Photo Courtesy of Grant Cochrane/FreeDigitalPhotos.Net
It feels like yesterday when I did the update for the end of 2012 and here we are at the end of January 2013 with another Net Worth Update. Looking back over January everything seemed to be running fairly smooth with the new budget and we are optimistic that 2013 will be a better year for us in terms of knowing more about where our financial path will lead us. Up until now we were deciding what we should do with our money, should we invest or should we pay off the mortgage? We met with our financial advisor a few weeks back now whom we spoke to about the Manulife One and The Smith Manoeuvre both of which at one point in time we considered doing. We opted out for various personal reasons but now we have the cash to either invest or design invitations to our mortgage burning fiesta.
The Smith Manoeuvre developed by Fraser Smith is basically about making the mortgage tax deductible whilst paying off the mortgage sooner and building your investment portfolio. There is quite a bit more to this and I won’t pretend to know it all although one day I may do a detailed post on our learning experiences with both. You could check out your local library to take out Fraser’s book or search the web for more in depth information. The Manulife One is an all in one account which is mainly one giant account where you can access your money including the equity in your house but if you are crap with your money you don’t want to go anywhere near this. It’s premise is to have your money paying down all your debts until you need to use the money. It simplifies your finances and helps you pay down your debts faster. For some it’s like an accident waiting to happen although both have their pros and cons we were happy we learned about them. Of course there is much more to each so research them in full if that’s something that you might fancy doing.
We’ve actually had the money for a couple of months now but needed to really think about it even though we were happily saying mortgage free was here and now. I think we answered our own questions even before having to talk about them. It has to be what makes us happy and sleep better at night. We decided to crush the mortgage because it is a sure thing. We could invest our money but as we all know nothing is certain when it comes to investing. So the mortgage will be paid by the end of this term, that is the plan come end of April unless something crazy happens between now and then.
The good part will be no more mortgage the sad part will be looking at our empty bank accounts. It will take time to build up our emergency savings account and working towards our goals of maxing out the TFSA’s and our retirement accounts. There sure will be lots more to discuss with our financial advisor and although we would love to go it alone we’re not quite confident yet to play with our money. I’m sure with further research and networking with my experienced friends who invest on their own we may dabble a bit but taking baby steps. There’s nothing worse than someone thinking they can beat the market or going in with a hot head thinking they know it all when they know nothing. I’d rather admit I know nothing but want to learn; anything is better than telling yourself a lie.
We’ve also been looking around at potential investment properties and talking to real estate agents in our area to hear what they had to say about the local market and whether they thought it was a brave idea at the moment. Some of the houses we looked at in our potential price range in order for rent to sustain the mortgage and maintenance needed lots of renovations and we didn’t want to waste money on the wrong home. It’s no wonder some people might not understand why their house hasn’t sold with the shape they try to sell it in coupled with the price far above market value. Right now is likely not the best time given the high cost of housing in our area but we also still need to save up for a down payment or take equity out of the home. So much to consider but we will cross that bridge when we come to it. First order of business is to own our home straight up.
For 2013 we’ve decided not to move our house value up even though houses that are smaller are selling for an average of $351,000. Either way it’s what someone is willing to pay for your home. Our vehicles prices remain the same as per Auto Trader. I looked up the same model vehicles, same year, same approx mileage with no real change in residual value. We hardly put any miles on it and we are lucky if each vehicle gets 5000 kilometres each year.
Question: What would you do? Pay off your Mortgage or Invest the money?
Question: What are your thoughts on the Smith Manoeuvre?
What does Individual Net Worth mean?
Net Worth is a snap shot of your financial health sort of like a picture. It’s a total of the value of your assets minus your liabilities. Posting our financial numbers is about showing others how budgeting has worked for us.
Who’s the Man behind Canadian Budget Binder? My name is Mr. CBB and I’m the frugal guy that does all the talking around here. I’m documenting and sharing our journey to pay down the mortgage and increase our net worth in hopes of an early retirement.
Determining Net Worth is fairly easy as long as you know your personal numbers. Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number. It doesn’t get any easier than that.
Our Monthly Finance Goal(s)- 2013
- To save as much money as we can while we are young to save for retirement while enjoying the present
- To spend time together as a couple doing the things we love
- Continue with meal planning and recipe creations
- To lower our Grocery Budget with The Grocery Game Challenge
- To spend less than we earn to carry out the above
- To pay off our mortgage with-in the 5 yr term ending in April 2014
- Focus on TFSA and RRSP as soon as the mortgage papers are burned in April or May 2013!
- To Save money for smaller renovations
- Continue to meal plan, create new homemade meals
- To sow and grow more vegetables/herbs in the garden to save money.
- To take vacation somewhere in Ontario this summer
- To take this blog to self-hosted and get a redesign (happening 2013!)
- Learn more about Passive Income (me)
- To Read a new Personal Finance Book (me)
- Learn more about SEO and Blogging (me)
- Continuing to educate ourselves on personal finance and investments
- Continue to Network with other like-minded individuals
- To finish renovating our home
- To continue with educational training to further careers.
- To Save money for big renovations
- Start thinking about saving for a second-hand vehicle for the next 5-7 years
- Save up for a European Adventure in the next couple of years
- Potentially save for a second home to rent out or build our dream home.
Our Financial Numbers
When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey. These are our numbers and our goals, not a means of comparison towards your own goals. We don’t care how much money others make or if their net worth is lower or higher as it’s not a competition. I hope what I post for you about our experiences perhaps will help guide you along that financial path towards debt freedom. Sometimes seeing personal financial numbers is what it takes to kick it into high gear like it did for us. I encourage you to learn what your own numbers are and make them work for you.
Money is Money, Debt is Debt, A Budget is SMART-Mr. CBB
Canadian Budget Binders Financial Health
Overview: We had an Ok month I guess as we lost some money in our emergency savings due to exchange rates and I’m betting next month won’t be any better. I’ve had to go spend $1100 on a new water softener as our decided to give up on us. I’m sure once we get rid of the mortgage it will give us a better picture. We’re starting to sort out all the paper work as I type this. Right now we are looking at money that is going to all dissapear soon into this house and we will be back at nil in our emergency savings. At least then we can focus on what we really want to focus on in terms of investments such as retirement planning, emergency savings and other ventures.
If you want to see our actual budget for January 2013 you can read it here.
Do you know how to calculate your own Net Worth? Why not go ahead and calculate your own using our Free Tool Net worth Calculator (Canadian Budget Binder 2012)
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- CBB December 2012 Net Worth Update-A Look Back Over The Year! (canadianbudgetbinder.com)
- The Benefits of Tracking Your Net Worth (mymoneyblog.com)
- Should You Pay Off Your Mortgage Early Or Invest? (boomerandecho.com)
- Follow these 5 commandments to help boost your retirement savings (business.financialpost.com)
- Financial Advisors: 101~Get The Inside Scoop! (canadianbudgetbinder.com)
- Too Many Bills Not Enough Money Each Month-$100 CASH GIVEAWAY (canadianbudgetbinder.com)
- New Year’s Resolution:Canadian Debt and Tackling Personal Finances (canadianbudgetbinder.com)
- Get Out of Debt First, Then Focus on Saving (canadianbudgetbinder.com)