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We were asked by our readers to show a year-to-year breakdown of our wealth accumulation, so we spent the day combing through our old pay stubs, etc.
And I am sorry to report that what we found was downright embarrassing…
Now, because of the amount of data we had to comb through and the length of the post running waaaay too long, we will be splitting up our Year-over-Year breakdown into a series of posts. This may upset some of you, to which my policy is that I don’t care.
Let’s get this trip down memory lane started!
2006 (June – Dec)
It was June 2006. I’d just graduated (and by graduated I mean quietly slipped through the cracks when the Dean wasn’t looking) from Computer Engineering. We had planned a 10-day Caribbean cruise—a breather, before diving back into the working world. Since Waterloo had a co-op program, I had an offer to return to my last placement on a 6-month contract, a place I’d like to call the “The Gulag”. The last time I worked there, I spent my days running around like my hair was on fire, and threw up multiple times from stress. I think I was forming my very own stomach ulcer. So, to put it mildly, the thought of going back was met with…mixed feelings.
“Stop thinking about work! Just enjoy yourself.” TheWanderer said, popping a fat, pink shrimp into his mouth. “Ohh, these are good.”
But I couldn’t. People were laughing, canon-balling into the pool, stuffing their faces with steak and lobster, and all I could think about was how to swan dive off the ship so I wouldn’t have to go back to work.
Back on land, “The Gulag” was exactly as bad as I remembered. I was regularly working 14-hour days and weekends, with my hair smelling like soot.
The stress meant I didn’t really have the time to cook very often, so we spent a lot of meals at restaurants. Specifically bars, getting wasted to forget the fact that tomorrow I was going to have to do this all again.
Spending:
| Category | Cost / month | Comments |
|---|---|---|
| Rent | $1500 | Stupidly, we were renting two places and living in only one. We weren’t married yet, so to keep TheWanderer's parents from condemning us to the 9th circle of Hell, we each had our own apartment, but as soon as their back was turned we would scamper off to his place. So half the rent was a complete waste. |
| Food/entertainment | $2700 | That's shameful $90/day! We ate out a LOT. And went clubbing, and got fancy $12 martinis. One time we went to some fancy lounge for a friend's birthday party and dropped $200 on NOTHING. When the night was over we were still hungry and had to go get a pizza. |
| Bus pass/utilities/misc | $300 | |
| Vacation | $833.33 | This I don't regret. Even though I was dreading going back to work the entire time, even though it cost $5000 for the year, this was my FIRST vacation ever. Worth every penny. |
| Savings | $5750 |
At the end of the year, this is what our balance sheet looked like.
| Category | Amount | Comments |
|---|---|---|
| Combined income (after tax) | $66,500 | |
| Total Spend | $32,000 | Keep in mind that in 2006 we only started working halfway through the year. We left school with basically no money. |
| Savings | $34,500 | |
| Savings Rate | 52% | |
| Total Net Worth | $34,500 |
So somehow even after all this excess and debauchery, we still managed to save 52% of our combined after tax salary. I know people who regularly spend DOUBLE that! I just don’t get it.
2007
I finally got sick of puking all the time and smelling like a forest fire, so I looked for another job. And within 6 months I found one. A full-time job! With benefits and shit! When I got the call from HR, I squealed loud enough to shatter all eardrums within a 10-mile radius and actually peed a little (Yup. I’m 2 parts FIRE, 1 part puppy).
The second I walked into my new office, I knew I’d hit the jackpot. No one was screaming. No one was panicking. No one was rocking themselves in the corner, crying softly. People were actually SMILING! Holy shit. I was going to love it here. (Spoiler Alert: This would not last)
Wanderer and I were working and finally getting settled, feeling like adults. Time to spend some mad money.
So in March of that year, we took a two-week vacation to Cuba. As soon as we set our bags down, we headed to the pool bar and drank like two greedy, wasteful, alcoholic fish.
Spending:
| Category | Cost / month | Comments | |
|---|---|---|---|
| Rent | $1500 | Still stupidly wasteful. | |
| Food/entertainment | $2200 | All that eating out was starting to turn my belly button from an innie to an outie. And, since my stress level was no longer in “screaming hair-on-fire” territory, I actually had time to learn to cook. I discovered a thing called the Paleo Diet, which is less of a diet and more of an excuse to stuff more delicious delicious meat into our pie-holes. I lost 15 pounds and our food expenses dropped by about $500 / month. Win-freaking-win. | |
| Bus pass/utilities/misc | $300 | ||
| Vacation | $250 | $3000 for the whole year | |
| Savings | $6167 |
At the end of the year…
| Category | Amount | Comments |
|---|---|---|
| Combined income (after tax) | $125,000 | |
| Total Spend | $51,000 | Was I really spending THAT much?!? :hidesheadinshame:. |
| Savings | $74,000 | |
| Savings Rate | 59% | |
| Total Net Worth | $108,500 |
Right around here, we had noticed our bank balance cross above 6 figures, 2 years out of school. We shrugged, thinking that’s weird, and moved on.
2008
We were getting comfortable at this whole “being real adults” thing and totally crushing it.
Work is great! We both get promoted for not sucking, and a nice bonus. So we decided to celebrate with a Mediterranean cruise, because why the hell not?
It’s my first time in Europe…and I am IN LOVE. We hit up Rome, Pompei, Florence, Pisa, and Venice.
I probably drove all the locals nuts with my obligatory pictures of us in gondolas, kissing under the Bridge of Sighs (did you guys know that it’s actually not a love bridge, but a bridge to death row? More about this in a future post), and yelling “THIS. IS. SPARTAAAAA!!!” at the top of my lungs in the Colosseum.
So now we’ve caught the travel bug, a disease that continues to plague us to this day!
And then something unexpected happened. The apartment I was pretend-living-in was basically a rooming house with a bunch of other students in it. And one of my housemates was constantly fighting with her boyfriend. Like, yelling, screaming, throwing-pots-and-pans at each other fighting. I never noticed because I was never there.
So one day my parents are visiting my pretend-home, and that housemate got into it once again. Anyway long story short, after a frying pan nearly nailed my mom in the face, our parents all of a sudden became totally okay with the two of us living together.
So I moved in with TheWanderer and our rent halves.
Our cash is now growing to a point that we figured we should probably start learning about investing. And like the naïve silly Millennials we were, we figured, who better to tell us what to do with our money than the people who are holding it for us? So we made an appointment with the investment advisors at our bank, and what we found was…less than impressive.
First of all, most of the bank mutual funds were a joke once you actually read past the first page of their prospectus. Hmmm, the fund’s called “US Equity Fund,” it’s got a fee of 2%, and yet somehow when I pull up a graph of its price history overlaid on top of the S&P 500, you’re trailing on average by 3%. What in the Hell are you people doing back there?!?
And the bank “Advisors” are even worse. They won’t stop pushing me into these Managed funds. Managed? What does that mean? So I peel back the layer and I find that they’re just buying their own shitty high-fee mutual funds, and then charging me a 1% fee on top of that for the privilege! Ohhhhh, “Managed” means you Managed to find a way to get paid to do a shitty job. Sounds like a great deal, for you. Not so much for me.
My favourite moment was sitting in the office of one these “Advisors” who was trying to sell me on what would happen if I were to buy their shitty fund.
“So let’s say you invest $10,000. And the markets go up 8%. That means in one year you’ll make…uh…hold on…”
I sit there, incredulous. After what seems like way to long, I offer “$800?”
“Right!” he says, obviously surprised by my little-girl-brain’s ability to do simple math. “You’re good with numbers!”
Hoo boy.
He then offered to sign me up for an investment seminar, and then, I kid you not, asked if he could tag along as well, since he “really should learn about this stuff too.”
Thus beginning my long-standing love-hate relationship with banks. Only, you know, without the love.
It’s around here that, searching for an alternative, I learned about index investing. Index investing, meaning the strategy of simply trying to match the index rather than beat it, appealed to me immediately. It’s simple and easy to understand, most active stock pickers can’t beat the index anyway, and by buying the entire index it’s impossible for our portfolio to go down to zero.
So armed with that knowledge, I took our wad of cash and invested it in a dead-simple portfolio using the lowest cost vehicles I could find at the time, the TD e-Series Index Funds. My portfolio was 60% equity, 40% bonds, with the equity portion split evenly between Canada, US, and International.
Immediately once I did this, my portfolio started making money. Every week it just went up and up and up, like magic.
I stared out over the horizon, smugly confident in my absolute knowledge that I had figured it all out. I had officially won at life. It’ll be nothing but smoooooth sailing from here on out.
Tomorrow was the first day of September 2008.
To read the next post in the series click here: Part 2: PANIC
Photo Credit: ankakay @ Flickr
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I think your blog is great. I’m a 38 year old pharmacist / investor who couldn’t agree more with your life philosophy and where your experiences have taken you. I’m also a fan of Garth T. – he’s brutally honest. I pretty much tell everyone more or less what you do: spend very little, rent or don’t take on a big mortgage in an overvalued market, invest in low cost ETFs (i.e. Vanguard) & work less (or not at all if you can). I’m looking forward to seeing your mock portfolio. Cheers.
Thanks! And yes, The Bearded One never minces words. That’s why we love him.
” I pretty much tell everyone more or less what you do: spend very little, rent or don’t take on a big mortgage in an overvalued market, invest in low cost ETFs (i.e. Vanguard) & work less (or not at all if you can)”
YES! Preach it, Shawn!
I am new to this blog. Can you share a link or, more information so I can find this Garth T.?
https://www.greaterfool.ca/about-garth-turner/ I believe this is Garth
Having two incomes, early on, is a key part of your success. What a difference. This is a part of the financial equation no one talks about but find love quickly so you can share expenses (and enjoy each other’s company of course).
Glad to see a new personal finance blog, particularly a Canadian one!
The trick is to browbeat your SO into doing whatever you want. Then you can accomplish ANYTHING.
I regret ever buying you that riding crop.
I agree. It seems as a single and not blessed with a world-rewarding STEM-disposition, I’m screwed by not fitting into any track towards high wealth accumulation. I’d love to see a single with an alternative and artistic life show me a sample track I could relate to – if you know one, point me towards them!
I get the feeling I’m one of the few – I spent 13 months nomadically dancing around the world with no home base and actually SAVED money, but I’m not exactly accumulating retirement-level wealth either and am constantly looking to bring in more income.
Nice to see you on the blog, Sophia!
The fact that you were actually able to SAVE money while being nomadic is amazing! I have friends making 6 figures who’ve saved nothing for 10 years.
The point of MR is not to save a $1 million. It’s to break free from the status quo. You are still young, with a long time horizon for investing, so with the power of compounding, even putting away $500/month will yield $500K in 30 years. And if you want to retire early, there are many ways to make money with side gigs (driving for uber, airBNB, teaching English over Skype, etc, etc) that most people haven’t even considered. Have you checked out Pat Flynn’s site? He teaches how to start online businesses: http://www.smartpassiveincome.com/
I know it’s great to see what you’ve been working on honey!
Oops, little miscommunication there – I meant I spent less money traveling the world without a home than I did living in Los Angeles.
Girlfriend you’re operating on a totally different earning plane than the rest of us – which is fine for your readers who are also probably earning enough to keep putting away. Alas, if I had been born with the propensity for a boring day job! 😛
We should probably hop on the phone to have a nice long catch-up about this – too many details to go over for one comment space!
Yes, we should definitely meet up if I’m ever in LA or if you’re ever in Asia. So much to catch up on!
Seriously addicted to this blog and feeling very empowered! Can’t wait to follow the rest of the series. Thanks again for sharing!
Thanks, Laura! We’re having a lot of fun writing the series as well. Glad you enjoy it!
Thanks for sharing! Good to know the exact details of how you managed (or mismanaged) your money over the years. I think we all forget what a huge amount of money passes through our hands in any given year….even those of us who make a combined income that’s half of what you were making.
Yup. Everyone makes mistakes. It’s all about watching your money.
“Thus beginning my long-standing love-hate relationship with banks. Only, you know, without the love.”
LMAO
Love your writing and looking forward to hearing more about your story and the revolution. It’s so very much needed today. Millennial and GenXers need to know there is another way to live life that doesn’t need to include 1,000,000 in debt.
I’m 39, married with 3 kids and we’re focused on a similar plan to yours. We rent a $1.7 million dollar home on 1 acre lot for 1/5 of what it would cost to own it. Lots of space to breathe and for the kids to run around. We’re still paying down debt but focused on building our marketing business and buying assets that pay us rather than getting into more debt.
Keep it up. Your blog is now bookmarked right below The Greater Fool 😉
Hi Craig,
Thank you SO much for the kind words. And good move on bookmarking us UNDER the Greater Fool. If you ever put us ABOVE it and Garth found out, he would hunt us down and sic Bandit on us.
Hey Guys,
It turns out it is a small world. My (now) wife and I lived in the same residence as you guys back in that 1A term when we had all just started at UW before we went on opposite co-op streams. Being a long time Garth follower, I remembered the original post about the couple bringing in the champagne, so this time when you were featured again with a link to your own blog I followed it. Then today, scrolling down this post I get to the third picture and discover that that we know these people!
We’re currently in the outer Bahamas aboard our 34′ sailboat that we’ve called home now for 2 years. We’ve travelled from Georgian Bay to the caribbean, then north to Nova Scotia, PEI and into the gulf of St. Lawrence before returning to the caribbean, Puerto Rico and now the Bahamas. We’re returning home as we are ready for a break from the boat and are trying to decide what to do next.
Keep enjoying the good life!
Love the picture about September 2008! It’s so funny, me and my wife were in the same boat as you guys, we just started investing around the same time, such bad timing! lol
But I hope you guys remained invested, we chickened out and lost a lot of $$, but lessons learned! As they say, you have to pay Wall St. some tuition! 🙂
If you don’t mind me asking, where are your tuition fees?
By June 2006, we’ve already paid off tuition by working throughout university. Waterloo has a co-op system that lets us work 4 months, study for 4 months, and so on. So each co-op term pays for tuition, food, residence, etc. That’s why we mention we start with around 0 savings at graduation because our co-op money went towards tuition.
Thanks for the prompt reply
A small bio about me. Had co-op, paid for it and hired by the “Gulrag” after. There is a lot of similarities with our story. Although you are more successful, so congratulations!
And thank you for liberating the people and giving them information. Think of yourself as Morpheus, you are showing people the door and they can choose to walk though the door… Yeah, i loved that movie…
Back to the point.. Co-op is great way to pay off your tuition fees so I’m assuming the co-op salary was high enough to cover all fees , don’t have to give all the details but you can say my assumption is correct?
Thank you and look forward to the economic collapse in part 2… Shit did I just give a spoiler?
“Co-op is great way to pay off your tuition fees so I’m assuming the co-op salary was high enough to cover all fees..”
Yup but just barely. It helps if you choose to live in mold-infested basements, while subsisting on stolen ketchup packets. Ahhh, those were the good days.
“Thank you and look forward to the economic collapse in part 2… Shit did I just give a spoiler?”
SHHHHHH!You’re ruining it!
Great job guys! I was late to Garth’s post but I did manage to read all the comments and found it very interesting. I do find it a little sad that your engineering experience was so bad as I think it has been a great choice for me. Anyway, I have two questions.
1) In the two and half year breakdown above I noticed no allocation to consumer spending. No mention of new computers, gaming systems, home theater, bicycles, camping equipment, down hill skis, dance lessons, cooking classes, or anything of the sort. Almost everyone I know spends a lot of their money on hobbies. Did you guys not have any hobbies that cost money or did you consciously decide you would pick up hobbies once you reached your goal?
2) You also mentioned either here or in the comments section of Garth’s blog that you can live on the 2% return of dividends and therefore immune to market corrections. So I assume then you have no plans to make large capital purchases that could reduce your capital but are you planning to never have a large capital purchase and did the choice to retire now solidify that commitment? I don’t mean a house but cars and furniture and stuff really start to add up.
P.S. Love the comment to the guy who retired first and then decided he had to go back to work and you said order of operations is very important. Not sure everyone got the coding comment!
Hi Mad Hatter,
Welcome to the blog! Glad to have you aboard. Okay so to answer your questions:
1) Our passions are traveling and writing, and we already had computers from university so we didn’t need to buy any new ones. Gaming systems, clothes, dance lessons…these things we bought so infrequently that it just got lumped into the $300/month misc bucket.
2) It’s actually 3%, and no, we don’t have any plans to buy furniture or cars since we’re nomadic. If we ever decided to settle down, we plan to take public transportation and Autoshare. Cars are a depreciating asset, so we’re not a fan.
Yeah, I was going to go for a regexp joke but that would’ve been too much.
How about your wedding cost ?
That’s why God invented Las Vegas.
Seriously though, it’s coming up in the next posts…
Thanks!
*Gets pop corn ready*
Hello, I found your blog through Garth’s! I have a question — in 2007, if your combined after tax earnings were $125,000, would you mind disclosing your combined gross income?
I’m in my mid-20’s and I’m so inspired that you guys were able to become financially independent/”retire” in your early 30’s! I wish to do the same, however, I only make around 45K gross (~36 net I believe) a year, which I thought was a good salary until I read what you guys earned (9 years ago! so even more in today’s dollars considering inflation…). Would it take me substantially a lot longer to become financially independent since there’s less being invested every year to compound? I don’t see how it’s feasible for me to “retire” in my early 30’s if I only earn 45-50k gross. (You guys must have been earning close to 100K each gross, no? Good for you guys!!)
Thanks
Katelyn
Our combined gross was $150,000, so $75,000 each. And I don’t know much about your situation (feel free to write me with more details), but the most important thing is actually not how much you earn, but how much you save. I know people making over $100,000 who are somehow mired in debt.
“$150,000, so $75,000 each”
You’re numbers seem to be a bit off. In 2007, your after tax income is $125,000 – that’s only 16% in deductions, which should be more like 25%. Either you were making 85,000 each or saving around $1000/month less than you reported above.
We found our way here from Garth’s blog. We’re on really similar paths! Except, you know, I want to reach financial independence by 40 instead of 31.
We also had an eerily similar investing experience with our bank, only I wasn’t as smart as you , and we bought the really bad mutual fund…in 2008. On the plus side, we got to chat about it on Stacking Benjamins…so totally worth it.
https://www.stackingbenjamins.com/worst-investing-mistakes/
Glad to have another good blog to read!
Love your writing style (it’s lot like mine), and your willingness to open your books to scrutiny by a lot of strangers. I am not a millennial and I think you guys get a bad rap in a lot of cases, but very impressed with your journey and your story, and will continue to follow.
It took me a failed marriage and a Chernobyl-level toxic post-marriage relationship to open my eyes, but I am finally on a good path with my investments and feeling better about my future. I have many, many fewer years to get to retirement than do you and Dean, but can only do what I can.
I (mostly) own a house, and I think that might have been the one thing I did wrong nine years ago. But it’s fairly cheap to live here (less than $1500 including mortgage, taxes, utilities, maintenance), so will probably continue to do so until it’s paid for (in about 6 years), then sell for as much as I can and invest it.
I am really enjoying your blog. I too am invested with Garth and Co. and much happier with him than I ever was with The Big Blue and Gold Bank…which shall remain nameless.
Keep posting and educating the old farts (and the young ones) Some of us are enjoying this a treat 🙂
Glad you’re enjoying this, and glad that you’re on a good path now. Who you’re with has such a huge impact on your money, and if I wasn’t with Wanderer I wouldn’t have been able to do this.
Howdy! I’m new to this site. I really enjoy reading about folks who’ve left the rat race early to do their own thing. It’s fun to live vicariously through others as well as live your own life too.
I’ll be following along!
Best,
Sam
Hi Samurai!
Wow, we are HUGE fans of your blog. It’s so great to have you here!
Oh yeah? How come you never come visit? :p
I’m a fan of the blogsphere in general. Great to read new sites!
S
We visit your blog a lot, but we not very prolific commenters *hangs head in shame*.
I am glad you two were able to live up to your dreams.. Kudos to you both… I for one love travelling however, I guess I got caught into a spiral of life with kids which make it almost impossible to do what you 2 are upto.. Nonetheless, good on you 2 and happy for you 2.
It is more challenging to travel if you have kids. But early retirees have done it. Like this couple: http://www.gocurrycracker.com. We plan to copy their moves if we end up having kids.
Hello, awesome story. When you speak of using “the bearded one” as your advisor did you find this better then investing in your own? What Are the fees like, is it worth speaking to him if I only have a 10k portfolio, I’m only 23. Thanks 🙂 – Paul
Inspiring story on cbc way to go! Don’t listen to all the haters on there! and wow there are so many people who can’t stand to see someone happy while living the life on their own terms! I have a few properties and am contemplating selling them all to live a life of freedom like yourselves. Well done!
What did you mean by “even though it cost $5000 for the year, this was my FIRST vacation ever”. How do you get the $5000 figure? Is that money lost if you had invested it instead? Or money lost because you weren’t working during the vacation? If opportunity cost, isn’t that true for any expense? Aren’t you being a bit harsh on yourself here? 🙂
This is a pretty hilarious post. 😀
“We both get promoted for not sucking” – pretty much always the case in IT, if that’s the field you’re in.
“Ohhhhh, “Managed” means you Managed to find a way to get paid to do a shitty job. ”
“You’re good with numbers!” LOL!
“He then offered to sign me up for an investment seminar, and then, I kid you not, asked if he could tag along as well, since he “really should learn about this stuff too.” – what??
He’s “not good with numbers” and doesn’t know about investing? How did he get a job at a bank??
Looking forward to reading the rest of your financial journey 🙂
Thanks, Linda! Yeah, I also have no idea how he got a job in finance without knowing math. Scary.
Hello, i’m new to the financial investing system. I have always been able to put money away into savings and have always considered myself ‘good’ with money. However it seems as though my money is not working for me, its just waiting for me.
Im currently working as an apprentice, I have enough money to live and so when my wage doubles in just over a year i’m keen to just plough that money into investments and eventually reap the benefits. After reading through your website I was just wondering what you would suggest I do in the meantime, I have regular contributions monthly to a TFSA and RSP accounts however it is just cash sitting there.
I’m really enjoying everything this website has to offer!
If you have over 150K to invest, I would reach out to Garth (he’s the only advisor we trust): http://www.turnerinvestments.ca/ContactUs.htm
If it’s less than that, you can do self-directed investing and here’s an article we wrote on how to get started: https://www.millennial-revolution.com/invest/what-should-my-asset-allocation-be-nervous-newbie-edition/
Before we had enough to invest with Garth, we went with TD Waterhouse e-series funds (0.33% MER). It’s not as cheap as ETFs but trading costs are included. Other readers have also mentioned they use Questrade as the low-cost brokerage to buy ETFs, so may want to check that out as well.
Fantastic website – and congrats on retirement!
I struggle keeping track of what I spend. Can I ask how you keep track of your monthly and yearly expenses?
Thanks.
I used a spreadsheet, but I’m thinking of moving over to a budgeting app (like YouNeedABudget or PersonalCapital). Will post my review so you can decide which tool to use.
Thanks! Will look for your reviews.
Can I just confirm that in your financials breakdown above, when you indicate that in 2006 you saved $5750…is that per month (combined)? Yeeash! I struggle to save $1000/month.
And in 2007, how did monthly savings of $5750 become total savings of 74k?
Yes, those numbers are per month. Sometimes they’re a bit misleadingly high since it includes bonuses and whatnot spread over the entire year.
And good catch on the 2007 number. That was a typo. How embarrassing.
Just trying to make sure I am following your info, and I can’t get to the 2006 total spend without adding in an additional $416.67 per month. Am I missing something? Thanks! Also, only just started reading, but really liking this blog so far. Thank you for making your experience available for others to learn from!
Good catch! Apparently I accidentally divided my $5000 vacation spending by 12 accidentally instead of the actual 6 months we were working. The totals at the end were still correct.
Thanks for your quick response, and I look forward to reading the rest of your blog!
Hi,
Great article as always. I was binge reading to try and learn to mimic your path to achieve my FIRE goal by 2031 – 15 years from now. I am maxing out my RRSP every year through the bonus I get at work (we have an option to direct it to a RRSP account).
I had overlooked the benefits of TFSA so far and realized the importance of it. I created two accounts for me and my partner and now very aggressively trying to max out TFSA.
I want to know where you put your money in the beginning years and from what kind of accounts are you withdrawing the dividend income every year with the 4% rule?
Am I making a mistake by following the above methods? I do not want to start on this path and realize only later that I should have had different kind of investments to achieve my FI goal.
Thanks a ton in advance for clarifying this for me.
Merci!
I stumbled onto your blog from CNBC.com and discovered that you have found the secret to creating a passive income.
I am an active trader that will like to share my knowledge since I do buy ETFs and stocks. I have not entered in other markets such as derivatives or FOREX since I am a passive, long-term investor.
When it comes to purchasing ETFs, I use various tools to look for comparables.
Morningstar’s ETF screener at http://www2.morningstar.ca/tools/screener/ca/ETFFinder.aspx?culture=en-CA
And the TMX ETF screener at http://www.tmxmoney.com/en/investor_tools/etf_screener.html
These tools are used for one purpose. To find ETFs from different providers that match a specific criteria.
As the number of ETFs available expands and shrink over time, the list should reflect that. Therefore, I use the tools above to find ETFs from various providers. From there, I compare the holdings, the MER, and examine how closely they track the underlying index.
I have written an article a while ago where I give my own tips on how to understand ETFs.
I am glad I found someone who is willing to share her knowledge with the world.
Yesterday I found an old prospectus for one of the 401(k) funds from my first job. Just looking at the fee table made my skin crawl. (Thankfully, I have since rolled over that account into my current 401(k), which offers index funds.) I’m so glad that you figured out early on how to avoid the mutual fund fee swindle.
I’m curious what your health care plan is like. I read your story and go curry crackers. I think that you two have in common is good reasonable cost to health care. Correct me if I’m wrong , Canadians and Taiwanese citizens have access to reasonable costs to health care. That’s just based on what I heard. Here in United States , with Donald trump in power, There may be a roll back in affordability in health care costs. That’s one of the major obstacles in retiring early. If one member of family gets cancer or something serious illness. This would can costs upwards of a million With out insurance. This makes me want to move to Canada!
Yes, being Canadian and Taiwanese (in Winnie’s case) is definitely an advantage in the healthcare department. I’ve heard of American couples (Mike and Lauren) having their baby in Costa Rica so they could have access to reasonable healthcare. Right now, American early retirees are waiting to see what happens with ACA. Once there’s a clear picture, we’ll write a post about it.
Hi,
Really cool blog, and I love the level of detail.
A question if I may. It seems you were both earning a solid salary right out of school? It’s not easy to work backward to determine gross salaries without some added info such as RRSP contributions, Ontario income tax rates and other info, but with an after tax income of 125k, (assuming an split evenly down the middle), meant you were both earning approximately 90-100k before taxes?
Maybe that is not much in Toronto, but seems like a very above average salary in most places.
Wow, amazing post. I just came here by way of JLC. I am fairly new to the FIRE lifestyle but me and my wife have started our 5-year Rat Race exit plan. Thank you so much for sharing your story and inspiring us. Look forward to your many awesome posts in the future.
Welcome to the blog! Very cool that you guys are only 5 years from FIRE. Well done!
In Ireland, you would need to be earning a quarter of a million in order to have after tax net of 125k…
Also, as many ETFs are domiciled in Ireland, our tax code (being as backwards as it is), means you cannot invest in lowcost indexes without incurring an 8year deemed disposal cost of 33%, irrespective of performance, and each investment is treated as its own taxable unit so you cant cost-average or do rebalancing without significant complication and cost, making them completely impossible to invest in.
It seems to me that FIRE is only a realistic goal if A) you happen to earn a ridiculous amount straight away in the workplace and B) you happen to live in a country with a seemingly very low and uncomplicated tax base.
Early FI is a nice idea and there are some useful principles for everyday life, but I can’t see it taking off for any more than a tiny percentage of the millenial cohort who happen to be in the right position to do so
“It seems to me that FIRE is only a realistic goal if A) you happen to earn a ridiculous amount straight away in the workplace…
Nope. I wrote two posts, once about a reader who’s only earning 30K/year and another about a couple each earning 50K/year and how they can reach FI:
https://www.millennial-revolution.com/build/become-financially-independent-travelling/
https://www.millennial-revolution.com/build/youre-closer-to-retirement-than-you-think/
It’s easier to get to FI if you have a higher salary, but that’s not pre-requisite. The thing that REALLY matters is your savings rate. Also, people tend to not sit around doing nothing in retirement. Even a small amount of earnings with side income in retirement significantly reduces the amount you need to retire.
“B) you happen to live in a country with a seemingly very low and uncomplicated tax base”
I’m not familiar with the tax laws in Ireland, but you think the US is consider an “uncomplicated tax base”?! HA!, read this: http://time.com/4286921/complex-tax-code/. Not only is it complicated, it’s also unforgiving! So if you make a mistake and forget to contribute to your 401K it’s doesn’t carry forward. And yet, most of the retirees are Americans…hm…
Thanks for the response FIREcracker, appreciate the time.
“Ridiculous” referred to the quarter of a million equivalent to your income that you’d need over here, and perhaps “uncomplicated” was the wrong phrase regarding tax, but it is significantly less punitive on your side of the world – index funds are literally out of the question on our little island, making self investing strategies extremely limited (and unprofitable). Have a quick scan of this thread / forum and weep for those of us trying adopt such strategies https://www.askaboutmoney.com/threads/the-tax-treatment-of-etfs-for-irish-residents.199443/
Add together twin gremlins of high income tax (we’d need 150k to scrape 80k after taxes) and particularly high costs of living (I’d estimate 4x against the US’s food, energy, and service costs, excluding healthcare), and it makes for an uphill battle over here.
Yes, we could leave Ireland, and I genuinely haven’t ruled that out as have not yet bought into the cult of house ownership, but it makes for depressing reading / podcast listening when your math looks so friendly and liberal in terms of the numbers, and it’s just not transferrable to us!
Like I said previously though, the FI saving principles are all very relevant and useful, its just a pity we only get one edge of the sword.
If you want to have freedom, you gotta be willing to compromise. There will never a “perfect solution” for every person. But you can take bits and pieces of it and customize it to work for your situation.
Ha! Just started reading your blog and love it. I am the dreaded Boomer and wish every single day that I would have known then what you know at your age. Guess I’m really a Millennial at heart. I’ve always had the wanderlust mentality. Started saving meagerly at 32 and never really made the effort till our 40’s when something in my brain went Uh-Oh. We did a lot of learning on hot ad how to not save. Tried financial advisors till we figured out how much their fees were eating into our personal savings. Dumped the advisors for the simplicity of Vanguard Index Funds and haven’t looked back. Interestingly enough the wifes work 401k is rock solid with great returns that have beaten the index over the past 10 years (lucky!). Managed to get our net worth up to the point where we could retire now at 57 but I can’t seem to pull the trigger. I don’t know what’s wrong with me…..
PS – I still hate my job. Hoping to muster up the courage to call it a career within a year.
Wow, good for you!
I feel you on the whole fear of quitting. No matter how many times I checked the numbers, actually handing over the resignation letter was terrifying. I wrote about it here:
1) https://www.millennial-revolution.com/freedom/fear-will-hold-prisoner-balanced-diversified-portfolio-will-set-free/
2) https://www.millennial-revolution.com/freedom/what-would-you-do-if-you-werent-afraid/
Once we’d actually been retired for a year and realized a) how cheap it is to live in other parts of the world b) how much your costs go down when you don’t have to pay work-related costs anymore and c) we ended up with more money than before we retired, I am no longer afraid. In fact, the longer you are retired, the most confident you become.
Hopefully that helps you.
Your blog is one of the inspirations for the journey I am currently setting out on; 7 years to Financial Independence and to add some challenge to it I am living in one of the most heavily taxed countries in the world: Sweden. I started http://www.fireviking.wordpress.com after having read yours and gotten very intrigued by it, now setting a similar goal for myself.
Thank you!
Welcome, Fire Viking! (Love the alias, btw). Interesting to see someone working toward FI in a country with high cost, high taxes! Does Sweden have any tax sheltering vehicles like the 401Ks and RRSPs in North America?
haha thank you! Finally ended up getting an actual domain for it today; http://www.thefireviking.com so just migrated the site to something hopefully better!
Good question! We both do and don’t 🙂 . In Sweden, there is a retirement-scheme that employers can choose to contribute to, and it will not be subject to income tax until the day you retire and are able to access this fund (at which point you pay normal income tax on it, up to 50% marginal tax). However I, as an employee, have no way of choosing whether to contribute to this or not. It is not considered a part of my gross salary put into a pension/401k-fund, but rather an income you will never see and that is not counted towards you salary the way you would normally measure it.
You have no right to touch this fund until you are 61 I believe and you can also not choose freely where to invest it but need to go via the broker your employer choose. Essentially it is like your employer paying for your health care in the US; you don’t consider it income, but rather a benefit.
Hmm, that’s kind of like the superannuation in Australia. You can’t touch it until you are a certain age, so not great for early retirees. Good to know.
Hi, great blog! I was looking at the first year numbers since my current rent and salary in 2018 is actually very similar to your combined from 2006 (although I am alone). However, even alone, I’m spending almost double! Can you explain how you saved so much in 2006? Your table says your spendings were (1500 + 2700 + 300 + 833) per month, which comes up to 5333*12 = 63999 for the year. That would only leave a saving of 2500 for the year. Thanks!!
Thanks Sara and welcome! The numbers from 2006 is only for half the year (since we only graduated and started working June. The post says 2006 (June-Dec)). So savings for the 6 months was : 5750 *6= 34,500 (spending: $32,000 for 6 months, combined salary: $66,500 for 6 months).
So you guys were making about $11k a month?
I want to preface this with the fact that this post is not meant to disparage what you two have accomplished. It’s an amazing feet, and should be commended. However, I think some perspective is really missing.
The way it reads at first is that your after-tax income in 2006 is 66,500. Usually when someone talks about their income, it’s an annualized number. So really, you were earning about 133K after-tax income in 2006.
66,500 * 2 = 133K After-Tax Income
133K in 2006 = 172K today assuming 2% inflation.
172K/2 = 86K After-Tax each.
86K after tax is about 125k gross in Ontario.
You were each in the third tax bracket right out of school. You were essentially in the 1%. While it is amazing that you were able to not allow lifestyle inflation to creep in given your income, this is not something that can be closely replicated by 99% of the Canadian population. The very, very large income is what made it at all possible.
Just for fun, lets assume the same level of spending by a couple who earns 50K each.
39K After tax x 2 = 78K after-tax income
32K x 2 = 64K spend annually
64K in 2006 = 82K today
78K – 82K = -4K Savings
You’d already be spending more than you earn.
Now lets figure out how much you’d have to save in order to reach $1 million in 15 years (which is already much longer than it took you).
Assuming a 6% return, you’d have to put away about 43K per year for a couple, or 21.5K each. Again, assuming a similar lifestyle as yours during your early years, you would need to each earn at a bare minimum of 84K gross to have a million saved up in 15 years.
I guess the main point of this post was to illustrate that while doing this is achievable, for most people it will require a lot more lifestyle sacrifice than this post is giving credit to.
As a followup, thought I’d mention that I found you by listening to the Build Wealth Canada podcast and I found your tools and insights on how to manage your lifestyle in portfolio now that you are retired to be really great.