Dr. Garth

Seeing Nurse Jiggles in an ‘Elbows UP!’ T-shirt gives a whole new perspective to patriotism. But it goes swimmingly with her “Canada is Not For Sale’ ball cap and glittery red hot pants. It appears patients feel suitably aroused the moment they walk in. At least they forget their symptoms.

Who’s first?

“Looking for some legit advice,” said James, as if this clinic dispenses anything but. “My wife and I have some savings and are looking at using it to pay off some debt we’ve accumulated.”

“The debt is around $80K at 8% interest between cars and a failed business attempt. We have around $140K in TFSA and about $390K in RRSP. I am wondering if it makes sense to pull from either to pay down some or all debt. We are pretty maxed so there isn’t a ton available to aggressively pay it down.

Also, we both have government jobs with DB pensions, so my gut tells me if I were to take it from either it would be the RRSP because with the DB pensions we will get taxed heavily on the RRSPs in retirement but I don’t know enough about it.”

Yup, 8% is brutal these days and may well be more than your investments are churning out. Good to get rid of it. But first, might the loan portion related to your failed business attempt be deductible? Money borrowed to invest in an income-producing enterprise, even if it’s underwater, can yield a tax break. Check that out with your accountant.

Where to get the cash? No, not the RRSP. Once money is withdrawn it can never be replaced into a retirement account. Instead, this is a job for your TFSAs, since every dollar removed can be paid back in, so long as you wait until the next calendar year.

As for getting tax-hammered in retirement because you have a defined benefit pension as well as a registered retirement plan, your gut is wrong. RRSPs at age 71 can be converted into RRIFs without triggering any tax. The required income from that account is then a measly 5% of the balance, a percentage that drifts higher over the years. If you have growthy assets in there, odds are that will more than cover withdrawals. Yes, the RRIF income is taxable, but it’s still income. Meanwhile TFSA withdrawals are not counted by the CRA. You need both.

Now, here’s Sean. “Am I really that screwed?” he asks. Let’s find out.

“Canadian white male aged 52 with maybe about 15 years to go before I get my cancer or other disease diagnosis – no medical treatment for fatal stuff ever for me thanks Will get MAID or fly to Sweden if necessary to get it done,” he says, cheerily.

“I have assets worth just aboutish under half a million (property plus tiny house) all paid for. It costs me about just under $20,000 a year in expenses to live (food, electricity, water, etc). I have no kids (environmental 101), best friend/partner on her own (finances separate – haven’t a clue what she does with her $$$) as it has always been. She is smart, can make her own decisions and, can take care of herself.

“We got together in the mid 1990’s in environmental sciences post secondary schooling. She has always made way more $$ than me but, I always paid my half I don’t expect to outlive her as per your blogs about the age thingy. I have been working since age 12 and will work until I die with a smile. I spend every penny I have in as many ways around my small community –  hopefully, helping others live a better life.  So, respectively, very very respectively  Mr. Turner am I really that screwed?”

Of course you are. It sounds like all you possess is real estate equity, which may be heading south for a few years thanks to what you-know-who will be doing to the economy. You’re 52, with little more than a decade left to mend your ways, get a balanced portfolio built and start worrying about how to buy groceries when you’re seventy.

And what’s this flimsy relationship with your partner of thirty years? You don’t know what she has, what she earns or where her money sits – so how can you both plan for what lies ahead? You two are an economic unit, presumably sharing the same roof and expenses as well as a life together. Stronger together. Have a serious talk with her. And grow up.

Well, maybe we can find more matrimonial stability and trust with Darryl. Or not.

“I’ve been reading your blog for the past 7 years and I wish I had started sooner because I feel like the sound advice you provide and the levelled critique on current events has made me a better person in general and prevented me from making critical financial errors,” he says, in a fine MSU.

“However, I’m afraid I’m about to make one of those and would love if you’d chime in and give me a direction. I’m a teacher making a little over 100K a year, divorced (I know you’re stance on that and it wasn’t my decision…but that’s another story), pay tiny amount of child support (kids live me with 50% of the time and I am unwilling to move anymore than 10 minutes from them So, I’m looking at 1.2 M for a townhouse that could fit us.

“Finally, I have a new fiancee (I’m an optimist okay – and there’s a prenup in the works) she’s younger and just started her career who would like to purchase with me if we found the right place. So the question is: should I continue to rent for the next 4 years and then worry about finding another situation then? Or should I buy something now, hoping that I can ride the wave of property value increases? I currently have $300K in a BD portfolio as well as the DBP. I would love your honest opinion as I don’t have people in my life that I trust for financial advice unfortunately.”

This does not sound good, Daryl. You want a $1.2 million townhouse and have only $300,000, which means a $900,000 mortgage plus ownership costs – and you’re willing to put a woman on title who has no assets and will likely make no contribution to the purchase price. Seriously? Did you not already learn something about choosing the right mate? It better be a good prenup because you’re taking on a boatload of personal risk.

But the main question is whether to rent or buy at this moment. That answer’s simple. Keep the lease, assuming it’s a good one. The housing market is in serious Trump-stress mode with at least a year or two of unknown gyrations to come. We could see recession, stagflation, rate changes and layoffs. Even for teachers.

Real estate sales, listings, prices and construction are all descending. As mentioned on this pathetic blog recently, this will bring opportunity – but not yet. Things could look a lot different two years from now after Trump faces midterm elections and Americans regain some of their native sanity.

Until then, just enjoy your stable rent, your young paramour and, of course, Nurse J. Get’em up.

About the picture: “Hi Garth – firstly many thanks for your years of FREE advice and putting up with the FREE comments that you endure,” writes Jeff. “This pooch, whom I christened Sandy, was wondering the beach in Yelapa south of Puerto Vallarta – he and the people down here send warm wishes to “Our Canadian Friends” – Salute.”

To be in touch or send a picture of your beast, email to ‘[email protected]’.