This is where your finance takes place

I recently explained why your mortgage should be considered as a bad debt. However, as a coin as two sides, your mortgage can also turn into a good debt. Some modification has to be done so your property produces income, creates value and finally that your mortgage become tax deductible.

 

In order to produce income, small modification can be made to your property. With a few thousand dollars, you can turn your basement into a 4 or 5 ½ and rent it. You can also rent only a room to foreign students if you are living near by a college or a university. If you are self employed, you can open an office or even a daycare.

 

When you are renovating your property, always think about resale value. Some details might seem very appealing at the time of selling such as a new kitchen or a brand new Jacuzzi. It will add-up to your comfort and to the value of your property. In the end, your property will always gain in value overtime and it is still better than renting a creepy 3 ½.

 

Make your mortgage tax deductible. Then again, I come around with the Smith Manoeuvre strategy. This is just an awesome tool to make your whole mortgage tax deductible while turning the equity left in your property to profit.

 

With small modifications you can make money out of your property and turn it into an asset. Properties represent goldmines for several individuals. It might be the case for you.

Oh boy, I’ve had this conversation over and over with my parents about their house being an asset. But before going on that route and walk on pins and needles, I would like to talk about the mortgage related to your main residence. Is it a good or a bad debt?

 

A mortgage can be a bad debt for several reasons. In fact, on top of paying your mortgage payment and interest, your property will require additional monthly payments. You will have to cover the electricity bills, heating fees, municipal and school taxes and so on. In addition to all that, you will have to invest in your property in order to make some renovations and maintenance repairs.

 

The property linked to your mortgage doesn’t produce revenue as well. Unless you are renting your basement as a bachelor, there is no source of income from your house. Therefore, you can expect a positive return on a long term basis.

 

Finally, no interest on your mortgage is tax deductible for Canadian residents. You are paying this debt with after tax dollar. You have then a huge amount of interest paid year after year and you can’t do anything about it.

 

You might be discouraged at looking at all the reasons why your mortgage is a bad debt. However, I got good news for you. Unfortunately, you’ll have to wait for the next post to find out. See ya!

A single question is always on my mind: How can I make money differently than receiving my regular pay check? Although the answer seems pretty simple, it is not always the case. After reading a few books, they all come to the same thing: create your own asset. Good knows I’d love to do so, but I know nothing about magic!

 

Fortunately for me, no black magic is required to get rich. Instead of a bloody heart and a snake, all you need is your brain and a passion. Human beings are capable of the greatest when they are driven and passionate about something. Get that special thing that makes you smile and start working on it.

 

I do have several passions. I love my wife, Josée and my son, William, I do golfing, I love cars as well but I decided to work my passion for personal finance. I think it’s a great thing because it is already about money. I’m already working on the field and trying several side lines on the side. This is how I got into writing about personal finance.

 

I want to make money by another mean than just working for a company, get a pension plan and retire at the age of 60. I think that we all deserve better than this. The real question is; “Are you willing to pay the price?”. If you are really passionate about something, you’ll make the effort and you’ll find you way through this.

 

People will tell you that you are stupid. That you are double working for nothing. That you should put more effort on your day job and get a promotion than working on something that is not profitable. Remember, an asset creates wealth and positive cash flow on a long term basis. Maybe I’m an outcast. If it means to make more money, I don’t’ care!

 

Look at most rich people such as Bill Gates, Donald Trump, Robert Kiyosaki. They all have something in common; they do what they love for a living. Get yourself started on something. Worst comes to worst, you’ll develop a passion and make new friends.