Higher Education = More Work and Crappy Return.

One thing the article I posted last week does not cover is this: realizing that a large portion of this is not just big screen tv’s or jewellery and cars that people can’t really afford, but that it is educational debt. It’s interesting how we’ve created a society where most often, the ‘smartest’ people are saddled with the biggest debt.  

          Think about it.

You spend 4-10 years getting a post secondary education they are up to their eye-balls in debt = Age 22-28 into the workforce

You spend the first 10 years of their career trying to pay for it. It makes zero sense = Age 32-38 finally out of debt

You’ve lost the first 15-20 years of all your disposable income when others have been plugging along working, for what?

You earn maybe another $50K a year to just lose half to taxes?

Then lucky you, you spend the next 20 years in a panic trying to make up for lost time climbing the ladder while everyone else just plugged along working.

So you make another $1,000,000 taxable dollars that your less educated peer made with a lesser salary.

Woohoo.  

It makes NO sense to me. Listen, I’m not saying go work at the Quickie Mart Einstein, and I am absolutely not saying don’t get a post-secondary education, what I’m saying is do it without taking on debt. Do whatever it takes to pay for your education as you go, work summers, evenings and weekends if that’s what it takes. Then bingo, the gift of making $50K more a year has it’s benefits, and those benefits can be seen right away.

Here’s the alternative.

Graduate from high school.

Work your tail off going to trade school, college or University for however long you’d like.

Graduate at 22 DEBT FREE.

Spend the next 30 years in a lower tax bracket, investing the money that you would have used to pay interest and minimum payments on your school loan, if you had one.

Rough numbers with average yields, by my calculations translate to over $15,000,000 compared to the $1,000,000 above.

Hmmmmmm. Which one is better? What can I say, I’m one of those ‘educated people’, but I was lucky enough to not ever take a student loan, so my money has always been mine, and continues to be that way. Consider this if you are going to be a student, are one with debt, or you are a parent. Higher Education = More Work and Crappy Return.

Cheers,

          Julie

Debt in Canada

The Bank of Canada is concerned about Canadian debt.  Many Canadians are taking out debts other than mortgages, using their homes as collateral.  

The fact that Canadians are in debt is fantastic. Let’s face it, those who are going to make the most money will do it by using other people’s money, and taking on debt like mortgages outside of their own home; smart debt.

But the fact that the average Canadian has over $25,000 in debt outside of mortgages makes me want to vomit. Knowing as well that it will take YEARS for those people to climb out of that level of debt, it amazes me that people take on debt so willingly to impress their friends, neighbours, family and sometimes to make themselves just feel better or worthy. It’s a sad state of affairs we’ve got ourselves in. 

This article makes an important point, that with oober low interest rates right now people, and with people borderline being able to carry the payments, things don’t look good for the future. Shouldn’t Canadian’s minds be still very fresh with the awareness that we were lucky enough to not get nailed with the sub-prime bottom out in the US? And yet, we continue to spend money without being entitled to it. Such and interesting phenomena.

Cheers,

          Julie

THE WORST 6 RENOVATIONS THAT TAKE AWAY VALUE:

You have seen the best renovations for adding value in the previous blog post. Canadian Real Estate Magazine also includes the list of worst renovations.

These renovations will reduce value on rentals, and can have a negative effect on sale price as well. 

Carpets

Although some people like the warmth of a carpet over cold flooring, carpets are very impractical for rentals and a house you plan to sell soon. They get warn down quickly and have to be replaced every few years, they stain easily, absorb odours, and are more readily damaged by pets and cigarette smoke.  If you don’t want to walk directly on hardwood or tiles, consider throw rugs to provide ease of installation and replacement. 

Installing cheap flooring 

It is tempting to skimp, especially on rental properties, but cheap flooring may come back to bite you in the long run. Cheap floors look it, and so discourage potential tenants. They also lack the durability of better quality flooring. You will be forced to replace it frequently in order to satisfy tenants. In other words, you will save now, but pay later. 

Landscaping 

If you have left over money from other renovations that you have completed, than this one can in fact be useful. Landscaping can do its part to attract tenants and potential buyers. In terms of total value however, landscaping is your lowest priority and should not take the place of better renos. 

Fancy light fixtures

Although you might enjoy chandeliers and hanging lamps,  our taste may run contrary to that of potential tenants and buyers. You are better off installing standard lighting and/or pot lights and leaving any fancy fixtures to be the responsibility of tenants.  

Wallpaper 

Wallpaper becomes dated very quickly. It is more expensive and difficult to replace than basic paint. You are better off sticking with paint, and using furniture accessories to play with bold patterns and colours. 

Bold colour schemes 

Like wallpapers, what is enjoyed by one will not necessarily appeal to another. By leaving the colours a neutral colour, your property appeal reaches a larger audience.

Best Renovations

If you ask most people on the street whether or not renovating your house will raise its value, chances are they will answer yes. What they should be answering is “it depends on the renovation”. This is true regardless of whether you are talking about your own home, or about a rental property you own.

The December 2011 edition of the Canadian Real Estate Magazine did a great article about the best and worst renovations you can do on your property. Without further ado:

The Best 7 Renos:

Create Warmth

This is the least expensive renovation. You can do it yourself, or hire a professional, both with relative ease. The idea is to create a space that is welcoming to potential buyers or renters. It is also a great way to quickly cover up little problems like cigarette smoke damage and unwanted odours from past tenants.

Luxury Countertops

Installing stylish countertops in your kitchen can serve two purposes: practicality and appearance. The right countertops can make your kitchen look modern, stylish, and appealing.  The right countertops, especially something like stone, are also hard and durable enough to last a while. If you are planning on renting out your home for example, this will reduce the need to replace or repair them between each tenant.

Install Hardwood Floors

Hardwood wins out over carpet due to its durability. A light varnish won’t show scratches as obviously. Maintenance on hardwood floors is a lot easier.

New Bathroom Tiles

If you can’t afford to completely redo your bathroom, but want to give it a facelift, changing the tiles can be a relatively inexpensive and creative option. Tiles come in a variety of colours, including mirror, and can go on both floor and wall.

Swap out the vanity.

Good basics in a bathroom can go a long way towards improving the value of your home. Bathtub, toilet, sink, not to mention tiles, can all be switched out to turn your drab bathroom into something more inviting.

Add wow factor to your kitchen

The popular trend for kitchens right now is open concept, stainless steel, and modern appearance. If you want to go that extra mile to really stand out, add an attractive backsplash. If you don’t have a big budget, a splash of paint on the cabinetry and a new faucet can also add that extra touch to make your kitchen stand out.

Waterproof the Basement

How much would you pay for peace of mind? Even if floods are not a usual concern in your area, this precautionary renovation could potentially save you money in the event of a broken pipe, clogged drain, or many other small mishaps that can cost you thousands in damage. This renovation might not add measured value to your home, but buyers will like that this “major” will already be done, and tenants will appreciate the peace of mind.