Financial Independence Saving

Our Personal Expenses Spreadsheet and Savings Rate

We are in June and it is time for the mid-year assessment of our household budget. Our last Open Book series article was published a few months ago so we thought it would be time for an update.

We have been tracking our income and spending for years. Since we discovered the whole concept of financial independence, we also started to track our savings rate. The amazing thing is; the more we can increase our savings rate, the faster we can claim our financial freedom.


Early Retirement GridSource, Four Pillar Freedom


Our friend Zach who writes over at Four Pillar Freedom shared with us this great early retirement grid. It is an easy way to visualize how many years you will need to reach financial freedom. Simply match your annual spending from the vertical column with your annual net income (take-home pay) from the horizontal row. The number where they meet is the number of years it will take you before reaching FI. This assumes a conservative 5% annual return on investments and a 4% safe withdrawal rate (see Trinity Study).

So far, we held an average 61.5% savings rate for these first 6 months of the year!

If we can keep this up, we can retire 9 years from now. Roughly 11 years after we first discovered financial independence was even possible. These rough estimates came from our assumption that we can be living off 4% of our portfolio once we retire and we assume 7% annual returns on investments given the historical averages of an equity portfolio (10%) minus the average inflation during the last century (3%).

This is a new record for us. We are super proud to cross the 60% bar for this considerable amount of time. We will calculate it again at the end of 2017 and, hopefully, we will have stayed above this mark.


Your personal savings rate =


Annual savings including any employer match (or any debt repayments) x 100

Total income less taxes, plus any employer match


The income side of our equation is slightly higher since I started my new job now with a 15% higher salary than my past position and we did earn a few dollars from sharing our home with travelers.

I still benefit from a generous employee stock ownership plan. They match part of my stock purchases so we included the match in too.

Our spending actually decreased from last year so our savings rate jumped quite a bit. To put numbers to the equation, increasing our savings rate from 50% where we were last year to the 60% we are now aiming to decreases our working years a whopping 4.2 years!

That is 4 more years to enjoy doing whatever you want to do. 4 more years not waking up to an alarm clock.

4 more years of freedom!


Household Budget

We did a lot this year, we traveled to British Columbia, New York City, and we booked a trip to LA and San Francisco in August. All of these were very cheap since we now get free hotel stays and free airfare through reward points but we are running out of vacation days!

All-in-all,  we spent about $1,000 for those three trips and most of that was restaurants. In our last spending post, traveling was our second biggest expense at a staggering $9,582 for the year but we were able to cut this so much that it is not even in our top spending categories anymore. Keeping this up for the whole year should decrease our annual spending by almost 14%.

Unsurprisingly, our biggest expense is our house. We spent $9,846.38 in the last 6 months on our mortgage payments, home insurance, home maintenance, and property taxes. This does not concern us too much since we greatly enjoy our house. Lately, we started maximizing its utility by renting out our spare bedrooms on Airbnb. In the last 6 months alone, we made over $2,000 just for hosting a few guests.

In our Food and Dining category, we spent $3,730 in the past 6 months. This brings our average monthly spending down to $621 compared to the $723 per month we averaged last year. We did not change anything to really cut our grocery bill except for an organic, locally grown, vegetable basket subscription we now enjoy. This small change not only decreases our monthly spending on fresh produce but also helps our local farmers thrive. We believe in sustainable, local, farming and it also tastes better. The $100 cut in this category mostly came from less dining out.

For the last 6 months, we spent a total of $2,102 on Bills and Utilities. This includes our two cell phones ($60/month plans), home internet ($45/month for unlimited high speed), and electricity (winter just ended so we had $200/month bills but we pay roughly $50/month during the summer). Our heating is all electric and we do not pay for water or cable TV.

For Transportation, we spent $2,553 or $425 per month. This includes car maintenance, gas, and repairs of our two cars plus any transportation we use during our travels. We do not have any car payments and do not advice you get one either.

Our last considerable expense was Shopping which includes some household goods we bought off Amazon, clothing, gifts, and a few little trinkets. This adds up to $1,508 in the past 6 months.

Including all the smaller categories that we are not budgeting for, we spent roughly 30% less from January to June than we did from July to December of last year. This is mainly due to the huge cut in our travel spending since we started getting free hotel stays and free flights through reward points.

We were spending thousands of dollars on travel and we are able to cut this down with a few credit card applications. The welcome bonuses these companies give to attract customers are more than worth our while and we can help you find your own way through travel hacking if you need a little help.

We wish you great savings and a wonderful summer, Mr. and Mrs. Xyz.



Finding the Perfect Job and Investments

It is a new beginning. After months of research trying to find the perfect job and over two dozen interviews, I am proud to announce that I finally found a new job.  I applied to at least a hundred positions online and received multiple offers from some of the biggest companies in Canada. Finding the perfect job as definitively not easy.

After so many interviews, I have received everything from deceptive offers to insulting offers, to plain old boring offers. I was amazed to see how many employers offer minimal salaries and try to get away with bottom-of-the-range compensation packages even in professional fields. In the end, I was getting desperate for change and I could imagine why someone would accept such low-ball offers.


Finding the perfect job

Finally, I was offered a job that answered all my criteria and I negotiated a compensation package 15% higher than my previous position. I now have a nice corner office with large windows and work with a great team of enthusiastic co-workers, which is a great change from my previous environment.

The biggest advantage of this new job is that it is in my community. My office is now only a 10-minute drive from home compared to the 35-45 minutes of traffic I used to previously drive. This alone is a great reason for a change.

Even without a salary raise, location alone can make a promotion worth it. In my case, my previous transportation costs added up to $9.01 per day (assuming our high gas prices in Canada of 1.195$/L or 4.523$/gal). With my new commute, my costs are four times less and these savings will add up to $1,722.5 per year, not to mention the six hours per week I have gained back in my life.


How to save with a new jobHow to save with a new job

Source: GasBuddy


New investments

Now I have cashed out my pension package and stock option from my previous employer, making this a great time to clear up my portfolio. I am very proud to say that we now solely hold index funds and are fully committed to our indexing strategy.

I sold the stocks that I had accumulated through my previous employee purchase plan and sold all of my holdings in the Bank of Nova Scotia since it has been flat-lining for the past quarter and did not show many signs of future growth. Fortunately, I was able to capture a 48.6% total gain on my investment over the year I had been holding BNS. Unfortunately, this is fully attributed to luck and not to my extraordinary stock-picking skills. Even after these amazing gains, I firmly believe that indexing will beat individual stocks over the long-term.

So many investors underperform because they try to time the market and pick the next Microsoft, Google, or Apple. Unfortunately, it is nearly impossible to only pick winners so you are better off putting all the chance on your side and invest in the total stock market to capture all future winners and to benefit from the general growth of our economy.

In our previous Open Book series, we separated RRSP (401k) and TFSA (Roth IRA) but it makes it harder to follow and less representative of our actual allocation. We use tools like Personal Capital to track all our investments in one place without the need to login into our accounts.


Below is a breakdown of my whole portfolio, as of March 31st, 2017:

VTI ♦ 34% of my total portfolio is invested in the Vanguard Total Market ETF. This is the total weighing from all my accounts (RRSP and TFSA) since it is now much simpler to follow once we see our allocation as a whole.

VCN ♦ 28% of my total portfolio is invested in the Vanguard FTSE Canada All Cap Index ETF. I have invested a lot more into the Canadian market since I sold my holdings of Canadian banks. After I sold both BNS and TD, I invested some in a bond ETF but mostly in the Canadian index.

VWO ♦ 16% of my total portfolio is invested in the Vanguard FTSE Emerging Markets ETF. This is only 1% more than my previous allocation shown in October.

VBR ♦ 8% of my total portfolio is invested in the Vanguard Small-Cap Value ETF. I am tilting my portfolio towards smaller caps since small-cap stocks averaged an annual return 2.20 percent higher than large-cap over the long-run.

BND ♦ 5% of my total portfolio is invested in the Vanguard Total Bond Market ETF. This is a small portion of my portfolio that helps during rebalancing. We rebalance annually or semiannually if our allocation thresholds surpass 5%. This provides sufficient risk control relative to our target asset allocation (according to many studies including this one from Vanguard).

Portfolio rebalancing: Why, when and how much

Source: Vanguard


VGK ♦ 4% of my total portfolio is invested in the Vanguard FTSE Europe ETF. This is a little bet to beat the US market over the long-term.

VRE ♦ 3% of my total portfolio is invested in the Vanguard FTSE Canadian Capped REIT Index ETF. I did not change my allocation in REITs but I am slowly increasing my holding up to 5% with new contributions. The American version of this ETF is symbol VNQ.

VEA ♦ 2% of my total portfolio is invested in the Vanguard FTSE Developed Markets ETF. This is an international, developed world index fund but I prefer the emerging markets since it is less correlated with our local economies.


The Grand Totals

Even after selling my individual stocks and reinvesting in ETFs, I still keep a strict asset allocation and rebalance every year. I always re-invest dividends and automate most of my investment contributions on each payday.


Current Asset Allocation Desired Asset Allocation
  • 42% ♦  US Market
  • 31% ♦  Canadian Market
  • 22% ♦  International Market
  • 5%    ♦  Bonds
  • 40% ♦  US Market
  • 30% ♦  Canadian Market
  • 25% ♦  International Market
  • 5%    ♦  Bonds


Mrs. Xyz

My wife has a very similar asset allocation as me and has kept it very simple. She holds only 4 index funds with Vanguard (VTI, VCN, VWO, and BND) and only invests in her TFSA (Roth IRA).


Mrs. Xyz Current Asset Allocation Desired Asset Allocation
  • 45% ♦  US Market (VTI)
  • 38% ♦  Canadian Market (VCN)
  • 10% ♦  International Market (VWO)
  • 7%    ♦  Bonds (BND)
  • 45% ♦  US Market
  • 40% ♦  Canadian Market
  • 10% ♦  International Market
  • 5% ♦  Bonds


This concludes the March update of our Open Book series. For those who had been waiting for an update on our portfolio, I know it has been (yet again!) 6 months since our previous post. 😛 I only update this post when our allocation changes and I thought that being (finally) a true indexer was worth mentioning.

Stay happy, Xyz.






Keeping a Monthly Budget as a Couple

With today’s online tools such as Mint or Personal Capital, it is super simple to track a budget and hopefully, to follow it. We have been keeping a monthly budget for a few years now and our most recent focus is our savings rate. By cutting out and not spending on stuff that does not bring us happiness, we are able to live off half our salaries while living a lavish life (to our standards anyway). We aim to retire very early and we gear our lifestyle towards this goal to be able to save enough to sustain our us in the future.

So many people are simply living their life according to marketing or are influenced by peers. You need to think about the core reasoning behind a purchase; Will this make you happy. 🙂

The principal wealth killers in America are houses and cars. Most people over-spend on their home, buying too much house, thinking it is an investment. With a clear budget, you can see if you can actually afford your home. Preferably, you should not spend more than 25% of your salary on your housing costs.

Buying a brand new car every few years will also greatly limit your savings abilities. With the average new car price at a whopping $33,560 (according to data from auto researcher Kelley Blue Book), no wonder it can put a strain on your budget! Putting this in perspective, a $33,560 car could be resold after 5 years for an estimated $12,488 (according to Edmonds) giving you an actual cost of ownership of $21,072 every 5 years or $4,214 per year to get a brand new car every half a decade. If you were to buy a 5-year-old instead and sell it in its 10th year for half the price you would effectively only spend $1,248 per year. Assuming a $12,488 purchase and $6,244 resell. By driving a 5-years-old car, you are effectively losing 4 times less to depreciation!

Most people fall for the brand-new car trap, even money bloggers,  but if you restrict yourself to a cash diet it suddenly becomes much harder to fall for. Try to pay for cars out-of-pocket and skip the financing. You should also skip the first few years and buy used cars. Unless cars are your true passion and a new car will truly make you happier, they are not worth it.

By cutting down both for our housing and transportation needs, we were able to save. Those two categories alone minimized our expenses and increase our savings drastically. We spent a total of $23,411 on our house in the past 12 months (including mortgage, renovations, and maintenance) and still own two cars from 2007.

If you are not already tracking your income and expenses, you can start for free with Personal Capital or Mint and really know where it is all going. Since we have been tracking our spending for a while now, we are openly sharing it with you today 🙂


What our spending looks like for the past 12 months (in Canadian $)

How to build and follow a great budget

Home $23,411
Travel $9,582
Food & Dining $8,681
Auto & Transport $6,167
Shopping $3,313
Bills & Utilities $3,269
Health & Fitness $3,217
Taxes $2,595
Uncategorized $1,096
Fees & Charges $611
Education $669
Entertainment $649
Personal Care $641
Pets $463
Gifts & Donations $374
Business Services $237
Misc Expenses $174
Total $65,157


Going over these one-by-one will give you a great idea of how we plan our spending and live our life. To begin with, our total house spending should include the $23,411 (mortgage, renovations, and maintenance) and the taxes of $2,595 since those are our annual property taxes. This brings our total housing costs to $26,006. We started renting out our spare bedrooms on Airbnb last month so we are now generating a slight income from our property.

Our second largest expense, and the one we enjoy the most is travel. We do spend a considerable portion of our income on traveling the world but it is our passion and obsession. There is no reason to save every single penny you earn to retire early if it makes the journey miserable.

Becoming financially independent takes time. You need to enjoy the journey as much as you will enjoy your final destination. Money is just like a river, it flows and you cannot keep it stalls, otherwise, it stinks! Out of this $9,582, we got refunded roughly four thousand dollars for business travels.

Whenever we need to assist a conference, we stay a week or two extra at our own cost, but the flights are still covered. We are also drastically cutting down on flight expenses for our next trip with the help of generous credit card rewards. The next 12-months should be much better on that front.


Find your card today and start earning those SWEET miles!


In our Food and Dining category, we roughly spent seven thousand dollars on groceries and the rest on restaurants. We home-cook most of our meals to save a ton on restaurants. In addition, we recently started cutting down on meats to lower our total grocery bill to about $400/month.

If these numbers seem high to you, note that we live in Canada and food costs are considerably higher than in the United States. Using a grocery list sample, food is roughly 29% more expensive in Canada so our current spending is comparable to a $425/month American grocery.

To continue, our Auto and Transport category includes the maintenance, gas, and repairs of our two cars. It also includes the subway tickets we sometimes purchase to skip traffic. We roughly spend two thousand dollars per car. There are no monthly payments or interest on them since we paid for them in cash.

We also minimize depreciation by keeping our old cars. Both models are 2007 and still run perfectly so we really do not feel the need to change them.

Our shopping spending is pretty high, however, this includes all store purchases we did as gifts. We also get some work clothes purchases reimbursed so we got back about half of this amount.

On the bill side, we include our two cell phones, home internet, and electricity. Our heating is all electric and we do not pay for water or cable TV.

In the Health and Fitness category, we have spent about two thousand dollars on ski lift tickets. Since we both really enjoy the outdoors, it is worth it. The rest was spent by Mrs. at yoga studios.


Meditate, relax, and pay your taxes.


Furthermore, the Uncategorized and Misc spending are mostly ATM withdrawals for small purchases like coffee and the few shops that do not accept credit cards.

Our Fees and Charges are mostly credit card annual fees. However, they mostly get reimbursed since we take advantage of promotions to get free premium cards. We also used our line of credits (we each have separate ones) for short-term cash-flow management but we mostly stay debt-free (other than the mortgage).

The spending on Education is more of an investment than anything else. Furthermore, our Entertainment expenses are mostly Netflix and video games.

In the Personal Care and Pets categories, we cannot really cut anything. We do not go to $100+ hairdressers or visit the nail salon every week. These expenses are for our basic personal care and pet food.

For the Gifts and Donations category only includes the cash or transfers directly sent. The items we purchased as gifts would be under shopping. Finally, the Business Services section includes all the expenses for this blog and my other projects.

After all of this, our biggest category is still Savings! It is not included in our spending but we do save the majority of our income and invest mostly in index funds for our future selves. 🙂

The government is smart, they deduct our income taxes right out of every paycheck. That way, they benefit from having our money now, rather than later. You should do the exact same with your savings! We deduct a set amount, every paycheck, and automatically invest it to maximize our returns over the long-run.

We hope you enjoyed and please comment away.

Mrs. and Mr. Xyz.