Welcome to the Million Dollar Journey March 2018 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. Nobleea – the Oil and Gas Engineer, was selected as a team member and will post net worth updates on a quarterly basis. Here is more about Nobleea.
- Name: Nobleea
- Age: 39
- Net Worth: $995,244
- Day Job: Engineering manager at oilfield services company, Teacher (wife)
- Family Income: $135,000 (main job), $10,000 (part time job), $80,000 (wife main job)
- Goals: Million dollar family net worth before 40, Retirement from primary job at 50 (for me)
We live in Edmonton where incomes are decent and housing prices are fairly reasonable. Some may roll their eyes at the high family income and say that a million dollar journey is going to be pretty easy. I have a plan to retire at 50 and pursue other interests. My wife will likely continue working until it makes sense to retire with her DB pension as the penalties for early retirement are pretty severe.
Our 2017 bonus will get paid out in the next few months. It’s 20% of salary and was fairly unexpected given how tight things were at the company last year.
My wife returned to her job from maternity leave in September and is enjoying it. We ended up having to get a nanny for one day a week due to scheduling changes with the grandparents. We received the pension buyback offer for her maternity leave. It was 11K but after calculating return to get the incremental pension income it came with, we decided against it. We’ll take a look at the price again if interest rates continue to go up and/or if we end up needing a third maternity leave. There was a drop in the commuted value of her pension plan due to increasing interest rates which resulted in a non-cash hit to the NW.
We started an RESP for our son as soon as we could. Combined, the two kids have a total RESP balance of about $22,000 although the value is not included below. It is invested in TD e-series. Our oldest is 4 and youngest is 16 months. When the balance exceeds $30,000, we will move it to a self-directed brokerage to save on fees.
We rent out our garage suite to a great tenant. They are just starting their PhD at the university, so that could be up to 4 years of a high quality, steady tenant. The suite and house are designed such that we never really see each other, so there’s privacy for everyone. They have indicated they want to renew their lease in May when it is due and we’ll gladly oblige.
As mentioned in our last update, we’ve embarked on our first residential infill project. It’s something that I’ve always wanted to do and we’ve been planning on doing for a couple years now. Since the last update, we split and sold the lots to our builder in 2017, crystallizing some of the gains for that tax year. One of the houses has already been pre-sold with possession in May. The other will go on the market in April – hopefully for a late summer close.
We wanted to try this project to see what was involved, how much, if any, money we could make and how hard it would be. We for sure made/will make money, though not as much as I was planning on. I learned a lot, enjoyed the process and will certainly do it again in 2018. The net worth numbers below include an amount for infill equity which includes the cash we have in the project and the prorated profit from the house that has been already presold. I am actively looking for a new lot to start the process again.
The housing market is still ok here, we never saw a huge run-up like other cities, and despite what is heard about the oil industry, employment here is still pretty stable. As this is a first-time project for us (our partner has done this successfully many times), I am keeping track of hours spent on it as well as expenses by date in order to generate a true XIRR of our investment (how to calculate XIRR with excel) and hourly rate of my time. The lot sale was done as a partnership with me and my wife and we’ve set up a corporation to deal with things going forward.
In May 2009, when we started tracking net worth in earnest, the value was $136,377.
Net worth numbers (Quarter/Quarter):
Assets: $1,763,692 (+3.7%)
- Cash: $6,846
- Registered/Retirement Investment Accounts (RRSP): $244,439
- Non-Registered Accounts: $84,398
- Tax Free Savings Accounts (TFSA): $0 (0%)
- Defined Benefit Pension: $210,700
- Principal Residence: $1,130,000 (N/C)
Home Maintenance Account: $4,374
- Infill Project Equity: $44,500
- Vehicles/Other: $38,330
- Mortgage: $727,554
- Credit Cards: $12,402
Total Net Worth: $995,244 (+4.2%)
Some quick notes and explanations to common questions:
Cash includes bank account balances in two accounts, plus any gift card balances. We use cash flow modeling to predict the maximum amount we can put towards debt/investments today without having a negative balance in the future, taking all one time or non-regular bills into account.
Loans and Credit Cards
The credit cards are paid off in full every month with no interest due. We put all our expenses on credit cards for cash back. As this can be a substantial amount some months, I believe it needs to have a line item in your monthly net worth as it is a liability at that snapshot in time. The large CC amounts are mostly for expenses related to the infill project.
TFSA’s will need to be replenished over the next 5 years. We cleared out the non-registered account for the downpayment on the teardown property. We are going to start putting $1,000 a month back into this in April.
We moved into our new build in July 2016 and have completed all landscaping. We have a 1BR suite located above our detached garage that is rented out.
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