HawthorneVillager.com

Hi Conrad,

In general I would say your correct, but I would like to think I am an exception. I bought my first house in Oakville when I was 22 with my now wife (she was 20). We bought the new house (36' Walnut) Sept 2008 planning to move in 2010, we were 25, and 23. By the time we move we will have paid almost 60% off the first house. We have worked our ass off and continue to do so. But like you said about young people, all of my friends rent, or still live with parents, my brother who is actually older then me still lives at home. One of the best things we did for our future and to be prepared for a crisis like you said is switched our mortgage to Manulife One. We have access to all equity so if any of us lost our job or got sick we would be covered for 2-3 years.

With all that, just trying to point out not everyone in the younger generation has it wrong BUT in general I would say your right. The only way I see it getting better is making a course on finances mandatory throughout school. Not sure if anyone else would agree here, but I truly feel it would help. Tips like never cancel your first credit card as that is when your credit starts, or always pay $1 extra on top of what you owe on your CC so they owe you which will keep it active even if your not using it.

I think our next step is finding a financial planner like yourself to plan retirement as we have no clue how to fully plan that far down the line. The retirement part to be honest worries me as I see my dad who is now in his 60s and no signs of being able to retire (my mom has never understood the word save)

Will

I think it is safe to say that the housing market in Milton did not burst.

Matt

If last year was a housing bubble burst (at least here in Canada), then the word burst is overrated. For those that sold during the tough 3 - 4months last year, majority did not sell at a loss. Just did not make as much money as they wanted.

If home prices slash by 30%-40% then I would call that a burst, talk to the folks in LA, FL etc.

Last November we started looking at our finances and came to the conclusion we didn't have enough debt, what with the current market situation. So we converted our brokerage 'cash account' into a 'margin account' and starting buying equities on margin, and at the same time started drawing down on our HELOC (home equity line of credit) to buy more preferreds and dividend paying stock that way.

Our HELOC only has an interest rate of 2.25% currently (it's prime minus .25%) so at the time there were a lot of preferred shares paying out rates that were in the teens, I felt that our debt level was really too low.

I have a financial blog at http://www.canadiandividend.com/

When I told people I thought we needed to start acquiring more good debt because we didn't have enough, I usually get people looking at me like I'm crazy

Right now though, I think our debt levels are just fine. Not too high, not too low.

Hi Rick, I got a notice from TD that they are apparantly following suit and all LOC and HELOC are going to be Prime +1%. Apparantly following the trend of other banks. Even for their employees.

Do you mind sharing who your HELOC is with? Sounds like you got a great rate.

Thanks
Matt

Mine's with TD as well, so I assume maybe that my rate may be changing as well in the future. I have to check my agreement with them. I opened the HELOC a long time ago with them when rates were different, so at the time the agreement I signed with them was Prime -0.25% I believe. I recently checked my statement last month, and it was still at that low rate. So for a year now I've been taking advantage of it (i.e. although I opened it a few years ago or so I only started using it last year).

My friend works there and told me that when I signed burried in the small print, all LOCs are capped to a Max of Prime +5% but that the discounts they provide can be altered at any time.

Apparantly it is costing them too much to borrow money and they are not making enough money these days.

Matt

Yes we are, a nation of 1.3 trillion dollars in personal debt not including mortgages. This is huge. Debt to income is 130% right now.

Hawthorner: Helping other people should be an important priority for everyone. Also, it’s not about the size of the house or type of car that you drive that matters, but living comfortable lifestyle and being able to help other. My dedication so far is 5% of every dollar that I make is going into a separate account and used to help people. I’m actually very proud of it.
When it comes to budgeting not everyone is great at it, and there is nothing wrong with it because apparently it depends on the brain structure: left vs right. So sometimes you might benefit from finding a right person to guide you through a saving program. Send me an e-mail and I will send you a great budgeting spread sheet in excel that may help you to begin.

Will: It is great to find a young guy who is thinking a lot like me. I’m a young guy myself and I work hard on my business. I bought my first rental property at 22 years old and going for more. I came to Canada when I was 16 years old and I’ve seen hard times while living with a single mother who was a teacher back in Ukraine. Trust me; growing up in 90’ in post USSR country was quite an “adventure”. I learned to live with no credit available and cash was only the way to go (unfortunately many time this option was also unavailable sometimes ) but at the same time it boosted my Spirit to take advantage of every single opportunity in Canada. I learned how successful everyone can become if to use credit system wisely.
My financial education started with my Step Dad who taught me about Canadian financial system and how to become a business owner. That’s why schools MUST implement financial education program for kids. We have to teach kids how to produce more than to consume in order to build strong society in the future. I’m trying to give my friends a proper advice how to improve their lifestyle, but like you said, they simply don’t do anything to improve and find every single excuse why not to make a change.
Having a HELOC as a security is what I mention to every one of my clients. This is a proper thing to do; there are re-advanceable mortgages that actually increase your HELOC portion with every mortgage payment automatically. Said that, I think Manulife Prime is 3.25% but I guess it does not matter if you don’t draw it.

Housing Bubble did not BURST in Milton, or Ontario, or CANADA. In fact it is growing bigger with interest rates being low. There are bidding wars going on and housing prices inflate to ridiculous levels. Single home in Milton over 700K, are you kidding me???? Try to sell it a few years down the road with interest rate 2 or 3 times higher. NO WAY!!!

Rick:
Great Blog,even though I disagree with few companies in your portfolio after reviewing financial statements. I also hold my YLO.UN stocks but I won’t sell it. Utilizing your home equity is an important way of building a financial success. Dividend paying stocks and real estate investment is the way to go. I strongly believe that people should utilize their home equity to create residual income. Think about this: “we are sleeping 1/3 of our lives, and if during this time you don’t make money I call it a WASTE OF TIME!!!”
I read tons of books on investments and follow Warren Buffets approach, so far I managed to go through the crisis without losing a dollar on the stock market, mainly because I was buying dividend paying strong companies. Recently I was considering ALA.UN and few other funds, since my Enerflex (EFX.UN) and Harvest Energy Trust (HTE.UN) are going through acquisition and I just took my money of the table.
God, I can go on about these topics forever. I will quote Robert Kiyosaki in a book called”Why We Want You To Be Rich”: We all born rich. We all have been given the most powerful lever on earth, our minds… so use your mind for leverage to make you rich rather than to make excuses.”

_________________
Dmitri Ivanov
Mortgage Broker
Lic # M09000265
Office: 905 876 4751
Cell: 905 691 6706
Fax: 905 693 1858
email: dmitri.ivanov@migroup.ca
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