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Situation: Bad condo investment was enough to decimate retirement plan, but they also subsidize friend who rents it from them Solution: Even with selling the property and working until 70, this couple will struggle with current income. A bigger paycheque would help

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What does it take to resuscitate financial life in middle age? That’s the dilemma of a couple we will call Sally, 48, and Bobby, 40, formerly artists in Britain and now parents of a seven-year-old daughter. For years, they lived in squats in East London, then came to Alberta in 2008, Sally’s former home before her approximately two-decade stint abroad, and settled down. Then they put their life savings into what turned out to be a rotten investment. They have money abroad but can’t touch it, a modest income in Canada, and wonder how to get out of their trap of debt and low income.

Sally has a full-time job with a nonprofit cultural group, Bobby a part-time position with a transportation company. She has come full circle from middle class security to cultural hobo and back to middle class but without financial security. They have take home salary income of $6,284 a month and receive $650 rent from a condo they own. Total income — $6,934 a month. That should buy a decent living in a low tax province, but their debts, a deficit in what they charge for rent and a big investment gone sour have drastically reduced their standard of living.

The budget breaker is an investment in a B.C. rental condo which has lost 35% of its original price. The bargain it seemed at the time turned out to be a money pit. To keep a tenant who is a friend, they charge $545 less rent than their own cost of ownership and operation of the unit. Thus they generate a negative return on a collapsed asset. The price drop has vaporized their down payment of $70,000. “That was our life savings,” Sally explains.