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How to talk yourself out of buying a house you can't afford

Home for sale

Andy Dean/Getty Images/iStockphoto

By Rob Carrick

A guy and his girlfriend go out for a weekend brunch at a diner and then a stroll through the neighbourhood. On the way, they stop by an open house and fall in love with a home costing $1.7-million. Can they somehow pull off this dream of home ownership? Nope. Sanity prevails after a run through an online mortgage affordability calculator.

I include this link because it highlights the way in which the dream of home ownership collides with the reality of expensive prices in some cities. I went to town on the dream of ownership in this recent column where I paraphrased both Karl Marx and a line from the movie Jerry Maguire to make the point that we put too much emphasis on owning a home.

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Americans have a better perspective on home ownership. Several years back, the urban studies expert Richard Florida wrote of a "great reset" where Americans would shift away from a decades-long obsession with suburban home ownership and move toward renting in cities and urban areas. Now, as you can read here, it's happening.

Rob's top web links

> If you are buying a house in a hot market, you may feel pressured to waive the condition of financing in your offer. Read here about the risks of doing this.

> If you need help completing your tax return, check out the Community Volunteer Income Tax Program. Free assistance is available for people receiving social assistance, newcomers to Canada, seniors and students.

> I'm as big a fan as anyone of dividend growth stocks, but let's get real. As the New York Times reports here, we have to accept smaller dividend increases in a slow-growing economy, not to mention dividend cuts in some cases. Here's my take on slowing dividend growth

> These are the stocks that big U.S. investors like – and don't like. Fodder for your investment research.

> What are the major risks facing investors these days? This money manager is worried about deflation, which is a function of a global economy struggling to get back on a solid footing.

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> Student debt is certainly an issue here in Canada, with the average amount owed at graduation coming in around $27,000, and students can struggle for 10 years to repay what they owe. But the situation is far worse in the United States, where U.S. marshals are arresting people with outstanding loans.

Today's featured investment tool

Experts say you should expect to need between 50 and 70 per cent of your working income when your retire. Find out your exact number using The Globe and Mail retirement readiness calculator. This is important stuff. If you know how much retirement income you need every year, you're well on your way to finding out the total amount of savings you require.

Ask Rob

The question: I'm retired and will soon be required to transfer my RRSP to a RRIF. I have been unimpressed with the financial industry the last eight years, and my adviser. How would one find a robo-adviser, or would you suggest an independent financial adviser who is paid a fee?

My reply: Hey, aren't millennials supposed to be the market for rob-advisers, which manage investment portfolios online for a low cost? Apparently, retirees also recognize the value in paying a reasonable fee in exchange for having a portfolio of low-cost exchange-traded funds managed. Something to remember here is that robo advisers just manage investments – they don't do any detailed financial planning. If you want that, seek out an accredited financial planner. Here's my guide to what's available in the robo-adviser world in Canada.

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Do you have a question for me? Send it my way. Questions and answers are edited for length.

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Being an American citizen living in Canada can mean tremendous tax headaches. Here's the financial case for renouncing U.S. citizenship.

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