Net Worth – Aug 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 $377,000
RRSP $29,200
LIRA $11,400
TFSA $16,400
Pension $51,600
Wife’s RRSP $29,100
Wife’s Investment Account $13,000
Wife’s TFSA $11,400
My Investment Account $6,200
High Interest Savings Account $700

Total Assets $ 546,000

Mortgage $10,700

Total Debt $10,700

Net Worth $535,300 (+$12,800 or +2.4%) [+ 13.1% YTD ]
Investment Net Worth $169,000 (+$5400 or +3.3%) [+13.1% YTD]

Die, damn you, die! I have to admit I’m having a bit of child like glee watching the last of my mortgage fall away.  As you might have noticed I decided to finish off the last of the line of credit balance since the last update.  It’s been a busy summer, so between vacation and trips to the dentist I’m a little behind where I would like to be on the mortgage (ideally I wanted to be below $10,000 now), but we should be able to make up the difference in the next two months.

Now I’ve turned my mind to starting to brainstorm some new metric to track my progress to financial independence.  I know that using my investment net worth is a little problematic since it can swing a fair bit on a month to month basis.  So should I focus on yield from the portfolio instead?  Then compare that to the average of our last 12 months of expenses?  I’m not sure if that is much more stable or not.  Any ideas on this would be welcome, so feel free to leave a comment on what you do below.

Oh, for those that are curious I do plan to have a small party once the mortgage is gone.  After that the rest of the year will be piling money into our RRSPs to offset some taxes.  Nothing terribly exciting I know, but it does give us some time to discuss our priorities as a family and make plans  for 2013.

Any questions?

(Click image to see larger version)

Tell Me Why Again

If you have read the book, Free at 45, you might recall the first question I ask the reader in the book is: why do you want to retire?  At the time I made the distinction between running away from something (work, stress, etc) or running towards something (new business, helping others, more family time).  You need something to aim towards otherwise early retirement may be the wrong choice for you.  I’ve come to realize that answer to ‘why’ is actually even more important than I give it credit for.

The answer to why is really your moral compass on your journey to financial independence and the more you understand where you want to end up the more your life can start looking that way right now.  You might find that statement somewhat obvious, but it is important to know your ‘why’, since along the path you will have many options and opportunities in your life which you need to judge: am I doing this to get closer to my why answer or is this a financial based decision?

Sometimes that answer is really the same, a new job with more money can also gives you more time with your family.  Then there are those difficult split decisions where its more money, but requires more time away from my family.  Are you willing to do that to get closer to financial independence if it takes you further away from your why answer?

In life I think we would all prefer the answer to be ‘keep to the why’ and forgot about the money.  Yet what if you only had to do it for a few years, would that change the answer?  Would two year of sacrifice be worth another year of freedom?  If so, how about three to one ratio?  Or what if the work was very interesting to you on a personal level? There isn’t a right answer to these questions, but rather your answers to them.

In the end we all have to find our own moral compass that lets us pick and choose how we sell our time now and in the future.  Just keep in mind, the relative value of these times are not equal.  An hour at age 30 is not the same as an hour at  age 70 and some days an extra hour would be worth $10,000 to you (that perfect Sunday afternoon) and others only $1 (filing at home).  Choose your times by your why answer and you will rarely regret them, but if you always choose the money you may find yourself going down a dark path that you regret.

It is possible to lose your way on this path to freedom, sometimes we get so obsessed with cutting expense we cut too much.  We forget you need to spend some money on the joy of today as well.  This is well known, just don’t forget about the other side of earning the money too.  You can’t have it all, but you can keep it in balance, just ask yourself: tell me why again.

My Daughter Thanked Me!

This is a guest post from Sheryl 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.

** Disclaimer** I know everyone has their own parenting style, and strong feelings about how a child should be raised.  I am not the perfect parent, but I am sharing what I did with the hopes that it will help someone else, not to advise anyone on what they should do.  We all know our own children the best, and what will work in your situation.

My daughter is not an emotional type.  She, like me, is an INTJ.  She speaks when she has something she feels is of value to say, and gets very annoyed at idle chit-chat, meaningless drivel, and words that have not been thought about before spoken. Yes, she was a pleasure to parent (said with heavy sarcasm). She rarely acknowledges if she is pleased with something major I have done for her, and if she does, it is a few years after the action.  When she does “thank” me, it is more said as an approval than a direct thank you.  For example, when she was going through chemo  in her mid teens, I didn’t dote over her.  I was there if she needed something and asked for it, tried to make life easier for her without being obvious, but also didn’t “do everything” for her.  It was hard for me not to over-mother her, but I believed that one of the best things I could do was keep my home running as normal as it could.  If she wanted something to eat or drink, and was able to do it herself, she did it herself.  No special treatment, breaking curfew or buying special things just because she had cancer.  A few years later she told me that was the best thing I could have done.  It kept her going,  she knew she had something solid to cling to when the effects of the chemo were especially horrible, and gave her a chance to feel normal when everyone else was treating like she was sick.

The latest approval came about how I handled money with her.  I didn’t get any lessons as a child about money, other than “Here’s 50 cents, make it last the week” and then we would go to yard sales and the local market that had a bulk candy store.  By Saturday night, my money was gone, I’d have some trinket from a yard sale, and empty bags that had held candy from the bulk store.  Saving only happened if I got money for my birthday, my mum would take me to the bank and I’d deposit it in my savings account.  In hindsight, I was taught to spend all I had, and only save if I got a windfall, not as a regular behavior.  I wanted to do better with my daughter.  I’d read about things like ” kids have to have enough money to budget in order to learn how to budget”.  As a point of reference, when I was getting 50 cents, a chocolate bar cost 35-40 cents, and my “allowance” went up about the same as chocolate bar inflation.

The summer before she went to high school (she turned 14 that September), I implemented a new allowance system.  I feel as a parent it is my responsibility to provide  clothing, shelter, food and some comforts to my child, so the system did not make her work for her base allowance.  I figured out how much money per year I spent on clothes, school supplies, minimal spending money, toys, and impulse purchases.  I divided that amount by 12, and gave her that amount at the beginning of every month.  She was not allowed to ask for impulse purchases when we went out anymore.  There were things I said I would continue to pay for like school trips, friends birthday presents, horse stuff,  and other irregular expenses.  She had the option of doing extra work around the house to earn more money, those paid about $5/hour.  The first few months, she bought $100 running shoes or other teenage have to haves, but she soon learned that if she did that, she didn’t have any more money for the rest of the month.  She started going to outlet or thrift stores instead of the mall, renting videos instead of going to the movies, comparing prices on supplies.  Soon, she started having money left at the end of the month, and would save for larger purchases.  I stopped giving her money when she started earning more at her part time job than I was giving her.

Now, she is a careful shopper who only spends what is needed.  She has no debt.  In a conversation she had with me the other day,  she was appalled at the amount of money spent by an acquaintance of hers for a prom.  She talked about the attitude of consumerism and entitlement and expressed concern that the person wouldn’t do very well on their own with that mentality towards spending and money.

I’ve brought up the topic of saving enough to achieve FI, but she’s not there yet, and knowing her, that’s something she will have to discover for herself (if I leave enough information lying around).  I feel that I have at least given her a chance to not end up like so many other sheeple:  consuming and spending with no end in sight.  I’ve changed the habits passed from parent to child.  I’m proud she dares to be different, and if she ever reads this, You’re Welcome.