Yeah! Another month with a small increase in my net worth combined with a debt reduction! All right… the debt reduction was smaller than expected. But still… I’m heading in the right direction!
The biggest reason why I didn’t see a major debt decrease (my debts went down by all of $354) is because I had my pool installed. As I mentioned in my previous net worth statement, I will have to get a loan to buy a pool this year as I overestimated my tax refund (darn! I should definitely do my own taxes!). This also means that my debt level will increase by $5,500 in June when my pool loan will appear on my balance sheet (yuk!). In the meantime, I had to cover several other expenses while installing the darn pool. Because the pool price doesn’t include the bulldozer and the water in the pool… Long story short, I had to spend a good $700 over the past 2 weeks for my pool (on top of the $5,500 loan coming onboard…).
This sucks, but this is my vacation budget as well (I’m not going anywhere this year). I also have a “plan” to drop my debt quicker as I will cash in a good part of my employer stocks (I’m allowed up to 75% without penalties) to pay off a part of my debts. The longer I can wait, the bigger the amount will be as I’m putting over $600/month in them. I expect to be able to get about $4,000 from my employer stocks. This will almost compensate for my pool loan!
I’m expecting a big jump on my asset side next update since we’ll be looking at the value of our company shares. As a valuation model, we use 3 times the yearly gross income minus all debts. To calculate our yearly gross income, we consider the average of the past 12 months (so from June 2011 to May 2012). I expect the value to go up to around $125,000 per shareholder (so the total company would be worth $250,000). This would jump my assets by more than 10% in a single month. I don’t think it’s exaggerated to think that my company worth this much since it currently has the possibility of paying me $18,000 per year in dividend (which is currently used to pay off corporate debts). Assuming a capital value of $125,000, the company will eventually pay me a 14% dividend on my investment… not too bad, huh?
At the beginning of the year, one of my most important goal for me was to open a RESP account (special account to fund my children’s tuition) and invest $200/month in it. Well last week, I opened it! The $200 systematic investment will start in June. By the time that my oldest boy reaches 18, I’ll have gathered 44K in today’s dollar (assuming a 2,25% inflation rate and 5,25% investment return). This will pay 15K per kid on top of the fact that my youngest will start withdrawing 6 years after the first one. So I’ll probably have the time to build a 50K+ nest egg to pay for tuition. Considering that the cost of education is super low in Quebec, this should be more than enough to pay for University.
The $200/month systematic investment will replace my daughter’s private daycare cost in our monthly budget. We pay $360/month for 3 days/week ($30/day) and this ends in June! This means that in July, I’ll be generating an additional $160/month to pay off my debts faster while I will contribute to my children’s future! How cool is that?
As of June, I’ll have around $21,000 (including the darn pool loan!) over the $300K debt I want to reach by the end of the year. This means that I will have to pay down for $3,500/month worth of debt… ouch! At least, I can count on my employer’s stocks along with a few thousand in dividends from my company. My last resort will be my year-end bonus but I can’t expect much from it this year since I’m starting from scratch. I’ll definitely need to chill by the pool this summer and leave my wallet in the drawer!
CHANGE (%) CHECKING ACCOUNT $1 000 $1 000 0,0% EMPLOYER STOCK
$3 898 $4 319 10,8% RRSP ACCOUNT $28 628 $28 763 0,5% PENSION PLAN $20 218 $20 218 0,0% HOME $345 640 $345 640 0,0% COMPANY SHARES $98 000 $98 000 0,0% MAZDA TRIBUTE $16 492 $16 058 -2,6% MAZDA RX-8 $4 400 $4 000 -9,1% TOTAL $518 276 $517 998 -0,1%
CREDIT CARD $6 371 $6 672 4,7%
LINE OF CREDIT $19 945 $19 900 -0,2%
HELOC $263 400 $263 433 0,0%
CAR LOAN $16 492 $16 058 -2,6%
Personal Loan $10 208 $9 999 -2,0%
TOTAL $316 416 $316 062 -0,1%
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