Net Worth – Dec 2009

I’m really having issues with it being the end of the year already.  It’s past so fast!  It’s certainly been an interesting one so far, so let’s check on my final net worth for 2009.


House $327,000
RRSP $23,400
LIRA $10,300
TFSA $7,700
Pension $15,100
Wife’s RRSP $12,100
Wife’s Investment Account $12,300
Wife’s TFSA $6,500
My Investment Account $5,800
High Interest Savings Account $5,500

Mortgage $121,200

Therefore my net worth now stands at $304,500 for the end of Dec 2009. That is an increase of $23,100 or 8.2% from my last update.  Of that my investment net worth was $98,700 which was an increase of $11,300 or 13%.

On a year over year basis net worth is up 38.7% (or $84,900) , while investment net worth is up 101% (or $49,600) for 2009.  Umm…..(long pause)….well that went better than I thought possible!

Now obviously this net worth looks partly so good since last year at this time we were all collectively just had our investments crushed by the market drop in late 2008.  The other factoring helping it along this year was the fact I focused on my increasing my investments this year and it really paid off.  My investing net worth is now just short of the $100,000 mark and double what it was at this time last year.  On an overall basis that investment increase is 58% of my total net worth increase this year, while paying off the mortgage was another 19%.

Which brings me to my little New Year present to myself.  A quirk of how my benefits are applied to my pension at work means I’ll be getting a lump sum payment of $2300 on Jan 1, 2010 which I have NOT included in these numbers.  So as of tomorrow I’ll have broken the $100,000 mark.  Now that’s a good way to start a New Year.

So as impressive as this year was next year I’m shifting my focus to paying down the mortgage so I know next year I won’t have the same jump in my investment net worth.  Any questions?

(Graphs will be posted later as I’m having issues with my spreadsheet this morning)

Housing Bubbles and You

I’ve previously discussed the concept of a potential housing bubble in Canada, but apparently that speculation is also going on in a few other places such as well such as China and some fears about the US re-inflating their housing bubble again.

Regardless of if these are real bubble or not since 2008 we have collected learned that a housing bubble can send debt shock waves around the world.  Yet what does it all mean for the average person?  Well here’s my list of some common hazards to a housing bubble.

  1. Buying a House at the Peak.  This is likely the worst case event to have happen.  You get sucked into a buying a house near the peak of the market and then if the market falls you end up owning a house which has a bigger mortgage than what it is worth.  At this point that extra debt you took on at the peak can’t be gotten rid of by selling you have to eat the extra interest and principle costs.  The good news is if you don’t have to move soon you can spread out the pain over a number of years.  The bad news is you still paid too much for your house.
  2. Spread Things Around.  Yes just about every world market got nailed when the US housing bubble burst, but some specific markets in the US did a lot worse for housing prices.  So the rule of diversification still applies, you don’t want all you money in a single country or even city.  Spread things around a bit especially in your real estate investments as you likely have too much money as is in your local real estate market compared to the rest of your assets.
  3. It’s Better to be a Lender than a Borrower.  Owing debt sucks  since you are at the mercy of others for interest rates and getting credit.  Especially so when the credit markets start to cease up.  So keep your own borrowing to a modest level and keep a decent credit history they can come in handy when things get tough.  Also some fixed income investments is a good idea for just about everyone since bonds actually did well overall in 2008/2009 and so provided a nice hedge.  Just don’t forget point #2 above still applies to bonds as well.
  4. Panic.  The top risk to you in a housing bubble collapse is very simply just one thing: you.  So regardless of how bad things are looking remember to NOT PANIC.  The trick to avoiding panic is having a plan and sticking to it or even selectively ignoring the news for a few weeks.

So that’s the obvious hazards I see in housing bubbles.  As you might have noticed there isn’t a lot of difference to them to most other risks to your financial health.  What else would you add to that list?

Major Expenses in 2009

With Tim’s much anticipated Net Worth update coming, I thought it might be interesting to look at my financial year in review.  From a net worth perspective, it has gone up, but only slightly over the past year (I don’t have exact numbers, this is something that I have on my list as a New Years weekend project), but over the past year, there were two significant financial expenses that I incurred, the purchase of a house and a wedding/honeymoon.

I got married in March of 2009, the wedding and honeymoon was budgeted and saved for and didn’t really make much of a difference to our day-to-day budget, but for someone like myself who watches their spending, dropping approximately $8,000 on a wedding and another $2,500 on a honeymoon was tough to do.  If I had any advice for people looking at cost savings in their wedding it would be the following:

Limit your guest list: Guests can be viewed as a variable cost to the whole ceremony.  There is a lot of tradition around who to invite to weddings (I’m sure many people have been to weddings with 300-500 guests – how many of these people do the bride and groom actually know?) but by inviting people you don’t talk to, or in some cases don’t know but your families think you should invite, savings could be in the hundreds or thousands of dollars when you factor in food, drink and other minor expenses.

Don’t have an open bar: We had a toonie bar and it worked out well.  This may sound cheap, but I dislike open bars due to the waste that happens when people set drinks down, forget where that happened and just go get another – the $2 per drink  isn’t prohibitive to anyone’s fun and at least allows for a cursory look around.

Have your wedding someplace cheap: We got lucky because my spouse’s family all lives in a small town in an economically depressed part of the province.  Our costs were all approximately 20% lower then a comparable hotel in the city that we live in, and the place was just as nice or nicer then anything we saw in larger cities.  Might be difficult to do, but moving the venue could reduce costs as well.

Relax and have fun: Even if everything doesn’t go the way you think it should, in the end, in all probability the end result should be the same – you should be married and someone will do something ridiculous that everyone will talk about for a while (hopefully not you).

As for the house purchase, the only thing that I would really advise is going to a mortgage broker over a bank – in my experience the mortgage broker was much more flexible with rates then the bank.  Even if you decide you like your bank, you should at least shop around and engage in negotiations – we were able to reduce our fixed rate from the initial offer from a bank of 4.25% to 3.59% with a few calls for a 5-year fixed rate mortgage – probably about half an hour of time saved hundreds of dollars over the term of the contract.

Those were my major expenses incurred for the year – the wedding being (hopefully) a once-in-a-lifetime occurrence and the house expense happening probably only 2 or 3 times.

How about you?  Any large, one-time expenses in 2009?  Any you wish you could have back?

I hope everyone had a great Christmas – Happy New Year to everyone!