048 – Pretty FI for a car guy

We discuss the trades path to FI, cars and more on today’s episode. Cory joins the boys to discuss his path to FI through the trades, his experience with cars and investing during a pandemic.

Episode Beverages

Show Notes – FI for a car guy in the trades

3 Comments

  1. Another great discussion. It’s great to hear from FI people in the trades. These careers are so overlooked, especially in younger generations.

    One thing I wanted to mention to Cory: he said he used his HELOC to buy investments in his TFSA. There’s nothing wrong with doing this, but:

    1) He shouldn’t/can’t write off the HELOC interest unless the investments were made in a non-registered account.

    2) He’s probably still better off using leverage to invest inside his TFSA than not investing with his HEROIC funds. However, it’s likely far more advantageous to use the HELOC funds to invest in a non-registered account, due to the interest write-off (which lowers his taxable income, which nets him a large tax refund).

    One final note: the worst thing he could do is use the HELOC to invest in both a TFSA and non-registered account. That would be an accounting nightmare and very difficult to clean up if CRA audits him. (When you’re using leverage to invest, it’s when—not if you’ll be audited!)

    Maybe Cory knew all this already and had planned to invest in his TFSA without claiming the interest, so feel free to disregard my comment if that’s the case!

    Either way, nice work on being on the FI path without even knowing it! And glad to have you in the community, Cory!

    1. You make an excellent point here Chrissy. I didn’t question Cory about this during the episode, as he knew this and chose to get that money into his TFSA. I also disagree with you about mixing the borrowing from a HELOC between TFSA and Non-reg. While it is not advised, because many aren’t good at keeping records. As long as you have trace-ability, and document where and when the money moved, and of course only deducted the appropriate interest. It’s pretty straightforward. All that said, it would be pretty rare to be mixing the borrowing between TFSA and non-reg. More likely someone would end up with consumer debt on their HELOC mixed in with money borrowed to invest. This is fine too, just has to be tracked appropriately.

    2. Hi Chrissy!

      Thanks for the kind words.
      With interest rates being so low, I figured the tax shelter of the TFSA was more advantageous than being able to deduct the interest. Plus, my plan is to pay off the HELOC asap. Also, I should’ve mentioned in the podcast, I didn’t put the full $90k in the TFSA, as I only had $70k worth of room in there. I put the extra $20 into my RRSP.
      If there is another big correction before the HELOC is paid off, I would consider investing in my taxable account this time, but as MM mentioned, I would have to keep good records of everything to keep the CRA happy.

      Cheers!

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