Reader Case: I’m Scared I Screwed Up My Family’s Future

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I know everyone’s doom-scrolling the news right now about what’s happening in the Ukraine, so I thought we’d all take a break from the daily news by doing a reader case.

I can’t even say I chose this reader case because honestly, this time, this reader case chose me. I simply couldn’t look away. A slow moving train wreck that’s impossible to ignore, this reader case serves as a warning for other’s not to get into the same situation because, as the reader says, “I’m embarrassed at my financial mistakes …but…maybe it can help others.”

Dear Firecracker and Wanderer,

Firstly ty, ty, ty for creating this blog! I found you last night and couldn’t stop reading. I intend to read your free investment DIY course. You are fabulous human beings!!! I also hope you and your loved ones are doing well during this time.

OK, I’m embarrassed at my financial mistakes after reading your blog but here goes maybe it can help others.

I live in a condo with my hubby, a kid, and dog.

I had an unexpected injury years ago and have chronic pain that has left me disabled, immunocompromised with depression. 

My hubby is the sole supporter.

He loves his job and is fine working full-time.

The lockdowns were tough and I made a crap load of financial mistakes for some dopamine hits thinking I was in control.

All of them were real estate related. 

I got FOMO reading all the news about Canadian real estate and wanted a piece of that pie. Now we are locked in for 5 years!!!

I’m scared I screwed up my family’s future and my hubby’s hard work.


I re-financed our mortgage and bought not 1 but two pre-construction condos (2025), moved my RRSP and some of my hubby’s to a property management company (locked 5 years) and moved some of my TFSA to a developer’s project (locked 5 years).

Part of me thought, I could be a landlord since its very part-time. Nope, I just added more stress to my life. I also found out that I was a so called (air quotes) accredited investor because of my hubby’s income. Hook, line and sinker, I took the ego bait and invested more into real estate.

I just created more stresses and wasted years.


That my hubby, who is in his 40s, and wonderful father can retire early and possibly just do very part-time work.

To give my child all the experiences to know themselves and become a well rounded autonomous adult.

To not be or leave a financial burden because of my health expenses.


• Your gross/net annual family income


• Your monthly family spending

Property Tax $200

Condo Maintenance  $572

Storage Rental  $138

School  $1060

Piano Lessons $167

Cellphones $87

Internet $51

Hydro  $44

Dog food/treats $94

Vet visits/Vaccines $56

Grooming $80

Home Ins.  $56

Life Ins.  $174

Car Ins. $145

Pet Ins. $89

Amazon Prime  $9.03

Google Storage  $2.67

Groceries/TakeOut $1080 

Spotify  $18.07

Household $750

Medical $680

Gas $130

Maintenance  $50

WorldVision  $49

Church $80

• For any debts you have, please include:

Mortgage  $1370/mo, variable 1.45%, end Nov ’26, current balance $397,207.53

HELOC $0, $100,000 available

PrePlanning Cemetery  $260/mo, 0% interest for first year (pay off full ’23), current balance $6,112

• Any fixed assets you have (house, car, etc.)

Condo $700,000

Car $18,000

Pre-construction condos

1) $493,290 – deposits due:  $24,665 Nov ‘22

2) $634,900 – deposits due: $15,873 Apr ’22, $15,873 Oct ’22, $31,745 Mar ’23, $31,745 May ‘25

• And investments or savings you have (cash, bonds, stocks, etc.)

Chequing account:  $338,700

Emergency savings:  $15,597



Fidelity   $79,109

Primerica   $23,059

Manulife  $18,313

Equiton  $23,290

Tangerine  $615

Work Stocks $114,991


Fidelity  $26

Motus $10,045


Fidelity  $221,171



Equiton  $15,447

Wealthsimple  $32,667


Greybrook $26,000

Wealthsimple $44,118



Equiton $29,887

Please HELP us!

1) Our current investments are all over the place. Can we slowly move all our investments with so many institutions to DIY investing (I’m guessing there are penalties/fees)?

2) The re-fi deposited an advanced mortgage. Wow did our account look rich even though it wasn’t ours. We plan to put the deposits for the condos into a high interest savings account/ GICs. With the remaining balance (for closing costs of condos) can we invest in ETFs for a short time?

3) When can my hubby retire? Any optimizations to make it sooner?

4) Any Canadian resources for charity giving investments?

Going forward I will keep my eye on the prize and avoid real estate investments. Going to start your free DIY investment course. Thanks again for sharing your stories and advice to the world.

The more I see the numbers I realized we haven’t been saving enough for retirement. We always just maxed out his RRSP, but that’s not enough.

I really screwed up with buying the pre-constructions and doing the re-fi. I was greedy and was all emotions. I’m scared. Hope you pick this email to give advice, crossing fingers and toes!

Also, congrats on the book!


Yikes! Given her situation of having only one income to rely on, having to support a child and a dog, and betting hard on housing without diversifying their investments makes this as terrifying as hell. As soon as I read the words “accredited investor” my heart stopped. That’s basically code for “I’m gullible idiot, please scam me.” So, PandemicMistakes is right to be scared. I would be too if I were in her situation.

Now let’s see if we can get you out of this mess…


Income$140,000 (gross), $106,491 (assuming they live in Ontario and max out their RRSPs)
Expenses$5,861.77 + $1370 (mortgage) = $7231.77 per month or $86,781.24 per year
Debt$397,207.53 (primary residence mortgage) + $493,290 (condo 1) + $634,900 (condo 2) + $6,112 (cemetery) = $1,531,509.53
Investible Assets$338,700 (savings) + $15,597 (emergency) + $259,377 (RRSP1) + $10,071 (TFSA1) + $221,171 (LIRA) + $48,114 (RRSP2) + $70,118 (TFSA2) = $963,148
Primary Residence$700,000

Looking at the debt line, $1.5 Million is a stomach-churning amount of debt to be in. Especially given that they are relying on one salary. What happens if that person loses their job? As we’ve seen from the pandemic, your job is not secure. Anyone can be laid off at any point. And I would be terrified to be in $1.5M of debt if I’d lost my job.

They could potentially liquidate their $700,000 condo that they’re current living in and go back to renting. But, as we know, unlike a portfolio, real estate is illiquid. Meaning you can’t get out of it within 5 seconds by clicking a “sell button”. Plus, you can’t just sell off a window or brick to cover your expenses if you lose your job. It’s all or nothing. Not diversified and illiquid.

And the really sad thing is, they had a healthy net worth of $963,148 that could’ve generated a yearly passive income of $38,525.92 if invested properly. But now they have $1.5 Million in debt and they can’t sell the pre-construction condos to pay it off because they don’t exist yet. AND they can’t walk away from the deal without losing their deposits because they are past the 10 day cooling off period.

They literally took their winning hand of $963K in retirement savings and gave it to the real estate industry. *sigh* Real estate bites another one.

I’ll never understand why people can have over $300K sitting in a chequing account and afraid to invest in index funds while comfortably taking on $1.5 Million in debt for real-estate without batting an eye.

It’s like they think the $300K is their own hard-earned money and a mortgage is just risk-free “other people’s money.” News flash: You do not own the house. The bank owns the house. As a result, they also own your ass. Leverage is all fun and games until it suddenly turns on you. Just ask anyone who’s ever had to experience an underwater mortgage.

Given that PandemicMistakes wishes are for her husband to retire early, their child to have a good life, and themselves to not be a financial burden, I’m seriously worried whether those dreams can still become a reality.

But feeling things out aren’t how we make decisions on this blog, so as we always say, it’s time to Math Shit Up!

Damage Report

Based on their yearly expenses of $86,781.24, they’ll need a portfolio size of $86,781.24 x 25 = $2,169,531 to retire early.

Assuming he maxes out his RRSPs, they have a yearly savings of $106,491 + $25,200 (maxed out RRSPs) – $86,781.24 = $44,909.76

If they hadn’t bought the pre-construction condos, they would’ve had investible assets of $963,148 – $6,112 (debt on cemetery plot, which is weird but whatever) = $957,036. By saving $44,909.76 per year, their time to retirement would’ve been…

YearStartingContributionsROI (6%)Total

Around 9 years!

But, with the 2 condos they just bought, they’ve taken on an additional $1,128,190 of debt. She plans to rent it out to generate a passive income, but that’s unlikely given the rental environment in Canada, and here’s why.

With a 20% down payment, the monthly mortgage on the condos alone will cost $1,786 (condo 1) and $2300 (condo 2) respectively. But on top of that there’s also monthly condo fees, property taxes, and insurance.

In Toronto, one of the most expensive places to rent in Canada, at an average of $900 per square foot, $493,290 (condo 1) will get you a 548 sq. ft. studio and $634,900 will get you a 700 sq. ft. one bed condo. With average condo fees at $0.65 per sq. ft., she’s looking at $356/month for condo 1 and $455/month for condo 2. Tack on property taxes, that’s another $251/month and $323/month respectively. Then another $50 for insurance each and we have monthly carrying costs of $2443 for condo 1 and $3128 for condo 2.

According to Zumper, average Toronto rent on studios is currently $1450 per month, while one bedrooms are $1900 per month and the rent increase is capped at 1.2% for 2022.

So even in a city with unbearably high rents and near-100% occupancy, these puppies will be bringing in a negative cashflow of -$993/month and -$1228/month.

A good investment pays you to own it, in the form of rental income, dividends, or interest. It’s not dependent on the whims of capital gains or appreciation. You shouldn’t have to predict when to sell in order to lock-in your gains. That’s gambling, not investing.

Rather than earn them money and help them get to retirement, because of the negative rental cashflow, these condos cost them money and make retirement even harder. Their yearly costs would increase to $86,781.24 + ($993 + $1,228) x 12 = $113,433.24

Which means they would need a portfolio of $113,433.24 x 25 = $2,835,831 to generate the necessary passive income required to cover their expenses. It would also reduce the amount they’d be able to save every year down to $106,491 + $25,200 (maxed out RRSPs) – $113,433.24 = $18,257.76 per year. They will also need to pay for the 20% downpayment of $98,658 and $126,980 respectively, reducing their starting portfolio.

If they held on to these negative cashflow investments, they would reach FI in…

YearStartingContributionsROI (6%)Total

…19 years!

So by buying the condos, she’s more than doubled his time to retirement! And that’s assuming he never gets laid off, develops a health issue that prevents him from working, gets a pay cut, or has to switch to a lower paying job if the existing job turns stressful. So if everything went perfectly, he could’ve retired in 9 years if she hadn’t gotten them into an addition million dollars in debt!

In order to get back to their initial 9 years to early retirement plan, they would need to either a) sell both condos at some point or b) break even on rent by renting the condos out for at least $2443/month and $3128/month.

A tall order, given that the rental laws in Canada greatly favor the tenant over the landlord. God help them if they get a nightmare tenant who is incredibly difficult to evict. Unlike index investing, real-estate investing isn’t passive. It’s a ton of work and not for the faint of heart. There’s no way I’d do it just to break even or end up with negative cashflow.

They could bet on appreciation and rising rents but as we’ve seen during the pandemic, rents actually went down and so did condo prices. Gambling on continuously gains isn’t reliable. If your investment doesn’t pay you to own it, get rid of it.

Does Buying with Cash Help?

But what if they paid off the mortgage on the 2 rental properties? How does that change the math?

If they paid off the $1,128,190 mortgages, that would take up their entire $957,036 net worth, plus require another $171,154 which would require an additional 3.5 years to save up based on their current savings rate.

However, with the mortgages gone, their monthly carrying costs for the 2 investment condos would drop down to $657 per month for condo 1 and $828 per month for condo 2.  They could potentially net $793 per month and $1072 per month in cash flow respectively if both condos were rented out.

This would drop their monthly expenses down to $7231.77 – $793 – $1072 = $5366.77 per month, or $64,401.24 per year. Which would reduce their FI number to $64,401.24 x 25 = $1,610,031 and increase their yearly savings number to $106,491 + $25,200 – $64,401.24 = $67,289.76. But having used their entire investible net worth (and then some) to pay for the investment condo mortgages, they would start at $0, meaning they would reach FI in…

YearStartingContributionsROI (6%)Total

…around 15 years, plus the 3.5 years they need to save up the shortfall needed to pay off both mortgages, giving us 18.5 years until retirement.

So, paying off the mortgages doesn’t help much.

By making this emotional decision of buying these negative cashflow condos, she’s extended her husband’s time to retirement by a whole decade! If he’s in this early 40s, by the time he retires, he’ll be around 60 years old, which is just regular retirement.

What Can She Do?

We don’t have a ton of options here, to be honest.

In order to achieve her dream of having her hubby retire early, she’ll need to at least break even on the rental properties by charging around $2400+ and $3000+ per month respectively in rent or sell them to get their money back once construction is completed.

Another option is cut her expenses, but these would be some pretty drastic cuts. In order to offset the damage these condos did to her finances, she’d have to cut her monthly expenses by about half. This would entail pulling her kid out of private school/daycare, losing the car, getting rid of the pet, stopping all charitable donations, and abandoning the cemetery plot (which again, is so weird! Is this a thing that people actually do? Pre-pay for a cemetery plot?).

They could also sell their primary residence to unlock their equity and go back to renting, but again, that’s a big lifestyle change.

Making all these changes would obviously drastically alter her lifestyle, so I’m expecting this idea to go over like a lead balloon. But the reality of the math here is, there are 3 things you have to choose between:

  1. Preserve your lifestyle
  2. Keep your condos
  3. Your husband’s early retirement

You can only have 2 out of the 3. Which will it be?


OK with that…er…rosy assessment, let’s move on to other questions:

Our current investments are all over the place. Can we slowly move all our investments with so many institutions to DIY investing (I’m guessing there are penalties/fees)?

The funds held in “real” financial institutions like Fidelity, Tangerine, or Wealthsimple should be relatively straightforward since they’re regulated by the government from doing shady things, but I’ve never heard of some of these others. Equiton appears to be a private REIT, Primerica is an insurance company, and Greybrook is private equity firm of some sort. Call each one and ask how to get your money out. If you’re lucky, you’ll be able to do it with some fees or penalties, but if those companies start stonewalling and saying you can’t get it out, they might be giant Ponzi schemes for all I know.

The re-fi deposited an advanced mortgage. Wow did our account look rich even though it wasn’t ours. We plan to put the deposits for the condos into a high interest savings account/ GICs. With the remaining balance (for closing costs of condos) can we invest in ETFs for a short time?

No. Index investing is a long-term investment strategy. If you need the money in 5 years, don’t invest.

When can my hubby retire? Any optimizations to make it sooner?

See above

Any Canadian resources for charity giving investments?

I applaud you for being charitable but I think you should pause charitable giving until you get your financial situation under control. As the saying goes, “secure your own mask first before assisting others.”

For those of you who are thinking of buying a condo as an investment, read JLCollin’s new book first “How I Lost Money in Real Estate Before It Was Fashionable“:

Don’t make the same mistakes as PandemicMistakes.

What do you think? What can PandemicMistakes do to improve their financial situation?

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60 thoughts on “Reader Case: I’m Scared I Screwed Up My Family’s Future”

    1. Wow. We have always been frugal. I grew up in the working class world where you were only 1 step away from being homeless. Most of the men died by age 50 from work related accidents or disease. A lot of women died too. Also my sister had 2 husbands die on her. So I’ve always felt the pressure to earn enough to take care of myself and others. That said, I am very grateful. We are in our early 60s. My husband is still alive and well despite working a semi-dangerous job. He is having problem with his eyes right now so while he is working we hopefully will be able to get that problem fixed if it’s fixable.

      It’s hard for me to relate on buying anything without waiting to make sure we really need or want it along with doing a lot of research. It amazes me that people will invest in something without spending time researching it and talking it over with their partner and/or trusted friends and relatives. Real estate can be an OK investment but it is not passive nor easy. It is a lot of work if you want to do it successfully.

      I love your book and your blog. I wish it had been around when I was younger. I find it very useful now.

      1. If presale is common in your area, it means there is not enough supply of built properties to be sold; thus, you are paying a premium for the opportunity of taking the risk from the builder by subsidizing his cost. Therefore, I declare buying a presale is generally idiotic.

  1. Some of us, the “lucky” got a cemetery plot deed when we turned 18 — pre-paying for it is pretty common in Spain, Italy, etc, and sold as a way to take off a burden of your family’s mind when the time comes. It’s usually bundled with some kind of life insurance that also covers burial expenses.

    1. Yes. Agreed. It would be nice if our hosts stopped doing that.

      On the other hand, maybe they’re doing it because they don’t like Ukrainians. As much as I say that as a joke, maybe it’s true but more likely, it’s all about persistent ignorance.

      1. and who likes them? I don’t, they always discriminated black people and now they are all saints? not with me

        1. Really? 100% of them? Was there a referendum and you were the topic of it and they decided that? Wow, you popular, bro!

          Maybe it’s because you’re just a loser and you have victim mentality written all over your face.

          And anyways…we’re all black, bro. All our ancestors are originally from “the” Africa.

      2. Well, that escalated quickly.

        I’m 48 and for some reason, for most of my life, whenever I heard people discussing Ukraine, they were as likely as not to put “the” in front of it. I have never understood why and have had to fight the impulse myself ever since I figured out that wasn’t really the name of the country.

        But hatred? No. This does not come from hatred. Jeez dude, chill.

    1. Yeah, I was thinking the same thing. An interesting experiment would be for these people to spend a year cleaning up all these accounts (i.e. reduce number of accounts/bills/crap/etc by a factor of 2 or more) and then see where they’re at.

      Also…I’m totally ignorant in this area, but I couldn’t help but wonder if there’s some way they could sell their interest in the condos in their present state. Sort of like selling a lease/option..maybe ?

  2. Interesting case study. I’d love to see an updated post on the state of the housing market. It’s been a wild few years and would be interested to know your thoughts on it compared to earlier articles from a few years back.

  3. My wife and I have reached FI and I’ve been toying with experimenting with some different investment areas. Financial Samurai has pushed out the ideas of private equity and crowd-funded real estate. So I’m curious about those v owning properties for rent solely, for all of the reasons that this example illustrates. Namely, I don’t really want to actively manage real estate and I don’t like how the numbers look in my area. Thoughts?

  4. They’ll be mostly living on “hope” at this point. Keep the condos, try to cut some expenses, and hope that they’ll go up in value over the next few years.

    Maybe they’ll be able to pocket some gains on the condos. Then they can sell their primary residence if they can find a good rental deal.

    They’re basically screwed if there is a downturn in the Canadian R.E. market…

  5. Hello PandemicMistakes,

    my condolescences and my congratulations. You messed up, but:
    judging from the way you’re writing, you have what it takes to turn things around and steer into a rosy future. You get to choose how much you spend and what you can live without.
    And trust me, you’ll be surprised how good it feels to do without all the stuff that you currently have in your life. I’m an engineer that spends less than everyone I know, yet is happier and more optimistic than anyone I know.

    Your life is in your own hands.

    And remember: with every expense, you prolong the time your family is not spending together! I’d say spending time with Daddy and as a family is more important then most of the things you currently might consider necessities. You’ll be happier and better without many things.
    The following list is, from the bottom of my heart, well-meaning.

    Here are options that I would consider:
    1) Lower your cost of living. Here are many low-hanging fruits.
    – Storage rental. Get rid of the stuff you store by selling, donating and tossing away. Less costs, more money, less stuff to worry about. –>$138 saved.
    – Piano lessons. Youtube is your friend. –>$167 saved.
    – Grooming. Grooming each other is a nice thing to learn and means bonding time together. —>$80 saved
    – Try GEICO for lowering car insurance –>$30 saved
    – Same for pet insurance –>$20 saved
    – Groceries. Cook for yourself! This is healthier, more fun, and way cheaper. –>$500 saved
    – Household: Boy, $750 for random household goods? $50 are more than enough! –> $700 saved
    – Gas: try cycling. Be more local. Your happiness will increase. –> $30 saved
    – WorldVision: it’s emergency time. Take care of yourself before caring for others. –> $49 saved
    –> Ca. $1.700 less spending every month, while simultaneously increasing your fitness and happiness! You don’t need all this stuff!

    This alone will shave YEARS off your hubby’s mandatory work life.
    “Mr. Money Mustache” is a valueable source of input here as well.

    2) Do not fret upon the past. Get rid of the rental condos asap.
    Even if that means losses. These rental condos are eating your freedom and wealth!
    And a potential $100.000 loss is just a year of work, instead of decades of paying off these moneysuckers.

    3) Move all investments to ETF. Lower costs, lower risk, more profits.

    4) Maybe consider trading your car for a cheaper car with a price of$5.000-$10.000.
    Mr. Money Mustache has some good explanation blog posts and videos here.

    My personal yearly costs of living (in a paid off house in Germany with my wife) are $12.000 including two cars and a motorcycle, organic food and $3.000 of vacation budget. I build and fix everything myself. Fitter and happier than ever. All while rarely spending a dollar on something else than food, electricity and gas. My wife lives for even less since I pay for cars and gas.

    You can do this!

    Greets from Germany,

    1. Patrick, that is a great reply to take a close critical look at what is are “necessities” in the monthly expenses. Tough love.

    2. Awesome Patrick. You’re a FIRE minded person. If they don’t do at least 90% of that, they don’t even deserve to be FIRE in the first place

      1. Thinking from the other side, FIRE is spending relative to portfolio. If someone can be solidly FI at a 3% withdrawal rate with that spending, don’t they definitely deserve it?

        1. Sure, they can spend more with a bigger portfolio, but the portfolio has to exist before it can support the spending. Spending first with the hope of getting to the right number later is not going to work.

  6. I’m not a real estate “investor” and am usually one of the first to discourage those who think it’s a path to easy, low-risk wealth. Having only about a $250k mortgage with my spouse, I would personally never feel comfortable with the amount of debt this person has taken on, but at the same time, I don’t think all is lost here.

    As long as the market holds until these preconstructions are built (and nothing shady happens between now and when the projects are completed), there will be options. Given what real estate in Canada has done for the last 2 decades, the chances are decent that they’ll be able to get their money back out of this investment – maybe even make a profit. I feel it necessary to point out that all the good calculations that were done in this article dealt only with cash flow and didn’t factor in the likely price appreciation of the condos. Furthermore, the calculations also didn’t factor in any part-time work the husband may do in retirement, so I’d call the time to retirement estimates here conservative (which is always a good way to go when you’re talking finances). Buying these preconstructions has exposed this family to a lot of risks that they have no control over, but as long as things keep going as they have been (which is by no means guaranteed), they can get out of this relatively unscathed.

    For now I’d focus on the things they do have control over. What is a $750/month expense for “household?” In my head “household” is for things like garbage bags and cleaning supplies, and shouldn’t amount to the cost of a Mercedes lease. Whatever these expenses are, I’d break them down into more specific categories and see if they can be trimmed. Furthermore, more than $1,000/month for food strikes me as high for a family of three. If the OP is able to cook at home, it seems like that could be brought down considerably. And as someone whose parents sacrificed a lot in order to put my siblings and me through private school, I’m not convinced it’s worth it compared to what that $10,000+ per year could do for the family.

    To venture even further into things that aren’t my business, the poster refers to herself in the first person singular (“I”) whenever talking about buying these condos. Where was her husband in these decisions? Given that he’s the sole earner, I have to assume that he signed off on this as well, so the responsibility of the consequences of the decision should be shared by him, too. If somehow he had no say in this, well… yikes.

    It looks like this family took good care of their finances – lots of savings, very reasonable mortgage on the primary residence, investment accounts – up until the purchase of these condos. My guess is that they’ll figure out a way to make this all work.

  7. Maybe she could consider working for a while to add some income. I understand there are health issues involved, but nowadays if you can use a computer, you have job options. So many jobs are remote now. I have a medical issue and I work 100% remotely. This, coupled with reduction in expenses could really help!

  8. How much did they put down on the condos? Maybe just cutting their losses and walking away (forfeiting deposits) may be better than continuing to pay in? Especially if they’ll be rented at a loss.

    1. That’s exactly what I was thinking too. Was half expecting a math breakdown for “if you walked away from the deposits”

  9. Very interesting case study! With so much FOMO around owning real estate, I appreciate reading about the realities of what this really does to your finances. I sold my home many years ago and never bought back in (Ten years ago I thought everything was too expensive in Toronto! But I waited for a crash that never came… now I don’t think I’ll ever own a home again) However, I have resigned my job earlier this year and am now FI. People still think we are weird because we don’t own…

  10. The expenses are outrageous.

    I would start with axing Spotify right away.

    There’s so much free stuff out there. Do you really need Spotify, especially if you already have Amazon Music?

  11. PandemicMistakes,

    We all make mistakes, big and small. Don’t worry about it. The most important thing is to fix them as quickly as possible once we recognize them. That said:

    Get out of the pre construction condo contracts ASAP!!!

    1) Set a maximum amount that makes sense to pay to get out of them (including lost deposits) with a cursory look, up to $100,000 seems fine given the alternative of 9 years of your life and the fact that you have $300K+ accessible in a bank account)
    2) Reread the contract to see if there is an “out” clause (usually there is something)
    3) If there is no easy way out, identify no less than three lawyers with direct experience getting people out of these contracts, interview them, contact their references, and hire one (be sure to set a maximum budget in advance)
    4) Get the lawyer to negotiate an out

    Just so you know, in Toronto’s hot market, the property developer you bought from likely would be glad for $25K or more for each condo to release you from your contract. That means they make a profit now and can resell the condos (which are nowhere near occupancy). They are a business – they like money.

    Even if you spend a “fortune” now to get out of these future commitments, you will save yourself both money and life energy in the future. I am Canadian and I know we generally avoid conflict (except when driving on the 401). However, this situation calls for a skilled and experienced lawyer to get you out of these long-term obligations. Almost certainly worth every penny spent.

    Good luck!

    1. Wow! I agree with this line of thinking re: Deposit and Lawyers. I would try to wholesale your Condo contract i.e. take whatever money you can for them and run. Option 2, is default on the Condo deals and take the $40k hit.

      This is a great example of sunk cost fallacy. The decision and money to buy the speculative Condos are a sunk cost. Don’t keep throwing good money at bad in the hopes to make it better.

      Bit the bullet and move one. I bet if you unload the condos but your current condo up for sale and think about geo arbitrage that you all could be FI in 9 years still or earlier.

      You can do it!

  12. In Edmonton Alberta Canada the preplanning for end of life (plot and casket) is very common and is a very considerate option. Really, it’s not weird. From personal experience, it is a lot easier on the surviving family members, estate administrators and/or executors of the estate as all the decisions have been made and paid for. It is not surprising the number of disagreements that can arise on the death of a loved one, as different family members have different ideas of how their loved ones’ lives should be celebrated and to what degree, the choice of cemeteries, the choice of caskets which can range from practical to astronomical. You as an individual have that choice to make. Thank you for an amazing web site that brings a hard reality into all things financial for regular folks who are living day to day without knowledge or experience with long term planning. For what it’s worth, that’s my 2 cents.

  13. Why do I get the feeling that the cemetery plot is somehow related to the two condos.. I’m imagining a RE broker, “Buy two condos now and we’ll throw in a cemetery plot for an additional low low $ix thousand dollars !!”.

  14. Hi FireCracker,

    I don’t think the situation is as bad you think. It is certainly a mess. But with some cleaning, it could look a lot better.

    First, I don’t think they will get a 1.5M$ in mortgage. Their revenue is way too low for a mortgage of that magnitude. Canadian banks will never lend that much money…

    My understanding is that the 338K$ in the checking account is a re-fi of their primary residence, so it’s probably be already included in the 397K$ mortgage. They need this money within one year to make the deposits, plus pay the balance on condo #1 when they take ownership. So, they really can’t invest this money. They must keep it in a savings accounts or money market fund.

    Within one year, they need to make 63K$ deposits on condo #2 and they will likely take ownership of condo #1 for the total amount (493K$, less any deposit). Since they have 556K$ in payments due (493K$ + 63K$), they need 218K$ additional cash. 100K$ is available on the HELOC. So they need another 118K$ additional financing. Their total mortgage in 2023 would be 615K$ (397K$ + 218K$). This a little bit stretched, but I can see banks lending an amount like that.

    I don’t know what was their financing plan when they purchased the condos, but my guess is the bank won’t lent much more than 615K$. The rest would come from additional savings as well as selling investments. This part is pretty bad – I don’t think selling their investments is a good idea. But the completion of condo #2 seems to be not before 2025, which leave them another 2 years after they take condo #1 to figure out something to do with condo #2.

    After that, the question of keeping condo #1 or invest in a index fund is really a business decision based on the return expected from the rental vs the amount of work required plus the financial risk of having a leveraged investment.

    We have almost no information about this. And they don’t have any experience in real estate. So they probably don’t know much about this either.

    My guess is, if they don’t want to manage a rental or if the rental price they can get is not enough to cover all the cost of the unit, then the best solution would be to sell condo #1. They have two years before they get condo #2 and then sell this one also.

    They can also wait to take ownership of condo #1 and sell their primary residence. But that become a decision based on where they want to live. They can do the same with condo #2 as well if they prefer this one over the two others. But I would not rent a primary residence. I think this is a bad idea.

    If they choose to sell 2 condos and live only in one condo, they could live almost mortgage free – not to mention rent free. Which would be great ! 😀

    There is also the option of opting out completely before completion. They would need to analyse the cost of doing so vs closing the transaction and selling the units.

    Second, on the other investments, I don’t know anything about Equiton and Greybrook, but I know Primerica is well-established mutual funds companies. They are very costly , so I would personally recommend index funds over mutual funds.

    I don’t think any of these companies are fraudulent or pyramid schemes. But I would avoid making these kind of investments unless there is a particular interest for one project or if they are able to analyse the project themselves and conclude it’s better than anything else they can put their money in. The reality is – it rarely is. Those companies also need to make money. And there is no reason to believe they are better at managing money than Apple, Google or Microsoft (aka index funds).

    For the rest, I would try to regroup and simplify. There is no reason to be so dispersed. This just complicate things and add no value. Index funds are a great way to make this possible.

    Finally, I just looked quickly, but I think they can reduce their expenses a little bit, and be live a much better life in the end.

    I don’t want to be perceived as crual, but … ditch the dog ! Take care of the kid and health instead… That’s way more important in term of priorities.

    But I understand this is a very personal decision and not everybody is willing to take it.

    Anyway. I’m just sharing my opinion. Hope they will be well !

    1. Yeah.. I’m the same way regarding pets. I love dogs, but having a dog often incurs a huge lifestyle penalty that works against FIRE. If you own a dog, then there’s the new SUV that goes with it to take it camping/hiking, a larger house with a yard, a neighborhood with houses that are suited to owning pets, vet bills, etc, etc. While there’s always exceptions, generally speaking, people with dogs end up retiring in their late 60’s and 70’s.

      1. @Bill, you are on point with everything you say re. having a dog. It’s a big responsibility and can be very costly. We were fortunate to have been able to retire earlyish with a hefty financial buffer, however, our dog has just developed diabetes, requiring daily insulin injections and frequent monitoring of her blood levels. The costs are not an issue, but the restrictions for travel are now significant as we can’t leave her with anyone while we jet off to New Zealand for a month. Oh well, a minuscule problem by other measures.

  15. I agree that it doesn’t make financial sense for the investment property to generate a negative cashflow. I would get out of it (or just keep only one condo to minimize the risk) whenever it is possible to do so without a penalty or loss. The Toronto Condo market saw prices go down in 2020 but then the price went up again. The average price has now surpassed its pre-pandemic level. I don’t think the price will go down soon considering the lack of supply in the GTA, higher labour cost, higher building material cost, immigration inflows…etc. They should be able to sell their pre-construction condos after their completion with some profit. They can also look into the assignment policy in the contract. Most of the developers allow buyers to assign the pre-construction contract to a third buyer with small or no assignment fees. They can also consider selling the primary residence and moving into one of the new condos after it is completed. The capital gain on the primary residence is exempt; the new condo will then be their primary residence and will be exempt from capital gain tax in the future as well.

  16. This case study shows a lot of behavioural finance biases. Loss aversion, endowment affect, sunk cost fallacy, hindsight bias. Just like with index investing, the best asset allocation is the one that you can stick with over the long term. Their asset allocation happens to be extremely concentrated in leveraged real estate. Whatever they decide to do with the preconstruction condos, they must leave speculation of real estate prices, interest rates and other hope traps out of the process. It’ll be painful but they will feel better once they decide and can move forward. Beware the analysis paralysis trap.

  17. Can you forfeit your down payment(s) on the condos and just eat that cost? You have over 300k cash… Those condos are going to be boat anchors on your finances for potentially decades. Then take whatever you have left in cash and invest in a world stock market index fund and call it a day. Good luck.

  18. I purchased a presale in the Lower Mainland of BC last year for $284k. Currently, assignments are going for $450k. The government plans to bring in 300-350 thousand immigrants annually. Where will they live? Like the person above, I am going in a lot of debt for presales but as long as the Canadian government keeps on printing money and inflating hard assets, real estate should climb dramatically. Even if I can’t obtain a mortgage, I will get a private loan for one year and simply sell the condo at a profit.

  19. I know of the property management company and the land developer project that you invested with. Those investments should be good but they are locked in. They yield higher returns than the stock market but just aren’t liquid. However, since your husband is still working the money in those investment accounts shouldn’t be touched anyways.

    As for the condos, I would review your contract to see if you are able to sell it to another buyer before the condos are completed. I highly doubt it because often times, there is a clause in the contracts that prevents you from doing that. The builder does not want you to be listing it and basically affecting the sales of the remaining units (if they haven’t fully sold). Another idea would be to speak with them and tell them your situation and see if there is anything they could do. There is always a way out of a bind,.. just don’t make rash decisions. The rash decisions got you into this bind, another rash decision would only amplify an already bad situation. Shit happens, learn from it and move on..

    Best of Luck!

  20. Hi, I don’t know what social safety nets there are in Canada so this is a general question/suggestion. If she is disabled and can’t work because of this, doesn’t Canada have a payment system to provide disability payments to people who can’t work? If so, she should apply for this asap to try to increase her family income. Also, stop donating to charity and church. At this point, they can’t afford it and are in need now that her husband is stuck working an extra decade.

    She should try to do a side gig. If she has a talent in making anything, she should try Etsy to sell her wares to bring in some extra income to keep her family fed.

  21. Another vote to read JL Collins’ book, The Simple Path to Wealth.
    A few general thoughts:
    1. There is beauty and health in simplicity. Everything about this case study says way too complicated! And this level of pending condo debt (to me) is more like that of a $350K income.
    2. Want to retire early? You have to go after it with a **vengeance**, not just la la la, well, it would be nice….
    Start with “our budget is zero.” Add back ONLY necessities. Nothing gets a free pass. I’d keep the dog 😉 but …I see far too many expenditures to keep track of. Why? You need to pay for your house, you need to eat – cook at home from scratch. Cut cut cut. Services and extras are an immediate cut. Cut until it’s too much and then add just a tad back – you’ll actually appreciate the “luxury” this time.
    3. Another reading assignment: Vicki Robbins’ Your Money or Your Life. Read it twice. Every $1 you spent is a certain amount of your life. You are spending dollars you don’t have, which ties your family up in work for decades to come. The condos might work out and sell for more. Or not. Who’s life and time are the table stakes?
    4. I second those who said get out of the condos – if you must keep 1, fine otherwise break the contract or sell ASAP, see attorneys for advice. You don’t NEED those albatrosses to succeed and they’re a Major Risk. It might work out, it might all collapse, their delivery dates might get delayed due to supply chain and they can’t find appliances or garage doors…or we could be embroiled in a war or who knows what. Why risk it x 3?
    5. Ext time, if you get antsy to “do something” …hit the frugalista blogs instead of *anything* where you give them your money or credit. Go cut your budget some more. Get a part time job – you’re writing is great, maybe do more of that? Where there’s a will, there’s a way.

  22. As someone who survived an episode of major depression a few years ago, what I’d say to this reader is that making bad decisions is inevitable when you’re depressed, so her first priority should be getting whatever help is needed to recover from her depression – unfortunately that’s much more complicated than simply asking for help, it usually involves going through several therapists, doctors and medications, it’s painful and expensive in the short term, but it’ll pay off in the long term for her, her husband and their child (as someone whose mother has had untreated anxiety for as long as I can remember, I can also say that getting your mental health in order is the best thing you can do for your child).
    Normally I’d say that everything else can wait, but her financial situation can’t, there’s probably a time limit for looking for an out clause with the condos (surely it must be possible to cancel the contract with a penalty, or sell her interest in it, or worse case scenario walk away from her deposit). I think it’d be best for her to turn all financial decision making over to her husband until she’s recovered from her depression – that’ll be a burden on him, but not nearly as big a burden as dealing with the debt they’ll have if they don’t get out of those contracts!
    After the condo situation is dealt with, they can look at reducing their expenses – I’m much more spendthrift than the average FIRE devotee, but even I can see expenses that could easily be reduced or eliminated

  23. I may be labelled as insensitive, but there is a lot in this post that concerns me.
    “I had an unexpected injury years ago and have chronic pain that has left me disabled, immunocompromised with depression. ”
    This is difficult but there are good treatments for depression and if at all possible, returning to some form of work may help both the depression and pain.
    “To give my child all the experiences to know themselves and become a well rounded autonomous adult.”
    I’m not sure what this means but it seems significant here.
    The dog: We loved our dog for 17 years. Our vet told us that when we first got her she was likely more than two but let’s just say she was only one. For a lab mix, that’s still old. We spent not one penny on insurance and maybe as much a year as this person does in a month on vet bills. Dog food was also WAAAAY less expensive in our home. Our pets live better than most children in the world. Kudos for supporting children around the world with World Vision. Let us remember that our pets are pets and that human children around the world suffer unnecessarily.
    I don’t get the cemetery plot thing either. It’s a personal thing, but I’ll return to haunt anyone who tries to bury me in an expensive wooden box in a plot in the ground that has to be paid for.
    If you are financially struggling, a church may be able to do without your monthly contribution until you are stable.
    Would a visit with a credit counsellor be helpful to realize all of the current expenses that may be avoided?
    I am not warm and fuzzy but every time my pet cost me money I supported another child through world vision.
    I did not buy things my children did not need and they have a very good appreciation of money now. They were also fortunate to receive a very good education in the public system.
    I have not had to deal with any significant health issue and so I can consider myself exceedingly fortunate. I hope that this person is able to overcome depression and some of the disability.

  24. It’s very possible that the cause is wanting to feel worthy while depressed, but spending spree and risky decisions can also be a part of bipolar (which is depression and mania). There’s not enough information for me to confirm, but I hope you are getting treatment for your depression. The reason I bring this up is if this turns out to be bipolar, you may make this mistake again.

  25. I don’t have much sympathy for the Ukrainians given the way they always treated black people.
    But, war casualties apart (war is war and people have just forgotten the last ones or not paid attention because they were in countries Americans don’t like, but innocents were killed there even more)
    It seems nobody really is asking why Putin is doing this. Because the US was doing the same they did with the missiles in Cuba during the cold War. Having a Nato base 100km from Moscow? Really? If I were Putin I’d do the same as he did.
    Besides, Putin should have nuked Kyiv already since US okayed it when it did the same on innocent lives in Hiroshima, or have you forgotten that? (Or motivation justify the consequences?)

  26. I give them credit for laying all of this out for the public to see in the interest of trying to do better.  I’m sure that wasn’t easy.
    Lots of great advice here.  I hope they take it.  They should definitely see a lawyer or two.  I know nothing about Canadian law but there has to be a way out of this even if it means losing thousands.  They’ll come out ahead in the long run.  Plus I can’t imagine all that stress of waiting three years for them to be built, watching the real estate market the whole time to see how much they are going to lose every month.  That’s sure to make any depression much worse.
    There are several expenses that can be cut drastically.  That food budget is way too high for a family of three.  I don’t understand the pet expenses either; even the most frou frou breed doesn’t need that much care.  They have high vet bills AND pet insurance which doesn’t make sense.  They should take a look at what they really need and make some cuts.  They might have to take a lifestyle hit – maybe it’s not the time for organic milk, pricey takeout, etc.  $750 for household?  No way.  Clip some coupons!  Join some bartering groups on social media for things like clothes, especially for the child.  Not sure how old the child is so this could be daycare or preschool or something, but if it’s private school – um, no.  It’s time for public school. Storage rental?  Are the items in there really worth the financial toll that they are taking?  I doubt it.  The piano lessons I can understand IF the child has shown talent and loves playing.  But if the child is young, doesn’t care, etc. I would ditch them.  Bottom line is that this is the time to live a bit leaner.  
    I hope the OP gets the help she needs.  Depression is no joke.  However, when she listed all of those items – chronic pain, immunodeficiency, and depression – I read that as a yellow flag.  At the risk of sounding harsh, it sounds like excuses.  It’s as if she dug up every reason that keeps her from bringing in even the tiniest bit of income.  I would be doing everything I could to get my family out of this mess, even if it means a job that I would hate.  I’m sure she could find a remote job or something of that ilk.  Babysitting?  Anything to bring in something extra.  She owes it to her family.
    OP, I really wish you the best of luck.     

    1. I agree that if you know in advance that you will do bad decision while thinking you do good one, it is perhaps a good idea to factor that in your future decision.

      Perhaps your husband should have more control over the financial decision? Or hiring a fee based advisors might be a good idea if you want a third party to make thing more neutral.

      You need to dug yourself out of this, but also it is important you avoid throwing yourself in another hole.

      At this stage in my life, I know Im disciplined and don’t need a fee based advisors, but it is in my plan to pivot to one in my 70s to protect myself against the inevitable cognitive decline that age will bring.

  27. Nobody likes to work. It’s one of the worst things in live but I’m sure she could find a remote job or something to help your family. It will help with the depression as well

  28. I think they are a little hard on this couple. Who knows what the condo’s values will be once they are built. They can sell them once they are built and maybe come out ahead, who knows! I do not think their future is ruined, there is a good chance they can still retire in 9 years, just don’t repeat mistakes, learn and move on. As for everyone in the comments about cut cut cut, some of us don’t want to cut, we like our lifestyle and want fatFIRE, if that takes a few more years to retire so be it.

    Sell the condos in 2025 take the proceeds and pay off their mortgage (-$1,370/mo). I would also guess in 9 years they will no longer need $1,060 for school as their kid will be old enough? This will cut their living expenses to $4,801/m or $57,621/yr meaning they only need $1.44M to retire. When I math shit up, I get 8 years to retire, they still need the school then I get 9.5 years, not bad!

    Year Starting Contributions ROI Total
    1 731,398 18,257 44,979 794,634
    2 794,634 18,258 48,774 861,666
    3 861,666 18,259 52,795 932,720
    4 932,720 18,259 57,059 1,008,038
    5 1,008,038 61,349 64,163 1,133,550
    6 1,133,550 61,349 71,694 1,266,593
    7 1,266,593 61,349 79,677 1,407,619
    8 1,407,619 61,349 88,138 1,557,106
    9 1,557,106 61,350 97,107 1,715,563
    10 1,715,563 61,351 106,615 1,883,529

    This is assuming they do not lose or make money on the pre construction condos. Things are still on track!

  29. She may not like to hear this, but one option is to back out of (at least one of) the pre-construction condos. They’ll lose the deposit, but they’ll also have reduced the negative cash flow problem. The money is gone either way.

  30. Tough choices to make…!! But, it’s necessary to correct mistakes of the past to secure the future (let alone become FI). So…
    – Kill or at least minimize debt – sell condos (1 condo at a time)
    – Close the wasteful spending pipe – cemetery, charitable donations.
    – Separate the nice-to-have expenses from the must-have expenses, and try to minimize or eliminate the former.
    – Commit to making lifestyle changes (egs: private school education)
    – A part-time job for the wife?

  31. Run as fast as you can away from Primerica. The fee’s on their mutual funds are so outrageously high.

    1. I just checked the MER on one of Primerica’s funds: 2.58% (Asset Builder V). Everything about this family screams “easy target” for a slick sales person. I believe they would benefit greatly from a fee-for-service financial expert, preferably someone who embraces the FIRE principles.

      1. I only went to one meeting with Primerica and all the alarms were up. When they are more interested in you becoming a seller for them than selling their product to you, you know there is something weird… Just based on their ethics, that would be the first place I would exit.

  32. I don’t know if the law allow that in Toronto, but I remember seeing a Garth Turner post about people in BC selling their pre-constructed condo to other people as a way to speculate on rising properties value.

    It is perhaps possible to sell those condo to others people interested in buying at this place. Heck if the condo market is hot, perhaps the original sellers will accept to sell it for you to someone else for a commission fee. that would be low-risk for him, the unit is already sold and he might even get a little extra out of it.

  33. Hey Pandemic Mistakes,

    Fellow depression-sufferer and investor here. I felt the need to respond because I know first hand how depression and anxiety can make a person question themselves and their decisions. This might be felt even more acutely when a ton of commenters with strong opinions decide to dunk on you because they have a pre existing bias against real estate investments.

    If I were you I’d stop worrying about this . Don’t assume that you screwed up just because you made some investment choices that others wouldn’t make. I don’t think you should panic about your investments after reading a blog on the internet, even if its a great blog like this one.

    There are people in the world who prefer to invest their money in real estate and people who, like me, prefer the stock market. This blog and its readers are heavily skewed towards the latter. But we’re not gods, we’re human like you. Our way is not the only way.

    If you don’t need to access your investments for the next 4-5 years I’d gamble on sticking with what you’ve got. There are huge external forces at work on Canadian real estate – many rich people in many parts of the world would prefer to live in Canada because their current home country is less desirable and more dangerous to stay (if you click on the news right now you’ll see this phenomenon is not going to let up anytime soon). Those forces translate to increased demand for housing, especially single family homes, which leaves regular wage earners hunting for condos in major metros . As another commenter mentioned Canada allows about 1% of its population each year in the form of new immigrants, and these tend to be skilled people who can afford a place to live and will want to buy one. You will be in a position to sell to these people in a few years’ time. That’s still an enviable position to be in.

    It’s said there are no guarantees in life, and it is certainly not guaranteed that home values go up every year, but if there are guaranteed penalties associated with trying to get out of your condo investments early, it’s probably worth it to sit tight.

    I do agree with the advice to get your remaining money out of high-fee funds. Fees are a killer! Whatever money you need for the condo payments, I wouldn’t put in an ETF because you never know when you get a big drop.

    And finally, you might want to change your name to PandemicInvestmentChoices.

    Good luck!

  34. Can you get rid of those condos as quickly as possible? Losing deposits and possibly paying an attorney (discussing attorney fees in advance) sounds like the best way to go. You can fix this! Best of luck to you.

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