Net Worth Update November 2015 – Sean Cooper – Mortgage Free by Age 30!
Welcome to the Million Dollar Journey November 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: 30
- Net Worth: $667,064
- 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.
I finally did it! I paid off my mortgage! My goal was to pay off my mortgage before age 31. On September 22, 2015 I made my very last mortgage payment. Ironically, the bank took the full mortgage payment out of my bank account even though I only owed about $400.
Through hard work and determination, I managed to pay off mortgage in a little over three years by age 30. I never planned to pay off my mortgage so quickly (I signed up for a five year fixed rate mortgage), but through hard work and determination mortgage freedom is now a reality. My next goal is to achieve a million dollar net worth by my mid thirties.
What good is reaching a financial milestone if you don’t celebrate? To mark paying off my mortgage, I threw a good old fashioned mortgage burning party. My friends and family joined me as I literally burned my mortgage papers. I spent about $800 in one evening, but it was well worth it. My good friend was nice enough to take time out of her busy schedule to help me plan the event. I couldn’t have pulled it off without her. She’s the best friend I could ask for.
Now that my mortgage is paid off, a lot of people are asking me what’s next. Am I going to sell my house or stop living in the basement and move upstairs? I’m not going to make any rash decisions. I’m going to take some time for my new financial freedom to sink it. One thing I’m definitely going to do is travel a lot more.
Places I’m going to visit include Vancouver, New York, Chicago, California, and Europe. I’m striving to achieve a better work-life balance. No more 80 hour workweeks for me (maybe just 70 hours). I recently volunteered for the United Way campaign at my work. It’s been a really eye-opening experience by helping put life into perspective. As for meeting someone, I’ve tried online dating, but it just isn’t for me. Hopefully I’ll meet someone one day, but if I don’t – so what. I’ll keep making the most of everyday with a positive attitude.
After my mortgage was paid off, I splurged a bit and purchased a new wardrobe. Since I hadn’t bought new clothes in almost five years, I ended up spending over $2,000 on clothes. After maxing out my credit card two months in a row, I decided to slow down my spending.
Reading FrugalTrader’s post, My Mortgage is Paid Off – Now What?, was a wake up moment. I had worked so hard to pay off my mortgage and sacrificed a lot. I didn’t want to fall victim to increasing my lifestyle to replace mortgage payments. Since I had forgone contributing to my Tax Free Savings Account (TFSA), I decided to take the amount I was previously paying towards my mortgage and use it to contribute to my TFSA. I’m currently investing in TD e-Series Funds. I should max out my TFSA by mid-2016.
Paying off my mortgage has been such a big part of my life the last few years, so I’m writing a book on my journey there. It will chronicle my life from university student to homeowner. It will serve as a blueprint, so others can follow in my footsteps. This is where I need your help.. There are many topics I could cover in my book, but a limited number of pages. Which topics are you most interested in me writing about in my book?
On to the net worth numbers:
Assets: $667,064 (1.33%)
- Cash: $14,226 (243.24%)
- Registered/Retirement Investment Accounts (RRSP): $66,439 (-3.05%)
- Tax Free Savings Accounts (TFSA): $792 (100.00%)
- Defined Benefit Pension: $35,266 (+0.00%) (commuted value adjusted annually in June when I receive my annual statement)
- Non-Registered Investment Accounts: $341 (0.00%)
- Principal Residence: $550,000 (+0.00%) (purchase price adjusted for average selling price annually)
Liabilities: $0 (-100.00%)
- Principal Residence Mortgage: $0 (-100.00%)
Total Net Worth: ~$667,064 (+2.16%)
- Started 2015 with Net Worth: $585,926
- Year to Date Gain/Loss: +13.85%
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?
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 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 neighborhood.
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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Hey Sean, congrats on the mortgage being paid off.
It is so smart to use the old mortgage money to invest into your TFSA.
If you want to stick it to the big banks, buy their stocks and not their products.
The funds the big banks sell its clients typically do not generate the same returns as their stocks (when you include dividends)
Often these holdings sold to clients by the big banks, contain their own bank stocks and well as their competitors. Furthermore, the banks make a profit selling you funds and accounts….the bank’s stocks send you a dividend cheque every quarter…..I prefer the latter.
Congrats, Sean! I saw a few articles about your story and I just wanted to say how impressive it was that you were able to accomplish this. I also saw some of the negative comments and disbelief, which is quite frustrating, but I’m willing to bet that you are in a better place financially than 99% of those people.
I’m on the Mr. Money Mustashe forum and I thought you would enjoy this comment that someone made, especially as you are still looking for that special someone:
“Several of the original commenters talked about how he would never get married because he had no social life. I am sure women all run away from an attractive 30 yr. old with a paid off house and tight biking buns as fast as they can.”
Congrats Sean!
As much as I believe what you’ve done is an awesome achievement it also shocks me when I read a CBC news article about what you’ve done. The article talks about how Sean paid off his mortgage in 3 years which isn’t realistic for most. I agree that this isn’t probably realistic for most but the article aludes to the fact that most of us could shave 3 years off.
As someone who personally paid off my of 270k mortgage by 31 in 6 years while also contributing to RRSPs and TFSAs I would hope that Canadians could aspire to doing better than taking three years off their mortgage.
Congrats Sean that is great news. Like you I was adamant on paying off our mortgage which we did in 5 years and I’m in my 30’s. I bought my first place very young in the UK when most kids my age were at the pubs partying and drinking. I’m happy that I was able to balance my “fun” and finances. You’ve got a great road ahead of you.
The most important part of this is that Sean set a goal for himself, formulated a plan, and did what was necessary to stick to the plan and complete the goal.
Whether or not it was the best allocation of resources is immaterial.
Of course financial goals are almost always easier to achieve without dependents. Good for him for doing it while he’s young & single instead of heaping his goal-achieving lifestyle on a wife & children.
Congratulations on the achievement. Time to focus on a bit more balance now that you have the peace of mind.
And congratulations on the CBC interview!
http://www.cbc.ca/news/business/mortgage-pay-off-three-years-1.3302229
Wow, that is impressive!
Congratulations on hitting the goal and best of luck on choosing your next ones.
I would suggest that you try moving out of your basement, I think you will find it to be another eye-opening experience.
Congrats, well done Sean,
I don’t have plan to pay off my mortgage any time soon. I will keep investing in high quality dividend stocks and build wealth by taking advantage of the ultra low interest rate.
Best Regards,
Congrats, Sean! I paid off 50% of my mortgage in the first 2.5 years while maxing out my retirement accounts and could have paid it off next month, if I hadn’t quit a toxic long-hour job, took two months off unpaid, started grad school, and found myself with more retirement contribution room. I’m fine with this all though – I’m building my net worth in other ways and sometimes life happens.
Congratulations. I tend to be cynical of these types of stories, but this is an impressive accomplishment. Savour it.
I’m curious to know where your initial $170,000 down payment on the property you own came from? That’s a whopper for a first time homebuyer in their twenties. Not to diminish your accomplishment, but that certainly helped start your adventure on the right foot.