Retirement Progress Report 3

Two big things happened this quarter for our financial game. The first is we met our annual goal of investing $20,000. The second is our rate of investing crossed over the 50% threshold, meaning that we are investing more than we’re spending.

I don’t know how these good things happened because it certainly didn’t feel like we did very well over the past 3 months. This goes to show that how I feel about our performance and how we’re actually doing aren’t very closely aligned. I simply don’t really know what’s going on. But our finances are more automatic now, and in a good way. There is less personal willpower needed – we just have systems that ensure we’re being smart over the long term. Lia and I have continued to do a little better with our unnecessary spending and these new habits have plugged some of the holes in our bank account. There is still a lot of room for improvement, but behavioural change is a very slow process and there’s solace in knowing we’re moving in the right direction. Lia’s also bringing home the bacon as a yoga instructor, which is certainly helping.

Of course, there were hiccups in the last few months. We drove a lot, and spent lots of money on gas. But we drive a civic, so “lots of money” is probably laughable to anyone with a more serious vehicle. We compare ourselves to Mr. Money Moustache though, and that guy limits himself to one tank of gas per month!

One of the larger hiccups came in the form of a being bad and buying a fancy cordless vacuum for $300. My mind has a tendency to drift into thoughts of doom and gloom whenever we make big purchases. I don’t enjoy spending money nearly as much as I enjoy seeing this retirement account grow, so anytime we buy something (even something quite necessary/useful) I feel a great deal of buyer’s remorse. It’s a hell of a vacuum though. Before, Lia was using a god damn massive shop vac to do the stairs, the bedrooms, everything. So I suppose the frustration and rage saved in upgrading to something much more civilized is going to more than compensate for the minor retirement setback.

Figures:

TFSA: $22,472.92 (up $7,278.46 from last quarter).

Mortgage: $166,622.84 (down $1759.03 from last quarter).

We’ve made our $20k goal for the year and we still have 3 months to go! So we’ve upped our target to $30k for 2018. I find it very helpful and encouraging to see our investing progress laid out in smaller, monthly increments. I keep a piece of paper on the fridge with the projected TFSA balance listed beside the month by which we need to hit each amount.

Tracking retirement savings by month

The position of the magnet represents the current total value of our investments. Seeing the steps broken into smaller fragments, and that we’re a few months ahead of our goal helps me not get too stressed out about the otherwise daunting idea of investing $50,000. After 3/4 of a year of doing this, and saving $20,000 already, $50,000 feels very doable.

Then things get a little more exciting. $50,000 is a 20% downpayment on a $250,000 house or property. Within the next couple years, we will have more interesting investing options available to us than simply plowing money into mutual funds. Lia and I will be able to cruise realtor.ca with the knowledge that we have the cash to move on a property if the right one comes along. We may be on the verge of being able to do that sooner if we pull equity out of our current home and remortgage, but I hate that idea. I don’t like being in debt. Nobody does. And while doubling our debt is certainly one way of doubling our exposure to real estate appreciation, it also doubles our property related expenditures and vulnerability to things like mortgage interest rates. Things will happen faster in either direction. Either we’ll get richer faster, or we’ll get into financial trouble faster. I like the idea of a conservative and highly attainable approach over riskier maneuvers when the stakes are this high. Factoring in peace-of-mind, a slow approach seems like the way to go for me.

The next report is in my calendar for December 31st, which is only a couple months away but it will be more comprehensive moving forward to align these posts with the actual calendar year (instead of doing it on the 18th every few months from whatever month happened to be the first post).

I hope reading this has inspired you to invest! I know at least one friend has taken shit into his own hands and is now on track to retiring in his 40s. I’ll extend the same offer here as I extended to him: if you want my personal help in getting set up with the same investment strategy I employ, just ask and I’ll help you. It’s straightforward once you have the accounts set up and you’ve bought your first mutual funds.

You can then start buying your freedom.

Retirement Progress Report 2

So things have changed quite a bit since we last looked at the Lowe family retirement strategy. They’ve simplified. Mainly, I realized that it made very little sense to have such a big “Rainy Day” fund ($20k) and not have that money invested and compounding. So now we have $5k ready for emergencies and the rest gets invested.

The last few months we’ve worked hard to spend less frivolously, and to invest more aggressively.

Here are the figures:

TFSA (self-directed TD Waterhouse WebBroker account): $15,194.46

Up $9,127.46 since last report.

This is our main investing account comprised of 3 low MER TD E-Series mutual funds (TDB900, TBD905, TDB902). We’re 1 month ahead of schedule for our goal of $20k invested for the year, averaging $3,042.49 invested every month.

This quarter we invested 42% of our net income. To help free up money for investing, we’ve also been selling thousands of dollars worth of shit we no longer use via Kijiji. Guitars, a motorcycle, electronics, old paintball guns, roller blades, it adds up!

Mortgage: $168,381.87 ($1,496.13 lower than last report)

We haven’t paid down our mortgage any quicker than we had been prior to the last report. Our current interest rate of 2.92% is below what is expected to be earned investing in indexed mutual funds (8%). If we renew in a couple years with a significantly higher interest rate (anything over 8%) it will make far more sense to pay down the mortgage more aggressively and stop purchasing mutual funds altogether.

That’s all for this report, see y’all in October!

 

Retirement Progress Report 1

nail figures

I’m currently stuffing my face with a bagel slathered in butter and dunked in baked butternut squash soup. I’m drinking cold homo milk fresh from the fridge. My legs are sore from having just played hours of ultimate frisbee. My mind is silent. It was in programming mode today building this javascript calculator and now it seems happy to be idle. Lia, Isla and I biked to Little Lake and fed the ducks, played, and sang the ABCs dozens of times. Today was damn near exactly what I’d like every day to be.

Thinking about that, I catch myself not appreciating the day for what it was. Recently I’ve caught onto Mustachianism and become infatuated with saving more aggressively for retirement (defined as the point I no longer have to work but for sure will keep working on certain things). This mindset is problematic in that it has me preoccupied thinking about the future more than ever before. This is good if it gets me to invest instead of wasting money on dumb things, it’s bad if it clouds my ability to see the moment I’m in. There’s a lingering fear that if I stop thinking about it, I’ll backslide into old habits and not change my behaviour at all.

Overall I’ve got it pretty good. I enjoy my work, mostly, and I’m already living how I’d like to be living. So why save for retirement at all? Why not just keep doing what I’m doing if it’s enjoyable?

The answer, for me, is about a core principle that I wrote as a note to myself late one night in Hawaii:

Always move toward greater freedom and happiness.

More net worth means more freedom. Debt is the opposite (unless it’s “asset” debt). The happiness part is in my head.

I think of saving for retirement as a very difficult challenge presenting a massive payoff. I played around with this compound interest calculator to figure out where my current rate of saving was going to land me in 14 years. I currently buy $200 of Mutual Funds every month. That puts me at $62,000 by the time I’m 45 years old. Not horrible but not retireable either. Further tinkering with the compound interest calculator indicates that Lia and I will need to sock closer to $20k annually if we’re to hit our retirement goals. It’s just doable on our current income, but we’ll have to be much more intentional about our spending than we’ve ever been before. Sushi once a month instead of once a week. Not buying a bunch of drinks at the bar on a random weeknight. Not buying expensive toys whenever I want.

The only question left is: Which do I value more? Being in a position to retire 20 years early or grabbing sushi/drinks/toys every time I get the urge? I really hope it’s the retirement option.

I’ve heard there’s a lot of power behind making goals public, and providing measurable evidence of one’s progress or lack thereof. And it’s probably true because I’m really second-guessing whether to proceed with this or not. In kicks the Neil Gaiman quote I really love:

The moment that you feel, just possibly, you are walking down the street naked, exposing too much of your heart and your mind, and what exists on the inside, showing too much of yourself…That is the moment, you might be starting to get it right.

Remembering that quote always makes me man up and take the risk.

So here it is, in black and white for everyone to see: our progress toward retirement. I’ll post an update quarterly, with actual figures. This holds me accountable to at least two other people, Kyle and Tyler, both of whom I know read these blog posts religiously.

And the numbers are…

Rainy Day Savings: $3,436

TFSA: $2,631 

Mortgage: $169,878

Our first priority is to save $20k in a savings account for “rainy day” situations/seriously slow times at Butter/etc. Once this $20k layer of fat is in place we’ll be able to invest in mutual funds with the confidence that we won’t need to sell them prematurely out of a sudden need for cash. For those of you interested in tracking our progress, “rainy day” money is what we’re currently trying to save up.

After that, you’ll be able to track the growth of our mutual fund holdings because they’ll be getting all spillover once the “rainy day” account hits $20k.

I’ll report back on this again in July!