You might already know by now, over the last couple of years I’ve posted our financial goals on My Own Advisor. I do this because:
- I believe all goals should be clear and transparent,
- I believe all goals should be realistic,
- I believe all goals should be measured, and
- I believe all goals should be documented.
So those are the academic / textbook reasons. The other reason? Doing this works and we’re realizing most of our goals because of it.
Here’s a recap of our financial goals for 2015:
- Maximize our TFSA contributions.
- Put $300 lump sum payments on our mortgage every month.
- Save $5,000 for home improvements.
- Do not incur any new debt.
As of this post here’s where we are:
Maximize our TFSA contributions.
Done! We filled up our TFSAs earlier this year. We just recently maxed out the additional contribution room available for 2015. We’ll have to wait until January 2016 to contribute more to these accounts but this was a major goal for us and I’m proud to write we nailed it.
Put $300 lump sum payments on our mortgage every month.
So far, so good. Our mortgage is up for renewal later this year. We figure the less debt at the time of renewal, the better.
Save $5,000 for home improvements.
So far, not so good. Actually, fail. We focused on our TFSAs and mortgage this year but in doing so, we neglected to save the additional money needed for our home improvements. We might tap our Home Equity Line of Credit (HELOC) to provide the additional funds.
Do not incur any new debt.
Failed. See above. I dislike debt but the only way we can take on these improvements is if we borrow some money.
Note: We have not included RRSP contributions as a goal in 2015 since those contributions are already a steady monthly habit.
Sometimes, plans change (i.e., a renovation will cost more than you think) and you need to adapt. We believe improvements and maintenance of our home is a good thing, even if some short-term debt is required.
I’ll have a few more updates on our goal progress later this year.
Got any comments for our saving and investing goals in 2015?
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.
Sweet progress! We also made aggressive lump sum payments on our mortgage and we found it so motivating to watch the interest column shrink and the principal column grow. Oh, that is just the best feeling. I’m sure you’ve already done this, but we created an amortization schedule in excel and then would play around with it to see how quickly we could pay our mortgage off. I don’t think we would be totally paid off without it!
Great opening statement on goals. Most peoples goals are vague and more statements than things they really want to work towards. Personally, I like maxing out tfsa and borrowing for repairs, as long as you work to repay the loan as quickly as possible. You’ll earn more in the tfsa than the interest you’ll pay it you’ve invested in solid stocks and reinvest the dividends.
Thanks Henry. It’s good to get feedback on the articles if they resonate with folks. We hope to have the loan paid back in a few months, and afterwards, we intend to max out the TFSA for 2016. We focus on maxing out the TFSA first, then contributions RRSP second.
We had lots to update around our house too but everything was and still is very functional. We focused on paying our mortgage off in the 5 years we set out in our plan and now we are renovating. What do you want to renovate? Congrats on the TFSA! My wife is all caught up but I’m not. I have too much RRSP room to catch up on but I’m still contributing the TFSA. One of these days I’m just going to dump the lot in and get it over with.
Yeah, that’s the thing. I think either you kill debt quickly or invest it. It’s really hard to do both.
We hope to be mortgage free in another 5-7 years. Hopefully that plan and the reno will come together Mr. CBB.
Mark
Good progress so far. I am a goal oriented person and like to keep track of progress. It is fun, but most importantly, make me look back to analyze how I can do better going forward. Thanks for sharing!
BeSmartRich
We like progress too, even when it’s not that far ahead…every little bit counts.
I’m with the people who say relax and borrow the money if you need to for the reno. Your savings and investments are leaps and bounds above a good chunk of people it is definitely OK especially with low interest rates and a solid plan to pay it back.
However, I am a big proponent of saving money wherever possible and you have a prime opportunity here. Why not just save the $300/mth on the mortgage and use that pay for the reno instead of incurring a higher interest rate on the LoC? You might not come out ahead doing that though because you are saving money on mortgage interest now vs. having to wait months until you do the reno if you were to stop overpaying the mortgage.
What I would do is this: do the reno, put the money on your LoC, then call your bank and see if you can stop your overpayments and maybe even skip a few payments (they often allow this especially if you have been over paying), then use all that extra money to pay off the LoC almost instantly, then revert everything back to the way you had it. That way you’ll save the maximum on interest and eliminate the debt in a month or two.
Thanks for sharing your thoughts Stephen…
I think it makes sense to do this reno now given are jobs should be stable in the coming months and borrowing costs are low.
As soon as we decide on the amount of the reno, I/we will kill the extra mortgage payments since the HELOC will be higher interest debt. After we borrow money, we kill higher interest debt first, hopefully in a few months and no longer than one year.
If the goals were in place and unchanged since the start of the year, then I would consider it a pass .. perhaps ‘technical fail’ (but that would just be left hand/right hand swapping). For myself, the TFSA goal suddenly became a bigger goal than originally planned when there was suddenly an additional 9k in room.
Like what Michael James said, “RRSP and TFSA room feels like an obligation.”
TFSA and RRSP contributions definitely feel like an obligation for us. We don’t want to stop contributing at all or borrow money from these accounts. These are both retirement accounts for us. Michael James is a smart dude.
Thanks for your comment.
Borrowing $5k to complete a home reno project is not the end of the world. With your savings rate, this is just a minor blip on the radar. At most it would cost you a couple hundred bucks in interest. Relax, and just get it done!
Thanks Robb. We hope not to borrow more than $5k. Even if we do, say $10k or $15k, and decide to borrow the entire amount we’ll be aggressive in paying it back, I know.
I side with Michael James on this one. If it’s important and urgent do the reno with the home credit line. If it’s just important wait, save the money and delay gratification!
Make sure its an acrylic surround if you go ahead.
Btw, I’ll let you know sometime what I did for 5 years up until retirement.
Good job on the mortgage and the TFSA’s.
Well, the bathroom is not yet broken but it is worn, dated and wearing out. Might do an all-tile shower…
Need to keep TFSAs intact. I consider this a retirement account.
Looks like great progress. If you can try to save up for the home improvements instead of borrowing money.
Yeah, we’re trying to save but based on what we want to do some debt is inevitable.
Nice work, Mark. Your TFSA contributions will keep looking better and better each year. The low cost of debt today makes it a bit easier to stomach, although you always prefer no leverage or acquisition of an income-producing asset if you have to take on some debt. However, it sounds like your bathroom improvements were essential and will be enjoyed often – nothing wrong with a step-up in daily morale. Good luck with your project.
Brian
Thanks. I’d rather keep our TFSA assets intact and borrow a bit of money than steal from this account. The low cost of debt does make things easier to stomach but still not fun.
Thinking about this update, I realized my opinion depends on information you haven’t provided. Home maintenance is important when it comes to things like fixing leaks and other repairs that are cheap now but could become expensive problems if ignored. However, updating drapes, new furniture, new countertops and other such home improvements are another category. IMO, these home improvements are not worth going into debt for. So, my thoughts on your situation depend on the nature of the home maintenance/repairs you are planning to borrow for.
Well, our bathroom is probably “OK” for another year or so but we want to fix it/improve it this fall. The shower is starting to wear out (builder-basic fiberglass shower surround) and the sinks are old and becoming stained for our hard water due to our well. The builder-basic fixtures installed 15+ years ago are wearing out. So, while we could wait for another year or so to fix the bathroom we have decided this fall is the time. Borrowing rates remain low and we hope not to borrow very much.
I don’t get it…
Paying off your mortgage, AND using more credit?
Isn’t the line of credit a much higher interest rate than your mortgage?
Those Lump Sums should be going into home improvement, probably?
We haven’t borrowed the money yet. Once we do borrow it, we’ll only borrow what is necessary and kill that credit first (before mortgage debt) since that debt will be higher than our mortgage. I suspect the fall update on our goals will state that – kill high interest debt first. We’ve always done that.
Looks like good progress, Mark. Im sure the extra money going into mortgage will help you out over the long run. We are new homeowners (been here just over a year) and have been paying down faster than we need to. Also great to hear that you are maxing out your TFSAs…we are a little behind on that – hoping to catch up.
cheers
R2R
Thanks R2R. It sucks borrowing money for our home improvements but I think it’s our only choice.