For those whom have been reading me for a while you might wonder why it takes me a while to post an update on my net worth. After all my last one was in Dec, 2006. To be honest I find tracking it on a monthly basis just a bit too mind numbing for my taste, but in the interest of knowing how I'm doing I have decided to update it every two months. So here we go.
Assets
House $200,000 (I raised this up a bit to cover some recent house improvements and also to reflect my most recent market survey of house prices in my area.)
RRSP $12,200
Old Work Pension $10,500
New Work Pension $500
Wife's RRSP $5000
Wife's Investment Account $4400
ING Savings Account $2000
Debt
Mortgage $149,150
Line of Credit $0
Therefore my net worth now stands at: $85,450.
Overall a nice little increase (+$5,250 or 6.5%) from my last check up. As you might have noticed my new work pension has kicked in so that should help out the savings nicely. I will note here that these numbers were from Feb 26 when I started pulling them together and don't count in yesterday's slide on the markets (but my guess would be that slide dragged me down around $500 total).
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8 comments:
Your net-worth calculations bring back memories! I did this at one time then got away from it.
A Simple Plan
In my retirement planning, I only needed to own my house so I would not have to make mortgage payments. When I was about 30 or so I planned on being able to retire at 55. This set a limit on the value of the home that we could pay off by that time. In hindsight it worked out well. I'm sure part of it all was just "dumb luck" or as I call it these days...random chance.
I focused mainly on the question: When would I have a large enough retirement income to support our desired standard of living?
With respect to keeping track of things, one of the most useful things we did was write down where every dollar went each month. Then, once a month the spending was summed for the month and entered into a spreadsheet. Categories include; groceries, entertainment, mortgage, taxes, water, sewer, house maintenance costs, gifts, car gas, car maintenance and so on.
We never had a "budget" but just knowing where the money was going each month kept us in line I guess. For example, I can tell you how much we spent on groceries in January 10 years ago or in January 2007. It sounds tedious, and sometimes it is, but it is like a doctor taking the pulse of his patient. You always know where you are with respect to money.
This cash flow habit paid off in spades when the "when to retire" decision came around. Retirement can be a scary thing. It’s a little like jumping off a cliff. Having a good handle on the cash flow takes away a lot of the uncertainty about whether or not you will have enough income to be comfortable.
Already Retired
AR,
Thanks for your insights. I've got a question about all your spending data. Have you ever done an analysis on how much your personal inflation rate has been over the years?
I'm curious to see how someone's spending changed over a long period of time.
Thanks,
CD
That's funny that you find your net worth so boring! I find mine endlessly fascinating and I'm always trying to analyze it from a new perspective. It just goes to show that there are many different routes to the same goal. Great blog by the way! I read it regularly.
already retired,
I guess you didn't have any personal finance software available at the time, eh? I'm a huge fan of Quicken and have been using it for about ten years now. It'll cost you a bit more than doing it by simple spreadsheet, but in the end I think the convenience is worth it.
Personal Inflation
I haven't taken the time to calculate changes over time. My income always increased faster than the inflation rate so inflation was never a concern.
I recall paying $12,000 for our first house. Back then you could still buy a small shack for the price of rent. So we did.
We sold it about 5 years later for around $24,000. All I did was paint it. That was real estate inflation in Winnipeg in the late 1970s.
I guess the boomers were buying their first homes and driving prices up. These days a lot of boomers are buying condos.
AR
Money Diva,
I used to track everything with a bit more detail, but I'm cutting back. I just find I'm spending more time on other things.
Pragmatic,
I have tried Quicken and I didn't like it. Too much front end setup for my taste.
AR,
Fair enough answer. Thanks for the comment.
CD
Equity has a 0 percent return and is worth nothing until you do something with it.
Counting your house as 'net worth' is pretty misleading.
Your true assets are minus the supposed 'equity' you are counting in your house. If you wanted to be fair, you should minus 7% (selling broker) + 2% closing costs.
And then you would also have to consider you have no place to live (in other words, you can't sell your house).
Anon,
I don't find my house equity in my net worth misleading at all. After all it is in the first line of my asset list.
I don't intend use us a broker when I sell, so I would only incur closing costs which is tiny compared to the total equity. But you do have a point that if I cash out the house I would lose a bit in fees.
Why can't I sell my house? After all I can always finish fixing it up sell it and net another 10K. Then buy another one and repeat. Or even downsize and cash out some equity. My point is your home is an asset. Just because most people don't use it to generate money doesn't mean you can't. Also owning your house outright reduces your required cash flow in retirement by 1/3 in my case, so I feel that it is an important to include in my net worth calculation.
What to include in your net worth calculations varies by what you’re using it for. For example, I don’t include three other accounts in my net worth because they have nothing to do with my retirement goals. So I hope that deals with your concerns, if not please feel free to send me an email.
CD
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