“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
You might recall I used this quote a few months ago because unlike Alice, I need focus and direction in my life; so I’m more like the Cat. Earlier this year, my wife and I put together four financial goals to accomplish in 2013. Here’s a recap:
- Put $300 lump sum payments on our mortgage every month ($3,600)
- Make a healthy contribution to one TFSA ($8,000)
- Save for and take a great trip ($4,000)
- Do not incur any new debt ($0)
Through end of March here is our report:
Lump Sum Mortgage Payments
While some investors may disagree with me, while borrowing rates remain very low, we’re going to pay down our mortgage using lump sum payments. I have no idea where interest rates may be in a few years, so if they are higher, this means our future borrowing costs will be much lower thanks to extra payments made today. So far, we’re just ahead on this one with $1,000 in payments made year to date.
Make a healthy TFSA contribution
Earlier this year, I maxed out my TFSA for 2013. We’ve still got work to do on my wife’s 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, the real return on bonds is pathetic. So far, we’ve contributed $2,200.
Save for and take a great trip
We love to travel and see new places. We just had an amazing trip and later this year we’d like to travel again. Some close friends are considering a vacation this winter and we’d like to celebrate with them. To enjoy this trip stress free, or afford to go in the first place, we need the money saved in advance. This is our budget and we can’t afford to spend any more because we’ve got some home improvements planned in 2013. So far, we’ve only saved $800 for this trip.
Do not incur any new debt
This is how I feel about debt. There’s no point in making lump sum payments on the mortgage or making some investment if on the other end, our debt is increasing somewhere else. Year to date, this has not happened. The balance on our credit cards remains zero and because we’re slowly killing the mortgage and making investment contributions, the net worth is inching upwards. We have the aforementioned renovation to pay for in 2013 but the bulk of the funds to pay for that were saved in 2012.
With some job uncertainty now in play (due to some reorganizations at work) it will remain important to kill off debt sooner than later and definitely not take on any more.
Got any comments on our 2013 financial goals? What about your goals for this year, how are they coming along?