Despite the lack of new posts since last Fall, we want to reassure you that the Modest Millionaires family is still on the road to reach their financial independence and that we have not abandoned the idea of maintaining this blog to document this journey.
Now that the (very busy) 2017 year is a thing of the past (like 3 months ago already) and that today our little blog ModestMillionaires celebrates its first year of existence, I thought it would be a perfect time to (finally) publish the Modest Millionaires family spending for 2017 and give a short update on the value of our investments (in date of January 2018).
As a little update on us, the Modest Millionaires are doing very well! With the two little ones growing at light speed, now aged 3 and 2 (so technically no more babies!), and two working parents, daily life is quite busy! This does not prevent us from fully enjoying everyday together but does contribute highly to dreaming about the days when we will finally be free to spend our time as we please without depending on a job to finance our cost of living. Furthermore, Ms Mod still managed to find some free time to launch a business by taking on a few contracts on nights and weekends (I will go into more details on this side hustling in a future post) which can in part explain the absence of posts on this blog these last few months.
Now without further ado, here is the overview of our spending for 2017.
As a quick reminder, our objective, as described in our 2025 plan, is to spend a yearly average of $45 000.
|Category||Sub-Category||Yearly 2015||Yearly 2016||Estimated Yearly 2017||Average Monthly 2017|
|Recurring fixed expenses||$11,477||$10,728||$11,457||$955|
|Municipal and school taxes||$2,825||$2,929||$3,138||$262|
11,000$ over budget! What happened in 2017?
In our mid-year spending review post, we were on the way to spending a little under 55,000$ for the entire year, therefore it seems we continued down that track of high spending for the rest of the year.
Here are some events that marked 2017 in terms of higher expenses:
- In January, we went on vacation with our family of 4 which ended up being a rather expensive trip.
- A few increase in spending related to Ms Mod’s return to work after her maternity leave (snif!), such as: daycare costs, public transportation passes and other various small expenses.
- Bought new summer and winter tires.
- We often hosted guests at our home and consequently maintained abusive wine and beer costs.
- Our dog had a rather costly operation but is now happily back in good health.
In conclusion, these are all expenses that we could and probably should have predicted but that we nevertheless chose to do. There is still plenty of room for us to make progress and become more frugal and perhaps that writing on this blog more regularly could help us improve!
Objectives to reduce our spending for 2018:
- Less spending at restaurants and maintain the habit of bringing our lunches to work which had a fabulous impact in 2017 (1000$ less in lunch expenses vs 2016).
Less expenses in wine/beer :
- While we had good intention mid-2017 to reduce our spending in this category, we decided to take a more concrete way this year which is to ban alcohol during weekdays (except on really special occasions). The difference for January and February is already huge with a monthly average of about 200$ compared to 362$ in 2017.
- Be more attentive to our spending in terms of shopping (clothes, books, gadgets and other) sine I honestly have trouble figuring out on what we spent almost 1500$ for 2017!
Value of Investments at the beginning of July 2017:
According to our 2025 plan, in 2018 we should have a total investment worth 42% of our target FI # (does not include the value and asset we own of our home), however, that amount accounted for our plan to only pay off our mortgage in 2021 or later but, in February 2017, we decided to take out a portion of our investment to pay off our entire mortgage.
Here is a brief history of the value or our investment and where we stand in comparison to our 2025 plan:
|Month/Year||Objective 2025 Plan in % of FI#||Actual Total Value of Investment in % of FI#||Note|
|January 2017||36%||34%||We decide to pay off our mortgage at that moment by withdrawing about $100 000 from our TFSAs|
|July 2017||39%||28%||With a house fully paid as well 🙂|
In 2017, what largely contributed to our high savings rate was by contributing an additional amount to Ms Mod’s pension plan to buy back years of student work at the same employer. Additionally it is important to note that the market was performing nicely in January when we checked the total value of our investments.
In conclusion, despite the fact that our expenses were higher than our target, thanks to good savings habits, a market that has performed well and a bit of additional revenue from contracts Ms Mod took on as a side hustle, we are slowly catching up to the gap created by our change of plans to repay our mortgage sooner.
According to the very fun and useful Mad Laboratory by MadFientist, at this rate, our FI date should be September 2024 therefore it is all very encouraging!
To be continued…