Mr. Tucker opening the door of our home the day we got the keys
Our plan has always been to pay off the mortgage as soon as possible. Partially, it was because Mr. Tucker said that he would feel more comfortable with the guaranteed payoff but also as the prime rate got higher and higher it just made sense. We were set to renew for another term this September and we knew we wouldn’t get that sweet 2% interest that we’ve had for the past six years. So we rolled up our sleeves, didn’t take a vacation this winter, and we funneled every extra cent into savings.
Yesterday, Mr. Tucker walked into the bank, handed them a cheque, and walked out with our payout and discharge noted. He felt great.
Eyes are going to roll if I bring up the rent vs. own debate here and drill down into the financial quagmire of it all. Honestly, people who are smarter than me have done a great job of discussing the nitty gritty. What I am going to do though is discuss my own thought process because as a disabled person I feel like that changes a lot of my decision making. So let’s go for it:
Renting isn’t throwing your money away: that’s like saying that we shouldn’t eat because some of it lands in the sewage system. Shelter – like food – is a need, and you need to have shelter. Many of my friends rent and it suits them just fine because they don’t have to deal with the hassle of home ownership. But that brings me to the untold story about renting…
A lot of my friends who rent are either well off or very poor: let’s face it, the buy vs. rent debate can only really happen for people who have the privilege to make the choice. My rich friends rent because the premium on their time and money is important to them and my poor friends rent because they have absolutely zero choice in the matter.
During the pandemic when housing prices exploded, I saw friends get evicted because their landlords sold their properties. In our province, your rent is controlled under certain circumstances so if you live somewhere a long time your rent will be much lower than current market rents. But in a situation where home prices and rents start soaring, you risk eviction into a high-priced market. If you have a good income you probably will be mildly irritated but if you are a low wage worker or you are on disability, your options are very, very limited. Since we have a housing crisis in Canada right now being a low-income renter must be terrifying. Renovictions and other sneaky tactics are at an all time high and they can take years to resolve with the Landlord-Tenant Board. I think the stress would break me.
Disabled people also tend to be poorer and being poor can sometimes mean bad credit or no credit. Getting a rental without a credit check is really difficult in 2023.
Finding an accessible rental is near impossible: when you are able bodied and have money, you have a world of options. You can rent a small shithole and save a fortune. When you are a wheelchair-user, for example, you need more room and more accommodations within the house from shorter counters to handrails and benches in a roll-in shower. More room costs more money and few landlords would pay to renovate a current space. Your options are generally subsidized or co-op housing but that could mean years on a waitlist.
Even for disabled people who have the money to buy a home, the costs can quickly spiral. Developers are generally not keen to change things even if you bought a condo from plan, which means you will be on the hook for renovations to make it habitable. If you buy a pre-owned home, renovations generally are needed too.
Why don’t you just move to a lower cost of living area!?: this is decent advice for people who have the option but for someone like me who has a bunch of specialists who know my needs, accessing health care in another area may not be as easy. For those of us who spent years getting a diagnosis and who have built solid relationships with their care team won’t want to risk having to restart the process in a new area and risk getting a care team that doesn’t suit our needs. For example, a friend of mine with a heart condition has considered moving to the country but right now he is an 8 minute drive from the Heart Institute. Would you risk not having the care you needed in a crisis?
Which brings us to the fact that most hospitals and specialists tend to be concentrated in urban centres of large cities that are accessible by public transit. Most disabled people use some sort of public transit to get around as private hires can be costly and the options are limited.
I like to give my kids stability: I have read some stories about how people moved around a lot as kids and were fine with it. I am glad they had a positive experience or a higher purpose that made it worthwhile. I had to move thrice as a kid and I hated it. I really wished for some kind of stability in my life. When we moved to our current home, the Youngest struggled a lot as well. They had a really hard time adjusting and were really upset about moving.
Of course, things happen and there are myriad reasons that families are forced to move – both negative and positive. But it was a priority for Mr. Tucker and I to give our kids a home and so we made that happen. If something happens to Mr. Tucker and I am left with the kids in our bungalow, I can manage because…
We make continuous accessibility improvements: when it became harder and harder for me to step into the tub, we installed an accessible tub. Because our backyard has a lot of steps, we hired a carpenter to build ramps. As the years go on we don’t know how mobility will be because everyone with PLS is different. So as owners, we can adjust our home as necessary and…
We get tax credits related to accessibility improvements: so when we do renovate to make our home more user friendly for me, we do get some tax credits for it.
If the housing crisis continues, we can renovate for our kids: the vacancy rate is under 2% and the average one-bedroom condo is renting for $2000 a month in our city. Who knows what the future holds as we bring many new (much needed!) immigrants into the country over the next few years? I suspect that it will get worse before it gets better and that housing prices won’t see a drop but more of a stagnation or small increase.
On our property we could theoretically renovate our basement to put in a two-bedroom apartment as well as build a coach house in the backyard. If our kids needed a place to go, we could do that. If we found ourselves suddenly needing more income, we could rent out some space. I like the idea that we have a property that gives us options. Or, if need be we could always…
Sell the house if we need money someday: I don’t like the saying, “My house is the best investment I have ever made!” Because most of the time the people who say it will admit that it is usually one of the only investments they have ever made. Having said that, it is still worth something. While I wanted a home to put down roots and raise a family the time may come when I am forced to move on and selling our home may end up paying for Long Term Care.
We were lucky in the fact that we were able to save for our kid’s education, Mr. Tucker’s RRSPs AND were able to still pay off the house. The flip side of that is that I know folks who wanted the stability of a home to raise their families but didn’t have much in the way of other savings after that because their salaries were so much lower. People also may be risk adverse (often, we forget that not everyone is as interested in this stuff as we are). So they get the stability of raising a family for many years, paying off their mortgage as they go along and when it comes time to retire, they sell the home and use that as their retirement money.
Sure, it may not be the best option for the finance nerds who optimize every penny but the reality is that most people aren’t optimizers looking for ways to eek out a percentage point more from their investments. They like safe bets* and paying off a mortgage is a safe bet to them.
I think rent vs. own comes down to your own personal priorities and preferences (if you have options). I always find these conversations about GOOD vs. BAD disingenuous because as we all know: personal finance is personal. Also – and as much as the FinBros think it doesn’t – feelings matter! You need to be comfortable with your decision and be able to sleep at night.
For Mr. Tucker he really, really, really wanted to pay off the house and so we worked on that even though for the majority of the time we saved, we would have made way more on an index fund. In retrospect with the prime rate being so high it was a smart move to not have to renew in September at an exorbitant rate but we didn’t have a crystal ball: it was a decision made purely because it worked for us.
Home, sweet home
*I am definitely not entertaining the “bUt It iSn’T rEaLlY, lOoK aT mY dEtAiLeD sPrEaDsHeEt…” Yes, inflation is a thing. Yes, they could probably make more in an index fund but if they WON’T do that because human psychology being human psychology, this is at least something.