Life Update: November 2020
One year around the sun on our debt reduction, wealth building journey! What a year it has been. We're proud to say we've paid off over $51,000 in debt, saved over $43,000, and increased our net worth by over $120K. But we'll talk more about that later.
In the first week of November we decided to host a yard sale to clear out as much of our unused items as we could. It's funny how much "stuff" you tend to accumulate over the years. We've only lived in Canada for 4 years, but in that short time we've managed to accrue several decorative items, clothes that we never wore, toys that the kids barely played with, and several other miscellaneous items that maybe had one or two uses.
It wasn't until we piled all the things we wanted to sell into the living room that we realized just how much stuff would be put to better use by others. Allanah was actually the instigator and organizer of the yard sale and I'm glad she suggested we do it. We managed to make over $500 for the day and we still have a spare room full of stuff yet to sell.
We'll try to sell the remaining items one by one on Marketplace to get rid of it all. What we don't sell we will donate. Clearing out old things will also make room for the new gifts that the kids will receive on Christmas. We also made a deal with the kids that whatever they sold of their own, they got to keep the money they made from the sale. That gave them a bit of motivation to help out. Besides, who doesn't like the idea of making money as an 7 and a 9 year old?!
So with the yard sale out of the way, we decided to make the house feel a bit more "Christmassy" by putting up the Christmas tree around the middle of the month. We have a few other small decorations we keep stored away in the shed until this time of year, such as a wreath, a little snowman, and a few other festive things.
Most people who know me, know that I'm not the most festive guy who ever lived, but I'm getting better each year (at least I think so). The kids love this time of year so I owe it to them to listen to all the Christmas songs, wear the Santa hats, and watch the same classic Christmas movies each year. I can even be convinced to listen to Elvis music once in a while, but that one is still a rare occurrence for me.
Seeing the kids so happy and joyful makes it a lot easier to be merry and festive. One of their favorite things to do is decorate the Christmas tree and put the star at the top. This year, my little helper Addi got the joy of placing the star atop the big green fern in our living room.
If you take a good look at the Christmas tree you'll notice some of the crazy decorations that the kids have whipped up over the years. To some, those mismatched decorations would make the tree look "messy", but to us it makes the tree look perfect, thanks to all the memories we can see scattered around the big green shrub.
Also I'm super thankful that Allanah decides to start shopping for Christmas gifts all the way back in September. Not only does it make it easier on the budget as you can spread the cost out over several months, it makes it less stressful too. Who am I kidding though, I don't buy the presents. Allanah is the mastermind behind all of that. I just smile and nod. I'd seriously be lost without her.
We've purchased 90% of all the gifts we planned to buy for Christmas with some good deals snagged up on Black Friday weekend. We've even sent a few packages back to Australia for two members of the family. How organized! The only things remaining to buy are gifts between Allanah and I. Hopefully we don't blow the budget on ourselves!
It wasn't all sunshine and rainbows in November though. We had the unexpected expense of $641 to replace our car windshield, for the second time this year. That's the joys of driving 30kms to work every day and passing large trucks on the highway I suppose.
Usually that kind of thing would have really pissed me off, but we now have an emergency fund - a stash of cash specifically for unplanned expenses - to cover these kinds of events, so it barely bothers me at all. Hopefully we don't encounter anymore stray rocks for the next 6 months at least!
Another good month in terms of pennies saved. Even with all of the Christmas shopping we still saved 41% of our income. Not quite at the 50% mark just yet, but I think we can get there in the new year. If we hadn't of had the windshield replacement we might have made it pretty darn close to saving half our income.
You can see some red percentages on the picture below that are higher than some of the greens, and that's because some months we plan to save more than other months. For example, in September we planned to save 49% of our income but only managed 44% and that's why it's red. Where in October we only planned 38% and saved 42% so therefore it's green.
NET WORTH UPDATE
Our net worth seen a $20k jump in November, from $331k to $351K. This is the biggest jump we've seen since I started tracking our net worth.
The good news is my Superannuation in Australia went up by $5k from the previous month. It's been steadily climbing for the past 3 months now. We don't contribute to this account. This is just the gains we see from the wonder of compound interest.
We also grew our Canadian RRSP accounts by $5k. A small portion can be attributed to capital gains growth, but most of it is from depositing money into this account.
Another milestone event occurred in November, with us paying back our final family debt, which was $29k we borrowed for our wedding back in 2017 (I know, I know. That's before we were clued up on personal finance). We paid it in one lump sum! It was quite a satisfying feeling to transfer that amount of money all at once.
Paying this off doesn't change our net worth though because we used some of our cash savings to pay off the debt, so we lower our cash position and get rid of the debt, therefore our net worth stays the same (remember: net worth = what you own minus what you owe). Regardless, paying off debt is always a good idea if you can afford to do so.
While we were on a roll with ticking off the debts, we decided to pay out the remainder of what we owe on our car lease. The total for that was close to $4k. A lease is a bit different from a loan, where if you pay a loan off early you will save money in interest. But with a lease, the interest is already baked into the final price, so paying it off early doesn't save you anything. We just wanted to pay it off because we could, and it would be one less payment every two weeks.
So now we are debt free except our mortgages! Oorah! So what's our plans going forward? In 2021 we will likely chip away at the mortgage on our Australian house while simultaneously maxing out our retirement account contributions.
If we still have money left over after all of that we will invest into low cost index funds/ETFs through a standard brokerage account. We're excited for the New Year and continuing our wealth building journey!
Merry Christmas to all!
Blake - FIRE with a family