Determining Needs vs. Wants When Buying a Home

What you need and what you want.

When the time comes to begin your search for the perfect home, there’s a good chance you have an idea of what you’d like to find inside it. A gourmet kitchen, glistening hardwood floors and a luxurious master ensuite may be at the top of your list. It’s a good idea, however, to establish a list of needs and wants in order to avoid purchasing a home with a price tag beyond what your budget allows.

Your needs: These are the must-have features that you can’t live without. For those with children, you will likely need a home with at least three bedrooms. It would be convenient to have an extra bedroom for guests or an office, but you can certainly make do without. When it comes to bathrooms, be prepared to settle for a home with two. You will need one for family use and one for guests; a master ensuite is an added bonus.

The kitchen is one space that many house hunters don’t want to compromise on, particularly the person who does the most cooking. When viewing homes, pay close attention to things like counter space, layout and the number of cupboards. These are factors that will come into play on a daily basis and cannot be changed without major renovation.

Depending on the number of vehicles you own, having ample space for parking is a definite need. There’s nothing worse than driving up and down your street searching for a parking space every night.
If you have children and/or pets, you will also want to consider outdoor space. A backyard doesn’t have to be huge, but many people consider it a necessity for little ones or pets.

Your wants: Once you begin your home search, you may find that items you originally considered “needs” can actually be categorized as “wants”. It’s more important to stay within your budget than it is to buy a home that is loaded with extras. Granite countertops, an island and a marble backsplash would be lovely to have, but remember that you can always add these features down the road when you can afford it. The same goes for hardwood floors, a finished basement and a pool in the backyard. The best part about buying a home you can improve on is the opportunity to earn a return on your investment.

Kirby Chan’s Real Estate Investment Workshop runs once a month. See the schedule at www.KirbyChan.info

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Eliminating Debt Strategy – Get Rich Slowly

Saving Money

Turning consumer debt into long-term savings is doable.

A lingering credit card balance is costing you money each month when it’s not paid in full. So, it might be worth borrowing from the bank to buy enough RRSPs to generate a tax return that will pay off that credit card debt.

Sure you have the monthly loan payment on the RRSP debt to cover but the interest rate on a bank loan is typically significantly lower than a credit card’s, and those RRSP investments are making you money over the long term. Unpaid credit card debts instead ding you over the long term.

There are plenty of online tools to help you figure out how much in RRSPs you’d need to borrow to generate a refund large enough to wipe out a credit card debt.
But be sure to only borrow as much as you can manage to pay off in a short time and live within your means learning to pay off your credit card in full each month so that you aren’t left with an RRSP loan to pay, as well as a newly accumulating consumer debt.,

And when the debt of the credit card is paid off, as well as the RRSP loan, consider setting up a monthly contribution to your RRSP because that bank loan has already instilled a habit of dedicating money in your monthly budget toward long-term savings.

For example, if you were paying $400 each month to pay off that RRSP loan to the bank over the past two years, when the debt is wiped out turn that loan repayment money of $400 into an investment builder. You’re already in the habit of budgeting for that every month.

Other ways to reduce debt is to transfer it to a lower-interest card. You’ll pay off more of the bulk of the money owed faster.

You can also convert non-deductible debt into deductible debt. In some cases those with an investment portfolio as big as their mortgage, for example, can sell off the investments, pay the mortgage and then set up a line of credit to buy investments. The benefit is that the interest you are paying on the line of credit would become a tax-deductible expense.

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