2014 Financial Goals

To keep me honest but also 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 write them down and keep them visible.  This blog is an enabler for that.

Last year, we accomplished all our financial goals.  Here’s a recap of what and where we saved:

• Put $300 lump sum payments on our mortgage every month ($3,600).
• Make a healthy contribution to one TFSA ($8,000).
• Save for a take and take a great trip ($4,000).
• Do not incur any new debt in the process.

This year, our major goals remain the same (continue to kill debt, save money and invest money).   Spending less than you earn and paying yourself first are the foundations of financial freedom, a position we hope to be in around our late-40s if possible.  Over the last few years, our savings rate has increased which has allowed us to purchase more investments in our portfolio.  A higher savings rate will accelerate this goal.  Life is also for the living so money saved in 2014 beyond these goals will likely go to entertainment and travel and updates for the house.

Here are our 2014 financial goals and how we’re going to get there.

• Continue putting $300 lump sum payments on our mortgage every month ($3,600).

We will accomplish this by keeping existing mortgage payments the same.  By making prepayments automatic we should have little incentive to spend the money we never see.  I’ve also learned that debt could be considered borrowing from your future self.  The bank just happens to be the middleman in the process.  By taking advantage of our low borrowing rate we’ll kill debt sooner than later.

• Maximize both Tax Free Savings Accounts (TFSAs) ($11,000).

We will accomplish this by moving some non-registered money from my account to my TFSA.  This is not really saving money per se, more like a swap of monies already saved.  We will however need to save $5,500 for my wife’s TFSA that will likely take a good 6 months to do so.  We will do this by making automatic contributions each week to our joint savings account and then transferring money from there to the TFSA.

• Increase each Registered Retirement Savings Plan (RRSP) by $200 per month ($4,800)

By making more small changes in 2014, such as lowering our heating bill, negotiating our cable services, avoiding an abundance of take-out food, shopping with a purpose and avoiding impulse buys I think we’ll be able to find more savings this year.  Those savings will be directed to  our RRSPs.  We currently contribute a few hundred bucks a month to our RRSPs.

On the topic of RRSPs, we tend to optimize and not maximize these accounts.  This is largely because we have competing priorities (paying down mortgage debt, making TFSA contributions and enjoying life).  Based on some early calculations, because we intend to get a small tax refund back in 2014, we’ll likely reinvest the refund back into our RRSPs.  I’ll write a post about our intentions and some other considerations for your tax refund later this winter.

So, that’s about it.  Three simple goals with the same expectation as last year, do not incur any new debt.   Hopefully we can achieve all of them and have some fun in the process.

Got any comments for our 2014 financial goals?  Should we prioritize one thing over the other?