- I generated the chart using the Mad Fientist FI Tracker. It’s an amazing tool that digitizes the wall chart from the book Your Money or Your Life.
- Time scale: Each dot represents one month (the first dot is from November 2015).
- Light green line: Our monthly expenses. As you can see, our expenses fluctuate a lot from month-to-month. (This used to be challenging for me to deal with, but thanks to YNAB, those crazy gyrations no longer faze me.)
- Teal-coloured line: How much monthly income our current investment holdings would give us (based on the 4% rule).
- Bright red line: Our FI number. This amount will cover all our expenses, PLUS monthly payments for our investment loan.
- Faded red line: Our old FI number. This was the amount we were aiming for before we started investing with leverage. As you can see, we now need a significantly higher FI number. BUT the investment loan still got us closer to our goal.
- Percentage at the bottom: How much our investments increased or decreased compared to the previous month.
- If I was 100% anonymous, I’d happily reveal all. But I’m only semi-anonymous, so I’d prefer to keep our numbers under wraps.
- M loves his job and plans to continue working even after we reach FI. Revealing our net worth could give people the wrong idea and jeopardize his career options.
- I’m lazy, and math isn’t my strong suit! Reporting my numbers accurately each month would be time-consuming and I’d constantly worry that I’ll make a mistake.
Welcome to my first-ever FI progress update!
In my previous post, I wrote about my reluctance to post any sort of net worth/spending updates. In the end, I had a change of heart, and will now be posting monthly FI progress updates!
Below is my update for April. Let me know what you think, and if there’s anything I can change to make future updates more helpful or interesting.
Our expenses were a little high
In February, M and I each applied for a BMO Air Miles World Elite Mastercard. In order to receive the 3,000 Air Mile sign-up bonus we had to meet the minimum spend of $3,000 on each card by the end of April.
We’d already spent $1,000 on each card by using them to pay for some of our Korea trip expenses. But we had to put another $2,000 on each card to hit the $3,000 minimum spend.
This was easily taken care of by prepaying $2,000 for our property taxes (through Paytm) and renewing the insurance for my Mazda 5 ($1,854—yikes).
These large expenses are the reason behind the spike in our expenses this month. (Painful, but necessary.)
Note: We also received four free lounge passes with the Mastercards—a $27 US value per pass! We used them to access the Matina Lounge in Incheon airport on our way home from Korea. Unfortunately, I was pretty disappointed with the experience. The lounge was really far from our gate, crowded, and the food was only so-so.
Our investments went up
The increase in our investments was mostly from stock market gains. But it was also the result of a huge cash infusion from M’s tax refund (more on this below).
We received a massive tax refund
M’s tax refunds are usually in the low four-figure range. But this year, his refund was about seven times that!
This ridiculously huge refund was planned-for and the result of our leveraged investing* strategy. To explain further: when you invest using leverage, you can deduct your interest payments from any income the investments earn.
After that, if there’s still interest credit left, you can deduct it from your earned income. Since we invest for minimal dividends (don’t hate me, dividend investors!) there wasn’t much investment income to deduct against.
M’s the breadwinner in our house, so the remainder of the loan interest was deducted from his income—which resulted in a very nice refund.
We maxed out our retirement accounts
As soon as that gargantuan refund hit our account, I immediately transferred it into my Spousal RRSP and both our TFSAs—maxing out all three accounts for 2019! Phew, it’s nice to get that done and out of the way.
Note: Since I don’t earn a lot of income, I can’t contribute much to my own RRSP. This could lead to a huge imbalance in my and M’s post-FI income. In an effort to even out our RRSP balances, all of M’s contributions go into my Spousal RRSP instead of his individual RRSP.
I updated our RESP contributions
During my annual check-in with our financial advisor in January, he let me know that Kid 1’s reached his lifetime max of $7,200 for government RESP grants. Oops—I wasn’t paying attention! I sent in a letter of direction this month to direct all future contributions to Kid 2 only.
I decreased our life insurance
As our investments increase, our need for life insurance decreases. So this month, I sent in forms to decrease our life insurance death benefit by 1/3. This netted us a small refund cheque for the remainder of the year, and will save us a couple of hundred dollars next year.
Fortnite money lessons
We had some major drama at our house last week when Kid 2 accidentally bought a pickaxe in Fortnite. He claims he never pressed the button and that the purchase used 800 of his V-Bucks!!!
He’d previously used up all three of his ‘accidental purchase’ refunds from Fortnite. So this time, he was out of luck. He was extremely upset, but there was nothing any of us could do.
He was still upset at bedtime, so we had a chat about it. I started by asking him why it bothered him so much. (800 V-Bucks wasn’t a huge loss—it only cost him about $13.) He told me he was mad because his money was gone—then he started crying.
I realized then that this situation was my fault. My kid was torturing himself over $13, and it was all because of me.
The thing is, M and I talk very openly about finances in our house. We explain why we spend money on some things and not on others. Because of this, our kids have a healthy awareness of money and are careful with their spending.
But I realized that night that I can get overly focused on saving and optimizing our money. My kids see and internalize that—and it’s not necessarily balanced. I’d never realized it, but I also need to tell my kids it’s okay to not be perfect with your money. We all make mistakes, and that’s just fine. It’s how we learn.
I told Kid 2 all of this, then helped him put the $13 in perspective by reminding him how much he’d just received in birthday gifts (over $100). The $13 didn’t sting quite as much after that.
While I’m happy my kids hate wasting money, I now know I also need to work on balancing their money beliefs.
People want financial literacy in schools
In happier news, I discovered Kid 1’s current unit in Math 9 is personal finance! Naturally, I just had to tweet about it:
My oldest son is in Grade 9 math... and they have a personal finance unit!— Chrissy @ Eat Sleep Breathe FI 🍁 (@esb_fi) 2 May 2019
It includes things like budgeting, types of bank accounts, how loans and interest work, etc.
So glad to know they're finally starting to teach kids these basic, but crucial lessons.
I posted the message thinking one or two people might see it—but it somehow became my most popular tweet to-date! (It just goes to show how desperate we all are for financial education in our schools—let’s hope this is the beginning of more to come.)
As for the content of Kid 1’s personal finance unit: it covers all the basics of personal finance, and Kid 1 actually seems to be getting it! I was such a proud mama when he eloquently explained principal and interest to me:
The principal is what you owe from the beginning, then the interest is what gets added on top.
– Kid 1
That’s a better and clearer explanation than I could’ve ever come up with!
Side note: The new BC school curriculum has been a pain for teachers to adjust to (and not everyone’s happy with the changes). But so far, I’m mostly impressed—especially with this particular math unit. It’s about time this kind of material was taught in schools.
And that’s a wrap!
April was a pretty busy month for us money-wise, but I’m expecting May to be a little quieter. What about you? How was April for you?
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