Personal Finance

Financial Life Coach needed

  • Last Updated:
  • Oct 6th, 2012 10:45 pm
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Newbie
Sep 23, 2012
1 posts
MUNSTER

Financial Life Coach needed

Hi,

I need a mentor. I am at a loss as to what to invest in first.

House
Kids Education
RRSP's
Accumualted DEBT

Some background: I am 41. My wife is 40. We both had a late start in life with careers and have since come to realize that we have no savings, and reality is going to come fast. I work for the gov't so I am pretty stable. I make a 73K base and have cleared 85K the last 3 years with overtime and on call pay. She's a contractor for a high tech company and makes decent money as well $30/hour. Combined we make about 125-130K/year.

HOUSE: We've owned a house for 7 years that I feel is to far from our jobs now. I called the mortgage company and know what I owe as of this week, and what the homes around our area have sold for lately. I'm confident we could have between $60-70K in equity. I am trying to make my wife realize we have to move closer. But the house needs work and this seems like a terrible time to sell. I spend roughly $60/week in gas and she spends $110 every 10 days. An area I am looking at she would spend $50 a month and I would spend $100. Roughly $400 a month in gas savings...let alone wear and tear, oil changes etc. I was thinking that if I fix up the house and sell it in the spring I will get more money. Which in turn will help me buy a more expensive home and hopefully have the gas money going into the equity of the home instead of to the gas company's profits. I am thinking that instead of buying RRSP's that I would sink that money into my home. Say the $450-500 a month into a mortgage on a larger home....then gaining the profits as the home rises in value over the next 25 years. Does this sound reasonable?

Kids Education: We have just started an RESP for our 2 kids. 1 of our kids is turning 16 this december and will no longer be eligible for the gov't grant that is offered with the RESP as of that time. Our other daughter is turning 6. So we have lots of time to invest in her. Unfortunatley I think we have to get the eldest child to get OSAP or some sort of student line of credit and help her pay it back when we can.

RRSP's: I have a mistrust for RRSP's. Everything I ever read is that they are underperforming and really you don't know what your going to have at the end of it as it could all disappear. I don't really trust a lot of financial advisors as they are usually just trying to sell me what ever they offer. No one has been able to give me some solid advice on what the benefits/pitfalls are to all sides of investing. I don't have the time in my life to learn to invest in stocks, and will probably lose it. Especially at our age.

Accumulated DEBT: We had $20K in debt on a line of credit from the last few years getting her educated and have been trying to pay that down. We are down to about $10K now.

Can anyone help me out with some advice?
23 replies
Deal Addict
Aug 13, 2008
3401 posts
426 upvotes
Mississauga
shushushushi wrote: Hi,
Unfortunatley I think we have to get the eldest child to get OSAP or some sort of student line of credit and help her pay it back when we can.
i'll start by commenting on this.

don't expect serious amounts of OSAP assistance with a combined income of 130k at home.
Deal Fanatic
Feb 1, 2006
9645 posts
911 upvotes
Muskoka
You have a very small amount of equity for your age, and you want to upgrade to a bigger, more expensive house? That doesn't make any sense to me. Houses aren't investments, you buy them, live in them, pay them off as fast as possible, and don't worry about the value of it. Even a small correction might wipe out your equity, why expose yourself to more risk here? Your gas costs are insane, I would definitely look to move houses or jobs, if possible. Or take transit or carpool, if possible.

Your likely have a good goverment pension? You didn't say. So maybe RRSP's would be a bad idea for you. By your post, you don't even know what an RRSP actually is, it seems like. So you either need a financial advisor, or you can just put all savings against the mortgage till paid off, then worry about financial advice later. Make it a forced rapid paydown, though, tell mortgage lender to take extra every payment.

Really, not nearly enough info here to give any real advice.
Sr. Member
Oct 21, 2005
615 posts
95 upvotes
London
Find a financial planner. As someone suggested, don't go with the one at your bank due to conflict of interest. Regardless, you still need to do your homework: come up with a list of assets, liabilities, expenses, etc. A budget may help.

If you want to do it RFD style, newspaper (globe and mail, financial post, toronto star) usually have free financial coaching. Something like this:
http://www.theglobeandmail.com/globe-in ... le4559964/
http://www.moneyville.ca/article/125829 ... of-failure

Contact the editor for a "free" advice. Good luck.
Deal Addict
Jul 8, 2009
2028 posts
482 upvotes
Edmonton
First, RRSPs are a bad thing because they're not an investment, but a means of sheltering income for taxes. Don't lose faith in the.

Also, you're a great candidate to work with a good financial planner. Ask friends for a referral. You need someone who will actually do full planning. Wesboag is in Ontario if you want to PM himif you're there.
Deal Addict
User avatar
Jan 31, 2007
1997 posts
545 upvotes
Markham
Guys, what are some other online resources/forums for getting financial advice? I'm fed up w/ simply collecting better than average interest from online banks...I really need to make some real investments (maybe even in real estate). My issue with professional financial planners (even ones that don't work in banks) is the same with real estate agents, etc. because at the end of the day someone is trying to make money off of me and will hide (by omission) great choices that aren't offered directly by them. Thanks in advance!!!
Newbie
Nov 20, 2008
46 posts
4 upvotes
shushushushi wrote: Hi,

I need a mentor. I am at a loss as to what to invest in first.

House
Kids Education
RRSP's
Accumualted DEBT

Some background: I am 41. My wife is 40. We both had a late start in life with careers and have since come to realize that we have no savings, and reality is going to come fast. I work for the gov't so I am pretty stable. I make a 73K base and have cleared 85K the last 3 years with overtime and on call pay. She's a contractor for a high tech company and makes decent money as well $30/hour. Combined we make about 125-130K/year.

HOUSE: We've owned a house for 7 years that I feel is to far from our jobs now. I called the mortgage company and know what I owe as of this week, and what the homes around our area have sold for lately. I'm confident we could have between $60-70K in equity. I am trying to make my wife realize we have to move closer. But the house needs work and this seems like a terrible time to sell. I spend roughly $60/week in gas and she spends $110 every 10 days. An area I am looking at she would spend $50 a month and I would spend $100. Roughly $400 a month in gas savings...let alone wear and tear, oil changes etc. I was thinking that if I fix up the house and sell it in the spring I will get more money. Which in turn will help me buy a more expensive home and hopefully have the gas money going into the equity of the home instead of to the gas company's profits. I am thinking that instead of buying RRSP's that I would sink that money into my home. Say the $450-500 a month into a mortgage on a larger home....then gaining the profits as the home rises in value over the next 25 years. Does this sound reasonable?

Kids Education: We have just started an RESP for our 2 kids. 1 of our kids is turning 16 this december and will no longer be eligible for the gov't grant that is offered with the RESP as of that time. Our other daughter is turning 6. So we have lots of time to invest in her. Unfortunatley I think we have to get the eldest child to get OSAP or some sort of student line of credit and help her pay it back when we can.

RRSP's: I have a mistrust for RRSP's. Everything I ever read is that they are underperforming and really you don't know what your going to have at the end of it as it could all disappear. I don't really trust a lot of financial advisors as they are usually just trying to sell me what ever they offer. No one has been able to give me some solid advice on what the benefits/pitfalls are to all sides of investing. I don't have the time in my life to learn to invest in stocks, and will probably lose it. Especially at our age.

Accumulated DEBT: We had $20K in debt on a line of credit from the last few years getting her educated and have been trying to pay that down. We are down to about $10K now.

Can anyone help me out with some advice?
1) I think the number one piece of advice is to work with your wife when determining what to do or you might as well start investing in a good divorce lawyer.
2) There is no way (very unlikely) your child will be getting OSAP with dual-income earning parents in your wage bracket.
3) Pay off the LOC you have enough income to cover it.
4) See how much is in your gov't pension, you will probably be surprised
5) Max out the RESP contributions for child number 2

In defense of financial advisors until recently the 10 yr return on stocks were near 0.
Newbie
Nov 20, 2008
46 posts
4 upvotes
JohnyBGood wrote: Guys, what are some other online resources/forums for getting financial advice? I'm fed up w/ simply collecting better than average interest from online banks...I really need to make some real investments (maybe even in real estate). My issue with professional financial planners (even ones that don't work in banks) is the same with real estate agents, etc. because at the end of the day someone is trying to make money off of me and will hide (by omission) great choices that aren't offered directly by them. Thanks in advance!!!
You will have a nearly impossible time finding unbiased financial advice especially online. There is no real resource in my opinion.
Newbie
User avatar
Aug 16, 2012
4 posts
1 upvote
TORONTO
Hi shushushushi

My name is Stephanie and I work at TD – I just came across your post and thought I can share some tips.

1. House – The right home can be a good investment if you do your homework, but just be aware that it can bring higher costs and could leave you "house poor" – especially if finances are already tight. This may include a larger mortgage payment, insurance, hydro, electricity, property tax and even things like furniture expenses. Shelter costs are usually the biggest burden on anyone's monthly cash flow. Instead of upgrading your property, it may be wise to downsize on a property that can still be a good investment, offers an excellent standard of living and is hopefully closer to work. That way you’ll free up a good chunk of your cash flow that can be re-directed to savings or debt repayment.

2. RRSP's: Registered Retirement Savings Plan’s do not underperform – instead, it’s a registered account that allows investments to grow tax deferred. If you’re concerned about market volatility, then rest assured that there are some principal secured investments that are backed by CDIC (http://www.cdic.ca/e/index.html). This includes Guaranteed Investment Certificate (GICs), Term Deposits and High Interest Savings Accounts. You can also consider Canada Savings Bonds which are backed by the government. Also keep in mind that RRSP contributions may generate a tax refund, which could be put towards debt repayment or your kids RESPs. I agree with the community that meeting with a Financial Planner would be a great first step in getting your retirement plan in order.

3. Accumulated DEBT: You’ve done a great job paying down the debt, but I wanted to share some great budgeting tips and debt-reducing strategies. Check out this link: http://www.tdcanadatrust.com/planning/e ... n-debt.jsp. Remember that if you and your wife both make RSP contributions, then you may each be entitled to a tax refund next year that can go straight towards paying this down. Once it’s paid off, then you can consider redirecting your existing payments to your RSP and/or your child’s RESP. Have your bank save the money automatically so that you won’t be tempted to spend it.

4. Kids Education – Continue to contribute as much as you can towards your child’s RESP, but be sure to accelerate the savings with the tips noted above.

Hope this helps!
Deal Guru
User avatar
Jun 26, 2005
10111 posts
1966 upvotes
Toronto
sslinn wrote: Do yourself a big favor and spend a couple of grand to educate yourself. Financial planners can be a great resource, but at the end of the day no one cares as much about your financial situation as you do.

http://www.cifp.ca/Desktop/English/Gene ... tners3.asp
100%+ agree. Education is the best. You can only trust yourself in the end. I got education for trading stocks and it has changed my life and how I view things. See my signature if you are interested. Whatever education you choose, it is your choice. It will be the best choice you've ever made.
Member
Apr 8, 2006
329 posts
21 upvotes
Wing Nut wrote: First, RRSPs are a bad thing because they're not an investment, but a means of sheltering income for taxes. Don't lose faith in the.

Also, you're a great candidate to work with a good financial planner. Ask friends for a referral. You need someone who will actually do full planning. Wesboag is in Ontario if you want to PM himif you're there.
Why RSPs aren't an investment?

Contributions can be deducted from income in order to reduce taxes owed, yes, but once the money is in an RSP it can easily be invested the same way as any other money.

It's an investment for your future (retirement)
Member
Apr 8, 2006
329 posts
21 upvotes
wesboag wrote: Again….blabbing on about your damn trading school. You don’t have an education in stock trading; you have taken a single class. Do you really think this guy sounds like an active trader? The guy needs financial advice, not a lesson in options trading.
Also a terrible idea given the amount of capital needed to day trade (and actually make money off it) and the risk involved. But I agree that education is a great investment and will help you understand what options are available and which road to go down.
Deal Addict
Jul 8, 2009
2028 posts
482 upvotes
Edmonton
spyder83 wrote: Why RSPs aren't an investment?

Contributions can be deducted from income in order to reduce taxes owed, yes, but once the money is in an RSP it can easily be invested the same way as any other money.

It's an investment for your future (retirement)
Because you can't actually buy an RRSP. You buy investments and put them into an RRSP.
Deal Addict
User avatar
Aug 24, 2005
2056 posts
1312 upvotes
Look up Gordon Pape and Rob Carrick. Both are Canadian authors who have written a number of books on investment and finances in general.

If you don't want to learn to DIY and would like to see a financial advisor, find a fee-based financial advisor who does not have any conflict of interest in trying to sell you products to make money off you.
Member
Oct 25, 2010
499 posts
61 upvotes
I'm going to go counter the advice here.

There is nothing wrong with you going to a *FINANCIAL* Advisor at your bank. You don't need an INVESTMENT Advisor. They will help you figure out your long-term financial flows, plan for expenses down the road, etc... and figure out WHAT you need to do to meet your goals (e.g., you'll need X saved by 20XX to pay for university) then you can figure out if it's even achievable with typical rates of return, etc...

Sure, they will try to sell you products that match the plan - but you're not obligated to agree and the discussion and process would probably be good for you. I'd even go to two banks and see what they say. At the end of the process just take their card and tell them you need to think about it. I doubt you'll get the hard-sell.

It'll be informative, I'm sure, and will help you sort our some numbers.
Deal Fanatic
Jul 1, 2007
8569 posts
1763 upvotes
Just to clarify, should you be seeking a financial planner: some people stated not to use your bank's FP but to seek an independent one. More specifically what they mean is to use a fee only financial planner, not some independent mutual fund salesperson who calls themselves a financial planner. You pay for financial planning in either of two ways: an hourly fee or through product commissions. Bank affiliated FPs may not give you the time of day at this point because you do not have enough assets for them to make enough money off you to pay for the plan, however there's always someone out there who can rip you off just enough on a smaller amount of investments to cover their expenses of creating a financial plan for you. In any case, either seek out a fee only planner or do the work yourself is all I'm saying.

My advice when it comes to priorities, because it looks like in your situation you can't fully tackle all of your goals: forget about education planning. Focus on debt elimination and retirement planning. if you save nothing for your kids' education it does not preclude them from attending university. They can pay for their tuitions themselves, accumulate debt (which they'll have many many years to pay off) or - best case scenario - qualify for scholarships. Meanwhile, if you're in your 60s, health prohibits you from working longer, and you haven't saved enough for retirement or still carry a lot of mortgage debt you have no contingencies. You could be hooped.

If you can tackle all your goals though, great. That's really the value of a financial planner is to determine if your goals are attainable, how to prioritize and to give you some peace of mind.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Sr. Member
User avatar
Aug 22, 2009
589 posts
151 upvotes
Guelph, ON
shushushushi wrote: HOUSE: We've owned a house for 7 years that I feel is to far from our jobs now. I called the mortgage company and know what I owe as of this week, and what the homes around our area have sold for lately. I'm confident we could have between $60-70K in equity. I am trying to make my wife realize we have to move closer. But the house needs work and this seems like a terrible time to sell. I spend roughly $60/week in gas and she spends $110 every 10 days. An area I am looking at she would spend $50 a month and I would spend $100. Roughly $400 a month in gas savings...let alone wear and tear, oil changes etc. I was thinking that if I fix up the house and sell it in the spring I will get more money. Which in turn will help me buy a more expensive home and hopefully have the gas money going into the equity of the home instead of to the gas company's profits. I am thinking that instead of buying RRSP's that I would sink that money into my home. Say the $450-500 a month into a mortgage on a larger home....then gaining the profits as the home rises in value over the next 25 years. Does this sound reasonable?
OP, good on you for deciding to take control of your finances! If you don't already do so, I suggest you start tracking your income and expenses -- nothing is more encouraging than seeing your Net Worth increase! This could be as simple as an Excel spreadsheet, or you could shell out the mere $50 for a personal finance software such as Quicken:

http://www.staples.ca/ENG/Catalog/cat_s ... xedcode=WW

Quicken 2012 seems to be getting some bad reviews for some reason. I'm using 2011 and although it isn't perfect, it works pretty well for my purpose. Finance software makes the tracking kind of "fun" and it is definitely the single best investment I have ever made. Since tracking my finances I have learned to change my spending habits and save MUCH more than I ever did, while still feeling like I have the money and freedom to spend on things I enjoy.

What kind of cars are you and your wife driving? Are you driving really long distances, or do your cars have poor fuel economy ratings? It might be in your best financial interest to switch cars.
Newbie
Apr 21, 2006
57 posts
3 upvotes
Has anyone suggested finding a Certified Financial Planner professional here? see http://www.fpsc.ca

Financial Planner is a wholly unregulated title. You can get great ones and poor ones. A CFP designation holder, however, is held to a pretty high standard of ethics and standards and has to have a solid amount of education (including continuing education).

Bank CFPs will likely be paid a salary PLUS comissions/bonuses based on product placement targets.
Other firm / independent CFPs may be paid comissions / bonuses based on similar things.
Fee only CFPs don't...does that make them any better/worse than the other options?

These are just different fee models - and if the advisor is being held to a higher standard of practice / ethics then how they get paid should be of little consequence. Keep in mind it's your choice on who you work with - so choose the fee model you're most comfortable with.

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