Welcome to the recurring monthly net worth updateThe August 2008 edition.

This summer is turning out to be a little expensive. As predicted a few months back, now that my wife is back on her feet and settled into the baby routine, she is now in home decorating mode! Of course with a new house requires new furniture right? If it were up to me, I’d stick with our older furniture until it falls apart.. But who am I kidding, I am the lacky and have no say when it comes to interior decorating. Thus far in 2008, we have spent over $7,000 on new (depreciating) furniture and appliances for the new house with more to come in the very near future. Ah, the joys of home ownership.

Enough rambling, here are the numbers:

Assets: $ 593,050 (+0.56%)

  • Cash: $4,500 (+0.00%)
  • Savings: $28,000 (+14.29%)
  • Registered/Retirement Investment Account: $55,300 (-1.60%)
  • Pension: $ 22,350 (+0.00%)
  • Non-Registered Investment Account: $18,400 (-4.17%)
  • Smith Manoeuvre Investment Account: $51,000 (3.08%)
  • Investment Property: $ 124,500 (+0.00%)
  • Principal Residence: $275,000 (+0.00%) (purchase price)
  • Vehicles: $14,000 (2 vehicles) (+0.00%)

Liabilities: $276,922 (-0.23%)

  • Investment Property Mortgage: $92,900 (-0.21%)
  • Principal Residence Mortgage (readvanceable): $125,242 (-0.51%)
  • HELOC balance: $50,780 (+0.41%)
  • Other Liabilities: $8,000 (-0.00%)

Total Net Worth: ~$ 316,128 (+1.27%)

Started 2008 with Net Worth: $279,300

Year to Date Gain/Loss: +13.19%

Looking over the numbers, it was a strong month for cash savings as income was higher than expected. Some of my investment accounts are taking a beating due to a couple Chinese stocks that won’t cooperate. Other than that, she’s holding steady!

Some quick notes and explanations to net worth questions I get often:

The Cash

The $4,500 cash are held in chequing accounts to meet the minimum balance so that we pay no fees. Yes, we do hold no fee accounts also, but I find value in having an account with a full service bank as the relationship with a banker can prove useful.


Our savings accounts are all held with PC Financial. We hold a fair bit of cash due to a cash liability coming in the near future along with the fact that we typically have some cash on hand in case “something” comes up. The “something” can be anything that requires cash such as an investment opportunity that requires quick cash or maybe an emergency car/home repair.

Real Estate

Our real estate holdings consist of a primary residence plus a rental property. The value of the principal residence remains valued at the purchase price despite significant appreciation in the real estate market that we’re in. The rental property value was it’s appraised value in 2006. I’m considering raising the reported values of the homes at the rate of inflation starting January 2009.

Let me know if you have any other questions and I’ll add it to next months net worth update.


  1. Four Pillars on August 29, 2008 at 8:29 am

    I still have some furniture that I bought used in university… :)

    I’ve read numerous times where people rationalize expensive furniture (ie non-ikea) by saying they want “something that lasts” – I think this is silly since furniture doesn’t usually fall apart on it’s own.


  2. Nit picker on August 29, 2008 at 8:37 am

    That’s “principal residence”, not “principle residence”.

    • FrugalTrader on August 29, 2008 at 8:56 am

      FP, that’s awesome! If it was up to me, I would stick with the old stuff also. We don’t have any “value” furniture stores here like Ikea. Too bad b/c I love that store!

      Nit picker, thanks for the spelling lesson! Learn something new every day. :)

  3. Chuck on August 29, 2008 at 8:55 am

    Very impressive income.

  4. Q Cash on August 29, 2008 at 9:17 am

    My wife and I both had furnished apartments/homes when we married.

    While we have not spent much money on new furniture, I have noticed that it is my things that are slowly being “discarded” while hers remain.

    Funny how that works :-)


  5. MoneyGrubbingLawyer on August 29, 2008 at 9:39 am

    Impressive progress, FT!

    When did you purchase your residence? With real estate values increasing at the current rate, I expect that you’re going to see a very substantial bump in your net worth if you do adjust it in the future. What is your rationale for not including increased property value in your calculations?

    I also notice that you include your pension value- is the the total of your contributions, or a commuted value?

  6. FrugalTrader on August 29, 2008 at 9:49 am

    Q: Apparently, I have the interior decorating taste of a 12 year old. :)

    MGL: Thanks for the comment. We built our house, which took forever. We finally closed in March 2008. But yes, the value of our home as risen substantially, probably 15% from our purchase price. Why don’t we include the increased price? Perhaps because I’m a little skeptical over the huge increase in the short period of time. I also usually value my real estate at the lower range of real estate comps after agent and lawyer fees. With that said, the value reported isn’t far off when accounting for the fees etc.

    With regards to the pension, it’s contributions + interest not including employer matching.

  7. Dividend Growth Investor on August 29, 2008 at 11:02 am

    Great progress FT. Would it be too much to ask if you could provide us with a glimpse of your alternative income streams? ( dividends, real estate, interest)

    By the way I admire your creative a double income stream from the rental property. First i assume the rent is more than enough to cover the monthly maintenance as well as the mortgage. Then I am pretty confident that the dividends are more than enough to cover the second mortgage.

    One-two decades from now you’d be a millionaire many times over..

  8. Chris L on August 29, 2008 at 11:14 am

    TD bank has a limit of $1k for a no fee bank (chequing) account. I know I e-mailed you before but if you dumped $3500 into your open line of credit to pay down your balance you could be earning an additional $157.50 in savings at 4.45% which is prime interest. Essentially it is costing you that money sitting in a chequing account if it’s not earning you interest. I know I’m a big fan of this concept.

    My other big issue is your cash savings. Rainy day, I know, but if you have a line of credit and it’s open, that’s your rainy day fund. Store your money there and then use it when you need it. To hold that money in a savings account means you aren’t paying down your line debt which means it costs you $1575/year in interest losses. I explained the same thing to my mom years ago because she too felt she needed a rainy day fund. I say borrow it when you need it! Now I think you said that that line was tax deductible so no sense in paying it down, but if you pay it down, your income also goes up (actually net lose goes down), but that also means you have more money to pay your taxes so it’s no big deal.

    Just my concept, I live day to day with zero cash on hand and plunk it all daily into a negative line of credit. I use my line like a bank account. Put everything on my visa or even write cheques from my line. It’s all no fee via TD bank. I even get cheques for free. The negative bank account, give it a try! I always have cash on hand, it’s the difference between my max in my line of credit and my current deficit. I can move money I need back and forth from my line to my actual account if I really needed to (so far not necessary). This negative account is going to be more and more popular as people catch on.

  9. FrugalTrader on August 29, 2008 at 11:39 am

    Hey Chris, thanks for the feedback. You are absolutely right that the cash could perform better elsewhere, however, our comfort zone is having some cash on hand. Like you said, since my HELOC is tax deductible, I won’t be messing around with it to make consumer purchases. In fact, I believe one of the weaknesses of the m1 type mortgage is the fact that clients use their line of credit to make every day purchases. There are way too many people out there that do not have spending discipline.

    I think it might be time to take another $10k and pay down the mortgage further. :)

  10. Chris L on August 29, 2008 at 12:04 pm

    Yup, I think you are right. Most people would suffer having access to such a huge amount of money. We are a different bread, that’s for sure. My wife and I used to have an ING fund, another mistake. At the time we were saving for a downpayment for a house, we saved for a long time waiting for the right deal. As you know real estate kept going up over the last few years and I wasn’t ready to buy into a bad deal or compete in a bidding war, so we continued to wait and save. Looks like that plan panned out as real estate is dropping and expected to continue to drop.

    I wasn’t waiting for a drop though, that’s rediculous, I was waiting for a good deal. Now there are much less fish in the sea meaning good deals are becoming more common. That is an aside! The real issue was our ING was earning 3% (I think) but my mortgages were costing us nearly 6% (it was fixed 5 years), I’ve since combined two mortgages into one line of credit when the term expired and put extra money down when I can. I’m not interested in stocks, I just don’t understand them and never will, they simply don’t interest me. 4.45% interest on my line of credit plus putting tenant money down (paying down debt) in addition to whatever extra will get me to my goal and then it’s time to go big with larger buildings. It’s a painful struggle, because like you, I’m frugal. The benefit is that I’ll have a long retirement and the health to enjoy it. Long term pain for long term gain! I’m watching the blog now, keep up the good work. It’s a slow process huh!

    Now I see what you are saying about the mortgage being tax deductible and using it as a deduction. It does mess things around a little, but there is a mortgage level that is tax deductible for the year i.e. a value that the line never goes lower than and therefore it is this value of which the interest is tax deductible. Thanks for making me consider that when I file, I hadn’t thought of that.

  11. nobleea on August 29, 2008 at 12:14 pm

    I think at some point you’ll have to get a house value closer to actual. Ten years down the road, your purchase price will be much lower than the actual.

    But as you mentioned, it will be nice to see the net worth shoot up as house value appreciate at hot rates, but it is painful to see the networth drop like a stone when the RE market cools off. This has been the case for me here in Edmonton.

    Of course, if you are going to mark to market the value of the houses, then you’ll have to pay closer attention to the market and that can lead to stress if prices are going down, and ‘irrational exuberance’ if prices are going up at a fast clip.

  12. DAvid on August 29, 2008 at 12:34 pm

    Frugal Trader,
    Most of your increase this month seems to come from savings. Given your current situation (new house, new furniture, new family member, wife on maternity leave) that increase is truly stellar!

    Don’t worry about your decorating skills — you’ll likely be building a shed soon! http://www.videojug.com/film/how-to-pimp-your-shed


  13. Dividend Growth Investor on August 29, 2008 at 12:46 pm

    Chris L,

    Although from a number crunching perspective it does make sense to keep as little cash as possible and put everything towards the mortgages, from a comfort point of view it is very nice to have some cash on cash just in case. Otherwise the best way to save would be to put every penny you can get to in real estate, stocks and mutual funds. If a rainy day comes you can just use 0% credit cards for 12 months or borrow aginst your HELOC..
    However PF is stricly personal, so what might be ok for you or me or Ft, might make others sweat at night :-)

  14. FrugalTrader on August 29, 2008 at 12:53 pm

    Nobleea, how much has the Edmonton market corrected from its top?

    DAvid, the video was hilarious. I am seriously considering pimping out my shed!

    DGI, you can read more about my alternative income streams here.

  15. Chris L on August 29, 2008 at 12:54 pm

    DGL lol! So true! I get 9 hrs of excellent sleep, so I’m good. Credit cards are great for sure, then pull money out of your line of credit if you have to. What about two lines of credit? One for HELOC and one for emergencies? Unsecured would be higher, true, but it’s for an emergency…hmm scratch that I don’t think it would make sense. I guess if you had a big emergency, you could just keep track of how much it was then subtract it from the interest you can deduct.

    Is there an article on here about 0% credit cards? I think I could move some of my debt over to cc’s then avoid interest. My goal is to have all my real estate paid off in 5 years. If I can get big enough loans at 0% interest, I can pocket/save an extra $8k/year by moving my debt from 4.45% to zero. It would be a lot of work to get all the cc’s but it might be worthwhile over the long run.

  16. nobleea on August 29, 2008 at 1:11 pm

    I can’t comment on the city as a whole, but for the areas that I’m familiar with, I would say it’s been as high as 15-20%.
    In July 07, my condo downtown could’ve sold for $310K, but a year later, it’s a struggle to sell it for $250K. (I’m renting out the condo instead).

    The house we bought, at $350K, would probably have sold for $420K or more last year. So that’s about 18% as well.

    The biggest struggle is probably in the high end housing. In a city of about 800,000 people (not including the bedroom communities), there are 500 houses for sale at a list price over $650K. Over 100 houses for sale over $1million. And they sit for a long time. There’s only so many buyers for them.

    For comparison, a $650K list price house is typically around 2500-2800 sqft in a newer subdivision. Nice finishes with a standard subdivision yard.

    Prices can probably still come down by a bit, but if home prices follow wages and salaries, then Alberta and Edmonton should be able to support some of the higher priced homes in the country.

  17. FrugalTrader on August 29, 2008 at 2:02 pm

    $650k for 2500-2800 sq ft? Wow, that is expensive! Even though prices around here are skyrocketing, a similar house with single garage would go for around $400-450k! Too rich for my blood.

    So if i’m reading your comment right, you are renting out your condo? What has your landlording experience been like?


  18. nobleea on August 29, 2008 at 2:11 pm

    There are very few houses with single garages in Edmonton. All double or triples. I have seen a six car garage (but the house was 3.4mil).

    The renters move in this weekend. The rental market is quite healthy. I posted a free ad on kijiji and got maybe 20 responses. The young couple I picked were very grateful for the opportunity. They were keen on signing a 14month lease, which works well with my mortgage renewal date. We’ll see how it pans out. Young couples can have a way of breaking up, but they’re both on the lease, so they can figure it out.

    Due to the location, age, and finish, my 1 BR condo rents for $1450/mo.

  19. FrugalTrader on August 29, 2008 at 2:16 pm

    Hey Nob! The same house with double garage is definitely in the $450k
    range here!

    Best of luck on your landlording adventure. I’ve got a few articles here that pertain to that subject which may be of help.

  20. Dividend Growth Investor on August 29, 2008 at 2:51 pm

    Chris L,

    I tried searching for 0% apr on this site but I didn’t find anything.
    I found this website online: http://www.creditcardguide.com/balance-transfer.html ( it’s for US only I think and I am not affiliated in any way with them).

    Normally however 0% APR’s on balance transfer purchases last from 6 to 15 months and the credit limit is only several thousand dollars. If you miss a payment on the 0% apr card or on another card they could increase your APR because of the universal default clause.. which won’t be fun..

  21. Chris L on August 29, 2008 at 3:27 pm

    Thanks DGI. It might be a fun game, but certainly lots of work and require lots of organizing. I was thinking of lending out the remaining balance on my line. If I pay 4.45% right now and could lend an equal amount (to which I owe) out at 10% interest (borrowed from the line) then I could break even as far as interest is concerned. I know second mortgages lend out for 10-13% and I could do it for a 5 year term to match my goal for which I want my entire loan paid. It would yield about $9000/year which makes my entire loan interest a wash since I currently pay about $750 a month interest if my loan is maxed. A little risk and not something I know anything about despite knowing a good local mortgage broker who can both find me clients and a mentor. The wheels are spinning.

  22. DAvid on August 29, 2008 at 5:42 pm

    Just let us know if you choose the leopard skin print! Looking forward to seeing your shed in 2010!


  23. moneygardener on August 30, 2008 at 1:54 am

    Your YTD net worth gain is impressive FT.

  24. Jon Kepler on August 31, 2008 at 12:14 am

    Furniture is one of those always-underestimated expenses, especially when you find something you just HAVE to have. I know the feeling; I’m probably at the five figure mark for furniture this year, and there’s still more to go.
    Also, couldn’t get the trackback feature to work for some reason, but here’s the blog link anyway:


  25. Financial Freedom on August 31, 2008 at 5:11 am

    I admire your journey to earning 1 million dollars by 35. But i personally feel that being financially free involves more than just increasing your networth. Perhaps a better gauge would be to have passive income that far exceeds monthly expenditure.

    I have also recently started on a plan to be financially free by 2022 with the desired end goal of $2800 per month (not adjusted for inflation yet). I am now only at a miserly $190 per month passive income.

    Do visit my website to see the long journey that I still have ahead.

  26. FrugalTrader on August 31, 2008 at 8:41 am

    FF, I agree that passive income is more important than net worth. The net worth goal is simply that, a goal. It doesn’t represent financial freedom for me.

  27. Kelly Parks on September 1, 2008 at 5:57 pm

    I agree that passive income is a better gauge then net worth. Depends on what you want to count towards your assets as well could really flucuate your net-worth?
    Is your car really an asset?

  28. Chris L on September 1, 2008 at 7:05 pm

    PI is what everyone is really looking for and it’s closely tied to net worth… but only if net worth is used properly. A high net worth *invested* properly yields a high PI. If my net worth is held in cash, say $500k I haven’t reached my full potential for a high PI. I always aim to yield 10% return on my net worth to put all my money to work for me. Currently that is what my properties return and I always base this return on the current value of the properties i.e. what I could sell them for today. My goal is to reach 500K in net worth, then I know that I can match this to 10% to yield $50k in passive income. Always have to keep an eye on both!

  29. Jon Kepler on September 1, 2008 at 8:47 pm

    Do Donald Trump, Richard Branson and Steve Jobs profit primarily from passive income? I guess it depends on how you’d define it, but I’d say ‘no’, as they can’t leave their businesses alone long term without creating a nose-dive in sales. Because of this, I’m tempted to believe that a high net worth is significantly more important than simply creating hands-off income.

  30. DAvid on September 1, 2008 at 9:00 pm

    Since properly assembled net worth can be converted to income production fairly easily, does it really matter which measure you use? If one manages a portfolio in it’s early years for growth, eschewing income, does it have less value than the portfolio managed entirely for income? I think not. As most of us find our needs change, so will we adjust or portfolios, converting their purpose from growth of value to generation of income!

    As long as I can extract my net worth, it has the same value as a metric as would ‘passive income’.


  31. Chris L on September 1, 2008 at 9:37 pm

    I suspect a portion of all high income earners is “passive” for they aren’t paid hourly or based on any salary. Commission might be a better word, but you can bet a large portion of Donald’s income is due to work that is farmed out. He could go hands off and depending on the skill of his replacement could yield equal income. If he hired right, he could likely exceed his income. Once you get high up in pay, the rules change significantly. It’s once all your bills are paid and your quality of life is met can you begin to truly live life as it exists for the privileged. Net worth means nothing if it’s used improperly. I think passive income is therefore more important, but perhaps less so in the earliest of stages. Net worth must come first before PI comes and PI is almost always only a factor of your net worth. Any asset producing PI has value to someone else.

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