# Staying Disciplined



## seton (Jun 22, 2014)

H,

Been a lurker for some time and would like to use this thread as an additional check and balance to stay disciplined. I am 34 and my wife is 29, we live in the prairies (no kids yet). Our goal is to balance the comfort in life with have a future stable retirement. Financial goal is to be in a position to retire by 55 for each of us (just be able to, not necessarily do so). We both have stable jobs have seen income growth especially in the last 3 years, and are trying to manage lifestyle creep.

*2019 Household income and expenses*

Gross household income: $186,141
Net household income (after taxes/pension deductions): $111,626
Annual expenses (including mortgage payments): $90,000

Our savings rate including pension deductions and additional savings is 25% of gross income. If I add the principal part of our mortgage payments, it is 33% of gross income. We travel a lot as a goal to maximise this time before kids, so our expense this year included about 7 different trips we took. I just received a ~30% raise that will take effect in January, but we want to try to maintain our expense level next year and just have a bigger cushion for all the life changes to come.

*Retirement assets*

We started really saving for retirement in 2015, when at the start of that year we had $20K saved. My wife has a public sector DB pension that should pay around $35K annually in retirement in today's dollars. Indexed assets are a self-manage ETF portfolio similar to the Canadian Couch Potato model. Goal is to have about $1.5M in inflation adjusted assets by 2040. We both have TFSA room which is a priority to catch up on in the coming 2-3 year

Company stock: $16,480
Indexed TFSAs: $32,759
Indexed RRSP: $55,344
Work DC Pension: $49,739
Saskatchewan PP (DC Pension): $10,849
Wife's DB Pension: $49,318 (Valued at current survivor death benefit)

Retirement assets: *$214,869*

Overall I feel like we are doing okay. There are opportunities to trim expenses, but trying to manage the balance.

Happy for feedback on our status.


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## moderator2 (Sep 20, 2017)

Welcome to the forum. I just recently approved your post, so it should be visible now.


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## fireseeker (Jul 24, 2017)

moderator2 said:


> Welcome to the forum. I just recently approved your post, so it should be visible now.


Moderator 2: Is the time stamp on the OP accurate? Has it really been awaiting moderation for more than three weeks??


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## moderator2 (Sep 20, 2017)

fireseeker said:


> Moderator 2: Is the time stamp on the OP accurate? Has it really been awaiting moderation for more than three weeks??


Apparently so. There are two moderators who volunteer at the forum and it seems to have slipped by both of us.


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## AltaRed (Jun 8, 2009)

Maybe it is time for the absentee owners to put a bit more coin into these forums, rather than sucking them dry for every penny they can extract?


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## Topo (Aug 31, 2019)

I think you are doing very well for your age and you are on track to financial independence in the next 20 years. 

Maximizing your RRSP and TFSA would be a worthy goal.


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## seton (Jun 22, 2014)

Well it's been a crazy year since I posed this in November 2019. I'm 35 now, and my wife is 30. Still no kids, we were considering but the pandemic put that plan on pause.

Here's where we are now, vs my last post ~15 months ago:


Income and ExpensesNovember 2019March 2021ChangeGross household income$186,141​$232,870​$46,729 [+25%]​Net household income$111,626​$142,050​$30,424 [+27%]​Annual expenses$72,739​$71,002​($1,737) [-2%]​

We've been fortunate to see salary growth since the last update, and a higher net income growth thanks to largely maxing out our RRSPs. I restated our annual expenses to exclude the mortgage; our expenses are down due to limited travel in the pandemic, offset by higher costs with a new car (we are a one-car household, but prefer to drive a newer car which was replaced in 2020) and inflation. Pretty happy that, despite good income growth in the last 15 months, we've kept our expenses level and haven't creeped our lifestyle.

For our retirement assets:


Retirement AssetsNovember 2019March 2021ChangeWork DC Pension (prior Company stock)$16,480​$27,989​$11,509 [+70%]​Indexed TFSAs$32,759​$58,178​$25,419 [+76%]​Indexed RRSPs$55,344​$100,583​$45,239 [+82%]​Indexed LIRA (prior DC pension)$49,739​$64,869​$15,130 [+30%]​SK Pension Plan (DC)$10,849​$16,982​$6,133 [+57%]​Wife's DB Pension (using the death benefit value)$49,318​$123,209​$73,891 [+150%]​*Total retirement assets**$214,869*​*$391,810*​*$176,941 [+82%]*​

Happy with growth in our retirement funds, nearing $400K. Pretty good growth all around. Markets have been kind; we use an ETF strategy, and stayed very disciplined with the market volatility through dollar cost averaging. Our gross savings rate towards retirement assets is 26%. We also save an additional 10% of gross income not reflected here (future cabin property fund). If I include our mortgage principle, our gross savings rate is about 45%.

We have some other TFSA assets not reflected as "retirement", more an emergency reserve, but one of my 2021 goals is to get closer to maxing out our TFSAs and catching up on contribution room. Last year posted of wanting to hit $1.5M (inflation adjusted) by 2040, but due to increased savings, should reach that goal by 2035 at the latest. 

We've also been paying off our mortgage. In November 2019, the balance was $204,000, and it's $150,400 today. At the latest, we should have it paid off in about 6 years. I know it's probably more optimal to not rush paying off the mortgage in a low rate environment, but we both want to be mortgage free as a personal goal that isn't purely financial.

Overall, pretty happy with the last 15 months.


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## Plugging Along (Jan 3, 2011)

Great gains (and reduction of expenses) on all front. I would really think hard about a cabin. We have one that hardly gets used. We used it when the kids were younger, but now, even in COVID they are busy and don't have time to go.


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## seton (Jun 22, 2014)

Time for my annual update.


Income and ExpensesNovember 2019March 2021March 2022ChangeGross household income$186,141$232,870$260,400+$27,530 [+12%]Annual expenses$72,739$71,002$87,183+$16,181 [23%]


Retirement AssetsNovember 2019March 2021March 2022ChangeDC Pension$16,480​$27,989​$49,708​+$21,719 [78%]​DB Pension$49,318​$80,098*​$93,806​+$13,708 [17%]​TFSAs$32,759​$58,178​$169,132​+$110,954 [191%]​RRSPs$66,193​$117,565​$148,712​+$31,147 [26%]​LIRA$49,739​$64,869​$65,703​+$834 [1%]​Non-registered$0​$0​$10,634​+$10,634 [New]​*Total retirement assets**$214,489*​*$348,699*​*$537,696*​*+$188,997 [54%]*​
* I entered the wrong number for the death benefit from my Wife's DB pension in last year's update - this is the right one.

Couple of key things that happened since my last update:

We refinanced our mortgage at the end of 2021, taking about $100K equity out. My views on debt have evolved, and paying off the mortgage isn't a priority. Half of this is set aside to do some kitchen and home renovations, and half we put into our TFSAs. 
Expected 2022 annual expenses are up to reflect about $25K in renos expected to incur this year, offset by no longer having car loan payments, which became fully paid off at the end of 2021.
We also decided not to buy a cottage not long after my last post (instead will do some renos as per above), and used the funds we had set aside for a cottage purchase to max out our TFSAs and the remainder of our RRSPs (mostly my wife's, I was already maxed). We started a non-registered account this year with our registered accounts now maxed.
Our income continued to move upwards, mostly thanks to my wife moving up a salary level in her teaching scale. This year she will end at the max in her scale, and thankfully their union negotiated cost of living salary increases, which will help keep up with inflation.
I'm pretty happy where we are year over year. Our retirement nest egg increased $189K is nice, even though our portfolio is down about 10% YTD with all the market volatility / geopolitical things happening. We are fortunate to have our jobs and health through the pandemic. I really try not to look at the portfolio often, and moved to monthly contributions to reduce the urge to tinker.

We plan to kick up travel in 2022 (we did a lot of cabin rentals and hotel staycations in 2021), and really looking forward to that (3 trips booked already!). Still no kids; we'll see what happens this year. 

Inclusive of our pensions, we are putting about $90K annually towards our retirement, about 35% of gross income. I'm 36 now, and initially I said the goal was to be able to retire by 55. Based on rough calculations, 50 looks possible even with the most conservative estimations, maybe even a few years earlier.


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## KaeJS (Sep 28, 2010)

Why are your expenses so high for 2 people with no kids?


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## seton (Jun 22, 2014)

KaeJS said:


> Why are your expenses so high for 2 people with no kids?


Probably driven by our two biggest items:

Renos: $25K
Travel: $15K

Also driven by our restaurant spending; we love eating out together (usually once a week), and it's not something we feel bad splurging on.


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## KaeJS (Sep 28, 2010)

If you don't feel bad, then don't let me judge. You do you.

If spending brings you value, you enjoy it, it brings you closer to your partner, then keep doing it. You only live once.

My only critique was your spending - but if that's what brings value and meaning to your life, don't stop.

Otherwise, you're doing well. Congrats.


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## seton (Jun 22, 2014)

I appreciate the feedback. Part of posting here is to get feedback, and it’s good to know our spending is on the higher end.

My wife and I have had many long conversations, especially through the pandemic, about what we spend on and what’s our values. Experiences we both agree on are worth it, stuff, not always


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## afulldeck (Mar 28, 2012)

seton said:


> Still no kids, we were considering but the pandemic put that plan on pause.


You are in fantastic shape at 36. Kids are an investment of hope, and for the future as well....


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## AltaRed (Jun 8, 2009)

One has kids if they really want kids. Many couples are not choosing to do so any more and I applaud them for not doing so just because..... 

However, to the extent one plans on kids, I feel that should be underway though by mid-30s to avoid potentially having to still be financing them past one's mid-50s. I see too many couples trying to juggle booting them out of the nest and/or still financing them, while wanting to retire early. It is tough to do both if the budget would struggle to accommodate both..


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## nobleea (Oct 11, 2013)

To add on to AltaRed's comments, in addition to the kid anchor in later life, when you may already be retired, waiting to have kids increase the likely costs of getting pregnant.
I would say the majority of our friends who started having kids after the age of 34ish, required some form of fertility treatment, usually at a cost of 20K and 2 years of effort. Don't assume you'll just be able to crank one out if you so choose to at this age.


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## Plugging Along (Jan 3, 2011)

seton said:


> I appreciate the feedback. Part of posting here is to get feedback, and it’s good to know our spending is on the higher end.
> 
> My wife and I have had many long conversations, especially through the pandemic, about what we spend on and what’s our values. Experiences we both agree on are worth it, stuff, not always


Our spending has always been on the higher end (sometimes too high), hence why I never post my spending. I am okay with our spending even though higher, because I know most of aligns with our values and what is important to us and I am okay with my spending because I am okay with my savings. I could save more, but I feel we already save enough yearly, and when I do my calculations, there will be more than enough to meet my retirement needs. My retirement is anchored based on key milestones for my kids, so unless I had millions more, I wouldn't retire earlier. I think the trick to getting the right spend-save ratio is to understand what is really important to you make sure you know what the 'value' of something is then to balance is with what you need to to save for the future. That requires a lot of thought earlier on in considering your retirement needs. Then adjust along the way.

In terms of kids, I can say as a type A - planning person, career oriented previously on the corporate ladder track, there is no optimal time to have kids. Most want to be financially stable, career stable, emotionally/mentally and relationship stable, and in physical prime. All of them are important, but the most is being physically able (notice I didn't say prime). As you get older, it's harder to conceive a healthy baby, so waiting will have hirer risks. The next is relationship and mentally stable, need to have a solid relationship because raising kids are the frggin hardest thing in the world and you have little control in many areas. Having money and career is important, but once you have enough to raise your kids to cover their essentials, everything else is gravy. Really there is not stopping what parents want to give their kids.

My thought is if you are stable in the areas even if you aren't 'at the place' you want to be, AND you really want kids, then you will find a way and should have them hopefully by mid 30's (for the woman). If you are even a little hesitant on kids (not how you will take care of them). then don't have them. My few cents.


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## Gator13 (Jan 5, 2020)

We refinanced our mortgage at the end of 2021, taking about $100K equity out. My views on debt have evolved, and paying off the mortgage isn't a priority. Half of this is set aside to do some kitchen and home renovations, and half we put into our TFSAs.
I am not a fan of this move. I would have stayed the course and paid off the mortgage. Your expenses are not high. If you back out the 25k for your reno your expenses are not high at all. Smart move to enjoy the journey. Well done.


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## peterk (May 16, 2010)

Sorry to jump on the "have kids" bandwagon here... but yes, get on that. 

To the already-good lists above of "why waiting is worse" I'll add:


Your habits are more ingrained, and changes to your lifestyle will irritate you more.
Tempted to spend more money to solve your problems rather than put in more effort.
Career breaks or pullbacks feel like bigger issues than when younger.
Bemoaning wasted youth while changing dirty diapers (can't do that if you're still youthful), maybe this one is just me.


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