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.

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