Debt & Frugality

As Didi says in the novel (Findependence Day), “There’s no point climbing the Tower of Wealth when you’re still mired in the basement of debt.” If you owe credit-card debt still charging an usurous 20% per annum, forget about building wealth: focus on eliminating that debt. And once done, focus on paying off your mortgage. As Theo says in the novel, “The foundation of financial independence is a paid-for house.”

CMHC: Why it’s Time to rip off the Bandaid

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By Kevin Fettig
Special to Financial Independence Hub

 

CMHC [Canada Mortgage and Housing Corporation] is unique among federal entities. As a Crown Corporation, it carries out securitization and insurance operations under a corporate mandate while also receiving public funding for federal policy initiatives. Once funding is allocated, CMHC reports to its board rather than the minister responsible on a day-to-day basis.

This differs from the typical departmental reporting model, which has created issues for the PMO, particularly as housing became such a hot-button political issue. Over time, the Department of Infrastructure and Communities evolved into Housing, Infrastructure and Communities, and CMHC’s reporting shifted to the department rather than directly to the minister.

As budgetary spending responsibilities have gradually been peeled away from CMHC, the structure has become more complex and confusing. Policy responsibilities now overlap between the department and CMHC, and some areas – such as addressing homelessness – are jointly managed.

Reducing Chronic Homelessness

A 2022 Auditor General of Canada report found federal efforts to reduce chronic homelessness have been ineffective because departments lack clear accountability for the National Housing Strategy’s target of reducing chronic homelessness by 50 per cent. The report also found that federal departments and CMHC did not know whether their initiatives were effectively improving housing outcomes. In addition, it highlighted a lack of coordination among various federal housing and homelessness programs.

The fragmentation of roles has worsened with the creation of Build Canada Homes, a $13 billion plan to build social housing, starting with development on public land. The initiative is designed to speed up delivery, strengthen Canadian supply chains, and ensure homes are affordable and sustainable over the long term. It focuses on a Canadian, factory-built, net-zero housing platform capable of delivering quickly in major cities, rural communities, and the North.

In the past, CMHC was responsible for social housing programs, typically under Section 95 of the National Housing Act, providing funding for non-profit and co-operative housing. More recently, new initiatives have included the Federal Community Housing Initiative, the Co-operative Housing Development Program, and preservation funding to support asset management planning.

Do 3 agencies make sense for social housing?

Does it make sense to have three agencies responsible for social housing? These agencies have demonstrated poor accountability when responsibilities overlap. Consolidating CMHC’s social housing activity under Housing, Infrastructure and Communities or under Build Canada Homes  could create a more streamlined and cost-effective framework for delivering on policy.

This would allow CMHC to focus on its two commercial mandates – securitization and insurance – while retaining some housing finance activities that require a commercial perspective for reviewing and underwriting loans. Continue Reading…

This Financial Literacy Month, Reverse Mortgages aren’t the only way (HESAs are)

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Photo courtesy Home Equity Partners

By Shael Weinreb, CEO and Founder of The Home Equity Partners

Special to Financial Independence Hub

November marks Financial Literacy Month, a time when Canadians are encouraged to “Talk Money” and build confidence in their financial decisions. When it comes to one of the biggest financial assets we own, our homes, though, that conversation is still far too narrow.

Right now, one message dominates the conversation: if you’re a homeowner struggling with affordability, a reverse mortgage is your best bet. Reverse mortgage rates are dominating headlines, even for retirees aging in place, but it’s making the alternative financing conversation biased and incomplete.

There’s no denying that reverse mortgages can be useful for some. They provide cash on hand, but they also saddle investors with new debt, compound interest, and a shrinking equity stake over time.

As someone who spends every day helping homeowners unlock equity without new debt, I see the same pattern over and over. People feel backed into a corner because they’re told they only have one choice. That needs to change.

The Alternative no one’s talking about

There’s another way to access your home equity, one that doesn’t involve taking on more debt or losing control of your home. It’s called a Home Equity Sharing Agreement (HESA).

Here’s how it works: a HESA gives you a lump sum today in exchange for sharing a portion of your home’s future appreciation. You keep full ownership and control. There are no monthly payments, no interest, and no loan sitting on your balance sheet.

When you sell (or buy out the agreement), the investor shares in your home’s gain or loss. It’s a partnership, not a payday loan in disguise.

This model works for a much broader group than reverse mortgages: homeowners under 55, people who can’t borrow enough through traditional channels, or anyone who wants to protect their equity while sharing market risk.

At The Home Equity Partners, we’ve helped clients use this model to pay off debt, fund renovations, or supplement retirement income without taking on new financial stress.

Why you haven’t heard of it

The simple answer? Awareness. Most advisors are trained on debt-based tools such as mortgages, HELOCs, and lines of credit because that’s what the industry sells. Reverse mortgages fit neatly into that mold. HESAs don’t. Continue Reading…

Almost six in ten Canadians worry they’ll run out of money in Retirement: especially women and young people

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The majority of Canadians are afraid they’ll run out of money in Retirement, especially women and young people, according to a survey released Wednesday morning by the Canada Pension Plan Investment Board (CPPIB).

The 2025 CPPIB Retirement Survey  (for Financial Literacy Month) says 59% of all Canadians are afraid of running out of money during Retirement, with the percentage jumping to 63% for women, compared to just 55% of men. It also found a whopping two thirds (66%) of Canadians aged 28 to 44 share the same fear. As the CPPIB graphic  below illustrates, those who have a financial plan are slightly less worried.

 

As you’d expect the CPPIB to point out, the Canada Pension Plan (CPP) helps protect retired Canadians from this risk: as it says above, CPP “benefits are payable as long as you live and [are] indexed to inflation.”

Indeed, CPP and the other main government retirement income program, Old Age Security, are both valuable sources of inflation-indexed retirement income. CPP is available as early as age 60 and OAS at 65 but a staple of Canadian personal finance commentary is that the longer you wait to receive benefits, the higher the benefits will be. In the best of all worlds, you’d wait until 70 for both programs to start paying out, even if you have to keep working longer and/or start withdrawing money from your RRSP before it’s mandated at age 71/72. (While the CPPIB doesn’t mention it, retirees with no other savings may also benefit from the Guaranteed Income Supplement to the OAS: and the GIS  is tax-free.)

The second graphic reproduced below is less straight-forward: it appears to present various excuses for delaying the creation of a proper financial plan to help get to Retirement. Roughly half of younger Canadians cite their need to advance their careers and make more money, and to buy their first home as priorities.


While it’s true that if nothing else, the future arrival of CPP and OAS benefits should put minds partially at ease about covering off basic Retirement expenses, it seems to me pretty obvious that at least for those who lack a generous employer-sponsored pension plan (ideally an inflation-indexed Defined Benefit pension), that it will be necessary to maximize savings in RRSPs and TFSAs as soon as possible.

Because of the Time Value of Money and the magic of compounding investment returns (especially when tax-deferred in RRSPs and TFSAs), the sooner you start saving in these vehicles the better. There’s no excuse not to make RRSP contributions from the get-go, ideally as soon as you land your first real job, since it reduces your income tax. Yes, decades from now when RRSPs become RRIFs you’ll have to pay some tax on the ultimate withdrawals, but that’s more than made up by the tax-deferred investment growth. Continue Reading…

Avoid being trapped by a Mortgage as a FIRE Retiree: 5 Tips

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Can you really achieve Financial Independence when you still have a mortgage looming over you? Our insights will help you avoid feeling trapped by payments.

Image: Iryna for Adobe

By Dan Coconate

Special to Financial Independence Hub

Achieving Financial Independence early brings freedom, flexibility, and opportunities. But entering this new chapter requires thoughtful planning, especially when it comes to housing.

Avoid being trapped by a mortgage in early retirement by adopting a strategic approach that aligns with your financial goals. Whether you plan to downsize, relocate, or stay put, being proactive can preserve your hard-earned independence without a mortgage becoming a financial burden.

Below are five essential tips to guide you through managing your mortgage while protecting your financial independence.

Prioritize Paying off your Mortgage

Carrying a mortgage into Financial Independence can feel like dragging a heavy anchor. If you can, aim to own your home outright before retiring early. This eliminates one of the largest monthly expenses, giving you greater control over your budget. Many Canadians find success by accelerating their payments or making lump-sum contributions when possible. Debt-free living provides immense peace of mind and opens up new possibilities for pursuing the lifestyle you envisioned.

Consider Downsizing

Scaling down your home can offer financial and lifestyle benefits. Downsizing can free up home equity, reduce maintenance costs, and even lower property taxes. However, a well-thought-out plan ensures you don’t trade your current home for another financial burden.

It is possible to buy a new home before selling yours: you just need to be strategic about it. You also don’t have to limit yourself to smaller square footage; consider homes in less expensive areas or those better suited to your needs.

Explore Passive Income from Real Estate

Turning your property into a source of income can significantly offset costs. For instance, renting out a portion of your home or owning a rental property can transform your mortgage payment into a cash-flow opportunity. Many pursuing Financial Independence have increasingly tapped into short-term vacation rentals or long-term tenants to supplement their budgets. Proper research and planning ensure this approach aligns with your goals while providing notable financial advantages. Continue Reading…

Protecting your Nest Egg: A Guide to Safely buying Big-Ticket items in Retirement

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Image via Pexels: Jalmar Tõnsau

By Devin Partida

Special to Financial Independence Hub

As you transition into retirement, you deserve to treat yourself to big-ticket items like a new vehicle, an upgraded appliance or a memorable travel experience.

Smart planning ensures you do so without putting your financial security at risk. Below are several strategies to budget, save and make informed purchases while preserving your nest egg for a comfortable retirement.

Anchor your Retirement Plan with Realistic Budgeting

Start by identifying your income and expenses. Track your monthly fixed costs — like housing, insurance and utilities — along with flexible spending, such as dining out, travel and hobbies. Review six months of spending to estimate your monthly average and spot opportunities to trim nonessential costs. This frees up money for purchases that truly matter.

Check your withdrawal rate as well. The classic “4% rule” suggests withdrawing 4% of your portfolio in the first year and then adjusting for inflation. Financial calculators or advisors can help you tailor a sustainable strategy to your lifestyle.

Prioritize Big Purchases within a Savings Plan

Set clear goals and classify purchases as short-term versus long-term. Write down when you want an item, how much it will cost and what you have already saved. Separating priorities helps you stay on track. Here are some examples:

  • Appliances: Replace older units before they break during retirement years.
  • Vehicles: Lock in financing while still employed or before fixed income makes borrowing tougher.
  • Home upgrades or travel: Save gradually, pay in cash or use carefully considered low-interest funding.

Consider the Timing of your Purchase

Some purchases are less costly when made before retirement. Long-term care insurance typically costs less when purchased earlier, such as in your mid-50s rather than your mid-60s.  Major home repairs like a roof replacement, heating system or appliance upgrades are easier to fund while employment income is steady, helping you avoid straining retirement cash flow.

Build Resilience against the Unexpected

Health care expenses, emergencies and fraud can quickly drain savings, so planning ahead is vital. Even with Medicare or provincial coverage, out-of-pocket costs for prescriptions, dental work or long-term care often arise. Keeping an emergency fund in a liquid account helps cover major surprises like home repairs or medical procedures without touching investments. Continue Reading…