Reader Case: No Degree. No Problem.

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Going through the reader cases in our inbox today, this one immediately caught my eye. Specifically, because of this sentence: “it may expand some reader’s horizons and remove the stigma towards tradespeople”.

As someone who grew up being taught under no circumstances should I ever consider getting a certificate in the trades (apparently, I might as well be a prostitute) or blue-collar work (given that my Dad once worked in a factory, I find that a tad hypocritical, but you don’t question a man who’s survived a famine and 10 years in a labour camp), this reader’s story blew my mind:

 

Hey guys!

I’m a big fan of your blog. I’ve been following it for a while now and it has set me on the right track for financial independence.

I have a case study that may be of interest to you. Given that I’m probably one of the few “blue collar” workers that read your blog, it may expand some reader’s horizons and remove the stigma towards tradespeople.

I’ll give you a quick rundown on how I got to my current situation. To start off, I grew up in Ontario, Canada. I originally wanted to be an accountant, but my grandpa told me I should get a trade so I would always have something to fall back on.

After graduating high school, I moved out to Alberta to complete my electrical apprenticeship. I worked mostly in Calgary as well as northern Alberta, typically on a 14/7 rotation. For those who don’t know, that essentially means I would work 10-12 hour days for 14 days straight, with meals and accommodations paid for. I would then spend my 7 days off in Banff or Lake Louise, or occasionally go on trips south of the border such as Mexico, Costa Rica, Colombia etc (I should really learn Spanish one of these days).

Anyways, after a few years of doing that, I ended up taking a job in North Vancouver as it has always been a dream to live & work here. Due to my experience, I am in a specialized position where I earn a little north of 200k a year. I believe simplicity is key when it comes to investing, so I put the majority of my savings into ETF’s and have my pension set up at a 90/10 stock/bond split. I also allocate a small portion into growth stocks such as Tesla and Nio, which I have earned a handsome profit on.

To be a little conservative, I will underestimate my income and overestimate my expenses.

Income: $200k/year

Monthly spending: $1200 on rent, $500 on vehicle, $600 on food, $300 miscellaneous. Total $2600

Debt: ~$11k on student loans, 2% interest. I could pay it off but I am earning more interest with my current investments, so I am in no hurry. $150 monthly payment.

Fixed assets: Mazda 3 paid off. Considered a pre-construction home but due to the insane market right now I am holding off.

Investments: around $6000 in cash, $51,000 TFSA, $35,000 RRSP, pension not sure but probably around $12-13k

Given the current numbers, how long do you think it will take to reach my goal of $1 million? Most of my coworkers are well on their way there and I feel like I have a long way to go. I am currently 27 and have a goal to reach it by 35.

Thank you for your consideration! I look forward to reading your future case studies. All the best

BlueCollarFIRE

 

I have to admit, my eyes bugged out when I saw BCF’s salary. I had no idea that you could make this much as an individual, and not only that, be able to do it without a university degree. So in that sense, you’ve actually got a much better return on your trade certificate than our engineering degrees because you spent way less on it. When it comes to POT score (see Chapter 4 of Quit Like a Millionaire), you’ve got us beat.

Now, let’s see if you can beat us to early retirement too.

Summary

Category Amount
Income: $200K (gross), $144,658 + $27,830 (RRSP contribution) = $172488 (net)"
Spending: $2600/month or $31,200/year
Debt: $11,000 @2% interest
Investable Assets: $6000 (cash) + $51,000 (TFSA) + $35,000 (RRSP) + $12,000 (pension) = $104,000

Wowza. If BCF maxes out their RRSPs (our American readers, that’s the Canadian 401K), when I plug their numbers into the tax calculator, they’ve got an individual net income of $172,488, which is more than our highest earning year COMBINED! And they’re only 27 years old! I’m impressed. Good thing you listened to your grandpa, BCF, because the man is a genius!

With a yearly spending rate of $31,200/year, BCF will need $31,200 *25 = $780,000 to become financially independent.

With a savings rate of ($172,488-$31,200)/ $172,488 = 81% (holy shit!), investible net worth of $104,000, and $11,000 in student debt, BCF will be FI in:

Year Starting Contributions ROI (6%) Total
1 93,000 141,288 14,057 248,345
2 248,345 141,288 23,378 413,011
3 413,011 141,288 33,258 587,557
4 587,557 141,288 43,731 772,576
5 772,576 141,288 54,832 968,696

Less than 5 years!

Since BCF is only 27 years old, BCF can choose to retire at the ripe young age of just 31. That’s the same age I was when we became FI, and there are TWO of us.

Given that BCF’s goal is to have $1 Million in net worth, let’s see how long it’ll take to get to this milestone:

Year Starting Contributions ROI (6%) Total
1 93,000 141,288 14,057 248,345
2 248,345 141,288 23,378 413,011
3 413,011 141,288 33,258 587,557
4 587,557 141,288 43,731 772,576
5 772,576 141,288 54,832 968,696
6 968,696 141,288 66,599 1,176,583

Less than 6 years! So BCF will reach $1 Million in net worth before turning 33. So yes, BCF, you should become a millionaire by 35 if you max out your RRSPs and maintain your current spending level.

The fact that BCF can get to FI faster without a university degree challenges everything I’ve ever been taught about the trades. So contrary to my parent’s beliefs, becoming a blue-collar worker isn’t like becoming a prostitute and you won’t die broke? Shocking.

I also agree with BCF that it doesn’t make sense to pay off your student debt, given that the interest rate is only 2%. However, I would caution that since your runway to retirement is less than 5 years, you may want to rethink your 90/10 allocation as you get closer to retirement. You’ll need that money to live on and anything can happen in the next 5-6 years.

That’s it! What do you think of BCF’s story? Does it surprise you that a cheaper trade certification can be a better investment than an expensive engineering degree?


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36 thoughts on “Reader Case: No Degree. No Problem.”

  1. LoL north of 200k per year? Plz! he maybe made that back during the oil boom but he’s not even going to come close to half of that these days, how do I know? Im a industrial electrician in Calgary been doing the 14/7 shift for over 10 years and yes it pays good but over 200k? nope, not during these times … good luck with the 6 year thing but its just laughable, you want to be financially independent make yourself realistic goals and don’t lie to yourself and others just to boost your ego

    1. Thank you for your comment Samuel! I keep in touch with many of my previous Alberta coworkers and it’s a shame that the industry has been hit so hard these last few years.

      Just so you’re aware, things have been extremely busy in BC lately and if you’re in the union those numbers are absolutely achievable. That being said, I do work 70+ hours a week and a lot of that income is due to overtime. Half of my coworkers on this site are also receiving $150/day tax free LOA, so their numbers would actually be higher than mine.

      Have a nice day 🙂

      1. Vancouver Electrical industry reader here – popping in to say it is absolutely insane out there right now. So much work available. It checks out.

  2. I’ve spent my career in Industrial Construction (Recruiting) and BCF’s story doesn’t surprise me at all. He must be incredibly specialized to be pulling that kind of cash now but he is a great example of how fantastic life can be for a skilled tradesperson.

    The Canadian labour crisis is brutal. Specifically skilled labour. I always suggest anyone looking to get into the workforce look at the skilled trades because there’s only so many of them and it’s getting worse finding them.
    https://www.skillscompetencescanada.com/en/

    1. I would love to know where the growth areas are in skilled trades and which industries are actively searching for (and paying decent wages to) skilled employees. I have a whip-smart 14-year-old who hates school and doesn’t want a college education, and I’m seeking secure trade options for him. Anecdotally, whenever you talk to someone in a trade, they complain about how all the work has dried up or that they have to work 7 days a week and are burned out.

      1. Hi Christiana, depending on where you live, there are lots of options. Skills Canada or Skills US is the one I think is the best. Best of luck there are TONS of great options out there.

    2. In the end it’s all about ratios though, if 1 in 100 blue collar trades make 200k by 27 vs 20 in 100 post grads. Which Path would you rather have your kids go down?

      You have to keep in mind his not working the conventional 40hr/week to earn the 200k. Also, considering a bus driver could pull in 100k with OT in any of the majority cities, the number doesn’t sound that impressive.

  3. BCF’s salary is definitely an exception from the norm as I’m not aware of any electricians anywhere near this range. It is mentioned that this individual is in a specialized position – so this may explain the out of the ordinary salary.

    Regardless, even if this individual was grossing 40% less, they would be well on their way to financial independence at an early age (mid 30’s to early 40’s). This individual has not let the high salary translate into high lifestyle inflation costs – so they are set!

    As a working Professional Engineer, I have the utmost respect for the skilled trades. They should be celebrated, not shamed. I am sad to see that in 2021 we still have this stupid stigma surrounding “blue collar” work. Not sure if this is a distinctly Canadian or Ontarian bit of classism. Whatever it is, it needs to stop.

  4. Something does not add up. If he is 27 and saving $140k+ per year, why does BCF only have $104K in assets??? And why did you not see this?

    1. Hi KS,

      I didn’t make this income from day 1, and I also had setbacks in my early 20’s such as expensive car/insurance payments, periods of unemployment during my apprentice days, money lost from bad investments, as well as a pandemic (decided to take the year off).

      I do admit that I may be one of the few in my industry earning this income, but that doesn’t mean it’s not achievable. I also put in many more hours than the average person while I’m still young and have the energy. This is not exclusive to my job though. I can think of 2 high income friends who also work 70+ hours a week (software engineer and doctor).

      Hope this helps!

      1. Very impressive! Given the Overtime, I can certainly see how the gross income is north of $200K.

        While in the FI community we definitely recommend making the most of your younger years with investing and harnessing the power of compounding – I do caution not to burn yourself out too much. I’ve seen a lot of young engineers and tradespeople really compromise their health with excessive overtime and messing up their sleep cycles (I also did this once in a while in my late 20s).

        Take it from me as someone in their late 30s – time flies by super quick. When you’re in your 20s, 10 years feels like an eternity – but when you’re in your 30s and older – 10 years feels like just the other day. Plus this pandemic has also really warped our concept of time. Whether it takes 5 years or 8 years or 10 years to reach the magic number of $1 M, in the grand scheme of things it doesn’t make that much of a difference – especially if you spend your money wisely and thoughtfully (i.e. you don’t deprive yourself while at the same time you aren’t just blowing money wastefully)

  5. I was an engineer and my highest salary, in Vancouver, was only around $110K (and that one, in my field, was considered high, as most pay <$100K) That means the prestige of going to a downtown Vancouver office, has cost me around $250/day. he3x….Definitely an eye-opening truth!
    Good for you BCF!

  6. I’m in the UK and my cousin’s son when he was 16, 25 years ago, decided to leave school
    and got an apprenticeship at the local refinery. After going through the 3 year part -time
    course, 3 days a week on the job and 2 days in the local college, the oil refinery offered to put him through a degree course, whilst on full pay with them, and nowadays he is pulling
    in north of £80k a year, after tax!!. To put it in perspective , the average income in the UK
    is around £30k per annum. Goes to show, leaving school at 16 need not be a setback –
    ability and effort counts. That is a little ability and a lot of effort, and not a lot of ability
    and little effort, i.e expecting things to be handed to you on a plate.

  7. I noticed that too and I figured that this individual only started to get this specialized position in North Vancouver recently. This individual is only 27 years old and if you factor in 2 to 3 years of trade school it’s only about been about 6 to 7 years of practical work experience. Given that the oil & gas sector has been hit hard in Alberta since 2015, it’s unlikely this individual was making that staggering salary over there, especially not fresh out of trade school.

    At any rate, to me any salary over $100K for someone in their 20’s is quite impressive and if they don’t lifestyle inflation get the better of them, they can achieve financial freedom very easily.

  8. I love the can do spirit in this post. THAT is how you get ahead. I actually am cool with him having a huge allocation towards equities given that he has a frugal lifestyle and over the long haul stocks will likely protect against inflation better. I retired a few years back and have no bonds, 5 percent cash, 9 percent private real estate (owned passively), and a small private equity investment, and the rest (over 80 percent) in stocks. It’s really about how he will react in a huge downturn. If he is sure he won’t panic, I think this allocation can work for some people. I think you are right this post will inspire a lot of people who aren’t college bound for whatever reason. Also, with his trade skill, he could always go back to work if necessary. One thing he should think about that few do is whether he should purchase disability insurance. I probably would if I were in his shoes…. Nobody likes to think about that stuff, but our labor is our best asset for most of us during much of our lives unless we get deep into seven figures liquid net worth. Cheers!

  9. Not surprised about the salary and the can-do attitude.

    I’d only say that if he already is being a bit conservative, calculate based on a higher yearly spending, as the future might bring kids, house etc…

    Spend a couple more years investing and retire with a bigger safety margin. You’d still be laughing.

  10. I’m in the US, specifically Michigan. Many folks in my inner circle, and myself, work in various trades. And other than one emergency room doctor in the group.. we earn more gross income per year than those in the group with 4+ year degrees.

    Granted, those of us in trades (massage therapist, electrician, welder, software development) selected occupations with highly specialized skills and high-demand markets, while several with degrees selected more generic degrees with less in-demand jobs prospects. But, especially with relatively low educational costs, it goes to show trades are a viable and important option when considering a career. 🙂

    I really appreciated this post!

  11. Yeah, not surprised…at all. Growing up in Alberta it was quite obvious how much money can be made in trades or by being entrepreneurial. I know several people in Alberta who made millions in their twenties and semi-retired (things to keep them busy). One founded a software company in Calgary during the dot-com boom (no degree, keeps busy doing house renos, carpentry and totally random design work like a collapsible rv trailer), another created an alarm system for heavy trucks (no degree, $26 million payday), numerous plumbers and heavy equipment operators pulling in $25K-40K a month (oil work in the north). Plumbers working in city limits still made silly amounts of money if they did piece work, and ~$45 hourly with oodles of overtime otherwise. Even in an office environment the highest incomes of people I know do not have a degree, but they do get to hire and fire those people who do. A Montana friend has a saying in relation to being the owner/boss with no degree: It’s great to hire a degree (explanation: he didn’t have to spend years grinding in school, he hires the talent and makes truck loads of money restoring watersheds).

    Even my high school principal did not have a degree….or a high school diploma — though he did get an honorary diploma the year I graduated and he retired (though he drank himself to death on a beach in Florida shortly after — hey, Alberta is Redneck central…)

    The thing that seems to link everyone who is successful at reaching FI is being abnormally driven and having enough brains to choose a successful path to their goal.

    1. Jesse – your last sentence says it all.
      It’s not how much school people have – it’s their self-motivation and spunk that sets up these people for success.

      Great work BCF. An inspirational story.

    2. That reminds me of a yearbook quote I once saw. “This C-grade student will one day have all the A-grade students working for him”

  12. I spent my life working in the construction trades. Consider that currently the average age of contractors in the US is 58. I always did (and continue to) encourage folks to get into the trades, particularly as a commercial electrician. Often there is no cost for education as unions will provide the training for free while you get paid to gain mastery. Specialized engineering degrees may or may not hold up as industry speeds in new directions but houses and commercial buildings will aways get built or rehabbed and the labor pool for this work is aging out.

    Congratulations to BCF and all like him who make the big stuff AND the big money.

    I am FI but can go past dozens and dozens of sites…real buildings and say “that is my work”. That gives me immense satisfaction. Tell your kids to give it some thought and “math that shit up”.

  13. Two hundred thousand dollars a year?! As a twenty seven year old?! Boy, did I take the wrong route in life.

    I had no idea someone could make that much either, let alone without a university or an advanced degree. Why can’t they teach us things like this in school? It’s like everyone has to fend for themselves in teaching the actually important things in life.

    There no doubt your reader will be a millionaire in no time. Can easily do it by 31.

    1. “Why can’t they teach us things like this in school?”

      Because schoolteachers are academics and they tend to only see the academic world and like to produce more academics.

      There is also the old saying,”those who can, do. Those who can’t, teach”. A bit unfair to some, but more than a grain of truth.

      In the UK a couple of years back, there was a move from government to teach computer coding in primary school. It would be better to teach typing!!

  14. Although 200k is unusually high as an electrician if he’s management it’s totally possible. I’ve been making 100k as an electrician for the past 13 years in Northern Alberta. The last 8 years I’ve managed it on a 10/10 shift. I haven’t saved anywhere near 80% but between my wife and I have saved 800k and are in our mid 30s. School cost next to nothing and I make more than most of my university educated friends.

  15. When I was teaching high school, I had an opportunity to learn about the trades and apprenticeship route. I was just blown away by the options and funding available. The joke was that I was going to sign up for a trade school when I retired. Joking aside, I had an eye opening moment and tried to encourage more of my students to take this venture. However, it was convincing the parents that was the problem.

    Way to go BCF! We need more stories like this to remove the stigma.

  16. I just realized that the net income calculated seems to have some double counting.

    If you use the Wealthsimple calculator for British Columbia, you get a net of 144,658 based on a maximum RRSP deduction of 27,830 (which is an RRSP tax savings of 12,807).

    You can’t add this 27,830 to the 144,658 – the 27,830 came from the net income in the pay checks where taxes are paid upfront and the net 144,658 factors in the eventual 12,807 tax refund the individual would get from maximizing the RRSP contribution (the 27,830).

    The calculations should be re-run based on the correct net.

  17. Tradesmen working in Boston make over $90 per hour if they are on a public job or in a union. Easy to make $180K per year US on 40 hours per week, after a 5 year (or so) apprenticeship. There’s always side work and overtime as well, for anyone who wants it. Trades are a great way to earn a very good living. Just takes hard work.

  18. Kudos for your drive BCF! One piece of advice if still interested: live a little.
    70 hrs work week is a recipe for depression. There is little room for anything else but work and pursuit of $. And when you are FI in a few years you may find out that there is nothing you find interesting in life because work was the main and only focus. Pace yourself a bit. You’ll be fine if you become FI 4-5 years later, and with some interests and hobbies to look forward to.
    BTW investing, “Quit like..” is good. And don’t miss Bogle’s book: https://www.amazon.ca/Little-Book-Common-Sense-Investing/dp/0470102101
    Good luck!

  19. This is by far the most interesting article at least to me. After spending my life as an artist I finally ended up in the medical trade as a technician. I ended up living in California and earning over a hundred thousand a year which isn’t a ton but for a single person with the tuition bill of $1,500 total and only 12 months invested the payback is startling. I wish I had done this when I was 20. I would highly recommend avoiding universities and picking up a trade. How things have changed in the last 20 years! I have a sibling who got an engineering degree and proceeded to spend most of his life unemployed. Now I’m able to help him!

    1. Hi D,
      Nice to see the change in your trade. btw may i know what kind of technician course you have taken so that i can suggest to my son who is passing out high school next year and interested in medical sciences but getting medical degree will take an arm and leg for sure. Instead i am exploring options of technician courses which will pay decent and gives work life balance too.

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