Net Worth Update: December 2010

Net Worth: November 2010

$122975 (- 4.3%)

*GASP* Yes, what you see is indeed a negative month compared to last. There's a huge reason for this…I have officially put an end to home envy (and possibly single-handedly driven myself to the other spectrum, lack-of-mortgage envy)!  BF and I bought a house in Vancouver close to good schools, in a good neighbourhood, and close to shopping.

As I have found, there are TONS of costs associated with buying a house and I will share with you every nitty gritty detail later this month.

In the  meantime, here's how my negative net worth this month looks.

Okay, so here’s the breakdown:

ASSETS:

CASH: $7540 (-81%)

  • More money Pictures, Images and Photos

    Yes… ouch!  I took out most of my cash savings for the down payment (we put down 20% and saved some money for renovations)

  • I added up my chequing and savings account (High Interest Savings Account).
  • I have a new ING automatic savings account where I put away $100 a month in lieu of giving $32 a month to the pet insurance company– when they keep on denying my poor doggy's claims. ING gave $100 just for opening up an automatic savings account and funding it with $100 a month until March 2011.
  • I automatically deduct money from my chequing account and have it siphoned to the HISA account (paying yourself first)

STOCKS: $24757(-0.9%)

  • These are stocks that captures the “moment in time”, including unrealized gains or losses in my BMO Investorline and Questrade accounts. I added up USD and CAD stocks as “Canadian” money to be simplistic (which is about a 0% difference right now)
  • I bought 50 shares of Telus as they have recently increased their dividend to $2.00/share annually and they still have a low P/E (around 13).  I know that some companies are eating into this big $1.2 billion profit pie (like Mobilicity, Wind Mobile etc) but I don't really see that happening so soon yet.  People have a trust in Telus (must be all that cutesy animal marketing) and I think don't mind signing on contracts for phones like the iPhone and Blackberry Torch.
  • I sold my shares a gold mining company, bought at $8.98 and sold for $13.10

RRSP: $15565 (-38%)

  • I took out about $9500 for the Home Buyers Plan and sold my mutual funds (getting rid of the “Other Investments” one by one!)
  • I bought some bond ETF's this month with the money that was sitting there in my Questrade account
  • This includes the monthly deduction from my HISA into my TD E-Series account (primarily bonds), a GIC in my ING Direct Account and my new Questrade RRSP account.
  • I hope to max out the $25,000 and withdraw for my first home purchase with this amount saved with the RRSP home buyers plan (done

PENSION: $18903 (+3.2%)

  • Sadly, this is the only asset that went up this month!
  • How I calculated it: I took my pension statement and added my monthly contributions from my pay cheque to reflect this month's pension amount. I'm not including my employer's contributions in my pension calculation.

OTHER: $3224 (-61%)

  • Got rid of most of my “other investments” and used it as a down payment- sold all the mutual funds but I still have one that I am locked into until 2012
  • If you're wondering what I hold in my Other investments- check out my post long story
  • I have some investments that were poor choices (I signed up for them before I became self “edumacated”) that are losing money big time. In order to receive a tax credit, I got persuaded into buying some flow through shares, Venture investments that gave out a tax credit, and some more mutual funds about four or five years ago.
  • These guys haven't been moving much, unlike the rest of the market. Once I break even with one of the venture funds, I'm gonna get the heck out (which is in 2012 because I'm locked in).

TFSA: $6079 (-51.0%)

  • Principal protected through an HSBC fund investment (+6%) from inception (TFSA of 2009)
  • For my 2010 TFSA, I signed up for a Tax Free Trading Account with Questrade and I bought lots of income trusts and am having some yummy monthly distributions roll in until they incorporate the income trusts in 2011.
  • I sold most of my TFSA income trusts (all but one) and kept about $500 in the TFSA account as Questrade requires you to have a minimum of $200 in the account.
  • I plan to put $15000 back in when January 2011 rolls around (slowly throughout the year, of course… or I might move my non-registered investments into the TFSA) to avoid the penalty from our good friends at the Canada Revenue Agency.

CAR:

  • I’m not going to bother counting the car as an asset. It’s 10 years old and I’m planning to drive it to the ground.

PRINCIPLE RESIDENCE: $387,000

  • There's no way I can buy a house for $387,500 in Vancouver.  So I divided price the house in two to simplify my net worth calculation.  BF and I each are paying 50% of the costs of the house to make in nice and even in case we split up.  Besides, BF would not want me to be disclosing his net worth with the rest of the world, either.
  • Also, you will note that this amount doesn't add up to the net worth I have posted above (and neither in the networth IQ widget too)– that's because for my net worth calculation, I have decided to omit the $30K from the money my parents saved up for me to use as part of a down payment (all from compounding interest on money given to me by relatives from GIC's over a span 20-something years!  Goes to show how powerful compounding interest really can be)

LIABILITIES:

Mortgage Debt: $309,591

  • Before anyone goes ballistic on me for taking on such a large mortgage debt (which I know you might anyway! 🙁 ) we are planning to rent the out the basement out after the renovations to help with the mortgage.  This will be on top of the full amount that we pay biweekly and this will help tackle the principle beastly amount.
  • The street we bought the house on has a lot of new houses being built (a good sign, of course), and a comparable house on the same street (older, but with three stories and with minor renovations) sold for over $1,000,000.
  • Now I'm excited to tackle this mortgage beast and pay down my debt- might be a new focus on youngandthrifty.ca

CREDIT CARD: $838

  • I pay off my full amount every month (and folks, it's VERY important you do so otherwise you're losing out on a 19% return!) but include it in my net worth update so I have an accurate picture of my actual net worth. I sort of think “If I were to sell everything right now, what would my net worth be?”
  • I basically charge everything to my card to reap the benefits (free flights and hotel stays here I come!)
  • I got the SPG AMEX card for a few months already and have been using it as often as I can (compared to the MBNA travel elite card) but American Express isn't accepted everywhere here in Canada…which is a hassle.

42 Comments

  1. Steve Zussino on December 6, 2010 at 7:51 am

    Listen,

    Congratulations on jumping into the home market. I am happy for you.

    It is a tough call to make.

    People don’t realize how expensive housing is around here.

    Even with a $100,000 down payment it barely covers a 20% down payment – average home is over 1/2 million.

    Would love to see some posts on finding a tenant and adventures in being a landlord.

    Steve



  2. SavingMentor on December 6, 2010 at 7:51 am

    Congrats on the new home purchase, that’s soo exciting! Being a homeowner is a wonderful, albeit expensive, experience 🙂



  3. Money Rabbit on December 6, 2010 at 8:09 am

    Way to go, Young and Thrifty!!! No way should anyone be going ballistic on you for a $300,000 mortgage – in Vancouver and certainly in Toronto, that sum is quite modest. Very exciting!!!



  4. Jenn @ Paying Myself on December 6, 2010 at 8:44 am

    Congrats on the house purchase!

    And here comes the lawyer in me – please please please call a family lawyer and make sure you understand all the laws regarding cohabitation and home ownership etc., especially with the changes coming to BC, and get a cohabitation agreement done if necessary. 🙂



  5. young on December 6, 2010 at 8:54 am

    @Jenn@Paying Myself-Thanks Jenn! So awesome to be a blogger and have connections to lawyers! (like you!) I did a post on cohabitation agreements too (Better practice what I preach, right??) youngandthrifty.ca/relat…d-to-know/

    We haven’t moved in yet, but on our to-do list is a will and a cohabitation agreement. With the new changes, it’ll be huge!



  6. young on December 6, 2010 at 8:56 am

    @Money Rabbit- Awe thanks 🙂 To me, a $300,000 mortgage for myself is huge. I see other PF bloggers trying to tackle their mortgage debt, and it’s at like $100,000 for the couple!



  7. young on December 6, 2010 at 8:57 am

    @SavingMentor- Thanks! I’ll be definitely trying to scrimp and save every penny now!



  8. krystalatwork on December 6, 2010 at 8:57 am

    CONGRATS ON THE HOUSE! 🙂 I am so excited and happy for you, and it makes me motivated to keep on saving so that one day I will also be able to buy a house in Vancouver.

    We should do the Vancouver PF meet-up at your new place one you guys take possession and settle in! Look at me, I’m already inviting myself over. haha

    Congrats again, you are awesome!



  9. young on December 6, 2010 at 8:59 am

    @Steve Zussino- Thanks Steve 🙂 Yes, it is a tough call to make, what with the housing bubble etc. I think as long as we bought something that we could afford (though this amount seems unaffordable) and we plan to live in it for 10 years, we should be okay.

    I will definitely post on the “Adventures of being a Landlord”. Right now, we have to put in a kitchen in the basement and knock down some walls to make sure it doesn’t look too hovel-like, lol.



  10. young on December 6, 2010 at 9:01 am

    @krystalatwork LOLLLLL!!! We have already taken possession, but need to renovate and that should take 1-2 months. That would be cool- a Vancouver PF blogger meet up at my house haha.. Thanks Krystal! I know you and your BF will be homeowners in no time with the money-saving progress you are making (I admire your ability to save so much and work PT on top of your full time job!).



  11. FB @ FabulouslyBroke.com on December 6, 2010 at 9:17 am

    Wow congrats!! What a great deal even with that mortgage. $1 million can be expected once you clear it 😀

    Awesome job



  12. young on December 6, 2010 at 9:23 am

    @FB- er.. that mortgage is about $300,000 for each of us!! So it’s actually $600,000 🙂 Not that good of a deal- it will be better of a deal when I pay off the blasted thing! Debt is like this big elephant sitting in the room lol.



  13. retirebyforty on December 6, 2010 at 1:52 pm

    Oh wow, that’s a big mortgage. Congratulation!



  14. The Passive Income Earner on December 6, 2010 at 1:10 pm

    Congrats on your house purchase!!! Glad to see you have plans to rent part of it out. I should also welcome you to the rat race … It’s not so bad though …

    I noticed you only took out less than 50% of the eligible Home Buyers Plan, would you mind explaining why? Each is allowed to withdraw up to 20K$.



  15. BeatingTheIndex on December 6, 2010 at 1:27 pm

    Congrats on buying a house! I love living in a house anytime over a condo.

    I hope you bought just enough “house” for this price. Your mortgage sure is hefty.

    Now the time has come to buckle up the budget and maximize those lump sums if you want to get rid of that elephant 🙂



  16. jill on December 6, 2010 at 2:01 pm

    wow, congrats young and thrifty!! scary and exciting stuff…just hit the ground running and keep chipping away at the mortgage. every bit counts in the long run!



  17. anon on December 6, 2010 at 3:23 pm

    You mention you put 20% down, but based on your share of the house (357,000) and mortgage (309,591), it doesn’t come out to 20%.



  18. Financial Cents on December 6, 2010 at 6:05 pm

    Congrats on the home purchase!

    Now you can be like the rest of us and be a homemoaner, err, homeowner 🙂



  19. Henway on December 6, 2010 at 7:53 pm

    Congratulations on buying a new home! I consider a home more of an investment than a purchase, so its OK if your net worth goes down from it =)



  20. eemusings on December 6, 2010 at 8:54 pm

    Oh wow and even with all that your net worth hardly went down!

    I feel your pain; prices in Auckland are just as ridiculous and saving 20 per cent for a DP seems nigh on impossible.



  21. young on December 7, 2010 at 1:41 am

    @anon- Oops! Thanks for catching that- it was a typo because I wasn’t sure whether I was to include the bonus money from family in my net worth- thought it would inflate it too much (like a false positive or something!!). I have fixed it now and clarified. Thanks for pointing that out!



  22. young on December 7, 2010 at 1:42 am

    @Financial Cents- Homemoaner! I’m learning all these fun terms, guess I’m officially in “the club” now.



  23. young on December 7, 2010 at 1:43 am

    @Henway- Thanks for validating my feelings 🙂 Some people view it as an investment, some don’t.



  24. young on December 7, 2010 at 1:45 am

    @eemusings- Oh believe me, there will be more plummeting in net worth! And it starts with the letter “R”. Renovations!



  25. young on December 7, 2010 at 1:46 am

    @Beating The Index- Hey Mich- yup, I’m really scrutinizing “the budget” now (and going to whip BF in shape). Every decision/ purchase I make has a larger consequence now.



  26. young on December 7, 2010 at 1:48 am

    @jill- Thanks Jill! yeah, I like tinkering with the mortgage payment calculator- love the idea of paying extra and having it go directly to the principal amount. I’m happy that if the interest rate rises, it’s not the payment that rises, but the amortization (we got a standard one, not one of those 30 or 35 year ones).



  27. young on December 7, 2010 at 1:52 am

    @The Passive Income Earner- My fellow Vancouverite- glad to hear that it’s not so bad! Re: HBP eligibility: Excellent question! I am planning to take out another $8000 from my TD E series RRSP, it’s just that the $9500 I had with the other RRSP was from the “other investments” so they were separate accounts. I am using the $8000 for renos. I hesitating with the idea of the HBP and whether to withdraw the full amount or not (e.g. loss of return of investment) and decided that I should just take most of it out because I don’t have to pay 1/15 back of it until 2012. Though the idea of being in more “debt” because of the HBP sucks, but in case I go back to school for a masters degree, that can just be “income” and I wouldn’t have to pay tax on it because I would be considered low income…at least for a year or two.



  28. Christine on December 7, 2010 at 2:15 pm

    Hi,

    I actually followed a link to your website. Someone on another site (www.vancouvercondo.info) was referring to your purchase and the possible risks of a cohabitation agreement in British Columbia, and I thought I should pass on the message to you. Apparently there is some strange loophole in BC where the cohabitation agreement can be used against you to make you liable for more than if you hadn’t signed it in the first place.

    bcfamilylawresource.blogspot.com/2009/…ation.html



  29. Christine on December 7, 2010 at 2:17 pm

    Just to clarify: I know absolutely nothing about legal family matters.



  30. Big E on December 7, 2010 at 2:24 pm

    Congrats on the new home! Exciting times, but I can relate with the darn mortgage. I don’t think Canadians outside of Vancouver can really relate to the outrageous cost of housing here!



  31. young on December 7, 2010 at 3:20 pm

    @Christine- Thanks. I’m not sure if that information is accurate considering the common law marriage agreement will be changing in 2011…

    It’s too bad that the vancouvercondo.info lurkers are still hanging around…..



  32. young on December 7, 2010 at 3:20 pm

    @Big E- Thanks 🙂



  33. SomeGuy on December 7, 2010 at 6:57 pm

    Wow, exciting for you to buy a home. It is crazy expensive in Vancouver. There’s basically nothing affordable for most people.

    Did I read correctly that $300K is YOUR share of the mortgage? That, to me, is huge. That’s about $1800 per month payment for you alone…BEFORE property taxes etc. I hope your individual income is over $140K per year.

    It’s good that you seem to be interested in personal finances, as you’ll need to focus on saving, etc. to pay that down quick.

    Sounds like your downpayment was in the $200K range. Most people would consider that a big downpayment, but reality is that for Vancouver, that’s really the bare minimum to even be in the market at all.

    It’s amazing what people in Vancouver have convinced themselves to be “affordable”. Interesting what historical low rates will do.

    What is most important is that you are OK with the risk you are taking on. That amount would scare the heck outta me…



  34. SomeGuy on December 7, 2010 at 7:26 pm

    Wow, Henway’s comment is pretty disturbing – and a good example of why houses in Vancouver are so expensive.

    According to Henway – “I consider a home more of an investment than a purchase, so its OK if your net worth goes down from it =)”

    Shouldn’t you want your investments to INCREASE your net worth?

    Unless by “home” he/she meant the intangible values of home ownership. However, I hardly think that’s reason to take on large debt.

    Really, at these levels, you’re basically renting from the bank…



  35. Ken @Spruce Up Your Finances on December 7, 2010 at 8:45 pm

    Congratulations on buying your new house. I can see a lot of “red ink” on most of your assets/investments but you are not alone. I, too, have seen dipped this past couple of months



  36. young on December 7, 2010 at 10:22 pm

    @SomeGuy- No, I’m not paying $1800 for me alone per month. Good try at calculating though! Yup, I am okay with the risk that I am taking on, everyone has different risk tolerance levels, though.



  37. young on December 7, 2010 at 10:24 pm

    @SomeGuy- Sorry, your name was initally “Serf” but I changed it to SomeGuy since your IP addresses were the same. At this current time, I am not considering my home as a major investment, it is a home that I plan to live in for the next 10 years +, so I don’t think that the term of investment is really applicable to this, unless I were to flip it and sell it a year or two later, for example.



  38. young on December 7, 2010 at 10:25 pm

    @Ken@Spruce Up Your Finances: Yup- this month I’ve gotten the red ink because I took out money in all of my accounts for the down payment, it wasn’t necessarily because of the market, though for my stock portfolio, it did decrease by a smidgen.



  39. Financial Samurai on December 7, 2010 at 11:28 pm

    I’m excited about your new homeownership adventure! I guess marriage ain’t too far away.

    Perhaps you can write about the decision to buy a house together first before marriage. That is an interesting topic!



  40. Sandy @ yesiamcheap on December 7, 2010 at 11:32 pm

    Congrats on the new home purchase. You’ve done it in a very responsible way and even with 600K in combined mortgages (which isn’t bad in NY so comparable in Quebec) a potential sale price of $1M will be a decent ROI. I know that you’ve read about my tenant HELL so I hope you learn from my mistakes. Another update to my tenant mess is coming up this week, but I don’t want to scare you. :))



  41. young on December 7, 2010 at 11:36 pm

    @Financial Samurai- Great idea, Sam. Yup, marriage isn’t too far away (maybe 1-2 years down the horizon?). I’m excited about my home ownership adventure too 🙂



  42. young on December 7, 2010 at 11:38 pm

    @Sandy- I’m surprised to hear that in NY mortgages are so high too. I guess it’s the case for most major cities that people really want to live in (Toronto, New York, San Francisco, Vancouver etc.). I’ve indeed read about your tenant issues, and am definitely learning from your experiences 🙂 Uh oh- update on tenant mess? It already was pretty bad, can’t believe it might be getting worse?



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