When the TSX closed this past session at an impressive 25,648.00
points, I knew I was onto something. After updating my investment portfolio, I
discovered that my net worth now stands at a satisfying $467,529.69. Thanks to
the dividend from TMX Group Inc. (X) from this weekend and the three paycheques
I received this November, my margin debt has been reduced to a tiny little $427.12.
I should be able to clear it off by mid-December. I haven’t been debt-free in
what feels like forever. In fact, I think I’ve been carrying some form of debt
my entire adult life. Not that it mattered much to me. However, as I get older
(turning 45 next year), I feel it’s about time for me to become debt-free.
Like most people, my debt journey began with student loans.
For a long time, that was my only debt—until December 11, 2010. That’s when I
opened my margin account. Back in the day, TD Waterhouse had an office at the
Montreal Eaton Centre, right next to the food court. That’s where I opened my
margin account. I remember it clearly because there was snow, and it was real
winter weather. I even wrote down the date—December 11, 2010—on a piece of
paper that I’ve kept to this day. That’s how I can tell you that when I opened
my margin account. At the time, my investment portfolio was already somewhat
established. I didn’t open my margin account at the same time as my brokerage
account. At the time (on December 11, 2010), my non-registered portfolio was
valued at $72,232.12, and my margin borrowing limit was $43,653.66. That $43K
represented the amount I could borrow. And that’s how began my historic with my
margin account. With interest rates at historic lows, I couldn’t pass up the opportunity.
It was an exciting time to invest. But as interest rates rose, I realized it
was time to develop a plan to pay off my margin debt—my only debt—and now, that
plan is finally coming to fruition. Soon enough, I won’t have any debt at all!
Once my margin debt is paid off, I plan to keep the account
open—not because I expect to use it anytime again soon, but more as a safety
net. It’s there just in case I need quick access to funds for emergencies or unforeseen
expenses. I must admit, I’ve borrowed from my margin account in the past to
cover things like vacations and unexpected costs. That happened primarily
because I had no savings. For over 15 years, I invested every spare dollar into
stocks, leaving just enough to cover my basic expenses. Leaving almost next to nothing
to cover any extra expenses. And there are always some…
So naturally, when extra expenses came up, I turned to my
margin account. I didn’t mind carrying a margin debt because for a very long
time, my interest rate on that debt was low. At one point, my margin debt was close
to $100,000, most of it borrowed for investment purposes. At the time, it made
sense because interest rates were low, and the returns on my investments
outweighed the borrowing costs. But now, things have changed, and it’s time to
adapt. Now, interest rates are much higher, and the TSX is trading near its
highest value ever. It’s no longer the same old game, and it hasn’t been for a
while. A stock market at an all-time high and a high-interest-rate
environment create the perfect excuse to focus on paying down debt. I have less
than $500 left, and I still can’t quite believe I’m almost there. I’ve always
found the “paying down debt” theme as being extremely boring. This time, I have
to admit I’m actually excited about paying off my margin debt. I’ve had this
goal in mind for quite a while, but I never thought I’d actually achieve it so
soon. I am now on the verge of being debt-free and currently sitting at my
highest net worth ever: an exact $467,529.69. With Donald Trump returning to
the political spotlight in January, the next four to five years could be more volatile.
Interest rates remain high, and as I approach my goal of a $500,000 net worth,
it only makes sense to be debt-free. In my view, the only way to protect myself
from the potential volatility that may be caused by Trump's return is to be
debt-free.
Another priority once my remaining $427.12 is paid off is
building up my savings. It’s the only logical way to ensure I stay debt-free. Without
savings, I’d inevitably dip back into my margin account whenever extra spending
arises. I’m curious to see how quickly I can build my savings. Becoming
debt-free will undoubtedly give me the motivation I need to make it happen. Having
a clear purpose for my savings makes a big difference. The goal itself is
relatively simple: stay debt-free. That may not sound exciting, but it’s a
vital part of my long-term financial strategy. Without debt, I’ll have the
flexibility to focus on wealth-building through dividend growth stocks and
other investments. For most of my adult life, I’ve carried some form of debt,
whether it was student loans or a margin account. But as I prepare to enter
2025, I’m ready for a new phase—one where I remain free from debt and focus on
building wealth.
While my immediate focus is on paying off my debt and building savings, I haven’t lost sight of my stocks. With my new Stockopedia subscription, I’m excited to discover fresh investment opportunities in the coming year. Stockopedia has been a valuable tool in the past, helping me identify high-quality stocks, and I’m confident it will continue to guide me in 2025. I probably won’t be investing heavily in stocks, but I will likely invest occasionally, just as I did this year. Currently, I have over $3,000 in cash sitting in my RRSP portfolio, waiting to be invested. I still have a bit of work to be done when it comes to investing. With Stockopedia by my side and a renewed focus on saving, I’m excited for the opportunities that lie ahead. Here’s to a future of smart investing, financial freedom, and lasting wealth-building.
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