Dec 2018 – Net Worth

Welcome to my net worth posts where I try to prove to myself and you that I wasn’t crazy for leaving work in the fall of 2017 to start my early retirement.   A few important notes:  we are mortgage free and our goal is have our income/investment gains exceed our spending by 102% on a 12 month rolling average (the extra 2% is a buffer for inflation).

Investments

Accounts

RRSP $54,860
LIRA $16,430
TFSA $88,990
Pension $170,100
Wife’s RRSP $88,290
Wife’s TFSA $78,180
Wife’s Taxable $37,330
High Interest Savings Account $38,330

Investment Net Worth $574,170 (-$22,050 decrease over last month from investments)

Home Equity

Estimate $395,000

Income

To keep things simple I’m only going to track what income comes into our main ‘house’ chequing account.  I won’t be tracking my wife’s or my businesses income as those don’t really matter until the money moves over to the ‘house’ account.  Also I won’t track investment gains since that is covered above.

  • Wife’s Monthly Payment to House: $2219
  • Child Tax: $340
  • Interest $29
  • Tim Brewery Income: $96
  • Total Income: $2684

Spending

Last Month $5123

Of course this includes the rest of the Christmas shopping, another $660 in dental work and $1569 for my wife’s Rider season tickets.  Even for us that was a lot of spending.

Results

Net Worth ~$969,170

This Month Investment Gains & Income/Spending Ratio = (-22050+2684)/5123 = -3.78 (Target 1.02 or higher)

Jan 2018 to Dec 2018 Invest Gain & Income/Spending Ratio = (-47285+18081)/35435 =-0.82 (Target 1.02 or higher)

Commentary:

Ugh, that was ugly.  Thank goodness 2018 is over.  Our total investment loss for the year is at 8.11% which is high but not high enough to trigger our backup plans and yes I’m starting to wonder if I wasn’t a bit crazy for leaving work in late 2017.

You might have noticed some big shifts in some of the account values but not all of that was from the markets.  I took out $7,000 from my RRSP from the bonds portion for living expense in 2019.  We also took out the cash that accumulated in both my TFSA and my wife’s TFSA accounts.

Oddly enough, while all of this made me nervous I still managed to enjoy my holidays and focus on spending time with family and friends.  Sometimes you just have to ignore the ugly stuff to remember what in life is important (hint it isn’t the money).  The reality is I still don’t have to run out and go back to full time right away.  We still have a lot of money invested and we aren’t going to go broke anytime soon.

The good news is 2019 should start to turn things around.  Why?  Well first off the markets as I write this have already improved from that dip at the end of 2018.  Also we expect a substantial increase to our Child Tax Benefit starting in July which should improve our non-investment cash flow for the year.  I’m also going to make an effort to make some more income this year from writing and side jobs (which I was planning to do even before the markets went to hell but it is just more important to do it now).

Any questions?

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Nov 2018 – Net Worth

Welcome to my net worth posts where I try to prove to myself and you that I wasn’t crazy for leaving work in the fall of 2017 to start my early retirement.   A few important notes:  we are mortgage free and our goal is have our income/investment gains exceed our spending by 102% on a 12 month rolling average (the extra 2% is a buffer for inflation).

Investments

Accounts

RRSP $64,000
LIRA $17,300
TFSA $94,840
Pension $171,220
Wife’s RRSP $91,390
Wife’s TFSA $85,380
Wife’s Taxable $42,800
High Interest Savings Account $29,290

Investment Net Worth $596,220 ($6100 increase over last month from investments)

Home Equity

Estimate $395,000

Income

To keep things simple I’m only going to track what income comes into our main ‘house’ chequing account.  I won’t be tracking my wife’s or my businesses income as those don’t really matter until the money moves over to the ‘house’ account.  Also I won’t track investment gains since that is covered above.

  • Wife’s Monthly Payment to House: $550
  • Child Tax: $340
  • Interest $28
  • Total Income: $918

Spending

Last Month $2942

This included $1024 for dental work (mostly cleanings) and we started our Christmas shopping ($610).  So other than those two item not a bad month.

Results

Net Worth ~$991,220

This Month Investment Gains & Income/Spending Ratio = (6100+918)/2942 = 2.39 (Target 1.02 or higher)

Dec 2017 to Nov 2018 Invest Gain & Income/Spending Ratio = (-27588+16507)/33428 =-0.33 (Target 1.02 or higher)

Commentary:

This month was slightly better after the disaster of Oct 2018 but I am still down overall for the last year with a negative ratio result which sort of sucks since I have to take out some cash right away for next year.

The other factor that kicks into play here is my ratio is based on a 12 month average so I just stripped out the results of Sept, Oct, Nov 2017 which were really good so that made the results look even worse.  If you put those back in the overall decrease in investments since I retired is only $3641.

I’m still not in needed to use a backup plan mode here so while it sucks it isn’t terminal to my retirement plan.

Any questions?

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Year End Financial Cleaning

Well with the Christmas over you might be focused on cleaning up the cardboard and packing up the tree before getting ready for the New Year’s fireworks. Yet this is also a good time of year to get some financial items in order before the New Year hits. The good news is many of these items only take a few minutes to take care of.

For retirees like myself you should consider pulling money from your RRSP and/or your TFSA for living expenses for next year. Why now? Well with the TFSA if you pull the money out now you regenerate the contribution room on January 1. Which may come in handy if you want to shift money around and maximize your TFSA to reduce your long term tax burden. After all, why keep money in a taxable account when you have contribution room in an TFSA?  I would rather pay a small capital gain now and reduce the long term tax liability.

As to the RRSP, the fun part of those funds is if you have no other income for the year you can pull money out of it up to your basic income tax deduction and pay zero tax (the exact number can vary by province but generally you are safe around the federal deduction limit of $11,809 for 2018). The key point here is you eventually get your money back.  You still have to pay the withholding “tax” when the money comes out but you get it back when you file your taxes next spring (it really isn’t a tax but rather an bulk estimate of income tax that is automatically deducted when you take the money out).

I already did both of those items. I pulled the cash sitting in our TFSA accounts out last month and then this month I pulled just under $7000 out of my RRSP.   Which honestly felt more scary than it was…why?  Because I pulled the money from the bond portion of my RRSP.  That way I can ignore the noise of the stock markets which seem to acting closer to a yo-yo than anything else lately.

Finally, you might also plan to sell some of your investments, which I know sounds nuts given my last statement but there are situations where that is a good idea.  For example, you might purposely sell off that dead end individual stock you own and that is worth a faction of its worth to create a tax loss which can be used to offset some capital gains from those investments that did turn out and you are getting out of.  I’m personally not in this situation but it can be useful at times.

Finally, you likely want to gather any copies of tax documents you might need to get a jump on your taxes.  So that might mean updating your accounting records for your small business or/and downloading digital copies of bills if you use your home for your business.  Often this can be done fairly quickly and make the tax season a bit easier.

So what do you for a year end financial clean up?

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