Weekend Reading: Steady Financial Progress Edition

It’s frustrating to feel like you’re not making any progress with your finances. Maybe you haven’t got a raise for a while, or you’ve been slogging away at debt payments for months at a time, or a stock market dip took your investments right back to where you started. Some people get desperate to make a big financial move and instead make a big mistake (get rich quick schemes, anyone?).

My goal is to make steady financial progress – to move the needle forward a little bit at a time so that eventually all those little steps add up to a giant leap.

That’s why this sketch by The Behaviour Gap author Carl Richards is so powerful. You don’t notice the steady improvements you make in real time as you knock an extra $100 off your credit card balance, or when you slide $50 into your savings account. But over time all those little steps do indeed add up to a massive improvement in your finances.

Carl Richards Massive Improvement

There was a great discussion initiated by J. Money on Twitter asking how far you’ve come with your finances since 2012:

Scroll through the comments to read some pretty inspirational money stories.

I wasn’t tracking net worth on this blog back in 2012 but I do have an Excel spreadsheet (of course!) charting my financial progress for the last decade.

In 2012 we had been in our new house for a year and welcomed our second child into the world (our oldest turned three). We had emptied our TFSAs to top-up our downpayment, and then after purchasing a new vehicle (2013 Sante Fe) we were in full on debt repayment mode.

I felt like we weren’t making any financial progress because instead of contributing to our TFSAs we were paying $800+ per month towards the new vehicle. Two years later we took out a line of credit to finish our basement, digging ourselves another $30,000 hole.

Fast-forward seven years and our vehicles are paid off, the line of credit is paid off, we’re contributing heavily towards our RRSPs and TFSAs, the kids’ RESPs are fully funded for their ages, and we’re making significant progress on our mortgage. Here’s a side-by-side look at then and now:

Assets 2012 2019
Home $424,900 $459,000
RRSP $53,774 $196,500
TFSA $2,000 $34,100
RESP $4,690 $45,000
Pension $59,778 $206,920
Cash $8,200 $16,500
Total Assets $553,342 $958,020
     
Liabilities    
Mortgage $311,513 $209,978
     
Net Worth $241,829 $748,042

I’ll be honest, it’s really gratifying to see how far we’ve come in just seven years. That’s a half-million dollar leap forward!

Sure there have been bumps along the way, but our financial plan is the compass that has guided us so far and will continue to point us in the direction of financial freedom.

What was life like for you in 2012 and how has it changed in 2019? Leave a comment below, I’d love to hear your story!

This Week’s Recap:

This week I wrote about women, wealth, and retirement.

I applied for a NEXUS Card at the end of December. Applications were taking longer to process due to the U.S. government shutdown but finally in late March my application has conditionally approved and I was invited to schedule an interview at an Enrollment Centre.

I did that on Friday at the Calgary Airport. It’s ironic that I drove 2 hours each way to apply for a program that might save me a few minutes in the security line at the airport and at border crossings for the next five years.

As a side benefit, I got to see exactly where we’ll depart from on our flight from Calgary–>Chicago–>Edinburgh in June. I was also pleasantly surprised to see the Marriott’s lobby opens up right into the airport near the international departures. We’re staying there the night before we leave and the location will make our early morning flight that much less stressful.

Promo of the Week:

One reason why I applied for the NEXUS Card, other than out of sheer curiosity, was because a credit card I signed-up for offered to rebate the $50 application fee.

That’s right, the CIBC Aventura Visa Infinite Card has an enticing offer that pays up 20,000 Aventura points, a $120 travel credit, and a NEXUS application fee rebate. Plus, get a Priority Pass membership and 4 complimentary visits per year at over 1,200 airport lounges.

Weekend Reading:

A decade ago, as the world began to piece the financial system back together after an epic credit crisis, there was agreement on one thing: Too much debt had caused the crisis, and so there must be a huge de-leveraging. It has not worked out like that.

A brave post by Nick Magguilli (Of Dollars and Data) on the importance of knowing yourself.

Morgan Housel asks how you deal with volatility:

“The last three months of 2018 was the worst quarter for stocks in seven years. The first three months of 2019 was the best quarter for stocks in 10 years.”

A Nova Scotia family is now stuck paying the mortgage on their home almost two years after it was swallowed up by a sinkhole.

There’s a new digital bank in town called Motusbank, an offshoot of Meridian Credit Union. Motusbank offers a free chequing account, a savings account paying 2.25 percent interest, and mortgages with fixed rates across 1-5 year terms.

Gordon Pape shares why you might want to avoid using your RRSP to buy a home.

10 questions on annuities answered on the My Own Advisor blog by expert Money Gal Alexandra Macqueen.

Here, a My Own Advisor reader shares a reader story who reached financial freedom at age 52 and now wants to know how to draw down what he’s worked so hard for.

Frugal Trader at Million Dollar Journey argues that the ultimate FIRE indicator is once you’ve reached your financial freedom crossover point:

“It’s a fairly simple, but motivating, concept that shows the point at which your passive income grows enough to meet (or just about exceed) your recurring monthly/annual expenses.  In essence, it’s the point where you reach financial independence or FIRE (financial independence/retire early).”

Squawkfox Kerry Taylor shares three behavioural science tricks to help you pay off debt faster.

100 square foot apartments and 5-foot-10 ceilings: Harrowing tales of Millennials renting in Toronto.

Finally, music fans can access a nearly identical library of songs on Spotify, Apple Music, or Google Play. So why is the streaming video market so fragmented? Ben Carlson laments his experience cutting the cord.

Have a great weekend, everyone!

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9 Comments

  1. Jan on April 6, 2019 at 11:18 am

    I started tracking my finances and investments about 20 years ago. The feeling that you aren’t getting anywhere disappears when you look at 5 year intervals. That is positive reinforcement.

    • Robb Engen on April 7, 2019 at 11:47 am

      Hi Jan, totally agree – pay yourself first and watch the power of compounding work its magic!

  2. Tricia on April 6, 2019 at 1:02 pm

    I came across a copy of my company group rsp statement from 26 years ago when the value was under $4000 at that time. I chuckled and thought that I am so glad I joined when I did for the free contribution $ from my company. Hard to believe how that investment has grown and become the biggest portion of my retirement plan.

    • Robb Engen on April 7, 2019 at 11:48 am

      Hi Tricia, that’s outstanding! Gotta love that employer match – good for you for taking advantage of it back then 🙂

  3. Gerald Clark on April 6, 2019 at 9:27 pm

    Your article is a great reminder to stay the course. I was frustrated the previous 15 months on th return of my portfolio, very pleased in the last months. I want to give a shout out to Mawer Balanced. Great long term returns and now an excellent YTD return.

    • Robb Engen on April 7, 2019 at 11:50 am

      Hi Gerald, it’s so true. They say Rip Van Winkle would’ve made a great investor. Just take a twenty year nap to ignore all the noise and volatility and you’ll be pleasantly surprised when you wake up!

  4. sara on April 7, 2019 at 1:20 pm

    Inflation adjustments. Add -2.7% and to total returns and if it equals zero than you are staying afloat and not sinking. Interest rate should at least be equal to the inflation rate. Do not forget our silent investment partner the CRA. They want at least 1/2 of our profits on top of the sales tax we buy.

  5. Marc on April 7, 2019 at 4:55 pm

    Nexus is a godsend for pre-clearing US customs and immigration at Pearson. No lineups and very short interview. It also speeds you through if you’re coming back into Canada at the same time as a number of other international flights. But you can never break the rules or lie on the questionnaire. If they spot check and catch you, the consequences are dire.

  6. Joe Ker on April 20, 2019 at 8:05 am

    I’ve tracked our income, outgoings, mortgages, car loans, lines of credit, credit card debt, asset values, etc. since January 1997. Below is our bottom line year-end Net Worth over those years:

    1997 54,224
    1998 69,035
    1999 91,650
    2000 102,622
    2001 110,160
    2002 129,270
    2003 150,481
    2004 192,849
    2005 241,079
    2006 288,237
    2007 361,357
    2008 400,054
    2009 471,108
    2010 558,858
    2011 645,715
    2012 747,089
    2013 855,946
    2014 1,016,865
    2015 1,143,973
    2016 1,313,929
    2017 1,549,485
    2018 1,717,163
    Apr 20, 2019 1,834,528

    In 1997 we were a couple in our mid 30s with three young children. We lived a moderately frugal lifestyle in an area of Canada where the average house price is currently $290,000 (i.e. no crazy net worth gains from property values). We do almost all of our own home repairs and renovations, largely because paying out large sums is painful, unless it’s for a well planned out vacation.

    We’ve made a few notable financial mistakes along the way: too many house moves (but at least we always did our own selling), leasing cars, buying new cars, and not focusing on our finances with any intent until about six years ago. Being in a unionized job (good pay and benefits; a non-governmental job) with a DB pension has been a significant boost to our financial position. I tell our kids to seek out both these factors when looking for a job.

    Based on our current income and savings rate plus growth, it would take us less than six years to increase our net worth by another million, however, we will call it quits at two million.

    I’ve shared with you more than I’ve shared with my own family, so, Joe Ker is not my real name – it would be cool if it was!

    I hope the above is of interest.

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