Westside Renter – “Am I doing financially OK compared to others? Because I feel poor and worry about money all the time.”

“I am 41 years young living in Vancouver. I earn $100K a year and I have $275K cash, $20K TFSA, $200K in RRSP. I have no debt, but renting a place on the west side. My question is, am I doing financially OK compared to others? Because I feel poor and worry about money all the time.”
Finally at greaterfool.ca 1 Aug 2012 12:10am

41 years old; $100K income; $500K net-worth; no RE exposure.
Important unknowns:
Dependents?
Guaranteed pension?
Capacity to save?
Level of investment savvy?
Target age at retirement?
– vreaa

34 responses to “Westside Renter – “Am I doing financially OK compared to others? Because I feel poor and worry about money all the time.”

  1. I would say you are doing pretty well. Obviously knows the importance of saving and have no debt.

  2. pricedoutfornow

    I see a lot of people’s financial situations in my line of work. I would say the majority are up to their ears in debt and barely have any savings. $500k net worth which doesn’t include RE? I’d say this person is in the top 1% in terms of net worth (not including those who think they’re “rich” because of RE).

    • If you have $500k, a stable $>100k income, and no debt yet worry all the time about money and feels poor- I’d suggest that the person seek out some sort of therapy. I doubt that any amount of money would make them feel that they had enough to feel safe, there’s something else going on here.

      • Aldiss Huxtable

        I believe it’s called status anxiety.

      • Aldus Huxtable

        A comical auto correct on my username. Suppose I should be more positive!

      • Hi procrustes, thanks for your comment. I think it is a very important point.

        Why is it that someone with an above average job, no debt and strong net worth feels poor?

        Perhaps it is because they feel that reasonable shelter, one of life’s necessities, is significantly more expensive than what they can comfortably afford.

        And perhaps, they feel that, for the past decade, those who were lucky or financially reckless have been more successful than those who were financially prudent.

      • “Why is it that someone with an above average job, no debt and strong net worth feels poor?”

        Because they’re a troll?

      • Yellow Helicopter

        Agreed Jeff.

  3. Agree with pricedout that this guy is a 1%-er. I think there’s a statscan report that provides net worth distribution among age groups and geographical location. HOWEVER, with $500k I think he probably can’t afford an early retirement (<60). If he keeps $275k in cash, he probably isn't very investment savvy (unless he is just parking it temporarily in cash, waiting for better time to act).

  4. You describe >50% of your net worth as “cash”. Is this cash in Canadian currency?

    As sure as the sun rises in the east and HAM is blamed for every Vancouverite who lives beyond his means, bubble countries experience economic crashes. What is your exposure to Canada’s pending economic disaster? Do you hold currency, securities, or own a business here?

    I AM NOT A FINANCIAL ADVISOR, nor am I financially sophisticated. These thoughts are just my stream of consciousness.

  5. PS a second, and possibly greater exposure, is behaviour: Did you inherit this money or otherwise accrue it via a one-time transaction, or have you been saving it carefully over the last two decades?

    The reason I as is that the holding of a quarter of a million dollars in cash rings some small alarm bells, especially in the context of your opening phrase “I feel poor and worry about money all the time”.

    If you have been saving it carefully, you know how to live within your means and manage your finances in a conservative and risk-averse manner. This behaviour, coupled with your income and your current net worth, makes your financial security as close to a sure thing as there is in this world.

    If you were mostly broke until the day your wealthy uncle died, then took the inheritance and maxed our your RSP and TFSA and don’t know what to do with the rest of it, you are at greater risk. Be cautious of the various pitchmen, “investment advisors”, “wealth managers”, and other skimmers who will squander a hundred grand of yours to earn themselves ten.

    Having half a million bucks in cash, securities, or “equity” is not a guarantee. How much of it will actually stick to your fingers? Only you know for sure.

    • Burnabonian, I agree with your statements. If this is saved money, the writer is doing just fine, but may want to find some investments with a bit more tax-savy yield than a “high” interest account (DIVIDENDS!!!!!). In fact, the writer may want to loosen the purse strings or make plans to spend some money and actually spend it.

      But if it is a windfall, who knows? Invest the cash, get some tax-savy returns. Spend a little of it on something you love, so that you aren’t feeling deprived. Then make a spreadsheet and track the growth of your nest egg and love the security you are accumulating.

  6. Exile on Main Street

    I wondered if this person was addressing the high cost of living in Vancouver. I think it is much harder to get ahead in this city, compared with many others, thanks to the very high cost of all the basics.

  7. Vancouver Renter

    The average net worth numbers obviously vary from province to province but this person is well above averages. Averages obviously don’t tell the whole story since age is (typically) a big factor. Someone 20 years older or 20 years younger relatively should have greater and lesser net worth respectively. But, with home ownership numbers around 70% and housing prices expected to go down it’s safe to say 70% of Canadians will see a significant reduction in net worth. In this persons scenario that will only push their net worth ahead of the average further since they have no exposure to Real Estate (and assuming Real Estate values go down)

  8. I would say this person is okay and shows some common sense. They don’t seem to be in debt by any means unlike many people I know. Although if he was wanting to buy a house then the situation could change quickly. They have not mentioned if they drive a $1000/month Mercedes or have a car paid off nor have they mentioned the rent they pay. People seem to be maxing out credit etc just to get ahead.

  9. Vancouver's Gross Grind

    The query is rather patronizing. Kind of like a guy in a Ferrari asking “Do you think I’m hot?”

    What kind of response was he expecting? A “No dude, you’re broke and poor. Better cut back on those morning lattes?”

    LOL. LOL.

    • Ya, I thought this post came across more as insincere bragging vs. any real anxiety or insecurity. But I like the Ferrari analogy.

  10. I wonder how he would feel about not having enough money if he owned a property outright. Further I think it would be easier if he asked if he’s doing “financially OK”, without comparing. It’s not a race you can ever win because there will always be someone else richer and luckier.

  11. According to the rigorous journalists over at the National Post, “There is little doubt Vancouver is now a buyers’ market.”

    Here I was thinking it was ridiculously overvalued. Silly me…

    http://business.financialpost.com/2012/08/02/vancouver-real-estate-market-in-full-retreat/

  12. This person obviously needs to live a little. What good is money if you are always worrying about it? spend some – have fun !

    But on what ?????? Hookers and blow for starters …

  13. Unfortunately, those financial numbers are nothing for one of the world’s most expensive cities. I was in Burnaby recently and had difficulty finding a loaf of bread for under 4$ at the grocery store after getting nearly half a tank of regular gas for 40$. Must be because everyone in Vancouver is a millionaire many times over. Ridiculous how overpriced and over-rated everything is there. You could have a couple of million $ in equity in Vancouver and still live like a peasant – and many people do based on my experience.

  14. 500k net worth at age 41 means that the poster can plan on a retirement income of 75k (in today’s dollars) assuming a 1% real return and continued saving that got him here from zero at age 25 (namely ~30k/year). His net worth at 65 will be about 1.5mm (in today’s dollars). When I say retirement income, I include spending down the assets.

    Put another way, if he were to use 60k as a target retirement income, he is $110k ahead of schedule. If he were to also believe in 2% real returns he’s $225k ahead of schedule.

  15. OP has no RE exposure , not even in REIT. the allocation amount assets is not well balanced for sure .

  16. I’m wondering what would Vancouver be like if people weren’t spending a huge proportion of their income on housing every month … the old normal so to speak. Would all the restaurants be full? Huge flat screens in every room? Big SUVs and BMWs everywhere? Or people actually saving for a rainy day and less stressed out?

  17. @donald:

    Vancouverites are spending a huge portion of their income on housing, yes. As much as several hundred percent, as near as I can tell.

    More importantly, though, they are spending an even “huger” portion of their housing-based “found paper wealth” on the day-to-day lives that we all see being lived here but strangely cannot afford even with good salaries.

    Leased exotic vehicles, $10k annual Whistler patronages, $300/head restaurant meals, $300/order “bottle service only” in bars, designer apparel, and yes $5 loaves of bread and $100 tanks of fuel. These are the norm here not because of our good salaries, but because of our easy access to billions in credit.

    I know this because I am from Calgary, and have family and close friends there. In a city where people actually *do* make very large incomes, (rather than a city where everyone is *posing* as rich,) spending did take off in many areas. And the cost of living did go up. But strangely, it didn’t get anywhere near as stupid as it is here.

    In Alberta, among my parents’ generation, it is reasonably common to an 8- or 9-figure net worth. I see how these people live and how they spend, and ironically it is nowhere near as extravagant as the showy, always-posing “real estate bajillionaire” set who wander around downtown Vancouver.

    My conclusion is simple: If you spend money as stupidly as Vancouverites do, you must be spending someone else’s money.

    • UBCghettodweller

      I would believe an order of magnitude less in the net worth calculation for Calgary. I grew up in the northwest of Calgary. Plenty of double professional income families living in nice but still relatively middle class houses driving middle class cars and spending (and saving regularly) within their means. Applied until retirement age, this results in easily six figures of net worth by their late-50s or early-60s.

      Although there definitely are people who like to show off their wealth in Calgary (luxury pickup trucks anyone?), many people very quietly just go about their lives without having to make their wealth a political or social statement. What I’ve noticed is that nearly everyone in Vancouver is a little bit pissed off about something and they need to passively aggressively make a statement about that issue usually through buying crap. They confuse purchasing with creativity. Something that should be one of the new modern seven deadly sins. They just can’t _be_. They just can’t be happy in “the best place on earth.”

  18. “In Alberta, among my parents’ generation, it is reasonably common to an 8- or 9-figure net worth”

    erm, you do realize that that translates to “10M -or 100M net worth”, correct? You parents might be affluent enough to have a social circle that includes several of these people, but this sort of household net worth is not “reasonably common” in any city in Canada in a larger population.

    • Yes, I can count to 9. No, my parents are not affluent. I was raised in a working class neighborhood and went to working class schools.

      I worked at several junior and one major upstream oil company while I was in Calgary. By “reasonably common” in my previous post, I mean that millions or tens of millions of dollars were quite reasonably attainable to many, many people who graduated with a 4-year earth sciences, engineering, landman, or other related degree in the 70’s.

      Having a gross overriding royalty in your name, starting a junior oil with other people’s money, or just earning an ownership position in any junior oil or services company is worth millions. Successes like these have been attained by (likely) tens or hundreds of thousands of Albertans over the last 40 or so years.

      The real ten-millionaires that I’ve met live under the radar. They are regular people driving late-model domestic vehicles and living in $900k houses in Bearspaw. They never talk about money, they do not always pay for lunch, and they wear Levi’s jeans.

      They also would *not* be seen staggering down Granville at 2 in the morning on a Tuesday, sporting $600 jeans and douchey tribal tattoos, fumbling for the keys to their leased Mercedes, bragging to an escort about the value of their real estate “holdings”, and having no apparent need to get to work later that morning.

      That’s my perspective on the difference between spending your *own* money and spending borrowed money.

      • Meh – anecdotes about “tens or hundreds of thousands of Albertans” with tens or hundreds of millions of dollars each are anecdotal. I call BS for what it’s worth.
        Alternatively, I’d like to introduce you to some of the tens if not hundreds of thousands of BC residents with grow ups netting hundreds of thousands of dollars a year.

      • Total truth – I know many Calgary couples in their late 40’s and early 50’s with 9 figure equity – all built on oil and gas. One of my grad school mates is lucky/clever enough to have joined this club over the last 3 years – he drives a Volvo. Calgary just doesn’t have the ostentacious display of wealth that is common in Vancouver.

  19. I’m not sure where you’re getting your info,
    but great topic. I needs to spend some time learning more or understanding more.
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