# My entire finances, any advice?



## one day at a time (Aug 4, 2019)

Hi guys. I'm just trying to get some advice from people here that know more than me about how to improve my financial situation. I'll write down all my expenses and if anybody can see an area where I can improve, please let me know...

Monthly Bills:

Rent 2100 (cheap for the area I live in)
BC Hydro 100
heating gas 50
car payment (5 years left @0%) 500
car insurance 223
car gas 240
2 cell phones (Koodo BYOP) 90 for both, not each
Teksavvy internet 33
food for 5 people 1000
interest on 15k loan 90
MSP 75
Invisalign (3 more payments) 145

total: 4646

income: 7000 net

I am left with $2354 at the end of each month which I put towards the 15k loan which I will have paid off in the next 5-7 months tops. After that, I will finally be able to start saving. I don't take ANY vacations, and don't plan on taking any vacations for the next 5 years or so. I also pick up as many extra shifts at work as they allow me to, which gives me approximately $300 net/day extra, but I cannot very often as I already am working full-time. Me and my wife make meal-plans for the week and try to stick to a strict shopping list.

You guys can critique these numbers/habits and if there is any area where you guys see I could use some improvement, please let me know! Thanks in advance!


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## Just a Guy (Mar 27, 2012)

My first advice is rethink vacations and extra shifts. Life is too short not to enjoy it. Also, working all the time puts strain on relationships. If you want to stay married, it’s good to spend time with your spouse. Finally, kids grow up really fast, you don’t want to miss it, trust me. 

My wife and her sisters once pointed out to their father that they would have preferred less stuff growing up and more time with him. He thought he was a very good father by being a good provider. My kids, on the other hand, once complained I was the only parent who came to everything, even sports practices. At least they did until their friends pointed out that their parents never came.


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## sags (May 15, 2010)

It looks pretty normal to me, and I would agree with JAG.......take a break once in awhile, even if to just spend a weekend in a nice hotel and dine out.......once in awhile.

The only thing I would suggest is to set up an automatic saving method, even if only for $100 a month to start and make it a part of the financial routine.


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## peterk (May 16, 2010)

Well that's a nice list of minimal expenses. Hard to see that there's much to improve... Though it sounds like you bought a brand new $30k+ car?

But we don't know your ages?

3 kids? ("food for 5 people")

Is that net income for just you or do both of you work?


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## Mukhang pera (Feb 26, 2016)

Not really enough information to offer much. 

Resorting to guesswork, it sounds like dad working, mom at home with 3 kids. But maybe food for 5 is dad, mom, one kid and 2 grandparents. Or who knows?

We know nothing of ages, stage in life, etc., but one can guess a young family, I suppose.

Gasoline and and motor vehicle insurance amounts suggest some commuting. Maybe $ could be saved on public transit, but we know nothing of the relevant facts.
What was the $15k loan for?

Good news is the $75 MSP drops off come January. But taxes will go up somewhere else, likely for more than $75, if I understand anything about government.


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## kcowan (Jul 1, 2010)

Just a Guy said:


> He thought he was a very good father by being a good provider. My kids, on the other hand, once complained I was the only parent who came to everything, even sports practices. At least they did until their friends pointed out that their parents never came.


You kind sir will never regret that investment of time. My kids who are now in their 40s often reminisce about the time and advice I gave them. And they are doing the same with their kids.

Plus by only allowing 50 hours for work forced me to be more efficient with my time there.


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## kcowan (Jul 1, 2010)

one day at a time said:


> car payment (5 years left @0%)	500
> interest on 15k loan	90
> Invisalign (3 more payments) 145


$30k to go in car payments sounds way too much. Buy a good used car and save yourself a lot of money.

$145/mo for teeth straightening! Save yourselves a lot of money by only purchasing orthodontics that you can afford to pay in cash. You are paying too much for the luxury of financing them.

Aside for those 2 items, it seems you have a good handle on your finances. Use the savings in car costs to go on a vacation once a year. Maybe go to Mexico to get your teeth handled?

What was the $15k used to purchase?


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## Just a Guy (Mar 27, 2012)

kcowan said:


> You kind sir will never regret that investment of time. My kids who are now in their 40s often reminisce about the time and advice I gave them. And they are doing the same with their kids.
> 
> Plus by only allowing 50 hours for work forced me to be more efficient with my time there.


I’ve never regretted a minute of time spent with my family, even in the bad times, can’t say the same about work.


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## Mukhang pera (Feb 26, 2016)

I think we can all agree with advice to the OP to take time to spend with kids/family (assuming kids are in the Group of Five).

For my part, I am happy to have deferred having kids until I had the wherewithal to no longer have to report to an office (or anywhere else) every day, or ever. It has been said that the "traditional" model of having one parent (usually mom) at home with the kids is superior to the whole daycare, etc., scene. In our case, both parents have always been available all day, every day. It's been a great experience.


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## Longtimeago (Aug 8, 2018)

I can't get past the $30k in debt for a car. You should have come on here and asked BEFORE you got into that. With a net income of $84k per year, you should not have to be financing cars at all. Zero percent loans are a suckers game to get you to spend money you do not HAVE. I don't care what kind of vehicle you NEEDED, you could have bought a solid, reliable, used vehicle for $10-20K.


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## off.by.10 (Mar 16, 2014)

Longtimeago said:


> I don't care what kind of vehicle you NEEDED, you could have bought a solid, reliable, used vehicle for $10-20K.


And probably saved on car insurance too. Otherwise everything I can think of has already been said. Just make sure you maintain that car well and drive it until it falls apart.


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## AltaRed (Jun 8, 2009)

I've never understood people getting into auto loans, even at 0%, but it seems to be very widespread. Much better to get a cash discount, or as already said, buy used. Reputable brand vehicles should be good for 300k km and/or 20 years these days in most parts of this country. A lesson for next time perhaps.

Would cut insurance costs in half too.


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## cainvest (May 1, 2013)

AltaRed said:


> Reputable brand vehicles should be good for 300k km and/or 20 years these days in most parts of this country.


While true, reliability generally drops after 7-9 years even with proper care. Also, long term ownership requires one to know when "refresh" maintenance is required, usually starting around 12 years or so. This can be a problem as many can't see a value to putting significant $ into an older vehicle but it really is required to have a solid vehicle. Backyard mechanic types shouldn't have any problem with this though.

Added: To make things worse, newer vehicles with all the electronics make long term upkeep more costly and troublesome.


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## AltaRed (Jun 8, 2009)

Perhaps. I don't do any of my own maintenance but I tend to the things that need to be done like fluid changes. With the exception of a complete brake job a few years ago (calipers, rotors, pads),I've done virtually nothing to my 2007 Infiniti M35X over 198,000km. I'd take that vehicle anywhere still. The key is either to buy 'reliability and quality' in the first place, or simply 'get lucky'. I have little doubt it will go for many years yet...albeit I am getting ready for a change. $2-3k of maintenance per year is an absolute bargain compared to $5k per year or more of deprecation of a newer $30-40k vehicle.

Still, since the OP already has the vehicle, and the outstanding loan is likely as much as the vehicle is worth at this point. Best choice right now is to stay out of dealerships and keep driving it another 10-15 years.


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## sags (May 15, 2010)

People buy new vehicles for 0 down and 0% interest because they are affordable and they will have no high maintenance costs.

New car warranties expire after 3 years (bumper to bumper) and power train (5 years) because that is the point that maintenance costs become an ever increasing expense.

Rental companies trade in their fleets at 60,000 kms because they are still worth something and the value plummets as kms are added on. 

Proper routine maintenance of a car after the 3 year period costs thousands of dollars a year. Oil changes and inspections aren't cheap.

New car dealerships don't keep cars over 3 years old or high mileage vehicles to sell because they don't want to hurt their reputation if the car fails.

Once a vehicle hits 200,000 kms it is almost worthless. Nobody is interested in a high mileage vehicle unless it is a special make or model.

Enter a car into the Kelly blue book with 50,000 kms and it might have some value. Enter it with 200,000 kms and the value will be $0.

There are many moving parts and high technology in new vehicles and it doesn't take much to add up to many thousands of dollars in repairs.

If people don't require the reliability of a new vehicle, they could save money buying an old one, but that is a trade off most people don't want to make.


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## AltaRed (Jun 8, 2009)

Maybe if all one buys is NA designed vehicles. One only has to look at numerous FB, AutoTrader, etc. ads to see many, many vehicles over 200k km bringing in several thousands of dollars. I'd expect mine to fetch $8k or better in Western Canada. https://www.autotrader.ca/cars/infiniti/m/2007/ They sell well.

That isn't the point though. Depending on what the OP owns, it could have longevity well past its 5-7 year financing and an opportunity to get true value out of it, while saving up the cash for a cash buy for the next vehicle. Get ahead of the game and keep insurance costs low(er).

P.S. to the OP. You are doing well (save for the auto debacle and whatever that $15k loan was for). Work at getting rid of those things, but at the same time I agree with others that it is necessary to get away for cheap weekends somewhere at a minimum and re-bond and re-energize.


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## sags (May 15, 2010)

Our insurance costs are lower on a new vehicle. They have many more safety features that save insurance costs.

The comparison is pretty simple and 0% interest changed the dynamics.

Buy a new car for $30,000 and drive it for 5 years, putting 20,000 kms a year on it. End result........5 year old car with 100,000 kms.

Buy a 5 year old used car for $15,000 and drive it for 5 years, putting 20,000 kms a year on it. End result........10 year old car with 200,000 kms.

Which car would be worth more at the end of 5 years ? Plus, the new car would be covered bumper to bumper for 3 years and power train for 5 years.

The 5 year old used car would have no warranty coverage at all.

Compare the value of a 2012 Infiniti versus the 2007. It is worth more than twice as much.....$23,000 versus $10,000.

https://www.autotrader.ca/cars/infiniti/m/2012/


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## AltaRed (Jun 8, 2009)

Sags, you sound like a commercial for an auto dealer. Surely you don't believe what you just wrote? 

A typical $30k American auto is not worth close to $15k after 5 years. It would need to be a Toyota or a Honda, or..... Further, that 5 year old car should be driven another 10 years and another 200k km. One gets twice the value out of a 5 year old vehicle than a new vehicle kept 5 years. Most consumers are still in their 7 year loan at that point. 

All I know is I have done the math for all the decades I've owned vehicles and it isn't the first 5 years of a new vehicle. But feel free to keep the auto industry going.


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## ian (Jun 18, 2016)

I put 440KM on the last new car that I bought before I gave it to our son eighteen years later. Only higher expense items were timing belts and shocks. The rest was standard mtce/fluid replacement. Never burned any oil.

Bought a three year old used full load with 43K km's Accord ten years ago. Slightly more than half the price of the new one in the showroom. Going to put the second timing belt replacement on it next week. Plan to keep it for another 10 years. Hope to keep our 2007 Solara convertable summer car for another 10 years.

Both the Accord and the Solara have great value to me now.......replacement value. 

200K may be high mileage for a GM vehicle but certainly not for the imports that we have owned. I guess that is why they depreciate so quickly.


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## cainvest (May 1, 2013)

There are many variables in a life of a daily driver car that make some last longer than others. Climate, garage kept, gravel or rough road driven, short trips or highway miles, trailer towing, etc. 

On average, in the 200-300k km range vehicles require a full suspension refresh when greater than 12-14 years old. Basically ALL bushings in the suspension plus tie rods and ball joints. Also, all brake hoses (not the metal lines) and coolant system hoses should be replaced in this range as well. From this point on there are other replacements but tend to be more vehicle specific like brake calipers, wheel bearings, fuel pumps, etc. Around 20+ years too many things start to wear out, usually interior and bodywork are going bye-bye at this time as well.

Myself and two other friends have been doing this all our lives, saves a ton of cash when compared to friends that buy new cars every 5-7 years especially since we do most of the work ourselves.


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## ian (Jun 18, 2016)

I don't like shopping, especially for vehicles, so I tend to buy things that I know will last. The new car 'smell' does absolutely nothing for me. The last time we were in an Acura dealership my spouse told me to just buy it. Money was not an issue. I didn't. The reason...one is supposed to be excited when buying a new vehicle. I wasn't so we simply kept the old one and had the suspension and timing belt done at 275K. Lasted another 175K so it was a good investment. More to the point...I was just as happy keeping the Camry as I would have been with the new Acura.

I believe that the time to buy a used vehicle is when the value to you exceeds the market value of the vehicle. My daughter bought a three year old Chevy Traverse. She was astounded at the difference in price between the new floor model unit and the pre owned unit. She decided, wisely in my opinion, to buy the pre owned unit and let someone else suffer the first three years of depreciation. She plans to unload it in three-four years when it starts to fall apart.


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## Just a Guy (Mar 27, 2012)

One of the best markets, and often unknown, is the used luxury car market. The middle class swarm over Toyota and Honda while Mercedes and other high end, well engineered vehicles go for pennies on the dollar. The rich don’t buy used cars and the middle class don’t even consider them. A used diesel Mercedes will go for 600k+ and sell cheap, usually less than a Toyota, especially when you think they went for 100k.


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## one day at a time (Aug 4, 2019)

Thanks for all of the advice guys. To answer some of the questions, my family is comprised of 3 kids and wife, the oldest being 4.5 years and the youngest being 10 months. I commute 30 minutes each way to work and hence the car gas money. I realize that what all you guys were saying is true, that I shouldn't have bought a brand new car. It was a brand new Dodge Grand Caravan that I needed for my growing family. What happened was I used a very old car and kept driving it for years to save money until I started spending more money on it with a single repair than what the entire car was worth, and wanted something very reliable that I would drive for a very long time. Looking back I should have bought one that was 2-3 years old at the least, because they can still be reliable, but I guess we all make mistakes once in a while...

About the Invisalign, I got a very good deal, it normally costs $6000 and I got it for $900, and there is zero interest on the monthly payments.

About spending time with the family, my wife is a stay-at-home mom and we have both decided that she will continue to be so until all our kids go to university. We also plan to home-school all our kids so they will have lots of parental exposure over the years, I'm sure. I just feel little stressed that I'm 35 and have not yet started to save, but have learned some very good tips at being frugal during this time of paying off all our debts, (other than the car) and I think that from now on we'll save all our leftover money after bills, hence why I wanted to not take vacations as this would save me approximately $4500 net a year not including the money I would spend on the vacation. And from my personal experience, it's too difficult to go with young kids anywhere other than the park, which my wife does regularly since it's across the street from where we live, and on the weekends, we both spend our entire time with the kids. I guess when the kids will be older, I'll probably start taking time off but I just didn't feel like we really used the time efficiently while the kids are so young.

What I really want to do is figure out what to do next after I'll be done paying off the loan. I currently have zero in savings, and am getting a little anxious about starting to save for my kids' education and retirement. I really have no idea what the next step should be.....I'm thinking about starting RESP's for all my kids and trying to put $2500 in each of their accounts every year from now on, but have no idea what to buy....I've been reading on here that some people recommend ETF index investing, or should I just buy one single "stable" stock that I can drip and not worry about anymore? (I was recently looking at AQN....seems like a relatively stable stock that returned well over the last decade or so....) And with the rest of my money, should I put some in RRSP's, or TFSA's, or both?...

Thanks again guys, I really appreciate any advice!


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## Just a Guy (Mar 27, 2012)

Take the child tax credit you get each month until you’ve contributed $2500 each. There should even be a little left over. The government will give you $500 more at least and it won’t cost you a dime to send your kids to post secondary. As to what to invest in, you could start with something like the couch potato.


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## one day at a time (Aug 4, 2019)

Just a Guy said:


> Take the child tax credit you get each month until you’ve contributed $2500 each. There should even be a little left over. The government will give you $500 more at least and it won’t cost you a dime to send your kids to post secondary. As to what to invest in, you could start with something like the couch potato.


Well part of the 7k net income I spoke about does include the child tax credit, so yes, I'll get a bit over 2K a month left over, so I plan to max all 3 of my kids' RESP's every single year. But is the Couch Potato method really better than just buying a stock like AQN and setting it on drip and then forgetting about it? I read that with the couch potato you have to rebalance the portfolios and doesn't this just eat up your funds by paying commissions? Would it be too risky to just buy AQN in your guys' opinions....?


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## marina628 (Dec 14, 2010)

My neighbour home schooled their daughter until 10 years old but to make up for lack of social relationships they spent small fortune in sports activity.Nothing you can do about the car now but maybe next time as other posters said look for a used option. Your wife staying home now may make sense but I would be concerned about her future if god forbid something happened to you.I highly recommend she try learning some skills and upgrade her education even if it is online courses because crap can happen in life.


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## lonewolf :) (Sep 13, 2016)

one day at a time said:


> Hi guys. I'm just trying to get some advice from people here that know more than me about how to improve my financial situation. I'll write down all my expenses and if anybody can see an area where I can improve, please let me know...
> 
> Monthly Bills:
> 
> ...


 Something is not adding up for those numbers to work since you make 2354 extra each month yet you still had to borrow money for a car either your expenses were higher in the past & or your income was less ? 

Your thinking has to be spend less then you make, Since you had to borrow to buy the car the trend in your thinking has been spend all your pay check plus more since you borrowed to buy the van. Does not matter how much you make if the thinking is spend everything you make or worse spend more then you make you will never build up a retirement account.

You do not want to be average regarding spending all your pay check. Did a quick google check in 2017 over half of all Canadians were 200 dollars a month away from not being able to pay their bills or debt obligations.

You have to learn better money management before you can invest.

As for RESP first you have to fund your own retirement account. Based on the stats further schooling to produce more income does not work for the average. More money is spent going to school then is returned by a bigger pay check.

The good news is the hand your holding now if played right can work.


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## peterk (May 16, 2010)

one day at a time said:


> What I really want to do is figure out what to do next after I'll be done paying off the loan. I currently have zero in savings, and am getting a little anxious about starting to save for my kids' education and retirement. I really have no idea what the next step should be.....I'm thinking about starting RESP's for all my kids and trying to put $2500 in each of their accounts every year from now on, but have no idea what to buy....I've been reading on here that some people recommend ETF index investing, or should I just buy one single "stable" stock that I can drip and not worry about anymore? (I was recently looking at AQN....seems like a relatively stable stock that returned well over the last decade or so....) And with the rest of my money, should I put some in RRSP's, or TFSA's, or both?...
> 
> Thanks again guys, I really appreciate any advice!


I agree with Lonewolf. Even if the kids going to university is the right move (it might not be), RESP is not a major priority, especially if you* don't own your home *yet. Keeping budget in check and paying into your retirement is more important at this point, as well as figuring out what your preferred long term housing situation is. If you can actually save $2300/month consistently, then in 2-3 years you'll have 50k in your TFSA/RRSP (couch potato portfolio for-the-win). Maybe then you'll be thinking about buying a house, and won't want money stuck in an RESP.

Besides, 3 maxed RESPs is an upper-middle-class luxury, and totally not a "need" for the success of your kids. It'd be an unbalanced family plan, according to your current profile. When your kids are mid 20s they'll be confused, wondering why they are debt free and living on easy street, while dad is 60 and still working and paying a mortgage (or rent??) - but didn't he just give us all that money??

My parents only helped me out with paying for housing my first year of university, and again a little bit in my last year of university when I was really, really running out of money from, loans, co-ops. Dad is 63 now and still stuck at work... I'd be aghast if they had given me a full ride, they shouldn't even have given me as much as they did!

I think if one is keen on giving money to young adult children, it is better keep the payments minimal and inadequate during university years, so they can understand that more money needs to come from elsewhere (loans, work). I'd rather pay for their housing and transportation than school tuition. Then when school is over, and they're 23 instead of 19, you can come in and rescue them from their debt. Then again at 25+, after they are working and realizing life is hard, maybe help them with a house down payment. Seems a lot more sensible to me than dropping 4 consecutive cheques of 20k while they're ages 18-22. 

Since you are planning to homeschool, I'd hazard a guess that you are probably not very keep on the government interfering with the raising of your children - well, the RESPs are just one more way for the government to interfere with the final steps of the raising of your children, and to turn young adults into successful consumers & spenders during those formative, habit-building, late-teen/early-20s years.


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## Longtimeago (Aug 8, 2018)

sags said:


> People buy new vehicles for 0 down and 0% interest because they are affordable and they will have no high maintenance costs.
> 
> New car warranties expire after 3 years (bumper to bumper) and power train (5 years) because that is the point that maintenance costs become an ever increasing expense.
> 
> ...


You know sags it really is hard sometimes to understand where you get your ideas from. People buy new cars because they want to show off a new car. As for not having high maintenance costs, well I'd call paying $5k a year for it as the OP is doing, a high maintenance cost.

Warranty is an interesting thing. What do you think it is really worth? Chances are, anything that was defective will show up in those first few years. If so, someone buying after the warranty period is no worse off than someone who bought from new. Did you know that most electronic items are 'burned in' for 72 hours at the factory. What that means is they are powered up and left to run. That catches around 98% of all failures that are going to occur. The same is true of a vehicle in the sense that the 3 year warranty will catch most problems. You don't need to own the car during that period in order for the warranty to have done it's job.

Proper maintenance of a vehicle does NOT cost 'thousands' of dollars a year. I recently had my garage check their records to see what my average spend was per year for the last 10 years on a 2006 Kia Sportage. So from age 3 to 13 in other words. It is under $1000 per year and that includes having put in 2 new timing belts at 100 and 200K at a cost or roughly $1000 per time. Oil changes and inspections are indeed cheap, under $100.

When a vehicle becomes 'worthless' as you put it, is irrelevant. The question is what does it cost you per year over its lifetime. A new car kept and properly maintained for 10 years will cost you more per year than a used car that is properly maintained for 10 years. If you keep it less than 10 years, the bought new car will cost you even more per year.

A new car is no guarantee of more reliability of a used car.


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## Just a Guy (Mar 27, 2012)

My thoughts. 

A) child benefit money is supposed to benefit the child, so putting it in a resp is pretty obvious. Use the remainder on other stuff if you want. 

B) don’t tell the kids how much money there is, mine expected to pay for their school as they grew up. So they applied for a lot of scholarships and kept their grades up. 

C) once they’re in school, you can basically take out as much as you want very few questions asked as to what it’s used for. Technically you could lump sum your mortgage then. 

As to what to invest in, I don’t know your experience or comfort level. I suggested couch Potato because it’s sort of easy for people who don’t want to learn or do work. I’ve never invested that way, nor would I plan to. You probably want to be fairly conservative with the resp though. 

As for home schooling, I’d bet most people here have said they were going to do it at some point, I did. Reality sets in a lot of times though and I only know a few who actually did it. It may be worth checking out the local schools, sometimes you find stuff that’s better than you expected. There are a lot of specialized schools these days that never existed in our day (gifted programs, remedial programs, art programs, IB, etc). With a bit of research, you may find something better than home schooling.


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## sags (May 15, 2010)

Keep your old cars folks........the auto repair industry appreciates your continued support.


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## AltaRed (Jun 8, 2009)

sags said:


> Keep your old cars folks........the auto repair industry appreciates your continued support.


Sags, imagine if it was socially fashionable to get off this 'new' auto bullshit and maintain our vehicles for twice as long. Imagine the tremendous savings to the environment and climate change by halving the production rate of vehicle production. Half the wasteful production and energy consumption of raw materials, fabrication of vehicle parts, costs of logistics and assembly, the closing of wasteful auto assembly plants and the like. We might solve a good portion of the climate change 'crisis' just by doubling the life usage of vehicles alone. 

My bro drives an '82 and a '93 and maybe spends $3-4k per year on maintenance above and beyond the usual oil changes. He is making a personal contribution to reducing consumption....which is the most important thing we can do for the planet.


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## AltaRed (Jun 8, 2009)

marina628 said:


> My neighbour home schooled their daughter until 10 years old but to make up for lack of social relationships they spent small fortune in sports activity.Nothing you can do about the car now but maybe next time as other posters said look for a used option. Your wife staying home now may make sense but I would be concerned about her future if god forbid something happened to you.I highly recommend she try learning some skills and upgrade her education even if it is online courses because crap can happen in life.


I second this thinking wrt to home schooling. I have always thought home schooling could be one of the most damaging things a parent could do for their kids, kids who may not fully develop social skills in preparation for the real world, and the health and welfare of the home schooler him/herelf. 

I've seen a few partial examples where it was tried for a few years and they have not turned out well. It is a touchy subject though to have a debate on.


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## AltaRed (Jun 8, 2009)

one day at a time said:


> Well part of the 7k net income I spoke about does include the child tax credit, so yes, I'll get a bit over 2K a month left over, so I plan to max all 3 of my kids' RESP's every single year. But is the Couch Potato method really better than just buying a stock like AQN and setting it on drip and then forgetting about it? I read that with the couch potato you have to rebalance the portfolios and doesn't this just eat up your funds by paying commissions? Would it be too risky to just buy AQN in your guys' opinions....?


Buying a single stock sets you up for a devastating loss if that stock flames out. AQN could collapse before you know it. You can get diversification at very low cost and mitigate your risk. Simply by owning ONE asset allocation ETF (like VBAL) and/or balanced fund (like MAW104). You need to read some of the financial threads on Balanced Funds, Asset Allocation ETFs, etc. I have not read all the posts in this thread on financial advice, but the first thing you need is a 6 month Emergency fund to provide a cushion and this should be fairly liquid assets like a HISA. Then focus on filling the contribution room of TFSAs and probably ultimately RESPs. These can all be ONE fund portfolios at minimal MER cost.

There is a lot of good material on https://www.finiki.org/wiki/Main_Page including low cost Investment Management options. My entire TFSA is MAW104. My wife's RRSP is mostly in VBAL and my ex-wife's TFSA is VBAL. Hands off management during all these years when you are really busy doing more important things like paying attention to your career and your family.


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## one day at a time (Aug 4, 2019)

lonewolf :) said:


> Something is not adding up for those numbers to work since you make 2354 extra each month yet you still had to borrow money for a car either your expenses were higher in the past & or your income was less ?
> 
> Your thinking has to be spend less then you make, Since you had to borrow to buy the car the trend in your thinking has been spend all your pay check plus more since you borrowed to buy the van.


Just to clarify, I did not borrow money to buy the car. The sad reality is I borrowed the money to invest in a business that did not work out....I prefer not to get into the details, but the car was bought brand new and therefore it was at 0% financing.


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## one day at a time (Aug 4, 2019)

AltaRed said:


> Buying a single stock sets you up for a devastating loss if that stock flames out. AQN could collapse before you know it. You can get diversification at very low cost and mitigate your risk. Simply by owning ONE asset allocation ETF (like VBAL) and/or balanced fund (like MAW104). You need to read some of the financial threads on Balanced Funds, Asset Allocation ETFs, etc. I have not read all the posts in this thread on financial advice, but the first thing you need is a 6 month Emergency fund to provide a cushion and this should be fairly liquid assets like a HISA. Then focus on filling the contribution room of TFSAs and probably ultimately RESPs. These can all be ONE fund portfolios at minimal MER cost.


Thanks AltaRed and for all the other responses I received from the other people. I've read each one and have given them some thought. I looked at both the Maw104 and VBAL and saw that the Mawer one has an MER of 0.91% whereas the VBAL one is 0.25%. Does one have any real benefit over the other...as one is technically more than 3 times the price of the other? Also I see that the VBAL is considered an ETF which I know some brokerages like Questrade allows you to buy with no commissions if I remember correctly, which would not be the case for the MAW104 fund. 

So from what I gathered from the general consensus of the advice I received, I should prioritize my retirement first, then the RRSP. I've given it some thought and I think you guys are right, as my kids would likely be able to pay off their school in a few years after they start working, whereas I would be in a bad place for the best of my life if I retire without much savings and probably become a financial burden to them. So currently, if I continue on this path, I'll have approximately 28K net left over each year that I can put in an RRSP. Do you guys recommend I put all of it in an RRSP and then perhaps use the tax rebate for the RESP or a TFSA? Or should I invest it all in a TFSA for a house purchase later on? To be honest, I don't really know if I have the drive to own a place, as real estate is very expensive where I live. A 40-year-old home costs 750K and that's in a bad neighbourhood with no backyard. I've even considered moving but feel like that isn't the right choice for me right now. If I had that amount of money, I wouldn't mind renting and just keeping all the money in an investment account... 

I'm still a little confused as to how much I should put in each account....the RRSP, the TFSA, and the RESP....if you guys could give me some advice, I would really appreciate it!


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## Just a Guy (Mar 27, 2012)

Rrsps are a bit of a scam, you’ll learn that when you try to take the money out and are heavily taxed. Tfsa are better in my opinion.


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## AltaRed (Jun 8, 2009)

one day at a time said:


> Thanks AltaRed and for all the other responses I received from the other people. I've read each one and have given them some thought. I looked at both the Maw104 and VBAL and saw that the Mawer one has an MER of 0.91% whereas the VBAL one is 0.25%. Does one have any real benefit over the other...as one is technically more than 3 times the price of the other? Also I see that the VBAL is considered an ETF which I know some brokerages like Questrade allows you to buy with no commissions if I remember correctly, which would not be the case for the MAW104 fund!


Firstly, VBAL is an ETF you can likely buy at Questrade for zero commission. Whether that is important enough to you (having a Questrade account) to avoid 1-4 commissions per year is up to you. Neither my ex or my current spouse care about a $10 commission once or twice a year....accounts at Scotia iTrade and RBC Direct Investing respectively.

MAW104 is an actively managed mutual fund that has had a strong historical record of active management making up for its higher MER and beating most of its peers (no guarantee of the future though). So from that perspective, one shouldn't get hung up on the higher MER in isolation of everything else. In most cases, mutual funds are bought and sold without commissions because they pay trailer fees to the brokerage, and thus the beauty of mutual funds for smaller accounts. MAW104 is a bit different though in that it does NOT pay a trailer fee and thus a few brokerages will not sell it to you (RBC Direct Investing is one).

Only time will tell whether MAW104 will outperform VBAL or not on a multi-year basis, but time will tell. One must be careful though in direct comparisons because each of these (and other asset allocation ETFs/MFs) slice the global pie a little differently. So it may be geographic markets that result in annual differences between similar products (or not).

As to your question on where/how to allocate first, I am a strong believer in filling up TFSA space first, at least in the short term of 5 years or so. It provides the most flexibility to withdraw funds for a down payment, or other curve balls life can throw at you unexpectedly.

Added: I disagree with JAG that RRSPs are a scam. They are a substitute for folks, especially employee types, not having DB pensions. In fact, TFSAs and RRSPs are not that different in terms of the ability to compound and to generate after tax income in retirement, but each can have different 'value' under various scenarios. TFSAs favour the younger generation with fewer assets and lower income generation power. RRSPs are more beneficial in higher marginal tax brackets because of the higher tax deduction (at higher MTR).


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## james4beach (Nov 15, 2012)

I also don't think RRSPs are a scam. They are tax deferral... you must keep in mind that there _will_ be tax owing. But you get to grow your investments tax-free, deferring them until eventually you pay taxes at withdrawal. One consequence of that deferral is that the value of an RRSP account is somewhat over-stated or inflated on paper, because the (inevitable) taxes have not yet been applied.

That happens in other types of investments too, so it's not a problem unique to the RRSP. Let's say you have $100,000 in non-registered investments that aren't tax sheltered. Imagine they are stocks you bought for 50K and are now worth 100K. That $100,000 value on paper is also over-stated; there will be capital gains taxes to pay, so you don't get to keep the full 100K.

Tax effects show up in a variety of ways. I personally like the RRSP structure just fine. It also enjoys special creditor protection in case of bankruptcy, by the way.

Always fully use the TFSA first, as AltaRed says. From a tax perspective I think this one is easiest to deal with, with the fewest strings attached.


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## agent99 (Sep 11, 2013)

Mukhang pera said:


> I think we can all agree with advice to the OP to take time to spend with kids/family (assuming kids are in the Group of Five).


True, but no need to blow money on cruises, resorts, hotels and expensive restaurants. 

When we were young, we mostly did weekend trips with the kids. Things like camping and crosscountry skiing in winter. We had a small sailboat, and our kids still recall all the good times we had camping out with that little boat. OP seems to be in BC. No need to go far to get away for a weekend break.


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## agent99 (Sep 11, 2013)

Just a Guy said:


> A used diesel Mercedes will go for 600k+ and sell cheap, usually less than a Toyota, especially when you think they went for 100k.


But learn how to repair it yourself. At dealer you will go broke and independents don't know how or don't have equipment to diagnose and repair them.

PS: I own old Benzes


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## agent99 (Sep 11, 2013)

sags said:


> Keep your old cars folks........the auto repair industry appreciates your continued support.


Only if you are unable to maintain them yourself.


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## agent99 (Sep 11, 2013)

james4beach said:


> I also don't think RRSPs are a scam. They are tax deferral... you must keep in mind that there _will_ be tax owing. But you get to grow your investments tax-free, deferring them until eventually you pay taxes at withdrawal. One consequence of that deferral is that the value of an RRSP account is somewhat over-stated or inflated on paper, because the (inevitable) taxes have not yet been applied.
> 
> That happens in other types of investments too, so it's not a problem unique to the RRSP. Let's say you have $100,000 in non-registered investments that aren't tax sheltered. Imagine they are stocks you bought for 50K and are now worth 100K. That $100,000 value on paper is also over-stated; there will be capital gains taxes to pay, so you don't get to keep the full 100K.
> 
> ...


Good post James! 

RRSPs would be better still IF taxpayers re-invested the tax they save when contributing. But human nature results in most spending that money on things they may or may not need


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## one day at a time (Aug 4, 2019)

Thanks AltaRed. So considering that I'm 35 years old with an income of 95K per year approx. and 10K in child benefits, with about 2.3K disposable monthly income after I pay off my loan, would I be considered as part of the higher marginal tax bracket that would make me benefit more from RRSP contributions? Or should I fill up the TFSA accounts of both me and my wife first? Considering 28K savings a year and the cumulative contribution room of the TFSA for my wife and I is currently 127K, I have a ways to go to be able to max them both out....but then should I ignore the RESP and RRSP accounts and just solely max out both TFSA's? Option B of course is to put the whole amount of 28K in an RRSP account, and get back probably get back 15K? as a tax refund, and then maybe put that in our TFSA...?


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## one day at a time (Aug 4, 2019)

agent99 said:


> . RRSPs would be better still IF taxpayers re-invested the tax they save when contributing. But human nature results in most spending that money on things they may or may not need


I can pretty much guarantee you that re-investing the money would be us. So would it be better for us then to put like 20K in an RRSP account, and use my leftover 8K plus my tax refund to put in a TFSA for example? Or should I still just put the entire 28K into TFSA's?


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## Just a Guy (Mar 27, 2012)

The problem I have with RRSPs is, if you do well, when you try and take it out, it’s taxed at the highest rate. Take out too much and half your returns are going to the government...so you only take out what you need. When you die, your estate cashes out the entire amount, most of which will now be taxed at 50%, the government is happy, your heirs are happy with their free money and your returns for all those years was pathetic thanks to taxes.

Technically, you can defer taxes in any account, just don’t sell. Also, in an unregistered account, they’re considered capital gains which you can take out in a much more tax efficient manner.


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## agent99 (Sep 11, 2013)

one day at a time said:


> I can pretty much guarantee you that re-investing the money would be us. So would it be better for us then to put like 20K in an RRSP account, and use my leftover 8K plus my tax refund to put in a TFSA for example? Or should I still just put the entire 28K into TFSA's?


I would invest first in TFSA. Then RRSP. Income on TFSA investments is not taxed, nor are withdrawals. Both are taxed with RRSPs, but of course you get the initial tax credit that reduces your taxes up front.


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## agent99 (Sep 11, 2013)

Just a Guy said:


> The problem I have with RRSPs is, if you do well, when you try and take it out, it’s taxed at the highest rate. Take out too much and half your returns are going to the government...so you only take out what you need. When you die, your estate cashes out the entire amount, most of which will now be taxed at 50%, the government is happy, your heirs are happy with their free money and your returns for all those years was pathetic thanks to taxes.


This can no doubt happen. But it doesn't apply to everyone. Those who were salaried or who have a pension scheme won't have accumulate as large a RRSP. For self employed, there is an opportunity between retirement (say 60 or 65) and 72 to draw down some of a RRSP/RRIF. 

We are well into our RRIF withdrawals yet with income splitting, both able to stay close to where OAS clawback kicks in. It's true that even with withdrawals, our RRIFs may grow for a while, but the withdrawal rate does increase as you get older. 

If there is a good size balance in old age, it's nice insurance against unforeseen health issues or need to move into retirement home/long term care.


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## one day at a time (Aug 4, 2019)

So if you were in my position would you wait until you fully max out the TFSA's?....in my case I calculated it would take me approximately 8 years in ideal circumstances to fully max out both my wife's and my TFSA accounts. So only after that would you invest in an RRSP account while continuing to invest in the TFSA's? And how about the RESP accounts...should I just forget about them and help my kids out as I'm able when the time comes? Thanks in advance guys, I appreciate your opinions!


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## Just a Guy (Mar 27, 2012)

No account gives you a 20% instant ROI other than the RESP, ignore it all you want. Plus the government gives you the money to fill it...you can take it out and spend it on anything, doesn’t have to be the kids education, they just pay the tax. 

Best deal out there that Ive ever seen. Just make sure all the money is out on the last kid.


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## one day at a time (Aug 4, 2019)

Just a Guy said:


> No account gives you a 20% instant ROI other than the RESP, ignore it all you want. Plus the government gives you the money to fill it...you can take it out and spend it on anything, doesn’t have to be the kids education, they just pay the tax.
> 
> Best deal out there that Ive ever seen. Just make sure all the money is out on the last kid.


So let me get this straight, if you take out 30K out of an RESP for tuition and other expenses, your child would be considered to have a 30K income and they get taxed as if they made 30K in that year? Or would their income be considered 0 as they haven't officially "worked" and they pay zero taxes?


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## Just a Guy (Mar 27, 2012)

Its taxed on the gains, not the contributions...not exactly sure how it works, thats why i have an accountant. 

As for taking it out, the “other expenses” can be a new car for you from what I’ve heard, as long as they are in school. Doesn’t have to be used on the kid because they expect the parents are paying for everything. i suppose they can’t control where it’s spent because you may be charging them room and board, so they don’t audit you.

Technically, you can take out enough to cover the contribution for the younger kids and put it back in the next day and get the 20% return.


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## agent99 (Sep 11, 2013)

one day at a time said:


> So if you were in my position would you wait until you fully max out the TFSA's?....in my case I calculated it would take me approximately 8 years in ideal circumstances to fully max out both my wife's and my TFSA accounts. So only after that would you invest in an RRSP account while continuing to invest in the TFSA's? And how about the RESP accounts...should I just forget about them and help my kids out as I'm able when the time comes? Thanks in advance guys, I appreciate your opinions!


I don't know anything about RESPs, but others here probably do. What I do know, based on our grandkids, is that post-secondary education is very expensive, especially if student can't stay at home. Having a fund available for each child would certainly add security.

Regarding maxing TFSA. That's what I would suggest. And when you have additional funds, put those in a RRSP. But just make sure all TFSA income is re-invested and that you are not tempted to draw your retirement savings early! There are many articles on net that compare TFSAs and RRSPs. Here is one: https://youngandthrifty.ca/tfsa-vs-rrsp/


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## OnlyMyOpinion (Sep 1, 2013)

^ I agree, definately don't eliminate the idea of an RESP without understanding them and your specific family situation. 
Getting $500 from the gov't for a $2500 contribution (possibly more) is a great deal. With options like a family plan, self-directed, etc. they have some flexibility.
https://www.moneysense.ca/save/inve...-registered-education-savings-plan-explained/


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## one day at a time (Aug 4, 2019)

Ok thanks agent99, that's what I'm leaning towards as well....and also probably put a little towards their RESP accounts as well. So I guess I'll just forget about the RRSP's for now??? Anybody really disagree with that and have a good rationale why I should consider it as well?


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## Parkuser (Mar 12, 2014)

one day at a time said:


> ... So I guess I'll just forget about the RRSP's for now??? Anybody really disagree with that and have a good rationale why I should consider it as well?


My kid, your age, invests mostly in RRSP. It is difficult to get money out of RRSP, so no temptation; TFSA money is easily accessible. Tax refund you get in March is also an incentive.


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## lonewolf :) (Sep 13, 2016)

one day at a time said:


> Ok thanks agent99, that's what I'm leaning towards as well....and also probably put a little towards their RESP accounts as well. So I guess I'll just forget about the RRSP's for now??? Anybody really disagree with that and have a good rationale why I should consider it as well?


 I would put some in RRSP reason being in 2022 we should be in a depression If you lose your job it will be hard to find another. You will be able to take money out of the RRSP @ a lower tax rate since it might be the only source of income.

For those thinking of moving outside of Canada for retirement money can be taken out of RRSP last I herd @ 25% taxed provided all financial ties are broken with Canada.

Interest rates when they go higher growing the account tax free will make a bigger difference though taxes never know how much higher they will go. Highest tax rate in the US If memory correct was 98% @ one time.


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## AltaRed (Jun 8, 2009)

As one can see, almost everyone has a different opinion. Mostly due to personal bias and/or what might work best given a specific reason. IOW, it is situational.

If the OP does not have much cash in reserve, I would definitely be putting one year's wages in TFSAs simply because of the after tax flexibility in access in event of life throwing a curve ball. I consider a reserve essential in a one income family. Then consider both RESPs and RRSPs.

The joy of the RESP is getting the free govt grant. One of the best returns one can get.

The attraction of the RRSP is the tax credit of course and being to also invest it courtesy of Cdn taxpayers to leverage even more in returns. The key of course is to actually invest the tax credit. I would contribute to an RRSP if the $95k income plus $10k child benefit pushes the OP into a MTR that he doesn't like. Contribute enough to drop just below that MTR.

Obviously, once the OP catches up to topping TFSA and RESP contributions, then the RRSP is next on the list. I disagree with JAG on his aversion to RRSPs. Re-investing the tax credit is leverage he is not considering. Also the worry about possibly being in a higher tax bracket when retired than while working simply doesn't happen for the vast majority of Canadians, and if by chance it does happen though a wildly successful career or luck, it is a hell of a nice problem to have. And there are ways to mitigate that through spousal RRSPs and pension income splitting, or starting drawdown of the RRSP immediately upon retirement. Ignore the noise on this red herring.

P.S. There is no specific right answer.


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## cainvest (May 1, 2013)

When you setup you and your wife TFSA's make sure to set each other up as the successor holder.


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## Plugging Along (Jan 3, 2011)

Another configuration to consider...
I would put $2500 per kid , so $7500 into the RESP. This would give a $1500 in grants free money each year
I would put the remaining amount of about $20k in the TFSA. I am assuming that Op is in a lower marginal tax bracket? Did Op mention his income? Or if you put the money in theRERSP, how much does that increase you CTB? With out an income it’s hard to calculate which one is better between RRSP and TFSA. 

I would first do RESP, When the kids goto school, you can take out your contribution back and give them the grants, which should be tax free if pulled out properly between three kids. The gains can be put into your rrsps at that time since you will have the room. If you are in a better position you can choose to give the gains to the kids too, but you the don’t have to make that decision now, and don’t lose the free grant. Essentially it’s like treating your kids RESP as a holding for the rrsp.


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## one day at a time (Aug 4, 2019)

Plugging Along said:


> Another configuration to consider...
> I would put $2500 per kid , so $7500 into the RESP. This would give a $1500 in grants free money each year
> I would put the remaining amount of about $20k in the TFSA. I am assuming that Op is in a lower marginal tax bracket? Did Op mention his income? Or if you put the money in theRERSP, how much does that increase you CTB? With out an income it’s hard to calculate which one is better between RRSP and TFSA.
> 
> I would first do RESP, When the kids goto school, you can take out your contribution back and give them the grants, which should be tax free if pulled out properly between three kids. The gains can be put into your rrsps at that time since you will have the room. If you are in a better position you can choose to give the gains to the kids too, but you the don’t have to make that decision now, and don’t lose the free grant. Essentially it’s like treating your kids RESP as a holding for the rrsp.


That's definitely an interesting way of looking at it I've never thought about.....since it does give you the $1500 grant money and there really is no obligation for me to give them the rest. So how exactly do I pull out the money I contributed without paying taxes on it? I'm unsure how to do this, can you please explain?

And yes I did mention my income. I make 95K in a year with 10K in child benefits. I don't know what tax bracket that puts me in.....is the 10K added on to the top of my 95K and is considered taxable income?


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## one day at a time (Aug 4, 2019)

cainvest said:


> When you setup you and your wife TFSA's make sure to set each other up as the successor holder.



That's a good point, I'll keep that in mind, thanks!


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## Parkuser (Mar 12, 2014)

> ... Or should I invest it all in a TFSA for a house purchase later on? ...


No, no, no. For this you use RRSPs. You can borrow tax free from your and your wife's RRSPs when you buy your first house. Google Home Buyers' Plan. And while you are at this, google Lifelong Learning Plan ($10k loan tax free from your RRSP.)



> The Canadian government's Home Buyers' Plan (HBP) allows first time home buyers to borrow up to $25,000 from your RRSP for a down payment, tax-free. If you're purchasing with someone who is also a first time homebuyer, you can both access $25,000 from your RRSP for a combined total of $50,000.


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## peterk (May 16, 2010)

one day at a time said:


> Ok thanks agent99, that's what I'm leaning towards as well....and also probably put a little towards their RESP accounts as well. So I guess I'll just forget about the RRSP's for now??? Anybody really disagree with that and have a good rationale why I should consider it as well?





Parkuser said:


> My kid, your age, invests mostly in RRSP. It is difficult to get money out of RRSP, so no temptation; TFSA money is easily accessible. Tax refund you get in March is also an incentive.


Yes, I think in your specific situation there is merit to contributing to all of the accounts and not maxing any (since you can't max all). Have some RESPs but not too much, have some RRSPs to lock in retirement money and to get the deduction to whatever the next lowest tax bracket is (you are fairly medium-high income, and it's likely that your retirement income will be lower than your current employment income), and have some TFSA to grow tax-free and be an accessible savings for things like a future house, cars, retirement, etc.


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## AltaRed (Jun 8, 2009)

one day at a time said:


> And yes I did mention my income. I make 95K in a year with 10K in child benefits. I don't know what tax bracket that puts me in.....is the 10K added on to the top of my 95K and is considered taxable income?


I don't understand your comment. Do you not already know all this from your prior year tax returns? You already know your MTR from last year's Schedule 1. 

We all know precisely where we stand assuming 2019 is going to be similar to 2018 actual.


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## AltaRed (Jun 8, 2009)

Parkuser said:


> No, no, no. For this you use RRSPs. You can borrow tax free from your and your wife's RRSPs when you buy your first house. Google Home Buyers' Plan. And while you are at this, google Lifelong Learning Plan ($10k loan tax free from your RRSP.)


You keep mentioning this. It is not relevant if there is no money for a down payment. The down payment money needs to be found first and what better than a TFSA to fund that, and only IF the OP decides to buy a house (current statement is not likely given life expenses and the high cost of housing where currently located). RRSPs are a good thing....but the HBP is only a peripheral 'good' idea depending on the overall financial situation.


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## Parkuser (Mar 12, 2014)

AltaRed said:


> You keep mentioning this. It is not relevant if there is no money for a down payment. The down payment money needs to be found first and what better than a TFSA to fund that, and only IF the OP decides to buy a house (current statement is not likely given life expenses and the high cost of housing where currently located). RRSPs are a good thing....but the HBP is only a peripheral 'good' idea depending on the overall financial situation.


I am not a financial planner, I do not even play one on TV. I am probably wrong nineteen times out of twenty, but:

When you invest using TFSA you grow after tax-money; when you invest using RRSP AND reinvest the tax refund you invest before-tax money. At the beginning of your investing life this after/before difference can be meaningful.

If you invest in US equities, say Dividend Aristocrats, TFSA US dividends are taxed at 15%; in RRSP US dividends are not taxed, .

You are less tempted to withdraw money from RRSP because they hit you with the tax right away, even before you even put your hands on the money, but not when you borrow for HBP.

Is it not worth considering?


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## AltaRed (Jun 8, 2009)

Of course it is worth considering, but in what sequence? Studies show that the TFSA and RRSP are essentially equivalent given consistent marginal tax rates. With an RRSP, you get a tax credit up front, but everything, including investment income and capital gains, is taxed coming out at one's then marginal tax rate. The HBP has value but it is limited.


> The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.


As for US income taxation, 15% of essentially nothing in US investment income is nothing. Tell me now much (percentage) of withholding tax would have been lost in 100 units of VBAL in a TFSA this past year? Might* it be about 1-1.5bp? At this point, the OP likely doesn't give a cow turd about whether US withholding tax is lost in a TFSA vs a RRSP.

Yes, the RRSP provides some obstacles with respect to withdrawing money. I don't see the OP has that lack of discipline.

* Someone with a 2018 VBAL T3 tax slip can tell us more precisely. I am estimating based on a 2% yield (actually less), and 50% of the investment income is from ex-Canada sources and a 15% withholding on that.


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## one day at a time (Aug 4, 2019)

AltaRed said:


> I don't understand your comment. Do you not already know all this from your prior year tax returns? You already know your MTR from last year's Schedule 1.
> 
> We all know precisely where we stand assuming 2019 is going to be similar to 2018 actual.


Sorry I'm not that good with the taxes bit. So I checked and it says I made $96,149 last year. I'm trying to find out though what you guys mean about putting enough money in an RRSP to get to a lower tax bracket. I tried to go to taxtips to finds out the tax brackets but can't really understand them. It says that the people in 2018 that made over $93,208 and up to $110,630 they get charged 38.29% on their entire yearly income? Or is is just the income that falls within that bracket?? So if I wanted to "drop below" to the lower MTR underneath that level, I would contribute to an RRSP account the difference between $96,149 (my income) and $93,208, and this would make me pay less taxes? Forgive my ignorance. I really don't understand this....


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## Parkuser (Mar 12, 2014)

AltaRed said:


> ... Studies show that the TFSA and RRSP are essentially equivalent given consistent marginal tax rates. ... I don't see the OP has that lack of discipline. ...


Well, yeah. I am sure you are right, I will not argue.

The difference is mostly philosophical.

As somebody who spent his whole life dealing with experimentally derived numbers I find it bizarre when I read in newspapers (e.g.NP,) or here on CMF often too, statements like this: “If you invest what remains at 2.75% then after 23 years you will have $82,377.98.” Even forecasting the real life result as “around $80k” is misleading, in my opinion. (I would go with “between $60k and $100k.”) Haven’t I read recently that most indexers, over the long run, perform worse than the index? I think I have. Probably because they keep changing the index?

I believe in the “nudge theory (*)”. You should go with a strategy which works against your instinct "to do something,” nudges you in the right direction, and creates obstacles to go into wrong direction. 

(*)Richard H. Thaler, Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness


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## Eclectic12 (Oct 20, 2010)

Parkuser said:


> ... If you invest in US equities, say Dividend Aristocrats, TFSA US dividends are taxed at 15%; in RRSP US dividends are not taxed ...


Depends on what one picks for the RRSP US investments. 

US stock directly held or a US domiciled ETF will mean the RRSP US dividends won't be subject to the US 15% withholding tax (reduced from 30% by the tax treaty).
Buy a Canadian domiciled ETF that holds US stock then you will pay the US 15% withholding tax no matter where one holds it. The RRSP has no Canadian tax on payment so there's no FTC to recover the 15% that the US slices off before the ETF company receives it.

https://canadiancouchpotato.com/2012/09/17/foreign-withholding-tax-explained/
https://canadiancouchpotato.com/2016/07/11/foreign-withholding-taxes-revisited/


Part of the consideration is whether one is willing to convert to US $ then back again as one likely needs CAD for the house. Another part is that a fair number of Canadian ETFs with US stock pay something like 2%, putting the drain due the US withholding tax at well under 1%.
https://canadiancouchpotato.com/2014/02/20/the-true-cost-of-foreign-withholding-taxes/




Parkuser said:


> ... You are less tempted to withdraw money from RRSP because they hit you with the tax right away, even before you even put your hands on the money, but not when you borrow for HBP.
> 
> Is it not worth considering?


There is also the extra paperwork ... but where one needs to save for a down payment for a house, discipline is required, n'est pas?
One is allowed to open as many TFSAs as one wants as long as one stays under one's TFSA contribution limit so it should be relatively easy to setup a TFSA that has a dedicated use.


All good things to consider where the OP should follow what they figure fits them the best.


Cheers


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## Eclectic12 (Oct 20, 2010)

one day at a time said:


> Sorry I'm not that good with the taxes bit. So I checked and it says I made $96,149 last year.
> 
> I'm trying to find out though what you guys mean about putting enough money in an RRSP to get to a lower tax bracket.
> 
> I tried to go to taxtips to finds out the tax brackets but can't really understand them. It says that the people in 2018 that made over $93,208 and up to $110,630 they get charged 38.29% on their entire yearly income? Or is is just the income that falls within that bracket??


My understanding is that is for what tax *the next dollar paid* will have.

So if you use say an RRSP contribution to deduct $5K of income, assuming your employer already withheld the tax properly - the first level (i.e. the $96,149 - the lower bracket level of $93,208 or $2,491 will be refunded at 38.29% while the remainder (if it fits the next bracket down) will be refunded at the lower percentage.




one day at a time said:


> ... So if I wanted to "drop below" to the lower MTR underneath that level, I would contribute to an RRSP account the difference between $96,149 (my income) and $93,208, and this would make me pay less taxes? Forgive my ignorance. I really don't understand this....


There's only two possibilities.

If the $2,491 (i.e. the difference between your income and the MTR low end) is from something like employment income where the employer has sliced off the withholding tax then the taxes no longer owing but already collected will be refunded.

If the $2,491 came from sources that don't have taxes withheld (ex. dividend income, interest) then the taxes you would have owed have been deferred.


For that particular tax year, you will end up with a lower overall tax bill but may or may not receive a refund. I say deferred as when you withdraw from the RRSP in the future, hopefully in retirement at a lower income level - the withdrawal funds will be reported on your tax return. Or if it is a spousal RRSP where the withdrawal rules have been followed - the tax refund or deferral will be at your tax rate and the income being reported will be on your spouse's tax return.



The MTR is showing the band but isn't telling you what the average tax rate is.

Say the bottom rate for $0 to $40K is 20% (made up number for illustration) and from $40K to $55K is 22%. 

Should your income be $50K, the first $40K has 20% which is $8,000 while the next $15K of income has $3,300. Your total tax bill is $11,300, which is an average tax rate of 20.5% instead of the MTR of 22% that one can mistake for average tax rate.


Cheers


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## AltaRed (Jun 8, 2009)

one day at a time said:


> AltaRed said:
> 
> 
> > I don't understand your comment. Do you not already know all this from your prior year tax returns? You already know your MTR from last year's Schedule 1.
> ...


It is the latter. Contribute $3k to your RRSP and you fall back under $93,208. Or contribute $5k, but only take the deduction for the precise amount you need when you do your tax return in March next year. This is called optimizing your deductions. That all said, this degree of preciseness can get a bit anal and for gearheads, and can be a distraction to bigger picture issues. Pick your main strategy of where and how you want to build your investment, and execute that first.

P.S. I assume you are looking at taxable income data and not gross nor net income data. What matters is what is on Schedule 1 and where you calculate your deduction you should take.


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## Plugging Along (Jan 3, 2011)

one day at a time said:


> That's definitely an interesting way of looking at it I've never thought about.....since it does give you the $1500 grant money and there really is no obligation for me to give them the rest. So how exactly do I pull out the money I contributed without paying taxes on it? I'm unsure how to do this, can you please explain?
> 
> And yes I did mention my income. I make 95K in a year with 10K in child benefits. I don't know what tax bracket that puts me in.....is the 10K added on to the top of my 95K and is considered taxable income?


Your children take out the money at time they are enrolled in school. They goto the their financial institute(wherever the resp is) and tell em how much they want to withdraw. They must specify how much of the grant money they want, the gain, and then contribution. Taxes are paid son the gains and grant portion u dear the child’s income. So if they have scholarships, or other income, it get added on s a part of their taxes. The contribution have no tax on it. They give that back to you. 

some considerations. 

They have to be careful they are only taking their portion of the grant because there are three kids, they each get $7200 in grants [assuming you maxed out]. Grants cannot be transferred to other siblings 
There is a max the child can take in the first 13 weeks of enrolment. You can’t suck out all the money at once. 
Weepy principle contribution could be taken Out after the first 13 weeks, but you may want to let it grow tax free.
The remainder of the gains that are not used can be transferred to your rrsp tax free. However, the resp has to be collapsed at that time. 

I don’t have all the details, as my kids are sill in grade school but this is what I know from my advisor and family.


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## Plugging Along (Jan 3, 2011)

Parkuser said:


> Well, yeah. I am sure you are right, I will not argue.
> 
> The difference is mostly philosophical.


For the OP. You may want to calculate the difference CCB since you have three kids. A larger rrsp contribution will reduce your income to a larger ccb payout. 

http://https://www.canada.ca/en/revenue-agency/services/child-family-benefits/child-family-benefits-calculator.html

Then compare it to the taxes you would save in the different marginal rates, the. You can calculate the gains over time to make it a fair comparison.


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## AltaRed (Jun 8, 2009)

Lots of interacting and moving parts here. But I'd not lose sight of the need for an emergency fund of 6+ months of living expenses in highly liquid investments, e.g. HISA. The OP mentioned nothing about cash reserves, and with 3 kids and stay-at-home wife, an emergency fund is a mandatory thing. IMO, nothing else matters until that is dealt with.


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## one day at a time (Aug 4, 2019)

Plugging Along said:


> Y
> 
> The remainder of the gains that are not used can be transferred to your rrsp tax free. However, the resp has to be collapsed at that time.


Thanks for your response Plugging Along. So what I want to know is, can I take out the money but NOT transfer it to my RRSP? In other words, pocket the money, while only giving the government portion to my kids? Or do I have to prove to them that it was used for school? Thanks!


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## one day at a time (Aug 4, 2019)

AltaRed said:


> Lots of interacting and moving parts here. But I'd not lose sight of the need for an emergency fund of 6+ months of living expenses in highly liquid investments, e.g. HISA. The OP mentioned nothing about cash reserves, and with 3 kids and stay-at-home wife, an emergency fund is a mandatory thing. IMO, nothing else matters until that is dealt with.


I will definitely save every last penny after strictly paying bills each and every month, and try and max out both of our TFSA's. My yearly bills come up to 52K, so I can have half that money saved up in a year.


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## one day at a time (Aug 4, 2019)

AltaRed said:


> It is the latter. Contribute $3k to your RRSP and you fall back under $93,208. Or contribute $5k, but only take the deduction for the precise amount you need when you do your tax return in March next year. This is called optimizing your deductions. That all said, this degree of preciseness can get a bit anal and for gearheads, and can be a distraction to bigger picture issues. Pick your main strategy of where and how you want to build your investment, and execute that first.


I guess what I really need to figure out is exactly where I want to contribute my extra funds first....I was thinking that it would make sense to contribute $2500 in each of my kids' RESP accounts and to deposit the rest into TFSA's for now. It's more liquid in a TFSA and it would act like a safely net in case I need to withdraw funds in an emergency like you said. This way I also get the $1500 yearly for my kids, and to keep doing this until I get the max $7200 for each child. Then when it's time to withdraw the funds, I will only give them the free money from the government and keep the rest for myself. Is this even possible to do without having to prove to them that I spent it on their education?


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## Just a Guy (Mar 27, 2012)

one day at a time said:


> Thanks for your response Plugging Along. So what I want to know is, can I take out the money but NOT transfer it to my RRSP? In other words, pocket the money, while only giving the government portion to my kids? Or do I have to prove to them that it was used for school? Thanks!


There is no proof required. You can only use a portion of the grant money in the first, I think, 13 weeks of school. Any extra comes out of contributions and gains. After 13 weeks you can take out the remainder. As to what the money is used for, no restrictions, no follow up, no proof as long as your child is registered in a proper school. You could take the money out one day and put it back in as contributions for younger ones the next day and gain 20% return if you want. You could take out money and use it to buy a rental condo if you want. You could also use it to pay tuition, buy them a computer, or whatever. The money doesn’t even have to go into the kid’s bank account. Once the money is in your account, you can put it anywhere.

The one thing to know is make sure all the money is out before the kid graduates, or the last kid in the case of a family plan, because the government will claw back any remainder if you don’t.


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## one day at a time (Aug 4, 2019)

Just a Guy said:


> There is no proof required.


That's fantastic! So I think I've made up my mind - I will contribute $2500 to each of my kids' RESP accounts until I get the lifetime maximum $7200 in grant money. Then I will withdraw my contributions and transfer them to my TFSA if I have room (likely not), or RRSP account. This makes the most sense to me because I'm really not interested in buying property at the moment.

Do now the only thing I need to find out is, what do you guys recommend is best to buy in a RESP account? Would it be something like the maw104 or some ETFs? And if so, which ones? I do know about rebalancing ETFs but not sure which ones would be best for an RESP account. Could you guys give me some advice in this? I would really appreciate it, thanks!


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## humble_pie (Jun 7, 2009)

one day at a time said:


> So what I want to know is, can I take out the [RESP] money but NOT transfer it to my RRSP? In other words, pocket the money, while only giving the government portion to my kids?





one day at a time said:


> I will contribute $2500 to each of my kids' RESP accounts until I get the lifetime maximum $7200 in grant money. Then I will withdraw my contributions and transfer them to my TFSA if I have room (likely not), or RRSP account.



can't believe i'm reading this. Something going wrong here.

reminds me of that time cmf forum had a spate of ottawa-based graduate students who were scamming the ontario student loan system. They'd show fake financial need, then borrow to the max at zero interest, then invest the funds in interest-bearing paper throughout their undergraduate & graduate years, since they didn't really need to borrow $$ at all.


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## Just a Guy (Mar 27, 2012)

You can’t take the money out until the kid is registered in a program. So your RRSP contribution will have to wait several years.


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## one day at a time (Aug 4, 2019)

humble_pie said:


> can't believe i'm reading this. Something going wrong here.
> 
> reminds me of that time cmf forum had a spate of ottawa-based graduate students who were scamming the ontario student loan system. They'd show fake financial need, then borrow to the max at zero interest, then invest the funds in interest-bearing paper throughout their undergraduate & graduate years, since they didn't really need to borrow $$ at all.


I don't think that's my situation at all. I DO have financial need, and am almost guaranteed to be giving them almost all the money anyways, for a car, wedding, pay their expenses during school etc. I'm their father after all, not their business partner. But it's nice to also have the option of NOT giving them the money if by some chance they get multiple scholarships/bursaries etc and they can pay for their expenses themselves...

Also, irrespective of financial need, I don't believe in doing something illegal/immoral for financial gain, but in this case I think it's playing by all the rules of the system in a wise way. If they had a restriction, it would be a different story, but my conscience is clean, and I work hard at keeping it that way.


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## one day at a time (Aug 4, 2019)

Just a Guy said:


> You can’t take the money out until the kid is registered in a program. So your RRSP contribution will have to wait several years.


yes I know, that's when I was planning to remove the extra funds that I wouldn't be giving to them


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## Plugging Along (Jan 3, 2011)

one day at a time said:


> Thanks for your response Plugging Along. So what I want to know is, can I take out the money but NOT transfer it to my RRSP? In other words, pocket the money, while only giving the government portion to my kids? Or do I have to prove to them that it was used for school? Thanks!


The grant must go to the kids. The interest or gains must either go to the kids or into the RRSP, the amount you put in can come out tax free. 

The child must be registered in school and be in for 13 weeks before you can take out your portion. The child can only take out their portion of the grants. Each child must register before all the grants come out.


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## Just a Guy (Mar 27, 2012)

Actually, you can take out as much of the contribution and interest as you want right away. Only the grant is limited to $5000 withdrawal in the first 13 weeks. After 13 weeks you can take out the rest of the grant, you want to use up the grants first if possible.


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## one day at a time (Aug 4, 2019)

Just a Guy said:


> Actually, you can take out as much of the contribution and interest as you want right away. Only the grant is limited to $5000 withdrawal in the first 13 weeks. After 13 weeks you can take out the rest of the grant, you want to use up the grants first if possible.


Ok sounds good. So how do I make sure that I withdraw the grant first? If I use all my money in the account to buy one etf like VBAL, how can I specify I only want the grant money withdrawn, especially when it's all together with my contribution?


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## Just a Guy (Mar 27, 2012)

It’s part of the withdrawal form. Whoever is managing the account will probably help you fill it out, but its not complicated.


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## humble_pie (Jun 7, 2009)

it's not surprising that Just A Guy, who never lets a day go by without taunting & jeering cmffers for allegedly receiving gummint largesse, would himself be the first person to stand in line with his hand held out for ottawa's RESP subsidies

don't look at the shadow now but isn't that JAG's arm sticking out the farthest?


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## Just a Guy (Mar 27, 2012)

Oh no humble, you and Sags are far larger...I gathered a crumb left from the two of you feasting at the trough...and demanding more. I could barely see the minor scraps the two of you leave behind. Wouldn’t dare even get close to you two, I may loose a hand or something as you gobble up everything in sight. $7200 over 18 years, man that’s not even breakfast for you two.

Technically, it’s my kids who benefitted and took advantage of the money. Also, the got scholarships for a variety of things, the greedy bastards. Not only that, but they used it for building passive income, so they don’t need more handouts in the future, nor will they whine for UBI, free Education and other government funded things paid for by their grandkids...


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## humble_pie (Jun 7, 2009)

Just a Guy said:


> Oh no humble, you and Sags are far larger...I gathered a crumb left from the two of you feasting at the trough...and demanding more. I could barely see the minor scraps the two of you leave behind. Wouldn’t dare even get close to you two, I may loose a hand or something as you gobble up everything in sight. $7200 over 18 years, man that’s not even breakfast for you two.



you are raving gibberish. I have never received one single penny of gummint money in my entire life. 

paid for college myself with parents' help. Sent my kids through university without RESP grants & without student loans. They worked to support themselves. I worked to support them.

JAG we've gone through this before. The Berubeland hypothesis. Your imaginary fantasies in this forum. Your endless boasting about your mythical wealth in this forum.

alas your ugly taunts, jeers, curses & insults are poisoning cmf. Not a day goes by but you are back with more fabricated filth to hurl at humanity. I for one am truly sorry to see that you are so unhappy.


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## Just a Guy (Mar 27, 2012)

Time to add you to the ignore list, your rants and attacks are well documented. You’ve driven many a user away. I don’t need to be baited into being you’re next carverman. 

I wonder which of the you is more ignored on this board you or Sags? Especially considering how “respected” you are. I’ve been advised to put you on the ignore list for over a year by others, about time I take their advice.


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## sags (May 15, 2010)

I think it is likely that JAG also happily collected child benefits from the government. He is a "do as I say and not as I do" kind of guy.


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## AltaRed (Jun 8, 2009)

We all take our benefits when they are there to be taken, but that is way different than an expectation of a benefit, or worse, a mentality of entitlement.

We have too many people with their hands out. I've advocated time and again for an overhaul of OAS to claw it back from rich seniors and beef up GIS with the savings. That should make all those progressive leftists jump up and down with joy should it not?


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## james4beach (Nov 15, 2012)

AltaRed said:


> We have too many people with their hands out. I've advocated time and again for an overhaul of OAS to claw it back from rich seniors and beef up GIS with the savings. That should make all those progressive leftists jump up and down with joy should it not?


Not sure I'm a leftist, but I do like this idea. These programs are meant for seniors with low incomes, who need the extra income or a baseline amount of income so they don't live in poverty. Rich seniors should not be getting additional government money.

This could turn out to be a significant issue with the large baby boomer cohort. We have a lot of rich people (beneficiaries of an economic boom) about to retire.


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## sags (May 15, 2010)

I believe that Trudeau increased the GIS.....did he not ? If he proposed cutting OAS to wealthy seniors, Andrew Scheer would be calling for an RCMP investigation.


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## AltaRed (Jun 8, 2009)

sags said:


> I believe that Trudeau increased the GIS.....did he not ? If he proposed cutting OAS to wealthy seniors, Andrew Scheer would be calling for an RCMP investigation.


The point you missed is that he also went back to 65 for OAS. You can't add money to both. You have to take away from OAS to fund an enhanced GIS. That is the problem with a fiscally irresponsible Lib. JT should have decoupled OAS from COLA and/or left it at 67. In 20 years, inflation would take care of the largesse in OAS such that no one with an income of about $75k in today's dollars would get a cent of OAS.


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## sags (May 15, 2010)

Of course the government can fund both the OAS and the GIS. It all depends on where Canadian's priorities lay.

From every poll I have seen, when asked the question if they would rather cut social programs or raise taxes.......Canadians choose to raise taxes.

It is what it is.


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## AltaRed (Jun 8, 2009)

Tax and spend. What a socialist combination. The only folk who want higher taxes are those not paying much, if any, income tax already. The classic case of entitlement


It is time to hold the line on taxes and hold, if not decrease, spending.


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## humble_pie (Jun 7, 2009)

AltaRed said:


> Tax and spend. What a socialist combination. The only folk who want higher taxes are those not paying much, if any, income tax already. The classic case of entitlement
> 
> It is time to hold the line on taxes and hold, if not decrease, spending.



... you do realize i hope that whenever you go on about classic libertarian economic conservatism & not-spending, me i am going to tease you about those 100 warships & coast guard vessels costing $10 trillion dollars, no?

not to speak of those 33 new ice breakers

next soonest, waiting in line after the Navy for $$ billions if not trillions, is the air force, you went on to say. They need stealth fighters & they need drones. 

another mega-billion-dollar challenge that i believe should catch your fancy would be development of a functioning recycling industry. So far the chemical engineers in first world countries have mostly failed with plastics recycling. The technology they were able to develop cost too much. For decades it was cheaper for canada to export its recyclable material to 3rd world countries for processing.

but then last year the countries, led by china, said Nyet. Enuf, they cried, we are not taking your toxic ---- any more. 

so now we have to Do Something $$ About That.


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## diharv (Apr 19, 2011)

AltaRed said:


> Tax and spend. What a socialist combination. The only folk who want higher taxes are those not paying much, if any, income tax already. The classic case of entitlement
> 
> 
> It is time to hold the line on taxes and hold, if not decrease, spending.


I agree 100% . Canadians are tapped out when it comes to taxes being raised to fund out of control spending. Canadians support raising taxes ? What a crock. What Canadians want is responsible controlled spending and the Ottawa crybaby to stop sending billions overseas for socialist programs to appease his leftist base . Lowering the OAS age was just a vote grab and it is benefit that should definitely not be available to anyone with significant means . It's just a head shaker to read about wealthy seniors and advisors moving heaven and earth to avoid OAS clawback to collect their measly six grand or whatever the hell it is.


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## sags (May 15, 2010)

If politicians doubt the poll numbers accuracy, they can always run their election platform on cutting benefits to lower taxes.

We can then observe how it works out for them.


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## AltaRed (Jun 8, 2009)

Sags, polls never ask the right questions, so they are useless. Any poll that asks about increased spending needs to ask about the tax increase that goes with it. 

A spending freeze could by itself slowly improve the revenue expense ratio over time.


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## james4beach (Nov 15, 2012)

Canada has some of the lowest taxes (especially corporate!) among industrialized, first world countries. It never ceases to amaze me how conservatives can complain so much about such low taxes!

I'm a high income earner, and while I recently earned income in the US, yes I do file and pay taxes in Canada. As someone who has earned everywhere between 50K - 200K yearly, and closer to 200K last year, I can say that my tax burden is not too high. In fact I'm surprised how little tax I pay in Canada.

Having lived in the US, I also see what happens when you don't sufficiently spend public money on essential services. Undiagnosed, untreated mentally ill people wander the streets. You have to pay for private health care, and that cost between 7K a year up to a 20K/year for a large family. Not to mention generally poor social safety nets, and lots of pain & suffering that goes along with it.

The taxes we pay in Canada, relative to the social services and safety nets, is an *incredibly good deal*.

Saying this as a high income earner, I am absolutely willing to pay even more taxes to strengthen our social services and safety nets, and care for our poor and disadvantaged.


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## AltaRed (Jun 8, 2009)

I am fully aware the USA is way over on the other side of the spectrum when it comes to social spending, especially for the truly disadvantaged, I don't think that is remotely what any of us are talking about. 

It is about social spending 'creep' from a pretty high base that can get out of hand like it is in much of Europe. Their GDP is effectively stalled because of high taxes (of all kinds including VAT). Business doesn't invest nearly as much as they could (they move their capital elsewhere) and high income earners look for opportunities to leave. Population growth is stunted, if not in decline. Hardly a scenario to emulate. 

FWIW, I do not have a problem with taxes that support the truly disadvantaged, and just as importantly, invest in productivity gains for GDP growth. However, we don't need to be giving away the farm to those not in need, and yes, OAS is one of my current pet peeves, giving money to wealthy seniors. Something needs to be done over time to curb those excesses.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> I am fully aware the USA is way over on the other side of the spectrum when it comes to social spending, especially for the truly disadvantaged, I don't think that is remotely what any of us are talking about.
> 
> It is about social spending 'creep' from a pretty high base that can get out of hand like it is in much of Europe. Their GDP is effectively stalled because of high taxes (of all kinds including VAT). Business doesn't invest nearly as much as they could (they move their capital elsewhere) and high income earners look for opportunities to leave. Population growth is stunted, if not in decline. Hardly a scenario to emulate.
> 
> FWIW, I do not have a problem with taxes that support the truly disadvantaged, and just as importantly, invest in productivity gains for GDP growth. However, we don't need to be giving away the farm to those not in need, and yes, OAS is one of my current pet peeves, giving money to wealthy seniors. Something needs to be done over time to curb those excesses.


+1

ltr


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## diharv (Apr 19, 2011)

AltaRed said:


> I am fully aware the USA is way over on the other side of the spectrum when it comes to social spending, especially for the truly disadvantaged, I don't think that is remotely what any of us are talking about.
> 
> It is about social spending 'creep' from a pretty high base that can get out of hand like it is in much of Europe. Their GDP is effectively stalled because of high taxes (of all kinds including VAT). Business doesn't invest nearly as much as they could (they move their capital elsewhere) and high income earners look for opportunities to leave. Population growth is stunted, if not in decline. Hardly a scenario to emulate.
> 
> FWIW, I do not have a problem with taxes that support the truly disadvantaged, and just as importantly, invest in productivity gains for GDP growth. However, we don't need to be giving away the farm to those not in need, and yes, OAS is one of my current pet peeves, giving money to wealthy seniors. Something needs to be done over time to curb those excesses.


+2
I don't think anyone is advocating cutting the good social programs here at home. What draws the ire is when these same programs remain underfunded amid tax raises to fund Trudeau giving away millions to terrorists and billions overseas to fund whatever leftist special interest projects to appease the crybaby base to fill in gaps left by the US withdrawing funding .


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## james4beach (Nov 15, 2012)

I disagree that Europe's economy is stalled due to high taxes. Their problems began once their banking system got out of hand and then blew up, and they've never quite recovered. So I see Europe's problem as the fallout from unfettered, over leveraged banking greed and their insistence on supporting banks "no matter what"... a huge ongoing cost to society.

European GDP growth was very similar to elsewhere before the financial crisis, and they had high taxes then as well. I don't see the evidence that Eurozone taxes are the culprit, but it's natural that those with low tax agendas would try to paint this picture.


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## Just a Guy (Mar 27, 2012)

not sure where James lives, but I’ve seen mentally ill wandering the streets in every city I’ve been in in Canada. Is the difference that they are diagnosed? We had cutbacks, because health care is approaching 50% of the budget in most provinces and there just is a limit despite deficit spending, so they’ve closed mental hospitals in most provinces. There certainly aren’t enough of them, but then there is certainly not a lot more money we can call on.

Also, I’m not sure if people understand the tax system. We aren’t supposed to tax money multiple time. We’re not supposed to tax a tax (gas and hidden taxes being the exception it seems). The idea is you’re supposed to tax the end user only. If you understand that concept, why would you be calling for corporate taxes? Corporations don’t hold money, it’s passed through to the end users in the form of products and services, or dividends and capital gains. That is where they should be taxed. If you tax a corporation, then then end user, you are taxing money that’s already been taxed.

Of course, it’s easy to say “tax the corporations” or “tax the rich” as long as it’s not “tax the Sags, or Sags Jr.”.


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## sags (May 15, 2010)

JAG's example on taxes shows why direct stimulus to consumers generates a lot of revenue return to the government.

Even those people who pay no income tax, pay taxes (government revenue) built into the product that have accumulated and are incorporated into the final price to consumers.

The countries in Europe who decided that "austerity" measures were the economic measures needed, ended up destroying their own revenue sources and economies.

The Greeks didn't have a debt problem as much as they had a revenue problem. They weren't collecting the taxes needed to service their debt.

In contrast when they got hit by the last recession the Chinese government gave free vouchers to people to buy Chinese goods. It kept their economy going and they recovered very quickly.


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## AltaRed (Jun 8, 2009)

james4beach said:


> I disagree that Europe's economy is stalled due to high taxes. Their problems began once their banking system got out of hand and then blew up, and they've never quite recovered. So I see Europe's problem as the fallout from unfettered, over leveraged banking greed and their insistence on supporting banks "no matter what"... a huge ongoing cost to society.
> 
> European GDP growth was very similar to elsewhere before the financial crisis, and they had high taxes then as well. I don't see the evidence that Eurozone taxes are the culprit, but it's natural that those with low tax agendas would try to paint this picture.


I will look up more (e.g. 30 year) data when I get time without visitors, but a quick proxy for Europe performance is VGK with inception circa 2005. VGK has had a 3.95% CAGR since inception, 10 year CAGR of 5.24%, 5 year CAGR of 1.29%, an 3 year of 5.01% None of these are stellar relative to other economies.....but yes, more in-depth sources are required.

I can also say during the '90s when I had some responsibility for evaluating development proposals from affiliates around the world, it was rare for European projects to be able to compete for funding....and it was the fiscal (royalty, tax and labour) burdens that did the most damage to economic proposals. That was the case despite the fact that oil and gas selling prices were some of the highest in the world, being so close to a hungry fossil fuel market. The exceptions were the '70s and even a portion of the '80s when both the UK and Norwegian O&G offshore regimes were designed to attract investment, e.g. accelerated write offs, deferred royalties until capital payout, etc. But I suspect you will write off this as an anecdote.


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## Ryzen (Apr 20, 2021)

The most basic advice to improve your finances would be for you to save as much money as you can for future investments. This sounds really easy, but it's not if the amount of money you make every single month isn't enough for you to live a decent life. The general rule I've learned from my financial coach is that in order to be financially independent, you need your budget to have an emergency fund, an investment fund, an educational fund, and a safety fund. Won't get into details, as I suppose that everyone understands what these funds are about, but the whole point of wealth is to spend as little as you can while investing as much and diverse as you can.


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