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Apologies folks who received the incorrect email notifications regarding this interview! Thanks for dealing with this non-technical blogger’s IT issues.  

Here we are again with our next installment of the FIRE Community Guest Interview Series!  

But first, let’s announce our winner for Doc G’s new book, Taking Stock!

Drum roll pleaseeeeee

Danielle, congrats!  You won!  I send you an email with some more info here shortly 🙂 Back to the show.

For anyone new here, this interview series will cover people within the FIRE community who are on their way to becoming financially independent, have already reached financial independence, or who have retired early. If you are reading this and you are financially independent, retired early, or close to reaching these major financial milestones, please reach out to us! You can check out the previous FIRE Community Guest Interviews here.

Ok you guys, are you ready for today’s interview? It is a fantastic one!  Grab a coffee/tea as there are a ton of details being shared as 99% of you have never heard their story before as they are not bloggers. (These are my personal favourite types of interviews – just everyday FIRE freaks not on the internet showcasing it is possible.)

I decided to break this interview up into two parts or else this would be a 10,000 word post!  So hang tight for part 2 next week.

Today, we have the pleasure of having a fellow Canadian retiree couple on to share their journey to FI. What makes their story unique is that they were late to learn about FIRE… yet they still did it!  So for all the “old” folks out there saying FI is not possible, here’s your inspiration!  They prefer to remain anonymous so we will call them Mr. and Mrs. Late to FIRE.

I hope you appreciate these responses as much as I do and hope you can relate to these guest interviews in some sense to see that there is no cookie-cutter way to FI. If you have any follow up questions or would like to get in touch with Mr. & Mrs. Late to FIRE, please either reach out to them via email at LateToFIRE@outlook.com or leave a comment below!

WAIT.  Did you guys see what they did there?!? They created an email account as part of this interview!! How friggin cute is that?  You better send them an email, dammit!  (I’m serious.) There is so much love in this interview!

Without further ado, take it away Mr. & Mrs. LateToFIRE!

1. Can you give us a little background of who you are, what you do, and how you became interested in personal finance? How did you discover the idea of financial independence?

Hello Court, and thank you for allowing me to share some of our story with your readers. Because we discovered the FIRE community fairly late in life, we’re going by the alias Mr & Mrs Late to FIRE, and for brevity, just Mr & Mrs LtoF.

I feel a bit of a FIRE fraud as our situation is more along the lines of an old-school retirement, but one where applying FIRE techniques helped change our spending habits, become debt free, start saving and investing, discover a whole other pension source, and achieve the earlier and more financially secure retirement we’re living today.

Having never visited Canada, we moved here from the UK in 1997. I’d just turned 34 and Mrs LtoF 32. We’re a blended family, and at the time of our move we had one 5-year-old and two 10-year-olds. We had no family or friends here, no contacts, no jobs or interviews lined up, one suitcase and backpack of possessions each, and just five nights accommodation booked. We immigrated under the skilled worker program as I had IT qualifications and experience.

For the first six months we covered our expenses with the cash we’d brought with us, plus Child Tax Benefit and a Manitoba program for families on a low-income; both programs were a very welcome surprise. Also, Mrs LtoF brought in a few dollars working from home writing general knowledge questions for gaming machines.

After six months in our new country, I’d found employment in the IT department of a publicly traded company, while Mrs LtoF took on the role of stay-at-home parent. Due to money pressures in our fourth year, Mrs. LtoF took a full-time job in the administration department of an insurance company. I later transitioned to the role of manager and strategist in a not-for-profit organization.

By the time we were fully established in Canada, with a house (mortgage of 95%), furniture, and a vehicle, we’d exhausted our entire financial reserves. The next 15 years were spent running hard around the proverbial hamster wheel; working and spending. This was no different from our lives prior to moving to Canada; proof that moving a third of the way around the planet in itself teaches you nothing about money management!

Today we live in rural Manitoba on a small acreage. Our children have moved out and are making their own way in the world. We also have three young grandchildren.

I became interested in personal finance during the 2012 Christmas break, when out of nowhere the reality of our situation hit me. We had to dial down our stress levels before it killed one of us. Mrs LtoF’s stress was coming from changes in the leadership in her department, and for me, it was coming from always having to be “on”, including evenings and almost every day off. I said to say to Mrs LtoF “we have to do something about this, else we’ll be working well into our 60s”. Mrs LtoF was instantly onboard. That brief exchange was the catalyst to turning around our finances and the development of an escape plan.

We began our financial makeover in January 2013. Our general finances were pretty sad for our age, but we did have a few things going for us, primarily, we had two incomes, mine being above average pay, we had been making the mandatory payments into our work (DB) pension plans, and our mortgage was down to $85K. Through most of 2013 we focused solely on debt reduction, including the mortgage.

In late 2013 I stumbled across several dividend investing blogs, which then led me to the FI/FIRE community. Wow! I was blown away by the bloggers and their stories. Some of them just a little older than our oldest children. The question for us was could FIRE techniques work for us? For sure, we weren’t going to be retiring 30 years before age 65, but it might help shave some time off. After reading just a few blog posts I was sold on the idea, and down the FI rabbit hole I went.

2. When in your journey did you realize financial independence was actually possible?  Was that the original goal at the beginning?

I first realized FI was mathematically possible on my way home from college at age 17. I asked myself what yearly income did I need, how much can I earn on savings, and how much do I need in my savings. From that, I knew half a million [GB] pounds would be plenty. So far so good. Over the next three years, I set about developing several electronic and software-based products. That went well too. Unfortunately, getting funding to ramp up production proved to be an obstacle I couldn’t overcome. There were no GoFundMe or Dragons’ Den type options back then. Thoughts of FI were slowly squeezed out by normal daily pressures and the complexities of life. On the bright side, I had broadened my skillset greatly, and that would payoff later in my career. In the meantime, I got to participate in several tech start-ups and work on some amazing cutting-edge tech and scientific projects.

Fast forward three decades, January 2013 was when we unknowingly rebooted our financial journey to FI. Our initial plan was just to become debt free, and it was while working on debt reduction that I became immersed in everything FIRE. I quickly learned there was another path to FI, and we wouldn’t have to put our home in jeopardy or risk going bankrupt.

At the outset we each had different goals. I wanted us both to be able to walk away from our jobs by our mid-50s, and to have the headspace to think and be present with Mrs LtoF and our children. Mrs LtoF’s expectations of what could be achieved were a little lower, with her goal being able to switch to working part-time, which would perhaps make the work stress more bearable.

On the monetary side, the goal was to be debt free, have enough income to cover $40K annual living expenses, and also have $150K in the bank to cover 10 years of travel.

There was one particular FIRE post that excited me and captured the essence of what I imagined FIRE would be like. If you have 27 minutes to spare, you can listen to it here: First Year of Freedom written by the Mad Fientist, and read by Robin Homer, voice actor.

3. To help put things into context, if you are comfortable sharing some numbers, what was your savings rate, FIRE number, net worth, salary, how many hours a week did you work, etc?  How long did you work towards financial independence and where are you today? 

Prior to discovering the FIRE community, we let our employers dictate our savings rate through mandatory wage deductions for our work pensions, which, in conjunction with the employers’ match, brought our savings rate (as calculated here) to just 12.5%. With this savings rate, our retirement date was age 65, and only if we could both hang onto our jobs (yep, that didn’t work out).

Mrs LtoF and I also participated in our respective employer’s employee share purchase plans at 3% of our pay plus the employer match. We would occasionally raid these plans to pay for a vacation or replacement vehicle, so I don’t think that really counts as savings.

After making headway on clearing the debts, we refined our initial goal to two goals:

  1. Regular FIRE: $50K joint after-tax income; FIRE number $1.28M (excl. house). This goal didn’t leave much room for travel, but we could at least walk away from our jobs.
  2. Comfortable FIRE: $70K joint after-tax income; FIRE number $1.63M (excl. house). This was our preferred goal. It would provide us with $30K a year for travel, hobbies, and gifting. However, it would require both of us to work an extra two years beyond goal #1.

At the start of 2013, our assets included $36K in employee share purchase plans, $68K in foreign/UK RRSPs, $475K in work pension plans, and $170K of home equity. Debts included a mortgage of $85K, vehicle loans of $36K, and other debts totaling $12K, giving us a net worth of $616K.

So, in the Pro column, our investments and pension plans minus our debts was $446K, not too bad of a starting point, but in the Con column, I was age 50 and Mrs LtoF 48. To reach our preferred goal “all” we needed to do was clear $133K of debt, and increase our investments plus work pension plans by $1.05M.

We cut back on spending, and increased our savings rate to an average of 39%. Our savings rate was limited by our decision to continue taking travel vacations. It meant reaching our end goal would take a little longer, but we knew that sometimes you have to do things when you are able.

Four years into our journey everything was going great, when, without warning, Mrs LtoF was laid off from her job of 18 years. That event was emotionally tough on Mrs LtoF as she had always received excellent performance reviews and numerous commendations; an all-round good employee. I could certainly go off on a rant about this, suffice to say, if you don’t work for yourself, be prepared!

We resolved to not allow this layoff to derail our FIRE plans, so I reworked our plan. At Mrs LtoF’s suggestion, we engaged a fee-for-service financial planner to check my numbers, which were correct, and much to Mrs LtoF’s delight, she was able to retire at 52. Her work pension was not indexed, so she took the commuted value and transferred the funds to a self-administered LIRA, which has since been converted to a PRIF and a LIF.

For the remainder of our journey to FI and subsequently FIRE, now on one income, our average savings rate increased to 58%, peaking at 70% in the final year.

To summarize: Two years into our journey we were mortgage free. Four and a half years in we were debt free, and Mrs LtoF was able to retire forever. Six months later we reached our first goal; we were FI. We decided to press on to the second goal, meaning I keep working! At seven years into our journey, we achieved our second goal of Comfortable FIRE. I quit my job six months later.

In total, it took just over 7.5 years, from “we have to do something about this” to achieving Comfortable FIRE with a sizable cushion. In that time, we increased our net worth by $1.68M, taking our net worth to $2.3M when we include $380K home equity.

Here’s what our journey looks like in chart form:

Prior to retirement, the work pension plan’s commuted value is used. After retirement, the value is analogous to an RRSP/RIFF that reduces to zero by age 90. The real game changer was building our investment portfolio.

The below chart shows more clearly how adopting FIRE techniques helped ramp up our savings and investments, and into retirement with the recent declines in the markets:

Prior to Mrs LtoF being laid off in 2017, our combined annual gross income was $180K. In 2020, my final year of employment, my salary plus bonuses was in the region of $140K.

Mrs LtoF worked a regular nine-to-five office job, and for the most part, was able to forget about work when she had finished her day. Due to the nature of my work, I was always working at some level, both in the office and at home, often to 2 am. Although I had full control over the hours I worked, the work had control over me! A typical week was 60 to 70 hours, but in the worst-case situations, I’d be running on four hours sleep a night for days at a time. That higher-than-average pay cheque and a work pension didn’t come easy!

4. Do you feel deprived?  Do you feel like you are sacrificing and missing out on life?  How would you say your mindset has shifted throughout your FI journey?

I had to check with Mrs LtoF on this one as it was something we’d never discussed. The answer is a categorical “no”, we didn’t feel deprived at all. In fact, we felt quite the opposite. We had the prospect of leaving behind the stressors that were sucking the life and happiness out of us. Financially, we were moving forward, while people around us were standing still, or worse, going backwards.

At no time did we feel we were missing out, and perhaps this is because we didn’t cut back on the things that gave us the most pleasure, mainly photography and travelling. During our financial journey, we visited three Canadian provinces, three US states, including the four largest Hawaiian islands, Ireland, Scotland, and England twice.

When it comes to experiences, we can report that becoming mortgage free is a great experience. We immediately felt less burdened, less vulnerable, and more confident about the path we were on. When Mrs LtoF was laid off, being mortgage free paid off big time for how we were able to handle it. Even though I understand the math of investing vs paying off the mortgage, I would do the same again – there’s real value in having one or two things in your life that are done and dusted [a mainly British phrase].

We’ve definitely undergone a mindset shift around making purchases. We no longer buy on impulse, albeit if Mrs LtoF finds a bargain at the thrift store, she might throw caution to the wind and buy a $2 photo frame or book. As a matter of course, we now ask ourselves “do we really need this?” or “will this really make us happy?”. The operative word being “really”.

Instead of making excuses as to why we should buy something, we now find reasons why we shouldn’t. It used to be easy to spend money that we didn’t have, and now that we have money, it’s difficult to spend it!

Another change has been a desire to hoard less, donating or selling off our unwanted items. Mrs LtoF frequently takes boxes of stuff to the charity shop, while I prepare and post ads for our old computer and camera gear. My sales over the last 12 months topped $3,600!

5. What do you spend your money on and what don’t you spend your money on? What brings you happiness and joy? How much money do these things cost?

We enjoy photography, so that’s an area where, after extended deliberation, we’ll spend more than I suspect most people would. We don’t go too crazy, such as buying a $15K lens, but we would buy a $1K or $2K lens and be happy with that. For 2020 (a partial retirement year) we’d budgeted $12K for travel, but as we couldn’t go anywhere due to the pandemic, we spent half of it on upgrading our camera gear, and shared the rest between our children and the grandchildren’s RESPs.

When we buy new, we look for a good balance of price and quality/reliability. And whatever we buy today, we aim to get close to a decade’s use from it. Our bedroom furniture is 25 years old this year, and we have plans to give it a makeover with a nice paint job and new handles. When it comes to our computers, I buy individual parts and assemble the machines myself, ensuring I get the best processing power and upgradability our money can buy.

We don’t buy “toys” like ATVs, skidoos, and the like. We just don’t need the adrenaline rush enough to buy something we’ll barely/never use. Our vehicles are practical, reliable, and 100% paid for. We already live in a rural location, so we have no desire to buy a cottage.

Eating out is a rare occurrence for us, typically tied to a special occasion. When we do eat out, it’s a pretty cheap deal. Anything over $60 for just the two of us would be expensive.

What brings us happiness and joy is, without doubt, being free of the pressures of debt and work, and having the freedom to do what we want on our own schedule. We feel very fortunate. Sure, it would be great to have been here 10 or 20 years earlier, but definitely better late than never.

Many of the things we enjoy cost very little, including walking with our dog, spending time with family, taking photographs (as mentioned, we did splurge on the equipment), reading books and blogs, listening to podcasts, watching movies, and observing the night sky from our deck. Mrs LtoF always has a craft project on the go, while I’m often organizing our photos or working on a spreadsheet related to our finances and future plans, and writing this!

We also get a great deal of satisfaction from finishing a project on the house at a fraction of the price of paying someone else to do it. Our annual budget for house and property maintenance and upgrades is $5K. After all, it is an asset that we might want to draw from one day, plus, we live here and wish to enjoy the improvements. We don’t spend money on work that we can do ourselves, which has included decorating to moving walls, installing new windows and doors, upgrading the kitchen and bathrooms, and all the plumbing and electrical work.

Travelling is something we enjoy a great deal, especially as that’s when we do most of our photography. As I write, we have over 11,000 photos on Google Maps, with over 12.5 million views. It’s pleasing to see our photos show up all over the web and occasionally receive a request to include one in a book or even a TV ad.

6. Do you use a budget?  Do you track your expenses? Do you track your net worth? If so, how often do you update these?

We do have a budget, but the overriding figure of interest is the total annual spend vs the amount in each individual category. If one line item goes over budget, and that is balanced out by an underspend on other items, then that’s fine. The budget (which is an Excel spreadsheet) is split into bi-weekly periods, with numerous categories. For each category it shows the budgeted amount, amount spent, unused budget, and any overspend. Mrs LtoF enters the amounts spent once or twice a month. This tracking is very useful for anticipating how much cash we need to cover upcoming bills, and for planning our future income needs.

I do track our net worth. Again, Excel is where the action happens. If I want an up-to-date net worth, I just open the spreadsheet and the latest prices are pulled in. The spreadsheet calculates our net worth, and updates our drawdown plan and projected net worth out to age 85. The house value increments automatically using a modest growth rate, and the work pension decrements toward zero at age 90.

I also use the free Yahoo Finance web and iPhone apps. These give me a near real-time net worth update as easily as checking a Facebook feed or news stream. This is what it looks like:

“Total gain” has little meaning, as it doesn’t include gains on previously sold stocks/ETFs. “Investments” includes our ETFs, stocks, and cash. “Other Assets” includes our house and the work pension – these and the cash amounts have to be updated manually, but they change little from month-to-month.

While on the path to FIRE, checking our net worth frequently helped build resilience against the hard knocks the markets periodically throws at us. I would give Mrs LtoF updates, “we’re down $12,000 today”, “We’re up $9,000 today”, so when the big drop came in March 2020, and I said “we’re down $145,000”, she calmly replied “yes, but it’ll come back up eventually”, as it did.

Having made it this easy to check our portfolio and net worth, barely a day goes by without me taking a quick peek. I’m thinking I need to cut down on this, because on a bad market day, checking our numbers doesn’t add any value to my day.

7. As someone who learned about financial independence at a later age, how has that impacted your finances and your FI journey? 

There’s a little bit of sadness that we let so many years pass without doing more to help our children and our future selves.

Had I never learned about FI and FIRE, I’m confident that, other than clearing the mortgage, little else would have changed. Mrs LtoF’s layoff would have been a much bigger blow to her wellbeing and our finances, and if we wanted the income we have today, Mrs LtoF wouldn’t have retired at 52, and I wouldn’t have retired until 65, assuming that the stress didn’t get me first.

My mindset shifted from being indifferent to our finances and retirement, to being hyper focused to obsessive levels. With so much to do, and so little time to do it, the first three years on the FIRE path were extremely intense. To an observer, it may well have looked like panic. Every incoming dollar was mapped to an account weeks before it was received. I even started waiting for our wages to appear in our bank account at 2 am, so I could immediately send the funds to the designated investment accounts, maximizing as much as possible the time in the market. My employer’s payroll department told me I couldn’t put $900 each payday into the spousal RRSP because with my work pension, I’d run out of available RRSP room within four months. I had to explain how that was my plan, and that I would stop the contributions once I’d hit my limit. Mrs LtoF would probably have preferred me to have been a little more laid back, but she understood the need at the time, and appreciates where we are today.

A big part of my mindset change was an insatiable thirst for knowledge of all things financial, and to apply whatever I learned to our situation. I’d like to share how this worked for us in some less than usual ways.

Building multiple income streams is a common FI/FIRE strategy, and it got me thinking about what, if anything, we might be entitled to from the UK OAS system for the time we were living and working there. We filled in a few forms, and two months later discovered that we would each be eligible to receive $6,600 a year, (at today’s value and exchange rate), starting at age 67. Over ten years that’s $132K. Digging deeper I discovered that we might be eligible to buy additional years in the system. A little more paperwork, and we received approval to make additional contributions, including the option to buy back 10 years. To date we’ve each bought an additional 16 years, doubling what we already had. The cost was $3,950 each for an annual boost of $6,600 each, meaning that we will more than recover our contributions in just the first year of drawing the pension. The total income from these pensions over 10 years is now $264K. Unlike when a Canadian receives OAS overseas, the UK OAS pension ceases to be indexed when being drawn by recipients residing in Canada; the Canadian government are trying to get this rectified. Incidentally, the pension is indexed for recipients residing in the US and the EU.

Another trait of people pursuing FIRE is optimizing. I knew that my work pension was based on my annual salary, and that my bonus was ignored by the pension formula. Realizing this, I made a proposal to my employer, suggesting that the bonus be built into the position’s salary. My employer was receptive and implemented the change. This move increased the annual pension by around 10%, and had I taken the commuted value, it would have added an additional $110K to the payout.

Further optimization was achieved by consolidating our UK RRSPs, which were with three different companies, all of which refused to let us have any of our money unless we received advice from a UK financial advisor. When we contacted UK advisors, they all said they couldn’t help us, because we didn’t have a UK address. A catch-22 situation! One specialist London company offered to ‘help us out’, explaining how a 5.8% annual fee was a great deal. Eventually, after talking with a UK FIRE blogger, we found a UK company that, for much more reasonable fees, could resolve the catch-22 conundrum. We’re now drawing down these funds. Had it not been for reading FI websites and blogs, I may well have been suckered into paying those super high annual fees.

We didn’t have much lifestyle creep because moving house every three to five years is a great way to burn money. Having said that, in the UK the real-estate agent fees were only 1% to 2%, and in Canada we sold our properties ourselves, spending about $500 on advertising. Still, every house move requires a lawyer, survey and registry fees, removal truck, new stuff, etc. Lifestyle creep was mostly around our vehicles. We progressed from buying used vehicles to dabbling in leased vehicles, and then to buying a series of new vehicles. Once we started on the path to FIRE, we kicked that habit into touch. In almost ten years now, we’ve only done one vehicle upgrade.

8. As a FI member living in Canada, are there any pros to living in Canada specifically that have helped you along your journey?  Conversely, any cons?  

When considering where in the world we wanted to live, at the top of our shortlist were the US and Canada. The big differentiator was their respective healthcare systems. We didn’t have any health issues, but the Canadian system offered a safety net, that regardless of how things worked out, it would be there for us and our children; we chose Canada. We’ve had a few medical scares and injuries over the years, but we’ve never had to worry about the cost of seeking medical attention. This is a huge pro for Canada. We realise this doesn’t come at zero cost, but we feel the higher taxes far outweigh the cost of financial ruin when a serious medical issue arises.

I think many jobs in Canada are better paid than in the UK, and our money does go a lot further overall. This can just mean that you can buy more stuff, bigger houses and higher spec vehicles, and still be living paycheck to paycheck.

Cons for Canada, especially where we live, include long periods of cold weather, high-cost cellphone and internet service, and not so great credit card bonuses when compared to the US.

9. What is your investment strategy? Do you invest in index funds, dividend stocks, real estate, other businesses, etc.?  Has your investment strategy changed over the years? 

Initially we focused on buying Canadian dividend stocks, with our portfolio containing all the usual suspects, banks, telcos, REITs, and energy companies. Choosing, monitoring, and balancing the portfolio soon began to distract from other things in my life, and the more I read about stock picking, the more I realized I was doing little more than making a best guess at what was going to do well. The turning point was a five-part investing video series by a Danish national and former UK hedge fund manager, Lars Kroijer. I highly recommend the series, available on YouTube here. I was also following a number of blogs where low-cost index investing was the main theme, including Millennial Revolution and Canadian Couch Potato. So, after just 12 months of stock picking, we switched to index funds.

Today, we invest primarily in four ETFs: VCN, VIU, VUN, and ZAG. We also hold ZCN for tax loss harvesting (more on that later). I don’t feel an all-in-one ETF is suitable for us just yet because we hold Canadian ETFs (VCN and ZCN) plus our few remaining Canadian dividend stocks in our non-registered accounts. I also want to know exactly how much we have in bonds as that forms part of our six-year fixed income cushion in the event of a prolonged market downturn. Our fixed income also includes two years of cash in savings and GICs, plus cash for the current year’s expenses.

Here’s what our portfolio allocation looks like today:

The “Unassigned” funds are for whatever comes up that we might want to buy guilt free.

The only real-estate asset we have is our house. When we bought the house, it was a borderline fixer-upper; it was livable, but needed a lot of work e.g., new windows, new septic tank, new well and water system, and much more. Here’s what we’ve spent on it over the years:

And in all that spending, we didn’t get a granite countertop! There is a new roof though.

For all but my final job, I always had some form of side business. Now that we’re FI, it’s something I may look at doing again, but for now it’s not something I need, emotionally, monetarily, or for something to do.

10. Did you take advantage of tax advantaged accounts offered to you?  If so, which ones and how so? 

Prior to moving to Canada, we’d put a small amount of money into a UK RRSP like plan, but since our move until 2013 nothing into RRSPs or TFSAs. By the time we’d turned our minds to investing, I’d accumulated $70K of RRSP room and Mrs LtoF $40K. We also had TFSA room of $25K. So, our starting point was $160K of untapped tax advantaged account room, which was increasing at $21K a year. By the time we achieved our Comfortable FIRE goal we had deposited $300K into our RRSP and TFSA accounts, plus a $90K transfer from Mrs. LtoF’s commuted work pension.

Soon after we started investing, I learned about spousal RRSPs, and as I would have a decent income from my work pension, we stopped paying into my RRSP, and redirected the savings to Mrs LtoF’s RRSP and the spousal RRSP. Income from a work pension can be split with a spouse from age 55, but if that option is rolled back to age 65, like it is in Quebec, our respective incomes can still be fairly well split prior to age 65, saving us thousands in unnecessary taxes.

I was very calculating as to how much I deposited each year into the spousal RRSP. I had a good idea of how much RRSP room I would have available before I quit my job, and also gained a good understanding of the tax brackets applicable to my income after deductions. So, each year I would contribute only enough to bring my marginal tax rate down from 43.4% (federal + Manitoba) to the 37.9% bracket. In retirement, our marginal rate is 27.75%. Once I’d reached the cut-off point for funds going into the spousal RRSP, despite still having untapped room, the rest of the year’s savings went into our TFSAs. When the tax advantaged accounts were maxed out, we directed our savings to non-registered investment accounts and built up our cash cushion. Ideally, we would have topped up the TFSAs first, but my employer wanted to know the spousal RRSP contribution amount at the start of the year.

To take full advantage of the dividend tax credit, we only hold Canadian equity in our non-registered investment accounts. We’ve recently added ZCN to these accounts, bought with dividend income, for use when topping up our TFSAs in a down market i.e., when the sell price of ZCN will generate a capital loss, we will sell ZCN in late December, move the cash into the TFSAs in January, and immediately buy VCN. Doing this allows us to capture the capital loss in the non-registered account, without being subjected to the superficial loss rule, and we’re only out of the markets for a day or two. If the Canadian markets are up, we just transfer VCN from the non-registered accounts to the TFSAs as there’s no loss to be captured.

For our grandkids, we’ve built into our budget annual contributions to each of their RESPs.

Let’s pause there for this week and circle back next week with the second half of the interview.  Any comments for Mr and Mrs Late to FIRE so far?

HOW GOOD IS THIS INTERVIEW?!  I just love Mr and Mrs Late To FIRE.  I cannot imagine how many hours it took just to write this first part of the interview.  So truly, thank you for putting in such amazing work into this interview.

Thanks for tuning in and check back next week for Part 2!

We love highlighting other members of the FI community. Please contact us if you’d like to be a part of the FIRE Community Guest Interview series and we’ll see if we’re a good fit!

And in case you wanted to read the previous interviews that make up our FIRE Community Guest Interview Series, here you go!

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5 thoughts on “FIRE Community Guest Interview #25 – Late To The FIRE Party – Part 1”

  1. Pingback: FIRE Community Guest Interview #25 – Late To The FIRE Party – Part 1 - news.iNthacity: More Top Breaking News and Popular Stories To Stay Informed

    1. Mr. LtoF

      Yes, one indexed to inflation, and the other not. Looking at where inflation is today, and perhaps for a year or two to come, we appear to have made the right call.

      Reply

  3. Pingback: FIRE Community Guest Interview #25 - Late To The FIRE Party - Part 2 - Modern FImily

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