Net Worth Update: 2015 Mid-Year Review

I like to take a snapshot of my financial situation every six months to review my progress and make sure I’m on track to reach my goals. I want to be a millionaire by the end of 2021 – the year I turn 41 – and become financial free by 2025.

That’s the dream, anyway. Short-term reality means paying off a home equity line of credit over the next 18 months and then ramping up contributions to our tax free savings accounts.

In the meantime, we continue to look after the rest of our finances, putting away what we can afford into my RRSP and contributing $300 per month to the kids’ RESPs.

Related: Net worth update – 2014 year-end review

I switched my portfolio of dividend stocks into a two-fund solution in early January and the move has paid major dividends. The VXC (All World ex-Canada) portion is up 10.5 percent on the year, while the smaller Canadian portion (VCN) eked out a 2 percent gain.

We managed to knock $5,000 off the line of credit so far this year, and reduced our mortgage balance by about $4,500. Both of these debts are of the variable kind and so we benefited (slightly) when prime rate fell from 3 percent to 2.85 percent.

Here’s a look at the numbers:

Net worth update: 2015 mid-year review

Total Assets – $706,893

• Chequing account – $1,500
• Savings account – $5,000
• RRSP – $114,518
• Defined benefit plan – $116,015
• TFSA – $4,828
• RESP – $15,032
• Principal residence – $450,000

Total Liabilities – $285,415

• Mortgage – $254,434
• Home equity line of credit – $30,981

Net worth – $421,478

A few questions that I’m often asked after posting these net worth updates:

Banking

All of my day-to-day spending is done with a combination of the Capital One Aspire Travel World MasterCard and the Scotia Momentum Visa Infinite. These cards allow me to maximize my reward points and earn more than $800 per year.

I have a no-fee chequing account at Tangerine, which I use for bill payments, email money transfers, and the odd debit purchase.

The rest of my banking is done at TD, including my mortgage, line of credit, and investments.

Pension

Each month I contribute roughly 12 percent of my salary to a defined benefit pension plan that my employer matches. The amount listed above is the commuted value of the pension if I were to leave the plan today.

The plan pays 2 percent of your highest average salary multiplied by the number of years worked.  So if I retired at 60 with an average salary of $100,000 I’d receive $60,000 per year from the pension plan.

RRSP / RESP

I prefer to list the current value of these plans rather than discounting their future value to account for taxes and distributions.

I consider a net worth statement to be a snapshot of your current financial picture, so when it comes time to draw from my RRSP and distribute the RESP to my kids, net worth will decrease accordingly.

Principal residence

We bought our home nearly four years ago and, even though the market has gone up, I’ve continued to list the value at purchase price. This year I’ve factored the basement renovation into the equation by increasing our home value by $25,000.

Are you on track to reach your financial goals this year?