The end of the year is a great time to review your finances and update your net worth. I’m a personal finance nerd, which means I update our net worth every month or so, and I publish a net worth update here twice a year.

At the midway point this year our net worth had just about reached $575,000. Now I’m thrilled to see that it has jumped over the $635,000 mark!

The financial highlights for this year include a very solid 14.38 percent return for my two-ETF RRSP portfolio (more on this in the new year), plus I started contributing $1,000 per month into my TFSA with the goal of catching up on a few years of missed contributions.

While I haven’t quite maxed out all of my unused RRSP contribution room, I’m only $3,300 shy and hope to make that contribution before the 2017 RRSP deadline. It’ll be a few more years before we can catch up on all of our unused TFSA contribution room, but adding $12,000 per year to it is a good start.

Sadly, no salary increase again this year, which meant manufacturing my own raise through freelance writing, credit card rewards, and selling used items on Facebook and Kijiji.

Another bummer that I hadn’t counted on was the $3,500 I had to put into our vehicles this fall, including new tires and a windshield replacement for the Sante Fe, plus replacing the brakes and leaky struts on the now 10-year-old Tucson.

These unexpected repairs meant I couldn’t finish paying off our home equity line of credit, so that unfortunately will carry over into 2018.

Still, I’m happy to see our net worth increased by more than $100,000 year-over-year. Here’s a look at the numbers:

Net worth update: 2017 year-end review

  2017 2016 2015 % change
Assets        
Chequing account $1,500 $1,500 $1,500
Savings account $12,500 $12,500 $5,000
Defined benefit plan $174,843 $150,853 $127,451 15.9%
RRSP $162,201 $133,454 $119,373 21.5%
TFSA $20,327 $7,359 $4,227 176.2%
RESP $34,442 $25,052 $17,642 37.5%
Principal residence $459,000 $450,000 $450,000 2.0%
Total assets $864,813 $780,718 $725,193 10.8%
Liabilities
Mortgage $225,290 $236,843 $248,056 (4.9%)
HELOC $3,816 $11,472 $25,387 (66.7%)
Total liabilities $229,106 $248,315 $273,443 (7.7%)
Net worth $635,707 $532,403 $451,750 19.4%

A few questions that I often get asked after posting a net worth update:

Credit Cards & Banking

We funnel all of our purchases onto a couple of different rewards credit cards to earn points on our everyday spending.

Our go-to card is the now discontinued Capital One Aspire Travel World Elite MasterCard. We have a grandfathered version that pays 2 percent back on every purchase and comes with a 10,000-point bonus each year. Our secondary card is the new American Express Cobalt Card, and we also use the now discontinued Amazon.ca Rewards Visa for Amazon purchases and for any foreign currency transactions.

We each have no-fee chequing accounts at Tangerine, which we use for bill payments, email money transfers, and the odd debit purchase.

The rest of our banking is done at TD, including our 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 also 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 that means 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

The right way to calculate net worth is to use the same formula consistently over time to help track and achieve your financial goals.

My preferred method is to list the current value of my RRSP and RESP 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 in 2011 and even though the real-estate market has gone up I had typically listed its value at purchase price. I’ve since factored our basement development into the equation and increased our home value by $25,000. This year I bumped up the value by 2 percent (which is still less than its city-assessed value).

Final thoughts and a look to 2018

My goal is to amass a net worth of $1 million by the end of 2020. That’s only three full years away, so we’ll have to continue to see $100,000+ increases (and then some) each year to make that happen.

After that, the goal is to reach financial freedom by age 45, which is less than seven years away!

2018 is going to be a crucial year to make sure we’re on track to reach the million-dollar mark.

While we can’t control what the markets do, I can make sure to max out my RRSP, continue to add $1,000 per month to my TFSA, pay off the line of credit, and start putting a bigger dent into our mortgage next year.

By the end of the year I’d like to have a net worth of $750,000. My goal is to have $180,000 in my RRSP, $35,000 in my TFSA, and get our total liabilities down closer to $200,000.

How did your 2017 shape-up? Care to share your financial goals for 2018?

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24 Comments

  1. GYM on December 29, 2017 at 12:07 am

    Congratulations Robb!! Your YTD increase with your two ETF portfolio is amazing! Here’s to $100k increases annually for the next three years! We have similar goals but our time frames are a bit different 🙂

    • Echo on December 29, 2017 at 10:59 am

      Thanks so much, GYM! I’m loving the simple two-ETF portfolio. It’s great to capture ALL the returns from global markets rather than trying to guess which of the BRIC nations will outperform 😉

  2. My Own Advisor on December 29, 2017 at 6:37 am

    Great work Robb and continued success to you in 2018!! 🙂
    Mark

    • Echo on December 29, 2017 at 10:59 am

      Many thanks, Mark – same to you!

  3. Pellrider on December 29, 2017 at 6:41 am

    Great to know that you are on your way to the million mark! I am on my way to half a million in assets next year. Congratulations on your achievements!

    • Echo on December 29, 2017 at 11:00 am

      Thanks, Pellrider, and congrats on your progress! Half a million is no joke.

  4. MJ on December 29, 2017 at 10:45 am

    Congratulations on another successful year. Adding more than $100,000 to your net worth must feel amazing. Our family did the same through a combination of mortgage payments ($30K) and RRSP contributions ($77K). I am excited to see if you make it to $750K net worth this time next year – I imagine there must be something so satisfying about reaching 3/4 of a million. Only a hop away from $1M. Happy New Year!

    • Echo on December 29, 2017 at 11:03 am

      Hi MJ, I was definitely excited to see the progress this year. After a few years of paying off car loans and line of credit debt it was nice to finally start contributing to my TFSA again and see those investment gains.

      Congrats to you as well for your impressive net worth gains. $77k in RRSP contributions – wow!

      • MJ on December 29, 2017 at 12:09 pm

        Quick note on the RRSP contributions – they are a combination of our own savings and employer matching. I’ve been maxed since the 2016 tax year, but we are still playing catch up with my husband’s RRSP, hence our aggressive savings amount. He should be maxed by end of 2018 or mid-2019. Then, like you did, we turn our sights to the TFSAs.

  5. EngPhys on December 29, 2017 at 11:07 am

    I usually don’t ask people this type of personal information, but since you are posting all of your financial details, would you be able to provide us with your family salaries so we have a point of comparison with our own expenses and salaries? Also, can you provide a quick breakdown of your main expenses like mortgage payments.

    • Echo on December 29, 2017 at 11:59 am

      What, is this not revealing enough? 🙂

      We are a single-income household and I earn less than six-figures (with no salary increases in the last four years). You can see all of our expenses here (minus the car loan, which has been paid off): https://boomerandecho.com/anti-mustachian-family-spending-report/

      Look closely enough and you’ll figure out the salary.

  6. David Dunn on December 29, 2017 at 11:31 am

    Can you please shed a bit more light on how you derive the commuted value of your defined benefit pension plan ?

    • Echo on December 29, 2017 at 12:04 pm

      Hi David, each year our plan administrator sends out a statement and in that statement it says something like:

      “Had you terminated employment on December 31, 2017, the transfer value of your benefit would have been $xxx,xxx, determined based on the interest rates at that date as prescribed by pension legislation.”

      So I use that amount for my year-end net worth update and in my mid-year review I just estimate the amount based on the previous year’s total, plus my current year’s contributions.

      Hope that makes sense.

  7. sara on December 29, 2017 at 11:47 am

    great job. Remember house is not an asset but a home. These are before taxes payable. year to year must increase pass inflation. Remember a $ in debt have to be paid back with 2$ before income taxes.

    • Echo on December 29, 2017 at 12:08 pm

      Hi sara, the house is an asset – we could sell it and rent, or downsize into something smaller. The value is real. Yes, the RRSP value is pre-tax, but as I said I’ll discount it when it comes time to withdraw the funds. Not sure what you mean about the inflation comment, but yes the goal is to increase my returns beyond inflation. As far as debt goes, I’m not in a 50 percent tax bracket – more like 32 percent – but your point is taken.

  8. Dividend Earner on December 29, 2017 at 4:46 pm

    Congrats! It’s great to see it all moving forward. Your investment portfolio should start to pull its weight and move the needle on its own.

    Do you track your CAGR for your portfolio since inception? Basically, the contribution times (date and amount) against the total will calculate the true annual rate. I am curious how your new index portfolio is doing.

    • Echo on December 29, 2017 at 9:06 pm

      Thanks! Yes, that’s the exciting part is more of the gains can come from market movements and compounding rather than just my own contributions.

      I do track my personal rate of return but you’ll have to stay tuned next week to see the results 🙂

      Next week it will have been three years since I sold my dividend stocks and switched to this portfolio.

    • sara on December 30, 2017 at 2:40 pm

      good job you saved 35k per year

  9. DS on December 29, 2017 at 5:05 pm

    Congrats and thanks. Kind of took your 2 fund ETF approach. I dropped my bond fund and bought the NASDAQ EFT just for fun and its solid 20 yr return as well. Looked at my Net worth as well and decided to max out rrsps and tfsas mostly with equities and start putting my nonrrsp money into tangerine savings to keep a balance and keep taxes down…I am finally maxed out in rrsps and tfsas (I have 12 yes or so on you though and am still working, but hope to retire around 55). Again, thanks for your free and open advice. Well done!

    • Echo on December 29, 2017 at 9:08 pm

      @DS – thanks! Sounds like your finances are firing on all cylinders – way to go!

  10. Loonie Doctor on December 29, 2017 at 7:30 pm

    Congrats! You are obviously a “wealth generator”.

    Also good to see your balance between your income generating financial assets and the money tied up in your home.

    We had a boffo year in terms of portfolio return also – not sure how long that will last, but one can hope. With your savings rate and balance, you look to be doing great in the long run regardless.

    • Echo on December 29, 2017 at 9:11 pm

      @Loonie Doctor – thanks! Yes, I’m definitely happier to see our house only making up about half of our net worth rather than 2/3. The balance gets better every year.

      This bull market won’t last forever. I’m still happy to be in the accumulation phase so I’ll be ready to take advantage when stocks finally do go on sale again.

  11. Eagle Flow on December 30, 2017 at 11:31 am

    WOW! I am happy for your achievement! As you calculate your house value based on purchase price (plus cost of upgrade), is there any reason to do so? If you purchase your house in 2011, the current GTA market value may be at least increased by 50 to 75%. In that case, your net worth is pretty well reached your $1M mark if you sell your house.

    • Echo on December 30, 2017 at 11:41 am

      @Eagle Flow – Thanks! The reason why I peg the value of our house to its cost is that our local real estate market is pretty soft (Lethbridge, AB) and I also want the market value to realistically reflect what it would cost to sell it (deducting for realtor fees, etc.). That’s why I calculate our home at less than its city-assessed value.

      That said, I realize I can’t keep it valued at purchase price forever and so going forward I’ll increase it by 2 percent each year unless there’s a drastic downswing in the market, in which case I’ll peg it more closely to what the city assesses it at for property taxes.

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