Net Worth Update And Year-End Review

I like to review our finances at the end of the year so that I can update our goals and objectives and calculate our net worth.

There was a lot going on in 2012.  Here’s a quick recap:


  • Owed additional taxes for the first time in my life which resulted in a $2,000 bill.
  • Set up a corporation for my online business which cost me about $1,000 for the lawyer fees.
  • Bought out my car lease for $10,000.
  • Completed fence and landscaping at new house for $6,000.

Our daily living expenses went up a bit this year because we had another baby in June and our oldest daughter started preschool and dance in September.


  • Paid extra $800 a month on mortgage
  • Made $5,000 lump sum payment on mortgage
  • Made $5,000 contribution to RRSP
  • Saved $4,200 in TFSA
  • Saved $2,400 in RESP
  • Saved $7,800 in high interest savings account

Related: Our Fast Track To Financial Freedom

Net Worth

Our net worth went up 39 percent year-over-year, mainly due to an increased savings rate and an aggressive mortgage repayment plan.  Here’s a look at the numbers:

Total Assets – $548,821

Total Liabilities – $290,519

  • Principal Residence Mortgage – $290,519

Net Worth – $258,301

Looking Ahead To 2013

I’m happy with the progress we’ve made this year and looking ahead to 2013 I’m aiming for another 35 to 40 percent net worth increase.  That will put us around the $360,000 mark.

We’ll do this by continuing to be aggressive with our mortgage pay down.  I’ve increased our monthly mortgage payment by another $200 so we’re now adding an extra $1,000 a month above our regular payment.

Related: Should You Pay Off Your Mortgage Early Or Invest?

I’m also conscious of the fact that three-quarters of our net worth is tied up in real estate.  With the housing market softening, our net worth could take a serious blow in the next year or two.

Since we won’t have any big ticket expenses to worry about next year, we’ll be able to increase the amount that we’re saving.  Here’s how we’ll do it:

  • RRSP – $5,000
  • TFSA – $10,000
  • RESP – $2,400
  • High Interest Savings Account – $15,000

That allocation may change throughout the year, but for now I’m focused on building a bigger cash reserve.  At the end of the year I might put that money to work by making another lump sum mortgage payment or by making a bigger RRSP contribution.

Related: Why Your Financial Plan Sucks

Have you reviewed your finances yet this year?  Will there be any big changes for 2013?

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  1. Mrs. Pop @ Planting Our Pennies on December 31, 2012 at 5:58 am

    Maybe you’ve addressed this in another post that I missed – but if you’re worried about the fact that so much of your net worth is in real estate, why are you focusing so heavily on paying down your mortgage when you could be investing in other vehicles. Are mortgage interest rates THAT much higher in Canada? Just curious =)

    • Echo on December 31, 2012 at 9:40 am

      @Mrs. Pop – The fact is, we’ve got a big fat mortgage that I’m not entirely comfortable with so I’d like to pay it off in 10 years while also trying to build up my other savings vehicles. I’m comforted somewhat because I’ve got a solid defined benefit pension that will secure the bulk of our retirement income.

      Our mortgage interest rate is really low – 2.2%. But it’s a variable rate with three and a half years remaining on the term, and then I’ll have to renew into a presumably higher rate.

      • Dustin Small on December 31, 2012 at 10:25 am

        I am doing the same. I’m in Vancouver and am very concerned that the over-inflated housing prices here are eventually going to crash but the way I look at it is that we need to have a place to live so it’s just as much an expense as it is an investment. I also have a variable rate mortgage and have been working to pay it off as quickly as possible. RBC allows double-up mortgage payments and over the past year have managed to do so almost every month.

      • MG on December 31, 2012 at 6:14 pm

        The other comment to Mrs. Pop is that, unlike in the US, mortgage interest on one’s personal residence is NOT deductible for income tax purposes in Canada. In the US, there is clearly less incentive to pay off one’s mortgage debt.

        Keep up the good work!

        • Wendi on January 1, 2013 at 11:13 am

          If you had a basement tenant, using half of your house, you can claim half of the mortgage interest as an expense on your income taxes. As well as any other home improvements or lanscaping that are in the common areas.

          • BNgarden on January 1, 2013 at 12:08 pm

            Although you should then claim all the rent / house sharing income as well. It may not be worth the headache if it’s not a legal suite.

  2. Richard on December 31, 2012 at 9:13 am

    Happy New Year,

    I have enjoyed reading your emails. I do have some interesting observations on your increasing your net worth and your savings habits. If you can save 17,400 a year why would you not leverage the government programs to the max and take advantage of the max RESP contributions as well as get a higher RRSP refund to make sure you do not have to pay tax? Or if you get a refund then you can add that to your TFSA. If there is something I have missed in your net worth I apologize otherwise please feel free to take advantage of my suggestions :).

    Keep up the great articles,


    • Echo on December 31, 2012 at 9:43 am

      Hi Richard, thanks for the kind words. I owed taxes last year because of earning higher than expected online income (from this site and because I started writing a weekly column for The Star). That’s why I’ve set up a corporation for my online business, and now I stream dividends from the company to my stay-at-home wife. Hopefully that helps solve the tax problem.

      I have a defined benefit plan, so my RRSP contribution room is only about $3k a year (I do have some unused room though). Once I review my taxes, I might have to make another RRSP contribution in case I owe more.

      As for RESPs, I’d like to get our own finances on the right path before maxing them out. You can catch up one year of contributions each year, so there’s still time to maximize all the grant money if I increase the contributions down the road (as long as I start before the kids are 10).

  3. Lynne on December 31, 2012 at 9:23 am

    Thanks for being so candid. I am a firm believer of an open book policy, WTF cares what money you have or I have? It’s a wonderful opportunity to LEARN from others, and I wish more people would open up about their finances. I won’t like them less if they have more money than I have, ha ha!

    My neighbour and I discovered we are both in ABC Funds and so have been crying together since 2008, ha ha!! We both had a figure in mind and we were going to haul the money out and go into fixed income. He is 67, I am 66. Well, as usual, GREEDY PIGS that we are, we waited too long and watched our funds drop more than 50%, ha ha!!

    Fortunately, we have decent pensions, and his wife still works, ha ha, and the money is not required to live. Still a real shit kicking to watch it drop by $40K a MONTH. OMG!! Suicide watch in Muskoka!!

    Where does the bulk of your income come from? Can you make a living writing for The Star, et al?

    Anyway kid, you are sure doing something right, Bravo!!

    Best for 2013,

    • Echo on December 31, 2012 at 9:48 am

      @Lynne – Thanks for your comment. 2008 was a tough year for a lot of investors, especially those close to retirement.

      The bulk of my income comes from my day job. Writing online is a minimum wage game, unfortunately. It’s a fun hobby, though 🙂

  4. Garthm on December 31, 2012 at 9:24 am

    I would be curious to know how you arrived at the figure you have shown for your Defined Benefit Pension. Thanks.

    • Echo on December 31, 2012 at 9:54 am

      @Garthm – I just add up my monthly contributions.

  5. Ken Faulkenberry - Arbor Investment Planner on December 31, 2012 at 10:00 am

    Good job in a year many people went backwards. A good time to “count our blessings” as we enter the new year. HAPPY NEW YEAR!

    • Echo on December 31, 2012 at 2:16 pm

      Thanks Ken – Happy New Year to you, too!

  6. My Own Advisor on December 31, 2012 at 10:34 am

    Great work…especially the NW value up by 39%.

    Barring any major expenses, it looks like you’ll be able to hit many of those goals: RRSP, TFSA and RESP contributions.

    I can’t recall…do you treat your HISA as an emergency fund?

    If so, $15 K is a very healthy amount. Our goals for 2013, which I will publish in another couple of weeks, are to increase our EF to $10 K by the end of 2013.

    No big changes to our plan in 2013, except to max out my wife’s TFSA due to all her carry-forward contribution room.

    I expect to max out my TFSA this week, with an in-kind transfer.

    Keep up the great work – HNY!


    • Echo on December 31, 2012 at 2:19 pm

      @Mark – I treat my HISA as sort of an opportunity fund. I like having cash on hand in case something comes up, whether that’s an investment opportunity or a larger expense.

      If I can put most of it to work by the end of each year, then I’ll do that.

      • Jane Savers on December 31, 2012 at 9:58 pm

        Do you feel, as a self-employed main income earner for you household, that you need to keep a larget than normal cash emergency fund?

        Do you feel confident in your financial future when you only have yourself to rely upon?

        I only have myself to rely upon and sometimes it is scary.

        • Echo on December 31, 2012 at 10:52 pm

          @Jane – I’m not self-employed, but we’re a single-income household and so I do feel it’s important to keep a large cash reserve.

          • Jane Savers@ The Money Puzzle on January 1, 2013 at 3:03 pm

            I thought you were a full time writer. You post so much content.
            Good to have a day job.

  7. Joe on December 31, 2012 at 12:23 pm

    Excellent calls on getting out of the lease and starting a corporation. Operating through a company is a lot better for a variety of reasons.

    I by no means blame you for wanting to pay off your mortgage. As noted, however, it’s a catch-22. The more you focus on paying it off, the less liquid you become. But you’re trying to build equity and lower your mortgage balance, both of which lower your exposure to future adverse events.

    • Echo on December 31, 2012 at 2:24 pm

      @Joe – Yes, starting a corporation will start to pay dividends this year. I was a little late getting it set up because, well, we didn’t really make any money for the first year.

      Definitely a catch-22 with the mortgage pay down. The way I see it we’re still at the very beginning of our financial journey, which is why our home is our only significant asset.

      But I’ve got a long term plan to build other assets while paying off the mortgage so that we can reach financial independence sooner than later.

  8. Billybob on December 31, 2012 at 12:52 pm

    Enjoy your articles. Regarding TFSA’s… If I start paying into one for the first time this year, can I put in the maximum $5000 for previous years? Also what is the best way to get a decent return on this money?
    Thanks, Billybob

    • Echo on December 31, 2012 at 2:31 pm

      @Billybob – As long as you were at least 18 years old in 2009 you should have $20k in TFSA contribution room. Add another $5,500 to that starting tomorrow.

      Before thinking about getting the best return you should decide what you want to use this money for.

      If you’ll need it in a few years for a down payment on a house, then stay away from stocks and invest in something conservative like a high interest savings account or a GIC.

      But if you’ve got a long time horizon and won’t be tempted to tap into this money in the next 5+ years then you should consider equities, either through index funds and broad market ETFs or by investing directly in individual stocks.

      The nice thing is you won’t pay tax on your capital gains, but at the same time you’ll lose the ability to claim a capital loss inside a TFSA.

  9. Canadian Budget Binder on December 31, 2012 at 9:51 pm

    Great job! You did an amazing job with the net worth up 39% can’t complain about that. I’ll be posting our Year End Net Worth in the next week. Like you we wanted to smash the mortgage so we could forget we even had one. Now that we have the cash to pay it in full we can concentrate more on adding to our investments. Happy New Year!!! Cheers Mr.CBB

    • Echo on December 31, 2012 at 10:53 pm

      @Mr. CBB – thanks for the kind words. I’m looking forward to smashing the mortgage even more in 2013.


  10. Bet Crooks on January 3, 2013 at 8:51 pm

    It looks like financially you’re in great shape. So my question is more one of curiosity than concern.

    When we review our net worth, we include our RRSP savings. We include only 50% of the current value of our RRSPs, though, because we know that the money saved in them is pre-tax money. While I hope we won’t be in a 50% tax bracket when we retire, it’s an easy number to use and it may even be a realistic number (unfortunately) as the population ages etc.

    Do you similarly reduce the value of your family RRSP savings when you calculate your net worth, so that you are adding all “post tax” values? It isn’t clear from the summary above. (Perhaps I missed the info somewhere?)

    Part of the reason for this comment is that I’d just like to make sure that readers don’t think you can calculate a net worth by adding a TFSA savings value (post tax) and an RRSP savings value (pre tax) as they are not comparable values.

    Anyway, congratulations on a successful 2012, and here’s hoping for an even brighter 2013!

    • Echo on January 3, 2013 at 9:29 pm

      @Bet Crooks – I understand where you’re coming from but for this purpose I don’t see the point in discounting my RRSP by some unknown future variable.

      I also would not subtract potential capital gains from rental properties or non-registered accounts, nor would I include potential realtor fees and moving expenses.

      I use the contributions to my defined benefit pension rather than the commuted value, because that’s much more difficult to determine.

      Basically, I don’t want to make this too difficult to track. I’m using the same metrics year-over-year so that I’m comparing apples to apples.

  11. Bet Crooks on January 4, 2013 at 1:55 pm

    Sounds reasonable!

  12. Julie on January 21, 2013 at 8:13 pm

    I really like how you are concentrating on increasing your Net Worth and doing so by %. You are definitely speaking my language! I’m doing the same exercise and will be checking in quarterly to see how I’m making out and tweak things through the year to make sure we stay true to our goals!

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