Quarterly Net Worth Update: Q4 2021

Bam! Out with the old and in with the new.  Happy New Year everyone!  This year I am aiming to live in contentment, be grateful for “enough”, and to try to focus on more non-financial topics.

What Happened in Q4 2021

• The stock market continued to rip and bounced back from those Q3 dips.  VTSAX, which tracks the overall US stock market, was up 26.05% for 2021.  Similarly, VCN, which tracks the overall Canadian stock market, was up 25.66% 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, was up 6.69% for the year.  And VEE, which tracks the emerging markets, is up 5.98% for the year.  Those are some wiiiild numbers!
• It has now been 6 months with both of us off work and it still remains glorious.  I’ve recently experienced this zen-like nirvana knowing that we are in good shape, we’ve reached “enough”, and don’t need to over analyze every expense (even though our food expenses for December went haywire!).  It took some time to reach this point since starting parental leave but I’m glad to finally be here.  It obviously helps that the markets have been doing their thing chugging along and padding up the numbers while we’re off. CAPE numbers are crazy high so we shall see if/when a correction comes but my made up prediction is that we will continue to see positive stock market growth in 2022 but not as pronounced.
• Our minds have been wandering deep into the world of unschooling/worldschooling these past few months.  This topics deserves an entire blog post but man we can see so many pros (and cons) to alternative schooling and we’re excited to keep digging into this topic further.  We always assumed we would go the traditional public schooling route with our kids.  But after reading a bunch of books and listening to a lot of podcast episodes on this topic, we both are on board to explore other educational options for our kiddos.  (For those interested, I’d recommend starting with the book The Call Of The Wild And Free and The Life Without School podcast.) This honestly seems like our calling, especially with reaching FI with young kids – we have the time to be there and teach them which is such an incredible gift (in our opinion at least).  Our current “free dream” is to keep our home base and live here for ~8 months of the year and then slow travel each January – April to a different country/region to explore.  We absolutely love traveling (and travel hacking) and really want to expose our kids to other cultures out there in the most sustainable fashion possible.  We likely are 2-3 years out to do any sort of long haul travel so we have some time to figure it all out.
• This was the quarter we finally became a single car household.  Woohoo! Over the course of a month, we sold our Toyota Corolla, purchased our new-to-us Honda CRV, and sold our Subaru Legacy.  The used car market has been crazy since COVID and we honestly didn’t think we’d make the transition until this Spring but we ran some numbers and it made sense to switch things over.  We thought we would just sell the Corolla for now and drive the Legacy over the winter since it’s such a beast.  But Nic, being the car shark that she is, found an awesome deal on the CRV that was too hard to pass up.  While selling the Corolla was overwhelming to say the least (over 100 messages between FB Marketplace and Kijiji in the first 24 hours), the coolest part of this entire experience is that we actually sold the Legacy to one our our followers!  Overall we ended up with a $4,000 profit by downshifting that we put into our “new car fund” for a future new-used car once the CRV is no longer with us.  It only has 90,000 kms (56,000 miles) so it should last us awhile.
• We continued to have our “locals only FI meet-ups” in our town each month and I’m loving them.  It’s so amazing to connect with others right in our community who “get it” and are open to sharing their story and money saving tips.
• My brother came up to visit for 2 weeks and it was so nice to see him after 2 years of not seeing anyone in my family.  Unfortunately, he was not able to take any vacation days off while up here and was working remotely.  While we wish we could have spent more hours each day with him, this was a wonderful reminder of our “why” for all of this.  We personally value time over money and would rather have the time to spend together as a family with our kids and watch them grow versus feeling stuck to a laptop, phone, email, etc.
• On the family topic, my mom had unplanned open heart surgery this quarter (and thankfully she is recovering well).  We’re seeing first hand how each of our parents have been going through some tough times this past year – all in their 60s – and it’s another grim reminder of our “why” behind all of this.  I don’t want to be working until 65 just to end up with health issues shortly after reaching “the golden years”.
• Parker is a beast and in the 97% for both height and weight.  He recently turned 6 months and we just switched into 12-18 month sleepers as the 12 month ones are too short for him!  He’s doing the army crawl scoot and loves jumping in the exersaucer.  He’s such a genuinely happy little boy who is constantly smiling.  The only time he gets angry is when we can’t keep up with his demanding food requests at dinner time.
• Finn is my little mini me and I love watching her grow.  She is such a kind, smart, sassy, and empathetic kid.  Her maturity level constantly blows my mind.  Her current favourite things include reading books (especially anything to do with the human body), playing in her little pretend world, doing her “morning craft”, taking baths, skating, and sledding.  I asked her what her favourite thing to do is and she said “play” – atta girl.  She’s at the early stages of putting letters together to form words and it’s so cool to watch it all “click” for her.
• We spent 10 days out at the cabin over the holidays and had 3 IHG hotel free nights that had to be used by the end of the year (thanks credit card sign-ups).  We went out to our favourite mountain town for a night to see all the holiday light displays and also booked a hotel in Calgary for a day of swimming and waterslides.  One of the days at the hotel sums up our life – here’s how it went.  While Nic had Parker in the room for his first nap, Finn and I went down to the continental breakfast area for 1.5 hours.  We sipped on multiple rounds of “apple cider” (1/3 apple juice 2/3 hot water), talked about tadpoles turning into frogs, told stories, and people watched. During his second nap, I took Finn to the mall nearby to ride the escalator (I lost count but it was at least 30 trips up and down).  Yes, that is all we went to the mall for and it was glorious.  Then we surprised her and had her cousins show up at the hotel for pizza and the pool. All in all a great day was had for the low cost of $15 (pizza).
• We were approached by TD Bank to be a part of their investor webinar series!  This ended up taking a lot of time to create but I’m happy with how it turned out.  The YouTube link below shows the first half of the session.  Those who were able to sign in for the actual webinar on December 9th also go to partake in a live Q&A but unfortunately that part was not recorded.
  • How I Achieved Financial Independence While Raising A Family
• We also appeared on the Friends on Fire podcast with Mike and Maggie.  I really enjoyed their genuine, down to earth attitudes and we dug into some fun little tangents on this episode.  Hope you enjoy!
  • The Modern FImily – A Retired Family of 4 Living Happily on $30,000 Per Year
• I tallied up our spending for these first 6 months and so far we’ve spent $12,445.
  • This does not include our mortgage or HOA as our rental income is paying for that and when we want to be mortgage free we simply will sell the paid off townhouse and be done with the mortgage forever (and HOA as it’s linked to the townhouse).  At this point, the rental income is easy so we will keep things as is for a bit.
  • This does not include any of the income/expenses for the car transition as this was a one off ordeal and I did not want the $4,000 gain to skew our figures.
  • This figure does include our home insurance for the year for our primary residence and our rental.  Over the next 6 months we will have a few additional planned one-time expenses on the horizon: our annual property taxes (~$3,000 for our primary residence – property taxes for the rental are covered by our rental income), our annual car insurance (~$1,500), our RESP contributions for the kiddos education ($2,500 x 2 = $5,000), and a 6 week vacation out to Vancouver Island (~$4,000).
  • So my guess is we will spend right under $40,000 during this first year off.  With a 4% withdrawal rate, that would equate to an investment portfolio of $1,000,000.

Enough of the small talk, let’s dig into the numbers to see where we are at!

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.  When I took off on parental leave, my goal was to somehow reach this figure 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 (pay for parental leave) + CCB (Canada Child Benefit).  In Q3 2021 were we sitting at $1,158,505 without the mortgage so about $101,000 to go.  Let see how we compare with our goal.

Our current liquid portfolio is sitting at:

$1,243,406

Excuse me, what! How the hell did that happen??

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.

It’s hard to justify itching to sell the townhouse and sending 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 after expenses.  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.

Mortgage Balance Remaining: -$304,544

Net Portfolio: $938,862

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

Those silly ARK funds have gone down the shitter this whole year.  Thankfully these make up a very small portion of our portfolio so I’m not freaking out but I’m contemplating how long to hold these for as the constant red is not pleasant to see.  I likely will hold on for awhile as I am curious to see how it performs longer term.

Now that we’re into the new year, we already sent $2,500 to each kiddos RESP accounts, $6,000 to Nic’s TFSA, and we will be opening up an informal trust account for each kid and putting in either $5,000 or $10,000 for each of them as their “CoastFI” inheritance.  (If you haven’t read Chrissy’s post on The Ultimate Guide To Informal Trusts For Canadians – get on it!)  That will wipe out $21,000-$31,000 of the cash on hand which will leave us with around 4-4.5 years of cash.

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, with the purpose to shuffle over to our TFSA instead for some tax sheltering.  We also will withdraw from our RRSPs first up to the federal basic amount (accounting for any dividends, rental income, earned income, etc) to shift over into our taxable accounts for tax purposes as we drain the cash wedge down to 1-2 years of cash.

Stocks/Bonds/Cash Allocation:

• Stocks: 81.7%
• Bonds: 6.0%
• Cash: 10.3%
• Crypto: 1.7%

We’re currently sitting at a 69/31 USD/CAD split.  With the USD/CAD exchange rate sitting at 1.26 our liquid portfolio fully converted into CAD is $1,467,831.

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	1.70%	0.55%		2.01%	0.64%
$35k/year	2.38%	1.23%		2.81%	1.45%
$40k/year	2.73%	1.57%		3.22%	1.85%
$45k/year	3.07%	1.91%		3.62%	2.25%
$50k/year	3.41%	2.25%		4.02%	2.65%

It’s pretty awesome to see that the only scenario where we are currently over the “4% rule” (by only 0.02% at this point) 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: $1,234,406
• Townhouse: ~$300,000*
• Home: ~$400,000*
• Total: $1,934,406

*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.  (These figures are likely closer to what we would net after realtor fees in the current market).

Total Liabilities:

• Mortgage on our primary residence: $304,544
• Total: $304,544

Net Worth:

$1,934,406 – $304,544 = $1,629,862

Total: $1,629,862

There we have it! Comparing this to last quarter, we were sitting at $1,551,483 so we are up $78,379 or 5.05%.  I say it every time, but it’s true, these numbers continue to amaze me.  Not too shabby considering neither of us are working!!  Comparing this figure to this time last year, our net worth was $1,375,760 so we are up $254,102 or 18.4% in a 12 month period.

Since taking time off at work in June 2021, we’ve seen our net worth grow by just over $105,000.  This is just wild to me.  It will be fun to track this number over time.

During Q1 2022 we will see some of the cash disappear from these calculations as we do not include anything in our RESPs or informal trusts in our own net worth figures.  I also will be receiving my 2022 bonus in March of this year to reflect the work from the first half of 2021.  Our team had another awesome year so it will be interesting to see what this bonus looks like.

Even though I understand the magic of compound interest, it continues to amaze me.  I still feel quite confident that we will reach our FatFIRE goals before my parental leave is up 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 6 months from now after a year of no employment income at all to report besides my bonus from the work I did from earlier in 2021.

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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