# My Journey to Financial Freedom



## joetheneighbour (Apr 17, 2017)

Hi Everyone,

New to this forum and have just recently decided to start my journey to financial freedom.

*About Me*
I am a millennial, married, and currently reside in Eastern Canada. I work with the government, getting paid an average salary, and live an ordinary life. I first started investing when I was 19. I opened up a Tax Free Savings Discount Brokerage Account with TD Bank, and invested all my savings I had at the time (~$1000). However, I ended up withdrawing it a few years later to pay off debt. When I graduated from University in 2011, I was able to get a government job, bought a house, and got married, but really didn’t have a good financial plan. Fast forward to 2017, my wife and I are expecting our first child, so I wanted some extra income to cover off the additional expenses. I began reading books and articles on finance and how to build wealth. I developed a strong passion to pursue the road to financial freedom.

My short term goal is to have my mortgage paid off in 3 years (~$160 000 left). My next goal is to have a net worth of $1 million by the age of 40, and my long term goal is to generate sufficient passive income ($15,000/month). I also started a blog call slowly but wealthy to track my own progress

*Asset*
Cash: $400
Savings: $5
TFSA Investment: $24,000
TFSA Mutual Fund: $3,500
Real Estate: $260,000

*Liabilities*
Mortgage: $163,000
LOC: $12,000 

*Net Worth:* ~$113,300

I am in a dilemma rather or not I want to consider my house an asset because it give me false sense of net worth. What do people in this forum think? 

*Monthly Budget*

HOUSEHOLD INCOME (ME +_WIFE) Approx. $6,500 after Tax and Work Pensions

EXPENSES Approx. $3,240
Mortgage + Property Tax: ~$1,075
Utility: ~$150-$200 Depending on the season
Cell Phone: ~$120 for 3 Month
Internet: ~$55
Food: ~ $600 - $800
Gas: ~$300 -~$400
Insurance: ~$270
Entertainment (Eating out + other stuff): ~$100-~$200
Misc Expenses: ~ $200

LEFT OVER Approx. $3,260

A question I wanted to ask people on this forum is a what point in your journey did you see a sudden change in growth rate? Is it when your mortgage is pay off? 

Thanks.


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## james4beach (Nov 15, 2012)

Welcome!

I think you should include the house, it's definitely an asset. And you're listing the mortgage, so this is an accurate picture of the contribution to net worth.

You briefly mentioned pension (presumably a payroll deduction). I presume you're accumulating a pension with your government employer. These can add up to a lot! You should list RRSP/pension under Assets.


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## gibor365 (Apr 1, 2011)

On opposite, I don't think you should include your house  , you need to live somewhere , no?!

Yes, I'd suggest to pay off mortgage ASAP.



> my long term goal is to generate sufficient passive income ($15,000/month).


 Really?! $180,000 per year in passive income?! You will need about 6M in savings to achieve it!

Curious, what province/city you live?


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## none (Jan 15, 2013)

Of course your house is an asset. Why? Because look up the definition of what an asset is. It's an asset. 

What you do with that asset is another question but it's an asset full stop.


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## gibor365 (Apr 1, 2011)

none said:


> Of course your house is an asset. Why? Because look up the definition of what an asset is. It's an asset.
> 
> What you do with that asset is another question but it's an asset full stop.


Thus car, iphone and TV are also assets


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## canew90 (Jul 13, 2016)

Congratulations! The fact that you are starting to think about your future and recognizing that finances are more than how much can one spend and on what. Yes your house is an asset as are all the other things you own of value. But that's just accounting and has little meaning at this stage of your life. What you should concentrate is living within your means, limiting your credit card debt, pay down your mortgage and saving a portion of your net earnings. 

Also great that you've put $27,500k into your tfsa's. However, I'd get it out of mutuals. If you read many of the other posts here the majority would probably recommend putting the funds into etf's. Better idea than mutuals, but you could also invest in some high quality dividend growth stocks, your choice. Is planning to obtain $15k per month unrealistic, doesn't matter if it is or not, go for it!


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## tygrus (Mar 13, 2012)

joetheneighbour said:


> A question I wanted to ask people on this forum is a what point in your journey did you see a sudden change in growth rate? Is it when your mortgage is pay off?


We all saw massive growth when bubbles ripped across the country. Nothing more.

As a millenial, there is only one way to wealth now for you. RE is done. Working is going to be harder and harder and taxed more and more. You have to get compounding hard. Throw all you can into investments and drip them every month. Thats the only way I can see now.


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## Dilbert (Nov 20, 2016)

tygrus said:


> We all saw massive growth when bubbles ripped across the country. Nothing more.
> 
> As a millenial, there is only one way to wealth now for you. RE is done. Working is going to be harder and harder and taxed more and more. You have to get compounding hard. Throw all you can into investments and drip them every month. Thats the only way I can see now.


+1, sad but true.


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## Mukhang pera (Feb 26, 2016)

tygrus said:


> We all saw massive growth when bubbles ripped across the country. Nothing more.
> 
> As a millenial, there is only one way to wealth now for you. RE is done. Working is going to be harder and harder and taxed more and more. You have to get compounding hard. Throw all you can into investments and drip them every month. Thats the only way I can see now.



If I had a dollar for every time I have heard it said over the last half century that "real estate is done" I'd be going head-to-head with D. Trump, Esq. in a net worth showdown. 

Even the "bubble" markets - perhaps especially the bubble markets - are far from done. Back in the early 1980s, that was the lament heard all around...it's done. I bought Vancouver house in 1979 for $110,000. It was worth about $275,000 by 1981 and down to $140,000 in 1982, by which time the prime rate hit 22.75%, compared to the cheap 11% mortgage money to which we had grown accustomed. All around, people were crying in their beer. Oh, it's over, they wailed. It will never come back again, no fool will ever buy real estate again, blah, blah.

I sold my $110,000 house in 1989 for $525,000 in 1989 - almost a 5-fold increase in a few years. That was land value, which was all I paid in 1979 for a 1914 bungalow. A bigger increase than seen in Vancouver and Toronto in recent times. The prices dropped again in about 1991. That $525,000 house went down to probably about $400,000. Today, the 1914 bungalow is gone. The lot is assessed at $3 million and the new house on it at $2 million. Is that indicative of a "bubble"? Probably. Is it poised to blow? Probably. If it blows, will it ever come back and pull ahead of the old record? Certainly.

So even the folks who bought those Vancouver houses for $275,000 in 1981 and saw the value cut in half about a year later have no need to whine about losing half of their money, unless they bailed out in the trough. Look where they are now. Like the stock market, I suppose. The advice around here seems to be against liquidating one's portfolio in a down cycle. Real estate is no different. 

As for the OP's goal of $15,000/mo. passive income, where's JAG today? He'll almost certainly tell ya' that RE is the best way. He is able to pick up houses for a crummy $100k and rent them out for $1k/mo. I am not sure that he is the only person on the planet who can do that. So by the time you have accumulated about 20 or so of those, and employed the rents to retire the mortgages, lo and behold, you have $15,000/mo. 

Perhaps JAG will chime in here, but one thing about his method of which I am unsure is this: Let's say you have the misfortune of buying a house that appreciates in value quicker than the rents. Take my 1979 Vancouver house. At the 1979 price of $110,000 that house could have been rented in those days for about $1,000/mo. or a bit more. Nicely within the "1% rule" - i.e., it can be rented for 1% of the purchase price per month. But now, with that same Vancouver house being worth about $3 million, I doubt you'll find many tenants willing to shell out $30,000 a month for a 1,300-square-foot 1914 bungalow, despite the quarter-cut hardwood floors of a quality not found today. Que faire? I did a bit of online research awhile ago and saw houses back in the old neighbourhood listed for rent at about $8,500 per month. If you find yourself in that unenviable situation, with the vision of the 1% rent fading in the rear view mirror, do you bite the bullet and accept the lesser return, or do you sell and return to basics, buying 30 houses for $100,000 each and renting for $1,000 a month apiece?


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## Pluto (Sep 12, 2013)

as to your question when did savers/investors see a change in growth rate? 
don't know if you mean in dollar terms or % terms. 10% of 100,00 is 10,000, but 10% of 1,000,000 is 100,000. So in dollar terms significant increases tend to come at the end. 

I agree with above that you might want to reconsider the mutual fund. The are probably bleeding you with ongoing fees/commissions. Over the years that adds up to huge cunks of cash for them, not for you. the most effecient way is to buy a stock directly. Commissions are very low by comparison and not ongoing. Next, as somoe mentioned, if you prefer funds, etf's have ongoing commissions/fees but are way lower. 

I notice no RRSP, and if you have a defined benifit government pension, don't bother with the RRSP as retirement pension income + RRSP withdrawals + other investment income will leave you in a tax bracket where RRSP is not of benifit. Stick with the tfsa. 

List you house as an asset. Banks love people with steady employment and a house. That means they would likely lend to invest. But I wouldn't do that now. sometime in the future when you get your mortgage paid off, you might find it worthwile to borrow to invest. 

If you can be agressive with extra payments on the principle of the mortgage - until you notice the % interest on your statement getting lower than principle payment. Usually this is most effective in the first five years of the mortgage. Later when the interest component is much lower than the principle component, it is less effective. If you haven't already done so, study how extra payments on principle shorten your amatorization and the eventual amount you pay in interest. 

Study the taxes on elegible dividends. They are quite low for middle income earners and the almost tax free dividend income can be used to buy more investments.


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## humble_pie (Jun 7, 2009)

.

congratulations on the baby & the growing family. I think you have a terrific financial profile. You're working hard on your financial plans & undoubtedly all will succeed in the end.

the suggestions upthread are excellent. Pay down the debt ASAP, say the suggestions. Don't buy mutual funds, their management fees are too high. Buy ETFs instead. Even better than ETFs, start accumulating a 5-pack of quality individual stocks. DRIP everything that can be DRIPPed.

you mention a pension, presumably from work. This means you & spouse can concentrate on building those 2 TFSAs for a long time to come.

re including house in net worth calc or not - opinions & practices from cmffers range across the spectrum, so the OP could take his pick.

persons who do not include personal residence in net worth point to the illiquidity of real estate. Net worth should be cash that can be raised fairly easily, they say. Obviously parties who own rental properties but no other investments would have a different point of view, still, this particular OP is not in the landlord category at present.

a compromise approach among the house includers is Dmoney's. He includes his principal residence at cost. He has a fairly large mortgage so the inclusion compares nicely. Dmoney has a diary thread in this section, you can see how he handles the house.

all cmffers agree though: do not include vehicles, boats, jewellery, art or any other personal possessions in net worth.

welcome to the forum. You've made a great start, now please don't forget to come back & tell us about the baby when he or she arrives.

.


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## tygrus (Mar 13, 2012)

The biggest asset the OP has is that govt pension and if he quits work at 40, it will be a fraction of what it could be. Have to put in 25-30 yrs to get that thing close to max.


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## cashinstinct (Apr 4, 2009)

Home is an asset for sure.
However, in general, would worry about relying too much on house value increase.

Example: if net worth went up from 100k to 200k in a couple of years, only because of home value, but mortgage stays the same (person refinances / has a heloc balance / etc) and there is no extra savings... 

In your case, you have good savings habits, so you should have great progress in the future.

Some people would use a "Financial Net Worth" to isolate how their investments are doing.

For pension, did you get a 2015 annual statement (probably too early for 2016) saying its "commuted value" ? (value you would get if you quit). It's something you own and could be part of net worth.


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## joetheneighbour (Apr 17, 2017)

Thank you everyone for the replies. I am actually quite surprise on the number of replies and all the great opinion and advice. I am slowly trying to learn things along the way and I think this forum will help me out a lot. My mutual fund is currently invested into TD e-series, not quite sure what my plan is with that yet. My next few financial move is to bring my debt down while putting a little bit aside for investing. I have a DRIP setup but I don't hold enough share to make it work right now so I'll have to buy a few more share as well. 

Someone asked which province I was living in. I currently live in Newfoundland but will be moving to New Brunswick in the near future.

But a lot of you mention pension which I never actually looked into. I think I'll go find out how much is actually in my pension plan right now and add that on here. 

For the long term goal of $15,000/month, I am not sure if it's realistic or not. I just wanted to put a tangible goal down to strive for and use it as a way to measure progress. I find that it helps motivate me.

In terms of mortgage, I was actually doing bi-weekly payment at $925 per payment until recently. I wanted to free up some cash flow for baby expenses so I changed it back to monthly payment for now. 

Once again, I am very grateful for all the replies and opinion. It definitely allow me to see some alternate point of view. I'll definitely keep you guys updated with the baby and my progress.


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## none (Jan 15, 2013)

gibor365 said:


> Thus car, iphone and TV are also assets


Of course they are - anything you can sell for $$$ is technically an asset. Whether it's worth accounting to that level is up to you. If you're talking about a $100 asset versus an asset worth more than 100K is up to you.

House being an asset is a no brainer.


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## peterk (May 16, 2010)

humble_pie said:


> .
> all cmffers agree though: do not include vehicles, boats, jewellery, art or any other personal possessions in net worth.





none said:


> Of course they are - anything you can sell for $$$ is technically an asset. Whether it's worth accounting to that level is up to you. If you're talking about a $100 asset versus an asset worth more than 100K is up to you.
> 
> House being an asset is a no brainer.


I think for cars I would include an expensive car as an asset, and a junker commuter not. Perhaps also based on whether I plan to drive it for a few years and sell later for a newer car, or drive it into the ground and sell for scrap. Since I don't own a car I don't have to deal with the issue.


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## gibor365 (Apr 1, 2011)

none said:


> Of course they are - anything you can sell for $$$ is technically an asset. Whether it's worth accounting to that level is up to you. If you're talking about a $100 asset versus an asset worth more than 100K is up to you.
> 
> House being an asset is a no brainer.


Some cars are more expensive then some homes 



> For the long term goal of $15,000/month, I am not sure if it's realistic or not.


 I'm sure it's not , unless you are NHL or NBA player 

there are a lot of discussions on this forum how much family needs for very comfortable retirement .... afair, the maximum amounts was about 6-7K per month. In Maritimes it can be less


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## Spudd (Oct 11, 2011)

Plus, right now you're living comfortably on just over 3k/mo, are you going to 5x your living standard?


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## gibor365 (Apr 1, 2011)

Spudd said:


> Plus, right now you're living comfortably on just over 3k/mo, are you going to 5x your living standard?


Sure  We live in very expensive GTA, family of 4, 3-4 times per year we travel abroad, spending thousands on food (like tasty stuff) and we spend 80K per year...

If you want to save, consider moving your bank account to Tangerine. If your salary is deposited there , you gonna get some cash as a gift + $50 if you open account there and no any fees...
Also for saving account they offer much higher rates than big banks.


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## gibor365 (Apr 1, 2011)

> Someone asked which province I was living in. I currently live in Newfoundland but will be moving to New Brunswick in the near future.


 Just curious where and why are you going to move? Considering that house prices there at least 4-5 times cheaper than in GTA, I was thinking in future to retire there (one of the options)....


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## redsgomarching (Mar 6, 2016)

thank you for sharing your current picture! how old are you? great mind set and attitude towards getting yourself set for life and nice goals.

the 15k per month in passive income goal is certainly a big one. do you have any ideas on how you will achieve this? or is this a combined goal for you and your wife?

in your first post, do you also include your wife's investments in the networth calculation?


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## tygrus (Mar 13, 2012)

For the OP, just to be realistic, $4-6 MM throwing off $15k monthly income is not possible with your set up. I am all for setting goals, but better to be realistic I think. You need other asset holdings like big RE portfolio to get those kinds of numbers and that involves risk and you dont sound like that kinda guy. I think something in the order of couple mill is doable if you use your RRSP/TFSA and govt pension the right way.

Also, if you want to get wealthy forget paying down your mortgage. If you take those extra payment you are making and invest and monthly compound them, they will far exceed the value on your home one day.


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## redsgomarching (Mar 6, 2016)

tygrus said:


> For the OP, just to be realistic, $4-6 MM throwing off $15k monthly income is not possible with your set up. I am all for setting goals, but better to be realistic I think. You need other asset holdings like big RE portfolio to get those kinds of numbers and that involves risk and you dont sound like that kinda guy. I think something in the order of couple mill is doable if you use your RRSP/TFSA and govt pension the right way.
> 
> Also, if you want to get wealthy forget paying down your mortgage. If you take those extra payment you are making and invest and monthly compound them, they will far exceed the value on your home one day.


15k per month, conservatively (3.5%), would require a total portfolio of nearly 5.2 million aha. That is a lot of after tax dollars to save. 
Truth be told, for the way you describe you live currently, what would you need 15k per month for in passive income?


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## humble_pie (Jun 7, 2009)

tygrus said:


> For the OP, just to be realistic, $4-6 MM throwing off $15k monthly income is not possible with your set up. I am all for setting goals, but better to be realistic I think. You need other asset holdings like big RE portfolio to get those kinds of numbers and that involves risk and you dont sound like that kinda guy. I think something in the order of couple mill is doable if you use your RRSP/TFSA and govt pension the right way.




tyg imho you have been ever so slightly too hard on this OP from the get-go.

he's 27 years of age. He has a job, a wife, a family on the way, a house, a TFSA, good savings. He even boned up on investing & he knew enough to avoid the mutuals & buy index e-funds instead.

bref, he's a poster millennial. So maybe his thumb wobbled when he typed in a big passive income as a retirement goal. A goal is only a motivator. What counts is what he's accomplished already, where he's at today, where he's going tomorrow. Looks good to me.


.


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## joetheneighbour (Apr 17, 2017)

humble_pie said:


> A goal is only a motivator. What counts is what he's accomplished already, where he's at today, where he's going tomorrow. Looks good to me.
> 
> .


That's what I was thinking when I set that goal.

I know it is really an ambitious goal, I really don't have much substantiation for that number other than using it as a motivator. Maybe I'll be 80 years old before I get to that number or maybe I'll change that number after my first two goal is realize. I just wanted to throw a number up to get myself to stop procrastinating.


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## joetheneighbour (Apr 17, 2017)

gibor365 said:


> Just curious where and why are you going to move? Considering that house prices there at least 4-5 times cheaper than in GTA, I was thinking in future to retire there (one of the options).....


I am moving for work. Going to be moving to the Fredericton area, been looking at houses online, its even cheaper than Newfoundland. I won't recommend Newfoundland because of the Tax, weather, and cost of living. The provincial gov't has recently hiked tax on several areal. The cost of living is high cause most goods gets on the island via the commercial ferry which makes grocery more expensive. The Iceberg are kind of nice tho.


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## joetheneighbour (Apr 17, 2017)

redsgomarching said:


> in your first post, do you also include your wife's investments in the networth calculation?


I did not include her investment which is around $17,000. I am currently restructuring her investment portfolio since it is all in standard TFSA savings account right now. I will include it on my progress update.


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## tygrus (Mar 13, 2012)

humble_pie said:


> tyg imho you have been ever so slightly too hard on this OP from the get-go.
> 
> 
> .


Just being very honest. IMHO you cant work or save yourself rich. Only way is to get some asset that is wickedly influenced by inflation or speculation, or to compound like the devil and that takes saving which goes back to the first point. 

To get $6M requires something different than just working a job owning a home and saving/investing what you can. It would require taking on some leveraged debt right now and hope its paid off and inflated in 25 yrs.


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## humble_pie (Jun 7, 2009)

tygrus said:


> Just being very honest. IMHO you cant work or save yourself rich. Only way is to get some asset that is wickedly influenced by inflation or speculation, or to compound like the devil and that takes saving which goes back to the first point.
> 
> To get $6M requires something different than just working a job owning a home and saving/investing what you can. It would require taking on some leveraged debt right now and hope its paid off and inflated in 25 yrs.




out of all the data the OP provided about his situation - an excellent situation btw - a few people have chosen to harp, as above, on a casual retirement goal he happened to mention in an offhand manner. Later he qualified that future & hypothetical $15k a month, which might or might not materialize half a century from today, as merely a figure that motivates him at the present time.

.


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## canew90 (Jul 13, 2016)

Think back 40 or 50 years, there was the double digit inflation, tech bubble, financial crisis and how many others. Cars in 1980 averaged $5,500 a house $86,000, income $11,300. Today an average car cost $25k but most probably pay over $40k and average income $75k? So what will happen 30 or 40 years ahead? I certainly don't know but it clear that prices and costs won't go down. Maybe 30 or 40 years ahead, if the trend continues, $150k of income from savings or more might be reasonable, especially if one is actively working towards that goal.


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## cashinstinct (Apr 4, 2009)

If you goal is 15k passive income per month and you end up with 10k passive income... I would consider it a great success 

The most important thing is you are 27, you have things under control, you save money...

Good luck in the future. You will make your own luck.


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## Eaglyeye (Mar 21, 2017)

joetheneighbour said:


> I have a DRIP setup but I don't hold enough share to make it work right now so I'll have to buy a few more share as well.


Wow your journey sounds so very related to me only wish i was 27  (not far am 29 myself). Congratulations on the baby and all the very best its the best part of the life . You mentioned about the DRIP, just curious what account you use for DRIP .


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## joetheneighbour (Apr 17, 2017)

Eaglyeye said:


> Wow your journey sounds so very related to me only wish i was 27  (not far am 29 myself). Congratulations on the baby and all the very best its the best part of the life . You mentioned about the DRIP, just curious what account you use for DRIP .


I am currently using TD direct investment. I think there is a lot of post here and on the internet that compares different account. I have not done too much research myself yet, so it might not be the best account out there.


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## joetheneighbour (Apr 17, 2017)

http://www.slowlybutwealthy.com/2017/07/neighbour-joe-july-2017-net-worth.html

Hi, sorry for being gone for so long, my son was recently born so things got a little busy.

Here is an update:
*
Asset *
Chequing: $5,121.62
TFSA Investment: $29,885.99
TFSA Mutual Fund: $3,558.30
Real Estate: $255,000
Work Pension: ~$153,000 (I checked but I can't remember the exact amount)
*Automobile is not included as I feel it depreciate too fast and will give a misrepresentation of my true net worth

*Liabilities *
Mortgage: $162,573.98
LOC: $12,282.32

*Credit Card is not included as it is paid in full every month

Current Net Worth: $271,709.61


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## joetheneighbour (Apr 17, 2017)

Haven't posted here for a while, but I am making progress towards my goal.

Asset
Chequing: $2,685.62
Savings: $6,515.11
TFSA Investment: $91,285.85 (Market Value)
RESP: $2,039.45 (Market Value)
*Real Estate: $224,000 (Purchase Price of my house)
*Define Benefit Work Pension (Transfer Value): ~$153,000 (Last checked in Jul 2017,aprox $1000 a month of contribution)

*These have not been updated since the start of this blog.
**Automobile is not included (No monthly car payment)

Liabilities
Mortgage: $121,099.50

*Credit Card is paid in full every month

Current Net Worth: $358,426.53

Passive Income
Current Passive Income: $2,940.24/Year or $245/Month


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## OnlyMyOpinion (Sep 1, 2013)

^+1 Awesome progress Joe! 

Net worth and TFSA are impressive, and great to see that you've even taken advantage of RESP grants.

The little guy will be keeping you busy these days I'll bet - enjoy!


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## joetheneighbour (Apr 17, 2017)

Just sharing my progress. My networth is now at: $363,765.24, TFSA generating $3,365.42/Year in dividends.

https://www.slowlybutwealthy.com/2019/09/neighbour-joe-september-2019-net-worth.html


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## My Own Advisor (Sep 24, 2012)

Well done Joe!


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