Author Topic: Latest garbage advice peddled on Financial Post  (Read 3968 times)

RichMoose

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Latest garbage advice peddled on Financial Post
« on: May 29, 2015, 10:57:38 AM »
The headline of this article caught my eye. Oil patch consultant and wife are advised to buy an almost $1m home with mortgage payments and property taxes of over $5000 a month. All this when lay offs are still continuing in Alberta.

http://business.financialpost.com/personal-finance/family-finance/how-this-b-c-couple-can-buy-a-940000-home-and-still-retire-at-65

dandarc

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Re: Latest garbage advice peddled on Financial Post
« Reply #1 on: May 29, 2015, 11:10:49 AM »
Move from $850 / month rent to a $1M house?  I'm guessing they won't be buying a house that is in any way similar to their current rental situation.

Hidden in all of this is they are actually living a pretty mustachian life, at least at the moment.  Unless they define the ~10K / month "savings" to include saving up for vacations and what not.

RichMoose

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Re: Latest garbage advice peddled on Financial Post
« Reply #2 on: May 29, 2015, 11:22:58 AM »
Move from $850 / month rent to a $1M house?  I'm guessing they won't be buying a house that is in any way similar to their current rental situation.

Hidden in all of this is they are actually living a pretty mustachian life, at least at the moment.  Unless they define the ~10K / month "savings" to include saving up for vacations and what not.

Saving $10k a month is impressive for most people, but not when your after-tax monthly income is $17k and your rent is $850. That means they are spending $6k on everything else. That is 2.5x my monthly expenses (not including mortgage).

SpicyMcHaggus

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Re: Latest garbage advice peddled on Financial Post
« Reply #3 on: May 29, 2015, 03:18:45 PM »
They're in an oil patch. That business is going down fast. It may rebound, but if their income real estate is in the same market, they may take a big hit in their rental income, not to mention his employment. She's on disability? Shameful. They make enough that she doesn't need $7k / month in disability. And despite all this, nobody has asked them "how much house do you NEED?"

FML <bang head on desk>
Come on, Canada, I expected better.

dycker1978

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Re: Latest garbage advice peddled on Financial Post
« Reply #4 on: May 29, 2015, 04:05:44 PM »
They're in an oil patch. That business is going down fast. It may rebound, but if their income real estate is in the same market, they may take a big hit in their rental income, not to mention his employment. She's on disability? Shameful. They make enough that she doesn't need $7k / month in disability. And despite all this, nobody has asked them "how much house do you NEED?"

FML <bang head on desk>
Come on, Canada, I expected better.

The oil field will bounce back... It always does.  But having said that, it says about 4 or 5 times in the article, that as long as he keeps his current income that things will be good.

I think that they need not count on keeping their current income.  Her income is going down by half as well it said.... bad bad bad news....

RetiredAt63

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Re: Latest garbage advice peddled on Financial Post
« Reply #5 on: May 29, 2015, 07:02:06 PM »
Thank you for your high opinion of us - but it is a crazy world out there for everyone.

Oil patch = money = bad financial habits

Come on, Canada, I expected better.

TheGrimSqueaker

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Re: Latest garbage advice peddled on Financial Post
« Reply #6 on: May 30, 2015, 09:29:18 PM »
An "oil patch consultant" does have the option of going global, or branching out to other aspects of construction such as mining or industrial manufacturing. Depending on the consultant's specialty, expecially if he's willing to travel for work or do business in a developing country, he might still be able to bring in the big bucks. The income will be bursty: a lucrative short-term gig followed by long periods of unemployment. But as a consultant he's most likely used to that.

The oil and gas industry is indeed in a much needed correction phase right now. Interesting that Alberta is being used as an example: their big oil boom, 2005-ish to present, was preceded by a 20-year regional recession that at times deepened into a full-blown regional depression. Jobs existed in the oil and gas sector, but they were scarce, physically risky, and frequently underpaid especially at the executive level. You don't ride out a storm that lasts 20-25 years unless you're already FIRE.

The oil and gas industry doesn't "always" come back in regions where it takes a hit. If it did, the Sarnia region of Ontario would be booming. It's not.

Much of the trouble with the Tar Sands development is the fact it's necessary to get the oil to regions where it can be refined and consumed. That means either to a populated part of the USA, or to the coast where it can be shipped to a country that wants it. For various political reasons, chiefly the extremely corrupt and opportunistic behavior of the provincial government of British Columbia and the general refusal of many people in the USA to maintain the pipelines and infrastructure we've got (much less build a new one), the most probable solution will be an eastbound pipeline to the St. Lawrence or else northeast to the Hudson Bay, which is not ice-free throughout the year. Until there's a way to get the oil to where it's needed, it's going to stay where it is. There's no guarantee-- absolutely zero-- that the political environment is going to change enough to allow that.