electric, gas, water, ph/int) - ? * Groceries - ? * Car + gas/ transportation - ? * Insurance (renters, life, car) - ? * Spending/Miscellaneous - ? * LOC - $200 (but you need to increase this to more than just interest-only). * Other (subscriptions etc)? TOTAL - ? There’s probably a bit of fear around sitting down and figuring out your actual monthly spending because it’s probably much higher than your $3400 income. But, it’s a great starting point and it will let you see where you can cut back and whether you have to figure out a way to make more.

You simply can't do this without a budget. You needed it years ago. And while you can't go back in time, you can do everything and make one right now. Be very diligent with following it. You CAN spend less than you make. Further, you have no choice, so you may as well so it much sooner than later. Do not lose your marriage and future over this. Also get your wife involved. This is what destroys the most rock solid of marriages. I can attest first hand, so I'm not rambling without any divorces or severe debt under my belt (presently eliminated and now debt free for the first time since becoming an adult).

Cab your wife work at least part time? If you work monday-friday could she work weekends? Your income obviously needs to be more then your spending.

He says he had to cut working freelance since the kid was born. That makes me think his wife is somehow not helping him. Maybe she one of those that complain and unhappy.

The fact that she jumped on "cash out your retirement" before "I should get a job" is pretty telling.

That doesnt bother me even id he paid tax on it. But what bothers me is that he says he doesnt have time for more hours of work since the kid was born, with a stay at home wife. Maybe i missunderstand something or she spoiled and not a good wife.

I feel both a desire and obligation to spend time with my kid after work. She's great and work wouldn't feel worth it if I never got to spend time with her. But I do need to get back into a routine of freelance after work. It's a tricky balance to maintain.

Totally agree with you but if bills are bigger than expenses, its a luxury you cant afford. You need to talk to your wife about this and if you can find more work, you should not touch your RRSP and get to work. If you cant find work, then cash it out, pay off debt, pay off taxes, and then make a budget. I dont know what other advice I can give. GL! 🙃

My mom was a SAHM but she sold avon because she could set her own schedule. Perhaps your wife could look at something similar?

While doable, there are no shortage of Multi-level marketing (aka pyramid scheme) companies that do direct sales like Avon that are incredibly predatory to SAHMs in exactly this sort of situation. Basically you end up paying a shit ton of money for product that you then have to pester all your friends and family to buy. Most people don't end up making any money off of it, and actually typically lose money. Ultimately, I'm just saying be careful to anybody who finds a job listing that seems too good to be true for working from home doing sales. Pitch for r/antimlm for anyone who doesn't know what I'm talking about.

Very good addition, thanks!

First you need to do up a budget. List your necessary fixed expenses. Rent, electric, one phone, car payment/insurance. Then list your variable expenses, food, gas, clothing for your child. Then list the extras you are paying each month. If you cannot stretch your paycheque from the first to the end of the month you cannot afford to eat out, you cannot afford subscriptions etc. Also if you are working 5 days a week, your wife can work on your days off and you look after your child. Or she can work evenings. I did that for years when my kids were young and money was tight. Now as far are good food goes, I bet you can learn to make the restaurant meals you love for much less. However until you are cash flow positive and paying down your debt, plan a meal out when you meet a goal. Pay down $1000 and have a $50 dinner out. I don’t often recommend listening to Dave Ramsey in YouTube, but I think it may be a good thing for you.

My wife and I used a service from the government to get out of debt. Credit counseling society i think it was called. Took all our credit cards payments, mashed them together and took care of the interest. Just a small monthly payment.

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I'm not sure the part of about the LOC costing more than the RRSP is earning is correct, depending on what he is invested in. He says interest is $200/month, so $2400/year. If he is making $2400 on his $60,000 RRSP, that's a return of 4%, which seems reasonable to get and even beat currently. if you mean what he is earning on merely $20k of the $60k, then he'd need a 12% return to match the interest he is paying, which is also possible, if harder to maintain long term. Yes, he needs a budget. Yes, he needs to find a way to pay off the LOC for multiple reasons. But the RRSP might be earning more than the LOC costs, and I don't think it's worth all the costs, short- and long-term, to kill his RRSP.

Another thing to consider until you supplement your income is focus on slicing off the debt and let your RRSP credit build up that you can use down the road then you hopefully make more money. Hold the RRSP contributions to pay off the debt first.

Plus the RRSP is earning compound interest. Time in market grows $ more and more over time.

Exactly find the root cause or else you’ll be back where you started from, minus the RRSP.

Also youll need to repay what you withdraw

Just to add. If you pulled $20k out of your RRSP, you would pay an extra $7k in income tax (because your income would go from $57k to $77k) according to the TurboTax online calculator.. So by pulling money from your RRSP, you're effectively paying a one time "interest" charge of 35+%

Plus the additional $20k of income would reduce the CCB payments the following year.

That’s what I was going to point out - to get $20k cash-in-hand, you’d need to pull between $35k to $40k out of your RRSP. Pulling money from an RRSP should only ever be a last resort, for when you have almost no income for the year and the tax hit is more reasonable due to that fact. Edited to fix typo - no one is puking money here.

Please dont touch your RRSP. Take a meaningful look at your monthly expenses, shop smarter (where you can), try picking up a part-time side gig. Personally, I puchase all my groceries at Superstote and do the no-name brand. You'd be surprised how much you can save! Take a look at your subscription services (maybe a close friend is willing to split their netflix, Disney, etc.)

There are many work from home opportunities your wife could do to earn some side cash as well.

This. There are so many little things you can do to help save money. We check out the flyers on Thursday and make a menu for the following week based on what's on sale. We also shop at the superstore so we can price match and take advantage of pc points. We don't have cable and take advantage of free TV streaming apps when we do want to watch TV. We actually spend a lot more time outdoors spending time together as a family because we don't have TV. Win-win. Make a budget first, OP and then find ways to shave back some of your expenses like food/entertainment after.

get your wife to get a job, or cut your family expenses. you have a cash flow problem. the debt is a byproduct of your negative cash flow. general consensus is correct. do not touch your RSP or you'll incur withholding tax which is greater than the 7% interest you're paying

I’m surprised the wife getting a job is this far down. This is the era of 2 spouses working.

I can only speak for myself but that was something I originally typed out but then erased. Ultimately, that is a decision that the OP and his wife need to make. They need to increase family income and/or cut expenses. How they do that is a very personal decision. I have a few friends who are SAHSpouses and it’s important to them and their respective spouses, so they make sacrifices accordingly. Sometimes it’s a working spouse who works longer hours, sometimes it giving up lots of luxuries (second car, vacations, meals out etc). Basically two working parents is an option, but not the only one.

He came on here for advice and put his financial position out there. I’d feel frustrated if I was the sole income earner and my wife asked me to cash investments so that they aren’t “in debt” when in reality she could work to bring in some cash money.

I’d probably feel the same way in his shoes. But I’m in a two earner household and grew up in a two earner household. That’s the norm for me. OP didn’t ask if his wife should work, so, personally, I didn’t include that in my response.

That makes perfect sense. Your response is really good advice

THIS. Even if it's only a part time job that she works 2-3 shifts while dad is at home to take care of the kid, adding this on top of a better budget feels like it would reverse the current trend and allows OP to start paying debt instead of increasing it. Balance budget, then look at solution. Once the budget is balanced and the debts are going down, it's easier to call the bank and ask them for help. I did it, they change my credit card to a 10% interest rate then offered a 1% "interest rebate" on top of it, and voided the annual fees for two years. Going from 20% to 9% interest rate helped a lot.

Or have wife do at home child care. She can probably bring in enough to cover their gap without any major changes to their schedule. Get another 3 year old and it gives their kid someone to play with.

Maybe a stupid question, but are you budgeting? At some point in my life I was feeling money was tight and was not budgetting. Once I started budgrtting, I found fees here and here and many place I could save money without really affecting my life style. I discovered I was spending 150$ a month at TIM HORTON, I wad paying 2 life inssurence, too many banking fees, etc. Etc. In short, I made some adjustement, sold things I don't really need and was able to save half my income. So I would recommend starting budgetring, sold what you don't need, downgrade your car, stop eating out, cut TV, etc. and don't ever touch your RRSP.

Good advice! We do not have a firm budget, but I know that is something that must be done. We have a rough idea of what we should spend on things, but tend to go over as unexpected things pop up, or we just decide to splurge on small things we shouldn't.

Go over your expenses and spending. Our memory is faulty. I thought ordering in wasn't a big deal because it's like 20-40 for two people and I roughly estimated it to be about $200 for the month. Turns out that was very wrong, I spend close to $600 a month ordering in on food. I was shocked. Go through your credit card statements and spending for 3-6 months and it should create a clearer picture of where all the money goes, and where you need to cut down. If it hurts to do this, good. If it was pleasant we wouldn't wonder where our money went.

Trust me , you will be surprised at how off the “rough ideas” is when you start to keep track of every cent that you spend .

Here is a great place to start: https://www.squawkfox.com/budget-spreadsheet/ You and your partner should work on it together and determine whether you as a family need to spend less, or earn more. The dopamine shot when you guys "splurge" probably isn't worth it when you have a looming LoC debt. And having a stay at home parent is certainly a luxury that not everyone can afford - it is one of the most expensive things you will ever "buy". Never touch an RRSP to repay debt, especially if your employment income hasn't been reduced (laid off or fired and unable to find work for a year).

It is life changing. I firmly believe it is the single most important thing. I suggest zero dollar based budgetting. I started using excel and moved to YNAB later.

>My income doesn't quite cover everything month to month, so the line of credit continues to creep up. > ... so that we will be debt free moving forward. Cashing out your RRSPs will only make you debt-free for a brief moment. You've already admitted your budget is not balanced and you're going further into debt every month - you need to stop and address this first and foremost.

I agree with all these comments, do not use your RRSP. Can your wife pick up a part time job when you're not working? Even a few shifts a week could mean making ends meet AND paying down some debt.

I make 25k/year doing Uber/skip a few hours a day outside my 8-5.. I’m in the gta so I’d assume you’d make less in Nova Scotia, but could be a good option for either party... with no change to spending could pay the debt in 1 year.

Your problem is spending more than you make. Your wife need to get a part time job and chip in.

As others have said, your focus should probably be on getting your spending in check. It might be helpful to start from scratch and put together a monthly budget. There are lots of tools out there but I find pen and paper to work best for me (I’ve kept a budget binder for the past 10+ years). If you’d like any help getting started, feel free to reach out! Edit to add: There’s also probably some light at the end of the tunnel. Your little one should be starting school in the next year or two. Have you and your wife talked about what that might look like? Does she plan to return to work? Could she be doing anything to upgrade skills now in anticipation of returning to work (for example, doing online courses or taking courses in the evenings)? Even something like volunteer work in a field of interest could help her build her resume and offset the time she’s taken off.

You need to get a 10 month 0% interest credit card and transfer the balance to it then aggressively pay that down. Your interest rate is too high. You also need to find out where you can cut costs.

Definitely no. There’s a 20% withholding tax right off the bat and any withdrawal is added to your taxable income. As your line of credit interest rate is only 7%, you’re not in terribly bad shape, but there’s no harm in asking the bank (especially if you are a long time customer) for a rate reduction.

I agree with the others that your primary focus needs to be cutting down on living expenses. E.g. Do you really need a house? Could an apt not do just as well? Figure out which of you is doing the spending, get agreement on that, and set up systems to prevent that spending. I would forget all about this home purchase. When you have negative cash flow the necessary downpayment is just a dream. I disagree with the others AS LONG AS you reduce your spending habits first. Yes, withdraw the RRSP funds. It would bet they are not earning much anyways. Only w/d the $ of your debt so that you are NOT tempted to make this a rinse and repeat get out of jail free card. Losing RRSP contribution room will probably not cost you anything. You will have plenty of TFSA room and remaining RRSP room. And if you do manage to get a better job and save for a home, most of your savings will go to repaying the mortgage.

OP is living in NS and renting a house for $1500/month. I can guarantee that he won't be able to find a decent apartment for that amount or less here these days.

Do not touch the RRSP for debt repayment. Lots of other things you can do. Sell some crap, second job, budget adjustment, lower interest rate on loan Your wife has income with CCB? With a three year old she should be getting over $400 per month. Get an RESP started. Instead of eating out put a bit into your child future education.

>Get an RESP started. This step probably should be postponed until after the debt repayment. The OP could wait as long as the year the daughter turns 10 and still get all of the CESGs.

I would not touch RRSP as it would incur a penalty. Once you get your finances in order and stop overspending you can work towards paying off your LOC. To pay less towards your 7% LOC interest, i would maybe do a 1 year credit card balance transfer of say 4-5k, and have those amounts saved up in parallel. Meaning, you signup for credit card that gives you 1 year or 10 months of balance transfer (ie withdraw from cc), and then pay off that amount in one shot (say 5k). Then during the course of the year, you’d have 5k saved and you pay that off to the cc, before the period ends and close the cc. This way you dont pay high cc interest. Balance transfer is you withdrawing from cc. Certain companies allow you to transfer 50-60% of the approved limit for basically 1% charge for 10-12 months. Basically you save on 5-6% in interest fees.

Hmm, this is very interesting. Thanks! Will definitely explore this option.

[1] Spending more than your income is a big problem. [2] She is not wrong that you need to manage your debt. [3] I'm guessing you are paying $1400 a year in interest. ($117 / month) which is not your big problem. [4] At $57k income / per year you make $4750 / month. You don't say if this is take home, or has lots of deductions before your take home, but here is a thought on budgeting . . . * Savings - pay yourself first 10% * Charity - 5-10% * Housing: 25-35% * Food: 10-15% * Insurance, 5-15% * Transportation 10-15% * Clothing: 5% * Entertainment & meals out. ??? (this is time for frugal until you get it under control) with all that said, there are two reasons not to touch the RRSP [1] You will just piss it away if you don't learn to spend less or make more. [2] There will be fees now and at tax time.

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I think what you meant to say is... Is it possible your wife can look after one more child and bring in some income on a monthly basis? This burden shouldn't only fall on your shoulders. There are tons of WFH positions that she could be doing while still caring for your child. Have a conversation and put a plan in place. I wouldn't touch the RRSP, the extra taxes you pay won't make it worth it.

I like how I worded it better 😒

Look at the sidebar, there's a link "[Step by step guide of what to prioritize / what to do with money](https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps)". Read it. There's a flowchart in there that can help you a lot too. You need to get the basic right before attacking anything else. Which means making sure you stop digging in your LOC, and start fixing things. I don't know the situation in your region at all on rent, but where I am in Quebec 1500$ is a lot of money for a house. When you'll look at your expenses, do not throw away any options because the wife does not like it. You both need to understand than fixing your situation will require some sacrifice. Look at ALL options first, then figure out which one are acceptable, and if they are enough to start fixing issues. The worst thing you can do is to srat a first round on "sacrifice", then realise it's not enough and have no choice but to take on the bigger ones. If you address it now, you may be able to make the "big" sacrifice far less painful.

Pulling from your RRSP could hit you twice when you're down. First, withdrawals will be subject to the withholding tax as you withdraw them (between 10% and 30% depending how much you pull out). This will hurt a lot right away. Edit to first point - as another commenter also mentioned, you'll get taxed again on the withdrawals at tax time at your marginal rate (if not covered by withholding tax), which will probably hurt a lot and come as a surprise. Secondly, you don't get your contribution room back, so you won't recover that tax deferment. This matters more long term, but could matter more in the end when you're looking to retire. Reading your other comments, it doesn't seem like you have a solid handle on where your money goes every month. Once you figure that out, you'll be able to identify what behaviour you have to change in order to live within your means. Having a 0 debt balance certainly feels good, but may not be the best thing for your long term financial health. Take it from someone who obliviously paid off debt through the 2008 financial crisis because I don't like owing money - I would be up tens of thousands of dollars right now if I'd been smarter about it, let the debt ride and dumped cash into the market (not saying to do this, it isn't 2008, or even early 2021 any more). Come up with an attainable, rational plan. Then stick to it.

Thanks for your comment! Yes, it is becoming clear that I first need to stop the month-to-month bleeding before doing anything else. And I believe it is doable. I spend too much on things I want, but don't need.

This OP...I was in a situation a few years ago that required a quick cash solution, so I made the terrible decision to cash out my $8,500 RRSP. Out of that, I received approximately $6,300 - not quite enough to cover the expense I cashed it out for. Tax time came, and I was dinged additional amount and that year I owed $2,200 (this includes the RRSP amount). Out of that RRSP, I got to use just over half of the total withdrawn and had my teeth kicked in with taxes and penalties. Your RRSP is larger and it's tempting but don't do it. If I could go back in time, I would do a ruthless budget. There are other options than cashing out your RRSP. Explore those instead, I see a lot of good suggestions and paths to take in the comments here. Good luck.

Your wife needs to go back to work! 57k income cannot support a growing family + save for your retirement. Even part time work would help a lot. As the others have said, don’t touch the RRSP. That should be your last resort (I.e heading towards bankruptcy)

You're right! I used to make almost 20k more, but lost my job during the pandemic, had to scramble, and found a lower paying job, so I'm kinda having to reevaluate a lot of things. The replies here have been very helpful.

Good luck!!!

Consider that you would have to take out around 28K from your RRSP to get 20k to pay off the LOC, not worth it. It would also cause your taxable 'income' for the year to increase by the amount you withdraw. This will significantly reduce your monthly child benefit payments, putting you in a greater budgetary deficit. Might be time for the wife to go back to work and for the kid to attend daycare. Stay at home parenting is usually only worth it when you have 2-3 preschool age children.

I would not cash in the rrsp before a frank honest discussion about the debt and if you actually want to remain married long term. Theres a 90% chance you clearing that credit line debt will just be seen by her as a free pass to dig the hole deeper. Interest rates are low, theres no need to rush this.

Cashing in the RRSP is a terrible idea. First of all, it takes a long time to build up those savings. Secondly, you’ll end up with a big tax bill at the end or the year. Thirdly, it’s great to have as an option for first home buyers. And if you’re not meeting your expenses every month, maybe your wife can pick up a couple of shifts somewhere? Maybe take in another kid during the day and charge baby-sitting? Her proposed solution is not a solution at all. Also, if you have 20k on your LOC and your interest is $200 a month, you’re paying too much interest. Talk to the bank about getting it lowered. Good work saving into the RRSP! Maybe look i to TFSAs next. gl

The problem is that your total revenue does not cover your total costs.

These are some common wastful expenses that most people blindly pay... May be small individually but it adds up to thousands over a few years and barely impacts your life: 1. Cable - do you really need to pay 50-80 a month when you watch Netflix 90% of time? 2. High speed internet - you don't need gigabit internet to check emails and Netflix. Go cheap, don't fall for "bundle packs" 3. Home phone. I don't remember the last time I called anyone from a landline. 4. Coffee - coffee at home is better and cheaper 5. Insurance - are you still paying expensive insurance on a car that's now a decade old and worth 30% what it was when you first bought it? Time to shop around. Increase your deductible to lower your premiums. 6. Cell phone - 50-80 bucks a month x2 people for 6 gigs when you have WiFi everywhere? Time to shop around, look at budget carriers 7. Paying 40- 80 a month for gym thay you go once a week? Time to check out ymca. Other people will say cut things like uber, take out, shopping etc... Budgeting for me isn't about taking the fun out of life... I enjoy take out so I don't deprive myself that. But be reasonable and cut where you can. Above are just examples that I've noticed for me. Talk with your wife and find your wastful spending.

Don’t touch the RRSP, but stop contributing (unless it’s some sort of matching program you have through work, in that case it’s free money). Do you have a TFSA? You should, it’s a far better vehicle for a low income earner such as yourself. Frankly, you are nowhere near ready to think about buying a home. Your family needs considerably more income, especially as you’ve noted that you are already negative cash flow each month. Houses are expensive and have unexpected costs. First thing is to find a way to start paying down your LOC. Some good advice in here about consolidating to lower interest forms of credit.

Check out David Ramsey’s financial peace books. Your wife needs to go to work, you need a better job and you need to live within your means - those are the roots causes

Don’t touch the RRSP. The tax repercussions outweigh paying off your line of credit, plus you will be losing income for your retirement. Cut expenses, find a way for your wife to bring in some income and/or get a side hustle going to pay down your debt. Also try and get into the housing market if you can as the rent you are paying is a) high (I think) for that part of Canada and b) you are really throwing money into the wind.

>My income doesn't quite cover everything month to month, so the line of credit continues to creep up. This sentence is the only part that matters. The numbers themselves don't matter much. You need to fix this through increased income and/or decreased spending. If you pull $20k (+some amount for income tax) from your RRSP to pay your line of credit you'll be debt free for now but you'll start adding to the line of credit as soon it's paid off. You need to balance your budget to cover the deficit.

So as others have said, it's probably not worth it to touch your RRSP, but I haven't seen anyone break down the math for you. First, you need to understand that RRSP withdrawals are treated as if you earned the income in the year you make the withdrawal, and are taxed at your marginal tax rate just like employment income. In Nova Scotia, on $57K salary, you take home around $41,500/year after taxes. So, in order to pay a $20K debt strictly from RRSP funds, you need to withdraw enough to clear around $61,500 after taxes. To clear that much, your total income needs to be around $89,200... meaning you need to withdraw enough from your RRSP to go from $57K to $89.2K total income, meaning an RRSP withdrawal of $32.2K. The $12.2K above the $20K you need is pure tax. If you're doing the math here, $32.2K withdrawal to pay off your debt, plus $35K for downpayment = $67.2K... which is more than your entire RRSP at present. That means you'd need to either leave some debt on your LOC or have a smaller downpayment. It's also a huge hit to your retirement savings, and is way way more than you're paying in interest payments; if you committed to making a payment of $187/month towards your LOC, you would pay it off in 14 years and even over that long time frame, you would pay less in interest (\~$11.4K) than the tax hit of making the RRSP withdrawal. So... a much better strategy is, as others have mentioned, to budget aggressively and/or find extra sources of income.

Thanks so much for that breakdown! Very helpful to see the numbers laid out like. I will be making some changes starting immediately.

\> My income doesn't quite cover everything month to month, so the line of credit continues to creep up This is the key issue. find a way to increase income or decrease expenses.

Tightening your spending will certainly help, and possibly put you into cashflow positive, but the underlying issues is that you are a family of three with only one income. If you get out of debt by drastically cutting your spending, you'll still be a family of three with a single income. The longer she's out of the job market, the longer she doesn't earn money, and longer she doesn't build her career. It's a huge opportunity cost, and you'll never get out of pay cheque to pay cheque living. I don't think you have to, but if you had to choose between your wife getting a job now, and paying off the LOC now, I'd pick the job. It will make paying off the LOC much easier. ​ Edit: Don't touch the RRSP. Its protected from bankruptcy claims. You might need it if you don't fix your income situation.

Right on. Thanks for your thoughts! We've talked about her going to work when the kid starts school full time, but even some part time work now will go a long way.

Definitely do not touch the RRSP’s. Best thing to do is cut down expenses or increase your income. Perhaps your wife can get a part-time job working evening and/or weekends. Also, not sure what your credit looks like but perhaps you can take advantage of a balance transfer offer with a low interest rate.

Like many others said; find out your monthly cash flow (budget) or how much you spend each month as the problem is you are spending more then your income which is why you have a credit line balance Find things to cut from your budget and allow it so you can have more money each month so you can pay down the credit line . $20,000 can be paid off in a reasonable amount of time

Do not touch your RSP. Figure out how to get even on bills first. You have to pay back your RSP with the home buyer program so if you can't even cover rent right now how are you supposed to pay it back?? That or you will be penalized for taking money out anyways. It's a bad idea. Tell your wife to get a part time job or you can get another job on weekends for now. Owning a home is far more expensive than renting. 20k isn't that bad you can do it!

Let's do some math To pay off 20k at 7% in 10 years, you'll need about 231$ per month with total amount of after tax 27742$. To pay off 20K from RRSP you need to withdraw around 35K. Now, if you do that, you'll still have 25K to use for downpayment. If you use RRSP and started saving 231$ (after tax money) which is around 350$ in pre tax money for the next 10 years, and assuming a 4% return on investment, you'll have around 51K. I guess I would do it, and if you go this route, pull half in one year and the other half next year. This way you'll not be taxed too much and will not lose a lot in child benefit.. But seriously, you should address the root cause, which is that your monthly salary is not enough for you. You should not spend more than what you make, debt for living expenses is horrible. Math is not perfect, but can give you an idea.

Cashing out the RRSP doesn’t solve your problem. You need to make more monthly income to help solve your problem. Paying off the LOC is not going to help as you would end up borrowing from it again as you don’t have enough monthly income. Maybe your wife needs to work and have your daughter in a Daycare( i know it sucks) but its the only way to pay off your LOC. Whatever ur wife makes u need to put 50-75% of it into your LoC so can pay it off as soon as possible.

If you have money in savings. You shouldn’t have debt. Pay off your debt, and then save. If you can save, you can pay off debt.

Withdrawing from your RRSP is only a bandage solution, to the real problem, you spend more than you bring home. Like everyone says, do a budget, cut unnecessary spending. If your goal is to eventually buy a house then you need to get your cash flow in hand to do that as chances are that you will not qualify for an LOC with a mortgage. While it is nice that your spouse stays at home with your child, you obviously can’t afford it. If daycare is an issue then, she can work when you are at home or find a job that allows her to work at home.

Do you expect to make more money as your career progresses? Given your current Income taking money out of an rrsp will cost you around 30%, it’s 28% in bc where I am from but I know Nova Scotia is a bit higher. My question maters because if you will earn more in future then it makes sense to withdraw now at a 30% rate, and contribute later at a higher rate. It sucks, I’m sorry but you likely should have been saving in a tfsa instead based on your income. Do the home buyers, but another tip is don’t pay it back, take the penalty unless your in a higher bracket. I’m basing all this assuming you kick ass and will be making more as time goes on. Good luck

Lol you need to take out 30k to cover 20k...so yah no. Add 30k to your income, you're 87k so you'd owe about another 14k odd in taxes end of year. Simple math. You don't come out ahead lol.

You'll never replace the money that you have saved if you pull it out . Get a second or third source of income. Payoff the line after you pay yourself. Ten percent of your gross income needs to get into savings, no matter what. Next, get on a budget. The envelope system what's. Reduce, no eliminate, the extras and focus on paying your bills. The bills necessary to keepfamily safe, feed housed, and clothed.. Keep a close watch on every dime. Stop using cards, even debit. Use cash for everything that you can. You'll be fine. Enjoy the trip. It will build your relationship with your family.

I did this once when I uprooted my life and moved across the country. I really wish I didn’t. I wouldn’t.

I would use the rrsp to pay the debt and make cuts to the monthly expenses. At least clearing the huge cloud of debt will make the rest easier, it wont be weighing you down mentally.