Wednesday, April 28, 2010

personal finance activities

Like any other family our personal finances are under a constant state of flux. We are in the process of or have recently completed the following changes to our financial situation:

1. Paid off a 4 year old vehicle in full. We ended up saving some interest on this open loan.
I was just sick of this payment and I felt that it would be nice to be payment free for my wife's maternity leave.

2. Renewing our mortgage; choosing a variable rate, changing our amortization to 35 years & lumping our HELOC balance into our first mortgage.
Going variable was an easy choice due to the current rate options and my view on the economy and Canadian rates going forward. Increasing the amortization just means that our mortgage is manageable and I'd prefer to put it on the back burner and enjoy lower rates during this period. The money not deployed here will be invested. The HELOC was lumped in to get a better interest rate on the HELOC portion.

3. Opening a second RESP with TD e-funds for our second son.
I've been very pleased with TD's online portal and the fund fees are hard to beat. I'll continue to focus on using the $200 per month UCCB as the base to fund the RESPs. We will add aditional money when appropriate to take advantage of the full grant.

3 comments:

Anonymous said...

Moneygardener, can you give your readers the thought process you went through for moving to a 35 year amortization on your mortgage? I don't feel out of place saying most people with a moderate amount of knowlege about finance would not make this decision. I appreciate the variable mortgage market is currently sub-prime, but we are in an increase rate enviornment. From reading this blog for a while you're not one to make an a decision that's not well thought-out. For the benefit of less savvy readers I think it would be helpful to give some detail on your move to a 35 year amortization and why it's not a move to be taken lightly.

MG (moneygardener) said...

Sure, let's address it. Here is the thought process:

1. Rates are low
2. We want as much available cash to invest as we can get our hands on.
3. Our debtload when compared to our assets is very manageable
4. If we change our mind we can make extra payments at any point in time.

It might not be the conventional wisdom but I believe that it is the right move for our strategy of saving heavily and investing for the long term. It is just another step toward asset growth rather than debt repayment.

MG (moneygardener) said...

Too add to your last point: Never take debt lightly, but manageable debt on appreciating assets at low interest rates is good use of other people's money.