Category Archives: Pay off Debt or Invest in Real Estate

What does being rich mean? How to define it

You probably know wealth when you see it around you – but do you know whether you are rich?

With real estate values soaring across the country, many Canadians feel a level of financial confidence today they’ve never known before. But have they reached a point of financial security? Do they have enough money for their future, and if not, how will they know when they do?

Statistics Canada employs numerous metrics for the other end of the spectrum, without ever using the term “poor.” For instance, the income cutoff for a single person living in a large city was $24,328 in 2014. For a family of four the amount was $45,206.

But there is no magic threshold, no national statistic, that defines you as rich. Wealth is a malleable term that might mean a well-stocked beer fridge, living mortgage-free or having enough money invested for a long retirement.

When it comes to amassing wealth, the United States sets the gold standard. But Americans themselves can’t definitively articulate what being rich means.

Twenty-seven per cent define it as having a lot of money; while 24 per cent say wealth means enjoying life’s experiences, and 22 per cent say it means being able to buy anything they want. That is the breakdown according to a representative sample of 1,000 U.S. adults surveyed in April by Koski Research for Charles Schwab Corp.

When asked to express how much is required to be considered “wealthy,” this “average” group of Americans came up with the amount of $2.4-million (U.S.), or nearly 30 times the actual median net worth of U.S. households.

Ask rich people a question like that, however, and you get a completely different answer.

Many people who have the drive to make significant sums of money don’t have the ability to dial down that ambition once they are wealthy. For them, the thrill is in the pursuit and money is the scorecard.

When the investment firm UBS AG polled 2,215 U.S. millionaires in 2015, nearly two-thirds of those with a net worth of less than $5-million and dependent children expressed concern that they are only one wrong step away from a major setback – be it a large investment failure or job loss. For individuals with $5-million or more, one-third said they felt they couldn’t withstand a setback.

Clearly, money doesn’t make it easy to sleep at night; it can be difficult to relax once you get to the top.

“With memories of the financial crisis still lingering, most millionaires don’t have enough wealth to feel secure,” concluded the UBS report, entitled When is Enough … Enough? “As a result, many feel stuck on a treadmill, without a real sense of how much wealth would make them satisfied enough to get off.”

In Canada, the average household net worth rose 4.3 per cent to $680,098 in 2015, according to Environics Analytics. Vancouver households crossed a symbolic threshold, becoming the country’s first “city of millionaires,” with an average net worth of $1,036,202, up 7.3 per cent from the prior year.

These gains were powered largely by rising real estate prices; Canadians’ principal residences comprise about one-third of their assets, according to Statistics Canada. What homeowners generally fail to accept, however, is that the money in their principal residence is permanently locked in. Very few Canadians end up selling their homes in retirement and enjoying the proceeds until their last cheque bounces the day they die peacefully in their beds.

Instead of looking at home valuations, a better measurement of wealth is whether your earned income – that is personal income from investments rather than employment – exceeds your expenses. Another sign of real wealth is the ability to forgo life insurance, because your estate would have enough assets to support your family at its current lifestyle.

Probably the least helpful way to assess your wealth is by comparing your spending with others, a process that will surely leave you feeling short.

Consider the millionaire family that flies to Whistler, B.C., annually for a ski vacation during the March break. By most standards, they look rich. But those parents may well be looking at a select group of their friends who are redefining the holiday experience by opting for snow and surf during the two-week break scheduled by most private schools: the first week in Whistler, the second in the Caribbean.

Instead of chasing a mirage, the best approach may be to embrace a broader definition of wealth. If you knew you only had five years to live, how much financial hardship would your family incur? How drastic a set of steps would you need to take to get your financial affairs in a state acceptable to you? What financial legacy would you be leaving and how close to your goals would it be? And most importantly, what course would you set to optimize those final years? Answers to these questions could provide the best snapshot of your true personal wealth today.

 

https://beta.theglobeandmail.com/globe-investor/what-does-being-rich-mean-how-to-define-it/article36380777/?ref=http://www.theglobeandmail.com&

 

Know Your Options

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Life has a habit of throwing unexpected twists at us when we least expect them. While none of us should live our lives in a constant state of worry, it’s important to know that, should financial troubles from the loss of a job or other unexpected situations strike, you can count on the advice of your mortgage broker to see you through it.

Life changes involving illness, change of work status or change of marital status can affect your ability to make your mortgage payments, so if you anticipate a change in any of these things please call to discuss your payment options as soon as possible.

If you have to default on a payment, lenders can sometimes grant you temporary payment relief and give you options for a repayment plan, depending on the situation. Mortgagors with a good payment record can often work out a temporary agreement that will allow them to make reduced payments for a specified period of time.

Remember, lenders do not want you to default on your mortgage any more than you do. It is in everyone’s best interest for you to demonstrate good financial discipline when times are good, so you have the best chance of full cooperation from your lender if you ever run into difficulty.

Please call me if you anticipate needing a “Plan B” for your loan obligations!

253 Verdun Road. Oshawa

Trendy, Thoughtful, Fully Renovated, Charming Brick Home.

Located on Quiet Street Close To All Amenities. Everything New Including Kitchen W Granite Countertops, Main Floor Powder/ Laundry Room, Hardwood Floors On Main Floor, Wide Square Baseboards, 200 Amp Service And Panel, Gas Furnace, Ac, Paved Driveway, Concrete Walkway, 2 Porches Plus Walkout From Dining Room To Gigantic Deck Overlooking Huge Shady Back Yard. Everything Except Furniture Included.

Home Shows Amazing! All of This for $355000.

Positive Cash Flow!

271 Nassau Street. Oshawa

Income Generated each month, in this Property, Close to Schools, Transit and Shopping. Main Floor has two units, and one upper unit. Yearly rental income is $ 33684. . Expenses are: Taxes $3428, Water $1096, Gas $1555, Hydro $5670.39. Home is fully rented, and ready for a new owner to collect the rent cheques.  Call Today!

 

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271 Nassau St. Oshawa
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Upper Unit Living Room
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Upper Unit Kitchen
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Bedroom
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Main Floor 1 Bedroom Unit
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Main Floor Unit
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Main Floor Unit
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Main floor Bedroom
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Triple Closet
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Large Yard
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Parking for 6 Cars
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New A/c 2015
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Main Floor Unit + Basement
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Kitchen
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Living Room
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Where Do Extra Payments Go?

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If you were lucky enough to get a raise earlier this year, or found yourself in possession of a one-time lump sum, you may have asked to have that extra amount applied directly to your mortgage. If you have a relatively new mortgage, you may be wondering why the interest portion of your monthly mortgage payment is not noticeably declining by now.

The reason is that the interest portion of your payment is calculated on the outstanding balance of your mortgage which, especially in the early years, makes up a significant portion of your monthly payments. As your mortgage term progresses and your principal starts to shrink, the amount of money that goes directly towards the principal increases while the amount that goes toward the interest declines.

Any time you make extra payments, they go directly toward reducing your overall principal balance, and with that lower principal you’ll pay less in interest overall and shave years off your mortgage.

Please ask for an example, based on any extra amount you may be able to put toward your mortgage on either a one-time or a monthly basis, of how much time AND money you could save!

For More Information, Contact The Mash Team!

10 Ways to Avoid a Tax Audit

We have several times, and its very stressful.

Here are 10 ways that may help you to Avoid an Tax Audit

1.  Don’t Ignore the CRA’s requests for further information

2. Don’t have large or unusual changes in deductions or credits. 

3. Don’t claim large home-office deductions.

4. Don’t Claim 100 per cent business use of a vehicle. 

5.  Not reporting income from a T-slip. 

6. Don’t Report  income much lower than other residents in the same area. 

7.  Don’t Claim an aggressive tax shelter. 

8.  Don’t have Recurring losses from a rental property. 

9.  Avoid being Self Employed

10.  Don’t Have a lot of money in your TFSA 

Source: CRA 201242540

For The Complete Article: Click Here: 10 Ways to Attract A CRA Auditors Attention

 

Interest rate and how it affects you

 

Saving strategies to pay off your mortgage

Many financial planners will agree that one of the best financial strategies available to homeowners is to pay off your mortgage as quickly as possible and eliminate years of paying unnecessary interest. Here are a few strategies to help you cut years off your mortgage:

  • Shop around – When your mortgage comes up for renewal, you aren’t limited to using the same lender. Take a look at what other financial institutions or mortgage brokers have to offer. We can put you in touch with a choice of lenders and help you evaluate the various options available to you.
  • Consider all your options – When evaluating mortgages, remember there are other factors that can have an impact on cost in addition to the interest rate. The opportunity to make supplementary payments against the principal has significant value. Penalties for early termination can also have an impact on how quickly you can retire your mortgage debt.
  • Make payments as frequently as possible – Most lenders will allow you to change the frequency of your payments during the term of an existing mortgage. Speak to your lender and choose the most frequent schedule of payments available to you. Choosing weekly payments versus monthly can literally save you thousands of dollars and help you pay off your mortgage years earlier.
  • Generate additional income from your property – Renting out a portion of your property to earn income is a time-honoured practice that still holds true today. Sacrificing some living space in the early years of your mortgage can ‘jump start’ your payment schedule. Lump sum payments applied directly to your principal early in your mortgage term will have make a major impact on paying off your home quickly and achieving financial independence. This can easily be done in the Durham Region as long as you meet the Regions guidelines.

 

Buy or Rent – What’s right for you?

A key reason many people choose to rent instead of buying their own home is their reluctance to sign their name to a long-term mortgage agreement. But when you come right down to it, very few of us can expect to go through life without paying the cost of a place of residence in one form or another. As a renter, you’ve probably already made a commitment to a fixed schedule of payments for housing – but instead of a mortgage, it’s a lease or rental agreement. In reality, rather than being a negative, one of the major advantages of a mortgage agreement is that payments can be locked in for an extended period—which can work in your favour. Since no one can guarantee what your rental payments may be three or even five years down the road, your mortgage agreement can actually protect you from the unexpected increases you may experience when you rent.

pdu8ckjklu4k_Nelson_Coldwell__0396-webStill, some people are intimidated by the large amount of debt that is represented by a mortgage agreement. Yet if you added up all the rental payments you could expect to pay over a space of many years, you may find that going the mortgage route is actually the more affordable of the two options. And at the end of the process, renters are left with nothing to show but a pile of receipts. With today’s low mortgage rates and some creative financing, the cost of buying a home may be lower than you think. Your Coldwell Banker real estate professional can show you how owning your own home may be more affordable than you ever imagined.

While making mortgage payments may actually be more affordable than paying rent, let’s not lose sight of the biggest financial benefit of all. The simple fact is, when you rent, you’re building someone else’s ownership equity in the property where you live. On the other hand, when you buy a home, you’re making an investment in your future, while a portion of your mortgage payment builds personal equity for you. If you decide to sell sometime in the future, that equity is something you’ll take with you as you make your next move.

Lastly, let’s not forget the creative freedom and pride of ownership that comes with owning your own property. When you buy, you decide about the home improvements and decor changes you want to make. You decide colour schemes and where to hang that favourite picture. And you’ll also earn the added equity that any such improvements may add to your home. Spending money to improve a rental property just puts value in someone else’s pocket.

If you’re tired of paying off someone else’s mortgage for them, then why not call me, your Coldwell Banker real estate professional for a no obligation consultation to help you find out how to make your dream of home ownership a reality.