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Net Worth Update May 2015 – Sean Cooper (+4.83%)

Welcome to the Million Dollar Journey May 2015 Net Worth Update – Team MDJ edition. A select group of readers were selected to be part of Team MDJ which was conceived after the million dollar net worth milestone was achieved in June 2014. Sean Cooper was selected as a team member and will post net worth updates on a regular basis. Here is more about Sean.

Profile:

  • Name: Sean Cooper
  • Age: 29
  • Net Worth: $614,228
  • Day Job: Employed with a major global pension consulting firm.
  • Family Income: $50,000 (full-time job), $18,600 (rental income before expenses), $40,000 (approximate freelance income), $5,000 (part-time job)
  • Goals: Mortgage paid off by 31, million dollar net worth by mid thirties.
  • Notes: Owns a house, rents out main floor. Most of net worth is in the principal residence. No other debt besides mortgage.

Boy, I can’t believe it’s May already! Where has the time gone? 2015 has gone by in the blink of an eye! Despite some minor setbacks, I’m well on my way to accomplishing the goals I set out for 2015. I reached a major milestone in February when I turned 30. I hope to reach another milestone when I pay off my mortgage before the end of the year.

Not much has changed at work since my previous net worth update. Things are still crazy. January to June is our busy time at the pension consulting firm. I’ve been arriving at home most evenings at 9PM. As previously mentioned, I’ve taken on a heavier workload with the hope of being promoted. I recently trained a junior employee in preparing pension packages in hopes of taking on a more senior role. August 2015 will mark my five year anniversary at my company. It’s my goal to be promoted to a senior pension analyst before the end of the fiscal year (June 30th). I’ve been receiving plenty of positive feedback, so it looks like I may have a shot. This should provide a nice boost in salary and the opportunity to advance further in my career.

Winter once again took its toll on my house. February ended up being the coldest month in Toronto history. In fact, the temperature never made it above 0 °C. Due to the frigid temperatures, the frost line froze deeper than usual. When I came home from work one evening, I noticed damage to my house. There were cracks in the foundation, walls and crown moulding. I filed a home insurance claim, but big surprise, it wasn’t covered! Frost heaving is one of the exclusions in my policy. While the damage wasn’t extensive, I’m setting aside as much money as possible to repair the damage. I want to avoid underpinning my house at all costs.

I’m actually doing a better job of paying down my mortgage than I realized. At my current pace, I should have my mortgage paid off in October 2015. Achieving mortgage freedom at age 30 will be my biggest accomplishment thus far so I’m planning an epic mortgage burning party. I’m pulling out all the stops to make sure this is one mortgage burning party for the ages.

When my mortgage is paid off, I’ll have to decide on my next major goal. I plan to continue to living in the basement until it makes sense to move upstairs. I hope to achieve a better work-life balance. I’d like to get married in the future, but first, I need to meet someone special.  I’m currently having a tough time meeting women, so I’m giving online dating a shot. I’ve looked at speed dating, but it doesn’t seem like it’s worth the money. Does anyone have any advice for a frugal way to meet young, ambitious people of the opposite sex with similar interests?

After reviewing my RRSPs, I decided to transfer my portfolio from CI Investments to TD. I’ve gone with the same asset allocation with the TD e-Series Funds (30% Canadian equities, 30% U.S. equities, 30% International equities, and 10% Canadian bonds). I’m happy with this decision, since I’m paying a lot lower MERs.

I recently filed my income tax return for 2014. My balance owing wasn’t as big as last year since I started paying my taxes by installment. You may be wondering why I have a lot of money sitting in cash right now. Once I receive my notice of assessment in the mail, I plan to start contributing to my RRSP, maximizing my contributions for the year before August 1st, my mortgage anniversary date, when I can start making lump sum payments on my mortgage once again.

On to the net worth numbers:

Assets: $668,217 (+2.90%)

  • Cash: $40,522 (+60.43%)
  • Registered/Retirement Investment Accounts (RRSP): $52,929 (+7.20%)
  • Tax Free Savings Accounts (TFSA): $0 (+0.00%)
  • Defined Benefit Pension: $24,421 (+0.00%) (commuted value adjusted annually in June when I receive my annual statement)
  • Non-Registered Investment Accounts: $345 (+2.27%)
  • Principal Residence: $550,000 (+0.00%) (purchase price adjusted for average selling price annually)

Liabilities: $53,990 (-14.93%)

  • Principal Residence Mortgage: $53,990 (-14.93%)

Total Net Worth: ~$614,228 (+4.83%)

  • Started 2015 with Net Worth: $585,926
  • Year to Date Gain/Loss: +4.83%

Some quick notes and explanations to common questions:

The Cash

The cash is held in a no fee chequing account with PC Financial. I use my chequing account for regular bill payments, as well as making lump sum payments on my mortgage.

Savings

My savings are held in a Tax Free Savings Account (TFSA) with Canadian Direct Financial. I mainly use my TFSA as an emergency fund and to save towards the balance owing when I file my personal income tax return at the end of April. Even though I contribute the maximum to my RRSP annually, I still have a large balance owing to the taxman since I receive rental income and income from self-employment (I’m a freelance writer).

You may be wondering why my balance is currently $0. At the beginning of the year I had $15,000 in my TFSA. However, this year was especially costly, as I had to spend $25,000 on repairs and renovations to my house, including a new retaining wall, side walk, front porch, sump pump, and eaves troughs. I plan to rebuild my emergency fund once I’ve maximized the prepayment privileges on my mortgage. If any more costly home repairs creep up, I can always slow down on prepaying my mortgage.

Where Do the Savings Come From?

I’m very frugal with my money. People are often amazed at how low my monthly expenses are. For most families the most costly household expenses are housing (mortgage or rent), transportation, and food. I’ve been able to minimize all three through lifestyle choices.

As a single first-time home buyer in Toronto, I decided to take on the added responsibility of being a landlord. Instead of living upstairs, I decided to live in the basement and rent the upstairs to a family. I got this brilliant idea from the host of HGTV’s Income Property, Scott McGillivray, who lived in his basement for nine years while renting out the upstairs unit to save money.

Instead of driving a car, I cycle the majority of the year and take public transit during wintertime. In my recent article in the Financial Post readers were amazed I only spend $100 per month on groceries. How have I managed to spend so little? I shop at discount supermarkets, price match, avoid fast food, and buy sale items in bulk. I’m also vegetarian, which helps me avoid paying the outrageous prices for meat.

How Have I Been Able to Pay Down My Mortgage So Quickly?

Despite an annual salary of only $50,000, I’ve been able to pay down over half of my mortgage in only two years through hard work and determination. Besides being a landlord, I’m a financial journalist. I also work part-time at a grocery store once a week. Through secondary sources of income, I’ve been able to maximize the prepayment privileges on my mortgage and maximize my RRSP contributions each year.

Update May 2015 – I’ve revised my freelance income up to $40,000 from $20,000 to better reflect how much I earn. I’ve received a few questions about how I’ve been able to pay down my mortgage so quickly. It’s mainly been through my freelance income. I tend to be conservative with my estimate of freelance income, as it can vary a lot from month to month. For example, some months I earn $2,000, while others I earn $5,000+. For 2014, I ended up earning over $60,000 in freelance income. Earnings that much in freelance income requires working 80 hours or more a week (including my full-time job). I don’t plan to keep this insane workload up forever. Once my mortgage is paid off at the end of 2015, I plan to scale back and only focus on the freelance work that I enjoy.

Real Estate

My real estate holdings consist of my primary residence. I purchased my house in August 2012 for $425,000 with a mortgage of $255,000. As I live in Toronto, one of Canada’s most expensive housing markets, I’ve based the value of my principal residence on comparable properties that have recently sold in my neighbourhood.

Pension

The pension amount listed above is the value of my defined benefit pension plan. I take the commuted value from my annual statement, which I receive by June 30th each year. I am fortunate to receive the commuted value on my annual statement, as most employers don’t provide it. This makes retirement planning a lot easier.

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About the author: Sean Cooper is a single, 20-something year old, first time home buyer located in Toronto. He has experience in the financial sector as a Pension Analyst, RESP administrator and Income Tax Preparer. He holds a Bachelor of Commerce in business management from Ryerson University. You can read some of his other articles here.

{ 10 comments… add one }
  • joe May 4, 2015, 9:45 am

    Hi Sean, congrats on the progress, looks like you’re well on your way to meet your goals.
    What do you do for the freelance income? Is it consulting in your current field or online income based?

    • Sean Cooper, Financial Journalist May 5, 2015, 12:02 am

      Thanks for the kind words, Joe. When I’m not at work at the pension consulting firm where I work, I’m a financial journalist, freelance writer and fee-based financial advisor.

  • Cassie May 4, 2015, 4:04 pm

    That sucks about the frost heaving, but nicely done on being so close to having your mortgage paid off! I’m hoping we can have ours annihilated by 35.

    As for meeting someone, I met my husband on Plenty of Fish of all places. I’ve been told finding Mr./Ms. right on there is like finding a unicorn, but it can happen.

  • saveddijon May 5, 2015, 1:07 pm

    I’ve heard that online dating is often a fraud.

    The catch: only registered (paying) users are permitted to respond to messages. However, you have no way of telling which profiles you’re interested in are registered or not. Only about 10% of the users on an online dating site are paying users. Therefore, even if you see TEN profiles you’re really interested in, on average, only one of them will even be in a position to reply, provided the interest is mutual.

    What worked for me: try to find a singles club in your area. After a few years of that, on one dreary Saturday when I wasn’t feeling all that well I decided to go on a hiking activity from the singles group. Lo and behold there was a shy new member for whom that was her first outing. Sparks flew. We will be celebrating our 10th anniversary later this month.

  • Mike S May 5, 2015, 6:17 pm

    18600 / 550,000 = 3.38%

    This is before expenses. the winter event is just normal maintenance cost, and unless your house is very new you should plan for a maintenance cost all the time (say 0.5%-1% of the cost of the house per year)

    Also, it seems that you will pay 43.6% tax on your rental income (above 89K tax bracket), and you subject to pay more, once your salary will increase

    Does it makes sense financially? especially when you have 0$ in your TFSA?

  • SST May 5, 2015, 8:52 pm

    re: “When I’m not at work at the pension consulting firm…I’m a fee-based financial advisor.”

    Are you a licensed financial advisor, or is that simply generic terminology? What would a typical client be for you?

  • Alex May 23, 2015, 6:14 pm

    The $100 in groceries is just food or does that include toilet paper, dishwasher liquid, soap etc?

    For food alone I wouldn’t call it very frugal (not to detract from what you did but just trying to say that its possible without much frugality required). Can be done by just cooking for yourself basically.

    We’re in Montreal (for comparison) and have about $120 per week for four persons for just food (incl. coffee for breakfast). Since you’re alone that is about the same amount. That’s including the meals for us at work but the kids get breakfast and lunch at daycare. Adding non food that jumps (diapers and washing often since kids get everything dirty the first day they wear it ;)

  • Joey Sapien June 5, 2015, 11:56 am

    Great post ! What you focus on expands. Good on you for focusing on your net worth. Great model for us to learn from.,

  • EL @ Moneywatch101 June 5, 2015, 2:14 pm

    Good job on the net worth, I think most of the progress comes from tracking it. Secondary is obviously adding to investments. But good luck in 2015.

  • Obese Lizzy June 5, 2015, 5:11 pm

    Since the February update, Sean increased his net worth by $28,301. This is due to increases in cash ($15,263), RRSP ($3,552), and unregistered investments ($8), and a decrease in his mortgage ($9,478).

    Let’s assume he didn’t contribute anything to his RRSP and the growth there is purely due to gains on his investments (so let’s assume he didn’t contribute any cash). Same with the unregistered investments (though these are immaterial).

    This suggests that, between the increase in his cash and the decrease in his mortgage, he was able to save $24,741.

    Based on Sean’s self-reported numbers, this seems to be impossible. His income is $50,000 from his job, $40,000 from freelance and $18,600 from rental. Let’s assume that the rental income is completely non-taxable. Since he’s in Ontario, he’d need to pay tax of approximately $22K for the year or $5,500 for the quarter (either automatically withheld for his salary or through installments for his freelance work).

    Sean’s gross income is $108,600, or $27,150 for the quarter. He loses approximately $5,500 in income taxes, so he’s left with $21,650. I know he’s frugal but he’s still going to have some expenses (property tax, home insurance, groceries, etc). Yet somehow, even before we subtract a single cent in expenses, he was able to save $3K more than his net income?

    MDJ – virtually every time Sean posts people show considerable inconsistencies in his numbers. He’s never given a satisfactory answer (at least that I’ve seen). I don’t doubt that Sean has an impressive net worth, is very frugal, and will soon be mortgage-free. But his repeated inconsistencies detract from his story. You should consider removing this guy from your site – you have so much high quality content, why risk associating yourself with someone like this?

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