“Long Time reader of the blog and hailing from Cowtown,” says Derek. “Shamelessly looking for some free blog friendly advice for someone trying to make the single income thing work!”
Yes, there are still a few families out there with only one paycheque coming through the door. (Plus the kiddie pogey, of course.) “Career Momma keeping our 6 yr, 4 yr, and 7 month old alive and out of trouble,” he says of his squeeze. They’re both 40 and live in a smallish Eighties house in the burbs bought seven years ago, now assessed at $650,000. They scored on the mortgage – a lowly 1.59% locked in until April of next year.
And here are the numbers. Income is $170,000 (oil guy, “it’s a good gig”). Balanced portfolio of $225,000. Mortgage remaining is $275,000. Work pension (company stock) sits at $135,000.
So, Derek, wassup?
“These days with all the tiny humans and associated stuff the house is feeling pretty tiny. (no room for a dog even… sad). So what do we do? Gut it out to the end of our current term knowing it’ll be a long while before we see cheap money like this again? Jump to something a bit larger in the 850K range? Or…we’ve got an acreage dream, but anything within a reasonable commute with the space we want (10 – 20 acres) is 1 to 1.2 million.
“Do I give up my current rate and jump on an acreage because acreage values are likely to outpace my ability to save and grow? If tariffs hit, and Canada seems keen on counter tariffs, then rates could jump – so should a person try to lock something in asap? I guess it boils down to feeling like we are living below our means and trying to be risk averse and careful – but also having concerns that if we wait things may inflate faster than we are able to catch up with and we’ll miss our chance!”
There is so much wrong with this note. First, D should be happy and proud that on one decent salary he has a home, has saved some dough, supports four other people, locked in the cheapest debt in Canadian history and has a spouse who hasn’t left him. So, chill. Second, at forty, he should be in better financial shape. Outside of the corporate pension (in oil company stock – which is a bad idea) the portfolio of just over two hundred grand is woefully thin. Presumably that includes TFSAs and RRSPs for two people, plus an RESP for the kiddos. But, dunno. Not enough.
Third, the world. It’s a mess. Trump’s tariffs, now on metals, have started the storm. If he makes good on the energy tax of 10% next month it’ll rip through Calgary. He’s just destroyed the Gaza ceasefire and yesterday made the first moves to throw Ukraine under the bus and abandon NATO. US inflation came in hot this morning so no more Fed rate cuts are on the table. Bond yields up. Washington is in chaos at the moment and Canada on high alert. Trump says he wants to annex us, steal Greenland and seize the Panama Canal. In short, macroeconomic and geopolitical risks are flying all over the place.
Amidst this he has house lust? And craves chickens?
Sheesh, Derek, give your head a shake. There are times to be acquisitive, and times to turtle.
Upsizing to anything will cause you to lose the cheapest debt financing of any lifetime and immediately increase living costs. It will also mean cashing in some of the scant portfolio, especially if you lose your mind and go rural. That will have consequences down the road when you run out of retirement money, or lack the funds to put the children through med school. And you have to accept the fact your family’s income depends on the fortunes of a fickle, volatile and targeted industry. Tariffs could cost your job. Green politicians could ratchet up the anti-oil regs if we keep getting once-in-a-century events every year like floods, wildfires, or the hail Apocalypse that destroyed $1 billion worth of cars in Calgary.
The economy could go recessionary. Inflation from higher imports and a lower dollar could mean higher rates and a mortgage renewal that will shock you next year.
So if the house is cramped, stick a new room on it. Finish the basement. Put in a new bathroom. Use whatever income is left after living to ensure your TFSAs are plumped. Make RESP contributions so you can collect the free grant cash. Rethink the wisdom of buying more of your employer’s stock and open a spousal RRSP in order to split future income with your spouse.
Do not succumb to FOMO. Leave the chickens and goats in peace. Rent an RV once a year and find a canola field to lie in. Be thankful for what you have, where you are plus the fact you’re not an American.
And, above all, let’s keep it that way.
About the picture: “Here is 100 pound Hugo who is a regular reader of your amazingly informative blog,” writes D.L. “He hopes that it keeps going as there is very little out there on the web that doesn’t have a self serving agenda. Thx very much.”
To be in touch or send a picture of your beast, email to ‘[email protected]’.
