The winter had arrived for real in New Brunswick! I had been enjoying a few vacation days. I am starting the year on an interesting note: my margin account debt is now at a low $13,497.36. Not too bad, considering that I started the year 2023 with a margin debt of over $46,000. I updated my investment portfolio earlier, only to find out that my net worth is now standing at $379,670.38. I could have been within the 380k, but I have some bills to pay, not to forget my rent, since we are in the first few days of a new month.
I should be able to clear my margin debt by September, if not a bit earlier, depending on how things are going with my spending. I am currently in New Brunswick for the next couple of weeks. I don't know exactly how long I will be here, but one thing is for sure: I spend much less money while in New Brunswick than when I am in Montreal. For that reason, I think I may have a chance to reduce my margin debt from 13k to 10k over the next two months.
There's still no bus covering Riviere-du-Loup to New Brunswick, so I am stuck here for a big part of the winter. It's a problem and it's not a problem at the same time, but I feel less free to do what I want and go where I please. The winter months can be quite long here in New Brunswick. The winter has just begun here. However, I work full-time, so it's not too bad, but it really gets to a point where I feel the need to be alone in my own space, just me.
Anyway, while I am here in New Brunswick, the advantage is that I save a lot of money. I don't have my daily espressos; I don't go to the movies, and I don't go shopping just for the heck of it. I sincerely have no place to spend my money except for the grocery store and a few more places of the same nature to cover essential needs. I really want to pay off my margin debt in 2024, so I am off to a good start. Once that debt has been paid off, I will have some money left at my disposal to rebuild my savings within the 10k.
While having these very two clear money goals in front of me for 2024—paying off my margin debt and building up some savings—I don't have the liberty that I am used to. Usually, I don't set myself any really defined financial goals, if not general ones, like increasing my net worth. The stock market is already a very difficult place to be - and I know that - I don't want to add extra pressure by having to think about having to fulfill some financial goals. I am quite easy-going on a day-to-day basis.
However, this time around is quite different. 2024 is going to be a challenging year for me, where I have to really work at controlling my spending, pay off my margin debt, and build up some savings. We'll see how things evolve over time.
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2 comments:
Hello Happy New Year!
Over the years that you have had this margin debt. Have you paid most of it off by your earnings, as opposed to cashing in shares and putting that toward the debt? Or was that only the pbh time?
Do you think you would ever take out debt again, once this is paid off, or, you have enough to work with now? You had good timing as the rates were low during all this time!
Have a good new year!
Happy New Year! :-)
Interesting questions!
I opened my margin account in December 2010, and since that time, I carried margin debt ever since. The interest was low at that time, 4.52%. It gave me the liberty and the little push I needed to create a bit of wealth for myself. At one point, my margin debt was $100k. With the increase in interest, I went on a mission to pay it off.
To pay it off, it's been a mix of a little bit of everything over the years, but the repayment money mostly came from selling stocks. I sometimes used the dividend distribution to pay off my margin debt when they didn't DRIP. For the past year, I transferred the dividends earned inside my TFSA over to my margin debt. I recently trimmed my TFSA portfolio - I partly sold some investments, like SRV.UN and a few others. I also sold all of the shares I own in my TFSA of JFS.UN.
In 2024, the interest rate will eventually go lower, but it might not become as low as when I opened my margin in 2010. For that reason, I am still looking forward to paying down my margin account debt in 2024. Once it's paid off, I plan to keep the margin open - just in case I need money.
I am getting older, and I find it to be a good move to pay down my margin, but I may use my margin again in the future for investment purposes if the interest rate goes back to super low levels. I don't close the door :-) The problem with money is that it's never enough. I have a lot of money invested, but I would like to have a tiny bit more. And I would like to have a bit more in terms of dividend income too.
Thanks for reading :-)
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