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Know Your Mortgage Penalty

With my new zest to pay my mortgage down faster it made sense to do a little research in regards to the maximum allowed payments I could make on my mortgage without having to pay a mortgage penalty.

First of all, if you have an open mortgage (meaning you can pay down your mortgage whenever the heck you please and no one is going to bat an eye) this post doesn’t apply to you.  If you have a closed mortgage (like most of us out there), you pay for a lower mortgage rate but there are more restrictions, such as not being able to pay down the mortgage whenever you please and having to pay a penalty for it.  If you want to find out more information between open and closed mortgages and you’re out shopping for mortgages in the Spring Real Estate Frenzy season, check out this old but good Young and Thrifty post here.

Why it is Important to Know Your Mortgage Penalty

There are multiple reasons why you might want to know your mortgage penalty.

Or perhaps you don’t want to port your mortgage.  As TM mentioned in that post, there are many different reasons when it makes sense to port your mortgage and many different reasons when it does not make sense to port your mortgage.

  • You’re thinking of paying down your mortgage

This is the situation that I’m in right now.   I have a lot of money in cash that I’m not really investing with.  I am pondering about the Smith Maneuvre.  I don’t want to pay too much of my mortgage down to trigger a penalty.  I wanted to make sure that I was aware of the mortgage rules and how much I can pay down.Know Your Mortgage Penalty

  • You’re thinking of taking advantage of the lower interest rates

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You Know You’re Frugal When…

Sometimes it dawns on my how frugal I am.  It’s almost like a compulsion.  I can’t help it.  It’s ingrained in me.  If I were to rate my frugalness from a scale of 0 to 10, I think I would be about a 7 or 8.  I don’t think I am that frugal that I would compromise my health by eating Kraft Dinner every day or anything, but I am pretty frugal and I don’t like paying full price for most things if I can help it.

I would put myself in the frugal camp rather than in the cheap camp.  Frugality is the tendency to acquire goods and services in a restrained manner to achieve a long-term outcome (e.g. more savings and more money put towards things that matter to you, like for me, travel!).  Remember, there is a clear line and distinction between being frugal and being cheap, they are not the same though most people assume they are, and frugality is a turn on whereas cheapness is not.  If you’re not sure which camp you fall under, here is an Investopedia post on how to tell if you’re frugal or if you’re cheap.

These are my confessions….that are indicators I can be quite frugal at times:

Some of these are borderline embarrassing to share haha!

My television was free.

  • The television set in my living room a small flat screen television that sits on top of my fireplace was free.  My dad has a rental property where the tenant was moving out and didn’t want it anymore… so now it’s mine!  It works great, it’s not a 60″ Sonia Bravia Smart 3D TV (is that even a thing? I just made it up) but it works for me!

My computer chair was $10.

  • It’s not the most comfortable chair but it gets the job done.  I didn’t want to pay $150+ to $250+ for a computer chair.  I went to at a moving sale and I got the chair for $10.  They even gave me an inkjet printer for free because they were having trouble getting rid of it.  Admittedly, I think I still have it lying around somewhere because I prefer my laser printer over an inkjet printer.You Know You're Frugal

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TFSA Contribution Room Increases to $10,000

In case you’ve been living under a rock for the past few weeks, the federal government recently increased the annual Tax Free Savings Account contribution room to a hefty $10,000…(If you’re not sure what a Tax Free Savings Account is, here is some basic information for you to get started).

Yup.  That’s $4500 annually more than the $5500 before the big announcement.

When I heard the news, I was quite excited for this increased contribution room and contributed an additional $4500 to my Tax Free Savings Account (as known as my Tax Free Trading Account) right away.  Then I panicked for a little bit because I was worried that I read it wrong somewhere and should not be contributing to the account until the law passed.  However, I was reassured that this was not the case, according to the Financial Post.  The additional contribution room is in effect retroactively since January 1, 2015.

Thank goodness for that, because I do not want to face the over contribution penalty again (well, I didn’t end up having to pay the over contribution penalty, but it was a good lesson to not over contribute!!).

The TFSA Got a Makeover!

I’m a big fan of analogies, and one way that helped me understand the difference between a TFSA and an RRSP is that they are like siblings- check out my old post on the TFSA and RRSP Head to Head Comparison.  Opposite siblings.  With the RRSP, you save with pre-tax income but you end up getting taxed later in life when you withdraw the money.  With the TFSA, you contribute with after-tax income and you don’t end up getting taxed when you withdraw the money.

TFSA Contribution Room Increases to $10,000Well, with the recent increase to $10,000 contribution from from the initial $5000 contribution room, then the $5500 contribution room, the TFSA sibling (previously unpopular, kind of neglected, mis-used because it is misnamed and most people put their money in a High Interest Savings Account earning less than inflation) got a HUGE makeover. Continue Reading

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