“If you want to live a happy life, tie it to a goal, not to people or things.” -Albert Einstein
“If you don’t know where you are going, you’ll end up someplace else.” -Yogi Berra
“Cat: Where are you going?
Alice: Which way should I go?
Cat: That depends on where you are going.
Alice: I don’t know.
Cat: Then it doesn’t matter which way you go.” -Lewis Carroll, Alice in Wonderland
Unlike Alice, I’d like to realize some goals in 2013 by having a direction and some focus.
Last year, we were relatively successful in realizing our personal finance and investing goals. We hit the mark on almost every one. This year we’ll test ourselves again…
1. Put $300 lump sum payments on our mortgage every month ($3,600)
I struggled with this goal but decided to put it down as #1 anyway. I also struggled with this goal since borrowing rates remain very low and because of it there’s little incentive to pay off debt – money is cheap. Further, our dividend paying stocks are providing higher returns than the guaranteed rate of return that comes with paying off mortgage debt. These things stated, I hate debt and do not enjoy being a slave to it – especially since I have a fat 6-figure mortgage. Until that mortgage is more manageable I’m going to make some lump sum payments every month on top of our existing accelerated payments.
Do you agree with my reasoning?
2. Make a healthy contribution to one TFSA ($8,000)
Last week, I moved some unregistered holdings to my TFSA so I’m done with my contribution for 2013. This is not the case with my wife’s account. (We need money a couple of years ago from her account to pay for some things in our current home.) So, one goal this year is to make a healthy contribution to one TFSA. Thanks to TFSA rules, contribution room is carried forward from previous years – we definitely want to take advantage of that. As we make contributions in 2013, I expect we’ll buy a Canadian dividend paying stock or a low-cost Exchange Traded Fund (ETF) for the account. We’re not buying bonds in this interest rate climate.
What do you think of this goal?
3. Save for and take a great trip ($4,000)
We love to travel and see new places. We’ve got a trip coming up very soon and later this year, we’d like to travel again. Some close friends are considering a cruise or a vacation to celebrate New Year’s and we’d like to celebrate with them. Whether it’s a cruise or another fun, sunny destination about a year from now – we want to go – so we better start putting money away for it.
What do you think of this goal?
4. Do not incur any new debt ($0)
Michael James on Money had a recent post that I thought was worthwhile to mention, related to goals and debt. Michael feels financial goals are great, saving and investing is all well and good, but don’t take on any more debt in the process. I tend to agree with him which is why you see goal # 4 here.
Do you agree with this?
Last year, we had six financial goals. This year, four, more focused goals. I could have mentioned my dividend income goal for 2013 but to be honest it is not a priority. I suspect it will happen indirectly from reinvesting dividends already earned and making that big contribution to the TFSA account. A nice goal would be $8,000 in dividend income by the end of December but it’s not something I’m going to focus on…there are enough priorities above.
That pretty much covers our financial priorities for 2013.
Every quarter or whenever I feel like it, I will report where we are. I hope you follow along.
What goals do you have for 2013?