💸My $1.5M FIRE progress update
After 8 years of aggressive investing, I am finally ready to enter the next stage of my FIRE plan, which is to re-focus my cashflow on debt repayment to reduce fixed cost. Here is an overview of my current financial positions as of July 11th (all currency in CAD):
Financial Assets
DIY stock portfolio (taxable/TFSA/RRSP): $1,027,993
WS private Equity: $11,872
Employer RRSP: $54,000
Smith Maneuver portfolio: $99,486
Crypto cold wallet: $10,600
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Total: $1,203,951
Portfolio Debt
Margin Loans: $52,335
HELOC Balance: $88,823
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Total Debt: $141,158
Current Monthly Fixed Cost:
Mortgage: $2,300
Condo Fee: $670
Property Tax: $246
Utilities (insurance/internet/phones/hydro..): ~$300
Food: $600
No guilt spending: $200
Travel budget: $1000
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Total: $5,316
Annual burn rate: $63,792
Emergency funds: I keep multiple personal line of credit opened which can cover 1.5 years of expenses.
Based my financial position, I am satisfied with my equity portfolio size which should compound itself to $1.5M within a few years without additional contribution. However, my burn rate is slightly higher than my $60,000 target (covered by $1.5M end goal using 4% rule). My focus over the next 2-3 years will be mainly paying down the mortgage balance to reduce the monthly payment down to about $1500. This will reduce my burn rate to about $54,192, comfortably below the spending limit after FIRE. My future contribution to the portfolios will be mostly for registered accounts only, with the rest of saving goes into debt repayment.
One important consideration is that the mortgage payments in Canada does not decrease even if you accelerates the payment once the term is locked. My workaround will be to use WealthSimple portfolio line of credit (PLOC) to make a significant repayment in the upcoming renewal in October, and aggressively pay it down over the next 1-2 years. This allows me to lock in the fixed cost reduction, aka reducing mortgage payment to $1,500 per month immediately, while also allowing me to continue reducing fixed cost as I'm paying down the PLOC. The WS PLOC currently offers an lower rate of 3.9% compared to my new 4.21% 5-year fixed mortgage rate.
Overall, I'm feeling pretty good about my progress and should be able achieve FIRE in the next 3 years. Any comments/suggestions are appreciated, make sure leave them below.
