Show Transcript
You’ve paid off your mortgage. Congratulations! It’s a big deal. Now what? Georgia Swan, Tax and Estate Planner, TD Wealth, joins Kim Parlee to talk about some key considerations as you pivot your financial plan to gain ground on other important goals, including retirement, helping your children or finally buying a vacation property.
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[MUSIC PLAYING]
* You've paid off your mortgage. Wahoo, congratulations. It is a big milestone. The question is now, what do you do? When you've spent so much time and money paying off your mortgage, how do you pivot your financial plan to focus on future goals? Well, here to tell us what you should be thinking about is Georgia Swan, Tax and Estate Planner at TD Wealth. And always a pleasure to have you here.
* Hi, Kim.
* Hi.
* Good to see you again.
* I love this topic. So for people, you know, they've paid off their mortgage. What kind of financial freedom does this create for people?
* Well, the first thing I always tell people is you need to take a beat. It's time now to do exactly what you said and refocus on those important things. So are there areas of your financial wellness that you've been neglecting a little bit in favour of the mortgage? What does your retirement plan look like? Are you on track for that? Is your TFSA topped up? Children's education? What's that emergency fund look like?
- Now it's time to relook at those goals. And start with those big ones, the sort of needs and must-haves. And then look to some of the secondary ones. So is it time to get rid of that 14-year-old car and replace it? Are there some renovations or repairs to the house?
- So you keep going down those tiers of things that you now want to focus on. And maybe you'll get to the more fun stuff. So is it time to give to that charity that you've always wanted to give to? And that's always a good one because you get the charitable-donation credit. Or can you maybe now start helping your kids buy their first home? So you have to take that beat and then decide, what are your goals, your needs, and your wants.
* Can I ask-- I feel like that's a whole lot of do's. What about the don'ts?
* Don'ts-- don't procrastinate on that retirement planning. And really remember that you need to keep budgeting. You didn't get to this point by not focusing on the important stuff. My grandfather used to say: You've eaten the elephant. Don't choke on the tail now.
- So you have to keep that focus going. Now, OK, I don't want to rain on everybody's parade. I know that there might be the odd splurge that you want to do-- that great vacation to the place you always wanted to go to or that great pair of shoes. But you can't oversplurge. You still have to keep a focus on those goals.
* What about-- I know some people-- they've paid off their house and are like, I've paid off a property. Let's get another one.
* Yeah, that's a very common one. And you know what, that could be a good idea. So-- but you have to be very careful about-- are you cut out to be a landlord? So make sure you do your research. Make sure you have that expert telling you where the best places are, what your expected return is. And be honest with yourself about whether you are cut out to be a landlord, especially in circumstances-- if you're going to do a short-term rental, make sure you do your research because that might not be appropriate where you are.
- Then, if you're looking at a vacation property, though, you have to look at, what is that going to cost you? Do you want to go back into debt? And what are the fees to actually maintain it on a go-forward basis? This is all stuff that you need to do to educate yourself to make those right moves.
* And the other thing I was going to say with vacation properties, I've heard people say, oh, you know, I'm going to buy something for the family in the States and just-- what that opens up, right?
* No, absolutely, because you're buying something, obviously, in a completely different country. The laws are different. The value of the money is different. You're not there all the time to take care of it. So you have to be really careful in that circumstance
* I hate to ask this question, but I do think we need to ask it because you need to have some cautionary tales, right? You need to say-- so what are some of the worst things that you've heard for people when they're like, whoo?
* Yeah, the worst thing that I see is people that suddenly start treating that disposable income as truly disposable and disposable for too long. So they're the ones that are the endless shopping sprees and so forth. And they've forgotten to kind of regroup and go back to the beginning.
- The other thing is I've seen a lot of people-- they suddenly start getting into these business opportunities and get-rich-quick schemes and things like that. And when those go bad, they go horribly bad. And a lot of times, they take more than just what you've put into them. So you really have to be careful. And like I said, go back to the fact that you got here by being-- you know, by doing your budgeting, by doing your planning. Don't stop now.
* OK. So then-- I hear you. So someone's saying, OK, Georgia said, I'm going to just slow down, take a beat. Maybe I'll buy myself a new sweater or something-nice kind of thing. But then what do they do? How do they figure out what the next right step for them is?
* Well, this is the place where you have to be in lock step with your investment advisor or financial planner, because they're going to ask you, what does retirement look like for you? How much do you think you want in retirement? And they'll tell you if, yeah, you're there already, you're on your way to being there, or you've got a fair bit of work to do. And I don't think you can get that information on your own. So the first step is to go to the people that have the answers that you need, and they can help you formulate those needs and wants and work down that list so that you can know that you are where you need to be.
* And if you were-- and you talked a little bit about this at the very beginning, about the needs and the wants. But some of the right things to think about, if somebody wants to kind of prioritize, is like retirement planning and the children's piece. Just run through some of those again.
* Yeah. So retirement planning-- are you there? Do you need to put more aside? Your TFSA, of course, always a good thing. Make sure you top that up. Is your children's education fund where it should be, or do you need more?
- That emergency fund-- a lot of us neglect that. And we don't know what the future's going to hold. There could be issues where you need to help take care of your parents or you have your own medical issues or long-term-care issues. So you need to make sure that's in place before you start looking at some of the fun stuff.
* Georgia, it is always a pleasure. Thank you so much.
* Thanks.
[MUSIC PLAYING]
* You've paid off your mortgage. Wahoo, congratulations. It is a big milestone. The question is now, what do you do? When you've spent so much time and money paying off your mortgage, how do you pivot your financial plan to focus on future goals? Well, here to tell us what you should be thinking about is Georgia Swan, Tax and Estate Planner at TD Wealth. And always a pleasure to have you here.
* Hi, Kim.
* Hi.
* Good to see you again.
* I love this topic. So for people, you know, they've paid off their mortgage. What kind of financial freedom does this create for people?
* Well, the first thing I always tell people is you need to take a beat. It's time now to do exactly what you said and refocus on those important things. So are there areas of your financial wellness that you've been neglecting a little bit in favour of the mortgage? What does your retirement plan look like? Are you on track for that? Is your TFSA topped up? Children's education? What's that emergency fund look like?
- Now it's time to relook at those goals. And start with those big ones, the sort of needs and must-haves. And then look to some of the secondary ones. So is it time to get rid of that 14-year-old car and replace it? Are there some renovations or repairs to the house?
- So you keep going down those tiers of things that you now want to focus on. And maybe you'll get to the more fun stuff. So is it time to give to that charity that you've always wanted to give to? And that's always a good one because you get the charitable-donation credit. Or can you maybe now start helping your kids buy their first home? So you have to take that beat and then decide, what are your goals, your needs, and your wants.
* Can I ask-- I feel like that's a whole lot of do's. What about the don'ts?
* Don'ts-- don't procrastinate on that retirement planning. And really remember that you need to keep budgeting. You didn't get to this point by not focusing on the important stuff. My grandfather used to say: You've eaten the elephant. Don't choke on the tail now.
- So you have to keep that focus going. Now, OK, I don't want to rain on everybody's parade. I know that there might be the odd splurge that you want to do-- that great vacation to the place you always wanted to go to or that great pair of shoes. But you can't oversplurge. You still have to keep a focus on those goals.
* What about-- I know some people-- they've paid off their house and are like, I've paid off a property. Let's get another one.
* Yeah, that's a very common one. And you know what, that could be a good idea. So-- but you have to be very careful about-- are you cut out to be a landlord? So make sure you do your research. Make sure you have that expert telling you where the best places are, what your expected return is. And be honest with yourself about whether you are cut out to be a landlord, especially in circumstances-- if you're going to do a short-term rental, make sure you do your research because that might not be appropriate where you are.
- Then, if you're looking at a vacation property, though, you have to look at, what is that going to cost you? Do you want to go back into debt? And what are the fees to actually maintain it on a go-forward basis? This is all stuff that you need to do to educate yourself to make those right moves.
* And the other thing I was going to say with vacation properties, I've heard people say, oh, you know, I'm going to buy something for the family in the States and just-- what that opens up, right?
* No, absolutely, because you're buying something, obviously, in a completely different country. The laws are different. The value of the money is different. You're not there all the time to take care of it. So you have to be really careful in that circumstance
* I hate to ask this question, but I do think we need to ask it because you need to have some cautionary tales, right? You need to say-- so what are some of the worst things that you've heard for people when they're like, whoo?
* Yeah, the worst thing that I see is people that suddenly start treating that disposable income as truly disposable and disposable for too long. So they're the ones that are the endless shopping sprees and so forth. And they've forgotten to kind of regroup and go back to the beginning.
- The other thing is I've seen a lot of people-- they suddenly start getting into these business opportunities and get-rich-quick schemes and things like that. And when those go bad, they go horribly bad. And a lot of times, they take more than just what you've put into them. So you really have to be careful. And like I said, go back to the fact that you got here by being-- you know, by doing your budgeting, by doing your planning. Don't stop now.
* OK. So then-- I hear you. So someone's saying, OK, Georgia said, I'm going to just slow down, take a beat. Maybe I'll buy myself a new sweater or something-nice kind of thing. But then what do they do? How do they figure out what the next right step for them is?
* Well, this is the place where you have to be in lock step with your investment advisor or financial planner, because they're going to ask you, what does retirement look like for you? How much do you think you want in retirement? And they'll tell you if, yeah, you're there already, you're on your way to being there, or you've got a fair bit of work to do. And I don't think you can get that information on your own. So the first step is to go to the people that have the answers that you need, and they can help you formulate those needs and wants and work down that list so that you can know that you are where you need to be.
* And if you were-- and you talked a little bit about this at the very beginning, about the needs and the wants. But some of the right things to think about, if somebody wants to kind of prioritize, is like retirement planning and the children's piece. Just run through some of those again.
* Yeah. So retirement planning-- are you there? Do you need to put more aside? Your TFSA, of course, always a good thing. Make sure you top that up. Is your children's education fund where it should be, or do you need more?
- That emergency fund-- a lot of us neglect that. And we don't know what the future's going to hold. There could be issues where you need to help take care of your parents or you have your own medical issues or long-term-care issues. So you need to make sure that's in place before you start looking at some of the fun stuff.
* Georgia, it is always a pleasure. Thank you so much.
* Thanks.
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