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.

202120202019
Me$123680 (CAD)$84652 (USD)$73599 (USD)
My wife$35341 (CAD)$20418 (USD)$41581 (USD)

Spending

All expenses listed in CAD
Taxes$14,143
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$82,411 CAD
~$65,000 USD

That tax amount is as combination of what we owed for the ~5 months we were living in Canada in 2020, plus a portion of my estimated taxes for this year. 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, 2022Jan 1, 2021Jan 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. 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.

What does your spending look like? (Nov 2021)

I must confess — before we moved to Canada (in July 2020) I never tracked our spending. I used Mint to aggregate our investments, and I usually added credit cards there as well, but I never cleaned up or looked at the data. I’ve always felt that one of the perks of living within well within your means is not having to track expenses or make a budget.

I changed my tune when we moved because I thought we were near our FI number. To be sure, though, I had to pin down what our spending was. I had a rough idea of our spending in the US, but since we were in a new country I decided to bite the bullet and track it.

I’m using a tool called GnuCash. I’m only using a fraction of it’s functionality — it’s a full accounting suite, but I’m only using it to track spending. I chose it for a few reasons.

  1. It’s free.
  2. It’s located on my PC (rather than cloud-based). I’ve increasingly moved away from “free” apps or websites where I’m providing them with a lot of personal data.
  3. It learns — as I classify expenses each month, it makes better guesses as to how to classify them in future months.

I thought, when I started doing this, that handling multiple currency (CAD and USD) was going to be a priority for me (which GnuCash can also do) but to get the results I want (a single view of my expenses) it’s easier to just convert my few USD expenses into CAD each month.

Here’s how our average monthly expenses broke down for the last 13 months. This is all in Canadian dollars.

Mortgage$1,142principal and interest
Home Repair / Maintenance$931having house (interior) painted
having the garage / attic finished with aspenite
service for our pellet stove and HVAC
every trip to the hardware store
Taxes$857
Groceries$775vegetarian, mostly whole foods, CSA / farmer’s markets, decent amount of organic
Household$716another catchall — if I was looking to cut expenses I might dig into this one
Auto (gas, parking, insurance)$215doesn’t include the purchase price of our used Subaru Outback
Utilities$195doesn’t include pellets (which appear under home repair / maintenance).
Clothes$190mostly winter, shoes / boots, and skates / sporting goods
Spiritual Health$188retreats and classes w/ our meditation group in Florida
Phone$133currently 2 US, 1 Canada.
Gifts$126
Education (school lunches and summer camp)$125
Dining$104
Insurance (home)$81
Dental$66
Professional Expenses$65
Entertainment$59
Other / Miscellaneous$590
TOTAL$6558

There are undoubtedly places we could trim our spending. I also suspect that this first year in Canada will be a bit higher than subsequent years. My goal in this exercise, though, is to understand our spending, in order to get a sense of where we stand in terms of financial independence. And, based on these numbers, we look to be in pretty good shape.

Our current portfolio sits at about $1.3 million USD. Using the 4% rule (an imperfect but reasonable quick and dirty estimate), that should enable spending at about $52,000 USD (or $65,000 CAD) per year. Our current spending is just under $78,700 CAD (or ~$62,000 USD). This is very similar to what we were spending in the US.

If we were to fully retire, some of these expenses (including our taxes) would reduce, and we’d get an increase in some benefits (like the Canadian Child Benefit) as well. If, for example, we were drawing down so that my wife and I both had $20,000 CAD in income, we’d pay less in taxes and get almost $6000 in CCB, which would put us very close to the ~$65,000 CAD spending target.

Regardless, my wife is currently working part time (and really likes her job) and my plan is to go down to part-time next year (I think). We’ll do that for a few years and see where things stand. Plus, I’d like to pay off our mortgage when it opens up in a little under 4 years, which would significantly reduce our monthly spend.

All in all, I was happy to see, after this first year, that our spending in Canada wasn’t too far off our spending in the US. What about you? How carefully do you track your spending? And what tools do you use?