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 Post subject: Re: DINKS on track so far
PostPosted: Fri Sep 24, 2010 10:10 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
peachy wrote:
Instead of paying down your mortgage have you considered boosting your retirement savings?


I've waffled back and forth on the issue. A few years ago, I was 100% behind the idea of dragging your mortgage out as long as possible, and directing all your extra cash at investments. However, in the past couple of years, my risk tolerance has adjusted downwards. Right now, I think I'd rather be completely debt-free, including the mortgage, than have a $350,000 RRSP and 20 years left on the mortgage.

I just turned 35 this year, so if I pay the house off in 5 more years, I'll be 40 with no debt whatsoever, and I'll have about $5,000/month in "extra" cash I can direct at catching up on our retirement savings.

Part of it also might be that I've lost faith in the "miracle" of compound interest. It hasn't done squat for me in the past decade, and I don't see that changing dramatically in the near future. I think the guaranteed return of paying down the mortgage is the better bet, personally.

peachy wrote:
118k in the RRSP plan isn't very much for two people.


Doesn't that depend entirely on their ages? ;) It's woefully inadequate for a pair of 65-year-olds, but it'd elicit a tidal wave of high-fives for a pair of 25-year-olds, wouldn't it? Being 35, I don't think it's anything special, but it's not peanuts either, in my opinion.

Plus, there's the $80k in investment property we own, and the $30k in cash.

peachy wrote:
In addition, your TFSA account only has 1600 in it. Do you have a 5k limit/year like we do in the US?


Yup. The TFSA's only started in January, 2009 in Canada, and the annual limit is $5,000 per person. Unused contribution room carries-forward indefinitely, and there's no age penalty at all for withdrawals - you just can't re-contribute money you take out until the next year. They're like Roth IRA's on steroids.

Thus, at the moment, my wife and I are allowed to have up to $20,000 in total contributions in there, but we're presently only saving about $50/month/each. We just set it up to get it done and started, figuring that down the road, we could just adjust the automatic payments upwards. So far, there have been other priorities (the mortgage, RRSP's).

To be honest, lately I've been toying with the idea of storing our emergency fund ($14,000) in our TFSA's and investing the cash in CD's, to earn at least a little tax-free interest, but I haven't pulled the trigger yet. CD rates are so low presently that it hasn't really seemed worth the hassle.


Thanks for the comments!


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 Post subject: Re: DINKS on track so far
PostPosted: Mon Sep 27, 2010 1:54 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
I'm about the same age as you, and I'm only looking at your accounts from my perspective. I think you're doing great as far as 25 year olds are concerned, but my portfolio is about the same and I'm only one person. That's why I mentioned your values seem a little low for two people.

Don't be disheartened by compound interest. The stock market goes up and down and of course, so do our retirement accounts. You have to think positively and know that over time they will go up, and hopefully your money will be in there to accept those gains and the associated interest.

You have a good handle on things, regardless, so keep up the good work.


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 Post subject: Re: DINKS on track so far
PostPosted: Tue Sep 28, 2010 3:48 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
peachy wrote:
I'm about the same age as you, and I'm only looking at your accounts from my perspective. I think you're doing great as far as 25 year olds are concerned, but my portfolio is about the same and I'm only one person. That's why I mentioned your values seem a little low for two people.


We've made some major financial missteps along the way.

We joined an "Investing Club" that has cost us over $50,000.

We financed a brand-new car as our first vehicle. The total cost ended up being over $40,000. Sure, we would have needed to spend money on a car anyway, but we could have gotten a perfectly good car for half as much. Another $20,000 wasted there.

At any rate, we've learned from those experiences, and while it's painful to know where we could be, if we'd only had a little more street-smarts, it's a little comforting to know we won't make such big mistakes again.


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 Post subject: Re: DINKS on track so far
PostPosted: Sun Oct 03, 2010 7:23 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
Updated with October numbers. Almost a $6,000 gain in one month - not bad. :) The Travel fund is going to take a hit next month when the bills for the Hawaii trip come out. The mortgage is really moving as a result of those extra payments.

Code:
Assets

  $   7,450   Cash savings
  $ 120,500   RRSPs (Canadian 401(k)'s)
  $   1,700   TFSAs (Canadian Roth IRAs)
  $  14,200   Emergency fund (Target: $12,500)
  $   5,700   Car replacement fund
  $   6,400   Travel fund
  $ 400,000   Home value
  $  80,000   Land banking investment

Liabilities

  $ 338,300   Mortgage
  $       0   Line of credit
  $       0   Credit card debt
  $       0   Student loan debt
  $       0   Car loan(s)

----------------------
$ 297,650   NET WORTH


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 Post subject: Re: DINKS on track so far
PostPosted: Wed Dec 01, 2010 3:15 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
Time for another update. As I mentioned before, we've been focusing our extra cash at the mortgage, although this month we're going to have to put some money in our retirement savings, because we borrowed against it back when we bought the house, and we're required to repay a certain amount each year. Here are the numbers as of right now:

Code:
Assets

  $  10,450   Cash savings
  $ 124,600   RRSPs (Canadian 401(k)'s)
  $   1,800   TFSAs (Canadian Roth IRAs)
  $  14,400   Emergency fund (Target: $12,500)
  $   6,300   Car replacement fund
  $   3,600   Travel fund
  $ 400,000   Home value
  $  80,000   Land banking investment

Liabilities

  $ 333,800   Mortgage
  $       0   Line of credit
  $       0   Credit card debt
  $       0   Student loan debt
  $       0   Car loan(s)

----------------------
$ 307,350   NET WORTH


It's interesting to look back to my post exactly one year ago. Back in December of '09, our net worth was $254,400. So we've grown it by almost $53,000 in one year.

My wife just got a bit of a promotion at work, but her company is having financial troubles. So she'll either be getting more money, or will be laid off in the near future. :) I'm still working on a contract basis with the government, but I've submitted my application for a more permanent position with them.

The Hawaii trip is completely paid off, and our next vacation is planned for August of '11 (Mediterranean cruise). Hopefully, the "Travel" fund will be built up big enough to cover that when the time comes.

Our mortgage is up for renewal next summer, and I'm determined to get our loan-to-value ratio below 80% so we won't have to pay CMHC (Canadian PMI) again. I'm really, really tempted to break our current mortgage and renew at today's rates (our current rate is 5.35% and we renew next July), but I can't bring myself to pay the $4,000 penalty. Maybe the math makes sense, but I just am really against adding more money to our mortgage. I'm determined that from here on out, it only goes in one direction: DOWN.

I'll post another update in the new year.


Last edited by kombat on Wed Dec 01, 2010 6:43 pm, edited 1 time in total.
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 Post subject: Re: DINKS on track so far
PostPosted: Wed Dec 01, 2010 8:10 pm 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1221
Kombat,

I have a question about this land bank deal. Have you actually visited this property you own?


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 Post subject: Re: DINKS on track so far
PostPosted: Thu Dec 02, 2010 6:01 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
Tightwad wrote:
Have you actually visited this property you own?


No. It's in Edmonton, and I live in Ottawa, several thousand miles away.

We've verified that our name is on the title for the land, and we've seen the land via Google Maps in sattelite view. It's a triangular plot of land adjacent to a major highway, just south of a golf course. The land is currently just farmland.


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 Post subject: Re: DINKS on track so far
PostPosted: Thu Dec 02, 2010 11:53 am 

Joined: Mon Nov 01, 2010 5:15 pm
Posts: 1221
kombat wrote:
Tightwad wrote:
Have you actually visited this property you own?


No. It's in Edmonton, and I live in Ottawa, several thousand miles away.

We've verified that our name is on the title for the land, and we've seen the land via Google Maps in sattelite view. It's a triangular plot of land adjacent to a major highway, just south of a golf course. The land is currently just farmland.


I realize it's just farmland but I grew up on a farm & my point is that farmland needs alot of maintenance to remain in good shape. In the timeframe that you've indicated that you've held this land, alot of things can go wrong with it. You could show up in a couple of years to sell it to a prospective homebuyer & it has become a piece of swampland due to bad drainage while it's just been sitting there. That's why I asked if you've actually set eyes on it & know what you have bought.

But it does sound like a good location.


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 Post subject: Re: DINKS on track so far
PostPosted: Wed Jan 05, 2011 7:07 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
Well, as promised, here's an update. We let ourselves go a bit in December, spending more than we planned on Christmas gifts and whatnot. We also bought a new Precor treadmill ($4,000), a PS3 ($400), a new 40" LCD TV for the exercise room ($540), and some mounting hardware to mount it to the wall, along with the assorted HDMI cables and so forth. The good news is, we had the cash for all of those things, it just meant I didn't make an extra mortgage payment in December.

We'd been planning to get a treadmill for a while, and I'm glad to have an improved setup for our exercise room. Now we just have to use it. ;)

Overall, our net worth slipped by about $2,200 from December to January.

Code:
Assets

  $   5,500   Cash savings
  $ 126,000   RRSPs (Canadian 401(k)'s)
  $   1,900   TFSAs (Canadian Roth IRAs)
  $  14,500   Emergency fund (Target: $12,500)
  $   6,600   Car replacement fund
  $   4,000   Travel fund
  $ 400,000   Home value
  $  80,000   Land banking investment

Liabilities

  $ 333,200   Mortgage
  $       0   Line of credit
  $       0   Credit card debt
  $       0   Student loan debt
  $       0   Car loan(s)

----------------------
$ 305,300   NET WORTH


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 Post subject: Re: DINKS on track so far
PostPosted: Tue Feb 01, 2011 6:56 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
Just another quick update. It seems like something in my wife's RRSP took a bit of a dive in December, then spiked back up in January. It's weird - her RRSP gained $5,600 in January, with no new contributions.

Anyway, we're just humming along as planned. We've got another $3,300 "extra" mortgage payment scheduled for later this month. Our mortgage is up for renewal this summer, and I want it down as low as possible to avoid paying CMHC (Canadian PMI) again.

Code:

Assets

  $   5,600   Cash savings
  $ 133,800   RRSPs (Canadian 401(k)'s)
  $   2,000   TFSAs (Canadian Roth IRAs)
  $  14,600   Emergency fund (Target: $12,500)
  $   6,900   Car replacement fund
  $   5,000   Travel fund
  $ 400,000   Home value
  $  80,000   Land banking investment

Liabilities

  $ 330,600   Mortgage
  $       0   Line of credit
  $       0   Credit card debt
  $       0   Student loan debt
  $       0   Car loan(s)

----------------------
$ 317,300   NET WORTH


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 Post subject: Re: DINKS on track so far
PostPosted: Fri Jun 03, 2011 10:51 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
OK, I know how this looks. It's been like 4 months since an update, and we've only grown our net worth by $3,000. As I've mentioned before, we're planning a cruise in the Mediterranean this year, so we've been paying for that. In addition, we pre-paid for a trip to Las Vegas next winter (Dec. 2011) for the Rock 'n Roll Half Marathon. As a result, our cash reserves have been depleted a little faster than we've been building them.

On the bright side, we've continued to pay extra on our mortgage. At my last update, we owed $330,600 on our mortgage. As of this update, we've gotten that down to $317,800 in just 4 months, so that's got to count for something.

We haven't added anything to our investments. Any change is entirely due to market fluctuations.

We're renewing our mortgage next month, we're hoping to get a better rate and continue to pay extra, so that we can kill this mortgage off completely within 5 years.

Code:
Assets

  $   5,600   Cash savings
  $ 134,000   RRSPs (Canadian 401(k)'s)
  $   2,550   TFSAs (Canadian Roth IRAs)
  $  10,245   Emergency fund (Target: $12,500)
  $   5,145   Car replacement fund
  $   1,130   Travel fund
  $ 400,000   Home value
  $  80,000   Land banking investment

Liabilities

  $ 317,800   Mortgage
  $       0   Line of credit
  $       0   Credit card debt
  $       0   Student loan debt
  $       0   Car loan(s)

----------------------
$ 320,870   NET WORTH


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 Post subject: Re: DINKS on track so far
PostPosted: Wed Nov 02, 2011 5:44 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
Alright, I suppose it's time for another update. We've continued to live debt-free, but we spent some savings on a trip we'd been planning for 2 years. In September, we spent 2 weeks on a Mediterranean cruise. Also, we're traveling to Las Vegas in December for the Rock 'n Roll half marathon. Those have all been paid for, and came out of our travel budget. In addition, we had a couple thousand in car repairs.

Other than that, we've been staying the course, and pounding away at the mortgage. I hope to have it paid off in 4 years. Here are the numbers as they stand today:

Code:
Assets

  $   7,538   Cash savings
  $ 127,300   RRSPs (Canadian 401(k)'s)
  $   3,100   TFSAs (Canadian Roth IRAs)
  $  10,750   Emergency fund (Target: $12,500)
  $   5,065   Car replacement fund
  $     711   Travel fund
  $ 400,000   Home value
  $  80,000   Land banking investment

Liabilities

  $ 300,283   Mortgage
  $       0   Line of credit
  $       0   Credit card debt
  $       0   Student loan debt
  $       0   Car loan(s)

----------------------
$ 334,181   NET WORTH


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 Post subject: Re: DINKS on track so far
PostPosted: Thu Nov 03, 2011 7:05 am 

Joined: Mon Jan 11, 2010 9:06 am
Posts: 160
Location: Texas
I think you've got a pretty healthy balance of financial focus and enjoying your life.

And on that note - I want to hear more about the Med cruise!!! What cruise line/itinerary did you do? Opinions? Thoughts? Recommendations? This is on my partner's and my mid-term travel list as well....


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 Post subject: Re: DINKS on track so far
PostPosted: Thu Nov 03, 2011 9:08 am 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
Thanks, Panda!

We did Hawaii in the fall of 2010, and a 12-day Mediterranean cruise in September of 2011. We're taking it easy next year to let the "Travel" money pile back up again.

The Mediterranean cruise was awesome! We actually traveled with family. It was my wife and I, my parents, my wife's mother and her friend, and my wife's aunt and uncle. We traveled on Princess cruise lines (on the Ruby Princess). We started in Barcelona, then visited Monaco, Florence, Pisa, Rome, Naples, Sorrento, and Capri, then around to the Greek island of Mykonos, then Istanbul and Kusadasi in Turkey, then back to Athens in Greece, then finally back to Venice in Italy where we headed home. It was amazing! I'm glad we got to see it now, since who knows what the region will be like a few years from now.


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 Post subject: Re: DINKS on track so far
PostPosted: Fri Mar 09, 2012 11:46 pm 

Joined: Tue Mar 11, 2008 12:19 pm
Posts: 1790
Location: Ottawa, Canada
It looks like they've changed something with the forum software, and a bunch of weird question marks are appearing in my old posts. It looks like a character set issue with the server. If you're using Firefox, go to View -> Character Encoding, and set it to anything other than Unicode UTF-8.

It's been several months since an update. Here are my current numbers:

Code:
Assets

  $   3,700 Cash savings
  $ 137,000 RRSPs (Canadian 401(k)'s)
  $   3,500 TFSAs (Canadian Roth IRAs)
  $  10,300 Emergency fund (Target: $12,500)
  $   3,500 Car replacement fund
  $   1,700 Travel fund
  $ 400,000 Home value
  $  80,000 Land banking investment

Liabilities

  $ 284,800 Mortgage
  $       0 Line of credit
  $   1,000 Credit card debt
  $       0 Student loan debt
  $       0 Car loan(s)

----------------------
$ 353,900 NET WORTH


Still making progress, although the expensive holiday season, and a trip to Vegas in December (for the Rock 'n Roll Half Marathon) made a bit of a dent in the Travel and Emergency funds. Also, some car repairs dinged the car replacement fund. Nevertheless, we've been chipping away at the mortgage with extra payments, and our overall net worth is still headed in the right direction.


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