As is the case at the beginning of each month, I publish my net worth and how it changed over the past 30 days. So here we go:

ASSETS:

DEBTS:

TOTAL NET WORTH: $111,813 (+3.1%)

Another month, another payment

While I don’t think I will be able keep up this pace, I was able to give my parents another $2,000 payments in February. We were able to withdraw money from our business so it didn’t hurt my budget too much. I am now down to $26,000 due in November 2010 (including upcoming interest). Since my current plan will lead me to have about $15,000 at this time, I am getting closer to my goal!

I don’t expect much growth in March

This month won’t be a big month in terms of net worth. My best friend is getting married at the beginning of April so a few expenses (wedding gifts, bachelor’s party, hotel room) are going to seriously hit my budget during the next 30 days. Oh well, we’ll try to work harder so it doesn’t show too much

But There Is Great News coming

As you can see, I do not update the value of my house nor my company shares from month to month. I personally think it is not fair to update it monthly as it is only a perception based on a few metrics. However, I know that both my house and company shares are secretly going up .

The housing market is really good in this beginning of the year in my neighbourhood and I feel that I will be able to grow the value of my house by at least 5% at the end of the year. This autumn, I am seriously considering having an appraisal done to refinance and get what I am missing to pay back my parents at that point.

As for my company shares, I had previously estimated a valuation of roughly 2 years of gross income. Since I own half of the company, this means 30K. However, if we keep the pace we are on right now, we should be able to reach the $50K mark in gross income (or more!) with our websites at the end of the year (yeah, yeah, I know, we are only at the beginning of March ). In this specific case, I will evaluate my shares twice a year (in June and December) in order to avoid an artificial boost for nothing. I will also base the valuation on the past 12 months and not forecasted income until the end of the year.

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This year will be quite interesting in terms of our financial situation. Since September 2009, I work 4 days a week at my day job in order to devote more time to my online business. While my wife quit her job in 2009 to stay home with our children, I have managed to reach the milestone of a 6 digit income. In 2010, we are looking to accumulate $31,000 to pay back the loan to my parents. Since having taken the decision to look at my net worth on a monthly basis, I tend to be more careful with my spending and I always have my parents’ loan in mind.

So here’s where I stand after the first month:

ASSETS:

DEBTS:

TOTAL NET WORTH : $108,445

Major Changes:

I don’t think it will be like this every month, but we had a few major money movements.

Parents’ Loan

I managed to get an extra $3,000 from my year end  bonus (I didn’t get a bigger bonus, I just decided to use this amount of money differently) and give it back to my parents right away. Since I have to finish this debt in November of this year, I do not want to wait to give them money back when I have an opportunity. Since I know that I may spend the money if it stays in my bank account, I would rather start making payments

Getting ready for wedding$

I am best man for 2 weddings this year (my best friend and my sister-in-law). Therefore, we’ve already started to spend money towards their wedding gifts. Since they are very important people to us, we will definitely not be cheap . This is what explains my small net worth increase even if I was concentrated in paying back my debts.

What is coming in February?

I am almost sure that I will be able to make another payment to my parents! The online company has shown a great start to 2010 so we will probably be able to withdraw money from it. My partner has to buy a computer so I will withdraw the same amount to pay back my parents. The only problem is that I started to have pixel bars showing on my laptop screens… I am in the process of requesting an extended warranty payment from my credit card… I don’t know if it will work (gotta find my bill first!).

Follow other PF Bloggers net worth update at The Suburban Dollar.

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Being a financial planner, I create retirement plans for my clients every week. I speak with them to know about their goals, their dreams and their fears about retirement. We look at where they are right now and how they can achieve their financial goals for the next 10, 20, 30 years.

Having money to realize your dream is a prerequisite. Money doesn’t buy happiness? Well let me tell you that if you have some, you will surely be able to buy a few happiness coupons here and there .

All these discussions got me thinking about my own retirement. Having started working 4 days a week at the age of 28, I now make the joke that I will be retiring at 35… This is actually the foundation of our online company: becoming millionaires by age 35. While this is a huge challenge (huge is actually a small word ), I think it is important to have dreams if you want to achieve something in life!

Do I really want to retire at 35?

If retiring means not working, going down south and drinking Strawberry Daiquiris all day, I will not retire at 35. However, I have discovered through discussions with my clients that retiring doesn’t necessarily mean to stop working. It means the end of being forced to do something.

Most of my clients are wealthy and they intend to work until they are 65 or even older. While several of them could afford to retire at the age of 55 (yup, freedom 55 still exists!), they want to work. The only difference is that they will do what they really want most. Many of them have side projects or new careers in mind. This is what brings me to my definition of retirement.

To me, retirement means…

-         Not having a boss looking over my shoulder. Being  financially independent and be able to make my own decisions.

-         Working but not all day, everyday, week in, week out. If I can work 20-30 hours a week, I’ll consider myself as retired.

-         Doing what I want. I don’t mind working on my stuff since it doesn’t feel like working. It’s like being paid to do a hobby. While I would love to be paid to golf or to play with my kids, I still have to find something that will actually bring home the bacon .

-         Definitely quitting the 9 to 5 job. I am already not doing the 9 to 5 every day, so I just don’t want to do it anymore .

-         Spending more time with my wife and children. Life is too short to not spend quality time with the ones you love!

-         Be able to work around the world. My online company provides me this option, I can work anywhere in the world as long as I have a functional laptop and a reliable internet connection.

I don’t really see retirement as not working at all, waking up at 9 or 10 am every day and wandering around all day… this must be quite depressing!

In the end, I guess that I am not looking too much toward retiring young but more towards financial independence!

Your Take: What do You Expect from Retirement?

I would like to know if you aspire to Freedom 55? Or if you think that you will never retire? Do you have any projects for your retirement?

image source: kevin dooley

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After talking about how to deal with money and family yesterday, it is now time to take a serious look at my options in order to pay off the loan from my parents at the end of the year. Gathering such an important sum of money will require a solid plan, discipline and probably a bit of luck as well!

As I previously mentioned, in May 2009 our life took a drastic step back when my wife quit her job to take care of our children. Since then, our personal finance has been somewhat difficult to manage as it was filled with new challenges.

Things have been back under control recently with the deposit of my big bonus cheque in the bank account. Now that my financial situation has reached stabilized, it is time to figure a way to pay my parents back.

What I have so far:

My biggest “savings” is held in the form of my employer’s stock purchase plan. Directly from my pay, I put $475 per month (including my employer’s contribution) aside. So far, I have $5,000 in this account. If I contribute until the month of October, I should be able to put another $4,750 on the table. This would make a total of $9,750. Out of it, I can withdraw up to 75% of its value twice a year in order to keep my privilege. So if I take up to this percentage, I should be able to withdraw about $7,300 in November 2010.

So I now have 10 months to find $22,000.

Whoa, this doesn’t sound right at all… It is actually quite discouraging L. But, there are a few things I should consider:

I have about $5,000 available on my line of credit and I am paying $500 per month in capital. Therefore, in 10 months, I should be able to get another $10,000 from my line of credit. While it doesn’t really count as a paid off debt since I am transferring from one creditor to another, at this point I wouldI rather owe the bank money than my parents!

Now down to $12,000…. Still a huge challenge!

For the last $12,000, I will have to run with the big dogs in the big world of “what if”. Here are a few possibilities that could help me pay my parents back:

-         I am currently looking for a bigger client portfolio, which would increase my annual income by $10,000. While taxes must be paid on this amount, I should be able to put about $3,000 aside from this salary increase (as long as it comes in the first months of 2010….).

-         By November 2010, I will know how much my next bonus will be. If it’s similar to this year, I should be able to pay an additional $5,000 to my parents. While this money will only be available in January, it will be confirmed before the end of 2010 and I will be able to guarantee my parents that they will receive the money.

-         Speaking of my bonus, since it is paid in January, I have to pay the maximum contribution in pension and insurances. Therefore, I will benefit from a higher net pay faster this year. I will probably be able to put this money aside and have an additional $2,000 by the end of November.

-         I will certainly have more equity in my property that should be appraised around 335K by the end of the year. I could probably be able to refinance my property and get enough to pay my parents. However, this is not my first plan as I would prefer to pay this debt off as much as possible rather than switching from my parents to the bank.

-         The last wild card I have in my pocket is how well my online company does. It has been a tremendous end of year and the month of January seems to continue on the same path. I just hope it will continue to grow so I can take a few more thousand out of it by the end of the year!

So as you can see, I will not be able to gather the full $31,000 in cash by the end of the year. However, I have enough options to make sure my parents get paid and that I don’t have to deal with money issues with my family.

I must admit that they have been pretty smooth with me and they told me that I didn’t have to pay them back this year if I couldn’t. However, I just can’t spend money thinking about the fact that I owe money to someone I love and respect. Once this debt is paid off, it will be a huge relief for me!

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The very bank that ever exists for any 10 yr old kid is “The Mom and Dad Bank – funded since your birthday”. This is not always the most generous or the most comprehensive bank that ever been (have you ever dealt with a generous and comprehensive bank anyway?), but this is the only bank that will give/lend money when you are young.

As you grow up, “real” banks will open your doors and allow you to apply for a credit card, a student loan and ultimately for a mortgage. I was 24 when I bought my first home. We just had our son and we were looking for a nice place for him to grow up. Back then, I was able to gather interesting cash down (thx to leveraging!) but I was still missing money to reach the 20% cash down required to avoid CMHC insurance premium. The 20% cash down was also giving me access to the most flexible type of mortgage ever: the Home Equity Line of Credit (HELOC). So this is why I have turned (once again!) to The Mom and Dad Bank.

A Feeling of Guilt

While I was very excited to purchase my first home, I was feeling guilty that I couldn’t buy it completely on my own. We have discussed this issue with my parents and my wife to make sure that everybody agreed on the very same thing: They would lend us the money for 5 years according to the mortgage interest rate in place (they were mortgage their rental property to lend me the money). Therefore, I was free to do whatever I want until November 2010, the date that I have to give them back the money (along with the interest).

It is touchy to mix money with family

While I would have preferred to not borrow from my parents, I must say that everything is going well so far in term of relationship. They were happy to help us out and they are not waiting to get the money back. However, I definitely want to maintain my good relationship with them and I want to pay them back fully at the end of the year as I don’t want to jeopardize everything.

I think the key was to keep a simple and clear agreement with everybody. We have 5 years to pay them back, the interest rate and date of repayment are known and agreed by both parties. Even though you are dealing with family members, I think it is important to not forget that you are also dealing with money. This is why following such contracts is very important to me.

Spending while you are owing

I think the worst part about owing money to someone close is that you feel bad of spending money on vacation, renovating your home or on a new car (the situation is a bit more complicated regarding the car issue…). Each time you spend money, you think that you might have put this amount aside and pay back a debt. I guess this is why I am looking to pay back my parents completely according to the original term of our agreement.

What if I can’t?

Gathering 31K in a single year seems almost impossible at first glance. While I was regularly putting money aside during the first 4 years, I ran into a few speed bumps that made me spend this money in one way or another. I have always thought I had enough time to pay them back “later”. But “later” is about to come to an end as November is getting closer and closer.

Honestly, I don’t think about not paying them back completely yet. I think that I could still manage to gather enough money before November through my online company, my savings and a potential salary increase (yes, I am working on another one at the moment).

Any Thoughts?

I would be curious to know if you have borrowed money from your parents or friend? How you have dealt with it? Did you reimburse in time?

image source: kyz

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