House Rich at 27 — Should I Continue to Hold Off Investing Until Renovations Are Finished?
I'm 27, married with three young kids, looking for advice on balancing renovations and investing with future plans in mind.
All figures are approximate and in CAD.
Current financial position (spouse and I combined)
• House: $300k estimated value (my estimate), recently appraised at $360k by the bank for heloc but I think thats high
• Vehicles: $80k
• TFSA: $20k
• RRSP: $65k
• Cash: $3k
• No mortgage or other debt
• $220k HELOC available at 5.45% (prime + 1%), currently unused
Income and expenses:
• Taxable income: $75k YTD (not including my current shift), potentially $110k by year-end
• Annual living expenses: $35k
• Approximately $50k/year available for renovations and investments after taxes and living expenses
• Income depends on how much I choose to work away from home
Renovations:
I'm doing major renovations, I have $30k in expenses/materials I need to purchase at the end of the month. $120k in total planned renovations over the next two or three years (including the $30k). This budget isn't flexible, but it's also an estimate.
Once complete, I estimate the house will be worth around $550k.
I've focused heavily on the house over the past couple of years, so investing in my TFSA and my children's RESPs have taken a back seat.
Children's RESPs:
• Eldest child: $700
• Other two children: $0
Long-term plans:
Once current house is done - we expect to pursue one of these options:
Build a new house (our forever house) for around $400k over approximately three years, take on some debt, and then sell my current house once the new one is move-in ready.
Save for 6–7 years and build debt-free, then sell my current house.
Sell my current house, rent temporarily, Top up TFSA, and start building with the remaining money.
My question:
Given the above information, should I continue to hold off investing until the renovations are finished, or start contributing to my TFSA (If so how much?) and my children's RESPs now? I'll have to draw at least $20k from my HELOC to pay for the upcoming house expenses to keep myself moving forward through the winter.
For now, I'd like to calculate lump-sum contributions to my children's RESPs based on their ages to give them an equal start, then set up recurring monthly deposits to reach the annual grant limits. Beyond that, should I invest in TFSA ETFs knowing I'll incur more HELOC debt, or hold off and see if I can out-earn my renovation spending, considering I'm doing all the work myself?.. which is almost certain.
I've worked hard to be diligent with my finances and recognize that I'm in a great position so far. Although this isn't that complicated, for some reason I can't seem to create a plan going forward that I don't second-guess.
Thanks in advance.