Net Worth – Aug 2011

Here is my bi-monthly update on my net worth, where I try to show a little hard data on the journey to early retirement.  Like all journey’s even mine has a few bumps in the road.


House $349,000
RRSP $26,100
LIRA $10,600
TFSA $13,600
Pension $35,200
Wife’s RRSP $18,500
Wife’s Investment Account $12,600
Wife’s TFSA $10,700
My Investment Account $6,100
High Interest Savings Account $800

Mortgage $54,500
HELOC $4,900

Net Worth $423,800 (-$800 or -0.2%) [+ 10.5% YTD ]
Investment Net Worth $129,300 (-$5200 or -3.9%) [+ 1.9% YTD]
Mortgage is down by $29,000 or 74% of my goal for 2011.

Talk about kicking a guy when he is done. Ouch, these stock market drops have really hit my investment net worth for the last four months.  So much so that my net worth actually drop even with all my payments to reduce my mortgage principle.

You might have noticed I have actually used my line of credit, I borrowed a some cash to pick up a few investments during the recent downturn.  Hopefully this will pay off in 2012.  In the mean time I’m at least on track to meet my mortgage payoff goal by the end of the year.  This of course leads into my big plan for 2012: make my last mortgage payment on Dec 15, 2012 and then be complete debt free!

So while the road is long, there are some bright spots on the horizon and I’m hopeful it isn’t a train that is going to run me over. *grin*

Any questions?

Spending to Save

This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.

I try to limit my consumerism significantly in order to attain a level of savings that will eventually be high enough that I no longer have to work.  I stop myself (usually) from making wasteful purchases, and as such have begun (compared to five years ago) been able to somewhat reduce the amount of crap that I have lying around my house.  There are a couple of purchases that I am pondering that may actually save me money down the road.

The first item I am looking at is fairly cheap, less than $100, that could possibly save me 25% in fuel costs per year for my car.  I’d like to think that I am an efficient driver, but if I could save some of the approximately $2,000 per year in fuel costs I take on, I would be a happy person.  I read about the Ultragauge in an article written by Mr. Money Moustache and have been pondering this purchase for the last month or so.  On top of helping me, my wife just recently started driving our car by herself and this tool could possibly teach her to drive much more efficiently.

The second purchase I am looking into is a tankless water heater.  Currently, I am renting a hot water heater – it was here when my wife and I moved in and we just haven’t really thought about it since then.  This purchase will cost between about $1,500 and $2,000.  It costs me about $35 per month for the hot water heater rental, so it would be about 4 years before I would have repaid the capital cost of the heater.  I’m hoping that due to some efficiency gains had by not constantly heating a huge tank of water, that it would work out to around 3.5 years.  Looking at cashflow, it’s one less payment I would have to make every month as well, and I am always looking to rid myself of bills.

One purchase that I made when I had just moved into my house, and has paid significant dividends is a programmable thermostat.  This cost around $80 and easily saved that much money over the first 6 months between heating and cooling costs.  In the winter when my wife and I are at work, the house is kept at a somewhat frigid 10 degrees Celsius.  We make sure that it’s warm enough for when we get home, and then shut off the heat about an hour before we go to bed – on a normal weekday, the heat comes on for about an hour in the morning and 4 hours in the evening.

Those are just a few examples of many I’m sure there are for products that can be purchased that would save money.

What have you spent money on to save in the long-run?

Spending Cash

This is a guest post by Robert, who lives in Calgary and works as a financial adviserretired at 34. He is married, has three kids.  Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.

How much do you spend month to month? If you’re like most people, you probably can’t answer that question immediately. Most people have a pretty good idea of how much money comes into their bank account monthly. And the best guess that I’ve most often heard for how much they spend each month is: “All of it.” Given that most people don’t have money left over at the end of the month, that’s probably true. But it doesn’t help people who want to start saving and who wonder how much they can afford to set aside.

I think that a big part of the problem is credit cards. Fifty or more years ago, credit cards were very rare. Some people used charge cards, for convenience, but credit was extended by banks based on a relationship with the bank manager. These days, everyone uses credit cards (often multiple) for the convenience, for the rewards and, in some cases, for the credit. Without getting into the system-wide costs of everyone using cards for transactions, there are negative impacts on individual spending decisions.

According to psychological research, spending cash incurs a certain pain. It’s the feeling of giving something up, the same feeling that comes from losing money, since your wallet now has less. Credit cards have been shown to remove that psychological pain, since we give up nothing. We hand over our card, it’s swiped and returned to us. Using cash instead of a credit card would cause most people to be more reluctant to spend.

Credit cards don’t display a balance. When we spend money using a credit card, we don’t immediately see how it affects our bank account. We can’t get a sense of how quickly we are moving toward spending the money that’s available in our account. In fact, with a credit card (and good credit), there’s no indication when we have spent all the money in our account and more. With most cards, the only indication that a person must stop spending is when the maximum amount of credit has been reached. By that point, the consumer is already carrying a balance (likely) and spending additional amounts on (high) interest charges.

Using a cash budgeting system, on the other hand, gives immediate feedback on the rate of spending and on the amount still available. Suppose, for example, that after my regular bills, I give myself $250 per week for groceries, gas, entertainment and incidentals. As I spend money, my wallet gets thinner. If I take out $50, I can immediately see that I have $200 left, and I get a sense that I’ve used one fifth and that at this rate, I will exhaust my weekly amount after four more similar purchases.

Using cash instead of cards for almost all purchases would give most people increased control of their spending. In many parts of the world, including Taiwan where I lived for two years, credit card acceptance is still not widespread. I found that using cash for all of our spending helped us to develop good spending habits. We could withdraw the amount of money we expected to spend, immediately see how spending choices affected the amount left and realize when we had spent all the money we had allocated for the week or month.

Have you experienced benefits from using cash? Do you have another way to stay aware of spending and your bank balance?