Think again

LONELY modified

Yesterday I offered a few nuggets. Like not getting divorced and throwing your adult kids out of the basement. But two caused a stir – leasing cars and taking CPP early. Let’s dig in a little.

The car thing is easy. Buying used (or new) with cash and riding the wheels off seems to save money over the high monthly cost of leasing. But that’s not the point. Cars are depreciating assets and almost all of them eventually go to zero. Leasing makes sense, but only if you take the money you don’t spend and invest is instead. That twenty grand in a growth-oriented TFSA over thirty years will end up being $132,000.

This is money you can withdraw free of tax. Better still, at 6.5% return it will provide you with more than $700 a month income for the rest of your life – money not added to your taxable income which doesn’t affect CPP or OAS. Over 20 years of retirement, that’s more than $171,000 in cash flow, plus you still have the $132,000 left. This is a $293,000 reason why you should have leased that car.

No, how about taking that CPP at age 60 instead of 65? I said it was a non-brainer decision, and it is.

Shockingly, most people need the pittance the CPP delivers (along with the OAS pogey, to which nobody contributes directly). A survey by one of the banks found that 89% of Canadians believe they’ll require these bucks to make ends meet. A third of those said they’ll lean on CPP “heavily.” It’s an indictment of us all that the number is so large. If you’ve lived six decades and still can’t support yourself, you probably made bad choices.

Well, you can start getting pension cheques now at age 60 even if you’re still working, and pocket the money until death. No longer does anyone have to give up a paycheque to get public money – a decision the federal government will long regret (and may some day reverse).

In order to stem the tide, the feds have built in a financial incentive to wait, so at age 60 you receive less than you would at 65 or age 70 – when the amount augments by about a third. Like buying a car versus leasing one, people do the wrong math when it comes to CPP. They studiously contemplate the point at which you’d be better off waiting (around 73), then conclude that because they’ll live forever, it’s more profitable to wait and get more later.

It isn’t. Here (again) are some of the reasons why everyone should collect at 60.

  • Any time the government gives you money, take it. Handing over pensions five years before most people think of retiring, when they are still employed, is idiocy. This could, and probably will, be changed on a whim in the future.
  • But what about the 30% more if you wait five years? If you absolutely know you’ll live to 95, delay. And don’t eat red meat. Or Hoverboard. But for most of us it makes way more sense to collect the largesse as soon as possible, and invest it. Sixty monthly payments of $600 from age 60 to 65, for example, equals $36,000. That amount invested for a decent return becomes almost $60,000 in ten years, tax-free if inside your TFSA – turning out enough income to increase your OAS by 50%. That sure beats waiting to get an extra $150 a month.
  • Delaying until 65 or 70 to get more CPP income might also edge you into a higher tax bracket if you’re drawing from RRSPs. That would pretty much wipe out any benefit. Remember that during the year you turn 71 all RRSPs must be converted into RRIFs, meaning you’re forced to start taking the capital as taxable income. Why not bank your pension cheque for 11 years before that happens? Put the loot into a TFSA and when it comes out, no impact on your tax bracket.
  • You can split your CPP payments with your spouse, reducing the tax bite.
  • Finally, you’ve contributed to this plan your entire working life, so it makes sense to suck out cash the moment you have a chance. That way you’ll drain far more from the plan than you ever contributed, which is excellent revenge for being, like, really old.

177 comments ↓

#1 powder_hound86 on 05.18.16 at 6:05 pm

Garth, your simply wrong about leasing the car.

Unless we are talking luxury vehicles, or having a new vehicle every few years, in that case most people are making a shit personal finance decision anyways.

Buying a 3/4 year old car and driving it till the wheels fall off is the most cost efficient way to own a vehicle.

Just don’t get it, do you? — Garth

#2 Part-time Garage Monkey on 05.18.16 at 6:09 pm

Drive a beater and the lease argument loses… All that money on the lease is invested. TFSA, RRSP maxed every year. Car is 22+ years and running like a beaut.

#3 JSS on 05.18.16 at 6:11 pm

Ok fine, but lets talk about the possibility of a second interest rate hike in US, and how us Canadians will be affected.

http://business.financialpost.com/news/economy/u-s-federal-reserve-targets-june-for-possible-second-rate-hike

#4 Debt's Dark Embrace on 05.18.16 at 6:12 pm

I’d like to know who pays a safe 6.5% yearly dividend. I bet a lot of readers would like to know that.

Where did I say dividend? — Garth

#5 Brazil ex-pat on 05.18.16 at 6:16 pm

http://www.cknw.com/2016/05/18/effect-of-foreign-cash-on-real-estate-no-mirage-report/?sc_ref=facebook

Shocking news from the Conference Board of Canada.

#6 bdwy sktrn on 05.18.16 at 6:17 pm

i have no plans to ever get old.

#7 Jungle on 05.18.16 at 6:22 pm

Agree with everything except implying that leasing is better than owning.

Best answer: well it depends.

Overall better to own car 3-5 years old then drive into the ground.

#8 will on 05.18.16 at 6:23 pm

Garth, where can I find out how much CPP I will get per month before I sign up?

#9 common sense on 05.18.16 at 6:26 pm

Please raise the interest rate Janet. Please!!!!

My shorts are all ready for this rumour to enjoy until June when it won’t happen.

#10 Mighty Mouse on 05.18.16 at 6:33 pm

LOL!! Great timing Garth!!! Just paid 65K (plus my trade in, 2008 truck) for a fully loaded 2016 full sized truck lifted and custom everything (yes, I am a redneck)… Sadly… Paid cash (yesterday)…. But I have perma-grin and I can’t stop turning back around to look at it!!!

I figure houses are now way too ridiculous to touch…. Even if I had the money to buy ought-right I wouldn’t… Just ain’t worth the risk…

I’ll rent and have all the toys!

Was totally worth it!!!

#11 Andrew Woburn on 05.18.16 at 6:37 pm

#95 Smartalox on 05.17.16 at 11:01 pm
@Andrew Woburn;

I don’t know about SF rents, but in Toronto, I recall my parents renting a 5br house in North York in the 90s, for $2400/mo. Just about the same a house rents for in the same neighbourhood today.
======================

I too was surprised by the SF numbers. Over that long a time I would have expected rents to only track inflation.

As you say, rents have not recently kept pace in Canada. I speculate that the high rate of home ownership here has reduced the number of potential renters on one hand while increasing the supply of rental space in the form of mortgage helper suites. Certainly there are SFH streets near my area where there is almost no available street parking because of rental suite tenants.

#12 Brydle604 on 05.18.16 at 6:48 pm

Vancouver’s Currency Exchange Ponzi Scheme against Canada’s Housing Bubble

Ross Mckay points the finger particularly at the real estate community which he says has turned its back on federal laws, particularly reporting to financial regulators, the Real Estate Council of BC, which he says appears unwilling to hold agents accountable, and politicians who are afraid they’ll be blamed for popping the bubble
http://www.cknw.com/2016/05/17/is-vancouvers-real-estate-market-a-ponzi-scheme/
http://www.rosskay.com/vancouvers-ponzi-scheme.html

#13 Golfman on 05.18.16 at 6:51 pm

30 years in the car biz, leasing makes sense. You still negotiate your vehicle price and you pay, monthly, for what you use. Like Garth said it is a depreciating asset. You buy what appreciates and lease what depreciates. In B.C. it is a huge savings as taxes are paid on the monthly amount instead of the total vehicle purchase price.
Have a $10,000 accident, get it repaired and see what the re-sale is for a vehicle with a $10,000 hit on it. (B.C. we have to report that) If it is leased, it is not your problem.
Manufacturers normally have super rates on leases as it sells more vehicles for them.

#14 Mark M. on 05.18.16 at 6:51 pm

#3-JSS – Ok fine, but lets talk about the possibility of a second interest rate hike in US, and how us Canadians will be affected.

Sure. Then we can talk about the possibility of the US being hit by a meteor, and how us Canadians will be affected.

#15 momo on 05.18.16 at 6:53 pm

Here’s an example:

Mazda 3, brand new: $20,000
Three year lease: $186 every two weeks;
$20,000 invested in ETF with 7% dividend/year: $1,400;

So I drive a brand new Mazda 3, for about $100/month,
have $0 maintenance cost, and at the end of three years
I still have the $20,000; I might even make a capital gain if I sell the ETF after 3 years.

If the ETF happens to be down, I just keep it for the ongoing dividends until the price recovers.

There are plenty of Canadian ETF’s paying over 6% dividend. Also, I invest the funds in a Canadian ETF and so I pay a lower tax rate.

Furthermore, at the end of the lease I might first find a buyer and sell the car for a small profit, instead of returning it to the dealer. I drive far less than the allotted 20,000km/year so the car has a good value after 3 years.

#16 momo on 05.18.16 at 6:55 pm

Correction to previous post (this blog does not allow to edit comments)

The lease is $98 every two weeks or about $196/month

#17 DON on 05.18.16 at 6:56 pm

#1 powder_hound86 on 05.18.16 at 6:05 pm

Garth, your simply wrong about leasing the car.

Unless we are talking luxury vehicles, or having a new vehicle every few years, in that case most people are making a shit personal finance decision anyways.

Buying a 3/4 year old car and driving it till the wheels fall off is the most cost efficient way to own a vehicle.

Just don’t get it, do you? — Garth
*************************
I get it – took a bit – was part of the drive it into the ground. Your approach makes sense – although it takes discipline. Will bring it up at the dinner table tonight.

Thank you for all your sage advice over the years.

The main even is well on its way.

#18 Andrew Woburn on 05.18.16 at 6:57 pm

A group of ex-Google engineers have just launched Otto, an autonomous trucking startup.

The really interesting features of their approach:

– They are building retrofit kits to install on existing trucks

– They plan autonomous driving only on highways.

“There are only 222,000 miles of highway in the US, just 5% of the roads in the country. They’re easier to map and it’s a much more constrained problem to solve than all those city and rural streets.”

– A human driver would get the truck on and off the highway but

“We want to get the technology to the point where it’s safe to let the driver rest and sleep in his cabin and we can drive for him, exit to exit. This is what allows us to change 11 hours’ driving into 24.”

It is not hard to see how this could develop into fully autonomous trucks delivering themselves to yards at highway exits and dropping their trailers for local delivery by human drivers.

https://backchannel.com/the-man-who-built-googles-first-self-driving-car-is-now-a-trucker-aa1726d3a36f#.p4luzy9r3

#19 Dan on 05.18.16 at 6:57 pm

I see your point Garth about leasing the car thanks for the article.

What’s your opinion on 0 percent financing because the payment work out to be the same lease vs finance and most dealers are doing 84 months payments with 0 down

#20 I'm stupid on 05.18.16 at 7:06 pm

Garth I really don’t get how leasing a car for $700 a month is better than buying a 20k car and running it into the ground. $700 a month is $8400 a year so 2.5 years is $20k the lead payment never end

#21 jay on 05.18.16 at 7:06 pm

Now the real Justin is starting to appear . http://www.cbc.ca/news/politics/trudeau-conservative-whip-1.3588407

#22 PeterfromCalgary on 05.18.16 at 7:26 pm

Garth the CPP at 60 makes sense. Thanks for explaining it. However I still have to disagree on the car lease. Here is my reasoning.

1. You only get a really good deal on leasing if you buy a new car. Buying new means the car will lose half it’s value in the first 3 to 4 years. Your way better off the buy a lightly used car that has been checked out by a mechanic.

2. If you buy a used car (which you should) your interest rate could be 5% or higher for the lease. Now sure you can do better then that 5% on average if you invest in a balanced portfolio of ETFs. However, not financing is like earning 5% guaranteed. So it should be compared to a CDIC guaranteed investment which pays a lot less then 5%. If you want that car money to invest you can probably get a HELOC for a lot less then 5%.

3. If you lease a car you are required to get not only liability insurance but comprehensive insurance. So you are forking out still more money then absolutely necessary.

4. If your car gets some cosmetic damage it you have to pay for it. If you own the car you can just drive around with a dent or scratch and not worry about it.

5. Paying cash for a used car means you are less likely to get ripped off with hidden fees. Better to keep it simple.

6. Most importantly! If you lease the car the sales person will try to get you to lease a lot more car then you actually by focusing you on the monthly payment rather then the real cost. This makes it too easy to add on lots of features without thinking about the total cost. When buying a car you need to focus like a laser on the total cost. Leasing obscures what the total cost is making it difficult to keep that laser focus.

#23 jay on 05.18.16 at 7:27 pm

Forget about the 649 ,get a mortgage and buy a house in Vancouver. http://www.cbc.ca/news/canada/british-columbia/metro-vancouver-ccpa-lottery-1.3588159

#24 nonplused on 05.18.16 at 7:28 pm

I can see Garth’s point if you want to drive a new car. In the case of my jeep it’s already done depreciating and my kids drive it. It’s nice not to worry that if they bang it up it’s worth real money. I originally paid $14,000 for it in 2001 and it’s served us without a major repair just maintenance since, so it has freed up a lot of money to invest. I think new tires was the most I spent on it.

PS it’s cheaper to rent a motorcycle when you want to go for a ride than own one for most people too, but that’s just not how people view these things. They fall in love with their motorcycles. Even Harley’s are depreciating assets now but no Harley rider I know would consider leasing, it’s “their bike” and nobody else’s. Yet they cost more than most cars.

Also the economics of leasing even a new car is seldom clear, the lease price includes all of the depreciation the vendor expects over the term of the lease plus financing costs. Thus, if you go with a 5 year term, minimum down payment (or can score a cash back), and get a good interest rate, chances are you have almost as much money left to invest in the TFSA but at the end of the 5 year loan you have a car in your driveway you can drive the wheels off of over the next ten years with only maintenance expenses.

But I will agree saving money by owning is a long term plan. If you can’t keep a vehicle for 10-15 years because you need to drive something new or bought a Mustang just before your wife got pregnant then you should lease.

#25 Brydle604 on 05.18.16 at 7:29 pm

#18 Andrew Woburn
Interesting article, however I doubt that many existing Trucks will be retrofitted for autonomous driving as most are manual transmissions. Only automatic transmissions will work to be autonomously operated as well as electric steering
I have no doubt this will be the future, but it will take new trucks like the Nicola
Andrew thanks for all the great articles you find and share. Most topical and informative.
M70BC

#26 powder_hound86 on 05.18.16 at 7:30 pm

>Just don’t get it, do you? — Garth

No I get it perfectly fine, Most of your advice is good, some of it is bad. Your advice to always lease vehicles falls into that category.

#27 JP on 05.18.16 at 7:33 pm

2 or 3 more fed rate hikes coming this year. Be ready to buy stocks when over reaction occurs.

#28 nonplused on 05.18.16 at 7:37 pm

PS I did waste some pointless money on the jeep’s air-conditioning. This is a waste on an older vehicle. We recharged it with dye twice and they still couldn’t find the leak and want to just start replacing very expensive parts until it worked. I decided no dice. When I was a young driver most of the cars me and my friends could afford didn’t even have air conditioning so I told my daughters they were just going to have to use the old 4-60 air conditioning we had when I was that age. (4 windows down and go 60 miles an hour. I guess in metric it would be 4-100.)

#29 OffshoreObserver on 05.18.16 at 7:38 pm

Comments:

#1

#8 will on 05.18.16 at 6:23 pm

Garth, where can I find out how much CPP I will get per month before I sign up?

Go to: http://www.servicecanada.gc.ca/eng/home.shtml

You can find out what your CPP amount is, the GST Rebate and the status of your tax return.

You can use your online banking credentials to get in.

=================================

Comment #2 – Early CPP:

I live in Vietnam, where living on a motel on the beach costs about USD250/month. (50Meg/second optical fibre internet is about $50; food is plentiful, healthfull and cheap; beer is 30 cents a can from the grocery store.

When one calculates the present value of my CPP and OAS when I collect–I am 62 now, so when I am 65–I’ll get about $700/month:

BOND YIELDS 0.1833% 0.2167% 0.22%
MONTH ANNUALLY Infinite 10 20 30
Rent 700 8,400 $280,000 $75,340.19 $135,814.29 $184,355.66

So that means, if I live to 93, I could leave my GF a house I purchased today for $184,000-ish–the one she is looking at to build is only $30,000.

==================================

Comment #3 – Lease or Buy vehicle?

I just bought three motorbikes. Total capital cost about $17,000. GF ensures they are fully-fuelled and oil changed every 3,000 clicks. (Oh, and I always drive with helmet-on!)

#30 Haunted by Tulips on 05.18.16 at 7:42 pm

#1 powder_hound86 on 05.18.16 at 6:05 pm

“Buying a 3/4 year old car and driving it till the wheels fall off is the most cost efficient way to own a vehicle.”

#2 Part-time Garage Monkey on 05.18.16 at 6:09 pm

“Drive a beater and the lease argument loses… All that money on the lease is invested.”

I’m also happy driving a car until the wheels fall off, but I start with 10 year old cars. I spent about $2500 on each of my last 3 cars, sold them for $1k average after 3 or 4 years, and got 10 year of driving without ever being stranded for a net $6500 expense over 10 years (minimal maintenance expenses by doing my own oil/brakes/exhaust). I don’t bother getting collision insurance coverage, and save on the basic premiums due to low value.

Of course the lease vs buy argument is only reasonable when comparing similar cars of any notable value. If I were to start driving newer cars that are worth something I believe the leasing argument holds and I’d be better off investing more by outlaying less for the car. But while I’m happy driving beaters with negligible outlay costs, then I’m better off financially doing what I do than leasing a car.

#20 I’m stupid on 05.18.16 at 7:06 pm

“I really don’t get how leasing a car for $700 a month is better than buying a 20k car and running it into the ground.”

$20K car is a cheap economy car.
$700 a month lease is a fancy high end luxury car.

Not really a reasonable comparison.

#31 Ogopogo on 05.18.16 at 7:44 pm

#4 Debt’s Dark Embrace on 05.18.16 at 6:12 pm
I’d like to know who pays a safe 6.5% yearly dividend. I bet a lot of readers would like to know that.

Where did I say dividend? — Garth

Don’t you just love it when the first “gotcha” numbskull steps up to Garth’s guillotine every night?

#32 crowdedelevatorfartz on 05.18.16 at 7:45 pm

@#5 Brazil ExPat

I’m not really surprised.
More and more agencies seem to be jumping on the band wagon.
I think that even if the foreign ownership issue is less than 10% of the problem the fact that the media and govt agencies are finally starting to dig is at least something.
Kinda make one wonder where the hell CRA has been for the last 10 years of realtor “house flipping” income declaration.
Im sure this is just the beginning of a long drawn out financial tragedy………

#33 SueP on 05.18.16 at 7:45 pm

Won’t taking CPP at 60 put you in a higher tax bracket so that you will have to pay it back in taxes?

#34 Firebird on 05.18.16 at 7:46 pm

You may be right about the 6% to 7% on the RRSP. I lost 12% in 08/09 then started to climb to where it was at, then lost 3% since November and still down 1.5%. I think the Banks/Government have it rigged in their favor.

#35 April. on 05.18.16 at 7:46 pm

But what about tax? Money in hand? Check. Invest inside TFSA? Check. Initiate pension receipt because tomorrow we die? Check.

But that pension money is getting dinged at my highest tax rate, both federally and provincially, so I’m only getting to keep and invest 2/3rds. Is that really better than waiting?

Although – if I can pass the income on to my spouse – maybe that would work.

But the tax – my noobie brain needs help with the tax issue of taking CPP while still earning my highest pay cheques ever.

#36 White Crock BC on 05.18.16 at 7:46 pm

Mark M. on 05.18.16 at 6:51 pm

#3-JSS – Ok fine, but lets talk about the possibility of a second interest rate hike in US, and how us Canadians will be affected.

Sure. Then we can talk about the possibility of the US being hit by a meteor, and how us Canadians will be affected.
=================

You mean President Trump?

#37 robert turpin on 05.18.16 at 7:49 pm

to #19 about the lease of car..i understand it to mean that instead of buying a 20k car for cash or making payments..plus sales tax on total amount.e.g. a mazda 3 or toyota corolla with air and automatic..if you have the cash ..20k$ …put it in the tsfa in garth suggested etf and let it grow..if you do not have the cash 20k$…then just lease the car for 3 or 4 yrs and contribute what you can to the tspa in a etf garth suggests…the point being not to take 20k$ and buy a depreciating asset..you will always have reliable warrantied car and have tax free porfolio growing..i don t know where the reference to leasing for 700$ comes into it..a mazda or corolla would lease for 240$ a month plus the taxes…remember that those shinning higher end models all turn to rust and expensive repair bills..is that what you really what..or do you what to free yourself from financial slavery ?..thank you Garth for all your help and solid advice

#38 Ontario's Left Coast on 05.18.16 at 7:49 pm

Guys, you’re missing the point on leasing… Nobody is leasing so they can invest the cash they would have spent; they’re leasing because they are flat broke and living paycheck to paycheck. Most couldn’t purchase outright if their lives depended on it.

We’re replacing my wife’s 250Km Flex this month… it’s the only way for me: 100% down and zero payments for 6-8 years…. priceless!

#39 Ogopogo on 05.18.16 at 7:51 pm

A rare anti-owning article in the mainstream media. The Star’s Heather Mallick makes a case for why

“Home ownership a form of slavery while renting is what you do when life is so interesting you don’t notice where you live”

https://www.thestar.com/opinion/commentary/2016/05/11/are-you-sure-you-want-to-own-a-house-mallick.html

One of my fav bits here, which fits right into what I’ve said before about how I increasingly don’t care to buy even in a correction (unless there is a ridiculous crash, of course):

“What I am describing [re. home ownership] is not mere tedium and expense, it is slavery. Careful what you wish for. You might get it.”

#40 Scott on 05.18.16 at 7:54 pm

#15 Doesn’t add up. 1400 divided by 12=116. 186 times2=372. 372-116=261/month. Allows only 2 weeks per month.

#41 earthboundmisfit on 05.18.16 at 7:54 pm

@10 Mighty Mouse
Sucks to be you, needing a penis extender.

#42 JP on 05.18.16 at 7:54 pm

The most valuable thing in life is yourself. By leasing the safest car you can afford with the latest and greatest technology and advancements every 3 years you increase your odd of not becoming a statistic or have to spend the rest of your life with pain and suffering. Most people spend a great amount of time in their vehicle, take care of yourself. I have been in a few accidents and if it were not for the cars I was driving(both leased by the way) I would most likely have been severely injured or worst dead.

#43 Win on 05.18.16 at 7:55 pm

Leasing vs Buying

Get the best of both options.

Yes, I am repeating myself.

If you own your own business, leasing is the best option.
There is a right and wrong way to lease however.

The wrong way? A car dealership or leasing company.

The right way? Buy the car yourself – new or off lease, 1 yr old etc like suggested.

Then lease it to yourself, or your business. Reasonable figures. $300-$400 (check similar commercial lease rates)

Your business pays the lease TO YOU (you own the vehicle, remember). Make sure you have a simple lease agreement and make a monthly payment by cheque to yourself.

The lease payments to you as owner of the car are not considered income and are not taxable.

(If financing, your owner’s payment might be $200 but you could lease it to your business for $300)

I am not an accountant or tax lawyer but we were taught this by a Rev Can auditor in a biz seminar.

I believe I just saved some people money.

PS Even most accountants are unaware of this

#44 BS on 05.18.16 at 8:05 pm

The key to saving money when buying a new vehicle is to buy from fleet sales. Usually about 15% cheaper than the best deal you will get at a retail sale after haggling, plus no doc fees or bogus add ons like paint protection or security stickers. This will save you enough buying new makes more sense than used. The person selling used paid retail plus all the bogus add ons.

To do this find an auto broker which will cost you $200 or if you have a business you can go directly to fleet sales at any new car dealer. You can lease or buy and get all the same incentives from fleet and they can sell you any vehicle.

I always buy new vehicles this way and have yet to lease. It always works out to be cheapest to pay cash factoring in everything. If I wanted to increase my investments I would rather borrow the money to invest, write off the interest and not be tied to the terms of a lease. With a lease you are stuck changing vehicles at a specific time which does not always work out.

#45 Give us this Blog our daily Garth on 05.18.16 at 8:05 pm

#22 PeterfromCalgary on 05.18.16 at 7:26 pm

6. Most importantly! If you lease the car the sales person will try to get you to lease a lot more car then you actually by focusing you on the monthly payment rather then the real cost. This makes it too easy to add on lots of features without thinking about the total cost. When buying a car you need to focus like a laser on the total cost. Leasing obscures what the total cost is making it difficult to keep that laser focus.
——————————————–
Yeah, be careful with dealerships.. buying or leasing. I leased once… the conversation started off with “what can you afford per month?” I was young… didn’t do the math!

#46 MilkandVodka on 05.18.16 at 8:16 pm

Today’s Observation

On my way to work this morning driving along Ellesmere/York Mills (avoiding the 401), I encountered two accidents. The first accident I drove by and it disappeared from my mind. But the second one stuck in my head. It involved two cars, one an Audi and the other an Acura both driven by young males. Both cars are write offs, air bags deployed even on the roof. Both approximately in theirs 20’s, both had the same hair cut, shaved on the sides and long on top wearing their standard skinny jeans. Both pacing backing and forth talking on their cell phones. One apparently crying to his mommy probably who I could hear. The main point, both were also thinking the same thing at the time of the accident. I’m not not going to stop or brake or let you go by. Two individuals with the same mind encountered each other at the same time.

This blog is about how we think and someone out there is counting on you to not think very differently. Remember you can get into an accident.

#47 Craig on 05.18.16 at 8:16 pm

Re: CPP at age 60 ?

Although I would like to take CPP at age 60, I will get an extra $240 per month at age 65. Since I’ll have some leaner earning years between age 59 and 65 I’m considering withdrawing money from my RRSP ( tax shifting strategy during these years ) to avoid getting hit with potential OAS clawback at age 65.

#48 Still employed in AB on 05.18.16 at 8:19 pm

I bet this guy wished he leased http://tinyurl.com/jn62j8m Presently he is hoping to take a haircut of 48000 after owning the 750Li for less than a year….an operating cost of of 9.23/km + fuel + insurance

#49 chase the dream on 05.18.16 at 8:23 pm

Calling all suckers…..a ‘lawyer’ has a plan to match up ‘real sellers’ with ‘real buyers’…..the catch is that the seller has to be willing to forego market value….no telling what the restriction for flipping will be imposed on the ‘real buyer’.

http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouverite-aims-to-fix-broken-housing-market-by-connecting-real-buyers-with-real-sellers

But…if so….anyone who wants to sell either of my kids a home for less than market value should respond right now as I have hundreds of dollars waiting. I’ll need a nice west side house and am willing to go up to say…..’$10,000’…..yeah….that sounds right.

#50 Life among the Stars on 05.18.16 at 8:24 pm

#48 Still employed in AB on 05.18.16 at 8:19 pm

I bet this guy wished he leased http://tinyurl.com/jn62j8m Presently he is hoping to take a haircut of 48000 after owning the 750Li for less than a year….an operating cost of of 9.23/km + fuel + insurance

People are nuts… oh well.

#51 BS on 05.18.16 at 8:25 pm

Win on 05.18.16 at 7:55 pm
Leasing vs Buying

Get the best of both options.

Yes, I am repeating myself.

If you own your own business, leasing is the best option.
There is a right and wrong way to lease however.

The wrong way? A car dealership or leasing company.

The right way? Buy the car yourself – new or off lease, 1 yr old etc like suggested.

Then lease it to yourself, or your business. Reasonable figures. $300-$400 (check similar commercial lease rates)

Your business pays the lease TO YOU (you own the vehicle, remember). Make sure you have a simple lease agreement and make a monthly payment by cheque to yourself.

The lease payments to you as owner of the car are not considered income and are not taxable.

(If financing, your owner’s payment might be $200 but you could lease it to your business for $300)

I am not an accountant or tax lawyer but we were taught this by a Rev Can auditor in a biz seminar.

I believe I just saved some people money.

PS Even most accountants are unaware of this

If you buy the car yourself you are on the hook for the GST. A business gets it back. That adds 5% to the initial cost in BC. More in some other provinces.

Bottom line if you make money then it is taxable. No free lunch when it comes to the tax man. Otherwise people would just lease everything at a premium to their business and collect a tax free profit.

#52 IHCTD9 on 05.18.16 at 8:28 pm

#15 momo on 05.18.16 at 6:53 pm
Here’s an example:

Mazda 3, brand new: $20,000
Three year lease: $186 every two weeks;

———————

Used 1999 SAAB 1300.00 with 150.00 worth of parts for repairs so far over 3.5 years – $17.26 every two weeks

Expected biweekly payment over 6 years of ownership including all repairs – $13.54 every two weeks

Part out and scrap at the end puts about 400.00 back in my pocket – $10.76 biweekly cost to own for 6 years.

The right old car + the knowledge to repair and maintain is the ultimate unbeatable cheap transportation formula.

Mine makes about 275 hp as well with a few dirt cheap tweaks :)

Sorry, couldn’t resist!

#53 Smoking Man on 05.18.16 at 8:29 pm

T2 what a loser. ..

Elbows a chic. Crosses the floor like he’s some kind of alpha.

And look at the commies come to his aid. Remember.

Hitler, Stalin started of as Socialists. LiberalS are violent intolerant thIves, and freaks of nature. T2 showed some today.

Discusting inappropriate behavior

#54 BOOM! on 05.18.16 at 8:31 pm

If I were Canadian I would have done the CPP at 60. As an American, took my social security at 63, though I retired at 60 and got paid what I would have earned under social security by my employer until my 62nd birthday. (Hey, it is their riles, not mine). Waited a year collected 6% increase for waiting…

On the car., I have not run the numbers, but I AM skeptical.

If I buy, (whatever the terms) I pay the negotiated terms.
I get to keep the car long after payments have ceased (hopefully, anyways). The money paid for car is gone.. I might recover a small token when I sell the car.

If I lease, (whatever the terms) I pay the negotiated terms. At lease end, I can sell, turn in, or then purchase the car. Down payment & leave payments are lost…

So, If I keep driving my 1993 Caddy, and 2 other old Fords i have no further outlays for a vehicle until they croak, or I decide to sell them.

Last one seems like the most practical option to me presently. I don’t “need” a car.

I will have to look into the “Fleece” oh, I mean lease when the time comes. Never did lease a car.

M64WI

#55 Bottoms_Up on 05.18.16 at 8:36 pm

#38 Ontario’s Left Coast on 05.18.16 at 7:49 pm
—————————-
Garth’s advice is meant exactly for people in your situation.

#56 Life among the Stars on 05.18.16 at 8:36 pm

Garth’s point is good because so many don’t invest and thus have a big junk of $$ depreciating on their driveway rather than having their money working for them…. but oh well.

Max out all investments first, buy used and drive it forever…. That will beat leasing any day, but it ain’t for everyone. It is so easy with kijiji which is an oasis of bargains from over-extended idiots… people are nuts.

CPP early makes sense.. take it and and use it for fun or dump it in TFSA… If ya’ve got the long genes yeah you lose out after a while but when yer 85+ who cares.

#57 Life among the Stars on 05.18.16 at 8:38 pm

#53 Smoking Man on 05.18.16 at 8:29 pm

T2 what a loser. ..

Elbows a chic. Crosses the floor like he’s some kind of alpha.

And look at the commies come to his aid. Remember.

Hitler, Stalin started of as Socialists. LiberalS are violent intolerant thIves, and freaks of nature. T2 showed some today.

Discusting inappropriate behavior

Where’s ford when ya need him.. !!

#58 menoagree on 05.18.16 at 8:39 pm

Hi Garth,

I don’t agree with your car opinion either. Leasing is the most expensive way to drive (unless you rented). You get jacked at 25 cents/km as soon as you go over the pitiful yearly limit, or you pay outrageous sums to buy extra kms in advance. You should poll your blog addicts to see who thinks what on the frugality of: buy vs lease. Do up a quick and free survey monkey on this – it would be interesting to see the results.

Thanks for tirelessly banging out the blog daily – 2017 or 2018 will be your 10th anniversary. Have you started making celebration plans?

Would be nice if grateful blog addicts crowdfunded $5 each for a well deserved vacation for you to Grand Cayman 2018 Christmas, no? It must feel like a friggin’ sentencing for you to try and reason with people like me.
me-no-agree

#59 Lease? on 05.18.16 at 8:47 pm

Lease your bike Garth?

#60 Smoking Man on 05.18.16 at 8:58 pm

#57 Life among the Stars on 05.18.16 at 8:38 pm
#53 Smoking Man on 05.18.16 at 8:29 pm

T2 what a loser. ..

Elbows a chic. Crosses the floor like he’s some kind of alpha.

And look at the commies come to his aid. Remember.

Hitler, Stalin started of as Socialists. LiberalS are violent intolerant thIves, and freaks of nature. T2 showed some today.

Discusting inappropriate behavior

Where’s ford when ya need him.. !!
……

He’s been reincarnated. Now goes by the name of: The Donald.

I’m waiting for the mental case toronto star (can’t call em journalists) mind fkd weirdos try and type some sunshine to make their golden boy come out smelling sweet .

No one can fool a track 5er.

#61 Chuckles Mc Liberal on 05.18.16 at 9:02 pm

Justin Trudeau has drank his own PR bathwater…thinks he’s a ‘tough guy’ who’s going to bully Canadians into line with his fantasy utopia ….maybe he’s just mad at us for not giving Sophie a new nanny squad and a staff for her ‘I’m not just a bimbo housewife’ BS

We have truly entered the realm of a Uzbekistani style government where fists fly and the ruling family punches anyone they like in public.

http://news.nationalpost.com/news/canada/canadian-politics/trudeau-accused-of-manhandling-mp-as-tempers-flare-in-house-of-commons

#62 Marco Polo on 05.18.16 at 9:03 pm

Leasing does make financial sense in a few small instances. A company vehicle for a profitable company? Lease that and deduct the costs from tax.

A luxury vehicle? Lease that and pay only the depreciation, if you want to own one, buy an older one with the money already out of it.

#63 Ontheledge on 05.18.16 at 9:04 pm

I disagree with Garths “don’t buy penny stocks”.

Over the last couple of decades I have had the opportunity to see how thousand of Canadians invest in both at retail (advice driven) and discount (self directed) environment. I have the misfortune of working in this business for a long time as a manager, executive and advisor. This has been a very valuable education into what works and what doesn’t.

What doesn’t work is what most Canadians have – a diversified portfolio of mutual funds. This is a losers game where returns are eaten up by fees and performance chasing and under performance, style drift, untimely switches, etc, etc.

The most successful investors are disciplined and patient. They run low turn over portfolio, they won’t pay fees (sorry Garth) and they’re engaged and often contrarian.

By far the most impressive returns I have ever witnessed were in diversified portfolios of penny stocks. This was my most important lesson/observation. Dudes (they’re always dudes, with balls of steel) that hold 100-150 positions in penny stocks. Essentially venture funds. I saw portfolios with book values of low 6 figures with >5M in equity. They took a sector approach, understood their companies, and when they hit it was always typically big and the whole sector moved. It was never 1 stock but 10-20% of the portfolio moving 500 to 2000%. There are bull markets in penny stocks, they move in cycles just like the RE market. The important part is that you buy when its quite and sell when its a riot…

I’m a dividend growth fella…while I appreciate the ETF approach, this isn’t for me. I’ve outperformed markets consistently for the last two decades doing what lots of the most successful investors I have seen do.

I have also formed my own Venture penny stock fund. It began as a penny stock fund, recently I have had to diversify according to my rules based approach. The best months in the past two years have been in the first two quarters of this year. Before that I was up 200% absent a bull in penny stocks. The run in O&g and gold and ore tripled this. I see lots of opportunity in this market where viable companies are deeply discounted because fear runs rampant and when they hit greed is off the charts, and the door to get in is small in relation to the heard. I’ve never seen a TFSA with more equity then my own. And I have thousands at my finger tips.

Life is too short to fail to arm yourself with knowledge of heard mentality and seek opportunity. Garth provides lots of good insights into investor psychology here the crazy market that isn’t the RE market on our left coast might be where you best apply your wisdom.

#64 X on 05.18.16 at 9:14 pm

re #26 “Your advice to always lease vehicles falls into that category.”

You may want to re read the blog post again…..

#65 common sense on 05.18.16 at 9:16 pm

I’ve never leased and never will….have done the buy new and drive for 15 years option and the buy a car 3-4 years old and drive to junkyard option. Both worked out well.

Always nice though to have a fun convertible or cheap to insure classic car to drive in the summer as well. $70 a year insurance!

Ironically, most fun vehicle I had was a beat up Mazda pick up that was great for it’s flexibility and “I do not give a damm where I park it, if I lock it, if anyone hits it” factor.” $900 100% worry free and lasted 5 years!

#66 TS on 05.18.16 at 9:19 pm

Garth,

Can you or maybe someone else on here tell me which posts outline your portfolio recommendations in detail. I know I have have read them in the past but I would rather not have to search through them all again.

#67 For those about to flop... on 05.18.16 at 9:37 pm

My last car was Harper it was a rigid old piece of steele that slowly rusted out.
My new car I didn’t want, so I leased it is a Truedeau 2.0 it is weak and flimsy, and another feature I don’t like is if you don’t do what it wants it grabs you by the shoulders and sends you off in another direction…

M41BC

#68 joblo on 05.18.16 at 9:40 pm

Just finished watching Brexit the movie.
Makes a good case for Britain to exit the EU.
So, what’s the play here? How to make some moolaa?

https://www.youtube.com/watch?v=UTMxfAkxfQ0

#69 Smoking Man on 05.18.16 at 9:50 pm

After the wine is done. And it don’t taste like vinagre anymore. Your in the hotel with your hot wife of 33 years and she says. “Had a great time. It’s yours, what ever you want no matter how depraved.”

That would be too easy. She’s hammered.

I chose to go outside for my last smoke of the day. Stopping at the lobby bar for a double on the rocks of wild turkey burbin.

I’m back….

#70 A box in the sky on 05.18.16 at 9:53 pm

#38 Ontario’s Left Coast on 05.18.16 at 7:49 pm
Guys, you’re missing the point on leasing… Nobody is leasing so they can invest the cash they would have spent; they’re leasing because they are flat broke and living paycheck to paycheck. Most couldn’t purchase outright if their lives depended on it.

We’re replacing my wife’s 250Km Flex this month… it’s the only way for me: 100% down and zero payments for 6-8 years…. priceless!

——————

Anyone who puts 100% down at a time when 0.9% financing is readily available is an idiot.

#71 Rainman on 05.18.16 at 9:54 pm

If you can buy slightly used (less than 6 months old) and no down payment and 0% interest, it seems a no brainer to buy and not lease. I’ve done with both my current vehicles. This is like paying a lease and at the end of it walk away with owning the car. From there you pocket whatever its worth at end of term, or just drive it to it’s death. Invest the money that you would have been putting towards a lease from that point forward. Just saying, makes sense to me and working out great.

#72 jay on 05.18.16 at 9:59 pm

Play crack shack or mansion.http://www.crackshackormansion.com/part2.html

#73 Pitbully on 05.18.16 at 9:59 pm

Garth would you recommend Federal Employees to take a “cash out” on our pensions? Figured you talked about provincial do you feel the same on federal?

#74 Mark M on 05.18.16 at 10:02 pm

#27 JP – “2 or 3 more fed rate hikes coming this year. Be ready to buy stocks when over reaction occurs.”

JP, please leave a comment on this site June 15th, when the Fed decides it’s “too sunny” for a rate hike and that they need more data but could hike in September.

What will it take for you guys to stop believing the them? Seriously, tell me why you take them at their word? What have they done to earn your trust?

Even Garth doesn’t bother talking about it anymore, tired of being burned by the pathological liars at the Fed.

#75 Dave on 05.18.16 at 10:09 pm

Amazing how much discussion is generated about vehicles and how little about things in life that are actually important– Too many financial wizards hung up on the wrong subject!!

#76 common sense on 05.18.16 at 10:12 pm

Well looks like USD will be back on a roll and oil prices going back down…

#77 Ronaldo on 05.18.16 at 10:14 pm

#4 Debt’s Dark Embrace on 05.18.16 at 6:12 pm

”I’d like to know who pays a safe 6.5% yearly dividend. I bet a lot of readers would like to know that.

Where did I say dividend? — Garth”

STB-TSX pays 9.887 at the moment and it’s been very safe over the years. As good as anything else out there.

http://web.tmxmoney.com/charting.php?qm_page=17636&qm_symbol=STB

#78 Smoking Man on 05.18.16 at 10:20 pm

My second 2 burbin after wild turkey. A good bartender is so underrated.

This shits amazingly smoth, I’ll never buy it. It’s sure death. Goes down like water.

http://dyslexicsmokingman.blogspot.ca/2016/05/my-second-burbin.html

#79 Ontario's Left Coast on 05.18.16 at 10:20 pm

Box in the sky #70

Wrong, dude. The 0.9 rate is only available on a new vehicle, you’ll get killed on depreciation. I’m advocating buying well used and driving it into the ground. No wear and tear fees, excess mileage fees or bs 84-month terms. To each his own, but don’t resort to name calling; it doesn’t reflect well one one’s character. Glta

#80 [email protected] on 05.18.16 at 10:23 pm

fools, you keep talking about how to get more scraps from the 1%

open your eyes wider. here’s a couple of films:

http://www.theglobeandmail.com/arts/film/film-reviews/noam-chomsky-industry-continues-with-requiem-for-the-american-dream/article27497866/

https://en.wikipedia.org/wiki/Where_to_Invade_Next

#81 Tiger1960 on 05.18.16 at 10:24 pm

42 jp!
Yup if you can’t drive, that is a smart move!
The new tec in vehicles is made for dummies,

#82 Life among the Stars on 05.18.16 at 10:34 pm

#69 Smoking Man on 05.18.16 at 9:50 pm

After the wine is done. And it don’t taste like vinagre anymore. Your in the hotel with your hot wife of 33 years and she says. “Had a great time. It’s yours, what ever you want no matter how depraved.”

That would be too easy. She’s hammered.

I chose to go outside for my last smoke of the day. Stopping at the lobby bar for a double on the rocks of wild turkey burbin.

I’m back….

Such determination!.. I thought this blog was about car leasing, CPP, YVR RE and thirsty underwear… NOT the pornographic adventures of aged alcoholic boomers hooked on forex and slot machines

#83 liquidincalgary on 05.18.16 at 10:38 pm

well, our part time drama teacher has caused a bench clearing brawl in the House of Commons

#84 Doug in London on 05.18.16 at 10:52 pm

To lease or to buy a car? I’ve never really sat down and run the numbers for new cars but as I’ve always drove older cars, some that I got quite cheap, and that solution has worked best and cheapest for me. Keep in mind you don’t really get something for nothing, when you drive these older cars they will require more work to keep them going. That’s not a problem if you don’t mind being a grease monkey like me and doing a lot of repairs and maintenance yourself.

#85 Gramps on 05.18.16 at 10:52 pm

So just lease a used car…

#86 Love my Kia on 05.18.16 at 10:53 pm

Whatever anyone does, never buy a 2015 Ford Sierra pickup truck, 13 recalls on it!

Research those used car buys and check Transport Canada Vehicle recalls website for the model and year you are interested in.

2015 Kia Sorento recalls – 0

#87 Armando on 05.18.16 at 11:03 pm

Adding to others’ comments: Leasing a car vs. buying a used/new car and driving into the ground is not a clear cut decision. Not sure how it is in Canada, but in the US if you drive more than 10K miles per year, you’re gonna have to pay a heap of money at the end of the lease. On top of that, you are paying higher insurance premiums because you always have a relatively “new” car (you also need more liability insurance, but you should probably have that anyhow). I’ve done the calcs and it doesn’t work for me.
I’m thinking Garth is saying this only because he wants an excuse to have a hot car to go along with his hot abs/pecs so that he can impress the chicks!!

#88 tundra pete on 05.18.16 at 11:22 pm

I was looking for the real estate blog, but I see this is the car lease blog. Sorry. Toodaloo. Nothing to see here.

#89 MadCat on 05.18.16 at 11:26 pm

@earthboundmisfit #41

Actually…. I’m a hot blonde…. No penis what so ever….

And I know how ridiculous this truck is… But what is so fun is watching the guys in the parking lot watch me climb into it… I’m sure they can’t believe its mine Lol!!! In fact I am pretty sure they think its my boy toys… It’s a complete showstopper…. Gets more attention than a hot blonde (I SHOULD KNOW) :))

Driving this showroom beast around has been the most fun I’ve had in eons!!!

Time to SPEND some of this cash I’ve been hoarding lol!!!

Xoxo -Hotness

#90 Smoking Man on 05.18.16 at 11:42 pm

On my 4rt burbin.

Out having a smoke. Knowing that this post won’t see the light of day till the sun comes up. Gartho, Dorithy and bandet blowing dog farts in the family bed.

But had to get this one down before the hangover erased the thought.

My maid. Short Mexican chic. Semi crippled. Doing a crazy shift for peanuts.

Diferances between her and me.

Self confidence. You walk the world like your shit smells like purfume your going places. You walk the world as real perfume but don’t feel quite worthy.

Your changing sheets.

It’s all about ego. The thing your teacher is trained to destroy.

Good thing I was born stupid..and didn’t understand the lesson.

#91 Not Freedom First on 05.18.16 at 11:54 pm

Yes. Cash flow is king. Always.

#92 CAPITALIZATIONJason on 05.18.16 at 11:56 pm

Garth + Dogs. You might get a kick out of these two young bloggers investigation into a Langley Condo development camp out.

http://somelittlegnomefacts.blogspot.ca/2016/05/langley-interview.html

#93 Greg on 05.19.16 at 12:05 am

My strategy regarding cars is to buy 2-10! years old and NOT drive them into the ground but rather sell them for decent money and upgrade every few years. I bought a 2007 Honda ridgeline a couple years ago for $15k. Bulletproof and still like new today. I can sell it for $13-14k easy today. Cost me nothing to own and its better than most trucks on the new lot today.

Remember Garth is looking at this through the lens of an adviser. He’s always looking for an angle to show where investing the extra cashflow in a balanced portfolio gaining 6-7% value is better.

Bottom line – for some cars are just transportation and you may as well lease and focus your efforts elsewhere.

If cars mean something more to you, but used and take care of them – you’ll save more money.

#94 Freedom 45 max on 05.19.16 at 12:09 am

Garth if I decide to retire at 45 and collect cpp at 60 what amount would I receive ?

Cheers

#95 Life among the stars on 05.19.16 at 12:36 am

http://bloom.bg/1sz9Trj

Penny stocks can be amazing!! Especially when the new ceo is insane!

#96 GD on 05.19.16 at 12:48 am

In most of your advice you’re assuming the person has room in their TFSA. A lot of your readers will already be maxed (as they should be). Does that change your direction at all?

My TFSA is maxed. I can lease a 25K Focus/Jetta/Whatever for 4 years @ 170 bi-week = 4500/year. 4 years, 18K. Assume I repeat with another new lease.

Instead, take 16-18K buy a 2 year old Focus/Jetta and drive it for 7 years. Same payments, car is done in less than 4 years, next 3 years ALL those payments go in the savings/investment. Then sell car, maybe for 2K, maybe 4K. No worries about mileage overages either. Possible repairs but even allowing for a big 2K job you’re still miles ahead.

Used car DESTROYS the lease plan. And that’s buying a pretty new/nice car. Would you feel obligated to sell driving a 2009 today? Is that a beater? Every “free” year with no car payment is a full set of payments going into your account instead of Ford’s.

In other words, leasing 4500/year for 18 years is 81K. Buying used for 4, then 3 with no payments works to 50K. And it would be much less if you’re ok buying an 8-12K car instead.

#97 Ontheledge on 05.19.16 at 1:01 am

Leasing a car only works if you own your own biz.

My prestige car is a ’81 Toyota Land Cruiser. Paid 8K for it in 2001. Don’t think I’ve had a major repair on it in the last 150k. Buy quality, leasing is for suckers.

#98 Ontheledge on 05.19.16 at 1:12 am

STB-TSX pays 9.887 at the moment and it’s been very safe over the years. As good as anything else out there.

——–

Seriously??!!?? You do realize they’ve cut their distribution recently and could take a 50% haircut over night…right?? Chasing yield is a rookie mistake. Hope this isn’t a core position for you. Way better risk adjusted returns out there that will leave your school bus company in the dust.

#99 Winterpeg on 05.19.16 at 1:15 am

Thank you Garth for the first clear explanation/discussion as to why CCP should be taken early. Have been looking for that for awhile. I have shown to a few folks already.

As for car ownership, I bought a beater, still driving it.

#100 TRT on 05.19.16 at 2:25 am

Back from my month long vacation.

Prices up 38.4% year over year for detached in Vancouvers Fraser Valley.

Now when can we get that correction and then the long melt??

Made $360,000 in 7 months on a house purchased in North Delta. Until you minions understand what is causing this price increase, you will continue to be bewildered.

I’m not even going to post why prices are still going to double. Buying now in South Van. Purchase price $1.6 million. Will be $2.5 within 2 years. Mark my words. !!

Go Foreign Students, Supervisas, IMP, CEC, and 10 year
Visitor visas. Follow these categories and they will tell you the RE future.

#101 Ostrich on 05.19.16 at 3:05 am

Buy a 90’s Japanese Econobox for a grand or two and drive it till it dies. If you have the ability to read a Haynes manual and operate hand tools, it’ll likely last a decade or more, and cost you next to nothing in maintenance.

Hell up until recently I was driving a 70’s Corolla I picked up for a couple hundred dollars, that rolling pile of rust served me 5 glorious years before I sold it for the same price I bought it for; no maintenance except for oil changes.

#102 Freedom First on 05.19.16 at 3:10 am

When it comes to cars, I like a comfortable ride with all the options. Bought my car new 11 years ago. I have about 90,000 km’s on it. Time commuting for work-0. Driving more than 15 minutes to work is insanity. Waste of time and money. Time I spend in rush hour traffic: as little as possible. Rush hour traffic every day, more insanity. Parked inside when not driving. Looks like new. Toyota. Special order built in Japan. When maintenance is done, I get a loaner.

CPP at 60? Of course. Person should have it all worked out long before then. Same as correctly using the RRSP & TFSA gifts right to the nutz. Take maximum legal advantage of everything. Nobody could possibly look after me better than me. I am highly motivated.

#103 Justin is Hot, Garth is Not on 05.19.16 at 7:35 am

Garth, smarten up and stop criticizing the Liberals!

If you don’t, Justin will elbow you right back to Vegas, with Ruth Ellen.

(You’ll have to spend time in the rental reception area with Smoking Man)

#104 AfterTheHouseSold on 05.19.16 at 7:36 am

Yes, take CPP early … before bloated ‘management’ bleeds it dry.

http://news.nationalpost.com/full-comment/andrew-coyne-cpp-board-cant-escape-blame-for-its-bloated-state

#105 Horse n Pony Show on 05.19.16 at 7:46 am

We all know the story of how Rockefeller was having his shoe’s shined and the boy who was shining them was giving stock tips of which Rockefeller knew it was time to unload his positions. Well, can’t say this is comparable but I work in the Insolvency Industry and one very troubling trend has emerged the past year. I hear at least 3 times a week from someone who wants to file or has filed and states as a matter of fact, I need to get my credit repaired so I can buy a house. I can’t even count how may said that while on Ontario Works. We even have clients who are falling behind on payments with us and still remark about buying a house. Time to sell….though Garth will out me on this comment – part of the run up on prices that has defied logic is foreign investment. Our neighbour who works for a major builder in Milton has said for the past 10 years the only thing keeping his firm operating at full capacity are buyers from overseas (he noted 3 very specific demographic groups)..so I then ask myself, maybe housing prices will stay strong while the economy barely squeaks by.

#106 Leasing is smarter which seems to escape some on 05.19.16 at 7:53 am

What people seem to be missing in all of this is that it is the effect of time as it withers and defiles the lump of metal, plastic, and rubber that sits in the driveway versus that same time that will, if used wisely, allow the invested money to grow, flourish, and produce valuable returns. We don’t get this time back to use again.

To paraphrase the author Herman Hesse: of all the paths we can follow in life, none of them will return us to the garden of our youth.

#107 Raptors CRUSHED, Blow Jays DESTROYED, Toronto SUCKS!!!! on 05.19.16 at 7:55 am

Ha ha, Toronto is SOOOOOOO pathetic!

Your lame teams are just like your city and its real estate prices – a delusional mirage that’s about to implode.

Cleveland even kicks your ass! Cleveland has many lovely areas to live in, Orange Ohio one of my faves, where top homes go for under $300,000. In Toronto, a slanty semi costs 3X that. Toronto is a city with multiple racialized suburban ghettos about to explode in agony, where your gun murder rate this year has your cops freaking out and people running for cover. What an ugly place to live Toronto is becoming!

You are fools, Torontonians!!!

Cleveland has the Rock and Roll Hall of Fame :)

Toronto has Drake :(

Nuff said….

You are goin’ DOWN Toronto!!

Real estate prices will drop by at least 50% in the next five years.

All you amateur flippers will be on welfare and back in your mom’s basement.

Suckers.

Losers.

Pathetic Leaf fans.

#108 Mr. Frugal on 05.19.16 at 8:05 am

#53 Smoking Man on 05.18.16 at 8:29 pm
T2 what a loser. ..

Elbows a chic. Crosses the floor like he’s some kind of alpha.

And look at the commies come to his aid. Remember.

Hitler, Stalin started of as Socialists. LiberalS are violent intolerant thIves, and freaks of nature. T2 showed some today.

Discusting inappropriate behavior

==========================================

T2 was angry because he wanted to limit the debate on doctor assisted suicide. This is the way the progressive left works. When things go their way, they are all happy and smug. But, when faced with opposition, they resort to name calling and violence.

“Get the F*** out of the way”!!! That’s got to be the best T2 quote ever. He has no more class than his father did. The Trudeau family is consistent if nothing else.

#109 Cherry Blossom on 05.19.16 at 8:13 am

Garth I just told my nephew to put his $25,000 he just inherited into a TSFA and invest in a REIT. Specifically AAA.UN I calculated the dividends out 20 years but didn’t come near the $132 over 30 years. The dividends only came to $32,000, Can you tell me a stock he might invest in that would get him. I suppose it would be more if he put it into a stock that had a drip. Help

#110 AfterTheHouseSold on 05.19.16 at 8:14 am

Expand CPP and pay billions more in income tax:

http://business.financialpost.com/fp-comment/jack-mintz-want-to-pay-more-income-tax-thats-what-the-liberals-expanded-cpp-could-mean

#111 maxx on 05.19.16 at 8:23 am

#21 jay on 05.18.16 at 7:06 pm

“Now the real Justin is starting to appear . http://www.cbc.ca/news/politics/trudeau-conservative-whip-1.3588407

One-arm push-ups in front of veterans: Embarrassment Scale: 10/10;

Elbowing an MP in Parliament: Entirely off the scale for anyone, never mind the so-called “leader” of this country.

Pathetic lack of judgement. Again.

These “are you $hitting me?!” incidents are coming in thick and fast, at a rate of more than one a month.

Pauvre Canada.

#112 Ace Goodheart on 05.19.16 at 8:51 am

RE: #1 Powder_Hound86:

“Garth, your simply wrong about leasing the car.”

You are right on this one. However, you have to be very careful in picking the “beater”. As we all have heard and know, it is very easy to drive almost for free, by picking up good used “beater” cars and driving them into the ground. But pick the wrong one, and you are paying $1000.00 or more per month in expensive car repairs, while you slowly rebuild your chosen vehicle part by part.

I have found the best ones are the $500.00 “certified” “off program” cars with obsolete software. Basically they are disposable. Because, if they break, you can’t fix them (software interface is no longer available, so you can’t hook up to the car’s computer). These vehicles are incredibly cheap and sometimes will last for years with no repairs. When they do break, scrap them (you get $250 of your $500.00 back) and buy another one.

RE: continuing, never ending discussions on real estate “crashes” and “corrections”.

My theory on this is that we are in the midst of one of the largest currency devaluations in history, and soaring real estate prices are a “canary in the coal mine” so to speak, of things to come. Theory is based on simple observations of runaway first world government debt.

If a government cannot pay back the money it owes, it must print more money. That is how it is always done. This devalues the currency. Right now, if interest rates were allowed to go up to normal levels, governments around the world would be printing money like mad. They would have to. They could not afford the interest payments otherwise.

So we are in a situation of “delayed currency devaluation”. This has spilled over into real estate, as people are now able to borrow large amounts of money for almost no interest, and purchase houses at what looks like inflated prices.

When the great “correction” comes, it will come in the form of currency devaluation.

That is my theory anyway. Time will tell if I’m right.

#113 cramar on 05.19.16 at 8:58 am

#83 liquidincalgary on 05.18.16 at 10:38 pm

well, our part time drama teacher has caused a bench clearing brawl in the House of Commons

——————-

It’s the new T2 version of “Playing politics in the House of Commons”.

#114 debtified on 05.19.16 at 9:05 am

#69 Smoking Man on 05.18.16 at 9:50 pm

After the wine is done. And it don’t taste like vinagre anymore.
Your in the hotel with your hot wife of 33 years and she says. “Had a great time. It’s yours, what ever you want no matter how depraved.”

That would be too easy. She’s hammered.

I chose to go outside for my last smoke of the day. Stopping at the lobby bar for a double on the rocks of wild turkey burbin.
I’m back….
……………………………………………………………………………………………………………………………………
#198 Smoking Man on 10.03.15 at 7:00 pm
#191 Freedom First on 10.03.15 at 6:02 pm
#143 debtified
Your Post reminded me of something. Today’s women always go on about how they don’t need a man. This is great. Men like me can come and go as we like. Don’t have to stay the night.
_______________________________________

You should try love buddy, I’ve been with the same hag for over 35 years. She’s moody, goes through stages of obesity and anorexia.

Sometimes I plot her murder, other times I thank my lucky stars she’s here for me.

Remember, Mr happy, the adventurous beast on the hunt for boardom releaf will one day be dead and lost in the forest. Then you will understand loneliness.

You get one that can cook, you’ve won the lottery.
My call on you, your heart was broken… You’ve never recoverd.
………………………………………………………………………
Are you sure this is the same wife smoky?

#115 G on 05.19.16 at 9:06 am

I also have to disagree with the buy-vs-lease recommendation; it really depends on the circumstances. I bought a used 2003 vehicle in 2007 for $9K (all-in) that I still drive to this day. I’ve put about $3K work of repairs in over the years, so I’m out $12K. If I’d instead leased the vehicle for $200/mo and invested the $9K into the S&P500 (which has returned 6.91%/yr over that period), my $9K would have grown to $16K but I’d also have incurred $24K worth of lease payments–$24K that could have been invested instead.

#116 CJBob on 05.19.16 at 9:09 am

That twenty grand in a growth-oriented TFSA over thirty years will end up being $132,000.
______________________________
Not for me because my TFSA’s are already at their max so any extra income will be taxed.

Generic ‘always do this’ advice is often suspect. It’s ok to admit you were ‘not exactly right’, you can still be as cool as the Fonz: https://youtu.be/fbMKjLe-RFA

#117 Wild Albertan Gonads on 05.19.16 at 9:20 am

#90 Smoking Man on 05.18.16 at 11:42 pm

On my 4rt burbin.

Out having a smoke. Knowing that this post won’t see the light of day till the sun comes up. Gartho, Dorithy and bandet blowing dog farts in the family bed.

But had to get this one down before the hangover erased the thought.

My maid. Short Mexican chic. Semi crippled. Doing a crazy shift for peanuts.

Diferances between her and me.

Self confidence. You walk the world like your shit smells like purfume your going places. You walk the world as real perfume but don’t feel quite worthy.

Your changing sheets.

It’s all about ego. The thing your teacher is trained to destroy.

Good thing I was born stupid..and didn’t understand the lesson.

How’s the billion dollar hedge fund you’re running in Boston doing?

#118 Bottoms_Up on 05.19.16 at 9:27 am

The actual benefit of investing upfront and leasing monthly vs. outright purchase upfront and investing monthly is really the time advantage of having 20 large invested over maybe 8 years (the time it would take to instead invest 20 large on a monthly basis, being equivalent to a car payment).

So while $293000 (over 50 years) seems like a lot, the actual difference should be looked at on an 8 year time frame first, where in scenario A you may end up with $35,000 invested (and a paid off lease) vs. scenario B where you may have $23,000 invested and also a car that you’ve owned for 8 years.

There are benefits to both “upvesting” and leasing a vehicle, but I don’t think it equates to $293,000. But a $12,000 investment difference after 8 years (less the additional cost to do a lease buyout vs. upfront purchase)…let’s say you’re ahead by $10,000 after 8 years in scenario A, is still nothing to sneeze at. And sure, $10,000 invested for an additional 40 years could be worth $160,000.

#119 Bottoms_Up on 05.19.16 at 9:34 am

#73 Pitbully on 05.18.16 at 9:59 pm
————————
You can only cash out before the age of 50, and to do so you have to leave the workforce.

#120 Bottoms_Up on 05.19.16 at 9:38 am

#61 Chuckles Mc Liberal on 05.18.16 at 9:02 pm
————————–
So Trudeau bullies one MP for a minute but Harper bullied 160 MPs for a decade?

#121 fancy_pants on 05.19.16 at 9:40 am

#67 For those about to flop… on 05.18.16 at 9:37 pm
lol. you should be a writer for rick mercer

#90 Smoking Man on 05.18.16 at 11:42 pm
low self confidence and ego . good thing we in this province that proudly holds the centre of the universe have new ciriculum says that can be fixed. kid was likely born wrong gender. god got it wrong but our gov’t can fix that. lets all curl up by the electric furnace and sing kumbuya while we change dressings on our kids gender alterations. this province/country is so fubar

#122 Hot Albertan Money on 05.19.16 at 9:41 am

Leasing vs. buying should come down to lifestyle, no?

I made the mistake of leasing once, then got (and still have) a job that requires lots of driving. Got a nice ding when I returned the car due to the mileage allowance being exceeded.

Since then, it’s been used all the way.

Also, where are these “$0 maintenance cost” comments coming from? You definitely need to maintain the car even if it’s a lease.

But taking CPP at 60? Yeah, that’s a no brainer…take that government cheese as soon as you can

#123 waiting on the westcoast on 05.19.16 at 10:00 am

Another sad attempt to change market dynamics rather than accept that the price is irrational and wait for sanity to prevail…

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/personal-finance/mortgages-real-estate/vancouverite-aims-to-fix-broken-housing-market-by-connecting-real-buyers-with-real-sellers&pubdate=2016-05-19

#124 waiting on the westcoast on 05.19.16 at 10:01 am

See the numbers coming out of the US… becoming much more likely that a rate hike will come in June.

#125 };-) aka Devil's Advocate on 05.19.16 at 10:03 am

Cars, like houses, have become far too over rated accoutrements to life. Both tend to fall short in how we expect they will raise our level of happiness and social standing.

I am soooo waiting for the Google driverless electric car (er transportation pod”). And on houses… people are so house horny right now they’ve lost all perspective on life… and finance. Try as I might to have them “check emotion at the door and bring logic to the table” the MSM keeps feeding them bullshit that pollutes their minds and stirs their emotions.

SHIFT happens, learn to ride the tide.

#126 BillyBob on 05.19.16 at 10:05 am

Hmmm…CAD breached .77 and looking to punch through .76…in the words of a certain conglomerate’s commercial tagline, I am….LOVIN’ IT!

#127 Chopper Dude on 05.19.16 at 10:08 am

Bought a 2005 Dodge Ram (4×4 Laramie full load) brand new for 43K.

Drove it 10 years trouble free. Just regular maintenance.

Sold it in 2015 for 10K.

So the cost to me was 33K divided by 120 months?

$275 a month. It would have been almost double that to lease. Sorry Garth, I usually back you 100% but with this I disagree.

Unless I am missing something?

#128 farsyd on 05.19.16 at 10:09 am

Cars are a huge suckhole for dough. to save easily – if you live in a city, rent so that you are walking distance to work. use carshare and uber when needed. buy a grocery cart with solid wheels. kids or a spouse with a job can complicate the need for wheels but creativity and hard choices can compensate.

#129 };-) aka Devil's Advocate on 05.19.16 at 10:14 am

#93 Greg on 05.19.16 at 12:05 am

My strategy regarding cars is to buy 2-10! years old and NOT drive them into the ground but rather sell them for decent money and upgrade every few years. I bought a 2007 Honda ridgeline a couple years ago for $15k. Bulletproof and still like new today. I can sell it for $13-14k easy today. Cost me nothing to own and its better than most trucks on the new lot today.

Good strategy Greg.

And if you own your own business upgrading to another similar makes even more financial sense considering the write-offs. In my experience leasing or buying new is six of one / half dozen of the other at the end of the day. With leasing though you are married to that bitch for the term of the lease. Owning a late model outright you can ditch her for something different when you grow tired of her. Change is as good as a rest };-)

And… because the cash outlay is hugely mitigated you can take the difference and invest it with someone like Garth or… go on an awesome life experience get away.

#130 BillyBob on 05.19.16 at 10:22 am

Generation Screwed.

http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/halifax-millennial-22-struggling-to-find-full-time-work-and-repay-50000-debt/article30068252/

What always makes me pause for thought is the sheer disconnect in the scale between what people think will solve these problems, and the problem itself.

When you are 50k in debt, it will not make a difference if you give up a latte a day or whatever. That kind of thinking – one of the bedrocks of personal finance advice – has to be the most misguided bits of nonsense ever. The article made me feel sad to read that she was pleased to find a french press at Winners. Like bailing the ocean with a teaspoon.

50k of debt on a 23k annual wage is a forever debt, unless something changes profoundly on the income side. You cannot solve it by solely by changing your spending. THAT ship sailed when one decided to spend multiples of a yearly net income on a useless education.

I am not being judgemental. There, but for the fact of having an upbringing that taught me to shun debt and live within ones means, go I.

Oh and the other thing that struck me about the article is how badly Canadian consumers get gouged for so many things. “$115 for cell phone service”. Huh? Sitting here in Taipei and the (albeit, company corporate plan) is 550$NT for 7gigs of 4G LTE data. That’s $22/month Canadian for internet at 50mb/s. On a phone.

I love Canada. I hate Canadian companies. Most of the major industries are held by a few families, descendants of the robber barons who founded the place. The rest, multinationals for whom Canada is but a couple of lines on an annual report. Disruption can’t come soon enough.

#131 };-) aka Devil's Advocate on 05.19.16 at 10:22 am

BTW

Women don’t generally know the difference between a BMW M3 and a BMW 318i. If you want to impress your buddies buy the M3. If you want to impress the ladies buy the 318i, wear better clothes and treat her to a nice night out more often.

M3 = mo, mo, more money…

On houses… ya she’s gonna want to see hardwood, stainless and granite. On that note your screwed and not necessarily the way you wanna be.

#132 Wild Albertan Gonads on 05.19.16 at 10:23 am

#114 debtified on 05.19.16 at 9:05 am

#69 Smoking Man on 05.18.16 at 9:50 pm

After the wine is done. And it don’t taste like vinagre anymore.
Your in the hotel with your hot wife of 33 years and she says. “Had a great time. It’s yours, what ever you want no matter how depraved.”

That would be too easy. She’s hammered.

I chose to go outside for my last smoke of the day. Stopping at the lobby bar for a double on the rocks of wild turkey burbin.
I’m back….
……………………………………………………………………………………………………………………………………
#198 Smoking Man on 10.03.15 at 7:00 pm
#191 Freedom First on 10.03.15 at 6:02 pm
#143 debtified
Your Post reminded me of something. Today’s women always go on about how they don’t need a man. This is great. Men like me can come and go as we like. Don’t have to stay the night.
_______________________________________

You should try love buddy, I’ve been with the same hag for over 35 years. She’s moody, goes through stages of obesity and anorexia.

Sometimes I plot her murder, other times I thank my lucky stars she’s here for me.

Remember, Mr happy, the adventurous beast on the hunt for boardom releaf will one day be dead and lost in the forest. Then you will understand loneliness.

You get one that can cook, you’ve won the lottery.
My call on you, your heart was broken… You’ve never recoverd.
………………………………………………………………………
Are you sure this is the same wife smoky?

One or likely both were uttered in one of his drunken stupors… or he was confused with a rental…so give the dude a break!

#133 Wild Albertan Gonads on 05.19.16 at 10:35 am

#106 Leasing is smarter which seems to escape some on 05.19.16 at 7:53 am

What people seem to be missing in all of this is that it is the effect of time as it withers and defiles the lump of metal, plastic, and rubber that sits in the driveway versus that same time that will, if used wisely, allow the invested money to grow, flourish, and produce valuable returns. We don’t get this time back to use again.

To paraphrase the author Herman Hesse: of all the paths we can follow in life, none of them will return us to the garden of our youth.

No, we get it….. driving a beater in total dollars is cheaper… the difference is invested…at least it is with me… thus you are ahead… but yeah having significant depreciating dollars sitting in your driveway ain’t smart ….of course most leasers don’t do that..because they don’t want to drive a beater…. so they are double screwed.. bad lease deal and they are not investing… but oh well people are nuts.

#134 Wild Albertan Gonads on 05.19.16 at 10:48 am

#130 BillyBob on 05.19.16 at 10:22 am

Generation Screwed.

http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/halifax-millennial-22-struggling-to-find-full-time-work-and-repay-50000-debt/article30068252/

What always makes me pause for thought is the sheer disconnect in the scale between what people think will solve these problems, and the problem itself.

When you are 50k in debt, it will not make a difference if you give up a latte a day or whatever. That kind of thinking – one of the bedrocks of personal finance advice – has to be the most misguided bits of nonsense ever. The article made me feel sad to read that she was pleased to find a french press at Winners. Like bailing the ocean with a teaspoon.

50k of debt on a 23k annual wage is a forever debt, unless something changes profoundly on the income side. You cannot solve it by solely by changing your spending. THAT ship sailed when one decided to spend multiples of a yearly net income on a useless education.

I am not being judgemental. There, but for the fact of having an upbringing that taught me to shun debt and live within ones means, go I.

Oh and the other thing that struck me about the article is how badly Canadian consumers get gouged for so many things. “$115 for cell phone service”. Huh? Sitting here in Taipei and the (albeit, company corporate plan) is 550$NT for 7gigs of 4G LTE data. That’s $22/month Canadian for internet at 50mb/s. On a phone.

I love Canada. I hate Canadian companies. Most of the major industries are held by a few families, descendants of the robber barons who founded the place. The rest, multinationals for whom Canada is but a couple of lines on an annual report. Disruption can’t come soon enough.

Was just reading that… person is a total idiot…generation screwed indeed……. that is who this blog is for!!… but they ain’t reading it and thus Garth is often preaching to the choir here… people are truly nuts.

#135 Rausscher on 05.19.16 at 11:01 am

The numbers on leasing vs. buying don’t work out. Example: brand new 2016 Mazda3 GX. All-in price 21,480, lease for 60 months at 258.81 (high mileage option), both from Mazda Canada’s website. Re-sale price assumed to be 13,000 after 5 years, estimated from local Mazda dealer’s website (low-balling a bit).

Purchase would cost 21,480, and since you now can’t invest that amount for five years you miss out on 7265.09, assuming 6% return. Resale value is 13,000 coming back after five years, so the total cost including opportunity cost is 15,745.09.

Lease payments are 3105.72/year, so already 15528.60 for five years. In addition, the lease payments could also have gone into a TFSA each year at 6%, so an additional 3029.07 of opportunity cost is lost.

In the end, leasing is more expensive than buying by about $3k for this example. Own the car beyond year five and things just get better.

*Sigh*. So many people confuse frugality with investing and long- term results. I give up. — Garth

#136 Capt. Serious on 05.19.16 at 11:18 am

See the numbers coming out of the US… becoming much more likely that a rate hike will come in June.

Especially given the FOMC minutes say that in April they were thinking about a June hike already.

#137 Iconoclast on 05.19.16 at 11:29 am

Re: bourbon

Smoking Man, welcome to the world of Bourbon.

Try Eagle Rare 10 year. Only a few bucks more than “plain” Buffalo Trace but a nice upgrade.

But lose the ice. (Okay, one piece is permissible)

#138 Wild Albertan Gonads on 05.19.16 at 11:52 am

#135 Rausscher on 05.19.16 at 11:01 am

The numbers on leasing vs. buying don’t work out. Example: brand new 2016 Mazda3 GX. All-in price 21,480, lease for 60 months at 258.81 (high mileage option), both from Mazda Canada’s website. Re-sale price assumed to be 13,000 after 5 years, estimated from local Mazda dealer’s website (low-balling a bit).

Purchase would cost 21,480, and since you now can’t invest that amount for five years you miss out on 7265.09, assuming 6% return. Resale value is 13,000 coming back after five years, so the total cost including opportunity cost is 15,745.09.

Lease payments are 3105.72/year, so already 15528.60 for five years. In addition, the lease payments could also have gone into a TFSA each year at 6%, so an additional 3029.07 of opportunity cost is lost.

In the end, leasing is more expensive than buying by about $3k for this example. Own the car beyond year five and things just get better.

*Sigh*. So many people confuse frugality with investing and long- term results. I give up. — Garth

my car is worth peanuts..always has been. all that wasted lease money year after year after year is invested… Sigh, I give up.

#139 doom on 05.19.16 at 11:52 am

doom. doom. doom. woe! The ring of fire has story to tell not too long. prepare. also severe inflation a time and a half beyond horizon

#140 Natrx on 05.19.16 at 12:14 pm

Still driving my 90’s Corolla (which was bought used by my wife back in the day). If that really falls apart, I’ll look for something similar and comparable. People laugh at me, but in reality, I’m the one laughing at them.

#141 Baph on 05.19.16 at 12:17 pm

@#127 Chopper Dude
Yeah, you are missing that you could have invested those $43k over 10 years…while making small monthly lease payments.

#142 Dups on 05.19.16 at 12:25 pm

Everyone:

What is the best 5 yr locked mortgage rate one can get as of today with one of the top banks?

So far RBC is giving us 2.59%, is there better out there?

#143 Capt. Serious on 05.19.16 at 12:27 pm

I think based on the comments people don’t understand that you can drive a nice car at low opportunity cost AND invest successfully. For them it’s a binary problem, unfortunately.

You can’t convince me driving a 10 year old car is great. Been there, done that, and will probably do it again. It’s cheap.

#144 cramar on 05.19.16 at 12:34 pm

#108 Mr. Frugal on 05.19.16 at 8:05 am

“Get the F*** out of the way”!!! That’s got to be the best T2 quote ever. He has no more class than his father did. The Trudeau family is consistent if nothing else.

————-

He could at least claim, as his father, that what he said was “Fuddle Duddle!” T2 has the same genes!

https://www.youtube.com/watch?v=bsZRxyK2YMg

#145 Thinking Outside of The Box on 05.19.16 at 12:51 pm

It comes as no surprise to The Guerrilla that hybrid war recently erupted in Alberta, Canada. Chinese assets there have been targeted and thousands of acres burned to maintain the Petro Dollar standard. Why are the Agents of Chaos embarking on such a desperate course now? Simple, because Iran has entered the oil fray and along with Russia they are speeding up the demise of the Petro Dollar. Burning a few thousand acres of Canadian timber is a small price to pay for maintaining the empire.

http://www.silverbearcafe.com/private/05.16/faith.html

#146 Prairieboy43 on 05.19.16 at 12:57 pm

After your 15-20 year car is ready for disposal. Donate car to Kidney Car Foundation. They will come and pick it up. Probably cut you a Tax Reciept from $1500-$3000. Beats selling it on kijiji ( missed appointments, murders (late Tim Bosma. R.I.P.)).
PB43

#147 Andy on 05.19.16 at 12:59 pm

Garth — agree with all of your analysis. I think to be fair when you talk about how much an investment is worth in X years time, you should mention inflation. $293,000 in 20 years, is not the $293,000 of today.

#148 Thinking Outside of The Box on 05.19.16 at 1:04 pm

Iceland’s Biggest Political Party Is Now The “Pirate Party” — and It’s Amazing

http://theantimedia.org/icelands-pirate-party-amazing/

#149 spaceman on 05.19.16 at 1:07 pm

Agree with everything except implying that leasing is better than owning.

Best answer: well it depends.

Overall better to own car 3-5 years old then drive into the ground.

Own your own business ? Talk to your tax man, a lease can be written off on your taxes, many companies do not own assets, as the tax man doesn’t let you write off depreciation, but expenses such as lease costs, are 100% write off’s.

Some cars deprecitate to 0, and some don’t. My best purchase was a 1991 Caprice, for $5000, lasted 5 years, sold it for $1200 in good working condition. Better performance and reliability than my Caravan (piece of junk) total cost of transportation… (gas excluded) @$90 a month… ( I could do my own repairs )

Spend no more than $6000 on a used car, sell it in 5 years, and do the same… no more than 10 years old, and do your homework… (stay away from the Neon etc)

My cars…. 1966 Ford Falcon, 2001 Jimmy, 2005 Pontiac G5. All less than 6000, very few problems, ok, the Falcon is the exeption, its a collector and costs 200.00 /year to insure… cheap

A car is probably the one thing people blow the most one… that and now dope… (thanks JT)….

#150 Karl hungus on 05.19.16 at 1:10 pm

Sigh Garth. Either you are really bad at explaining this lease thing or you don’t understand it. Every example given in the comment section shows leasing is more expensive then buying for the same car. What does frugality have to do with it ?

On a side note, you should be frugal and invest anyway, that’s the only way average people can fill up their registered accounts.

#151 TRT on 05.19.16 at 1:18 pm

#130 BillyBob on 05.19.16 at 10:22 am
Generation Screwed.

http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/halifax-millennial-22-struggling-to-find-full-time-work-and-repay-50000-debt/article30068252/

————————————————————-

No why would any idiot take out a loan to finance an education? That is financial suicide. This is not how it works in India and China. in North America, the masses have been brainwashed into thinking that you takeout a loan, get an education, and then get a job. Hahaha…you’ve been scammed.

Go to india and show me a few people who have ‘student loans’. Either you have money to send your kids to school or you don’t. If you don’t, you use other means to try to raise your socioeconomic status. Students in canada are more confused than i thought.

That is financial suicide.

#152 BOOM! on 05.19.16 at 1:23 pm

#135 -Garth’s ‘snarky comment’

*sigh* So many confuse frugality with investing, and long-term results. – I give up. (GT)

OK, “WE” collectively are obviously missing something here. One brick shy, or missing half a truckload?

Some people would rather buy, than lease. Most are NOT advocating buying a “new” car, but rather a partially depreciated, yet quite serviceable unit.

Others, a fully depreciated shit-box that they keep running (Often so they can continue investing money that would other wise be pissed away on car payments, or lease payments).

Others would prefer stuffing their Tax Free, and -pr tax deferred investments before spending serious money on a depreciating asset.

Others, already residing in the land of critical mass don’t give a dam, and have earned that freedom.

It’s a dam CAR, Garth…..

#153 Keith in Calgary on 05.19.16 at 1:42 pm

I didn’t read the entire thread of replies, so I apologize if someone has written this already. But I doubt it………

When you lease a car you should always choose a “CLOSED END” lease, versus an open ended lease contract. This is where you can give the car back at the lease termination date (or before, if you prepay the remaining months of the contract,very useful when you have 2-3-4 months left on your lease but you want out) and walk away, subject to not exceeding normal wear and tear.

Why ?

Well, simply put, you are protecting yourself but not loosing any of all the rights and benefits of ownership with the lease company guaranteeing a certain value at a specific point in time.

Cars a lemon ?…….resale value sucks ?……it is worth less than the buyout ?…….is it the first year o f anew model ?……..you got into a bad accident and had the vehicle correctly repaired, but the accident has diminished the value of your vehicle ? Give it back and the lease company takes the loss, not you. When you pay cash or finance the vehicle, you are stuck with all of the above risk factors and have no out, except to suck it up and loose the money.

Like the car and want to keep it, then go right ahead. Want to sell it and maybe make $1K or more, go ahead.

I’ll never forget my 2009 SMART car going thru the auction lane at ADESA and getting bid up to $8,500 when my buyout with Mercedes-Benz Credit was $12,000………I walked away clean, they took the pill.

#154 CJBob on 05.19.16 at 1:45 pm

#135 Rausscher on 05.19.16 at 11:01 am….
_____________________________
*Sigh*. So many people confuse frugality with investing and long- term results. I give up. — Garth
______________________________
It’s your blog so you aren’t going to admit you were wrong, but this example was for the same car lease vs buy. Nothing to do with frugality, everything to do with math with disproves your thesis. Not an opinion. A set of facts.

#155 IHCTD9 on 05.19.16 at 1:52 pm

#120 Bottoms_Up on 05.19.16 at 9:38 am

So Trudeau bullies one MP for a minute but Harper bullied 160 MPs for a decade?
_______________________________________

WOW!!!

A guy here at work called it. I said no, Trudeau boot lickers are not the brightest bunch, but they surely have more brains than to give T2 a pass on this.

Guy said no, Trudeau could kill a kitten in front of the NDP’s and his entire party would stand up and clap just like they did after Trudeau elbow-dropped Brosseau.

I bet him $5.00 that the Lib supporters would condemn physical violence in the House of Commons.

Well, I guess I’m off to pay my dues. But, maybe before handing over the five, I’ll declare my allegiance to Trudeau, tell buddy to get the f&%# outta my way, and drop him with a right hook.

If there happens to be a lot of Libs in the room, maybe I’ll get my 5.00 back…

#156 jess on 05.19.16 at 1:57 pm

Alberta Chief Justice Neil Wittmann has ruled to put lenders ahead of clean-up costs when energy companies go bankrupt.
http://www.cbc.ca/news/business/redwater-energy-bankruptcy-1.3588209

Alberta’s Abandoned Wells Quadrupled in Last 12 Months. Who Will Clean Them Up?

By Samantha Power • Friday, April 22, 2016 – 12:14
http://www.desmog.ca/2016/04/22/Albertas-abandoned-wells-quadruple-last-12-months-who-will-clean-them

#157 Nuke on 05.19.16 at 2:00 pm

If you live in the city you don’t need a car, so lease or buy is not even close to using ride share or weekend rentals.

That being said, having started a ride share company and being car free for 10 years I just bought a 3 year old german sport sedan. (added the 6 year factory warranty). I wanted the car and 10 years without one I treated myself Carrying tandem bikes, outriggers, riding on old country roads etc. I didn’t want an SUV or have to baby the car due to lease repairs. Not to mention ECU chipping the car and lots of fun with aftermarket crap. Leasing was not my cup of tea. I enjoy pouring my cash into this car hole.

As for early CPP, I will make that decision next year. Wife took hers early and it paid for a nice vacation to California as well as kids flights home and to Europe for school. Try to find another way to get $600 indexed per month guaranteed with zero risk.

#158 jess on 05.19.16 at 2:21 pm

human replacement drivers

a self driving car ‘s software is considered a person

waze
Google Launches Its Own Ride-Sharing Pilot Project

Take A Look At Uber’s First Self-Driving Car

#159 Jakethesnake on 05.19.16 at 2:28 pm

Smoking Man, is there an ECN broker you recommend for USDCAD Forex trading? Which broker do you use? Thanks.

#160 45north on 05.19.16 at 2:36 pm

Horse n Pony: Our neighbour who works for a major builder in Milton has said for the past 10 years the only thing keeping his firm operating at full capacity are buyers from overseas so I then ask myself, maybe housing prices will stay strong while the economy barely squeaks by.

in which case the government needs to make sure that Canadian real estate remains attractive to foreign buyers. Increasing interest rates and toughening CMHC regulations would prick the bubble but housing would remain attractive to foreigners.

some on this blog don’t like foreigners and don’t like the idea of making real estate attractive to them. Politically the idea is dead in the water. Here’s a picture that sums that up ( no need to read the article ):

http://www.macleans.ca/politics/ottawa/the-truth-about-justin-trudeaus-tax-cuts/

me, I’d increase interest rates and toughen CMHC regulations.

#161 45north on 05.19.16 at 2:40 pm

Toronto Sucks: Cleveland even kicks your ass! Cleveland has many lovely areas to live in, Orange Ohio one of my faves, where top homes go for under $300,000.

They say the heart of rock and roll is still beating
And from what I’ve seen I believe ’em
Now the old boy may be barely breathing
But the heart of rock and roll, heart of rock and roll is still beating

In Cleveland
Detroit!!
Huh, heart of rock and roll

https://www.youtube.com/watch?v=M7JVlpm0eRs

even so 744 Mt Pleasant rocks!

#162 Toothless Measures on 05.19.16 at 2:43 pm

Back from my month long vacation.

Prices up 38.4% year over year for detached in Vancouvers Fraser Valley.

Now when can we get that correction and then the long melt??

Made $360,000 in 7 months on a house purchased in North Delta. Until you minions understand what is causing this price increase, you will continue to be bewildered.

I’m not even going to post why prices are still going to double. Buying now in South Van. Purchase price $1.6 million. Will be $2.5 within 2 years. Mark my words. !!

Go Foreign Students, Supervisas, IMP, CEC, and 10 year
Visitor visas. Follow these categories and they will tell you the RE future.
————————-

Yes, someone actually gets the impact of foreign capital and has the wherewithal to invest on his knowledge.

Mark my words – the real litmus test of whether foreign ownership is a driver is when rates start to increase.

If prices continue to go up after rates start to ‘normalize,’ proponents of the low interest rate as driver theory will have zero legs to stand on.

Those proponents will then have two choices: modify their theories to a new variable, as they have had to do for the past 8 years as cooling measures have been introduced which only increased prices; or acknowledge the role of foreign capital.

#163 Russ on 05.19.16 at 3:04 pm

Bottoms_Up on 05.19.16 at 9:38 am
#61 Chuckles Mc Liberal on 05.18.16 at 9:02 pm
————————–
So Trudeau bullies one MP for a minute but Harper bullied 160 MPs for a decade?
====================

So, your position seems to be “bullying is okay if it’s done properly”…

This line of action is unprincipled.

#164 Life among the Stars on 05.19.16 at 3:17 pm

Way to go Lord Conrad! Ouch!

“According to the Multiple Listings Service, which tracks real estate sales, Black sold his 23,000-square foot property in the tony Bridle Path neighbourhood to an undisclosed buyer for $16.5-million in March. Black has three mortgages on the house for $15.5-million.”

“The Canada Revenue Agency claims that Black is in arrears in the amounts of $12,307,717 and $3,513,877.”

http://www.theglobeandmail.com/report-on-business/conrad-black-fights-liens-for-unpaid-taxes-placed-on-toronto-mansion/article30094614/

#165 For those about to flop... on 05.19.16 at 3:25 pm

#121 fancy_pants on 05.19.16 at 9:40 am
#67 For those about to flop… on 05.18.16 at 9:37 pm
lol. you should be a writer for rick mercer

//////////////////////////////////

I don’t really watch his shows but I will take that as a compliment ,Fancy.
Also since yesterday I have been thinking about running in the next Federal election just so in the House of Commons I can give the Metrosexual Messiah a”Liverpool Kiss” .

I knew this “kid” was going to be more entertaining than his predecessor but he is turning into comedy gold that Rob Ford could have only dreamt of…

M41BC

P.S …as a huge Manchester United fan it pains me to mention our biggest rival Liverpool but that’s exactly what that prat deserves…

#166 jess on 05.19.16 at 3:51 pm

Thomson also said that beginning this week, News Corp is launching a “broad-based marketing campaign across The Wall Street Journal Digital Network to drive quality traffic to realtor.com.”

When News Corp made the acquisition of Move official, Thomson said he wanted to “turbo-charge” Realtor.com.

“In partnership with the National Association of Realtors and its 1 million members, we look forward to turbo-charging realtor.com and making it the most popular and profitable property site in America,” Thomson said in November….
In a recent filing with the Securities and Exchange Commission, Zillow (Z) disclosed that its listing agreement with Listhub will end on April 7.

In the SEC filing, Zillow said it is ending its four-year listing agreement with Threewide Corporation. Threewide operates Listhub. Threewide is owned by Move Inc.

#167 jess on 05.19.16 at 4:08 pm

hell and these kids do not live in the b asement

http://www.ourchildrenstrust.org/

“In agreeing with the youth plaintiffs in this case, the Massachusetts Supreme Judicial Court joins growing
global judicial recognition of youth’s rights to demand
that their governments act in accordance with the
urgency of the climate change crisis,” said
Julia Olson, executive director and chief legal counsel

This win follows two other recent landmark wins in
youth-led lawsuits against the federal government
and the State of Washington

“youth-driven legal campaign in the United States and
around the globe. Related cases brought by youth to protect the atmosphere are pending before other U.S. courts in the federal district court in Oregon,
and in the state courts of Pennsylvania, Colorado,
Washington,and Oregon, as well as in several other countries.

#168 LTL_FTC on 05.19.16 at 4:11 pm

Hi Garth,

Wondering if you make private wagers with friends about how many posters here will be distracted from the main topic?

Mentioning lease/buy here is like giving a squirrel a shiny bauble. They lose focus of anything else and get flattened by a truck on the highway!

Increase in the supply of squirrel meat (recipes previously posted here).

Well put. It’s been an astonishing day here. No wonder so many people fail. — Garth

#169 Godth on 05.19.16 at 4:34 pm

The problem with all of your Pollyanna financial prognostications is the same problem as with your doomer housing predictions 9or rather those that don’t get it): the underlying assumption is that infinite growth on a finite planet is a sound proposition. Good luck with that ultimate fools, the science says otherwise.
Reams of evidence dogs and bitches:
http://guymcpherson.com/climate-chaos/introduction/

#170 BOOM! on 05.19.16 at 4:47 pm

Another poop day on Wall St. WHAT is going on now?
Just ‘talk’ about getting rates up, a bit and the place goes nuts.

Oh, that’s right. Human nature. Never mind… The saga of the “never rising” rates will continue, after this important message from our sponsors…

LOL. Thurs. Night!! means gaming & booze here in WI

#171 Bottoms_Up on 05.19.16 at 4:49 pm

#155 IHCTD9 on 05.19.16 at 1:52 pm
——————————–
To be fair I was making a point about Harper’s bully tactics over a decade. Definitely not about condoning physically abusive behaviour.

But, I have seen the video (from one angle) and it is definitely not clear whether there was intent (he had to reach between two people to help guide the man past, and his back was toward the elbowee). Trudeau immediately walked over to find her to aplogize, and Elizabeth May has called it an accident.

#172 jess on 05.19.16 at 5:17 pm

Mentioning lease/buy (deep subprime)

pathetic
http://www.motherjones.com/politics/2016/04/car-subprime-bubble-auto-loans-credit-acceptance-don-foss

#173 Metaxa on 05.19.16 at 6:26 pm

All you Harperites need to calm down.
Just because you can get it in first with as much snark and disdain as possible doesn’t make it right.

Have you even seen the video or are you just going off what the Stephen Harper’s Conservative No Longer Government of Canada echo chamber tells you?

to read you sorts it would appear that a terrorist attack took place. Talk about hyperbole. Misplaced hyperbole at that.

He (T2)didn’t punch her in the face. He accidentally elbowed her, and he apologized for that. He accidentally elbowed her because she was unexpectedly in his personal space, probably because she is a classless ditz.

Borrowed from another place because s/he wrote it better than I could:
I am regularly embarrassed by our politicians, both sides of the floor. You listen to sound bites from the house with the heckling and the tone and it sounds like 2 rival cliques beaking at each other during recess in the 4th grade. I’m sorry, but the tactic of ‘I don’t like what we’re doing today so I’m going to move really slowly’ is nothing short of immature and pathetic. I completely get why Trudeau was in a rage, although I’m very sad that he let the childish antics of the opposition goad him into acting so inappropriately. I’m ashamed of Mulcair, who by the NDP platform and agenda should be fully on board with allocating time to discuss this particular issue, but was obvious colluding to interfere with due process. You killed your party’s hope for a win in the last election, stop being such a crybaby and deal with it, or let someone who gives a crap about Canadians take over.

Cons taking the side of an NDP ditz just to score points against T2, now that is rich. See? They will side with anybody if it suits their immediate purposes.

Sorry Garth but the comments on this blog were already ruined, eh?

Completely. — Garth

#174 robert veitch on 05.19.16 at 7:53 pm

Why would anyone buy something that depreciates up to 30% 5 minutes after you drive it off the lot! Oh yes if you financed the same vehicle plus 12% tax, chances are very good that in a year you will owe 50% more than what the car is worth. Find a vehicle that meets your monthly budget and satisfies your needs for a vehicle and you will save thousands over your lifetime. Lease the depreciation asset (vehicle) and recognize you are limiting your risk!

#175 That's the way it is on 05.20.16 at 2:01 am

https://m.youtube.com/watch?v=Xb0bwbcfd28

Rates will rise, people are drowned in debt.

God bless you Garth for crying out but we prefer to die while owing some one something.

#176 Graeme on 05.20.16 at 2:22 pm

I get what you’re saying about leasing however it doesn’t apply to me. I bought a used car for $7K and have been driving it for 10 years. I actually wish somebody would steal it so I have an excuse to buy something newer. That’s $700 a year ownership cost. Still under $2K a year if you count maintenance. It does involve knowing how to spot a lemon and wielding a wrench every so often but for a young guy I’d recommend it.

#177 greaterfool on 05.20.16 at 3:18 pm

Happy long weekend Garth.

This time last year (3pm on Friday), with media offline already and residents checked out for weekend, Harper would have been sneaking out (quietly) a new bulletin – coward!