The Big 2017 Financial Review

As we’re well into 2018 by now, it’s time to share the Moose house numbers for 2017.

As you probably figured out by the regular monthly updates, 2017 was a big year for us. We hit some big financial milestones and our investments rocketed higher thanks to disciplined investing and favourable markets.

We started 2017 with around $442,000 in our investment accounts. On top of that, we have pensions which were valued at approximately $103,000. Our other assets and debts are trivial. We pay off our credit cards each month and we always carry a moderate balance in our chequing accounts to cover about 2 months of expenses.

We have been renting since 2016, so there are no real estate assets or associated debt. At the beginning of 2017, we owned two vehicles: both older models. The value of these vehicles would have been around $13,000 combined.

Savings Rate Information

Since we both have careers with defined benefit pensions and plenty of mandatory deductions, calculating the true savings rate can be a bit subjective. Do you include employer contributions to certain plans into income and expenses? If you include pensions, should you also include benefits and union dues? How much control do you have over these kinds of expenses?

I decided to keep things as simple as I could without distorting the numbers too much.

Basically I took our net income (which is the money actually deposited into our accounts) and added both our pension contributions and the employer contributions. This formed the denominator of the adjusted income number.

Then for savings—the numerator of the equation—I added our personal savings from net paycheques, our pension contributions, and the employer pension contributions. This isn’t a perfect calculation because my wife’s pension isn’t vested yet, meaning her employer contributions don’t go towards our net worth numbers. However, we’ll assume she will be in the pension plan at least until that becomes vested.

2017 Financial Information

I welcome any questions about these numbers, including suggestions on how I should better calculate savings rates!

Beginning Net Worth Data

Investment Accounts: $442,000
Pensions Value: $103,000
Vehicles: $13,000
2017 Starting Total Net Worth: $558,000

Income Data

Net Income: $113,000
Estimated Taxes: $30,800
Other Federal Deductions: $6,800
Benefits & Pension Payments: $22,900
2017 Combined Gross Income: $173,500
Other Gain: $4,300 asset sale from our truck

Expenses Data

House Rent Expense: $19,150
Tuition Expenses: $2,700
Other Living Expenses: $31,650
2017 Total Expenses: $53,500

Savings Data

Personal Savings: $63,500
Pension Contributions: $19,450
Employer Contributions: $24,550
2017 Total Adjusted Savings: $107,500
Savings Rate from Adjusted Income: 68.5%

Ending Net Worth Data

Investment Accounts: $671,000
Pensions Value: $135,000 (wife’s pension is not vested yet)
Vehicle: $7,000
2017 Ending Total Net Worth: $813,000

Summary Observations

Overall I'm very happy with our numbers for the year. Our expenses were kept pretty tight considering our lavish, first-world lifestyle. We eat like kings, we do a fair amount of entertaining, we live in a beautiful newer rental home, drive a nice and reliable vehicle, I ride a super-nice mountain bike, and we live in general luxury and comfort.

We keep our expenses under control mainly through limiting outside entertainment (bars, restaurants, big name concerts, etc.), choosing to rent a size-appropriate dwelling instead of buying a too-large, too-risky house, having just one older model vehicle (2010 Mazda), and focusing on basic and wholesome living. We buy staple groceries and cook nearly everything from scratch, we make our own wine, and we spend a lot of our spare time with friends at homes or outdoors, reading and studying, and enjoying fun volunteering activities.

In 2018, I expect that our rent expenses are going to drop a bit while education expenses will go up significantly. Our other living expenses will remain pretty comparable.

We've got a few vacations planned, but they're already partially paid for and part of our normal spending. Given our spending, we would need a net worth around $1.5 million to quit our jobs tomorrow and never work again without any reduction in spending power for the rest of our lives. (That's not the plan.)

Our income should go down a bit as I am trying to work less overtime and will be booking most of my overtime for more days off instead of pay. Unfortunately in my position it is nearly impossible not to work overtime as I am a shift worker with an odd schedule and working on some of my days off is part of the job and largely out of my control.

We are in the fortunate position where our household income is definitely higher than the Canadian average. The median total household income for couples in Edmonton area is around $120,000, so we would be solidly in the upper-middle class (approx. 70th percentile).

With two, full-time earners in this house, it makes sense that we earn above the average. Considering our education levels, we are right in the ballpark for average earners with my wife earning a bit below the average and myself earning above (mostly because of that overtime pay).

If you are looking to get ahead financially, Alberta is a good place to be!

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