Net Worth – Feb 2012

The following is a update on Tim’s plan to retire early.  The current metric to tracking this goal is my net worth.  This will be the last year for these posts, since once the mortgage is paid off it will cease to be useful.  At that point future updates will shift to investment net worth only in 2013.


House $368,000
RRSP $28,700
LIRA $11,500
TFSA $16,100
Pension $47,400
Wife’s RRSP $29,200
Wife’s Investment Account $12,400
Wife’s TFSA $11,300
My Investment Account $5,900
High Interest Savings Account $2,800

Total Assets $ 533,300

Mortgage $34,500
HELOC $1,700

Total Debt $36,200

Net Worth $497,100 (+$23,600 or +5.0%) [+ 5.0% YTD ]
Investment Net Worth $163,600 (+$14,200 or +9.5%) [+9.5% YTD]

Agh, so close to hitting that half a million net worth number! Oh well, that will have to wait until the next update I guess.   Regardless at hitting that level or not, I am still closing in on approximately the half way point to my goal of Free at 45 if you measure it by net worth.  I should end up with about $1.1 million net worth at the end of the plan.  So if things go well I should hit that milestone early next year.

The good news is the recent up tick in the stock markets can clearly be seen in my investment net worth for a bit of larger increase than normal (since that metric ignores the house and mortgage).  The other factor to this is how some of my benefits for my pension plan are paid out at work.  I end up with a lump some increase at the start of the year.

I have to admit I am having fun paying off the mortgage now.  As we are now on the home stretch of paying it off you can really see the interest cost dropping off.  Right now interest payments are just over $100/month, so the majority of our regular payments go straight to the principle amount.

Any questions?

27 thoughts on “Net Worth – Feb 2012”

  1. Assuming your house will be worth $400,000 when you get to age 45, you and your wife plan to live on $700,000 for the rest of your life. You must have extremely low expenses. Even at $2500 per month (increasing with inflation) you’d be at risk of draining your capital early.

  2. Congrats, that is awesome!! It must be exciting to see that total debt number coming close to zero. Soon you’ll only have assets.

    I saw your TV appearance and laughed out loud when you said your wife can get her cork floors after you pay off the mortgage. I bet she’s counting down the days… 🙂 How long until you get that mortgage paid off?

  3. @ Michael James,

    That $1.1 million is in today’s dollars, so your numbers are a little off from that. Expenses covered by that fund will be about $2000/month, which should be a stable draw down given the total amount. We both plan to do some work on the side after pulling the plug to fund some luxury items and trips.

    @ Mrs. MMM,

    Actually the floor project is a going to be a little bit more complex than paying off the mortgage by end of October, since we are doing several other kitchen related projects at the same time (paint walls, replace counter tops, new tiles, new sink). We can’t have renos going on when the daycare is running (legally impossible according to the regulations)so that will likely push the entire project until summer 2013.

    It won’t be bad, it gives my wife lots of time to find the perfect match between wall colour, floors, tiles and countertop. Then I also get to watch for sales on materials we need to keep the overall costs reasonable.

    Good questions,

  4. If $2000/month works for you then that’s great. With my wife and two sons all in post-secondary eduction, I dream of a month where I spend only $2000. Hopefully, my expenses will go way down in a few years.

  5. Ouch, three people in post secondary has to be hard on the expenses. I keep a seperate fund for our boys education that isn’t included in these updates to help with those future costs (currently about $28K), so I will have some cushion when we hit that phase (I’m planning on $40K for each kid in today’s dollars).

  6. Having the mortgage paid off is a financial boost & a great mental boost. You no longer have debt. That is HUGE.
    Very Impressive…

  7. So close to that mortgage being zero, I am actually excited for you. And that is awesome that you have 28K set away for your kids already.

    I think that investment net worth is a better measure of the freedom to retire, so that is great that you are getting closer to that being the only number that matters.

  8. So you are almost at $500000 net worth right now and you hope to hit 1.1 million by early next year ? A $600000 increase in 12 months ? I am not sure if I am misinterpreting anything here but do you earn a million dollars per year or do you expect house prices to triple in the next year or the TSX to hit 50000 in the next 12 months ? Please clarify for me and if I have misinterpreted that paragragh please let me know.

  9. @diharv,

    You really misread, I think I should hit the half way point to $1.1 million by next year or $550,000. So a $50,000 increase in one year overall, which should be completely doable by paying off the rest of the mortgage and then saving/investing to get the rest of it.


  10. So if your plan is to achieve a net worth of $550,000 by next year, I’m wondering how much time you have to achieve your final goal. I read in the Star (Moneyville) that you are planning to retire earlier than expected–42 instead of 45. But I’m curious as to how much time you have calculated that you will need to raise your investment accounts by $550,000, for your final goal of $1.1 million. Also how much in annual gains are you assuming for your calculations? And what’s the plan should there be a sudden loss of in the value of your investments, like was seen in 2008?

    Sorry for all the questions, it just seems to me like $550,000 (after you reach the halfway mark) is such a long stretch. But that’s also just a perspective thing as my net worth is far less.

  11. Sounds great Tim. Looks like you are well on your way. The thing about your plan, is that it is exactly that, “your plan”.

    I get a kick out of the negative comments and lack of understanding of others. People get a little offended when they can’t figure out how someone can manage to do things, that don’t make sense in their mind. We live on about $2400.00 per month, although we could live on less, and I know people who live on as little as $400.00 per month believe it or not. They are happy, and have developed a lifestyle that fits their budget. I couldn’t do what they do, because I have set up restrictions for myself, levels of comfort and perceived responsibility that I or my wife are not willing to forgo. Each of us has to decide at what level of money assisted living we need to be at, in order to be happy. The thing with most ER people, is that we have decided that we need less than what “our station in life” says we should have in order to be happy, we’ve found other, less expensive things to fill that void, like family, freedom, or for some just plain difference.

    My brother, a successful executive had a difficult time during the downturn of 2008 because his income dropped below $300,000.00 per year. But on the other hand, a roommate of mine several years ago had lived on $0 dollars per year for two years, and loved it. He was in Jamaica, slept where he could, on the beach or wherever, ate local fruits or what others offered, went to parties and drank other peoples booze. He didn’t find it a very fulfilling life, but it suited him for at least two years.

    So to reiterate, any “plan”, no matter how good it is, will only work for the person that makes it. For the rest of us, it can only provide us with some ideas in developing our own “plan”. Those who cannot manage to make their own “plan”, will forfeit their lives to masses. And for most, that is the best “plan” they will be able to come up with. That doesn’t make it wrong, but avoiding that outcome is the goal of pre, and post ER people.

    So, it is of vital importance that each of us with our goal of “Early Retirement”, not judge those who have a plan, but take from their example, and try and look at ourselves and find out what material things and responsibilities we are willing to give up in order to make our dream of ER possible. It may be that it is not possible for some, but those are the choices that we each must make regardless of our reasons.

  12. @Rob: Nice speech. However, testing the feasibility of a plan is something that people should seek out rather than avoid as just “negative comments”. We should not judge people’s decisions to live without television, cars, or other expensive goods, but we should judge whether a plan can work. Some people have unrealistic expectations about future investment returns. Others forget to account for inflation. Still others may not get full buy in from their spouses about living very frugally. Ignoring such crticisms is potentially disastrous. I have no reason to believe that there is a problem with Tim’s plan, but you won’t make me feel bad about testing him. I’m tempted to retire right now myself, but when I take a realistic view of my finances and likely consumption, there is too high of a risk that I’ll end up looking for work at age 70 (that would probably pay one-thrid of what I make now). So, I’ll keep working a while longer.

  13. Thanks Micheal. Unfortunately, I have to disagree with you, I’ll explain, but I don’t want to turn this into a debate, because in many ways, and for many people, you are correct. However, No one really has a fool proof plan, but if they believe that what they have come up with will work for them, then its perfect and doesn’t require testing. If during its execution, the plan begins to fail, then they must do some juggling of the plan to make it work again.

    The thing about “testing”, is that eventually it gets to the point where you just want to punch everyone who tests you, right in the face. I have been tested by almost everyone I have talked to about my retirement, in the last 5 years, before and after. And I can tell you that very few, if any of these people had my best interest at heart. Most were just trying to debunk my plan because it didn’t fit into what they believed to be feasible.

    And to be honest, maybe my plan won’t work, who knows. I did seek out all the information I could, but I found that almost all information that was offered to me without my asking, was tainted by others perception of what was right. I had a guy tell me once that I was an idiot for putting my money anywhere but in GICs. Which, by most standards would be a big mistake. If I had listen to this person, I would still be working. He is still working, but I’m the idiot.

    There is a philosophy that says, that a man will try to convince you that what he has done is the right thing for you to do, only because if you don’t do it, then he may have to face the fact that he may have been wrong. I find it all the time in the yachting world, where most people will try to convince you that you can’t do something unless you have something. Example: you can’t sail across an ocean unless you have a life raft. Which is silly, because of course you can, you may not survive if your boat sinks, but chances are you will end up on the other side of the ocean. But in their mind, it is so foolish a thing to do, that they would not even consider it, so to them, you need the life raft to do it.

    The moral of the story is that we can’t test someone else’s plan, because we can never understand their rationalization of the plan, all we end up doing is offending them. Most of us are therefore, better left to our own choices. If someone comes to us for guidance, that is a very different thing.

    Besides that, my guess is that Tim has been tested more than he cares to remember.

  14. @Rob: That’s a long comment for someone who doesn’t want to debate. To believe that your plan is “perfect and doesn’t require testing” just because you “believe that what they have come up with will work for” you is nonsense. If your plans have received unfair or incorrect criticism, then ignore these critics. However, I prefer to keep listening to those who have different ideas from mine. Occasionally I learn something new and useful.

  15. Tim is certainly swimming against the current of thought about retirement these days. The talking heads are saying Freedow 55(never mind 45) is now a pipe dream, an unworkable spawn of London Life sales marketing. But looking at Tim’s assets, he should not count the house unless his plan is to sell it and live in a tent in a park in a warm clime. So if you don’t count the house, he has dick all except a future saving winfall after the mortgage is paid off. I see Tim working full time until 55 at least. Hope this blog keeps up for a while, I am interested in how this will turn out. BTW, I just came across Tim recently so my comments may have been said before by others in earlier posts as I only read the most recent posts.

  16. Regarding Rob’s Comment “We live on about $2400.00 per month, although we could live on less,…”

    Ok, I retired at 56(just short of the Freedom 55 goal) for 7 years now. I own my house outright, no mortgage, no car payments at this time yet, no debt.
    Just fixed expenses alone(power, water,gas,phone, cable, internet,property tax,property&car insurance, personal insurance, medical insurance amounts to $1300/month. So there is still food, recreation, gifts clothes, etc other needs and wants to take care off. I would be hard pressed to make it on $2400/month especially when the time comes to get a replacement car. I get a fixed income of $3400/month after taxes. Possible runaway inflation is a contant worry for me, an example is that my property taxes increased by 38% since I retired. We all know what’s happening to gas, food and power. So again, I think Freedom 45 is a pipe dream except for the fortunate few who lucked out in some way. Does not apply to the vast majority of the rank and file middle class.

  17. You guys keep sucking me in, and I am foolish enough to keep falling for it. Silly me….

    Our Budget (Monthly Amounts)

    House Taxes $187.00
    Hydro $140.00
    Bell $146.00
    Insurance $100.00
    Food $650.00
    Transportation $416.00
    Entertainment $195.00
    Clothing and Gifts $169.00
    Miscellaneous $104.00

    Total $2107.00

    The other $300.00 is for all the things that don’t fall under those labels, kind of like a slush fund.

    I took these numbers from our actual budget, and we do live off of this. My pension brings me $1919.00 per month. We have $126K invested that gives us enough dividends to cover the shortfall, and allow us some capital expenditures as required. Like a car, etc…

    If you get a chance to go through Gail Vaz Oxalade’s Til’ Debt Do Us Part website, you’ll see what this budget amounts cover. That’s where we stole the idea from.

    Our income tax return of $1100.00 covers our Yacht Club fees, and there is a little coming in here or there, and a little going out here and there that is not captured in this simple extraction, but I guarantee you that we keep an eye on it all, we just don’t plan for everything.

    Okay, lets talk about the obvious. There is no amount for heat. We heat with wood, most of which we collect ourselves, for very little.

    Our cost associated with where we live is a lot lower than some, but it could be even lower if we moved to a different area. But this is a “CHOICE” we make. Each of us has to make that choice for themselves, and pay the consequences or reap the rewards of that decision.

    If we were content to sit here for the rest of our lives, then we could make this work. As my pension is not indexed until I am 60, at 42 I still have to compensate for 18 years of inflation, which would put a pretty good dent in our investments, but that is what they are there for, to use in retirement.

    However, we are not content to just sit here for the next 30 to 40 years. We want to travel, and the way we can afford to do that is to do it on a sailboat. Our intention is to sell our house, and put it into investments as well. When we return from travelling, we’ll build another house in the lot across the street which we already own. This house cost us $160k to build, and is worth about $240, conservatively. That’s $80k of play money. Our intention is to enjoy the next 20 or so years before we settle down and live out the remainder of our years spend time tending the garden, visiting with family, reading, drinking wine, and watching the world go by.

    And this is the important stuff. There is no way we can compensate for all the changes that will happen over the next 40 years, I am just not good enough to see into the future. However, we have decided to remain as flexible as possible. If the cost of a loaf of bread goes to $10, we’ll eat less bread. We are not ashamed to go fishing in order to have meat on the table, if it really got down to that. We are willing to live without a car, if we really had to. We are willing to live in an apartment or in a camper, or a boat, in order to keep our freedom. And, if needs be, we are willing to go back to work in order to keep from starving.

    We may not have a whole lot, but we are extremely flexible, and that makes it all possible.

    Tim may not have the money that he needs to retire yet, but his head is in the right place, and that makes all the difference.

    At age 30 our net worth was $0. No debt, but no assets either. At age 40 we retired with a meager pension, and a net worth of $425,000.00. And that was with a yearly household income on average of about $70k. A little luck perhaps, but mostly because we had our heads in the right place. Early Retirement is not a goal for pessimists.

  18. @Rob: Can I ask if you have benefits with your pension to cover eyeglasses and other medical costs that are likely to come up as you age, or am I at risk of getting punched in the face?

  19. LOL…. Questions are good, questioning is different. I am sorry if I came on a little strong, sometimes my words get away from me. I wish I was better at putting my thoughts down in writing, instead I just type too much.

    I do get benefits. I pay for them, they come off of my pension before it gets to me. Medical with drugs, eyeglasses, dental, and a special death benefit as well. It is a great perk for a cost of about $75.00 per month. I can’t imagine what a private policy would cost. We don’t come anywhere near using the amount we pay every year, but we know that we will one day.

  20. I’m contemplating a HELOC as well in the fall upon renewal. I’ll search and see what you’ve got already written about it.

    Can you write something about the pluses and minuses of the HELOC if you haven’t already? I only know two people IRL that have had them to my knowledge, both of them bad with money and both of them never paid them down AT ALL. A regular mortgage would have been way better for them.

    And yeah, according to my data, about $2000 is pretty solid for 2 people with a paid off house and cheap hobbies. Just work a bit to cover any excessive extras and you’re fine. My “problem” is more that the 40’s is a really good decade for earning a ton of money (YMMV and all that). That’s really hard to walk away from. Really hard. 🙁

  21. Holy $%@#!! The comments got long on this post. I suppose I should thank Rob and Michael for that. *grin*


    I have about 8 years to hit the final goal. That assumes a real return of 5%, but I have run alternative scenarios which come out with very similar numbers even if I drop down to a 3% average return. The savings rate in general grossly out paces the market returns. If I ran into a 2008 type situation I would likely keep working at least part time for a year or two to let things work out. Let’s face it being financially independent at any point in my 40s is a good thing.

    @Rob and Michael,

    You are both talking about similar things. Constructive feedback is useful while attacks are pointless. You have to tell the difference between the two and use them well. I had some excellent points from readers over the years that have helped out my plan a lot while others tell me things that I just forget about instantly.


    Swimming against the tide is a good way to describe it. I don’t count the house in the plan other than a longer term desire to downsize and roll that extra cash back into building a low energy consumption house. Which should reduce some inflation effects which is a nice hedge, but I’m not really counting on it.

    In general you are correct I have put a huge amount of my savings into paying off the house. That was a choice I made a few years back. I wanted the flexibility of no mortgage in order to allow semi-retirement options to occur earlier (if I choose to go that way). So yes, my net worth is a house heavy right now, but that will allow a huge free cash flow to shift into saving later this year. We will all have to stick around for a few years and see if the plan works out or not.


    I can’t recall if I have discussed HELOC either, I’ll have to write a post for you.

    I do understand that walking away from you peak earning years is REALLY HARD! Trust me I have run numbers if I just work a two or three extra years and the results are mind blowing. Yet it always comes back to: do you enjoy the work, do you have enough money and what else could you be doing with your time? There isn’t a right answer, but rather what answer works for you.


  22. My wife and I are currently in the “savings mode” that Tim probably envisions when his mortgage is done. Our montly employment income is about 8k… and we are living (quite well actually) on $2500 (we could cut this down, but we like eating out and buying good wine). Add to this about $1000 montly from dividends. So, every month we are addng about $6500 to our “ER” fund. It is at the point now where our savings are starting to compound at an ever increasing rate, along with the re-invested dividends – feels like a snowball starting to roll down a mountainside – its a great feeling. Our net worth is now growing in excess of 100k every year. Financial independence is at hand…

    Have read yoru book 3 times now Tim… can’t wait for your next project.

  23. Ahhh, I know what I did wrong. I got a divorce, lost my fully paid house and coughed up child support for 15 years while in the process of buying and paying off another house plus spending an additional $70,000 in renos to keep the new house spouse happy. And to add insult to injury, lost $25,000 in a very bad investment back in 1998 and got stiffed out of $10,000 I loaned to a relative who turned into a crack whore. No wonder I could only retire at 56.

  24. Tim,
    I’m new to your blog, can you clarify the following calculation:
    “Net Worth $497,100 (+$23,600 or +5.0%) [+ 5.0% YTD ]
    Investment Net Worth $163,600 (+$14,200 or +9.5%) [+9.5% YTD]”
    Is this how much you expect your investments to grow this year? 5% of $497,100 is $24,855.
    Thanks and great blog.

  25. Uh, yeah, a divorce would pretty much torpedo my plans… everything hinges on a few more years of dual incomes (+ no kids). 😉

  26. @Mich,

    The +5% number in ( ) refers to the increase of the net worth over the previous report including investment growth and contributions. The number is created by dividing by the previous net worth number thus the 5% of the current net worth isn’t the correct value. I hope that helps, I know it gets a little confusing.


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