# Hello, whats first?



## PeterOceanicX (May 14, 2013)

Hello everyone,

I just turned 19 a few days ago.
I stumbled around this forum while looking for advice regarding what to do with my money.
Currently in post secondary and work part-time.
I just started working half a year ago.


I was wondering if there was a fundamental starting point for allocating my income. I want to know how much money I should put in where.

NOW:
Right now I have $1500 in my savings account gaining 1.5% interest.
I have another $1000 in my chequing gaining nothing.
$230 in Silver (I but a bit every paycheque)
Just applied for a credit card, probably not going to use it that much.

SOON:
Open TFSA
Receive money from my parent's RESP (unknown amount)
Take out student loan?

Should I take out a student loan? I will not have to pay interest until I graduate. I also get a few hundred for free from the government as a grant or something. So I was thinking of just letting it sit and gain interest.


What should I do with my future income, and the RESP money I'm about to receive?
Max out my TFSA?
With such a small amount of money to invest, I can't put anything in the stock market. The trading fee would eat up my profit (if any), but what about Mutual Funds?

Ya... so.. Starting points?


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## thompsg4416 (Aug 18, 2010)

I think you need to define your goals before figuring out what to do. I.e do you need cash for schooling and daily expenses? You mentioned getting an interest free school loan.... 


Starting to save early is always good but just be sure you have money to save. Use the money you have before taking out any type of loan you'll pay interest otherwise it kinda defeats the purpose.

Good luck!


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## Nemo2 (Mar 1, 2012)

thompsg4416 said:


> I think you need to define your goals before figuring out what to do.


+1

(Not that I ever did it, especially at the OP's age, but identifying your target before taking aim is good advice.)


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## jcgd (Oct 30, 2011)

I try to make goals, and even though they change/ have changed it was a good way to ensure I made progress. It is startling how much progress you can make in a few years, and it compounds as time goes on. Before I really concentrated on goals it seemed like I did a lot more treading water than actually getting anywhere.


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## Toronto.gal (Jan 8, 2010)

t3hdaniel said:


> 1. I just turned 19 a few days ago.
> 2. Receive money from my parent's RESP (unknown amount) - Take out student loan? I will not have to pay interest until I graduate. I also get a few hundred for free from the government as a grant or something.
> 3. Mutual Funds?


*1.* Belated happy b'day & welcome to the forum! 

*2.* I don't know if your student fees are very high, but do you really need loans when you have RESP/grants/income from a p-time job?

You say you don't know the amount of your RESP, but as this is considered an asset, I believe a loan [not sure about grants] would be reduced by your RESP amount, so you need to have this information. I don't know the details, but just make sure that you know all the rules to avoid future problems.

Loans can accumulate fast, so would you not prefer to graduate debt-free, if possible? About the interest, you don't know what it will be when you graduate.

*3.* Do you know what they are exactly & all the fees involved? I would concentrate on graduating debt-free, and having a little bit of fun time with some extra money. The stock market will be there after you graduate & you'll be able to carry forward unused TFSA contributions.

http://taxtips.ca/tfsa.htm
http://www.investopedia.com/university/mutualfunds/mutualfunds.asp
http://www.investopedia.com/university/mutualfunds/mutualfunds2.asp

I recommend the book 'Investing for Canadians for Dummies'.


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## cainvest (May 1, 2013)

What others have already said plus focus on the school work! IMO, as a well paying job is probably the most important thing towards building assets.


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## My Own Advisor (Sep 24, 2012)

cainvest said:


> What others have already said plus focus on the school work! IMO, as a well paying job is probably the most important thing towards building assets.


+10


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## PeterOceanicX (May 14, 2013)

I'll try to reply to everything in this one post.

Thank you everyone for the replies!

I don't need the loans to pay for school. The RESP and my job is sufficient for that.
But since it's going to be another 4 years before I graduate post secondary, I was thinking that I would take out a loan and let it sit in my bank gaining interest. The loan is interest free as long as I am enrolled. I would pay it back right before I graduate.
As a bonus for taking out the loan, I receive a portion for free (couple hundred). 

It seems like a good idea to me, but I'm not sure if there are any tax issues for doing this. 

I am still confused about where to allocate my savings after all my expenses.
Thank you for those links!
It's making me want to avoid them at the moment


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## lonewolf (Jun 12, 2012)

I say avoid developing the neural pathway to take on debt. Dont under estimate how developing bad habits can destroy your chance for finacial independence in the future.


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## londoncalling (Sep 17, 2011)

t3hdaniel said:


> I'll try to reply to everything in this one post.
> 
> Thank you everyone for the replies!
> 
> ...


Welcome to the forum. There are a ton of helpful and intelligent posters here and you can learn a pile just by learning from others mistakes and wisdom.

I assume the loans you are talking about are the federal and provincial student loan programs that will be interest free as long as you are in school. My roommate was fortunate enough to have his education and accommodation paid for while he went to university. I believe he benefited from having a wealthy grandparent and parents that were not high income earners. As a result he was also eligible for student loans. He did not need this money during his education so he invested it and made excellent returns. When he finished he sold the investments paid off the loans in full and pocketed the profits. He was very lucky. I do not recommend taking this approach as wonderful as it sounds. For him he was lucky to be investing in a time of market prosperity. Things could have gone terribly wrong and he could have been stuck with a debt (that he never needed) and be paying interest on it for years had things gone a different route. Even my friend will admit that he got lucky and if he knew now what he knew then he would not have made the same choice.

However, If you have the self control you could take the loans each year (provided you don't need the money for school0 and purchase GiCs. Then repay the loans when you finish. I myself would not take this route as the current interest rates are abysmal. Other things to consider are what if you decide to discontinue your studies? Then you will have to begin repaying the loans. I only present the idea as a safer alternative then putting them into the market. I believe the market will be higher in 4-5 years but I cannot guarantee it. My first rule of investing is "don't invest what you can't afford to lose" More importantly, I think you need to learn more about investing before using "margin" to fund your investments.

I would agree with others that have posted and focus on your education as it usually has the biggest impact on your future earning potential than any investment ever will. Next start reading everything you can about investing. I recommend the eight with weight thread on this board as a good start. Once you think you know all there is to know to start investing read some more. When you do take the plunge, start small and slow. Most of us do not make phenomenal returns out of the gate. Figure out your style. set your goals and stick to them. Good luck. I wish I was thinking about these things a bit more at your age.

Cheers!


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## Young&Ambitious (Aug 11, 2010)

Hello, way to go starting early! There are some young folk on the board here so you are aren't alone 

1. Emergency savings. I know you are young and don't likely have a lot of commitments/responsibilities but there are things that can happen and when such events do happen, it's nice to know you have money available. Approximate values of 2-6 months of living expenses are some offhand estimates people use, but really it's a bit of a guessing game more so than an art. 
2. next up, TFSA. For smaller amounts of money, the TD e-series would be a good fit for you. 
3. if you happen to max out your TFSA, contribute to your RRSP but do not claim the deduction until you are working full time.


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## Toronto.gal (Jan 8, 2010)

londoncalling said:


> He *did not need this money during his education* so he invested it and made excellent returns....


Great post, except for the above noted, even when you were not encouraging it at all.

Any approach can be taken with one's own money, but not with government loans, which are meant to pay for tuition/books/living expenses [not to take vacations with it as many do, nor invest it in the stock market].

While many indeed abuse the system & use the loans for other purposes, it isn't fair to the tax-payers for borrowers to party away or gamble with such funds [some of which never get paid]. If a student is fortunate enough to have had 'wealthy grandparents', who fully paid for all of the student's expenses, why then was such a person borrowing from tax-payers in the first place? :rolleyes2: 

I am not saying the OP might not be eligible for loans, just that it does not seem that he needs to burden himself with debt.

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

In general, it is estimated that a student with a 4 year degree, graduates with $30K in loans [that may not even have been needed], which at a rate of 3%, would need to pay $363.98/month, if taken 10 years to repay, and which could be a considerable amount for someone just starting out. Total interest paid would = $14,225.05 [$13,677.93, if grace period not used]. 1/2 those amounts to repay $15K.

http://tools.canlearn.ca/cslgs-scpse/cln-cln/50/crp-lrc/calculer-calculate-eng.do

Going back to the OP's question: 'what is first'?

- get good grades [depending on the job, employers will be asking for your transcripts]
- keep good credit score by paying all your bills on time, and in full if possible [u mentioned getting a c.card soon]
- avoid unnecessary pressure/worries & also have fun - you're only 19-22 once!
- if you have extra money, guaranteed investments would qualify as 1st type investment 
- financial literacy is required in order to make informed decisions on other type of investments
- if you're too busy with your p-time work & studies, pick one or more literacy months in the summer.

If you read just 2-3 books per summer, you'll be more than ready to begin investing by the time you graduate [or perhaps b4], by which time, until your income is high enough, you can maximize your TFSA and use RRSP in later years to minimize taxes once your income increases.

*Daniel:* avoiding MFs had been the purpose of those links!


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## lonewolf (Jun 12, 2012)

Read books or go straight to the source & look @ or construct charts of price ?

Books can be a source of a lot of noise

I might be a little bias because I was not good with books I failed 2 grades (although my bank account does not care)


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## donald (Apr 18, 2011)

I would build a ledger and start making goals(focus on the process and build up on the habits)Don't worry so much about if you are beating inflation yet ect
-Build a pie chart and start fresh with your assets and liabilities(like your doing)get used to allocating every monies(10% to investments/10% to emergency fund/ect ect
-If you have 1500 hundred in a chq acct set mini monthly targets
I think because you are so young it might not be a good idea to get to bogged down.(kiss---keep it simple)
An interesting read is -ledger A,john d rockerfeller(he was around your age)goggle it and have a read.
Not trying to give boring advice but i would still focus on the basic-----learning how to allocate(hard to give investment advice because imo you aren't rooted yet in life.


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## Toronto.gal (Jan 8, 2010)

lonewolf said:


> 1. Books can be a source of a lot of noise
> 2. I might be a little bias because I was not good with books I failed 2 grades


1. Do you truly believe that discouraging reading is sound advice for a newbie? :rolleyes2:
2. What do you mean you were not good with books, and are you blaming the books for your failed grades?


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## J Watts (Jul 19, 2012)

t3hdaniel said:


> Should I take out a student loan? I will not have to pay interest until I graduate. I also get a few hundred for free from the government as a grant or something. So I was thinking of just letting it sit and gain interest.


I assume from this you mean OSAP? If so, yes, take as much interest-free money as they'll give you and invest it. Put it into TD e-Series funds, savings accounts, or GICs (or all of them). When you've graduated you'll be able to pay off 100% of your student loan, interest free, and you'll have made interest on the government's money just sitting in your bank account. That's what I did and continue to do, and it's worked well.


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## J Watts (Jul 19, 2012)

t3hdaniel said:


> I am still confused about where to allocate my savings after all my expenses.


So _everything_ is paid off, no debt, and you're wondering what to do with some extra money?

1. An emergency savings account: three months-worth of living expenses in a non-registered savings account. If you lose your job/someone dies/you need to flee to the Dominican Republic, you can have access to this money tomorrow.

2. A longer-term savings account: set up a recurring monthly transfer from your paycheque or chequing account directly to this TFSA. This can be for household furniture, a car, etc.

3. Open a TFSA. Start with a GIC or something simple so you get used to the process of going into the bank and 'buying' products.

4. While you're working on 1-3, read up on investing in mutual funds.


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## humble_pie (Jun 7, 2009)

J Watts said:


> I assume from this you mean OSAP? If so, yes, take as much interest-free money as they'll give you and invest it. Put it into TD e-Series funds, savings accounts, or GICs (or all of them). When you've graduated you'll be able to pay off 100% of your student loan, interest free, and you'll have made interest on the government's money just sitting in your bank account. That's what I did and continue to do, and it's worked well.



but i thought loans were made strictly to students from Low Income Families w demonstrated financial need?

whatever happened here?


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## humble_pie (Jun 7, 2009)

J Watts said:


> I assume from this you mean OSAP? If so, yes, take as much interest-free money as they'll give you and invest it. Put it into TD e-Series funds, savings accounts, or GICs (or all of them). When you've graduated you'll be able to pay off 100% of your student loan, interest free, and you'll have made interest on the government's money just sitting in your bank account. That's what I did and continue to do, and it's worked well.



gosh i thought the broker lending me & others money at prime was as good as it gets.

but i see now that we are all making a great big fat mistake.

the deal is enroll, then borrow interest-free, then invest as usual.

it should be possible to keep the scam going for 5 years. Back in the day it was practically lifetime, but universities are getting so rotten picky about graduation now ...


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## J Watts (Jul 19, 2012)

humble_pie said:


> but i thought loans were made strictly to students from Low Income Families w demonstrated financial need?
> 
> whatever happened here?


OSAP is calculated by measuring the student's (and parents') assets ("A") against their anticipated costs of living and attending university ("B").

Sometimes A - B = a negative number, where the student needs to take on a (second) job or take out a loan. Other times A - B = a postive number, where the student is given extra money which could be invested, saved, or used on stupid things (which many students do).


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## humble_pie (Jun 7, 2009)

J Watts said:


> OSAP ... Other times A - B = a postive number, where the student is given extra money which could be invested, saved, or used on stupid things (which many students do).



yes that's what the senators must have said to themselves ... hmmn nice government is throwing all these $$ at me, i'd be so foolish not to take em & have a nice time for myself ...


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## Toronto.gal (Jan 8, 2010)

J Watts said:


> you'll have made interest on the government's money just sitting in your bank account. That's what I did and continue to do, and it's worked well.


I'm so happy to hear that the money is just sitting & growing in your account because it seems you did not actually need assistance, but are simply investing taxpayers' money & doing well with it! 

And here I was thinking that I was subsidizing those that would not have been able to afford higher education without such gov. help.

It does not bother me one bit to subsidize a student's education/grants/loans/scholarships, but if you just want money to invest/save, why not borrow from the bank, or wealthy parents/grandparents if you happen to have them? Why are you my responsibility if you don't require help?

'OSAP provides eligible Ontario students with financial assistance to help pay for their tuition, books, mandatory fees, living costs and transportation' - where does it say personal investing?


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## J Watts (Jul 19, 2012)

Toronto.gal said:


> 'OSAP provides eligible Ontario students with financial assistance to help pay for their tuition, books, mandatory fees, living costs and transportation' - where does it say personal investing?


Your problem is with OSAP and the Ontario government, not me. OSAP determined I was entitled to $_x_. Some of $x was used and there was some left over, which I figured I should save rather than blow on vacations or cars or hookers. In the end the Ontario taxpayer will have gotten a highly educated student and their principal loan returned in full.


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## humble_pie (Jun 7, 2009)

J Watts said:


> Your problem is with OSAP and the Ontario government, not me. OSAP determined I was entitled to $_x_. Some of $x was used and there was some left over, which I figured I should save rather than blow on vacations or cars or hookers. In the end the Ontario taxpayer will have gotten a highly educated student and their principal loan returned in full.



watts this isn't how you described the protocol for invest-the-entire-student-loan-on-OSAP's-dime just this morning. In the quote above, you're describing the strategy all innocent as a little lamb. Just a few dollars left over after student expenses were met, so of course you saved em, haha. A mere overcalculation by the OSAP, they are to blame, haha.

but look below to see how you described this same action upthread this morning. Here we have what sounds like a deliberate heist, in which all - that's right, 100% - of taxpayers' monies loaned to you interest-free, strictly for your educational needs & for no other purpose, instead got diverted & invested for financial gain for yourself.

notice, please, the quote "*take as much interest-free money as they'll give you and invest it*."

you did not mention one red cent that was ever needed for anything remotely resembling bona fide student expenses.

like i say, senators duffy & wallin probably talked to themselves the same way.
.



J Watts said:


> I assume from this you mean OSAP? If so, yes, take as much interest-free money as they'll give you and invest it. Put it into TD e-Series funds, savings accounts, or GICs (or all of them). When you've graduated you'll be able to pay off 100% of your student loan, interest free, and you'll have made interest on the government's money just sitting in your bank account. That's what I did and continue to do, and it's worked well.


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## J Watts (Jul 19, 2012)

humble_pie said:


> watts this isn't how you described the protocol for invest-the-entire-student-loan-on-OSAP's-dime just this morning. In the quote above, you're describing the strategy all innocent as a little lamb. Just a few dollars left over after student expenses were met, so of course you saved em, haha. A mere overcalculation by the OSAP, they are to blame, haha.
> 
> but look below to see how you described this same action upthread this morning. Here we have what sounds like a deliberate heist, in which all - that's right, 100% - of taxpayers' monies loaned to you interest-free, strictly for your educational needs & for no other purpose, instead got diverted & invested for financial gain for yourself.
> 
> ...


Firstly, there was nothing illegal about what Duffy and Wallin did. Nor is there anything illegal about what I'm doing.

Secondly, it is my fault for not clarifying. I should have added to my original quote: "take as much interest-free money as they'll give you and invest it *after paying off your student expenses*."

With that being said, I don't retract the original strategy. If a student _correctly and honestly_ completes an Ontario government application for student aid, and the result of that application says he or she is entitled to $10,000 (for example), then that's that. You can't blame the student if he spends $5,000 on student expenses and invests $5,000, or if she spends $4,000 on student expenses and $6,000 on a trip to Vegas. Either way, the student owes that money back to the government.


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## humble_pie (Jun 7, 2009)

no, it's not possible to wriggle back here & try to amend your statement of this morning.

look at the rest of the statement. There is not one single word about student expenses. Instead there are explicit exhortations & instructions to invest all of the loan money.

*"as much as they'll give you ... Put it into TD e-Series funds, savings accounts, or GICs (or all of them). When you've graduated you'll be able to pay off 100% of your student loan, interest-free, and you'll have made interest on the government's money just sitting in your bank account."*

whatever you did, however truthfully you applied, is water under the bridge. The story that's interesting to news media right now is that a gaggle of canadian students are posting together, in full public view here in this forum, about how to rip off the student loan programs.


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## MRT (Apr 8, 2013)

Successful applicants to OSAP are deemed worthy of receiving financial aid. They are not "entitled" to anything. 

That is a subtle but important distinction, IMHO.


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## J Watts (Jul 19, 2012)

humble_pie said:


> whatever you did, however truthfully you applied, is water under the bridge. The story that's interesting to news media right now is that a gaggle of canadian students are posting together, in full public view here in this forum, about how to rip off the student loan programs.


1. What news media?
2. What students?
3. I can't and won't speak for other students, because I know often times they do blow the money on vacations, trips, alcohol, drugs, girls, and other stupid, short-sighted ideas.

But as I've already said: at the end of the day the Ontario taxpayer has educated a post-grad student, and they get 100% of their principal back in one lump sum the day after I graduate. If you're going to chase that guy because he made a few hundred dollars in interest while that money was in an investment account, instead of chasing the girl who's $40,000 in debt because she blew it all on trips to Europe, then you need to re-evaluate your priorities.


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## humble_pie (Jun 7, 2009)

no, i don't need to re-evaluate anything

it's a great media story just waiting to be investigated


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## J Watts (Jul 19, 2012)

humble_pie said:


> no, i don't need to re-evaluate anything
> 
> it's a great media story just waiting to be investigated


*BREAKING: Ontario Student Loans don't always get used on school supplies!*

Really? You think this is new? Throw $10,000 at a 19 year-old fresh out of high school with no parental supervision and with a bunch of other teens in the same boat (loaded with cash and no idea how to spend it), and it's surprising they don't always use that money on school expenses?


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## humble_pie (Jun 7, 2009)

kids impulsively mis-spending their funds are not the story.

what's interesting about this story is the high degree of premeditation. The calculation. The cunning. The use of the internet. The transmission of detailed how-to advice in this forum.


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## thompsg4416 (Aug 18, 2010)

This thread is good for a laugh. Watt - You will be much better off and have better stories to tell if you just blow "any extra money" you might have on booze and women!! It could be the best investment you ever make or maybe not

Put it this way... You might meet your future wife - this wife could either bleed you dry herself or have your kids who will eventually bleed you dry. Or if you're really lucky, do your homework, practice safe sex, and make sure she has a good job, a family with lots of money etc etc she could contribute greatly to your future fortunes.. Way more then the interest off some puny GICs. 

You see Booze and women are just like the stock market just way more interesting and with a bit more risk and reward. As with every new investor you may want to dangle your toe in the water before jumping all the way in. 

Good luck to you!!


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## londoncalling (Sep 17, 2011)

J Watts said:


> Firstly, there was nothing illegal about what Duffy and Wallin did. Nor is there anything illegal about what I'm doing.


Clearly I shook up a hornet's nest with my reply earlier about how to use student loans. I would agree that the intent of student loans are to fund education at the tax payer's expense for students who would otherwise not be able to afford higher education. How they are actually used is no different than any other government money be it welfare recipients gambling/drinking/abusing drugs while their children starve to ex media icons/current senators misappropriating expense accounts and being bailed ut by the PMO. Although, none of these things may be inherently "illegal" there is a difference between legal and legitimate. That being said I would rather see a student invest the remainder of their student loans than party it away as what is often done with the excess of these funds by the majority of the students. Unfortunately, it is difficult to determine who will use the money appropriately and who will not. I would prefer to have a small minority of the population misuse/save this money than to deny someone who may actually need and use the funds to better their education and improve their station in life by securing a good career. When my friend took advantage of the situation I was also very annoyed and hurt as I relied on the same money to buy my books, bus pass and help cover my rent. A few years afterwards, I thought I was just jealous of my friend. Thanks to the posts of hp and Tgal I now remember/realize that I was seeing how unfair it was to those who need the loans programs and those that pay taxes. 

I apologize to the OP for the misguided advice (my intent was to warn the OP about risking borrowed money with limited investing knowledge not about manipulating the system to your advantage) and sidetracking the thread. Now back to regular scheduled programming... 
Cheers


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## humble_pie (Jun 7, 2009)

londoncalling said:


> ... I would rather see a student invest the remainder of their student loans than party it away



london our intrepid student loan double-dipper was crystal clear that he did not need or use any of his loan funds for student expenses. He was not investing "the remainder" of his loan, after applying some of it to legitimate student expenses. He said he applied for & used 100% of his loan from the getgo - "as much as they'll give you" were his words - to buy securities including TD e-funds.

in another recent post here in this forum, our intrepid student states that he earns $47,000 per year. As it happens, a child of mine is in university full-time, so i'm somewhat in touch with student finance. $47k strikes me as significantly high income for a student, far above the norm. I for one cannot see that a 47k earner has any significant need for a "student loan" from a taxpayer-funded program intended for genuinely needy young people.

i'm beyond delighted to see such a student collect $$$ from any source for his academic merit achievements, of course. I just draw the line at interest-free loans for investment purposes being grabbed out of a public program that was designed, on a non-merit basis, for any student with real financial needs.

the news story is not, of course, about any one single case.

what is newsworthy - a small sidebar story - is how widespread the practice of student loan double-dipping specifically in order to make financial investments has apparently become.

that students are now brazenly meeting in the internet to exchange advice & how-to tips, exactly like the gaggle of students here in this thread, is the news story.


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## humble_pie (Jun 7, 2009)

thompsg u are a riot, as usual


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## Toronto.gal (Jan 8, 2010)

J Watts said:


> at the end of the day the Ontario taxpayer has educated a post-grad student....then you need to re-evaluate your priorities.


At the end of the day, you have taken advantage of the taxpayer and have been dishonest, and it is you who need to re-evaluate your attitude.


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## MRT (Apr 8, 2013)

the OSAP system is very broken, with many needy kids not getting loans, and many others getting more than they need (if they even have a need) because we all know that it is relatively common to have tax docs not truly reflect the household's financial situation. 

back to the OP...

don't worry about 'investing' right now, because you don't have any money (I'm not being condescending here, just factual). At this stage, you should just be focusing on disciplined spending and accumulating savings. TFSA contribution room carries forward, so don't worry about 'maxing it out', but by all means use it if you want. Just don't buy mutual funds or other securities that risk your principal. Earning 10% on a few thousand dollars would require significant risk, and the payoff is merely a few hundred dollars. But I bet losing that few thousand dollars, or seeing it halved in 12 months, would not make you feel so good. Just focus on saving for now, IMHO.

If you can avoid incurring student debt, then avoid it (unless it means working so much that school suffers). Trust me...you will be THRILLED to graduate without debt, if it is possible to do so. Nothing puts a damper on graduation, entering the workforce, earning a 'real' income, etc. than having to pay back a sizeable loan over the course of a number of years. 

IMHO, the priorities for anyone starting out are to: learn how to save money, spend wisely, and self-educate on investing. Later, when the income is flowing, you will then be well prepared to implement a solid investment plan.

I came across a site from another forum quite some time ago, and the first section is great info for anyone, IMHO:

www.retailinvestor.org 

I highly recommend at least reading the sub-section on 'saving money'. We don't need any special insight to know that millions of people don't know how to save, incur way too much debt, spend frivolously, and live their lives in constant financial worry (or worse, are oblivious to their precarious situation). 

Instilling disciplined habits early is perhaps the best 'return' you will enjoy.


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## marina628 (Dec 14, 2010)

Student applies for loan and declares their income as well as their parents income. In my daughter's case for 2012-2013 study year she got $5300 loan and she earned just under $18000 in 2011 and expected to earn same in 2012.She is a good saver so technically her student loan money is in her bank account right now and she has invested it. She also keeps $1500 cash in her savings for emergency .Is that wrong to apply for another student loan for September? I think not since rent will go up this year ,cost of her materials alone in April was over $400 and not calculated into expenses. She is a art student and outside tuition last year she had to spend $1800 in printing projects plus supplies. And her living expenses and school expenses will definitely total 100% or more of her new loan and her income. Also last year she had to carry her tuition on her credit card for 2 months while waiting for hers to get processed .You definitely need a cushion when you are a full time student and I am sure the new software and computer requirements she will have to assume in September is not even factored into expenses. I know from another thread some of you probably think my daughter is in wrong to get a student loan and not have to count her pennies but living on your own and have a net worth of $7000 is not fleecing the system. I can easily cut a cheque to pay for everything and we have to give permission every year for then to see our income taxes even though she does not live at home. I have nothing to hide and neither does she . If they send it back and say she gets zero in September then she will start using her 4% credit line as my contribution has been set in stone for duration of her studies and she knows that.


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## J Watts (Jul 19, 2012)

@Marina Exactly.

Do we really want the government chasing down student for 100% accountings of _exactly where_ their OSAP went? Is the government going to create regulations stating extra OSAP money can sit in a savings account but not a GIC? What about an investment savings account?

As I already mentioned, OSAP should be chasing down the students using their money to go on trips and buy new shoes before they ever think about punishing the responsible students who hold extra OSAP funds and use them for good.


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## MRT (Apr 8, 2013)

it has nothing to do with the gov't chasing down students, or closely monitoring how they use their OSAP funds, and everything to do with how broken the adjudication system is for OSAP.

the very fact that Marina says she can "easily cut a cheque to pay for everything" is evidence that the system is far from optimal. Income/tax documents lack context, and it is very easy for people who are self-employed or who have other tax deductions (e.g. rental property owners) to dramatically understate their income, for tax purposes. I've personally seen a client who owned about 70 rental properties (yes, 70), who declared about 20k per year. Obviously that is a ludicrous misrepresentation of their financial situation. 

This is not at all intended to criticize Marina (and I don't even know the details of her overall financial situation to even comment further). The point is simply that the OSAP system is very flawed. If a student doesn't truly NEED financial assistance, they shouldn't qualify for it. OSAP is not a system to promote financial convenience...it is there to assist those in NEED. If a parent can cut a cheque, then is there really a "need" for the loan...or it is simply convenience and allows the parent to do more profitable things with their money? Why are taxpayers subsidizing that financial convenience? Why isn't that parent obligated to simply co-sign a traditional loan or PLC for their child?

Marina, I mean no offense to you at all, and am not implying you are doing anything wrong, unethical, etc...just pointing out that the system is flawed, and that 'qualifying' is very different than 'needing'. I think the system needs to be revamped, as many received interest-free loans who do not NEED them, and many who do are left to scramble for alternatives.


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## arrow1963 (Nov 22, 2011)

All of this talk seems a little 'cart ahead of the horse' to me.

Lets see if the OP is able to get loans, and if so, whether it is any amount of money worth writing home about. It's easy to get wound up over the situation that you think might possibly exist.


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## marina628 (Dec 14, 2010)

My husband and I do own a business do have rental income , basically all of the above ,we earn $xxx,xxx a year and probably because my daughter does not live at home they still deem her to qualify for $5300 loan.Again as stated my income is not my daughter's after all do all of us provide 100% for our adult children living at home?Her Osap is enough to pay the first term fees and not much more.Not taking it personally but it is like saying if somebody is well off and has a sister on welfare in another city they should be paying for their living expenses.As least my daughter will be paying her loans back with interest.


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## J Watts (Jul 19, 2012)

marina628 said:


> My husband and I do own a business do have rental income , basically all of the above ,we earn $xxx,xxx a year and probably because my daughter does not live at home they still deem her to qualify for $5300 loan.Again as stated my income is not my daughter's after all do all of us provide 100% for our adult children living at home?Her Osap is enough to pay the first term fees and not much more.Not taking it personally but it is like saying if somebody is well off and has a sister on welfare in another city they should be paying for their living expenses.As least my daughter will be paying her loans back with interest.


OSAP _expects_ parents to be contributing to their child's education. It's social planning backed by the government, and it's wrong since not all parents support their children the way the government expects they should.


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## Toronto.gal (Jan 8, 2010)

marina628 said:


> *1.* She is a good saver so technically her student loan money is in her bank account right now and she has invested it.....definitely need a cushion when you are a full time student
> 
> *2.* I can easily cut a cheque to pay for everything


*1.* Her loan is invested 'technically' because she did *not* need it. You already pay her a generous salary of $18K/yr. + a $400/monthly allowance, so why not give her a little more in form of a loan for the 'cushion' that students indeed need? [if you're against paying 100% of her costs].

When I was a uni. student, I can tell you that I did not receive such a salary/allowance, what I did receive from family, I partially invested in GICs because my scholarships & w/end work covered for tuition & room & board at a uni. residence [did not rent a $1,000+ a month apt.]. 

*2.* As *MRT* mentioned upthread: 'qualifying' is very different than 'needing'. I think the system needs to be revamped, as many received interest-free loans who do not NEED them, and *many who do [need help] are left to scramble for alternatives.'* Our taxes should subsidize the latter group.


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## humble_pie (Jun 7, 2009)

watts in your case you have told cmf forum that you earn $47,000 per year, so parents would be out of your picture. A person earning 47k doesn't need any outside support imho.

i'm enthusiastically in favour of merit awards, scholarships & bursaries paid directly to high-achieving students by taxpayer-assisted government funds & also by philanthropic donors. What i oppose is the raiding of loan programs designed strictly for disadvantaged youth, for the sole purpose of running a personal investment portfolio or sparing rich parents the full costs of supporting their kids through university even when they, the parents, can easily afford it.

perhaps the media should focus on rich student loan syndrome as the new senator perks scandal.

i have offspring in university. They have worked part-time for many years. One began working part-time at the age of 14 & has never stopped. However, as students their hourly wage is meagre, so they're not able to earn enough to fund all of their student lives. Just textbooks alone are killingly expensive.

we have zero loans. The thought of obtaining a loan for any part of a child's education has never occurred to me, never been discussed by us. The balance of their costs & expenses are paid by myself, very willingly i might add.

i also pay for summer travel/work/study programs since i believe that young people benefit in a unique way from studying & living in foreign countries where they can learn foreign languages. I believe that ages 18-26 are the only time when young people can travel free as the wind, without marital or child-raising or career responsibilities. This age also happens to be a time when they can wonderfully learn & grow in every sense.

i think there's something terribly wrong with a loan program created for disadvantaged youth when it ends up loaning to affluent profiles who have figured out how to take interest-free funds for personal investment purposes.

another way of looking at the issue would be to dismantle most of the OSAP program except for true hardship cases; cut out all the rich-kids fat; & deliver the $$$ saved to universities in return for lowered tuition fees.


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## J Watts (Jul 19, 2012)

humble_pie said:


> watts in your case you have told cmf forum that you earn $47,000 per year, so parents would be out of your picture. A person earning 47k doesn't need any outside support imho.


Parents are automatically assumed to be supporting the student for their first four years after high school, unless the student has themselves legally emancipated. This was unfair to me, since they never supported me with a dime, yet their incomes (~ $80k combined) were held against me as if I got any of that money.



humble_pie said:


> i think there's something terribly wrong with a loan program created for disadvantaged youth when it ends up loaning to affluent profiles who have figured out how to take interest-free funds for personal investment purposes.


In no way am I an "affluent person" or did I come from an "affluent family." I started working part-time at 8 years-old. My family is not good with money, so it was out of my own initiative that I started my own RESP at 15. From 15-20 I worked 2-4 part-time jobs or 2-3 full-time jobs at times. I worked my *** off to save for school with the knowledge that my parents would not and could not support my education.

Only recently have I come into a more comfortable lifestyle, which even then is a contracted-government job for the $47k I've posted about. By all standards, I was a student in need. And, to say it a fourth time, there are bigger issues in the OSAP system than a student who saves $1000 of his OSAP money to invest it.


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## humble_pie (Jun 7, 2009)

we're going round in circles here. If you really were a student in such dire need, how come you applied for & received your student loan strictly - as in 100% strictly by your own words quoted 3 times upthread - in order to get an interest-free loan for investment purposes? according to yourself, you never needed the loan to meet the expenses of student life ...

like i say, it looks like it's time the media went after student loan programs & administrators


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## J Watts (Jul 19, 2012)

humble_pie said:


> we're going round in circles here.


I agree.



> If you really were a student in such dire need, how come you applied for & received your student loan strictly - as in 100% strictly by your own words quoted 3 times upthread - in order to get an interest-free loan for investment purposes?


That's not what I said.



> according to yourself, you never needed the loan to meet the expenses of student life ...


That's also not something I said.


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## humble_pie (Jun 7, 2009)

watts indeed it is exactly what you said. Post #16 upthread. It's been quoted several times.



J Watts said:


> I assume from this you mean OSAP? If so, yes, take as much interest-free money as they'll give you and invest it. Put it into TD e-Series funds, savings accounts, or GICs (or all of them). When you've graduated you'll be able to pay off 100% of your student loan, interest free, and you'll have made interest on the government's money just sitting in your bank account. That's what I did and continue to do, and it's worked well.


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> *1.* perhaps the media should focus on rich student loan syndrome as the new senator perks scandal.
> *2.* The balance of their costs & expenses/summer travel/work/study programs are paid by myself, very willingly i might add.
> *3.* we have zero loans


*1.* Or, just like the *'wealthy Canadians with money stashed overseas that came forward in droves to confess their misdeeds'*, LMAO, that perhaps some of the many financial aid abusers out there, might want to reflect a little.

*2.* Could not agree more! Learning comes in many forms after all, and nothing is more important than education! 'You can never be overdressed or overeducated'. :encouragement:

*3.* Fantástico!

While some do invest their entire student loans just to pocket the interest [ie: abuse us], and promptly repay it in full upon graduation without any interest, others, even when they don't need the funds, may succumb to various temptations & spend it foolishly, only to find themselves with a large debt to pay for several years, in which case, they would indeed find themselves paying accrued interest.

Wouldn't it be better to be able to buy that car/property, etc., with those monthly payments instead of a student loan? And that had been my key message to the OP, that as he was fortunate enough to have a job/grant/RESP, that it was better to graduate debt-free.

http://tools.canlearn.ca/cslgs-scpse/cln-cln/50/crp-lrc/calculer-calculate-eng.do

On a positive note, I read that 87% of student loans [or thereabouts] are repaid.


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## J Watts (Jul 19, 2012)

humble_pie said:


> watts indeed it is exactly what you said. Post #16 upthread. It's been quoted several times.


I already attempted to clarify my suggestion vs. what I have personally done, which you quickly shot down.


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## marina628 (Dec 14, 2010)

I remember 2+ years ago getting **** on in this forum for giving my daughter a $40 a week allowance. By not paying for everything my husband and I are trying to teach her to be responsible and to budget. But since some of you see it as an abuse I will tell you what, I will cut back my monthly charity donations by $700 a month to local charity and give this money to my daughter and she won't apply for a student loan in September. I can't help but be offended by some of the posts here but this is a forum and you guys only see some of the picture. If I were the kind to take advantage of anything when I had my accident I would have sat on my *** and did nothing ,collected disability payments ,gotten free home care from the province but that is not me. Even now I qualify believe it or not for 10 hours a week homecare from local programs but I spend $3000 a month for my own employees. I have a brother who lives with me with terminal cancer who I am paying for his expenses. We as a family do not need any help but I never looked at my daughter taking student loans as doing anything wrong. I have nothing else to say on this topic.


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## humble_pie (Jun 7, 2009)

J Watts said:


> I already attempted to clarify my suggestion vs. what I have personally done, which you quickly shot down.



watts you might have "attempted" but it didn't succeed. You'd already made black-&-white statements in post #16 about how you had applied for & received loan funds strictly for personal investments.

you can't wriggle back later & pretend something else. One post or the other has to be false & it looks like the wriggle post. We've already been through this point.

the fact that there are, apparently, so many students taking loans to nurture their own personal investments or their parents' personal investments that now they are even meeting up blatantly in anonymous forums to give each other investment tips is a great media story.

bye, watts. Marina has the right idea. It's time for u to keep quiet. Don't be dumb.


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## Spudd (Oct 11, 2011)

humble_pie said:


> It's time for u to keep quiet. Don't be dumb.


So which is it?


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## J Watts (Jul 19, 2012)

@Humble_Pie Seems the media already did cover this "scandal": http://www.torontosun.com/2012/05/20/the-misuse-of-osap-money

Was there any outrage then? Have the policies changed? Didn't think so.


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## Toronto.gal (Jan 8, 2010)

J Watts said:


> 1. the media already did cover this "scandal"
> 2. Was there any outrage then? Have the policies changed? Didn't think so.


*1.* No one said it's a new 'scandal', and yes, it is scandolous, though you don't appear to believe that dishonesty is a problem as you have been encouraging others to follow your actions.

*2.* And your point is? 

Someone in the 'no limit to credit' thread said, that such loans lowers a student's self-esteem, when in fact, the opposite seems to be the case for the majority of borrowers these days, as it's a blatant fact that many take all they can from the tax-payer, whether they need the assistance or not.

We're no longer subsidizing education & related expenses of the needy, but of the rich as well, including their cars/igadgets/condo. rentals/investments/vacations and the other long list you mentioned upthread.


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## J Watts (Jul 19, 2012)

Toronto.gal said:


> *1.* No one said it's a new 'scandal', and yes, it is scandolous, though you don't appear to believe that dishonesty is a problem as you have been encouraging others to follow your actions.


There is no dishonesty. I have been 100% honest and complete in my OSAP applications.

This is going around in circles. If there is an issue it's with OSAP and the Ontario government - contact them and suggest they change their policies.


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## lonewolf (Jun 12, 2012)

Social dependence is a powerfull force. Only the strongest of the strong will be able to overcome its force when it dictates to be part of the herd & destroy ones esteam in the process. The strongest of men will stay committed to that which is good & true regardless if they are accepted by the herd. Anyone that wants to promote thier long term happiness & be able to accomplish goals such as being financialy independent instead of herd dependent should understand the power of social dependence to destroy ones long term happiness.


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## Toronto.gal (Jan 8, 2010)

*JWatts:* you're the one going around in circles. Just because the system is broken, which obviously is, doesn't mean that students should abuse the system, and in many cases, harming themselves in the process by taking on unnecessary debt for years to come. 

O - Ontario
S - Student
*A* - Assistance
P - Program 

- government assistance is intended for students in need;

- investing 100% of government assistance, as you have done, in 'TD e-Series funds/savings accounts/GICs' means that the student was not in need, and that the thousands in gov. loans growing in his/her acct. could/should have gone to the above mentioned; 

- when contribution from children/parents [despite all efforts] is not enough to pay for education and related expenses, there is a need to help. 

But after telling us that your parents contributed nothing for your education [assuming there had not been a valid reason for it], I understand your actions a little better [though there is still no justification].


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## J Watts (Jul 19, 2012)

Toronto.gal said:


> *JWatts:* you're the one going around in circles. Just because the system is broken, which obviously is, doesn't mean that students should abuse the system, and in many cases, harming themselves in the process by taking on unnecessary debt for years to come.
> 
> O - Ontario
> S - Student
> ...


I was, _according to OSAP, _eligible for that assistance. I provided legitimate, accurate information, and _according to their system_ I was entitled to assistance.

It's not like I committed fraud and said I was a homeless female aboriginal amputee with 12 kids. I gave them accurate information and _they - OSAP_ - came back with the amount of eligibility.


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## MRT (Apr 8, 2013)

it is not a case of illegality or fraud...it is one of ethics.

a position of "hate the game, not the player" is rather weak in such situations, don't you think?


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## Toronto.gal (Jan 8, 2010)

+1.


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## Eclectic12 (Oct 20, 2010)

J Watts said:


> I was, _according to OSAP, _eligible for that assistance.
> 
> I provided legitimate, accurate information, and _according to their system_ I was entitled to assistance ...


So when you graduate, should you get a job in Ontario so that some of your taxes are being banked by a future generation of students - will your thinking be the same?


Just wondering ...


Cheers


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## J Watts (Jul 19, 2012)

Eclectic12 said:


> So when you graduate, should you get a job in Ontario so that some of your taxes are being banked by a future generation of students - will your thinking be the same?
> 
> 
> Just wondering ...
> ...


I have no plans to leave Ontario.


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## Eclectic12 (Oct 20, 2010)

J Watts said:


> I have no plans to leave Ontario.


So since you plan to pay taxes in Ontario - will your thinking be that since OSAP qualified the students, I'm okay with it & keep paying? 
Will you think it's gov't stupidity & protest to the gov't? 

Will the thought of your tax money given to a student that banks it bother you after paying taxes for fifteen years or more?


Cheers


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## J Watts (Jul 19, 2012)

Eclectic12 said:


> So since you plan to pay taxes in Ontario - will your thinking be that since OSAP qualified the students, I'm okay with it & keep paying?
> Will you think it's gov't stupidity & protest to the gov't?
> 
> Will the thought of your tax money given to a student that banks it bother you after paying taxes for fifteen years or more?
> ...


So you're asking whether I think reforms need to be made to OSAP. Absolutely I think they do. Along with welfare, disability, pension programs, CPP/EI deductions, health care, and many other broken social programs.


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## Toronto.gal (Jan 8, 2010)

Seems that you like this thread a lot.


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## Eclectic12 (Oct 20, 2010)

J Watts said:


> So you're asking whether I think reforms need to be made to OSAP.


No - though it is interesting to find that out as a sidebar.


Let's try the question in a different way.


Today - when you benefit, you are happy to bank OSAP money that is not needed & are recommending others do the same.

In the future, should you become an Ontario tax payer funding the program - will this advice stay the same?



Cheers


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## J Watts (Jul 19, 2012)

Eclectic12 said:


> In the future, should you become an Ontario tax payer funding the program - will this advice stay the same?


"Should" I become an Ontario taxpayer? I am an Ontario taxpayer... And yes, my advice is the same; it's legal and legitimate advice.


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