Welcome to the Million Dollar Journey November 2014 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.
- Name: Sean Cooper
- Age: 29
- Day Job: Employed with a major global pension consulting firm.
- Family Income: $50,000 (full-time job); $18,600 (rental income before expenses); and, $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.
August 1, 2014 marked my mortgage anniversary date, so I’ve started aggressively making lump sum payments on my mortgage; my mortgage is down a whopping 29.84%. In only three months, I’ve made lump sum payments totaling $35,350. Once I maximize my lump sum payments, I’ll start building up my emergency fund.
Similar to most people, my investment portfolio took a beating. With the TSX hitting an 8-month low, my RRSP is down 1.23%. Since I’m investing for the long-term, I’m not too concerned about daily fluctuations in the markets. I view this as a good buying opportunity for investments for my TFSA.
I decided to quit my part-time supermarket job to better focus on my full-time job and budding career as a financial journalist and personal finance expert. I was rated highly in my yearly performance review at work and received my full bonus for this calendar year. I’m considering working towards my Certified Employee Benefits Specialist (CEBS) designation and enrolling in Toastmaster to improve my communication skills. I’m interested in doing motivational speaking as a keynotes speaker.
My old tenants moved out at the end of September 2014, with my new tenants moving in October 1, 2014. Besides missing smoke detectors, my home was luckily in pretty good shape. I did do some minor repairs, including repainting the side door. I structured the lease slightly different this time around – instead of making the utilities inclusive, my tenants are paying a share (60%) of the utilities. I learned from my mistake last time when my previous tenants left my baseboard heater on for two straight moves and doubled my electricity bill.
On to the net worth numbers:
Assets: $623,413 (-0.77%)
- Cash: $3,102 (-57.86%)
- Registered/Retirement Investment Accounts (RRSP): $45,566 (-1.23%)
- 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: $324 (+0.58%)
- Principal Residence: $550,000 (+0.00%) (purchase price adjusted for average selling price annually)
Liabilities: $75,131 (-29.84%)
- Principal Residence Mortgage: $75,131 (-29.84%)
Total Net Worth: ~$548,281 (+5.21%)
- Started 2014 with Net Worth: $460,500
- Year to Date Gain/Loss: +19.06%
Some quick notes and explanations to common questions:
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.
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, 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.
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.
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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