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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

February 18, 2018 | GYOW

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Days ago we sliced & diced the young musical Starbucks babe who decided to gamble it all on a condo in dubious Mission.

Is it cultural, tribal or just FOMO pressure that makes kids hot to get mortgaged? Do they believe it’s an easy path to getting money without working? Maybe an overpowering urge for stability and nesting? Or is it just social – succumbing to peer pressures – that would make a young person trade freedom, flexibility and infinite choices for condo fees, property tax and a mortgage payment?

Dunno. But if you could buy a home for two or three times your income, it might not matter. Today it can be ten or twelve (at least) times annual earnings. In Vancouver, says the National Bank, it now takes 29 years to save enough for a down payment – which is the definition of futility. So why do people keep trying? Why not just (a) move or (b) decide there are more productive things to do with your money, and your days?

An enduring tenet of this pathetic blog is this: the goal of life is not a house. Instead, it is the worthy spending of your time.

So here’s a counterpoint to the Mission-bound Ms. Sbux. Please welcome Scott…

“Just a short note to let you know I’m liking that blog.  I’ve been following your advice for years and your blog does a great job,” he says in the obligatory suck-up.

My own tale of woe.  I started out as an English major at UofT.  I wisely came to my senses, and moved to Manitoba where I switched majors, improved my employment prospects after graduation, and took full advantage of a relative lower cost of living, whilst enjoying the same standard I had in T.O.

My tale gets worse.  I actually graduated with 0 debt.  I’m one of those weirdos who held a job despite managing a full course load. I eventually found satisfactory employment completely unrelated to anything I studied in school.  I was lucky, because although we’re all in a profession where we’re pulling in a good wage, I was mentored by a few of the guys in money management.  They set the foundation.

So did I buy a house in cheap, cold Winnipeg?

No.  I rented.  For years.  My sad tale continues.  I bought groceries and made food like a normal person, I never did “Timmy’s runs” and don’t even think about talking to me about $tarbucks. I endured ridicule.  “How come you don’t buy a house?”  “Tim’s (coffee, what else) is like, the best ever.”  I was single then, performing shift work, so I needed a low-maintenance place to rest up and have little worries.  Toilet blows up?  Property Mgt deals with it.  I’ve paid for that in my rent.  I can make own coffee (still do) for pennies a cup.

I’ve heard it more times than I care to remember, “You’ll never get ahead by bringing coffee from home.”  It all adds up.  It does.  Or, “You’re a young guy.  Buy a house and sell it down the road, you’ll make lots of money.”

I learned early.  A house doesn’t make money.  It COSTS money.  So amid all the mockery and snickering along the way I quietly worked, invested and basically didn’t make a life and/or money stupid move.  Like investing in a speculative venture or ponzi/pyramid scheme.  I guess the kids call that Bitcoin these days.

My sad story ends with me being semi-retired.  I can pick and choose my hours and have enough FU money (I guess the ‘moisters’ refer to this as … ‘Freedom Unlimited’.) to call it a day if I choose.

Ok I guess that wasn’t so short after all.

A few observations:

Too many people try and spend their way to wealth.  You refer to the Audis and so forth.  They might be faking-it-till-they-make-it.  But, they’re all fake, and they’ll never make it.  Next time you see a massive house, or an Audi, or a high cost purchase, ask yourself, “Is it bought and paid for, free and clear?”  Sometimes it is, most often – nope.

For the ‘moisters’ out there – I believe getting married is the most important financial decision you’ll ever make.  More than your education, profession and even what you’ll invest in.  My wife, bless her heart, is even more of a bad ass than I am.  She possesses an MA in Philosophy and also worked a job completely unrelated to her post grad work.  She’s completely on the same page with how we invest and manage our finances.

We still consider $100 a lot of money.  As time went on we eventually caved in and bought a house and not a mortgage.  We only have one vehicle, and we can afford to buy new. 0 financing.  If we don’t get the deal we want, we’ll walk.

We also learned from our parents.  I know, it’s odd in our world today, but my folks actually knew each other and stayed married.  Same with my wife.  Buy only what you can afford.  Save.  Invest.  One step at a time.  Don’t skip steps or take shortcuts.  Don’t listen to morons.  Don’t do stupid shit and go to jail.  And etc.

You must either be bored if you’ve read this far.  One more thing – I believe a lot of this house-horny nonsense is a result of those ridiculous TV shows (buy it, flip it, renovate it, design it, buy it? and etc etc etc.  Selling them on something they can’t afford.  But hey, it’s “on trend.” Ok, thanks Garth.  I know you have more important things to do.  If you want to gleefully dissect this and pass along a response that’d be solid.  Cheers.

Scott’s moral: go your own way.

If the goal is freedom from worry and work at an age you can enjoy it, real estate my not be the right path. Especially now when costs are extreme and historic. Nobody needs to own, nor be in debt, to have a home. That’s where you live with the ones you care about. It’s where the dog sleeps.

Emotional and financial goals are often opposed. People make decisions by rote and instinct, not always with intellect and forethought. What worked for the parents may not for the child. What others covet may be your downfall. Pick the destination, then go your own way. Proudly.

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February 18th, 2018

Posted In: The Greater Fool

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