2018: A Year in Review
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2018 was a year of transformation and learning, for me. During mid-2018 I started doing a lot of reading and learning about financial independence. I also got engaged to my wonderful fiancé after dating for nine years.
The rabbit-hole of personal finance
Now that I was gainfully employed after completing my masters degree, I wanted to learn more about how to make money work for me.
I started by downloading Jessica Moorehouse’s Mo Money podcast and I didn’t really realize the world that was about to open up in front of me. I eventually listened to episode 163 with Gwen Merz of Fiery Millennials entitled “How to Achieve FIRE in your 20’s”.
This opened my eyes to the concept known as “FIRE”. She talked about house hacking and leaving her corporate 9-5 job like it was just part of the plan. W…T…F!!! This is real? People do this?
I never actually thought about how much money I could put away if I saved the money I spent shopping and eating out, probably a ton! I was hooked.
Gwen mentioned her and J’s Fire Drill podcast and off I went. Becoming inspired on a daily basis listening to the lives of those who had the gall to do something major and putting their dreams first. I no longer wanted an ordinary life.
The beginning of wanting more out of life.
I want a high savings rate, and to build up my FU money stash. I want the ability to be a SAHM if we ever have little ones, to take advantage of real estate as a means of investing and cash flowing, or see through my passion projects.
Maybe instead of retiring ten years early, I will work part-time and continue to save to travel more?
That’s not really a thing in the industry I work in, but we have about 25 years before that time comes and I think that the accommodation of employees needs has being prioritized more than ever before. Anything can happen in 25 years. Or at least I will have a healthy enough savings that once I have expertise, maybe I can consult?! One day… for now let’s get saving!
After getting bitten by the personal finance bug I continued to listen to podcasts, read books (from my local library!) like mad, started a budget (let’s just say budgets aren’t my ideal), and I met with a few financial planners. I did pick a financial advisor for setting up my registered retirement accounts and the one I went with was fee-based and he was actually great but didn’t dive deep into investment conversations and I saw that I could get lower fees online, which is part of the learning process. I didn’t have a lot in my savings yet so it wasn’t really a big deal but it was definitely a learning curve.
“I no longer wanted an ordinary life.”
Working to improve our finances
My main focus after all of the above was to set up retirement accounts for my fiancé and I, and knock out my student loan debt (hovering just below 7% interest, charged daily).
At the beginning of 2018 my fiancé and I had a combined total of $39,434.15 of student loan debt and $1,936.66 within my personal Registered Retirement Savings Plan (RRSP) that had been sitting there in an RBC mutual fund. I’m from Vancouver Island, off the west coast of Canada, so we have RRSP’s (instead of 401k’s) and Tax Free Savings Accounts (TFSA’s) instead of Roth IRA’s.
At the time of writing this post, in January, 2019 I am 28 years old and Kevin is 31. I organize our finances. We’re working to improve Kevin’s credit and now have a credit card in his name.
We signed up for EQ Bank for our savings goals, since you can add up to five individually named savings accounts or “buckets”. I love this.
However, the best part is the high interest rate of 2.33%. This is a great option for holding the cash portion of a savings/investment portfolio.
We started around Halloween, and contribute to these accounts each Friday. The amounts sometimes vary since I am incredibly indecisive, and always changing my mind as to the highest priority. After coming back to this post nine months later, I am much more interested in paying down debt since we have established a decent cash cushion “just in case” we need it.
so this is the current set up we have for our longer-term savings accounts, including amounts, so we can compare them again next year.
- Emergency Savings / Insurance: $1706.81 ($50 weekly)
- Holidays/Vacations/Honeymoon: $485.22 ($50 weekly)
- Down Payment: $250.44 (contributes $90 weekly)
- Christmas Gifts: $150.11 (contributes $15 weekly)
- Wedding: $0 (contributes $25 weekly starting now until July)
Before, I mentioned that we used a financial advisor. We ended up transferring our barely-started retirement accounts to Wealthsimple as a means of getting into index funds and paying low fees. I also really appreciate the freedom of being to add or adjust my regular contributions at any time. This may be too much freedom for some, but if you’re disciplined or goal oriented it’s a great option.
Our Wealthsimple accounts currently look like this:
- RRSP: $3,535.23 (-$132.21 earnings)
- Spousal RRSP: $1,556.56 (-$25.54 earnings)
- TFSA: $382.90 ($-7.10 earnings)
- Savings: $100.20 (+$0.20 earnings / 1.95% interest)
All accounts for Wealthsimple are also automatically funded to contribute on a weekly basis each Friday.
For these investment accounts we are currently contributing $65 per week to each of the RRSP (growth portfolio), Spousal RRSP (balanced portfolio) and $75 per week to our TFSA (growth). I really do look at our TFSA as a joint retirement savings that we can withdraw from prior to age 65, if we retire early or work part-time. Wealthsimple also has a high interest savings account which offers 1.95% interest. I made this account to put extra money in. So in case of a bear market I’ll pop it into one of the registered accounts. I was contributing regularly but decided to just up my registered account contribution rather than trying to time the market. Also for the sake of simplicity.
We do have other accounts as well. I have a general cushion in my checking account that I use to pay our automated bills including for our American Express Cobalt card. We’re working on getting travel rewards and this was the best card I could find with a $10 monthly fee rather than a larger annual fee.
Just a note on the AMEX Cobalt card, we really appreciate that this card is set up for millennials as it offers 5x points for every dollar spender on food and drink, 2x points on travel and transit, and 1x points on everything else. Plus you get a bunch of sign-up points to use toward future travel or cash back on already-made purchases. Pretty sure my Visa offers 2x points on everything, but I mean, 5x points on groceries with the AMEX is pretty dang good. I’m hoping to get some major use of these points in the future with flight bookings!
If you choose to click the referral link you will get extra points when signing up (and I will too, so thank you in advance for your support!). On the American Express website, it states “your friend could earn 2,500 Membership Rewards® points for each monthly billing period in which they spend $500 in purchases on their Card in their first year as a new Cobalt Cardmember. This could add up to 30,000 points in a year³.” This is the same referral bonus I received and I was easily able to fulfill the $500 per month spend.
The unnamed debt: our car loan
We have one larger debt we haven’t spoken of yet, our brand new car we bought in 2017 that we love! In hindsight, with the knowledge I have now, I would not likely have purchased a new car.
Although we certainly appreciate the safety aspects and the new technology (we never had a car with heated seats before). But alas, since Kev isn’t fully on the FI (financial independence) train (I’ll get more into this some other time), and we share a vehicle, meaning we carpool to work daily, we decided to keep our beauty.
It was a 5-year contract at 0.9% and we still owe roughly $26,000, so 3.5 years remaining on the contract. Since it’s low-interest I have no qualms with the car payment. In all truth, I feel like it’s been a blessing in disguise as it has otherwise kept us from lifestyle inflation as we pay $287 every two weeks on it.
Avoiding Lifestyle Inflation
You see what I did there? I previously stated that buying a vehicle KEPT US from lifestyle inflation. While we did indeed inflate our lifestyle by purchasing a new car, basically what I’m getting at is that I had a large amount of money tied up in the car, meaning, it would come available again once it is paid off.
Once the payments are done I’ll roll over that entire bill into other savings goals. I’ll be happy as a clam and I think Kev will be cool with it too. We intend to have our debt (student debt, plus car loan) paid off all roughly around the same time: hopefully by mid-2022, I intend to redirect these funds toward travel, wealth-building opportunities, and retirement.
Reviewing our Net Worth
So we’ve discussed some of the accounts and savings I’ve put together and accomplished for 2018 and so here’s my overall net worth calculation for the end of the year:
- RRSP: $3,535.23
- Spousal RRSP: $1556.56
- TFSA: $382.90
- Wealthsimple Savings: $100.20
- EQ Bank: $2,593.58
- RBC accounts: $4,785.05
- Sadie’s Student Loan: $13,501.75
- Kev’s Student Loan: $11,845.43
- Car Loan: $26,000
- AMEX balance: $2,621.21
- Visa Balance: $693.26
Total for end of 2018: (-41,708.13)
How far did we come in one year?
This is where we were at the beginning of last year, in January of 2018:
- RBC accounts: $3,236.64
- RBC TFSA: $5,155.02
- Sadie’s Student Loan: $24,927.10
- Kev’s Student Loan: $14,570.05
- Car Loan: $33,450
- Visa Balance: 578.20
Total for January, 2018: (-65,133.69)
What we achieved in 2018
To identify the first major win, our total net worth increase for 2018 was $23,425.56! Further, I just want to point out that $14,149.97 of that amount was toward our combined student loan debt, reducing the daily interest charge significantly. I am super proud of what we have accomplished as we have still lived a very comfortable lifestyle (with a really spendy Christmas this year).
Our annual combined salary after taxes is about $71,000, so I think we have room for improvement. However, I am proud of what we achieved considering many avoid thinking about finances all together.
Looking forward to 2019
My main financial goal for 2019 will be to have our net worth sitting around $(-8,000) by the end of the year. This will mean continuing with my weekly savings transactions (paying ourselves first) and putting an extra $2,000 away throughout the year. Now it wouldn’t be like me to just end it there! We haven’t talked about habits or living intentionally and what I’ve achieved in that realm!
Here are a few of my wins from 2018:
- Figured out that my side hustle should be passion projects and not working for someone else;
- identified a list of things that significantly add value to my life;
- gained control of my finances and identified room for improvement as well as long-range savings goals for traveling, a down payment, and our registered retirement accounts;
- increased my active outdoor lifestyle by going on more hikes (Mount Benson 3 times), more local hikes, going mountain biking (buying a full-suspension bike) and also trail riding, jogging outside, participating in a 5k fundraiser and going on lots of longer walks around our where we live;
- lost 50 lbs;
- became more interested in nourishing foods;
- embraced the seasons and good weather during the fall/winter;
- actually started writing draft content for my blog!
So there you have it! A little update for the end of 2018.
I will be updating again next year around this time but perhaps I’ll set up a separate page for more frequent updates, maybe by month or milestone, once I get rolling on this blog.
Until next time, live intentionally.