The other day I was chatting with a friend of mine. During the conversation I asked her if she was hoping to retire early. She said, “No way! I love my job too much.” It is a similar response I’ve heard from others. Even when I asked my spouse about his projected retirement date, he said somewhat too sincerely, “I enjoy what I do to much to to retire before I have to.”

Contrast this with someone who hates their job. “Not soon enough!” is the response I hear most often. Have you ever worked in a job where you counted down the hours and minutes until the end of your shift, every day? I have and it wasn’t fun. To work in a job like long term would have sucked the joy right out of my life.

Sometimes we don’t have the luxury of doing work we love in a bad economy. Sometimes we just have to take any job we can. There are many of us who are working in a job that’s just ok. It’s not terrible but it doesn’t fulfill us.

Here are some ways to know you’ve found your passion

1. Does the time seem to fly while your at work? When you’re doing what you love, you aren’t counting the hours. I have an uncle that works 12 hour days. I asked him how he did such long days, and he said, “It’s so much fun that time goes by so fast I’m surprised when it’s over.”
2. Do you love talking about what do you? Some people never talk about their work after hours. My brother is one of these. He works to live and has fun during his off hours. It’s not that he hates his job. He’s just done with it by the end of the day and would rather focus on the things he is passionate about after hours. Then there are people whose eyes light up when you ask them a question about their specialty. That’s a sign they’ve found their passion!
3. Do you feel more energized then drained at the end of a work day? There are tasks in life that drain our energy and tasks that restore our energy. Ideally, when you have found your passion, you’ll be spending about 80% of your time on tasks that give you energy. At the end of the day, with few exceptions, you’ll feel content, fulfilled and energized rather than drained and exhausted.
4. Does the idea of an early retirement not sound the least bit appealing? There are many people who can’t wait to retire so they can get on living the life of their dreams. Wouldn’t it be amazing to live the life of your dreams and continue to draw a salary from it! When you’ve found your passion, the salary is just the icing on the cake .. the icing that makes an even nicer eventual retirement more likely.

When you do what you love and love what you do, you’ll do it well. Your passion will show through in everything you do. Employers love people who are passionate about their work. Their enthusiasm is contagious and they bring a positive energy to their work environment. They enjoy what they do, do it well and are more often then not the ones who are promoted and become long term successful employees.

Have you found your passion? Do you love love your job? Share with us here how you found work that you enjoy.

Kathryn is a regular contributor on Million Dollar Journey and has a passion for personal finance.  She volunteers her time as a money coach meeting with ordinary Canadians, teaching them the basics of budgeting, no fee banking, saving for the future and other basics of personal finance.

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There was a reader question about the strategy of borrowing to invest in an RRSP instead of a non-registered portfolio (like the Smith Manoeuvre).  Here is the question:

I have a readvanceable mortgage – Take your equity out as you pay your mortgage (max payment you can afford like in SM), and invest this equity in an RRSP.  Receive tax refund end year, put that on mortgage, then withdraw equity again and continue the process.

Now I realize that in this scenario that you would not receive the interest deduction that you would receive for a non-registered investment, but instead would receive the normal return that an RRSP would receive. As far as I can figure the effect would be receiving a large tax refund in the present (by using RRSP) and smaller in the future, versus a normal SM where you receive a very small refund at first and larger in the future (on a continual basis I realize until the loan is paid).

Any comments on this hybrid RRSP- SM idea, I am certain others have considered this option before and knew reasons why it is either worse or not legal than the regular SM, but I’d like to know those reasons. Please advise.

To begin, lets go over the tax rules, benefits/disadvantages of each strategy.

Leveraged RRSP:

• Tax refund on the contribution – thus larger tax return to put on mortgage.
• Investment loan is not tax deductible.
• All withdrawals from the RRSP are taxed at the marginal tax rate.

Leveraged Non-Registered Portfolio:

• Tax refund based on the interest to service the investment loan.  Depending on the current interest rates, this can fluctuate.  This tax deduction is small initially but will grow over time as the investment loan grows.
• Withdrawals are very tax efficient from a non-registered portfolio.  Only 50% of capital gains are added to income, and dividends can be extremely tax efficient depending on the amount of other income during the year.

Having explained the tax rules, our resident calculator guru Cannon_Fodder has modified his Smith Manoeuvre Calculator to compare both strategies.  This is the scenario and conclusions that he came up with:

Instead of borrowing home equity as it accumulates to invest in a non-registered portfolio, borrow to invest in an RRSP, and apply the full refund to the mortgage. This uses a readvanceable mortgage so there is a lot of flexibility to do this as each payment is applied.

So, I tweaked my SM Calculator to allow for this scenario. Here is what I found:

Inputs

- $300,000 House Value
- $240,000 Mortgage @ 5%
- $1,395.85 monthly payments amortized over 25 years
- 8% investment growth rate
- 5.75% HELOC rate
- Marginal Tax Rate of 46.41%

It should be noted that higher MTR’s make the case for investing into an RRSP more favourable when compared to the ‘traditional’ SM.

Here are the outputs:

With SM -
- Mtg is retired in 21 years
- $240k HELOC that is TAX DEDUCTIBLE
- investment portfolio of $304,142 that is NON-REGISTERED
- Adjusted cost base (not including commissions) of $138,516

With RRSP
- Mtg is retired in 18.25 years. Therefore, run the scenario until 21 years still making ‘mortgage payments’ but the money now goes to paying the HELOC interest and anything left goes into RRSP.
- $240k HELOC that is NOT TAX DEDUCTIBLE
- investment portfolio of $395,143 that is in an RRSP

Assuming the same MTR as used above, the net of it is whether a $240k LOC that costs $13,800 after tax to service annually and a fully taxable portfolio of $395k (that would be worth $212k if cashed out all at once) is better than having a $240k LOC that costs $7,650 after tax to service annually and a $304k portfolio (that would be worth about $265k if cashed out all at once).

If, however, your MTR is lower when you cash out (e.g. < 30%), then the advantage swings to the RRSP investment – especially if you can get rid of the HELOC quickly.

The basic conclusion is that the higher your MTR AND the larger the difference between the cost of the mortgage/HELOC and your investment growth rate, the better it looks for the RRSP.

All in all, I don’t see sufficient evidence to suggest that the SM-RRSP hybrid can be reasonably be expected to outperform a traditional SM as long as tax efficient investing is used for the traditional SM. That is based on these facts:

1. At the end, the SM has a HELOC that tax deductible interest payments where the SM-RRSP hybrid has no tax benefit.
2. The RRSP will have significant tax consequences as one withdraws funds from it. The SM’s non-registered portfolio, although smaller, will have substantially less tax liability on withdrawals.
3. A >4% difference between the long term mortgage rate and investment performance over 25 years is uncommon (unknown?) in Canada.

Thanks to Cannon_Fodder for taking the time to run the newest scenario.  Cannon_Fodder has created a new commercial version of his SM Calculator that is more detailed.  Contact me if you’re interested in learning more.

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