New Year, New Beginnings

For Canadians living with type 2 diabetes small steps can add up to big changes in the New Year

For most people the start of another year inspires big plans and life-changing resolutions. Shannon Crocker, a registered dietitian who works with many clients living with type 2 diabetes, says turning New Year’s promises into lifelong habits is easier when you set realistic goals and celebrate small milestones.

“The best way to set yourself up for success is by breaking down your goals into small, manageable steps,” says Crocker. “Now is a great time to do this, because most of us view the new year as an opportunity to create new habits.”

In addition to their holiday indulgences, many Canadians with type 2 diabetes may be facing greater health risks today because of decreased activity levels. In an Angus Reid survey, about one in two Canadian adults living with type 2 diabetes said they became less active during the pandemic.

But the survey also uncovered positive results. Almost three in four respondents said they plan to make lifestyle changes – such as becoming more active and improving their diet – as the risk of COVID-19 exposure decreases.

While these lifestyle changes are beneficial for everyone in general, they’re particularly critical for those living with type 2 diabetes, who have a higher risk for heart disease – the leading cause of death for Canadians with type 2 diabetes. One in two people living with type 2 diabetes will die of heart disease.

Crocker says a good place to kickstart changes is with one meal and one physical activity.

“As a first goal, you could start with a simple change like adding whole grains to your breakfast, such as wholegrain bread or steel-cut oats and then maybe adding a short, 10-minute walk to your lunchtime,” she suggests.

Meal planning is key. Crocker recommends a “cook once, eat twice or thrice” approach – basically making bigger batches that can extend to two or more meals, to have healthy meals on hand. She also encourages the use of healthy shortcuts, such as store-bought cruciferous slaw mixes that can be stir fried and canned fish for quick salads or sandwiches.

Enlisting an “accountability buddy” is a great way to stay on track with your goals, says Crocker. Getting help from a guide or trainer can also make a big di erence.

That’s what Crocker did when she tore both of her Achilles tendons just before COVID hit. After years of running trails, she felt frustrated by her lack of on-foot mobility.

“I booked an appointment with a friend who was into mountain biking to show my husband and me how to cycle on the trail,” Crocker recalls. “We started o with short rides and now we’re hooked.”

For people living with type 2 diabetes, an increase in physical activity should be accompanied by a greater focus on a diet that can fuel the body. Crocker says it’s important to focus on sensible portions of nutrient-rich, higher fibre foods – such as beans and oats – that can help keep blood glucose levels under control and lower risks for heart disease.

“Speak with your healthcare provider before you start implementing a new workout routine, especially if you haven’t been active for a long time,” she says.

This strategy bore fruit for Toronto marketing consultant Heather Finley, 58, when she learned from a home-care worker that her mother, now deceased, had given out credit card information on the phone. Using remote access software she had previously installed, with her mother’s permission, Finley discovered a discount vacation company had enrolled her mother in a monthly subscription program. “I don’t know how they found her, but her dementia made her vulnerable to manipulation,” Finley says. After spending an hour on the phone with the company’s aggressive marketers, “I was able to unsubscribe her.”

RECOUPING LOSSES

If you’ve succumbed to a scam, you might or might not get all (or any) of your money back. In the first 10 months of 2022, the CAFC was only able to recoup $2.4 million – well under one per cent – of the total fraud losses tallied up over that time period. Even so, it’s worth reporting a scam, not just to the CAFC, but to the police and to your bank, which may have a policy of refunding some fraud losses. That’s how things played out for David B, 80, a retired social worker who lives in Parry Sound, Ont. When his computer froze in 2021 with a message to call a phone number, he shelled out US$300 to fix the computer and an extra US$600 for three years of “protection” before realizing he’d been scammed. He was able to reach the scammers and cancel the service, and he contacted his bank, which put its fraud department on the case.

Whether or not you get your money back, you’ll likely have some emotional equilibrium to recover. “It was so embarrassing,” David B recalls of his fraud experience. “I’ve been in the Air Force a couple of times. I didn’t think I was the type to get taken in.”

Indeed, scam victims face unique psychological hurdles because “their trauma has an element of shame,” says Iafolla, who includes recovery from fraud trauma in her services. As tempting as it may be to bear the shame alone, “the worst thing you can do is to isolate yourself,” she says. “Sharing and support are crucial to recovery.” You can also take heart in the knowledge that, if a brilliant writer like Gowdy could fall for a scam, you’re in excellent company.

apply to expensive debt means more funds to invest; more funds to invest means more comfort in your golden years,” says Robinson Smith, who took over Smith Consulting Group Ltd. from his late father, Fraser Smith. The Sidney, B.C.-based company sells books, courses, certification for financial advisers and access to its online Smithman calculator, where you input variables like your income and investment rates to see the effect on, for example, projected tax benefits and net worth.

When Fraser, a financial strategist, published The Smith Manoeuvre in 2002, it detailed what he described as a debt conversion strategy, which had been used for years by wealthy Canadians to reduce their tax brackets and bills and increase investment returns.

HOW IT WORKS

Say you have an $800,000 property and a $300,000 mortgage with a fixed rate of 5.49 per cent that matures in 15 years.

Your monthly mortgage payment would be about $2,349, with $1,082 going towards the principal balance, and the rest to interest. With each payment to the principal, your home equity line of credit (HELOC) limit would automatically increase by the same amount.

After every payment, you immediately borrow the $1,082 from your HELOC and invest it. This is the Smith Manoeuvre in a nutshell.

After you file your taxes each year, you can claim a tax deduction for the HELOC interest related to borrowing to invest. With this tax refund, you can pay down your mortgage that much sooner.

Keep in mind that interest on loans used to buy investments in Canada are tax deductible, with the exception of buying TFSAs, RRSPs and other registered investments.

It’s important to note the Smith Manoeuvre requires a re-advanceable mortgage (a home loan and a HELOC packaged together, with a credit limit that can’t exceed 80 per cent of your property’s value), so when you pay down the principal on your mortgage, the same amount is freed up on the HELOC.

THE BENEFITS

The Smith Manoeuvre can work in both high- and low-interest rate environments, but it is a long-term strategy. And the earlier you start and the more you invest, the more compound interest you will earn on your investments.

“It was developed back in the mid1980s, when rates were double-digit. High rates actually improve your tax savings, which leads to that mortgage conversion being achieved even faster,” explains Robinson, the author of the 2019 follow-up to his father’s book, Master Your Mortgage for Financial Freedom.

While interest rates and investment returns will fluctuate, the structure of the strategy means that when rates are high and returns are low, your tax relief is high and you’re investing in quality assets that are on sale.

THE RISKS

The Smith Manoeuvre can be a great way to build wealth, but it isn’t without its risks.

To come out ahead with the Smith Manoeuvre, your investment returns must be higher than HELOC interest. That may seem like a big hurdle, since the prime rate was 6.45 per cent at press time and most HELOCs were at 6.95 per cent (prime plus half a point).

However, it’s important to keep in mind it’s the after-tax cost of borrowing that matters. If your marginal tax rate is 50 per cent, then your after-tax cost of borrowing would only be 3.48 per cent. That means you’d need to earn at least 3.48 per cent long-term to come out ahead. And 3.48 per cent is a lot better than 6.95 per cent, isn’t it?

Secondly, if you try to set up the Smith Manoeuvre on your own, you could make costly mistakes. That’s why Robinson created the Smith Manoeuvre Certified Professional (SMCP) designation in 2021, to ensure you get expert help to set up the Smith Manoeuvre properly.

THE PERFECT CLIENT

People aged 45 or older are often in the later stages of their career, so they’re in higher tax brackets. Using the tax-deductible interest payments on the HELOC can shift you into a lower tax bracket or, at the very least, ensure a refund.

“When you’re in your 40s, you usually have a family, so cash flow tends to be limited. Why not use the Smith Manoeuvre to build wealth, when there’s effectively zero effect on your cash flow?” says Andrew Galea, vice-president of digital sales at MortgagePal in Toronto, and a Smith Manoeuvre Certified Professional.

Every day, Galea helps clients reap the rewards, including a couple in their 40s who own a property in Toronto worth about $1.5 million, with about $750,000 on the mortgage. With the Smith Manoeuvre, they will pay off their 30-year mortgage 12 years before it matures and improve their net worth by $1 million.

If your home is paid off, you can still use the Smith Manoeuvre. Galea set it up after he paid out the mortgage on his Toronto house, using the equity to buy a rental property. Since he financed the purchase with borrowed funds, he was able to write off the interest.

Whether you’re in your 40s, 50s or 60s, you can benefit from the Smith Manoeuvre. If you have at least 10 to 15 years left to invest, you can build significant wealth with it.

TO COME OUT AHEAD WITH THE SMITH MANOEUVRE, YOUR INVESTMENT RETURNS MUST BE HIGHER THAN HELOC INTEREST