I have a confession to make today. But more on that in a moment. First, a word on media manipulation, which this blog refuses to participate in because all the information here is, of course, genuinely fabricated. (This speaks to my coming confession.)
This week the largest real estate board on the continent announced that 2011 was a boffo year in godless Toronto. Said the cartel: “The December result capped off the second-best year on record under the current Toronto Real Estate Board (TREB) boundaries. Total sales for 2011 amounted to 89,347 – up four per cent in comparison to 2010.” And what about prices? The realtors are also declaring an unconditional victory: “The average selling price in December was $451,436 – up 4% compared to December 2010. For all of 2011, the average selling price was $465,412, an increase of 8% in comparison to the average of $431,276 in 2010.”
As usual, this does not tell the complete story or, more critically, give all those moist young property virgins camping out on TREB’s lawn waiting for divine guidance a real idea of what this market’s doing. After all, it’s not what happened in the last 12 months that matters, it what comes next. If the market’s growing stronger (as the salesguys suggest in this release) then it might be safe to buy. But if it’s weakening, then jumping in now could be a fatal move.
Well, according to TREB’s own numbers, we’re going in reverse.
In May of this year the average property (SFHs, condos and everything else) sold for $486,233. But by the end of the year (last week), this had dropped to $451,436. That is a correction of almost $35,000, or 7.2%. And negative seven per cent is a helluva different story than the plus-four per cent that the realtors shoved down the throat of a hungry media. In fact, most of the price decline happened in the last month (suggesting this was not a seasonal phenom).
As for the cost of a SFH in 416, in May that property was changing hands for $774,046. By last week it had plopped to $701,845 – a drop of $73,000, or more than 9%. On an annualized basis, that is 15%. Interesting that when the stock market falls by 10% it’s gravely called a ‘correction’. A drop of 15% is called (on this blog) ‘a meltdown,’ leading to the collapse of capitalism and roving gangs with hot tongs looking to castrate anyone owning a 5-series Bimmer, or above.
In other words, when Jason Mercer, the realtors’ analyst says: “Very tight market conditions meant substantial competition between buyers and strong upward pressure on selling prices,” his shorts are smouldering. It’s not exactly a lie, because that was true for part of the year. But it is now.
And how can you blame the guy? How can you expect a paid shill of the real estate industry not to make stuff up when he’s taking his lead from the country’s most esteemed economists (who work for banks)?
At the same time we got the evidence cited above of a statistical correction in the nation’s fattest housing market, a Toronto economics conference heard CIBC’s Avery Shenfeld proclaim house prices may be overvalued by 15%, but “The catalyst for a correction just isn’t there. We’ve largely lent to those who have the income and ability to pay.” Mr. Shenfield has a most promising career as a stand-up comic. But BMO’s Doug Porter is a virtuoso. Said he: “The conditions aren’t in place yet for even a mild correction in the Canadian housing market, let alone a serious one.”
So there ya go. Now, is there any wonder why mortgage borrowing has been increasing all year at the breakneck pace of more than 7%? Why we’ve surpassed the Yanks in the household debt Olympics? Why the kids continue to be so much willing cannon fodder for the banks? And, of course, why the danger keeps augmenting?
At a time when we need truth, there is little.
Now, my confession.
From time to time I publish letters on this miserable blog from people who write me because they probably have no friends left. I am routinely accused of making these missives up (like I have time) because they don’t match the experiences of those who read this site and know everything.
I confess I’ve thought about this act of fiction. I’ve even wanted to create letters that hopelessly humiliate the gold-pumping, doomster nimrods or the insufferably smug fearmongers who turtle in their GICs. But, alas, I was unable. My keys bled as I typed. I wept.
Sadly I must confess every single letter posted here has been has been real. Worse, I have one more for the haters.
Shamed beyond words, I hand this over to you, my unrelenting dogs, for your counsel.
My wife and I are a pair of engineers in our late 20’s, and we’ve been following your blog for a while now. We’ve been hesitant to write you this entire time, because, well, you just tend to make fun of people who do regardless of how good or bad their situation is. But now we feel we kind of HAVE to write you, because you’re actually a big reason we find ourselves in our current situation.
Following your advice, we’ve resisted pressure from friends & family to buy a house and have instead been renting and quietly socking away money into our down payment fund. Now, six years later, we find ourselves in the surreal situation of sitting on a down payment fund that’s grown to $500,000.
A typical house-horny virgin reaction would be to go blow it all on a house. Here’s what we’re thinking instead: continuing to follow your advice (it’s worked out so far!), we invest the 500K in a dividend-producing portfolio. Then, when we find a good deal, we buy a 500K house on a mortgage. The portfolio’s yielding 6%, and I can find 25Y mortgages @ 3.5% fixed for a 5-year term, so the portfolio pays the interest and then some. We’ve proven we can save 500K in 6 years, so by the time that 5 year term is up, the mortgage will be gone (or mostly gone). And then we’ll be in our 30’s, we’ll have a house, no debt, and the portfolio will still be there generating 30K of (mostly) tax-free income, regardless of market flucuations. That’s enough to cover our living expenses if housing is out of the way. So…I dunno, we retire?
So here are my questions:
1) Something about this plan seems fishy. Is there a glaring fatal flaw that I’m just not seeing? I mean, if retiring in our 30’s was this easy, everyone would be doing it, right?
2) I would consider myself a beginner investor (all that money IS sitting in a savings account, after all). Do you think it’s actually realistic for me to build a 6%-yielding portfolio? Or is that number only realistic for someone like YOU (i.e. investment author and financial guru who used to be head of the CRA)?
Thanks, and you can start making fun of me now. I have skinny little girl-arms, so you can start with that if you’d like.
235 comments ↓
1st?
This letter must be made up since there is no such thing as a female engineer. Unless the “wife” is male?
If your letter writer was intelligent, he would keep renting and become part of the 1% club in 5 years. Then he could also buy a home for pennies on the dollar, with the investment income, and retire at the same time.
If he wants investment advice, he would also be well served to flip back through your previous posts, gleaning good information as he goes – or alternately, call Garth and get him to manage your portfolio…..
A lot of us don’t believe YOU make up what goes into the letters you print…
http://www.spiegel.de/international/world/0,1518,806772,00.html
When Carlo Ponzi, a dishwasher from Parma, Italy, immigrated to the United States in 1903, he had $2.50 in his pocket and a million-dollar dream in his head. He was able to fulfill that dream, at least temporarily.
Ponzi promised people that he would multiply their money in a miraculous way: by 50 percent in six weeks. With his carefully parted hair and charming accent, Ponzi beguiled investors and fueled their avarice. The first investors raked in fantastic returns. What they didn’t know was that Ponzi was simply using the next investors’ money to pay them their profits.
a good read, enjoy.
2) Yes. Just hire Garth or someone like him. That tart is for rent, cheap, just drop him a note.
1a) You missed the costs of ownership. Taxes, bigger insurance policy, repairs, yard maintenance, upgrades, blah blah blah. Not to mention all the time you spend on it. Houses are money pits.
1b) It only looks easy because you have *two* engineering salaries and you’ve got your heads screwed on straight about debt and possessions. Most people are hung up on buying stuff and have only one good salary plus kids ($200K+ each to maturity.)
1c) Retiring on 30 a year at 30 years of age assumes no expensive surprises. Getting old costs a *lot* without a company health plan. You’ll probably run out of money at some point.
My personal recommendation: if you want to live in a house in TO or Van or Cowtown or some other place that is going to sag, rent one for a couple of years. You might find you really don’t like the damn things. I know people who swear “never again!”.
“Something about this plan seems fishy.”
Here’s my choice for “fishy” (or, at least, something that would get in the way of this ‘plan’):
You have 2 highly-paid people in their late-twenties that want to buy a house… but this rarely stops at a house: kids, cars, renovations & furniture, vacations, etc. etc. get piled on.
So, you’ve saved $500k without any real expenses in your life — and obviously without any setbacks or changes to the plan you’re on.
In the next 6 years, SOMETHING will change — likely kids arrive on the scene, and one of the incomes disspears either due to mat. leave or that job being cut in the recession.
oh – and do I get a writing credit for posting about the misleading TREB stats earlier today?
http://www.greaterfool.ca/2012/01/04/trojan/#comment-142991
You are always an inspiration. — Garth
Mr & Mrs Engineer-
You’re the kind of people I really admire. SAVERS 1st consumers 2nd. Yes, you should be able to get 6% easily.
Save another 20% for a good down payment, and pay the new house off in 5 years, or so.
Then smugly peeve all your friends, because you won’t really give a ratz zass what happens to the economy (within reason). Money is NOT everything, but trust me, it can buy a lot of it.
Good Job, and i don’t care if you have skinny arms, or your wife needs a shave.
yes, I believe you just wrote that. but if you didn’t…
save another $500,000 in the next six years, and then retire.
and for God’s sake, get it out of the orange guys shorts.
#1 TurnerNation on 01.05.12 at 10:04 pm
1st?
***********************
TN! You get the New Award for Doing the First Thingy!!
http://bit.ly/zHDcxn
The rise in prop assesments this year is another windfall for local governments…one has to wonder where all the money is going? Schools are broken down…but pay and pensions are up up up……..seniors are starving…..but holiday flights are fully booked…….food banks are at record capacity…….well ..you get the story. The money doesn’t seem to be filtering down to the people who should be getting it. Is this a type of institutionalized corruption we’re seeing Canada…where a cadre of the elite are fat and greasy…where the average guy gets boinked and has no say in the matter due to gag laws and politically appointed judges? Where’s all the money going guys? All this additional ‘value’ serves no one except the greasy fat elite. Every year..tax creep in every aspect………..where the f**k is the money going? Your average citizen can’t pay this additional 20% a year without something breaking down…seniors and those on fixed income are living below third world standards……..try looking into the life of a disabled person…..lets take a look….hmmmmmmm…fat cat on fully paid holiday….disabled person starving….nice eh? Thats institutional Canada for you……lets all NOT look shall we.
To the engineers, it appears that you have little investment knowledge, so I would recommend that you seek out help with the investments.
Also, if you buy a house, you may find that it eats up a little more captital that living w M+D, however, you seem to have a grasp on saving, so perhaps it can be done.
Personally I would buy the house, get a heloc, and secure a better rate for the investment loan than the mortgage rate.
Also….expect rates to be higher in 5 years.
Our Government continues to punish savers….Probably because the lower interest rates are the more they can do what they love to do ——–> Spend Money we don’t have….
If you are just a normal peon citizen and you do what the governments do…..you will eventually default…
Well, Mr Engineer, don’t quit your day job, but that pile of money certainly takes the pressure off. You can actually give your prick boss the finger, and still feel good about it the next day. Starting your own business is a real possibility now too, if you’re so inclined. Of course that is risky, you could lose a lot of money. Starting a family, raising kids, growing old, that all costs money. And don’t forget the inexorable march of inflation, which will eat away at the $500k (and the income it produces) unless you keep growing it at at least the same pace.
Don’t buy yet. Keep building up the vultch chest, and when the time comes, swoop in.
Don’t forget to make your mortgage tax deductible. Buy the house clear, mortgage it to the hilt, buy dividend-producing assets with the mortgage, deduct the interest from total income, and pay off the mortgage with your dividend and other income.
But do forget retirement in your 30’s. Wait until your rich enough to do it in style.
You gotta buy yourself a corvette first along with a ski-boat. Then start thinking about your next vacation. Silly people.
This couple has been in the work force for a maximum of 10 years, likely less as they both have degrees. So lets be generous and say they somehow managed to gross an average of $200k per year for 10 years, with a net after tax income in the range of $100k per year. And miraculously they managed to save nearly half of their annual net income or $50k per year? Every year for 10 years? In their 20s? And these money “savvy” kids are keeping it in a measly savings account?
Someone is being played here Mr. Turner.
Garth Realtors over here in Perth Western Australia are no different.
in The Sept 2011 Qtr Perth housing prices fell $30,000 or $2300 per week. This is the latest offical data available.
However our local Realtor Body tried to argue that if you took the long term view { 80 Weeks } things were not that bad because prices had only dropped @ $590 per week.
Can you believe they would actually be be dumb enough to put up that defence of prices.
Talk about shooting yourself in the foot.
(Read for yourself)
http://nfbpsh.blogspot.com/2011/12/reiwa-mouthpiece-confirms-perth-house.html
BTW latest Perth land sales data shows land sales have dropped by 70% !!
Now banks are forcing developers to sell stocks & get their houses into order.
The Great Perth land sales have started with $110,000 discounts on $550,000 blocks of sea side land.
http://nfbpsh.blogspot.com/2012/01/perth-land-sales-fall-70-prices-slashed.html
Hang in there Canada we are leading the way & you guys are going to be not that far behind us.
Pair of Engineers:
Your plan to buy a $500k house is sound. If prices drop, you can just trade it later for a bigger one. No big deal.
You do not need any advice from this Blog, you are already in the 1% club (considering your ages). Wayne Gretzsky did not take his advice from beer league hockey players and neither should you.
Garth, you continue to demonstrate that this blog is not meant for average people, but for people sitting on millions in liquid assets or youngin’s with $500K to burn. :(. . . .
So write me. — Garth
#2 Really? Is it still 1950 in your neighbourhood? As the female counterpart to an eng-eng pairing I can confirm that we are indeed real. A large portion of my circle of friends are eng-eng pairs who met their spouse at school/work due to assortative pairing.
‘Assortative pairing’ is the fancy biology term for ‘like-pairs-with-like’ and results in the power earner couples of dentist-dentist, doctor-doctor, lawyer-lawyer, etc.
The increase in women competing professional university degrees in the last two decades is one of the dominant reasons for growing inequality among households. Forty years ago a ‘professional man’ might have paired with his secretary but now is more likely to pair with another professional. So if you’re a walmart-walmart cashier pairing it could be a rough life.
As an aside, congrats to the couple in this letter. Inspirational!
Man some people live such a boring life scrimping and saving and worrying all the time while life passes them by. Some people know nothing about risk taking or investing or starting their own show, so thats why they sit in a cube all day answering the phone and email and praying to their blackberry while “the man” circles near by.
I had one of those engineering jobs and I would never go back. I will eat sardines under a bridge before I would ever take it up again. Fortunately, I knew how to take a risk and won’t have to worry about either of those things happening.
A million bucks each for these upper beaches Toronto houses on a tiny lot, with horrible interior finishings?
http://www.realtor.ca/propertyDetails.aspx?propertyId=11321010&PidKey=1177446542
http://www.realtor.ca/propertyDetails.aspx?propertyId=11257890&PidKey=-1753785140
Too rich for you? How about 600k for a 12 yr old teensy townhouse in same area:
http://www.realtor.ca/propertyDetails.aspx?propertyId=11373722&PidKey=-260446865
A lifetime of debt slavery for a mediocre product. No thanks.
“In other words, when Jason Mercer, the realtors’ analyst says: “Very tight market conditions meant substantial competition between buyers and strong upward pressure on selling prices,” his shorts are smouldering. It’s not exactly a lie, because that was true for part of the year. But it is now.
And how can you blame the guy? How can you expect a paid shill of the real estate industry not to make stuff up when he’s taking his lead from the country’s most esteemed economists (who work for banks)?”
==========================================================================
It’s a pity so many people are so easily taken in by what are nothing more than industry con artists.
Does anyone remember the Chief real estate con artist of the US National Association of Realtors? His name was David Lereah, and he is the former Chief Economist of NAR. You would think that if anyone in the entire real estate industry could predict where prices would be going it would be him right, I mean he was the chief economist? Well not only did he predict that prices would continue to climb past the end of the decade, he wrote a book about it. That clown was in front of the media non stop telling new home buying suckers from coast to coast that there was no bubble, and there never would be a bubble. Well we all know how absolutely wrong he was.
FACT, Realtors, developers, the CMHC, mortgage brokers, etc. have a VERY STRONG vested interested in pumping prices and convincing people that prices will go up forever. It’s is nothing but pure, self interest motivated propaganda.
Here is a quote from David Lereahs book which was put out just as the US Real Estate market was beginning the start of it’s meltdown.
“Some of today’s hot residential real estate markets are beginning to cool down a bit. As predicted in my first edition, for the nation as a whole, the boom is winding down to a healthy real estate expansion. There will continue to be great opportunities to build wealth in real estate for the remainder of this decade. Some in the media and elsewhere claim there is a housing bubble, and that it will eventually burst, similar to the stock market bubble debacle in 2000. As I demonstrate throughout this book, their reasoning is flawed, a point I have driven home time and again on major business television networks like CNBC and CNN in recent years. Nonetheless, each year the naysayers come back sounding further alarms. Fortunately, given the reaction from the marketplace, few are paying attention.”
This guy the whole way down kept telling the media that it was only a cooling down, a leveling off, a re balancing of the market , etc. etc. until he finally lost every shred of credibility and quit. A Bubble is a Bubble is a Bubble, they never just quietly cool down!!!
Here is his book, it’s good for a laugh now!
Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market
http://www.amazon.com/Real-Estate-Boom-Will-ebook/dp/B0012SMGME/ref=sr_1_4?ie=UTF8&qid=1325820199&sr=8-4
I call BS on the $500K. As an engineer myself, I know that if under 30 they have only been working in the industry for maybe 6 years which means maybe, just maybe they just got their P.Eng. Without a P.Eng, I don’t care what sector you are in, you do not get paid enough to save that kind of jam. Starting wage for an engineer fresh out of University is $65K at best.
“I’ve even wanted to create letters that hopelessly humiliate the gold-pumping, doomster nimrods”
Bring it on Garth, just be careful not to mention golds yearly increases over the last 10 years, or the failing economies of Greece, Ireland, Spain, Italy, Hungary, Britain, Portugal and especially the US.
Its a waist time, nothing is going to stop until the Canadians wake up AND do something about it! Giving money to everybody to invest in real estate at ridiculous low interest rate, microscopic down payment that can be given back by the bank, even more! So sleep well its sadly gona last as long as the ones in power decide whats good for us. And they think you should be more in debt, much more.
Gentlemen, come on now. Attempting to compare a seasonally high May to a seasonally low Dec is hurting your otherwise sound logic.
Surely you didn’t expect to post this without being called out.
A better argument is the declining year-over-year gains witnessed over the past few months, down to 4% now.
So you’ve got a half mil in cash savings and rather than using it to buy a house that costs $500K or less , you’re going to put this money in harms way on the stock market casino in the magical 6% yield portfolio to start the endless conveyor belt of solid returns year after year after year. Then you’ll sign up for a one sided mortgage agreement with one of our greedy banks and pay them a large chunk of change for the priviledge of borrowing from them plus the cost of the loan itself. Then by your late 30’s you’ll be kicking back on the golf course in Phoenix as a full time job. Dude, why not go and blow the load in Vegas? Tax free income for a non US resident. You can’t go wrong with the slots you know. Actually gambling in Vegas is a dumb thing to do with your hard earned money, but not as dumb as your game plan.
Where did he say anything about putting money in equities? — Garth
I’m making my kids read this post. This young couple is smart…sure… But more important, they have discipline, something that is lacking these days. Hence the many “Jones” Families that will be up debt creek with no paddles this year.
Keop talking dirty Garth..or I will sue you !!!
#12 truth hammer on 01.05.12 at 10:43 pm
I was wondering the same thing today. Little People, pay your carbon taxes (a tax on thin air and Goldman Sachs carbon credit trading) as our Glorious Leader’s
shiny new F-35 jets streak overhead, in the regime’s latest show of military force (N. Korea eat your heart out).
Ask not why the elites do not pay carbon taxes. Rather, take solace as they defend “Our way of life” against evilodoers and miscreant thinkers in far and away overseas lands.
For 2012 “Our way of life” inlcudes: a reduced 2-party Federal system (Libs are gone), new carbonazi taxes, 20% hike in water, gas, hydro; 4% property tax hike, and HST. I’m loving my freedom!
Well at least I can write a Letter to the Editor without fear of a knock on my door. Then again, said letter will acomplished absolutely nothing. For something I must hire a million dollar lobbyist firm. Yep “democracy” ain’t free.
Well at least I am not living in a brutal military regime that bombs the h-ll out of random people in countries who pose no threat to us. Oh wait, we did. (“He’s killing his own peoeple!!”) Just following orders.
Well at least we still have habeus corps and that quaint old Geneva Convention. Oops, 1000s arrested during G20 including uniformed bus drivers on way to work. “This isn’t Canada anymore” a direct quote from our uniformed oppressors. Google it.
just a rough estimate to analyze the numbers:
6 years ago, a good starting salary for an engineer was about $60k (ontario); however, most would start at $50k. Assuming you two got paid the same and if you now make $100k, I’d estimate over the 6 year period, you two each raked in $300k (net) = $600k total. Meaning, you two have spend about $100k in the last 6 years or say approx $15k per year.. which is practically nothing.
The following questions run through my head:
– You two had no student loans?
– Don’t own cars?
– Pay extremely cheap rent?
– Hardly eat?
– Rarely go out?
– Following the ways of the Amish?
I assume you two are not comfortable living the way you are, otherwise, why change and buy a house?
You’ve built a solid amount of capital that you two can even rent a nicer unit, live a bit more lavish-like and still throw more bills onto your cash pile.
Why buy a house if you can earn 6% on your investments; as Garth mentioned in his previous blogs, the interest will pay your rent off. Thus you live for free while continuing to build capital through direct income.
Now the question is, how do you invest your money and earn 6%? Garth makes it seem so easy and pretty guaranteed however, many of us still have no clue how. Garth, feel like elaborating?? Or are you going to continue teasing us with little bits of info throughout your blogs?
“I’ve even wanted to create letters that hopelessly humiliate the gold-pumping, doomster nimrods or the insufferably smug fearmongers who turtle in their GICs. But, alas, I was unable. My keys bled as I typed. I wept.”
Oh go on. Think of the comic relief.
Is anyone an engineer out there? How much do they typically make in say oil and gas or telecommunications? Like entry to intermediate level say.
If they’ve saved that much they are making like 150+K per year, each. If they graduated in their mid 20’s and spent half a decade at work.
This just doesn’t sound realistic to me, like many who lie about how much they make, especially when you considering avg wages and household income in Canada.
Can anyone comment??
Aussie Update
Happy new year to all fellow dawgs and of course to you to Garth, boy I missed my daily read.
John Clake, Aussie comic would bought us “but who’s going to pay the banks” has a crack at the Aussie RE industry. – MMMM Aussie humor – hope it translates ok.
http://www.youtube.com/watch?v=4tzCYY93NNY
Unemployment keeps growing
Four years after Australians elected a Labor government to address the plight of working families, the nation’s unemployment level has risen by 130,000.
http://afr.com/p/national/howard_battlers_are_back_vying_for_rr3hsXwzdOTShN0JKr527I
It’s called deleveraging
The services sector continued to contract in December, as concerns about the global economy kept households wary about spending.
http://www.theage.com.au/business/services-sector-faces-headwinds-20120105-1plt7.html#ixzz1ieCYBOfp
Video – The foreclosure ghettoes are not always in the ‘mortgage belt’, but the homes there won’t sell at even a fraction of their original cost.
Sale signs have gone up across the country, as the financial pain hangs high for all to see. While the banks enjoyed record billion dollar profits last year, they sent the sheriff knocking on the doors of plenty of families who failed to meet their repayments.
And they didn’t discriminate between the very rich and poor. Repossession was up 22 per cent last year, and it seems we’re not out of the woods yet.
http://au.news.yahoo.com/today-tonight/latest/article/-/12486561/mansion-repossessions/
Real estate fascination under the hammer
http://theage.domain.com.au/real-estate-news/real-estate-fascination-under-the-hammer-20120103-1pit5.html
Cheap Debt is gone.
one of the big questions for the Australian economy, and more specifically the Australian housing market, is whether the Australian banks are going to be able to source funds at a rate that allows them to maintain interest rates in line with any movements by the RBA.
http://www.macrobusiness.com.au/2012/01/cba-pays-the-price/
RP Data December home price index – But houses only ever go up in “it’s different here in Australia”
http://www.macrobusiness.com.au/2012/01/rp-data-home-price-index-for-december/
RE industry full of confidence for 2012 as “From their peak in 2010 property values in Brisbane are down 9.5 per cent”.
http://www.couriermail.com.au/life/homesproperty/property-revival-will-be-slow-going/story-e6frequ6-1226235142721
Houses only ever go up in China ?.
http://online.wsj.com/article/SB10001424052970204331304577140274059333142.html?mod=WSJAsia_hpp_LEFTTopStories
Houses only ever go up in Ireland ?.
http://www.irishtimes.com/newspaper/property/2012/0105/1224309824485.html
MMM Houses only ever go up in Australia and Canada – LOL.
Funny how this guy uses terms such as ‘surreal’ and ‘fishy’. I’d say the title to Garth’s blog today says it all… this clueless guy is spinning a bunch of BS and Lies.
I am astounded sometimes at the amount of money young professionals are able to accumulate before they are 30. Does this couple have another source contributing to the half million fund? I guess I am envious. Where on earth can an engineer maybe 5 years out of school get an income, taxed in Canada, that can amount to this kind of savings? Just curious. Please can they respond to this question?
#26 Another Engineer on 01.05.12 at 11:46 pm
I call BS on the $500K. As an engineer myself, I know that if under 30 they have only been working in the industry for maybe 6 years which means maybe, just maybe they just got their P.Eng. Without a P.Eng, I don’t care what sector you are in, you do not get paid enough to save that kind of jam. Starting wage for an engineer fresh out of University is $65K at best.
———————————————————
This makes more sense to me. When I worked in HR for a big telecom they paid engineers 40-50k range for entry to intermediate level.
Which coincides with Canadian avg salaries. 150K range was senior/director level stuff, and those were people well in their 40’s with the backed work experience to match the pay. And this type of work/pay positions don’t open up often in the workplace.
#26 Another Engineer
Not at all. Look at anyone who entered employment shortly after the Y2k market crash with “worthless” stock options. The markets have done quite well in the last 10 years so it’s not just possible; it’s a reality. Hell, I have family members that have made that much on RE in the past decade let alone their incomes. It’s one of those luck-of-the-draw things.
Though I cant say he is typical, I do know a 28 yr old P.Eng who made $130K last year. No, he doesnt work in the city, he goes where the $ is.
#40 Spending a few years on site location mining, offshore oil/gas or field time on location with overtime are opportunities for young engineers to earn $$$.
Mech eng I went to school with saved +80K a year because he was constantly shipped to different manufacturing plants. He had almost no expenses because his hotel + food was paid for by his company. He got out of it after 5 years and had a great head start on the rest of us who took more stationary jobs.
Another mech eng went abroad to work in mining. Same deal. No expenses (food, shelter, rent covered by company) and infinite overtime.
#2 Bubba,
You are a complete a$$hole, there are plenty of female engineers, and it’s not unusual for them to marry male engineers since that’s who they go to school with. Sure, there are plenty more male engineers than female, but the girls are up to 30% of the enrolment. I am surprised and disappointed Garth did not delete you post. PS I am an engineer, I know and work with these females. Some of them are brilliant.
#21Guy_in_Regina
Petty. Being all jealous of people who put in the time to go to school and work hard is just petty. Petty, petty, petty. Go back to school and get a good job if you don’t like your lot in life, Mr. Petty.
As to the letter,
Garth, sometimes when the student is ready the teacher appears. Well, the teacher has been online since 2008. I recommend Money Road, a GarthPlan ™, and thanks for posting this letter, proving not everybody is a bunch of lazy socialist jealous steal-from-your-neighbour type turds.
One thing I am having trouble with is how many of your commenters are so insanely jealous of anyone younger than they are who worked hard, got smart, and did ok. It’s pathetic. Everyone knows engineers do well, and they do well with money too because they can do math.
Lies = Dennis Gartman
late 20s , 500k savings sound a bit hard to believe but its ok i guess
Winnipeg-based biotech company Cangene cutting 120 jobs, shakes up management
The Canadian Press – 4 hours ago
http://ca.finance.yahoo.com/news/winnipeg-based-biotech-company-cangene-235103123.html
#40 City Slicker: Your message seems more correct. Unless they are working as software developers, and possibly on contract, for which an engineering degree isn’t required.
–
A wife was in bed with her lover when she heard her husband’s key in the door.
“Stay where you are,” she said. “He’s so drunk he won’t even notice you’re in bed with me.”
Sure enough, the husband lurched into bed none the wiser, but a few minutes later through a drunken haze, he saw six feet sticking out at the end of the bed.
He turned to his wife: “Hey, there are six feet in this bed. There should only be four. What’s going on?”
“Nonsense,” said the wife. “You’re drunk, you miscounted. Get out of bed and try again. You can see better from over there.”
The husband climbed out of bed and counted. “One, two, three, four. Damn, you’re right.”
*
“Now, my confession.” Confessions (true or false) are good for oneself. “(This speaks to my coming confession.”) The reality of Garth’s confessions are littered thruout here.
“. . . we’ve resisted pressure from friends & family to buy a house and have instead been renting and quietly socking away money . . .”
From “The chaste renter”, a few days ago: “Rent of $4,000 a month ends up being $240,000 over five years. [– But there are no property taxes no pay. No building insurance. No closing costs moving in. No transactional fees moving out –].”
Build up a nice nest-egg first (which you already have done), add a decade or so on then see what kind of position you’re in, and you won’t have paid a dime in costs, save for basics.
If you still want to buy, follow #16 Herb’s advice; prices will be far lower then, and this is not taking anything into account that’s happening in TROTW at the present time.
Life can turn on a dime. Doesn’t hurt to stay on the sidelines for a while.
*
#33 TurnerNation — Nice rant and spot on! Some people can’t handle truth.
*
Soros As Brazil’s economy has overtaken the UK (a month or two ago), why would the WH farm this out to Brazil instead of keeping it in house? Obooma New jobs plan? Rich, but CNN are known for being liars and re-arranging news; Banks park cash with ECB; Irish squatters; Itakian tax dodgers; Hungarian Goulash; China rejects sanctions on Iran., and Top Ten importers of Iran’s oil, , but Interference again; US in decline since joining WTO.
*
Iowa ‘Owzaboud a recount? Nikola Tesla and ten inventions that changed the world; and The Iran Central Bank, same as Libya and Syria’s; Straits of Hormuz This should spice things up; SOPA US threatening Spain for not bringing in SOPA-style law, but it doesn’t work anyway; Albertq and BC have had strong winds, but are not the only ones; Heavy tumor Some things have to be seen to be believed; Underground Ice Caves Colorful.
To all the doubters about the savings of this couple, it is possible to amass the savings that they have – its called living at home while earning a professional salary
Since both of the individuals are engineers, the odds are very good they share a certain ethnic background which supports “adult-escence” or the failure to launch into adulthood.
I believe they left out the fact they they each live with their parents, and contribute nothing to the household expenses (ie. rent free, utility bill free, grocery bill free, etc). I am sure that had Garth known that little fact, he would have chastised them for not flying from the nest.
Engineers making 60k, when they have no expenses, are like engineers making 120k who actually live independent of mom and dad. Do the math folks.
If they are not living at home, then they are not telling the truth about their “savings.”
Unless you go to the hell camp in fort mac, an engineer fresh under 30 is only going to be making 60-70k plus maybe some company savings plan and a bonus. Take $20k tax off that right from the get go and your take home is about $50k. Take another 25% for living and you are $35K disposable income. Living like scrooge and eating cheese whiz after that becomes 2 people x 6 years x 35k = $420k. Yup I guess it can be done, but buy have you missed out on some fun times in your young years.
During the same time, I lived like a mad man, drank, partied, had lots of premarital relations and owned properties that tripled and quadrupled in value. I made 3 times that not even worrying about saving or investing a nickle.
#2 and #22
Agree whole-heartedly with #22 on this one…gone are the days when the primary breadwinner is the male while the little lady stays at home and stokes the homefires. I’ve always been primary breadwinner (some years by only a few thousand, we have a healthy competition every year) and my husband is more than ok with it (why wouldn’t he be? be honest: if your spouse works outside the home, would you prefer them to bring in 60K or 120K?).
And identical to #22, like-seeks-like is evident amongst many of our friends: eng-eng, Dr-Dr, CA-CA, etc…where the romance began in school, etc…and this is in the City-meets-Country Fraser Valley, not Westside or West Van.
While I expect #2 was intentionally trying to fan the flames, unfortunately there are still too many men out there who still say to my husband in astonishment “You let XXX work and travel for work??”. Seriously people, get with the times.
#22 CoB on 01.05.12 at 11:22 pm
Too funny. Thanks for the science lesson.
Eng-eng pairing? Assortative mating? Pretty hot stuff.
Dorks gone wild 2012.
Start with Elizabeth Warren’s The two-income trap, then come back and post something intelligent about professional couples, income disparity and quality of life.
#2 Bubba is just talking smack anyway (funny tho’). Loosen up a little.
Most sheltered professionals forget that not much actually separates them from a job at Walmart, toots.
#25 Jsan- thank you for that link to Lereah’s book on Amazon. I just finished reading the customer reviews. I’m still wiping away tears because I laughed so hard!
Of course Garth’s letters are real, and I got a lot of great dating advice from this blog last year. I’ve since met a girl who likes me for who I am (and not the Vancouver stainless steel and concrete that I don’t have!)….even when my used car blew its starter in the middle of a recent date she stuck with me!
There is hope for Vancouver renters after all :P
Is anyone an engineer out there? How much do they typically make in say oil and gas or telecommunications? Like entry to intermediate level say.
My wife is a chemical engineer with post-doctoral training (12 years of university) and ten years of industry experience. She is an adjunct professor and extremely good at what she does.
Of course, this being Canada, it does not mean all that much. A person in her job class will just break a 100K…much less than many master tradesmen.
Remember when America’s debt was about $8 trillion? That was pre-housing crash. Today it is $15 trillion.
Check out the graph in this article to see what happened post 2006: http://seekingalpha.com/article/293312-hyperinflation-and-the-fiscal-case-for-gold
Canada could easily see the fiscal problems experienced by the US and Europe if Canada’s real estate bubble implodes.
I call BS on the engineers’ savings. There’s an extra 0 in there.
Why bother doubting if they had $500k or not. The printed number was 500 – whether they had 25k each to start working coop terms, then maybe got nice envelopes from families at a 500 person wedding and saving 80k a year for 5 years. There are many variables that add up to a number.
It’s entirely possible, with or without their P.Eng. The average starting salary in BC is ~$60k and very localized. Work in the boonies or for a mining company and you’re close to six figures including OT and bonus.
You’re forgetting that these two could’ve been living at home and having everything paid for by their parents.
I just want to say that I wrote a letter to Garth last year, and he posted it in a blog entry almost VERBATIM except that he was kind enough to change my name. With the little I gave him about my situation, he gave some great advice. By contrast, the commentators, working from the same information, made assumptions and presumptions were off base, in poor taste, and in some cases, downright hurtful. A couple of comments were nice and supportive though.
Also, as an engineer, I can say that it is easy to make a lot of money early in one’s career, working weekends and evening shifts that others don’t want, or working in remote locations. As a member of a couple, I can attest that it is easy to make ends meet on one salary, and invest the rest. Rent, make meals at home, bring a lunch to work. I drive a 25 year old car, that I paid cash for, and have the tools and skills to maintain myself (engineering degree, remember?). We’re not at $500k yet, but we will be there soon.
Salary-wise, I started my career in the low 40s, 15 years ago. Now I’m on track for $100k after bonus, and more this year if a couple of consulting contracts pan out. When my investment income gets high enough, I might stop working for a while, but if ever I need a steady income, all I’ll have to do is dust off that degree, and get paid a lot of money for something I love to do.
Also, as an engineer,
#25 Jsan—-yes David Lereah was a real piece of work but you should look at the guy who took over for him—Lawrence Yun—-google his name–hilarious stuff–nicknamed Bagdad Bob or Sunny Yunny–among others–
heres a couple of links–scroll down in the second link to LMAO
http://www.zerohedge.com/news/existing-home-sales-debacle-larry-baghdad-bob-yun-confirms-overstatement
http://www.theburningplatform.com/?tag=lawrence-yun
this is the guy our RE pumper DA quotes in some of his mythical blog entries
Respested Garth
Either you are making up this letter or they are hiding something. How can you be responsible for them socking away 500K in 6 yrs. You have not been writing this blog for 6 yrs. This blog is hardly 5 yrs old
I do not know what to believe anymore!!!. On one hand people are buying these expensive houses on average salaries and on the other hand we hear if interest rates go up a couple of points all hell will break lose.
I really hate the letters but my sister sent one in and you posted it. So, I would say that Garth is an honest Dear Ann Landers want to be….
Cheers,
Not sure if that is a good thing for those people that love to hate…
Life is diverse get your groove on baby…yeah and 2012 is going to rock!
OK – to me, this story is ENTIRELY possible.
Let’s take the following. Let’s assume an average gross of $75,000 per year for each of them since graduation, max out RRSP contribution of 18% or $13,500 per year. That leaves $61,500 taxable and taxes on that is approximately $11,000 (per turbo tax). This nets one of these engineers, after full RRSP contribution of $13,500, and taxes of $11,000, $50,000 cash, to live on. So they live off of one of their salaries and they save they other.
$50,000 net is $4,000 per month to spend. $4,000 per month is PLENTY to spend for two people if they are slightly careful and don’t consume, just for the sake of consuming!!
For savings, this gives them $13,500 each in RRSP contributions for total between the two of them $27,000 per year, plus $50,000 from the amount they net from the salary that they don’t spend. Thus, in total they’re saving $77,000 per year, EASY PEASY.
Assuming they’ve been working since they are 22 and are now 29, that’s 7 years. 7 years @ $77,000 per year = $539,000. Wow, they spent an extra $39,000 on something. Maybe they had a few nice trips and extras too!
We were able to TOTALLY save money like this before we had kids. It was VERY easy. And we still had a life. But instead of renting a $2,500 a month apartment, we lived in the ‘burbs and paid $1,500 a month. We didn’t own a car because it was too expensive and didn’t NEED one. And by the time I was 35 we had our house 100% paid for and more than the value of the house in the bank.
Two professionals, who are earning $75,000 a year and are careful with their money, there is no reason this can’t be accomplished. However, most are paying for expensive trips, leased BMWs, cell phones, mortgage payments and dinners out. That’s the norm.
Good for you two. You might not be able to retire, because, like Tony yesterday, he found that having over $1 million, you certainly don’t feel rich, but, you do have freedom of quitting your job, taking a sabbatical, and having a better life later for sacrificing a bit earlier.
BTW, since we had two kids we can’t save as much anymore because we need to pay for daycare, $2,000 per month, 2 cars, and need to live in a more expensive rental than we would if there were just two of us. (We live in a rental because we sold the house late last year for a (big) profit.)
So yeah, retirement’s not quite in the cards at 30, but financial security for the rest of your life is. And certainly didn’t have to sacrifice much to get there, did you?
Poor fellows- in their 20’s and already dreaming about retirement…
The past decade hasn’t exactly been very kind to certain kinds of engineers either. For instance, the people who studied to be the sort of engineers that Nortel employed — have mostly found themselves unemployed for the past decade. As others have said, I have a hard time believing that, absent some big-time inheritances, that $500k was accumulated on an engineers’ salary.
#40, yeah, the telecom field has been absolutely saturated in Canada, with positions receiving sometimes hundreds of applications per actual job — with sometimes even guys with 10-20 years of Nortel experience applying for entry-level positions. But not all sectors have been like that.
#39, I ask the same question, as I have an engineering degree as well (which has largely been worthless, especially with the telecom/IT glut, and a belief amongst employers that Nortel will rise out of the ashes and sweep us all back into the fold!). The answers I’ve received are usually extremely vague. I don’t blame the engineers for not wanting to give up their gravy train, but at some point, it really affects their credibility. Especially when the salary surveys done by organizations like APEGGA seem to indicate only a minimal increase in salary for professionals in Fort McMurray versus elsewhere.
the logical flaw is a need to own, or own in 5 yrs. when people buy with a mortgage, they don’t own outright until the debt is extinguished. so, considering the timescale of a typical mortgage (25 yrs), why should one be compelled to buy now, or even in 5 yrs? likely better opportunities to buy undervalued will arise in the next 10-15 yrs. we have a family with young kids and sold our CA bungalow in mid-06. we’ve rented various houses for $30k/yr – $45k/yr since. we’ve not once felt we were missing out or ungrounded. quite the contrary, there are great advantages to being entirely debt-free, liquid, flexible and adaptable – especially now. it may make sense to own a house again someday. but for me, that would be for purely economic reasons. meanwhile, there are far more important things to be concerned about than fretting over when it will be a good time to buy. owning a house, or for that matter – stuff in general, will not make life more complete. that is just a sales pitch. in fact, a distraction. owning, understanding and controlling (not repressing) wants and desires is the way to being happy.
btw, increased pm-related exposure to 45% tnw on the recent breakdown – my level of conviction there will be printing until they can’t.
A long time since I commented.
The couples saving in the letter is quite possible and feasible.
Below is a link to appega reported salaries (by company HR departments) in Alberta.
http://www.apegga.org/members/publications/salarysurvey.html
Very impartial, unlike most comments on this blog towards this couples incomes.
Good work for them!
Speaking of lies, things may be worse than most think, if the Edmonton Journal (a notorious RE-friendly rag) is publishing this:
“Turchansky: Do Canadians need 30-year mortgages?
We’re already on the verge of drowning in household debt”
http://www.edmontonjournal.com/business/Canadians+need+year+mortgages/5954218/story.html
Aside from being uncharacteristically “negative” on the prospects for RE and Canada’s dirty little debt secret, it features one of the regular blog dogs.
A surprising read – not for this blog, but perhaps it will make some sheeple question the status quo.
“NEVER UNDERESTIMATE THE POWER OF STUPID PEOPLE IN LARGE GROUPS”.
That saying pretty much sums up our real estate market right now.
I’m 29, married 3 years ago and have a 6 month old kid. Me and my wife have almost 650k in cash. She’s on maternity now. Last year I made only $27 000. On average over the last 5 years we have made $60k each, so combined $120k. We pay taxes, but basically save everything. It only costs us $12 000 per year to live, of that $6240 is for rent. We are very frugal. Once taxes are paid we cleared about $90k per year net, for 5 years, that makes $450k. Plus, I am a good investor, so was able to make some excellent returns in the market. All said an told, we are sitting on $650k, have no debt, rent a small apt, drive a 6 year old Chevy Aveo. My friends all laugh at us and pity our situation. (I recently quit my job (as a real estate agent co-incidentally)). Nobody knows about the cash stash… hahaha.
I’ve moved out of stocks and am sitting mostly on the sidelines now, waiting for something interesting to come along. If I can double the stash over the next 5 years, neither of us will ever work again… just live off the interest. The apartment where we live is a hovel, but it would easily cost $200k if we wanted to buy it. I prefer to rent for $520 per month. For $200k I can drive 1 hour south, to upstate NY and get a 4000 sq.ft Victorian mansion on 1/4 acre…. not that I would do it, but it puts things in perspective. Message to all readers: save your money, don’t blow it on useless crap. Have a plan and don’t listen to anybody else. It’s not about how much money you make, it’s about how much you are able to save.
#22 CoB & #44 nonplussed – It was a joooooooooooooke. Obvious now that there are engineers that are female, hence the lack of sense of humour and inability to detect sarcasm.
Dear couple:
You banked $500 K in 5 years, you have this kind of earnings potential? Nice! I bet you both love your careers too… but without the house, will she ever settle down and get off the pill? Start house shopping.
You both are a rarity in this world, people who can afford to buy a home so buy one. Why not? Affordability counts and the 6% idea sounds good, plus achievable so why not do that as well.
Now, for me going on and opening up my big mouth telling a young couple to buy into an inflated market (family plans and social value still counts) when anything can happen including recessions, unforseen accidents, pregancies, illness, injestion of toxins, neighbors from hell blah blah blah adnausium excetra… I suppose I should throw you both a bone for taking on such RISK.
Take your unused $20,000 TSFA and open up a self directed account and stuff 20 G’s worth of Canada Lithium CLQ:TO in your self directed TSFA (they hit a 52 week low today, hint, buy low sell high) and forget about it for 5 years. Should Lithium ever hit $10 a pound due to electric car demand a 1000 to 1500% return would not be out of the question in 5 to 7 with this stock considering its current market cap, potential earnings and dilution from here on in. (yes, I’m a speculator, thats what I do)
Best of luck!
Aussie Roy
Must be boring as sheet in Aussie land that you find the need to be spewing your down and under here in Canada. Misery does love company
I have my doubts that they’re pulling in enough at this age to save a cool half mill… potentially possible, but I question the authenticity of this. Maybe if they’re both petro engineers working long hours in remote areas, but then they’d never see each other…
Sorry, its a recession and Engineers are being decimated right now ! If you are still employed consider yourself LUCKY !
Conestoga College: Engineering Technologists are accepting jobs starting at minimum wage, I am not kidding !!!! Just talk to Dave Gardner, the coordinator of that program and he will tell you himself that the grads are “HURTING BIG-TIME”. Uniersity of Waterloo is having trouble finding enough co-op places for their co-op students, and once graduating many are making a lot less than $50,000 per year, most anywhere from $32,000 to $45,000 , no more than that for starters.
So I would say that these two youngsters are pulling your leg, they probably earn about $45,000 per year each ($35,000 net after taxes, etc.)
Total combined income after taxes = $70,000.
Cost of renting a nice house = $1,500 / month = $18,000 per year.
Cost of a compact car = $30,000 = $500/month financing = $6000 per year.
Now BOTH of the them will definitely NEED a car for their engineering jobs as engineering jobs usually require travel to on-site installations. So take away $12,000 from their income.
Cost of car insurance = $1500 each = $3,000 /yr
Cost of maintenance = another $2,000/yr (winter tires on rims alone = $1000 extra cost for each car)
Total costs so far = $35,000 / yr.
Now they need food to live on, so assume about $400 per month for the two of them for food, drinks, Internet/telephone, and entertainment. then add another $100 per month for clothes and medical / dental that is not covered by their employee’s medical plan, so total for this is another $500 / month cost, or about $6,000 per year.
So lets see how much this couple really has to invest each year:
Combined after-tax income = $70,000
cost of rent = $18,000
car financing = $12,000
car insurance = $3,000
car maintenance = $2,000
food, entertainment, medical = $6,000
So what’s left of their income is only $29,000 per year.
Engineers usually graduate around their 25th, 26th birthdays, so if they are in their late 20’s they have only worked no more than 4 or 5 years each.
$29,000 per year X 5 years = $145,000 in savings MAXIMUM.
Like I said earlier, this couple is toying with you, there is NO WAY they could have saved $500,000 unless they won the LOTTO !
Wow, late 20s and debt free and no student loans to pay back from the 2 engineering degrees and no car payments and $500, 000 in savings? WoW! You’re RICH!
15% decline coming as Garth states… i call BS!
When the Real correction arrives, it will be much more than that… and all domestic asset classes will suffer (or not if our dollar is devalued … then equals lower living standards).
Events that will lead to RE meltdown (in a few years):
1) Stagnant wages (due to offshoring and abundant labour pool via high immigration)…NO MORE MONEY TO PAY DEBT.
2) Higher taxes on salaried employees. Teachers, Police officers, etc will get less to take home. On the other hand, the Self employed will continue to rape the government with their ‘deductions’, thereby lowering their incomes. Anyways…this leads to higher taxes on the former…LESS TAKE HOME PAY.
3) Immigration will eventually be lowered as there will be a backlash of letting in more people when many are unemployed…LESS DEMAND.
4) In 2016, number of people turning 65 will equal those turning 20…ZERO LABOR FORCE GROWTH excluding immigration = STRUCTURAL BUDGET DEFICITS.
5) BC’s population will grow by 120,000 in the next 100 years if you exclude immigration…DO THE MATH WHERE DEMAND WILL COME FROM.
6) Higher Insurance rates, Gas Rates, Hydro rates, Telecom rates, and Health care rates…somethings gonna give within a few years!
So a 15% decline? Hardly… when it comes, expect a minimum 33% decline! In Surrey, have the immigration population works in the housing sector…if that slows down or busts, then look out. Not stopping at 15%.
Not yet though; 550,000 people continue to be let into the major cities.
If it were only true and these ‘ads’ weren’t a way to hide the embarassment of riches that is flooding city halls around the country because of the ‘real estate boom’. Do you think the federal government hasn’t organized this boom as a way to flood the coffers for ‘pandering money?’ If you didn’t think it possible…pinch your tender parts…..you’re sleepwaalking into the poor house.
http://www.theglobeandmail.com/news/national/toronto/property-tax-windfall-may-stave-off-cuts/article2292433/
“Oh well” they say, “we’ll improve student calories”….c ome fuc*ing on …..is anyone stupid enough to believe that will happen?
Walks every weekend…runs every weekend….drives for this..collections for that…….childrens hospital charities need money for broken blood machines etc etc because ‘there is no money’ ….schools are broke…..It is all about BS’ing the people into thinking that there is a shortage of money for the social issues people thought they were funding in the first place.
Hey…if we are able to stop the waste and the spending on outrageous perks for the elite this country would run with milk and honey plus we’d get a tax reduction of 50% or more !
Shut down all civil services and contract out the same…within days we’d have 90% improvements for the citizens while the unionista;s and sloppy fat got their come uppence…whats wrong with justice? We’d get our moneys worth and the work would have some accountability…instead of the system of favoritism we have now.
Hi Engineers,
While it’s uncommon for people to become financially independent in their 30’s it’s not entirely unheard of. Maybe check out http://earlyretirementextreme.com and http://www.mrmoneymustache.com for a couple of examples.
That pile of money you have saved up will give you lots of options. You should start thinking about what kind of lifestyle you would like to have if you didn’t have to work as much (or at all), and consider whether owning a house would be part of that. If you didn’t have to work, would you want to be tied down to a house? If so, would you want to live in the same area you currently live? Maybe you’d want to do some (long-term) traveling? Or if you’re planning to have kids, would you want one (or both) parents to stay home (or maybe each do some part-time work)?
If you had another $500k, would you really want to spend it on a house, and how much would that really save you over renting? (Factoring in maintenance, taxes, utilities, etc.) Instead, you could have that extra $500k added to your investment portfolio, paying your rent, and giving you even more flexibility.
It would be a good idea to learn more about investing; at the very least so you understand what various advisors tell you. Also, look up ‘safe withdrawal rates’; 4% is generally the most you should withdraw from your portfolio annually so that it doesn’t get drawn down and keeps up with inflation. With $500k, that’s $1666/month.
Finally, if you really want to buy a house, then buy the house with cash, and take out a mortgage/HELOC to buy your investments. That way the interest becomes tax-deductable.
Good Luck.
http://www.everydaymoney.ca/2012/01/according-to-economists-at-the-td-bank-a-larger-than-average-price-and-sales-correction-looks-to-be-in-store-for-the-housi.html
As for Garth’s astute observations concerning our homespun media fluffed spin on real estate, as aforementioned, why take the words of those who have the most to benefit from such opinions, as gospel? Why not, but for the grace of God goeth he, take the virtues of teachings at the mount for what they are when one sayeth, “as prices rocket skyward, risk grows?”
Oh, and for those who somehow believe that interest rates in Canada are poised to stay low forever, try BNN’s story on provincial debt (don’t forget to add federal to see where our true public debt to GDP story is and compare apples and oranges from there) at:
http://www.bnn.ca/
Conclusion, higher interest rates and higher taxes, perhaps much higher within 5 years.
Why is it that whenever there is a letter written by a young professional who has hoarded a massive wad of cash in an unrealistically short period of time and thus provoked cries of “BS!” on this blog , why are they always engineers ?
#27 Basil Fawlty
How is economies failing in Greece, Ireland, Spain, Italy, Hungary, Britain, Portugal and especially the US good for gold?
Garth, what did you think of the statements made by Craig Alexander of TD? He has been very cautionary in the past and seems to be a little more perceptive than his peers concerning the direction of our economy.
do you spend any money? please tell me you’ve travelled lately.
well done on the 500k..congrats!
Don’t buy a home…keep doing what your doing? you are being emotional about the house purchase
#36 City Slicker on 01.06.12 at 12:10 am
Is anyone an engineer out there? How much do they typically make in say oil and gas or telecommunications? Like entry to intermediate level say.
——————————————————–
Well I’m in Telecommunications and started contracting with AT&T on March 15th. I’m at $92,800 U.S. gross as of 12/18/2011. I have paid 18,573 in Federal tax, $3,855 in Social Security tax and $1,331 in Medicare tax. I have one more two week pay period coming before my 2011 closes out.
I’m at home for XMAS but looking forward to going back to Dallas, it’s a he ll of a lot cheaper to live there then in Deadmonton.
The first link in my post will take you to the Total Household Credit numbers in Canada as of the end of November 2011 (as per the Bank of Canada’s web site).
In spite of the record household debt in this country it looks to me like the lending to (and the borrowing by) Canada’s household sector is not slowing down one little bit.
If you want to see some real interesting numbers check out the Residential Mortgage Credit lending done by Canada’s chartered banks over the last year.
If anyone is interested Canada’s total business credit numbers as of the end of November 2011 can be accessed by clicking on the “business credit” link at the very top on the page.
http://credit.bank-banque-canada.ca/householdcredit
Follow Australia by privatizing CMHC
http://opinion.financialpost.com/2011/12/29/follow-australia-by-privatizing-cmhc/
So Garth if prices in 416 have already dropped an annualised 15% does this mean the correction in Toronto is already over? (Darn, missed it!)
To the engineers – you are obviously ultra frugal. As many here have pointed out, you must be living at home and eating kraft dinner every night. At least you have splurged on internet. Go on, go out to the movies, you have earned it.
Since you are good at maths, you might want to sit down and actually add up all the costs of ownership. Will you be able to cope with this? You’re in for a very big shock.
So how many engineers does it take to change a light bulb???
None, the electrician does it for them…
Rare to find something the media doesn’t lie about. I never did understand why over-priced housing was a “good” thing? Extend the logic – Is it a “good” thing if bread costs $100 bucks per loaf?
The letters that Garth recieves may be true, the writers however may be full of SH*T!
Why does everyone on this blog associate “Engineer” with some Oil and Gas job working in Ft McMurray?
What if this guy and his wife are computer engineers working for a software company? Or, an electrical engineer working on chip design?
There are many ways to be a highly paid engineer.
This is quite hilarious :
A typical irish conversation, pre housing crash
http://www.youtube.com/watch?v=e4CtWb4tJBg
#72 Waterloo Resident
Here, I’ll shorten it for you: “NEVER UNDERESTIMATE THE POWER OF PEOPLE IN LARGE GROUPS”.
Mob mentality is no match for intellect.
#95 T.O. Bubble Boy
Because they’re the best paid ones, in the little-to-no experience category? Especially if willing to work up north, in the field, with overtime.
“Computer engineers”? Aside from the fact no such engineering designation exists, software work is poorly paid, unless you are very experienced in a niche field.
Electrical engineer working on chip design? Get used to commuting in Portland, that’s the closest to Canada you’ll get.
Ex-Nortel electrical engs are still applying by the dozens for entry level telecomm positions. Nortel must have kept 80% of them on payroll, RIM has the other 20%… poor souls.
Garth,
Nice to see a couple of young people in their 20’s who actually have their heads screwed on straight when it comes to resisting the urge to buy everything they can get their hands on. However, the business of retiring in their 30’s is quite another matter.
Kids (I teach at a university and call anyone under 30 “kids” so please don’t take insult), it is quite commendable that you have managed to save up so much in such a short amount of time. Don’t pay attention to any of the jealous and bitter comments on this blog regarding this. Good for you … money is security, don’t ever forget that.
A million dollars may seem like a lot of dough right now. However, if you were to retire in your 30’s or even by say, age 40, you will find that even with a decent return, that million will only serve to buy you the bare minimum by the time you are in your 60’s.
Right now you are both young, in good health, with good jobs and no huge financial responsibilities to speak of. Between the ages of 30 to say 80 years of age you will live through many things that will cost you: house repairs (count on them), children (if you so choose), divorce (heaven forbid but you never know), illness (ditto), in-laws and family (very likely), mid-life crisis (ditto) and many other things ..
PLUS, when you hit your sixties and seventies, life may get even more expensive should you wish to remain at home with mobility issues (think one of those Premier bathtub thingies, that chair that goes up and down the stairs, physiotherapy, a hot nurse to come to the house … male or female .. etc.) OR EVEN should you need to move into a home (money can mean the difference between a decent one and one that is infested with cockroaches).
You guys are not going to be twenty year old gainfully employed engineers in the prime of their lives forever. Shit happens .. count on it. Always hope for the best and plan for the worst as they say.
Look around and if you see a nice property for a reasonable price, put a hefty 30% downpayment on it and take out a mortgage for the rest. Make double payments and get rid of that debt in record time (before interest rates go up). In the meantime, keep saving and try to invest the remainder of that nest egg and whatever else you can save in the future as wisely as possible. Then when you guys are 45 years old, you can reassess your financial situation and see if early retirement is indeed possible.
20 somethings thinking of retiring at the age of 35 … what next ?! A cure for cancer ?
HHHW
Garth, I belive in this story.. good for the couple
Shane
City Slicker on 01.06.12 at 12:18 am
#26 Another Engineer on 01.05.12 at 11:46 pm
I call BS on the $500K.
It’s a longshot, but far from impossible. Say they both start at the upper end of grad salaries, 60K, and then in over 6 years boost that to 80K. Average combined of $140K.
Maybe if you’re frugal and have the luck to have a paid off car and rent/work in a lower cost area for six years, you can live off like $50,000 a year and bank the rest.
He’s ignoring risk.
If earning 6% were really so easy, why would the banks ever bother lending mortgages at 3.5%? Why wouldn’t they just buy their own shares and get 6% on their money instead?
It’s because the shares are riskier than mortgages. Thus, they command a higher return. Economics 101.
I think you skipped class. — Garth
How’d they do it? I’ll tell ya.
Their engineers, that means their smart, rational, persistent and logical. Work hard and diligent, perform mental gymnastics (at least they did at school) and savoir their time when the job is done, relief from mental burden is often reward in itself plus a few cable channels and a drink. No need for stuff or a house!
Sacrifice and self control is their nature, prudence and saving comes natural.
As an engineer I owned a house once too, very expensive. My advice is don’t buy keep renting unless you’re going to have kids then buy near family on a quit street.
Burnt Norton on 01.06.12 at 1:02 am
“Most sheltered professionals forget that not much actually separates them from a job at Walmart, toots.”
True. I remember many fellow grads taking eng. jobs in “hi tech” sectors in the early part of last decade. They started their careers earning 2 to 3x what I did. Then TSHTF, lots of places sacked thousands, and some of these guys wouldn’t/couldn’t adapt.
Me, I grew up differently and don’t look down on guys that wear blue shirts with their names on the front……If I lost my engineering professional job and had no prospects with competitors, I’d elbow my way into a skilled trade and get on with life for a while until the professionals are hiring again.
Re: TREB numbers….
Garth, your direct comparison of May to Dec prices smacks more of manipulation than the TREB analysis.
Seasonally adjust.
You quoted that Dec 2011 was up over Dec 2010, and the annual average was up YoY.
I generally agree with your overall theories, but sometimes your number playing seems as prejudicial as the pumpers.
Do some research. Look at November numbers compared to December. See something, Sherlock? — Garth
#88 Ben on 01.06.12 at 3:56 am
#36 City Slicker on 01.06.12 at 12:10 am
Is anyone an engineer out there? How much do they typically make in say oil and gas or telecommunications? Like entry to intermediate level say.
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Well I’m in Telecommunications and started contracting with AT&T on March 15th. I’m at $92,800 U.S. gross as of 12/18/2011. I have paid 18,573 in Federal tax, $3,855 in Social Security tax and $1,331 in Medicare tax. I have one more two week pay period coming before my 2011 closes out.
I’m at home for XMAS but looking forward to going back to Dallas, it’s a he ll of a lot cheaper to live there then in Deadmonton.
———————————————————
And how many years experience do you have, and what level was the job – entry level/supervisory/managerial?
That’s where the rubber meets the road in pay grade.
Do some research. Look at November numbers compared to December. See something, Sherlock? — Garth
I don’t have to look to see that there would be a big drop from Nov to Dec. But almost all businesses see rollercoaster results through the year. It’s Year over Year that matters most.
You ignored my point.
It was too small to notice. — Garth
As explained by others the $500K savings is totally plausable with two yearly salarys at $65K each. At this salary level with that savings amount the math shows that they have been living on $30K per year which is also plausible by renting and not buying new cars (even better use public transportation).
Is 30K enough to add the expenses of a house with no mortgage & retire? Only if you have a way to protect yourself from inflation. Assuming they are living on $30K now, with 2% inflation that becomes $36K at 40, $44K at 50, & $54K at 60.
Save the additional $500K, don’t buy a house, get advice on how to reliably get the 6% per year, & keep your current lifestyle and the numbers work to retire at 35. Go for it.
#25 Jsan
Jason Mercer = David Lereah
Look! Davids book is still for sale!
“Why the Real Estate Boom Will Not Bust – And How You Can Profit from It”
Kindle Price?: $9.99 includes free international wireless delivery via Amazon Whispernet
You Save: $9.96 (50%)
Wow!!!
I notice your books are a little more than that, eh Garth.
Yes,ebooks are one of the great bargains of our time. My next one will be digital-only. — Garth
$500,000 and too cheap to hire somebody to help.
Sorry, but I hate propagandizing politicians too much to let this slip by:
“Iran is greatest threat to peace: PM” – to-day’s Front Page Headline at http://www.ottawacitizen.com/technology/Iran%2Bgreatest%2Bthreat%2Bpeace/5954468/story.html
Isn’t it great that Canada is defining its foreign policy by shilling for the USA? Perhaps Kim-il-Harper could ask someone in the real world how many countries Iran has invaded in the last, say, 100 years, compared to, say, the USA.
The worst part is that “we” – via the man theoretically speaking for all Canadians – are encouraging disaster by propogating spurious justifications. And, to ask the Dr. Phil question, how has it been working out? Well, in Iraq and Afghanistan, not too well, in Lybia – wait for it.
#40 City Slicker on 01.06.12 at 12:18 am
#26 Another Engineer on 01.05.12 at 11:46 pm
I call BS on the $500K. As an engineer myself, I know that if under 30 they have only been working in the industry for maybe 6 years which means maybe, just maybe they just got their P.Eng. Without a P.Eng, I don’t care what sector you are in, you do not get paid enough to save that kind of jam. Starting wage for an engineer fresh out of University is $65K at best.
———————————————————
This makes more sense to me. When I worked in HR for a big telecom they paid engineers 40-50k range for entry to intermediate level.
Which coincides with Canadian avg salaries. 150K range was senior/director level stuff, and those were people well in their 40′s with the backed work experience to match the pay. And this type of work/pay positions don’t open up often in the workplace.
——————-
I can comment for the semiconductor (electrical engineering) industry.. In the GTA, a fresh grad makes around $70k. You can expect to reach $100k within 5-10 years, depending how good you are. Management varies from ~$100k-$150k, with senior directors making closer to $200k, and executives well beyond that. Software engineering can be more or less than this – if you’re really good you can be making close to $200k (with bonuses) within 10 years of graduating depending on your specialization, whether you’re comfortable consulting, etc.
BTW – a P.Eng is really only needed in Civil or possibly Mechanical engineering trades. For other engineering fields, like computer, software, and electrical engineering, all a P.Eng buys you is a fancy suffix to your title and a nice insurance discount.
Look at all the haters,
A couple of engineers with no kids and a frugal lifestyle could easily amass $500k in 6 years. It does take lot more discipline than most people I know have.
The only thing I worry about for them is the fact that in my experience engineers shouldn’t marry each other because if they do, the marriage is far from smooth. Male engineers should marry nurses (like I did), and female engineers should marry men who will never earn as much as they will. Its the natural order of things.
Honestly can’t believe the comments on this blog … 70% are bashing the couple as untruthful, 29% are defending them.
Let’s assume people at 29 with 2 degrees can save 400 – 600k in 6 – 8 years of work.
I think the bigger lesson is this, with 500k, or better yet, 1 million in the bank, you can do whatever you want.
Buy a house and pay it off in 5 years, great, if it goes up, or down, who cares.
Rent, fine – you have 500 – 1 mil in the bank, and you have freedom, you can do anything you want.
Truthfully, the below can work with as little as 10k in savings.
For me it’s an easy choice – Rent. You’re 29ish, why buy a house, why settle down, why, why, why?
Travel, Rent, work in Malaysia, travel, rent, work in Dubai, knock up your wife, visit family back in Canada, consult for a few years, travel, help with a water project in Africa, travel, relax on a beach for 3 months, back to Canada, …..
The point is, why does everyone think they need to Buy a house, live in one city, retire by 55, you are going to die, sooner than you think. Live your life.
Thanks #49 Nastra, I always enjoy the very clever pythons!
(I’ve even met another smart guy Dr. Paul Connett that went to university with them.)
i have as clients, many unionized welders who were pulling in $150k/yr easy. i’ve seen the proof, in notice of assessments and t4. this is not bullshit these folks are working in edmonton, not fort mac. some getting living out allowance depending where their home address is. some getting paid this kind of money even without their ticket yet. of course, lately, alot are making about half that because there’s less work. in alot of cases, it’s hard and dangerous work though. alot of these folks haven’t a penny to their name though due to poor spending habits. so what’s the big problems with engineers making big money? they’ve put in the schooling. i think too many of you are from toronto, where most blue collar get paid shit all. i should know, i’ve welder clients from toronto too, and most are lucky to even have a job right now. i can tell you one thing, a welder in edmonton will make more than a p eng in toronto with the same years on job. just like real estate, the job market and incomes levels are local
Okay, there are so many naysayers, non-believers, that I can’t help chiming in.
We are such an engineer pair and by the age of 30, we saved even more than what this pair did. It was not because of windfall income (options).
This may sound beyond people’s belief. I guess you don’t know what you don’t know.
First, engineering generally pays well. But even within the engineering field, there are a huge divergence in pay. A software engineer, for example, can easily get close to 100K within 3-5 years of working experience. I also understand many other engineering fields may pay far less, despite much harder math and efforts. That’s the reality.
An engineer pair would easily get into the top 2-3% household income percentile. That is the foundation their seemingly good fortune.
Second, let’s do the math. Let’s assume on avg they get 80K each in their 20s (low entry point but racketing higher), and they only worked 6 years. These are conservative numbers that you can change (say worked 8 years) to see various scenarios.
Gross income: 80K*2*6=960K
Tax: about 30%, assuming maxed RRSP
After tax: 960K*70%=672K
Since they have 500K savings, they could spend at least 672K-500K=172K in the 6 years. That’s 29K annual expenditure.
This is a very reasonable number, and very conservative one because we have not included passive income from their savings. The 500K today is already throwing off about 30K passive income. Practically they are already living on passive income, and no longer touch their earned income any more.
Third, is 29K annual expenditure reasonable? The answer is yes because we did it too. We had one car (do-able if you rent as you stay close to one workplace). If you don’t use expense tracking software like Microsoft Money/Quicken, you won’t know. I know most people don’t. But we do and have been doing it for 15 years.
Is this couple ready to retire in 30s ? No. But with their engineering minds, they will figure it out. As ShawnAllen pointed out, they probably don’t need the blog for guidance. The distant future is very unpredictable to live on 500K or even 1mil, unless you only have 20 years left (retiring in 60s).
Finally, choose your career wisely (if too late, at least for your kids). Engineering is no glamor job, but it pays well in general. Don’t crowd into the soft studies (not that these have no societal values, just less market value). If your kids don’t work hard, tell him there will be 350K new engineering graduates from China and 112K from India, who work hard to take their places)
http://www.businessinsider.com/unemployment-by-major-2012-1#the-unemployment-rate-for-architecture-majors-is-the-highest-at-139-1
…Now the question is, how do you invest your money and earn 6%? Garth makes it seem so easy and pretty guaranteed however, many of us still have no clue how. Garth, feel like elaborating?? Or are you going to continue teasing us with little bits of info throughout your blogs?…
====================================
My gosh…..if you people cannot find 6% for your portfolio then you do not deserve to have money!
AGF.B 6.54%
AX.UN 7.49%
XHY. 7.55%
These are a few of stocks I hold and their return.
How frickin’ hard was that?
Lets have a look and see if this 8 Mil property sells in Richmond hill.
http://www.realtor.ca/propertyDetails.aspx?propertyId=11439311&PidKey=891912320
Garth – Why are you comparing May #’s (traditional high season) with December #’s (traditional low season)? Of course the #’s are going to go down. They do every year. Everyone wants to buy in the spring/summer and no one wants to in the cold winter months. Do you think you’re readers are really that nieve?
Sales show more seasonal fluctuation than prices. And it’s spelled ‘naive.’ — Garth
#111
Beware politicians and politicos. The west is gearing up for Iran. Fill up your gas tank before it’s too late.
“How is economies failing in Greece, Ireland, Spain, Italy, Hungary, Britain, Portugal and especially the US good for gold?”
This was more for the “doom” category, however the current policy options for failing economies and banks has been QE, Twists and now Swaps. Opinions will differ, however I don’t see any of this alchemy as being good for the value of currency in our pockets.
#133 Homer yesterday
I was unable to find the CREA stat that I posted some weeks ago. In any case, if you wish to believe DA, go right ahead. Buy a house in Kelowna right now, insist on paying a higher price than the 2008 peak even if the offered price is 15% lower. Let me know how it all works out for you.
I have a Computer Engineering degree and an engineering license (P.Eng.) and worked for Nortel ($55k/yr) for many years. Later I took two years off to get an MBA and worked in IT services for IBM ($80k/yr) and now Cisco ($110k/yr). I also work as a Telecom Consultant on the side ($10k-20k). It took a long time, but now I make about $125k both jobs put together.
Where are those boomers that were supposed to buy up all this overbuilt inventory ???? Maybe that was just more Realtor pump and dump BS..lol The stats came out yesterday for the Central Okanagan. Prices have dropped and are dropping.. At the peak,, April 2008,, the average house price was $552,830.. As of Dec. 2011 the average house price was 451,130 if you can sell it..http://www.omreb.com/page.php?pageID=115§ionID=2
My next one will be digital-only. — Garth
I have to say you’re quite good at keeping up with trends, that is for an older Harley guy :-)
The couple never disclosed where the 500k came from. Maybe that do make 140k combined. But their savings could of come from Their parents or maybe they made big from RE. We don’t know. We know they have the money. So all we can do is comment on this topic.
Many commentors here are jealous that this young couple have that much money. Well, I knew people at 21 years old that already made 1 mil. Of course illegally. How about these people?
And for RE MOM stats, Dec is normally slow for RE. That could really skew the avg and med numbers. YoY is a much better comparison.
A hint on just one aspect of your fail: You said “When I said that I was still well above the other houses they assured me “Don’t worry, we’ll get them”. Oops…”
And you believed them? I would demand equal treatment RFN. Their unfair assessment is costing you money as the municipality shifts the mil-rate to reflect your neighbours underassessment and you and others taxe on more of the tax burden than they! The emphatically stated ultimatum; “Reduce my assessment accordingly and then raise it when you do raise that of my neighbours or raise my neighbours assessments R.F.N.!!!”
Everyone, from governments, to companies, to individuals, use statistics to try to prove their argument, because statistics can be manipulated very easily by carefully choosing the timeframe and area they represent.
While it is true that the stats for the whole of 2011 show higher sales in certain areas than for the whole of 2010, the stats also show that sales are down in December compared to earlier in the year. However, those December stats are not unexpected, because house sales are almost ALWAYS down in December, even in years when the real estate market is fairly robust.
Personally I find sales statistics to be of limited use, unless I want to manipulate them to make a point. Because a few very high end sales in one part of the country, can skew the overall average and make it look as though national real estate is doing far better than it really is, and vice versa for a few very low end sales.
The bottom line is that real estate values are LOCAL, always have been, and always will be. So national statistics are absolutey useless when trying to track local RE prices.
But even within a local area, a few high end, or a few low end, sales can skew the overall average. So people need to be very, very careful when using statistics to help them make a buying decision. They can help you see an overall trend, but that’s all, and they shouldn’t be relied upon too heavily.
A real estate transaction is an individual transaction between two individuals, who negotiate to get what they each see as the best price. And there are a lot more variables in the mix than just statistics, or the overall trend. Human nature for one.
So, if you really are interested in buying a home, and have the financial wherewithall to do so (decent downpayment and secure job), then make a lowball offer and be prepared to do some negotiating. Because at the end of the day, that is the only way you’re going to get prices down. Sitting around waiting for prices to fall on their own, while complaining that it isn’t happening fast enough, isn’t going to make it happen.
Oh keep patting yourself on the shoulders Mr Engineer. I also call bullshit on you. You didn’t save anywhere near $500,000 from your earnings…you obviously were gifted a very large chunk of that, but your cryptic email isn’t honest about that.
A young couple can bank the wife’s salary in many cases and still have lives.
In 1975, we didn’t have I-pads, Pro-Line, bar bills or Caribbean vacations but we had jobs, friends, a car, walks in the park, summer days on the local beach, and loved going to amateur little theatre productions. We rented a 440 sf bachelor apartment for 2 years and then got a one bedroom for 3 more years. Modest house and car paid for at 32.5 years of age. Never have had a mortgage since. Still saving some every year even as retirees more or less out of habit than need.
Why do so many bloggers think that a young couple can’t save some serious money? It can be done and they don’t have to live a monastic existence to amass some serious savings.
Best indication of the health of the RE market is average number of days on the market. This number is lower in hot markets and much higher in slow/slowing markets
#125 Engineer on 01.06.12 at 11:48 am I have a Computer Engineering degree and an engineering license (P.Eng.) and worked for Nortel ($55k/yr) for many years. Later I took two years off to get an MBA and worked in IT services for IBM ($80k/yr) and now Cisco ($110k/yr). I also work as a Telecom Consultant on the side ($10k-20k). It took a long time, but now I make about $125k both jobs put together.
———————————————————-
Did the MBA actually help you on the job, or more specifically give you any better IT/Engineering skills for your work? Or is it just a percetion thing people have when they see MBA at the end of your email signature?
Thanks for the input.
Lol so funny how the green eyed monster (ie. jealousy for any FOBs) has reared its head all over the place here today. $500k isn’t that hard in 6 years to save if you sacrifice your materialism and have decent incomes. We saved $30k/yr on a $90k/yr combined income when we got out of school, and that was without cutting back on anything (we had a $1400/mo condo & $600/mo car payment).
The people are looking for advice, not ‘OMG you are so BS’ comments. You’re almost as bad as the ‘first’ posters..
Everyone keeps talking about the high paying jobs in Fort McMurray: THAT IS TOTAL LIES !
Here is the truth : http://www.jobbank.gc.ca/detail-eng.aspx?OrderNum=6211679&Source=JobPosting&CmmGrp=GAB020&OpPage=50&Stdnt=No
Building maintenance worker, $1 to $2 per hour for 40 hours per week. Location: Fort McMurray.
I don’t think this story is “impossible.” The couple should be cautious about life-events that will make it difficult to continue saving at such a rate in the future. When do they plan to have children? Are they anticipating moving into a larger home when that happens?
No kidding about the high unemployment for engineers, everyone here today’s an engineer! Cranky!
Also, this whole Iran thing is warmongering BS, check out that RT video Nosty poster yesterday.
http://www.youtube.com/watch?v=01L7dDntDbA
6:47 clip “Iran far stronger than the US admits”;
Ron Paul 2012 or die!
@ #98 Devore
“Computer engineers”? Aside from the fact no such engineering designation exists, software work is poorly paid, unless you are very experienced in a niche field.
No such thing as Computer Engineers? Are you joking?
From the P.Eng. site, the various disciplines:
http://www.peo.on.ca/EXAM/Exams.htm
Not only do you have Computer Engineering, but also Software Engineering.
http://www.engineering.uwaterloo.ca/undergraduate/programs/computer.html
http://www.discover.engineering.utoronto.ca/programs/academic-programs/electrical_computer.htm
http://students.sfu.ca/calendar/engineering_science/ensc_maj_computer_eng_option.html
I stand corrected by the commenters. Engineering salaries vary widely by location and specializiation, and position, e.g. technical vs. managerial roles.
The best laid schemes of mice and men ….
The young engineer isn’t accounting for risk nor taxation. Best bet is to continue banking the cash, do some research as to what areas constitute a good place to buy and be prepared to strike. Put a timeline together based on life expectations (ie kids in 2 years, 4 years or never?). Use those expectations/timeline to determine type of house/area for the long term. Model portfolio and plan to return portion of portfolio to cash based on that timeline. Use strong cash position as leverage when time is right in property negotiations. Put half into the house and the rest in balanced portfolio. Live a long, happy prosperous life.
Comfortable retirement for those of us under 40 is going to involve a $2M+ portfolio. Real estate appreciation is unlikely, which means we’ll need to earn it. Don’t think you can take foot off the gas until you hit that number.
Harper is all for attacking Iran because he’s a religious nutbar bible thumper and therefore mentally ill. Iran’s full of mentally ill mystics too but there not the aggressors here, we are! This whole thing that’s unfolding is sickening and we are being completely hypocritical.
Let them have nuclear power and the bomb too if they want it, who cares. They wouldn’t dare use it and if they did they’d be sorry right quick. But we have no right telling them what to do.
Who do we think we are? Oh yeah, we’re Christians.
Christian hypocrites. That’s a tautology.
Now he’ll be able to buy a house: http://tinyurl.com/PrinceReal
Interesting to note the TREB #’s, November average $480K, mid Dec $461K and total Dec $451K. A quick calculation shows the 2nd half average for Dec would be $439K to arrive at the total $451K for the month. I know Dec is typically weak but this may be the start. Check out this website for early January.http://www.century21.ca/antonia.yan
The past few days I have written just general topics – and each time they are deleted…
Are we in China – nice censorship Garth –
Maybe your no better then the rest –
You accused me of fabricating letters, and called another blogger a turd. Why should you be published? Buzz off. — Garth
To all the doubters, it is very simple how this couple amassed their fortune – its called LIVING AT HOME with the bank of Mom and Dad.
It’s not hard for average engineers making average salaries to put that much money aside when they have no expenses. Given the demographic composition in certain major cities like Toronto and Vancouver, and the cultural tendency for “kids” to stay at home until married in certain ethnic groups, its not hard to conceive how these people “saved” so much. Gee, it sure is hard to save your money when you get paid a professional salary and have no real expenses!
In fact, this couple is not really special, except that it’s rarely brought to light how these cultural practices can support certain markets. This type of situation, where adults live at home and amass large down payments, is very common. It is another reason that certain markets may be propped up longer than some would like.
Given Generation Y’s desire for instant gratification, and their sense of entitlement, this couple is certainly an anomaly. Odds are, they are not devoid of instant gratification – they just get to satisfy their wants on the cheap because they have no real expenses. Not hard to do people….
#141 Cato
You’re right about that OK. The young engineers need to keep on saving their money.
There is simply too much doubt out there in the markets and economies around the world for small investors to get any kind of handle on what’s really going on, and to therefore not get skinned alive.
In all my years as an investor I can think of only one other time when things were this “difficult” to suss out: 1982, following Mr. Volker’s purging of the system, with high interest rates. I remember 1982 as uniquely economically glum. That turned out to be the start of a new historically high bull market and a few subsequent bumps in the night, especially October 1987! It took me two more years to recoup the losses.
Today, by contrast, there seems to be way too much “sunlight” on the markets in the forms of greed and fear.
I really think if people are trying to figure out where to park their money, whether it be real estate or the markets, if successful so far, then continue in that vein.
This is not the time to change for change’s sake
A good source of salary info is at glassdoor.com. Numbers for my job description at my own company are spot-on, so I believe the data to be quite good.
Continue renting and invest in a Garth-fund.
Wait til the equivalent house is 15X rent before you buy…it might even over correct.
Retire when you have investment income = 66% of salary or 50% if you are mortgage free.
can someone please explain what “retirement” really means? vegetating at home in front of the tv? traveling? golfing? How much of those can one do till it gets boring? Maybe fellow posters could share their views in comments to a “what is retirement”-style article by Garth? eh?
I just can’t imagine stopping doing something till I die and if it made money – the better.
#126 Robert James
thank you. For Homer and DA, that works out to a 19% drop for the average Kelowna home price since the peak in 2008. Courtesy of OMREB. While this does correlate with what I am seeing, don’t let those stats get in the way of DA’s ‘gut instinct’………..
well done kids.
invest it wisely as per Uncle Garth’s plan and tell the relatives and friends to pound sand.
“NEVER UNDERESTIMATE THE POWER OF STUPID PEOPLE IN LARGE GROUPS” – Waterloo resident.
NEVER UNDERESTIMATE THE POWER OF PEOPLE IN LARGE GROUPS. – Devore
NEVER UNDERESTIMATE THE POWER OF PEOPLE.- disciple
NEVER UNDERESTIMATE. – disciple’s mom.
What is $500,000 doing in a savings account?! Could have saved alot less and had alot more if they knew how to invest properly! Get on that!
Mr & Mrs Engineers,
You plan to pay off a huge mortgage in 5 years. And then retire. What, no kids? The little rugrats weren’t factored into your Utopian dream.
Why do you need a $500K house? What market do you live in? How did you come up with this valuation? Why not buy a $350 – $400K home? Especially with no kids in tow.
Good luck.
Yawn, another letter about people bragging on how much money they have, another letter that supports this investment is better return then real-estate, except this is a TINY % of the population. If you really saved 500k in your 20’s, you’ve been living at home, doing nothing, never struggled, maybe time to live life like the rest of us instead of hiding, saving and being boring
Computer Engineers starting at $70k? You guys have got to be kidding. There’s practically no demand in Canada. Most of my graduating class, 10 years later, are underemployed or unemployed if they stuck to the field.
Speaking from personal experience here, nothing like graduating in the top 25% of your class, spending out thousands of targetted resumes, and being able to count the responses (nevermind the interviews) on one hand. UW guys seem to have a it a little better because employers seem to prefer interns/co-op students, but for everyone else, its a catastrophe.
Y’all should see this. A single mother of three had put $165,000 in deposits on two units at the Trump Towers in Toronto that were valued at $2.4 million. Pre-construction. Now it’s 2 years behind schedule. And she wants out.
http://realestate.yourmoney.ca/2012/01/should-you-be-able-to-back-out-of-a-deal-if-the-going-gets-tough.html
Also, turns out that the 1,000 sq ft unit she thought she’d bought was a mere 856 sq ft.
#133 Al on 01.06.12 at 1:01 pm
Best indication of the health of the RE market is average number of days on the market. This number is lower in hot markets and much higher in slow/slowing markets
____________________________________________
wrong wrong wrong—after sitting for months properties expire or are terminated–10 days later they’re relisted with a new MLS # and a new DOM
if you’re watching any specific area you’ve noticed a decrease in the number of listings at the end of the year–there were hundreds every where–(how could you miss it)-watch those same listings now reappear with a new mLS #and new DOM
just another way for CREA to screw with numbers
Any gas and oil engineers from Calgary? I here that pays a bundle, no matter what. Or is it another myth?
Judging by the stock chart performance of the big three Husky, Nexen, Suncor – it doesn’t look like they can be forking over much for labor costs.
gartho,
this blogg is getting a bit out of hand men. thus, people claiming saving half a million bucks by 30 its normal and a right. bring this god damn blogg back to earth now. i know you strategies. aparte that you are fun to read.
Since this blog is on the topic of engineering employment, I will mention that for those who qualify, it is possible to access the US job market under the TN visa category. The US recession hasn’t hit skilled professional employment all that hard. There are still lots of opportunities.
Working only on the projects that interest me. Doing it from wherever I want, like living in Chile for 1 year. Taking time off when I want. Not having a ‘boss’ except for my customers.
Not worrying where my next pay comes from while doing the above.
Blue Hammer #138,#142
Two of my favourite quotes of all time are:
Gandhi:”I like your Christ.I do not like your Christians. Your Christians are so unlike Christ.”
and
Lester Pearson: “The grim fact is that we prepare for war like precious giants,and for peace like retarded pygmies.”
Hmm, you don’t think this may be a typo? Seriously we have minimum wage laws in Alberta.
$500,000 saved (after tax) over a 6 year period?
What kind of engineers are they? And why aren’t they eating any food?
#34 Matt: “Now the question is, how do you invest your money and earn 6%? Garth makes it seem so easy and pretty guaranteed however, many of us still have no clue how.”
You’re going to need to educate yourself on that one. Garth’s given hints: diversification, preferred shares, dividends, REITs, bonds.
But the biggest concept to get your head around is that there are no guarantees. You must embrace at least a small amount of risk. Clinging to guarantees gets you 1.5% interest with 2% inflation: you just lose slowly.
If you instead invest, you have a high likelihood of making that 5-7% over time. It may not be perfectly predictable and regular (one year you may get 12%, and the next nothing), but with a few decades ahead of you, that will average out. It will also not come with a government guarantee. Yes, you can dream up catastrophic scenarios of loss, but you know what? They’re very unlikely. Much less risky than houses at this point.
We fear not necessarily what is most dangerous to us, but what is unknown: it’s why people fear flying, but not the swimming pool in their backyard. Having everything in one over-valued asset is risky, and no matter how much you can touch it, that risk doesn’t go away.
# 151 Form Man Well don`t be too hard on our realtor friends,, they are just naturally optimistic people.. I would not be surprised to see some of them selling Timeshares in the Stoney Mountain Pen if they thought they could get away with it… One of the sales pitches would be, “Where else can you get 3 FREE meals a day ” ?? Might even pay some people to stand in line..
The argument over whether the couple saved $500,000 is irrelevant. There are few people who are good at saving. Maybe they are exaggerating their savings they accumulated, but even if they managed to save only 20% of that in that short time, they are way better off than vast majority of people I know of.
“The US recession hasn’t hit skilled professional employment all that hard.”
Are you kidding? The engineering/professional sector has been decimated in the United States by the H-1B guest workers (usually from India), and the low salaries they often accept.
There is no thing as zero risk in investing or anything in the universe.
A balanced approach Garth advocates minimizes the risk to a greater degree. Even if you weighted the portfolio heavily in ETFs, the risk on the ETF exposure can be reduced significantly by applying financial hedging techniques involving derivatives.
#34 Matt –
“Now the question is, how do you invest your money and earn 6%? Garth makes it seem so easy and pretty guaranteed however, many of us still have no clue how. Garth, feel like elaborating?? Or are you going to continue teasing us with little bits of info throughout your blogs?”
Clearly you don’t read very carefully as Garth has addressed this question more than once. Since his answer wasn’t good enough, maybe mine will help…..
First off you need to stop wasting your time sniveling, waiting for someone else to give you all the answers and figure it out for yourself. Start with picking up any book on investing, then keep reading other points of view until you decide for yourself the best plan of action. It’s entirely possible but it will require you to think for yourself instead of waiting on someone else to give you all the answers. If you need a step by step guide, you’ll never get there.
I’m soooooooo over people who have no knowledge / experience questioning Garth’s 6%. Let me be yet another person to attest that it is possible.
Also wanted to say – Thanks for all the great advice, Garth. Every time I start feeling sorry for myself for not having all the things my peers do, I read your blog and review my net worth – suddenly I feel better. Living “beholden to no one” is the only way to live.
http://www.worldsalaries.org/engineer.shtml
http://www40.statcan.gc.ca/l01/cst01/labr69a-eng.htm
Average household expenditures,
2009
B.C. Average expenditure per household Households Total expenditures 73,571
ontario
Total expenditures 76,577
http://www40.statcan.gc.ca/l01/cst01/famil16d-eng.htm
“We at IEEE-USA are concerned about how rapidly engineering and computer-related unemployment is trending upwards,” said Gordon Day, president of IEEE-USA, in a statement.
Breaking it down, the unemployment rate for electrical and electronics engineers rose from 2.4% to 4.1%. Mechanical engineers saw an increase from 2.1% to 4.2% in jobless rates and aerospace engineers experienced a less dramatic increase in unemployment rates from 1.1% to 1.4%, over the same timeframe. The IEEE based its findings on numbers released last week by the U.S. Department of Labor’s Bureau of Labor Statistics
By Denise Dubie, Network World
April 06, 2009 03:23 PM ET .
http://www.networkworld.com/news/2009/040609-engineer-unemployment-rate.html
And I would add that you can get a TN at the border, it costs your employer 50$ and is valid for up to 3 years or until your passport expires. Whichever is shorter.
It is much easier and cheaper than other visas and if you use the right lawyer CAN provide a path to a green card if desired.
If you are asked to travel to the US for an interview make sure to get a later stating the purpose of the visit. So if you get the job and apply for a TN 2 weeks later everything is legit.
When getting the TN make sure that ‘Multiple Entry’ is stamped on it and it’s stapled to your passport. Never allow the border agent to remove it. Some are absent minded and will remove it out of habit.
2 Indicted for Illegally Flipping 235 Houses
Monday, January 02 2012 08:22
Blaine Murphy (aka Bryce Peters, III and Martin J. Franks) and Bryce Peters Financial Corporation, Inc. have been indicted for illegally flipping homes in Ohio.
Cuyahoga County: Man indicted for ‘flipping’ 235 homes
http://www.wkyc.com/news/article/221988/45/Cuyahoga-County-Man-indicted-for-flipping-235-homes
I wish Bibi Harper would STFU,he is an embarrassment to a country that was once known for it’s peace-keeping missions.
Now Canada is known as a warmongering nation,following the US around the globe on it’s rape and pillage mission.
Can everyone please get off this poor couples case. They saved $500K. Stop being so jealous and commend them for doing something that 99.9% of the population is unable to do now…SAVE anything.
We have two kids and are similiar in that we have seven figure savings, no debt whatsoever, one very good salary but we rent….for now.
My advice to them…wait. At least a couple of years to see what is trending in real estate. Before you have kids, take some money and travel. It opens your mind and world and makes you a much smarter, global person. We did that pre-kids and it was the best thing we could have done. Have a life before you have a house. You are young, good jobs and opportunities are mobile. Don’t tie yourself to one big asset until the time is right.
#173 Jess, official US government statistics of unemployment generally are derived by looking at the previous job of the unemployed person. If an unemployed engineer even so much as delivers a pizza after they were laid off from an engineering job — the unemployed engineer is really considered an unemployed pizza delivery person.
My personal experience is that EE hiring in the past decade has been extremely scarce, and that a very large number of EE grads have been unable to find even their first job in the field. So that might explain why they ‘think’ engineering unemployment is low, when it is anything but.
6% portfolio, is that all people are shooting for these days? I used to make this on my savings account, and paid 14% on my mortgage.
Yes Virginia, if you follow sound advise, there are more than enough good dividend paying stocks.
With a balanced approach it is fairly easy to create a portfolio that yeilds 6% or better in tax prefered investments. See an advisor or read some books.
And I’ll tell you why.
First, you aught to know that engineering wages vary greatly by region, disciplines, education level, industry, work locations, years of experience, type of services, employment types (employee, contractor, consultant, etc.), the negotiation skills, exposure to risk, etc. The list goes on.
Now, it is not common for a couple of engineers in their 20s to save this kind of money so early in their career, but it can be done given a certain circumstance. In the engineering school, they always tell you to list out all assumptions when analysing a problem. So let’s see what we have here.
– DINK (Dual Income No Kid), minimum Bachelor degrees, Years of experience < 10.
– High paying industry, low household expenses, low or no debt.
– Low entertainment cost, have cheap vacations, have reliable, paid-for car(s) and don't upgrade every few years.
– Both makes the same money (yes it is possible)
– There was no mention of RRSP or TFSA, so I will assume that they have been contributing zero.
So the couple work for some ritzy Oil & Gas company. Both did co-op work terms in rural location which paid additional 20% differential and stayed in the camp to lower personal expense. Stayed with parents while in school so all the money made went to offset their student loans. Then they entered the full-time workforce with a pretty good financial start.
Let's be optimistic and say they now have about 7-8 years under the belt. Base salary over the past 6 years, let's round it down to $70k/year. If they still work in remote location add 20%. (IMO there is no premium large enough to offset the misery.) Annual bonus, add 15%. There's some other benefits and travel allowance but we won't count pennies. We are now looking at $97k/year for 1 person or $194k/year for 2 people. Pay a third to the tax man with no RRSP contribution and they both take home $130k/year. Let's average all the household expenses at $3k/month or $36k/year. If budget wisely, that is enough to pay for rent, utilities, food, insurance, student/car loans, clothings, entertainment, vacation, etc. And if they live at the camp half the time, most of the expenses are technically cut in half. So they are left with $94k/year and after 6 year they have over $500k. It's a shame they won't be getting much return from the savings account, but at least their capital is preserved.
Now if these people had a stint in the Middle East they would have been on a different galaxy. For a fresh grad there you can make 60% more (and you take home more as well). I am in the industry and this much I know.
#124 Form Man
Not sure where your “believing DA” comment comes from – I’ve done all my own research on this.
(I like to use median prices as I believe they remove distortions of a few highly priced homes).
You’re right that Kelowna median house price peaked in 2008 (May – $497K), and are down 11% from then (Dec – $424K).
But as Dorothy above states – statistics can be manipulated. You imply, or at least I think you attempt to imply, that after peaking, prices have been on a steady decline ever since, AND THEREFORE will continue down.
In fact, median prices quickly dropped to $395K in Jan09, and have oscillated seasonally ever since, hitting lows of $420K in Nov09, $407K in Nov10, and $424K in Dec11.
So a fairer statement would be that after a quick 11% drop in 2008, prices have been flat or range-bound for the last 3 years.
Of course, this says nothing about the future, which we both hope bring declines. It’s just that there’s not yet any convincing data to show that it has started.
Agreed?
Peter,
It’s not really harpers fault…Canada is owned by the U.S. Alsways has been. The phone rang at his office, he picked it up and he got his orders from Washington… simple really, isn’t it?
#181 Use any numbers you like but what it boils down to is record low interest rates kept the show going up until now.. Unless Harper and the Pigmen start paying people to buy houses this party is over.. Stay tuned !!
.#106 City Slicker on 01.06.12 at 9:40 am
#88 Ben on 01.06.12 at 3:56 am
#36 City Slicker on 01.06.12 at 12:10 am
Is anyone an engineer out there? How much do they typically make in say oil and gas or telecommunications? Like entry to intermediate level say.
——————————————————–
Well I’m in Telecommunications and started contracting with AT&T on March 15th. I’m at $92,800 U.S. gross as of 12/18/2011. I have paid 18,573 in Federal tax, $3,855 in Social Security tax and $1,331 in Medicare tax. I have one more two week pay period coming before my 2011 closes out.
I’m at home for XMAS but looking forward to going back to Dallas, it’s a he ll of a lot cheaper to live there then in Deadmonton.
———————————————————
And how many years experience do you have, and what level was the job – entry level/supervisory/managerial?
That’s where the rubber meets the road in pay grade.
——————————————————
I’m just Joe engineer, I write scripts/translations for AT&T’s wireless Nortel Mobile switching Centers or MSC’s they call them.
I have been in telecom all my life, but you could do what I do without a life career in it… easy!
Oh Ya, I started April 1st and not mid March like I thought. Did you notice the Fed tax I paid? Texas has no State tax. People in Canada haven’t a clue how bad they are getting raped when it comes to tax this, tax that. Unreal!
#181 Homer
The facts are Kelowna prices have been declining since 2008, are continuing to decline, and will until the MOI gets below 6 months. An interesting stat will be the yearly BC Govt census estimates for 2011 ( should be out in early February ). If the population growth of Kelowna continues to stagnate, then look for further declines. What happens in the lower mainland will not necessarily mimic what has happened in the Okanagan.
Tiger Woods’ ex-wife bulldozes $12 million home
http://ca.sports.yahoo.com/blogs/golf-devil-ball-golf/tiger-woods-ex-wife-bulldozes-12-million-home-232405259.html
Three sure topics to stir the greaterfool crowd:
1. 15% (only!) decline in real estate.
2. 6% risk-free investment return.
3. Fresh-from-college kids earning/saving more than 90% of Canadians.
Simply amazing that the real estate industry can still manage to manufacture good news these days.
Even a 15% price correction might be more than a whole lot of households can bear.
Based on other countries experiences, it appears that a price correction can turn into along term secular decline. So even if some fortunate soul can actually buy a home for $500K from personal savings, there is no real protection against a systemic change.
http://www.counterpunch.org/2012/01/06/foreclosure-crisis-goes-global/
#150 gladiator on 01.06.12 at 2:21 pm…
Being retired six years now, it is: all of the above.
Wake up in the morning, feel like sleeping in? No problem.
Want to go on a vacation? Go.
Golf? Book your tee time and hit the greens.
Basically, within the realm of your finances, health and the laws of the land – you can do anything you want.
If you are a free spirit, you look forward to every day as an adventure – and are happy to be retired. I can’t picture retirement at 35, but it worked out fine for us at 55.
But as an admission, both of us worked hard (and lived frugally) for almost 40 years. However, we feel no guilt for enjoying our retirement and the investment funds the great Professor granted us when we took his advice and sold our Vancouver Island property.
Nothing against those who want to work because they may get bored, but I don’t recall any point in the last six years that was an issue for us.
Mirror mirror on the wall, who’s the most insolvent of them all?
http://i42.tinypic.com/6oexyr.png
#26 Another Engineer on 01.05.12 at 11:46 pm
I call BS on the $500K. As an engineer myself, I know that if under 30 they have only been working in the industry for maybe 6 years which means maybe, just maybe they just got their P.Eng. Without a P.Eng, I don’t care what sector you are in, you do not get paid enough to save that kind of jam. Starting wage for an engineer fresh out of University is $65K at best.
____
I am having difficulty believing this story. I hope it is true, as I have paid for 1 idiot, now the other to graduate Electrical Engineering.
It would benefit me if they both did this well. I would never live with either of them as they would probably cement me into the floor of a McMansion, and have the last laugh. I think I might get a King Doberman. Do they still make those dogs?
Hey, that is my first ex-husband, has he ever lost weight. He is looking much better. He is a bit more tanned than I remember and those jeans look much better than the stuffed ORCA look he had perfected before.
#185 Form Man says:
“The facts are Kelowna prices have been declining since 2008, are continuing to decline, and will until the MOI gets below 6 months.”
Form Man, prices declined from a peak in May 2008 of $497K hitting a low in January 2009 of $395K.
Dec 2008 $427K
Dec 2009 $438K
Dec 2010 $418K
Dec 2011 $424K.
Pleas elaborate on how an increase from 395K to 424K constitutes a state of “continuing to decline”?
#119 Young Old Fart.
The key is not the find stocks currently yielding 6%. That is the easy part. The key is to find stocks that will maintain a yield of 6% after the financial system and real estate bubble collapsed (or if they collapsed at all).
–
Engineered Psychopathetic Condoms
Miss Beatrice, the church organist, was in her eighties and had never been married. She was admired for her
sweetness and kindness to all.
One afternoon the pastor came to call on her and she showed him into her quaint sitting room.
She invited him to have a seat while she prepared tea . . .
As he sat facing her old Hammond organ,the young minister noticed a cut glass bowl sitting on top of it.
The bowl was filled with water, and in the water floated, of all things, a condom!
When she returned with tea and scones, they began to chat. The pastor tried to stifle his curiosity about the bowl of water and its strange floater, but soon it got the better of him and he could no longer resist.
“Miss Beatrice”, he said, “I wonder if you would tell me about this?”, pointing to the bowl.
“Oh, yes,” she replied, “Isn’t it wonderful? I was walking through the park a few months ago and I found this little package on the ground.
“The directions said to place it on the organ, keep it wet and that it would prevent the spread of disease.
Do you know I haven’t had the flu all winter?”
If you don’t send this to five friends right away, there will be five fewer people smiling in the world.
(7:24 clip Wally and Dilbert are engineers, who are doing well.)
*
#116 GregW, Oakville — G’day Greg. The Pythons were something else, and are still growing in popularity, primarily because they spoofed society (the establishment).
#164 Harlee, Blue Hammer #138, #142 and #176 Peter — Bingo. This is another crusades (the fourth, I think). Slaughterhouse 5 has a different connotation now.
#182 Westernman — “. . . he got his orders from Washington.” — And Obomba gets his orders from TPTB. It’s a hierarchial system, which works quite well.
#183 robert james
I think the party should be over too, and I am eagerly waiting for the data to demonstrate same. Sadly, in my view we don’t have that to date, and so we wait.
#70 Another saver on 01.06.12 at 2:05 am
Agree. It’s absolutely possible and bravo to this brilliant duo!
I notice that whenever someone has the $ in hand either through foisting RE onto a greater fool (or in this case has earned and saved it paycheck by paycheck) they experience, at some point, an epiphany and then become very reluctant to blow it as nonchalantly as someone who simply borrows unearned $ at arms length from TNLATB. This is real money-value knowledge: how it mostly is so very hard to get and even more difficult to keep.
Take your time, invest well and then vultch mercilessly young grasshoppers…
The previous 5 years median single family Kelowna home sold for…
2011 = $432,000 median sale on a volume of 1,946 units
2010 = $444,000 median sale on a volume of 1,952 units
2009 = $425,000 median sale on a volume of 2,153 units
2008 = $475,000 median sale on a volume of 1,953 units
2007 = $440,000 median sale on a volume of 3,222 units
Price follows volume, up or down, as you can well see and volumes, as have prices, have been quite stable these past three and four years.
These past 3four years volumes are commensurate with those of the pre-boom years. Again – this is a return to norm not a departure from it and after four years of stable volumes and three of stable prices I think it is fairly safe to say we have arrived.
Now it’s just a matter of waiting for the next major screw up. What THAT will be is anybody’s guess. BUT, what are you going to do? Sit on your hands and wait for it to happen.
Failure is not falling down, but staying down.
An easy one.
Pay cash for the house from the investemnt account. Arrange a reasonable mortgage on the house and then invest the proceeds.Mortgage interest is now tax deductable. Allow new investemnt portfolio to grow over time.
#182 WESTERNMAN
I agree…we need a Prime minister that is not a new replacement poodle for the americans..Harper is lockstep with their disastrous policies.
Plus…..worst of all…I heard he wears a hairpiece.
Never trust a man who wears fake hair.
How long have you lived in Kelowna Form Man?
As I explained to a colleague just today who is looking for a home and disgruntled with prices here, “Get used to it. Kelowna has always, always, been a more costly place to buy real estate than most every other Canadian city and there is little indication that is going to change anytime soon. And why did you move here anyway? Oh the lifestyle you say? Interesting… yes the lifestyle…”
Apparently the “lifestyle” commands a pretty penny as many are prepared to pay it and so they should be. Of course there are many who move to this “little hick town” expecting it to be something different and are so busy trying to survive at the bling level they were before they arrived they never really get to experience that “lifestyle”. Could you be one of them Form Man. I do sense a bitter chip on your shoulder. Is the mortgage on that waterfront property prohibiting you from actually using your sailboat as you struggle to compete with the others in your industry who know how it works here as you continue to bash your head against that brick wall at city hall? I’ll stop at that as I am quite sure I must have struck a nerve.
But really Form Man… seeing as you loath the Kelowna condition so and been threatening to leave… why haven’t you?
#75
20,000 in TFSA only 1 stock? Better advise is wait until CLQ starts moving up. Never $ cost average down only
$ cost average up and remember that 52 week lows bring on more 52 week lows !!
Peter,
Don’t look for it to happen in the forseeable future…
It’s like saying ” we need a chicken to stand up to the foxes ”
Easy to say but do you want to be the chicken to take the job?
# 196 Homer When I look around and see the over building and the slow sales here in the Okanagan I don`t need stats to show me that the cycle is over.. Besides every day that goes by just means one day closer to rate hikes which most people living on edge simply cannot afford.. Our house is payed for long ago and the house my wife inherited is also payed for so if prices dropped by 90% it would not make a bit of difference to me as we giving both of them to are two boys anyway.. Bubble prices always go back to the trend line or historic average as what is happening in the US now.. ie: Year 2000 Nasduq = 5000 plus during tech bubble.. Today Nasdaq = 2674…. Just the way it is..
#201 DA How long have you been living in Kelowna DA ?? Were you living there in 1981 ?? I have been living in Peachland on and off since 1967. Personally speaking ,,of course,, I would not live in Kelowna if someone payed me to live there.. It has turned into one God awful ugly strip mall with the crime that goes with it.. 7 th most dangerous city in Canada to live in,,Prince George being #1 .. You can have it !! LOL
The Watchdog’s Charts of Week.
Canadian Born vs Immigration Jobs http://i44.tinypic.com/2cijuwg.png
Personal Lines of Credit http://i39.tinypic.com/2zf04te.png
Credit Card Debt http://i42.tinypic.com/27wr3nn.png
Finance, Real Estate & Manufacturing Jobs Down http://i40.tinypic.com/16k3x4l.png
+55 Workers Leading Employment http://i40.tinypic.com/2dooe1.png
–
THOUGHT FOR THE DAY! — “If you are going to tell people the truth, you had better make them laugh or they will kill you.” — Oscar Wilde
*
Dismal economic year. Guess this means more wars; 5:24 clip This is what Israel has wanted all along, and 7:25 clip; 11:25 clip Artificial tensions? Failure The failure of the Euro. Now a grand plan, incl. WW3 comes forth; Kodak Bankrupt blank pix; TSA Hawaii revenues down. Not one terrorist has been caught, either; Fudge the Numbers It’s been done before and will be done again; Mortgage Movies and 8:36 clip.
Prostitution New jobs, better incomes; Euro The roller-coaster downward curve as begun; IMF – NATO – US – UN Next stop on their travels; BoA Women. Don’t mess with ’em! Illinois can’t honor lottery winners.
*
Syria – Iran – China Forgotten Russia? Self Healing Anyone is capable. Ignore the mind. Use The Illumined Mind instead; Obomba Except Ron Paul; Tracking One and Tracking Two. This is exactly the same as the Nazis did in WW2 (2:42 clip); 7:06 clip Foreign Policy and war profiteering go together like port and brandy; Globalism isn’t quite dead yet; Colorado Legalizing marijuana? Heck, they’re printing up their own currencies and smoking shit as well; Joe Lieberman finds new ways to destroy the US.
War talk becomes war “A nuclear Iran does not offer the existential threat to Israel to justify war (as the Mossad chief, Tamir Pardo, said only last week)”; Warmongering m$m Unknown hot mic reveals a lot; 5:35 clip Elite fooling everyone; GW Yes, Global Weirding exists; Wind Turbines can’t cope with high winds (it’s a govt. make-work project); 11:04 clip Former CIA official says The Toilet doesn’t exist (we knew that anyway).
Can you buy diamond-encrusted engineer pinky rings? That’s an expense.
Everybody’s cherry pickin’ data these days to make their point. This fellow has been tracking and charting the GTA sales data for years now. Looking back, his work seems to be pretty accurate. And the best part? We can all judge the conditions for ourselves!
As far as I can tell from looking at his charts, everything still looks pretty damn good in the GTA. Better than many other years in fact. But yeah, past market conditions do not necessarily indicate what may be in store for us in the future.
Engineers?
Usually brain dead geeks………
Have no clue of ” reductionism”….their jobs are dependent on making humanity redundant, and not realizing Henry Ford’s classic bromide about ” WHO will buy the cars he produces “….aka well paid humans are a necessity , not an option.
Good “Twilight Zone” episode re: the factory owner who laid everyone off due to mechanization, then the Machines took over and got rid of him.
Theme repeated in ” Terminator” movies…..
#201 DA
mortgage free buddy. live here, make my money where the opportunities are. I see you have no way of arguing against me, so you resort to shrill name-calling, and immature schoolyard taunts ( much like westernman ). I will let the facts speak for themselves DA. You are beginning to sound panicky………
#103 Homer,
you obviously do not live in Kelowna
#73 Mario
You live in a hovel with $650 grand in the bank or invested.
Get a grip man! Even though you might be an engineer, you probably realize most people don’t live past 100 years.
Enjoy life while you can because eventually you and all of us will one day eventually die.
You are unbelievable! Stop spending your life thinking about and making money. The cockroaches will eat you!
129 DA – yes they did get them! The very next year. So what was supposed to be an arguement to lower my assessment became their arguement to raise everybody
elses. The biggest irony was their acceptance of the
appraisal for market value, but ignoring the comparisons
it made to some of these other properties.
The difference was maybe $200 in tax in the end. But it was a interesting experience
Looks to me Bob like I have lived here pretty much as long as you have. I don’t disagree that the town has changed and not necessarily for the better for a couple old farts like us but, hey you can’t stop change. Roll with it Bob, roll with it.
Main thing it is still the same place for the most part, still the same lake, still the same ski hills (but better), still the same mountain trails, still the same climate (but due to this climate change thing, again, better). Still a lot of great people. I don’t hang with them big city folk who come here thinkin’ they’ll teach us a thing or two. Spent my time in those big cities and came back here for a reason.
As far as being a dangerous city… well you can find trouble anywhere Bob… even in Peachland. But I gotta hand it to ya there Bob Peachland is a pretty nice spot to hang your hat, bit of a bitch in the winter though if you work anywhere but there and what is there for work. Almost bought the old hotel there a few years back but my wife wasn’t so keen on owning a strip joint ;-) Capozzi owned it then for a bit. Cam was living there then.
Yup I’ve been around here a spell and now you know it.
Feb’s Toronto Life magazine hit my mailbox today. Features: families and couples earning 160-200k per year.
Only one couple blows it all each month – zero savings. 1/2 of this couple is a realtor at a high end firm. If there is a slowdown…and would you take real estate investment “advice” from someone who cannot even budget and save in their own lives?
And I could not believe how many spend hundreds each month on wine! I’m not much of a drinker and not of wine. What a waste of $.
Garth should really subscribe to this magazine about godless Toronto – every month’s rag contains real estate follies and bubble talk.
Perhaps there is room in his reading budget, after Bunker Life, Frank, Bikes & Babes, and Hummer Lifestyle magazines.
#73 Mario and my response to your post at #213.
I didn’t get a chance to finish my response since the wife was coming down the stairs and I didn’t want to disclose my pen-name.
Your addiction to money is no different than a junkie who is addicted to coke, crack, heroin, etc. You get your high from it.
I could be wrong though if you are earning this money to pass on to Charities or help Humanity with your life savings when you pass away.
If that is the case, I offer you my sincere apologies!
@189 Snowboid:
thanks for sharing the info. Basically then, retirement is trying to get yourself busy with something. Just need enough creativity, I guess…
Hey Form Man,
If DA is making you uncomfortable why don’t you just fall back on your default fascist position and lobby Garth to have him banned?
In your caring, politically correct, tolerant neo-liberal socialist way, of course…
You are so full of shit. Prices have been stable for the last three years as volumes have for the last four and THAT is the FACT.
In May of this year the average property sold for $486,233. But by the end of the year (last week), this had dropped to $451,436. That is a correction of almost $35,000, or 7.2%.
I take notice but guava.ca shows 2011 was just another year. Garth is talking TREB. I looked up TREB and it seems to be talking about the City of Toronto:
http://www.torontorealestateboard.com/about_GTA/Neighbourhood/index.html
which is definitely not the GTA. does TREB represent a fixed geographical area?
GTA sales did take a very steep dive from November to December.
Form Man: well if your living depended on real estate sales you would sound a little panicky.
#218 gladiator on 01.06.12 at 10:09 pm…
You make retirement what you want it to be. You have busy days, then you feel like ‘bumming’ around other days – the important aspect – it is your choice.
And you are right, being creative helps.
#217 Ballingsford
Hey, no, not passing anything to charities. I’m pretty sure we’re not addicted to money, we just have a plan. I’ve always been self employed (in real estate) and frankly I liked it for the first few years, but for the last 4 I hated it. I don’t think I would work well in an office setting, although I would like to try it at least once. Ultimately, I think the best work is if I have my money working for me, rather than me having to work for money. To do this I would need about 1 million, but could probably swing it ok with about 750k. Basically that is the goal.. work and save until we have 750k to 1million and then relax, have steady dividend income and some capital gains and never have to work again. It would be nice to have many millions and live a rock star life, but it’s not likely to happen, so the next best thing is to have at least a million and to enjoy living off it modestly, without having to bother with working for other people everyday. Money cannot give you happiness, but it can provide freedom. Personally I will probably never be happy, but at least I will be free.
#215 DA Actually DA,, I used to drive to Penticton ,25 miles rather than drive to Kelowna 15 miles to do any shopping ,,now I can just drive to the strip mall starting in Westbank.. Yeah,, you are right as far as work,,, nothing other than health care here ..The good thing is I retired at 48 ,,had oil wells on my land in SE Sask.. and now lots more in the Bakken formation.. Life is good !!!
1) Something about this plan seems fishy.
– You’ve managed to save money. The majority just spend it on stuff. But do you think you retire and live on that for another 50 years? I doubt it.
2) I would consider myself a beginner investor (all that money IS sitting in a savings account, after all). Do you think it’s actually realistic for me to build a 6%-yielding portfolio?
– Go to a professional. (here’s an idea, how about Garth)
#176 – The U.S.’s rape and pillage mission? Even for an obvious exaggerator, that’s a bit much. Blind bigotry, anyone?
Salary info for Canada can be found here – click around for all types of engineering salaries (and yeah, it does seem like an extra zero in the number, or someone has helped them out with student loans and the cost of living along the way. That and they both found a dream job fresh out of school!):
http://www.livingin-canada.com/salaries-for-mechanical-engineers-canada.html
Hmmm….another thought….maybe one of these engineers is a contractor and is accummulating the savings in an incorporated business while living off the other engineer’s salary? If that is the case, then this story is indeed plausable. But that person would have to have a very “in demand” skill which usually also requires years of experience to command a high hourly rate. But alas, over say 5 years, a contractor could indeed rake in this kind of dough and keep in sheltered in a business (i.e. taxed at a low 11% corporate rate, and not taxed at the individual rate in the year it is earned). The savings would eventually be taxed at the individual rate though, so it’s not really 500K in savings. But it’s a thought…
Having spent the last little while reading every single comment here I’m surprised no one has raised an obvious question: why, pray tell, hasn’t the Power Couple engineers in all their money-saving savvy chimed in? I assume they’ve bothered to read Garth’s article and at least a few of the comments.
I find that extraordinarily rude, frankly. I recall quite a few letter writers featured by Garth actually contributing to the comments section. The engineers’ case is egregious in the sense that many of us here wonder how they’ve amassed their not insignificant war chest at such a young age when most of their peers are wet dreaming their youth on granite countertops and plasma TVs.
So, dear Power Couple, do you have anything to say?
By email they commented to me: “Ha! Cool! We both got a kick out of reading our story on your site, but we weren’t expecting everyone in your comments to start fighting with each other! One half think we’re not real, the other half are defending us and calling the first half idiots, and there’s a few random people ranting about government conspiracies in Australia for some reason.” — Garth
Thanks for posting their emailed comment, Garth. I chuckled at their reference to “government conspiracies in Australia,” as I have thought about that myself many a time here. There is still hope for the future when millennials like our featured engineers have their wits about them.
Keep it up, Power Couple, but don’t forget to also take some risk and exposure on the public sphere of ideas. I’ve learned more about finances and better living from this blog since discovering it a few months ago than I did in university, and that goes both for Garth’s articles and blog comments (give or take a few kooks). Your opinion matters.
Engineer kids, you rock! I’m sending this to my 20-something kid who will have a hefty OSAP loan to pay off this April. Oh and thanks McFlinty for the rebate to them.
Engineer couple great work! Totally believable. I don’t get why anyone would doubt it. If one’s fortunate enough to be able to work and study at the same time, save a little every month, buy RRSP’s, use the student tax loopholes to one’s advantage and isn’t too proud to take on jobs others turn their nose’s at, some sacrifice, blood and sweat, a little old school thinking it can be done. Without a doubt some people have much tougher life situations to contend with. Equal opportunity does not exist no matter how much a person wants to believe it. Unfortunately some people on this board tend to sound like a bunch of crybaby’s and sound as though they are deserving just because they have some post secondary education. Maybe some didn’t have the lucky bounces as others, or were born into a family that was financially incapacitated. Who gives a shit what other people are doing and how much they have saved. It doesn’t make a difference in your life, so quit worrying what others have, work hard try to be positive. Don’t waste the one life you have on trying to keep up to the Jones’. Nobody wins that game. If a person really wants it bad enough they’ll do whatever it takes. Collecting pop cans on the weekend, night job at Mac’s… moonlighting, sacrificing and saving from a very young age just might get you into this position. A little productivity can go a long way when your young. If your a person that was fortunate enough to have parents that took the Atari away, made you get your fat ass off the couch and get a paper route most likey you’ve developed a work ethic from a young age. Those types understand how difficult it is to earn an honest dollar. One learns to appreciate the money from their labors and doesn’t piss it away on garbage. Start young or teach your kids to save young…they’ll be like the engineers. If I were them, I’d grind it out a few more years, then cut back to part time or independent consulting. At the rate they’re going they’ll be able to spend more time with family on a beach then sweating it out in the Rat Race fighting to earn those dollars to make that next payment. The only other honest option in Canada I can suggest is to pick up a hockey stick when you’re two and learn to Dangle like Datsyuk. You and you’re family with some common sense will be taken care of for generations. Carpe Diem hombres and try to enjoy what you’ve got…oh yeah, and if someone enjoys being in debt slavery let’em have it, not our head ache to deal with…those with the “I deserve it and want it all now” attitudes are about ready to face an unfortunate demise to their current situation.
To #18: Saving $50k or more out of $100k net is not unreasonable at all. My wife and I combined gross $144k, and our net in 2011 was about $100k. From the $100k, we we paid $71k in mortage payments and overpayments, $4k in property taxes, $2k for utilities, and just under $1k in property insurance. That’s $78k for housing and housing-related expenses. If we had rented an all-inclusive apartment for $1.6k per month ($20k/year), we would have been able to save $58k. We own a late-model car (paid off), go out to eat once a week, take sensible vacations, etc., but we watch our finances very closely.
6% is too high the TSX yields 2.6%
possible closer to 3.5-4.5% without preferred shares as they are sensitive to interest rates. Realestate trusts grow the income stream too slowly if at all and are overpriced now.
read The Single Best Investment by Miller
dividend growth stocks can triple the income stream in 9 years. being young use DRIP plans.
shop for house to first find what you might like and wait.
I noticed a few people on here thinking that it seemed impossible for these 2 people to be making that kind of money in Engineering. I’m thinking (while we don’t know by their letter where they are located) that perhaps they may be in Ft. Mac? I know just being here (7 yrs now) that wages are ridiculously high. There are lot of things about this place that (at least I’ve noticed) may surprise a lot of people :/ Just saying by my own observations.