Creating Your Future Net Worth Statement

Having and updating your very own personal net worth statement is one of the most beneficial ways of viewing your current financial status and can be a deciding factor in decisions such as buying a house, car or taking time off work.

While I believe that it is crucial to create a monthly update of your personal net worth, I also think it is equally important  to make your future net worth statement as well.

Here is how it works. After you calculated your current net worth (hopefully it is positive!) Try to think out of the box and create a net worth statement sometime in the future. I usually create one a year from my current statement. Try to come up with realistic numbers of where you are expecting to be financially. The benefits of creating a future net worth statement are numerous and are as follows:

  1. A future net worth statement is highly motivational as it is almost in the same line as goal setting. The more realistic the goals are, the better the chance of you reaching them and accelerate your motivation!
  2. This statement can give you a much more clear picture of where you can expect to be down your road in life and can help you plan more precisely major buying decisions.
  3. Creating a future net worth statement is a great way to teach self control as you strive to achieve your own expectations. A future net worth statement set a year from now is a little easier to meet compared to budgets as you do not feel as “hand-cuffed” on a weekly basis. (Budgeting is still a great way to achieve your goals. Consider a future net worth statement a beginners tutorial in budgeting!)

There are many other advantages that can be branched off from the above mentioned 3 points but the main benefits are there. I am currently in the process of making my own future net worth statement and will be positing it by the end of the month.


Life Expectancy and Our Retirement

A big issue that is gaining a great deal of attention is the life expectancy of an average human being and how it has been slowly increasing in today’s age. With modern health practices, medicine and the latest in technological developments, the average adult life leading towards the ripe old age of 100 is becoming quite possible.

While this is great news, it can be quite worrisome when you throw retirement into the mix. 65 is the age most people aim to retire and many more are planning to retire at 60 and earlier. I for one am aiming to retire somewhere in my early 50’s and hopefully even leave the workforce much sooner if I can get a viable business up and running whatever it may be. One thing I am cautious about is the possibility of living 40+ years without an income from a job. It seems that us future retirees will have to be more strategic in the coming years!

If you, like me, are interested in receiving a calculated estimate on how long you will be alive, I would suggest you visit the Living to 100 life expectancy calculator. The questionnaire takes roughly 10 minutes to complete and it is free.

As our life expectancy continues to increase, I do not want to spend more of my time in the workforce then I have to. I value my time and I am looking forward to becoming financially independent while still being relatively young. I believe that sound investing at an early age is a great way to be prepared for life after work as well as being content with what you already have. Also, take advantage of employee matching to your retirement fund while you are employed as this is free money. Free money is always a good thing! If you consider your self in being far from financially savvy, I would suggest an investment in index funds. Index funds are a low cost alternative in investing and almost always out preform mutual funds. A great article from Financial Self Starter on index funds and can be found here.

While it is a smart idea to prepare living for the long haul and have as much saved as possible to enjoy your life, try not to stress too much about it. Besides, stress decreases our lifespan!

Remaining Debt

After I paid off the remaining balance on my car loan a few weeks ago, I enjoyed the luxury of a greatly reduced debt load and am highly motivated and focused on paying the remaining balance on my line of credit from a major bank and my MasterCard.

I created a chart below detailing the remaining debt that I have to pay off. Luckily, I only have two forms of debt remaining with one of them being a really low balance. I am aiming to be completely debt free in the next 3 months if possible.



As you can see, I owe just a little over $2,000 and I will be using the following method in eliminating the remaining debt:

  • Entirely pay off the remaining balance on my MasterCard and put about $100 towards the balance on my line of credit.
  • Once the credit card debt is eliminated, I will put all free money used to pay off the MasterCard on a monthly basis onto my line of credit.
  • Stop adding money to my high interest savings account (usually around $150/monthy) and add this amount to repaying my line of credit
  • All money remaining from my bi-weekly budget will go to debt repayment. This varies all the time depending on what part of the month I am as I tend to  pay more in expenses early in the month and barely any during the second half.

Once I receive some extra money from my budget or by any other means, I usually transfer the funds from my chequing account to my line of credit on-line. This eliminates any hassle of travelling to pay off debt and tackles the problem as quickly as possible.

If all goes according to plan, I should be debt free by the end of November! Excited is something that barely describes what I am feeling.  It is extremely hard to mimic the feeling you receive of being debt free. I know it has been a long road for me and I must say I am enjoying the journey but am much looking forward to the benefits of reduced stress financially by seeing a big fat 0 on my debt column.

However, with my wedding less than 14 months away and the pursuit of home ownership hopefully not in the too distant future, staying out of debt will be tough. Having a mortgage is debt I am willing to take on but  my fiance and I are trying extremely hard to pay for the wedding in cash rather than credit. Getting into debt for one night (even though its a great one!) is not something we are willing to do.

For the time being, I am going to focus on what I can control, and that is eliminating the last remnants of my debt.

My Car Payment is a Thing of the Past

Today has been a great day for me. I decided to go the root of paying the remaining balance on my car from my savings account.

for the last few years, I have been nearly paying $300 dollars monthly for my car and it was beginning to irritate me knowing that such a large expense was being regularly deducted from my account.

I mentally struggled on what I was going to do between keeping my savings or paying off my car. It all came down to interest rates. I simply just saved $70 this year by paying off the balance. The interest I was being charged for my car loan was close to 4% higher than interest I was making on my savings account. No matter how small the amount saved, it was the deciding factor for me.

I am glad to say that moving forward, I have just created more options for myself by freeing another $300 a month. I believe that I will benefit the most for paying off my car in these 3 ways:

  1. The greatest way I can see myself benefiting is by making my second, night shift job expendable. I will be giving my notice any day now and will slightly reduce my slavery to the work force
  2. Secondly, I can use the extra money to repay  my savings account and rebuild the balance or pay off the remaining debt I have left.
  3. Finally, I will free up some money to donate to charities and start helping out. I am still currently researching what will be the best charity to donate to.

As of now I only have $1,900 remaining in debt which is the balance on my line of credit. I expect this to be paid off in full within the next few months. This will be easier as my expenses are now lower then they were a few months ago when I had close to $8,000 in debt.

I do not think I will ever finance another car again as it becomes a financial and mental strain as time progresses. Sure it is really nice to have a new car but my next approach is going to be to purchase a very slightly used car(maybe 1 -2 years old) and paid in full. In time, I plan to make monthly payments to my high interest savings account to mimic  a car payment. Once I have generated enough money, only then will I purchase another car.

Winning the Lottery – What Would You Do?

lotteryImagine waking up in the morning, rubbing your eyes before getting out of bed, turning on the television and up pops the news. You turned on the TV at the perfect time, they are just about to reveal last nights lottery numbers. You  hurry over to grab your ticket, still half asleep and routinely look from your ticket in your hand to the television set.

The numbers match, you have just won the lottery!

I know this story is too good to be true for most of us, but I for one can’t help but wonder what it would be like to win the lottery and what I would do with such a large sum. For fun, let’s say I won 5 million dollars at this weeks lottery ( I can only wish).  I am well aware of the stories of past lottery winners going broke within 2 years. Let’s face it, there are a great number of people in this world who are not good at managing money. Some, are downright awful.

If I won 5 million dollars, I would put the following moves into action.

  • $1,000,000 For Family and Friends– Yes, you read this correctly, I would give 1 million dollars to the people I care most about. Making others happy around me is a very rewarding experience in life and it makes the good deed more fulfilling. 80% would go to family and the remaining 20% would go to friends.
  • $1,000,000 in High Dividend Paying Stocks – This might be considered risky but I am a buy and hold type of guy when it comes to investments. Setting up a DRIP plan will mean I will constantly gain wealth as all dividends will be reinvested which means the purchase of more stocks. Over time, I will hopefully be able to live off the passive income earned from the dividends alone without touching any of the initial investment.
  • $500,000 For a New House – I would be really happy if I could get a house with a purchase value of $500,000. Especially since it would be mortgage free. I am not looking for something extra fancy just a pretty nice home, in a nice neighbourhood.
  • $1,500,000 in Liquid Assets– This could be either a high interest savings account or something similar. The reason for this is for safety purposes. If I could get a savings account with interest earning 3.00%, I would be earning $30,000 in interest annually! Another reason I want to keep this amount in a high interest savings account is to give me options for investments in the future. The downside to this is the enormous taxes I would have to pay on an annual basis with so much of my money not in tax sheltered investments.
  • $300,000 For Business Opportunities – This could be starting up my own business or become a stakeholder in smaller companies. I might also consider investing in real estate if the markets are decent and such an opportunity exists. I would also probably keep this in a relatively safe investment vehicle for quick and easy access.
  • Remaining Money for my Goals and Passions– This will be donating to charities on a consistent basis, traveling with my fiance and maybe even starting my own charity organization. The point with this money would be to enjoy myself and feel good about life.

I am in no way a financial adviser or planner but I feel pretty good about where my money would be going. I would suggest that you try as much as possible to secure your winnings that you have not decided to give away to family friends and charities but to also enjoy your life and celebrate your rare victory.

I can only imagine what it would feel like to win the lottery and enjoy the pleasure of not having to work and be able to enjoy the fine things life has to offer. I think it is time for me to go buy a ticket.

Posted in Life, Money. 1 Comment »

Savings, the Gateway to Options

I love saving money.

Since I was young, the thought of accumulating money facinated me. I had this ceramic piggy bank where I kept all sorts of coins. I would routinely check my balance by dumping the coins onto a table even when I haven’t deposited any money in the piggy bank! I did this for a while until I saved a decent amount of money and only spent this money on items I really wanted.

At the age of 14, I opened my first ever savings account. This was really exciting for me and I deposited money whenever I had any. When I started working part time at a grocery store, I started to make automatic contributions in savings and watched, slowly as interest accumulated into my account.

Savings accounts are not the best way to build wealth as any interest gained is taxable and has a hard time matching inflation rates. However, saving accounts can be beneficial if you are saving for something within the next 2 years such as a home or the purchase of a car.

The majority of people in our society never save for purchases or set goals for themselves. They live on impulse purchases and are followers to the media, hot trends, and their own pursuit of short term satisfaction.

Saving when you are young creates something very valuable when you are older.

savings create options.

Having options is very important to living the life you want to live. Some ways that savings equal options are:

Money set aside for emergencies:Having an emergencey fund will definitely help out in hard times. If you were to lose your job tomorrow how much of an impact would it have to you and your family without an emergency fund to protect you? 3-4 months worth of your salary is a great start in dealing with these types of situations and is a better option over accumulating debt by using your credit cards.

Putting your money to work in other investment vehicles:  Having money set aside saves you from having to borrow money to invest and gives you time learning as much as possible to make smarter investment choices. Once you are ready to invest, you can simply transfer your saved money, into an on line discount broker account, RRSP, or even mutual funds from your local bank.

When Opportunities arise..:Maybe a house you have been following has dropped to a great price and you need to act now. Having the money saved for a down payment would be a great opportunity and you would be really grateful you had this money saved. There are a large amount of opportunities you can benefit if you have money saved for such occasions.

The bottom line is that money is mostly better saved than spent. Try to enjoy your life by being a little more frugal and appreciate such things as nature and helping others. You will feel better about yourself and from time to time, you can reward yourself for your good deeds with the extra money you saved.

Control Your Money: Don’t Be a Follower

With the media increasing in popularity at a rapid pace, more and more people are becoming dependent on sources such as TV, Radio, advertisments on billboards etc.

Media, although it is something that is innovative and good to a certain extent, can be a real pain to someones morale and bank account.

Whenever I view the media, I try to take a very logical approach. I look at the ad in a marketers point of view to see who their target market is and what they are trying to accomplish. I try not to get “brainwashed” by a new fad that is supposedly made to better my life in the short term.When I buy a “want” item, from small items such as a new book to bigger purchases such as a TV or even a car, I make sure it is something that I research heavily on and believe I will enjoy for a long time. I ignore most media advertisments for the products I want and focus on:

  1.  Word of mouth from close friends
  2.  My own interpretation of the product
  3.  Highly reputable articles

This approach helps me determine at my own pace if the product is something that I truly want and nothing that just tempts me to buy out of impulse. Overall, I save a lot of money on things that I think I would want, but would actually be tossed aside after a few days of use.

There is a limited supply of money for all of us (unless you are on the Forbes list). Try to really think about what you want and if you will use it before you pruchase it. Does this item have any value to you? Is this something you are buying to improve your image or give yourself a quick lift? Would you buy this item for twice the amount? These are the types of questions you must ask yourself. Do not be afraid to take longer than expected to make your purchase.

Advertising works. People fall into marketing traps daily. Do not lose countless amounts of money from the media on items you will never use. Instead, save this money for your retirement or donate the amount you might have spent to your favourite charity. I guarantee a greater sense of fulfillment if you follow this route.