MEET JIM AND PAM.
- Jim and Pam have professional jobs with a combined household income of $125,000
- Jim has RSP matching through work, but Pam has no pension, no benefits
- They want to build retirement wealth without having to put after-tax dollars into savings
- Cash flow is adequate, but two maternity leaves, and some part-time work lead to the realization that they would rather put money into emergency savings, large ticket items, and vacations.
- Good credit, no credit card or loan debt
- Jim and Pam own one house worth $300,000.
- Mortgage outstanding is $145,000, Monthly payment $748.19
Jim and Pam want to keep their current house and rent it out, and buy a new family home worth significantly more.
They have no down payment, and they cannot afford any extra payments.
- Refinanced mortgage on current home to $240,000 @ 2.45% variable rate over 30 year amortization. Monthly Payment: $940.52
- Rented house for $2,000 per month
- $940.52 mortgage
- $265.00 property taxes
- $100.00 property insurance = Jim and Pam keep $695 per month income
- Bought new house: Used surplus cash of $95,000 from the new mortgage and put it down on a new family home priced at $425,000. Covered the 20% down payment and closing costs.
- New home mortgage of $340,000 @ 2.45%. Monthly Payment: $1,332.40
- Absorbed increased mortgage payments from the $695 rental surplus income above.