Hello there!

Finally, a new year has begun!

To all my readers, I wish you a very happy new year, full of wealth and prosperity, of course, but also happiness and, above all, good health. I hope that we’ll have as much fun learning and supporting each other on the road to financial independence.

Also, I hope that this ugly pandemic will fade away and that we’ll find a semblance of normalcy in our respective lives. And I don’t know about you, but I wouldn’t say no to a trip or two. 😉

Before completely turning the page, I want to do my usual monthly review of December 2020. In fact, these monthly reviews have helped track exactly where my money is going and assess how realistic my FIRE goals are.

I’ll keep doing those very enlightening reviews in the new year, as previously mentioned in my 2021 Goals article.

So without further ado, let’s get down to the juicy details.

Net Worth as of December 31, 2020

Assets
Checking Accounts:
Questrade TFSA
Questrade LIRA
Questrade RRSP
FTQ RRSP
Fondaction RRSP
$1,624
$29,608
$43,118
$33,679
$5,752
$13,427
Total assets:$127,208
Liabilities
Car Loan:
Line of Credit:
CIBC Aeroplan:
Tangerine Master Card:
Amex Air Miles:
BMO Air Miles:
Amex Aeroplan:
$9,403
$0
$0
$0
$0
$0
$0
Total liabilities:$9,403
Net Worth$117,805
Difference+$7,692

Full disclosure: I never dared hope to reach such a high net worth at the end of the year. I’m so grateful that I have been able to save so much throughout the year, in good times and bad. By following my automatic and regular savings plan (every two weeks on payday), I have been able to get exposure to different market prices throughout the year. This is what we call taking advantage of dollar-cost averaging.

I must admit I also made an effort to invest a little more than normal whenever the markets were down, too. 🙂

It wasn’t that long ago that I was hoping to end the year with $100,000 in net worth. I certainly wasn’t expecting to end with $117,805, which is 17.8% more than expected. Needless to say, I am extremely pleased with such results after a year like we had. I’d never have expected that back in March! So, there is something positive to come out of 2020. 🙂

I am ready to tackle a new month and a new year with those very motivating numbers!

Debt repayment

Finally, I also reached a new milestone on the debt front. My car loan went below $10,000! I can’t wait to see it disappear forever from my calculations.

In fact, some may wonder why I don’t pay off the balance in full and get rid of it once and for all. After all, I do have the money in my TFSA.

Ultimately, it’s a question of opportunity cost. If I take almost $10,000 out of my TFSA to pay off my balance, I’m turning my back on the return I could have earned on that investment. Of course, the return I could earn is hypothetical and cannot be predicted or guaranteed. However, I believe there is a good chance that the return will be higher than the interest rate on my car loan.

Believe it or not, the interest rate on my loan is 0.04%.

See the dilemma, here?

So while being debt-free is very appealing, I can’t possibly give up on the return I’d get on my TFSA to pay down a debt that costs me next to nothing in interest.

Nevertheless, I believe I made a compromise between the emotional side (being debt-free) and the rational side (getting a return on my TFSA) by increasing my regular payments to the maximum. I reduced the amortization by more than two years. The maturity date will be November 2021 instead of December 2023.

Additionally, I don’t rule out the possibility of making additional payments throughout the year. For example, I expect a tax refund in the spring, as well as a hypothetical bonus at work. If I use these to repay my loan, I’ll reduce the amortization even further.

However, selling investments to pay off my debt is the last thing I want to do.

Savings

Here are the details of my December savings:

  • December 2: $1,200 out of $2,148.84 net (56% savings)
  • December 16: $1,000 out of $1,892.52 (53% savings)
  • December 30: $1,000 out of $1,897.52 net (53% savings)
  • Total savings: $3,200 in December or 54% savings

Of the $3,200 I saved, I invested all of it in my TFSA. That leaves me with about $44,000 of unused contributions, in addition to the new $6,000 contribution limit for 2021.

I still managed to save a large portion of every pay, considering (yes, again) this never-ending lockdown and the low expenses associated with it. The fact that I was paid three times instead of two in December and that I did some overtime also helps a lot. I had 27 pays in 2020, instead of 26. Apparently, it happens once every 11 years!

Expense Report

DateAmountDescription
2020-12-01$497.50Rent
2020-12-01$99.84Groceries
2020-12-01$19.72Gas
2020-12-01$18.63SAQ
2020-12-02$7.15Spotify
2020-12-02$10.00Donation
2020-12-04$403.85Car Payment
2020-12-04$27.36Yarn
2020-12-05$6.79Starbucks
2020-12-07$14.39Home Insurance
2020-12-07$48.04Car Insurance
2020-12-09$7.70Netflix
2020-12-09$29.50Hydro-Québec
2020-12-12$4.37Dollarama
2020-12-14$109.33Groceries
2020-12-14$13.90Gas
2020-12-18$403,85Car Payment
2020-12-19$6.79Starbucks
2020-12-21$230.43Registration
2020-12-23$206.55Airbnb
2020-12-23$6.93Groceries
2020-12-25$3.40Starbucks
2020-12-29$27.60Home Internet
Total:$2,203.62

In December, I had $2,203.62 in total expenses, or $26,443.38 annualized. If we take out the car loan payments, it amounts to $1,395.92, or $16,750.98 annualized. I consider this very reasonable.

There is little difference from the past months again. There aren’t many opportunities to go splurge, after all! I spent the holidays with only my sister at our place, out of concern for the sanitary measures. For Christmas, we had already planned not to give each other presents. In fact, we both consider that we don’t need anything, and we really didn’t want to buy a useless thing just for the sake of it. Actually, we much prefer to offer each other experiences (tickets for shows, activities, travel) and these are rather limited nowadays. That was definitely the least expensive holiday season I’ve ever had! 🙂

My slightly more outlandish expenses are generally related to keeping me sane during the lockdown. So you’ll notice a few Starbucks coffee here and there, again, and even a visit to SAQ. I also used my travel account to book a small cottage for a few nights in January with my sister. After the last few months, we feel like seeing something other than our 2-bedroom apartment (and our noisy neighbours).

Finally, I still don’t have any charges on my cell phone plan this month. By the way, a huge thank you to those (two) who used my Fizz code (N5MMB) so far! I’m not going to say no to $50 applicable on my cellphone bill. That’s a great way to reduce both our expenses. 🙂

Here’s to 2021!

That’s it, that was my December monthly review. All in all, an unusually uneventful month, but also very beneficial for my savings goals. I’m sure we’ll get to celebrate with family and friends soon.

My next article will officially be the last one regarding 2020, as I will make a full review of the whole year, regarding various financial aspects. As you know, I love numbers and statistics, and I will have plenty to give you.

So, did you start tracking your expenses like I do, after reading my monthly reviews? Were you surprised to see where your money is really going? Have you noticed that simply tracking every expense makes you spend more consciously?

For me, it’s been more than beneficial! I hope it is for you as well, or that you will try it out soon. 🙂

See you next week!

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