Net Worth Update February 2015 – Sean Cooper (+6.7%)

Welcome to the Million Dollar Journey February 2015 Net Worth Update – Team MDJ edition. A select group of readers were selected to be part of Team MDJ which was conceived after the million dollar net worth milestone was achieved in June 2014. Sean Cooper was selected as a team member and will post net worth updates on a regular basis. Here is more about Sean.

Profile:

  • Name: Sean Cooper
  • Age: 29
  • Net Worth: $585,926
  • Day Job: Employed with a major global pension consulting firm.
  • Family Income: $50,000 (full-time job), $18,600 (rental income before expenses), $20,000 (approximate freelance income), $5,000 (part-time job)
  • Goals: Mortgage paid off by 31, million dollar net worth by mid thirties.
  • Notes: Owns a house, rents out main floor. Most of net worth is in the principal residence. No other debt besides mortgage.

2015 looks to be a big year for me. I’ve set several ambitious goals for 2015. Not only do I turn 30 at the end of February, I plan to be mortgage-free by the end of November. I’m considering my investment options to better diversify, since most of my net worth is tied up in my house.

2015 has started off pretty busy at work. January is always a crazy month because pension adjustments and pension adjustment reversals are due by month end. I’ve also taken on a heavier workload with the hope of being promoted. I’ve gone from preparing pension packages to checking and reviewing packages from junior employees. August 2015 will mark my five year anniversary at my company. It’s my goal to be promoted to a senior pension analyst before the end of the fiscal year (June 30th) and I’m well on my way. This should provide a nice boost in salary and the opportunity to advance further in my career.

With mortgage freedom on the horizon, I’m starting to look at my investment options once my mortgage is paid off. When I’m mortgage-free, the first thing I’ll do is max out my TFSA. I’m debating on what to invest my money in. Currently, my RRSPs are invested in the TD e-Series Funds (30% Canadian equities, 30% U.S. equities, 30% International equities, and 10% Canadian bonds). I’m not much for trading stocks; I prefer turn-key investments that provide a solid long-term return. I’m debating between the TD e-Series Funds and Tangerine Investment Funds. Readers, do you have any other suggestions?

My new tenants have been wonderful so far. I couldn’t ask for better tenants. They’ve been courteous, considerate and always pay their rent on time. They even offered to paint my upstairs and did a fantastic job. After my old tenants moved, I decided to change the rent from inclusive to plus utilities. I did this because my old tenants didn’t respect my utility bill. Fzor example, they left a heater on for two straight months, causing my hydro bill to skyrocket. Furthermore, utility rates tend to increase well above the rate of inflation, yet I’m only allowed to increase the rent one or two percent a year. This arrangement has worked out great so far. Although it’s a pain to photocopy utility bills, it’s well worth the effort; my tenants have paid the utilities on time every time.

After last quarter, my investment portfolio has recovered nicely. My RRSP account is up 8.36 percent (without making any further contributions). You may be wondering why I have a lot of money sitting in cash right now. With all the freelance income I earned this year, I expect a hefty tax bill. Also, I plan to start contributing to my RRSP in March, maximizing my contributions for the year before August 1st, my mortgage anniversary date, when I can start making lump sum payments on my mortgage once again.

On to the net worth numbers:

Assets: $649,394 (+4.17%)

  • Cash: $25,259 (+714.35%)
  • Registered/Retirement Investment Accounts (RRSP): $49,377 (+8.36%)
  • Tax Free Savings Accounts (TFSA): $0 (+0.00%)
  • Defined Benefit Pension: $24,421 (+0.00%) (commuted value adjusted annually in June when I receive my annual statement)
  • Non-Registered Investment Accounts: $337 (+4.05%)
  • Principal Residence: $550,000 (+0.00%) (purchase price adjusted for average selling price annually)

Liabilities: $63,468 (-15.52%)

  • Principal Residence Mortgage: $63,468 (-15.52%)

Total Net Worth: ~$585,926 (+6.7%)

  • Started 2014 with Net Worth: $460,500
  • Year to Date Gain/Loss: +27.24%

Some quick notes and explanations to common questions:

The Cash

The cash is held in a no fee chequing account with PC Financial. I use my chequing account for regular bill payments, as well as making lump sum payments on my mortgage.

Savings

My savings are held in a Tax Free Savings Account (TFSA) with Canadian Direct Financial. I mainly use my TFSA as an emergency fund and to save towards the balance owing when I file my personal income tax return at the end of April. Even though I contribute the maximum to my RRSP annually, I still have a large balance owing to the taxman since I receive rental income and income from self-employment (I’m a freelance writer).

You may be wondering why my balance is currently $0. At the beginning of the year I had $15,000 in my TFSA. However, this year was especially costly, as I had to spend $25,000 on repairs and renovations to my house, including a new retaining wall, side walk, front porch, sump pump, and eaves troughs. I plan to rebuild my emergency fund once I’ve maximized the prepayment privileges on my mortgage. If any more costly home repairs creep up, I can always slow down on prepaying my mortgage.

Where Do the Savings Come From?

I’m very frugal with my money. People are often amazed at how low my monthly expenses are. For most families the most costly household expenses are housing (mortgage or rent), transportation, and food. I’ve been able to minimize all three through lifestyle choices.

As a single first-time home buyer in Toronto, I decided to take on the added responsibility of being a landlord. Instead of living upstairs, I decided to live in the basement and rent the upstairs to a family. I got this brilliant idea from the host of HGTV’s Income Property, Scott McGillivray, who lived in his basement for nine years while renting out the upstairs unit to save money.

Instead of driving a car, I cycle the majority of the year and take public transit during wintertime. In my recent article in the Financial Post readers were amazed I only spend $100 per month on groceries. How have I managed to spend so little? I shop at discount supermarkets, price match, avoid fast food, and buy sale items in bulk. I’m also vegetarian, which helps me avoid paying the outrageous prices for meat.

How Have I Been Able to Pay Down My Mortgage So Quickly?

Despite an annual salary of only $50,000, I’ve been able to pay down over half of my mortgage in only two years through hard work and determination. Besides being a landlord, I’m a financial journalist. I also work part-time at a grocery store once a week. Through secondary sources of income, I’ve been able to maximize the prepayment privileges on my mortgage and maximize my RRSP contributions each year.

Update February 2015 – I’ve received a few questions about how I’ve been able to pay down my mortgage so quickly. It’s mainly been through my freelance income. I tend to be conservative with my estimate of freelance income, as it can vary a lot from month to month. For example, some months I earn $2,000, while others I earn $5,000+. For 2014, I ended up earning over $60,000 in freelance income. Earnings that much in freelance income requires working 80 hours or more a week (including my full-time job). I don’t plan to keep this insane workload up forever. Once my mortgage is paid off at the end of 2015, I plan to scale back and only focus on the freelance work that I enjoy.

Real Estate

My real estate holdings consist of my primary residence. I purchased my house in August 2012 for $425,000 with a mortgage of $255,000. As I live in Toronto, one of Canada’s most expensive housing markets, I’ve based the value of my principal residence on comparable properties that have recently sold in my neighbourhood.

Pension

The pension amount listed above is the value of my defined benefit pension plan. I take the commuted value from my annual statement, which I receive by June 30th each year. I am fortunate to receive the commuted value on my annual statement, as most employers don’t provide it. This makes retirement planning a lot easier.

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Sean Cooper

Sean Cooper

Sean Cooper is a single, 20-something year old, first time home buyer located in Toronto. He has experience in the financial sector as a Pension Analyst, RESP administrator and Income Tax Preparer. He holds a Bachelor of Commerce in business management from Ryerson University. You can read some of his other articles here.
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EL
6 years ago

Congrats Sean on the good income and increasing net worth. DO you post anywhere the source of the freelance income? I actually saw that income Property episode with Scott. I cant believe he owns over 100 properties today.

Chris
6 years ago

I am the same age as Sean and have similar net worth. I have roughly half of my net worth tied up in the housing market, 10% in stocks, and the other 40% in cash which I plan to use this summer to buy another property for my growing family (wife and 2 kids). The two rental properties will pay for themselves and half of the new house with rent that is collected on a monthly basis.

If housing prices stay at current levels I can reach my goal within 5 years by saving 47k per year which is within reach due to low housing costs and my wife and I working full time with above average incomes.

For Sean to save the 430k in 5 years it is obtainable but it will take a lot of sacrifice and some clever investing.

I look forward to reading your net worth updates.

GoodLuck
5 years ago
Reply to  Chris

“If housing prices stay at current levels…”

Ha.

SKL
6 years ago

I’m interested in watching Sean’s progression over the next year but a few tweaks to the way he reports might help. He could adjust the way he includes the freelance income and report the previous quarter’s actuals next to his 2015 projected total.

Also, it would help us follow along if maybe he reached out to a realtor to get a selling price on his house. People often overestimate their home’s value so getting a professional to look at comps in the area couldn’t hurt…unless he doesn’t want to know the answer; it could seriously change his net worth.

Sarah
6 years ago

@Sean,
This seems like a great opportunity – rather than state you make $X in freelance per year, why not include in your updates what you actually made, and why. So if it’s a low month, tell us about it – loss of clients? Taking a break? If it’s a good month, was it because you did a tonne of guest blog posts or perhaps you’ve found a regular gig.

This is the kind of info that’s interesting – like I said, you’re doing an amazing job…but the inconsistency in reporting acts like a distraction – kind of like Rob Ford at Toronto city hall.

Sarah
6 years ago

@David,

When I said I was 100% confident I didn’t mean it literally – you are right, I can’t be sure because I do not know him. I simply meant that I was not implying that he was trying to mislead the CRA as was suggested.

I assume this because that would be crazy – he’s got his name and face all over the internet – stories not just here, but also on other blogs and even profiled in the Globe and Mail. I would assume that he wouldn’t publicly brag about tax evasion, that’s all.

On the other hand, LOTS of people “tell the CRA I make $X and tell everyone else I make $Y”. People are generally honest in reporting their income, because most people only have official income verified through T4s etc. At the same time, lots of people act as though they have/make much more than they do. People like to brag, like to impress…certainly if it makes them popular. Maybe Sean just wants to be the popular kid for once?

Sean Cooper, Financial Journalist
6 years ago

I am being fully honest with my numbers. As mentioned, I tend to be conservative and understate my freelance income. In 2014, I had $60,000 of freelance income. The reason I didn’t include that figure is because it’s very unstable. For example, in December 2014 I earned nearly $5,000 from one-time projects, but this month I’m only going to earn only $2,000. I treat freelance money as found money. Including a high number in my budget would be foolish because it’s not guaranteed. For example, I lost four well-paying clients in the last month because of declining business.

I put everything to rest, I will revise my freelance number to $60,000 (even though I doubt I’ll earn that much this year). My plan is simple: work my @$$ off to pay off my mortgage and enjoy the rest of my life debt-free.

SST
6 years ago

Hilarious!

It seems all have forgotten a fundamental economic law:
You Get What You Pay For.

All of MDJ, including Mr. Cooper’s writings, can be had for F-R-E-E.
Nowhere on this website does it mention you will be greeted with quality or even honesty.

Mr. Cooper isn’t licensed to sell any financial product, service, or advice; he’s not providing anything of a professional nature. Bottom line, he’s simply telling us a story. It’s just that he’s not a very good story teller (and it’s kind of embarassing).

There also seems to be no angry vehemence against Frugal Trader (or any other ‘Update’ persona). Why not? He, like Mr. Cooper, provides no proof whatsoever to support his personal finance claims, they (and he!) could all be fabricated. Perhaps FT is simply better at math and marketing. At least we know Mr. Cooper’s name and face!

Kudos to Cooper for riding the ‘No Such Thing as Bad Press’ wave.
To cop a Charlie Sheenism — WINNING!

p.s. — I’m applying early for Team MDJ v2.0! :)

David
6 years ago

Sarah,

How can you be 100% confident that he’s not evading taxes or hiding income?

Why would anyone tell the CRA I make $X and tell everyone else I make $Y?

The fact of the matter is, without full disclosure, you don’t know whether he’s being dishonest to the CRA, to the public, or both.

nobleea
6 years ago

Joseph (#23),

“Presumably he’s writing this stuff on his own time, but again $60K in freelance income is basically a full time job. Is he waking up at 5am to write, going to work, comes home and writes more?”
He mentions that he works 80hrs a week to earn the 60K in freelance income. He says including his full time job, so I will assume 40-50 hours a week on freelance items. That works out to about $27/hr, but since it’s all OT (already has a regular job), the base rate is closer to $18/hr. Working 45 hours extra a week would require working almost every waking hour during the week, plus a full weekend day. It’s good that he realizes this is only for a short time period, because that’s not healthy at all. If I was going to throw my 20’s away working, it’d have to be at a base rate well well above $20/hr.

Frugal Trader
6 years ago

Sean’s posts certainly stir up a lot of controversy. I will discuss some of these points with him to see if we can get some closure.