Welcome to my second financial goals update for 2016.
I’ve always liked this napkin-drawing from Carl Richards because it’s very true.
All plans in life are basically a set of assumptions. This makes planning in our lives important for two key reasons – you set expectations for what you think might happen and you have a baseline to work against when those expectations don’t happen.
My wife and I feel goal setting and monitoring our goals every year are helping us get to where we want to be – financially free.
Let’s recap our goals and see where we’re at as of this month.
- Maximize our Tax Free Savings Accounts (TFSAs)
The TFSA remains a gift to all adult Canadians regardless of their income status. If you don’t know the rules of the TFSA yet please read this post here.
We recently maxed out both of our accounts for 2016 so we’re out of account contribution room. Although it’s not an explicit goal for 2016, we’ve started to save some money for 2017 contributions.
- Make double-up mortgage payments
I continue to say this on my site and it’s worth repeating again: I don’t think there’s an absolute right or wrong way of tackling debt. We’re fans of getting rid of all high-interest debt first. That means we strive to never carry a balance on our credit cards. We have a small car loan on the books for another 6 months but we don’t really worry about it. We figure we’ll always be saving or paying for a car at some point in our lives. We tend to sweat the bigger stuff – our mortgage. Our mortgage debt remains in the six-figures. If we keep after it though we could potentially retire the mortgage by the end of 2020. We continue to make double-up mortgage payments throughout 2016. So far, so good.
- Save $5,000 for a future trip
Investing for our financial future is needed but you gotta live. I don’t mean YOLO (You Only Live Once). Just spending within reason.
Last year my wife and I spent two weeks in Scotland. This year we’re making plans to do some wine touring in British Columbia. This winter, we’re making plans to travel south – I’d like to visit Panama or go back to Costa Rica. We usually save the money for trips in advance, so this is where this goal comes in. We’ve got about $2,000 saved so far and we hope to save more money for trips later this fall.
I’ll keep you posted on our plans.
Thoughts and comments on our saving and investing goals for 2016?
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've surpassed my goal and now investing beyond the 7-figure portfolio to start semi-retirement with. 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.
Most look at future p/e and future price growth when projecting their investment growth. That’s better then not looking at anything but I found it much easier projecting future income based on my current yield and dividend growth. In fact it did worked and continues to be quite accurate.
Thanks cannew. I also believe projecting future income is smart. I’m biased though 🙂
Way to go Mark. I haven’t been to either Costa Rica or Panama but maybe some time we’ll have to consider them. We’ve booked our winter travel (35 days)- Hawaii, California, Vegas, Grand Canyon. The details have yet to be determined.
Panama would be great I think. Maybe more jungle adventures and zip-lining.
Costa Rica has great food.
Never been to Hawaii yet….Vegas is always, well, interesting 🙂
Hi Mark,
I’m working on some goals myself and I’d greatly appreciate your opinion. I’m 25 and living at home and I would consider myself close to being a super saver in that I save over 50% of my take home pay.
I’ve always been retirement saving focused but lately I’ve considered buying a house. My question is what should I save for? I’m concerned that buying in Toronto won’t likely be accomplished by trying to save for both retirement and down payment simultaneously. I recently read about a savings method of focusing primarily on down payment until that’s finished, and then saving for retirement afterwards.
Then again, there’s always renting and ETFs! Thoughts?
Michael
First of all Michael, thanks for reading.
Second, very well done with the savings rate. It sounds like you’re doing things right!
Third, it’s hard (rather impossible) to provide advice (to folks that I don’t know, other reasons, including no professional background, I run a blog, etc.) but I can offer a take as my younger-self.
I’ve always been a fan of doing a few things really well – when it comes to saving and investing. I started my investing journey as a young 20-something living in Toronto. I partied too much I think, but I did save a bit for a future home but I also invested in my RRSP. I did a little bit of both because those were my goals. The early retirement was/is still a goal – so I keep doing it today. I’m also a homeowner now. That comes with many expenses though that renters don’t have – namely home maintenance and property taxes. Don’t underestimate how much those things cost over time.
As for the home downpayment only you can decide if home ownership is a goal of yours. If it is, you might have to prioritize given your point – “…won’t likely be accomplished by trying to save for both retirement and down payment simultaneously.”
If homeownership is very important to you, then you’ll likely need to put every penny into the downpayment. That’s OK, just understand there are tradeoffs and risks with every investment decision. And real estate is a very big investment decision.
My rule of thumb when it comes to big investing decisions is: a) if it doesn’t feel right and b) you have to talk yourself into it then c) (homeownership) it is probably too much risk for you right now.
Good luck!
I didn’t expect to see the word (is it a word yet?) YOLO on your site, but here we are 🙂
Nice work doubling up on mortgage payments, that takes a lot of discipline.
Thanks for the kind words. Yes, some people I know think we’re nuts to focus on our debt. I/we feel good about it anyhow.
Nice progress on the goals! Saving for trips is one of my all time favourite saving goals. I have set up a plan to save quite some money per year to fund ski holidays and future international travel with the family.
If that means working a few years longer, so be it!
We LOVE saving for trips 🙂 Thanks for the kind words. Sounds like you have a good plan in place as well. International travel is fun.
Congrats on doubling up mortgage payments, hopefully the terms allow payments on A weekly basis. My banker complained, partly joking, that they did not make money on my mortgage because I doubled up the weekly payments as well as increasing the payments by 15%, then at the mortgage anniversary I topped up the annual 10% towards principal. Tight budgets, good salary and consistent payments reduced about $37 k annually against the 6-figure mortgage for 4 years. A few years later and I am in financial freedom territory with another month-long get-away in the planning…Costa Rica in February 2017 or Italy in October 2016?
Well, if you have the mortgage terms to do it, and some cash to kill debt, why not?
Well done Carmen.
We’ve been very fortunate to visit Costa Rica and Italy. I’d go to Costa Rica myself and hopefully we will again. We have Panama on our list for the next southern vacation but we’ll see!