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2022 Annual Review

As I said in our 2021 Annual Review, I write with post with some trepidation. In the interest in helping financial independence seem more attainable, I want to be very open about the math behind it. At the same time, comparison is a real source of suffering, and I don’t want to contribute to that. I’m also not a passionate tracker of these things, so our numbers are inherently rough. Regardless, in the hopes that this will do more good than harm, here’s how our finances played out in 2022.

Salary

I still work full-time and my wife still works part-time. This year was our first “clean” year in the sense that we were both working for Canadian employers. You’ll note that both our salaries are lower. For me, that’s because I got a lump sum payout on my vacation time when I left my US employer in 2021. For my wife, that’s because her US employer paid more. Now that our income situations are cleaner, I’m considering taking over our Canadian tax filing. For now, I’m planning to do it alongside our tax accountant and see if I get the same results.

And note that this is just salary — it excludes things like the Canada Child Benefit, re-imbursements, and credit card benefits.

	2022	2021	2020	2019
Me	$98,871 (CAD)	$123,680 (CAD)	$84,652 (USD)	$73,599 (USD)
My wife	$24,672 (CAD)	$35,341 (CAD)	$20,418 (USD)	$41,581 (USD)

Spending (minus taxes)

	USD	CAD
Monthly Average	$4,913	$6,466
Annual Total	$58,953	$77,699

This year, I shifted to tracking our spending in a much simpler way. Itemizing it simply took too long. Also, I’m not trying to cut our spending, so knowing where it goes (e.g. groceries vs home repair) isn’t important. And I’m leaving out taxes because we’re now having them pulled from our paychecks. Thus, when I pull our spending from our bank accounts I’m not getting them. I’m OK with that, though, as I need to figure them in manually for our post-work phase as we’ll have significantly less taxable income then.

All-in-all, I’m happy with this spending. Would I like it to be lower, sure, but that says as much about me as it does about our spending. Using the 4% rule as a rough estimate, this would mean we’d need ~$1.5M USD / ~$1.95M CAD to retire, with the caveat that we’d need to account for taxes. We’re close to these numbers, but not quite there as our net worth dropped last year.

Net Worth

All values in USD
	Jan 1, 2023	Jan 1, 2022	Jan 1, 2021	Jan 1, 2020
Cash	$64,611	$69,113	$124,913	$33,132
Taxable	$247,552	$269,830	$134,469	$78,060
457(b)s	$167,360	$184,711	$154,718	$131,036
Roth IRAs	$229,437	$279,360	$237,008	$201,669
403(b)s and RSPs	$529,604	$645,266	$548,075	$469,428
TOTAL	$1,238,564	$1,448,280	$1,199,184	$913,325

Our net worth went down by 14% in 2022, which isn’t too bad considering the market performance. We’re continuing to hold more cash than we usually would, along with ~$42K in iBonds, with an eye towards paying down a chunk of our mortgage when it comes due in 2025. After we top off our RRSP contributions for 2022, I’m planning to put the bulk of this cash into a 2 year GIC.

Housing

We don’t count home equity as part of our net worth. We purchased our house in July 2020 for $254,000 CAD (~$200,000 USD). The value has definitely increased from there based on comps. I’d guess, if we were to sell it today, we’d be close to (if not over) $350K CAD, which is nuts. When our mortgage comes due in 2.5 years, we’ll owe ~$178K. We’ll likely pay it off (or at least down significantly) if interest rates are high then. If not, we may do another 5 year mortgage.

Conclusion

Even with the market downturn in 2022, we’re still in the ball park of FI. At the same time, I’m not currently considering shifting to part-time work. This is partly because my company is going through a rough patch and I don’t want to make myself appear expendable. In addition, I’ve really come to appreciate the work-life balance that my job provides, along with a salary which would be very difficult (if not impossible) to find locally in semi-rural Nova Scotia. For now, my plan is to stay as a full-time employee for the next couple of years, then re-assess.

In addition, I’ve really come to realize that full retirement isn’t my goal. It does me good to have structure and purpose, and to have projects that make me engage with other people on a regular basis. Ultimately, I’d like to create this type of structure myself through part-time work and volunteering but, for now, I’m appreciating the security of a good salary with good work life balance. At the same time, I’ve started working with someone locally on some IT consulting that could eventually become a part-time replacement for my current job. We shall see.

2021 Annual Review

I have mixed feelings about putting these numbers down on the page. On the one hand, I think bringing more transparency and openness to personal finance is a good thing. At the same time, I think that our tendency to compare ourselves to other people is a lousy thing, and I certainly don’t want to encourage that. Fortunately, there are many people out there who have more money than we do, and there are lots of folks in the personal finance space who spend less that we do, so I don’t think our numbers should stir up too much suffering.

I’m also a bit hesitant to do this as I’m not a zealous tracker of every dollar that passes through our lives, and I realize that this isn’t a popular approach in the personal finance space. Until we moved to Canada, for example, I never tracked our spending or wrote out a budget. I’ve always felt that one of the perks of living well within your means is NOT having to track things religiously.

The combination of the international move and closing in on our FIRE number, though, made me more interested in knowing our actual spending. So I’ve been tracking that since we moved to Canada in the summer of 2020. I’ve also been tracking our net worth for about 9 years.

Salary

Currently, I work full-time and my wife works part-time. For most of 2021, we were both employed by US employers, switching over to Canadian employers in the fall. I got a bonus as I received a lump sum payout for my banked vacation time when I left my US employer. Next year, both of our salaries will likely be somewhat lower. And I’m only tracking our earnings from our jobs. In other words, I’m not counting things like the Canadian Child Benefit or investment earnings (which were all re-invested). We also received a small inheritance (~$15K USD) in 2021.

	2021	2020	2019
Me	$123680 (CAD)	$84652 (USD)	$73599 (USD)
My wife	$35341 (CAD)	$20418 (USD)	$41581 (USD)

Spending

All expenses listed in CAD
Taxes	$39,801
Mortgage	$13,711
Groceries	$12,152
Home Repair / Maintenance	$9,754
Household	$6,642
Utilities	$3,042
Spiritual Health	$2,519
Other	$20,448
TOTAL	$108,069 CAD
	~$85,000 USD

The utilities number is actually a bit higher, as the pellets that we buy for our primary heat source are counted under “home repair / maintenance” (as that’s where everything from a hardware store goes. We probably spend about ~$750 CAD per year on pellets. Finally, spiritual health is a combination of meditation retreats and classes that we do.

Net Worth

All values in USD
	Jan 1, 2022	Jan 1, 2021	Jan 1, 2020
Cash	$69,113	$124,913	$33,132
Taxable	$269,830	$134,469	$78,060
457(b)s	$184,711	$154,718	$131,036
Roth IRAs	$279,360	$237,008	$201,669
403(b)s and RSPs	$645,266	$548,075	$469,428
TOTAL	$1,448,280	$1,199,184	$913,325

Net worth over the years, in USD

We moved in July 2020, selling our house in Tampa, and clearing ~$100,000. That’s part of both the jump in our taxable account, and also the jump in cash for January 2021 — I was dollar cost averaging into our taxable account at the time. The tremendous growth by January 2022 is primarily market gains. We’ve contributed a bit to our RRSPs up here, but I only had a little room.

Housing

I don’t consider our house as part of our net worth. We purchased our house in July 2020 for $254,000 CAD (~$200,000 USD). Crazily, based on the price per square foot of several recent sales in our neighborhood, I suspect it has already appreciated to close to $300,000 CAD. We have a mortgage of ~$195,000 CAD, with a monthly payment of ~$1100 CAD. I’m currently leaning towards paying it off (or at least down significantly) when the mortgage matures in about 3.5 years.

Conclusion

I suspect our future spending will be a bit lower, as we were still getting established in Canada this year. At the same time, we didn’t have any major one off expenses (we replaced our ERV, but that wasn’t too bad) so it may not be too far off. And I feel like the tax portion of our spending will drop significantly in retirement, as some of the money that we’re spending each year won’t be income. In other words, it will come from our taxable account or (eventually) our Roth IRAs.

If we take $65,000 USD as our target for annual spending, the 4% rule would give us a FIRE number of $1,625,000. At $1,448,280, that puts as about 90% of the way there. And neither my wife nor I plan to fully retire in the near future. I’m thinking I’ll go down to part-time in the next year or so, but at the same time with the combination of working from home and generous leave, I’m also thinking I might just stay full time until I’m ready to pull the plug. Regardless, I feel like we’re in great shape.

How do you buy clothes?

Full disclosure — I am a man who does not care about fashion. That being said, I’m not afraid to spend money buying practical clothes. Here are my favorite ways to get clothes, in order of priority.

In general, I think my attitude towards clothes is similar to my attitude towards other consumables — I don’t want to spend a lot of time thinking about that. I don’t want clothes to add to my cognitive load. Some people deal with this by wearing the same outfit every day. This has always seemed like more trouble than it’s worth to me. I find it very easy to just put on whatever shirt I grab from the closet with whatever pants are most appropriate for the weather. I tend to buy stuff that all matches (earth tones, jeans, etc.).

And my thinking is that I’ll make a series of posts like this, sharing how I approach various aspects of consumption.

Buy Nothing Group / Freecycle

My wife has been an avid user of local Buy Nothing Groups for years, both in the US and in Canada. Buy Nothing Groups are great because they are hyper local and encourage both frugality and environmental responsibility. They typically use Facebook to post items available. If you Google “Buy Nothing” and your town name, you’ll likely find one. In our small town in Nova Scotia (~10,000 people) I see that there was three posts in our Buy Nothing Group today, with 83 this month. There are 245 members. Even in a group this small, we’ve gotten some good stuff, and given away a bunch of stuff. In terms of clothing, my wife got me a garbage bag full of sweaters when we were in Florida, in preparation of our move to Canada. And here in Nova Scotia, she got me a great lined raincoat. Buy Nothing is often particularly good for kids clothes, as they outgrow stuff so often. And it’s also a great way to get rid of things you’re no longer wearing.

Thrift

We have lots of thrift stores here in Nova Scotia, and they are a great place to get shirts. For whatever reason, I have a hard time finding pants at thrift stores, with the exception of athletic shorts. I’m generally able to get all my shirts there, though. When working from home, I like linen shirts or cotton polos for warm days, and sweaters or cotton long-sleeved shirts on cooler days. All of these are readily available at thrift stores.

Gifts

What do you get for the man who wants nothing? I’m a terrible gift recipient. I don’t generally want anything, and if I do want something, I want a very specific version of that thing, which takes all the fun out of picking it out (or so I am told). Because of that, socks, underwear and t-shirts tend to be frequent gifts for me, which is great. For t-shirts, I tend to get solid color shirts that could be warm either as a shirt or as an undershirt, rather than dedicated white undershirts.

Sometimes, I need something that I can’t readily get through one of the aforementioned methods.

Work Clothes – While in Florida, there was a store at the mall (K&G Superstore) that had a brand of work pants I liked for ~$30 a pair. I’d buy a couple a year. Now that I work from home, I’ve got about 6 pairs that will probably last me until I die since I’ll only use them for work trips. Similarly, there was a Dillard’s Clearance store at that same mall that had a brand of work shirts I liked that, if memory serves, cost less than $10 each. Now in Canada, I can get my shirts and sweaters at thrift stores, and wear more casual pants for work (since I work from home).
Shorts and Pants – For whatever reason, I have a hard time getting pants at thrift stores — I range between a 32 to a 34 waist, depending on the fit. Just like with my work clothes, I typically find a type I like and buy them in a few different colors / styles. In Canada, I buy Wrangler jeans and cargo shorts at Walmart, and I also really like their fleece-lined cargo pant for cold days. I have a couple of pairs of each, each probably costing $20-$30CAD, and I replace them as needed.
Winter Gear – Moving from Florida to Canada, this was something I needed to buy a bit of in my first year. My approach was to go slow, see what I really needed, and look for deals. In terms of boots, I got a good pair on sale at Canadian Tire. I had an OK winter coat when we moved, but I bought a better one at the end of our first winter, on clearance. In Nova Scotia, you don’t need crazy gear — it’s more about layering and staying dry. We did splurge on ice skates (again from Canadian Tire) but that has been really fun. We do a lot of hiking, but it’s family style hiking, so I don’t need a lot of high performance tactical gear.

Shoes

I’m giving shoes their own section. I spend money on shoes. I don’t spend money on shoes because I particularly like them or care about how they look. I spend money on them because I don’t want my feet to hurt. And, in the long run, I don’t feel that I actually spend THAT much money on them, because the shoes I buy tend to last a really long time.

I like to run, and about a decade ago I got plantar fasciitis. I was lucky, it wasn’t too bad. It was never debilitating, but it took a long time to recover (like 2 to 3 years). Since then, I kind of baby my feet. I also have extremely wide feet (4E) which has made me very loyal to the few brands who make shoes I can actually wear.

In terms of everyday shoes, I’m very much a Birkenstock man. I bought a pair of Birkenstock sandals that I wear as a house shoe. They probably cost $110, but I’ve had them for like 7 years. Similarly, I bought two pair of Birkenstock work shoes (Corvallis and something else, one black, one brown). They cost ~$120 each, but now that I work from home they will probably last me until I die. Oh, and when we moved to Nova Scotia I bought a pair of Birkenstock Chelsea boots that cost ~$300CAD and I expect to have for a decade or more. Everyone here has Blundstones for the muddy spring but they’re too narrow for me.

In terms of running shoes, I overpronate, and I’ve sworn by Brooks for years. I typically buy a pair a year, and they cost ~$120. I switched from Beast to Addiction a few years back, which made them a little cheaper (but certainly not cheap). They were a bit cheaper in America, but this is one area where I’m (mostly) OK not being so frugal in.

In terms hiking boots, I’ve had very good luck with Hi-Tec (an inexpensive brand) and I just got a brand new pair of waterproof Ravus boots for $39 CAD. If I were doing crazier hiking, though, I might need a fancier shoe. I’ve worn them on weeklong backpacking trips, though, and been totally fine.