Archive for 2014


November 28th, 2014

Globe and Mail – Financial Facelift  by Dianne Maley

web_kc Lena and Louis have good jobs and manage their money well. She is 38, he is 39. They have two children, ages 1 and 3.

Lena is in the Canadian Armed Forces, while Louis works as a manager. Like many parents, they are eager to buy a vacation retreat while their children are small, but they still have a while to go until their mortgage and car loans are paid off. Should they wait or buy the cottage now?

Louis and Lena are paying an extra $1,500 a month on their mortgage on their home in Southern Ontario and hope to have it paid off in three or four years. As well, they are saving for their children’s higher education. Although they have some cash and savings, they would have to borrow to buy the cottage.

Longer term, their goals include paying off the vacation property mortgage in turn, increasing their retirement savings and travelling more. They hope to retire in their mid to late 50s with $60,000 a year after tax.

“Can we afford to purchase a cottage for about $250,000 in the next two to four years and still afford our retirement goals?” Lena writes in an e-mail.“Should the cottage purchase be delayed until after the house mortgage is completely paid off and the kids are out of daycare?” she asks.

Lena will qualify for a full government pension when she retires but Louis has no work pension plan.

We asked Keith Copping, a fee-only financial planner with Macdonald Shymko & Co. Ltd. in Vancouver, to look at Louis and Lena’s situation situation. Macdonald Shymko is a fee-only financial planner.  Click here to read the rest of the article.


November 7th, 2014

Money Sense – By Julie Cazzin

The current situation:

Justin Langlois, 30, and his wife, Danielle Sabelli, 29, recently moved to Vancouver. He’s a professor at a local university, while Danielle, who is currently articling at a law firm, plans to open her own practice when she finishes in a year’s time. Together, the couple earns about $100,000 annually but expects to increase that to $130,000 in a couple of years. Their only debts are a $297,000 condo mortgage and a $5,000 RRSP loan—obligations they’ll have no problem paying off as they don’t plan on having any children. “Post-secondary school was a good investment for us,” says Justin. “We want to support other students who want a good education but don’t have the money.”

That’s why the couple has a unique goal. They’d like to set up an endowment fund that would give out scholarships annually to a few civic-minded students. They’ve just started contributing $100 a month to a savings account and hope to contribute $10,000 or so annually starting in two years. By 2029—or 15 years from now—they’d like to have at least $200,000 in the plan, or enough to fund two to five scholarships totalling about $15,000 a year in perpetuity. Are they on track to do so?

The verdict:

Justin and Danielle will not meet their goal of saving $200,000 in 15 years if they contribute only $10,000 a year. “Assuming an annual rate of return of 4%, they’ll have only $170,000,” says Ian Black, a fee-only adviser with Macdonald, Shymko & Co. in Vancouver. “They’ll be $30,000 short.” Click here to read the rest of the article.


October 31st, 2014

The Globe and Mail – By Diane Maley

As their wedding date approaches, Ruth and Cameron are looking for a financial road map to guide them through the various stages of their lives, from paying off debts to raising a family to long-term financial security.

At least Ruth is. Cameron seems a bit of a spendthrift.

Ruth is 30, Cameron 33. Both have good jobs, bringing in $260,000 a year including bonuses. They have a home in Toronto and a rental property, both with substantial mortgages. As well, Cameron has $27,000 in consumer debts.

“We’re trying to save for a wedding, a hypothetical maternity leave and pay off my boyfriend’s consumer debt – all while saving for retirement,” Ruth writes in an e-mail. “I’m worried that we’re not paying down his debt aggressively enough, yet he wants a lavish wedding,” she adds. “Obviously, we’re not seeing eye to eye when it comes to household finances.”

Longer term, they want to upgrade their house and eventually move to a larger one.

“Please help us create a strategy to balance short-term financial commitments, pay off consumer debt and plan for both a family and an early retirement,” Ruth writes.

We asked Ngoc Day, a financial planner at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Ruth and Cameron’s situation. Click here to read the rest of the article.


August 15th, 2014

The Globe and Mail – By Diane Maley

Burt and Betty seem to be in an enviable position work-wise – she is a self-employed yoga teacher, while he earns a six-figure salary in education.

Yet they can hardly wait to throw off the shackles. He’s thinking of changing jobs, casting his teacher’s pension to the wind. She wants to close up shop by the time she is 55.

Betty is 47, Burt is 49. They have two children, 15 and 17.

Their goals: to retire sooner rather than later, and to help the children pay for their schooling. Short-term, they need a new car and some work done on their house in suburban Toronto. Longer term, they wonder whether they can make the desired changes and still maintain the same lifestyle. They like to travel with the children and pay for it using their Air Miles reward miles.

On top of his salary, Burt brings in a little extra money consulting, which could lead to a new job. But the salary and benefits are unknown. Burt’s current pension and benefits would be “impossible to replicate with a non-governmental employer,” Betty writes in an e-mail. Would it be “financially disastrous” if he quit his job? she asks.

Betty likes her work, but is finding it increasingly taxing physically. “If I quit at 55, before the mortgage is paid out, can we afford our present lifestyle?” she wonders.

We asked Ian Black, a fee-only financial planner at Macdonald Shymko & Co. Ltd. in Vancouver, to look at Burt and Betty’s situation. Click here to read the rest of the article.


July 4th, 2014

Globe and Mail – Financial Facelift by Dianne Maley

web_kcGreg describes himself as a “55-year-old divorced dad of three,” ages 6, 13 and 16. He earns a good income – $96,400 before tax – and likes his consulting work.

His long-term goal is to “enjoy a modest retirement that might gradually phase in by the time I am in my late 60s,” Greg writes in an e-mail. He has no work pension, $113,000 in savings and a mortgage on his Alberta home. Two of his biggest expenses are child support and keeping an apartment in the city where his children live so he can spend time with them.

Greg plans to pay off his $90,000 mortgage as quickly as possible. “I want to be mortgage-free by the time I am 60 or 61,” he writes. Then he would scale back his work slightly (to $80,000 or so, before tax).

“I am in excellent health and feel this is a way to work longer while remaining healthy by carrying a lighter workload,” he adds.

At age 68, when his youngest child is age 19 and child-support payments cease, he would cut his workload in half (to about $40,000). “I really don’t have a burning desire to retire,” Greg writes. “If I have a paid-for house and the kids are grown, I am hoping I can live off a few thousand a month and do a little travelling.” While Greg may help with his youngest’s university costs if he can, he wants the children to pay most of the cost themselves, like he did.

We asked Keith Copping, a fee-only financial planner with Macdonald Shymko & Co. Ltd. in Vancouver, to look at Greg’s situation. Click here to read the rest of the article

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