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July 9, 2019 | Messing with Heads

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.

First to Calgary, where Amanda is  vexing about what to do.

I’ve been reading your blog for about 5 years now and I’m hoping you can help with a decision my husband and I are in the process of making. We purchased a house in our dream neighbourhood in Calgary a few years ago. The house is old and needs a major renovation to get it to what we’d be comfortable with. We’re looking to start a family soon and would like to get into our forever home in a year or so, but we’re struggling with weather to:

1. Do a major renovation down to the studs
2. Tear down the house and build a new reasonable house
3. Sell and purchase a house in a less desirable neighborhood with little to no mortgage

Ideally, we’d like to stay in our neighbourhood where we are close to downtown, work, parks and amenities. However, it’s also been nice having no mortgage. We’re 35 and 40 years old and make a combined $250k/year. We have $400k in retirement plans, $100k in investments and a mortgage free house worth $750k. What would you do?  If we take out a mortgage, how much would you recommend? Any advice would be appreciated.

Easy. Move. If you go to the studs, a full reno will cost at least $300,000 and take a year, forcing you to move out and rent. If you tear it down and build a new house, the cost will be even greater – at least $400,000 (probably more since you’re not going to do any of the work yourself) – and, yes, you’ll have to move out for at least a year. In both of the above your savings will be eaten up with only crummy company RRSPs left intact, and you’ll owe three or four hundred grand. Of course, this is just when life gets a lot more expensive (kids) and your household income goes down (kids). Moreover, pouring that much more money into the property may mean you never get it out again. (There is no ‘forever’ house…)

Almost always (and especially in Calgary) you will get a lot more for your money with a resale than a new build. So list. Go shopping. Be aggressive.

Now to Montréal, and poor Jean. At 41 he’s jobless – laid off six months ago. He owns a condo, no savings, no investments, with a $140,000 mortgage and two credits cards, one with a $30,000 balance, now in default. “I am paying for mistakes made in the past,” he says. “Obviously that credit card is causing a lot of stress and anxiety.”

I’m thinking of the following two scenarios.

Scenario 1:
Get a 5k Line of Credit from the bank. I would use it to paint my condo (painting the unit will cost approx. 2k + home staging etc.) Once set up, I will sell the condo and make a profit. With it, I will pay off the mortgage, both CCs, save enough money for a 6-month emergency fund. Save a little for retirement. And I still have some money left over to travel, put a down payment on another condo, or simply rent an apartment and invest in stocks, mutual funds, etc. I would be free but homeless so to speak. But I would be able to do anything I want, travel, start a business, invest in my TFSA etc.

Scenario 2:
Accept any job. Keep the condo. Rent it. The monthly rent would cover the mortgage, condo fees and taxes. Borrow some money from the bank to pay off my CCs. Then, I would rent a cheap apartment to live in. I wouldn’t have an emergency fund so I would need to work and save for that. Also, I wouldn’t be able to travel or invest as much as I would love too.

What do you think I should do? Thank you very much for any advice or inputs.

Jean, Jean, Jean. Is this even a serious question? Step away from the poutine for a minute and clear your mind.

First, paint the damn place yourself. You’re unemployed, remember? Second, sell it. Pronto, while mortgage rates are below 3%. Pay off all your debts, forget the vacation (spend the time looking for a job), stuff your TFSA and a non-reg account with nice ETFs (no stocks, no mutuals) and, for the love of Allah, do not buy another condo. Obviously you need to rent and start getting serious about saving and investing (you’re now in your 40s. Grow up). And did I mention getting a job?

Real estate. Messing with heads, one Canadian at a time.


The barking, snapping, licking, whining and snarling continues this week as this pathetic blog brings you more Vox Canabis. One day last week readers were asked to submit a guest post, and scores did. Many are too weird to publish (not a total surprise, I admit), but others are worthy efforts. Should we continue this periodically? Let me know.

Well, here’s KC Jo, who wants us to know what’s wrong with the world (and see her dog). In two words, it’s the Gig Economy. Oh, and you can add Millennials to that.

  Pensions, and government industries exist when workers are supporting the system. Being a manager requires employees to manage, not to mention keeping work flowing as raw products are consumed to create new consumer goods. There are 10 openings for entry level positions that are not being filled by young workers aged 19 – 25 on our site. These are not low paying jobs, the starting wage in my section is $19.00 an hour for the 1st 2 weeks and caps at $26.00. full time with medical dental and pension.

HR and all the managers try to fill these openings, however, the new age workers are only wanting cash gigs and expect payment after each days’ work. Craigslist’s resume section here in Vancouver is full of GIG ads.

When did a cash gig become non-federal offence with the CRA following up on lost taxes? These young people either refuse to comply with paying their way nor do they want to work hard for what is freely given to them. The jobs that need to be filled aren’t glamorous, light bodied positions, however they demand attention to work safe with fast paced environments. The young people we get to choose from would rather do little as possible then actually make something positive in life.

Society has created these “GIG KIDS,” did their parents want better for their offspring but by wanting better, not show these pale bodies how to work hard in life for what they want? How can these young’ins pay our pensions and hospital bills doing cash GIG jobs all their lives?

Let’s hear from Ed now. No dog pic, and he didn’t actually want this published. But, too bad…

First of all thank you for the blog I’ve ready daily for years, it is an important part of my life. My concerns are really centred around the political environment, both here and around the world.

At home I’m very concerned that we seem compelled to run deficits even when unemployment and the cost of borrowing are at historical lows. How can this be seen as anything but stealing from future generations? Should we expect the deficits to swell considerably as the cost of money increases or do we plan to further increase taxes. Unfortunately, it seems like a sustainable budget is nowhere to be found as new votes are purchased and spending cuts are political suicide.

You may say that the conservatives would tackle this problem but there are two foundational issues there. First, a conservative government is far from a guarantee of a balanced budget (think Doug Ford and subsidized beer). Second, the conservatives are opposed to a carbon tax which seems like a necessary step to combat climate change. How can we possibly expect to reduce emissions when goods and services do not include the cost of polluting to influence our purchasing decisions? So are the choices that we can continue to dig ourselves deeper in debt or ignore climate change with decorative programs without specific targets?

This email could have been a lot longer and I hope you don’t publish it as I’m sure I would never heal from the abuse I would take. Thanks for listening and all that you do.

Finally, today, Julia. If you’re walking around reading this blog on your devise instead of intereacting with fellow human beings, she says, shame on you. Bad zombie!

   What is wrong with the world, you ask? To me it is the zombification of the mind of an individual. The fact that as if overnight all people seem to have disappeared from the face of this planet and it is now inhabited by walking cell phones. I watch individuals on public transport, women especially, how they put the phone down. Then a hand begins to twitch, exhibiting immediate withdrawal, until the person snaps and has to check the phone again, even if there is nothing there. Constant nervous reaching for the thing that is now the pivot around which every life revolves. Each moth has a personal little flame it gets to circle around endlessly.

Everyone is a dopamine addict. Imagine those same people as any other kind of addict and ask yourself: “What kind of a functioning society can you construct when 99% of the population can’t last a minute without a dopamine hit from a battery powered wireless dispenser.” Can you trust these addicts to watch over someone else’s baby or to raise a child of their own? Can you trust them to plan long term and exercise restraint, instead of seeking instant gratification? What can you do when everyone has a brain trapped in a cell phone, and the world is slowly decaying around them?

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July 9th, 2019

Posted In: The Greater Fool

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