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Life - Act III: Working for Money

157K views 457 replies 70 participants last post by  peterk 
#1 ·
I am finally in a stable point of my life where I feel I can make this money diary. It's been a long time coming.

Act I of my life being "childhood", and Act II of course "paying for education". I am very glad to be moving on from those parts of my life.

To recap Act II - At christmas last year I had no job prospects, was struggling to finish one final course to get my degree, and had stretched the hospitality of (and relationship with) my parents to a near breaking-point - as I had been living with them like a lazy jobless slob for the 6 months prior. My net worth had just slipped into the negatives for the first time (-$2000), and I was starting to get pretty bummed out with my life.


I managed to somehow turn it around though, finish my degree, and had the good fortune of an amazing job landing in my lap! I have just crossed the 6 month mark at work, and things are going great. The work is interesting, busy but not too busy, and the commute situation is such that I don't need a car nor have to pay for public transportation.


Due to a substantial signing bonus and moving allowance, combined with agressive savings, I've been able to pay off my entire student loan ($7000) and now have a net worth of $36,000.

This money diary will provide a place to report my monthly spending and income, and where I can identify (with the help of you kind folks of CMF) any problems with my spending or savings plans.

Cheers!
 
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#2 · (Edited)
August 2013

Age 26

Assets

Stocks - $19,500
---TFSA: $7000
---RRSP: $12,500

Cash - $16,500
---TFSA: $12,500
---Savings: $4000

Liabilities

Zero

Net Worth

$36,000


Income

$6300 after tax monthly
18-25k in annual and quarterly bonuses

Total annual before tax income is around 120-125k plus overtime (although I'm not getting the opportunity to work much overtime yet).


Expenses

I generally don't track my exact spending breakdown, just do a monthly review of how much I spent and if anything went unusally high, investigate why that happened.

Core Expenses

Rent (all in): $900
Groceries: $300
Phone: $32
Gym: $59
Transportation: ~$60 (I buy a tank of gas for my girlfriend's car here and there. Don't drive much)
Eating Out: $50
Alcohol: $20
Household nick-nacks: $30

Total: $1450

Variable Expenses

This parts a bit harder to nail down. But I'll post my best estimates based on previous spending and future projections.

Bi-monthly "mini vacation" to another city: $120
Furnishings/household: $40
Vacation: $600
Electronics: $30
Fish Tank stuff: $10
Other: $100

Total: $900

Total: $2350

Total spending for the past 6 months has been $16,000 - equating to $2700/month, but that has included a few flights across the country and other various moving/one time costs, so I think $2350 is a reasonable breakdown going forward.
 
#5 ·
TIME TO BUY A SWEET-*** CAR, amirite?

Seriously, not a lot to criticize here. I hope my kids are as practical and conscientious as you. (Gosh. That makes me sound REALLY OLD. My kids are a long way from university...they are going to be "lazy jobless slobs" for many more years!)
 
#6 ·
TIME TO BUY A SWEET-*** CAR, amirite?
Tell me about it! Could lease an Audi S5 for $810/month. *drools* But I've got bigger goals in mind than cars...

Physik - I'm an Engineer in the oil sands. This salary would be difficult for me to achieve elsewhere (perhaps Australia).

I would like to be out of here after 5 years and relocate to a warmer climate, like Calgary (lol), where I can gain financial independence before 40. This will require some aggressive saving and even more aggressive money making.
 
#9 ·
So you are 26 and able to save around $4000 every month. My friend you are on a fast track to finanical independence. If you are fortunate enough to meet a professionally minded partner, combine your incomes, well.... you can join me in retirement in your 40's. :biggrin:

Your future is bright indeed. :encouragement:
 
#12 ·
haha are you offering? :biggrin: I just lost $40 in poker last week actually - I could use some lessons!

TRM - I'm pretty comfortable with a small cash cushion. In fact the only reason I have 16k not invested is because I'm uncertain about what my housing situation will be next year. I may consider buying so I don't feel comfortable being all-in (heh) the markets at this point.
 
#14 ·
Maybe you could adopt him to take over when you retire in 10 years? :tongue-new:

peterk. Keep at it. You are on the right track. But watch out for degenerative diseases. As a petroleum engineer in Sarnia and a salesman in Edmonton, I was familiar with many engineers who were struck down early after working in those conditions for their productive lives. My wife's cousin (an entrepreneur) became very rich during a lifetime in Ft Mac but both he and his wife died in their 60s from degenerative diseases. :upset:
 
#16 ·
Holy! That's pretty scary. What exposure do you think the cousin had to get such an illness?

I don't work in upgrading or with chemicals or anything. Mostly office and often fieldwork in the mine. There is more dust in the air up here though than I'm used to. You literally must sweep the patio every few weeks because of dust settling from the air...

Either way - I'll be out of here in 5 years, 10 tops!
 
#19 ·
Please stop the tales of woe - Peter knows the situation in Fort McMurray and doesn't need to be told over and over about everyone we all know who lived there and died young. I know a number of people who spent most of their working lives in Fort McMurray and are living long and healthy retirements. You`re doing really well, Peter, and congratulations for getting your finances in such good shape at your age.
 
#23 · (Edited)
September 2013

Big update since August: 3 pay cheques, $1900 quarterly bonus, 10 hours overtime, and about $1500 market gains

Assets

Stocks - $23,300
---TFSA: $10,800
---RRSP: $12,500

Cash - $21,350
---TFSA: $12,500
---Savings: $8,850


It appears I'm building up quite a cash hoard that I'm not sure what to do with. I may be looking at buying a house in the next couple years but I also may not. It'll depend on career decisions that are unpredictable at this early stage, relationship decisions that are up in the air, and the housing market. I've pretty much decided that I'll be renting until at least spring 2015 (when my retention contract is up and when I'll have a big enough down payment).

I'm leaning towards keeping an asset allocation as if I'm not planning on buying a house and not worrying about it. This would mean mostly stocks, with a reasonable cash pile for emergencies and/or investing opportunities. I'm not sure what reasonable is at this point. I think having 20k cash seems OK...

Liabilities

Zero - Or is it? I have some stipulations on the signing bonus and the rental subsidy that I received that would require me to pay back many thousands of dollars to my company if I were to terminate employement today. I have every intention of fulfilling the vesting periods of these monies.

Do you guys think this should this be considered a liability in a net worth calculation?

Net Worth

$44,650


Income

$6350 after tax monthly

After 6 months employement my company matched savings plan kicked in. Gives me an extra ~$60 net each month.


Expenses

Non-essential expenses in September included new shoes, new winter coat, new clothes, and a trip to Edmonton.

September Spending --- $2238
August Spending --- $1907
6-month moving average --- $2724
 
#25 ·
Hopefully Jon! My goal is more to be financially independent by mid 30s. I could always work until 40-45 I suppose if my lifestyle isn't too constricted by a job and I want more money for fancy things.

At age 36 I come up with a net worth of $800k @ 3% raise, 3% returns and increased spending $500/month. $1.2m @ 5% raise, 9% returns and current spending levels.

There's of course a decent chance I'll change jobs between now and then for a lower salary and things may get set back by a couple years.

I'm also in the brainstorming & learning phase of building up some online income. At the end of my engineering career I hope to have something in place where I can work part time on a computer to make an extra 1-2k monthly and supplement investment income.

Working a leisurely 10-20 hours/week from a home office is the end game. Half the year in a cool Canadian city like Montreal, Halifax, Kelowna, or Vancouver - Half the year in some interesting southern destination. Buenos Aires, Lima, Christchurch, Bangkok, or maybe the Mediterranean. (working on getting my European passport)


Well, now I've gone and spilled the beans on "the dream" haha.
 
#26 ·
At age 36 I come up with a net worth of $800k @ 3% raise, 3% returns and increased spending $500/month. $1.2m @ 5% raise, 9% returns and current spending levels.
Pro-tip:

Do your projections in today's dollars, to take future inflation out of the equation. To calculate future NW in today's dollars, use real rates of return and real (above inflation) raises.

3-4% real return is a good assumption. 9% is not, unless you think you are the next Buffett.

3% raise = 1% real, if inflation runs at 2%.
 
#29 ·
Thanks for the tip!

How do you determine what inflation is? CPI? real world inflation? personal inflation? What if I move cities or countries where it's cheaper or more expensive? What if canadian housing is at the top of a bubble and these highs won't be reached again for another 40 years until all the boomers are dead and gone and the world economy picks up again? Seems all too nebulous for me to properly predict...

MOA - due to my excessive indecision & jackassery in university, I'm 3 years behind all my same-age peers career-wise. This period of intense savings and working in the boonies is somewhat of a self inflicted punishment and an attempt at playing catch-up.

"not forgetting to live" in Fort Mac would involve paying $2500+ rent, buying a 40k truck, 3-4 apple devices, and $7 beers on the weekend. I don't see the bang-for-buck of doing this while living here, and have resigned myself to being reserved in my spending/"living" for the time being.

Not to worry though, heading home for 3 weeks at Christmas with a side trip to NYC. Planning a 3-4 week Asia trip in the winter, 1 week in the rockies next summer, and 2-3 weeks in Europe next fall. Life ain't so bad :)
 
#30 ·
How do you determine what inflation is? CPI? real world inflation? personal inflation? What if I move cities or countries where it's cheaper or more expensive? What if canadian housing is at the top of a bubble and these highs won't be reached again for another 40 years until all the boomers are dead and gone and the world economy picks up again? Seems all too nebulous for me to properly predict...
This is precisely why you should do your NW projections in today's dollars, using real rates of return. This method takes future inflation out of the picture. You don't have to define what inflation is. You don't have to guess the rate. It doesn't enter the calculations in any way.

You might ask: how do we know future real rates of return?

While we can't know future returns in advance, the estimates of expected ranges are widely available. For example, see this article on Bogleheads wiki:

http://www.bogleheads.org/wiki/Historical_and_expected_returns
 
#32 · (Edited)
October 2013

No net-worth update this month.

I took a >$4000 business trip at the beginning of October, which was spread over two credit cards and two billing periods, some of which was personal expense, some of which is paid for, none of which is reinbursed yet. Add in that it's a 3-pay month and the fact I'm still owed a bunch of overtime, and it's looking just a bit too messy to report a net worth at this time.

I'll update at the end of November when all the dust settles and I'm squared up with Mastercard and my employer.

Assets

Stocks - $27,300
---TFSA: $14,200
---RRSP: $13,200

($3000 added into TFSA and ~$1000 gains)

Cash - Currently in flux


Expenses

$2300 total spent in October - though much of the October expense is being spread to a November payment on the credit card.

Non-essential spending included ~$800 in personal expenses while on my business trip (extended the stay with personal time), $300 for a new suit, $400 annual gym membership, $150 road trip to Calgary for thanksgiving, $150 photo radar speeding ticket on said road trip (thank you City of Edmonton), and a $250 house warming gift for my sister who just got a new job and new place to live in Alberta herself!

All-in-all a pricey month. That'll be toned right down for November though, where I don't plan on paying much more than rent and groceries.

But at least, for this month, no one can accuse me of wasting my youth! :biggrin:
 
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