RRSP loans to self

So I’m not sure this is the best forum for this question but here goes!

It’s tax season and in Canada that means the deadline to contribute to RRSP’s is fast approaching. Lots of people go to their bank and take out a short term RRSP loan that they can use to invest in their RRSP and thus maximize their tax return, which they would then use to pay back the bank. 

I however, have a fair amount of money built up in many (like over 20!) true expenses/long term savings categories, which I’m highly unlikely to need to use in the next 6 weeks. So I took a specific amount of that money and invested in an RRSP, the amount calculated with tax software so I’ll end up getting back the exact amount in the tax refund as I invested in RRSP. Essentially, I gave myself an RRSP loan. 

But....now my budget is showing I over budgeted by a several thousand dollars. And I won’t get my tax refund until March. And I’m Not going to move all my money around cover it. Yes, this is a clear case of forecasting, which I normally never do, lol. 

Any suggestions to make it less wonky? I was half thinking of making a fake “loan from self” transaction. Because that’s essentially what I did. I gave a loan to myself. Thoughts?

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  • I was thinking of doing something similar.  You might find more discussion on this topic on Reddit:  https://www.reddit.com/r/PersonalFinanceCanada/

    As to how to address it in your budget, I would advise you to move the funds and then refill the raided categories only after you receive your tax refund. 

    My financial progress was remarkable once I stopped pretending I still had money that I didn't have anymore or at the moment.  It's interesting just how not fudging alters my decision-making paradigm.   When I have categories that reflect +$5,000 and -$5,000, I spend differently than when I have two categories showing Zero. As a result of that awareness, I tend to be a stickler for my budget reflecting the realities of the moment.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 yr ago
      • 3
      • Reported - view

      I was thinking of doing something similar.      

      And then, after moving funds to my investing category from all the true expenses categories I thought I could raid, I stared at my budget and all those zeroes.  I realized that if Revenue Canada messed up my anticipated (optimistic) timing on getting funds back to me, I would be in serious doo-doo on some upcoming big scheduled expenses in May and June. I could be at risk of having to take on short-term debt.

      When was the last time RevCan messed me over?  Interestingly enough, it last happened when I didn't have sufficient liquidity on hand to pivot and make choices. I decided against the extra RRSP contribution this year, but I increased my monthly goal for the investing category so more will be going in over the rest of 2020.

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      • Lynx Kitties
      • Toddler Wrangler
      • Lynxkitties
      • 1 yr ago
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      HappyDance I think I will go rob my expense categories. I just need to write down how much I’m robbing from each category so I can put it back later!

      I get your point about CRA not always giving back what we think it should. I did triple and quadruple check that all my numbers are correct, so it *should* be the amount I’m anticipating. If it is incorrect....well that will really be awful, but I do have other funds in my tracking accounts, they just take a couple days to get. If I need something immediately that’s a larger amount than I have available for, I can use my credit card or LOC for those couple days. So I do have that safety net.

      Im also increasing my regular RRSP contributions this year as well. 💰💰

      Like 1
      • MXMOM
      • MXMOM
      • 1 yr ago
      • Reported - view

      Lynx Kitties 

      Lynx Kitties said:
      I’ll end up getting back the exact amount in the tax refund as I invested in RRSP.

       That's odd. You must have been getting a refund before the RRSP contribution to make up the whole amount. 

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