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.
Mark
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.
Great update. I completely agree with your balanced approach to debt. We are fully funding our TFSA, RRSP, and other savings in addition to paying off our mortgage. It is a little uncomfortable to have debt but in the long run way better to be investing!
Interesting website Laura. I’ve only looked at a few articles (so far) but the ones I’ve read are pretty darn good. I realize they are from a certain perspective (a LOT younger than me) but if I had a child of the appropriate age I’d be encouraging them to look. Next rainy day I’ll look some more (but after I read Cannew’s book which just arrived today).
Thanks Laura – nice to hear from you! Ya, I mean, we could be debt-free now but have no non-registered assets that contribute to this growing income stream:
https://www.myownadvisor.ca/march-2019-dividend-income-update/
We could have more debt but be more leveraged and have my wife’s RRSP maxed out (along with mine that will be maxed out anyhow soon).
It’s all about choices but I think overall my wife and I are doing OK and so it’s great to treat ourselves to an international trip now and then. Life is short!
How are your saving, debt management and other plans coming along? Will check out your site!
Cheers,
Mark
As I look back over the last 40 years I wish that my mortgage wasn’t such an issue in my mind about paying off. I know we all want to be debt free but the money lost by having money stored in bricks and mortar really was a loss. My first mortgage of 330K was paid off in ten years, then those dollars just sat there doing nothing. Yes the house went up a little in value but not much. To think if I wasn’t so hell bent on DEBT FREE (You can’t get hurt debt free) it would be worth somewhere in the 1.5 million dollar range after 30 years. Back in those days, rates were very high thanks to Jimmy Carter and a 13% mortgage was a great deal. But today with low rates at 4% it just doesn’t make sense. Put that money to work and if you can’t get at least 5% return something is wrong. I bet in today world you would do way better.
You raise an interesting experience Michael. Being debt-free while important is not the be-all, end-all, there are opportunity costs you referred to. I guess this is why we have taken a balanced approach (rightly or wrongly) since some saving, some investing, some debt repayments and fun while we have our health is a good way for us (not everyone mind you?) to approach things.
Continued success to you.
Mark, I see your goals, your priorities, and your plan to meet them as very prudent. Continued best wishes with all.
You also have plenty of content on your site over the years that has provided plenty of ideas to help others develop or tweak their own goals and plans. That’s good.
My retirement plan now is simple. Keep my body, mind and finances as healthy as I can and enjoy life with my wife. So far so good.
Thanks for that. I guess at the end of the day, goals are very personal and I certainly wouldn’t expect my goals to be debt-free in a few years nor have a certain portfolio value to be unequivocally shared by all.
I like your goals – I intend to continue to work on my body, mind and finances more too!
Good progress, making out TFSA and RRSP is a ALWAYS great idea. 🙂
I agree 🙂
One question- how come you don’t move some non registered investments into your TFSA or RRSP as a transfer in kind? Are you trying to avoid the capital gain? I do this myself sometimes 🙂
Exactly…I’ll have capital gains to deal with and by working full-time, decent job, don’t want to pay more taxes than necessary. I might consider it for 2020 TFSA room though depending upon market prices. Do a transfer in-kind.
Other than generic issues, goals and priorities are most often case specific. From what I know, your goals Mark seem to be reasonable for what you wish to accomplish.
Thanks for the support Lloyd!
Good progress, Mark.
I consider our heloc can be used as emergency fund so there is no need for other emergency fund. Out of debt, check. Save for retirement, in progress.
Thanks May. Once our debt is gone, the party will REALLY start 🙂
Mark:Certainly your on track and your path is clear. For others they need to look at your three goals and see if its in the right order.
1. Build an emergency fund.
2. Save for retirement.
3. Get out of debt.
Personally I think they are reversed for many. With 168% of their income owed in debt the other two should be ignored until they get the debt managed. It also means a real change in their attitude towards spending, how they see life and start being realistic.
For those who have their debt under control, the Emergency fund should be looked at individually. Not everyone need the same coverage or security. For some it might just mean being able to get by or without for a period of time, others might feel insurance is important, while some might feel they need $10k, $20k or more stashed away.
It’s #2 that too often gets overlooked. We didn’t make it a priority because I never really felt I was going to retire, at least I didn’t have a specific time where I thought I’d retire.
But now I know we should have taken it more seriously, even though we achieved financial security. I now preach it’s importance to anyone who cares to listen, even suggesting a path to follow.
Fair enough Cannew with the order, an interesting observation since the order really depends on the risk tolerance of the person and the choices they make. For example, someone that has a huge student loan should focus on debt repayments vs. emergency fund vs. saving for retirement.
On the other hand, a 50-something investor that has a small mortgage, a modest emergency fund but no savings at all for retirement better get after the latter in my opinion!
I know our balanced approach works for us but it wasn’t always that way. It actually took us many, many years to build up our emergency fund. In fact, I would argue we might be ahead tax-wise if we’d been deb-free as well. Choices, choices, choices in life. Never easy to make the best ones but the ones that are the best at the time.
Thanks for your detailed comment.