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I've read a lot of personal financial evaluations and thought it was time I added mine to the mix. I have been doing a quarterly net worth calc since 2010 and have annual numbers before that until 1998. I'm personally quite pleased with where we sit but always feel I could or should have done better.

Background:
Married couple both 40yo.
3 Kids, 12yo, 8yo, and 2yo.
I work as an Independent Consultant and my wife takes care of the bookkeeping and administrative side of the business.

Goals:
My short term goal is to hit 2mil in investable assets and 3 mil net worth. Longer term goal is to retire as soon as possible but maybe continue to do the odd job. I feel a 4mil net worth should allow me to retire and feel that I can reach this by 2022 may continue to work until 5mil in 2024.

Current State:
Our company has averaged a net of $350K a year for the last 5 years. We take a total salary of around $240K a year but this varies. Money left in the business is invested, I've looked at it as our pension.

Assets:
House - $612K
Vehicles - $54K
NRSP - $263K
RRSPs - $545K
TFSAs - $118K
RESPs - $96K
Cash - $54K
Business - $872K

Total Assets - $2,614,000

Liabilities:
Credit Cards - $14K (credit cards are payed off every month)

Net Worth: $2,600,000

I've tried different investment 'strategies' over the years including penny stocks, 2nd mortgages, rental income property, self managed investment accounts, and crypto. I've been lucky enough to not lose on most of those but have decided to let experts manage my money. I still play a bit but 90% of our investments are with professionals.

I welcome any questions, comments, suggestions, or personal wisdom.
 

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Discussion Starter #2
July 1st 2018 Quarterly Update.

Assets:
House - $617K
Vehicles - $54K
NRSP - $278K
RRSPs - $554K
TFSAs - $124K
RESPs - $100K
Cash - $59K
Business - $948K

Total Assets - $2,733,000

Liabilities:
Credit Cards - $21K (credit cards are payed off every month)

Net Worth: $2,712,000
 

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Discussion Starter #4
Where do you spend $14k to $21k on a monthly basis? That's a lot of expenses.
I travel to the US for business monthly, usually two weeks. Hotel, flight, car rental adds up quick. I use my personal credit card for this and any other business expenses.
 

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Thanks. Would you care to share what type of consulting service you provide or what your background is? Your NW is very healthy compare to your age. I am planning to change my career. I may follow your career path...:encouragement:
 

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Congrats on being so rich, with 3 kids, employee wife, no mortgage, and resisting the urge to buy a $2M house with all that money. Sounds like a lovely family. :)
 

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Thanks. Would you care to share what type of consulting service you provide or what your background is? Your NW is very healthy compare to your age. I am planning to change my career. I may follow your career path...:encouragement:
My background is electrical engineering. I consult on control system automation mainly specializing in oil and gas. I also do some manufacturing and food/beverage. I spent 12 years working for someone else gaining experience and contacts before I decided I should try and do it alone.
 

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My background is electrical engineering. I consult on control system automation mainly specializing in oil and gas. I also do some manufacturing and food/beverage. I spent 12 years working for someone else gaining experience and contacts before I decided I should try and do it alone.
Hi Forebiz, I'm curious about methods to shift into independent work. I also have an EE background. Can you share any tips on going from working under an employer to working for yourself? Were you able to use contacts that you met during your previous employment? Or did you have to 'start from scratch' building up new contacts, customers, etc?
 

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I would say that 90% of your contacts will have no interest in your capabilities, but the other 10% will be loyal and refer you to their friends too. The secret is to separate the wheat from the chaff.
 

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I've read a lot of personal financial evaluations and thought it was time I added mine to the mix. I have been doing a quarterly net worth calc since 2010 and have annual numbers before that until 1998. I'm personally quite pleased with where we sit but always feel I could or should have done better.

Background:
Married couple both 40yo.
3 Kids, 12yo, 8yo, and 2yo.
I work as an Independent Consultant and my wife takes care of the bookkeeping and administrative side of the business.

Goals:
My short term goal is to hit 2mil in investable assets and 3 mil net worth. Longer term goal is to retire as soon as possible but maybe continue to do the odd job. I feel a 4mil net worth should allow me to retire and feel that I can reach this by 2022 may continue to work until 5mil in 2024.

Current State:
Our company has averaged a net of $350K a year for the last 5 years. We take a total salary of around $240K a year but this varies. Money left in the business is invested, I've looked at it as our pension.

Assets:
House - $612K
Vehicles - $54K
NRSP - $263K
RRSPs - $545K
TFSAs - $118K
RESPs - $96K
Cash - $54K
Business - $872K

Total Assets - $2,614,000

Liabilities:
Credit Cards - $14K (credit cards are payed off every month)

Net Worth: $2,600,000

I've tried different investment 'strategies' over the years including penny stocks, 2nd mortgages, rental income property, self managed investment accounts, and crypto. I've been lucky enough to not lose on most of those but have decided to let experts manage my money. I still play a bit but 90% of our investments are with professionals.

I welcome any questions, comments, suggestions, or personal wisdom.
Retire today.
 

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My background is electrical engineering. I consult on control system automation mainly specializing in oil and gas. I also do some manufacturing and food/beverage. I spent 12 years working for someone else gaining experience and contacts before I decided I should try and do it alone.
I also work in the O&G industry where I have seen engineers spend 80-100 hours during FAT or programming. Some of my colleagues are moving to Management where they would be making $200k to $300k yearly and their age is 38 to 40.

Unfortunately, I am not an engineer and I don't have plan to change my career to engineering. I am getting tired of making peanuts ($120k) compare to what others are making in my age range though I am not jealous of their success. If they can do it, at least I can try to improve my income. I am thinking to complete my MBA and look for a job in the investment industry. There will be always people who will pay 2% to 2.5% MER for their investment.:)
 

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You invited comments.

When I see these diaries I often see a house listed as an asset and then a mortgage listed as a liability and then I see Non Reg, RRSP, RESP accounts listed and no contingent tax liability. Absent these I don't think it properly reflects NW. I have long held, greatly appreciated stocks in a Non Reg account and I would be deceiving myself thinking my stock portfolio NW is simply todays closing price on the stock exchange. If you cashed in (sold) your 554K RRSP you may well have 225K owing in taxes?

Vehicles - I would never list vehicles. They are simply depreciating stuff for living . If vehicles, why not furniture, sports equipment, art, jewelry, clothing.

You listed your consulting business at 948K. How is this value arrived at. Absent your brain is it really worth anything? If you died tomorrow is someone going to give your wife 948K for the business? If the 948K is investments left in the business what's the tax liability
 

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You invited comments.

When I see these diaries I often see a house listed as an asset and then a mortgage listed as a liability and then I see Non Reg, RRSP, RESP accounts listed and no contingent tax liability. Absent these I don't think it properly reflects NW. I have long held, greatly appreciated stocks in a Non Reg account and I would be deceiving myself thinking my stock portfolio NW is simply todays closing price on the stock exchange. If you cashed in (sold) your 554K RRSP you may well have 225K owing in taxes?
I wrestled with this one for a while but ultimately decided to do a traditional NW calc without involving tax implications. My thinking was that its true that its not necessarily a true reflection of NW, but it provides a good indication of how you're doing reporting epoch to reporting epoch (month to month, quarter to quarter, etc). As a 35 year old I'm much more concerned with how my NW is trending as opposed to the absolute value of it. If I was planning on selling everything I own in order to make a major purchase then I'd take the tax implications into account but I'm more concerned about the rate of change than anything else.
 

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Discussion Starter #14
Can you share any tips on going from working under an employer to working for yourself? Were you able to use contacts that you met during your previous employment? Or did you have to 'start from scratch' building up new contacts, customers, etc?
I have plenty to share as I’ve learned by making a few mistakes. Here are a few off the top of my head. Don’t use your name in the company name, use a lawyer to initially setup company, get a good accountant, specialize in a narrow field.
I left with the plan to primarily take two clients, I talked to both before hand and they said they had no loyalty to the consulting company I worked for. This is shady at best but I knew the consulting company wouldn’t come after me legally. I currently have 4 customers with one giving me 70% of my income. I have no plans to grow company beyond me and my wife or look for any other customers.
 

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I am thinking to complete my MBA and look for a job in the investment industry. There will be always people who will pay 2% to 2.5% MER for their investment.:)
I’ve also thought I’d like to do something else. Financial planning or counselling?, Own a car wash?
 

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You invited comments.

When I see these diaries I often see a house listed as an asset and then a mortgage listed as a liability and then I see Non Reg, RRSP, RESP accounts listed and no contingent tax liability. Absent these I don't think it properly reflects NW. I have long held, greatly appreciated stocks in a Non Reg account and I would be deceiving myself thinking my stock portfolio NW is simply todays closing price on the stock exchange. If you cashed in (sold) your 554K RRSP you may well have 225K owing in taxes?

Vehicles - I would never list vehicles. They are simply depreciating stuff for living . If vehicles, why not furniture, sports equipment, art, jewelry, clothing.

You listed your consulting business at 948K. How is this value arrived at. Absent your brain is it really worth anything? If you died tomorrow is someone going to give your wife 948K for the business? If the 948K is investments left in the business what's the tax liability
You make some great points but Jerm argues the point quite well. I don’t think you’ll see a standard net worth calculation take into account the taxes you will owe, but for the tax reason I may never feel comfortable giving up an income. I have no argument on the car it’s just a significant asset. When I started doing my net worth in 1999 it was my only asset now it’s insignificant but historically important.
The business has that much saved in its investment account. Back to your point on taxes... I don’t need the money now and eventually it may pay out at a rate of about 50k a year, if it is able to be self sustaining what is its worth? The business is not a sellable asset, it’s worth nothing without me. I’d argue that about any consulting company with a small employee count. <30?

Thanks for your comments, I truely appreciate them.
 

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Great thread and story. I personally think all assets should be included in NW, just like one would do in a real business. Every business depreciates their assets by an appropriate amount, this has tax implications, but for personal NW it doesnt. I think cars should be on the list but one should depreciate them on paper by a logical amount each period. I just sold one of our cars - the sell price was within 4% of what I had listed for depreciated value so I was pretty darn accurate on that and the selling event had no impact on NW.

When you say consulting for automation, I assume you are doing high level consulting, rather than actual programming? To kick out on your own after 12 yrs experience is impressive. I have 17yrs experience now in a very narrow field (also O&G). I'm at the point I could probably go alone and be taken seriously.
 

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+1 for net worth before tax implications. its simply too unpredictable to involve taxes and makes the whole exercise too complicated for what its worth imho. Tax rates policies can change pretty significantly election to election, especially for those with higher net worth's.
 

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+1 for net worth before tax implications. its simply too unpredictable to involve taxes and makes the whole exercise too complicated for what its worth imho. Tax rates policies can change pretty significantly election to election, especially for those with higher net worth's.

For my stock portfolio I have a created a excel sheet and can
determine my tax owing amount and net amount very easily in seconds based on current stock prices. If tax rates change I can change the rate by changing one cell in the sheet. Presently my portfolio holds a tax liability of 17% which I consider very relevant in considering my NW.

There really is no right or wrong it just depends on how accurate one wants to be. I only consider my net portfolio and my house for NW. I ignore cars, boats, other toys etc, even some other RE which is significant. One piece would if sold generate a tax loss.

One of the other posters suggest the trend was the most important …… fair enough.
 

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Great numbers Forebiz.

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IMO, how you go about your NW type calculations is about what you're trying to show or analyze. For me, my totals include only assets that I'm hoping to use to generate cashflow for retirement. I then analyze taxes via TaxTip's calculators.
If I wanted to check how solvent I was, I would include all my assets. But even then so many things are fluid like how much you could truly sell your hard assets for. I would also agree tax analysis at that point would depend on too many variables.
 
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