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We paid off the mortgage!

We paid off the mortgage!

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.

The shocking realization you’ve reached your goals

The shocking realization you’ve reached your goals

Tax season brought us a huge refund which we will use to payoff the mortgage

I realized this week that some personal finance adages are true. I suppose that I always knew this intellectually but I managed to say this out loud (and by “out loud” I really mean, “in a Signal chat”) this week and once I said it, the weight of what I had accomplished came into sharp focus.

So let’s start at the beginning.

Mr. Tucker’s work was recently acquired by another company. This required him to sign a whole new slew of legal documents, some of which were a bit unclear. Fortunately for me though, I have a friend who is an incredibly brilliant employment lawyer who is licensed to practice in Ontario AND in California. Those are two very challenging jurisdictions to get licensed in (and she has a ton of experience with tech companies) so clearly, the woman is a GD genius. Luckily for me, she is also a lovely friend who read all of Mr. Tucker’s new documents before he signed them.

When all was said and done, she asked me about how things were looking for him at work, personally…and that’s when I took stock and realized that … IT DOESN’T MATTER! We are finally at a point in our lives that while it would be shitty, a layoff wouldn’t decimate our finances.

Having her ask that question made me go through our accounts and made me realize the following:

– Our mortgage will be paid off by July (two months before schedule!). The house is currently worth high 6 figures.
– Mr. Tucker’s retirement accounts will meet our target by the end of 2023.
– Any layoff would result in a severance enough to carry us through to the end of the year.
– The kid’s RESPs are currently funded enough to get them a 4-year undergrad degree + books at a local university. We’re still funding it but even if we stopped putting money in it today, they’d still be fine!
– We are currently mostly living off my income, which is private disability insurance indexed to inflation until I am 65.
– I have a small pension + lifetime benefits (Mr. Tucker would get half of it should I die as well as half of my CPP and the kids would get an orphan’s benefit as well until they are out of school).
– On top of regular tax shelters, I also have an RDSP which gives me 100% return on investment via government grants until I am 49 (and can grow tax-free in investments until I am 59).
– Should either of us pass away, we have sufficient life insurance and investments to carry the surviving spouse and the children.
– We have a secondary property that is currently rented to a family member at-cost but that has a mortgage on it at around 1/3rd of its value.

When I wrote all of this in a message I realized quickly that even though I had spent some time worrying about the company acquisition, there really is nothing to worry about. While we wouldn’t be living high on the hog, the decisions we made have been good ones.

We do a monthly game night with friends but for Easter we decorated eggs

So, those true adages? Consistency does beat intensity AND time in the market beats market timing. Let’s look at one example, our kid’s education savings accounts:

Consistency beats intensity
I didn’t end up opening an RESP until my eldest was around 3 (12 years ago). Up until 2020 we could only afford to fund it to the tune of $80 a month ($40 each) because we had a pretty high child support payment and I stayed at home with the kids until the eldest was 4.

But what we did do when they were younger was that we asked family members to give us money for their RESPs instead of buying gifts for various holidays. So for about 5 or 6 years (until they wanted to spend their birthday & Christmas money), we were able to throw in an extra $150 twice a year for their education.

Time in the market beats timing the market
When I go back and look at what we put in vs what we actually have, we see an almost 40% increase over the last 12ish years (investments + grants – so 20% each) in the original accounts (we do still fund these with the same $80 monthly).

Conversely, we also started a new RESP in 2020 using a Robo-advisor because we wanted to play catchup on our contributions and get the grants for previous years. In those 40 months we have seen a 24.6% return in that account – 20% of which is grants, so really we have only made 4.62% on our money since 2020. Not bad (but not great) considering how awful it’s been.

So even though we have been putting more away every month the long game has paid off in spades when you look at the return. We also aren’t done yet, I will continue to put money into the account until we run out of grants available to each kid AND it will also compound for at least another 3 years.

No matter what the market does, we just continue to fund our registered accounts. Dip in the market? Fund it monthly. Market overvalued? Fund it monthly. I just cannot be bothered to think about these things and even through it may or may not be the most perfect way, dollar cost averaging has often been my long term strategy. I used this strategy because it was easier to set up our budget and make savings come out of our accounts every month like a bill rather than have to constantly think about it.

Spring chorin’ has begun

Hoisted by my own petard
I was saying to Mr. Tucker the other night that while we intellectually know that we make good money and have assets, we sometimes feel a bit like money is tight. The reality is though is that we have structured our budget to feed money into two kinds of goals. Regular goals such as putting money away to buy a car with cash every 10 years, education savings, emergency savings etc. Then we also have stretch goals, which is basically saving almost everything Mr. Tucker makes into vacations, retirement accounts and paying off our house early.

So we feel poor sometimes when I have to say, “No, sorry, we are out of pocket money this month so we can’t have take out.” Because really, we live off of a bit over what a median household income is in Canada. But we don’t actually ever have to make really hard decisions, so it’s all in our heads and is guided by our goals. The things we end up denying ourselves is junk food, more subscription services or weird baubles at the dollar store. We don’t deny ourselves the things we really enjoy, such as travel and going to concerts. The kids also have all sorts of cool lessons and activities. But this is self-restriction for a higher goal. We’re actively making choices to deny ourselves shit we don’t really need in order to reach…well, apparently we’ve pretty much reached it…OUR LONG TERM GOALS.

It’s just absolutely wild to me that we can see the finish line after years of just putting in the effort. Of course, Mr. Tucker still wants to work until the end of 2024 but it is nice to know that we have a backup plan should things go south.

It’s so funny that one little question from my friend would lead to such a heavy weight being lifted off of me. But here we are!

Another fine book club was had

When it rains, it pours (in the laundry room)

When it rains, it pours (in the laundry room)

Mr. Tucker has always had a tumultuous relationship with the appliances that came with our house. From my perspective, he has an overly inflated view of how well appliances should function in today’s age. In his view, if you pay that much for something, they should work flawlessly. Truth be told, we’re both partially right.

It started at our old house we replaced our 30-year-old top loader & dryer with an energy efficient Samsung washer & dryer. Within a year we had to call the appliance repair person who basically told us that they were garbage appliances. He came back thrice that year to fix something until finally Mr. Tucker just decided to completely replace the dryer.

Since we had previously had good experiences with Kenmore, the Sears brand, Mr. Tucker decided that we should buy that brand with one caveat: no technology! He wanted an old-school clicky dial and mechanical machine that wasn’t governed by microchips and touchscreens*. When he went to Sears (RIP *snif*) to buy one, the salesperson explained that while their machines had dials that clicked and felt like low-tech, old school versions, they still had microchips and were still riddled with technology. In fact, the chances of getting an appliance there that didn’t have a microchip in it was zero. Still, we bought the cheapest model and it went on to serve us well until we moved out of the house.

To be fair, the man who used to own The Mullet loved this house and put top-of-the-line appliances in. Some (like the Dacor gas range) work amazingly and other ones (the Frigidaire Gallery dishwasher and fridge) not so much. Overall though, the appliances have done us well over the past 5 years in the house. Still, all good things must come to an end and a few things have.

1 – Mr. Tucker gets furious with the ice maker in our refrigerator but it’s the cheap shelves that are the real issue for me. The glass shelves inside the fridge have started to crack their plastic holders, which is frustrating enough but all the door shelves have busted off too. The most exasperating part is that a door shelf is $100 – for like a 6″ x 15″ piece of plastic! That’s just bonkerstown.

2 – The wall oven died slowly over the course of the spring. In its defense, it was original to the house (built in 1962) so it didn’t owe anyone, anything. Avoiding the more common, inexpensive brands we ended up deciding to splurge on a low-tech, higher-quality Italian brand. The cost? Approximately $3000 with installation. Wall ovens are expensive though and a comparable common brand would have been $1500-$2300. We wanted to go with a quality product that would last though and hit the low-middle range of the higher quality products.

3 – Then as we waited for 3 weeks for the oven install, the dishwasher died. At some point we will have our appliance guy out to look at it but until then the kids are washing the dishes by hand. They keep asking when we will have a dishwasher again and Mr. Tucker replies, “But we already have two dishwashers!” He’s definitely in his Dad joke years.

4 – The seal on the clothes washing machine somehow became twisted and we had a small deluge in the laundry room. Thankfully, Mr. Tucker caught it in time & it was something he could fix. Still, after all the other appliance drama I think that was the last straw and had we had to ALSO replace the washer he probably would have just walked out into the woods, never to return.

When we were in the thick of all the appliance drama, one night I tried to explain that unlike previous generations – even our parent’s generation – we tend to have an overly-inflated view of how much free time we should have and how much time we should spend on life tasks. Previous generations did more home and garden maintenance than we do, and even 100 years ago the expectation that you would have any free time was not a given except for a few moments snatched here or there. Life was work from the time you got up until the time you went to sleep. But for those of us who are Gen X or younger, we tend to think of most things outside of our work hours as free time. We hire people to do a lot of the maintenance around the house that previous generations did themselves on the evenings and weekends. So when things break – as they most certainly do in the age of Planned Obsolescence – we get angry at having spent money on things that are costing us precious free time when they were designed to GIVE us more free time.

So maybe that is why we are reluctant to call the appliance repair person yet AGAIN to look at the dishwasher: the kids are washing the dishes and it is working well enough for us so why spend the money? We also made the decision to not replace the shelves in the fridge – although I did float the idea of making some out of wood. I guess the situation isn’t, “if it ain’t broke don’t fix it,” so much as it is, “if it’s broke – do we really need it?” and “if we really need it, can we spend the money on something that won’t break down soon?” My final thought on this is something we should all consider: have I RTFM** and maintained the appliance properly? Chances are, that’s where the issue started.

*Hilarious for a man who works in IT and who used to believe in technology’s power to change the world. As the great Ella Fitzgerald once said, “What a difference a day makes.”
**Read the fucking manual

My RRSP, Mr. Tucker’s RRSP or house payoff?

My RRSP, Mr. Tucker’s RRSP or house payoff?

This is my question of the day: which one of the above should I prioritize, in which order, over the next three years?

Basically we both have contribution room in our RRSPs, and Mr. Tucker is in a tax bracket that is higher than mine, so on the surface it makes sense to prioritize his RRSP for the tax savings. However, I don’t want to use all of his contribution room up in year one and year two and then have him left with not enough to go down a tax bracket in year three.

I think the sensical approach is to a> make the 20% prepayment on the mortgage; b> put enough money into Mr. Tucker’s RRSP to bring him down a tax bracket; and then c> siphon the rest into my RRSP. We can use the tax refund to add to the savings to pay off the house.

I need to make sure I use up all his contribution room over the next 3 years so that he maximizes tax savings. After year 3 he won’t have an income so any savings we can continue to put any savings in our TFSAs and/or my RRSP.

It also means that we will get a larger Canada Child Benefit (CCB) as our gross income will be reduced. I need to make sure that year three his income is really low so that we get a larger CCB in the following year as his income will be zero.

Of course, since we are already living off my income and putting his away, we will already be used to it so it won’t feel any differently (except we won’t be putting a ton of money into savings!).

Anyway – happy Friday! The kids have a PD day so they are off cramming in more device use as they have an extra day in which to do it!