Do you have the wrong kind of debt? The kind that is not tax-deductible? Most of us do. The wealthy have debt too. The difference is they routinely turn their loans into ‘good debt’ by making the interest tax-deductible with the help of expensive accountants and lawyers. So, while the wealthy are transforming their house mortgage loans into free tax refunds, the rest of us are paying off huge amounts of mortgage interest with after-tax income.
Another question: are you investing enough, soon enough? Most Canadians aren’t. After ever-rising taxes and the cost of making ends meet, most of us don’t have the resources to put away 10% of our income or max out our RRSPs or TFSAs every year. The benefits of compound interest, which are essential to our long-term financial well-being, remain elusive. But there is a way to change that.
Last question, I promise: is your mortgage killing you softly? A $500,000 mortgage at 4.0% over 25 years will set you back about $289,000 in interest costs. So that $500,000 will end up costing you over $789,000. And that’s after-tax income, which means you’ll have to earn about $1,127,000 to pay off your home if you’re at the 30% tax bracket. No wonder it’s difficult to save for the future.
The Smith Manoeuvre is a refined and proven debt conversion strategy that transforms expensive mortgage interest into tax deductions. The method has a remarkable snowball effect that generates large and growing annual tax refunds, enables the homeowner to knock years off the life of a non-deductible mortgage and build an impressive financial portfolio at the same time.
If you are a Canadian homeowner with a mortgage, you have the opportunity to start improving your personal finances with a simple one-time restructuring of your financial affairs and no additional cash from your pockets on an ongoing basis. As a Smith Manoeuvre Certified Professional, contact me and I can show you how.