050: Taking the Leap From High-fee Mutual Funds to DIY

It was March 2020, and the pandemic had just taken over. EFIC listener Kay, still new to FIRE, moved a large chunk of her life savings from high-fee mutual funds to an all-in-one ETF at Questrade. But as momentous as this decision was, it was only one part of Kay’s financial transformation…

In the interview, Kay takes us back to her pre-FIRE days, when she followed the traditional narrative of paying down your mortgage and saving a little every month. Despite doing all these ‘right’ things, she still didn’t feel secure or confident about her financial future.

It wasn’t until Kay discovered FIRE that she finally experienced true financial security and peace. Even with the uncertainty of the pandemic (including unemployment) she feels more confident than ever! Kay’s story shows, once again, how FI can provide so much freedom—all along the way.

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Money Mechanic
Hello, listeners. Welcome to Explore FI Canada, where we sit at the roundtable with Canadians, and share their thoughts, ideas and personal journeys to financial independence.

Chrissy
Thanks to Matt McKeever for sponsoring Explore FI Canada. Matt is a Canadian investor, CPA, entrepreneur, and real estate expert who achieved FIRE at age 31. Do us a favour and check out his YouTube channel by searching Matt McKeever or using the link in our show notes.

Welcome again, listeners Money Mechanic with you. And of course Chrissy’s here sitting at the round table as well today.

Chrissy
Hi, Money Mechanic. How are you doing?

Money Mechanic
Fantastic. Thank you very much. And today’s show, you know, you know what I was thinking. Just before we started recording this, I was thinking for, you know, we’re still kind of in we’re in January still. So this is still like locked down for a lot of Canada. But we’ve been doing really well getting around Canada with our episodes. So far this year, haven’t we? We’ve had Vancouver Island, we’ve had Alberta, we’ve had Quebec, and today, representing Manitoba. That’s pretty good. We’ve been traveling. And I think you know, that’s one of the nice parts that we try to, you know, focus on with this podcast is hearing stories from different people in different parts of Canada, and what their FI journey looks like. Because, as we know, it’s different for everybody. And we’re all in different places and join at different times of our life. And you know, the stories help, you know, give actionable tips and motivation that anybody can get on this path. And this kind of community is super helpful. Everybody is not just us.

Chrissy
Exactly.

Money Mechanic
So along those lines, our guest today is going by the name of Kay, and she is from Manitoba. Welcome to the show, Kay.

Kay
Hi, thank you for having me.

Money Mechanic
Now, the reason we’re talking to you, is because you reached out to Explore FI Canada almost a year ago, and said that you had recently discovered Mr. Money Mustache. I think that was in one of your first emails, or your feedback. We appreciate feedback to the show, of course, you said you’d found Mr. Money Mustache, and you’d heard some other incredible stories that so many people were sharing, and that you were hopeful that there was still a chance for you to relieve your worries, and live a simple and happy life. Now, you’d been super aggressive paying off your mortgage, and you felt there was a whole new world of opportunity opening up. So here we are almost a year later. And I thought it’d be great to just go over some of the broad strokes of how your year even though it was like 2020 was crazy for all of us. Let’s be honest. But it’s pretty cool. What a difference a year makes. So let’s just go back to the beginning there and just a little bit about yourself and finding the FI community and Mr. Money Mustache.

Kay
For sure. It probably started actually a few years before that. Maybe 2017, 2018, a friend of mine had told me about Tim Ferriss and his podcasts. And she’s like, yeah, you should check it out. He’s really interesting. And so I was just listening to a few episodes and then came across the episode with Mr. Money Mustache, and it blew my mind. It blew my mind. And at the time I was I just thought that’s, that’s impossible. That’s impossible, or impossible for me. Anyway, so I put it in the back of my mind and lived my life for the next few years. And then, you know, lo and behold, I come up on the beginning of last year, and I’m about to pay off my mortgage, which happened sooner than I thought it would. And at that point, I kind of thought to myself, well, what, now what, what now, because I’m not going to have this payment, and I’ve been waiting for this moment, for Well, it was 14 years. And now what? And so then I yeah, I happened. I thought about that podcast again. And I listened to it again. And it went back to it and and I thought well, okay, maybe there’s more to this. And the thing that was missing for me was Canadian content, because I kept on I listened to, to him read his blog, and then just started, you know, listening to other podcasts that were American-based. And I thought Jeez, this is so frustrating. I want to hear about TFSAs and RRSPs, not a 401k and all that stuff. So then I started searching for Canadian and then I came across you guys. And lo and behold, here we are. Yeah, I sent out a simple email, you know, and I didn’t I didn’t know what I would hear back if anything and…

Chrissy
Yeah, you were so tentative in your message to us and like of course we we want to help!

Kay
I don’t know why it seems so unreasonable there that you know, if you if you email that people won’t, won’t respond, you know, but everyone here is so gracious and been a it’s been a year of change, that’s for sure.

Chrissy
Yeah, yeah. Well, I think that’s a big part of most of our journeys is when we come across this community, we feel like I’m not alone anymore, you know. And when you start talking, that’s when you really learn and grow and your journey takes off, because the journey becomes real, because you’ve got these real people who are going through it with you. And it’s amazing what you can learn from each other.

Kay
And I think the thing for me that’s been so refreshing and reassuring, is that this whole thing is not about… for me, it’s not about being rich, it’s it was always always stems from a fear of actually being homeless. When I was young, because my path is in the arts, so I’ve got a background in dance, I trained at Ryerson out in Toronto years and years and years ago, I’m 44. So, and I’ve been working in the arts, which is not the most stable career choice. And it’s been a really interesting ride. And I think I’ve managed to do well, considering that it is a lot of contract work. And it’s it’s been an interesting path in that regard. So it’s, it’s hasn’t been about being rich, but it has been about not worrying, I’ve never wanted to worry, in my old age, I want to make sure that I’m going to be okay. And so I do find that, in this community it is about the values seem to be more simple, and in line with maybe more minimalist, living and environmentally conscious and, and that’s what struck me, the value system seemed to be more in line with what I was already living.

Chrissy
Yeah, you’re right. For me, I think that was similar in that it all just makes sense. It aligned with my value system. And it encourages you to look at your own values. And that’s why I think it’s such a powerful motivator when you find FIRE, that it’s not about this one goal that everyone says you should reach, but it’s about what the freedom will buy for you. You know, is it more time with your hobbies, with your family, whatever it may be, it aligns with your values? And that’s why it’s such a powerful motivator.

Money Mechanic
Yeah, I think one of the things is you become I don’t know if want to use the word critical. But at the beginning, you kind of get a little bit of focus on what you where you’ve been spending your money. And then you can decide what’s meaningful and adds value. And I think we naturally on this path become better global citizens, because we cut out a lot of waste that existed previously. Right. And you can move move forward with that mindfulness. Now, at the beginning of the journey at the beginning of last year, were you a DIY investor?

Kay
No.

Money Mechanic
So you had high-fee bank mutual funds?

Kay
Completely. And I’ve been with RBC for the longest time I did start contributing when I was young, when I was 18. I was thinking about this stuff, but in the sense of, Oh, well, I have to contribute every month, and I’m going to contribute my $25 a month. And oh, yeah, I can’t wait… into an RRSP! That was all Canadian equity, right? Because I love Canada, that makes total sense, of course, doing the right thing. And, and then I started getting, I started looking into the fees and the fee structure and actually read reading the fine print, I just started doing a little bit of the math behind that. I was like, wait, wait a second, when I actually, you know, put the numbers together, I started feeling a little bit sick to my stomach. And then especially once I started listening to these podcasts, when that was also helping to educate me as to the impact of this little percentage, this one, or 2%. And in the impact, I had no idea about the compound interest and how much it would affect it. So that was that was the start. That was the start of it was waking up to that.

Money Mechanic
Once you found out the impact and like quite, like you said, you know, actually did some numbers and for the listeners out there, don’t get super concerned or afraid of the math, it’s it’s pretty straightforward to do some easy calculations on your existing portfolios. And we’re not here to tell you what to do or where to move your money or anything like that. I think it’s just highlighting that know where you stand with your investments. And so Kay you you have these high-fee funds, you did move towards DIY so it just want to ask a few questions about that. Did you did you have to break up with an advisor? That’s always some something people are uncomfortable with. If they’ve been banking or talking to somebody for a while, they kinda have to like it’s almost like a little bit of a breakup right to move your money. And it’s difficult to move your money out of the bank and you had to make choices. Where to move your money and what to do with it. So let’s just unpack some of that. So how was the transition out of the bank?

Kay
It was fairly straightforward. I had worked with a woman for many years who retired and I had a nice relationship with her. And then there was her replacement. And this particular advisor, nice guy, super nice guy. But he felt like a salesman to me. He really had the stick. And, and in my gut, I knew I didn’t like this guy. I just I didn’t like it. Of course, he recommended a fee, a fund that had a fee of something like 2.5%, right? At the time, I was like, Oh, great. It’s a global. Yeah, that’s great. Excellent. Okay, great. And then, you know, of course, in the end, when I, when I took a look at it, I wasn’t surprised. So it was really interesting. When, when I told him that I was planning on switching out and his, his demeanor changed somewhat. So. Yeah. And I, you know, I kind of feel bad, but not really because I’m taking, I’m taking control finally. So…

Chrissy
It’s your money.

Kay
Exactly, exactly. The actual process was pretty straightforward. Very easy. And now I’m with Questrade. And so that whole switchover was, Oh, yeah, it was very, very easy.

Chrissy
So okay, you’re saying it was easy to move over to Questrade. But I think psychologically, it’s not so easy. It’s actually quite scary to make that leap from just sending your money to the bank, and they invest it to taking it on yourself at Questrade. Because at Questrade, you have to do it all. So can you talk a bit about that? How did you get over that hump? Or was it not scary for you? Did you just make the leap? And it was no problem.

Kay
You know, yeah, I shouldn’t say it wasn’t stressful, because I’m talking in the present. So I have to go back to that time, which feels very far away. Now. So much has happened since then. Because it was really was a large chunk of my life savings that I was moving on over, I knew that it was going to be a smart move, though. I already knew that coming out of it, I felt the relief of coming out of a high-fee fund. But I did a little bit of research and do a little bit of playing around. And it didn’t take long to get the hang of it, honestly. But yeah, but yeah, the time and here’s a really interesting thing. So my funds are transferred out of Rotal Bank, and then the stock market crashes. And then my money goes to Questrade. So I don’t know if you guys remember how you felt when the pandemic… this is pandemic hitting. This is fresh, we have no idea what’s going on, you have no idea how bad this is. But, you know, if you’re listening to the news or anything like that, it’s so volatile, and the predictions are so dire. And at the time, I was really nervous to put it back into anything else. For fear. It was probably fear and greed, a little bit of both. Because at the time, I was assuming there was going to be another drop. So already there was a bit of that greed kicking in of Okay, well, it’s probably going to go down again. So I’m going to wait or should I wait, should I put all of this in now? Or wait? And I remember, I ended up doing a bit of dollar cost average I just kind of over maybe a few months, put it back in. So big chunks, but but not a lump sum? In hindsight.

Money Mechanic
Yeah, I mean, in hindsight, but at the time, it was probably pretty. I mean, I don’t know, psychologically, it probably was.

Kay
Yeah. And now, I don’t even think about it anymore. And I think Oh, of course, I should have lump summed. But at the time, that was a very real fear, or a very real thought that made it difficult.

Chrissy
Well, that was a trial by fire. You really had to dive right in.

Kay
Completely, completely.

Money Mechanic
Just focusing on that point for a second, because this is a question that comes up a lot in the community is the the lump sum versus dollar cost averaging. And we all know that the math says the lump sum works like what is the saying? 60% of time it works every time. It’s supposed to work but none of us probably watch and say none of us but most of us don’t have the fortitude to just go lump sum in you know, and but knowing what you know now, even though it’s only been a year of education to your own DIY investing, faced with that, I mean, hopefully we’re never faced with like a market crash because of a pandemic but in the future, there will be other market ups and downs faced with that again in a similar situation. Do you think it’s your psychology that’s improved and, or is it like your confidence because of what you’ve learned about the markets and DIY investing that would change your decision if it happened again?

Kay
I hope it’s a little bit of experience and a little bit of education, both of those, going through it, there’s nothing like going through it, to teach you in life and everything. And then, and then also doing the reading, I think, I’d read The Four Pillars of Investing. And it, it laid out crashes. And in this topic, exactly, and again, the math says, you can read that and read that all you want, but until you’re faced with it, you’re gonna, you’re gonna do what you’re gonna do, and you’re gonna do your best. And that’s all you you can do at the end of the day. So I hope that now, my best was maybe a little bit better than a year ago. And that’s great.

Money Mechanic
For sure. So you got into Questrade. Now, I just want to wheel back a little bit again, because you chose Questrade. But what about any of the robo-advisors in Canada? Did you look at those, because that seems to be a popular choice for people that are making the first transition to DIY. You know, I see a lot of people go from the typical bank funds to a robo, you know, and as they build confidence, they gradually move over to full DIY at Questrade. Did you consider that? What sort of helped you with the final decision?

Kay
I looked at it for a little a little while, but I knew I wanted to, to dig in there myself. And if, if that means that I’m going to be making the mistakes, I I wanted to take the chance. Because I just feel like when I’m truly doing it myself, that is when I learned the most and learning from your mistakes. Or maybe maybe it’s the pressure to educate yourself a little bit more when you actually have to do it all yourself versus a robo-advisor. I think maybe it had to do with the fact that I was so fed up with anyone else. Totally where my money was, but that was probably part of it. I think I was a little bit angry.

Chrissy
It was like cold turkey.

Kay
Yeah.

Chrissy
You’re done.

Kay
Yeah, yeah.

Money Mechanic
Yeah. Forced to learn it.

Kay
I think so. Yeah. Because it really did feel like my trust was betrayed a little bit under my experience with the bank, so.

Money Mechanic
You made the move, you got yourself your money over to Questrade, you dollar cost averaged a little bit in, did you pick individual ETFs? Did you go with all-in-one funds? Did you pick stocks? Did you have a plan?

Kay
I knew that my plan, I needed to diversify more because I was very much mostly Canadian equities. So I knew that I had to diversify that a lot more. And so I did learn about Vanguard’s VEQT and VGRO and and I wasn’t afraid of I’m not afraid of having an all-equity fund. So I knew that that was something that I was interested in. Because I know that I’m not going to be retiring in two or three years, it’s going to be some time still. So I’m okay to have an all equity fund. So I knew that that’s where I wanted to go. And, and yeah, I did some research. And Vanguard seemed like the one it was easy, in the sense that it has everything that I was looking for in one fund. So I do like that aspect. Because I wasn’t interested in having 20 different funds that I was going to manage myself, I I’m lazy. When it comes to that I really liked that it was all-in-one. And that made sense to me. so.

Chrissy
Yeah, I was getting close to that, and maybe not 20 but I had quite a few ETFs when I was at the peak of my DIY and it’s it becomes a lot to manage because it’s scattered across my husband’s and my accounts and the kids’ accounts. And it just it becomes really unwieldy. The more that you add, even though you just can’t help it sometimes you just want to optimize it that little bit more.

Kay
Yeah. And for me, I’m not I’m not someone who’s I’m not checking, I did my first check to see my balances this at the end of this year. So I let it go for the whole year. And then I rebalance. I’m going to rebalance. Starting now. I’m not checking it every month. Like I say I’m lazy I am this is the first year I ever kept track of every single penny that I spent. I don’t do that. I’ve always paid myself first. But this was the first year where I kept track of everything and it’s it’s very exhausting when you’re not used to it. It doesn’t take a lot of time. It’s just that little extra bit of energy. So you know, to get used to it. So I like my balancing every year as opposed to every week or month.

Money Mechanic
That’s awesome that you track everything. I’m super impressed. I I was just laughing to myself when Chrissy said she used to have funds and I thought you know hopefully listeners do as I say not as I do because I’m so guilty. I am so guilty of having different funds. I could admit my failures! Did you use a specific tool for tracking your spending? Did you spreadsheet it? Did you have you come across anything else? You know, sort of, there’s lots of FinTech out there to make life easier for tracking and all that kind of stuff. Now, did you find anything, or you still do it the old fashioned way?

Kay
The old fashioned way… I started with Mint, and I found that there’s always certain pieces missing because I have, I have some investments through my work and benefits society and stuff like that. So I just found that it would never actually funnel everything in there. So I I just like to do it myself. So I know where everything is. It’s laid out the way I want it to. So yeah, I just create my own spreadsheets.

Money Mechanic
Nice. Well, spreadsheet guru, I had no idea. You know, I I feel that. And maybe we should be doing this Chrissy maybe we should have an Explore FI Canada spreadsheet course, spreadsheeting is not a hard, it’s not hard. But it is intimidating. And I am nowhere near being a good spreadsheeter, but I can do some basic, I can kind of set up a little basic one. But there’s lots of templates out there. And it feels like at the beginning of your FI journey, you should learn to be able to make some basic ones, just because it’s gives you another tool in your toolbox of how to track your spending, track your accounts, track your investments and do things like that. So I think that’s actually an important part of the beginning part of this journey is dive into, I’m sure there’s a ton of YouTube videos find some way of just getting the basics of spreadsheet down. You don’t have to become like a spreadsheet guru like Tawcan, as my goodness his dividend spreadsheet. I know what he built with it. But you know, basics of spreadsheeting is important on the during the FI and it’s interesting that Kay, that’s what she’s using. That’s really cool.

Chrissy
Yeah, and I think there’s something to be said for manually entering your own info, whether it’s once a month or once a year, it’s just I don’t know, you, your brain seems to absorb it in a different way, when you actually take the time to look at each number and manually enter it yourself.

Kay
Yes, I definitely became more aware of where money was going. And alcohol was a surprising category.

Chrissy
I don’t drink in my house, but my husband does it. I added up separately, like look at this!

Kay
That’s an all-inclusive trip somewhere right there.

Chrissy
Yes, it can be!

Money Mechanic
Speaking of travel, was that a big impact on your budget in 2020? Or your spending?

Kay
Oh, there was obviously there was none of it. And I love it. I love traveling. So yeah, that was I kind of worried about that, too. I’m thinking what would it have been if I had traveled. So I’m gonna have to think about that how we’re going to broach in the future. But that is that is a goal for the future is to be able to travel. And I do like to be able to travel very simply. I’ve traveled to Southeast Asia, and it is so cheap to spend time over there. And spending time in nature. So I’m, I’m really, really looking forward to making that a part of my life. But again, because I I’ve never really budgeting is kind of new for me. You know, I’m, as long as I have that money saved, I wasn’t really keeping track of where every single penny was going. So I’m hoping that I can just keep those keep those trips simple. Yeah, keep enjoying nature and and make that a regular part of my life. So maybe it means a bit less wine.

Chrissy
Wine, don’t give up on the wine!

Money Mechanic
There’s always cardboardeaux,

Chrissy
They actually are really good. Some of them.

Money Mechanic
True. They are?

Chrissy
Yeah. So you have gone quite far with your accumulation. You’ve changed things a lot with your investments. Have you gone as far as to work out your FI number? And do you know where you are in your progress to FI?

Kay
Well, I calculated that number and I’m farther from it than I’d like to be. I guess I’m on paper and probably a third of the way there. But I’m not including my house in that in that piece, which I think is smart. And then I also didn’t really know much about Coast FI until talking with Money Mechanic a little bit and I know he’s big on that!

Money Mechanic
I’ve got a thumbs up on the screen. The listeners can’t see.

Kay
And so then I headed over to the Fioneers after they were on the show just to check out their calculator. And I was pretty surprised when I typed in some numbers that I’m a lot closer to that. And that’s becoming a little bit more exciting to me because I actually love what I do. I really love what I do. The thing is with what I do, I have a risky job. So it requires me to be fit and it’s very limited by my age. So I don’t think I will be able to do my job. When I’m 65.

Money Mechanic
I know exactly what you mean, I’m in the same place.

Kay
Yeah. So it’s a bit of necessity, and, but then allowing me to have the choice to. So I work in, in the film industry, but I also work as a photographer and work in the fitness industry. And so the (inaudible) I love, so maybe it’s just a matter of getting to pick and choose the contracts that you do, versus it having having to be everything and having to work so hard to save up and then just stop. And I love to work, I’m a little bit of a workaholic. So that will be a transition for me.

Money Mechanic
I think you nailed a super important point there, I don’t want to miss that for the listeners is that you’ve generated multiple streams of income, you know, and you’re using them all on sort of a contract or on a basis where you have a little bit more time optionality of how much work you put into photography, or how much work you put into the fitness, things like that, I think that becomes super important, the closer you get to financial independence, because you want to have those choices to be able to keep doing what you love doing. But more with, you know, the power of your choice of when to do it.

Kay
Yeah, and I can’t stress enough. I know, there’s all this talk of, of side hustle. And not everything has to be to make money. But I do strongly believe in just learning, skill building, just doing things that you love, like, for example, the whole fitness industry thing, I went to this gym that had these wonderful classes, did some kind of boot camp, you know, challenges. And then because of my background is so particular, like it’s, there’s a I have taught before and being physically fit is a part of my life. It’s a part of my work. So they asked me if I wanted to work for them. So this thing that was something that’s just been a part of my life ended up now not only am I going to the gym for free, and this is not a cheap gym, I’m teaching an hour making money. So it’s, it’s a win, win win all around. It’s fantastic. And there’s there’s other skills I’ve had to learn for work. And I’m just thinking of example of let’s say scuba diving, for me, that was a skill that I actually had to, to learn for my job. And I’m now close to being able to instruct if I want to want to take that route. And I love it, it’s opened up this whole interesting world. And it’s not that it’s not the cheapest thing, but it’s something that I love to do. And it could be something that could end up making me money down the road. So yeah, just never underestimate the power of learning a skill, you just have no idea where that might take you.

Chrissy
Yeah, and to me, it sounds like you’ve already gained a lot of freedom in your life, just by being able to take a bigger look at everything that you enjoy and your money and piecing it all together and seeing where you’re able to find freedom, even though you’re not at FI yet.

Kay
Completely. And that’s the unexpected thing about this past year was that, you know, beginning of the year, yes, I was so pumped to not have a mortgage payment and you know, the thought of the freedom and everything and then a pandemic hit and then so it was oddly preparing me for this unexpected year. And, you know, I almost feel guilty but because I’ve watched, there’s been a lot of my you know, a lot of friends and a lot of people that I know that are that are suffering, really, really suffering and, and even with my work, my work is very uncertain as well. And as I’m speaking to you, we’re in lockdown. And I am not working and I am not as worried. I am not as worried and the feeling. I cannot express to you the feeling of just not having to worry. And I know I’m not completely free. But I do not feel as locked down. I do not feel as stressed out. And you think about what that will do to your body over time. I just think it’s just a healthier way to live. It’s such a small change. I can already feel it. And I feel it day to day in the peace that I feel.

Money Mechanic
That’s amazing. That’s so amazing. Yeah, I can’t stress enough that the journey to FI you start seeing the benefits on day one. It’s the simple little changes that grow in aggregate over time and the confidence that you build and the education and the community, the like-minded people that you get to talk to you get to bounce ideas off, share information, send emails, talk online, communicate with people that have gone through it or going through it or working or going to help guide you you know that’s a big part of this.

Kay
Definitely and I reached out there was a lady on on Facebook that I reached out to because now the next question for me is real estate because now that I’m now that I have this investment that is Not doing anything for me anymore. I’m now those wheels are turning. And so I reached out to a woman here in Winnipeg who is a part of a Canadian landlady’s page. And she was just so gracious with me to speak with me about how that part of her journey has been and, and she’s got a lot of doors and and it’s been doing really great for her. And I mean, so far, if I look at my investment of my house, it is hands down been the best investment that I’ve made so far. So I’m excited and nervous and intrigued to see how I approach this because do I stay in this house and buy another rental property? Do I buy another property move in to rent this house out? I just received my Smith Manoeuvre book in the mail. I was thinking about new opportunities.

Money Mechanic
Now, I want to unpack this just a little bit, because I love this transition. And I think it’s an important discussion, because and I’m no exception, I at the beginning, I was like aggressively going after paying down my mortgage. Now, there’s lots of people in the camp that are pro paid up, pay off a mortgage be debt free, right. But in your particular situation, you’re not quite you’re 1/3 of your way to your FI number, but you have a paid-off house, which opens up a lot of options. So it is a psychological thing to pay off your mortgage or not. And a lot of times it’s a math thing like we’re super low interest rate environment. If you could go back and do it again. Would you do the same thing? And before you answer that, if you could go back and do it again. And well, you know about the Smith Manoeuvre. Now we think we can’t do too much back then. But knowing what you know about DIY investing, would you’ve paid off your mortgage the same way you did? Or would you have invested more? That’s my first question. That’s part one of two. I’ve got more.

Kay
I think it depends on if I’m going back in time as the person I am now or as the person I was?

Money Mechanic
Exactly, yeah.

Kay
Because the person I was when I bought this house that was so terrifying to me. At the time. There’s no way back in that time that I would have even if you had told me about Smith Manoeuvre. When I first bought this house, I would have said that’s great. It would have made me so uncomfortable. It seemed like a massive amount of debt. And I remember listening to Chrissy you talk about Smith Manoeuvre, as I had, you know, just put my last mortgage payment on the house. I was like it was really funny. So obviously now the person I am if if I went back and talk to myself, of course, I would have told her Yeah, do this. Yeah. Oh, my gosh, please do this. Because listening to that episode where Yeah, I wouldn’t want to know, I wouldn’t want to know.

Money Mechanic
So part part B of that question was, lots of us have chosen to be aggressive to pay down the mortgage. And one of the bonuses that you get from that aggressive pay down is A, you have the mind like the freedom that you are debt free, you have a place to live, nobody can take that from you, which is awesome. But the other thing is that you’re interested in real estate now. And that may not have happened if you still had a mortgage, and now that you’ve got that equity, you can create another income stream with it right, you can add that to your passive income. And it changes your FI number a lot if you’re getting passive monthly income. So I think that’s awesome that you’ve you’ve paid off, but also recognize that you now have a tool to use as part of your FI journey. Did you kind of have that in mind all along? Were you paying off the mortgage aggressively to get to that? Or were you just kind of going, Hey, I’ve learned a lot about finance and personal finance. And I’ve got a tool I can use what did what kind of spurred you on to making those that decision.

Kay
I think in the in the back of my mind, I knew I was interested. Because I knew that the reality of actually living in a house and the problems that go along with it were manageable for me. I didn’t have any horrible disasters. And I also had a couple of friends that had, you know, a door to doors. So I was able to talk with them about the realities of being a landlord. And it seemed interesting to me, so I’m not I’m not gonna say that I wasn’t thinking about it, but not seriously. But then yeah, and especially like I say, in terms of being a contractor, having, you know, just knowing that if there’s if there are those months where maybe maybe you’re not working for a month or two, then that’s very reassuring to have something coming in. That’s passive. So that to me now is even more attractive, for sure. Yeah. And then and then you’re building the equities building as well.

Money Mechanic
Yeah. And I think the important thing too, that perhaps we overlooked on times is that our journey changes over time to as we as we age, our priorities change, you know, work life balance, change the things that we want to do. You know, it all evolves and all change. You know, it’s a it’s a fluid process. There’s no fixed way for anybody to do it.

Kay
Yeah. And I mean, right now I’m really enjoying the freedom and I’m not gonna lie that it’s, it’s a really nice place to be the simplicity of it is also very nice. That has options. It’s nice to have options.

Money Mechanic
Well, and you’re in, you mentioned that you’re in Manitoba. So you’ve got some options there with more affordable real estate. For Chrissy and I, we’re in… Yeah, relatively speaking, of course, but you know, I’ve I’ve actually looked into real estate in in Manitoba as well, I just I haven’t pulled the trigger there. Because from my point of view in Victoria, it looks a lot cheaper. And and you’ve had good growth there. It’s a pretty strong economy and in there as well, right?

Kay
Yeah, the market’s definitely boomed this year, but I think it’s still in relation to the rest of the country. I I feel like it’s a pretty stable investment.

Chrissy
Hey, Money Mechanic, you use Passiv, right? How do you like it?

Money Mechanic
It’s great. It’s like my own personalized robo advisor. I set it up one time, then Passiv helps keep my portfolio balanced by securely connecting to Questrade.

Chrissy
Wow, sounds like Passiv saves you a lot of time.

Money Mechanic
Yeah, no more spreadsheets! And Passiv even has one-click purchasing, which makes life so much easier.

Chrissy
That sounds amazing. I also heard that Passiv added a new goal feature to help DIY investors reach their investment targets.

Money Mechanic
That’s right. The goal feature is built right in and helps you stay on track with your investments. Chrissy, did you know that Passiv is free for Questrade clients?

Chrissy
Free is good, especially when it normally costs $99! How can our listeners get in on this offer?

Money Mechanic
Just go to Passiv.com/EFIC.

Chrissy
So I want to pivot a little bit into your other real estate options that you mentioned to us. And I also want to discuss a little bit of how you used to have roommates. And I find that so interesting that, can you tell us a little bit about that roommate situation, because I think this is something more people could do. And I think it’s awesome that you actually did it.

Kay
This was very, very spontaneous. So I had been in my house, I bought my house with a partner and at the time, and that relationship ended. And so I had been on my own for a couple years. And a friend of mine was her and her husband husband to be we’re looking for a place to rent and they were having a bit of problem. And, and at the time, I was like, well, I’ve got all these two rooms I’m not I’m not using these rooms. And sometimes it’s a bit lonely and why not? It wasn’t it was literally as simple as that. And, and then three years later, wow, yeah, they’re there with me still in the house. And it was supposed to be it was a temporary thing. It ended up being a year longer than we anticipated. But yeah, I had a married couple living in my house with me, which is very interesting. I don’t I’m not sure that I that I could do it again. But they have since become like family to me. And they they bought a place it’s a block away from me. So it’s a it’s a wonderful relationship on them. I’m so thankful for it now. But you know, at the time.

Chrissy
Yeah, It reminds me a lot of us hosting students, you know, because she was your friend. And you know, when we host students we treat them like family, they’re like university-aged children. And so it’s a different kind of relationship that you have compared to having regular tenants where they’re just in the suite downstairs maybe it’s it is a lot of cooperation, needing to compromise but it in return you also get a very rich relationship that’s different than anything else.

Kay
Yes, we know each other inside and out. You know, we’re there for each other. Yeah, you really get to know someone. And and I was the one thing I was very, very smart about was we just split everything we split everything down the middle or three ways. And so that reduced my costs significantly. And I did not waste it. I doubled down every mortgage payment and I just put every every last cent that goes towards paying down anything.

Chrissy
So even before you discovered FIRE, you were already doing a lot of the right things.

Kay
I was doing it. Yeah. Yeah, I think the one the lesson that I’ve always learned was, you know, pay yourself first. And at the end of the day that is I think what I would take home if you’re if you’re just starting out because I do feel like a bit of a boundary right now. I feel like I got my wobbly legs I’m learning. So for anybody out there, if you’re listening, and this is absolutely brand new, you know, if there’s one place to start, it’s just that simple concept of, of pay yourself first at first and whether you’re, you’re so deep in debt, just just make that little payment. And every month, just do that first without thinking and even when it’s hard, because there were times where I really did not want to put some of that money towards debt, or, you know, it’s boring. But there’s so many distractions out there and, and the world is just begging for your money all over the place, you know, and, and it’s a really boring choice. But it’s, it’s just long term thinking and, and already now I’m here, and that in the end that my decisions helped, definitely helped me pay that mortgage down faster and bring me to the place I am now.

Money Mechanic
Yeah, which is, which is amazing. And I love that here we are chatting a year later. And you made all these positive changes through a traumatic year for all of us to be to be sure. I’m super impressed. Congratulations on where you got to where you’re at in the journey. And I think that’s one of the fun things about this community, as we all kind of get to know each other a little bit better and share our thoughts and plans. And yeah, it’s awesome to succeed together.

Kay
Yeah. And once you simplify, and once that once that debt is gone, and once you’re streamlining your expenses, I mean, the shift this past year, even those two things, and I had, I had a decent year of income as well. But aside from that, I think even with just having no debt, and looking at the ways that I was hemorrhaging money and not even knowing it, and I’m talking things like I was shopping at Safeway, I had a landline, I had an alarm system, because I had a fear of being broken into all this stuff that, you know, in in 14 years that, you know, there was there was not even a hint of a break-in. And so I decided to you know, let’s look at these fears. And so just got rid of all of that extraneous stuff. And you know, switched switch my cell phone provider and paying like half less than half of what I was paying stuff like that every month. Holy moly, does that add up?

Chrissy
We were talking in previous podcast with Diana Merriam from EconoMe conference. And this is one point that we made that you are the type of person that the FIRE community is trying to reach, you know, the middle income earners who make a decent amount and have more than enough to live on and yet we’re kind of just going through life the way everyone else does. You know, we buy the coffee every day we we do our yoga classes, whatever it may be, we buy a nicer car we upgrade every few years. That’s just normal. But when you really sit down and pay attention to it, and you realize, is this really what I want to spend my money on? Or do I want more freedom? It really helps you to focus in on what’s important and realizing that waste and the money that you could be putting towards a better use, which is your freedom and choice in what you do with your life.

Kay
Yeah. Now one question I have for you guys, because I I feel like right now I’m experiencing this A year later, but putting all this energy into making all these changes. Do you ever feel that you have frugality fatigue? Like, do you just feel like oh my gosh, I just wanna, I just want to get this treat or just want to reward myself, you know? And then all of a sudden, you know, you’ve treated yourself a bit too.

Chrissy
You know, my husband, my husband is just like that. I think he’s naturally more of a spender. He’s not a spender really. But he’s more of a spender than I am. And he definitely goes through phases like that where he’s like, I just want takeout pizza. Chrissy Can I just get a pizza for takeout? But for me, I just love being frugal. It’s right up my alley. So I just enjoy it.

Kay
So what’s what is the reward for you? How do you do you reward yourself?

Chrissy
My reward is watching the money grow. I love it.

Money Mechanic
Like Scrooge McDuck diving into the money.

Chrissy
Honestly, I mean, I also love the reward is the freedom you know, we we can be at home, I can be at home with my kids, and we get to travel when it’s not COVID those kinds of things are what are important to me. And that knowing that I’m saving money from other things to be able to do those things. That’s what is my reward.

Money Mechanic
I think for me, I know, I know, I can relate to what you mean. And we went through this a little bit this year with my wife because if we kind of had like a little agreement of when we were going to get takeout food, and that is a bit of reward because we generally don’t eat out a lot anyway. So it was kind of like okay, well you can have a poke bowl, once this month because we’re having pizza as well, you know. So I mean, there’s a little bit of it works that way. But one of the things for us, and I think it works for both of us here is that we don’t put any restrictions per se, on spending so we can maintain frugality. But if there’s something that you really want, that’s gonna, you know, improve your, you know, whether it’s you, you’d like to read on a kubu, or whatever it is something called Kubu, something like that. Kobo, I use my little iPad that I’ve had for 10 years, you know, if we have this agreement here, that if there’s something that’s you, you know, because I think what we’re really good about is not buying right away. So if you get it, that’s fine. And for me, specifically, I just thinking about my little project that I worked on yesterday, if people on Instagram are following me, is I like finding things that I can build, because that gives me the most rewarding feeling. And like yesterday, I found some black pipe in the classifieds. And I had some scrap wood in the garage. And, you know, I spent some money, but it was on something that was used. So I repurposed it and I built a little stand for the vertical garden to house the nursery of seedlings. And it’s like, that is it was totally unnecessary, but yet it was necessary. And, and that’s kind of where I get my reward from, right is it’s finding something that I can reuse finding a good deal. And, and adding value to our to our life, I guess.

Kay
That was really, I was just reading some psychology on that how, like, for me, I, I really want to get some new plants. So I got a plant, and then I needed another plant, you know, and then and then another. So I noticed there was a there was a bit of a trend of Okay, once once you start, then the tendency to want to keep going happens. And so for me, I know that that’s something I’m going to in the future are going to need to be aware of being able to put the brakes on it before I have a forest in my house. And is this actually adding? Or is it just this weird habit that I’m unaware of? I think again, awareness is the key. And that’s kind of the theme, right?

Money Mechanic
Like, you know, stop yourself. And if you still want to buy it, like a day later, a week later, whatever your number is, then go ahead, right you you you haven’t made a spontaneous or a purchase that you weren’t prepared for that you’re gonna have buyer’s remorse. You thought it out and then made a logical decision. Right?

Kay
Completely.

Money Mechanic
Chrissy, should we wrap this excellent episode up?

Chrissy
Sure.

Money Mechanic
Do you have any other questions for us. Kay?

Kay
No, I just…

Money Mechanic
I kind of like being asked questions. We never get asked questions, Chrissy.

Chrissy
I know, it’s…

Money Mechanic
Good to talk about ourselves for a little bit. No, it’s been absolutely fantastic. having you on the show. It’s great to have you in this community. And share a little, what your story is, like, where you live and how you got there, and how you moving forward. And it’s inspiring, and I really appreciate you spend the time with us today.

Kay
Yeah, and thanks for having me. And, and again, you guys have I just express how much you guys specifically have really impacted my life and continue to, and I think I’m not the I hope I’m pretty sure I’m not the only one. I feel it. So yeah, I just thank you guys so much for doing what you’re doing and keep doing it.

Chrissy
Well, we wouldn’t be here without listeners like you. So thank you straight right back at you.

Money Mechanic
I also want to add in a little acknowledgement and special thanks. Some of our listeners listen to my other podcast, the FI Garage, and they know that there’s a tube of beer that’s being shared around Canada and Kay, you and I shared some emails over the year. And beers came up in a conversation and you graciously sent me the first the very first the inaugural tube of beer from Manitoba, which I was forever grateful to have some new flavors to try a new breweries. And so you were the the impetus of the FI Garage beer tube. So I just want to share that because you’re on the show and I really really appreciate that

Kay
I’m the beer tube originator!

Money Mechanic
There’s your title. Right on. We will catch all your listeners again on the next episode of Explore FI Canada. Talk to you later, Chrissy and Kay.