Posted by Canadian Dream on September 23, 2008
Ok, here are a couple of reader questions I’ve been meaning to answer.
Chris asked:
Do you know if there are any tax advantages/disadvantages to buying a property down south?
I’m assuming by down south that Chris is referring to the US. Perhaps the most obvious thing to point out is if Chris is a Canadian resident that he is subject to Canadian income tax on his world wide income. Hence any money made on a rental in the States would be subject to Canadian income tax. Yet, Canada and the US do have a tax treaty which is suppose to reduce double taxation. Then to make matters more complex it depends if you setup the rental as a business or if you just own it personally. Generally speaking I did a little research on this and concluded you need to really talk to a professional about this one. There is just to many variables involved for me to take a guess at. I would start by giving a call to CRA.
David asked:
Hi; I am looking for a mortgage calculator that allows me to put in principal, payment amt., payment freq. and interest; and then tells me how long it will take to pay off. All the ones I find do principal, period, ayment freq. and interest; and then work out the payment amt.
I want to fool around with my weekly payment amounts to find out how it will affect the length of the mortgage.
David you can use the calculator I mention in the Tools section of the site. It will allow you to enter a payment and keep the amount of time to pay it off blank. That way you can play around with your payments and find out how long it takes to pay your mortgage off. Just keep in mind that the term number is in months not years.
Posted by Canadian Dream on August 20, 2008
Ok, I’m a fairly frugal guy and I’m comfortable with that. I know I don’t care about some things so I don’t spend the money, yet some people amaze me with things they will do to save a penny or two. I basically consider someone cheap when they place no value on their time so they will do things to save very small amounts of money like a dime or less.
So in the interest of entertainment here are a few things I would consider cheap and question why anyone would do them.
- Recycling Drier Lint by burning it in the fireplace – Umm, it’s drier lint. If you don’t use the drier a whole lot there really isn’t much to save. What is drier lint worth anyway? Perhaps 1/10000th of a garment or 1/1000 of a penny.
- Folding toilet paper into triangle pieces to use less – Pardon?!? It’s TP folks, how much can you possible save on a square or two per sitting?
- Mixing used paint cans to produce a new colour to paint in the inside of your home- Why play Russian roulette with your decorating? Come on people paint is the cheapest thing to decorate with in the first place. Just spend some money already and keep the colour for a few years. I’m fairly sure you can annualized the cost to a $1-2 per year.
- Keeping your home so cold in winter time that you need to wear a t-shirt, long sleeve shirt and a sweater just to feel comfortable – Ok, I agree with turning down the heat, but let’s be reasonable folks.
- Buying food that is less expensive even if it tastes bad – This is a complete mystery to me on why people do this. Buying another brand if it tastes the same is fine or skipping it if you can make it from scratch I get. Yet saving a dime on soup that tastes awful is just weird.
- Spending 20 hours to fix something on a previous tax return that will get you a $5 refund – I’m fairly certain that once you add up the CRA’s paper pushing and your time you would have easily wasted $200 by doing this, not to mention the cost of the cheque.
Anyway that’s my cheap list. If you’ve got one to add please share.
Posted by Canadian Dream on July 15, 2008
Ok after some thought I’ve finally figured out what drives me a bit nuts about emergency funds. Most people that save one always end up having too much money in them. Why? The don’t break down their expenses to the essential payments.
Let’s face it. When things go REALLY wrong you are likely to want to take a few measures to ensure you are going to be fine. So some expenses are just going to go. Cable TV will be gone and so will high speed internet. Long distance plan will be gone too. You will likely going to cut down your spending to your essential items.
So if you are going to use a rule of thumb like 6 months of expenses, do it on your essential expenses not your regular expenses. For example, my regular savings/spending amount is around $3200/month. My essential spending is around $2300/month. Which would mean I would have about $5400 less in an emergency fund.
The advantage of this is two fold: a) it is easier to save that much money in the first place b) you don’t have too much money tied up in low yield investments (like a high interest savings account).
I personally don’t have a dedicated emergency fund, but rather a larger cushion of savings in various accounts and a handy line of credit. Why? Because for those odd times I need an emergency fund I can borrow up to $10,000 for a low cost of $40/month. I can float that loan for a lot longer than burning up my savings directly. I’m comfortable with this and it works for me. Yet if you like the security of a emergency fund I suggest you think about doing an essential one.
