2019 Financial Goals – April Update
“I think goals should never be easy, they should force you to work, even if they are uncomfortable at the time.” – Michael Phelps.
Ya, I’m never going to reach the swimming heights that Phelps did, but that doesn’t mean I cannot realize some objectives that are important to me.
Typical financial goals
Many personal finance bloggers typically write about this stuff when it comes their goals:
- Build an emergency fund.
- Save for retirement.
- Get out of debt.
I’ve always found that generic goals lead to generic results.
On the subject of our emergency fund, we were specific in terms of how much to keep. We already have one. Some personal financial folks will argue you should be invested all the time; don’t bother to keep any cash on hand; just use a line of credit for emergencies instead. I would argue an emergency is the absolute wrong time to be borrowing small sums of money. Aren’t you stressed enough in an emergency? Even though we have debt, we’ll keep some cash on the sidelines. Your mileage may vary.
On the subject of saving for semi-retirement, we focus our investing in two accounts:
- maxing out our contributions to our Tax Free Savings Accounts (TFSAs) (first, every January) and then,
- maxing out contributions to our Registered Retirement Savings Plans (RRSPs).
With these objectives in mind, in rinsing and repeating this process over many years of investing, our TFSAs are now out of contribution room. This is one way we’re striving to reach financial independence within the next 10 years, if not sooner.
My RRSP contribution room is reduced every year because I contribute to a workplace pension plan. My RRSP contribution room (<$6,000 at the time of this post) should be maxed out in the next 5-7 months (ideally sooner). My wife’s RRSP account should be maxed out sometime in 2020, potentially by the end of 2019, if we work hard enough/save enough.
When it comes to getting out of debt – we’re working at it – but you should know we prefer to take a balanced approach to saving, investing, paying down debt and living our lives.
We believe this is a better way to budget. Essentially, those TFSA and RRSP contributions above are automated just like our mortgage, insurance, home utility bills, etc. – like bill payments. By automating our investing just like our debt or bill payments, we’re able to spend any money left over to enjoy. So, while we’re focusing on getting out of debt we don’t obsess over it. It will happen with time.
Mind you, if we sold all our non-registered assets, including those in these monthly dividend income updates, we would be debt-free now but I prefer to see that money/income compound over time instead. Do you think that’s a good idea? Thoughts?
2019 Financial Goals Progress
To recap, here are our financial goals and where we are at this April:
- Save for our 2020 TFSAs. This implies we’re going to try and save $12,000 this year – assuming contribution room is $6k per person another year from now. As of this month, we’ve only got $1,200 saved up for future contributions but I suspect we’ll be able to ramp that up later this summer after any expenses for our new condo clear. (We’re currently saving up cash now for lawyer’s fees, moving costs and more for our summer condo possession.)
- Completing the My Own Advisor $5 daily money challenge. Yup, new for this year, we’re saving just $5 every day….but that’s piling up. With these automatic money transfers, we’ve got close to $600 in our travel fund. We’re thinking a 2020 trip to Chile for two weeks would be nice.
- Reduce our mortgage by $20,000 by the end of 2019. By continuing to make our bi-weekly accelerated mortgage payments, and the odd lump sum payment, we believe we’ll make a sizeable dent this year on our mortgage as we move into our condo this summer. So far, so good with our payments.
- Max out my wife’s RRSP. This is an incredibly aggressive goal since I already mentioned above that 2020 is more realistic, but I figure why not stretch some wings. At the time of this post, my wife has more than $20,000 in RRSP contribution room left. We have a very, very long ways to go on this one especially when goals #1-3 above are more important.
That’s our progress. We’ve got some plans. I’ll keep you posted.
What financial goals did you set for yourself in 2019? What do you make of our approach to save, kill debt and have some fun at the same time? Let me know in a comment – I read every one.