Our wealth goals, journey, and targets - Page 2
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Thread: Our wealth goals, journey, and targets

  1. #11
    Well done, nice work so far! We are in a similar position as you. We live in Calgary. My wife is a teacher and I work in oil and gas as an accountant. Planning on having kids in the near future. Just curious what types of rewards programs do you use? Looks like you have the cash flow to be earning some decent rewards. We use the scotiabank momentum visa infinite and it works well. Also how will you handle childcare once your wife goes back to work? Some people have family look after their kids, some use day homes (expensive down here)

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  2. #12
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    Quote Originally Posted by OurBigFatWallet View Post
    Well done, nice work so far! We are in a similar position as you. We live in Calgary. My wife is a teacher and I work in oil and gas as an accountant. Planning on having kids in the near future. Just curious what types of rewards programs do you use? Looks like you have the cash flow to be earning some decent rewards. We use the scotiabank momentum visa infinite and it works well. Also how will you handle childcare once your wife goes back to work? Some people have family look after their kids, some use day homes (expensive down here)
    Thanks. For rewards program, I use as many as possible but don't go out of my way to get extra points. Our main CC is the MBNA World smartcash, which isn't as good as it used to be, but cash back is still great and no annual fee. I'll be looking for a better cash back card this year and will get the wife's card transferred over as well. The travel rewards cards would work well for us, but they all seem to have yearly fees which I'm not a fan of.

    Childcare, not sure yet. The plan right now is my wife will return to work part time, something like a 0.6FTE. Her mom will be retiring in that time and that is certainly an option we're comfortable with. I've budgeted $600/mo for childcare if it doesn't (for 2 days a week).

  3. #13
    Good plan. For cash back you may want to consider the scotia momentum visa infinite if you spend a decent amount on gas and groceries. Annual fee is $99 though so only worth it if you spend a lot on groceries and gas to recoup the fee. I've never had MBNA but heard they took a dive when TD bought them out. My wife will also likely go on 0.6 or 0.5 FTE depending on what's available. You're lucky if you can have family help out (we don't have any family in town). Best of luck in your journey and be sure to keep updating on your progress
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  5. #14
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    Oct 2013
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    Edmonton
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    March 2014 Update

    February was a good month. Got a small bonus which went against the mortgage. Equity markets did well, with my company stock up 30% in the month (I am overweight on it). Our baby still has not shown up yet, due date was last Saturday. Received all the tax slips this month and it looks like we'll be getting a net refund of about $3,500 once I get around to filing in March. This month was the biggest single month gain ($-wise) in net worth I've had since I started tracking, though the majority of it is due to equity gains. In regards to my idea to do some infill development, a lot came up (still for sale) in a very nice area of town that is wide enough to split. Checked out some builders and got budgetary pricing on construction costs. I think the numbers work out very favourably, but it would mean selling a house in the 1.1-1.2 mil range and those don't sell quickly. Have to be able to carry something like that for a 6 month listing I think. I have a friend that has 3 infills on the go (side job from his main job) right now with one almost finished and to be listed this month. I would like to see how his experience goes first and learn from his mistakes/tips, etc. As for our house, we plan on start looking for a potential lot in late fall. No rush, if nothing comes up, we can wait for a year for the perfect lot (lot being a small, older house in our current neighbourhood for tear-down). The city is making changes to the zoning in mature neighbourhoods, which would allow for more freedom in the house design, so I would wait until that passes (2014) anyways.

    Assets:

    House - $458,000 (+0.25%)
    SUV - $24,550 (-0.7%)
    Car - $2,225 (-16%)
    Non-Registered Portfolio - $66,796 (+14%)
    Work RRSP (mine) - $123,357 (+13%)
    Pension (wife) - $46,160 (+2.0%)
    Wife RRSP - $15,700 (+1.3%)
    TFSA's - $0 (N/C)
    Cash - $1,508 (-7%)
    Miscellaneous assets - $20,700 (N/C)

    Total Assets $758,900

    Liabilities:


    House mortgage - $61,364 (-11%)
    HELOC - $85,128 (+0.6%)
    SUV Loan - $8,700 (-9.1%)
    Credit cards - $4,180 (this is not a balance, but the amount due. we pay off every month, but a true snapshot must include this)

    Total Liabilities $159,372

    Net Worth: $599,524 (+5.5%, +$31,270 month over month, +37.2% year over year)

  6. #15
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    Mar 2014
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    88
    Looks fantastic, nobleea! You are killing the mortgage. And best wishes for the impending addition to your family.

    If you are still looking for a good cash back rewards card, I might suggest MBNA Rewards World Elite. It's 2% cash back on all purchases with an $89 annual fee. Thing is, they waive the fee for the first year and also give you 10k welcome bonus points ($100 value), so they effectively wind up covering the fee for two years. I love this card for the time being, but will cancel it and move on to another option after two years.

  7. #16
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    Oct 2013
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    Edmonton
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    April 2014 Update

    March was a life changing month for us, as we welcomed our daughter in to this world on the 9th. She was 7lb 13oz and full of hair - mom and baby are doing great and she's already giving us 5hrs of sleep a night. I opened an family RESP for her this month and am waiting for it to be converted to the e-series at TD before contributing, but we'll have no problem doing the max for this year to get the full CESG. As a bonus, AB gives a $500 grant at birth in the RESP. I do not plan on including the RESP in the net worth calculations, but may include the balance separately. It will be a couch potato type investment. We may some good progress on the mortgage, still on track for it to be gone in September. Equity markets were generous this month with one of the stocks I am overweight on up 30% in the month. Got a small promotion so that my pay scale and title reflect my actual work, this came with an 8% raise. Looking back at our goals for 2014, I don't believe I will be able to buy a new(to me) vehicle this year. According to the cash flow, it will likely be in mid-January, close enough I guess. I will be taking a month off in parental leave - we are likely going to go to Maui for 3 weeks. I can open TFSA's for both of us, but will have nothing substantial to contribute until 2015. With the house paid off, both TFSAs will be maxed out in 2015.

    Assets:

    House - $458,000 (N/C Keeping it constant for the next year)
    SUV - $24,375 (-0.7%)
    Car - $2,150 (-3.4%)
    Non-Registered Portfolio - $74,236 (+11%)
    Work RRSP (mine) - $123,708 (+0.3%)
    Pension (wife) - $47,060 (+1.9%)
    Wife RRSP - $15,750 (+0.3%)
    TFSA's - $0 (N/C)
    Cash - $876 (-42%)
    Miscellaneous assets - $20,700 (N/C)

    Total Assets $766,755

    Liabilities:


    House mortgage - $51,030 (-17%)
    HELOC - $85,381 (+0.2%)
    SUV Loan - $7,825 (-11%)
    Credit cards - $3,718 (this is not a balance, but the amount due. we pay off every month, but a true snapshot must include this)

    Total Liabilities $147,955

    Net Worth: $618,800 (+3.2%, +$19,276 month over month, +39% year over year)

    Chart of monthly net worth amounts since I began tracking them attached.
    April Update.png

  8. #17
    Senior Member
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    Oct 2013
    Location
    Edmonton
    Posts
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    May 2014 Update

    April went by in a flash and thank goodness as the weather was all over the place. Our EI maternity benefits showed up today, finally, in a nice retroactive amount. I have money assigned to our daughter's RESP, just have not contributed it yet since TD sent our e-series conversion forms back over a missing void cheque. I haven't checked yet to see if the change has been made. My stocks were all over the place this month - one down 21%, another up 22%. Made some more progress on whacking the mortgage down, on track to having it paid off in mid-September. We had a fair amount of expenses this month - booked 3 sets of flights (some on points) for travel to California, Ontario and Maui, and booked a vacation home. Still have some more travel expenses to go. I have found a few infill lots that we like in our neighbourhood. This would be for our next home. The lots aren't for sale, but everyone has a price. They all have small, old homes on them that are currently rentals, owned by people in their 60's. Nice big pie lots whose backyards face south. Will probably cost us in the 350-400K range for the lot, and then another 450K or so to build the house. We'll sell our current house when it's time to move (expected spring/summer 2016). I hope to end up in the new place with a mortgage under 250K which will take us 5-10 yrs to knock out. The question I toy with now is whether to get a builder to take care of the whole thing, act as GC myself, or some combination. Even with the screw ups that will inevitably happen and the additional time from acting as your own GC, the savings can be substantial.

    Assets:

    House - $458,000 (N/C Keeping it constant for the next year)
    SUV - $24,200 (-0.7%)
    Car - $2,075 (-3.6%)
    Non-Registered Portfolio - $71,148 (-4.3%)
    Work RRSP (mine) - $132,772 (+7.3%)
    Pension (wife) - $47,500 (+0.9%)
    Wife RRSP - $15,504 (-1.6%)
    TFSA's - $0 (N/C)
    Cash - $5658 (+646%)
    Miscellaneous assets - $20,700 (N/C)

    Total Assets $777,457

    Liabilities:


    House mortgage - $41,766 (-22%)
    HELOC - $85,627 (+0.3%)
    SUV Loan - $6,950 (-13%)
    Credit cards - $5,085 (this is not a balance, but the amount due. we pay off every month, but a true snapshot must include this)

    Total Liabilities $139,428

    Net Worth: $638,029 (+3.1%, +$19,229 month over month, +36% year over year)

  9. #18
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    Congrats on your baby!

    You're doing great. With a net worth over 600k you're not going to have any problems if you keep managing this well. A few suggestions.

    Be careful how you value the SUV on the asset side. What would you get in the used vehicle market if you sold it hastily? Be conservative with the number for the SUV.

    I'm scratching my head about why your TFSA(s) are empty. Do you realize you can do a contribution-in-kind, and move things like stocks (or anything else) you already have into the TFSA without selling it first? This is a beautiful tax shelter. Just take a look at your T3 and T5 tax slips. Are you paying tax on anything there? If so, see if you can transfer it into a TFSA.

    Your cash amount strikes me as a bit low, given that you have plenty of total money, and you're a 2 people with a new baby. I recommend boosting cash. In fact I would suggest putting money into a GIC ladder, and sheltering that within the TFSA. The idea here is that you will totally shelter the interest income, and GICs will be maturing every year or so providing you available cash should you need it.

    Your HELOC balance looks pretty high at 86k. I realize you've probably got a low interest rate, but why borrow ANY money --- why pay any interest at all -- when you have so much money? The bank of course will tell you it's a smart way to borrow etc but they're just trying to make business for themselves.

    The point I'm trying to get at is, when you have enough money (which you do) I don't see why you should have any loans. I think the reality is that while you have strong net worth position, your liquidity is poor... not much cash or equivalents sitting around. This can be problematic for instance during job loss or a weak stock market, when suddenly you'll be forced to liquidate assets like stocks to make ends meet.

    I think you should boost your liquidity and reduce your reliance on unnecessary loans like HELOCs. You're paying interest on loans, but you shouldn't even need those loans.

    Personally I don't think it's wise to be heavily invested in your own company stock. The problem is that you're concentrating your risk exposure to your employer. If the company has trouble, then both your job and your stock investment are at risk. It's putting a lot of faith in the company. Back when I was receiving company stock, I immediately liquidated it as soon as I could to minimize my exposure to my employer. (By the way they did in fact lay us off, and the stock declined at the same time)
    Last edited by james4beach; 2014-05-10 at 10:14 PM.

  10. #19
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    Here's another question: What is your total cash & liquid investments? If you lost your job or suddenly need emergency money, how much do you have without having to sell your stock or long-term investments? You don't want to have to sell stock investments... it's going to kill your future returns.

    I don't recommend relying on the HELOC for emergency money. Strictly speaking, HELOCs are callable loans. The bank can ask for the money back (unlikely) or they can prevent you from borrowing additional amounts (more likely).

    Your house and SUV/car are not liquid. Your non-registered portfolio holds stocks... but do you have investments that could be sold for cash in a pinch, like short-term bonds? The RRSP and pension are obviously locked in too. How about your misc assets, can any of them be converted easily to cash in a pinch?

    Otherwise you only have 6k of liquidity, not nearly enough for 3 people to live off for any amount of time.

    There are many options to improve your liquidity. More cash, more high interest savings, maybe cashable GICs (I have some at my credit union).

  11. #20
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    Oct 2013
    Location
    Edmonton
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    Quote Originally Posted by james4beach View Post
    Congrats on your baby!

    You're doing great. With a net worth over 600k you're not going to have any problems if you keep managing this well. A few suggestions.

    Be careful how you value the SUV on the asset side. What would you get in the used vehicle market if you sold it hastily? Be conservative with the number for the SUV.

    I'm scratching my head about why your TFSA(s) are empty. Do you realize you can do a contribution-in-kind, and move things like stocks (or anything else) you already have into the TFSA without selling it first? This is a beautiful tax shelter. Just take a look at your T3 and T5 tax slips. Are you paying tax on anything there? If so, see if you can transfer it into a TFSA.

    Your cash amount strikes me as a bit low, given that you have plenty of total money, and you're a 2 people with a new baby. I recommend boosting cash. In fact I would suggest putting money into a GIC ladder, and sheltering that within the TFSA. The idea here is that you will totally shelter the interest income, and GICs will be maturing every year or so providing you available cash should you need it.

    Your HELOC balance looks pretty high at 86k. I realize you've probably got a low interest rate, but why borrow ANY money --- why pay any interest at all -- when you have so much money? The bank of course will tell you it's a smart way to borrow etc but they're just trying to make business for themselves.

    The point I'm trying to get at is, when you have enough money (which you do) I don't see why you should have any loans. I think the reality is that while you have strong net worth position, your liquidity is poor... not much cash or equivalents sitting around. This can be problematic for instance during job loss or a weak stock market, when suddenly you'll be forced to liquidate assets like stocks to make ends meet.

    I think you should boost your liquidity and reduce your reliance on unnecessary loans like HELOCs. You're paying interest on loans, but you shouldn't even need those loans.

    Personally I don't think it's wise to be heavily invested in your own company stock. The problem is that you're concentrating your risk exposure to your employer. If the company has trouble, then both your job and your stock investment are at risk. It's putting a lot of faith in the company. Back when I was receiving company stock, I immediately liquidated it as soon as I could to minimize my exposure to my employer. (By the way they did in fact lay us off, and the stock declined at the same time)
    Thanks for the comments james. The SUV value is probably bang on for used car value. In a hasty sale, maybe knock a couple grand off. I can see no reason for a hasty sale.

    Haven't gotten around to TFSA's yet. Contribution in kind wouldn't work. The non-registered account is remnants of a smith maneuvre (which explains the LOC balance). If I contribute in kind, I lose the tax deductibility of the HELOC. The net interest rate on the HELOC is lower than the mortgage rate, hence our attack on that.

    I believe both our jobs are secure enough to not worry about a large cash savings. My wife is an award winning teacher. There'd have to be a >20% cut in staff across the Board before she was in jeopardy. My position is secure. I am close to being an international subject matter expert on the product. The product is a 2billion/yr niche of which my company has over 50% of the market. It's one of the crown jewels of the company. Even if the worst happened, a lay off would come with a healthy severance package and my skill set would be sought after.

    On the topic of emergency funds, I sit on the side of the fence that believes that a HELOC is fine for such a rare event. Once the mortgage is paid off, if one of us lost a job, nothing would happen. We would be fine just on one income. We both have disability coverage through work. Doesn't cover everything, but there's a big enough gap between our income and expenses that it's not an issue. Not listed on the balance sheet are future receivables. Not sure how I would put that in. This is for weddings and portrait sessions booked/contracted for 2014, but not paid yet. If I were to lose my main job and get no severance, those bookings would be enough to carry us through the year (wife can't get laid off right now as she's on maternity leave).

    Engineers are very by the numbers. I think I understand the risks well, but also understand the probability of said risks. One thing I do have to address soon, is some additional life insurance for both of us. It'll be Term10, as we'll be self insured after that.

    In regards to company stock of course holding it increases risks, however I do not plan on keeping it forever. Somewhere in the 4-12month range. When our stock was languishing a year and a half ago, I was begging to be put on the stock incentive program, even offering a cut in pay to do so. Didn't happen unfortunately. If they stick to their plan, 50-100% gain from here over the next 12months is likely.


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