To keep me honest and focused I post my financial goals on My Own Advisor. One thing I’ve learned over the years is I have a much better chance at realizing my goals if I keep tabs on them, and often.
In case you missed earlier posts on this subject, here’s a recap of our 2014 financial goals:
- Continue putting $300 lump sum payments on our mortgage every month ($3,600).
- Maximize both Tax Free Savings Accounts (TFSAs) ($11,000).
- Increase Registered Retirement Savings Plan (RRSP) contributions by $200 per month ($2,400).
Here’s where we stand to date.
Continue putting $300 lump sum payments on our mortgage every month ($3,600) – on target
Since January 2014 we’ve been meeting this goal. By making mortgage prepayments automatic, we never see this money. If we keep up these prepayments our mortgage debt will be under $200k soon. Being mortgage free years from now will provide some significant financial flexibility so we’re working towards that.
Maximize both Tax Free Savings Accounts (TFSAs) ($11,000) – done!
I have some stocks that pay dividends in a non-registered account so I moved some holdings into my TFSA earlier this year. My TFSA is out of contribution room now. A few months ago, we saved enough money to max out my wife’s TFSA. Her account is also out of contribution room. We need to start saving this fall for 2015 TFSA contributions.
Increase Registered Retirement Savings Plan (RRSP) contributions by $200 per month ($2,400) – on target
We currently contribute a few hundred bucks a month to our RRSPs and there is no intention of changing that. We’ve been meeting this goal since January. If we continue to save at our current rate I predict my RRSP will be out of contribution room in about two more years.
Three straightforward goals above with the same overarching goal as last year, do not incur any new debt. Stay tuned for more updates later this year.
Got any comments for our saving and investing goals for 2014?
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Great savings pattern Mark. I also am prepaying mortgage on a bi-weekly schedule. Have been doing that for more than a year now. Recently a news article in the Globe and Mail I think, pointed out that with the low interest rates, it is better to invest than prepay mortgage. So, by prepaying my mortgage, I am earning at 2.99% whereas if I invested, I would have been earning around 6-7% net of fees…etc.. I know it might not make financial sense to prepay…but I am doing it for emotional reasons. I just want to see that big number reduced as much as I can…and reduce my risk by sacrificing return….does this make sense? or is it better to redirect those payments to investments instead….
A great friend of mine and I have this discussion often: paydown mortgage vs. invest.
https://www.myownadvisor.ca/paying-down-debt-should-i-change-my-tune/
I will probably write another post about this, this summer.
I also want to kill debt for emotional reasons and on top of that, should anything happen to my job or our jobs, I’d worry much less without having any debt.
In the end, I do both – make mortgage prepayments and invest (by maxing out TFSA and contributing to RRSP). I think that’s not too bad…
Mark
Great job Mark! It is ciritical to maximize a tax-free savings account each year. Set the growth engine in motion without having to worry about the tax man taxing his share. Hopefully the second half of 2014 treats you as well as the first half.
Keep up the great work!
Bert, One of the Dividend Diplomats
I hope so as well Dividend Diplomats, thanks for the encouragement!
Mark,
Great job. 2014 is treating you very well thus far. Keep it up!!
Best wishes.
Thanks Jason, we’re trying!
Well done Mark,
Unlike you I have lots of unused TFSA room and my wife has a bit but not much that we can catch up with. Now that the mortgage is gone it’s an area to focus on BUT here’s the kicker, since I’m new to Canada I have lots of RRSP room too so what do you suggest… TFSA or RRSP or both? Cheers mate
Well, it’s coming along. You have a paid off home. I don’t 🙂 I have maxed out TFSA, you don’t. It’s a trade off I guess…
As to your question…TFSA or RRSP. Can you do both? Can you save more than $11,000 per year? If so, you can likely do both Mr. CBB. The kicker is also, it depends what tax bracket you’re in now and what tax bracket you think you’ll in, in retirement. If your tax bracket will be lower in retirement than today, then the RRSP contributions make total sense.
Here is an article about that…read it and let me know what you think 🙂
https://www.myownadvisor.ca/managing-the-refund-well-is-the-linchpin-in-the-rrsp-vs-tfsa-debate/
Mark
Yes we should be able to do $11,000 a year. We have about $80,000 now in cash so I can easily top up our TFSA so we are up to date which I may do. I just wasn’t sure if it was more important to dump it into RRSP first or what to do with it.
You could consider a bit of both actually. As long as you reinvest the tax refund generated from any RRSP contributions. TFSA, as you know, immediate and long-term tax shelter. RRSP, immediate tax deferral and long-term tax deferral. For either account, probably good to sit down and have a game plan for both accounts. I know for us, the RRSP and TFSA are retirement accounts.
Nice job on maxing out your TFSA, im trying to do the same, but I think i’v a year or two more before i manage it!
Thanks Wisp, we’ve been fortunate to save enough money in little bits to make it happen. We’ve started the process to save for the TFSA in 2015 already, just $25 per week but it will add up over time. Good luck on your TFSA goals, it’s a great account.
Nice work, Mark. I’m currently in the process of getting another vehicle – which derails my plan of putting that money into a TFSA. Thats great you have yours maxed out and have even started saving towards 2015 – definitely a position most of us aren’t in
Thanks Dan. I figure we better start saving now, even $25 per week, since time will creep up on us. We also want to do some home improvements next year that we’ll need to save up for…that saving effort should start next month.
Maxing out our TFSAs is important to us, we put that ahead of maxing out our RRSPs.
Congratulations Mark! Quite the accomplishment to stay on track. An inspiration for sure!
Thanks Doug! We’re trying our best but with summer there are a number of expenses!
Looks like you are right on track to meet all of your goals. How much will the $300/month extra save over the course of your mortgage in interest? And how much time will it shave off? We are definitely going to be increasing our payment at the beginning of 2015.
If we keep up the mortgage prepayments until the death of the mortgage, I think it works out to saving about $50,000 and shaving 10 years of the debt.
I hope we have just over 7 years to go for the mortgage.
Smart plan Daisy: increasing our payment at the beginning of 2015.
Mark
Great job staying on track! I’ve found that making my financial goals public has definitely provided an added incentive to stay focused. Is the interest rate on your mortgage high?
Just over 3% Addison…hopefully the mortgage will be killed in just over 7 years.