montreal mike

i second your comments

not2old

If you don't mind on that point, I'll make one post on that point since its widening the thread from the OP

I've told my kids to avoid RRSP's for now till a point in their lives after their own (if any) kids are gone, mortgage paid off (if they're lucky to have home ownership) when they in their mid lives earn more wages to start RRSP contributions even if its equal to what their mortgage payments were - then the huge RRSP available contribution limit can be maxed to reduce the immediate tax burden.

First rule is to pay off all debt - then anything left is what you do what you will do with it

Of course its all in an ideal world without the rocky road and lifestyle challenges as well as lifestyle changes along the way.

Different strokes for different folks

montreal mike

absolutely

in business, as well as in private life, debt repayment takes priority

then if anything is left over it goes to savings which could be used to finance an rrsp

(on a personal note it is so wonderful to be absolutely debt free)

Shard

In business debt repayment very rarely takes priority. Most businesses need the leverage of debt to grow.

not2old

One thing that I did in the 12 months before quitting the daily grind was to lock away the one credit card that I had, never pay for anything by debit/bank card & to limit myself (wife is the same) to $xx dollars per week for items such as Gasoline for the car, groceries & other personal expenses. It was back to the future 1967 all over again.

Now,four years later its no big deal, it curbs the spending. Big payment items by cheque, utilities by direct payment.

Some folks just don't get it Mike, with many living the life, then one day the $hit hits the fan.

It must be your bean counter mindset that sets you apart from others

montreal mike

you are correct

debt is a 'necessary evil'

point i wish to make is that once debt is paid off then any extra cash flow available, after expenses, should go investments or savings

not2old

With limited knowledge of this (google is my friend)

I thought business runs or exits on cash flow, borrowing & leverage against assets ... much the same as people do - until its all over extended leverage and/or it all goes belly up.

Should a business have tons of cash - the owners will either fill their pockets, or in a public company make sure they expense everything (company pays for it) or dividend or option themselves or hold a class of not voting shares in their favour.

montreal mike

yes, being a beancounter since 1962, it has served me well

I have always been a traditionalist: no money equals no purchases, avoid credit like the plague, unless it really crucial

when i see people paying for food at supermarkets, using a credit card instead of interac, it makes me sick

montreal mike

it makes sense to take on long term debt to finance capital acquisitions and to take on a revolving line of credit to compensate for short term cash flow deficits

Aviator

I would disagree. It depends on whether it is good debt or bad debt. Personal, a mortgage the the cheapest source of financing one can get. Pay a mortgage and invest max into RRSP, take the tax rebate and use that to pay down debt.

For business, so long as the return exceeds the cost, it is good debt. Make money with other peoples money, why use your own? When making a surplus and no plans to expand, then begin to pay down debt or diversify investment elsewhere to protect what you have.

My kids started an RRSP young, took advantage of compounding and spreading out the timeline risk of any investment. The longer one has an investment, the easier it is to ride out any blips. One can also afford to be more aggressive with investment strategies. The older we start the more conservative we need to be and the lower the returns.

haggis88

i use my credit card for everything then pay it off at the end of the month...get the rewards for stuff i'm buying anyway (airmiles, cashback etc)

Aviator

Why, I use credit cards all the time, get rebates, points for stuff I don't need, purchase protection insurance, low FX rates, convenience. I use debit maybe once or twice a year if there is no alternative.

Everyone's perception is different. I know of people who figure they can afford something if they can make the monthly repayments (mortgage excluded). They are fooling themselves if that source of income could dry up. Debt and credit is useful when used wisely. Unfortunately plenty do not know how to use credit to their advantage.

not2old

we're drifting off the OP mike ...

like every day folks - borrow against assets or the promise of the sky is the limit growth & expansion.

Or buy & own it first (house paid for) then a HELOC

In business the danger of borrowing or issuance of more shares within a pubco to raise capital is sustainability, new business, competitive edge ... it doesn't always work

Now as a member of the management committee or the CEO of a pubco with my big fat paycheque, bonus & options - I really don't give a $hit about the company or the shareholders - just my bank balance & free loading benefits

not2old

are you working or retired?

Aviator

Retired once and working again.