# Could I be doing more?



## showmethemoney45

I x


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## nobleea

Is that rental property income gross or net? If it's gross, that's really a bad number for 2M worth of real estate.


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## showmethemoney45

Net rental income!


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## nobleea

showmethemoney45 said:


> Net rental income!


Better, but that's still a cap rate of between 1-2.5%, which is extremely low. Investors might want 4-5% or more.
You could sell the rentals and with your equity (600K) buy an REIT and pull in the same net income with no work.


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## BoringInvestor

Hi showmethemoney45, 

Presently, your family has a yearly income in excess of >300k gross, you have net assets ~1.5 million, and you're both 'only' 34.
That all seems pretty great so far.

You're asking about passive income, presumably through investing, so tell us:

- over the recent past, how much are you savings each month and putting towards your TFSAs/RRSPs/DRIP stocks, and
- what are the actual securities held in your TFSAs & RRSPs and what do you consider to be DRIP stocks (I presume these are held in a non-registered account)?


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## Davis

Why do you have 95K in savings and 5K in stocks, but only 5K in TFSA? It looks like you have taxable investments without having taken full advantage of the tax shelter? Also, at 155K in RRSPs, have you maxed those out?

I agree on the REITs. Mine are paying 6-8 percent, and they don't phone me at 11 pm to say the washing machine is broken.


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## showmethemoney45

TFSA is held in cash-(yes I know this is bad)
RRSP's (don't know-I'm with Sunlife and doing a medium risk stew of sorts that they pick)
DRIP's I've been putting only $250/month sort of for fun as my skill level is so low.

I was just on mat leave so that slowed us down for the last year and a half. 

Currently we are putting $1000/month into savings, $250/m into DRIPs, and an extra $650/month onto our primary residence. Our property net cash has just been sitting in a separate savings (30K) in case vacancies spike or we need a new roof. I put roughly 500/month into RRSPs through my work.

Thanks for the replies!


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## showmethemoney45

Also, we don't manage the properties ourselves but yes they still take work.


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## BoringInvestor

showmethemoney45 said:


> TFSA is held in cash-(yes I know this is bad)
> RRSP's (don't know-I'm with Sunlife and doing a medium risk stew of sorts that they pick)
> DRIP's I've been putting only $250/month sort of for fun as my skill level is so low.
> 
> I was just on mat leave so that slowed us down for the last year and a half.
> 
> Currently we are putting $1000/month into savings, $250/m into DRIPs, and an extra $650/month onto our primary residence. Our property net cash has just been sitting in a separate savings (30K) in case vacancies spike or we need a new roof. I put roughly 500/month into RRSPs through my work.
> 
> Thanks for the replies!


Currently between your RRSP and stocks you DRIP, you're putting in $750 / month into your investment accounts, correct? 
Are you looking for advice on how to find room in your budget to increase that amount - if so we'd need to see your budget.
Are you looking for advice/ideas on how to invest these funds - if so we'll need to know details about what exactly you're invested in.


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## peterk

You guys seem to spend quite a bit. Perhaps there is more you could cut back on to increase that $2000/month savings? You net somewhere around $17,000/month? I would think you could save $5000/month easily without too much trouble or hardship.

What line of work is your husband in, BTW?


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## showmethemoney45

I de


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## showmethemoney45

BoringInvestor said:


> Currently between your RRSP and stocks you DRIP, you're putting in $750 / month into your investment accounts, correct?
> Are you looking for advice on how to find room in your budget to increase that amount - if so we'd need to see your budget.
> Are you looking for advice/ideas on how to invest these funds - if so we'll need to know details about what exactly you're invested in.


Yes, thats correct.
I want advice on how to be richer....thats right I said it. I want to be rich. I love what money can buy. Security/peace of mind/education/designer jeans etc. I wouldn't kill anyone over it but seeing as this is an anonymous internet site I can be honest. Thats why we're all here.


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## Mookie

showmethemoney45 said:


> I definitely know we could be saving more. Our kids daycare costs $1700/month, house/utiliies are roughly $3000/month, $2000/m investing....jesus...where is the rest going? I guess we're having too much fun? Trips, flames games, new tvs are really adding up. We probably take home $15000/month (not including the rental income).


So, that leaves over half of your $15,000/month unaccounted for. If you don't now where all of your money is going, it's hard to know where you can cut. I would suggest tracking *ALL* spending for a few months. Once you know where your money is going, you will be in a better position to decide what you can cut back on or cut out completely.


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## Plugging Along

I think you guys are making great incomes, but have no idea where you are spending. 

$8k a month is ALOT of discretionary income. Figuring this out would be your biggest impact.


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## OnlyMyOpinion

We download our chq acc and credit card accs from our on-line banking into excel and group expenditures that way. Not sure if that could work for you. The great thing is that you are young, have great incomes and are now focused on 'paying yourself first'. Financial independence is definitely do-able. Remember expenses and savings will change over the years, for example the kids will be in school all day before you know it, then maybe daycare costs will go to paying off the house, etc.


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## showmethemoney45

nobleea said:


> Better, but that's still a cap rate of between 1-2.5%, which is extremely low. Investors might want 4-5% or more.
> You could sell the rentals and with your equity (600K) buy an REIT and pull in the same net income with no work.


Is this really an ROI of 1-2.5%? We only invested maybe 50K of our own money to leverage 2M in real estate. Therefore isn't it more like 40-100% ROI?


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## BoringInvestor

showmethemoney45 said:


> Yes, thats correct.
> I want advice on how to be richer....thats right I said it. I want to be rich. I love what money can buy. Security/peace of mind/education/designer jeans etc. I wouldn't kill anyone over it but seeing as this is an anonymous internet site I can be honest. Thats why we're all here.


How do you know when you're rich enough?
What's your end goal?


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## showmethemoney45

BoringInvestor said:


> How do you know when you're rich enough?
> What's your end goal?


Thats a really hard question...
The things I dream for are as follows:

New house 2.5M (inflated cost 10 years from now)
cabin 250k (price now)
Condo 400k (for my parents when then get old)
kids RESP etc 200K

=3.35M
Think this is possible in the by the time we're 45? (10 years from now)

Obviously these are my dreams and I could definitely be happy with far less as long as I have my family. Just wondering how achievable these dreams are? I think my husband and I would still like to work after 45 (even if we had the option) but maybe just not as much or do something else.


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## nobleea

showmethemoney45 said:


> Is this really an ROI of 1-2.5%? We only invested maybe 50K of our own money to leverage 2M in real estate. Therefore isn't it more like 40-100% ROI?


It's not ROI. Cap rate is used to quantify whether a rental is a good one. ROI is based on how much you invested. ROI will vary wildly depending on how much you've leveraged, but cap rate will not. You can leverage in stocks too if that's what you like. A 600K stock portfolio in a margin account could probably be levered 2:1. I'm not sure exactly what the margin ratios are on REITs.


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## nobleea

showmethemoney45 said:


> Thats a really hard question...
> The things I dream for are as follows:
> 
> New house 2.5M (inflated cost 10 years from now)
> cabin 250k (price now)
> Condo 400k (for my parents when then get old)
> kids RESP etc 200K
> 
> =3.35M
> Think this is possible in the by the time we're 45? (10 years from now)


Of course they're possible, but you haven't included some important information. Do you want all those properties to be paid for? Do you want XX of passive income to pay for all the maintenance and taxes on those? Are you still wanting to work? Both of you? Given your incomes now, and assuming they are safe, then buying all that stuff wouldn't be a problem at all.


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## james4beach

You have more than enough income to become rich. Your household income is very high.

You must begin meticulously *tracking* your spending. Create a spreadsheet and create an entry for EVERY amount you spend more than $5. Put a code in the column next to it, like
F = food
E = entertainment
H = housing and home related
C = consumer goods/toys
K = kids

Collect this data for a few months and then analyze exactly where your take-home pay is going. As others have said before, figuring out where your money is going is a very important factor. Personally I think it's a bigger part of building wealth than investments. (The returns/gains from controlling spending will far exceed any investment gains).

That being said, you really ought to have much more in your TFSAs. Things like your savings and stocks can go inside the TFSA. This is the best tax shelter available... generally better than an RRSP, even.


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## peterk

showmethemoney45 said:


> The things I dream for are as follows:
> 
> New house 2.5M (inflated cost 10 years from now)
> cabin 250k (price now)
> Condo 400k (for my parents when then get old)
> kids RESP etc 200K
> 
> =3.35M


You seem quite obsessed with housing, particularly for someone living in a one horse oil town who I would think is feeling quite a bit of pain right now with 2.7M (last year's value I'm sure) in property.

I don't think pumping every cent you have into three houses is a wise financial strategy for building wealth.

Then again, this year and next may be excellent times to buy property in Alberta if you anticipate a recovery eventually (I do).

Then again,,, you are already massively leveraged, and I doubt the bank will be willing to give you much more. No one would recommend someone earning $30k/year to buy a $300,000 house, and it is certainly even worse for someone making $300,000 to have $3,000,000 worth of house! Worse for the bank (higher risk) and worse for the borrower (it could ruin you if things turn sour).


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## donald

I read it Peter as this is her goal in 10 yrs time(those being the items that would make her feel 'rich'?i think?)
I personally think to be successful at any thing and work towards any goal tracking is highly important and having little milestones etc
I don't doubt you have a high income but it is a little concerning you don't have a 'handle' on your personal balance sheet
It's nuts you can't account for roughly 8k a mth in your budget lol

Maybe i am a different bird(doubt it,lol)but 1st things 1st get a handle on where your money is going!my 2 cents-was said up thread.


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## My Own Advisor

"The things I dream for are as follows:

New house 2.5M (inflated cost 10 years from now)
cabin 250k (price now)
Condo 400k (for my parents when then get old)
kids RESP etc 200K

=3.35M
Think this is possible in the by the time we're 45? (10 years from now)"


These are good and ambitious goals. I wouldn't be too concerned with a "rich house", I'd be more concerned with generating long-term cash flow to do whatever you want. There is no point in being "house rich" and cash poor. 

I would focus on building assets (beyond your primary residence) that generate cash flow. Then, with that cash flow, you can do whatever you want...own and pay for expenses in a fancy home, downside the primary home and have other homes, have one home as home-base and travel the world; buy stuff - your designer jeans all the time; etc.

Again, I would focus on building assets that generate income and use that income to fund the lifestyle of your dreams.

Just my $0.02!


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## OnlyMyOpinion

Because we could never afford one, I've always shaken my head when we drive by the multi-million dollar houses (I mean the opulent ones, not those in Vanc 
Even if I could afford one, the thought of all those ongoing, embedded costs (taxes & util, upkeep..) would keep my semi-frugal (cheap?) nature from owning one.
The OP has some other priorities (i.e. where does the money go) before finalizing their future goals, but when that time comes I would really think about what is important, what financial independance is worth to you, and how much you want to have tied up in a roof.


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## tygrus

IMO, you have nice income, but are dangerously over levered in one asset area, real estate. Also, you are making the inaccurate assumption that housing will go up forever. I can tell that just by your 10 year inflated cost calculation. Housing is not tied to inflation, its tied to wages and interest rates. 

So those two things should tell you something right now, interest rates are as low as they are ever going to be and wages will be under severe pressure for years to come because of the oil situation. Calgary is a one trick pony. I lived and worked their for 10 years so I know. Your RE assets are likely to lower in a few years time. Shave 20% off your home and rental properties then take a look at your situation.

And maybe just a little tip for the poster, you are pretty wide eyed about wealth and its great and all, but freedom is your biggest asset. I retired at 39 and now nobody controls my path but me. I live in a area with lots of 1 million dollar houses around me, but noticed one thing, the owners still get up and go to work at 7 am. I am making breakfast for my kids in my PJs at that time.


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## AMABILE

hey tygrus, you're one smart fella :rugby:


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## peterk

tygrus said:


> I retired at 39 and now nobody controls my path but me. I live in a area with lots of 1 million dollar houses around me, but noticed one thing, the owners still get up and go to work at 7 am. I am making breakfast for my kids in my PJs at that time.


tygrus - If you don't mind my asking, what age were you when you got married and had children? Did you plan to stop working so young before having kids or did your plans change after they arrived?


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## showmethemoney45

tygrus said:


> IMO, you have nice income, but are dangerously over levered in one asset area, real estate. Also, you are making the inaccurate assumption that housing will go up forever. I can tell that just by your 10 year inflated cost calculation. Housing is not tied to inflation, its tied to wages and interest rates.
> 
> So those two things should tell you something right now, interest rates are as low as they are ever going to be and wages will be under severe pressure for years to come because of the oil situation. Calgary is a one trick pony. I lived and worked their for 10 years so I know. Your RE assets are likely to lower in a few years time. Shave 20% off your home and rental properties then take a look at your situation.
> 
> And maybe just a little tip for the poster, you are pretty wide eyed about wealth and its great and all, but freedom is your biggest asset. I retired at 39 and now nobody controls my path but me. I live in a area with lots of 1 million dollar houses around me, but noticed one thing, the owners still get up and go to work at 7 am. I am making breakfast for my kids in my PJs at that time.


I agree with your housing tips. I agree that we are (or were) overlevered in real estate. If it was up to me we wouldn't have as many rentals but my husband is sometimes a day dreamer who thinks real estate is always the answer and it could never "go bad." We've made mistakes and had a few hard years with negative cash flow but now we've made it out (somewhat). You're right- I think people assume that real estate will go up forever and that thinking will get you into trouble. Also, its not the same as investing-its like another job!

But what to do now? Whats done is done....Moving forward would you pay down the properties to increase cash flow? Or use you positive income to invest in stocks/RRSPs/DRIPS etc? Or use all your extra income to pay down your primary residence to keep your tax deductible expense the longest?

First thing first-tracking our family spending! I've recorded our last 6 months as thats how long we've had our full incomes-attachment to follow.

And again you are right freedom is the best asset. I have no desire to own a nice home if it means i have to eat mac and cheese and stay home all day. Also, a too big of house is too hard to keep clean!


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## tygrus

I retired, got married and had a kid all in in my 39th year. This wasn't really a plan but it worked out.

When I was a bright eyed engineer out of university, I got a job in the patch when I was 26. The money was ok, but I *HATED* working for someone else. My bosses were always these suck up type A'ers who wanted to micromanage me, gave me no freedom and I had to beg for a raise each year. I tried a couple different companies but always found the same thing. In my last job I was jetting all over NA attending endless meetings and getting home friday nights at midnight all on my way to gaining 100 lbs and about 6 months of insomnia. That was enough.

Fortunately 10 years earlier I had started to build alternative income in a business and investments and it was time to make a stake on my own. The first year or so was scary without a paycheck coming each month, but that soon subsided. Now its a beautiful thing and its income for life, even if I live to 100.


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## Barwelle

Smarter people than me would reply, but since your mortgages are about 60% of your real estate value, you have some room for their value to drop before you're under water... so I'd probably be putting money into investments so that your net worth is not so heavily weighted towards real-estate - at least up until you max out RRSP and TFSA. (Right now you have about 1.5M in RE vs 260K in RRSP & savings) 

Keeping tax deductible interest around when you have other debt to pay off is a good idea, unless that interest is at a higher rate than your other debt even when accounting for the tax deduction. 

Keep in mind... you're paying $0.00 for my opinion :biggrin: But I'm in a situation that is vaguely similar (numbers are quite different though) and this is my general plan, after plenty of reading on CMF and other forums, blogs... etc.

Something to be aware of regarding tax-deductible interest on the rental mortgages, in case you don't see this already... all other things being equal, your cash flow will be reduced towards the later stages of paying off the rental mortgages, since the amount of interest you pay per payment goes down, which therefore reduces the tax deduction you can claim. So it will seem that rental cash flow gets tighter and tighter, until they are paid off. (hopefully you can increase rent over time to cover that)



OnlyMyOpinion said:


> Because we could never afford one, I've always shaken my head when we drive by the multi-million dollar houses (I mean the opulent ones, not those in Vanc
> Even if I could afford one, the thought of all those ongoing, embedded costs (taxes & util, upkeep..) would keep my semi-frugal (cheap?) nature from owning one.


+1. I'd rather pile my extra dough into something that either _makes_ me money... or spend it on experiences (I'm of the camp that values trips and non-material fun over material wealth - like most CMFers, I believe.)


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## tygrus

showmethemoney45 said:


> But what to do now? Whats done is done....Moving forward would you pay down the properties to increase cash flow? Or use you positive income to invest in stocks/RRSPs/DRIPS etc? Or use all your extra income to pay down your primary residence to keep your tax deductible expense the longest?


The rental properties are blessing a curse at the same time. When they are full of good tenants, its a dream. Unfortunately, that doesn't always happen. A place that goes unrented for a few months or has a bad renter that you have to toss can go underwater in a heartbeat. And even if you have a manager, renters are a pain. A REIT pays you your income every month no matter what happens and they deal with the problems. I had a couple rentals at one time, I would never own them again and would just buy a REIT.

Paying off debt that is at 3% is a mistake but lots of people are doing it because they don't know what investing is. Paying debt is not investing, its an opportunity cost. Its money that you could have put to another use making a greater return. On my mortgage, I pay the minimum payment and any extra I have I invest with it. If I have a 500k mortgage debt and 500 k in investments, I am still debt free.


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## Plugging Along

showmethemoney45 said:


> Thats a really hard question...
> The things I dream for are as follows:
> 
> New house 2.5M (inflated cost 10 years from now)
> cabin 250k (price now)
> Condo 400k (for my parents when then get old)
> kids RESP etc 200K
> 
> =3.35M
> Think this is possible in the by the time we're 45? (10 years from now)
> 
> Obviously these are my dreams and I could definitely be happy with far less as long as I have my family. Just wondering how achievable these dreams are? I think my husband and I would still like to work after 45 (even if we had the option) but maybe just not as much or do something else.


One thing I see is that everything is RE, which already been mentioned. You have very little control, if any in what the future values of RE will be. This 2.5MIL home, you haven't even purchased it yet, what are you expecting for your purchase price in 5 years? Also, cabins don't always appreciate. The one I bought almost 10 years ago is just less now, than what I paid then. The cabins near the Calgary market and BC are driven by the economy in Calgary. The fluctuations for the recreation properties are much higher on the downside, than on the upside. 

Also, you make no mention of non real estate investments. This is where you do have more control in terms of your savings rate, and also the types of investments you choose. I would focus on this area, and increasing your investment savings. I see that you are not taking advantage of the TFSA to the full amount, that's one place I would start, and the other based on your incomes, you would both maxing out the RRSP, TFSA, and RESP for your kids. 



showmethemoney45 said:


> I agree with your housing tips. I agree that we are (or were) overlevered in real estate. If it was up to me we wouldn't have as many rentals but my husband is sometimes a day dreamer who thinks real estate is always the answer and it could never "go bad." We've made mistakes and had a few hard years with negative cash flow but now we've made it out (somewhat). You're right- I think people assume that real estate will go up forever and that thinking will get you into trouble. Also, its not the same as investing-its like another job!
> 
> But what to do now? Whats done is done....Moving forward would you pay down the properties to increase cash flow? Or use you positive income to invest in stocks/RRSPs/DRIPS etc? Or use all your extra income to pay down your primary residence to keep your tax deductible expense the longest?
> 
> First thing first-tracking our family spending! I've recorded our last 6 months as thats how long we've had our full incomes-attachment to follow.
> 
> And again you are right freedom is the best asset. I have no desire to own a nice home if it means i have to eat mac and cheese and stay home all day. Also, a too big of house is too hard to keep clean!


My advice would be:
1. Track your expenses. Also, don't think that because your kids are young costing a lot in childcare, that the expenses will go down. What are their ages? I am assuming because of your costs, and your age, they are still young and not in school yet. I predict that based on your what you have posted on your house and income, private school is a potential option you are thinking of. This can get very expensive. Also, the activities once they get older. 

The fact that you haven't been tracking you expenditures, gives an indication that you are comfortable just enjoying, and that's okay... I don't track my expenditures either, but I have a high savings rate. 

2. How are you calculating a house worth 2.5 mil, which you have not purchased yet. What are you assumptions, Calgary, is a very up and down market. Don't get me wrong, I like RE as an investment, and am looking to add more if the house prices drop in Calgary, but I also hold long term.

3. I would max out your RRSPs if you have done so, and your TSFAs too. This is where you will get some of the best tax savings based on your incomes. You haven't mention how comfortable you are in investing, so I won't say in what. 

4. With such low interest rates, and that you are cash flowing positive, I wouldn't pay down the rental mortgages. I would pay the principle residence as soon as possible, but that is me. With 2 young kids, would you be able to float all your bills on one income. That's always my question. My spouse was just laid off as the a result of the low O&G, and we have been through this before, and learned from the last time, keep all the debts down that don't cover themselves. I wasn't nearly as worried this time knowing we don't have a mortgage on our house or our cabin, and the other bills I can juggle on my income. Could you do that on your income alone? I didn't worry about our rental incomes because they cover themselves. 


Just so you know, my profile was almost the same as yours at your age (I am a little older), we had almost the same networth, incomes, and kids, etc. We were actually lower in terms of income and networth, but had a little less real estate and more investments, and about the for our spending tracking at that time. The advice I would give myself knowing what I do know now. 

- With kids, really know what your and your spouses priorities are when you are raising your kids. You want to know what is important so you allocate your resources appropriately. For us, it was about their education and experiences. We choose a smaller house, but bought a cabin so they could have the memories as kids, and they get a lot of really fun experiences and activities. They don't get a lot of toys, and designer clothing and gadgets. Their education and care are the upmost importance to us. We spend over $3K on month on childcare (that' with them being in school full time), and save for their university.

- We learned, we hate budgeting, it's not my personality. Even with layoffs, we don't budget. What we always did was put a set amount for investments and savings. We treat them like bills, and then everything else, we spend as we please. When both of us are working we save at least 25% of our income (enough to max out the RRSP, RESP, TFSA, emergency fund, and amount for mid term purchases). You need to figure out this amount. 

- The less you have in terms of debt for a mortgage for your house and cabin (not the rentals), the better, this gives you and your family more stability. 

- Take better inventory on your finances, you should look at what your husbands pension is. That makes a big difference.

There's my random thoughts.


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## tygrus

People's obsession with housing is becoming very disturbing. I get that people want some symbol to flaunt and I guess a house fits that bill better than cash in a bank or a stock portfolio.

A lot of those massive shacks are multi generational. Meaning that 2-3 families sometime live there. This is common with new immigrants. You will see the kids live at home until they are 30+ and on top of that older grandparents can be living there as well. Sometimes the house is willed to some of the kids in return for them letting their parents stay in the house when they are older. This is a different strategy than westerners have seen so don't get too rosy eyed when you see mansions. There could be 10 people paying the mortgage in there.

A 2.5 million house where I live is going to probably bigger than 5,000 sq feet. The typical family is 4 people. What do you need all that space for?


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## Plugging Along

I have to admit, I get sucked into the the housing piece too. We have one of the smaller houses in the area, but it's a great area. My kids friends have commented they thought we would be 'richer' because we do so much with the kids and we have a cabin.

We would like more space our place is under 2000 sq feet but I always like the idea that I want to have freedom and choice more than a larger house. I have to keep reminding myself that.


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## IFITSTOBEITSUP2ME

*Lurking For Many Years Here This Thread Prompted Me To Register*

I have had a wonderful time for several years just reading the posts on this forum and reading Canadian Couch Potatoe and learnt a tremendous amount based on individuals perceptions, albeit I've remained frozen on moving forward outside of what we know, but that needs to now change. Thank you to all that contribute. Now as we are prepping for the highlight of our twilight (hopefully), I decided to register, prompted by this interesting post and everyone's individual perceptions regarding real estate ownership versus other types of investments.

Ironically our wealth (for what it is) has solely been built up through real estate over the years = buying revenue properties, building properties ourselves and selling them, picking one of the last 5 lots in a community then flipping upon possession for a 20% return in the late 90's and early 2000's, and lastly buying a canal lot in the USA in 2009 when their market was at rock bottom low, which is now approximately worth just under double what we paid and cost of build. Have we made a few errors = Sure! Overall though RE has enabled us to build a 7 figure Net worth, whereas my consistent attempts in the stock market for over 15+ years has been sad to say the least by comparison. So we've stuck with thus far the "if it ain't broke, don't fix it" theory.

The biggest problems with RE which has been our personal experience over several decades, has been when people have tried to speculate and not look at long term buy and hold or a double sided option = fix and flip, but if market not there at the time, would it be a cash positive/initial low subsidise rental option? Typically, we all need a roof over our heads, food in our stomachs and somewhere warm to sleep at night, this is unlikely to change in the future, and has been our premise with what we've done over the years. 

It was generally greed and speculation of folks seeing a huge rising $$'s in RE market in the 2004/5/6 era where folks saw their neighbours sell their homes after contracting a builder to build and then saw the price of the same property go up by another $100/$200K plus between sale and possession of the new home. We heard many say "I'm not going to lose that much, I'll lock in at today's rate with the builder, and sell my current house just before possession date". They became gamblers or speculators. All of a sudden a glut of product hit the market (bubble), then folks were having to fire sale large highly leveraged properties, to meet their mortgage approval of "subject to their current home being sold". I recall even builders having to adjust their agreed to prices by 6 figures here in Calgary area because the lenders some 18 months after contracts being agreed would lend based on the rapid declining appraisal prices. 

OTOH, we have many many friends and family that bought properties over the years and have created a wonderful retirement portfolio. EG: One bought 9 properties back in the early to mid 90's at around $69,000 to $89,000 and these are obviously paid down now through huge rental increases, and the values are in that $350,000 to $400,000+ range. That same person about 8 years ago bought a 10 plex for a $1million from what he'd saved from the previous 9 rentals once paid off, and we questioned whether it was a smart move at the time based on lofty values then. Well, today it's worth considerably more than that and his rental rates have increased exponentially. My father paid UK600 for a piece of land in 1960, to build a luxury then, house on it total cost was UK4000 and he worried himself sick on having a loan at that time for the actual build. Sold in 1987 for UK82,000 Today it is worth even with up down markets in-between over UK650,000. Uncle bought a farm in late 1950's for a few thousand pounds, in 1980's bought the one next door for exponentially more, converted many of the granite outbuildings to holiday rentals being coastal area, and now so less change out work, rents out all as long term rentals - the value of his holdings here are worth a few million UK, and he has paid down many years ago any owings. These are just a handful of many many folks we know who have created their wealth being low income earners through using OPM for leverage through RE.

Of course it all depends on which market place you are in - we've always considered investment for RE only in areas where there is a large economic centre, and accordingly after the peak prices of 2007, the declines throughout the following 3-4 years, we are today even with recent declines still seeing single family properties worth more than they were in the peak of first quarter 2007. 1995 properties were selling here for less than they were bought in 1993 but today they are worth more than double that again. There's very few things you can invest in we've personally found that long term can give you the returns of what RE has for such a small initial investment by comparison. Every market rise, we hear that "oh don't you think properties are too high priced to buy now", yet just like the S&P500 long term they've still gone up, up, up.

For sure RE is not as liquid to sell as stocks, ETF's etc but for someone young enough and with time on their side, just as I see advised in the stock market long term, I'm curious how one could go wrong for such a small initial investment leveraging with OPM when in a large economic centre. Don't get me wrong, I'm going to start a "Pls advise/help me thread" regarding liquidating our assets now we are older, as we wish to start travelling, but reading the comments on RE here, I found it quite interesting our actual experience over the past several decades versus some other's thoughts.

I've really enjoyed this thread and it's comments, have been envious of what so many folks here on the forums generally have achieved at such a young age with good incomes and being able to retire so young like Jon Snow, MOA (great website by the way). RBull I like how you write very much also. Unfortunately we have always been what my father termed "house rich and cash poor", now we need to liquidate and decide where to put it all for a half decent return as risk adverse as possible all things considered. Hoping in future posts to glean your knowledge utilizing other less hands on, more passive investment vehicles outside of RE.


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## tygrus

IFITSTOBEITSUP2ME said:


> Hoping in future posts to glean your knowledge utilizing other less hands on, more passive investment vehicles outside of RE.


I only would recommend have maybe 20% of your assets in equities. Its not that the stock market is a bad place, its that people cannot stomach the volatility. 

If you had a 7 figure stock portfolio, you could find yourself easily down 50-100k any given day. Its hard to have conviction to hold on through those periods. Your RE portfolio probably held solid and even if it did fall a bit, you didn't know it. 

ETFs have help smooth a lot of the market volatility though. They are the only equities I buy.


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## atrp2biz

I disagree. It's all relative. We have ~75% of our net worth in equities. We are extreme buy-and-hold investors. The only time we sell is on the back end of a Norbert's Gambit. We also don't time too much either. Cash flow is pretty consistent so we buy 'something' every month or so. Not too much thinking required. If the market goes down, it just means our next purchase will be at a discount. Absolutely zero stress.


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## showmethemoney45

After spending some time going over the last 6 months of expenses I have come up with the following:
(Spreadsheet was too big to attach so I'll just give you the summary)

Net income: $106,598

Savings/Investment: $21,700 (more than I originally thought)

Housing/grocs/health: $37,202

Transportation: $6,150

Kids/care: $13,700

Personal/Entertainment/recreation/house stuff: $17,820 (bought 5500 worth of tvs recently)

Vacation: $6,800


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## BoringInvestor

showmethemoney45 said:


> After spending some time going over the last 6 months of expenses I have come up with the following:
> (Spreadsheet was too big to attach so I'll just give you the summary)
> 
> Net income: $106,598
> 
> Savings/Investment: $21,700 (more than I originally thought)
> 
> Housing/grocs/health: $37,202
> 
> Transportation: $6,150
> 
> Kids/care: $13,700
> 
> Personal/Entertainment/recreation/house stuff: $17,820 (bought 5500 worth of tvs recently)
> 
> Vacation: $6,800


Great. Where did the other $3,226 go?
'Other' spending?


To break this down for others, on a monthly basis you and your family:

Earn: $17,766.

Spending:

Savings/investment: $3,616
Housing/groceries/health: $6,200
Transportation: $1,025
Kids/care: $2,283
Personal/entertainment/house stuff: $2,970
Vacation: $1,133


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## OnlyMyOpinion

So you are saving ~20% which is actually pretty good. With further analysis and discipline you could probably increase that though and meet your goals even sooner. Also, are either of you making your own contributions to a pension through payroll? That might be another source of retirement savings that you haven't counted.


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## showmethemoney45

BoringInvestor said:


> Great. Where did the other $3,226 go?
> 'Other' spending?
> 
> 
> To break this down for others, on a monthly basis you and your family:
> 
> Earn: $17,766.
> 
> Spending:
> 
> Savings/investment: $3,616
> Housing/groceries/health: $6,200
> Transportation: $1,025
> Kids/care: $2,283
> Personal/entertainment/house stuff: $2,970
> Vacation: $1,133


I knew somebody would notice that!
There is some money sitting in our accounts doing nothing and I also put $2500 into my kids account that I use to buy RESPs. If the balance is 2500 then you don't have to pay a monthly fee.

And yes thats correct. I think we spend too much money on food and entertainment. When I point this out to the family I get called a "buzz kill."


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## showmethemoney45

OnlyMyOpinion said:


> So you are saving ~20% which is actually pretty good. With further analysis and discipline you could probably increase that though and meet your goals even sooner. Also, are either of you making your own contributions to a pension through payroll? That might be another source of retirement savings that you haven't counted.


My husband contributes to pension directly and I contribute to RRSPs (5% salary) right from my paycheck. Our take home pay is after these savings.


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## nobleea

showmethemoney45 said:


> I knew somebody would notice that!
> There is some money sitting in our accounts doing nothing and I also put $2500 into my kids account that I use to buy RESPs. If the balance is 2500 then you don't have to pay a monthly fee.
> 
> And yes thats correct. I think we spend too much money on food and entertainment. When I point this out to the family I get called a "buzz kill."


I think you need to break it down further. 6200 a month on 'house/health/food' is pretty nebulous. That's a huge number.
That account and the personal/entertainment/house stuff accounts (plus the missing money) are the ones worth looking at in detail.

Savings 20% of a large salary is good. It's a big number. But as the salary goes up, it should be easier and easier to save a bigger percentage of it. 30, 40, 60% is easily doable. I'd suggest a goal of living off your husbands salary and saving/investing yours. Might take a couple years to get there.
Our net income is close to yours but there's no way we'd spend that much. We have many friends who would be in the same league or a bit higher than what you net and none even come close to spending like that. We're all in Edmonton, so housing's a bit cheaper. And lifestyle inflation is much higher in Calgary.


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## james4beach

Actually your saving and spending habits are probably going to miss the bigger picture. Here's the big picture: *you have insanely high leverage*.

Going back to the first numbers you posted (the balance sheet part, assets & liabilities) I see that your overall leverage is very high.

3.03 M in assets
1.58 M in debts
= 1.45 M net worth

Your leverage ratio is 3.03/1.45 = 2.09 which I would say is very high considering the majority of your assets are illiquid. I would make it your first priority to reduce your leverage.

To illustrate why your high leverage is dangerous, consider the amplification effect and look at what happens in this very feasible scenario:

If assets decline in value by 40%, here's what happens to your balance sheet:

1.82 M in assets
1.58 M in debts
= 0.24 M net worth

It would slash your net worth from $1.45 million down to $240 K. See why leverage is dangerous? A 40% decline in assets causes an 83% decline in your net worth -- i.e. it WIPES YOU OUT. You're toast.

With your leverage ratio of 2.09, you are more than doubling the impact of asset price changes. This is why I love this ratio.

Reduce your leverage! Perhaps make it a goal to get down to 1.50 on the leverage ratio. The 40% decline is well within the realm of possibility. I promise you, if that happens, it will destroy you with your current balance sheet.


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## showmethemoney45

What would a good leverage ratio look like?


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## james4beach

There isn't a specific number, but I think you should improve your balance sheet until the "worst case" net worth is acceptable to you.

Balance sheet example (as google doc)... here is how I'd model your risk

For instance this spreadsheet I slapped together shows your net worth declining from 1.55 M to 365 K and I'm guessing that would be unacceptable to you. You'd see more than a million $ disappear.

But you might say, yeah we could tolerate our net worth dropping to 500k, or 1.0 M. Then you would use that decision to guide your balance sheet.

As a starting point you'll need to fill in the % declines (these are just a model) depending on each asset type. I strongly recommend using the US scenario from a few years ago because it's recent and relevant. Real estate declined -30% to -40% and stocks declined -40% to -50%.

You'll have to find out what your RRSP is composed of. If it's all in equities, use the -50% number. If it's half in equities and half fixed income, cut in half to get -25%.

In any case there are no easy answers but you should model this and see where you end up


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## showmethemoney45

Thanks for the spreadsheet! That's awesome. I don't think I need to look at it much to realize we'd be screwed if the market crashed. We are actually a lot better than we were 5 years ago! A chunk of our real estate was bought at the top of all the hype in 2008. For a few years we were actually SPENDING 2Gs a month on our rentals. It was also amazing to hear alot of "real estate professionals" continue to say we should buy more real estate with no money down


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## showmethemoney45

[Ss


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## showmethemoney45

A 2.5 million house where I live is going to probably bigger than 5 said:


> I definitely don't want that much space. I would like a nice new or remodeled home close to downtown in a nice neighborhood. Don't know how much that will cost in 10 years. If it means working pay check to pay check to pay for then I could easily pass on those dreams...


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## showmethemoney45

nobleea said:


> I think you need to break it down further. 6200 a month on 'house/health/food' is pretty nebulous. That's a huge number.
> That account and the personal/entertainment/house stuff accounts (plus the missing money) are the ones worth looking at in detail.
> 
> Savings 20% of a large salary is good. It's a big number. But as the salary goes up, it should be easier and easier to save a bigger percentage of it. 30, 40, 60% is easily doable. I'd suggest a goal of living off your husbands salary and saving/investing yours. Might take a couple years to get there.
> Our net income is close to yours but there's no way we'd spend that much. We have many friends who would be in the same league or a bit higher than what you net and none even come close to spending like that. We're all in Edmonton, so housing's a bit cheaper. And lifestyle inflation is much higher in Calgary.


Here is my embarrassing breakdown for the last 6 months: (not including the investments/savings)

Mortgage- $14,298
Trailer pad rental-$600
Property tax-$1890
security-$270
Ins home-$900
trailer ins-$600
all utilities/phone/cable-$5190
home repairs-$2150
home decor-$150
electronics-$5500 (this won't happen again for a few years)
groceries-$6000 (we're not even fat!)
lunch and coffee-$2400
work clothes-$1200
other clothes-$3000
bank fees-$60 (necessary for extra mortgage payments/RESP etc)
Health deductibles-$1200 (kids medical etc)
Gas -$1500
Gas 2- $750
Parking -$3000 ( husbands work expense covered by work but its in his take home pay total so I have to include it)
car repairs- $295
car wash/detailing -$425
transit- $180

daycare-$10050
kids activities (baseball membership)- $700
baseball/yoga kids -$325
kids clothes/winter jackets etc -$900
school fees- $200
skiing -600

booze-$275
Gifts family $1250
Haircuts $180
Dining out -$1800
Lotto/gambling -$150
books -$120
music -$60
hockey games -$1500

professional licenses- $180
professional dues- 350
Vacation (all)- $6800
gym -$330

There I've come clean- now the healing can begin


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## james4beach

I'm not sure your expenses are so crazy at all. I did a very crude comparison. I divided your numbers by 24 to get a value for "per person per month" and compared to my own long-term average monthly spending. I consider myself pretty frugal so I was curious what this would look like. Cost of living is similar where I live, higher than national average. I ignored all child related expenses since I don't have kids and have no comparison point on that.

Your utilities, food, transport, and vacation costs are just about identical to mine. On a per-person basis. The remaining categories have differences but actually average out and are a wash. The result is remarkably similar to mine. One might critique you and say your per-person costs should actually be lower because there should be more efficiency in feeding 4 people vs feeding 1, and same for utilities, and therefore your expenses _should_ be less than mine.

This is a very rough comparison but I was actually surprised that our monthly costs are very similar. The only big differences, obviously: you have more people, and kids require special costs.

Another way to state it: my total annual expenses are 35k. As you have four people it might be fair to anticipate 4 x 35 = 140k annual expenses. Yours is about that... 149k, ignoring the parking. Again the critique is that 4 people in a house should have efficiencies and lower per-person costs on many of these things, especially on food & housing.

P.S. I'd better stop looking at these numbers before I convince myself I can never afford to have kids.


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## Spudd

You know your own priorities better than we would, but I looked at the numbers and have a few suggestions:

400/mo on coffee/lunch - Start making coffee at home and bring it in a thermos in the morning. I highly recommend this thermos mug, it's fantastic. Even if you use a Keurig to make the coffee (this will be 10x more convenient than going to Timmies/Starbucks) it will still save you a bundle. I would also suggest bringing your own lunch but this is a more advanced step. 
700/mo on adult clothes - Really? I think you have room to cut back here. I'm not saying you need to start thrift shopping but just cut down on the number of pieces being purchased. Buy classic pieces that will last for several years without going out of fashion.

To me those were the 2 that really screamed out as being quick/easy wins. Your utilities bill is also very high, but without seeing the breakdown it's hard to give suggestions.


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## nathan79

That's definitely an upper middle class lifestyle. Lots of spending on discretionary items, restaurants, "lunch", and leisure/vacations. I guess it really depends on how attached you are to this lifestyle.

*groceries-$6000 (we're not even fat!)
lunch and coffee-$2400
Dining out -$1800*

When you break this down it works out to $425 per person every month. This is a huge amount to spend on food when you consider that kids eat less, and there should be an economy of scale for feeding more than one person. I would try to get that down to at least $300.

*work clothes-$1200
other clothes-$3000
kids clothes/winter jackets etc -$900*
That averages out to $212/mo on clothes per person -- that's very high. I only spend that much on myself in six months, but that's a little extreme probably.

*car wash/detailing -$425* - I'd do this myself, but that's me. Either way, there must be a way to lower that figure.

*home repairs-$2150* - Is this an ongoing expense, or a one-time thing? I would not want to spend that much on home repairs every 6 months.

*all utilities/phone/cable-$5190* - Seems high, but I don't know.

Kids activities, vacations, skiing, hockey, etc... all very expensive things, but only you can say how much you're willing to sacrifice.


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## showmethemoney45

nathan79 said:


> That's definitely an upper middle class lifestyle. Lots of spending on discretionary items, restaurants, "lunch", and leisure/vacations. I guess it really depends on how attached you are to this lifestyle.
> 
> *groceries-$6000 (we're not even fat!)
> lunch and coffee-$2400
> Dining out -$1800*
> Not willing to cut out my Tims every morning but definitely gonna bring my lunch/breakfast to save $$. My husband brings his lunch most of the time.
> When you break this down it works out to $425 per person every month. This is a huge amount to spend on food when you consider that kids eat less, and there should be an economy of scale for feeding more than one person. I would try to get that down to at least $300.
> 
> *work clothes-$1200
> other clothes-$3000
> kids clothes/winter jackets etc -$900*
> That averages out to $212/mo on clothes per person -- that's very high. I only spend that much on myself in six months, but that's a little extreme probably. You're right-I bought too much crap lately
> 
> *car wash/detailing -$425* - I'd do this myself, but that's me. Either way, there must be a way to lower that figure. Paid someone to wax our vehicles-money well spent considering it would take my husband all weekend to do this.
> 
> *home repairs-$2150* - Is this an ongoing expense, or a one-time thing? I would not want to spend that much on home repairs every 6 months. Just a one time thing
> *all utilities/phone/cable-$5190* - Seems high, but I don't know. Cable $120, cell phones $175, internet $70, $500 for electric/gas/water
> 
> Kids activities, vacations, skiing, hockey, etc... all very expensive things, but only you can say how much you're willing to sacrifice.


 I'm willing to make sacrifices-my husband on the other hand, not so much on the activities part


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## My Own Advisor

My comments, FWIW....

Mortgage- $14,298 (seems about right....)

Trailer pad rental-$600 (ok)

Property tax-$1890 (seems about right...)

security-$270 (ok)

Ins home-$900 (ok)

trailer ins-$600 (ok)

all utilities/phone/cable-$5190 (ok)

home repairs-$2150 (ok)

home decor-$150 (that's good!)

electronics-$5500 (this won't happen again for a few years) (wow)

groceries-$6000 (we're not even fat!) (seems high...although for 2 of us we're $600 per month)

lunch and coffee-$2400 (wow since $400 per month seems high)

work clothes-$1200 (seems high although if you're a professional line of work then understandable)

other clothes-$3000 (seems high given above)

bank fees-$60 (necessary for extra mortgage payments/RESP etc) (don't pay these fees although you can if you want since I'm a shareholder 

Health deductibles-$1200 (kids medical etc) (ok)

Gas -$1500 (ok)

Gas 2- $750 (ok)

Parking -$3000 ( husbands work expense covered by work but its in his take home pay total so I have to include it) (wow - that's $500 per month!!)

car repairs- $295 (ok)

car wash/detailing -$425 (seems high???)

transit- $180 (ok)

daycare-$10050 (understandable) 

kids activities (baseball membership)- $700 (ok)

baseball/yoga kids -$325 (ok)

kids clothes/winter jackets etc -$900 (not including in clothing above???)

school fees- $200 (ok)

skiing -600 (ok)

booze-$275 (that's good!)

Gifts family $1250 (wow, Christmas I assume?)

Haircuts $180 (ok)

Dining out -$1800 (wow, seems high, that's a $200+ meal every month or pizza night for the family every week?)

Lotto/gambling -$150 (bad, why bother?)

books -$120 (buy online?)

music -$60 (buy online?)

hockey games -$1500 (wow, nice...that must be a few games and great seats!?)

professional licenses- $180 (ok)

professional dues- 350 (ok)

Vacation (all)- $6800 (nice vacation!)

gym -$330 (ok)


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## Homerhomer

showmethemoney45 said:


> I'm willing to make sacrifices-my husband on the other hand, not so much on the activities part


Not being on the same page is your biggest problem.


----------



## Plugging Along

james4beach said:


> I'm not sure your expenses are so crazy at all. I did a very crude comparison. I divided your numbers by 24 to get a value for "per person per month" and compared to my own long-term average monthly spending. I consider myself pretty frugal so I was curious what this would look like. Cost of living is similar where I live, higher than national average. I ignored all child related expenses since I don't have kids and have no comparison point on that.
> 
> Your utilities, food, transport, and vacation costs are just about identical to mine. On a per-person basis. The remaining categories have differences but actually average out and are a wash. The result is remarkably similar to mine. One might critique you and say your per-person costs should actually be lower because there should be more efficiency in feeding 4 people vs feeding 1, and same for utilities, and therefore your expenses _should_ be less than mine.
> 
> This is a very rough comparison but I was actually surprised that our monthly costs are very similar. The only big differences, obviously: you have more people, and kids require special costs.
> 
> Another way to state it: my total annual expenses are 35k. As you have four people it might be fair to anticipate 4 x 35 = 140k annual expenses. Yours is about that... 149k, ignoring the parking. Again the critique is that 4 people in a house should have efficiencies and lower per-person costs on many of these things, especially on food & housing.
> 
> P.S. I'd better stop looking at these numbers before I convince myself I can never afford to have kids.


There is actually a lot more efficiencies for having kids, so I do think the numbers are pretty first. Food should be less, vacation should be less (usually when the kids are young they don't get their own room), housing is less, they don't count for the coffee budget or the lunch budget. 

Thought kids do cost a lot on the childcare, activities, ect.


----------



## Plugging Along

My thoughts bellows... I only commented not eh areas I thought could be improved

all utilities/phone/cable-$5190. This seems a little high, can you take a look where you can cut down
electronics-$5500 (this won't happen again for a few years). It's fine if it's not yearly, but just make the electronics isn't substituted with another toy very year. 
groceries-$6000 (we're not even fat!). This is a little high for a family of 4, especially of you eat out a lot as below. We spend just under $1000 a month for 3 adults and two kids. 
lunch and coffee-$2400. This is an area that could be reduced drastically. I know you said you don't want to cut your coffee, but it was our lunches out and coffees out we cut immediately when our income was reduced, Fund one of you TFSA almost fully with this amount in a year. 
work clothes-$1200. This is a little on the high side, unless you NEED the clothes. 
other clothes-$3000. this seems crazy high. We spend that much for the whole family on a YEAR including work clothes. 
bank fees-$60 (necessary for extra mortgage payments/RESP etc). Why are you paying these fees again? 

Dining out -$1800. This is also one of those categories you can cut down. 
Lotto/gambling -$150. 
books -$120
music -$60
hockey games -$1500

You have a lot under entertainment above. Sure it's fun, but are these things more important than your other goals. It's a matter of choosing what is important to you and your spouse. 


To put it in perspective, Very easily you could have saved $10000k in 6 months. Do you feel you revied $10k of enjoyment for the entertainment, clothing, and eating out? Was there something you would have preferred to have? Something to think about.


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## showmethemoney45

To put it in perspective said:


> Sadly no. 5k for a couple tvs that are too complex for me to work anyways.


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## Barwelle

showmethemoney45 said:


> tvs that are too complex for me to work anyways.


That's what the kids are for


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## Plugging Along

showmethemoney45 said:


> Sadly no. 5k for a couple tvs that are too complex for me to work anyways.



The $10k I was referring to did not even factor in the tv... That was on the other areas such as clothes, food, coffee, entertainment, what I consider consumables. If it was the TV, it would have been $16k saved. 

I only ask that because EVERY 6 months you are spending $10k on these consumables such as coffee, lunches, flames, eating out, clothing... I did NOT include the kids activities. Something to consider.


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## showmethemoney45

peterk said:


> You guys seem to spend quite a bit. Perhaps there is more you could cut back on to increase that $2000/month savings? You net somewhere around $17,000/month? I would think you could save $5000/month easily without too much trouble or hardship.
> 
> What line of work is your husband in, BTW?



Update: Net was $15,800 this month and we managed to save $5000!! Woot woot.
Just opened a Questrade account and starting my couch potato portfolio TFSA.


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## showmethemoney45

nobleea said:


> Better, but that's still a cap rate of between 1-2.5%, which is extremely low. Investors might want 4-5% or more.
> You could sell the rentals and with your equity (600K) buy an REIT and pull in the same net income with no work.


Just noticed this: cap rate uses the operating net value which doesn't include principle/interest payments. That would add another 60K to our income and thus making our cap rate over 4%.


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## showmethemoney45

Heres a little update:

Net Finances:
500,000 (rental property net value 2M-1.5M)
700,000 (primary residence, 180,000 mortgage = 520,000 net)
175,000 (cabin, 133,000 mortgage = 42,000 net)
90,000 (vehicles/trailer/boat)
15,000 (TFSAs-couch potato portfolio Vanguard ETFs through Questrade)
165,000 (RRSPs through work)
10,000 (cash for emergencies)
20,000 (cash for rental emergencies)

Current Income:
Husband: 200,000
Me: 100,000
Rentals: 40,000 (net cash flow conservative number. 25,000 paid down on mortgage out of this)

Just from watching our spending over the last 2 months we've been able to save *10,000*. I'm hoping we can save/invest 4-5k/month for the rest of the year. I would like to put in an extra 25,000 into RRSPs as this will eliminate the need to pay tax (approximately) on our rental property income each year. 
We plan on building some TFSAs and then hacking away at our mortgage. Any remaining income from rentals will be applied to primary residence. The TFSA buildup can be used in case of layoff/emergency or to pay down mortgage if rates rise.

Thanks for everyones advice these last few months!


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## showmethemoney45

Well now that the flames are out of the playoffs I have a some more time (and money) to update my progress...

Updates in red

Net Finances:
500,000 (rental properties net value 2M-1.5M) (same I guess...who knows unless you sell. I'll keep constant for simplicity)
700,000 (primary residence, 180,000 mortgage = 520,000 net) (mortgage now owing: $178500)
175,000 (cabin, 133,000 mortgage = 42,000 net) (no change)
90,000 (vehicles/trailer/boat) (no change I guess but realistically they've gone down-I should just leave out all together)
15,000 (TFSAs-couch potato portfolio Vanguard ETFs through Questrade) ($14,740)
165,000 (RRSPs through work) ($162800)
10,000 (cash for emergencies) (same) 
20,000 (cash for rental emergencies) (same)
5,000 (spousal RRSP added)

I'm mostly concerned about paying off our mortgage on our primary residence and cabin and building up our investment portfolio. Goal would be to be debt free (besides rental property mortgages) before the age of 40 with some additional investments built up. Keeping the thread for motivation 

In Summary:
Mar-2015

Mortgage 1= $186,500
Mortgage 2= $133,000
RRSP 1= $155,000
TFSA= $5000

May 10-2015

Mortgage 1= $178,500
Mortgage 2= $133,000
RRSP 1= $162,800
RRSP 2= $5000
TFSA 1= $9844
TFSA 2= $4896

A change in roughly $30,000 in 2 months  I think adding in cars/property values every month is a bit arbitrary so I'll leave them out.

Thanks,


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## My Own Advisor

"Net Finances:
500,000 (rental property net value 2M-1.5M)"

If I'm reading this correctly, you don't want to sell these assets, have no debt, have >$1 M in the bank and one of you could retire?

(Live off about $40k per year on $1 M invested and never touch the capital, capital grows over time).

Just a thought!


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## showmethemoney45

My Own Advisor said:


> "Net Finances:
> 500,000 (rental property net value 2M-1.5M)"
> 
> If I'm reading this correctly, you don't want to sell these assets, have no debt, have >$1 M in the bank and one of you could retire?
> 
> (Live off about $40k per year on $1 M invested and never touch the capital, capital grows over time).
> 
> Just a thought!


Nah. Why? We're healthy and what else would we do all day?
We plan on keeping the rentals for 5-10 years maybe more. They are paying for themselves so who cares.


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## none

opportunity costs.


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## My Own Advisor

showmethemoney45 said:


> Nah. Why? We're healthy and what else would we do all day?
> We plan on keeping the rentals for 5-10 years maybe more. They are paying for themselves so who cares.


Fair points


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## nobleea

showmethemoney45 said:


> Net Finances:
> 500,000 (rental properties net value 2M-1.5M) (same I guess...who knows unless you sell. I'll keep constant for simplicity)


A bit unclear here. I think you're saying the rental properties have a market value around 1.5-2M. What does the net finance number mean? Is that your equity in the rentals? Which would assume you have mortgages of 1-1.5M?


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## OurBigFatWallet

Interesting topic. Have you noticed selling prices of homes going down in Calgary at all recently? I have been following the market somewhat closely and it seems like prices haven't fallen at all (yet), especially on the west end of town. I ask because it looks like a significant portion of the total net worth is tied to local real estate values.


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## showmethemoney45

nobleea said:


> A bit unclear here. I think you're saying the rental properties have a market value around 1.5-2M. What does the net finance number mean? Is that your equity in the rentals? Which would assume you have mortgages of 1-1.5M?


I mean the properties are worth approximately 2M but we have about 1.5M in mortgages. If I sold them all I'd be left with 500,000.
We have 7 rentals in calgary and red deer but don't plan on selling anytime soon. They are cash flowing and managed well by others.

Yes, a significant portion of our net worth is tied to real estate. My goals for the next 5 years are to pay off personal residence/cabin and build an investment portfolio.

Cheers


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## CalgaryPotato

OurBigFatWallet said:


> Interesting topic. Have you noticed selling prices of homes going down in Calgary at all recently? I have been following the market somewhat closely and it seems like prices haven't fallen at all (yet), especially on the west end of town. I ask because it looks like a significant portion of the total net worth is tied to local real estate values.


That isn't true, they have fallen. It's just that they rose, so ridiculously much last year that they are only now getting close to the prices of a year ago. But it's a big game of chicken right now. Buyers know houses should drop more, sellers know the prices haven't dropped yet. So you get this huge backlog of houses on the market. Some sellers get desperate are are dropping their prices a lot. But some who aren't desperate are holding steady, and some of the buyers have been the ones caving.

But there are definitely pockets of Calgary that have dropped less than others. Some neighborhoods are so coveted right now that people are still willing to overpay greatly for them, if it means overpaying less than they would have a few months ago.


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## showmethemoney45

In Summary:
Mar-2015

Mortgage 1= $186,500
Mortgage 2= $133,000
RRSP 1= $155,000
TFSA= $5000

May 10-2015

Mortgage 1= $178,500
Mortgage 2= $133,000
RRSP 1= $162,800
RRSP 2= $5000
TFSA 1= $9844
TFSA 2= $4896


Update June 14-15

Mortgage 1= $178,000 
Mortgage 2= $133,000
RRSP 1= $163265
RRSP 2= $4976
TFSA 1= $9865
TFSA 2= $9857
HISA= $5400

Nothing too exciting to report. Added 10K+ to savings. If I can get them groceries under control I'd be laughing! 
http://canadianmoneyforum.com/showthread.php/36889-Help-with-grocery-bill?p=723274#post723274


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## showmethemoney45

For those of you who care (mom, is that you?), monthly update;

June 14-15

Mortgage 1= $178,000 
Mortgage 2= $133,000
RRSP 1= $163265
RRSP 2= $4976
TFSA 1= $9865
TFSA 2= $9857
HISA= $5400

July 13-15

Mortgage 1= $175,273 (down $3000)
Mortgage 2= $133,000
RRSP 1= $164817
RRSP 2= $4949
TFSA 1= $9903
TFSA 2= $9812
HISA= $11000 (saved $6000)


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## scorpion_ca

If you could mention net worth amount at the end of your update, that would be awesome.


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## showmethemoney45

I'll just add in non-depreciating assets (not sure what the norm is). Cars, boat, trailer etc. are paid for but not included. Kept property values the same.

JUNE
Mortgage 1= $178,000 (worth $700,000)
Mortgage 2= $133,000 (worth $175,000)
RRSP 1= $163265
RRSP 2= $4976
TFSA 1= $9865
TFSA 2= $9857
HISA= $5400
Rental Properties: Value 2M (1.5M loans) = 500k in equity

Net Assets: 3,068,363
Net Liab: 1,811,000
= $1,257,363

JULY
Mortgage 1= $175,273 (worth $700,000)
Mortgage 2= $133,000 (worth $175,000)
RRSP 1= $164817
RRSP 2= $4949
TFSA 1= $9903
TFSA 2= $9812
HISA= $11000
Rental Properties: Value 2M (1.5M loans) = 500k in equity

Net Assets: 3,075,481
Net Liab: 1,808,273
= $1,263,208


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## showmethemoney45

AUG
Mortgage 1= $174,150 (worth $700,000)
Mortgage 2= $122,000 (worth $175,000)
RRSP 1= $169000
RRSP 2= $4950
TFSA 1= $9812
TFSA 2= $10122
HISA= $4300
Rental Properties: Value 2M (1.5M loans) = 500k in equity

Net Assets: 3,073,184
Net Liab: 1,796,150
= $1,277,034

increase in 1.08% this month


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## tygrus

You are reporting your gains like its a stock. Order another appraisal on your properties then report back. I would bet dollars to donuts its less. You are way over leveraged in RE which is very vulnerable to a correction or at least slow melt. Your equity could start decreasing at the same rate you are paying it down which is a net zero return.


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## showmethemoney45

you're totally right. The main objective of this thread is to keep me motivated in paying down my personal property debt and increasing my non-real estate investments for the very reason you stated. Then I guess I should leave property values out and just track my progress of saving/investing (which is basically what I'm doing as I'm keeping the RE constant).


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## showmethemoney45

SEPT
Mortgage 1= $171,173 (worth $700,000) (paid off $2977)
Mortgage 2= $112,000 (worth $175,000) (paid off 10K)
RRSP 1= $164559
RRSP 2= $4840
TFSA 1= $9592
TFSA 2= $9600
HISA= $3327
Rental Properties: Value 2M (1.5M loans) = 500k in equity

Investments sh&t the bed and went down $6266 but I did manage to pay down $13k in debt. I guess thats the positive side


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## Sampson

No RESPs? seems like a waste to forgo the government monies. Or is that not included in these updates?


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## showmethemoney45

Sampson said:


> No RESPs? seems like a waste to forgo the government monies. Or is that not included in these updates?


Yes we have roughly $30k in RESPs. I don't keep track of the balance and include in in my net worth as I don't really see it as "my" money.


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## showmethemoney45

So heres a little update since I started tracking my debt repayment and non-real estate investments since March. biggest change has been living well within our means-which hasn't been hard at all. We still have some expenses which I know we could do better on as a family but I guess its all about the baby steps. Not only has these changes brought more money in our pockets but also less stress and more happiness. I know we could live off 1 income if need be.

Mar-2015

Mortgage 1= $186,500
Mortgage 2= $133,000
RRSP 1= $155,000
TFSA= $5000

Oct 26-15
Mortgage 1- $165,884
Mortgage 2- $92,000
RRSP 1- $168,396
RRSP 2- $10,100
TFSA 1- $9919
TFSA 2- $9929

A difference of:
$61,616 mortgage paid off
$38,344 increase in investments


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## Ponderling

You can put 50k per kid into RESP accounts gradually or as a lump sum. If done early you have it get the chance to grow for years before the kids need to put it to use.

So why not work on pulling in the reins on spending, especially groceries and lifestyle things, until you have poured $5k per month into the kids RESP account unit they are filled?

The if you leveraged existence ever bites you in the *** at an in-opportune time, there would still be funds set aside for your kids to get a post secondary education even if the parents are cash flow poor at the time in question.


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## showmethemoney45

We're putting about 6k/year away for the RESPs. (not in my net worth calculations) After the little one is out of daycare we could easily up that to double.


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## showmethemoney45

Ah what a difference a year makes....still focusing on paying down our house/cabin mortgages and increasing our liquid assets. I'm preparing for the crappy market for jobs/real estate for the next few years. I feel like its going to be a bumpy road ahead 

Mar-2015

Mortgage 1= $186,500
Mortgage 2= $133,000
RRSP 1= $155,000
TFSA= $5000

Mar-2016
Mortgage 1- $158,012
Mortgage 2- $69,673
RRSP 1- $172,000
RRSP 2- $9750
TFSA- $19,550

Decrease in debt by $91,815
Increase in liquid investments: $41,300


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## scorpion_ca

Would you mind to share your present net worth?


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## Ag Driver

Deleted.


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## showmethemoney45

Ag Driver said:


> Just a couple posts up showmethemoney posted purchase prices. Looks to be around 850k + 500k in rentals, not including RESP's


Sounds right...I don't like looking at that number as its a lot of guess work with the rental property values


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## Ag Driver

Deleted.


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## showmethemoney45

Dammit all to hell-our cabin build is coming in way over budget. Mortgage 2 is adjusted accordingly 

Mar-2016
Mortgage 1- $158,012 ($600k value)
Mortgage 2- $149,000 ($250k value)
RRSP 1- $172,000
RRSP 2- $9750
TFSA- $19,550


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## showmethemoney45

I would just like to point out that I spent less than $100 on clothes/shoes for myself in the last year and brought my lunch every day (minus around 6 times for retirement lunches)...I'm quite proud of myself if you can't tell...


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## nobleea

showmethemoney45 said:


> I would just like to point out that I spent less than $100 on clothes/shoes for myself in the last year and brought my lunch every day (minus around 6 times for retirement lunches)...I'm quite proud of myself if you can't tell...


You should be proud. I'd say that's a good achievement regardless of income.


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## showmethemoney45

showmethemoney45 said:


> Dammit all to hell-our cabin build is coming in way over budget. Mortgage 2 is adjusted accordingly
> 
> Mar-2016
> Mortgage 1- $158,012 ($600k value)
> Mortgage 2- $149,000 ($250k value)
> RRSP 1- $172,000
> RRSP 2- $9750
> TFSA- $19,550


Jun-2016 update!

Mortgage 1-$152,200
Mortgage 2-$149,000
RRSP1- $178,900
RRSP2- $9945
TFSA- $19782
TFSA2- $32,210 (not sure if I should pay down mortgage or save for an unexpected expense)


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## NorthKC

Based on your previous comment about your cabin going over budget, I'd say save for an unexpected expense.


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## showmethemoney45

Well its been a while since I last reported and a lot has changed. I was laid off a few months ago which was no surprise. Severance and EI will be enough for a while so I can stay home with the kids. We've spent an absurd amount of money on our rental properties and I'm sure they've decreased in value a few hundred thousand dollars  I'm hoping the worst is behind us in Alberta but who knows.

April-2017
Mortgage 1- $131,000
Mortgage 2- $141,000
RRSP1- $192,210
RRSP2- $10,976
TFSA- $11,057
Savings - $50,429

Ideally we'd like to pay off our personal residence mortgage by July 2018 as our mortgage will have to be renewed by then.
Cheers


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## showmethemoney45

August-2017
Mortgage 1- $129,000 ($550k value)
Mortgage 2- $141,000 ($250k value)
RRSP1- $199,179
RRSP2- $10,976
TFSA- $10,936
Savings - $64,500

Going to put all our savings in to pay off our mortgage 1. Have 11 months to get the rest paid off before renewal time 
Rental properties have easily dropped 200k in value since I started this thread


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## The Black Wizard

showmethemoney45 said:


> August-2017
> Mortgage 1- $129,000 ($550k value)
> Mortgage 2- $141,000 ($250k value)
> RRSP1- $199,179
> RRSP2- $10,976
> TFSA- $10,936
> Savings - $64,500
> 
> Going to put all our savings in to pay off our mortgage 1. Have 11 months to get the rest paid off before renewal time
> Rental properties have easily dropped 200k in value since I started this thread


Are these properties bringing in positive cash flow?


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## showmethemoney45

The Black Wizard said:


> Are these properties bringing in positive cash flow?


Unfortunately Not! 
We just sold a couple and are working to get them back in positive cash flow territory. I'm curious to hear the true landlord stories that are going on in Alberta. I don't know how the full time landlords out there are holding up. If we didn't have decent jobs to cover the slack we'd be screwed.


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## showmethemoney45

Update Dec 2017:

Sold a condo yay!

Mortgage #1 124,000 (600k value)
Mortgage #2 138,000 (250k value)

RRSP #1 $203,650
RRSP #2 $11,652
RRSP #3 $2,500 (new job)
TFSA #1 $11,557
TFSA #2 $44,579
Savings $56,273
Condo proceeds $100,000 (after fees and capital gains)

Going to pay off our house and cabin by July 2018 with Cash and condo proceeds.
Then the liquid investing can begin


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## Dilbert

You’ll really appreciate being debt free and plowing a ton of freed up loot into investments and watching them compound! Few things better in the world, IMHO.

Good luck!


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## showmethemoney45

Update Sept 2018

Mortgage #1 $0 (600k value)
Mortgage #2 $0 (250k value)

RRSP #1 $211,650
SRRSP #2 $12,050
RRSP #3 $8,250
TFSA #1 $12,557

New private company ESOP purchase $50,000
Savings $29,750


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## scorpion_ca

If I am not mistaken, you lost your job in Calgary. Have you found a job yet? How is the overall job market in Calgary?


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## nobleea

scorpion_ca said:


> If I am not mistaken, you lost your job in Calgary. Have you found a job yet? How is the overall job market in Calgary?


Also, I know you had a bunch of rentals, but then some were sold. How many are left, value, mortgages against them?
I assume TFSA 2 and some savings were used to by the private company shares. Do they pay a dividend?


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## showmethemoney45

I did lose my job a year and half ago. I've been at new job for 1 year paid the same as before. Hubby changed jobs and makes a little less money due to less OT. Income around $250k/year combined.
We have 5 rentals left with mortgages. To be safe I am assuming these are worth $0. 
The company stock does not pay a dividend.
Currently fighting the urge to go back in debt with a new house


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## scorpion_ca

Those who are in rental business, have you ever thought of buying REIT? ....less headache....5%-6% dividend per year.


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## showmethemoney45

yes a REIT would be less headache and probably more return...Its a really crappy time to sell in Alberta right now though so I think we will hold on and see what happens in the next few years...live and learn I guess


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## showmethemoney45

Update Mar 2019

Mortgage #1 $0 (600k value)
Mortgage #2 $0 (250k value)

RRSP #1 -$210,500
SRRSP #2 -$12,000
RRSP #2 -$11,700
TFSA #1 -$12,200
HISA -$20,250

ESOP- $80,000

Need to do some repairs to our primary residence and pay some capital gains taxes for 2018 so this will hurt our progress in 2019


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## showmethemoney45

Still plugging away...

Mortgage #1 $0 (600k value)
Mortgage #2 $0 (250k value)

RRSP #1 -$232,500
SRRSP #2 -$17,900

TFSA #1 -$17,200
HISA -$64,250

ESOP- $80,000


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## scorpion_ca

What is the Net Worth amount you want to reach before pulling the plug?


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