Net Worth Update March 2016 – Sean Cooper – Mortgage Free @ Age 30 (+10.39%)
Welcome to the Million Dollar Journey March 2016 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: 30
- Net Worth: $736,382
- Day Job: Employed with a major global pension consulting firm.
- Family Income: $55,000 (full-time job), $18,600 (rental income before expenses), $40,000 (approximate freelance income)
- 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.
Boy, what a difference three months makes! A couple days after my last net worth statement in November 2015 went live, my story about paying off my mortgage at age 30 aired on the CBC’s the National .
Just to recap: I was so happy I paid off my mortgage that I threw a mortgage burning party for the ages and invited CBC to capture the glorious moment as my mortgage papers went up in flames.
I was hopeful some people would enjoy my story, but I had no idea how huge it would become. My story literally went viral and garnered international media attention. I appeared on the front page of the Toronto Star. The Daily Mail wrote an article on me. Financial expert and best-selling author Dave Ramsey talked about me on his show. I even appeared on an Australian breakfast television program, Sunrise.
Unfortunately, not everyone was happy about my financial feat. Some people thought I was setting a bad example since not everyone can pay off their mortgage in three years. While I can understand where these people are coming from, I’m disappointed nonetheless. My hope was that people would feel inspired by my story. If you can learn from my story and aim to pay off your mortgage in 10, 15 or even 20 years that’s great. The sooner you have your mortgage burning party, the better!
My book is off to a great start! The working title is “Burn Your Mortgage.” The book’s for millennials and their parents. It goes through the stages of buying a home all the way to mortgage freedom. I offer readers a glimpse into the world of personal finance from my perspective. Not everyone is willing to make the financial sacrifices I made, but you can learn from my story and apply some of my advice to your daily life to boost your income and cut back on your spending. I’m self-publishing the book, so it’s quite a costly endeavor (I may have to delay contributing to my TFSA and RRSP this year), but I think it’s worth it. I’m aiming to release the book at the end of 2016 before the holidays.
I’m still trying to decide on a trip for this year. I had originally planned to go to New York City, but with the Loonie falling so much, I’m not sure if it’s worth it. Are you still planning to travel to the U.S. this year despite the low Loonie? What are ways you’re trying to stretch your money further?
On to the net worth numbers:
Assets: $736,382 (+10.39%)
- Cash: $24,499 (+72.22%)
- Registered/Retirement Investment Accounts (RRSP): $65,284 (-1.74%)
- Tax Free Savings Accounts (TFSA): $11,008 (+1,289.86%)
- Defined Benefit Pension: $35,266 (+0.00%) (commuted value adjusted annually in June when I receive my annual statement)
- Non-Registered Investment Accounts: $324 (-4.97%)
- Principal Residence: $600,000 (+9.09%) (purchase price adjusted for average selling price annually)
Liabilities: $0 (0.00%)
- Principal Residence Mortgage: $0 (0.00%)
Total Net Worth: ~$736,382 (+10.39%)
- Started 2015 with Net Worth: $585,926
- Year to Date Gain/Loss: +25.68%
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 savings account with Canadian Direct Financial. I mainly use my savings account 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).
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?
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 May 2015 – I’ve revised my freelance income up to $40,000 from $20,000 to better reflect how much I earn. 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 November 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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Well, he did eat crappy food and wear the same tie for 3+ years, that would cut his expenses. He also admitted to lying about his finances for an interview; so there’s that.
But whatever…it’s the Internet and finance, two of the most scam filled areas of modern life, roll with it. : )
This guy is such a fraud. Some people will believe anything. It really highlights how financially illiterate most people are to believe this is even possible.
He paid off 255k mortgage in 3 years? Really? That’s $7083 per month in principal alone + whatever interest he has on the mortgage. Do the math. That’s almost 85k annually BEFORE interest and expenses.
His total income BEFORE taxes and BEFORE expenses is 113k. He would pay roughly 30k in income tax on that money. That leaves roughly 83K after taxes to spend, which is not even enough to pay off the mortgage principal, let alone pay for anything else. I guess we are to believe he had absolutely no expenses at all except his mortgage principal alone? That’s believable.
Agreed with James’s comments. Sean’s self-reported numbers simply don’t work. His after-tax income isn’t sufficient to cover his mortgage principle payments (let alone mortgage interest or other costs like property taxes, groceries, etc). He’s also reported some large one-time costs (see his August 2014 update – $25,000 in repairs). These are substantial sums of money that are unaccounted for.
We know that he averaged $85K per year in principle repayments ($255K/3). He had a one-time cost of $25K for repairs (average $8K per year, assuming no other repairs the other two years). He spends around $1K/year on groceries. Let’s assume $4K a year on property taxes, $5K a year on mortgage interest, and $1K/year for everything else. I think these assumptions are, if anything, conservative and charitable. That equates to spending of $104K per year. In Ontario, in 2015, you’d need income of $155,000 to generate that amount of take-home income! Yet Sean claims to have that much take-home pay on gross earnings of under $120,000.
Even if he claims expenses to reduce his rental income to nil, that only saves around $8,000 in taxes (43% on $18,600). So even if that’s true, it only explains a small part of the difference. (RRSPs wouldn’t explain the difference either – yes, he’d get a bigger tax refund, but instead of having cash available to contribute to his mortgage, it would be used for investing – an RRSP is often a good idea, but it doesn’t help explain the cash flow discrepancy).
It’s a nice story but there are serious flaws (which readers, including myself, have been pointing out for a long time).
I’m not expecting Sean – or any person – to prepare financial statements that track every dollar, like a public company. But it’s frustrating that Sean will probably get rich(er) writing a book when there are obvious errors in his story.
“But it’s frustrating that Sean will probably get rich(er) writing a book when there are obvious errors in his story.”
The general pubLic likes to believe Cinderella stories, not the truth. Maybe put Sean in the same category as the Idiot Millionaire.
You’re doing great Sean!
Don’t worry about all the naysayers – save your time and thoughts for people who are actually contributing.
I think our family’s net worth when I was 30 was about $0k. (~$40k in RRSPs (for homebuyer’s plan) and ~$40k in student loans).
By comparison, you’re doing quite well!
Good luck going forward and don’t forget to find people to share your wealth with. Ultimately the wealth is just entries in databases, whereas a family is so much more :)
Nice job on the net worth and paying off your mortgage. I would be scared though to have that much of my net worth tied up in a home, especially in the Toronto market.
I read about Sean. Really motivated to pay off the mortgage too. $100 on groceries are possible. It need not be lot of pasta though. My family of two eat meat, eggs diary and veggies. We cook at home. (Very very careful due to our current financial situation). We don’t have any side income. Just have my low paying job and his EI. The goal is to live in this big city without having any debt other than the current mortgage.
If you already have a car, and paying the insurance, then using the car to go to work is better than using public transit, IMHO.
“If you already have a car, and paying the insurance, then using the car to go to work is better than using public transit, IMHO.”
Um, probably not. The car costs include insurance, maintainance, and gas, all of which will add up to more than public transportation costs. Also, if you buy monthly passes, there is a tax break on the cost (works out to something like a 15% discount on the pass).
Not to be cruel, but if you are a single low-income household, you probably shouldn’t have a mortgage. Gail Vaz-Oxlade would tell you to sell your house.
Yeah. Mortgage is on the small condo. Selling it is on the thinking process. I said right now we are getting EI payments too along with my income. Buying metro pass work for some people. It depends on individual situation.
Sean, paying off mortgage by 30 is an incredibly inspiring feat.. Keep on scripting such success stories
“I’m also vegetarian, which helps me avoid paying the outrageous prices for meat.”
You’ll want to revise that statement (unless what you mean by “vegetarian” is a whole lotta pasta):
Fruit & Vegetables +13-18%
http://www.cbc.ca/news/business/food-fruits-vegetables-meat-prices-1.3455523
Meat -15-20%
http://www.cbc.ca/news/canada/calgary/beef-industry-prices-eating-habits-retail-chicken-1.3454160
“I purchased my house…with a mortgage of $255,000.”
This brought back some memories…in the late 1990’s my mother bought a house with ~$100,000 mortgage @~10%. At the time, she was working as a comptroller (CMA designation) earning $100,000/yr (probably somewhat more). She paid off her mortgage in a year. Interesting thing is, even though the ratios are similar between her and Sean’s income and payments, my mom didn’t do any of the crazy “sacrificing” which Sean did. She drove a car to work every day, went on vacation, ate “regular” food, had an espresso machine, heck, she even had two pets to support! Not to mention, as stated, her mortgage rate was three times higher than Sean’s (and no rental unit).
I also have relatives who have never had a mortgage — ever. They saved their money and built their own small house when they were 25 (with 2 small children) and never looked back, currently in their 7th or 8th house. So you’ll have to excuse me if I’m not overly astonished by Sean’s feat. But hey, mortgage free is mortgage free.
Unless what you mean by “vegetarian” is a whole lotta pasta
Excellent Work Sean!
Originally you reported paying off 85K principal a year on 94K income before taxes. Revising to 114K before taxes is still a bit of a stretch. Point is – who cares, as long as you report it correctly to Revenue Canada? Also, the lower you report your income, the more incredible the story. Congratulations!
Congrats on doing so well
Sean. Unfortunately, I got a young family and don’t think I can execute what you did.