What would you do with $100,000 in savings? : January 2015 Net Worth Update (+2.53%)

SPEND MONEY TO MAKE MONEY

If you are new to Canadian Budget Binder welcome to our monthly Net Worth Update post.

I’ve posted our losses and gains for the past 3 years and this is the start of year 4 for us.

This year however will be much different for us as we have some decisions that we should make with the $100,000 in bank savings which we have accumulated.

At first you might think that’s a large amount of extra cash to be kicking about but as you will see by the end of this post that number will dwindle down in size with our projected expenses. There’s not going to be as much as you think by the time I’m done chopping down the pile.

It was never out intention to keep long-term savings in the bank of this amount but in talking with a banking representative it’s certainly not uncommon. What I mean is keeping more than $100k in one bank account which is not necessarily the smartest thing to do.

If you think about it money has to sit somewhere until it is invested. Some people have no intentions of doing anything with their money so into a bank account it goes.

You won’t get the best bank rate if ever doing that but you will make some money which is taxable after $50 in interest savings over the course of the year. You will be sent a T5 tax slip from your bank if your interest payouts over the year is over $50.

Since each bank account is only insured up to $100,000 per person or joint we had to open another bank account again. The bank teller says it’s amazing how many people don’t worry about that and keep pouring money in excess of $100,000 into their bank account.

What is deposit insurance?

The Canada Deposit Insurance Corporation will only cover :

Spending $100,000 in Savings

I’ve had a few emails from fans asking me what we plan to do having so much money in the bank so I though we would address that topic today.

First of all it was never our intention to have this much liquid cash sitting around as there were always goals we needed to carry out at one point or another.

It seems like many of our goals have been put on the back-burner due to time constraints BUT we do want to get them completed.

Here are a few things about us you might or might not know

• We are mortgage free
• We have zero debt
• We have room to invest but recently have increased our contributions
• We have two vehicles paid in full but may need to replace one in the next few years
• We have one child whose RESP is maxed out
• We have renovations that we would like to complete in our home ie: Bathrooms, Kitchen and finish the basement. Potentially put in a new fence this year as well.
• We would like to go on a family vacation back to the UK

There’s not much to tell about us but what I’ve described above is what we are zeroing in on to figure out what to do with our $100,000 worth of savings.

I’m not going to donate all the money so don’t even suggest that. We do however donate to one charity every year that we keep private but is reflected in our budget update.

Once the mortgage was paid it was easy to see that our net worth would increase as planned and now that I am working two jobs we are seeing that number grow faster than expected.

Some of the things Mrs. CBB and I talked about doing with our money …

• Buying a rental property or two in our community
• Investing more in our retirement savings
• Start or buy a family business (like I need more work) Pizzeria, Food Truck, Brownie Kingdom 🙂 (I’m passionate about my brownies). We almost bought a business in 2008 centered around real estate but backed out. That business is still  booming today.
• Sell the house and buy a bigger house or build our dream home
• Bank the money until we are ready to use it
• Finish all the renovations in our home then focus on the leftover cash
• Go on holidays around the world and enjoy ourselves

I know you might be think that it’s not that hard to spend money but it is very difficult when you have so much you need to do. You don’t want to make mistakes or jump in without getting all of your facts aligned.

Sometimes just looking at the money sitting in the savings accounts growing at such a slow rate pains me but I know that we can’t make decisions based on emotion.

In reality $100,000 isn’t that much money to work with especially when you have renovations you want to complete.

I figure the basement and kitchen alone will cost us about $40,000 if I contract people to do the work. I was initially going to do it but I just don’t have the time. I may do odds and ends to save money but I might have to find someone to do the work for us.

That is not including new appliances we would have to purchase so add another $5000-$7000.

Eventually we would need to buy a new vehicle so keeping back about $10,000-$15,000 seems reasonable so we can pay cash for it.

We also should have at least $5000 in emergency savings because all of our money is tied up with investments and the last thing we want to do is cash in money from our RRSP which is a huge no-no.

We do have a line of credit but again we’ve never had the need for it and hope we never get into the cycle of owning money on credit.

Keeping a percentage of money away for home maintenance every year is important so we like to hold back between $3000-$5000.

That holiday we want to go on will probably cost us about $5000-$7000…not much money left in the pot now.

So that leaves us with around $25,000-$30,000 in current savings. That number is increasing every month so there will be more money coming in but we can’t spend or plan with what we don’t have because anything could happen between now and then.

My dad always told me that sometimes son you have to spend money to make money. I believe you can do both spend it and just save it.

They own houses that are paid for and are using that rental income as extra savings that they are banking for their retirement years which is now. They don’t even need that cash but it’s a bonus just to know they are safe financially.

We have options yes and we are fortunate but we worked damn hard to get where we are today. Now the decision is up to us how to spend the money.

I’ll be sure to keep you update all year-long as we watch that $100,000 dwindle into what we hope will make us more money down the road. (With a bit of fun mixed in of course)

If you had $100,000 savings in the bank, no mortgage or debt what would you do with it?

Our net worth 2015

RESP Contribution 2015: $208.33 a month.

We are always looking for ways how to increase our savings and retirement investments. By tracking our net worth these numbers below show us how well we are doing in terms of meeting our target numbers or what areas we should concentrate more on.

This month has been nothing short of crazy. My second career has shot off to an amazing 2015 and generated quite a substantial extra income. I will be the first to admit that working two jobs is not easy, especially when you have other commitments at home.

To add extra clout to this months Net Worth increase we saw a significant jump in our investments to the tune of $9074.63. This figure however, does not take into account what we paid into Investments this month from our income.

As with all good things that happen a negative force will try to equal things out. This equaling out came in the form of depreciation on the vehicles as they got another year older.

The house prices have risen again around the local area, but we are not raising our house value again this year for the sake of Net Worth at this particular moment.

Understanding net worth

What Does Individual Net Worth Mean?

Net Worth is a snap shot of your financial health sort of like a picture or debt to net assets. In simple terms it’s a total of the value of your assets minus your liabilities.

We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up. Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.

If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do. I don’t charge for it because I want you to save money not spend more!

Enjoy and let me know what you think.

There are tonnes of other free printable lists offered at Canadian Budget Binder to help you achieve some of those financial goals and build your net worth.

Now… what you need to do is determine just how much net worth you actually have and go from there….

Determining net worth

Figuring out net worth is fairly easy as long as you know your personal numbers or monthly finances which means you need to do your homework. 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.

Understanding your net worth will help you determine if you are on track to meeting or beating your personal financial goals. It doesn’t get any easier than that.

How to Determine Net Worth?

Net Worth = Assets – Liabilities 

Calculate net worth

Do you know how to calculate your own Net Worth?

Now you can stop asking yourself the question, how do you find out your net worth? Why? It’s easy to determine. We like to calculate our net worth every month so we know if we are still on track. Some people calculate it yearly or quarterly. It’s really up to you and how informed you want to stay when it comes to your financial health.

Net Worth is essentially an estimate and not everyone uses the same type of figures. Some people don’t include vehicles like we do or they may leave out the assets inside the home like we have. It depends on what you want to calculate or what you can sell today and make money on.

Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)

Why you should set goals

Setting goals are the only way we work towards achieving what we want to get done as a couple around the house and in our financial life. I know that without them we would be flying by the seat of our pants which wouldn’t work for us.

I find it’s much easier to be held accountable when I share what we need to do with all of you. Yes, my wife refers to the list when she asks what I plan to do next. I’m not sure if that’s a good thing for me or not.

In the graphical representation below, I have used excel to provide a prediction based on the past years monthly net worth figures.

Using figures from our actual net worth gains over the past 12 months (the red line) it has suggested that come this time next year we should be at approximately $700,000.00.

This is nice to know but anything can happen over the next year. Hopefully with some careful planning we can achieve this goal and go beyond it.

Do you set goals for the year?

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 to others target goals.

We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition. I hope our experiences perhaps will help guide you along your financial path working towards debt freedom.

We all have different financial paths

Not everyone has the same path in life. Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.

Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or was injured on the job etc. but you can’t let that stop you from achieving your financial goals.

Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too. Remember what I said, “It’s not about how much money you make, it’s how you save it”.

Focus on you and don’t let the evil eye of money jealousy or keeping up with the Joneses cloud your vision. No one cares about your money as much as you do so don’t waste your energy trying.

The only reason people accumulate wealth is because they know how to save or invest it wisely even if they did inherit money or win the lottery. The smallest improvements should mean big strides in working towards reaching your goals.

Sometimes we have to fail in order to learn and we’ve all been there. Money can be an evil force for some people especially those who have a negative attitude towards their own financial situation.

I urge you to be optimistic and little by little with determination you too should see improvements, if you want that to happen.

Net worth updates 2015

Below you can click the links to read past 2015 net worth updates to see if we were on target or if we struggled with some of our numbers.

Since we are just starting off the 2015 year this is the first net worth update for the year I will start below with the end report for 2014 for those of you that missed it.

In the last year since January 2014 our net worth according to our figures has grown $80047.82

January 2015 $645,354.10 – January 2014 $565,306.28 = +$80,047.82

December 2014

That’s all for this month’s net worth update but please check in at the beginning of March 2015 to see how we made out in February 2015 and what has happened to our finances since.

Do you track your net worth? Share your net worth updates with CBB! You don’t have to give your name just a bit about yourself and what you are worth.

~Mr.CBB