- Name: nobleea
- Age: 36
- Net Worth: $717,634
- Day Job: Engineering supervisor at large oilfield services company, Teacher (wife)
- Family Income: $145,000 (main job), $30,000 (part time job), $85,000 (wife main job), $10,000 (wife part time job), $14,500 (rental income before expenses)
- Goals: Million dollar family net worth before 40, Retirement from primary job at 50 (for me)
- Notes: Owns primary house. Owns tear down house across the street currently being rented. (to be torn down for new family home)
We live in Edmonton where incomes are high and housing prices are fairly reasonable. Some may roll their eyes at the high family income and say that a million dollar journey is going to be pretty easy. The thing is that I have a plan to retire at 50 and pursue other interests. My wife will likely continue working until it makes sense to retire with her DB pension as the penalties for early retirement are pretty severe.
We recently bought a tear down property across the street from our home. We will be tearing it down in the spring and building a larger family home. Once we take possession of the new build, our current home will be sold. Someone approached us last month to buy our current home off us when they found out we would be selling in the future.
We travel a lot for pleasure but are pretty frugal otherwise (no cable, coupons, pay and talk phones, dine out or take-out a few times a year). I try to keep our cash balances as low as possible and want every spare dollar going towards debt repayment. I would say our living expenses are low relative to our income. We have tried hard to avoid most lifestyle inflation.
We have a few financial goals for this year including opening a TFSA for both of us and funding with a minimum of $2K each, signing up for additional term life insurance for both of us to top up that which is included in our group plans, and reduce our HELOC balance by 60K.
Since the last update in September, the financial picture hasn’t changed much on the aggregate. The equity markets have not fared well, especially in energy-focused portfolios, though we have made progress on reducing debt by eliminating two loans and the corresponding monthly payments and received a nice bump in the termination value of the pension plan. Without it, we would likely be looking at no change in net worth from Sept to Jan.
We finished 2014 with an increase of $151K in our net worth which we are proud of. I expect our net worth will increase between $100-150K again in 2015. At the current rate, we hope to meet our goal of $1 million in net worth sometime in late 2017 when I will be 39.
On to the net worth numbers:
Assets: $1,138,752 (+2.40%)
- Cash: $2,629 (+131%)
- Registered/Retirement Investment Accounts (RRSP): $142,866 (-7.30%)
- Tax Free Savings Accounts (TFSA): $0 (+0.00%)
- Defined Benefit Pension: $88,900 (+87.0%)
- Non-Registered Investment Accounts: $9,380 (-69%)
- Principal Residence: $458,000 (+0.00%)
- Tear Down Property: $375,000 (+0.00%)
- Vehicles/Other: $58,450 (+24.7%)
Liabilities: $417,591 (-3.20%)
- Principal Residence Mortgage: $0 (Paid off in October)
- Tear Down Mortgage: $296,147 (-1.30%)
- HELOC: $115,084 (+3.70%)
- Car Loan: $0 (Paid off in December)
- Credit Cards: $6,360 (+65.8%)
Total Net Worth: $717,634 (+5.40%)
- Started 2014 with Net Worth: $566,394
- Year to Date Gain/Loss: +26.7%
Some quick notes and explanations to common questions:
Cash includes bank account balances in two accounts, plus any gift card balances. We try to keep as little money in bank accounts as possible and make mortgage prepayments with it instead. We use cash flow modeling to predict the maximum amount we can put towards debt today without having a negative balance in the future, taking all one time or non-regular bills in to account.
Loans and Credit Cards
The credit cards are paid off in full every month with no interest due. We put all our expenses on credit cards for points and cash back. As this can be a substantial amount some months, I believe it needs to have a line item in your monthly net worth as it is a liability at that snapshot in time. The HELOC is almost completely tax deductible (small smith maneuvre and downpayment on rental). Considering the tax deductibility of interest, our highest net interest rate on liabilities is 2.24%, with a weighted average rate of 1.79%.
TFSA’s have not been started yet as all spare cash has been going against the mortgage. Transferring the non-registered investments over would affect the tax deductibility of some of the HELOC.
Our primary residence was purchased in 2008 for $355K. We have put in $110K in renovations since then in a complete overhaul. The house value shown here is based on those two numbers and is conservative relative to what similar homes in the area sell for.
Our ‘rental’ is across the street and was purchased last month for the lot, purchase price $375K. It is currently rented (cash flow negative) and will be torn down in April to start construction on our new home. The next 2 years will be a mess with construction draw mortgages, HELOC balances for some construction costs, messy accounting for a rental that was effectively disposed of after 7 months of rent. We have no desire to remain landlords now or in the future. Once we move to the new home and sell our current home, the plan is to pay that one off in 5-10 years.
My wife has a DB pension as a teacher. The balance shown is the termination benefit should she quit from her position tomorrow, net of any taxes. I have a matching RRSP plan through my work. Combined with CPP, we are not worried about retirement income, it’s just a matter of timing. We plan on contributing to my RRSP in order to get the full match but no more, then max out TFSA for investments, and then non-registered investments.
We have pretty substantial unused RRSP contribution room and will likely never use it. Perhaps in the event of a large capital gain, we may contribute some to offset the capital gain taxes. Not listed on the net worth values is our daughter’s RESP, which has a balance of about $3500. We plan on contributing enough every year to get the full CESG grant. The RESP is invested in TD e-series funds in a couch potato portfolio as a family plan.
Just over half of this amount is vehicles. We have a two 2013 model year vehicles, one purchased new, one purchased used. I depreciate their value every month in net worth updates to keep it at just above wholesale value. The two vehicles combined cost us $250/mo in depreciation and repairs. I find that reasonable considering it would be hard to lease a single small vehicle for that price. The “Other” refers to fairly extensive photography equipment (part time business), sporting equipment and personal property.If you would like to read more articles like this, you can sign up for my free newsletter service below (we will not spam you).