Further down in this Net Worth post update I talk about our long-term goals one of which is building/buying a final home or purchasing a rental home. I actually fuelled the desire last week when searching the multiple listing services (MLS) outside of our current city in a smaller up and coming town. The house wasn’t enormous as it was a bungalow with 1700 sq feet up and down in the basement, double garage, nicely landscaped but what caught my eye was the land. There was well over an acre of land where we could put in a pool, outside patio, grill, stone oven and huge gardens. The driveway was long and could fit more than 6 cars and something I could only ever dream of owning. I joked and said now that would require a riding lawn mower and a beer as opposed to the 20 minutes and no beer to mow our current lawn.
The problem was that the home was $500,000 and far more than we had ever imagined to spend. The Mrs. and I started talking about what we do to the house and literally fell in love with it so much as to even suggest going to have a look at it. Sometimes I think going on the MLS to see listings can be deadly but we like to keep an eye on the market to see where prices are at and what homes have to offer. It almost reminds me of my “No means No” post from the last week where I should just stay away from the grocery stores during a no-shop week.
Maybe we should stay away from the MLS because it reminds us of the “nice to have” perks that we don’t currently have in our home. If we keep looking we are liable to want to sell this house and take on a mortgage again. It’s marketing working it’s magic over the internet, like walking into a candy store with a $20 bill in your pocket. Some people move out and up and do this for various reasons, but would it be reasonable for us? That is the question we need to answer ourselves. Since we are in no position to move at this point in our life our dream remains a dream. We are still young, but as we age do we really want to have property so big to take care of when we are older? Lots of questions mulling around in our heads. Many folks heading in to retirement opt to downsize moving into bungalows which are highly priced in our area as they are desired by those who don’t care for an upper level. Will that be us in 30 years or are we thinking too far ahead? We want our next home to be our last home that we can do what we want to and sink as much money as we want to into it without worry that we “might” be moving in 5 years.
Can you tell we are forward thinkers although sometimes I wonder if it does us any justice, but I know planning is so important. The other point is, do we really want to sell a home we will have fully paid to purchase one that we would A-potentially have a mortgage or B-have to save up additional money for the price increase thus taking away from our investment power in other areas. Lots to think about and in reality this could just be our final home and we stay where we are. This could be a bout of the “want” instead of “need” but time will tell.
There is however always the option of purchasing land from our friend Pauline who makes the best with what’s available and gave up the corporate life for her little house in Guatemala. (yes she’s trying to sell us a plot of her land and is very convincing at it)
What would you do if you had your house paid in full? Do you search the MLS or other online sites to see houses for sale?
What does Individual Net Worth mean?
Net Worth is a snap shot of your financial health sort of like a picture. It’s a total of the value of your assets minus your liabilities.
How To Determine Net Worth?
Net Worth = Assets – Liabilities
Determining Net Worth is fairly easy as long as you know your personal numbers. Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number. It doesn’t get any easier than that.
Do you know how to calculate your own Net Worth? Why not go ahead and calculate your own using our Free Tool Net worth Calculator (Canadian Budget Binder 2012)
Our Monthly Finance Goal(s)- 2013
- To save as much money as we can while we are young to save for retirement while enjoying the present
- To spend time together as a couple doing the things we love
- Continue with meal planning and recipe creations
- To lower our Grocery Budget with The Grocery Game Challenge
- To spend less than we earn to carry out the above
- To pay off our mortgage with-in the 5 yr term ending in April 2014 (this should happen in April 2013)
- Focus on TFSA and other investing
- To Save money for smaller renovations
- Continue to meal plan, create new homemade meals
- To sow and grow more vegetables/herbs in the garden to save money.
- To take vacation somewhere in Ontario this summer
- To take this blog to self-hosted and get a redesign (happening 2013!)
- Learn more about Passive Income
- To Read a new Personal Finance Book
- Learn more about SEO and Blogging
- Continuing to educate ourselves on personal finance and investments
- Continue to Network with other like-minded individuals
- To finish renovating our home
- To continue with educational training to further careers.
- To Save money for big renovations
- Start thinking about saving for a second-hand vehicle in the next 5-7 years
- Save up for a European Adventure in the next couple of years
- Potentially save for a second home to rent out or build/move to our dream home
Our Financial Numbers
When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey. These are our numbers and our goals, not a means of comparison towards your own goals. We don’t care how much money others make or if their net worth is lower or higher as it’s not a competition. I hope our experiences perhaps will help guide you along your financial path towards debt freedom.
Canadian Budget Binders Financial Health
Overview: February was a bit of a hit to our overall Budget and Net Worth with the British pound tumbling down causing us further loss. Hopefully I will get my money moved over soon and be done with the rat race as it’s just depressing every time we look. Precisely the reason we want to get this mortgage paid although we know some people cringe at the fact we are doing this. When the mortgage is gone that leaves us over 30 years to do what we want to potentially plan for an early retirement. A big lesson learned there. So although we are up a bit this month we lost about $2500 with the pound drop and having to purchase the water softener.
As for the mortgage we will pay the 20% allowable pre-payment that’s left for this term of $33,068.xx which would leave us 11 years and 10 months left of mortgage payments . We will then turn around and pay the remaining $119,xxx to close off the mortgage in April the start of our 5th year provided everything goes as planned. There will also be a penalty included for breaking the mortgage.
Once that is completed I’ll likely combine this post with the budget update or just stop it all together, I’m not sure yet. There’s not much else to report on that is exciting after the mortgage is gone except for gains in our investments which are pretty boring at best.
What would you do once your mortgage is paid in full with the extra money each month?
Related articles
- CBB December 2012 Net Worth Update-A Look Back Over The Year! (canadianbudgetbinder.com)
- February 2013 Net Worth Update (edwardantrobus.com)
- CBB January 2013 Net Worth Update (canadianbudgetbinder.com)
- January 2013 Canadian Budget Binder Monthly Budget Update #1 (canadianbudgetbinder.com)
- How I Reduced Our Grocery Budget From $1100 To $600 In 6 Months (canadianbudgetbinder.com)
Laurie says
Wow – you guys get penalized for paying your mortgage off early? That doesn’t happen here. There are so many things to consider when contemplating a move, isn’t there? I agree with Pauline: check and see if the house could work with your long term goals, like possibly having kids, etc. A one-level would be good even in retirement years, and you could always hire out to help with the land care later. All in all you guys are in a good spot financially, so although a bigger mortgage might make things a little tight, it just might be the right decision for you guys. We moved to over 7.5 acres in October, and are loving it.
Canadianbudgetbinder says
Yes we will get penalized if we break the term of the mortgage so in this case we would be starting year 4 of a 5 year term. I’m not sure where we will go from here but we always keep our eyes and ears open. We would like to get out of the city a bit but that could just be a dream. Either that or save some money and just travel!
mycanuckbuck says
I don’t think I’d really look at MLS listings at all – I’m happy just dealing with the house I have now! 🙂
Canadianbudgetbinder says
We have plenty of renos to do so we also like to look and see what people are buying and selling and what’s hot… we enjoy it although I think it just got the best of us. I don’t know where this life will take us but what I do know is that we will consider everything we do throughout the process if there is any change.
onesimplefarmgirl2 says
We are mortgage free, and have been for 16 years. My Dearest is always looking MLS and for me it is scarry. That said we have never lost money on real estate. Dearest has bought land, rental properties and this farm. All which were at least triple the value in 15 years. But right now I personally find the market too high. Something has to give.
Canadianbudgetbinder says
So did you both have any desire to leave the home you had paid in full to buy a bigger home or one with a bigger plot of land? Why did you choose to stay for 16 years so far? How do you find being a landlord?
Kim@Eyesonthedollar says
I honestly don’t know what I’d do without a mortgage payment, but that’s a great problem to have. I’d probably start socking money into blue chip stocks until there was enough to buy some more rental properties. Even though a rental mortgage makes sense, it would be hard to tie myself back into a long term loan. Maybe if I knew I had enough to pay it off, that would be different?
Canadianbudgetbinder says
Well, it’s not a problem haha… you’re always a joker! But I really don’t know what we will do as we are always thinking about something. I know what you mean about the rental mortgage…. lots to think about that’s for sure.
Mrs. Pop @ Planting Our Pennies says
Oooh, that stinks that you have a pre-payment penalty on your mortgage. No fun! Mr. PoP still occasionally surfs the MLS listings, but mostly for investment properties to see if there are any nuggets of gold out there. Luckily (maybe?) there aren’t. So we’re still in paydown mode.
Canadianbudgetbinder says
Yes there is a payment penalty if we pay the mortgage in full but we are allowed $37k per year pre-payment with no penalty. We just have to wait and see the final numbers to decide on the best route. I’m still thinking pay it in full may turn out cheaper.
kathryn says
Are you sure? Generally with a residential mortage, if you pay off the mortgage at the end of a renewal period, there is very little penalty.
What we did when we paid ours off early, was changed it to an 6 month Open Mortgage term when it came up for renewal, which allowed us to pay it off with 3 months interest penalty. This wasn’t a posted renewal interest rate, but rather they told us about it when we went into the bank to enquire.
kathryn says
Sorry, I just reread your answer again.
I thought you were saying they were charging you a $37K penalty !
We did get charged $30K penalty for a commercial mortgage,a few years ago.
Canadianbudgetbinder says
Oh goodness no.. we would definitely be waiting it out if that were the case. I’ll do a blog post update once I know more info on what the final costs will be and our decision.
Christine Weadick says
I would have no problem with looking at the MLS listings and/or going to an open house. Not everyone looking at a model home is looking to buy the house itself. Especially if it’s a new build people will go have a look for ideas as anything else. Hubby loves looking at listings for Manitoulin Island. His parents had a cottage there back in the day. His sisters inherited the cottage and sold it a few years later. Getting there or coming home is a whole day shot…. assuming the ferry is running. It was nice up there but I don’t have much in the way of patience when dealing with drunks…… Some of the places he looks at are a nice water front location but the houses themselves are more of a nightmare than a dream cottage. To call these places a handyman helper is almost insulting to the poor handyman….. In the middle of nowhere can be a description too…. and I’m being polite here……
Mind you I have always enjoyed looking at house plans and playing with them, decorating in my mind…. I’ve had an interest in that kind of thing since high school. What drives me crazy is the fact that I really don’t care for what is “in style” right now…… I look at the designs and can’t find anything that I like!!!!!!! 🙁
Canadianbudgetbinder says
You are reading my mind as that is just what I was explaining to Edward in another comment. I look at houses outside our range and open houses. I’m going to write a post about it and I think it will help to see why we do what we do. I would prefer to move to a smaller city and have some land but there is so much to think about. We are still young and I hope to increase my salary as I gain more experience in my career. If only we had a crystal ball, right Christine? How was the day today? I hope it went well for him. Mr.CBB
Christine Weadick says
A crystal ball indeed!!! Part of the thing is that the more you look at other things, In this case houses, the better idea you get of what you like and what you don’t like. In that regard should you decide to move elsewhere you would have a better idea of what you want when you go see an agent and can avoid wasting time looking at houses that are not want you want. It clarifys things some what for you as you start to look. I could likely walk into an agents office and say … OK I want a house in this area…. I want this, this, and this, and I’m not interested in that or that. What do you have that fits the profile in this price range…..narrow the field there. Basically the more you look around , the more you can figure out what it is you want and what you don’t want…. Which can be just as important.
Things went OK with hubby, they took him about the time we were told, he was in recovery within an hour, so what we expected. He couldn’t have anything to eat or drink after midnight last night so he was a hungry grouch after. I’ll call for a follow-up in 2 weeks in the morning…… It’s looking good and we are glad to have it over with…..Thank you for asking
Canadianbudgetbinder says
That’s essentially what we do, just look to see what is out there, trending and cost in case we decide to move or have to move for work. Glad to hear he is ok Christine and recovering now.
Budget & the Beach says
That’s a loaded question about the house, because let’s say the area wasn’t selling well…you might lose money. But if the area was hot and you stood to make a killing off it, then possibly. In the meantime, I’d just enjoy something that was paid for and work on making some upgrades if necessary.
Canadianbudgetbinder says
Like everything in life right Tonya, bloody risk! How’s the car doing?
Edward says
When we were house searching, I simply entered my maximum number in and never had to look at listing that were out of my price range. The two million dollar mansion with lakefront property? Of course it’s beautiful, but I’ll never afford it, so why bother even letting it show up in my search listings?
Canadianbudgetbinder says
I can understand that and sometimes I like to look at them even though I may never own them. I like to see what they have inside, decor, landscaping, colours, finishes as opposed to wanting to purchase them. When searching in our price range I set the $amount to what we would be willing to pay yes.
kathryn says
Depending on the amount of the amount of the mortgage penalty, you may want to wait until there is no penalty? Do you have other bills to pay off? Could you put more in your RRSP?
When we paid off our mortgage we continued to put that money into an investment fund, until we decided what we wanted to do next.
Eventually we used it for rental properties, along with the equity from our house.
Canadianbudgetbinder says
Hi Kathryn,
No we don’t have any other bills to pay and the maturity date is April 2014 where we would have no penalty. When I called back a couple months ago it was around $2k but that was not putting down the 20% this year and then paying in full come April as the last year of the term begins. I’m expecting it will be even less than that. If tomorrow I put down the 20% prepayment of $33,xxxx that would leave us at around $118,xxx. In April 2013 we can put a further $37k down then break the mortgage. If we continued from April without putting the second pre-payment of $37k and continue to pay our weekly payments of $243.03 until April 2014 as per normal we would pay $5217.54 in interest.
Krista says
Mr. CBB, I think it is *great* you and Mrs. plan to pay off the mortgage early! I think that’s very exciting… and I love hearing success stories like this!!! 🙂 However, I’m wondering if you could take me through your thinking of paying it off in April 2013 (therefore incurring a penalty) instead of April 2014? It sounds like financially it could make the most sense if you got it as low as possible in April 2013 so that last year there was hardly anything on it (just enough to keep from paying it off completely)… and then you paid off the very last smidgen when the renewal came up – therefore not having to pay a penalty. I’m also guessing interest rates are lower now than they were when you originally got your mortgage – therefore likely making your penalty even higher (since I think the bank would then calculate it on that higher interest amount they lost)? Of course, I also think I’ve still got a lot to learn myself! So maybe my thinking is completely backward?! I’d love to hear your thinking behind this decision. Is it a financial one? Or is it even more about fully owning your home outright as fast as possible (which to me is more of a personal comfort level and so even if it cost a little more, it would be worth it)? Just curious! Thanks for sharing so many experiences and thoughts on your blog – I appreciate it.
Canadianbudgetbinder says
Hi Krista,
I answered this in a comment I believe one or two down if you want to give it a read. After we pay the $33k this month that leaves us with around 118k and around $90 a week interest with a grand total of $5217.54 in interest until maturity in April 2014. BUT>> Yes we could put another 20% down come April 2013 so around 37k bringing it down to $81k and less weekly interest. Then once we do that we will ask what the penalty would be to break the remainder of the term. What we don’t know at this point in order to make a final decision is what they will charge us to break the mortgage at $118k as it changes daily they said. We will know more information as soon as April rolls around so we can make a final decision and do the math.
The Happy Homeowner says
I love how comprehensive your updates are–I dream of the day when I hit the $500K mark! 🙂
When I was searching for my condo, the MLS was a blessing and a curse for exactly what you mentioned–those darn reminders of all the “extras!”
Canadianbudgetbinder says
I hear ya, but I really do like taking a look into others homes to see what they have done. It can get the best of me sometimes though. P.S All posts are moderated, I received both and deleted the last one. Cheers
Savvy Scot says
Interesting question… I would definitely invest some of it in Stocks / Funds (because it has fast become a big hobby of mine to research and make picks – doing really really well so far this year) – and I would inflate our lifestyle in the form of holidays.. more of them (Ski/Snowboard) etc. but not in the form of day to day living. i.e. I would definitely not start shopping at a more expensive supermarket. What I guess I am trying to say is that I would spend more on the things that are important to us in addition to investing and saving! 🙂
Canadianbudgetbinder says
I’d like to see us invest more, go on holidays as I haven’t done that since I moved here and would love to go home and travel with the wife as much as possible. I don’t think we will start spending more on food, clothes etc.. that would stay the same.
Jose says
I don’t think that looking through the MLS is anywhere near as deadly as actually going to look at a home that you saw on the MLS. 😀
Canadianbudgetbinder says
That I will agree on and probably why I said no we shouldn’t go lol…
Mary F Campbell says
Mr CBB, I disagree. There will be lots to report especially if you are investing. How about why you chose what you chose, how is it doing, what are you looking o do next and what if anything did you learn from the financial books you tackle. Digging your way out of debt through budgeting is only the first step where you can lead your fans. Now, when they follow your example and become debt free…what do they do next? Wealth doesn’t just happen – it has to be managed & you are just the guy to lead the charge! 😀
Canadianbudgetbinder says
I agree there will be lots to report IF I start investing on my own but if I’m not there is nothing really to report. At this point it’s baby steps and I need a starting point, somewhere to learn and play and understand what it’s all about. Any suggestions?
John S @ Frugal Rules says
That is very tempting Mr. CBB! I can understand that you look at the listings and see something that you fall in love with. In the end you have to do what’s right for you and your situation and I know you’ll do that. That said, the thought of having a house paid for with no worries of a mortgage…I think I’d have to stay there and not “move up” to take on a new mortgage. I might buy to have a rental, but not to move up. Who knows, maybe we can be neighbors in Guatemala on some of Pauline’s land. 😉
Canadianbudgetbinder says
Haha….wouldn’t that be funny now… and I’m sure Pauline’s shaking her head and drawing up the paper work as I type this although her post today was inspiring and makes one see through someone else’s eyes that paradise isn’t always what it seems. We have lots to think about I know.. thanks for popping in mate!
Pauline says
OK, both your contracts are drawn haha! If there is enough of us we may even get broadband internet 🙂 Thank you for the spotlight Mr CBB, that is so kind of you.
If you love the house and think it can be a good forever home, you should go for it! With a forever home I would look at flexibility to repurpose the space. Does it have space to have a family, can you rent that space if the kids move out or can they be independent as teenagers, can you turn that basement into a rental unit, etc. and why do you need 6 parking space? Remember delayed gratification, a beer after mowing the lawn is much better than while mowing….
Canadianbudgetbinder says
haha.. that’s funny mate… might even get broadband. We love the house yes, but we would like land. We don’t care if we don’t have a huge house as it’s only the 2 of us but we would like some land. Parking spaces are a premium here, we don’t need it’s just the house we were looking at had a long drive with lots of parking. Ya, I drink my beer after mowing, I’m not that talented 😉