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Originally Posted by Red
Allow me to be painfully honest....
It is very stupid to finance your house and use that money to buy depreciating assets (car) or RRSPs.
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Well... I have a property that gained 200k in value. I have a beat up broken Toyota Corrolla and a condo that I'd be ashamed to bring any woman over to. I figure a car and renovation (adding value to the property) are investments in 'me' and my happiness... not to be undervalued.
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What is the point of buying RRSPs that will earn you 3% when it costs you 6% to finance that very purchase?
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Well... I suppose it all depends on the math you used. Yours, for example, is wrong. If I put 1000 into my RRSP's, do I not get back on my tax return something like 200-400 (based on my income tax rate)? Wouldn't that make my 'one-year return' on the RRSP its percentage increase + tax return value (some 30-40%)??
But I'm no expert, so let me know where I'm lost here.
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I guess you could invest the RRSPs in the (increasing unstable) markets, but that's not any smarter.
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You fail to say why.
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What is the point of buying a car and repaying the loan over 20 years or whatever you chose your mortgage for.
What happens when the housing goes down 10 years down the road?
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I've re-financed at a property value of 180k. The property is worth 300k. I don't think I'm over-leveraged.
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Some people will have more mortgage debt than assets.
In these prosperous times it should be a priority to get rid of debts rather than trying to accumulate more.
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No, your priority should be to always earn higher interest on your investments than you pay on your debt. It makes sense to have debt and assets, as long as your assets are growing faster than your debt interest-wise. If you have no debt, and no capital, you're not much better off. This is often why companies have debt; to provide capital to provide greater returns than the cost of the debt.
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Sorry to rant, but that's how I feel about this. You asked for advise, mine is to not re-finance.
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Well... thanks for your input. Are you a financial advisor or something? Do you own property?