Net Worth – Dec 2011

Ugh, where has my year gone.  These last few months have just flown by on me.  Anyway here is my year end net worth update.


House $367,000
RRSP $27,100
LIRA $10,900
TFSA $15,300
Pension $40,500
Wife’s RRSP $27,900
Wife’s Investment Account $11,800
Wife’s TFSA $10,500
My Investment Account $6,000
High Interest Savings Account $2,100

Mortgage $42,900
HELOC $2,700

Net Worth $473,500 (+$14,500 or +3.2%) [+ 23.5% YTD ]
Investment Net Worth $149,400 (+$9,800 or +7.0%) [+17.7% YTD]
Mortgage is down by $40,600 or 104% of my goal for 2011.

The stock markets continued to be nervous over sovereign debt levels and have keep returns low for the second half of 2011, which would be a problem for most people’s net worth, but not mine.  So what the hell happened?  Simple, as you can see by my mortgage goal for the year I focused on debt reduction mainly which boosted my net worth for the year nicely regardless of the stock markets.  Of the $90,000 increase of my net worth just about half of that was from paying down my mortgage.

Overall I’m more than happy with 2011 results, which is good since my goal for 2012 is to finish paying off my mortgage which is slightly above what I managed to pull off in 2011.  As a stretch goal for 2012 I would also like to finish paying off my line of credit (HELOC) which I had previously used to put some money into investments earlier in the year when the market was down.

It’s interesting to note that after several years of concentrated effort my wife’s RRSP finally exceeds my RRSP.  We realized a while back that to split income in our early retirement years we would need to do this, so it’s nice to see that threshold reached.  In case you weren’t aware, income splitting only applies on pension income (not RRSP under 65), and since you often can’t take your pension early you need to have some spousal RRSPs to split income.

Happy New Year to you all!

Any questions?

Book Review: The Wealth Cure

Quick question: what happens when you splice a life threatening  medical condition with a frank discussion on money and your emotions?  The answer is the book called The Wealth Cure by Hill Harper (by the way, if the name is familiar, you likely watch more TV than I do – see here).

While not a great way to introduce this book, it does give you a bit of the theme of what the book covers.  Context after all if everything.  In this case, the author is diagnosis with thyroid cancer just as he was starting to write this book on personal finance.  So combining that with a cross country train trip and you have the blueprint of the book.  Yet while this might come across as confusing, the message of the book is very clear: money isn’t everything.

Money is rather a tool and one we often get messed up over because of our emotion context around it.  We fight over it, hope to get more of it and even wept over it when we lose it.  Yet we don’t do this with your actual hand tools , like your hammer,do you?  Of course not!  So Hill tries to come up with a medical analogy to cover this very same issue and you end up with sections called: The Diagnosis, Treatment Options, Sticking with a Treatment Plan,and Thrive and Survive.

While personally didn’t care much for the medical comparisons I did appreciate the amount of stories Hill uses to get his point across from people he knows or even meets during his train trip.  You need to understand that money won’t make you happy by itself.  It can buy things or experiences that do make you happy for a while, but it won’t work on a long term basis.  Wealth is really a concept that expands past money into other areas of your life and that is what you have to focus on.  You need to look at your health, your relationships and your money and balance those off to find a better life.

Perhaps my favorite quote from the book is:

When you decide to be happy, you take control of your life’s direction, as opposed to waiting for the right object to fall in your path or the right job opportunity to crop up.

In essence, he was saying you can let life happen or plan your life to happen.  For too often we let our lives happen and I have even been guilty of that at times.  So take control of what factors you can influence and stop complaining about your life and make it the best that you can.  It won’t be perfect, but you will likely be more wealthy than before and you might not even not have that much more money.

My only compliant about the book was it seemed to lack a cohesive path for the reader to follow.  It touched on lots of good points and Hill even quote some of the same research I used in my book, Free at 45, but fails to provide a path forward for the reader.

So overall the book covers some good points, but I won’t keep this one as a reference book myself.  Instead find a library copy to enjoy and take what you can from the book.

Sometimes, Ignorance is Bliss

This is a guest post from Sheryl (a.k.a Cdn Gwen) in Ontario, who is 40 years old with a grown daughter, and is trying to rebuild her retirement dream just 20 years too late for early retirement.

So in the past few months, I’ve worked on changing my thinking, finding motivation , learned not to talk about the idea of early retirement to most of the people I know, and generally changing my life for the better. I was paying attention to the things I could immediately gain control of, and educating myself about the next steps (investing).

I would really like to go back to my 35 year old self, slap myself upside the noggin, and tell myself to smarten up. Yes, my finances were an organized mess back then , we lived well above our means, I’m paying the price now, and I’m ok with that, not happy, but I know I have to clean up the mess I made.   I just found one very sore spot though.

In my divorce agreement, an amount of RRSP’s were transferred to me as equalization for the (small) equity we had in the marital home. Other than ensuring the mutual funds were in my name, and the correct amount at the time, I have ignored them since then (Nov 2009).

Big Mistake!

Although I understand the general picture when it comes to mutual funds and MER’s, I would not consider myself as knowledgeable in the details as I feel I should be, but I know enough that if a fund’s MER is 5.67% , that fund has to make a very good return for that to be worth while.

These are labor sponsored funds purchased through the ex’s employer.  We “bought in” to get the additional savings on our income tax at the time, without doing any homework on what we were buying (not that we knew what to look for at the time either).  These funds need to be kept for 8 years , otherwise I have to pay the income tax back that I “saved”.  Last year at tax time, I found I owed money, and my advisor suggested I “roll” the matured funds back into the fund to get the tax credit again.  Dumb move on my part.

So that brings me to now.  Knowing that these funds were purchased throughout the year, and that I should have a years worth of funds that I can allocate somewhere that hopefully has a return, I contacted my “advisor” to start making the change, only to find that the funds are frozen for redemption.

So, that puts me back to where I started, controlling the things I can, but being very wary of what else is out there.  I got burned, but I have learned my lesson.  I only hope that these funds don’t go down any more in value than what they already have.

Ok, I’m done ranting.  Thanks for listening and please don’t repeat my mistake.