garth@garth.ca

As you might imagine, I get a few emails. From time to time I share them with you (taking care to protect the identities of those who write), because each is instructive. Among those I received this weekend:

Hi Garth – Well we almost made a terrible mistake.
We were almost taken in by the fresh paint, the granite, and especially the glass showers.

Went to an open house south of Vancouver and fell in love with the place.
Yes it was an old house the had major renovations.
Yes it was small which appeals to us but really should indicate a cheaper price, which is wasn’t.

Yes it was expensive, and over priced, even in today’s standards.
Well we have to sleep on it for a few nights, even if we could pay cash, and did you see that kitchen, wow.

I kept saying to myself, where is my head, yes I love the place, but 1.3 mil for a 40 year old, 2200 sq ft house, (on an acre), what am I nuts.
Even if I can afford it, that’s an insane sum for 4 walls and a roof.
Let’s see what Garth has to say these days.
Then your blog brought me back to reality.
Thank you, I owe you one. (actually I bought your book some time ago so guess we are even;)

Garth, please explain to people that when they refinance they will have to make up the difference in their loan should their house value drop significantly.

This was the major kicker in the USA for the middle class.
I was speaking with some people at work and they didn’t understand that if they have $600,000 mortgage, and then house value drops to $500,000, that they will have to come up with the difference before they can refinance.
People don’t understand how a loan works.

Also, as a reality check, we have bought a nice 3br condo in Orlando Florida for $60,000, it was valued at $200,000 in 2008. Our parents will now spend their Montreal winters in Orlando.

Anyway, thanks for the slap in the face, almost got sucked in by the granite!
Cheers, Dianne.

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Dear Garth ~ I have rented my entire life. As my career progressed and I had to move in order to step up another ring on the corporate ladder, moving was much easier when I didn’t have to worry about selling in one city while living in another. And I have never looked at ownership as an investment (people will still tell me that I should) but as a place to put down roots, and create a home… a hearth…stability and safety.

I am now 55 without a job…but I work full time taking care of my husband of 7 years who had a major stroke four years ago… Presently we are living in the house he has rented for over 30 years…at $400/month… I know it is an unreal rent…but here is the thing…the owner who is now in his 80′s is planning to sell this house. It is not worth us buying as to bring it up to code would be astronomically high. The basement is crumbling, the electrical and plumbing are vintage 1950′s…it is on what is now a VERY busy street…the heating is antiquated (used to be a coal burner now converted to gas. No fan) This home will be sold as a tear down…I am sure of it.

We are living on the fixed income of his retirement and his Canada Pension Disability payments. We get a grand sum of 2,700/ month…. Hubby is an alcoholic and drinks up about $600 of that per month. We have no debt because we (his sister, who has power of attorney and myself) put him through bankruptcy while he was still in a coma in the hospital. We are just barely making it. This house costs us a lot of money in utility bills…as it leaks air like a sieve… But on this fixed income we simply cannot afford to rent anything as the average is running between 1,200 and 1,500 per month.

We DO have about $194,000 in RRSPs and a Money Market fund… Am I crazy to think that we should take about $90,000 out and buy something? Yes, I HAVE found several places that are WAY nicer than public housing…that people are desperate to sell. I KNOW of one place that they are asking 79,900 for but it has been on the market for two years….I would bet my hat I could get it for 50,000 to 60,000 cash, with some left over to do things to it that we would like to have. And then we would have a HOME with NO mortgage and no one could take it away from us…

Garth, I have always been a strong person….but frankly, I am really scared… In my former life I had a career that brought in about $90,000 a year…and now I am living right at the poverty line with a handicapped husband to look after… Yes, I know I should have been saving all these years…but I didn’t… I didn’t understand investing…and so paid no attention to it. I am struggling now to understand it ( I have one of your signed copies of “Money Road”)…but having a hard time…

Help… Ruth

Note: I corresponded subsequently with Ruth and suggested a course of action after receiving more information on her personal situation and investments. It does not include buying a house. — Garth

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Hi Garth my name is Duane. A neighbor of mine told me about you and your blog on a Saturday morning. Seeing that I have never followed politics nor even cared I can honestly say i had never heard of you. After spending a great chunk of reading your blog over the weekend I went and bought your book Money Road and finished it within a day and a half. I’m not telling you this to pump up your ego, nor expect you to post this email on your website.

I’m telling you this for two reasons. One you have changed a 34 year old man’s outlook on life, and you have kicked my ass into gear to think about securing myself for the future. You are the one and only person able to catch my attention in this aspect of my life. I’ve heard RRSP this and Mutual Fund that, and simply put I didn’t care. So thank you for the kick in the butt. Once again thank you for the change in life.

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Hi Garth. When my husband and I moved to Calgary in the spring of 2007 we were under a lot of pressure from friends and family to buy a house. “You don’t know what it’s like in Calgary,” they said, “House prices here just go up and up. You have to get in quick.” My husband and I felt a thing or two could be learned from our neighbours to the south (not to mention previous boom and bust cycles in real estate and other sections of the economy).

We have patiently avoided buying a house and have been quite content to rent. Still, it has been tedious to try to explain our decision to others. They can’t comprehend why anyone who could afford a house would not buy a house. (My favorite line is, “But when you’re paying rent you’re just throwing your money away.”) Anyhow, my husband discovered your blog a few months ago and we both read it daily. Now when well intentioned loved ones hassle us about not buying a house we just smile and refer them to www.greaterfool.ca.

You’ve made my life a little bit easier. Thanks!

Jennifer, Calgary Alberta.