How am I going to retire and how do I stack up against others my age? This led me, like many of us, to Google.
The first thing I ran into was “The Millionaire Next Door” the basic principle to determining net worth has a pretty straightforward calculator:
Age X Annual Pre-Tax Income / 10 = Net Worth.
It’s an eye opener! Based on this most people I know would not have had time to gather this wealth after paying off college or university loans, starting a family etc. Unless of course they had significant help starting out. I think as the calculation goes along cumulatively in the later years you start catching up but as a 40 year old, not happening.
While searching through many articles on the subject I found a calculator provided by Royal Bank of Canada “How Do You Stack UP?:
This was a great tool to help me look at my income and debts and average it out against other Canadians across Canada and in my Province of BC. I guess we all want to keep up with the Jones’ and this for me gives a pretty clear view of things.
Now another article I looked at was through Workopolis Average Canadian Paycheck.
They stated that based on Statistics Canada 2012 salaries went up by 2.8% to roughly $47,200 from 2011 of $46,000. It also gives a good list of professions and the average wage for each. It’s a good thing to share with families or young people that are looking at education as an expectation for wages.
With my research all I can conclude is that wealth is up to the individual’s current income, future potential income, investments in real estate or savings and the lifestyle they wish to lead now and in later years. Although for a lot of people wealth can also be measured in non monetary means.
I guess what I figured out for myself looking into my financial crystal ball is live financially modest and without a plan of action and implementing this plan time will be the eventual dictator where and how you live your life.
In the words of Harvey MacKay “If you fail to plan, then you plan to fail”
Learn how you can baby step your way to mortgage freedom saving thousands of dollars in interest in the process. A Scotiabank’s Mortgage Landscape Study, almost 2/3 of mortgage holders agree they could make additional payments to help pay off their mortgage faster without impacting their lifestyle. It can take — only an extra $20 a month.
While many homeowners think in terms of lump-sum payments, which are a great option, there are other ways to save money and pay down that debt. Seventy-nine per cent of mortgage holders have taken at least one of these steps:
1. Refinancing for a lower interest rate
2. Renegotiating for a lower interest rate
3. Switching to bi-weekly payments
4. Increasing amount of regular payments
5. Lump-sum payments
Save Interest on mortgage
Increasing your payment by just $20 a month will have a positive impact because the extra money is applied directly against the mortgage principal. This decreases the amount of interest you will pay over the life of the loan. For example, the average borrower would save almost $2,800 in interest over 25 years and reduce the amortization by 10 months. Imagine if you added $40 or $60 a month.
Interestingly, the poll also showed that 21% of mortgage holders have not taken any steps to pay down their mortgage for the following reasons:
1. Don’t have available funds
2. Have other payment priorities
3. Don’t know what steps to take
The poll also revealed that 51% of mortgagors have spoken to their mortgage professional about how they can become mortgage-free faster.
It’s easy to forget about your mortgage when you’re making automatic payments. It’s a good idea to keep up-to-date on mortgage options and interest rates .You could potentially save a ton of money by understanding those options.
The freedom that being completely debt-free brings is a dream for many Canadians. If you’re unsure of what your next step should be, it’s advisable to contact your mortgage professional. Together we can review your mortgage, look at your financial picture and devise a mortgage-reduction plan that works for you.
Reaching Out to Newcomers
You’ve made Canada your new home and are probably in the process of searching for a place of your own. Looking for a home can be a very exciting experience that can be both rewarding and challenging.
As Canada’s national housing agency, Canada Mortgage and Housing Corporation (CMHC) has been providing Canadians – including new Canadians like you – with information and tools to help you make informed homeownership decisions.
To help new Canadians make informed housing-related decisions and find safe, affordable homes for their families, Canada Mortgage and Housing Corporation has developed a multi-language one-stop online source for housing-related information. Visit CMHC at www.cmhc.ca/newcomers to access a series of guides and tools that take you through the home buying process.
CMHC wants to provide newcomers to Canada with relevant and simple housing-related information. A wealth of information on renting and buying a home is available for newcomers in both official languages – English and French – as well as in Mandarin/Simplified Chinese, Arabic, Punjabi, Spanish, Tagalog and Urdu.
The “Housing for Newcomers” site features information on home buying, including such topics as:
What to Look For When Buying a Home
How Much Home Can You Afford?
Choosing the Right Mortgage For You
Making an Offer and Closing the Deal
Location, Location, Location: Finding a Home of Your Own
Furthermore, the following information to help guide you with your mortgage planning is available in 8 languages:
Mortgage Fraud will teach you how to protect yourself from becoming a victim of mortgage fraud when purchasing or refinancing a home
Mortgage Planning Tips will give you tips to help you save money and provide for greater economic stability in the event of financial challenges down the road and
Your Credit Report will give you some simple steps you can take to maintain a good credit score and history and improve your chances of being approved for a mortgage.
The site also features information on renting an apartment – for most newcomers, your first home will likely be a rented house or apartment. Renting a home should provide you with a safe place where you can begin to adjust to your new life in Canada. It can also give you the time to look for a home to buy without feeling pressured into making a quick decision. Topics include:
Understanding “For Rent” Ads
Checking Out a Home or Apartment
Signing a Lease
Keeping Your Home in Good Condition
How to Find and Rent a Home if You Have a Large Family
Paying the Rent: What’s Included – and What’s Not.
A series of interactive videos have also been produced as well as translated and featured in subtitles in all the other languages to provide you with information on home buying mortgage literacy and home renovation. These consumer friendly videos offer tangible information to help with decision making.
For more information or for FREE information on other aspects of renting and buying a home in Canada, visit www.cmhc.ca/newcomers. For 65 years, Canada Mortgage and Housing Corporation has been Canada’s national housing agency and a source of objective, reliable housing expertise.
Most Canadians have now crawled out of the winter months to find their homes or patio in need of cleaning, repairs, or total renovations. I know the spring bug hits me very hard each year in terms of DIY projects around the house, but none more than outdoor improvements.
Last year I built for my daughter a playhouse/shed. In all reality it turned out to be a little bit more than a common playhouse or shed. With ¾ inch oak floors a Dutch door and plans this year for a patio, I believe I have over built for the neighbourhood as far as playhouse building goes.
Other plans for this year is a greenhouse with an additional shed built into it for more storage due to the fact I am without a garage or carport on the property. If this isn’t enough I have a few dream projects such as landscaping for the rear of the yard and porch off the front of the house to take in those summertime sunsets that drop down right in front of our home, but for now those two projects are closer to dreams than reality.
Now being a BC Mortgage Professional I am privy to information regarding home renovations that increase the value in your home and ones that will only increase your comfort of living. So many times I have seen people come to me and say Jeff I have totally renovated my kitchen at a cost of $35,000 so my home has surely went up in value $35,000 or more. With the current housing market, the fact is unless your kitchen was in terrible visual shape you probably have not added much value if you were to list and sell it. I see people switching out cabinetry for new cabinetry that is more appealing to them or replacing one colour of granite for a new colour. Now this did work in years past with Vancouver’s red hot real estate market, but for now we are in a bit of a holding pattern. That being said, if this is a home you plan to stay in for a long time then these renovations are truly about pride of ownership and will definitely give you good value for dollar spent.
Take for instance my yard renovations. I need outdoor storage space, so I built a playhouse/shed and plan to build a shed/green house. These two projects cost a fair chunk of money and do take care of needed storage issues but, in terms of an appraisal or, what a Canadian bank or mortgage insurer will deem as value; this will bring nothing. Lenders will request an appraisal of house and usually up to 5 acres but will not consider outbuildings in value.
That being said I need a carport or garage. If I was to add a standard carport or garage to my property which currently has none this would reflect positively to most appraisals and show an increase in value of my home. As well if I added a deck to my home off the front this too would increase the value of my home. How much value may vary; here is a neat site that gives average home improvements and the value vs cost. Keep in mind when looking at home improvement projects which ones will add instant value and which ones are for personal comfort.