Should we even be considering a used $25,000 truck at our income level? Should we just buy another under $10,000 vehicle and pay cash?
1 - Regarding the truck, based on your situation (bringing home game meat, from back road trails), it makes sense to buy a truck. But buy the least expensive vehicle that will meet your needs. At a minimum it sounds like you need an extended cab for family transport. For example, this used 2005 Toyota Tundra with 137,000 km for $13,000:
http://wwwa.autotrader.ca/a/Toyota/Tundra/CALGARY/Alberta/5_14885184_20110517083658496/?showcpo=ShowCPOYou should still be able to get another 150,000 km out of it.
Compare that to this 2008 with 76,000 km for $23,000:
http://wwwa.autotrader.ca/a/Toyota/Tundra/CALGARY/Alberta/5_17559561_20130514144445574/?ursrc=pl&urp=1&urm=4&showcpo=ShowCPOYou would be paying an extra $10,000 for a 3 year newer, and 60,000 km lower mileage vehicle. Even if you dont drive it at all for those three years, you will suffer depreciation of around $3,333 per year. (look at the wide variance of mileage on the 2004 - 2006 models that have similar prices).
2 - About financing your car. I forget who said it here on the forums, but as long as you have a mortgage, you are effectively financing
every purchase you make at your mortgage interest rate. That said, financing for used cars is substantially higher than the '0%' rate offered on new cars (They raise the price to accommodate the 0%). Used care financing costs the dealership money, and they charge a high % for it.
We pay our mortgage weekly $367/week at 2.89% - we've considered increasing the payment, but as a previous poster mentioned, it may make more sense to invest this money to earn a higher rate of return?
There is a
huge difference between Canadian mortgages & US mortgages. In the US, you can lock in the interest rate for
30 years. In Canada, you can lock in for up to 10 years (currently around 4.8%), but the most common period is 5 year fixed. This means Canadian mortgages are considered adjustable rate mortgages. I could go on for a page discussing the finer points of risks and benefits of each system, but what is boils down to is:
1 - The American DOES NOT CARE if mortgage interest rates return to 7% in 5 years. He would still be paying their locked in rate of ~3.5%.
2 - The Canadian is completely fucked if mortgage interest rates return to 7% in 5 years.
Your mortgage payment would jump to
$572 per week, and increase of $205 per week. (or so, without knowing the specifics of your amortization period etc). Do you have an extra $10,000, after tax, available per year?
And yes, 7% is considered a normal mortgage interest rate. I am 30 as well, and have never seen those rates either. As you may know, in the early 90s it was ~12% (payment of ~$862), and in the 80s it hit a high over 20% (payment of ~$1367).
These rates are obviously apocalyptic for the current Canadian mortgage market, but it pays to keep them in mind given these rates are still within the amortization period of your mortgage. I doubt the government would ever let interest rates get that high given the current indebtedness.
We tried to meet with a financial advisor in the last year to get advice, but were kind of turned away because we didn't have a significant enough portfolio for them to manage. Any idea where to find someone in Calgary to bounce ideas off of that doesn't care that we aren't rich? :)
In my experience, financial advisors are not worth the money. They will just sell you the highest fee mutual funds they can find. Get a self directed RRSP / TFSA, and buy low fee exchange traded funds (ETFs). This website is actually a very good resource for plain language investing advice. It has finally convinced me to stop trading in most individual stocks.
This is the right place to bounce ideas off of people. Everyone is very friendly here.
We both set up automatic contributions to retirement plans at our places of work when we started there 6 years ago. I contribute 6% of my net income and that is matched by my employer into a Defined Contribution Pension Plan. I had really no idea what funds to pick when I opened it, so I chose a fairly high-risk mix of canadian equity, us equity and international equity with some cash and fixed income investments as well. It's been losing some money over the past few years, but I have about $27,000 in there. When I am working, I am contributing about $3800 a year into the plan, and then my employer matches it for a total of $7600.
The funds in your DCPP have been making money. It is just that all of that profit has been taken (in my opinion stolen) by the fund managers. Canadian mutual funds are a massive scam. The have expense fees in the 2% range, compared to the 0.09% for the Vanguard S&P 500 ETF. See if there are any ETFs available to pick in the pension plan, if not... see if there is anyway you can convert to a self directed RRSP.
If you had just matched the market, you should be up by at least $7600 (stocks doubled from the 2008/2009 low). I am assuming you made a contribution in that year.
My husband has a Registered Pension plan and Structured RRSP through his work (no matching unfortunately) and contributes about $6000 a year into that. He currently has about $24,000 in his plan with a similar high risk investment mix.
Please, for the love of all that is holy, get a self directed RRSP. Not to harp on the point, but the risk in high risk funds is you wont have any money for retirement because they took all the profit.
I made this mistake, based on my financial advisor's recommendation. Put in 10k. Went down to 9.1K. Went up to $10,010 and I requested to transfer the funds to my self directed RRSP. FA said the fund it up 10% this year! The money was with him for 3 years, and all I got was $10.
Now my money is in Qtrade. They are a reasonably good online brokerage (rated #1 for like six years, but lost this year to a lower fee online brokerage).
Our plan to stay debt-free means that we will only pay cash for items we want to buy, and we will save up for larger purchases and projects. We are also putting the $100/month Child Tax Credit into a Family RESP at our bank for our two small children so we don't go into debt when they go to university.
Two comments here:
1 - The RESP 'investment' funds are usually the exact same funds that you can pick from in your DCPP. How well are they performing for you. Get a self-directed RESP!
2 - There is no such thing a retirement aid. But there is student aid. Fund your retirement first, by maxing out your RRSP
and your TFSA.
And speaking of the TFSA, if you have maxed your RRSP contribution, get a self directed TFSA investment account, and max that. Overall, the benefits of the TFSA exactly match the benefits of the RRSP (I did the math).
Let me know if you want guidance on your monthly expenses.
You actually inspired me to think about lowering our insurance coverage, because $100 / month is a shitload of money. We pay something like $108 for $1m coverage. After looking at our actual expenses, my wife could cover our expenses with an additional ~$400,000 invested in a high yield REIT, such as Senior Housing SNH, currently yielding a 7% dividend.