Quarterly Net Worth Update: Q3 2021

Is it seriously October already? Hoooooowwwww did that happen?!

What Happened in Q3 2021

• The stock market continued to soar and came crashing down hard those last few days of the quarter.  The markets are still in similar shape at the end of Q3 compared to the end of Q2 but they have come down from their highs in early September.  VTSAX, which tracks the overall US stock market, is +15.77% for 2021 so far.  Similarly, VCN, which tracks the overall Canadian stock market, is up 14.90% for the year.  Our international funds are also up for the year but nowhere near as impressive as figures.  VIU, which tracks the developed markets, is up 3.85% for the year.  And VEE, which tracks the emerging markets, is up 0.97% for the year.
• This has been our first quarter where neither one of us is working and it has been glorrrrrrious! Holy Hannah it’s amazing.  I knew it would be great but I didn’t realize how great it actually would be.  
  • The first month off my head was working way too hard thinking about what to do come next September once parental leave is over.  After calming down and processing it all, chatting with Nic, and just living in the moment – I can say with a lot of confidence that it is highly unlikely that I will be returning to work at this point.  It’s so weird how zen I feel with life right now.  I know that we are very likely more than set with the current numbers in place.  I know that we are not robots and do not have to stick to withdrawing a certain amount/percentage every year. I know that we are flexible humans and will have variable spending over the years.  I know that it is highly likely that we will do some sort of fun part-time side gig where we bring in say $10,000/year to either lower our withdrawal rate or increase our spending. Hell, we could rent out one of the two bedrooms in our basement for a year or two and be more than set.   We could flip used items on FB marketplace (not talking our own items – hunt for good deals since we have the time to do so and flip the items for a few hundred bucks).  We could rent out our house for a few months while we slow travel to greatly offset our trip costs.  And of course, I am really enjoying my coaching sessions so if I take on say 10 clients a year there’s a few more grand to add padding to the numbers.
  • I don’t know how this happened, but we’ve met up with so many FI friends this quarter.  It’s so nice to have a real conversation with others who “get it”.  I’m not sure how I’ve made all these FI connections but I’m so so thankful for them.  You all are my people and I love that we have FI peeps in our own town that we’ve made friendships with too.  I also love having FI friends passing through our neck of the woods to hang out with while on their journeys.
  • Our days are so enjoyable.  We do not have a crazy schedule with 15 things to do each day yet we stay very busy parenting that the question of “are you bored yet” is laughable.  We wake up and the next thing we know it’s 8:00 pm.  Mondays we have story time at the library (free), Tuesdays is kids yoga at the library (free and so cute to watch), Wednesdays is her forest school where she yells “I had SO much fun!” each time we pick her up (drop off has been a different beast lately!), Thursdays have no plans – hot tub?, grocery store?, visit family?, hike in the mountains?, explore the forest near our house?, hang with our neighbours?, go to the zoo? and Fridays is gymnastics ($5 drop in – last week were legit the only ones there).  Weekends we try to keep low key and hide out while everyone else is scurrying around to prep for the next week.  I’ve been pretty much on Finn duty and Nic has been on Parker duty.  Finn is genuinely such a good kid and I love spending time with her.  We may decide to head over to the playground but get side tracked by dirt on the path and hang there for 30 minutes and then lay under a tree and cloud gaze and come up with silly stories for the next 45 minutes and next thing you know it’s time to get ready for lunch and we never made it to the playground.  These spontaneous activities fill up our days but I wouldn’t want it any other way.  
  • So here’s something crazy.  Crazy Court is a tracker as you all know and I’ve been tracking our expenses each month and so far we are spending LESS each month than what I am receiving from EI ($713 bi-weekly) and whatever little FB Marketplace sales we have.  This does NOT include Canada Child Benefit that we are also receiving (and jumped up to ~$9,000/year after Parker was born). Of course, some months we expect to see higher spends (when annual car insurance, home insurance, and property taxes are due) but it’s crazy to see that we have not spent a penny of our cash stash yet! I’m guessing that between EI + CCB, we will spend less than $5,000 out of our own pockets during these 61 weeks of parental leave (mainly due to a 6+ week long trip we are planning to take to Vancouver Island next Spring).       
• As mentioned in a previous post, with the newest edition to the clan, I plan to scale back posting to once every 2 weeks instead of weekly.  For the first few months, a majority of this will be from guest interviews/posts that I have lined up with a few writings from yours truly sprinkled in as well. I likely will stick to this bi-weekly posting going forward as I am definitely feeling the blogging burnout. I like putting in these little life updates into our quarterly reports so I’ll keep doing that here.
• We were approached by Dough Roller (!!) to be interviewed for one of their upcoming articles and I’m happy to announce it’s out – and it’s really good!  Thank you Cheryl for reaching out to us!  Hope you all enjoy it:
  • 8 Steps To Retire Early That You Can Start Now
• Lastly, we also were featured on Credit Canada as one of the top 15 personal finance blogs! Thank you!! You can check out the full list here:
  • The 15 Best Personal Finance Blogs You Should Be Following

Ok, on to the numbers! For whatever reason Word Press is not allowing me to insert pictures at this time so this is going to be a much more plain Jane net worth update than what you are all used to.  Maybe this is the blogging world telling me to scale back with my posts.

How Do We Stand

As noted in our recent post with our updated FIRE goals/numbers, we are aiming to get to the ~$1.26M mark as our FatFIRE goal.  Call me crazy, but I still think we can reach this number (or very close to it) by the time my parental leave is up thanks to my 1/2 year bonus for 2021 that I’ll be receiving in March + compounding doing its thing + our low spend allowing us to keep our capital preserved while living off EI + CCB.  In Q2 2021 were we sitting at $1,133,900 without the mortgage so about $165,000 to go.  Let see if we’ve dipped back or have inched closer towards our goal.

Our current liquid portfolio is sitting at:

$1,158,505

We do still have the mortgage in place on our home while renting out the paid off townhouse.  We are hoping that by the time we sell the townhouse the proceeds will meet/exceed the remaining balance on the mortgage so we can swipe that out completely and not have to dip into our investments to pay off the remainder on the mortgage.

We decided to continue renting with our current tenants with a month-to-month rental extension and did not increase rent prices as a thank you for paying rent on time each month (even though the rental market around here is crazy and we could easily be charing $100-200/month more).  It’s hard to justify itching to sell the townhouse and send the proceeds to the mortgage on our primary residence when the passive income is quite easy.  Essentially, each year we hold on to the mortgage, we are netting ~$10,000/year.  Currently this is just chipping away at our current mortgage on our primary home so we don’t have to deal with a mortgage payment line item in our expenses.  We do have mortgage interest we are paying by holding on to the mortgage so really we are netting closer to $6,000/year after accounting for interest. This past year we dealt with two minor headaches that cost us a total of $40 out of pocket.  Let’s say it took us a total of 10 hours to deal with these nuances, that’s like getting paid $596/hr ((6,000-40)/10).

Mortgage Balance Remaining: -$307,002

Net Portfolio: $851,483

We didn’t do any tweaking to the portfolio and are sitting content with how things are looking.

Right now I am focusing on having 5 years worth of cash on hand.  Currently we have around $121,000 in cash which is actually pretty perfect.  Why?  If we assume $40,000 spend per year and $17,000 in CCB during the first 5 years, that’s a net difference of $23,000.  Over 5 years that’s $115,000 of cash needed (23,000*5).  We prefer this much more cautious and conservative approach vs something like the yield shield as we want to keep our non-cash investments in the overall market.

Once we FIRE, any taxable income/dividends we receive from our taxable account we plan to withdraw, rather than drip right back into the non-registered account, to shuffle over to our TFSA instead for some tax sheltering.  Once we are down to 1-2 years of cash we will start withdrawing more from the portfolio, starting with our RRSPs first.

Stocks/Bonds/Cash Allocation:

• Stocks: 81.1%
• Bonds: 6.4%
• Cash: 10.5%
• Crypto: 1.5%

We’re currently sitting at a 70/30 USD/CAD split.  With the USD/CAD exchange rate sitting at 1.27 our liquid portfolio fully converted into CAD is $1,377,222.

Withdrawal Rates

Let’s see what this means when it comes time to withdraw.  I like looking at a few different scenarios as we can cut down our spending if need-be in hard times (market tanks).  I also like looking at what our withdrawal rate looks like with Canada Child Benefit (CCB) factored in since it is such a juicy benefit that we will be receiving for the first ~15 years. As previously mentioned, we do NOT rely on any external support in our FIRE figures (CCB, CPP/SS, OAS, GIS) and view them as icing on the cake or to account for any future unexpected medical expenses we may encounter in old age.

	Convert CAD to USD	w CCB		Not convert to CAD	w CCB
$25k/year	1.82%	0.58%		2.16%	0.69%
$35k/year	2.54%	1.31%		3.02%	1.55%
$40k/year	2.90%	1.67%		3.45%	1.99%
$45k/year	3.27%	2.03%		3.88%	2.42%
$50k/year	3.63%	2.40%		4.32%	2.85%

It’s pretty awesome to see that the only scenario where we are currently over the “4% rule” is if we spend $50k/year and not have the USD/CAD conversion in place and also assume $0 in CCB. It is highly unlikely we will spend $50,000 every year and have the USD/CAD sit right at par and somehow see CCB dramatically altered/removed in the near future.

Putting It All Together

Total Assets:

• Liquid Investments: $1,158,505
• Townhouse: ~$300,000*
• Home: ~$400,000*
• Total: $1,858,505

*We likely could sell our townhouse and house for more than these values above in the current market but we like to keep this value close to our purchase price as we do not know the true value until we actually sell in the future.

Total Liabilities:

• Mortgage on our primary residence: $307,022
• Total: $307,022

Net Worth:

$1,858505 – $307,022 = $1,551,483

Total: $1,551,483

There we have it! Comparing this to last quarter, we were sitting at $1,524,413 so we are up $27,070 or 1.01%.  These numbers continue to amaze me.  Not too shabby considering neither of us are working!! And that is roughly what we spend a year! Comparing this figure to this time last year, our net worth was $1,290,613 so we are up $260,870 or 20.2%.  Even though I understand the magic of compound interest, it continues to amaze me.  I still feel quite confident that we will be very close to our FatFIRE goals in a year from now which is crazy to think considering neither one of us will be working!  I’m really interested to see what our net worth looks like a year from now after a year of no employment income at all to report besides my bonus from the work I did from earlier in this year.

Those following along know we have a few other items in our portfolio that we like to hide behind the scenes as our true emergency fund such as my Health Savings Account (HSA), my pension from my previous employer, Nic’s small 401k from her former employer, our children’s RESP, and any CCB/CPP/SS/OAS/GIS potentially coming our way in the future.  So for the sake of this exercise we are not including them.

The key to all of this is to stay flexible.  If we see the markets tanking during the early years we have no problem tightening the spending belt and taking some staycations vs longer vacations.  We also have no problem picking up some fun part time gig for 15 hours a week to add some extra padding.  We are humans, not robots, and are capable of adjusting plans if need be.

Voila! Stay tuned to see how our net worth has changed in 3 months when we check back in on this. Stay weird and wealthy muchachos! 

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We believe in stacking up life hacks to keep your enjoyment levels to the max without depleting your bank account.  Here are some ways to further educate yourself and save thousands of dollars over your lifetime by making some simple adjustments:

• Investing Newbies: Check out our free Investing 101 Series.
• How much are you paying for your phone plan?  Canadians, learn more about Public Mobile, and see how we are paying $3/mo for our cell phone plan.
• How much are you paying for internet?  Canadians, learn more about the various Independent Service Providers out there to see who services your area so you can lower your monthly bills.
• How much are you paying for home insurance?  We were able to reduce our rates by 25% by switching over to Square One Insurance.  If you live in BC, AB, SK, MB, and ON, check out Square One for your home insurance, landlord insurance, and/or tenant insurance.  Use this link to receive an extra $15 off your quote.  (Note that you must use this link to start the process to get the $15 off even if you prefer to pay over the phone.)
• How much are you paying for your monthly utility bills?  Fellow Albertans, see how you can likely save on this monthly expense.

 

 

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