Canadians naive about how long they’ll be in debt

[albertGQ]

Paying off your mortgage by 35? Wow. That's pretty tough IMO.

I'm 33 and nowhere near paying mine off.

[V]

You gotta make fotze-type money if you want your mortgage gone by 35.

[TheGrimm]

My wife and I decided against a conventional mortgage when we moved into our second home, we went with an all-in-one. I consider us to be pretty conservative financially, so to me this seemed a great choice, paying down principal on our home as quickly as possible but still having the flexibility to pull money back out from the account if "sh1t happens". It's been a great experience, but you need to have self control and it takes some adjusting to the concept that every time I buy something... even a loaf of bread, it's coming out of my mortgage so to speak.

The plus side is that if you are a decent saver, it starts to pay dividends very quickly.

[Erick Estrada]

Originally Posted by V

I have virtually no savings. Just enough that I can pay the bills every month. The rest of my cash has been converted to an investment account with varying levels liquidity. If I had to come up with $2k I would definitely use one of my 4 LOCs or any one of my CCs.

Savings are for suckers. What do you get these days, 1%?

Having cash in savings with the idea of making money off it is for suckers but I don't think there's anything wrong with having reserve cash as using a LOC or CC to come up with $2k is simply compounding debt and in the event you are without income for months you are digging a large hole. Read any financial or money magazine and an emergency fund is always recommended.

[chemgear]

Originally Posted by albertGQ

Paying off your mortgage by 35? Wow. That's pretty tough IMO.

I'm 33 and nowhere near paying mine off.

Originally Posted by V

You gotta make fotze-type money if you want your mortgage gone by 35.

Wasn't the salary survey on CP showing a lot of people here could (should be able to) clear a mortgage pretty quickly?

[nik-]

Originally Posted by chemgear

Wasn't the salary survey on CP showing a lot of people here could (should be able to) clear a mortgage pretty quickly?

If all you do is pay your mortgage.

[Cecil Terwilliger]

Originally Posted by Cowboy89

Unless your HISA is in a TFSA, then you're paying income tax on the interest income and thus losing to inflation. That's also inflation the way Stats Can / BOC calculates it, which includes a multitude of BS adjustments such as hedonic adjustments and substitute products. Inflation is more of a 'cost of survival' index than a true measure of what it really costs to maintain your standard of living. Ask the Financial advisors on CP here, one of the most common mistakes in managing money is people thinking they're being prudent by maxing their TFSA room using a HISA.

Yeah the inflation figures may be a bit misleading but I never said that it should be in a TFSA nor did the guy I quoted.

[GP_Matt]

Originally Posted by Deegee

Bloody hilarious to me that there is still an argument about debts being a liability or not. You can have a positive net worth, but a debt is a liability. When you write out your net worth, what side do you put loans on? Asset or liability?

Unless your lending out money yourself, I don't see a lot of loans falling on the asset side.

I don't think (Hope) there is anyone on here that doesn't understand what side of the balance sheet debt goes on. But there are people who are saying that debt isn't necessarily bad. It certainly isn't the most important factor in determining someone's financial health. ie. you can't look at two people and say that the one with more debt is always worse off.

[tvp2003]

Originally Posted by chemgear

Wasn't the salary survey on CP showing a lot of people here could (should be able to) clear a mortgage pretty quickly?

If you make $100k per year, that's $75k net. Pay half of that to the mortgage (which is quite high -- $37.5k or $3125 per month), and you can pay off a $450k mortgage (not including taxes/utilities/maintenance) in 15.5 years, assuming a 3.5% interest rate constant throughout.

Pretty steep numbers if you ask me; if you started at 25 you could do it just after you turned 40...

[nik-]

Originally Posted by tvp2003

If you make $100k per year, that's $75k net. Pay half of that to the mortgage (which is quite high -- $37.5k or $3125 per month), and you can pay off a $450k mortgage (not including taxes/utilities/maintenance) in 15.5 years, assuming a 3.5% interest rate constant throughout.

Pretty steep numbers if you ask me; if you started at 25 you could do it just after you turned 40...

That tax number is low too unless you're a business paying yourself. To get to 25% on a regular salary, you'd have to put a fair chunk to RRSP which obviously wouldn't be going to the mortgage.

You could do it quicker, but how much would you be enjoying life while doing it. You may be able to live well at 45, but living your entire 30's house poor would be awful.

[opendoor]

Originally Posted by tvp2003

If you make $100k per year, that's $75k net. Pay half of that to the mortgage (which is quite high -- $37.5k or $3125 per month), and you can pay off a $450k mortgage (not including taxes/utilities/maintenance) in 15.5 years, assuming a 3.5% interest rate constant throughout.

Pretty steep numbers if you ask me; if you started at 25 you could do it just after you turned 40...

Most homeowners live in 2 income households though, so the gross would be a lot higher than $100K in a lot of those, assuming the poll results were accurate.

[Azure]

Originally Posted by opendoor

Most homeowners live in 2 income households though, so the gross would be a lot higher than $100K in a lot of those, assuming the poll results were accurate.

And for CP members it would be even better since we all make over $100k as individuals.

[tvp2003]

Originally Posted by opendoor

Most homeowners live in 2 income households though, so the gross would be a lot higher than $100K in a lot of those, assuming the poll results were accurate.

Good point -- I was assuming a single person/income with no dependents. In a dual income family, that would certainly change things.

Or, if you bought that house before 2006 when it was only $250k, that makes it a lot easier to pay off...

[Sylvanfan]

Well my wife just had surgery today and will be off work for two weeks. So that's just under the number that most Canadians can't come up with. Bad timing too as we just fixed some flood damage in our basement meanwhile my wife paid $600 to take course 5 of 7 to maintain her job title...something her employer does not re-imburse, plus attended a conference in Calgary that was career related. All in about $2500 out of our regular spending account which put it at the lowest level it's been all year. I might have to raid my savings For the first time since I've been back to work.

Basically when you're 18 and single you need next to nothing. I know when I was 25 I had no debt, had piled up a heap of savings. Years later, it's a good thing I saved money young...I can't seem to keep any today outside my paltry 10% RRSP contribution. Sad that all I really have is a really below average house. But every freaking month I seem to get hit with some unseen expense that takes 2000 out of the bank account. Factor in pay cuts from the recession that I still haven't made back, daycare expenses, about 500 a month in uncovered extended medical expenses for the wife.....there was no way I could have anticipated these 10 years ago. Really it's how much life changed that I didn't anticipate.

If I had kept that life style of my 20's still, I'd easily be without any debt. My wife on the other hand...if she didn't have my to supplement her income, she would likely have drowned in debt years ago.

[yads]

Does your wife have short term disability with her benefits?

[Deegee]

Short term disability normally doesn't kick in right away. Usually your sick days are to be used until your short term kicks in,

[MarchHare]

Originally Posted by albertGQ

Paying off your mortgage by 35? Wow. That's pretty tough IMO.

I'm 33 and nowhere near paying mine off.

I won't quite make it at 35, but my mortgage will be paid off by the time I'm 37, and I'm most definitely not in the CalgaryPuck $100k+ Salary Club.

Granted, my wife and I made some money-saving lifestyle choices that I assume would be completely unpalatable to many posters here: we're child-free by choice, we live in a smallish inner-city condo, and we walk/bike/take transit to work. Not having expenses from children and the total cost of ownership of two cars that would be necessary if we bought a home in the suburbs instead of the core leaves us with more than enough money to aggressively pay down our mortgage, max out our TFSAs, and contribute 15%+ of our gross salaries to our RRSPs. And we still have enough leftover to dine out at nice restaurants 2-3 times per week.

I realize that lifestyle isn't for everyone, though. It certainly wouldn't be possible if we wanted children.

[BlackArcher101]

Jealous MarchHare, but like you said, I wouldn't be able to do that. I'm hoping to pay off my mortgage by myself before I hit 50.

[Ozy_Flame]

I'm in the same situation as you MarchHare, although no wife, I have a car, and it won't be 35 when I pay mine off. More like 40. However, I really enjoy what I do, so I don't mind working until I'm dead.

Wouldn't have it any other way

[AMG_G]

Mine will be done March next year I will be 39. Wife and 2 kids, paid off mdx and C63 so no car payments, maxed resp, tfsa and rrsp. I bought in 2003 with a 197k mortgage and 25% down. Been increasing my payments 20% whenever I could. Would have finished my mortage in 7 years if I didn't have a fast car vice. We chose to live in our modest home while all friends and siblings went full ###### on the cheap credit. My mortgage balance as of today is ~28k...my siblings are north of 500k.