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December 2020 Update

One month in to no pay and I can't say we're hurting. In fact, everything is ticking along quite nicely. The large gain in net worth this month was a split between adjusting the CV/termination amount of my wife's pension (up due to lower interest rates), good market gains, and debt repayment.

It sounds like I have a contract position for a few months lined up. I will bill it through our corp and not take income from it. We don't need the money right now.

The most pressing concern at the moment is our mortgage which comes up for renewal in Sept. If I don't have a FT job by then, which I would put at 50/50, then we would have to qualify on my wife's income which is not going to be enough given the size of the mortgage. Options are to 1 - sell non reg and TFSAs, load up the HELOC to pay down the mortgage enough to qualify on her alone (along with rental income), 2 - take whatever crap rate the bank gives us in our renewal papers, 3 - get a cosigner for a short 1 or 2 year term (her parents wouldn't hesitate), 4 - sell and downsize to something we can afford with little to no mortgage. Option 3 would be the easiest and lowest cost. Option 2 is a fallback plan that we could do for 1 or 2 yr term.

We currently have 2 leased vehicles. The leases on both finish this year (June and Oct). We for sure only need one vehicle as I have no job and my wife walks to work. I'm not sure what we'll do - buy out one of them and return the other, or maybe return both and buy a used vehicle.

My little web business looks like it will exit the year with sales of 50K (previous year was 16K). I could see revenue of 70K next year which would amount to 28-30K net income. I had looked at adding a new product/website together, but the insurance costs were ridiculous (like 5K/yr) for a small business.

What's on the plan for the next year? Not sure. We might kick around the idea of doing a 1yr contract in Qatar, Dubai, MAcao, etc where my wife can teach. She's always wanted to try something like that and the kids are a good age to experience it. I have been doing a few what if calculations if we did downsize our house to something mortgage free...1 mil in investable assets is within reach, our RESP is close to big enough to just grow with no contributions, child benefit payments are pretty healthy, and with rental income and some small business income...well. Might be a bit premature to talk like that, but it's moving in to the realm of possibility.

Assets:

House - $1,080,000
DB Pension (wife) - $322,000
RRSPs - $479,408
Non-Reg - $9,300
TFSA: $46,665
Corporate Account/Value/Inventory: $68,000
House Maintenance Account: $6,490
Cash - $15,070
Miscellaneous assets - $16,000

Total Assets $2,042,933

Liabilities:


Mortgage - $651,413
Credit cards - $2,266 (this is not a balance, but the amount due. We pay off every month, but a true snapshot must include this)
PLOC - $0
HELOC - $3,800

Total Liabilities $657,479

Net Worth: $1,385,454 (+$68K from last update)
You rarely need to re-qualify for your mortgage at time of renewal. In fact, in my 20+ years of banking, I never witnessed a renewal that wasn’t automatically offered.

were you planning on borrowing additional monies in Sept?
 

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Discussion Starter · #242 ·
You rarely need to re-qualify for your mortgage at time of renewal. In fact, in my 20+ years of banking, I never witnessed a renewal that wasn’t automatically offered.

were you planning on borrowing additional monies in Sept?
Certainly don't need to requalify with our existing lender. But they're going to give us just the posted rate.
If we want the amazing 1.5% rates that are floating around, it would be with a new lender, and I assume they'd want all the background info. I've been told from broker friends that we would only have to qualify at the actual rate, not some much higher qualification rate that new buyers have to follow.
 

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It’s my experience that getting a good rate with your existing lender isn’t thst much different than shopping around. I routinely gave my best rate to retain the business. I would assume most banks have retention goals. iIRc, ours was 90 or 95%.

I would find a published competitive rate and show it to your existing lender.
 

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Discussion Starter · #244 ·
January 2021 Update

Net worth keeps on humming along, all on the backs of market gains. I am now working a contract position until the end of March, though I can probably extend it several weeks after if I want to. It only pays 60% of what I was making before, but it's something to do, the weather's no fun and everything's locked down.

On our vehicles, we are probably going to buy out both of them in the spring/summer and then sell our SUV and keep the pickup truck. We've started planning for the summer. Sounds like a AB/BC road trip with stops in Jasper, Shuswaps, Tofino, Comox, and maybe Okanagan. Going to try and hit up Waterton NP and some of the more unique provincial parks within a days driving distance.

I took some HELOC money and put it in our TFSAs for more stock purchases. On the TSX, we hold AD, SPG, TECK.B, ATD.B, ENB, CGX, SU and in the US we hold MGM, VIAC, USB, INTC. After we passed 1M in net worth, which was barely 3 years ago, the next goal was to have 1M in investable assets. That looks to be happening some time this year, and we will likely pass 1.5M in net worth as well this year.

We have a family RESP with Questrade which has a current balance of $70K (for 3 kids, oldest is 6). At some point, we may no longer need to contribute to it.

Assets:

House - $1,080,000
DB Pension (wife) - $325,500
RRSPs - $520,526
Non-Reg - $10,150
TFSA: $95,933
Corporate Account/Value/Inventory: $60,000
House Maintenance Account: $6,600
Cash - $5,552
Miscellaneous assets - $16,000

Total Assets $2,120,261

Liabilities:


Mortgage - $649,289
Credit cards - $4,015 (this is not a balance, but the amount due. We pay off every month, but a true snapshot must include this)
PLOC - $0
HELOC - $44,416

Total Liabilities $697,720

Net Worth: $1,422,541 (+$37K from last update)
 

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I started to manage two RESP accounts for my nephews since last year. My plan is to buy only ETFs.

#1 started last year - Buying ZRE as REIT is lower lately. Will buy XEQT and TEC once the market is little bit lower. Let's see if we can reach $100K in 18 years.

#2 started last year with $16K cash - Buying ZRE as REIT is lower lately. Will buy XEQT and TEC once the market is little bit lower. However, he will need the fund starting from 2024.
 

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Can you explain what is the point you do not need to contribute resp? How do you determine it? Thanks
“We have a family RESP with Questrade which has a current balance of $70K (for 3 kids, oldest is 6). At some point, we may no longer need to contribute to”
 

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Discussion Starter · #249 ·
Can you explain what is the point you do not need to contribute resp? How do you determine it? Thanks
“We have a family RESP with Questrade which has a current balance of $70K (for 3 kids, oldest is 6). At some point, we may no longer need to contribute to”
I estimate we'll need somewhere between 200-250K in future dollars around 14-15 years from now to cover 4 yrs of university tuition for 3 kids. Now of course, one or more kids might not do a full 4 years, and one or more might do more than 4 years. And they might get scholarships or co-op terms. I've assumed that tuition inflates at almost double the CPI as that is likely to happen over the mid term.

Knowing our end point and how far away it is, it's just a math exercise to know when we can stop contributing based on certain estimated returns from here til then.

The kids' uncle gifts them money every christmas for their RESP and that will continue forever.
But if the RESP has a balance north of 100K and there is still at least 8 years until the oldest is university age, it seems overkill to keep on contributing even with the free grant. Since our oldest is 11.5yrs away from university age and the balance is already 71K and we're contributing 8K a year and returns are quite good at the moment, there's a very good chance we'll hit 90-100K in the next couple years. At which point we can save the 500-600$ per month we contribute.
 

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I estimate we'll need somewhere between 200-250K in future dollars around 14-15 years from now to cover 4 yrs of university tuition for 3 kids. Now of course, one or more kids might not do a full 4 years, and one or more might do more than 4 years. And they might get scholarships or co-op terms. I've assumed that tuition inflates at almost double the CPI as that is likely to happen over the mid term.

Knowing our end point and how far away it is, it's just a math exercise to know when we can stop contributing based on certain estimated returns from here til then.

The kids' uncle gifts them money every christmas for their RESP and that will continue forever.
But if the RESP has a balance north of 100K and there is still at least 8 years until the oldest is university age, it seems overkill to keep on contributing even with the free grant. Since our oldest is 11.5yrs away from university age and the balance is already 71K and we're contributing 8K a year and returns are quite good at the moment, there's a very good chance we'll hit 90-100K in the next couple years. At which point we can save the 500-600$ per month we contribute.
 

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Thank you nobleea for the detailed explanation, we have two kids at the same age of yours, your resp plan is a great analog for ours

also, good for your kids who have a generous uncle!
 

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Discussion Starter · #252 ·
Decided to look at the XIRR on our RRSP and TFSA's since 1 April 2020. I knew it would be good, but didn't think it was this good. 97.3% annualized return. I am guessing it will be higher than that once we hit 1 april 2021.
 

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Discussion Starter · #253 ·
We have a family RESP with Questrade which has a current balance of $70K (for 3 kids, oldest is 6). At some point, we may no longer need to contribute to it.
Barely 2 weeks later and the RESP is at 85K with no contributions or grants in the meantime. This market is crazy. At this rate, it'll cross 100K before the year is out.
 

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I estimate we'll need somewhere between 200-250K in future dollars around 14-15 years from now to cover 4 yrs of university tuition for 3 kids. Now of course, one or more kids might not do a full 4 years, and one or more might do more than 4 years. And they might get scholarships or co-op terms. I've assumed that tuition inflates at almost double the CPI as that is likely to happen over the mid term.

Knowing our end point and how far away it is, it's just a math exercise to know when we can stop contributing based on certain estimated returns from here til then.

The kids' uncle gifts them money every christmas for their RESP and that will continue forever.
But if the RESP has a balance north of 100K and there is still at least 8 years until the oldest is university age, it seems overkill to keep on contributing even with the free grant. Since our oldest is 11.5yrs away from university age and the balance is already 71K and we're contributing 8K a year and returns are quite good at the moment, there's a very good chance we'll hit 90-100K in the next couple years. At which point we can save the 500-600$ per month we contribute.
I am curious why you would not want to continue to fund the RESP (assuming you have the funds) for the max amount with grant or even up to the $50k per child. Other than deploying your funds else where is there any down side?

We have two kids how are older 12 &15 so only 3 years away from needing the funds. their account is just around $200k for the both of them with only one more year of contribution for the youngest. would it mot make sense to try and out as much as you ca. For them that grows tax free, and is with drawn and Taxed at their income bracket?

Is there any down side to having a large RESP?
 
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Discussion Starter · #255 ·
I am curious why you would not want to continue to fund the RESP (assuming you have the funds) for the max amount with grant or even up to the $50k per child. Other than deploying your funds else where is there any down side?
Of course, there is no downside (and some free money). However, our TFSA's are not fully funded. Our RRSPs are very close to it. If early retirement is in the cards, and I hope it is, then eliminating big monthly outflows is important. Funding an RESP for 3 would be close to $600/mo. If we have enough in the account to 'let it ride' for the next 10-12 years, why continue? I mean having a big RESP is nice, but retiring early is nicer. Obviously we have a big mortgage to take care of as well
 

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Of course, there is no downside (and some free money). However, our TFSA's are not fully funded. Our RRSPs are very close to it. If early retirement is in the cards, and I hope it is, then eliminating big monthly outflows is important. Funding an RESP for 3 would be close to $600/mo. If we have enough in the account to 'let it ride' for the next 10-12 years, why continue? I mean having a big RESP is nice, but retiring early is nicer. Obviously we have a big mortgage to take care of as well
That makes sense if your other accounts are not funded. I have heard of people saying that once the RESP hits a certain amount they are stopping. Money doesn t seem to be an issues, so I was just trying to figure out if there is downside to having a large RESP
 

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Discussion Starter · #257 ·
It’s my experience that getting a good rate with your existing lender isn’t thst much different than shopping around. I routinely gave my best rate to retain the business. I would assume most banks have retention goals. iIRc, ours was 90 or 95%.

I would find a published competitive rate and show it to your existing lender.
I talked to our existing lender about an early renewal, what the rates would be like. She asked if I was still employed at XYZ, I couldn't plead the fifth so said no and she said it doesn't matter. They offered fixed rates as low as 1.59% which is good enough for me and quite competitive with what's available locally. It's 1% lower than our current rate. Signing 6mo before the original term is up means our last mortgage was a 4.5yr term at 2.59, rather than the 5yrs it was supposed to be as the new rate kicks in 6mo early. No penalty. Our only decision is what kind of prepayment terms we want (10/10 or 20/20), 4 or 5yr term (4yr is cheaper), and what kind of ammortization we want (anywhere from 15-20yrs). My guess would be 4yr, 20/20 and 18 or 19 years to save a bit every month of our current payment but also drop the ammortization by a year or so.
 

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Discussion Starter · #258 · (Edited)
February 2021 Update

Net worth keeps on humming along, all on the backs of market gains. I am now working a contract position until the end of March. I've indicated to them, and they've been receptive to me doing a gradual exit, rather than abrupt. So in a few weeks I'll drop down to 3 days a week, then 1, then just on an as needed basis. They're pretty disorganized, so I'm sure that work will be there part time for quite some time. I also got a call from an ex colleague wondering if I was interested in contract engineering work, around 30-60hrs a month. For those kind of hours, and a rate in the 150-200/hr range, I'm sure I could handle it and that would honestly be all we need for income going forward. I do check the job postings every week, but there is nothing that I find interesting or really suits my skill set and experience.

On our vehicles, we will be buying out both vehicles and keeping the truck. It's just too convenient to get rid of. Will probably pay for it with TFSA money.

If we include the wife's pension value, which I have been for tracking, we passed the 1M mark for investable assets, as well as the 1.5M NW mark. Next goal would be 2M NW and 1M in RRSP and TFSA's alone.

We have a family RESP with Questrade which has a current balance of $81K (for 3 kids, oldest is 6). We contribute pretty close to the max every year.

I opened a HELOC last March to take advantage of the drop in equities. I also moved over as much as I could from my work RRSP in April, and then had access to all the rest of my work RRSP and severance amount when I got laid off in November. Combine that with the runup in equities and we have done quite well. I calculate our XIRR since start of April to be just over 115%. One of the TFSA accounts was pushing 170% XIRR. We are up 100K on just one company alone.

I have been trying to get some more entertainment in my life. Sounds weird but I'm actually trying to be more sedentary. I haven't watched many movies and no tv series in probably over a decade. I'm all caught up on Mandalorian and starting the Jack Ryan series, plus about a dozen movies. There's some books I need to get started. Once I finish off this contract work, I'll be looking to get in to a fitness routine as well.

Assets:

House - $1,080,000
DB Pension (wife) - $335,000
RRSPs - $588,810
Non-Reg - $9,200
TFSA: $112,674
Corporate Account/Value/Inventory: $59,000
House Maintenance Account: $6,730
Cash - $4,792
Miscellaneous assets - $16,000

Total Assets $2,212,206

Liabilities:


Mortgage - $647,164
Credit cards - $4,600 (this is not a balance, but the amount due. We pay off every month, but a true snapshot must include this)
PLOC - $0
HELOC - $47,658

Total Liabilities $699,422

Net Worth: $1,512,784 (+$90K from last update)
 

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Discussion Starter · #260 ·
Is it Tesla?
No, it's a small company called Spark Power (SPG.TO). Own their common stock and a lot of warrants (SPG.WT) as well. But honestly, there's a ton of companies that have doubled, tripled in the last year. And not small or tech companies. Disney, Ford, MGM, VIAC, Magna, Boeing, Canadian Tire, etc etc.
 
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