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David Trahair is a Chartered Accountant who operates as a sole-proprietor, offering a broad range of accounting and tax services to a variety of businesses and individuals. He is a frequent speaker, appears regularly in the media, and is the author of several books, including Enough Bull and Crushing Debt. He is also a previous director of Credit Canada, a non-profit organization dedicated to helping people deal with credit problems.
Introduction 1
Cash Is Not King 2
Cash Flow Is King 2
Who Gets Rich Off You 3
It's Not Just Them, It’s Us 3
Want to Get Rich Quick? 3
Back to Basics 4
Chapter 1—The Cash Cow Strategy 5
Cash Cows 5
Cash Pigs 6
Cash Jackpots 7
This Is Not a Philosophy; It's About Cash Flow 8
Cows and Pigs Can Change 8
One Person's Pig May Be Another Person’s Cow 9
Cash Cow, Pig or Jackpot? 9
A House or Condo 10
Gambling 11
Personal Debt 11
Defined Benefit (DB) Pension Plans 12
Canada Pension Plan and Old Age Security 14
Kids 14
A Bigger View: Government Debt 15
Why Don’t People Follow This Basic Strategy? 16
Chapter 2—Taking Care of Your Biggest Cash Cow 17
Your Biggest Cash Cow Is 17
How to Protect Your Biggest Cash Cow 19
Is Your Body Trying to Tell You Something? 19
Are You Eating Well? 20
How Much Exercise Do You Get? 22
How Much Sleep Do You Get? 22
The Value of Hard Work 23
Summing up Healthy Living 24
Chapter 3—Who Wants to Be a Millionaire? 25
What Is "Rich"? 25
Net Worth Is a Lousy Measure of Wealth 25
Mixing Pre-Tax and After-Tax Amounts 26
Ignores Cash Flow 26
Many "Wealthy" People Are Living a Mirage 28
Why I Don’t Want to Win the Lottery 30
Going Beyond the Numbers 31
Does Money Buy Happiness? 31
What Causes Happiness? 33
"The Happy Movie" 33
Happy for No Reason 35
My Take on Happy 38
My Secret to Life 39
Million Dollar Wrap-up 41
Chapter 4—The Trap: Why You Aren't Getting Rich and They Are 42
How the Banks Make Money 43
Plug the Cash Pig Leaks 43
The Mutual Fund Fee Monster 44
Borrowing to Get Rich: It Can Work, But Don't Bet on It 45The Wealth Effect Is the Enemy 46
Sometimes People Are Their Own Worst Enemies 47
Paul's Story 48
Closing the Trap 54
Chapter 5—The Dream of Home Ownership 55
The Wealthy Barber Weighs In 56
How Much Home Can You Afford? 57
Rent Is Not a Four-Letter Word 60
An Example—123 Any Street, Hometown 63
123 Any Street: The Assumptions 65
Don't Forget the Closing Costs 66
A Word About the Down Payment 69
CMHC Changes 71
The Key Points That Most People Miss 72
The Opportunity Cost 72
The Ongoing Cash Costs 74
Consumer Debt Warning 74
Compounding Confusion 75
123 Any Street: The TFSA Results 77
123 Any Street: The RRSP Results 80
Playing with the Inputs 81
Housing Prices Increases 81
House Price 81
Interest Rates 84
Beware Those Trying to Sell You Something 84
Beyond the Numbers 85
Long-Term House Prices 85
Repairs and Maintenance 86
Renovations 87
The End Game: Can You Sell? 87
Conclusion 87
Chapter 6—The Condominium Conundrum 89
Condo Basics 90
Defi nition of a Condominium 90
The Legal Details 91
Condominium Regulations 91
The Fees 92
Who Pays for What? 92
Insurance 93
Renting Out the Unit 94
Condo Costs 94
The Purchase Price 95
The Monthly Costs 95
Running the Numbers 96
The Toronto Condo: Results 97
Playing with the Inputs 100
Further Analysis Required 101
Buying a New Condominium 102
Buying a Re-sale Condominium 103
Condos: What Could Go Wrong? 104
What You Can Do to Manage Condo Risk 106
A Word about Rental Properties and Income Tax 107
Condo Wrap-up 108
Chapter 7—Infl ation: Monster or Myth? 110
What Is Infl ation? 110
The Consumer Price Index (CPI) 111
How the CPI Is Calculated 112
Historical CPI Rates 114
Percentages versus Actual Cash Flow 116
An Infl ation Example 117
Where Will Infl ation Be in the Future? 119
Defl ation May Be the Bigger Monster 120
Stagfl ation: The Two-Headed Beast 121
Why the CPI Matters to You 121
Chapter 8—Maximizing Your Canada Pension Plan 123
CPP and OAS Overview 124
CPP: The Basics 124
CPP: The New Rules 126
CPP Contribution Rate 130
Is the CPP Plan Solid? 130
The CPP Investment Board (CPPIB) 131
The Chief Actuary of Canada 133
Can We Count on the CPP? 134
Is the Canada Pension Plan a Good Investment? 134
How Is the Maximum CPP Pension Calculated? 137
CPP and QPP Maximum Amounts 138
How Will My CPP Pension Be Calculated? 139
The Child-Rearing Provision 139
Should I Elect to Start My CPP Early? 141
Infl ation Effect on the CPP Retirement Benefit 143
The CPP Disability Benefits 143
Summing Up the CPP 145
Chapter 9—Can We Rely on the Old Age Security Cash Cow? 146
The OAS Details 146
Guaranteed Income Supplement 147
OAS Clawback 148
OAS and GIS Amounts 149
The Proposed OAS Changes 150
OAS Wrap-up 152
Chapter 10—Cash Flow for Life 153
What Are Your Cash Cows in Retirement? 154
CPP and OAS 154
RRSPs: How Big Does Yours Need to Be? 156
RRIFs: The Details 157
Annuities: The Details 159
Cash Flow Finale 161
Chapter 11—The Inheritance Jackpot 162
The Great Wealth Transfer Is Going to Be Inefficient 163
How to Talk to Your Parents About Death 164
The Problem with Death 165
Is There Tax on Death? 165
Getting Ready: A Simple Checklist 165
Conclusion 167
Index 169
About the Author 177
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