Jim had a dream of owning a cottage on a lake, and the dream was strong enough that it kept him saving for 15 years, using every strategy he could think of.
Finally, he bought the property, on a lake in Eastern Ontario, and then, when he could afford to, he built the cottage himself.
And now he’s having a blast.
“Mine’s a four-seasons cottage,” says the city dweller, 45, who works in the health-care industry. “I have just as much fun in the winter as I do in the summer. Snowmobiling, skating and cross-country skiing are all available, right at your doorstep. I have a boat – one of the good things about cottages is taking your boat out after dinner, doing a little cruise and visiting your neighbours on the lake. The water skiing is great, and the kayaking, too. There’s a provincial park nearby, so you can explore all the different lakes. There are so many lakes in Eastern Ontario that you can explore very easily.”
The pleasures of summer are as much a part of Canada as those of winter, but they can be expensive. Canadians like Jim have developed strategies to save for those pleasures.
The key to Jim’s strategy was an automatic withholding of 10 per cent of his gross income each month for savings – he paid himself first, as the expression goes. Half went into a savings account for his cottage, and half went into a Registered Retirement Savings Plan [RRSP].
Today, he points out, Tax-Free Savings Accounts allow individuals to put in up to $5,000 a year ($10,000 for couples) for tax-free saving or investing. He considers it an excellent vehicle to save for a cottage. In five years, couples can jointly shelter $50,000 from taxes.
He also made sacrifices. While his friends travelled abroad, he stayed closer to home on vacations.
“I had to cut back on that type of travel. I didn’t go on big trips to Europe. When I got out of university some of my friends were travelling across Europe. I actually only started to go to Europe over the last few years. I really wanted something more substantial.”
He also delayed buying a house or condominium while he was saving for the cottage.
And he avoided buying an expensive car. “You have to think about what’s important in your life. I could have bought a nicer car but I didn’t see the point in that. I always drove cars that were very economical. Gas is extremely expensive, so look for the ones that give you better gas mileage. If you’re in an urban area, you may not even want a car for a long time. You can just go without and all that money that you spend on gas and car payments and insurance, go towards savings for a cottage, if that’s more important to you.”
First-time buyers can use their RRSPs to contribute to their down payment, if the cottage is deemed a residential property, rather than a recreational one, he notes.
Young people who have finished school will probably want to pay off their student debts first, he says. But if they are debt-free, they can consider owning a cottage a kind of retirement savings plan – an investment that he feels confident will grow in value over time.
“People tend to be attracted to waterfronts and vacation properties, and they hold their value. They don’t make waterfront and so it gets harder and harder to find a really nice spot on a lake.”
As for his own cottage, “the wildlife on the lake is quite amazing. You have the loons and bald eagles, which I’d never seen before. Turtles bask in the sun on the rock. The fishing is great. There’s trout, bass, pike. There are tonnes of deer. I have a deer feeder. They come right up and feed on the property. You can hear the coyotes at night howling. The most amazing thing is the loons. You can hear them at night. And your standard things like frogs and crickets. It’s almost like a symphony right now. I prefer it to sirens and cars and noise and all that.
“It’s a great place to have family and friends,” he says. “I love the outdoors and have great memories of cottages growing up. And it’s a great place to have once you retire.”