- How Has Covid-19 Affected Your FIRE Journey? Part 2 - May 29, 2020
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- How Has Covid-19 Affected Your FIRE Journey? Part 1 - May 11, 2020
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.
|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.|
|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.|
At the end of the year, this is what our balance sheet looked like.
|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.|
|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.
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.
|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.|
|Vacation||$250||$3000 for the whole year|
At the end of the year…
|Combined income (after tax)||$125,000|
|Total Spend||$51,000||Was I really spending THAT much?!? :hidesheadinshame:.|
|Total Net Worth||$108,500|
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!”
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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