# Young generation in trouble...



## argos1

What is a young couple starting a family supposed to do to begin there lives?

*THIS IS SO FRUSTRATING. BOTH MY FUTURE WIFE AND I TRIED TO DO EVERYTHING RIGHT IN LIFE*

*We were taught at a young age* to get an education and finish school. My wife is a university graduate after 8 years and I am a College Graduate after 5 years, check.

*We were taught at a young age* not to go into debt, so we both worked and went to school at same time to not have student loans, school has cost over $70,000k combined, check.

*We were taught at a young age* not to go out buy expensive things on credit, ok, both cars paid for (not attractive, yes they are older but run) no credit card debt and luxury items such as tvs, trips furniture are paid for with cash, check.

*We were taught at a young age* to save as much money while living at home, We are now few years away from 30 need our own space for our family and have saved almost $100,000 in cash together.

*We were taught at a young age* to always own your own home and not make your landlord rich by paying his mortgage. So we did, no we could not afford a 4 bedroom home in Toronto (2 children) we bough new up in vaughn, even though we commute to Toronto for work, the savings in a 4 bedroom in toronto vs vaughn is worth an hour in traffic.

So we bought new detached at an amazing price of $499k, yes alot, but in comparason to Toronto, Etobicoke, Mississauga, it was all we could afford on paper, that is a good area for children and within driving distance of Toronto.

Now doing everything we were taught in life, facing the fact of a $400,000 mortgage and children, when rates rise to 8-10%, we will not be able to afford our house, the math is simple. We are now locked into an agreement to purchase, our life savings invested, and a huge bubble burst on the horizon that nobody told us about, niave young couple trying to get a head start in life, hah we were fooled, not our family not our teachers not our banker, they told us we were doing great! *THEY LIED!*

*We will go bankrupt.

We failed.*

This economy is not forgiving on the younger generation.

You guys smile as your children and grandchildren pay the price.


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## Four Pillars

argos1 said:


> What is a young couple starting a family supposed to do to begin there lives?
> 
> *THIS IS SO FRUSTRATING. BOTH MY FUTURE WIFE AND I TRIED TO DO EVERYTHING RIGHT IN LIFE*
> 
> *We were taught at a young age* to get an education and finish school. My wife is a university graduate after 8 years and I am a College Graduate after 5 years, check.
> 
> *We were taught at a young age* not to go into debt, so we both worked and went to school at same time to not have student loans, school has cost over $70,000k combined, check.
> 
> *We were taught at a young age* not to go out buy expensive things on credit, ok, both cars paid for (not attractive, yes they are older but run) no credit card debt and luxury items such as tvs, trips furniture are paid for with cash, check.
> 
> *We were taught at a young age* to save as much money while living at home, We are now few years away from 30 need our own space for our family and have saved almost $100,000 in cash together.
> 
> *We were taught at a young age* to always own your own home and not make your landlord rich by paying his mortgage. So we did, no we could not afford a 4 bedroom home in Toronto (2 children) we bough new up in vaughn, even though we commute to Toronto for work, the savings in a 4 bedroom in toronto vs vaughn is worth an hour in traffic.
> 
> So we bought new detached at an amazing price of $499k, yes alot, but in comparason to Toronto, Etobicoke, Mississauga, it was all we could afford on paper, that is a good area for children and within driving distance of Toronto.
> 
> Now doing everything we were taught in life, facing the fact of a $400,000 mortgage and children, when rates rise to 8-10%, we will not be able to afford our house, the math is simple. We are now locked into an agreement to purchase, our life savings invested, and a huge bubble burst on the horizon that nobody told us about, niave young couple trying to get a head start in life, hah we were fooled, not our family not our teachers not our banker, they told us we were doing great! *THEY LIED!*
> 
> *We will go bankrupt.
> 
> We failed.*
> 
> This economy is not forgiving on the younger generation.
> 
> You guys smile as your children and grandchildren pay the price.


And your point is??


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## plen

Yeah, you had me until this:



> So we bought new detached near Vaughn at a price of $499k


If you're telling me that was your only option to begin as a young couple then you can't place blame on "them". You're saying there is not a single safe place in the GTA where you could have bought a home for $350k? Did it have to be new? Did it have to be detached? Was that a priority at your age? Did you need 4 bedrooms right now? Why 4? Do you not share a bedroom with your wife? Can the young children not share a room?

And I have no idea who you're talking to when you say "You guys smile"? Are you presuming the majority of this forum is 50+?


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## MoneyGal

Well, your available strategies would include:

- trading down your house value
- increasing the value of your human capital and translating that into higher earnings over time so the relative affordability of your mortgage payments increases relative to your earnings
- prepaying as much of your mortgage as possible while rates are low
- managing your expectations
- when someone is telling you that a particular path in life is right for you, ask yourself: _cui bono_? That is, who benefits if I choose this path? Any chance your banker would benefit from you taking on a large mortgage?

Also: if the math is simple, why did you wait until you were locked into a situation you say is unworkable before you did this "simple" math?


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## Berubeland

Argo, 

Don't be upset, you "did what you were told to do". 

Was it necessary to buy a brand new house? By my count you need three bedrooms not four. And why Vaughn? Why not Oshawa? 

By my ideas you could have paid half the price for your house in another direction. As a percentage of your purchase your appreciation would be higher as well. 

The first step to financial freedom is to stop doing what other people tell you to do. Because if you do what everybody does you will be just like them. Over extended and yes, if rates rise to 8-10% bankrupt. 

Do you know how many times my friends ask me why I drive a old beat up van? or live in Scarborough? Why don't you upgrade? blah blah blah... I tell them that I'll upgrade when they pay for it. My house is a place I live not a status symbol. 

In the meantime Argos work on paying that sucker down so you don't go bankrupt. The only thing worse that paying $500K for a house is paying $500K plus another $500K in interest. 

You might want to read http://www.milliondollarjourney.com/how-to-become-mortgage-free.htm/comment-page-1#comment-116592 to find out how Frugal Trader paid off his mortgage in 3 years.


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## argos1

lets say at 375k i could buy a townhouse in vaughn.

at $275,000 balance with a future rate at 8-9% that everyone is predicting, thats just less then $3000 mortgage month. How can I afford that. With property taxes almost 4000k a year and rising.

With 2 children, that would put us finacially bankrupt.


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## argos1

I never knew until I hit this forum that housing prices were going to crash, and rates going to rise, if I knew I would not of bought.

As a younger generation we are told to just get into the market!

As of last week I thought we were safe.


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## Larry6417

Argos, I do have some sympathy for you and your spouse, but you had, and still have, choices. "They" didn't force you to buy a $500 K home. "They" aren't necessarily correct in forecasting 8-9% mortgage rates. "They" aren't forcing you to stay in a too-expensive home. Instead of moaning about your raw deal, ask some of the real estate experts here (I'm not one of them) about your options.


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## MoneyGal

We don't know for sure that GTA housing values will drop and interest rates will rise (although both seem very likely). 

However, you don't need to know if and when something will happen in order to protect yourself from a poor outcome if it does happen. 

What you do need to do is find the weak spots or vulnerable places in your financial plan, and then rationally assess the risk associated with negative changes which affect those weak spots. 

For example: if your house is only "affordable" if interest rates stay where they are, you need to assess how vulnerable you are to upward changes in the interest rate - and then you need to figure out how likely those changes are. 

The Bank of Canada publishes historic mortgage rates all the way back to 1951 (for 5-year mortgages, reported monthly). You can plot the various mortgage rates in a spreadsheet, and then calculate the number of months the rate is 2%, 3%, 4%, 5% etc. and then use that distribution to calculate the "average" or "normal" rate. Or much more simply - you can glance at the sheet and see that today's rates are among the lowest ever in more than 50 years. Will these low rates persist? If history is a guide, this seems unlikely.


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## Dana

argos1 said:


> I never knew until I hit this forum that housing prices were going to crash, and rates going to rise, if I knew I would not of bought.
> 
> As a younger generation we are told to just get into the market!
> 
> As of last week I thought we were safe.


I am curious what mortgage terms and conditions you have agreed to. Have you chosen a variable rate open mortgage or a closed, fixed rate mortgage?

Are you in your Vaughn house or are you waiting for it to close?

If you want to read an optimistic mortgage payout story, go to www.milliondollarjourney.com and read about a family who paid their mortgage off in 3 years. 

I think every generation thinks their life is financially more challenging than the previous generation.


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## argos1

I close in 6 month, fixed at 3.95%, 35yrs ammortization however it ws a 24 month preapproval long ways back on new home construction, i will get lower rate.

Do i do variable or fixed?


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## FrugalTrader

Don't mean to be harsh but.. as others have mentioned, take responsibility for your actions. Second, it's not as bad as you think. With your strong savings habits, and increasing income over time, it'll work out. 

About the mortgage, IMO, if you are worried about going bankrupt etc due to rising rates, you'd probably be better off going fixed for the long term.


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## the-royal-mail

argos1 said:


> As a younger generation we are told to just get into the market!


Yes, this seems to be the conventional wisdom. It's the ongoing mindset that you are throwing your money away by renting and why not put the money to your bottom line.

Having lived on both sides of that fence, I know that the advice does not apply to everyone. But it doesn't stop people in social situations from attaching unwarranted stigma to apartment living. I personally am saving a lot of money by renting instead of owning. Ownership costs more real dollars than renting.

Some people attach quite a premium to "a place to call our own".


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## Dana

FrugalTrader said:


> ...if you are worried about going bankrupt etc due to rising rates, you'd probably be better off going fixed for the long term.


+1


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## the-royal-mail

argos1:

>What is a young couple starting a family supposed to do to begin there lives?

Take one step at a time and only move to the next stage when you have finished the previous one. Or have money saved to move to next stage.

*THIS IS SO FRUSTRATING. BOTH MY FUTURE WIFE AND I TRIED TO DO EVERYTHING RIGHT IN LIFE*

I understand how you feel. Let's take a look and see where you are at and what you have accomplished:

*We were taught at a young age* to get an education and finish school. My wife is a university graduate after 8 years and I am a College Graduate after 5 years, check.

TERRIFIC! Well done. You were taught very well. This is the foundation upon which your financial success is started.

*We were taught at a young age* not to go into debt, so we both worked and went to school at same time to not have student loans, school has cost over $70,000k combined, check.

Excellent!

*We were taught at a young age* not to go out buy expensive things on credit, ok, both cars paid for (not attractive, yes they are older but run) no credit card debt and luxury items such as tvs, trips furniture are paid for with cash, check.

Excellent! Wow you are doing very well. Lots of people cannot say that.

*We were taught at a young age* to save as much money while living at home, We are now few years away from 30 need our own space for our family and have saved almost $100,000 in cash together.

OK this is getting a bit slippery here. Saving money is great and that you've been able to put aside $100K in cash is tremendous, all the while resisting the marketing that wants that money to sell you junk. However, where your statement gets a bit dicey is when you say that you are approaching 30 and need your own space for your family. That statement says a lot. Why can you and your wife not take things one step at a time? By that I mean, take your time and first find a house that you can both afford. Once you're settled in and closing costs are paid, evaluate your finances and see where you are and where you are headed with the new set of operating expenses. Only once you are ready and well-fortified with cash, and there are no dark clouds on the horizon, should you then think about a family. Remember, one step at a time. Don't try to do too much all at the same time.

>*We were taught at a young age* to always own your own home and not make your landlord rich by paying his mortgage. 

That was bad advice in my personal opinion. I know some people disagree but this is the kind of traditional wisdom that needs to be challenged. We have had numerous discussions here at CMF about owning vs. renting. 

>So we did, no we could not afford a 4 bedroom home in Toronto (2 children) we bough new up in vaughn, even though we commute to Toronto for work, the savings in a 4 bedroom in toronto vs vaughn is worth an hour in traffic.

That's a lot of time and money sitting in your cars every day. Or fighting for an inch of space on crowded buses and trains. Is the whole GTA lifestyle worth it? That's the question I asked myself a few years ago.

>So we bought new detached at an amazing price of $499k, yes alot, but in comparason to Toronto, Etobicoke, Mississauga, it was all we could afford on paper, that is a good area for children and within driving distance of Toronto.

This is where I agree with the other responses in this thread. This type of mortgage is nuts. Was it really necessary to get something so expensive? I know prices are high in the GTA but what bank approved you for this type of mortgage?? Don't answer of course but sheesh. There has got to be a cheaper option.

>Now doing everything we were taught in life, facing the fact of a $400,000 mortgage and children, when rates rise to 8-10%, we will not be able to afford our house, the math is simple. We are now locked into an agreement to purchase, our life savings invested, and a huge bubble burst on the horizon that nobody told us about, niave young couple trying to get a head start in life, hah we were fooled, not our family not our teachers not our banker, they told us we were doing great! *THEY LIED!*

Yes, it can certainly seem that way when you add it all up and are armed with more knowledge. CMF is a great forum for learning about personal finance. I have learned so much and I hope you'll stick around and continue to learn with us. In any case, if you've bought the house and have two kids at this point there isn't much we can do to help you. Moving expense will be quite costly.

Must you live in the GTA? Is there nowhere else (ie. somewhere with lower property prices) you could work that wouldn't bankrupt you?

>*We will go bankrupt.

Correct.

>We failed.*

I don't think the failure is yours. I think it is a combination of numerous societal factors, not the least of which is this perpetual rhetoric/buzzword "moving forward" as well as telling everyone you are throwing your money away by renting. If you can see through that rhetoric for what it is, and take control of your life, you don't need to consider yourself as a failure. You've done very well, perhaps listened to some bad advice along the way, but are now here to try and correct it. Right?

>This economy is not forgiving on the younger generation.

I completely agree.

>You guys smile as your children and grandchildren pay the price.

I think I understand where this statement is coming from. But I think it perhaps may be behind a general lack of sympathy you may be feeling in this thread. It looks like you are blaming others, even though I think it is the frustration talking. There is one KEY difference between your generation and the previous two you mention. They saved their money, while most of the younger generation do not. You are in the debt/me-first/if I want it I will buy it generation. These days, people don't want to do without. They just abuse credit instead. Then spend years mopping up a financial mess with no savings to protect them as life throws curveballs. Your parents were probably much better at saving their money and living responsibly. I bet they didn't start off their family in a $500K mortgage with nice cars. My parents and their parents were SAVERS and were frugal. They only bought things they truly, really needed. I don't say this to make you feel bad. On the contrary! You have defied the odds of most of your generation by saving all that money and not wasting it! You've done very well. Keep hope, don't give up, you are NOT a failure!


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## Potato

argos1 said:


> lets say at 375k i could buy a townhouse in vaughn.
> 
> at $275,000 balance with a future rate at 8-9% that everyone is predicting, thats just less then $3000 mortgage month. How can I afford that. With property taxes almost 4000k a year and rising.
> 
> With 2 children, that would put us finacially bankrupt.



So what _can_ you afford? $2400/mo? That gets you a detached house, 3 bdrm, in good shape, right in the 416 off the Danforth. http://toronto.en.craigslist.ca/tor/apa/2065446146.html

Maybe you like Vaughn, in which case $1800/mo gets you a 4bdrm semi: http://viewit.ca/vwExpandView.aspx?ViT=105662

You have to actually save to "build equity", but it doesn't look like you've got a problem with that. Plus, no risk from rising rates. There are options.


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## MoneyGal

Amazing! When I first moved to Toronto I lived on that street; just 3 houses away, actually.


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## MoneyGal

p.s. I was 30, and I rented.


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## Berubeland

Uhmmm I'm not really "the older generation" I'm 37 and my house was paid off by the time I was 30. 

I come from a family of financial reprobates thought I remember when I was in high school (before I even knew what a mortgage was really) and as an assignment our typing teacher asked us what our parent's mortgage was. Si I went home and asked my Dad and he said "We don't have a mortgage" So I went back to school and told the teacher my dad said we don't have a mortgage. 

Off I went to the principal's office for lying... the principal called my Dad and my Dad drove to the school in about a half an hour, and by the end of the class had a "conference" with the teacher. It was very loud... included some swear words it went something like this

"Do you think I want to work for the F#%king bank like you? I don't have a mortgage I've never had a mortgage on my house and when you sit there and laugh at my f$%king shack I laugh at you all the way to the bank. What are you indoctrinating these kids to anyways? Do you think everybody has to have a F%^king mortgage? What the hell is wrong with owning your damn house instead of the bank owning it? Does everyone have to live in a fancy mansion? Don't call my daughter a liar. I don't have a f*#king mortgage and I don't want one either. A slave to the bank like you shouldn't be teaching kids about personal finance." 

Then when I was growing up... there were stories. 

When your mom went to the hospital to have your older sister, (she was hospitalized with severe feet swelling) I bought a big block of cheese and when I was home from the hospital I installed hot water in the house, I didn't have time to cook so all I ate was the cheese, after three days we had hot water but only half a block of cheese. 

Then as I grew up at point, they decided to expand... 

I was probably about 4 when this happened I remember the first house was very cosy and then one day my dad was complaining about how poorly insulated it was. Next thing I know dad was digging a giant hole in the ground and getting a foundation poured. Next there was a rather well built garage on the property and that got put on the foundation and insulated. Then a quonset hut went up where the garage was. Then we moved to the new "house" there was still a hole in the floor. It was still two bedrooms, then when I was about 9 another big hole in the ground and an extension was put on the house and we had three bedrooms. 

A couple years ago, my sister moved there and added another extension for an office. Still no mortgage. 

I had the same kind of parent-teacher conferences when at one point my grade school teacher asked me if my parents couldn't afford a TV after assigning us to watch a show and do a report. (We had one when I was young and my dad threw it out when I started asking for toys I saw on commercials) 

I remember desperately wishing for normal parents. My dad has an extremely loud voice that carries extremely well in a school. While all my friends were watching TV I had to read for entertainment all the books I had were educational, animals, history, newpapers. 

When I read "The Millionaire Next Door" it was like reading about my parents. Dad - Self Employed, Mom - Teacher, modest house, cars by the pound and still extremely frugal. They will save money until the day they die, I tell them go have a vacation! 

A couple years ago, they went to Belize, they drove of course, my dad won't go to those all you can eat buffets in the States, because he doesn't eat enough to justify the $12 expense so he brings my mom to the buffet. Then he won't go in, so my mom won't go in. He says "I'm not paying 12$ for a bowl of soup, you know I can't eat much or I won't sleep. You go, I'll have peanut butter and crackers and an apple" So they both end up sitting outside the buffet eating peanut butter, crackers, cheese and apples. That's my parents... 

One day I'll tell you about what happened when my Brother in Law leased a brand new truck for the business...


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## CanadianCapitalist

First, look at the bright side: 

1. You have no student loans.
2. You have no consumer debt.
3. You have no car loans.
4. You have a sizeable down payment of 20%.

Right there, you are ahead of 95% (okay, I made this number up) of your cohort.

However, it does seem that you may be skating too close to the edge financially speaking. A 3.95% mortgage locked in for 5 years at a 35 year amortization means you will be paying about $1,750 per month. Is that exactly what you can afford and not a penny more? What happens when one of you gets sick? Or God forbid, loses the job? What about other savings such as for your retirement or a retirement fund (if you don't have a DB plan)? Are you going to go into deeper debt if say we have a colder than usual winter and you face high heating bills?

Even if this is the case, you have options. You may have to bite the bullet and downsize into a less expensive home, however unpalatable that might be. Or even rent for a few years. There are always options. You need to carefully consider yours.


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## argos1

> Uhmmm I'm not really "the older generation" I'm 37 and my house was paid off by the time I was 30.


Must be nice, I dont think we are not financially smart like I said we drive paid off cars, dont bu luxury goods and try to bank as much as possible.

However having a mortgage paid off by 30 you must have has one of 3
things:

1. Some financial help to you from friends or family.

2. Make over 200k annually.

3. Bought in a market where houses were less then 200k


Unforunatley, non apply to us.


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## spirit

*You have done well. Don't panic*

As I was reading your post I kept on agreeing with you that you did all the things you were supposed to. You did some wise actions that will stay with you forever. But in life S___happens. In the early 80's house prices were very high and interest rates were 18, 19, 20 percent. Many of my friends and myself has just bought homes and were scared silly we would lose them. People were walking away from their homes and selling them for $1, just to get out of their mortgage. But we coped. Some rented the basement, others got part time jobs on top of their other jobs, and yes others lost everything. Then the economy crashed in Alberta and many got laid off. For many years there was little work. But we coped, raised our two boys and cut out what was not necessary. Rented movies, accepted second hand kid's clothes, pot luck suppers to save on babysitting costs, babysat for each other when we did go out. The point is that you have MUCH going for you and you will be fine. Just don't get overwhelmed. You will find answers that work for you.


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## Eclectic12

the-royal-mail said:


> Yes, this seems to be the conventional wisdom. It's the ongoing mindset that you are throwing your money away by renting and why not put the money to your bottom line.
> 
> Having lived on both sides of that fence, I know that the advice does not apply to everyone. But it doesn't stop people in social situations from attaching unwarranted stigma to apartment living. I personally am saving a lot of money by renting instead of owning. Ownership costs more real dollars than renting.
> 
> Some people attach quite a premium to "a place to call our own".


That's the problem with generic advice and comparison - it may not be suitable to the specific situation.

Case in point, if I choose to compare to my co-worker, he's paying a lot less in rent than I'm paying to own. If I compare to the consultant who is currently working with both of us, I'm paying a lot less to own than he's paying to rent.

Personally, I'd think the co-worker would benefit from the forced savings of ownership compared to paying his bar bills and I'm not convinced the consultant "needs" what he is renting but each has made their choice.


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## dogcom

Argos1 a correction can also be accomplished by the market doing nothing for a period of time. So your house price may go sideways for 5 years or so as affordability catches up and house prices do not go down. 

As others have mentioned, why did you have to have a new house with 4 bedrooms? You could have started with a townhouse closer to where you work and it doesn't have to be new and huge. When I started out in Richmond BC I started with a 2 bedroom townhouse and then moved up into a 30 year old house with a big yard in a very good area when the market was poor. Now I have people coming over and putting letters in my mailslot asking me to sell to them for 5 times what I paid for it 20 years ago.

The thing is I was also very afraid like my dad before me each step of the way but the thing was we didn't try to hit the home run on the first try. Sorry you did that because you were a follower, which most on this forum are not and that is their secret. So now that you are here you must set a goal to get yourself in a position that you can handle an increase in rates or whatever dangers you see in the future.


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## Berubeland

argos1 said:


> Must be nice, I dont think we are not financially smart like I said we drive paid off cars, dont bu luxury goods and try to bank as much as possible.
> 
> However having a mortgage paid off by 30 you must have has one of 3
> things:
> 
> 1. Some financial help to you from friends or family.
> 
> 2. Make over 200k annually.
> 
> 3. Bought in a market where houses were less then 200k
> 
> 
> Unforunatley, non apply to us.


Being self employed at the time, my parents helped me get the mortgage, the condition was that we would make double payments and full annual prepayments to the mortgage. 

I made good money at the time, at one point I had 14 people working for me

I also worked 18 hour days, when I split with my ex I bought a futon and often didn't even make it to the bedroom I was so tired. 

I chose to buy a house that was $150K even then it was a dump, there was one cupboard in the kitchen. Later on I renovated. 

There was also a basement apartment, and it was kept rented out the entire time. 

I made all those choices very deliberately... before I bought the house because of my upbringing. 

You know what? I could do it again, the house I'm in right now is worth around $380,000, but I wouldn't even consider living here if I had to buy the same house today. I'd probably buy in Oshawa like I said where you can pick up a 4 bedroom house today for $110K 

Once non deductible debt like a mortgage becomes something you don't believe in...you make different choices. 

You didn't do anything wrong, in fact you're in better shape than most of your colleagues, lots of them are buying the same house as you are but also have car loans, student debt and LOC's. 

I have a friend (the one who wants me to lease a new car) who started out with a 100,000K mortgage for an awesome house and after downgrading her house three times is now renting. After 16 years of paying a mortgage she owed $160K


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## argos1

Does it even matter that the house I bought for 499k in 2009 (line up new development) Is selling for close to $600k at the sales office, same house.


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## argos1

Sorry for bombarding your forum, just so stressed out.

A bit about us.

My future wife is a RN and right now only makes about $50k a year. (underpaid-newgrad)

I currently play pro football in Canada and make $60k a year but will be looking into business management field when I end my playing career in 4-5 years, hopefully.

Thanks for the insite.


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## Four Pillars

Argos - are you even looking for any advice? Most of the posters seem to be giving advice that is too late ie don't buy the house.

From your original post, it looked like you are just looking for sympathy, not advice.

FYI - every house buyer has a period of remorse and regret. It's perfectly natural.


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## argos1

My post was a rant! I am sorry.

It was out of frustration.

I am discuraged and upset.

Did not mean to get everyone upset. You are right I am signed and sealed so advice is difficult.

However I could use advice on my mortgage of $400k.

Go Fixed 5 year or variable?

Thank you all for listening.


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## dogcom

I think it is great you play in the CFL, a league where you actually earn what you are paid and should get more in my opinion. I take back the stuff I said before, now that you said that. I am sure you are a survivor and will get it together. Football is one of the most positive sports you can enter, you are taught that you can overcome any obstacle in a positive way and can carry that into any part of your life.


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## argos1

thank you dogcom.

If we only could get the support from more fellow Canadians (EX, TO/BC)

Thats a whole different post.

Berubeland, I dare you to show me a house in Oshawa 4bdr at 110k!!!????
Would you live there?


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## argos1

By the way in my field of work job security is only for 4-5 years, hence my panic.


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## MoneyGal

More memory lane for me in this thread! My grandfather was an Argonaut from 1930-1934; named all-Canadian inside guard in '34. I learned a LOT about money management from him. Wanna know what players were paid in the 1930's? Nothing. All those guys raised their families (my grandfather had three girls) while playing and working full-time.


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## argos1

The nice thing about our league is I can honestly say 50% of us athletes would still be here if they paid us nothing/next to nothing, its all about passion, desire and the love for the sport.

God Bless your grandfather.


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## MoneyGal

Thank you SO much. My cousin has his Grey Cup memorabilia; she was a pro athlete (different sport) for a while. Sports is fantastic training for life.


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## dogcom

How about going through some scenarios with your wife about selling your home during the good season in the spring and buying something you are more comfortable owning. It doesn't hurt to go through things just to see what you could possibly do. In stocks and investing you sell to a position you can sleep through the night with.

I know real estate is not the same as stocks because real estate is not as easy to buy and sell but I still think it is a good idea to go through things.


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## Jungle

argos1 said:


> Go Fixed 5 year or variable?
> 
> Thank you all for listening.


I would go variable over fixed. Also, sometimes your mortgage term can be more important than your mortgage rate. For example, if you choose a 5 year term today and decided you want to sell next year before the market crashes (just an example), you will have to pay a big penality fee. Some suggest going with an open mortgage or 1 year fixed term if you are uncertain about your situation the future.


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## slacker

Be a man !! Do the right thing !!

Take responsibility for your actions.

The good news, you're not in THAT much trouble. 

Yes, interest rate MAY go up, but it MAY also stay at current rates for quite some time. No one can definitely say either way.

Yes, housing prices is inflated by some measure, but it may stay at current levels for quite some time. No one can definitely say either way.

You've borrowed yourself a nice lifestyle that is bordering on the unaffordable. There is a risk of financial catastrophe if interest rate raise back to historic normal levels. Can you and your family take that risk? Are you willing to downsize your lifestyle to mitigate that risk?

You are responsible for figuring this out, and dealing with the consequences. Man up, don't blame others.


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## plen

Don't forget to shop around for the mortgage.

http://www.ratesupermarket.ca

What do you consider a maximum amount you can budget for the mortgage payment over the next 5 years?


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## Four Pillars

argos1 said:


> My post was a rant! I am sorry.
> 
> It was out of frustration.
> 
> I am discuraged and upset.
> 
> Did not mean to get everyone upset. You are right I am signed and sealed so advice is difficult.
> 
> However I could use advice on my mortgage of $400k.
> 
> Go Fixed 5 year or variable?
> 
> Thank you all for listening.


I'm sorry you guys lost out to the Als on the weekend. 

I think going variable is better. As Steve said, it will keep the mortgage more flexible if you decide to sell. Also, the fixed mortgage is a bit of an illusion if you only make the minimum payment - at the end of 5 years, you will still owe a ton and will face the interest rate risk at that time. The 5 yr fixed isn't necessarily that much safer than the variable in that situation.

$400k mortgage with $110k of income doesn't sound too comfy.

Is there any possibility of you working a second job in your time off? Do you get much time off between seasons? That would help quite a bit.

You could always look at selling the house once it's built - if the net amount is $500k or more then you won't lose anything.

I would take your time - there isn't much you can do right now anyway. Things are not as bad as you think they are.


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## Berubeland

Argos 

I emailed a link for a nice looking detached house for 110K on November 20th. 

The link is now dead but here's the list of all the ones I sent him as an investor looking for deals 


http://www.realtor.ca/propertyDetails.aspx?propertyId=9955782&PidKey=64175154 This one 99,000$ for 3 bedroom condo just north of the Subway at Kennedy. I could probably get $1300 per month for it once renovated maintenance fees are high at $600, maybe they are doing building work or it includes utilities.

a house $199,000

http://www.realtor.ca/propertyDetails.aspx?propertyId=10106336&PidKey=-498142281

In Oshawa....this one looks pretty good

http://www.realtor.ca/propertyDetails.aspx?propertyId=10128130&PidKey=-1007322649

They start at 69,000 in Oshawa ...

I don't live in a fantastic neighborhood now, and the house was a dump when I bought it, it was structurally sound and the basement apartment was nice. Most of the really cheap houses in Oshawa are in South Oshawa which has a bad reputation pretty well deserved, I managed a property there for a while. I'd avoid that neighborhood if I could. 

North Oshawa is nice and here's a three bed plus one bedroom basement in rough shape for $133,000 http://www.realtor.ca/propertyDetails.aspx?propertyId=10123658&PidKey=-1286918671

That one is in a better neighborhood than I currently live in.


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## Jungle

Vaughan has really gotten expensive. With all the Itialians up there it has boomed a lot in the past 15 years. Remember Canada's Wonderland was in the farm fields? Now there are rows and rows of houses that have been there for 10 years now. 


Berubeland:

Some of the houses you linked are ghetto. That area of Scarborough (kennedy subway) is not somewhere I would want to raise kids. About 4 years ago, I found a condo in one of those buildings for cheap on realtor. I was speaking with a police officer and they told me to stay far away. Police responded to 90 incidents/calls within a 6 month period in the building. The undercovers were even doing survelliance in that area and buildings too. 

There are some ok areas in South Oshawa and I too rent out property there.


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## Berubeland

Jungle you and I have had this conversation before...

The area I live in is not that hot, I am not too thrilled about that yet they are building tons of townhouses around here

One particular building at Kennedy & Eglinton has doubled in value in the last few years. 

IMHO if you are thinking of making money on your personal residence, you have to select a place that will gentrify. This means that it will be bad when you move there and will get better as it develops. 

About 12 years ago the Junction and Dundas West were a hellhole, more store fronts were empty than full, now it's "trendy" 

Riverdale is a weird mix of homeless people and high end homes.


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## kcowan

I think OP is over-reacting to what he has heard in this forum. There always seems to be a pop in prices in a new subdivision. Go with a variable rate mortgage. Seriously consider 25 year amortization. In 5 years, be prepared to move. You may have a new job then and should consider moving closer to work. Many ball players develop alternate lives in the off season. You may find that you can make more money in one of those.

Keep positive and don't panic. You are currently in great financial shape. Congratulations!


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## Potato

argos1 said:


> You are right I am signed and sealed so advice is difficult.





argos1 said:


> Does it even matter that the house I bought for 499k in 2009 (line up new development) Is selling for close to $600k at the sales office, same house.



Well, there's always an exit, it's just up to you to figure out if you want out badly enough. If you're no longer comfortable with the house purchase, then you can try to assign your unit to another buyer, or even get the developer to let you out of the contract -- that's a lot easier to do if the house price is indeed up. There are some fees to selling, but if the price has really gone up that much you may be able to walk away with a profit at the end of the day.

If it helps set your mind at ease, you can go talk to a lawyer about your options. I don't know, maybe you are sealed in until the house is built a few months hence. Even in that case, if you still want out then you can sell the completed house the old-fashioned way (again though, the fees are not inconsequential).


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## dogcom

That is good advice potato. 

Argos1 I am not sure you have made a mistake here, but I should tell you every person on this forum has made some blunders that they do regret either by investing or the purchase of a home. 

If you are serious that the future does not add up to you then make sure it does. Also make darn sure your wife is completely on board and behind the decisions that you make. You also don't need to take the worst house in the worst area. Sure you may need to compromise and take less house or an older house but I am sure if you look around you will find your house if that is your choice.

Also something Berubeland and I discussed here before is that most buyers know within a few minutes that they have found the right house when they walk in. Of course one needs an inspector and such but that is usually how it happens. The reason you didn't get the right feeling is because you bought new before it was built which is probably not a good idea for first time or even second time buyers.


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## argos1

Is it not true houses appreciate the most within first few years after beeing built?

My house was $500k, my nieghbour paid $800k, is ok to be the smallest house in a nice area? I bought 2500sq/ft 50 foot by 130 lot. My nieghbour is close to 4000sq/ft.

I love the house, just dont like the fact it will be worth half as much in a few years after this bubble. I dont want to lose it.

My area is full of first time home buyers, houses up to 1 million on my street. Most are young professionals making $150-200k joint.

I guess we all may be out of our homes in a few years!


----------



## spirit

*I know how you feel*

I am at the other end of the spectrum from you in age. I am near the end of my career and a few years ago I panicked at the thought of losing everything when the financial market crashed. But I settled down and started building a life for myself after my career was finished. It took a few years but by working steadily for a future shift that I knew was coming the panic eased up a lot. Are you preparing yourself for a life after football? Are you exploring options on how you will support your family after your playing days. Some of the answers may be close to you. I'm sure every player has these thoughts. How are some of the older ones handling it? In my case I was willing to try a new area in my field and am happily working part time in an area I love just in a different capacity. This panic is just your way of saying I need to take a different look at solving a problem, my life after football. Look at it as a good thing.


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## dagman1

If you want my honest opinion, buying a $500K house on $100K/yearly total income is just reckless. I don't care if you have $100K downpayment--you still are mortgaged 4x your salary. I also don't care if you knew or not about the likely market crash, even if prices were stable it would be a bad idea to overextend yourself so much.

In some ways I sympathize. I do think our generation is going to get screwed in the short term. But I find it hard to feel bad for you when you borrowed so much. 

I'm not trying to make you feel bad, but I think you should get out while you can. Ask yourself if you could afford your payment at 8% today? That puts you at about 2,900 a month... my guess is that puts about 60-65% of your salaries into a house. Now add deferred maintenance, property taxes and insurance, your commuting costs downtown from Vaughn, or Thornhill, or wherever, utilities, etc.

Either someone needs to start making some more money fast or interest rates need to stay near record lows.


----------



## osc

You made couple mistakes:
- had children too early and one should be enough for anyone. We are already too many.
- bought too much house for your income. Shouldn't get a mortgage more than 2x your income.
Besides that, it's unlikely rates will get to 8%. I think that at about 5-6% we'll see too many defaults, and the Canadian housing bubble will finally burst, taking the economy down with it. When that happens, rates will go back down to 0%.


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## Four Pillars

dagman1 said:


> If you want my honest opinion, buying a $500K house on $100K/yearly total income is just reckless. I don't care if you have $100K downpayment--you still are mortgaged 4x your salary. I also don't care if you knew or not about the likely market crash, even if prices were stable it would be a bad idea to overextend yourself so much.
> 
> In some ways I sympathize. I do think our generation is going to get screwed in the short term. But I find it hard to feel bad for you when you borrowed so much.
> 
> I'm not trying to make you feel bad, but I think you should get out while you can. Ask yourself if you could afford your payment at 8% today? That puts you at about 2,900 a month... my guess is that puts about 60-65% of your salaries into a house. Now add deferred maintenance, property taxes and insurance, your commuting costs downtown from Vaughn, or Thornhill, or wherever, utilities, etc.
> 
> Either someone needs to start making some more money fast or interest rates need to stay near record lows.


I tend to agree.

Even if rates don't go up much, it would seem that the argos1 family will be pretty house-poor, which in my opinion, is no way to live.


----------



## the-royal-mail

dagman1 said:


> If you want my honest opinion, buying a $500K house on $100K/yearly total income is just reckless. I don't care if you have $100K downpayment--you still are mortgaged 4x your salary.


What I don't understand is how the heck the OP qualified for such a mortgage. When I applied for mine, the bank did some sort of a formula (40?) that told them how much mortgage I could afford. This occured during the pre-approval process. They told me the limit I could afford was $x. I then went out and bought a house worth no more than x.

I didn't have the option of getting a mortage for more than x. 

How did the OP pull that off?


----------



## Sustainable PF

the-royal-mail said:


> What I don't understand is how the heck the OP qualified for such a mortgage. When I applied for mine, the bank did some sort of a formula (40?) that told them how much mortgage I could afford. This occured during the pre-approval process. They told me the limit I could afford was $x. I then went out and bought a house worth no more than x.
> 
> I didn't have the option of getting a mortage for more than x.
> 
> How did the OP pull that off?


Banks can tweak things quite generously and have been for a while. This is why Garth Turner and advocates in the disaster of a thread going no where on RFD about the housing bubble continue to doom and gloom the RE market. I read a little while ago that RBC was allowing people to borrow 125% of what they can afford using various loop holes in their lending policies.


----------



## FrugalCanuck

www.greaterfool.ca

While you take Garth Turner's writting style with a grain of salt. He has the right perspective when it comes to Canadian real estate and it's position in your portfolio.

You're just one of many dooped in to thinking a house is necessary for a family when only a _home_ is needed.


----------



## K-133

FrugalCanuck said:


> www.greaterfool.ca
> 
> While you take Garth Turner's writting style with a grain of salt. He has the right perspective when it comes to Canadian real estate and it's position in your portfolio.
> 
> You're just one of many dooped in to thinking a house is necessary for a family when only a _home_ is needed.


You have a valid point but disregard that there is value for some, in owning a home. Albeit, it is mainly a psychological one, but the value exists.

Just as there is value for some in owning a car vs others in leasing a car vs others in using public transit. Each individual or group of individuals has a different philosophy on value.


----------



## Berubeland

I for one want to welcome Argos to CMF. You've found a group of the most frugal savers around. 

Quite frankly I am the only person I know who thinks the way I do about money, my husband won't even go grocery shopping with me cause I bring so many coupons and get free stuff when they don't get the price right. 

We are a community here precisely because we are also a minority. Most people are happy to pile on debt and keep chugging away. 

Don't be too hard on yourself, your just doing what normal people do. You are now getting an education into an entirely different way of thinking. In real life when I talk to "normals" I am constantly amazed at the money they spend. 

If I had a dollar for every financial mistake I made I'd be so rich it wouldn't even be funny. We're all learning we just make different mistakes


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## argos1

Go to any major canadian bank online mortgage calculator.

Type in annual income of $110,000
Savings of $100,000
zero debt.

Result.

All major banks say I can afford a $700k plus house.

I decided to buy a house for $500k not maxing out what they give me, things I thought were all financially smart.

Every bank, RBC TD ING CIBC, are all dying for my business, we have credit ratings over 800points.

I'd rather be house poor drive and drive an old civic and live off pasta like we do, then have my kids grow up in a dangerous area full of crime and drugs.

Im a firm believer you are a product of your surroundings, have learned to respect that while playing football. 

I see the kids from Oshawa, Scarbourough, Brampton, with our outreach programs, and its not an area I want my kids to grow up in. ( Dont want to paint an overall picture, I believe there are good pockets in those areas, but not for less then 200k)


----------



## FrugalCanuck

I think you just concluded your own rant.

If your okay with being _house poor_ (a recent term that came from young couples who buy houses beyond their means) then I can only refer to what K-133 said. This is where you find value. Not in dollars but a comfortable neighbourhood.

I agree with being a product of your environment. But I also think it has more to do with home and the relationship with your childen then where your house is. 

Renting does not make you a second class citizen. Is there no homes in the neighbourhood for rent? How much of that cost could be covered by having 100K invested and producing income from it?


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## argos1

I dont disagree.

Renting in an upscale area in todays market, probably would have been the wisest move with the market today. I dont think renting is 2nd tier.

My first 2 years in Toronto I rented right downtown.

I just know my landlord at the time was making great money off me.

With alot of people renting, I do think if I had the money beeing a landlord is the best option, but not all of us have the money for multiple properties.


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## the-royal-mail

argos1 said:


> Go to any major canadian bank online mortgage calculator.
> 
> Type in annual income of $110,000
> Savings of $100,000
> zero debt.
> 
> Result.
> 
> All major banks say I can afford a $700k plus house.
> 
> I decided to buy a house for $500k not maxing out what they give me, things I thought were all financially smart.
> 
> Every bank, RBC TD ING CIBC, are all dying for my business, we have credit ratings over 800points.
> 
> I'd rather be house poor drive and drive an old civic and live off pasta like we do, then have my kids grow up in a dangerous area full of crime and drugs.
> 
> Im a firm believer you are a product of your surroundings, have learned to respect that while playing football.
> 
> I see the kids from Oshawa, Scarbourough, Brampton, with our outreach programs, and its not an area I want my kids to grow up in. ( Dont want to paint an overall picture, I believe there are good pockets in those areas, but not for less then 200k)



This is an excellent post and makes perfect sense. I completely understand where you are coming from. I'm short on time right now but want to reply more later on. What you say makes sense.

I'll check out those bank calculators. I am astonished they would lend you that much money. Are you American? This almost sounds like a big part of the problem they had, and now all those people have lost their beautiful houses.


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## Addy

Berubeland said:


> "Do you think I want to work for the F#%king bank like you? I don't have a mortgage I've never had a mortgage on my house and when you sit there and laugh at my f$%king shack I laugh at you all the way to the bank. What are you indoctrinating these kids to anyways? Do you think everybody has to have a F%^king mortgage? What the hell is wrong with owning your damn house instead of the bank owning it? Does everyone have to live in a fancy mansion? Don't call my daughter a liar. I don't have a f*#king mortgage and I don't want one either. A slave to the bank like you shouldn't be teaching kids about personal finance."


Priceless! I would pay good money to be able to over hear that conversation! Good for your dad to give that guy serious heck!


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## jamesbe

Wow $700k on $110k is ridiculous!

I thought I was house poor. $300k mortgage on $150k! It's one thing we like to splurge on, we like a big house in a nice area. 

Wasn't my first house though, I bought a small house first, then sold in 5 years making about $70k in equity, then did the same again.


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## the-royal-mail

Here's a random calculator I picked off. The results are strange. Someone who makes $48K a year, no debt and $15K credit limits each for LOC and CC, prop taxes of 3333 annually and 222 a month for heating, is apparently only able to afford a house worth $37,107.

http://calc.tdcanadatrust.com/HMCIA/Scenario

I think these calculators are screwed up. But maybe it's me who doesn't understand. WTH.


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## jamesbe

The line of credit SEVERLY reduces the amount of money they will lend you. Enter non and it jumps considerably.

I used yours to see $130k anually, no down payment, no debt and $4000 a year taxes, $200 a month heating came to about $550k mortgage with NO downpayment, INSANE!


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## argos1

I think alot of you ar eliving under a rock, banks give money to everyone and make us all feel we can afford it.

I work with 3 guys, no names, who make annually $250k with stay at home 
wifes that have homes/condos in Toronto with Mortgages over $1,000,000.

They tell me there mortgage payment is $6k monthly.


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## jamesbe

I'm trying to find one of these people to buy my house for more than it is worth!


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## argos1

Its worth what people will pay for it.

A game playes CFL Ball used in the grey cup is worth nothing in the states.

There are people would pay thousands for one in Canada.

Its all relative.


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## Jon_Snow

My wife and I would love a detached house. We live in a smallish condo. Our income is almost 150k per year. As of right now, we can save/invest 4k to 5k per month by living in the condo. We are a bit envious of our friends who have big houses and big yards with the toys to go with them... yet a few have confided in us that they live paycheck to paycheck - and most of them have children no less. There is no way I want to live like that, nor does my wife. Strong monthly cashflow and no stress about financials is priority number one for us. If Garth Turner is right on this one, and there is a sizable housing correction, we might pull the trigger... but we are not dropping 700k on a house in Vancouver.

I don't begrudge anyone if their priority is owning a house. Everyone's risk tolerance is different.


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## argos1

In no offense to anyone.....

But Im reading the past on this forum and Mr.Turners blog, its dated back to 2008! He and everyone has been screaming doom and gloom for over 2 years!

I dare anyone to show me in the last 2 years with the still increasing home prices how it was more benefical to rent then to own.

Im not talking about Oshawawa or Windsor, Im talking about people in Vaughn, Mississauga, Oakville, Richmond Hill.

I have friends who bought in Milton in 2008 for 225k and now sold last month for 350k. Thats in 2 years! I dont see those returns on renting even with extra cashflow.

Over the last 2 years while everyone screamed the end, the home owners came out on top, correct?


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## MoneyGal

There is another thread active in this forum *right now* where people are saying they had to wait years in order to afford furniture for their first houses (I am paraphrasing). 

It seems to me this is very much a risk tolerance question. None of us know that the players with $250K incomes and $1M mortgages won't come out on top. I do personally know that I cannot tolerate that level of risk - but who am I to say what is right for another person? I suspect those people are fundamentally more optimistic or just more risk-loving than I am (probably goes with pro sports, in fact). 

There are no absolute right answers w/r/t how much risk to take in your equity allocation, in your allocation of your financial capital to housing, and so on. It may well be that the population in aggregate on this site is relatively risk-averse and frugal (whatever that means) - I know that describes me. But is that the "right" way to be? I don't know. I just know I'm not comfortable behaving another way. (And I will argue for my point of view, for sure; but I am aware there's substantial uncertainty in predicting the behaviour of capital markets.) 

I think more than being risk-averse and frugal, though, this community prizes independent thought and questioning received wisdom. And, circling back to the original post and reading through this thread since then, it seems to me that argos1 is well along that path, too. Right?


----------



## MoneyGal

x-post with argos1.


----------



## Potato

argos1 said:


> I dare anyone to show me in the last 2 years with the still increasing home prices how it was more benefical to rent then to own.
> 
> I have friends who bought in Milton in 2008 for 225k and now sold last month for 350k. Thats in 2 years! I dont see those returns on renting even with extra cashflow.



OMG, you're right! How could I have not seen it? All this time I was doing math and trying to figure out how to best deploy my limited capital, planning and carefully budgeting to save up for a target $1M nest-egg when I retire, when all I had to do was buy a house in Milton! It'd be a cool million in just 8 years at that rate! It'd hit 10 million before I hit 50! I could sell the house then and just live in 5-star hotels all around the world for the rest of my life!

Sarcasm aside, there are several reasons. The first is that trick in your statement "_with the still increasing prices_" -- if prices are going up at more than say 5% per year, yeah, you want to make as big a leveraged bet on real estate as you can. _Of course _you'll do better than playing it safe and renting in that case. 

The problem is, if prices don't increase -- even with just the IMHO overly optimistic case of a "soft landing" where prices flatline for a few years but don't actually go down -- you'd have done better renting, and will going forward. And, your friends only really get that return if they now sell and go rent, otherwise it's just a paper gain (either in the current house, or one that's plowed into the next purchase). So, tell me, where are house prices going over the next 10 years? I'm quite confident the answer is "down", but maybe you've got some different data?

I don't know if I'd say I was "screaming" gloom and doom 2 or 3 years ago... I've only been screaming since the late spring  But I was definitely pointedly saying that this couldn't go on for much longer, and indeed, it's gone on for much longer than I predicted. Part of that is because the magnitude of the credit crisis and the rates crashing to effectively zero couldn't be predicted in 2007, and even in 2009, it was hard to predict that ZIRP would _actually work_ on the Canadian RE market (it didn't in the US, or Ireland, or the UK, or Spain... and Mark Carney was trying to talk it down the whole time).

Go back to one of those mortgage affordability calculators and try playing around with the qualifying rate... you'll probably find the amount one qualifies for drops ~20% if rates go up from ~4% today to ~6% (where they were going into 2008). It's very interest-rate sensitive, and rates are low, so for those buyers that believe those calculators, they've been buying like crazy the last year or two. 

I still don't think it can continue. 

Could I be wrong again? Perhaps. If rates stay low, maybe we can squeeze out another year or two of appreciation on that donkey's back. After that, the government's only got two more curveballs to throw at us to bring out more buyers: insuring zero-down interest-only mortgages, and actually paying people to buy homes.


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## argos1

This seams to be a never ending cycle here...

Everyone thinks our markets are crashing and housing is going to collapse.

You may be right, you may be wrong, I dont know.

I want to thank Berubeland and Royal Mail for there help and insite. (email me if you guys want 2011 football tickets)

I have to get off this forum its causing to much distress at home, my wife is saying all I talk about is our financial mess and how we are going to loss everything, she says it will be ok and our incomes will only go up, we have great families and morales.

You guys have taught me a lot in a few days.

Save your money

Live within your means

Dont trust anyone

All I can say is I am going to continue the way life is for me, I do feel for the most part we try to live within our means.

Im going to enjoy my $500k home, going to look forward to dropping my kids off at a great school, enjoy relaxing with my family, and enjoy life, we are all blessed.

I will focus on getting my mortgage under 25 years and paying it down as fast as possible.

Like Mike "Pinball" Clemens told me one. Dont stress about the things you cannot control in life. None of us can control the housing market. It may go up down or sideways.

I appreciate all the advice, criticism, courage from the posts, all were read!

Stay Healthy

God Bless.


----------



## dogcom

I for one can't be sure of any market collapse. Everyone says it, as you say, but that doesn't make it so. I believe Garth Turner has been saying run for the hills since 2000 and if I had listened to him I would have lost about $500,000 in house appreciation and counting.

My house dropped in 1997 from $300,000 to $240,000. In 2007 it dropped from $600,000 to $450,000 at the extreme low and now I know I have buyers at $880,000 after commission if I wanted to sell. The thing is I have heard all the crash stories for many years and yes there have been big corrections but at the end of the day I ask myself am I still happy and can I still afford to live where I live.

You just said you are happy with your home so that is the end of the story, so do all you can to make it work for today and for tomorrow. 

Now that you are done with this, I hope you keep contributing to this forum and become one of the family here. You don't need to stress out and keep it as a hobby and somewhere you can learn.


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## the-royal-mail

Hi argos1, sorry to hear the discussion is causing you to worry. You should definitely NOT worry, and NOT lose sleep at night. You are right about having a good school nearby, living in a good house/neighborhood with a family that makes you happy. These are excellent points.

We do offer our opinions to young people such as yourself when they come here BEFORE going down the home ownership/new baby route, but it's actually quite difficult to convince people otherwise when they have decided that is what they want to do. If you check the link in my sig file, that is a case where I did offer advice to a young couple BEFORE they went down the expensive new home/baby route and they took it well, but I don't think the wife was too pleased with me. Most people don't take it that well and just do what they want anyway. At this point, your situation is what it is, you can only deal with the cards in your hand now.

I think you know how to manage and save money. Anyone with your income who can save $100K in cash...wow that's really rare. I save money too but I've never managed to set aside that much.

Enjoy living the dream - don't sweat this stuff. I would rather not see you leave CMF, but I completely understand why you feel that way. Good luck in whatever you do. I don't think you'll need it though. ; )


----------



## kcowan

dogcom said:


> ...You just said you are happy with your home so that is the end of the story, so do all you can to make it work for today and for tomorrow.
> 
> Now that you are done with this, I hope you keep contributing to this forum and become one of the family here. You don't need to stress out and keep it as a hobby and somewhere you can learn.


+1
Markets go up and down. Just live your life, be financially cautious, and enjoy.

There is no use obsessing over what might have been.


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## HaroldCrump

argos1, reading your most recent posts, it appears that you are, in your mind, comfortable with your decision(s). 
Were you looking for other folks to corroborate or approve your decision?
Your tone is getting a little defensive, don't be.
If you are comfortable with your decision, don't get nervous by what others are saying.
Similarly, if you don't feel comfortable (the sleep test), regardless of what others may be saying, cash out.

Your example of a house in Milton is a rather extreme one.
Milton is the fastest growing region in the GTA.
You should not use that as an example, unless you live there or want to speculate in that market.
Milton is in fact catching up with the rest of the GTA after over 20 years of zero real estate development due to well water issues.
Once Halton region signed the water supply deal with Peel region, the floodgates opened and the real estate developers, builders and speculators came pouring in.

In your example, your friends made decent profit one time.
Although, after you take out the real estate commissions, the closing costs on two properties, moving expenses, etc. I'm not sure how much the profit is and whether it is worthwhile or not.
Most likely, they turned around and bought an even bigger and more expensive house thereby wiping out any equity profit they made.
Some friends of mine did the same.
Bought a new house direct from the builder at $250K, sold 3 years later too the profits and bought a bigger house.
They still had some profit left over so turned around and bought a new minivan, new appliances, a fancy TV, etc.
Net result is that there is no net reduction in their mortgage and they have just blown away all the equity they had built up, when they had the chance to blow their mortgage away.
This cycle will continue every 3 years, until RE prices crash (or stop increasing) and then the last batch of folks will be stuck with huge houses and huge mortgages that'll take them 30 years to pay and can't flip houses any more.


----------



## Taxsaver

Great example of greed in your last post, Harold.


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## Berubeland

Hey Argos... come back... 

BTW I just want to say that my son was a miracle baby I went through my whole life thinking I couldn't have kids. So schools were not even on my mind at the time. 

What I needed at the time was a large lot, with a garage so I could store stuff from my construction business. I wanted a renovation project in a gentrifying area. 

If I was buying a house today I wouldn't be in this area, it bothers me a lot that if my son goes to the neighborhood school, he will be a minority. One of the tenant's kids was the only white student in his class. So while my son now three is reading and doing simple math, I'm not even sure why I would send him to school, it's not a warehouse for kids they are supposed to be learning stuff. So I get your point about the kids influencing your choices.


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## slacker

Berubeland said:


> Hey Argos... come back...
> 
> BTW I just want to say that my son was a miracle baby I went through my whole life thinking I couldn't have kids. So schools were not even on my mind at the time.
> 
> What I needed at the time was a large lot, with a garage so I could store stuff from my construction business. I wanted a renovation project in a gentrifying area.
> 
> If I was buying a house today I wouldn't be in this area, it bothers me a lot that if my son goes to the neighborhood school, he will be a minority. One of the tenant's kids was the only white student in his class. So while my son now three is reading and doing simple math, I'm not even sure why I would send him to school, it's not a warehouse for kids they are supposed to be learning stuff. So I get your point about the kids influencing your choices.


Beth: Hey, what do you call a doctor who fails out of med school?

Jerry: What?

Beth: A dentist. (They laugh)

Jerry: That's a good one. Dentists.

Beth: Yeah, who needs 'em? Not to mention the Blacks and the Jews.


----------



## jamesbe

Well I was a skeptic about the market dying especially in Ottawa, but houses are not selling. The same 20-30 houses I have been watching on MLS have been for sale since August! Prices have fallen 10% and I expect even more! Ottawa has historically been sheltered because of the gov jobs but even that seems to been wiped away.


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## the-royal-mail

Apparently I only qualify for a mortgage of $145K.

Apparently my credit rating and money management skills mean nothing.

I don't like the idea that I would have to give up much of my LOC to buy a house. That LOC is my last line of defence in case of adversity. It's important that I preserve it.

I don't like their calculator. It doesn't add up to me.


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## tinypotato

Some great posts in this thread...I particularly like MoneyGal's response.

It's tough to stick to one's own values; especially here in real estate crazed Vancouver. No one know if the market will crash, all we can do is understand our own risk tolerance and live within that.


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## sags

The reality is that if homes takes a big dive in value, or interest rates rise to the point that people can't afford the payments, there will be a whole lot of other people in the same boat.

That is not comforting it and of itself, but the number of people who would be in danger of losing their homes, would force a combination of Government and bank intervention, to work out solutions.

Nobody, and I mean nobody, wants a repeat of what happened in the US to happen in Canada. If interest rates started forcing people out of their homes, everybody loses, so there would workouts arranged.

The banks could lower interest rates for homes, since they really don't want them back anyways. They have no interest in becoming landlords of thousands of empty homes.

The Government holds the ultimate decision for an awful lot of homes purchased under the CMHC program, so they would want to work out a solution. Perhaps extending the amortization period temporarily.

Bond holders want to receive their principal back, and would be willing to accept less interest.

If we have a total meltdown, there would be workabouts a plenty.


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## Cal

Argos...it sounds like you are accepting that the advice you received that owning is always better is not necessarily true. In some situations it can be better to rent. 

Also, you do have options, you stating the home you purchased for 499K is going for 600K now. Sell. Take your capital gains, and buy less home this time around. It does sound like you were concerned with being stretched too thin financially. Not everyone is entitled to owning a half a million dollar home.

Not everyone pays off a home by 30yrs old. You could stretch out your payments over a longer time period if rates rise and you find yourselves in a difficult financial situation.

Other than being house rich, cash poor, you are in good shape in that you have no other consumer debt.

I have a friend, who paid off his house in 5 years. That was his and his wifes goal. They sacrificed for 5 years, no cable, 1 car, stay at home vacations. And they kinda got used to it. Now they have been mortgage free and then some for a decade....and yes they did go on a 2 week vacation to celebrate paying off the mortage at the time.

Edit:

And I don't think you were lied to, I think it was more that you were misinformed by well meaning individuals.


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## the-royal-mail

sags said:


> If we have a total meltdown, there would be workabouts a plenty.


Sure. But an individual would be ill-advised into thinking that he shouldn't worry because of these "workabouts". By the time this trickles down to the individual level he will have long since run out of money and been evicted from his house by the sheriff. You can't trust the government to take care of you.


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## argos1

This is true,

I did have to close my wifes LOC to get the mortgage plus bring mine down I think from $40-50k to $10-20k.

I dont need a huge LOC, but a minimum of $10k if S*** hits the fan.


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## slacker

@sags: "Moral hazard occurs when a party insulated from risk behaves differently than it would behave if it were fully exposed to the risk." - Wikipedia

Naive (and greedy) individuals invest in the real estate market, driving up the cost of housing to unaffordable levels. The banks encourage this behaviour to maximize profit. The government encourage this behaviour because of the short term gains from property tax and jobs from construction boom.

And who takes on the risk? Not the greedy home owners who is looking for 15% ROI on their house. Not the greedy bankers who gave out risky loans. Not the politicians who is banking on votes from a temporary booming economy.

No, we, the tax payer have to bail them all out. We take on the risk on behalf of these greedy people. That is not right. I say let them rot, let them go bankrupt. I have no sympathy for greedy folks who took on risky investment, drive up housing cost for everyone, and then come asking for a bail out.

Alas, that's not going to happen in the short term. The insanity will continue for quite some time. That's why even though I'm "bear" on the housing market, I don't think the bubble will burst for a few years yet.

But I'd hate to play musical chair with 80% of my networth.


----------



## Jon_Snow

If the government came to the rescue of overleveraged home owners in a rising interest rate environment, it would bother me a great deal. For every person that has acted irresponsibly in taking on more debt than they should, there are people ( I am one of them) who have been waiting patiently for an opportunity to buy real estate at cheaper prices. The government should just stay out of it.


----------



## slacker

@Jon_Snow: Taxpayers are already on the hook for hundreds of billions of mortgages. If the housing market tanks, and people start to default on their loans, taxpayers are responsible to pay off the banks. That is the mandate of the CMHC, to get banks to make risky loans to unqualified buyers.

Therefore, the government has every interest in propping up the housing market. Otherwise even the government can go bankrupt.

http://www.financialpost.com/opinion/story.html?id=c9c1de43-4a27-4329-809e-1b5d807431c0&p=2


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## Larry6417

I suspect that real estate will correct in some of the hotter markets in Canada, but I have no idea how large that correction will be. I don't think we can use the U.S. as an example. We can't deduct interest on mortgages, and our mortgage insurance co. is a pure crown corporation, subject to strict governance. Fannie and Freddie were the worst possible hybrid: public liabilities but private profits. 

The feds have already tightened the rules around mortgages to dampen what would otherwise be an even frothier market. I don't think we need to fear a real estate bailout in Canada.


----------



## Cal

I guess you could rent out a bedroom if times are tought too...


----------



## Jon_Snow

If the government does manage to keep housing inflated, I guess it will be condo living for my wife and I for the foreseeable future.

The fact that you must drop 700k+ to live in a detached house in a vancouver suburb is a disgrace of epic proportions, IMO.


----------



## Taxsaver

Cal said:


> I guess you could rent out a bedroom if times are tought too...


I'm doing that already. $300 including internet. Located in a basement in Scarborough. Chinese owners who don't clean the bathub or oven very often, if at all. I took care of bathtub with a pair of gloves, mask and CLR. I think they need to paint it over. I'm not complaining. 

In the meantime, I'm saving up money. My TSFA is growing fast. Grow baby, grow! I should be ready to buy a condo at the beginning of 2012.


----------



## slacker

@Jon_Snow: Jim Flaherty says everything is fine. $700k is a perfectly affordable for a house.

"The evidence is not there that Canada has a housing bubble. In fact, the evidence with respect to affordability of mortgages in Canada is solid and we have a stable market," - Jim Flaherty, Finance Minister

http://www.reuters.com/article/idUSOLANME65120101123

The government has every reason to prop up the housing market. Prices will become increasingly distorted. I'm staying away from this toxic waste dump until wages catch up to housing cost. Of course, that could take a decade or more.


----------



## the-royal-mail

Taxsaver said:


> My TSFA is growing fast. Grow baby, grow! I should be ready to buy a condo at the beginning of 2012.


A couple of other people around here have managed to make their TFSA savings grow. Care to share what you bought to make yours grow so much?


----------



## Taxsaver

the-royal-mail said:


> A couple of other people around here have managed to make their TFSA savings grow. Care to share what you bought to make yours grow so much?


Ah, I should have been more precise. It's growing not thanks to its interest (2%), but because I keep adding appreciable amounts of money to it. I live modestly, and cut expenses as much as possible.


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## the-royal-mail

Ah okay I get it.

I'm planning to "switch" my TFSA money from tier 1 status to tier 2 in 2011, which means I'll be ready to start investing and taking chances with that money. So far I've gained $62 in interest in that account (another $120 should be coming by year-end) so it's better than a kick in the behind. Wish me luck that things go well for me in 2011 so I can really make my TFSA grow!


----------



## osc

The government IS propping up the housing market and the banks. It has been doing so for decades. With CMHC, with close to 0 interest rates, with allowing less than 25% down and 30+ year mortgages. The net result has been a transfer of wealth from the working people to the banks and their shareholders. Again, being shareholder is much better than actually working (besides these indirect advantages there are others, thanks to the government, like significantly lower tax rates for capital gains and dividends).


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## Taxsaver

Good luck, Royal. I am careful with that money that will soon be used for buying a house or condo.


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## dogcom

Argos1 that was a good Grey Cup to watch. To bad Saskatchewan threw it away in the end.

I am also sure Montreal will be very tough to beat again next year.


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## Taxsaver

My team won again. hehe. Vive les Allouettes!

This reminds me of that song. Listen from 1:32. That bird is to die for!

http://www.youtube.com/watch?v=_zszqA-pcwM


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## Sherlock

At least you have a wife and kids. I'm all alone. By my definition you are very rich even if you're not worth a cent. I don't even have a girlfriend.


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## hystat

I'm 45, and I don't think I've ever been inside a house worth $500K, certainly never would occur to me to live in one.


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## kcowan

hystat said:


> I'm 45, and I don't think I've ever been inside a house worth $500K, certainly never would occur to me to live in one.


You might not have realized it. In North Toronto, $500k will get you an 800 sq.ft. teardown. But in a really nice neighborhood.


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## Four Pillars

Sherlock said:


> At least you have a wife and kids. I'm all alone. By my definition you are very rich even if you're not worth a cent. I don't even have a girlfriend.


Well, get off the investing forums and onto the dating websites. 

You can't win if you don't play...


----------



## argos1

dogcom said:


> Argos1 that was a good Grey Cup to watch. To bad Saskatchewan threw it away in the end.
> 
> I am also sure Montreal will be very tough to beat again next year.


Great Game, Sask. did not throw ball away..... it was a smart play...... only if Darian could get some more mustard on the ball.

We all believed it would be a high scoring affair, it was really a defensive battle.

I think big Anthony silenced all of his critics. This guy is a class and Hall of Fame material.

Until Next Season.


----------



## Taxsaver

Sherlock said:


> At least you have a wife and kids. I'm all alone. By my definition you are very rich even if you're not worth a cent. I don't even have a girlfriend.


Great investment for you: Find a woman who has money.


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## Jon_Snow

Taxsaver said:


> Great investment for you: Find a woman who has money.


I lucked out and found one with paid for real estate, money, and a built in frugality that puts mine to shame.


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## ashby corner

hystat said:


> I'm 45, and I don't think I've ever been inside a house worth $500K, certainly never would occur to me to live in one.


in ottawa there are many, many, many teardowns within a couple of miles of parliament that go for north of 500k.


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## kcowan

Jon_Snow said:


> I lucked out and found one with paid for real estate, money, and a built in frugality that puts mine to shame.


I found one who I loved who had nothing but potential. Then after 14 years her Mom died and left us another $1 million. Talk about dumb luck!

She even cares about how she spends.


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## Taxsaver

kcowan said:


> I found one who I loved who had nothing but potential. Then after 14 years her Mom died and left us another $1 million. Talk about dumb luck!
> 
> She even cares about how she spends.


Does she has a sister for Four Pillars?


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## Four Pillars

Taxsaver said:


> Does she has a sister for Four Pillars?


Shhhh....don't tell my wife!

I think you meant Sherlock.


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## Taxsaver

Four Pillars said:


> Shhhh....don't tell my wife!
> 
> I think you meant Sherlock.


Great reply, 4 Pillards. Yes, I meant Sherlock.


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## marina628

argos1 said:


> thank you dogcom.
> 
> If we only could get the support from more fellow Canadians (EX, TO/BC)
> 
> Thats a whole different post.
> 
> Berubeland, I dare you to show me a house in Oshawa 4bdr at 110k!!!????
> Would you live there?


This house would be down town near a crack house but you can find many nice homes in Oshawa/Courtice /Bowmanville for about $240,000 .

I have a 5 bedroom , 4 bathroom ,4200 sq ft custom built home on a 1 acre lot which cost me $600,000 including my appliances and finished basement .I have granite everywhere ,5 inch plank solid oak floors , towel warmers in my bathroom , solid staircases ,everything high end .I have 11ft ceilings on all levels and 9ft ceilings in my basement.

I owe $330,000 on my house only because of using it for my business ,i had $124,000 Mortgage but had to bump it up just a couple months ago .I seriously sit here and think was it a good idea to buy my 'dream home' in my dream spot .But I never said I can't afford it ,in fact the only reason I bought this house is because my business has assets I could sell any day to pay my house off ,my business has cash and receiveables as much as my mortgage just made a decision to get a 3.69% locked in rather than look at a business loan which would cost about 8%.

I feel sorry for you that you feel you had no choice but buy that house.I lived for years in a semi ,then moved to a small house on 30 ft lot.I bought a $200 car one time ,a perfectly good 1989 Topez that i drove for 2 years then sold it to a friend for $500 lol.

I bought a brand new detached lot in Oshawa as an investment property ,it carries for under $1200 a month including property tax.The train goes downtown everyday from here !You have options!

I don't worry about my kids because the oldest just turned 18,she and her friend already decided they are going to buy a house together ,get couple more roommates who will pay $500 a month and they will live cheap lol.She has a full time job at No Frills and lives on her $40 a week allowance we give her and banking her entire paycheck!

Marina


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## I'm Howard

She works full time but still gets allowance?


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## the-royal-mail

If she moves out on her own and has a job, I think it's time to cut the allowance. She is 18. Adult.


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## Sustainable PF

Wow, my allowance ended at age 11 which was when I started a paper route. 2 years later I was working in fast food. Allowance was cut the instant I made my own money.


----------



## clovis8

Sustainable PF said:


> Wow, my allowance ended at age 11 which was when I started a paper route. 2 years later I was working in fast food. Allowance was cut the instant I made my own money.


that is exactly how it worked for me too. I think once a kid can get a job an allowance is a horrible idea.


----------



## I'm Howard

The next generation are in line to receive a largesse from Parents and Grand Parents, some in the several millions of dollars.
I have two accounts I advise on, no fees just a favour, where the person is very elderly and common sense says give with a warm hand not a cold one.
They cannot do it, and within the near future some 60 somethings who don't need the money will inherit these monies which they intend to immediately give to their kids. 
I always wondered how people so young could afford a $500,000 home.
Thanks Nana and Bamps.


----------



## Sherlock

And Nana and Gramps didn't even earn that money, they bought a house in 1970 for $18,000 and did nothing but live in it and that house is now worth 800k (if in GTA).

Typical example: http://www.realtor.ca/propertyDetails.aspx?propertyId=9769981


----------



## crazyjackcsa

Sherlock said:


> And Nana and Gramps didn't even earn that money, they bought a house in 1970 for $18,000 and did nothing but live in it and that house is now worth 800k (if in GTA).
> 
> Typical example: http://www.realtor.ca/propertyDetails.aspx?propertyId=9769981


That's a great 10% return on investment, minus taxes, utilities and upkeep of course.


----------



## marina628

clovis8 said:


> that is exactly how it worked for me too. I think once a kid can get a job an allowance is a horrible idea.


Actually her $40 a week has been going automatically from my acct to hers since she was 15 and we did not stop it.My daughter turned 18 on November 18 ,2010 and took a year off to work full time to pay for her own education.She still lives at home , sorry you guys think it is a horrible idea but I don't miss the $40 a week and she is making good use of her Money.Her paycheck goes to one acct and she has never taken a dime from it as she is saving for school.
Most of her friends work full time and spending their paychecks at the mall.


----------



## kcowan

I think savings habits are taught without extending an allowance beyond working age.

So I think the presence of an allowance is immaterial. It is the teaching that counts. By example works well too.


----------



## marina628

Yes definitely and I had good teachers ,my parents and try to do the same for my kids.My daughter shops at second hand stores and dollar stores ,I have no doubt that she will be a millionaire before she is 40 lol.


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## I'm Howard

Macleans jut did a feature on this, and I can't be the only one tired of hearing this whining.

Student Debt may not have been necessary had you waited to go to School, got a job, taken evening programmes, or maybe just have gone to a local School.

The complaining about Student Debt is hard to bear from a generation who think nothing of taking a $30,000 loan to get a car, or who must get that annual Winter Get Away.

Studies East Samoan Anthropology and even got a Ph.D in it too bad, so sad, no jobs for you.

Business, I.T, Engineering , Nursing, Medecine etc, take your pick of jobs.

I now a young couple, who by renting, not partying, not drinking, in a few years have saved almost $100,000, and they do not have high paying jobs.

This generation will be the richest in History, Dad and Grand Dad just have to die first.


----------



## marina628

Howard you are correct about the student loans , having to work at a lower paying job while saving a couple years may also make them appreciate the value of hard earned money a bit more.
My Daughter is earning $11.00 a hour at No Frills and starts at 7am so no late nights for her .She will have $15,000 in her own Savings when she goes to School in September and with her RESP will not have to take any loans.She is also able to work enough during the school year to cover her weekly expenses.

My husband and I lived in a bachelor apartment for 3 years sleeping on a pull our sofa to save for our first home ,we paid $315 a month for rent when a one bedroom in same building was $600.

We were family of three with $155,000 mortgage living on $40,000 a year for many years.We had everything we needed ,one car ,my husband would treat himself to a round of golf maybe twice a year and we managed to pay our bills and save as well.I know people earning $100,000+ that are struggling to pay the bills ,their savings is HELOC .They live at home rent free until they are 30 and their first homes are $400,000+ and mortgages $320k+ .

We have good money talks with our 18 year old ,she just got her first Visa card and opened her TFSA .As parents we are not going to do the kids any favors by paying their way through life.


----------



## Berubeland

Speaking from personal experience here, having horrible low paying and often bad treatment jobs where you are an expendable employee does wonders for your motivation at school. 

When I went to college I was very motivated to do well. It also made me get very angry when one of our profs didn't show up for 8 of 16 of his scheduled classes. I even went to the office and demanded a refund of 50% of the course along with about 5 other students who were also adults. This same prof also gave us all c's for out midterm because "he didn't have time to mark our exams" Considering that my lowest mark was an A+ in all my other courses I was not impressed. 

My parents did pay my student loans after I was finished about $3800.


----------



## osc

I think the young generation is partly responsible for its problems, but not in the way most people think. I think it's because they are not politically active at all, and most laws are for the benefit of the older generation. It's incredible that there are laws to directly transfer wealth from the taxpayer poor to the older high net worth rich. 
And another thing. I think it's sad that in a wealthy country like Canada people allow and encourage child labor (before 18). And after that, they force very young adults to work very-low wage jobs before they can get an education.
If it was up to me, I would scrap OAS and replace it with free college education. The old people have enough wealth, the young generation has nothing but debt (and they also need to pay the country's debt that the older generation has accumulated by having lower taxes than they should have been). It would be better for the future of this country.


----------



## the-royal-mail

osc said:


> I think the young generation is partly responsible for its problems, but not in the way most people think. I think it's because they are not politically active at all, and most laws are for the benefit of the older generation. It's incredible that there are laws to directly transfer wealth from the taxpayer poor to the older high net worth rich.
> And another thing. I think it's sad that in a wealthy country like Canada people allow and encourage child labor (before 18). And after that, they force very young adults to work very-low wage jobs before they can get an education.
> If it was up to me, I would scrap OAS and replace it with free college education. The old people have enough wealth, the young generation has nothing but debt (and they also need to pay the country's debt that the older generation has accumulated by having lower taxes than they should have been). It would be better for the future of this country.


Total, utter nonsense. But much like everyone else finally did in the other thread you started about OAS, I am just going to ignore you. I think you are a borderline troll.


----------



## osc

the-royal-mail said:


> Total, utter nonsense. But much like everyone else finally did in the other thread you started about OAS, I am just going to ignore you. I think you are a borderline troll.


I think you are a bully, instead of discussing the issues, you continue to insult.


----------



## Cal

osc said:


> The old people have enough wealth, the young generation has nothing but debt (and they also need to pay the country's debt that the older generation has accumulated by having lower taxes than they should have been). It would be better for the future of this country.


I disagree w that statement. I think we are going to see alot of poor retirees, needing financial assistance in the near future.

I also disagree that education should be free. I think if you pay for a portion of it you appreciate it more, and perhaps will work harder/take more consideration into what you are doing/achieving.

Having said that, I do completely agree with your notion that education should be more affordable for the average student.


----------



## osc

Cal said:


> I disagree w that statement. I think we are going to see alot of poor retirees, needing financial assistance in the near future.


I am not saying that there are not many poor retirees who should be helped. However, according to official government documents, the average net worth of people over the age of 65 is three times that of people in their 30s. The help that is available to people over 65 is not available to younger people.

Consider this:
How does the government assist a 4-person young family (let's say in their early 30s) with 2 small children renting a two bedroom apartment with an annual income of $40k from one earner?

How does the government assist a 2-person older family (let's say in their late 60s) owning a $500k house and with a $40k annual income from pensions and RRSPs?

Which of these two cases do you think should receive more government help and why?
Who do you think will pay more taxes?


----------



## the-royal-mail

osc said:


> ... the average net worth of people over the age of 65 is three times that of people in their 30s.


It's called working for what you want.


----------



## slacker

osc said:


> I think you are a bully, instead of discussing the issues, you continue to insult.


Agreed.


----------



## kcowan

osc said:


> I am not saying that there are not many poor retirees who should be helped. However, according to official government documents, the average net worth of people over the age of 65 is three times that of people in their 30s. The help that is available to people over 65 is not available to younger people.


Surely you are aware that older people can no longer get jobs and younger people have many options to improve their lot in life. If we remove the rewards for hard work, we will end up in a socialist state.

How old are you and what do you do?


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## marina628

My parents are 72 and 71 .Neither of them every made more than $30,000 a year intheir lifetime and they always bought RSP every year .They found out after they reached 65 it really made no sense to them to buy RSP in their working years as they lost their OAS and in their tax range their RSP was nothing more than Deferred taxes.

My parents live on $3000 a month and are in good health ,no mortgage they buy a new car every 10 years .The OAS helps them out and I am offended to see people call it welfare.My dad got colitis when he was 28 years old , he lost his vision in one eye for quite a while because of the steroid drug treatments they were giving him 40 years ago.I have seen him crippled up so bad in arthritis so bad but he still worked all his life.He was too proud to go on welfare and he earned his right to retire at 60 and collect his CPP and definitely earned the right to his OAS.His net worth probably has never gone over $500,000 but even if it did they are entitled to it.

To OSC
Consider this:
How does the government assist a 4-person young family (let's say in their early 30s) with 2 small children renting a two bedroom apartment with an annual income of $40k from one earner?

People in early thiries have plenty of years and health ahead of them to better themselves , save for their own house which in 30+ years will also be worth $500,000 +.If you are able bodied then I don't think the government should assist a family beyond what they already to with the Child Tax Benefit.If you are stay at home mom take in a couple kids.Two adults earning minimum wages will earn more than $40,000 a year these days.

How does the government assist a 2-person older family (let's say in their late 60s) owning a $500k house and with a $40k annual income from pensions and RRSPs?
Older people tend to have more medical costs and I don't see OAS as government assisting them ,I think the value of their home should not be a factor when deciding if they get the money or not.


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## marina628

Btw this thread started when Argos1 was whining about having to buy an expensive house and going to lose it , how did we get on OAS?LOL I see argos disappeared as well.


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## I'm Howard

Variable.

Pay off as quick as possible today's rates are a gift, you will see 10% rates within five years.

$400,000 is one hell of a debt load, get it down as quickly as you can, it will bte your arse if you don't.

We once faced 20% rates, damn near lost the house.

Obstacles are the things you see when you take your eyes off the opportunities.

Ideally, be able to live on your wife's income, Ideally.

Me, married to Retired O.R Nurse, Graduate Economist and former CEO of major company, wintering in Florida, retired at 53.

Stay positive, and be aware ,a child will rearrange your whole thinking.


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## Berubeland

I agree with OSC on this one. Other countries are much more supportive of their students. 

I just rented an apartment to 2 Saudi students. They are getting an allowance of $2700 per month each to study abroad plus their tuition is completely paid. 

My personal belief is that students who are most able to learn should be taught. The current school system classes the exceptional learners in the same category as the learning disabled. 

About half of high IQ students drop out of school, as I did in Grade 9. Funny thing is when I went back to get my diploma they did a test as I was an "adult" I tested out of every single requirement for High School except for one course Grade 12 English. Considering I had attended French school from grade 6 onwards, I thought that was OK. 

I'm not afraid to say I'm terrified for my son age 3 reading and adding and substracting and multiplying when he hits school. My mom and sister both teachers offer the sage advice to stop "teaching" him. We're not even teaching him he absorbs it through his environment in countless ways. 

I sincerely wish I could afford to send him to one of the private schools that caters to gifted kids. They learn curriculum in three languages and are taught as fast as they can learn in an environment that encourages learning rather than compliance. Frankly it's ridiculous that I should have to pay for this. People who are capable of learning at accelerated rates are very rare and should be treated as a non renewable resource. They are our future scientists, researchers and entrepreneurs. 

Our current school system is very damaging to these young minds. Imagine what it would be like to go to school and learn how to read when you've been reading for several years. Imagine learning how to add when you've been adding for several years. Now imagine doing it every single day for hours per day. So what are we teaching these individuals... social skills? Not really, we are teaching them to ignore their own frustration and boredom every single day and put up with our system then penalizing them when they don't fit it. 

Personally I'm seriously considering home schooling options at this point. There's no way I'll enable the kind of abuse I went through.


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## osc

kcowan said:


> Surely you are aware that older people can no longer get jobs and younger people have many options to improve their lot in life. If we remove the rewards for hard work, we will end up in a socialist state.
> 
> How old are you and what do you do?


I don't see how that matters but I'm not young and I don't need government help. I am in the highest tax bracket from a combination of wage income and capital gains.

I see a payment made by government to someone using money from income taxes as welfare, and it's a socialist idea. I don't see it as a reward for hard work. I don't think it should be given to people who don't need it, no matter their age. 
On the other hand, I think people should be helped when they need help. I think it's a moral thing to do. I think most young people could use government assistance much more than people who don't need help (like people over 65 with enough assets).


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## I'm Howard

Our Sons went to Leaside High School in Toronto where the question is not whether to go to University, but to which one.

Prior to that they had always attended Private Schools but we wanted them to have friends in their own neighbourhood.


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