This is where your finance takes place

I have been given the opportunity to write for The Financial Blogger about when I expect to become a millionaire. Mike asked me to write about this topic as to complement his article on when he expects to be a millionaire.

Some of you may already know me, but for those who don’t, I am the blogger behind Million Dollar Journey. I’m not on any Million Dollar Journey though, my goal is have a net worth of $1 million by the age of 35 which is approximately 7 yrs from now. Lets do a financial check up to see if I’m on track.

On a monthly basis, I write do a quick and dirty net worth update to see how I’m doing. Below is the April 2008 net worth summary:

Assets: $574,450

• Cash: $4,500
• Savings: $ 37,000
• Registered/Retirement Investment Account: $ 52,500
• Pension: $ 22,350
• Non-Registered Investment Account: $18,300
• Smith Manoeuvre Investment Account: $25,300
• Investment Property: $ 124,500
• Principle Residence: $275,000 (purchase price)
• Vehicles: $15,000 (2 vehicles)

Liabilities: $279,520

• Investment Property Mortgage: $93,700
• Principle Residence Mortgage (readvanceable): $152,700
• HELOC balance: $25,120
• Other Liabilities: $8,000

Total Net Worth: ~$ 294,930

In terms of growth over the next 7 years, lets make a few assumptions:

• RRSP contributions will be $10,000 / year, increasing at the rate of inflation
• RRSP growth will be 7% /year after inflation.
• Pension contributions to be $8000/yr, increasing at the rate of inflation
• Pension growth will be 7%/yr after inflation
• Cash Savings will grow @ 20%/yr after inflation (accounting for contributions)
• Non Registered growth will be 6% /year (3% growth 3% dividend) after inflation and tax
• Real Estate growth 2% after inflation
• $5000/yr mortgage (16 yr amortization) prepayment increasing with inflation.
• All tax refunds and dividends applied to mortgage.
• Non tax deductible mortgage will be paid off in approx 7 years
• HELOC will be around $220k in 7 years

Using the Smith Manoeuvre calculator spreadsheet and dinky town financial calculators, after 7 years, this is the estimated net worth in todays dollars:

Assets: $1,143,868

• Cash: $ 4,500
• Savings: $ 132,525
• Registered/Retirement Investment Account: $ 170,844
• Pension: $ 153,536
• Non-Registered Investment Account: $27,516
• Smith Manoeuvre Investment Account: $196,047
• Investment Property: $ 143,011
• Principle Residence: $315,889

Liabilities: $296,996

• Investment Property Mortgage: $76,996
• Principle Residence Mortgage (readvanceable): $0
• HELOC balance: $220,000

Total Net Worth: ~$ 846,872

There are some big assumptions that I”m making, especially with the short time frame of 7 years. Depending on how the markets go, and our ability to increase or save our income, will most likely result in a different outcome than projected.

Based on the assumptions, it doesn’t look like I’ll quite meet the $1 million mark in 7 years, however the projection also doesn’t account for future real estate projects or other business ventures that I will most likely be involved with. Hopefully, I’ll still be blogging about it at that time to report back.