# Looking for advice on our situation & plan



## CadMan (Apr 16, 2010)

*CadMan's Money Diary*

Hi all,

I've been folllowing this site, mostly as a lurker, for a several months now. Lots of good information for someone like me who's become much more interested in personal finance in the last few years. As people don't generally talk about details of their financial situation, I thought I'd post here to get some feedback and advice.

*Some Background*

I'm married and my wife and I are 39 yrs old. We have three kids aged 11, 6 and 4. We live in Calgary in an 1100 square foot bungalow we bought when we moved here for me to go to university. I graduated in 2004 and have now been working fulltime since then.

*Incomes*

Me - $175k + bonuses (0-25%). Just moved to a new job with a higher base salary after spending a year with a company with a lower base salary (and more potential upside that didn’t materialize). No employer pension plan.
Wife - $15k (part time)

*Assets*

•	House: $475k
•	Revenue Property: $475k
•	RRSP Accounts: $75k in ATB mutual funds (split roughly 50/50 between me and my wife)
•	TFSA accounts: $40k in shares (of one TSX-V company)
•	Approx $10k in RESP acount
•	Approx. $32k in shares of mix of public/private companies held directly
•	Two vehicles ($10k and $6k)
•	Approx. $115k in 4 collector vehicles (my one guilty pleasure)

*Liabilities*

•	$125k on principal residence (5.19% fixed, $500 weekly payments)
•	$430k on rental property (variable – currently $352k at 2.35% and $78k at 4% ($78k borrowed against principal residence). Revenue currently covers the mortgage/tax payments and I have the use of the garage for my cars.
•	LOC: $17k at 7%
•	Personal loan from former boss: $15k (interest free)

*Insurance*

•	Two life insurance policies on me, one personal one for $600k and one through my employer for one year’s annual salary

*Immediate Goals*

•	Pay off LOC and personal loan
•	Make RRSP contributions (haven’t made any contributions for 2010 due to lower salary). Would like to diversify RRSP portfolio by putting new money into EFT dividend funds
•	Increase mortgage payments to try to be debt free (other than revenue property debt) within 2-3 years.
•	Considering starting small business with friend

*Long Term Goals*

•	Retire at 55 with $3-5 million net worth
•	Buy vacation property in Mexico
•	Revenue property paid off within 7-8 years


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## steve41 (Apr 18, 2009)

I need the rental income as well as an estimate as to whether your 2 salaries will stagnate or grow and at what rate.


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## CadMan (Apr 16, 2010)

The rental income is currently $1800 per month, with the tenants paying all utilities. I have good prospects to increase my income, although it's difficult to say at what rate. Senior people in my profession can pull in between $350k and north of $1 million per year (although it can be a demanding profession, so who knows how long I will want to do it). I would ideally like to diversify income streams (salary, rental income, investment income and potentially business income). My wife's income will probably stay about the same.


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## humble_pie (Jun 7, 2009)

_" Would like to diversify RRSP portfolio by putting new money into EFT dividend funds."_

dividend payors, for you especially, should go into non-registered account so you can collect the tax credits. 2nd best spot would be the tfsa & worst of all, imho, would be the rrsp.

and why sacrifice any portion of return by buying dividend etfs. You've proven you can handle reasonable levels of risk. Why not make up a list of 4-6 top-ranked dividend payors & begin buying them outright in the non-registered account you've already set up.

management cost will be zero. Dividends can be dripped in order to capture that extra 2-5% off new share purchase prices, and also to avoid paying commissions on new share purchases.

there's an appealing detail you've barely mentioned. That tsx venture company that's doubled in your tfsas. Either that was luck, or you sure know how to pick em ... and i'm guessing it was the latter. Can you keep this up, ie keep the speculations in the tfsa while building the dividend payors in non-registered along with hi-yields in the rrsp.

whatever you do, please don't forget to come back & tell us how, so we can all learn a thing or 2 ...


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## steve41 (Apr 18, 2009)

Mrs Calgary
Mr Calgary

OK.... I whipped this off real quick, so you should check the numbers and the assumptions.

- I wimped out on your salary... indexed it at just 2%.
- I faked your 2nd loan rate at 3% and amortized over 15 years.
- I didn't expand on the RESP... I left it as is.
- Didn't sell either real estate entities.... they both go to the estate.
- I didn't bother adding to the TFSAs... it wouldn't have made much difference 
- Assumed 5% rate, 2% inflation, dying broke at 95, living in AB
- Reduced wife's CPP expectation by half

This took me 20 minutes tops, so you should check the data.

Steve


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## CadMan (Apr 16, 2010)

humble_pie said:


> _" Would like to diversify RRSP portfolio by putting new money into EFT dividend funds."_
> 
> dividend payors, for you especially, should go into non-registered account so you can collect the tax credits. 2nd best spot would be the tfsa & worst of all, imho, would be the rrsp.
> 
> ...


Humble Pie - Lots of interesting info in your post that I'd like you to expand on if you could. I'm not up to speed on the comparison of holding dividend payers through RRSP accounts or directly. I've always had the understanding that earners in high income brackets were best advised to max out RRSP contributions.

The TFSA accounts is a bit of an intersting story - At my last job I had the opportunity to invest in several junior resource plays (clients) as an accredited investor (usually at an earlier stage in the company's development, so higher risk and higher potential for upside. These shares were actually worth quite a bit more at one point ($85k, I think), but have come back down to earth. I would ideally like to hit a homerun with the TSFA investments and then convert value to a more conservative dividend payer which would generate a tax-free income stream.


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## CadMan (Apr 16, 2010)

steve41 said:


> Mrs Calgary
> Mr Calgary
> 
> OK.... I whipped this off real quick, so you should check the numbers and the assumptions.
> ...


Thanks Steve. On a quick look, there were lots of numbers there! I will have to take a few minutes to go through these reports.


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## Potato (Apr 3, 2009)

CadMan said:


> *Long Term Goals*
> 
> •	Retire at 55 with $3-5 million net worth
> •	Buy vacation property in Mexico
> •	*"*Revenue property*"* paid off within 7-8 years



_Note: this may sound harsh, but I'm sick and I don't want to go back and try to sweeten it up._

Are these remotely realistic goals? You have 16 years left, want to save 17X your current salary, and you only have 1X your salary in financial assets at the moment. How much of that later increased salary can you count on? If you can pull in 500k-$1M in salary in a reasonable time period, then just a few years of aggressive saving will make everything hunky-dory. Would you include your house, 2nd garage, and private land fleet as part of that net worth goal, or are you just focusing on what you would legitimately sell to fund your retirement?

*You have a very expensive car habit*. You're a rich guy, so maybe you have rich tastes, and that's where you want to spend your money (you do say it's your one guilty pleasure), but face facts: you have nearly as much money in automobiles as you do in financial assets, and a half-million-dollar garage to go with them. (Note: stop kidding yourself, it is not a "revenue property" -- with even the most basic allowances for vacancy, insurance, and maintenance, you're losing money on it even at today's low rates. It looks like it's just more garage space for you). Like I said, it's fine to want to spend your money on things that make you happy, just realize with eyes open just how expensive this hobby is.




CadMan said:


> I've always had the understanding that earners in high income brackets were best advised to max out RRSP contributions.



Yes, max out your RRSP and TFSA, but if you want to save aggressively as you indicated with your goals, you're going to need to save more than your shelters will allow. If you're going to have non-registered investments, you might as well put the dividend payers there.


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## GeniusBoy27 (Jun 11, 2010)

First off, I like to say I have a similar situation. However, a few things first. I'd pay off the principal residence before the revenue property first (since the revenue property is tax deductible).

Second, I would renegotiate your LOC, and go to a HELOC, at prime +1%. 

Third, why are you paying such a high rate for your mortgage? At that rate, it seems to make sense to work out the calculations to see if you should renegotiate or not.

Fourth, to get to your goal, you'd better diversify to build up your savings better.


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## kcowan (Jul 1, 2010)

> Approx. $115k in 4 collector vehicles (my one guilty pleasure)


These can be a lucrative investment if you treat them as such. The last couple of years has been tough because of the US meltdown but that will recover...


> Considering starting small business with friend


Be careful and make sure that the friend has similar values and finances.

Congratulations! With a few minor tweaks mentioned above the future ought to be fine.

You might buy a momentum trading tool for those junior stocks if you continue to play them. Selling near the top is easier with a tool. It removes the emotion.


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## steve41 (Apr 18, 2009)

As you will note on page 3 of "Mister's" PDF, (top graph)... your investment strategy will indeed take you past the TFSA and RRSP contribution limits.... the non-reg capital becomes quite substantial by the time you retire at 55. So what? The plan works!

This is not unusual for HNW, high salary trajectory individuals. Believe it or not, even now you fall into the HNW category. After all, your "salary asset"... those future paychecks -present valued- are every bit as tangible as your savings or real estate.


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## CadMan (Apr 16, 2010)

Ouch Potato, that was a bit harsh, so I feel like I need to explain (aka defend myself)....




Potato said:


> _Note: this may sound harsh, but I'm sick and I don't want to go back and try to sweeten it up._
> 
> Are these remotely realistic goals? You have 16 years left, want to save 17X your current salary, and you only have 1X your salary in financial assets at the moment. How much of that later increased salary can you count on? If you can pull in 500k-$1M in salary in a reasonable time period, then just a few years of aggressive saving will make everything hunky-dory. Would you include your house, 2nd garage, and private land fleet as part of that net worth goal, or are you just focusing on what you would legitimately sell to fund your retirement?


They're long term goals, but I do think they are realistic. As I mentioned, I have good prospects to increase salary and the growth to net worth will come from diversified income streams as well (i.e. compounded investment returns, rental income and possibly business income). I would include everything in a net worth calculation.





Potato said:


> *You have a very expensive car habit*. You're a rich guy, so maybe you have rich tastes, and that's where you want to spend your money (you do say it's your one guilty pleasure), but face facts: you have nearly as much money in automobiles as you do in financial assets, and a half-million-dollar garage to go with them. (Note: stop kidding yourself, it is not a "revenue property" -- with even the most basic allowances for vacancy, insurance, and maintenance, you're losing money on it even at today's low rates. It looks like it's just more garage space for you). Like I said, it's fine to want to spend your money on things that make you happy, just realize with eyes open just how expensive this hobby is.


I agree that a fair amount of my current net worth is tied up in my car hobby. I justify this in a few ways:



The amount of money I have tied up in "transportation" cars is low compared to others in my income bracket who buy new BMWs that depreciate. I have yet to buy a new car in my life.



The classic cars generally maintain their value (or go up) and are reasonably easy to liquidate if needed



Sure, it's an expensive hobby, but others spend on entertainment/hobbies like going to bars, eating out, expensive vacations, etc. that provide enjoyment, but there's no asset to sell (unlike there is when restoring cars)



I do a fair amount of the work myself (although there is a cost to buying tools etc.)

I'm not deluding myself into thinking the antique cars are a good investment (I'm sure I could get a much better return if the money was used elsewhere), but I think as far as "entertainment" money, it's not so bad.

And yes, the "other garage" is a revenue property. Rent is $1800 per month which covers the $1500 morgage/taxes with a bit to spare, plus we are building up equity and I get the garage for free. To me this seemed like a better option than paying $200/month to rent garage space.


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## CadMan (Apr 16, 2010)

GeniusBoy27 said:


> First off, I like to say I have a similar situation. However, a few things first. I'd pay off the principal residence before the revenue property first (since the revenue property is tax deductible).
> 
> Second, I would renegotiate your LOC, and go to a HELOC, at prime +1%.
> 
> ...


Yes, the plan is to pay off the revenue property debt last.

Our fixed mortgage rate is high at 5.19%, but when I crunched the numbers about a year ago it didn't make sense to pay the payout penalies. It's a five year term that's due in August, 2012, so I'm hoping to get a better rate than (and also pay it down aggressively before than, as I've become much more debt adverse in the last couple of years).


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## Potato (Apr 3, 2009)

CadMan said:


> Ouch Potato, that was a bit harsh, so I feel like I need to explain (aka defend myself)....



No need to defend yourself, I'm just playing devil's advocate, trying to help you see things in different lights, but it is ultimately your life and your money.

You are actually in a very difficult situation to plan for, since the variability in your future income is so huge. If you make a million dollars a year sometime soon, just a few years of even moderate savings at that salary level will dwarf any amount of scrimping and saving at $175k. It can be a trap for some people: believing that they can easily make up for missed savings later, they don't save in the present. You almost need to make several life plans: what happens if you stay at your current salary, when would you retire and what would your savings goals be; what if your salary went up by X, what then, etc...




> And yes, the "other garage" is a revenue property. Rent is $1800 per month which covers the $1500 morgage/taxes with a bit to spare, plus we are building up equity and I get the garage for free. To me this seemed like a better option than paying $200/month to rent garage space.



Well, I know that as humans we tend to tell stories to ourselves, and sometimes we like the story, and sometimes we don't. If the story was that hey, there's this win-win situation where we get this great investment property and free use of a garage, then that comes across one way. But if instead it's painted as tying up a bunch of capital to buy a garage and renting out the associated house and hoping it does a bit better than break-even, then that colours things in another light all-together...

Ok, let's go through it a little more slowly.

Using your numbers, the property is worth $475k, with two loans used to buy it, one for $352k at 2.35% and one for $78k at 4%, with $45k in equity.

So interest alone is $8.272k + $3.12k = $11.392k/yr. You've also got an opportunity cost associated with that $45k sitting in the property, so if you could be earning 4% with that, that's $1.8k/yr. You didn't say what the current property tax bill is, but I can see that the rate in Calgary is about 0.6%, so $2.85k/yr should put me in the ballpark.

All told, we're at $16k in expenses per year. Rent is $1800/mo, or $21.6k per year. So far, you're clearing $5.6k/year, which doesn't sound too bad.

Except we haven't accounted for maintenance, insurance, or vacancy yet. Most of the rules of thumb out there say to assume somewhere in the range of 1-2% per year for maintenance. It's not all going to hit regularly every year, but if we take the low-end assumption of 1%, that's $4.75k/year. Insurance I'm guessing should run about $1k/yr. If you take a 2% vacancy rate (that's just one month of vacancy every four years) that's another $0.43k to account for.

Those provisions put you slightly below break-even. But again, that's at current low interest rates. If that variable goes up to even just 4.1%, you won't need to get "unlucky" facing a vacancy or repair to realize this isn't a profitable holding.


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## Bupp (Nov 13, 2009)

If the penalty to refinance the principle residence is less than ~$3500 then you would be better off going for a refinance. It is possible to get cash back to cover your penalty + a fixed rate below 4%.

Your finances look like they are in great shape. Keep up the extra payments on the mortgages and they will be gone before you know it, and then you will be able to concentrate the extra cashflow on building up your investments.


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## humble_pie (Jun 7, 2009)

salut cadman re keeping payors of eligible dividends in non-registered accounts so as to benefit from dividend tax credits, it's my belief that this strategy is universally accepted. The unusual problem we have at present is that traditional interest-bearing securities - the kind that would normally be held in an rrsp - are paying zip. A stock yielding 4 or 5% looks good compared to a bond, gic or t-bill; so folks these days are opting to purchase dividend payors in rrsp.

for myself, i have kept higher-yielding securities whose payouts are not eligible dividends in rrsp, while holding eligible div payors in non-registered. My rrsp still has hi-yield distributors like fort chicago & arc energy whose options can be sold. However, these 2 unit trusts are converting to common shares as of 1 jan/11, so in due course i'll be selling them in rrsp & possibly buying them in non-registered.

then i will have the dilemma of what to buy with the cash in rrsp. Have not yet decided. Am leaning towards hi-yield bond funds. My rrsp is not at a broker that can maintain US rrsp accounts - i believe only rbc & questrade do this so far - but if it were i'd consider the US hi-yield bond fund JNK, which pays monthly (those are the US dollar distributions that will be nicked for the currency exchange fee, which i'd want to avoid) (however, US withholding tax will not be charged on these distributions since they will be in rrsp).

one way of avoiding FX fees on this US hi-yield's distributions would be to buy BMO's etf ZHY which is a licensed clone of JNK plus a canadian dollar hedge. Its yield is less than jnk, of course, and by more than the cost of the hedge plus the management fee combined - ie there's some kind of tracking error, although it's small enough to be of no concern.

the risk with hi-yield bond funds as i see it is that they act like proxies for broad stock markets & not at all like the safe top-rated interest-bearing paper that we used to buy in rrsps. So an rrsp holding one of these funds has to be monitored carefully. At this point i've arrived at the edge of topics like assigning probabilities to future market rises vs market declines, or even market crashes, which are beyond the scope of this message, so i'll stop.

as for the rrsp vs tfsa debate, here's a useful link:

http://www.theglobeandmail.com/glob.../tfsa-trumps-rrsp-report-says/article1446307/

the CD Howe institute study says that tfsas will have an edge over rrsps for - and here's the catch - for those individuals whose post-retirement incomes will be higher than their employment incomes.

it's possible you will be one of these, and in such a case a carefully-nurtured tfsa - which could be substantial 20 years from now - might be the top-rated retirement plan. Its withdrawals during retirement will be tax-free, whereas rrsp/rrif withdrawals will be 100% taxable.

the gamble, as i see it, is that persons in their 30s & 40s cannot know for a dead certainty what their circumstances will be in their 70s & beyond. They cannot project for a dead certainty whether their retirement incomes will be higher or lower than employment income, which itself can only be projected. My own conclusion is that it's wise to subscribe to both tfsa & rrsp; tfsa to the max since the amount is so small; and rrsp to the fullest extent i could manage.


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## Sustainable PF (Nov 5, 2010)

While there is income potential for you Cadman, you can not guarantee any additional income above what you earn today.

Potato is dead on re: the "income property". You either need to get more income from it or get rid of it - you're losing money. Do I care that you use it to store the cars? Not so much, however, take a look @ what it would cost you to rent the same space when taking a closer look at the "income" from the rental property.

Regarding the cars, I actually don't see these as a liability. Yes, you've splurged on some sweet rides but they do have value in re-sale. In the high end car market, if you wanted or needed to sell, you wait for the right buyer. So this is not an asset you can liquidate quickly (w/o taking a loss) - one thing remains: other guys like you want these kinds of "toys" (boys and there toys is the term) and will buy them.

One thing i'd be doing if I were you is putting ALL of the RRSPs into a spousal RRSP. You have a lot of accounts linked to yourself which should earn you income and your wife has a tiny percent of the income to come. Your tax rate appears to be MUCH higher than that of your wife come retirement time so it makes a ton of sense to have her withdraw from the RRSP as a spouse.

@ 30+ yrs old I envy your current and potential earning power. We could retire @ 45 if we were in the same boat. Nonetheless, I wish you well cadman. This forum will give you a lot of advice, both in your face and passive. Use it well.

Cheers


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## MoneyGal (Apr 24, 2009)

I'm surprised no one has mentioned this: you are very underinsured relative to your obligations and goals. $800K is not sufficient to pay your existing obligations and maintain your goals for your family in the event of your premature death. 

I don't see any mention of disability insurance, either; which would likely be even more devastating than your death, actually. 

Finally, you have some (very little) money in an RESP and 3 kids, one of whom is not that far away from post-secondary education. Do you plan to finance your kids' post-secondary education? I don't see that mentioned anywhere in your plans.


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## steve41 (Apr 18, 2009)

Mrs Calgary
Mr Calgary
OK..... I ran it again with maxing the TFSA til 65 and giving the kids some (not maxing) RESP. The reason your maximum ATI comes in lower is because I screwed up your wife's starting RRSP amount and the RESP strategy will reduce your combined ATI..... which comes in at $71K this time around.

I will leave it others to determine if living on $71k after tax is onerous or comfortable. I didn't wander into income splitting territory.... it takes a bit more fiddling. You are definitely income splitting candidates though.


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## CadMan (Apr 16, 2010)

It’s been some time now since I posted in my personal thread, so I thought I should update it. I find it helpful to look back on what my goals were and what I’ve been able to accomplish (and not accomplish, ha). I’d also like to have a periodic record with a snapshot of my finances.

*Some Background*

Still married (to a wife that has become more of a spendthrift – see my other posts). Our kids are now 13, 8 and 6. I’ve now been at the current job for nearly two years. We still live in Calgary in an 1100 square foot bungalow we bought when we moved here for me to go to university in 2001.

*Incomes*

Me - $220k + bonuses (0-25%). (up from $175 when I posted in 2010). No employer pension plan.
Wife - $5k - $10k (part time) (Down a bit from 2010)

*Assets*

• House: $475k (Roughly the same value as 2010 I think)
• Revenue Property (owned jointly by me and my wife): $475k (Roughly the same value as 2010 I think)
• RRSP Accounts: $80k in ATB mutual funds (split roughly 50/50 between me and my wife) and $55k in my TD Waterhouse account that is made up of ETFs, TD e-series funds and 5 or 6 blue chip dividend stocks (up $60k from 2010) 
• TFSA accounts: $18k in shares and ETFs and about $1k in cash (down $21k from the value of shares in one company that nosedived)
• Approximately $1k in high-interest savings account (up $1k from 2010)
• Approx $23k in RESP accounts (up $13k from 2010)
• Approx. $4k in shares of mix of public companies held directly (down $28k from 2010 – some were sold, but decline largely due to decrease in value of the shares)
• Two vehicles ($8k and $4k) (depreciated slightly from 2010)
• Approx. $125k in 5 collector vehicles and motorcycles (up $10k from 2010)

*Liabilities*

• $62k on principal residence (2.85% fixed, $850 weekly payments) (Down $63k from 2010 – Due to be paid off in May, 2014 at current increased payment rate)
• $418k on rental property (variable – currently $340k at 2.35% and $78k at 4% ($78k borrowed against principal residence). (Down $12k form 2010)
• LOC: $12k at 7% (Down $5k – was at “nil” for most of the last year, but had a couple of larger expenses recently)

*Insurance*

• Two life insurance policies on me, one personal one for $600k and one through my employer for one year’s annual salary

*Immediate Goals*

• Pay off LOC
• Continue with current mortgage payments in order to pay off by May, 2014 when the current term is up
• Continue to make RRSP contributions (hasn’t been a regular amount, due to focusing on paying down debt. Have typically contributed bonuses or made a $2k to $5k contribution when stock prices decline and there is a buying opportunity. Once mortgage is paid off, I want to get RRSP contributions caught up to the maximum contribution amounts)
• Get caught up on RESP contribution to maximize government grants (currently contributing set amount of $900 per month)
• Get caught up on TFSA contributions.
. • Have $5-10k in cash saved (my preference is to not have money sitting in savings account at 2% if there is a balance on the LOC at 7% - I know some don’t share this view)
• For both RRSP and TFSA, want to focus on more conservative investments. I have lost a lot of value in the more speculative stocks in the last two years. 
• Convert the variable portion of the mortgage on the rental property to a fixed rate when it comes due in 2013.
• Will likely be setting up a professional corp in early 2013. Want to engage a tax planner to get some advice on options for income splitting, etc.

*Long Term Goals*

• Retire at 55 with $3-5 million net worth
• Buy vacation property in Mexico
• Revenue property paid off within 7-8 years 
• Travel more before retirement – trying to find that balance between saving it all for later and having no fun now and being worn-out and broke in old age.


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## Jaberwock (Aug 22, 2012)

I was in a very similar position during most of my life. 
We had a high family income, which was heavily taxed because it came only from my earnings.
I have achieved the goals that you seek, I have the net worth and the condo in the Caribbean. 
Here are a few tips:
1.	Maximise your TFSA contributions. Both you and your spouse can contribute $5,000 per year. Top them up if you haven’t already contributed $20,000 each.
2.	Maximise your RRSP contributions. Put at least half of the contributions into a spousal plan, this will save you taxes when you retire
3.	Maximise the RESP contributions. Putting your kids through university will eat up a big chunk of your future income, start saving now and take full advantage of the government top-up and the tax-free accumulation of income. 

All of the above need cash, which you probably don’t have. However, after you have paid off the mortgage in 2014, you should be in a position to max out your RRSP, TFSA and RESP contributions quickly. 

4.	The cars are a nice hobby, but you have $125k sitting in a garage doing nothing. If you enjoy restoring old cars, buy one, restore it and then sell it. 

5.	Pay-off the line of credit – why are you paying 7% interest?


6.	I think owning rental property is a good approach for you. It is tax efficient, you can depreciate the property and you will not pay much tax until you sell the property. If you keep the property until you retire, the capital gain can be realised in a year when your income is low and you are in a lower tax bracket. 

However, the return you are getting on your property is below par. What will happen when interest rates rise, or if you have to make significant repairs (roof, furnace etc), or if your tenants leave and the property is vacant for any length of time? $1,800/month rent is too low for a $475,000 property.

I wouldn't pay off the mortgage on the rental property. The rate is only 2.35% and is tax deductible. If you invest in another property instead, look for something with a better return on investment.

7.	Two years ago you had $32k in stocks, now you have $4k, “largely due to a decline in the value of shares”. The value of your TFSA has also gone down by $20k. This has happened to you in a rising stock market. You are not an investor, you are a gambler. Normally, I would advise you to ditch the mutual funds and ETFs and buy your stocks directly, to save the fees. In your case, I would say first that you need to develop a more disciplined approach to investing before you start making your own stock picking decisions.
If you feel the need to gamble on high risk/high return stocks, set up two separate accounts. Put the high risk stocks in one account and place a limit on what you invest in that account (no more than 10% of the total), then only have solid blue chip, dividend paying stocks in your main account. That is what I did, and I tracked the progress of each account over several years, the blue chip account is way ahead of the high risk account. 

8.	Try to shelter as much income as possible from the taxman (within the law of course). 

Put non-registered investments into a joint account, and split the income with your spouse
Look for investments that pay a “return of capital” rather than a dividend. Many REITs fall into this category

And finally, enjoy yourself, spend some of your money on travel and the good life, you never know what will happen in the future.


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## arrow1963 (Nov 22, 2011)

Cadman,

You've had a couple of comprehensive, well written posts outlining your situation, and I think you've received some good feedback to date. There's one thing that I want to focus in on though, which as far as I can tell, hasn't been explicitly mentioned to date.

Both your 2010 post and the 2012 update had a series of headings: Incomes, Assets, Liabilities, Insurance, Immediate Goals & Long Term Goals

Isn't something really important missing from this conversation?

What are your expenses, and what level of savings do you intend to allocate to your goals?

From the looks of it, you've saved about $30K/year over the past couple years, primarily through mortgage paydown, on what seems to be 130-160K net.

Is this consistent with your long term plan? If you don't achieve the salary increases you're hoping for, are you planning on reducing consumption now, in the future, or working longer? It doesn't seem to me that you'll be meeting your goals if your situation stays the same, and you'll need at least $3 Million (inflation adjusted) in financial assets in 15 years to support your current level of expenditure.

And if you are planning on seriously putting money away, lose the ATB mutual funds, and spend the couple evenings you'll need to set up a couch potato portfolio.


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## CadMan (Apr 16, 2010)

Hi all,

I haven’t been active on the forum for some time – I checked in on this thread I started in 2010 and it is interesting to have a record of where we were at, what are goals were and what was achieved and what was “pie-in-the-sky”. The biggest change for us was a move in 2013 to a larger house. I know some are of the view that it is a good idea from a financial perspective to resist the urge to upsize. We were close to being mortgage-free, but 5 people in an 1,100 square foot house was tight and a great house in the same neighbourhood came on the market at a reasonable price. No regrets on the decision at all, although it has changed the financial landscape a bit.
Anyways, here’s the update:

*Some Background*

Still married, both of us 44 yrs old. We have three kids aged 16, 12 and 9.

*Incomes*

Me - $230k and likely to go up this year after a couple years at the same salary. No employer pension plan. Job is fairly secure for the next couple of years at least, notwithstanding the current economic climate in Calgary.
Wife – Approximately $10k (part time)
Rental Property: $2-3k after expenses (including mortgage)

*Assets*

• House: $1 million (Difficult to know exactly, but a conservative estimate I think)
• Revenue Property: $550k
• RRSP Accounts: $110k in ATB mutual funds (split roughly 50/50 between me and my wife), $80k in TD Waterhouse account with a range of individual stocks (large cap), ETFs and TD e-series and US$30k in a BMO account that holds US stocks
• TFSA accounts: $36k in mine and $29k in my wife’s. I have dumped most the one underperforming TSX-V stock and diversified with ETFs and a couple of individual stocks). These accounts are even or are underwater due to losses on the TSX-V stock)
• Approx $80k in RESP accounts (split between ATB mutual fund and TD Waterhouse account
• Approx. 10k in cash
• $1,500 in physical gold
• Two vehicles ($10k and $4k)
• Approx. $175k in 5 collector vehicles 

*Liabilities*

• $362k on principal residence (2.99% fixed, $600 weekly payments)
• $405k on rental property (2.85% fixed, $363 weekly payments). Revenue currently covers the mortgage/tax payments and I have the use of the garage for my cars.
• LOC: $5k 

*Insurance*

• Two life insurance policies on me, one personal one for $600k and one through my employer for $700k

*Immediate Goals*

• Max TFSA contributions and keep some in cash/conservative investments. I want some peace of mind in having more of a cushion.
• RRSP, TFSA and RESP contributions have not been set monthly amounts, but just contributing when there is extra cash on hand (it always feels like there is lots of ways to spend). Would like to get back to regular contributions, even if small.

*Long Term Goals*

• Develop other sources of income or transition to another career that is not Monday to Friday 9-5 (i.e. part time, consulting, or legal translation). At times I don’t mind my job and at times I hate it.
• Would like to be mortgage free as soon as possible, but I prefer to contribute to TFSA and RRSP now, rather than increasing mortgage payments.

*Other*

The ATM mutual funds have performed well and show steady growth, notwithstanding how many feel about mutual funds. In contrast, in my own picks (following recommendations on here and from Money Sense) some have done well, some have been spectacular losers (Canadian Oil Sands and Potash Corp, for example), others have had huge gains and come back down recently).

I also know I have a lot invested in my cars, but they have turned out to be decent investments (prices on some have gone up and they are priced in US dollars so the current exchange rate has increased their values – and they are more fun than GICs!)


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## nobleea (Oct 11, 2013)

Your retirement funds seem quite light given your family income and age. I would expect it to be close to double that given your age and income.

Nice to see so little money in your daily drivers. The collectible cars I'm sure can be fun and if they hold their value, or even increase, it seems like a decent thing. I don't know if you need 5 of them though. My buddy just sold some souped up 1 series bmw that he bought for 60K CAD 4 yrs ago. Got over 68K CAD for it thanks to the USD and went through a broker.

RESP seems light given the kids ages. Going to have to start withdrawing in a few years.

Who knows what the Calgary market will do. You may see softening in rents as well as drop in house prices which would hit you two ways on the rental. If you can net 100K out of selling the rental and invest it in a blue chip dividend payer, you'll exceed what you are getting currently in net rent with a more favourable tax treatment.


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## gentlepuppies (Jan 17, 2016)

I know I'm living the single life and all, but I'm saving 2/3rds as much per year with less than 1/3rd your income lol, and I eat out every day. If I were making over $200K, I wouldn't spend a minute worrying about my personal finances haha.


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## gladaki (Feb 23, 2014)

You work in oil industry ? if yes then with all this Job market swings, I will be more cautious.


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