Dec-31-2017 Report

Here comes our fourth net worth update! Sorry, I’m REALLY late on this one because either 1) I didn’t have time or 2) I was lazy. I admit that it was more of the latter, haha!

Anyway, I’m going to repeat the same thing I said in my previous reports:

blah blah blah… We’ve come a long way since 2011 to build what we have today. If you read the about me page, I mentioned that we started off with a net worth of -$91,000 in the fall of 2011 but made progress to reach $714,102 today. This number can fluctuate at any given time, so we’re not focused on hitting a million. Instead, we’re trying to learn as much as we can on our financial journey. Most importantly, we want to have fun while doing it.

After spending more time reading personal finance books and blogs, we started tracking our net worth more closely at the end of 2016. So, to give you an overall picture of our progress, you can see our summary below.

 

Our progress since Dec 31, 2016:

Date  Net Worth Change
Dec-16  $  554,936.00 N/A
Jan-17  $  571,038.00  $  16,102.00
Feb-17  $  581,622.00  $  10,584.00
Mar-17  $  585,263.00  $    3,641.00
Apr-17  $  601,095.00  $  15,832.00
May-17  $  614,576.00  $  13,481.00
Jun-17  $  624,705.00  $  10,129.00
Jul-17  $  630,320.00  $    5,615.00
Aug-17  $  654,409.00  $  24,089.00
Sep-17  $  665,167.00  $  10,758.00
Oct-17  $  691,188.00  $  26,021.00
Nov-17  $  710,138.00  $  18,950.00
Dec-17  $  714,102.00  $    3,964.00

And I’m not kidding when I say reading and learning about personal finance improved our finances significantly! So, I want to thank all the personal finance bloggers, authors, and contributors for making a positive impact!

To see how we did this, you can read about my “no spend challenge” post and the things I learned. This was a major contributor to our net worth result, thanks to books and blogs!

To help you further with your financial goals, I’ll also be writing in my future posts how we developed a disciplined approach to savings, earnings, and investing. Most of our results came from reading motivational ideas that changed our mindset. I wrote a few posts that will help you!

 

Here they are:

Money Tip - Cash is King
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5 Amazing Money Tips From a Billionaire That Will Improve Your Life!

10 Ways to Develop a Rich Mindset – #10 is seriously Mind Blowing!

This Quote Will Make You Uber Rich!

How To Save (And Spend) Money The Sexy Way

Should You Pay Off Debt or Invest? – Life Lessons Learned

 

Again, we made a lot of mistakes with our money in the past, and I won’t be surprised if we’re still making mistakes. However, the most important thing is learning from those mistakes.

 

Now moving on, let’s break down the sections to see how we did this month…

 

Let’s take a look at our assets.

 

Cash: $20,787

We’re down from $36,882 to $20,787 because a lot had to do with us paying down $20,000 of our student loans all at once. For 2018, we are looking to build more cash for any investment opportunities should the markets head south. According to Warren Buffett, he views cash as an option investment with no expiration date. Now, how savvy is that?? 😉

 

TFSA (Tax-free savings account): $120,570

Overall, our accounts increased by $565 for the month. Not much month-to-month movement here.

 

RRSP (Registered Retirement Savings Plan) Investments: $82,148

Our RRSP investment accounts increased by $209. Again, not much movement for this month. However, the few previous months were pretty bullish!

One thing we want to mention here is we exclude our company’s pension in our net worth calculation. We only record our self-directed RRSP investment accounts.

 

Non-registered Investments: $67,618

These are our holdings in USD. We haven’t made any contributions to this account since late 2013.

This account increased by $3,038 last month, and by $5,239 in October. For this month, our account decreased by $1,736. So, there will be times where $hit falls but it’s okay because overall, it’s still an uptrend since 2013. I mentioned last month that anything can happen at any time, so we’re prepared to see it fall should the markets head south. But either way, we’ll be ignoring the noise because we’re focused on the very long-term.

 

Company Stock Ownership: $56,759

Nothing much to say here, other than the fact it went up by $1,322. And who can say no to some free money? 🙂

 

Real estate: $1,060,000

As mentioned in the previous reports, for both the primary residence and the investment property, we decided to fix the values at $750,000 and $310,000, respectively. Despite the professional’s appraisal of $805,000 and $320,000, respectively, we decided to assign a lower value to be a little conservative. After all, we might see Canada’s (especially Toronto’s) housing market fall… *shrugs* 🤷‍♀️

Not that we care ’cause we ain’t selling these anytime soon. And for the most part, we’re hoping our tenants can continue to cover our expenses so that it gives us room to save more of our paychecks.

 

Investment Property Account: $9,371

We have a joint account and every activity associated with the investment property (not our primary residence) is tracked here. That is, all income and expenses run on its own on this account.

The account this month is down by $226 compared to last month. To be honest, I’m still not sure what happened and we haven’t been checking thoroughly because everything is automated.

It should be noted that six months worth of property tax has already been paid upfront with this account.

 

In sum, our assets went down from $1,433,215 to $1,417,254, a decrease of $15,961 for the month. A big part is due to our spending, the cash we used to pay off our $20,000 student loan, and the decrease of $1,736 in our USD investment account.

 

 

Now let’s take a look at that debt!

 

Student debt: $20,465 –> $0!!

This will be the same story from all of our previous report haha.

Since 2010 (him) and 2011 (me), we decided to invest instead of paying off our loans. Overall, we were lucky and it worked out in our favor due to a bull market after the 2008 crisis.

But honestly, with Canada’s two recent rate hikes (and more to come), we’ve been making plans to kill off our student loans soon. After reading Damn Millennial’s post “3 Reasons You Should Pay Off Your Debt Before Investing”, I felt more motivated to do it even sooner.

 

Update: As mentioned above, we paid off our $20,000 student debt! Woo-hoo!

 

Primary resident: $390,627

The outstanding mortgage went from $391,792 to $390,627. As a result, $1,165 went towards home equity thanks to our tenants (the ones who live in our separate unit)!

 

Investment property: $244,557

The mortgage reduced from $245,342 to $244,557, with $785 going towards our equity.

 

Revolving Home Equity Line of Credit (HELOC): $65,471

I’m going to repeat the same story from the previous report:

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Instead of buying boats and cars, we wanted to use HELOC to invest. So, we decided to take the leap with an investment property.

For about three years, we were testing the waters with our primary residence to see how it feels to be landlords. As a result, we were getting comfortable and wanted to learn more, so we decided to give it a shot with a second property. But, there’s a lot to learn since we’re still new at this!

With that said, we tapped into this line to pay for the down payment.

Also, if we use this borrowed money to invest (i.e. real estate, stocks, funds), the interest on HELOC is deductible. As long as the investments generate income (i.e. dividends and/or interest), we can deduct this interest from our income.

Now, I know that most of you will bash us here because, at the end of the day, debt is debt. And I totally understand and respect different views. But my fiance and I plan to hold this property forever (unless circumstances change) hoping it will become an income generator for us when we retire.

We’re hoping the tenants will build equity for us, along with generating some positive cash flow. Aside from the hopes of building net worth, we’re in it for the experience as well.

For over a year, we’ve done thorough research and analysis, along with some serious stress tests, before making the decision to buy. Of course, nothing is risk-free, but we are willing to take the risk given our situation.

We won’t know the outcome for now. Worse comes to worst, we’ll take the hit, lose money, and move on. That’s the risk of being in any business. Overall, we agreed with each other that we will admit to any investment mistakes and learn from it.

 

Anyway, our total liabilities went down from $723,761 to $703,152, reducing our overall debt by $20,609, thanks mostly to the pay off of our student loans!

 

In summary, our net worth went up from $710,138 to $714,102 for the month, an increase of $3,964. Not as sexy as our previous months due to holiday spending and our -$1,736 in our USD investments.