During the year of 2008, I’ve been reading a lot of information about Personal Finance that I’d like to share with my readers. Doing that, everybody could benefit – right? So, my wife and I decided to track at the beginning of next year all expenses that we will have. When we know the numbers, we’re able to make decisions of what to do with our income. However, in order to compare the numbers, we spent last night checking the statements and bills during 2008. Now, we know where the money is going to! I mean, I had before, but not precise as it is now 
Why don’t I give you a real example that you could benefit and save (or, better, invest) some money? Let’s take the CPP as an example. CPP stands for Canadian Pension Plan:
The CPP is an insurance program designed to provide you with income for your retirement. In general, if you work in Canada or are self-employed and you are 18 to 70 years old, you become a contributor and must pay into the CPP. If you are an employee, your employer must match your contribution to the plan. The CPP can also provide you with income if you become disabled and benefits may also be paid to your family when you die.
Checking the Canada Revenue Agency, I found the CPP contribution rates:
| Year | Max. Annual Pensionable Earnings | Basic Exemption | Maximum Contributory Earnings | Employee Contribution Rate (%) | Max. Annual Employee Contribution | Max. Annual Self – Employed Contribution |
|---|---|---|---|---|---|---|
| 2009 | $46,300 | $3,500 | $42,800 | 4.95 | $2,118.60 | $4,237.20 |
| 2008 | $44,900 | $3,500 | $41,400 | 4.95 | $2,049.30 | $4,098.60 |
| 2007 | $43,700 | $3,500 | $40,200 | 4.95 | $1,989.90 | $3,979.80 |
| 2006 | $42,100 | $3,500 | $38,600 | 4.95 | $1,910.70 | $3,821.40 |
| 2005 | $41,100 | $3,500 | $37,600 | 4.95 | $1,861.20 | $3,722.40 |
| 2004 | $40,500 | $3,500 | $37,000 | 4.95 | $1,831.50 | $3,663.00 |
| 2003 | $39,900 | $3,500 | $36,400 | 4.95 | $1,801.80 | $3,603.60 |
| 2002 | $39,100 | $3,500 | $35,600 | 4.70 | $1,673.20 | $3,346.40 |
| 2001 | $38,300 | $3,500 | $34,800 | 4.30 | $1,496.40 | $2,992.80 |
| 2000 | $37,600 | $3,500 | $34,100 | 3.90 | $1,329.90 | $2,373.00 |
Looking at the numbers above, what can we conclude?
- If you’ve received during the year of 2008 $41,400 dollars or more, you’ve contributed 4.95% of your salary to CPP ($2,049.30 dollars);
- For the following year (2009), if you’ve received or will receive more than $42,800 dollars, you will contribute with 4.95% too (at the end, $2,118.60 of your salary goes to CPP);
- If you know this, basically in the middle of the year you’ve reached your contribution room, right?
- Now, that you’re receiving more money (no more CPP contributions), why don’t you invest in something else?
That’s what we’re planning to do. Once I reach the contribution room, I will use the same amount deducted from my CPP before and use the money to pay our mortgage sooner!
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