Another great question David Chilton, The Wealthy Barber, asked me on his podcast is what big financial mistakes I see people making.  I’ll discuss two mistakes I see mainly among working-age people and two more specific to retirees. Buying expensive cars and trucks Paying $1000+ per month on car loans for the rest of your life isn’t a sensible financial move for most people.  You might need a car, but you don’t necessarily need such an expensive car.  In a moment of weakness and excitement, you sign the papers on that great car.  That sets up a cycle that’s hard to break.  You’ll be rolling one car loan into another.  The debt will keep growing and last for decades. I used to tell people to pay cash for cars.  I still think this is good advice, but people just blink now when I say it.  At the very least, think about the life burden your car payments will create and choose a car that fits your budget. Buying a house that is too expensive This is ...

A reverse mortgage is a loan against your home where you don’t have to make mortgage payments.  The lender gives you a lump sum or regular payments that are limited to a percentage of your home’s value, typically 20-60% depending on your age, and you get to stay in your home.  The mortgage balance grows until you die, leave your home for some other reason, or choose to pay it off. In a typical case, you or your estate pays back the lender from the proceeds of selling your home.  For most reverse mortgages, you get to stay in your home even if the debt grows to more than the home’s value.  The best information I could find is that this happens less than 1% of the time, which is hardly surprising given the extended real estate boom in Canada. House prices have been appreciating fast enough to keep ahead of the debt. The number of reverse mortgages held by Canadians is still just a tiny fraction of all mortgages, and even fewer reverse mortgages have run to completion....