Posted by Tim Stobbs on March 2, 2011
While I wasn’t expecting anything interesting for this update I did hit a minor milestone. See below.
Wife’s RRSP $20,200
Wife’s Investment Account $12,700
Wife’s TFSA $8,600
My Investment Account $6,500
High Interest Savings Account $6,900
Net Worth $401,600 (+$18,200 or +4.7%) [+ 4.7% YTD ]
Investment Net Worth $138,200 (+$11,300 or +8.9%) [+ 8.9% YTD]
Mortgage is down by $6,900 or 17.7% of my goal for 2011.
If I haven’t mentioned this recently let me repeat something: saving for early retirement is a really bloody boring exercise a lot of the time. Sorry to disappoint you if you have other ideas on the situation, but the reality is it is mostly about keeping up a savings routine. Yet today I hit one of little milestones that makes the journey a little more interesting as we finally broke the $400,000 net worth mark.
So that made me curious on when we past the $300,000 mark? Well according to my records that occurred in Dec 2009 ($304, 500), so from then to now was a mere 14 months. Pardon?!?! Does that work out to almost $7000/month? How is that even possible?
The answer is simple: the minor miracle of compound interest and a savings plan. That $100,000 gain is broken down into the following:
- Paying off mortgage $44,600
- Investment net worth up $39,500
- House value up $13,000
The mortgage is the classic case in point. As I continue to put on additional lump sump payments that drives my interest costs down and allows more of my regular payments to go to principle. Although each payment doesn’t change the situation that much, the compounding effect starts to build up until now over 80% of my regular payment is now going to the principle. So even if I stopped making lump some payments the mortgage would still be paid off in under five years. It’s now snowballing all by itself and I’m just giving it an extra push down the hill.