Family Formation & Housing

For young couples starting families, buying their first home and/or other real estate. Covers mortgages, credit cards, interest rates, children’s education savings plans, joint accounts for couples and the like.

6 unexpected expenses you need to prepare for

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By Lidia Staron

Special to the Financial Independence Hub

“Life is like a box of chocolates. You never know what you’re gonna get.”

Truer words were never spoken. We all know how life can be full of surprises: some of them happy while others can be a huge pain in the backside.

We’re talking about unexpected expenses here. Even when you’ve already set your budget,  you’re sticking with it, and you’ve got some savings set aside, you can still get knocked off your financial track due to a cost you never anticipated paying for. While you were patting yourself on the back for your financial savviness, life was preparing to throw you a curveball. To help you expect the unexpected and plan your savings accordingly, we’ve listed six of the most overlooked costs that are just waiting for you around the corner.

1.) Home repairs or replacements

It’s a fact of life that everything breaks down eventually, especially if it experiences everyday wear and tear. Your home won’t last forever, especially since you and your family are living inside it everyday. Anything that breaks down will need to be taken care of right away. Plumbing, electricity, a leaking roof, a flooded kitchen, a broken oven, termites …  all  these are things you never think of saving for when you plan your budget.

2.)  Health-related bills (Dental and vision care)

We all know you need to save up for those emergency room visits and prescriptions you may need to fill. But have you ever considered that you may suddenly need to pay your dentist or eye doctor a visit? If you’ve ever had a really bad toothache that turned out to be a root canal in your future, then you know this is something that needs to be placed in your “health budget” right away. Continue Reading…

Half of us fear rising interest rates will be negative for our finances

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Now that interest rates have finally appeared to bottom, consumers are starting to worry about the prospect of rising rates and their impact on their personal finances.

This is explored in my latest article, which is in Monday’s Financial Post (e-paper and online). You can access it by clicking on this self-explanatory highlighted headline: Only a quarter of Canadians have a  rainy day fund, but more than half worry about rising rates.

It describes a new Forum Research Inc. poll that shows more than half of Canadians (51%) fear rising rates will negatively impact their personal finances. The national poll of 1,350 voting-age adults was conducted after the Bank of Canada raised the prime interest rate from 0.75 to 1% on September 6th, which in turn followed an initial 0.25% hike in July.

After an amazing run of nine years of ultra-low interest rates, it’s clear consumers are starting to fret the party is over. Anyone with variable-rate mortgages might well be petrified that interest rates could again reach the high teens, as they did in the early 1980s. Little wonder that many homeowners are starting to “lock in” to fixed mortgages while rates are still relatively low.

Of course, as Credit Canada’s Laurie Campbell notes, for the longest time it’s paid to stay variable and flexible, whether with a variable-rate mortgage or a line of credit. It does cost a bit more to “lock in” to fixed mortgages, as Campbell notes, but the ability to sleep well at night in my opinion more than makes up for the difference.

While the poll asked specifically how consumers felt about the second hike, “they are worried more are coming,” Forum Research president Lorne Bozinoff told me. 12% say the negative effect will be extreme. However, 17% believe rate hikes will have some positive aspects:  you’d expect debt-free seniors to welcome higher returns on GICs and fixed-income investments. Another 38% don’t think it will have an effect either way.

Lorne Bozinoff

A quarter have no emergency savings at all

Bozinoff is more concerned that 26% of respondents have no emergency savings, and 40% have a cushion of a month or less: 9% have less than a month and 11% just a one-month cushion.

Financial planners generally recommend three to six months as a hedge against job loss or other setbacks. A minority do: 14% have two to three months, 9% four to five months, and 13% six months to a year. Only 15% have a year or more and predictably, 56% of the latter group are 55 or older. Continue Reading…

Right side of the tracks: most affordable commuter Neighbourhoods

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By Penelope Graham, Zoocasa

Special to the Financial Independence Hub

It’s a given that home buyers will pay a premium to live within big city limits: close proximity to work, lifestyle benefits and a comparatively healthy job market mean homes within a municipality’s core are in high demand.

While the concept of moving to further-away communities with lower real estate prices isn’t new, the suburbs near Canada’s largest cities are becoming a buying destination for home seekers at a faster pace. For example, homes within the Greater Toronto Area’s 905 region have appreciated 56.96 per cent over the past years, fueled by demand from spillover buyers from the 416.

This trend is mirrored on the west coast, where popular commuter cities Maple Ridge, Pitt Meadows and New Westminster have appreciated 6.5, 72.8 and 73.4 per cent, respectively.

Car commute costs add up

However, a long-standing argument against “driving until you qualify” is the opportunity cost of longer commutes. Those who choose to drive to an office in the downtown core need to factor in the cost of purchasing and maintaining one or more vehicles, as well as insurance, gas and parking. For this reason, neighbourhoods closest to well-serviced transit lines, such as rail, light rail or bus lines, tend to appreciate in value faster than their car-accessible-only counterparts.

“The cost of owning and operating one or more personal vehicles greatly outweighs the cost of taking transit,” states the Metro Vancouver-commissioned “Housing and Transportation Cost Burden Study”. It found the average auto-related commuter costs range from $13,500 to $17,700 annually, a “significantly higher amount than the average annual transit costs.”

That makes a pretty strong argument for suburban buyers to stick close to local transit stations when buying. But what regions provide the greatest value vs commute cost? To find out, Zoocasa crunched average home prices and transit pass prices in Canada’s two largest housing markets: Toronto and Vancouver. (Please refer to the infographic at the top of this blog.)

Toronto commuters could save $395,667

That’s the difference between purchasing the average home in the 416 compared to one in Malton, the most affordable neighbourhood located along the GO Transit Line, which services the majority of the Greater Toronto Area with commuter trips to downtown Union Station. Continue Reading…

Toronto Rentals vs. Hong Kong: A matter of perspective

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There’s been plenty of discussion recently surrounding Toronto’s hot housing market. First-time buyers are being priced out and young prospective home buyers are being pushed further and further away from the city’s desirable centre. With all this talk, it’s easy to get caught up and lose perspective, but lucky for you, I’m here to remind you to count those blessings (however meagre they may be).

Sure, the housing situation in cities like Vancouver and Toronto may be less than ideal, and yes, something should be done to improve the way things are going. However, there are far more dire housing situations in other top-tier cities, which, when compared to Toronto, really make everything here seem — dare I say –breezy?

Related Read: INFOGRAPHIC – July GTA Sales Plunge 40%

Taking A Global Rental Perspective

Take, for instance, Hong Kong. As those who’ve read my posts on Findependence Hub may know, I lived in Hong Kong teaching English. It is one of the most bustling, vibrant cities I’ve ever experienced, but I can only defend it so much once the subject of housing prices comes up. Year after year, Hong Kong tops all the lists of ‘most expensive housing,’ and having rented there for a year, I have to concede defeat on that point. For what you get in Hong Kong, there is much to be desired.

 

Chevreau’s Hong Kong apartment was tight on square footage.

Chevreau’s Hong Kong apartment was tight on square footage

If you’re like most millennials and looking to break into the housing market for the first time –- perhaps in a Toronto condo –- you’ve most likely experienced the disillusionment that inevitably comes when you realize the prices you’re looking at paying, even after this summer’s price correction. In the city of Toronto, the average price per square foot, or PPSF, is around $649 with an average home cost of around $550,000. This number spikes to $800 PSF if you’re looking to put down roots in ‘downtown Toronto’ (anywhere south of Bloor, west of Yonge, east of Bathurst).

Related Read: 5 Ways to Get Ahead in the Toronto Rental Market

Continue Reading…

Blending families and assets: How to make it easy

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By Rowena Chan, TD Wealth

Special to the Financial Independence Hub

Finances can become challenging when adding — or removing — a new partner, stepchild or extended family member into a household. The instances of blended or multigenerational families are becoming more and more common in Canada as the number of multigenerational families has grown in the last 15 years – rising 37.5 per cent. In addition, 12.3% of families in Canada are stepfamilies, according to recently-released 2016 Canada Census data.

A recent TD survey found 66% of Canadians living in a blended family say they face financial challenges because of their household situation. Additionally, 47% find juggling these challenges stressful. The top three financial challenges they faced are determining who pays for ongoing household expenses (25%), having different views on managing the household budget (23%) and determining household saving priorities (21%). Take a look at this infographic here for more survey findings, tips and advice.

No matter your family situation, money matters can get tricky. To guide you through the process, there are some simple steps blended families can implement to help create a more stable financial future for everyone involved. Continue Reading…