2018 Financial Goals – February Update
We’ve come a long ways in recent years, by documenting and following up on our financial goals, but we have more work to do – to reach our two major financial long-term goals:
- Become debt-free before we retire, and
- Own a $1 million investment portfolio for retirement.
Unlike what some bloggers or financial experts suggest, we save and invest, and we pay down debt at the same time. I’ve followed this approach for many years and will continue to do so for these key reasons:
- If you want to take advantage of the magic of compounding interest, it’s important to start saving and investing early and remain invested for many years on end. This way, it’s possible to grow money to a large sum with an initial small investment.
- While time is my best friend when it comes to investing, investing alone is of little consequence if I’m carrying debt for decades on end. That amount of interest will add up over time and hold me back. We recognize the sooner we pay off our debts, the more money we’ll keep for ourselves.
Some folks will suggest you should not invest AT ALL until you pay down all debt. Others have suggested keeping debt long-term is fine as long as you’re paying it down; building assets along the way. We take the middle road. We feel a balancing act of killing debt and saving for our financial future works for us. Your mileage may vary.
In years past I feel like we’ve accomplished a lot using this approach. Our balanced approach of saving and investing for retirement, reducing debt obligations, and then spending some money leftover has taken us to many cool international destinations and provided us with a good lifestyle – but this year is different.
This year, our financial goals are rather simple, focusing on just two:
- maximizing contributions to our TFSAs (for long-term dividend income and growth), and
- killing debt.
How have we done? Pretty good so far (but I’m biased).
In January 2018 we decided to maximize contributions to our Tax Free Savings Accounts (TFSAs). If you don’t already know, there are many great things you can do with your TFSA here! We decided to buy more Canadian dividend paying stocks inside our TFSA last month – including some of the ones I said I would in this post here (utility stocks) and here (bank stocks).
Our TFSAs are now fully maxed out – and that feels great Based on recent calculations, investments inside those accounts now churn out a combined $7,300 in dividend income per year. While nice we don’t dare touch that money. We have long since considered our TFSAs as retirement accounts. Investments within these TFSAs will help cover future retirement spending needs when we’re no longer working and/or when we no longer have a decent job. This is another benefit of saving money now while paying down debt – at least you have some money in the bank if you need it.
So, the good news is – goal #1 accomplished! Goal #2 – far more work to do. Later this year I intend to report back on how we’re doing with the debt load but at least for now we can enjoy a small victory dance for realizing another major money accomplishment.
How are you doing with your financial goals this year? What did you set for yourself or your family?