Bad idea

catdog1 modified

Jane’s sister admits to reading this blog, and suggested Sis write in for some Dr. Garth advice. This is never a good idea, but let’s proceed.

“I live in a nice townhouse in a desirable neighbourhood in North York.  I bought it for 360,000 and am currently carrying a mortgage of 305,000. I think it’s worth maybe $420,000 now.   I make a decent income (88,000) but I’m a single mom so money is pretty tight, and I have no other assets.   I have grown increasingly tired of my inability to stay out of debt (currently approx. 24,000) and am looking at solutions. I’m trying to decide what to do and I’m looking at two different options.

“1. Sell now and get out of debt and go into the rental market (or maybe purchase a less expensive condo) or 2. Rent out my townhouse (I have someone interested) for an amount that covers my mortgage, property tax, maintenance fees and rent something cheaper and continue to pay off my debt. I’d appreciate any advice you have for me.  I’m sure there are more options than I have listed such as refinancing but I am reluctant to do this again.”

Sis pays $1,600 a month in financing, plus condo fees, insurance and property taxes, which is a few hundred dollars more than she’d fork over in rent in that location. But that’s not the main issue. The woman spends more than she earns. Her only asset is her house equity, and her net worth is about ninety grand, none of it in liquid assets.

Sis clears $66,600 after tax, or $5,500 a month. The house costs about $2,200, or four-tenths of her take-home. Daycare in Toronto runs around $1,200, which leaves $500 a week for food, clothes, car and all else, including interest in $24,000 in debt. Obviously she cannot colour inside the lines, so something has to give.

Rent the townhouse out to cover its carrying costs? Bad choice. That achieves nothing, especially if real estate values flatline or decline as mortgages rates unavoidably increase. Tenants can do damage or skip on the rent. Even a month or two of vacancy would create a personal crisis. And the condo corp could always come knocking with a special assessment.

The best choice is to sell, unlock the tax-free equity, pay off the debt and rent. This will reduce monthly costs by a few hundred dollars and leave her $90,000. If that all went into an RRSP (assuming she has the accumulated room), then the tax refund of almost $30,000 could fill a TFSA. Now Sis has a net worth 30% higher, no mortgage to renew at swollen rates down the road, and $120,000 she can start growing. If she gets 7% on a balanced and diversified portfolio (consistent with the last decade, which included the crash) then she has about $250,000 in ten years – money for her and her child.

Of course, she must have the discipline and knowledge to unlock the equity, trash debt, invest properly and not piss away the money. And here’s where most people fail. It’s the strongest argument to be made for owning real estate. Buying property gives the chance to employ leverage, as Sis did, doing it with just 5% down. So any windfall gains in its value magnify profits. (Just as minor drops in value can instantly erase them.) Facing a monthly mortgage payment also forces people to save, since a portion of each one is debt. So long as the property does not lose value, you’re putting away value which can be cashed in later. Finally, gains are non-taxable on your principal residence, but all costs must be paid in after-tax dollars.

As for investing, most Canadians are useless. They know what TNL@TB tells them, and little else. They buy houses because GICs pay nothing and stocks are dangerous. Banks (naturally) encourage debt. Besides, her parents were so proud when the mortgage was signed. It’s a self-perpetuating familial cycle of willful ignorance. But in years when money’s cheap and greater fools abound, it works.

As you know, over 50% of all TFSA money is in bank accounts or equivalents, earning less than 2%. The savings rate is 80% less than it was a generation ago. Household debt is at an historic level and incomes are flat. And for Sis, this week’s Ontario budget just increased taxes. Already she can’t live on $88,000 a year, which is above the average. So obviously all is not well with the middle class.

Real estate bulls will say her property profit saved her. That’s correct. But smart people harvest gains and rebalance their lives, as they do with their investment accounts. There is absolutely no assurance housing will continue to appreciate, while there’s irrefutable proof Sis can’t live on what she makes.

The moral of this small tale is simple. Think.

177 comments ↓

#1 Joe on 05.01.14 at 6:18 pm

Rent is getting expensive in Toronto also……
$1600 per month,,,no brainer…keep the house….
for less you can find only the basement…smell the molds..

#2 Suz on 05.01.14 at 6:21 pm

Yep. She better sells it.

#3 Bargains everywhere on 05.01.14 at 6:24 pm

Normally I agree with you, Garth, but this time, I don’t. I think she should hang onto the townhouse. Daycare costs won’t last forever and then she’ll be able to handle the payments much easier. She just needs some help with current budgeting. With her salary, I think it’s doable and she’ll continue to grow her equity in her own place.

#4 Dean Mason on 05.01.14 at 6:30 pm

A 25 year old that contributes 1.90% of $45,000 is $855 per year.

This is the workers portion of the new Ontario retirement poverty plan.

The employer must pay as well $855 per year.

These ORPP contributions will easily go up by 3.00% annually at the minimum if not more.

Compare the ORPP to a person that puts $855*2=$1,710 a year in an RRSP and gets a 27% tax refund of $462 per year which is reinvested in the RRSP as well will have $465,000 by the time he or she is 70 years old.

This is with a modest 4.00% interest rate compounded for 45 years by retirement at 70 years old.

Just the interest at 4.00% annually will be $18,600 a year and they will still have the $465,000 in their RRSP.

The Ontario Liberals are saying that the plan will payout only $6,410 a year.

This is 35 cents on the dollar and no $465,000 per ORPP contributor.

This is a tax grab disguised as a pension plan, plain and simple because they will give peanuts at retirement.

It is so sad that people fall for this stuff.

#5 takla on 05.01.14 at 6:38 pm

checking out the {pussy] cat in the next building across the lane…you can get arrested for that cant you?
Working hi-rise construction in Van,that was a common occurrence,funny how free people can be with total strangers!
I tend to think those pets are looking for a way out as the owners are scrimping on pet food purchases to make the stata payments!

#6 Waterloo Resident on 05.01.14 at 6:43 pm

Quote: “I have grown increasingly tired of my inability to stay out of debt (currently approx. 24,000) and am looking at solutions. I’m trying to decide what to do and I’m looking at two different options.”

May I suggest to you a 3rd option: Marry a guy who makes $500,000 / yr + , then 2 or 3 years later divorce him and take half of his stuff, plus get a really nice alimony settlement too.

#7 Son of Ponzi on 05.01.14 at 6:44 pm

Sell, or be locked in your depreciating asset forever.
Get off the property ladder before it collapses.

#8 Jsan on 05.01.14 at 6:47 pm

Cool technology will most likely change how houses are built in the future.

The 3D printer that can build a house in 24 hours

“A revolutionary 3D concrete printer can build a 2,500-square-foot home layer by layer in a single day”

http://innovation.uk.msn.com/design/the-3d-printer-that-can-build-a-house-in-24-hours

#9 run....seriously...get out now!!! on 05.01.14 at 6:47 pm

It’s become obvious that people in Ontario are idiots.

http://www.bnn.ca/News/2014/5/1/Ontario-plans-130B-in-infrastructure-spending-over-10-years.aspx

If the Liberals think that people are going to vote for a massive tax increase and a massive increase in debt with no cut backs on the fat and sassy civil servant overhead then the time to shut the lights out and leave are here.

#10 Spiltbongwater on 05.01.14 at 6:50 pm

Why say four -tenths? Why not say two -fifths?

#11 Elena on 05.01.14 at 6:52 pm

Of course she should sell. Pay off the debts –both of them. A house with a mortgage is a debt as well, don’t forget. You’re paying interest on your mortgage with every payment.

#12 Danforth on 05.01.14 at 6:55 pm

Curious on your thoughts about various schemes to “unlock the equity in your home”.

There are lots of people out there (me incl.) with paid-for houses, who have that house increasing at the rate of inflation (averaged out over a lifespan, the multi-decade trajectory). How about the schemes to borrow against the house, invest, and hopefully your returns are higher than the (tax deductable) interest costs. Worth it?
Good fodder for a column…

#13 crowdedelevatorfartz on 05.01.14 at 7:00 pm

@#10 Spiltbong

Why not say 40%

#14 Nemesis on 05.01.14 at 7:03 pm

“Think.” – HonGT

#IfIOnlyHadABrain. #TheOriginalStrawMan.

http://youtu.be/nauLgZISozs

#15 Londoner on 05.01.14 at 7:03 pm

Abundance of buyers out there in Toronto. It doesn’t look like there will be any price declines this year. Not unless there’s a spike in rates or unemployment. On the sidelines are the people waiting for a “crash” year after year so they can go out and buy a house. Are they really any different then the ones getting into bidding wars? Maybe they’re just too scared that they will make the wrong decision. Too afraid to do anything. Seeking validation for their inability to decide.

#16 Shout out to the plumber on 05.01.14 at 7:03 pm

4th option: sell and relocate to a cooler housing market.

#17 JOE on 05.01.14 at 7:03 pm

sell the house and living in the basement….– the quality of life in Canada….get born, go to work and rent the basement…..Canadian life….
the best Country to live..or maybe to leave…

#18 I'm stupid on 05.01.14 at 7:04 pm

@#4 Dean Mason

Brilliant post. You didn’t even have to mention if they take money out of the plan to finance infrastructure or other pet projects.

#19 Andrewski on 05.01.14 at 7:12 pm

Saxony CRT home up for auction for the 2nd time goes to the same winning bidder as the 1st time, but this time closes for a paltry $6,000,000!

#20 Old Man on 05.01.14 at 7:14 pm

The Microsoft patch has been issued KB2964358.

#21 Derek R on 05.01.14 at 7:16 pm

Jane,

Dr Garth has given you good advice. Sell, invest the proceeds, and rent. You will end up better off a result.

But that’s only stage one. If you are really serious about staying out of debt stage two should be to reduce your other living expenses as far as you can. For this you should take a look at sites such as

http://www.mrmoneymustache.com/

which can show you (in an entertaining way) how to reduce your costs without reducing your standard of living.

The combination of advice from Garth and from Mr Money Mustache can put you back on your feet and running ahead of the pack if you are prepared to follow it to the letter.

Good luck!

#22 JOE on 05.01.14 at 7:27 pm

Why just not to admit ….we have to classes rich with houses and poor basement dwellers…in Toronto
and the system only crystallizes in that direction…
coming to 19 century capitalistic order….

#23 the jaguar on 05.01.14 at 7:28 pm

Unless this was the immaculate conception, where is the child support from the father of the child?
And is the 24,000 in debt a car loan or is it credit card debt? If there is a spending habit that is the first thing that needs to be addressed….just sayin’….

#24 wallflower on 05.01.14 at 7:50 pm

#23 the jaguar on 05.01.14 at 7:28 pm
——
lots of us single moms get ZERO child support
lots of non working non earning dads out there

#25 Chickenlittle on 05.01.14 at 7:50 pm

I wonder if and when there is a correction how many deniers will own up to the fact that they were wrong.

I read this blog every day and I see the same comments from the same people about how nothing will ever change. Time will tell….

#17 Joe:

As someone who is married to an immigrant from a former communist country I can understand your frustration.
The One thing that surprised my inlaws the most was how hard they have to work here. Communism handed them everything and judging by my father in laws work ethic he still wishes it was that way!
Countries are in one day and out the next. When I was in Romania the places to work were Spain, Portugal, and Greece. Not any more! I think Canada is cooling off right now too.

Having said all that, it annoys me to no end having to work really hard and see few benefits for all that work.

Im going to have a shot of cognac. Ill have one for you too, Joe. Here’s to finding the new land of opportunity!

#26 Ralph Cramdown on 05.01.14 at 7:54 pm

#15 Londoner — “On the sidelines are the people waiting for a “crash” year after year so they can go out and buy a house.”

The only reason I remain on the sidelines is so that, when the time comes, I ‘ll be there to utter that iconic phrase: “He ain’t pretty no more.”

#27 WhiteKat on 05.01.14 at 7:54 pm

Most single moms of one child WISH they made 88K a year.

#28 LB on 05.01.14 at 8:03 pm

@Chickenlittle

You are right. One thing with Communism as well was that there was always employment.

#29 Nemesis on 05.01.14 at 8:03 pm

#SingleMoms. #AdviceToPrincipledBachelors. #”NeverShopLiftThePooty. ”

http://youtu.be/OKoKYk4jC84

#30 JOE on 05.01.14 at 8:03 pm

I can buy Jane’s Townhouse,,,no problem without real estate vampire…..serious offer….first want to see it…

#31 gladiator on 05.01.14 at 8:04 pm

@1 Joe:
We rent a 3 bedroom apartment near Finch and Dufferin for 1,230 a month. It’s an old building, squeaky floors and stuff, but pretty good value for that money: comfortably warm in winter and window AC in summers, backyard for the kids and BBQ. Schools very close.
So, it’s doable.

#32 johnny on 05.01.14 at 8:05 pm

Please help
Tnl@tb means what?????

#33 My Life is a Pile of Shit on 05.01.14 at 8:06 pm

For her, selling the house and getting out of debt is a good idea, provided she can rent for less than mortgage financing cost plus investment opportunity cost. But for somebody who doesn’t have a lot tied up in his home and has no debt, that strategy isn’t as advantageous. I don’t think the line, “Honey, we’re selling the house and using the money to play…I mean, invest in the stock market!”, will go over well with the spouse.

#34 r on 05.01.14 at 8:07 pm

This might be stupid question but its my first step in investing in a balanced portfolio
If I have 30k cash in TFSA should I invest all money together in balanced portfolio or buy as and when market corrects?

#35 devore on 05.01.14 at 8:07 pm

There is absolutely no assurance housing will continue to appreciate, while there’s irrefutable proof Sis can’t live on what she makes.

Equity is all nice and good, but you can’t eat drywall. At the end of the day, the books must balance, or something has to give.

#36 Naga on 05.01.14 at 8:09 pm

Economics 101 explains supply and demand.

Best country in the world (Canada) everyone wants in = demand. Supply as it relates to RE is restricted and controlled in large urban centers that make up the bulk of the indeces that we keep getting reports on price momentums. Artificial low interest rates are contributing to the inbalance.

Part of the problem is that owning RE requires some short term pain – nothing new here. Need to save for reasonable down payment and then sweat it out to reduce or even pay off mortgage to enjoy a rent free lifestyle later on.

The discipline of renting vs owning and investing the difference is a hard act to do/follow.

Buy RE when it is right time for you and stop trying to outhink the market.

….they ain’t making any more land is a good old motto to keep in mind – and I do not not know anyone that got poor by owning RE but I know a lot of rich ones that got that way by owning RE….

Go Raptors Go….

Naga

#37 Cici on 05.01.14 at 8:09 pm

@#4 Dean Mason

I agree, well said.
I’d assume that they need the tax grab to finance the $130B infrastructure spending, the goal of which is to boost the provincial employment and GDP numbers in the hopes that majority of the population won’t notice that the economy’s tanking. This would help hide part of the housing horror story too.

#38 S.T. on 05.01.14 at 8:10 pm

Regina housing Market

http://www.theglobeandmail.com/report-on-business/economy/housing/frigid-weather-over-development-knock-down-regina-home-prices/article18350360/

#39 Smoking Man on 05.01.14 at 8:12 pm

#192 Kingarthur on 05.01.14 at 4:39 pmTwo daughters; both graduated debt free and are working in their fields (environment and communication). BTW, I don’t read Smoking Man or long posts.
………
Then join the other skippers…

But then you will miss the mother of all calls, once I front run this bitch, I’ll share the intelligence..

UCC is on the move….

#40 gladiator on 05.01.14 at 8:12 pm

@24 wallflower:
Would your post lead to a conclusion that ladies better make sure their male sex partners work and earn money before they… you know… do the deed? Just in case.

#41 Joe2.0 on 05.01.14 at 8:12 pm

Good advice I think Garth.
Get out while the goings good.
It’s true that she has amassed equity in her home, but the indicators are showing that times are a changing.

I know I sound like a broken record but if people think that things are going to end differently then down south then explain to me how?

1+1=2

#42 Fleabitten Monkey on 05.01.14 at 8:13 pm

How does the property appreciation save anything? I have this argument with a friend of mine all the time. Unless it can be realized and then put to work to earn income its not worth really anything is it? A false sense of comfort and confidence maybe. I guess you can borrow against it, great more debt.

#43 Cici on 05.01.14 at 8:13 pm

#15 Londoner – I’m on the sidelines because I don’t want to pay a premium for risk and decay. I’d rather retire early and live like a queen in a small, inexpensive town…preferably in Europe…

#44 TheCatFoodLady on 05.01.14 at 8:13 pm

No kidding WhiteKat – 2 of us live on 25% of that & are doing fine. I suspect ‘Sis’ may need to re-evaluate her fiscal priorities & budget as well as make housing decisions. Suspect is all, as I don’t know her circumstances.

Joe – what are you smoking? In your view it seems there’s a housing ‘black & white’ – home owners are ‘rich’ & renters are all living in musty basements & wailing in their poverty.

Owners sit on every rung of the socioeconomic ladder – some did it right or were lucky or both. They own well maintained homes suited to their lifestyles that represent a reasonable percentage of total assets. At the other end are owners so house poor they can never leave their Hardwood Heaven. Renters can be one step ahead of every major collection agency known to man or snickering as they take their fifth trip to nicer climes in a year. And there’s everything in between.

Whatever people choose to do about housing has to make sense for their OWN circumstances – no matter what the work peers, neighbours, in-laws or outlaws have to say about it. A great post yesterday noted
Garth’s block is ‘non-prescriptive’ – one size does not fit all. Very, very true.

We have massive economic problems & no clear cut solutions that are politically palatable. The Ontario budget – interesting. In spite of earnest words about looking after the poor & vulnerable, I don’t think it’s going to play out that well – I only see cash flying out of wallets.

We’re being nibbled to death by ducks.

#45 Victoria Real Estate Update on 05.01.14 at 8:13 pm

. . . . . . . .Canadian House Prices. . . . . . . . . . . . .
Percentage Price Increase Since March 2007. . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+70%
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . (Winnipeg)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+65%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+60%
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . (Quebec)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+55%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+50%
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . (Toronto)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+45%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+40%
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . (Vancouver)
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . +35%. . .(Hamilton)
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . (Ottawa,
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+30%. . . .Montreal)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . +25%. . .(Halifax)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+20%
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . (Calgary)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .+15%
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . +10%. . .(Edmonton)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . +5%. . . .(Victoria)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0%
———————————————————————————
March. . . . . . . . . . . . . . . . . .March. . . . . . . . . .
2007. . . . . . . . . . . . . . . . . . 2014. . . . . . . . . . .

(source: index)

The Canadian housing bubble began to inflate in 2000. By 2006, Canada’s housing bubble was as big as the 2006 US housing bubble (first chart). Since 2006, the Canadian housing bubble has inflated a lot more while the US housing bubble deflated. House prices in the US are supported by incomes and rents.

The Canadian housing bubble inflated as a result of federal policy. Lax lending standards in both Canada and the US provided a huge amount of housing market stimulus that resulted in skyrocketing house prices.

In Canada, much of that stimulus remains in place: 5% down payments (or less), emergency level interest rates and CMHC’s maximum mortgage coverage of $1 million (which is significantly higher than the maximum before the inflation of the bubble). Other sources of stimulus remain in place as well.

Despite all of the stimulus that has remained in place, house prices in the following cities have (dramatically) underperformed (since March 2007) compared to many other Canadian cities:

Victoria:
House prices in Victoria are only 6.1% higher than they were in March 2007. Victoria’s housing market has failed to react positively to the considerable (sustained) housing market stimulus the way other Canadian markets have. Victoria’s 10% price decline from peak (2010) has resulted in many (underwater) mortgage holders. House prices in Victoria remain well above the level where incomes and rents could provide price support. House prices in Victoria will fall a lot more before reaching bottom.

Calgary:
House prices in Calgary have increased 17.1% since March 2007 (when 5-year fixed mortgage rates were 5.04%). Quite disappointing, to say the least. What’s even more interesting is that house prices in Calgary lost 15-20% from 2007 to 2009 before more stimulus was added to further inflate Canada’s housing bubble. Most of this 15-20% price decline took place while the price of oil was above $100. Many Calgarians will tell you that oil is the reason that house prices in that city are high, which, of course, is completely false. Clearly lax lending standards and emergency interest rates are the real reason.

Edmonton:
House prices in Edmonton (oil country) increased only 10.5% from March 2007 to March 2014. Edmonton’s housing market underperformed even more than Calgary’s over this period of time, despite all of that housing market stimulus.

Houston, Texas is the oil capital of the US. Are house prices in Houston comparable to house prices in Calgary? If oil can be used to justify sky-high house prices in a city, then house prices in Houston and Calgary should be comparable. However, this is not the case. Let’s take a look at house prices in Houston:

House criteria:
* min. 3 bed, 2 bath
* min. 1800 sq. ft. of above ground primary (main) living space
* 2004 or newer
* attached double garage

In Victoria, a house like this would probably cost $700 K or more. In Calgary, a house like this would probably cost at least $400 K.

In Houston, the combined value of these 6 houses (that fit the above criteria) is about $771 K.

$117 K (3 beds, 2.5 baths, 2,127sq. ft.)
$124 K (4 beds, 3 baths, 2,138sq. ft.)
$127 K (4 beds, 3 baths, 2,000 sq. ft.)
$126 K (3 beds, 3 baths, 1,822 sq. ft.)
$134 K (3 beds, 2 baths, 1,974 sq. ft.)
$143 K (3 beds, 2 baths, 1,954 sq. ft.)

Girls and guys, house prices in Victoria will fall a lot more before reaching bottom. Canada’s housing bubble is the biggest in the world. All housing bubbles deflate and house prices always revert to the mean (the level where incomes and rents provide price support). If you buy now you will soon be in a position of negative equity. If you wait for prices to fall a lot more before buying, you will avoid the extreme financial stress associated with buying a property at or near the peak of a major housing bubble.

Until next time – Cheers!

#46 Ben on 05.01.14 at 8:14 pm

Londoner – you can take the Brit out of Britain but you can never (ever) take the house price nutter out of the Brit.

Prices always go up. They ain’t makin’ land any more. Make the house work for you. You’ll miss the boat. You can’t go wrong with bricks and mortar.

On and on and on, oblivious to how anything works but knowing you did okay out of it once upon a time.

#47 sheane wallace on 05.01.14 at 8:18 pm

In this case I think is worth to hang in there with the house.

- These idiots have no intend of increasing interest rates, savers would be wiped out
– This economy might not grow more that 1-1.5 % per year, you can diversify but they can take away your registered accounts so there is a risk.
- Ca dollar will depreciate

Better to hang in and to try to pay as much as you can on that mortgage in the next 5 years. Try to pay out the debt. 88 k should be enough for that.

#48 Trojan House on 05.01.14 at 8:22 pm

#4 Dean Mason

Yes, very good post. The people that fall for this stuff are the same people who don’t save. It’s the same people who constantly eat fast food and then wonder why they are obese or have medical problems. It’s the same people who smoke and then wonder why they have lung cancer.

You can’t teach smart but you can take advantage of stupid.

#49 investment virgin on 05.01.14 at 8:23 pm

A question for the investment savvy readers – how do you decide to buy among the ETF companies? For example, iShares S&P/TSX 60 or Horizons S&P/TSX 60. What info should one compare? Does it come down to the fees?

#50 sheane wallace on 05.01.14 at 8:27 pm

#17 JOE
———————
The ONLY country in the world where people live in basements. As there is no land in this country. Even in Hong Kong people don’t live in basements,

Not something to be particularly proud of (as it goes for the ‘proud’ Canadians’).

#51 Shawn on 05.01.14 at 8:31 pm

Apples, Oranges

Dean Mason at 4 says:

The employer must pay as well $855 per year.

These ORPP contributions will easily go up by 3.00% annually at the minimum if not more.

Compare the ORPP to a person that puts $855*2=$1,710 a year in an RRSP and gets a 27% tax refund of $462 per year which is reinvested in the RRSP as well will have $465,000 by the time he or she is 70 years old.

This is with a modest 4.00% interest rate compounded for 45 years by retirement at 70 years old.

Just the interest at 4.00% annually will be $18,600 a year and they will still have the $465,000 in their RRSP.

The Ontario Liberals are saying that the plan will payout only $6,410 a year.

****************************************

I suspect the $6410 per year will rise with inflation over 45 years.

If contributions go up at 3% per year, so should benefit.

IF it did then $6410 would be $24,240 per year in 45 years.

Also the $855 will be tax deductible to the employee.

Also in the RRSP you are not lily to get the employer to kick in $855

You are probably quite correct that the RRSP could win, but this program is targeted at the people who would not otherwise invest on their own. That is the problem they are trying to fix.

Every dollar spent and not invested grows to zero in 45 years. (Even at 10% returns)

#52 Millenial-Falcon on 05.01.14 at 8:32 pm

Lets all talk about the moral of the story, this moms finances and salary is the story of the vast majority of young families in Canada, the catalyst everyone is looking for is rite there! To many people who own a house and nothing else, spending more than they make.
It’s only a matter of time…….

#53 MD on 05.01.14 at 8:33 pm

I think her take home is much less as I also make the same amount of money and my take home is only 4400 a month after taxes, CPP, EI, Pension plan, Health benefits and union dues deduction.

#54 frank le skank on 05.01.14 at 8:34 pm

#20 Old Man on 05.01.14 at 7:14 pm
The Microsoft patch has been issued KB2964358.
====================

You make me laugh Old Man!

#55 Shawn on 05.01.14 at 8:34 pm

I like the Way You Think

Number 90 Suede yesterday said:

Where’s Shawn tonight? I would read his blog if he had one. I like his patient and thought out writing style.

*******************************************
Thank you Suede, I will also watch for your posts. You are obviously of person of great intelligence and discriminating tastes.

#56 DigDeep on 05.01.14 at 8:40 pm

Her after-tax net may be $5500.00 but all deductions in, she is taking home less than that. Sub $5K is more likely.

Tough sledding for any single parent.

Take Garth’s advice.

#57 Smoking Man on 05.01.14 at 8:42 pm

#42 Cici on 05.01.14 at 8:13 pm#15 Londoner – I’m on the sidelines because I don’t want to pay a premium for risk and decay. I’d rather retire early and live like a queen in a small, inexpensive town…preferably in Europe…
………

Ecuador, is all I’m saying…..

#58 Habs76-79 on 05.01.14 at 8:44 pm

At $88,000 per year only validates what I tell my friends and coworkers, money including well above the national house hold median, does not in of itself equal wealth or even we’ll being. It’s how you use, save etc. money earned that can help one be better financially.

Lack of fiscal discipline (most of us suffer from such at times) equals life behind a financial 8 ball.

Quite simply all too many Canucks, or even most in the developed world live beyond their means today. Too many people blinded by cheap credit (it still ain’t free) loose with earned money, entitlement, you deserve it mentality and a silly desire to try to impress, family, friends or worse strangers.

Live to find a better balance in life. Horatio Alger is dead! No matter the meme, not all of society can stand on the head of a financial pin. But understanding the balance between wants, needs and ability to pay will lead one to a more balanced and satisfying life.

#59 Julie on 05.01.14 at 8:47 pm

I can’t believe the market will keep rising but it just keeps surprising me day by day. That SFH on a 30 foot lot on Glencairn that sold over $1.3M with 72 offers that you mentioned earlier this week – already, it’s not looking so bad given that this week a semi on a 20 foot lot on Briar Hill, just a few blocks south, sold for just over $1M!

#60 HogtownIndebted on 05.01.14 at 8:47 pm

The budget moves, generally seen by the middle/left as very progressive, by the Ontario Liberals today are imho fairly mediocre, vague and incomplete….but may actually turn out to be politically brilliant (at least in the context of who their opposition is)

Once people start counting what they might get out of the new pension plan, however small, the thought of losing that will be a powerful disincentive to vote the Libs out (loss aversion – it’s a fundamental part of behavioural economics) The PCs offer nothing in exchange, just the old bs about let the market decide, lower taxes blah, blah…

Horwath has to decide whether to vote against a budget that would otherwise be seen as an NDP dream. If she does, and Hudak gets in or even just another Liberal government, she is finished.

Hudak was cornered today for his refusal to condemn Rob Ford’s idiocy and misogyny. This lack of character will be so easy to make stick to him now, and he has had nothing of note to offer for his party as an alternative (and PCs had promised to do exactly the same cancellation thing on the gas plants, conveniently forgotten by neocons) He is likely to be finished soon, as well. He really is the worst kind of one-dimensional, political hack.

Wynne, love her or hate her, has had the better strategy of late.

Reminds me a lot of the Rumble in the Jungle, a great fight that looked really uncertain until the very end. Ali was getting thumped by Foreman in every way that didn’t really matter, then in the last 20 seconds of Round 8….take a look (after the 2 minute point on this vid.)

http://www.youtube.com/watch?v=10ZIxV9KWgY

Ali won with a combination of left hook and hard right, after disorienting Foreman with his right hand punches earlier on.

Wynne has survived all these months with her Ali-like rope-a-dope on the gas plant criticisms and more, and people still see her as pretty good and more believable compared to the alternatives.

Wynne has disoriented Horwath her apparent right wing approaches, only to come out with what is so much an NDP budget today. To Hudak, she has delivered a powerful, populist left hook with this pension plan and taxes on high earners, and the hard right reality of a balanced budget not too far off, plus the fact that people are feeling how much they need some government help in their finances and they trust the Libs as much as the PCs to be fiscally prudent. (To whatever degree any of them are, of course)

If an election is looming, and I’d give it about 50/50 odds right now, I ask myself, whose “war-room” would I rather be in?

The Liberals’, by a country mile.

They’ve got something to fight ‘for’. The other parties have been fighting ‘against’ for months, with no results to speak of and no new plan. Both their leaders are looking and sounding very tired out.

It could be a fun spring.

#61 joe on 05.01.14 at 8:53 pm

#40 Thanks Sheane Wallace!!!

Thanks for the courage to confirmed that living in the basements only in Canada…..for $900/month …LOL
And another thing is the ridiculous yellow school buses full of diesel fumes…with kids inside….
Nowhere Outside North America anyone uses these….yellow Tractors…..LOL

#62 schaden freude on 05.01.14 at 9:00 pm

#15 Londoner on 05.01.14 at 7:03 pm
Abundance of buyers out there in Toronto.
Also an abundance of buyers in Guelph. A fellow shared with wife and I his horniness to buy his 2nd home . Wife spoke with him at length , he drank the kool-aid , there’s no reasoning with him , he’s going to buy.

#63 Aggregator on 05.01.14 at 9:01 pm

Emerging Gap Between Billion Prices Project and CPI

The gov't can only lie about inflation for so long until the market calls them out.

#64 Joe Calgary on 05.01.14 at 9:08 pm

@chicken little and joe

This system is worse than communism. We have all the negatives like high tax rates (similar to socialist countries), government controlled media, no freedom of speech unless it agrees with the governments agenda. And none of the positives that I saw in communist Czechoslovakia like free education, 0% unemployment unless someone was handi capped in which case they were taken care of by the government, no homelessness. And the breadlines you saw on TV here in the west were western propaganda, that didnt exist, in CZ anyway. Possibly in Russia. Always had good food to eat, no worries about retirement, no worries about mortgage payments or house prices.

#65 Oceanside on 05.01.14 at 9:08 pm

Off topic but here on Vancouver Island the local school board just closed 4 elementary schools, two in Parksville and two in Qualicum Beach….Just a week after a mid seventies gentleman told my barber to hold off on selling his house as there was a “boom” about to happen. Unbelievable how far one can sink one’s head in the sand.

#66 Victoria Real Estate Update on 05.01.14 at 9:09 pm

The links to these houses didn’t work. I think I’ve fixed the problem.

$117 K (3 beds, 2.5 baths, 2,127sq. ft.)
$124 K (4 beds, 3 baths, 2,138sq. ft.)
$127 K (4 beds, 3 baths, 2,000 sq. ft.)
$126 K (3 beds, 3 baths, 1,822 sq. ft.)
$134 K (3 beds, 2 baths, 1,974 sq. ft.)
$143 K (3 beds, 2 baths, 1,954 sq. ft.)

#67 baddog on 05.01.14 at 9:17 pm

Bad idea Garth. She needs to live within her means but becoming a renter is not going to solve her problem. Her income is high enough that she can figure something else out. I have seen people do this and the strategy never works. Renting always costs more than expected and life tends to chip away at the cash netted in the deal. Then they have nothing and it is very difficult to get back in the market when they realize that they don’t have a pot to piss in. Nothing wrong with renting but to go from owning to renting can have unexpected psychological consequences. The ideal you are conveying is good but it won’t work.

#68 Nemesis on 05.01.14 at 9:26 pm

#CatFood’Fillies’. #YearOfTheHorse. #JeepersCreepers! #You’veGotFortuneTellerPeepers!

http://youtu.be/6kHN1fc8ejs

#69 boopsie on 05.01.14 at 9:28 pm

#60 Hogtown
Andrea’s leaving before QP was telling..she’s not going to vote against this sort of budget. Relax, no election.
I have some admiration for her..an excellent and tough city councillor in the downtown ward in which I worked during the 90′s.
The one thing Wynne might have done is raise corp tax by a point. I like the transit plans. Who cares it’s expensive? This is a big rich country, you just have to
find better ways to finance things.

#70 Blacksheep on 05.01.14 at 9:29 pm

Waterloo resident # 6 & WhiteKat # 27,

Most single moms of one child WISH they could score a 500K dude, then 2 or 3 years later divorce him and take half of his stuff, plus get a really nice alimony settlement too.

#71 Smoking Man on 05.01.14 at 9:57 pm

HogtownIndebted on 05.01.14 at 8:47 pm

Hudak is a liberal insurgent, his job is to lose it, and he’s good at it..

I can’t tell the difference between him and Mr bean

#72 noodles' 79 on 05.01.14 at 10:01 pm

Sounds like Sis refinanced and got burned a bit.
I’ve got a freind who purchased a house about 15years ago.Almost had it paid off at one point , but got sucked in by the low interst rates .He has refinanced three different times over the last few years .,he now owes a lot more than what he originally paid for the property. He didnt refinance to re-invest or anything like that , he just had to maintain a lifestile His house is now worth $600,000 , he initially paid $170,000.He now owes $400,000.A correction in the market and an interest rate increase could eat away at my buddies equity real fast .Fifteen years of home ownership and he could be back to zero in no time.Just wondering how many people are out there in my freinds position?Tons I bet ,thats why a lot of people dont want this mess to end,if it ends, they’ll be in a finacial mess .lnstead of being mortgage free ,on vacation, according to plan , they’ll be back to zero , like their renter freind!

#73 Old Man on 05.01.14 at 10:03 pm

#70 Blacksheep – they are out there on the prowl looking for an easy mark.

#74 devore on 05.01.14 at 10:03 pm

#67 baddog

Nothing wrong with renting but to go from owning to renting can have unexpected psychological consequences. The ideal you are conveying is good but it won’t work.

I went from owning to renting, and I turned out fine.

It is a MUCH more difficult psychological challenge to reduce one’s lifestyle permanently while becoming housepoor, rather than to find equivalent and cheaper housing. All those things you’re used to buying and having are very hand to give up. Clearly there is a spending problem, but that includes spending too much on housing, not just on things.

#75 Renting is okay on 05.01.14 at 10:05 pm

#50 Don’t more people live in basements in Canada because we all have basements?

Houses are above the frost line.

Maybe I’m missing something here.

Were there so many basement apartments before the great price inflation?

#76 april on 05.01.14 at 10:07 pm

#8 – Where shall I place the house if I have no land?

#77 Big Johnny on 05.01.14 at 10:08 pm

Garth, i’m concerned about the Globe and Mail article today, which says that TFSA’s could be a victim of their own success.
“As an example, he suggests entitlements for Old Age Security could be clawed back if Ottawa decides to include money from a TFSA as income for retirees.

The federal government has made no commitment to how long the contribution limit will be increased each year, and it’s not certain the next government in Ottawa will even keep the TFSA alive.”

Thoughts?

TFSA proceeds will never be included as income, as there is no tax reduction for contributions. — Garth

#78 TheCatFoodLady on 05.01.14 at 10:10 pm

Yes of course – EVERY single mom wishes they can become a high priced hooker for a couple of years & teach their kids the ‘spread your legs’ way to financial security.

#79 april on 05.01.14 at 10:11 pm

#22 – Come on Joe, not all people with houses are rich and not all renters are poor.

#80 joblo on 05.01.14 at 10:13 pm

UCC is on the move….
WHAT’S UCC?

a small, inexpensive town…preferably in Europe…
IS THERE SUCH A THING?

#81 Smoking Man on 05.01.14 at 10:17 pm

http://stlouis.cbslocal.com/2014/05/01/second-grader-says-school-put-him-in-handcuffs-for-misbehaving/

School puts 7 year old in handcuffs….

His crime against humanity, miss behaving.

Hand cuffs people…. A 50 lbs 7 year old…

Now all the other 7 year old will learn, don’t question your, teacher, your govenour, your president….

See how it’s done…

#82 april on 05.01.14 at 10:21 pm

#36 Naga. Many in the US and other countries have lost all by being in RE and some of those who feel rich now in Canada will soon feel less so. You sound like a realtor……….

#83 Smoking Man on 05.01.14 at 10:29 pm

How can you tell you’ve been programmed. Never to get rich.

You use words like :

Live within your means.
It’s safe.
It’s risk free
It’s going to be a nasty crash Realtors a nasty crash.

Where hell is laughingCon

Miss the idiot….

#84 Old Man on 05.01.14 at 10:31 pm

#78 TheCatFoodLady – your behind the times as there are many sugar daddy websites in Canada looking for sugar babies. Most are university students who average $3,000 a month, and one site alone has 130,000 gals registered. I hear that York University is number one, and all sites are growing rapidly.

#85 Babblemaster on 05.01.14 at 10:36 pm

“There is absolutely no assurance housing will continue to appreciate, while there’s irrefutable proof Sis can’t live on what she makes.” – Garth

—————————————————

True. There’s also no assurance that stock markets will continue to rock either.

#86 Aggregator on 05.01.14 at 10:46 pm

#77 Big Johnny

Never plan on a government incentives. Ever. They will alwayas move the goal post and change the rules. That's guaranteed.

Europe rejects UK's financial transaction tax challenge

Sooner or later they'll get it through. Then the rest of the world will follow. Then you'll have a new tax on your assets.

They're ten years ahead of everyone. So be smart about where you put your money.

#87 the jaguar on 05.01.14 at 11:02 pm

response to #24 ‘The Wallflower”, and I say this knowing full well there is going to be a ‘pile on’ once I say it, but……

Yes, there are some dead beat dads out there. And lots of responsible caring ones, too. But in 2014 women are empowered with advantages and options their mothers and grandmothers might not have enjoyed. Jobs, income, freedom, and legislative support. Means they can/should choose more carefully the men they lie down with…or ‘keep it wrapped’ as men like to say. And something called the family justice system and maintenance enforcement exists when personal contracts need to be fulfilled.
The subject of accountability for ones choices is always unpopular, but it’s always the elephant in the room. (Financially or otherwise)
If you decide to abandon those options and pull up your own bootstraps and raise your child without that support then be judicious in your spending habits. Don’t try and spend your way out of the problem. Financial restraint, savings, sacrifice and planning for the future are all elements to raise the child a person decides to bring into the world.
Or am I hopelessly old fashioned?

#88 takla on 05.01.14 at 11:17 pm

Just in ….consumer gas/fuel oil levels at altime highs.Consumption way down as we approach the busiest part of the season,may,june ,july and that was after record cold winter…is the American public realy taped out??

#89 Bottom Feeder on 05.01.14 at 11:18 pm

A contributor tried to make a connection between oil prices and Calgary real estate. It was the collapse of natural gas prices that put a damper on real estate prices between 2008 and 2013. Yes, oil did recover quickly but natural gas is only now gaining traction. If the LNG plants are built on the west coast the Alberta and BC economies will take right off. You all know what that will mean. Equalization payments for all. And higher real estate prices for Calgary.

#90 The key to successful rehab on 05.01.14 at 11:20 pm

People are saying Mayor Rob Ford should have gone to rehab six or twelve months ago.

However, the key to successful rehabilitation is WANTING TO CHANGE when one is ready to commit.

Clearly, Rob Ford did not want to change until now, if indeed he really does want to change.

Alwyn

#91 prairie person on 05.01.14 at 11:23 pm

One needs to be careful comparing Canadian housing, taxes, to those in the USA. I’ve lived and worked in both and found, to my surprise, that there are taxes in the USA that don’t exist in Canada. For example, after we’d rented a house, a local tax assessor came by. He went through every room, evaluating all our belongings, including my wife’s engagement and wedding rings. Lucky for us, most of the furniture came with the rental unit. Every state has a different set of rules. There’s also a large difference in the benefits received for taxes paid. Check on what a medical plan will cost you. Or what a vehicle license will cost and h ow it is assessed. To my surprise, I had to have our car weighed. One of our neighbours with four kids was getting govt. food. Big cans with Govt of USA stamped on the cans. Not sure if that is what you get with food stamps.

#92 WhiteKat on 05.01.14 at 11:28 pm

@ BlackSheep#7

Why settle for half? I think a more realistic option is to find a lonely rich old guy to marry, and in 2 or 3 years get it all. Of course, I would never do this myself….sigh….destined to be middle class for life.

#93 WhiteKat on 05.01.14 at 11:29 pm

ooops re: #83, I meant @ BlackSheep #70

#94 Grantmi on 05.01.14 at 11:49 pm

Don’t even encourage JOE!

He thinks he’s the next SM .. .. and I think Joe is more full of Monkey Dung, then SM!!

#95 Jon B on 05.02.14 at 12:00 am

Yesterday’s picture still makes me laugh.

#96 Vamanos Pest on 05.02.14 at 12:23 am

Was catching up on a couple days away from the blog and noticed my comments from 3 days ago (nobs and tubes) generated a lot of feed back. I’d like to clarify a few things and respond:

-my comments, the tone of which were admittedly smug, were intended to refute Buy?Curious’s assertion that renting=failure. It was NOT just a general brag session, although it regrettably may have came off that way

-thanks to those renters who saw my point and had my back (2CntsCdn and HD)

Shawn-
The bulk of my income comes from owning a few restaurants of a well known fast food franchise. over the past 13 years, I’ve pretty much used the “wealthy barber” concepts of cash flow to build ownership of 1 restaurant into, well, more than 1. I don’t want to bore you, but happy to give more specifics if you’re interested.

BCD
so you don’t like my watch or car or life. you’ll pardon me if I don’t lose sleep over that. BTW what does “lean on wine” even mean? I buy wine to drink it, but maybe I’m doing it wrong. Whatever. As for “old curmudgeon”, curmudgeon maybe, but you’re older than I am. Finally, winners don’t begrudge success, they celebrate it. Making money is not a zero some game. Someone else’s success is not your failure, so no need to take it personally.

Old Man
Nice story about your timex, but we were actually talking about a lifestyle that included renting. Try not to get sidetracked by the shiny watch.

Buy? Curious?
That ‘nerd’ thing really hurt. No, really. Ouch.

#97 Cici on 05.02.14 at 12:36 am

#39 Smoking Man

Ecuador? Are you sure that’s a safe place for a woman? I definitely can’t flaunt any excess there (if I manage to accumulate it), or I’ll just robbed…Smoking Man, I’m get the feeling you don’t like me! Sheesh, and all because I can’t split atoms…

#98 Tony on 05.02.14 at 12:36 am

Re: #77 Big Johnny on 05.01.14 at 10:08 pm

When they get rid of the TFSA my guess is they’ll take the number of years the TFSA has been in existence and give you that many years to collapse the full amount. In the process taxing any gains over and above the initial contributions at your yearly marginal tax rate.

#99 Derek R on 05.02.14 at 1:04 am

Couple of request for the GarthFAQ tonight.

So #32 Johnny and #80 Jono, this is for you. TNL@TB and UCC…

The GarthFAQ

#100 Nemesis on 05.02.14 at 1:04 am

#WeekendFun. #FortuneTellersOnly. #TheyGotTheDateWrong. #ButCloseEnough[For.govWork]

http://youtu.be/8dQH_WNvL3Y

#101 Republic_of_Western_Canada on 05.02.14 at 1:06 am

DELETED

#102 Happy Renting on 05.02.14 at 1:25 am

#6 Waterloo Resident on 05.01.14 at 6:43 pm

I imagine the competition from young, gorgeous, non-mother women makes the goal of Sis marrying a guy earning $500k pa a bit out of reach. It’s like when Old Man told you to solve your problems by marrying a rich woman. Not necessarily realistic.

————-

#23 the jaguar on 05.01.14 at 7:28 pm

If not #24 Wallflower’s scenario, Sis might also be widowed or had the child via sperm bank donor.

————-

#27 WhiteKat on 05.01.14 at 7:54 pm

From a commenter link posted here a few days ago, $88k is higher than the median household income in most major Canadian cities (including Toronto). Most of us wish we made $88k/yr!

#103 KommyKim on 05.02.14 at 1:32 am

RE #20 Old Man on 05.01.14 at 7:14 pm
The Microsoft patch has been issued KB2964358

I stopped using IE years ago due to similar security issues. I switched to FireFox, liked it, and never went back.

#104 Freedom First on 05.02.14 at 1:41 am

Jane’s sister is a good sister to have for Jane. Also another example there is women out there (of course other than some of the female blog dawgs who get it), who are not afraid to commit blasphemy against the holy grail of home ownership and very wisely opt out for the sane financial management principles that Dr. Garth prescribes from his financial insanity free free good financial health blog.

#105 Happy Renting on 05.02.14 at 1:47 am

You say writing in to Dr. Garth was a bad idea, but you were very gentle with her! Hopefully she’ll take some of your advice to heart.

#106 hamr52 on 05.02.14 at 1:53 am

”I make a decent income (88,000)
Sis clears $66,600 after tax
The best choice is to sell, unlock the tax-free equity, pay off the debt and rent. This will reduce monthly costs by a few hundred dollars and leave her $90,000. If that all went into an RRSP (assuming she has the accumulated room), then the tax refund of almost $30,000 could fill a TFSA.”

Garth, something wrong with your math. Your tax refund cannot be larger than actual taxes paid for that year.

#107 Longterm on 05.02.14 at 2:11 am

#58 Habs76-79 on 05.01.14 at 8:44 pm

You nailed it mate.

People woefully confuse wants and needs. If you can’t live on $88,000 as a single parent you aren’t trying very hard.

My wife and I have a three year old. We moved back to Canada from the UK one year ago and lived off savings and investments for 350 days until I got a job. We only spent $2200 a month including rent, van insurance, gas, food, clothes etc. Now we are building a house on some land and though we are paying rent for a house while we build and a small mortgage on the land our outgoings are still only about $2700 a month. Our part time jobs bring in that much and we have a pretty nice life with 5.5 acres of land on a Gulf Island of BC.

I don’t need much and I don’t want much except my freedom and health. Oh, and my investment portfolio built up by understanding the difference between needs and wants.

#108 Nemesis on 05.02.14 at 2:46 am

#WeekEndTrax. #SomethingForEveryone. #CatchY’allOnTuesdayAfternoon. #F***TheMoodyBlues. #We’reTalkin’Doors&JohnLeeH.

http://youtu.be/2xzFWm9uXJo

#109 Londoner on 05.02.14 at 3:19 am

#46 Ben
Londoner – you can take the Brit out of Britain but you can never (ever) take the house price nutter out of the Brit.
—————————————————————-

Actually I’m a Canadian who moved to London. Brits are no different then Canadians when it comes to housing. All I’m saying is that people waiting for a crash have the same objective as the people buying now. The only difference is the risk premium.

#110 jane24 on 05.02.14 at 3:26 am

Re the sister

Easy one to solve. Assuming her townhouse has more than one bedroom get a lodger in to share the accommodation bills. Another single Mum would be ideal. Find one on the web or advertise at work.

Right now she is indeed over-housed for income and with a good single income coming in one can see how skewed RE ownership has become. She should be able to afford a simple home but can’t.

I understand from previous blogs that rental in Canada especially at the lower end can be poor quality and this may add stress to what sounds like an already stressed life so rental may not be a good idea.

There is more to life than money Garth.

#111 Nemesis on 05.02.14 at 3:37 am

#LastOrders. #PartingThoughts.

http://youtu.be/1xDkBPnZPdc

#112 Buy? Curious? on 05.02.14 at 4:16 am

Ah, Garth. Text book answers to real life problems. That’s like tell people who are overweight to eat less and exercise more. Or telling Rob Ford to just quit partying, “Problem solved, thank you very much.”

“If she gets 7% on a balanced and diversified portfolio (consistent with the last decade, which included the crash) then she has about $250,000 in ten years – money for her and her child.

Of course, she must have the discipline and knowledge to unlock the equity, trash debt, invest properly and not piss away the money. And here’s where most people fail.” – Garth

If? IF? IIIIIFFFF?????

Single mums are virtually undateable. Too many issues. She’ll be screwed (not in a good way) if she takes your advice. If she’s having trouble now with credit and debt, throwing her into the money market is going to save her? She needs to think of more income streams that won’t effect the time she has with her kid. Lean on the sperm donor for support, try selling stuff on ebay, maybe some setting up a weekend kids club for parents who want to get away for a weekend or take in a foregin exchange student. There are more ways to correct her financial situation.

By the way, do you know if she’s into Modern Art?

https://www.youtube.com/watch?v=UCp6Q0zb4pM

Rob Ford 2014! The Canadian Winston Churchill of our day!

Vamanos Pest still cuts the crust off his sandwiches.

#113 World Traveller on 05.02.14 at 4:17 am

Im going to have a shot of cognac. Ill have one for you too, Joe. Here’s to finding the new land of opportunity!

***

I guess the question is where is that, I am mobile and liquid currently. or are all countries in the toilet currently?

#114 Dr. Wu on 05.02.14 at 4:31 am

‘a desirable neighbourhood in North York’


RE is a long term investment. She has a house, good job, a kid, doesn’t have to watch hockey, count your blessings=stay put.

Dr. Wu says-
’416 ain’t over ’till the drunken fat man sings’

#115 Nomad on 05.02.14 at 4:48 am

A coworker at work has been encouraging me to buy a house, that his 400k Mississauga house could be sold for 50k more tomorrow. He said you just put 5% down and will make a ton of money in 1 year.

Today he got fired. 2 kids.

#116 maxx on 05.02.14 at 7:02 am

#21 Derek R on 05.01.14 at 7:16 pm

Stage two advice is excellent. People are largely unaware of the extent to which they can build wealth because it is a long process- a generally unromantic, brick-by-brick process. Of course, you do get to see your money grow along the way.

But it does work beautifully and quality of life needn’t be forfeited. Imagination, creativity and learning to source life’s requirements inexpensively can make you rich…..and you can get better quality goods than you might otherwise have bought.

Another part of keeping as much cash as possible for your life is fighting to keep prices and their increases low. Learning to ask for, argue, debate and refuse are essential. It hasn’t, generally, been the Canadian way. Start now. Do it nicely and your chances are good. Then, as experience takes hold, you get waaaay better at it. It is so worth it.

I regularly take on banks, telecom suppliers, insurance companies and retail for stupid prices and even stupider price increases. Why in god’s name would anyone accept 5, 6, 7, 10% increases when the rate of inflation is far below that?

It’s worth the effort and is certainly no more effort than we already put into earning a living.

IMHO, a critical basis for any country to have and maintain a healthy economy is for it to enable its citizens to grow and preserve wealth. We are no longer doing this and are largely hollowed out and facing higher taxes for fewer services.

RE won’t cut it any longer.

Oh, and btw, that crappy piece of merch that doesn’t work, has a defect or that orange you bought which rotted from the inside? Take it back! Your receipt is your contract. Always keep it and don’t take “no” for an answer.

#117 TurnerNation on 05.02.14 at 7:06 am

Sell in _____ and go _____ ?

#118 TheCatFoodLady on 05.02.14 at 7:13 am

384 – Old Man: I’m well aware Sugar sites are everywhere & more than doing well but in 2014 that’s what students feel they have to do, really? “Hey Dad, don’t worry about helping me with university – I’ve got a great dealio going. I go on dates & get money for doing so – hundreds of dollars at a time!” Yeah, just what every parent wants to hear.

And is this really an example single parents want to set for their kids?

#119 Smoking Man on 05.02.14 at 7:24 am

#97 Cici on 05.02.14 at 12:36 am

It’s real easy Cici. Go to UOG

Key word,,splitting atoms…

We can be pals again….

#120 GeorgeSoonToBeRetired on 05.02.14 at 7:36 am

To #90 Alwyn – The key to successful rehab

Been there myself. Rehab is actually quite easy and comfortable overall. It’s the first day you leave it and every day afterwards that is hard. Ask anyone who has been successful at it.

This is where Rob Ford is dumb. Thirty days won’t cut it and he will relapse before the election for sure. Most of us do. A smart approach would be to take until Labour Day when the election really begins anyway. Then come back and at worst he could relapse after the election.

But alcohol and drugs have nothing whatever to do with him being a gay-hater, woman-hater and ethnic-hater. Those are just the real RF coming out, sorry to say for his fans. Alcohol and drugs only magnify who you really are, let down the barriers, they don’t create a new personality.

#121 pbrasseur on 05.02.14 at 7:48 am

Ontario socialism at work: More spending, more taxes and more debt! The speed at which those liberals are sinking Ontario’s ship is mind boggling, as a Quebecker I’ve seen this movie before and I must say I’m impressed!

No doubt the cliff is coming and it won’t be long now.

With Quebec already in the hole, the Maritimes being themselves, that’s 70% of the country which is now an economic basket case. Yep, keep buying those million dollar SFH, profit guarantied!

#122 Tim on 05.02.14 at 8:29 am

TFSA question I can’t seem to find the answer to, maybe someone here can help?
If I have a fully funded TFSA ( say, $31 000 ), and it’s grown to $40 000 and I take all $40 000 out this year. How much can I contribute next year?

Is it the normal contribution limit? i.e. $31 000 + $5 500?
Or is it the amount withdrawn that gets added to next year’s contribution room? i.e. $40 000 + $5 500?

#123 Financial Freedom at 40 on 05.02.14 at 8:59 am

RE #115 Today he got fired. 2 kids.
_______

Selling our principal RE at a high point allowed one of us to weather a one-year break ‘between jobs’ and then the other to take 6 mos unpaid leave to look after a terminally ill parent, cash-flow stress-free. Wouldn’t trade that last time with my mom for all the overpriced/mortgage burdened houses in TO.

Have you done a sensitivity analysis on your financial plan – if some disaster hit one or more parts of your life, or selected holdings, how would you manage? I don’t see how people with all financial eggs in one main basket or a few related baskets have ability to weather the fluctuations in life and the economy. It’s not doom-saying and alarmist, it’s just being prepared and in control.

For me it is far from binary, real estate or stocks. Last count was 17 different asset types. I’m learning and experimenting. Lots of private placement opportunities too. All fascinating.

Comparable houses this month in our old TO ‘hood are up 12% versus our 99% of list/2 days ridiculous selling price in 2010. I check reguarly to see how our neighbours are doing and celebrate their cashing in. But our sale proceeds have grown more than that outside of RE, and our lifestyle has improved immeasurably. Our former property taxes equals half our current rental.

So far no regrets.

#124 T.O. Bubble Boy on 05.02.14 at 9:12 am

@ #122 Tim on 05.02.14 at 8:29 am
TFSA question I can’t seem to find the answer to, maybe someone here can help?
If I have a fully funded TFSA ( say, $31 000 ), and it’s grown to $40 000 and I take all $40 000 out this year. How much can I contribute next year?

Is it the normal contribution limit? i.e. $31 000 + $5 500?
Or is it the amount withdrawn that gets added to next year’s contribution room? i.e. $40 000 + $5 500?
——————————

In the next calendar year, you could re-contribute $40,000 + $5,500.

#125 T.O. Bubble Boy on 05.02.14 at 9:13 am

@ #117 TurnerNation on 05.02.14 at 7:06 am
Sell in _____ and go _____ ?

———————————–

Sell in Ontario and go away from lazy “tax the rich” leaders.

#126 Waterloo Resident on 05.02.14 at 9:16 am

NOW THIS IS WHAT’S GOING TO KILL THE CANADIAN HOUSING MARKET = DRAMATICALLY HIGHER RATES, SOON.

QUOTE: “Once we do see the data begin to fulfill the Fed’s and everyone’s expectations for a better economy, then we really see potential for much higher yields quite rapidly.”

http://www.bloomberg.com/news/2014-05-02/treasuries-fall-after-employment-jump-bolsters-economic-outlook.html

That’s news out of America, and as we all know, when American rates go up so do ours.

#127 rosie "moving forward" in the knowledge that, "this won't end well" on 05.02.14 at 9:21 am

Ostrich effect?

http://www.slate.com/articles/business/the_edgy_optimist/2014/05/global_economic_collapse_the_cassandras_who_are_predicting_a_crash.html

#128 Toronto_CA on 05.02.14 at 9:31 am

#122 Tim on 05.02.14 at 8:29 am

Next year starting Jan 1 you get the $40,000 you took out to put back in plus additional contribution room ($5,500) so $45,500.

#129 miketheengineer on 05.02.14 at 9:51 am

Options for Jane’s Sister:

1) Get a border…rent a room….female student, could bring in an extra 500 per month.(not always possible)
2) Rent out basement….800 per month.(not always possible)
3) Go after father for support for kid, assuming he is not dead or in prison.
4) With Income of 88k, should not be too hard to find “new spouse”…you are not a dead beat…or on welfare…so unless you are really undesirable, start to look about…and find someone like you, with a “real” income and vocation…like an “engineer”.
5) Join a “co-ed” gym, lots of spouse material there, and they are all “buff”.
6) Join a “running” group…find a spouse there, once again, no “slackers” there.
7) Sell and Rent – Sometimes hard to move your location…due to kid in school…I can’t move right now, since kids in High School…ain’t doing it.

It is not so easy being single and paying for all the “stuff” life throws at you. Transmissions blow up, roofs leak and need replacing, kids need braces, etc…24k in a line of credit is “easy” to rack up, just by “living” with life’s challenges…and no, I don’t think she was reckless with her cash, just trying to get by.

Good luck there is no easy solution.

#130 Daisy Mae on 05.02.14 at 10:00 am

#118 TheCatFoodLady
#84 – Old Man: I’m well aware Sugar sites are everywhere & more than doing well but in 2014 that’s what students feel they have to do, really?”

****************

Call it what it is — prostitution.

#131 Daisy Mae on 05.02.14 at 10:03 am

#120 George: “This is where Rob Ford is dumb. Thirty days won’t cut it and he will relapse before the election for sure.”

**********************

He’s finished as a politician.

#132 Blacksheep on 05.02.14 at 10:14 am

Waterloo Resident # 126,

“NOW THIS IS WHAT’S GOING TO KILL THE CANADIAN HOUSING MARKET = DRAMATICALLY HIGHER RATES, SOON.”
——————————————
Job participation at 1978 levels. Wage growth is shite.

Deflation still the concern.

= Rates going nowhere, soon.

#133 liquidincalgary on 05.02.14 at 10:31 am

@ #64 Joe Caglary et all

yup, capitalism is the WORST system out there…except for all the others :P

#134 Gigi on 05.02.14 at 10:38 am

Sold our house in Markham. I stay at home with my 2 kids. We are currently renting a 3 bed, 2 bath detach home in Markham for 1500 per month!!!
Money is well invested, oh I went to Brazil for 3 months (Nov/Dez & Jan) Husband went for 1 month only (well somebody needs to work lol). We are loving our new life style. No stress,no big mortgage,we are finally saving a lot. No more expensive daycare, no more rat race. Thanks Garth.

#135 rosie "moving forward" in the knowledge that, "this won't end well" on 05.02.14 at 10:48 am

Bloor St. viaduct or Golden Gate bridge. That’s a tough one.

http://www.thestar.com/life/2014/05/02/san_francisco_housing_crisis_a_warning_for_toronto.html

#136 Shawn on 05.02.14 at 10:52 am

Vananos Pest success story

A few days ago Vananos mentioned he was way into the top 1%.

I am always eager to hear success stories and asked for more info.

He responded above at 96:

Shawn-
The bulk of my income comes from owning a few restaurants of a well known fast food franchise. over the past 13 years, I’ve pretty much used the “wealthy barber” concepts of cash flow to build ownership of 1 restaurant into, well, more than 1. I don’t want to bore you, but happy to give more specifics if you’re interested.

*****************************************
I will leave the questions at that as I don’t want to pry.

Congratulations. Well done!

Can others do the same?

I think we all know that certain fast food franchises make their owners quite wealthy. Certainly Tin Hortons but it’s nigh on impossible to get in.

I finally woke up and discovered Subway as a customer a few years ago and now I buy lunch there most weekdays. A six inch sandwich is healthy and quick and it’s what I like.

I have often told people that there is money to be made in that franchise.

It’s not for everyone certainly and it’s not for me. But for the right people and situation I highly recommend it.

I have been closely exposed to family businesses since I was five years old in the mid sixties. I have followed and extensively studied businesses ever since.

Franchises would be the way to go for most people trying to get into business. But it must be the right franchise. 90% of what is available at a franchise show is garbage.

#137 HogtownIndebted on 05.02.14 at 11:00 am

Looks like Ontario may well be headed to an election.

Sorry, #69 boopsie – looks like I was right about the uncertainty, though I do agree with you that it made sense for the NDP to support this.

Could still be a gambit for more goodies, but Horwath is talking about ‘trust’…, not more specific budget measures she wants.

Almost all her union supporters are against her on this.

That’s a #fail.

She will be finished. If the Cons get in, she will be absolutely crucified in blame. If the Libs do, then labour has its new friend for the next decade and the NDP will look into its navel for another few years.

Hudak? The talking point I am expecting for is how he has no ideas, just retro neocon crap that has never worked since the Reagan era, and will make life harder for workers. Hudak=Ford=Harper=Duffy will be as much in people’s minds as any gas plant stuff.

Like I said yesterday, I think the Libs have the field open for an Ali-esque Round 8 left hook and hard right. I would not bet against them.

P.S. Speaking of Ford, today in the Sun, the paper that has supported him:

” At heart, the real Rob Ford is a racist, sexist, homophobic pig”

“His defenders will say it is the drink talking, or the drugs.

Who’s in denial now? Surely we have all seen and heard enough to know that this is the essence of the man, laid bare. The mayor of Toronto is crude and rude, a bigot and a misogynist who didn’t even have the decency to apologize for his vulgar remarks before he got out of Dodge in a last, desperate attempt to salvage his career.

So farewell and good luck to him. He will need it. Ford has to live with himself — but we shouldn’t have to any more.”

I’ll say it again: If you are a Rob Ford supporter, you are an ass and a moron. You are in wilful denial of this hateful idiot, criminal, abuser, liar and hypocrite.

Look in the mirror – what does that really say about you?

#138 Old Man on 05.02.14 at 11:03 am

#129 miketheengineer – mike as an engineer why hold back the best place to score a date or are you keeping this secret all to yourself. Its all at the grocery store late at night and stay away from the canned section as that area is my trolling area.

#139 tkid on 05.02.14 at 11:31 am

A 25 year old that contributes 1.90% of $45,000 is $855 per year. The employer must pay as well $855 per year.

Compare the ORPP to a person that puts $855*2=$1,710 a year in an RRSP …
This is with a modest 4.00% interest rate compounded for 45 years by retirement at 70 years old.

Put the money into a TFSA as Garth suggested in a previous post. $855 a year into a TFSA making 4% gets you $103,000 after 45 years, and $6,600 in interest a year for your retirement. Include the employer contributions and that $6,600 should turn into $12,200.

So why is Ontario government only coming up with $6,500? Where did the other $6,700 go?

Can I opt out of this Ontario plan and keep the $6,700 for myself?

#140 WhiteKat on 05.02.14 at 11:33 am

@TheAmerican #205, from yesterdays post, ‘Parents’

Its not my theory that I touted, thus the links to other articles.

Obviously USA holds the purse strings, or it would not be shoving FATCA down the throat of every country in the world with threat of 30% sanctions for not complying.

And you all wonder why Americans are so disliked (just as I am for my tenuous US connection). However, no empires last forever, and payback time may be closer than you think.

What are they teaching me up here you ask? They are teaching me that bullying is not cool in our schools, but OK when USA does it. As you allude, might makes right.

#141 WhiteKat on 05.02.14 at 11:45 am

@TheAmerican #205, from yesterdays post, ‘Parents’

You said: “My oh my, what are they teaching you up there? Canada’s self importance is laughable in this scenario. ”

I think you have it backwards. USA is the one hung up on its exceptionalism and self-importance. Unfortunately our current Conservative government doesn’t have the balls to fight back, and it will pay for this amongst many other things in the next election.

And believe it or not there are lots of things we could have done to fight back. Here are ten things Ottawa could have done before capitulating to a FATCA IGA:
http://isaacbrocksociety.ca/2014/02/08/10-things-ottawa-could-have-done-before-capitulating-to-the-fatca-iga/

#142 gladiator on 05.02.14 at 12:10 pm

@136 Shawn:
So, how you likin’ the taste of those yoga mats, Shawn?

http://www.cbc.ca/news/world/subway-says-yoga-mat-chemical-almost-out-of-bread-1.2606898

#143 Debtfree on 05.02.14 at 12:14 pm

Vancouvercondo.info

#144 Spiltbongwater on 05.02.14 at 12:22 pm

3) Go after father for support for kid, assuming he is not dead or in prison.
#129 miketheengineer on 05.02.14 at 9:51 am

I think Jane’s sister won’t know who the father is until appearing several times on Maury.

#145 Panhead on 05.02.14 at 12:24 pm

#92 WhiteKat on 05.01.14 at 11:28 pm
@ BlackSheep#7

Why settle for half? I think a more realistic option is to find a lonely rich old guy to marry, and in 2 or 3 years get it all. Of course, I would never do this myself….sigh….destined to be middle class for life.

———————————————————–

Read a book once about a group of Gypsies that found lonley old men and a younger female member offered to “look after them.” Soon she moved in and got him to sign over the house (unknown to him or his family.) Next he was over medicated on drugs he was already taking. Rinse and repeat. Had a hard time convicting them but finally did. Sheesh …

#146 pinstripe on 05.02.14 at 12:40 pm

This worth a read

http://www.cbc.ca/news/canada/edmonton/golf-course-hopes-wider-holes-will-drive-players-to-the-game-1.2629669

#147 Big Brother on 05.02.14 at 12:49 pm

#119 Smoking Man on 05.02.14 at 7:24 am
#97 Cici on 05.02.14 at 12:36 am
It’s real easy Cici. Go to UOG
Key word,,splitting atoms…
We can be pals again….

…………………………………………………………………………
MKULTRA says Smoking Man knows Splitting Atoms is child’s play. Nuclear fusion however is a whole different ballgame. Now Google that one Smoking Man.
http://www.treehugger.com/corporate-responsibility/man-arrested-for-attempting-to-split-the-atom-in-his-kitchen.html

By the way all of Smoking Mans information is available on UOG. You may not want to be his pal after you Google him.
Will have wine ready at your fav bar tonight.

#148 Kenny on 05.02.14 at 12:54 pm

I wouldn’t count that whole RRSP at net worth any more then I’d count the whole house value as net worth. Moving money from house equity to RRSP+TFSA doesn’t increase her net worth, it just makes it liquid and more balanced.

#149 Bottoms_Up on 05.02.14 at 12:54 pm

#129 miketheengineer on 05.02.14 at 9:51 am
————————————————-
Totally agree — furnace goes, there’s $5000. Appliance goes, there’s $1000. Small car accident, or someone drives into your fence, $1000 (to avoid having to go through insurance).

#150 Holy Crap Wheres The Tylenol on 05.02.14 at 1:05 pm

#137 HogtownIndebted on 05.02.14 at 11:00 am
P.S. Speaking of Ford, today in the Sun, the paper that has supported him:
I’ll say it again: If you are a Rob Ford supporter, you are an ass and a moron. You are in willful denial of this hateful idiot, criminal, abuser, liar and hypocrite.
Look in the mirror – what does that really say about you?
______________________________________________

And we should vote for whom else?
Yep you pretty much summed it up about good old Rob Ford, however when have you ever seen a politician who was not one or all of the above? Politicians are what they are pick the least likely one to have too many foibles.

Chow Down……….nope, nope, definitely nope
Soknacki………..Who
Stintz……………Who, who, who
Tory Tory Tory………..ehhhh mayby????
Morgan Baskin the Girl in School……..Now there is an untouched true potential leader……………Sure why not

#151 Derek R on 05.02.14 at 1:05 pm

#116 maxx on 05.02.14 at 7:02 am wrote:
#21 Derek R on 05.01.14 at 7:16 pm
Stage two advice is excellent.

Why, thanks, maxx. Kind of you to say so.

#152 Bottoms_Up on 05.02.14 at 1:05 pm

#72 noodles’ 79 on 05.01.14 at 10:01 pm
——————————————
Essentially what your friend has is a paid for house “worth” $170,000, and a racked up line of credit worth $400,000 (backed by the current market value of the home).

Clearly the lifestyle needs to change.

#153 Westcdn on 05.02.14 at 1:07 pm

Although the American jobs report was very good, It looks to me that total employment income growth for the 99% was essentially zero. It is hard to have inflation when there is no wage growth for so many. It could explain why the TLT (20 year+ Treasury Bond ETF) spiked this morning after the jobs report. I guess the smart money is betting on low inflation, cheap money and a tepid economic recovery. I think the defeated Ontario budget was blowing hot air on future growth projections. I believe a lot of people are going to get very restless over their poor economic prospects next year. I don’t think it is yet time to sell equities and buy fixed income or buy down debt.
I read this short essay written by Einstein in 1931. I admire the man and thank the fates he put his ideas on paper – now digital. http://www.farnamstreetblog.com/2014/05/einstein-the-world-as-i-see-it/
The paragraph that sticks in my mind –

“ This topic brings me to that worst outcrop of herd life, the military system, which I abhor. That a man can take pleasure in marching in fours to the strains of a band is enough to make me despise him. He has only been given his big brain by mistake; unprotected spinal marrow was all he needed. … My opinion of the human race is high enough that I believe this bogey would have disappeared long ago, had the sound sense of the peoples not been systematically corrupted by commercial and political interests acting through the schools and the Press. ”

#154 Old Man on 05.02.14 at 1:09 pm

They say that money is the root of all evil or what does love have to do with it. There is one thing that money can never buy, and that is poverty. Life is a long journey along a road with many twists and turns, so which road are you mapping out?

#155 Smoking Man on 05.02.14 at 1:18 pm

Finally, a chance to remove the communists from Queens Park..

Hats off to Horvath, she realized this budget would have destroyed Ontario.

She chose the logical hi road, inspite of facing a back lash from unions…

She thought of all interests of the province…

A true leader…

#156 Dupcheck on 05.02.14 at 1:19 pm

Someone making 88k year has no business buying over 300K property. It is just common sense. Only 32% or your gross monthly income should go for mortgage + heat + taxes per month. Banks and RE douches, parents, friends, etc, brainwash people into buying. Buy what you can afford.

#157 Flawed on 05.02.14 at 1:41 pm

#142 gladiator on 05.02.14 at 12:10 pm
@136 Shawn:
So, how you likin’ the taste of those yoga mats, Shawn?

http://www.cbc.ca/news/world/subway-says-yoga-mat-chemical-almost-out-of-bread-1.2606898
————————————————————

I don’t think Shawn cares as long as he is getting a dividend from the stock.

#158 TheCatFoodLady on 05.02.14 at 1:45 pm

On a light note because it’s Friday. Pair of ospreys have been nesting locally for a good 7-8 years; to be honest I doubt it’s the original pair. They’ve done well – local wildlife groups have been able to install 2 ‘osprey poles’ within several miles in either direction & they’ve been used for a few years now.

Last summer’s weather was hard on the nest site – an old, bypassed hydro pole. Once the pair migrated to southern climes, the old pole was cut & a really NICE, thoroughly upgraded pole was erected.

Obviously Osprey Realty was involved – LOL. The location of the potential nest site was moved to provide better views of their fishing grounds & overlooks all ground approaches. No nearby trees & a very high pole increase security for the pair, eggs & eventually nestlings. More square inchage too! Talk about an upgrade – the new pole affords the pair a solidly built 4 x 4′ platform with good drainage. Off to the side – a perch.

When ‘our’ pair came back, we happened to be around. We watched them exclaim over the absence of the old site, then catch site of the new one. They may not have hired a nest inspector but they went over that site inch by inch. They even checked commute times to the fishing grounds!

I guess she decided if the new abode was snazzier, she was going to hold out for better nesting material. The poor male kept labouring up to the nest with branches to serve as the basis for the nest structure. She turned up her beak at 4 out of 5 of his choices of suitable material, snottily flipping them off the platform. I guess even osprey acknowledge the equivalent of hardwood, granite & stainless! Currently, she’s busy with interior decorating, flying up holding wads of leaves & other material & taking forever to place each one just so.

Meanwhile, he’s busy chasing off other osprey – either makes trying to horn in on his female or overly eager osprey real estate agents telling them that now that they’ve improved it, the value has gone up 15% – great time to sell!

Hope they can swing the mortgage once she goes on mat leave.

#159 TurnerNation on 05.02.14 at 1:50 pm

TLT.US is saying…doom coming?

#160 Debtfree on 05.02.14 at 2:07 pm

Kia Nokia picture .

#161 Old Man on 05.02.14 at 2:16 pm

The media still cannot figure out why Ford flew to Chicago on a private jet for his so-called rehab. I will give them a clue, as the Ford family company has a business operation there. I wonder if it has a stocked entertainment bar for the clients. LOL

#162 Aggregator on 05.02.14 at 2:49 pm

Leaked Recording Reveals True State Of Chinese Housing Market

This is why I once said when Canada adopted a presale system (which includes ultra-levereged sales, breach of contracts and hiding units from the public's view in shadow inventory) it knew nothing about, there would be trouble once developers' cash flow deteriorated, leading to defaults on entire projects.

#163 Pope SnugglyJigglyBums the 666da (aka Nosty) on 05.02.14 at 2:54 pm

#153 Westcdn on 05.02.14 at 1:07 pm — “Although the American jobs report was very good, . . .”
– and –
#159 TurnerNation on 05.02.14 at 1:50 pm

Link – “Official numbers from the Bureau of Labor Statistics for April. Click on ‘civilian labor force level to see the numbers.

155,421,000 — that is 155 million willing and able to work. If 92 million are out of work the unemployment rate is %59″. wrh.com. It appears you are correct, Westcdn.
Re: Ukraine, Petrodollar and Squabbles. Note the second line — “the Ukrainian government . . .” — this was the unelected govt. that replaced the democratically-elected govt. No one asked for war, they had it shoved down their throats.

#164 devore on 05.02.14 at 3:18 pm

#110 jane24

I understand from previous blogs that rental in Canada especially at the lower end can be poor quality and this may add stress to what sounds like an already stressed life so rental may not be a good idea.

Even a fraction of what she is spending on ownership puts her well above “lower end” rentals.

There is more to life than money Garth.

Money is necessary for life. You can’t live on a deficit, can’t eat drywall, and love doesn’t put food on the table.

Overhoused, overspending. I don’t think the solution to a stressed life is to shack up with strangers.

#165 Dean Mason on 05.02.14 at 3:33 pm

The U.S. 30 year bond is now at 3.36% and the U.S. 10 year is at 2.59%.

They were 3.92% and 3.00% respectively just 5 months ago.

Canada’s 30 and 10 year bond yields are way down too with 2.88% and 2.35% versus 3.26% and 2.85% just 5 months ago.

The 288,000 U.S. jobs created for April-2014 and 6.30% unemployment report should of boosted bond yields but the opposite is happening, falling way down.

This means that there is something really wrong in the the strength of the U.S. economy and jobs.

Back to square one with ultra cheap money for all the borrowers and their debt laden friends.

#166 Aggregator on 05.02.14 at 3:43 pm

#142 gladiator

lol. Good one. The guy who claims to have made a $100,000 in stocks over the past few years is eating yoga mat bread stuffed with slices colt cut Zilmax and GMO vegetables for lunch everyday. Wealth and prosperity.

#167 devore on 05.02.14 at 3:52 pm

#142 gladiator

So, how you likin’ the taste of those yoga mats, Shawn?

I too have always liked Subway, but I realize it is what it is: fast processed food, no matter what the fresh advertisements say.

Various kinds of bleaching in baked products are extremely common, and serve virtually no other purpose than cosmetic. White bread looks better, tastier and fresher than “regular” coloured bread. As a response, many people are switching to whole grain options, but Subway has a surprise for them too: their “whole grain” bread merely replaces the bleaching ingredient with caramel colouring.

Lest you get too smug, unless you buy your bread from a traditional bakery, you’re probably doing no better than Subway. In fact, if your bread comes in a bag with a labelled shelf life of more than 2 days, you’re doing FAR worse. It is loaded with preservatives, moisture moderators, stabilizer and binding agents, anti-fungals and anti-bacterials of various kinds, and flavourings, colorings and enhancers to compensate.

#168 rosie "moving forward" in the knowledge that, "this won't end well" on 05.02.14 at 4:05 pm

Good advice.

http://www.marketwatch.com/story/live-condo-high-life-without-ownership-worry-2014-05-02?dist=afterbell

#169 PoltawaDiva on 05.02.14 at 4:06 pm

#163 this was the unelected govt. that replaced the democratically-elected govt. No one asked for war, they had it shoved down their throats.

This is the line that Russia has been peddling and it has become the standard mantra because of the number of times it has been repeated. Yes, RT does have a wide reach.

The present parliament sitting now in Kiev is the same democratically elected parliament as under former President Yanukovich (minus about thirty members from his Regional Party whose whereabouts are unknown – probably somewhere in Russia, hence they no longer form a majority government)

The acting president until May 25 was elected by this parliament (according to the procedure set up in the Ukrainian consitution). Even members of Yanukovich’s Regional Party (the ones who had not disappeared) voted for him in December.

The same cannot be said for the parliament or “head of government” in Crimea. They were “appointed”
with bayonets.

The government in Kiev certainly is not asking for war. Nobody is asking who shoved it down their throats (with a huge army of “brothers” armed to their teeth standing within 150 km of the border. )

#170 shawn on 05.02.14 at 4:25 pm

Honest Shawn’s Response

Aggregator said:

#142 gladiator

lol. Good one. The guy who claims to have made a $100,000 in stocks over the past few years is eating yoga mat bread stuffed with slices colt cut Zilmax and GMO vegetables for lunch everyday. Wealth and prosperity.

******************************************
I believe I did mention making more than $100k on Wells Fargo in the past few years.

If you must know, my total stock returns are much higher than that. In fact a bit higher than that in 2014 to date.

And yes I buy lunch at Subway most days. Never said I was a paragon of health did I? Paragon of wealth maybe. Health, no.

Believe what you want, but it’s clear that there is a VERY WIDE range of wealth and income represented on this Board. It’s easy to lie on this Board. I never do.

#171 TurnerNation on 05.02.14 at 4:33 pm

I’m talking about TSX continuing its outperformance this year over US markets. Gold, silver caught a bid today. Will only help.

#172 shawn on 05.02.14 at 4:35 pm

Don’t Judge a Man by his Lunch

Coincidently, just this morning I watched a clip of an interview with Warren Buffett on CNBC taped yesterday.

He walked up to Becky Quick (his favorite hot younger blond reporter) who in the Hallway of the Area in Omaha where his huge annual meeting takes place tomorrow (I attended back in 2003 btw but not since)

He was carrying a McDonald’s bag (he owns mega shares). She asked what he had for lunch and he said, a quarter pounder and fries. She said so healthy lunch? He said healthier than usual.

After the interview he walked off alone (no entourage) carrying his lunch.

So yeah, don’t judge anyone’s wealth by their taste in lunch.

#173 Aggregator on 05.02.14 at 5:09 pm

The Un-Robin Hood Condo Tax

Are Toronto’s multiplying condos shrinking out families?

Toronto’s got a problem. (Yes, it’s about municipal politics, but not what you think.) A lack of family-friendly condos are being built in Canada’s most populous city.

The new housing stock that is being constructed has shifted over the last decade from predominantly detached houses to condos. In 2005, about 35 per cent of the new units being built were condos. Now it’s about 60 per cent.

There are a number of reasons for this, including government policies that encourage downtown densification, and the greenbelt.

So now that Toronto's natural fertility rate is dropping and there's less spending on children, and less people to tax, the solution proposed is from non other then the very same people who lobbied densification and land restrictions in the first place:

The city has begun studying the issue. Steven Diamond, chief executive of Toronto condo developer Diamond Corp., and former head of the municipal law and planning group at McCarthy Tetrault, was asked to sit on a roundtable group on the topic.

He says that condo sizes have been shrinking as the land transfer tax, higher development charges and the introduction of the Harmonized Sales Tax on housing all drove up the cost of condos. [no, it's not cheap lending rates and mass speculation, fees he says]

“The way the taxes work generally is that there are exemptions [for units] under $400,000, but as soon as you get above $400,000 the taxes kick in,” he says. “So I believe what’s happened is that, in order to sell units, the industry has been ensuring they can market them at under $400,000. To keep the units affordable, the unit sizes fell.”

He has presented the city with an idea (see the accompanying slides): It’s a rough example of something that could be done, and shouldn’t be interpreted as a specific proposal, he says.

Basically, it’s to increase levies slightly on smaller units and decrease them dramatically on larger units.

It doesn't get more idiotic then this. Tax smaller units to force developers to build larger units because an extra 100 sq.ft. at record high prices will convince couples to have a few pups in a condo? No seriously. This guy must be smoking the same crack Rob Ford is.

I've got a proposal. How about the RCMP and Attorney General pick up on leads given during the Quebec construction scandal on how GTA's corruption is far more prevalent then Quebec? Oh, nobody wants to talk or report about that, when that is the problem; because once a market excludes public input on what should be developed (their needs) and is dominated by unelected officials and an oligarchy of developers whose sole intention is to profit by lobbying government, selling units to speculators — and then flipping those units to local end users at a higher margin, the only way to fix the problem, structurally, is from those who were responsible from the beginning.

There's no better of example of what city planners and developers can accomplish then by looking at their own results.

#174 The American on 05.02.14 at 5:10 pm

At #140 and #1401: WhiteKat, whoahhhhhhh, easy there tiger. So basically you’re touting a bunch of rhetoric crap of “what ifs” and hypotheticals that never happened. We could all do this all day long. Stick to the facts (and as an FYI, Canadians are now the most disliked travelers in the world..just a fun fact). It isn’t your conservative government or liberal government that doesn’t “stand up” to the U.S. or FATCA…. Have you stopped and asked yourself WHY it is accepted?

As for being disliked, I hate to inform you, and this is going to sound cocky, but being the prettiest and most popular girl at the prom she is ALWAYS sneered at by others. It goes with the territory. You love to cling to that like a life preserver. LOL

As for teaching children in Canada that it’s not okay to do it, it looks like there is a little more teaching to do… Just saying’…

http://globalnews.ca/news/469619/reality-check-bullying-rates-in-canada/

http://www.prevnet.ca/bullying/bullying-facts

#175 RICARDO on 05.02.14 at 9:01 pm

The government giveth and the government WILL take away. TFSA’s are minimal now. Wait until they are 30-40 yrs of accumulation and whatever government in pwoer will just be drooling. Take it while you can get it.
First time I have ever commented here. It is funny how the original article (Garth’s) morphs in to just about anything else.
To comment about the topic, I would really like to see her expenditures. Where the hell is the money going? before making a comment.
I got to pay for my house twice. First time mortgage and second time mortgage to pay off the EX. Now don’t all you fine ladies get in a hussy fit over that as I had an inheritance to pay the first time around. And I kept the house because it was the only way that I would stay around and be a part of my kids lives. Plus I paid all my child care support payments. The first few years after the divorce I was expending close to 75% of my salary for the mortgage (13%) and child support. The bank never shoul dhave lent me the money but i never missed a payment or support. The “kids” are all working now.
So I have a four bedroom house with ony one warm bed now.
Figure out where you are spending your money and then figure out whether or not it jives with what is coming in.
I budget $2K per yr for maintenance. It does not get spent every year but when that roof needs repalcing at $5K you better have the money put aside.
Plus taxes (town, school, water, etc), hydro, tele (internet, cable, etc)
I figure it cost me $8K per year to live here. Add on you rmortgage after that and figur eout if it is better to rent or own.

#176 A Yank in BC on 05.03.14 at 9:00 pm

Be Balanced – checkmark
Diversified too – another checkmark
ETF’s – A no brainer.
Rule of 90 – We understand.
TNL@TB – Avoid entirely.

Can we move-on?

#177 Andrew on 05.05.14 at 12:45 pm

A little late to the party I know, but I save these articles and read them when my schedule permits.

A few things don’t sit right with me…

Firstly, you have this woman with 305k owing on a property worth 420k, with 25k in debt. You claim she will then wind up with 90k out of the sale, which forms the premise of your future Math. But you’re failing to dock closing costs (realtor fees, etc) from that number. On the flip side, in any of your articles talking about the costs of ownership you are quick to point this out. It would be nice room see some consistency in your application here; in this particular instance, any money lost off the principal will severely affect her final take after 10 years.

Secondly, IANAL but I don’t think you can receive a tax refund in excess of what you paid for any given year. A single mother making 66k is unlikely to have a yearly tax bill of 30k,so if she wanted to unlock that money she would have to spread her deductions over multiple tax years. This means not all of the 30k refund you promise her will have 10 years to grow, further dropping her bottom line.

Given these factors, it would take a lot more heavy saving to make that 240k in 10 years… Or a much better rate of return.

I’d love some clarification here, as this is just me thinking off the top of my head…