exactly, i could always dump all my money into mortgage payments, but here you get a choice. People never thought about it because this is the first time in history that the interest rate dipped below the inflation rate.Spidey wrote: ↑Agreed, reading more and more, Im lower class compared to 99% of RFD members.. If I had a spare 10K lying around, it wouldn't be lying around, it would go towards my mortgage first.
I deposit $50 a month to TFSA, that's all. I could do more, I could do nothing. But I also max out my work pension so it gets matches 101%, and I also save for RRSPS, and RESPS to contribute to. I say Im lower class because non of these are maxed out either, yet everyone on RFD do seem to have these maxed out to.
I don't think many get on here, and I don't see why, that sometimes, some people, no matter how frugal they are, don't have a lot of money after all the bills are paid, or if something unexpected comes up that wasn't budgeted for (lets face it, you cant think of everything) that puts that couple behind the 8 ball for a few month
Im sure there are a lot on this forum that are doing very well, make great incomes, save, can retire early, live well and not live pay cheque to pay cheque. I wont deny that
But I also find that there are to many that just lie about it to to make them feel, I don't know, superior. The statistic don't match up to the country in this forum.
Why aren't more people taking advantage of TFSA?
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- SCORE+3
- divx
- Deal Expert
- Oct 26, 2003
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- Winnipeg
- Spidey
- Deal Expert
- Oct 16, 2001
- 76501 posts
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But then if you drop it to interest only, are you getting ahead as your mortgage takes longer to pay off.
Its simple, for some people, there are some bills you have no control over, and more or less, pay or don't use it. Power bill, as an example, sure you can be as cheap as possible and not use power, but that bill will still be there. And unless you sit in the dark all the time and unplug every appliance, that bill really cant be cut back to much to notice a huge "wow Im saving $100 a month now" More like, after chaning to all all LED lights, saving on vampire power, etc you more or less get "wow, I saved $9 last month"
- FirstGear
- Deal Fanatic
- Nov 2, 2013
- 5697 posts
- 1522 upvotes
- Edmonton, AB
A lot of those types are just youngsters / mid 20s people who lived at home or had some other sort of financial assistance from family, essentially reducing their living expenses to sometimes near or equal to 0. That's how you have extra money laying around and suddenly even that extra 50 a month seems like a lot because you hardly spend.
If you don't fit the above you're hardly ever thinking of how to gain that extra 50/month as that will get you hardly anywhere in the grand scheme of things, and even 500 isn't a life-changing amount. All it takes is one of your appliances blowing up, get sick and miss work for a couple days, or to hit a bad pothole and there goes your 500.
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- greenmoon
- Sr. Member
- Apr 5, 2009
- 948 posts
- 334 upvotes
- Toronto
Perhaps this depends on the institution, but it's definitely not the case in general. There are no restrictions on TFSA withdrawals, why would your bank care?brunes wrote: ↑The average Canadian (63% of 18 to 49) lives paycheque to paycheque and any one missed pay can lead to financial ruin - so if you think most people have all kinds of money sitting in their savings accounts, you're delusional. The reason most people don't contribute to their TFSA is they don't have the money to do so, simple as that. When you only have $100-$200 of free spending money each pay, it makes no sense at all to use a registered vehicle for that. Taking money out of a TFSA and accounting for it is not simple enough to let people do that. If the accounting was all automated and hooked into CRA systems, and thus I could deposit and withdraw from a TFSA at will without filling out paperwork or calling someone, MAYBE... as it stands, to pull money out of a TFSA usually takes 24 hours and a phone call.. that is way too much of a hassle for people for $100.
This is why so many people who support progressive tax reform have been against the TFSA increase. It's a cop out, a tax break for the upper class. Sure, I will make use of it. Will it help the working poor? No. Will it help the middle class? Not really. The people it benefits are people who have $10,000 in cash extra a year to put into it in the first place - that is basically eliminating most Canadians right off the bat.
I've had simple TFSA savings accounts with RBC and Tangerine and both allow me to easily withdraw money online with no need to call anywhere. RBC does take 24 hours (plus the weekend, if it's a Friday) to process any deposits or withdrawals, but Tangerine does it instantly, just like their non-registered accounts.
- AudiDude
- Deal Guru
- Mar 1, 2004
- 12861 posts
- 1485 upvotes
- Pickering
Hey Spidey! Just wanted to say that! Well actually what I am doing is adding security at the expense of not paying down manageable debt. If I made all my payments on time and had a house and a car payment plus all the usual bills, how long of me not working will it take before I can't make payments and I am screwed?
By putting money that can pay things down faster to work, I can have a second income that will pay me if I don't work. So while I am working and getting paid from the investments, the return money plus other money goes into investments. At the point where the investment covers the bills, you take your income and your investments and double down on the payments you could have spent the investment money on. If at any point you lose your job, you've still got income. If the mortgage rates increase and you are unemployed, you spend some of the principal while still collecting money from the investment.
This way you could survive with a P/T job and your return or if you cannot get a job for a while, you have it covered so the bank doesn't take your house or your electricity doesn't get shut off.
The last time I was unemployed I owed $18k on a car, but had the 18k in the bank. I had no faith in my employment and I was right. I kept making payments using the money and I borrowed from it to get education and another job. When it came down to it I was going to be $5k short, but I sold another car I had and before I exhausted that money, I got another job.
Never touched my RRSP or my non registered. Never had to get rid of the car or missed a payment. My goal is to create the equivalent income of what I get (or as close as I can get) and pay off what I can or as close as I want and then retire. If unforeseen expenses show up, I'll just not contribute to savings and handle it the way everybody else does. If things get real bad, I'll use the savings.
By putting money that can pay things down faster to work, I can have a second income that will pay me if I don't work. So while I am working and getting paid from the investments, the return money plus other money goes into investments. At the point where the investment covers the bills, you take your income and your investments and double down on the payments you could have spent the investment money on. If at any point you lose your job, you've still got income. If the mortgage rates increase and you are unemployed, you spend some of the principal while still collecting money from the investment.
This way you could survive with a P/T job and your return or if you cannot get a job for a while, you have it covered so the bank doesn't take your house or your electricity doesn't get shut off.
The last time I was unemployed I owed $18k on a car, but had the 18k in the bank. I had no faith in my employment and I was right. I kept making payments using the money and I borrowed from it to get education and another job. When it came down to it I was going to be $5k short, but I sold another car I had and before I exhausted that money, I got another job.
Never touched my RRSP or my non registered. Never had to get rid of the car or missed a payment. My goal is to create the equivalent income of what I get (or as close as I can get) and pay off what I can or as close as I want and then retire. If unforeseen expenses show up, I'll just not contribute to savings and handle it the way everybody else does. If things get real bad, I'll use the savings.
- divx
- Deal Expert
- Oct 26, 2003
- 39339 posts
- 6342 upvotes
- Winnipeg
we are talking about the middle class here, apparently people making 6 figures is still counted within the middle class, if these people have problem paying their power bills there is something else that is wrong.Spidey wrote: ↑But then if you drop it to interest only, are you getting ahead as your mortgage takes longer to pay off.
Its simple, for some people, there are some bills you have no control over, and more or less, pay or don't use it. Power bill, as an example, sure you can be as cheap as possible and not use power, but that bill will still be there. And unless you sit in the dark all the time and unplug every appliance, that bill really cant be cut back to much to notice a huge "wow Im saving $100 a month now" More like, after chaning to all all LED lights, saving on vampire power, etc you more or less get "wow, I saved $9 last month"
- brunes
- Deal Expert
- Dec 11, 2005
- 20136 posts
- 2964 upvotes
Almost definition, the middle class should contain the people whose salary is within 1 standard deviation of the median. If 60+% of people are living paycheque to paycheque, it sure as hell is nowhere near 300k. I have read somewhere before the average family income in the GTA is below 70K. People have no idea, its amazing how easy it is to forget this for some.divx wrote: ↑that's what happens when there is no official definition of the lower, middle and upper class, some people refer to $400k family income as been part of the "middle class", while others think >$300k should be classified as upper class. I would consider myself as middle class and I can max out the TFSA at $10k a year if I wanted to by shifting mortgage payments into it.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
- hoob
- Deal Fanatic
- Jan 6, 2002
- 6834 posts
- 7575 upvotes
- Toronto
I am a US Person for tax purposes, even though I have lived and worked my entire life in Canada. I cannot (don't) use TFSA as it is a tax shelter that is not recognized by US/Canada tax treaties, and it is also a financial vehicle that requires onerous documentation and accounting procedures for US IRS despite them not recognizing it as tax exempt (it has to be set up as something like a deferred anonymous trust account, or something stupid like that.)
Si Tacuisses, Philosophus Mansisses
- divx
- Deal Expert
- Oct 26, 2003
- 39339 posts
- 6342 upvotes
- Winnipeg
that's merely how YOU see it, but that's not the case of how people see themselvesbrunes wrote: ↑Almost definition, the middle class should contain the people whose salary is within 1 standard deviation of the median. If 60+% of people are living paycheque to paycheque, it sure as hell is nowhere near 300k. I have read somewhere before the average family income in the GTA is below 70K. People have no idea, its amazing how easy it is to forget this for some.
http://www.theatlantic.com/politics/arc ... ss/278240/
http://www.vox.com/2015/3/12/8193113/mi ... -rich-poor
http://economix.blogs.nytimes.com/2011/ ... ight/?_r=0
- Ducky
- Deal Fanatic
- Jan 18, 2003
- 6484 posts
- 2389 upvotes
- Mississauga
It is possible but not realistic for a family to put down 70k/yr for tfsa and rrsp...i am talking average family... You probably talking about the top 5%sleepyguy wrote: ↑LOL, with dual income (even with kids) it's very possible and not very hard to max out both RRSP and TSFA with a bit of budgeting. Keep your expenses in check and don't let lifestyle inflation get the best of you. Obviously you need to make a semi-decent salary as well. Max RRSP is $25k (or 18% whichever is less) + $10k TSFA... so a couple would need to put down $70k total per year. Matching programs definitely help the RRSP side as well as pre-tax dollar invested. Very doable with a couple earning higher middle-class salaries.
- brunes
- Deal Expert
- Dec 11, 2005
- 20136 posts
- 2964 upvotes
I couldn't care less how people see themselves. Math doesn't lie and neither do statistics. The middle class by definition is 1 standard deviation from the median. If you want to make it bigger, then it is two standard deviations. Even at two standard deviations, I doubt you will see a family income above 100k.divx wrote: ↑that's merely how YOU see it, but that's not the case of how people see themselves
http://www.theatlantic.com/politics/arc ... ss/278240/
http://www.vox.com/2015/3/12/8193113/mi ... -rich-poor
http://economix.blogs.nytimes.com/2011/ ... ight/?_r=0
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
- divx
- Deal Expert
- Oct 26, 2003
- 39339 posts
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- Winnipeg
oh, i'm gonna quote your post to few socialists here the next time they spew stuff like how everyone need something like $70k to livebrunes wrote: ↑I couldn't care less how people see themselves. Math doesn't lie and neither do statistics. The middle class by definition is 1 standard deviation from the median. If you want to make it bigger, then it is two standard deviations. Even at two standard deviations, I doubt you will see a family income above 100k.
- justaskthescientician
- Deal Addict
- Feb 24, 2015
- 1032 posts
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- Fort Mac, AB/Lambton…
Median family income in the Toronto CMA = $84,199 in 2011. It was $101,371 for "couple-with-children" families.
http://www12.statcan.gc.ca/nhs-enm/2011 ... m=&TABID=1
http://www12.statcan.gc.ca/nhs-enm/2011 ... m=&TABID=1
- Spidey
- Deal Expert
- Oct 16, 2001
- 76501 posts
- 1583 upvotes
lotsleepyguy wrote: ↑LOL, with dual income (even with kids) it's very possible and not very hard to max out both RRSP and TSFA with a bit of budgeting. Keep your expenses in check and don't let lifestyle inflation get the best of you. Obviously you need to make a semi-decent salary as well. Max RRSP is $25k (or 18% whichever is less) + $10k TSFA... so a couple would need to put down $70k total per year. Matching programs definitely help the RRSP side as well as pre-tax dollar invested. Very doable with a couple earning higher middle-class salaries.
I know a lot of average families where your "easy" 70K a year is someones yearly wage. Oh wait, that's me, and not take home either. So more or less, I put my entire paycheque away to save, and some of my wifes, and then continue to live with 3 kids. Hmmm, not as easy as it sounds
- AlexJosh
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- Nov 12, 2011
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- Markham
Because there are more than enough ppl who cash the amount their asses can't catch all the time. It's called modern finance.
- sleepyguy
- Deal Fanatic
- Jun 11, 2001
- 9475 posts
- 1610 upvotes
My calculations were very "raw", like I said I kept it simple and I put "higher middle-class salaries". The 70k was derived from having the highest earning RRSP ($25k), but most likely most with the tops 18% allowed would be much lower than that. A very 'real' case example is this.
Couple earning let's say.
Wife - $70k
Husband - $60k
So $130k total. RRSP max for them total is about $23.5K on top of total of $20k ($10K+$10k) TSFA. So roughly putting away $40k/yr
The 18% RRSP is easier to max because most large companies have matching programs, even some have 100% matching programs. So they may only have to put in 9% tops.
Like I said, just saying it is impossible and pushing it aside is not going to change anything. I'm just saying it's very possible, I know because we've been doing it for years now.
Couple earning let's say.
Wife - $70k
Husband - $60k
So $130k total. RRSP max for them total is about $23.5K on top of total of $20k ($10K+$10k) TSFA. So roughly putting away $40k/yr
The 18% RRSP is easier to max because most large companies have matching programs, even some have 100% matching programs. So they may only have to put in 9% tops.
Like I said, just saying it is impossible and pushing it aside is not going to change anything. I'm just saying it's very possible, I know because we've been doing it for years now.
Spidey wrote: ↑lot
I know a lot of average families where your "easy" 70K a year is someones yearly wage. Oh wait, that's me, and not take home either. So more or less, I put my entire paycheque away to save, and some of my wifes, and then continue to live with 3 kids. Hmmm, not as easy as it sounds
- Ducky
- Deal Fanatic
- Jan 18, 2003
- 6484 posts
- 2389 upvotes
- Mississauga
Even with 130k dual income, a family with kids...won't be able to have 40k leftover for tfsa/rrsp...In the real world... Fantasy world, sure.sleepyguy wrote: ↑My calculations were very "raw", like I said I kept it simple and I put "higher middle-class salaries". The 70k was derived from having the highest earning RRSP ($25k), but most likely most with the tops 18% allowed would be much lower than that. A very 'real' case example is this.
Couple earning let's say.
Wife - $70k
Husband - $60k
So $130k total. RRSP max for them total is about $23.5K on top of total of $20k ($10K+$10k) TSFA. So roughly putting away $40k/yr
The 18% RRSP is easier to max because most large companies have matching programs, even some have 100% matching programs. So they may only have to put in 9% tops.
Like I said, just saying it is impossible and pushing it aside is not going to change anything. I'm just saying it's very possible, I know because we've been doing it for years now.
- Spidey
- Deal Expert
- Oct 16, 2001
- 76501 posts
- 1583 upvotes
Show me your math please, that would be greatsleepyguy wrote: ↑My calculations were very "raw", like I said I kept it simple and I put "higher middle-class salaries". The 70k was derived from having the highest earning RRSP ($25k), but most likely most with the tops 18% allowed would be much lower than that. A very 'real' case example is this.
Couple earning let's say.
Wife - $70k
Husband - $60k
So $130k total. RRSP max for them total is about $23.5K on top of total of $20k ($10K+$10k) TSFA. So roughly putting away $40k/yr
The 18% RRSP is easier to max because most large companies have matching programs, even some have 100% matching programs. So they may only have to put in 9% tops.
Like I said, just saying it is impossible and pushing it aside is not going to change anything. I'm just saying it's very possible, I know because we've been doing it for years now.
Although in theory, we will have no idea if your math is even true. But just do it for fun.
- Spidey
- Deal Expert
- Oct 16, 2001
- 76501 posts
- 1583 upvotes
I sometimes wonder what pieces of the puzzle are missing, or what information isn't provided with some that say they have all this extra money left over to invest with kids and mortgage in the picture.
- hoob
- Deal Fanatic
- Jan 6, 2002
- 6834 posts
- 7575 upvotes
- Toronto
They don't have any fun. Eat sticks and berries and dried leaves. Vacation is a family hike to the ice cream shop.
I'm the first to admit I overspend and undertrack, but even with rigeur and attention to detail and fiscal ascetism I don't think I could max out TFSA and RRSP, and I'm UMC for sure. Here's the rough outputs for my lifestyle (single, homeowner, car owner, no dependents):
MORTGAGE: 23400
MUNI TAX: 2600
CAR INSURANCE: 1700
HOME INSURANCE: 800
HOME GAS: 600
HOME ELEC: 750
HOME WATER: 300
CELL/INTERNET/TV: 2000
RRSP: 7200
CAR FUND: 7800
HOUSE MAJOR FUND: 8320
HOUSE MAINT: 1000
H/L/D INSURANCE: 1000
TRAVEL & VACATION: 3500
SPORTS & LEISURE: 1200
CAR FUEL: 1800
GROCERIES: 3500
RESTAURANTS: 3500
BOOZE: 1500
COFFEE: 900
PETS: 1200
TOYS: 3000
Si Tacuisses, Philosophus Mansisses
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