A Late Start to 2020

I almost feel I’ve lost the right to post on this website…not only did my posts trail off at the end of 2019, but I’ve temporarily suspended my entire lifestyle. Yes, you read that right. I gave in to the debate in my previous post: I quit my job, moved to the big city, and jumped headfirst into a new career. The beloved home of Backwoods Finance is several thousand kilometres away and I miss it every day.

Trust me to move from a somewhat-isolated homestead to the urban jungle during the emergence of a global pandemic. I’m lucky to have landed in a very essential position, but between moving, income tax that makes me weep a little with every paycheck, and a whole new set of living expenses, I’m not too optimistic that 2020 is going to be a great year for FIRE. Nevertheless, this is where life finds me, and I intend to keep rolling.

First Step: The 2019 financial summary. I’m going to make the net worth statement current as of April 24, 2020, just to include all the fun market gyrations we’ve been experiencing as of late. Better late than never, right?

Net worth (all values in Canadian dollars)

Assets

Cash (TFSA and unregistered high interest savings accounts): $59,005

Canadian stocks (sheltered in TFSA): $24,018

US stocks (unregistered): $5,615

Personal residence (conservatively-estimated market value): $180,000

Exchange-traded funds (RRSP): $87,771

Total $356,409

Liabilities

Mortgage: $96,582

Total: $96,582

Net worth = Assets minus Liabilities = $259,827

Notes:

I’m choosing not to count my car (which like all vehicles is rapidly depreciating in value), household goods, or personal effects.

Assets also do not include wages already earned that I will receive next payday.

Similarly, liabilities do not include current balances on credit cards. (It goes without saying that balances are paid in full every month.)

2019 Income, Expenses, and Savings Rate

Active Income: $90,534 + tax refund $216.62 = $90,750.62. My after-tax income from my old job, which I walked away from in early 2020!

Passive Income: $3434.93. This includes interest on cash accounts, dividends, and distributions. The majority ($3055.80) is sheltered in my TFSA and RRSP. $202.30 is interest from unregistered accounts and is taxed as earned income, and $176.83 is from the US portfolio and is taxed as foreign dividends.

Expenses: $31,152 (Actually $31,492, but I can subtract the $340 I got back from cash-back credit cards). Note that I count the interest component but not the principle of each mortgage payment as an expense.

2019 Savings Rate from my job income = ($90,751 – $31,152) / $90,751 = 65.7%.

There’s a lot to be happy about there. Comparing 2019 to 2018, my income was higher, my expenses were lower, and my savings rate jumped by over 4%!

I won’t lie: I’m worried that my lifestyle change may have been a mistake. It’s hard to say where I’ll be this time next year. I would truly love to be back at Backwoods headquarters…

Either way, 2020 is set to be a difficult year for all of us. Save where you can, invest what you can to take advantage of bargain-basement prices, and keep DIYing as much as possible. (Sourdough bread anyone?) I will do the same.

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