Deleveraging to Build Back Better

Deleveraging to Build Back Better

Deleveraging to Build Back Better

Hey everyone

This is a post that is a long time running and one that I actually didn’t really want to sit down and write. For the first time since we started investing, I have actually turned bearish. We decided to sell off some stock to pay off our home equity line of credit completely. This will definitely destroy our passive income at the moment but I feel like its a good move being debt free once again.

Approximately 2 years later after governments around the world threw the slogan “build back better” out are we actually better? Think about that for a second and be serious with yourself.. Are we still going to use the pandemic excuse or we going to be real with what seems to be going on.

Right before everyone started saying build back better the world economic forum basically was talking about a great reset. 2030 you will own nothing and will be happy.. Unfortunately most of the world leaders (except those labelled as extremists) are members of the wef. So I think we should keep that in mind as we watch what seems to be happening these days. Is this all part of a plan or is this just more coincidence? Its kind of amazing how much coincidences seem to be happening at the moment.

Its actually hard to find a video on youtube of just the leaders saying build back better. This one does but also touches on the great reset if you have not heard of it.

Now some of you may be thinking wow Robs a right wing extremist. Media tends to paint that picture these days on anyone who questions the system. I definitely am right wing but don’t consider myself an extremist.

As I said before we recently sold some stock and paid off our heloc, I think this winter is going to bring some real issues into play. While Im a fan of buying the dip etc. I think we are in for more than just a little dip. Maybe a double dip! A triple dip? I don’t know some would say that’s too many dips. Seinfeld had a whole episode on that. =)


We all know inflation is bad right now. Heck its worse than bad. Govts say its like 8% but real numbers tend to show it a lot higher. I know us personally are feeling these effects. Everything is going up, grocery’s are crazy. Gas wow (although that’s also Trudeau’s awesome carbon tax which he is planning on continuing to increase) Real estate? Energy? well that’s going to be a whole different discussion. etc etc

As a lot of us know the governments were printing off money at an absolutely insane pace. Oprah kinda stuff. You want some money, you get some money! Things were booming, Interest rates were low. Creating money out of thin air at such a pace surely increases inflation! (did anyone not question this?)

I know in the fintwit (financial twitter) space lots of us were talking about raising the interest rates to cool things off a bit, not to mention mocking the printing press….

Housing here in Canada was absolutely insane.. What did central banks say while we were all talking about this? Inflation is not that bad, it will cool off.. Meanwhile they continued to print money and keep rates low..

why did people in the twitter space see this but not central bankers, who get paid a tonne to try to keep inflation around 2%

Anyways they screwed up in my opinion and since mid year have sky rocketed rates to try to control inflation.

Interest Rates

So I mentioned how they have been raising rates at super speeds. How bad could it be?

Well Canada’s prime rate in March 2022 was 2.70%. As of Sept 7 2022 it is at 5.45%. So we are now more than double in a 6 month span and they plan to continue raising these rates. That is an insane increase in such a short time period. So we got super high inflation, governments and households with record debts and rocketing interest rates… Sounds bad on paper doesn’t it? Pierre thinks so! But when Freeland actually answers she says debt is cheap, its no big deal. I wonder what she would say today, but lets be honest she probably wouldn’t answer the question.


Housing absolutely boomed the last couple years. There were bidding wars giving hundreds of thousands over asking price. People buying without housing inspections.. One house in our neighbourhood sold for a million dollars sight unseen. The place was full of mould from a leaking roof and the guy gutted the house right to the studs. A year and a half later its still in construction. Insane..

Again earlier this year on twitter there was discussions about how variable rate mortgages are historically the best way to go. Here we are today and variable rates are north of 6%. That is going to hurt a lot of people and will continue to hurt people as they renew their mortgages. Luckily we locked in for 5 years in March at 3.2%. This is not a short term problem, this one will last awhile.

Recently I attended my first monthly mastermind meetup with different investors – real estate, stocks and crypto. One real estate investor mentioned his rentals are all variable rate mortgages and some units just break even with the current payment. But the central banks have stated they aren’t done raising rates….. He will have negative rental income. Will rental rates increase more to make up for this or will the house of cards start tumbling down. People are already complaining how expensive rentals are.


Food, one of the things most impacted by inflation. Obviously the Russian conflict has an effect on certain foods here but you would think governments would be doing all they can to improve food prices. In some countries like here in Canada its the exact opposite. We now want farmers to reduce their fertilizer use by up to 30%. In the name of being green… In Holland they said the same thing and the farmers put up a massive protest. Massive would be an understatement but media tended to not cover the issue to much? why not?

Farmers are screaming this would kill their output and possibly put them out of business. A monster red flag, but hey its probably nothing….


One of the positives I did see for the coming 3-6 months was the end of the Ukraine war. They were/are gaining a lot of the country back and their was a lot of opposition in Russia about the war itself. Recently Putin said he was going to escalate the war and now send 300,000 troops almost double the initial 180k. Unfortunately this is not going to end soon and actually today Ukraine applied for Nato membership…. Time will tell if this is a good thing, or the start of a even bigger war. Not to mention the recent nordstream pipeline bombings… Do you really think Putin would blow up his own pipelines? I don’t. Who did it and if some other country did, I think its safe to say things will escalate quickly.


Moving into the winter this is going to be another issue once again, but this time worst than ever in my opinion. Whys that? Well covid isn’t gone. I’m sure you know my stance on covid. Its the new flu, I’ve said it for 2 years now. Now we are removing all masks etc (which is fantastic) but we also see all the added problems from all the vaccinations. Myocarditisis etc and we have a massive healthcare worker shortage. But why do we have such a massive healthcare worker shortage? Because they fired all the people who wouldn’t get vaccinated. Now that the science has “changed” will they come back? From the nurses I know (clients and family) who got fired, they are not going back. They system threw them to the curb and treated them very bad, why would they want to go back?


Alright last one, I swear. The energy crisis is a big one. Us in the west see it at the pumps but Europe is a whole different situation. They are about to have a energy crisis that we have never even experienced before. I think I read somewhere the average energy bill for residents in Europe will go from 100 a month to 600 a month. ArcelorMittal, one of the worlds largest steel companies has said they will be closing 2 steel plants in Germany due to the energy crisis. That says a lot. Get ready for more supply issues. Its also screams about the upcoming problems Europe will feel. How will small businesses handle these costs? Especially after all the lock downs the last couple years. If only someone saw these problems ahead of time… Oh yeah Trump did back in 2018, while the Germans laughed at him.

The world should be watching what is happening there and really focusing on their energy security. Canada could be absolutely making a killing right now, paying off our debt and making our citizens richer. But instead the Trudeau government decided oil and gas are bad.

cancelled oil and gas projects

I’m still bullish on the oil and gas space. While I think a recession is coming the amount of under-investment in this area will be a boom in the coming years especially if war does escalate. Here’s hoping it doesn’t though.


Obviously that is quite the list of negatives that are currently happening. I don’t think we will have the post covid boost we have seen in travel/leisure this winter as peoples wallets will be a lot tighter in the coming months due to almost all these factors. The one positive I do see for markets is the continuing of the printing press. We see lots of places printing more money in the form of inflation relief….. Is it really inflation relief or does it only stoke the fire and continue keeping these inflation numbers up while looking good for the general public. ie buying votes….

Of course this is a negative as well, as governments have increased their debts at break neck speed.

Isn’t it amazing how many of these problems are government induced? It must be just another coincidence…. I didn’t even bring up Central Bank digital currency’s. Governments will be wanting to implement these in the coming years and whats the easiest way to do that? A major banking crisis. Janet Yellen has openly stated they don’t really need banks these days, the feds could handle everyone’s finances. Sounds like a great idea….. They have been great with finances. More control and they will be able to monitor all your transactions, whats not to like?


Alright time for our sales. I didn’t sell everything in the portfolio as I could be wrong. We used a heloc to invest in our private investment and lots of dgi stocks since March. At the time the interest rate was just over 3% its now at 6%. While our added cash flow still easily covered the monthly payments I was starting to lose sleep over it. For the all the factors listed above I thought it would be a better idea to sell these positions in our tfsas and become debt free once again. In January next year I could always buy them right back and be where we currently are but I think we will see a nice pullback over the winter months. I just don’t see anything bullish to propel the stock market. We have a fed that is openly telling everyone they want to crash the market. Have we ever had that before?

I started off selling all our reits. I think real estate is going to get a hurt real bad… (Russel peters)

Smart Centers

We sold our 234 shares at an average price of $27.95 per share

This lost 432.99 in forward income.


Sold our our position of 1007 shares at an average price of $16.44 per share

This lost 815.67 in forward income.

Telus – I like this company and will add them again in the future. Interest rates should lower their stock price.

Sold 403 shares at 28.75 per share

Losing 545.82 in forward income.

Restaurant Brands International – Love the brands but their debt will be costly.

sold 145 shares at 78.26 per share

lost 313.20 in forward income

The more I thought about things the more I see a coming financial crisis. Finland is warning of an “energy-industry Lehman Brothers” crisis coming. I think there will be a ripple effect coming. Check out Deutsche Bank and Credit Suisse stock prices to see whats happening there. Credit suisse has said the worst is yet to come…

We sold all our financial stocks.. Yes even those Canadian Banks!

Bank of Nova Scotia

we sold 108 at 67.55 per share. Yes this stock is cheap but i think it will get cheaper. I don’t plan on buying this one back. Ill be buying National and TD as our bank holdings.

This sale lost 444.96 in forward income.

TD Bank – I’m not gonna lie this is one of my favourite holdings. I will buy this one in the future again.

Sold 194 shares at 84.90 per share

lost 690.64 in forward income.

National Bank – Ill buy this one back as well.

sold 168 shares at 86.41 per share

Lost 618.24 in forward income.

Manulife Financial – The only stock I sold that I took a loss on. I don’t plan on buying this one back. I try to stick to 3 stocks per sector and plan on having Na, Td and Bam in the future.

Sold 427 shares at 21.71 per share

Lost 563.64 in forward income.

Well there it is. Lets tally this up for the first time…. Ahhhhh all in all we lost a whopping $4,425.16 in forward income. Portfolio hasn’t been updated as of today. This is actually more than I thought it would be. lol.. I guess its 100k in stock so what was I expecting.


Well that’s the longest post I have ever written. Its not investment advice. In an effort to stay as transparent to you all as possible this is it.. While its unfortunate to lose that much in forward income our heloc was charging 6% (and will probably increase before falling down a bit) on 100k those payments would cost $7200 a year. I guess Dale at cutthecrapinvesting is starting to wear off on me. We need to focus on total return vs dividends. As I’ve stated I think the market isn’t done falling and we will see even lower stock prices in the coming months. That being said though. Im not necessarily trying to time the market. I wanted to pay off all our debts and will continue dollar cost averaging into positions each month.

I’ve always said I will focus on tech stocks in a market crash and plan on boosting that sector. They have tonnes of cash on hand to weather the storm. I will also be grabbing more dividend kings. Stanley Black and Decker continues to look attractive at current prices. Unlike the government I do actually plan on building back better.

This was a hard post to write as I’m normally a buy and hold investor. I see clouds on the horizon but like always after a good storm the grass is always greener!

What are your thoughts? Anything bullish happening right now that I missed? Id love to hear your thoughts. These sales could be a great move or they could be a massive failure and learning experience. Time will tell.

As always wish you all nothing but the best


20 Responses

  1. DividendsOn says:

    Hi Rob,

    I’ve been investing for over forty years and I’ve never tried to predict the future.

    With that, I haven’t been investing all summer since we’ve been saving for our upcoming TFSA contributions in January. That plus a few family expenses.

    Perhaps we’ll have enough to start investing in the taxable account later this month or else in November. We’ll see. As always, when we do invest it will be into whichever Canadian sector is lagging the most in our own portfolio.

    No equity sales this year. So far, so good. Haven’t had a dividend cut this calendar year. In fact, a few dividend increases announced in September for companies that we own.

    We’re lucky in that in retirement we have no debts of any kind. If there is a bad market, we’ll just ride through the financial storm as we always have.

    Hope it all works out for you and your family.

    • Rob says:

      hey Dividends

      always appreciate your comments as a dgi veteran. No cuts here either finally some good raises in Sept once again and should be some more good ones in October.
      Things are great with us and the family, hope I didnt come across tooo negative. haha


  2. SD Growth says:

    How dare you pay down debt to build back better, you need to add more to debt to BBB. Being responsible and paying down debt…you are an extremist 😂

    Sorry couldn’t help myself with a joke. Paying down debt in a rising rate environment is prudent and commend you on a smart move.

    • Rob says:

      haha thx sd, sucks seeing the numbers drop so drastically but I definitely think its a good move at the moment.
      all the best

  3. DGMan says:

    Thanks Rob. Were you using HELOC funds and investing inside a TFSA, or inside a non-registered account?

    • Rob says:

      hey dg

      both our rrsps and tfsas. Unforetunately got to the point one was maxed but next yr we gotta work on that once again =)


  4. DivHut says:

    You do what you feel is right. If reducing/eliminating debt helps you sleep at night… go for it. So you sell a little stock here and there, lose some forward income but are free and clear as a result. Not a bad trade off. Most people in the world do not even have that luxury of selling assets to tame debt. Most have little or negative net worth because of debt. We in the DGI space hold some assets and have passive income too. By the way, there is no coincidence. Everything is planned.

    • Rob says:

      “By the way, there is no coincidence. Everything is planned.” that seems to be the scariest part..

      no question we are all blessed to be in the positions we are in. I can only imagine how bad things are for people with massive mortgage payments/ car payments etc. Time will tell how things go, heres hoping things turn around and leaders step it up. The world needs them to
      cheers hut

  5. Norm says:

    Rob! Deleveraging 6 months in! WTF!!?

    I’m kidding of course, if you were “starting to lose sleep” over the loans you took to make investments then it makes perfect sense to make some sales and clear off the debt. Nothing wrong being debt free, it’s liberating! And if pretty much everything was sold in the green, nothing wrong with realizing profits.

    I’ve actually gone the opposite direction and have further leveraged although not for dividend stocks, this time I went with some US growth ones that had very favourable options premium with the recent volatility. That said there is a need to keep a real close eye on the margin loan as the percentage market drop the account could withstand is shrinking. September was brutal for my holdings, which had stood up reasonably well most of 2022 until September 😀 But the key to using leverage is a solid plan to deleverage.

    Build Back Better…. nothing more than a political slogan for a stump speech. Doesn’t seem like many (or any) governments have could articulate what such a plan truly means, let alone implement one. For a long time now the world financial system has been a clever balancing act, and I don’t personally see that changing any time soon. People are hurting and not just the over-leveraged ones. Governments all around the world will never pay back their debt, nor do many ever intend to. Therefore I don’t personally buy into the great reset, but human greed will persist and the rich will always seek a bigger share of the pie, no matter how they acquire it.

    • Rob says:

      hey Norm

      you got some balls! haha options in this market seems hard. One day its up the next down. Curious what growth stocks are you loading? Google seems great right now, but I cant pull the trigger without microsoft getting a bigger chunk of the portfolio first.

      Lets see if your right, there’s a scary video going around now of someone showing how bad of shape the us debt is at the moment. They wont be able to fund their healthcare by 2027 he says. and then it gets worst and worse. No question higher rates on these govt debts is going to be costly!

      I agree about greed and unforetunately these politicians are just making it rain on the taxpayers dime. Seems they charge more and more and yet noone loses their jobs. The osbournes just moved to england because they said the us is getting too soft… No consequences for any wrong doing..

  6. Linda Lesway says:

    Hi I just wanted to correct some misinformation you posted on health care workers .. health care is not in a crisis because they fired all the health care workers that didn’t get vaccinated .. the numbers are very small or actually rare of RN /Mds s that didn’t get vaccinated .. RN are an aging population .. we have been saying for many years to increase the numbers entering the nursing program . Also nurses and MD are exhausted and burned out from Covid .. they were denied holidays and time off and schedules became awful .. the hospital could put staff any where they wanted it was dangerous .. lastly RNs have only gotten 1% raises for many years .. if we were really heroes shouldn’t we be paid better .. Ford legislated only 1% raise allowed to be bargained and he refuses to changed that .. those are just some of the reasons thst seasoned RN and Md are walking away from health care .. very sad ..

    • Rob says:

      hey Linda

      No question that’s happening as well. I was just highlighting that even more of the problem was once again government caused.

      Unfortunately people these days don’t want to work period. We see this in all skilled trades as well. Lucky for us self employed we can just charge more. I feel for healthcare workers. 1% is nothing, meanwhile education workers are asking for 11% raises per yr I Think. (don’t get me started on that, that’s insane)
      Ontario has had healthcare problems for a very long time. Hospitals shouldn’t be overwhelmed during flu season, we know its coming every year!

      thanks for all you do Linda

  7. Mark says:

    That’s pretty hard to pull the trigger and sell – but kudos to you as it will help you sleep at night. You need to do what you need to do. Give it some time, at least you know through this you know where some of your pain points are.

    • Rob says:

      hey Mark

      Thanks, life is full of learning lessons. This one was no exception, definately sleeping better so it was a good move.
      all the best

  8. Bob Wen says:

    I’m genuinely grateful for the efforts of our healthcare professionals, especially throughout the pandemic. Thank you

    • Rob says:

      No question!

      Lots of people to be thankful for, but healthcare workers who continually put themselves in harms way during these health issues deserve a special thanks.

      cheers Bob

  9. Norm says:

    AAPL and MSFT were the two tech/growth companies of choice to start, nice that they also have dividends available if I happen to hold the underlying on the right day, and more than happy to own both companies long term. Also had to pick up a bunch of Shopify because it was so volatile and was printing premium for those willing to take a small risk, but I don’t want that as a long term holding.

    In October I actually sold all of my XAW shares to pay off a bit of margin, and plan to redeploy the same amount of margin for more US growth stocks to capture premium. Feels like there is a far better risk/reward profile with the latter approach right now.

    Definitely not financial advice but it’s working for me! 😀

    • Rob says:

      hey Norm

      Definately a great time, this wkend we start decorating full force for halloween. We have handed out drinks for adults before but this time I need to cut that out of the budget =) way to much spent on animatronics so far. haha!

      You are right about enbridge – we hold them in the kids resp and one of our tfsas. Thats unfortunate about investorline but im sure your putting that cash to work anyways. =)

      I think swk is a great buy these days but had to stick to my plan to buy tech on the dip. Recently we added more texas instruments to the portfolio and plan on buying more microsoft next purchase. Gotta grow these positions when they give us nice raises. The growth is a huge bonus and one we need to focus more on for sure.

      Interesting about you sell your xaw position, I keep adding to our position but at over 30 its not a steal, definately could be better putting that $ into growth names like google etc.

      All the best Norm!

  10. Ken says:

    I think you made the right choice if you had a variable rate heloc. thankfully when we did our heloc I locked in the portion I invested at 1.84%, as i make the payments more credit becomes available, but at these rates I would lose sleep as well. Should have it paid for before the end of the 5 year term easily as I am averaging 7% return on cost. I agree with a lot of your comments and better to be prepared as you are doing.

    • Rob says:

      hey Ken

      Thanks! Awesome that you were able to lock in at such a low rate, that’s fantastic. The snowball for you will surely grow. Time will tell how good of a move it was, has been a great move with the reits, but qsr has jumped. haha. It will definitely be a rough winter with the price of utilities skyrocketing everywhere.

      All the best Ken

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