Net Worth – Feb 2011

While I wasn’t expecting anything interesting for this update I did hit a minor milestone.  See below.


House $340,000
RRSP $27,700
LIRA $11,500
TFSA $10,600
Pension $33,500
Wife’s RRSP $20,200
Wife’s Investment Account $12,700
Wife’s TFSA $8,600
My Investment Account $6,500
High Interest Savings Account $6,900

Mortgage $76,600

Net Worth $401,600 (+$18,200 or +4.7%) [+ 4.7% YTD ]
Investment Net Worth $138,200 (+$11,300 or +8.9%) [+ 8.9% YTD]
Mortgage is down by $6,900 or 17.7% of my goal for 2011.

If I haven’t mentioned this recently let me repeat something:  saving for early retirement is a really bloody boring exercise a lot of the time.  Sorry to disappoint you if you have other ideas on the situation, but the reality is it is mostly about keeping up a savings routine.  Yet today I hit one of little milestones that makes the journey a little more interesting as we finally broke the $400,000 net worth mark.

So that made me curious on when we past the $300,000 mark?  Well according to my records that occurred in Dec 2009 ($304, 500), so from then to now was a mere 14 months.  Pardon?!?!  Does that work out to almost $7000/month?  How is that even possible?

The answer is simple: the minor miracle of compound interest and a savings plan.  That $100,000 gain is broken down into the following:

  • Paying off mortgage $44,600
  • Investment net worth up $39,500
  • House value up $13,000

The mortgage is the classic case in point.  As I continue to put on additional lump sump payments that drives my interest costs down and allows more of my regular payments to go to principle.  Although each payment doesn’t change the situation that much, the compounding effect starts to build up until now over 80% of my regular payment is now going to the principle.  So even if I stopped making lump some payments the mortgage would still be paid off in under five years.  It’s now snowballing all by itself and I’m just giving it an extra push down the hill.

Any questions?

19 thoughts on “Net Worth – Feb 2011”

  1. I’m just beginning to read financial blogs. When I saw the title of yours ‘Free at 45’, I said ‘WOW’ how is it possible, can really everyone do this? I found that what most blog authors fail to say is that, to reach these kind of goals, you have to earn a lot of money, and I mean A LOT. I saw a couple of blog authors posting net worth report. Net Worth Reports are meaningless without the corresponding Cash Flow report. But by reading your post, I realized something. Average savings 7000$/Month? Just your savings are more than twice my gross salary. So I guess ‘Free at 45’ is not for everyone. At least not for me. Would be interested in seeing your cash flow report.

  2. Stephane,

    Actually that $7000/month number was savings and investment growth. Which trust me was even mind blowing to me when I did the math for that time period. I know I’m saving a lot, but that was insane.

    So what are you looking for in a cash flow report? I don’t think I’ve ever done one for the blog, so I would be interested in what you would like to know.


  3. Tim, what is your break down of savings v. mortgage payments. If you were able to pay down $6,900 of your mortgage in two months your payments must have been somewhere in the neighborhood of $3,705. Are you still able to put a chunk into savings each month with such a onerous mortgage payment?

    Also, what program do you use to calculate your networth?
    I see some people use NetworthIQ but providing my financials to an internet based company doesn’t sit well with me.

  4. Great job. The NW really starts to take off once you get those bigger amounts.

    How old are you? I am turning 29 this month. On track to get where you are around 34-35.


  5. Cash flow tells us where you money come from and how you spent it. You’re saying 100 000$ (increase in net worth) was insane. May be, May be not. I’ll have to take you word for it. If your salary income was 200000$, and you were able to save 100 000$, it represents 50% of it, which is quite an acomplishement. If your income was 1 000 000$, It’s barely 10%. Or may be you inherited some money over the last year, which explains why you were able to save this much. We as reader don’t know.

    When I read you post, I made the following calculations. 300 000$ net worth at the end of 2009. Let’s say, he got 7% return. It’s roughly 21 000$. The rest 100 000% minus 21 000% is savings. This guy have to eat and pay for gas etc… Let’s say he has a budget of 40 000$ added to savings of 79 000%. That means he has spent 120 000$. To be able to spent 120 000$, at a tax rate of 30%, your income have to be around 170 000$.

    So this guy has an income of 170 000$ and want to retire by the time he is 45. Good for him, Does it apply to me (35 000$/year), probably not.

    You might want to put your cash flow report, it would help us understand how you did it. But it’s mostly personal data. So you might not want to.

  6. Stephane makes a good point about cash flow. While he seems particularly curious about income, outflow is just as important. Someone who earns $35,000 a year can certainly retire at 45 if he can live on $15,000 a year for the rest of his life. In my case, the ability to retire early was a mix of investment growth post-crash, mortgage pre-payments and minimizing taxes owing (RRSPs and flow-through shares).

  7. Stephane – yes, it’s all about the percentage of your income that you can save. If one can save 66% of their take-home pay, then they’re saving 2 years of expenses for every year they work. If one is saving only 33% of their take-home pay, then they’re saving only 6 months of expenses for every year they work.

    There are finance bloggers out there who have cut their annual living expenses to $6,000-$12,000 per adult, so it’s entirely possible to achieve financial freedom on an income of $35,000/yr.

  8. Impressive work breaking the $400,000 mark!

    Good points above about the importance of percentage of income and savings. I’m surprised how many people haven’t really thought about it this way. When I started saving, I calculated how fast I could achieve financial independence if I were able to save 100% of my take-home salary. That motivated me to try and save as much as possible!

  9. I am impressed at how fast you got from $300k to $400k. It took me just under 2 years to make that jump back in 1999-2001. Back then, the stock market was going down in 2000-2001 so it was the gains due to my wages which were at their peak while I still worked full-time along with my company stock which was just beginning to take off. I had no mortgage because it had been paid off by 1998. I do not include my real estate because my apartment was not worth a whole lot compared to my investments.

    Most subsequent increases of $10k took less time, though, mainly fueled by the company stock in my savings/retirement plan. But then again, as a percentage of NW they were lower, not that I am complaining, of course!

  10. Wow, lots of questions this month. Thanks everyone.

    I do understand Stephane’s point without the cash flow the net worth isn’t as meaningful. Context matters when it comes to money as she rightfully points out. At the same point I’ve hinted at most of our numbers but I have yet to put them out in public to that degree. Why? As Stephane’s rightfully points out it is private data that I may not want to share. Also I’ve noticed people tend to overly fixate on income so if I put that out there I am concerned about people not keeping in mind there are two small businesses in my house so the reality is my income keeps changing. Another concern I have with posting a detailed cash flow is while it might look neat summed up to a yearly basis the month to month is a bit of mess.

    For example, I’m paid for my school board work in sync with the school calendar so my income drops off for July and Aug and also 1/3 of that income isn’t taxable. Then also how my benefits work during my day job – I end up with a pension boost in late Dec and early Jan each year. I don’t want to have to explain every little detail like that.

    So as context I will provide some numbers that I’ve already stated. Our core spending is about $25,000/year (not including the mortgage), but the may drift up to $30,000/year depending on what we do for extra spending on vacation or buying something unusual like a new appliance. Our regular mortgage payment is a little over $1450/month.

    Our income like I mentioned is a little all over the map depending on several things. Yet the core income right now is about $65,000 for my day job and the school board pays me $23,400(this is a public number).

    These numbers will likely force just about everyone to the same conclusion: I made a killing on my investments in the last year, which is true. Hence even my shock at the $7000/month number.


  11. Ok, now to other questions.

    @ Ross – That $6900 in two months would be the majority of my savings capacity. I also on average put an additional almost $1100 into pension and RRSP accounts. Then there is about an extra $500 or so that can go into either savings or mortgage (more often than not mortgage, but not for this last time period). As for tracking I actually use a Google docs spreadsheet that I’ve built, which is where those graphs come from.

    @Ron – I’m turning 33 this year.

    @Melissa – That is a great idea to show you have fast you could do it if you saved every dime.

    @Chad – RRSP is mostly index funds (Cdn, US, International and bond) while TFSA’s are individual stock picks (EIT.UN, REI.UN, AQN). I don’t have an opinion on YLO as I haven’t looked at the stock.

    @Dave – House worth is based on my own educated guess as a look at similar homes in the area on MLS & Comfree and adjusting for obvious factors of size and finished basements or not.


  12. Thks for the extra info

    Just to compare

    37000$ Income
    6000 $ Tax
    7000 $ other deductions from paycheck
    6000 $ mortgage (2500 $ Principal)
    16000 $ spendings (live alone, no wife, no kids)
    2000 $ Savings
    500 $ investment income

    Increase of net worth 5000 $ last year

    We probably have similar lifestyle, but you’ve got 2-3 times the income, and that explains why you have such
    a net worth at a young age, and are able to save year after year.

    you probably work more than I do, and had better opportunities which you were able to make the most of.

  13. Beefoot,

    I’m actually running a little ahead of 45 right now, but not by much (~10K or so).


  14. Why no RESP? You have kids, don’t you? I have 2 young kids and I can’t say no to free money from the government!

  15. LMC,

    The net worth statement is for my retirement, thus I don’t include the RESP balance which is just for the kids. Current balance on that is an extra $28K or so.


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