Oct 032017
 

We are now 3 quarters into the year. The S&P 500 and Nasdaq both hit an all time high to close out September. Up here in Canada the S&P/TSX Composite grew by 3.7%. Gross domestic product (GDP) was essentially unchanged, at zero per cent growth in July compared with June, Statistics Canada said last week. I suspect that the slower start to Q3 is indicative of what’s to come for the rest of the year. The good thing is inflation should remain low at sub 1.6%. I wonder if the Bank of Canada raised interest rates too quickly over the summer.

September had turned out to be a great month. A rising stock market raises all boats so my brokerage accounts performed well across the board. I’m quite happy with the outcome. 🙂

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $700
  • Freelance = $1200
  • Dividends = $800
  • Interest = $600
*Discretionary Spending:
  • Fun = $400
  • Debt Interest = $1300

*Net Worth: (ΔMoM)

  • Assets: = $1,121,700 total (+9,100)
  • Cash = $3,600 (+600)
  • Canadian stocks = $151,700 (+3200)
  • U.S. stocks = $93,900 (+3500)
  • U.K. stocks = $20,200 (+500)
  • RRSP = $83,900 (+1500)
  • Mortgage Funds = $31,300 (-200)
  • Peer-to-Peer Lending = $21,500 (+200)
  • SolarShare Bonds = $9,600 (-200)
  • Home = $270,000
  • Farms = $436,000
  • Debts: = $474,700 total (-4,000)
  • Mortgage = $181,700 (-400)
  • Farm Loans = $187,300 (-500)
  • Margin Loans = $57,600 (-100)
  • TD Line of Credit = $9,400  (-1800)
  • CIBC Line of Credit = $23,000 (-1000)
  • HELOC = $15,700 (-200)

*Total Net Worth = $647,000 (+$13,100 / +2.1%)
All numbers above are in $CDN. 

My year over year net worth gain is $109,500. I plan to continue paying down debt while building up my retirement fund over the next 3 months. By the end of this year I hope to have a net worth of $675,000.

 

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Random Useless Fact

Sep 052017
 

After the FED raised interest rates in the U.S., the Bank of Canada did the same. In July the central bank increased rates by 0.25%. This means the Prime lending rate at banks is now 0.25% more expensive for borrowers. What does this mean for Canadians in debt? It means we should reduce our debt balances to normalize our interest expenses and keep our debt load under control. 🙂

How to Adjust Debt Levels Based on Interest Rates

So if the interest rate is higher by 0.25% how much debt should we try to pay down? We can use the following formula to find out. 🙂

Debt amount to pay down = (Interest rate increase amount) x (total debt balance) ÷ (new interest rate on loan)

For example, let’s say I have a variable loan with $100,000 outstanding and my interest rate was 5% before the interest rate hike. So this loan was costing me $5,000 a year in interest payment. But the central bank raised rates by 0.25% so now the loan is costing me 5.25% or an extra $250 per year more than before. I want to know how I can lower my cost of borrowing back down to $5,000/year.

Debt amount to pay down = (0.25%) x ($100,000) / (5.25%)
Debt amount to pay down = $4,761

This means in order for my borrowing cost to stay at $5,000 per year, I will need to pay down $4,761 of my $100,000 debt balance. So at this point I have a decision to make. I can either pay down my debt quickly to bridge the $4,761 gap so I can go back to my initial budget. Or I can accept paying more interest (0.25% or $250 more) every year and work that extra cost into my budget.

Personally I like to adopt a combination of both. 🙂 Earlier this year I used half of my monthly savings to pay down debt, and the other half to invest. But after July’s rate hike I’m putting roughly 75% of savings into debt repayment, and 25% into new investments. Anyway, below are the results of my August finances.

 

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $1100
  • Freelance = $800
  • Dividends = $600
  • Interest = $300
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1200

*Net Worth: (ΔMoM)

  • Assets: = $1,112,600 total (+900)
  • Cash = $3,000 (+500)
  • Canadian stocks = $148,500 (+2100)
  • U.S. stocks = $90,400 (-1000)
  • U.K. stocks = $19,700 (-200)
  • RRSP = $82,400 (-700)
  • Mortgage Funds = $31,500 (unch)
  • Peer-to-Peer Lending = $21,300 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000
  • Debts: = $478,700 total (-2,900)
  • Mortgage = $182,100 (-400)
  • Farm Loans = $187,800 (-500)
  • Margin Loans = $57,700 (-200)
  • TD Line of Credit = $11,200  (-1200)
  • CIBC Line of Credit = $24,000 (-500)
  • HELOC = $15,900 (-100)

*Total Net Worth = $633,900 (+$3,800 / +0.6%) 
All numbers above are in $CDN. 

 

 

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Random Useless Fact

According to Wikipedia, Iceland does not have a standing army. But it is recognized as the world’s most peaceful country.

Aug 092017
 

It was a slow month in July. But  at least I’m back in the black. 🙂 Household expenses were pretty normal, but incomes were above average; I received $800 of interest payments from a variety of loans such as P2P lending contracts and mortgage investment corporation funds. Yay!

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $1100
  • Freelance = $700
  • Dividends = $800
  • Interest = $800
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1100

*Net Worth: (ΔMoM)

  • Assets: = $1,111,700 total (-2,000)
  • Cash = $2,500 (-2800)
  • Canadian stocks = $146,400 (Unch)
  • U.S. stocks = $91,400 (-200)
  • U.K. stocks = $19,900 (-200)
  • RRSP = $83,100 (+500)
  • Mortgage Funds = $31,500 (+500)
  • Peer-to-Peer Lending = $21,100 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000
  • Debts: = $481,600 total (-4,400)
  • Mortgage = $182,500 (-400)
  • Farm Loans = $188,300 (-500)
  • Margin Loans = $57,900 (-2400)
  • TD Line of Credit = $12,400  (-600)
  • CIBC Line of Credit = $24,500 (-500)
  • HELOC = $16,000 (unch)

*Total Net Worth = $630,100 (+$2,400 / +0.4%) 
All numbers above are in $CDN. 

I took some savings in July and paid down some of my higher interest debts. Now that the cost to borrow is 0.25% higher I have to lower my overall debt to not become overwhelmed by interest payments.

 

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Random Useless Fact

Sometimes tough love is the best way to learn.

Jul 052017
 

In an interesting turn of events the Canadian dollar is showing signs of strength. It gained against the US dollar and the British pound. This is a double edged sword. The good news is my wealth is greater since I have more purchasing power. 🙂 The bad news is my net worth in Canadian dollars went down. 🙁

Since I have investments in foreign currency my assets fell in value. Oh well. I’m not cashing out any time soon so I will continue to hold and see what happens. Energy companies also lost value in June, following lower oil prices. I also purchased a vehicle in cash that cost over $1,000. It was expensive, but it’s important to have a life. 🙂

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $900
  • Freelance = $800
  • Dividends = $800
  • Interest = $200
*Discretionary Spending:
  • Fun = $1500
  • Debt Interest = $1100

*Net Worth: (ΔMoM)

  • Assets: = $1,113,700 total (-6,300)
  • Cash = $5,300 (+2100)
  • Canadian stocks = $146,400 (-200)
  • U.S. stocks = $91,600 (-4600)
  • U.K. stocks = $20,100 (-1300)
  • RRSP = $82,600 (-2800)
  • Mortgage Funds = $31,000 (+300)
  • Peer-to-Peer Lending = $20,900 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000
  • Debts: = $486,000 total (-5,500)
  • Mortgage = $182,900 (-500)
  • Farm Loans = $188,800 (-500)
  • Margin Loans = $60,300 (-3200)
  • TD Line of Credit = $13,000  (-600)
  • CIBC Line of Credit = $25,000 (-500)
  • HELOC = $16,000 (-200)

*Total Net Worth = $627,700 (-$800 / -0.13%) 
All numbers above are in $CDN. 

 

This is the worst month I’ve had in over a year, lol. It looks like my fixed income assets performed well at least. Hopefully I can turn things around in July and get back to increasing my net worth.

 

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Random Useless Fact:

Canada produces over 80% of the world’s maple syrup.

Jun 052017
 

U.S. Unemployment Rate Drops to 4.3%

U.S. job growth slowed in May, which suggests the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3%. The problem with the unemployment number is that it doesn’t account for people who are out of the workforce because they gave up trying to find a job. Finding work usually isn’t very difficult, especially if one has some marketable skills. But finding the right one can often be difficult. In Canada for example, many have chosen to not accept a job that pays minimum wage because they think their time is worth more. Here’s a breakdown of minimum wage across the country.

  • Alberta ‑ Currently, the minimum wage is $12.20 an hour, but it rises to $13.60 this year and $15 Oct. 1, 2018.
  • B.C. – $10.85 now and $11.25 or more later this year.
  • Manitoba – $11, with plans to raise it every year along with the rate of inflation.
  • New Brunswick – $11. Adjusted annually relative to the consumer price index.
  • Newfoundland & Labrador – $10.75 rising to $11 on Oct. 1, 2017.
  • Northwest Territories – $12.50
  • Nova Scotia – $10.85. Adjusted annually April 1 based on the consumer price index.
  • Nunavut – $13. Adjusted annually April 1.
  • Ontario – $11.40.
  • Prince Edward Island – $11.25.
  • Quebec – $10.75, rising to $11.25 per hour May 1.
  • Saskatchewan – $10.72. Adjusted annually Oct. 1 relative to the consumer price index and average hourly wage.
  • Yukon – $11.32. Adjusted annually April 1 based on the consumer price index.

May was an average month. Stock market went up a little. I’m still waiting for the crash that some people have been talking about for years, but hasn’t happened yet.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $600
  • Freelance = $700
  • Dividends = $700
  • Interest = $400
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1100

*Net Worth: (ΔMoM)

  • Assets: = $1,120,000 total (+7,200)
  • Cash = $3,200 (-1000) 
  • Canadian stocks = $146,600 (-200)
  • U.S. stocks = $96,200 (+900) 
  • U.K. stocks = $21,400 (+700)
  • RRSP = $85,400 (+6500)  ~ purchased 200 units of BMO high yield bond fund (ZHY)
  • Mortgage Funds = $30,700 (+100) 
  • Peer-to-Peer Lending = $20,700 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000
  • Debts: = $491,500 total (-3,300)
  • Mortgage = $183,400 (-400)
  • Farm Loans = $189,300 (-500)
  • Margin Loans = $63,500 (-1100)
  • TD Line of Credit = $13,600  (-600)
  • CIBC Line of Credit = $25,500 (-500)
  • HELOC = $16,200 (-200)

*Total Net Worth = $628,500 (+$10,500 / +1.75%)
All numbers above are in $CDN. 

 

 

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Random Useless Fact:

Just because something is legal doesn’t mean it’s ethical.