“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?
great post , really inspired me to do plan for my future investment . its good your investment planning is really good .
post of http://www.pennystockdetectives.com/penny-stocks/income-jumps-61-for-this-health-stock
Luckily I don’t have a mortgage yet but it seems reasonable to pay a little bit extra every month despite money being cheap. Even if I had a mortgage with a really low rate I’d still pay some extra to get the principal down faster. I don’t think I’d go balls to the wall with trying to pay it off, even though I despise taking on extra debt because like you said, you can get better returns just from the dividends of some pretty solid companies.
My wife and I are planning on taking a pretty nice trip this year in June. Probably go to DC and Nashville and who knows what else on the way. I have a friend in DC and she has a friend in Nashville so it’d be some good times getting to meet up with them.
Best wishes in 2013!
Thanks for the comment JC.
We’re doing exactly what you are saying…given our mortgage is way too much for my liking, we’re paying down debt as best as we can. We’re also investing for the future at the same time – trying to strike a balance.
Kudos to you for focusing on debt but also living for the moment. Life is short. 🙂
Good goals Mark! We struggle with paying off the McMansion mortgage vs. investing as well. For now, we’ve decided to tackle the mortgage and our goal is to have it paid off within 7 years since we’re worried about rates rising.
Well thanks! I’ve got some distance to go to catch up to you and your dividends but it’s actually not the focus in 2013. I hope indirectly, by putting lots of cash into the TFSA, then it will happen indirectly. Let’s hope.
Having your mortgage paid off in 7 years would be excellent. You guys will be set.
Those are impressive goals buddy. I’m still upset that I’m not able to use my TFSA because of my American tax situation. This despite that fact that the whole idea is based on the American Roth IRA. So ridiculous. Good luck with everything (not that you really need luck when you have cash flow and planning!).
Well thanks! I hope to hit all of our goals in 2013. I will keep you posted. Thanks for following along and all the blog support.
I really enjoy reading other people’s financial goals. We too have struggled with whether we should pay down the mortgage as fast as possible, or invest the money (in a second property we’d use as a rental property to make extra money). I’m thinking maybe we’ll do a combo of both since we can’t decide. Best of luck with all of your goals in 2013!
Glad you enjoyed our list. I think a combo approach is smart. Low rates are great but the time value of investing can never be replaced.
Great list. You are so organized. I am sure you will accomplish them. We have a few money goals of increasing our savings and investments but other than that our goals are focused on other areas of our lives. Hope all is well. It’s been ages. I have been so swamped.
Thanks Miss T!
We’re getting more and more organized every year. Feels good. I will stop by your site later this week!
Looks like some great goals again for you this year! #4 is a really great goal, even though it is something that isn’t usually listed as a goal.
My goal is to max out my TFSA contribution for the year, and the boy’s goal is to max out TFSA and maximize RRSP dollars. We will also save for a vacation as well!
@Ecoheliguy
Ecoheliguy – As long as he has a fixed rate mortgage then the borrowing costs won’t increase in the future when interest rates inevitably rise.
These all sound like really good goals to strive for. I also struggle with the idea of whether or not to pay down my mortgage early or not. My decision was to invest rather than paying down the mortgage for two reasons. First like you I also feel I can earn more return through investing compared to my interest rate costs on the mortgage. Second my investments will be available in the future should I fall on hard times and need them. The extra cash I pay towards a mortgage would be locked up and illiquid.
Also I totally agree with your goal of saving for travel. This is a priority for my wife and I as we like to have great life experiences now rather than later. Of course we hope to be able to travel through out our whole lives but you never know what may happen and you may regret not enjoying yourself while you are still young.
Thanks Dan.
I fully see your points about mortgage vs. investing…hence the small struggle myself.
In hard times, do you have an emergency fund you will use first?
We want to travel while we are young. Might as well…who knows what the future has in store 🙂
I surprises me to read statements like “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.” On you website.
I know your finacial intelligent, but this statement is the wrong way to look at it, and often what the Average Joe feels.
Why would anybody wait to pay down debt purposely at a later date when it will cost you more to do so? You pay down depts at 3% now so that you don’t have to at 6% later.
If you have a $400,000 mortgage , your saying you would rather start paying it off once it costs you an extra $12000 a year to hold it?
Pay it off aggresivly now, and if the bond rates are ever higher then your mortgage, then place money in the bond market.
Keep up the good work, I enjoy your blog.
Thanks for your comment.
The thing is, I can get a better return by NOT paying down my mortgage – my money is working harder for me.
That said, I really don’t like debt and because it, I’m increasing our mortgage payments. Waiting to pay down debt will definitely cost more when/if rates go up and because of that, the counter argument is true – paying off the mortgage when rates are low is the right thing to do.
My comment above, was simply showing both sides of the argument. In the end, paying down debt wins and will make me financially free faster.
I agree with you knocking off the mortgage, we put an extra $417 a month and have been since we got it in 2009. Now that we have the cash to pay it in full, it feels amazing. Like others said it was more to protect us from a rising rate. It’s a gamble I guess but in the end I’d rather owe no one. Good Luck with your goals mate, always here to cheer you on!!! Cheers Mr.CBB
Thanks Mr. CBB!
I can’t wait to have the mortgage killed…..9 more years. You must be so excited!
Good luck on all of the goals, Mark! We don’t have any specific financial goals other than to save as much as we can and avoid unnecessary spending. We have some personal and income goals in mind that I should share with you guys on the blog. 🙂
Thanks Kevin. I’ll see how far we get. As for you, for sure, you should post those PF and income goals.
I agree with Michael James about protecting yourself from rising rates in the future. It makes sense to pay more while rates are low so you can knock a big chunk of that mortgage out before you renew again.
I’m pretty much in the same boat as you – trying to balance the early mortgage pay down with investing and having a bit of fun. Unfortunately, with two young kids at home, our next great trip is likely a few years away. I guess I’ll have to replace that goal with RESP contributions.
Very true, with low rates, our mortgage renewal won’t be as significant. That will happen in 3 years.
You seem to be doing a great job with the balancing act.
Hey Advisor,
Great goals. Money is cheap and it can be hard to pay down debt, but we’re in the upswing of the economic cycle. Just like governments do (or should) with economic policy, you want to pay down debt when times are good, and leave flexibility for when times are bad. Wouldn’t you want to enter another stock market like 2008-09 sometime to make a final push for some great retirement investments at low prices? When it happens, you need money or available credit to take advantage.
doctrine
Hey Doctrine,
Good to see you visit the site. I was just on yours….
When times are good, you’re right, it’s prudent to pay down debt and thus we are doing so. If/when rates rise, our mortgage won’t be nearly as fat.
As for entering the stock market to make some great purchases at great prices, I can only hope for another market crash…that would be great.
Hopefully in my mid-40s, the mortgage will be dead forever. 🙂
Thanks for the mention. I think the most compelling reason for your goal #1 is to protect yourself against future interest rate increases. If we knew for certain that your mortgage rate would stay below 4% for the remaining amortization period, there would be little incentive to pay it off early. Good luck with your trip goal. Having a fun goal makes it easier to stick to all the others.