Approximately six years ago I stumbled upon Million Dollar Journey and started to read faithfully. At the time, I had just started to practice law and was in reasonable financial shape but with no real sense of direction or sense of how I was doing.

I remember FrugalTrader doing a monthly net worth post and thought that was an interesting approach to seeing how much money I had. So I started to do the same thing. As I am a goal oriented person, I would also have a yearly goal of increasing my net worth by 15% per year. The simple act of focusing on the numbers allowed me to focus on being frugal, on saving my money and saving for the future.

Approximately a year ago, at age 34 I crossed the million dollar mark, and a few months ago I fully paid off my house in downtown Toronto.  FrugalTrader  asked me to provide you with my roadmap to both of these goals.

Income/ Savings

The old saying that you have to spend less than you make is true. I tried to focus on making more than I spent. Since I wanted to pay off my mortgage (originally $340,000) within the first five years, I knew I had to increase my income to make it possible.

I am lucky (but worked hard) to have a profession which pays well and, if I go above and beyond at work, it allows for a big monetary bonus. Therefore, reaching my goals may have been easier for me, simply based upon the numbers in my paycheck.  Of course, I have a lot of  opportunities to keep up with t he Jones, and mine are all lawyers!  From what I have seen, a higher paycheck usually leads to an expensive lifestyle.   The new associate at my firm drives an Audi A6, and most of the other associates travel to Europe each year for vacation.  Me?  I do not own a car and use my bicycle and public transportation to get around.  It can be difficult to say no to consumerism and focus on my financial goals, goals which no one at the firm would necessarily know about.

How did I reach my financial goals?  I basically maintained a simple lifestyle and banked my raises. My primary goal was to pay off the mortgage,  so I made a decision to put all raises and bonuses towards the mortgage.  In addition to using extra money towards the mortgage, I max out my RRSP and TFSA annually, and keep a six month emergency fund.

Economics versus Sleep

The economics of paying off my mortgage probably doesn’t make mathematical sense. I was paying 3.79% on my mortgage and there are a lot of dividend ETFs paying more then that. That said, I knew that I would sleep better once my debt was gone. This is a personal decision, and it might not be the decision everyone will want to make, and I accept that.

It also means that, right now, approximately 70% of my net worth is in my house. This will change now that I’ll funnel my money into the market and other savings, but it’s a valid criticism to some.

What’s Next

JD Roth of GetRichSlowly talks about Stage 3 of personal finance being “What’s next”. This is when your debt is under control, you’re saving money and things are moving in the right direction. After paying off my house, I am still going through this issue. My goal prior was definite and therefore it was easy to save. Now, I need to determine what my next goal is.

I have decided to set aside ‘fun’ money, that I can spend on anything I want. It sounds silly, but it’s liberating to think that I have X dollars each week that I ‘have’ to spend and so if I want new jeans, I go buy new jeans. The fun money will be less than 5% of my take home pay.

Having worries about how to spend my money, where to save it, and what to do next is exactly why I wanted to pay off my debt. I now am the true master of my paycheck and at age 35 have limitless opportunities!

About the Author: David is a young lawyer in Toronto.  When he isn’t saving or working, he spends a lot of time outdoors being active and doing charity work.

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