Comments on: Overly Comfortable with Debt http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/ Wed, 08 Feb 2012 17:31:40 +0000 hourly 1 http://wordpress.org/?v=3.1 By: moneygardener http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26881 moneygardener Sat, 30 May 2009 19:57:39 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26881 Nothing wrong with debt, as mentioned net worth and personal balance sheet are key. Nothing wrong with debt, as mentioned net worth and personal balance sheet are key.

]]> By: Julie http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26708 Julie Thu, 28 May 2009 13:50:25 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26708 Thanks very much LutR - your story is really inspiring. You and your wife have worked hard and smart and been disciplined in order to reach your goals and make the life you wish to have. A lot of people could learn from your story -- you should take Tim up on the idea of a future guest post. I'm debt-free and on my way to financial independence but am still looking (though probably not hard enough) for that frugal, hippy guy! :) Hope to hear more from you in the blogosphere and thanks again for sharing your story. Thanks very much LutR – your story is really inspiring. You and your wife have worked hard and smart and been disciplined in order to reach your goals and make the life you wish to have. A lot of people could learn from your story — you should take Tim up on the idea of a future guest post.

I’m debt-free and on my way to financial independence but am still looking (though probably not hard enough) for that frugal, hippy guy! :)

Hope to hear more from you in the blogosphere and thanks again for sharing your story.

]]> By: Emperor http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26697 Emperor Thu, 28 May 2009 11:25:10 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26697 I am uncomfortable with debt because having debts means I am more dependant on a steady revenue stream to get by, e.g. less freedom. I am debt free since 2 years now and all I can say is that it's one of the best financial move I made in my life, the relief is astonishing. I am uncomfortable with debt because having debts means I am more dependant on a steady revenue stream to get by, e.g. less freedom.

I am debt free since 2 years now and all I can say is that it’s one of the best financial move I made in my life, the relief is astonishing.

]]> By: Canadian Dream http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26630 Canadian Dream Wed, 27 May 2009 12:47:16 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26630 LuR, Great reply and thanks for answering Julie's request. I really don't mind guest posts, so really go ahead and borrow the blog for a day if you want. Tim LuR,

Great reply and thanks for answering Julie’s request. I really don’t mind guest posts, so really go ahead and borrow the blog for a day if you want.

Tim

]]> By: Living under the radar http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26607 Living under the radar Wed, 27 May 2009 02:10:22 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26607 Julie; I'd be glad to share, but this really is Tim's blog ;) The strategy that worked best for us was to look at cashflow rather than just looking at savings, or chasing returns. We also looked at what worked for us in a holistic sense. We both enjoy people and I enjoy a part-time role as Mr. Fix-it on our house rentals, so the buying up the neighborhood and renting out houses allowed us to create our own little commune. We plan on staying in our house, so wouldn't it be nice to pick your own neighbors? And if things don't work out with them there's always the SRI factor (Sudden Rent Increase). The mix is really great now, we keep our rents reasonable, have great tenants, and have a steady stream of 'retirement' income. We incorporated and started a small business, in an area related to our interests, and in something the whole family enjoys and can be done as a home based business. Because corporations are their own legal entity, they only pay taxes on profit, not earnings. This allowed us to do income streaming to control our personal level of T4 taxation, declare a T5 dividend when necessary and depreciate assets against profit, therby reducing our overall tax burden. Obviously, the deductions must be on assets that are used in the generation of income for the business, and the tables of depreciation are on a fixed basis, based on the percentage of use for business use. We consulted a lawyer and accountant who specialize in tax law when we set the business up at the start up, and I would advise that they are well worth the investment. By re-investing the rental incomes and business profits, we were able to purchase assets that generated cash in a tax perferred basis. If a person is able to live within a low tax bracket from their T4 income (which you can stream out to family members who perfom duties for your company), you can reduce your overall tax bill, which is the biggest hurdle to accumulating wealth that most Canadian's face. We diversified into some gold and cash, knowing full well that the US dollar is in for a turbulent time when the 'package' gets some traction and inflation grabs hold. We are 50/50 in bonds and broadbased equities, but are going to back off on that over the next few months, as we are betting the north american markets are set for another slide soon. Diversification and asset allocation have seemed to work out so far, oh yeah, and low risk, we aren't big on risk. For us, the keys were finding investment vehicles that matched our 'hippy' lifestyle, and retaining control of our assets in our own hands; in our mind, we love being able to look out our window and see our assets everyday, knowing we set the rent and we pick our tenants, then going down to our small business downstairs and knowing we control the cashflow, the clients, the type of people we hire and the people we work for. To us (and it's a very personal choice), this control gives us the freedom to be what we want to be and how we do it. And that freedom fits with our overall life goals. Eliminating debt was a small step in the chain of events, but it worked for our lifestyle, for sure. Other just as important keys are personal frugality, and finding the right 'hippy chick' (or hippy guy, or hippy friends, or hippy cat) that share your vision and want to share it all with you. Never lose focus on the fact that cash is cool, but it's only a tool. :) Julie;

I’d be glad to share, but this really is Tim’s blog ;) The strategy that worked best for us was to look at cashflow rather than just looking at savings, or chasing returns. We also looked at what worked for us in a holistic sense. We both enjoy people and I enjoy a part-time role as Mr. Fix-it on our house rentals, so the buying up the neighborhood and renting out houses allowed us to create our own little commune. We plan on staying in our house, so wouldn’t it be nice to pick your own neighbors? And if things don’t work out with them there’s always the SRI factor (Sudden Rent Increase). The mix is really great now, we keep our rents reasonable, have great tenants, and have a steady stream of ‘retirement’ income. We incorporated and started a small business, in an area related to our interests, and in something the whole family enjoys and can be done as a home based business. Because corporations are their own legal entity, they only pay taxes on profit, not earnings. This allowed us to do income streaming to control our personal level of T4 taxation, declare a T5 dividend when necessary and depreciate assets against profit, therby reducing our overall tax burden. Obviously, the deductions must be on assets that are used in the generation of income for the business, and the tables of depreciation are on a fixed basis, based on the percentage of use for business use. We consulted a lawyer and accountant who specialize in tax law when we set the business up at the start up, and I would advise that they are well worth the investment.

By re-investing the rental incomes and business profits, we were able to purchase assets that generated cash in a tax perferred basis. If a person is able to live within a low tax bracket from their T4 income (which you can stream out to family members who perfom duties for your company), you can reduce your overall tax bill, which is the biggest hurdle to accumulating wealth that most Canadian’s face.

We diversified into some gold and cash, knowing full well that the US dollar is in for a turbulent time when the ‘package’ gets some traction and inflation grabs hold. We are 50/50 in bonds and broadbased equities, but are going to back off on that over the next few months, as we are betting the north american markets are set for another slide soon. Diversification and asset allocation have seemed to work out so far, oh yeah, and low risk, we aren’t big on risk.

For us, the keys were finding investment vehicles that matched our ‘hippy’ lifestyle, and retaining control of our assets in our own hands; in our mind, we love being able to look out our window and see our assets everyday, knowing we set the rent and we pick our tenants, then going down to our small business downstairs and knowing we control the cashflow, the clients, the type of people we hire and the people we work for. To us (and it’s a very personal choice), this control gives us the freedom to be what we want to be and how we do it.

And that freedom fits with our overall life goals.

Eliminating debt was a small step in the chain of events, but it worked for our lifestyle, for sure.

Other just as important keys are personal frugality, and finding the right ‘hippy chick’ (or hippy guy, or hippy friends, or hippy cat) that share your vision and want to share it all with you. Never lose focus on the fact that cash is cool, but it’s only a tool.

:)

]]> By: Julie http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26586 Julie Tue, 26 May 2009 18:51:14 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26586 I want to hear more from living under the radar! I want to hear more from living under the radar!

]]> By: zeromoney http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26576 zeromoney Tue, 26 May 2009 15:05:25 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26576 I found this interesting (although the numbers are from 2007) Canada is in debt roughly $26,000 per person, the United states is in debt roughly $29,000 per person. (both figures in Canadian dollars) Not sure how that fits into the overall picture, but it was definitely interesting. I didn't think we'd be nearly as bad off. http://www93.wolframalpha.com/input/?i=+canada+debt+/+population http://www93.wolframalpha.com/input/?i=+us+debt+/+population I found this interesting (although the numbers are from 2007)

Canada is in debt roughly $26,000 per person, the United states is in debt roughly $29,000 per person. (both figures in Canadian dollars)

Not sure how that fits into the overall picture, but it was definitely interesting. I didn’t think we’d be nearly as bad off.

http://www93.wolframalpha.com/input/?i=+canada+debt+/+population

http://www93.wolframalpha.com/input/?i=+us+debt+/+population

]]> By: Astin http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26569 Astin Tue, 26 May 2009 13:45:13 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26569 I'm debt-free, a couple friends are debt-free, my parents are debt-free, my grandparents were all debt-free when they were alive, I believe most of my aunts and uncles are debt-free... One might believe that being raised to avoid unnecessary, and non-beneficial (ie.- debt except as a tax strategy) debt takes root. I’m debt-free, a couple friends are debt-free, my parents are debt-free, my grandparents were all debt-free when they were alive, I believe most of my aunts and uncles are debt-free…

One might believe that being raised to avoid unnecessary, and non-beneficial (ie.- debt except as a tax strategy) debt takes root.

]]> By: Canadian Dream http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26562 Canadian Dream Tue, 26 May 2009 12:32:16 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26562 Living under the radar, Great story, thanks for sharing. I agree paying down debt is a great investment for the long haul. Everyone else, Great comments and excellent discussion. Tim Living under the radar,

Great story, thanks for sharing. I agree paying down debt is a great investment for the long haul.

Everyone else,

Great comments and excellent discussion.

Tim

]]> By: Living under the radar http://blog.canadian-dream-free-at-45.com/2009/05/25/overly-comfortable-with-debt/comment-page-1/#comment-26523 Living under the radar Tue, 26 May 2009 02:45:15 +0000 http://blog.canadian-dream-free-at-45.com/?p=716#comment-26523 My wife and and are both, by nature, somewhat frugal and debt aware. We worked hard to pay off the debt on our modest but comfortable home,(now 450K) ( 8 years on a 25 year mortage), then bought the neighbors house across the street and rented it out (was 165K now 325K) ( paid off in 3 years), then bought the house of the neighbor next to us (175K now 400K) ( rented out and paid off in 3 years). We incorporated a small business, and buy all of our depreciating assets that we legally can ( vehicles, computers, etc. through the company - why pay with after tax dollars or borrowed money on a depreciating asset?) We've dollar cost averaged into a few low MER mutual funds ( 400K), and have the rest in cash and gold (200K). Debt is a dirty word to us, and we don't care what the world thinks. I guess the key is to surround yourself with friends that think the same way and not to hang around the 'Jones' ' of the world. We sleep pretty well at night knowing we have zero debt and a nice group of appreciating assets. We're 49 and have been financially independent for quite a few years. Our thinking always was simple ( like us, some would claim ;) ). Debt is a reverse investment, and by paying off a 5% mortage, with after tax dollars, for example - wow, you'd have to be getting a hefty return to match that. And guess what, there are no MER fees or market timing, or "oh, you shoulda' bought THIS stock instead of that mutual fund". It's really a no brainer and the fastest way to accumulate real wealth. Nice blog by the way. Keep it up! My wife and and are both, by nature, somewhat frugal and debt aware. We worked hard to pay off the debt on our modest but comfortable home,(now 450K) ( 8 years on a 25 year mortage), then bought the neighbors house across the street and rented it out (was 165K now 325K) ( paid off in 3 years), then bought the house of the neighbor next to us (175K now 400K) ( rented out and paid off in 3 years). We incorporated a small business, and buy all of our depreciating assets that we legally can ( vehicles, computers, etc. through the company – why pay with after tax dollars or borrowed money on a depreciating asset?) We’ve dollar cost averaged into a few low MER mutual funds ( 400K), and have the rest in cash and gold (200K). Debt is a dirty word to us, and we don’t care what the world thinks. I guess the key is to surround yourself with friends that think the same way and not to hang around the ‘Jones’ ‘ of the world. We sleep pretty well at night knowing we have zero debt and a nice group of appreciating assets. We’re 49 and have been financially independent for quite a few years.

Our thinking always was simple ( like us, some would claim ;) ). Debt is a reverse investment, and by paying off a 5% mortage, with after tax dollars, for example – wow, you’d have to be getting a hefty return to match that. And guess what, there are no MER fees or market timing, or “oh, you shoulda’ bought THIS stock instead of that mutual fund”. It’s really a no brainer and the fastest way to accumulate real wealth.

Nice blog by the way. Keep it up!

]]>