5: Mar-31-2018 Report

Here comes our March, 31st 2018 net worth update. Instead of updating monthly, we decided to update them quarterly going forward.

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 -$93,000. I know that in my past net worth reports, I mentioned that we started off with $91,000 debt, but when I revisited our past statements, I made a mistake. We actually started off with more than $93,000 debt. But for simplicity, I will keep it at $93,000 debt and not get too nitty gritty with the details of that.

So, after calculating our net worth, we are at $767,150 today. Based on the numbers, that’s an increase of $53,048 from December 31, 2017.

Boy, that was a heck of a ride, especially when markets took a few dips in the first quarter. We understand that this number can fluctuate at any given time, so we’re not focused on how fast or high it grows. Instead, we’re trying to learn as much as we can on our financial journey. With that said, we decided to learn how to increase our passive income, make extra money, and/or save money so that we can share our experience with you.

As I mentioned before, after spending more time reading personal finance books and blogs, we started to track our net worth more closely at the end of 2016. To give you an overall picture of our progress, here is our summary below.

 

Our progress since Dec 31, 2016:

Date  Net Worth Change
16-Dec $       554,936.00N/A
17-Jan $       571,038.00 $  16,102.00
17-Feb $       581,622.00 $  10,584.00
17-Mar $       585,263.00 $    3,641.00
17-Apr $       601,095.00 $  15,832.00
17-May $       614,576.00 $  13,481.00
17-Jun $       624,705.00 $  10,129.00
17-Jul $       630,320.00 $    5,615.00
17-Aug $       654,409.00 $  24,089.00
17-Sep $       665,167.00 $  10,758.00
17-Oct $       691,188.00 $  26,021.00
17-Nov $       710,138.00 $  18,950.00
17-Dec $       714,102.00 $    3,964.00
18-Jan $       756,677.00 $  42,575.00*
18-Feb $       764,974.00 $    8,297.00
18-Mar $       767,150.00 $    2,176.00

* If you’re curious about the huge increase of $42,575 in Janurary, that was a result of our bonus pay of roughly $30,000. About 60% of that was sheltered in our RRSPs (simliar to the 401K in the US).

To see how we increased our worth over the years, head on over to read these posts that explain how we got from 100% debt (and no assets) to where we are today:

How We Went From Almost $100,000 Debt To Over $750,000 Equity in 7 Years
11 Things I Learned in a No Spend (on Stupid $hit) Challenge — Especially #6
How To Trick Yourself Into Saving Money [a $1,000 Monthly Savings Challenge Included]

These were major contributors to how our numbers look today, thanks to books and blogs! 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!

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 quarter…

 

Let’s take a look at our assets.

 

Cash: $21,498

We’re up from $20,787 to $21,498 over the quarter. Not much of an increase because I (at the last minute) transferred $10,000 into my RRSP (similar to the 401K) to fill up my room for 2017. But going forward, we are hoping to save more cash for any future opportunities should markets head south.

 

TFSA (Tax-free savings account): $126,850

Nothing sexy here. We actually have automatic contributions that go into this account every month, but it looks like it hasn’t been growing since markets haven’t been rosy for the past few months. Overall, our accounts increased by $6,820 (mainly due to contributions) since Dec 31, 2017.

 

RRSP (Registered Retirement Savings Plan) Investments: $113,872

On December 31, 2017, our combined RRSP was $82,148. Today, our RRSP investment accounts increased by $31,724 since Dec 31, 2017. Again, a big part of that was due to monthly contributions, our bonuses sheltered at about 60%, and the fact that I recently transferred $10,000 into my RRSP account (as mentioned in the Cash section above). Overall, that means we are losing money from the markets. But again, we only care about the long-term returns and not the short-term dips in the markets.

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: $70,600

We had $67,618 in our non-registered investments on December 31, 2017. Today, our market value is at $70,600, so not much movement since the last quarter. These are our holdings in USD. We haven’t made any contributions to this account since late 2013. As a side note, we are expecting this to fall if the markets take a hit. Again, we don’t expect consistent gains over the short-term.

 

Company Stock Ownership: $61,010

Today, our stock ownership is at $61,010. It was around $56,759 back on December 31, 2017. Nothing much to say here other than the fact it went up by $4,251.

 

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: $9,319

We have a joint account and every activity associated with the investment property (not our primary residence) is tracked here. That is, all rental income and expenses run on its own. We haven’t had time to track this thoroughly, but we are slowly building equity and some cash flow over time. Hoping we can hang onto this property forever. Fingers crossed!

 

In sum, our assets went up from $1,417,253 to $1,463,149, an increase of $45,895 over the quarter.

 

 

Now let’s take a look at that debt!

 

Student debt: $20,465 –> $0!!

This is the last time you’ll hear about how we paid off $20,000 student debt in December 2017.

 

Primary resident: $387,119

Our outstanding mortgage went from $390,627 to $387,119 since December 31, 2017. Thank goodness we have tenants living in our separate unit because they help with our mortgage payments.

 

Investment property: $243,410

The mortgage for our investment property reduced from $244,557 to $243,410.

 

Revolving Home Equity Line of Credit (HELOC): $65,470

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 $703,152 to $695,999, reducing our overall debt by $7,152 since December 31, 2017.

 

In summary, our net worth went up from $714,102 to $767,150 for the quarter, an increase of $53,048 within three months.