|I will start my explanation with some facts for today and I will post the strategy and the result in the following days. I was a bit reluctant to post about my assets and net worth but I thought it could help many people to get started. In fact, I really started to build my net worth about a year ago (when I sold my first house). Having two kids obviously make things more complicated. Nonetheless, I think I have a pretty good plan for the years ahead. So here my situation before I decided to do anything about it.
Here’s a quick peak of my financial situation prior to restructuring my debts and increase my HELOC:
– Personal loan 25K with payment of $650
– Personal line of credit of 20K with a balance of 18K (I am paying 3,25% on this one, so I only pay $65 a month)
– HELOC of 192K with a balance of 190K (remember, I am doing a Smith Manoeuvre) with a monthly payment of $1,200
– Loan from parents of 25K, not payments required yet (agreement to pay in full in three years with an interest rate of 4,8%)
– Total debts: 260K (I do not have credit cards balance as I pay them in full on a monthly basis). for a monthly payment of $1,915.
– Bank account : 1K
– Smith Manoeuvre investment account: 4,7K
– Stocks: 1,5K
– RRSP (mine): 6K
– RRSP (Wife): 2K
– Car: 9K
– House: 263K (last year’s appraisal value)
– Total assets: 287,2K
– Net Worth : 27,2K
While my net worth is not very impressive (I am actually not very happy about it!), when you put it in perspective of my age (26), I think it is not too bad. My goal is to use my SM investment account to pay back my parents in 3 years. I borrowed 25K from them 2 years ago. Therefore, it is a 25K loan over 5 years at 4,80%. In 3 years, I will owe them 31K with interest.
As I want to keep up with my $1,500 project I need to increase my cash flow. The interest rate I pay on my debts are all minimal since I am working for a bank. I will leave my line of credit as is since I pay only 3,25% on it. My second best interest rate is my HELOC with 4,25% (Prime rate – 2). This is why I decided to have a second appraisal done on my property to pay off some debts. We will see the result tomorrow.
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