2019 Financial Goals – December Update
The end of a decade…
So much has happened. So much to be thankful for too…
A few weeks ago, I shared those sentiments in this post here, my 2010-2019 decade in review.
But 2019 wasn’t all roses. Our downsizing move to the condo, although mostly positive, was not without issues. A broken window remains to be repaired since our pre-delivery inspection in May 2019. Yes, 7 months ago.
There is a crack in our drywall that needs to be repaired (after some drilling and blasting occurred for about a month straight – to make room for another new condo across the street.) The blinds we ordered 5 months ago, have been re-worked a few times over due to poor quality by the manufacturer. While at no cost to us, it’s painful to have no less than four visits to our condo only to return these blinds back to be re-ordered. I often think of the environmental waste associated with poor quality. I’m not sure anyone wins especially our planet…
These issues, while frustrating at times, are just that – issues. There isn’t anything that can’t be fixed eventually. Such is life in a new build. But we are happy we are here…
Since my last financial update
Since our last financial update a few months ago, I knew we needed to put the pedal down in a few areas in order to realize our goals. We did. Here is a recap of our goals for this year and why:
- Save for our 2020 Tax Free Savings Accounts (TFSAs). This implies we’re going to try and save $12,000 this year in after-tax dollars for those contributions that open up on January 1, 2020. Our TFSA contributions for 2019 are already maxed out with some of these favourite stocks of mine. Maxing out our TFSAs (similar to the Roth IRA in the U.S.) will provide some great tax-free income in semi-retirement.
- Completing the My Own Advisor $5 daily money challenge. I made up this money challenge for 2019. I wanted to see what the results might be to help fund future international travel.
- Reduce our mortgage by $20,000 by the end of 2019. Why? Because debt is our anchor to starting any part-time work right now in our 40s.
- Max out my wife’s RRSP. Why? My RRSP is pretty much out of contribution room. I only have $1,500 to contribute to max out contributions to this account again this year. Those contributions are already accounted for. My wife has ~ 20,000 in RRSP contribution room left. Earlier this year, we wanted nothing more than to max out this account as well.
Where are we at?
1. Save for our 2020 TFSAs. In April I mentioned we managed to save up $1,200 or just 10% of our eventual goal. As of July, we had $4,800 saved up. At the start of October, we saved up $6,900. As of this month, we have $11,300 saved. With another paycheck to go before the end of 2019, I’m now VERY confident we’ll reach this goal and be ready to make contributions in a few weeks or sooner.
This is a good time to remind you that you really, really should consider using your TFSA beyond a savings account. My TFSA alone now churns out almost $5,000 per year in tax-free income. Your account can too!
There are many great things you can do with your Tax Free Savings Account here.
I’m sure I’ll write about what we intend to invest in, within the TFSAs, in the coming weeks. My early thinking on this is to increase my exposure to both Canadian utility stocks (like Emera (EMA) and Capital Power (CPX)) and some Real Estate Investment Trusts (REITs). We already own enough Canadian banking, pipeline, and telco stocks. Thoughts folks?
2. Completing the My Own Advisor $5 daily money challenge. This goal was a layup since all I had to do was to automate my savings – which I did. I included this money challenge because I wanted to show you how easy it was for us (and you too?) to increase your savings but automating it. With just $5 transferred each day, or rather, $35 per week automated to savings, we haven’t missed the money at all. This simple savings hack put $1,820 into our savings account this year.
3. Reduce our mortgage by $20,000 by the end of 2019. Good try! We bombed at this one. When we took possession of our new condo in mid-June, it was not registered in our name. That means upon time of possession, we were essentially renting our unit from the condo builder as part of an interim close. Our “rent” payment for July and August (to cover the condo builder’s borrowing costs, to cover our condo fees until the condo is registered in our name) was ~ $2,150 until the condo formally closed in late-August. While this was anticipated to occur, we weren’t really fully prepared to hand over nearly $4,400 in cash, quickly, among higher than anticipated new condo purchases. Lesson learned.
On top of rent, we had new furniture to buy for our new place (since the older, former house furniture did not fit in the condo space). We needed new window treatments; still a work in progress. All this to say, we didn’t reduce our mortgage principal to our goal. However, we did keep our bi-weekly accelerated mortgage payments intact throughout 2019. That approach helps us reduce the mortgage interest we’re currently paying, as an incremental benefit.
At the time of this post, I don’t mind sharing we have just over $134,000 in mortgage debt. After that debt is cleared in the coming years, hopefully, the debt dragon is slayed for good.
4. Max out my wife’s RRSP. This was always going to be incredibly aggressive goal beyond the above. After the 2018 tax year, we received notice that my wife had more than $20,000 left as part of her RRSP contribution room. While we strive to max out contributions to our TFSAs every year, first, and make RRSP contributions a priority thereafter – we did set up monthly contributions to my wife’s RRSP that made a significant dent in her available contribution room.
As of this month, we contributed close to $15,000 to my wife’s RRSP as part of this tax season. While this amount didn’t reach our 2019 goal, I think it was a significant step forward. Besides, we have early 2020 to make RRSP contributions to the 2019 tax year.
Goals in perspective
I had an interesting, worthwhile comment on my site recently that I thought I would share:
“It is very brave of you to post your annual financial goals and report back on progress; brave, but also wise, telling someone about your goals adds a whole new level of accountability! Documenting your progress is not only valuable to you but also your readers … they get to watch your progress and see that even you have some challenges along the way, as we all do. It is very important to recognize that straying from a goal is not failure so long as you recognize the adjustment necessary and make the adjustment. Few people, if anyone, travels to financial freedom in a straight line!”
I’ve always considered goals not as an ultimate end-state but rather at the back end of a lengthy improvement process. Goals are therefore the by-product of a journey of continual adjustments. Realizing any goals, financial or otherwise, allow us to be reflective and be thankful for what we have.
I look forward to sharing my 2020 financial goals with you soon.
nice work Mark
seems 2019 was a fantastic year for you. The builder stuff would be frustrating but as you mentioned it’s something that can be fixed.
a 134k mortgage? I’d love that, nice work. We have been knocking ours down employing the bi weekly payments as well. I do debate if I would refinance at renewal and pull some more equity out to max these tfsas at current interest rates though. See what happens then I guess.
I’m utility heavy in the portfolio but that recent pullback in bip has me thinking. Hopefully we continue to see the utility and reits go lower as people become bullish again.
Anyways as always great work, keep it up
look forward to following along in 2020 as well.
Good to hear from you Rob. Yes, the builder stuff is frustrating but there isn’t anything I can really do to make it better…so I have to focus on that and try not to dwell. Won’t help me anyhow.
Yes, mortgage is going slowly lower with our bi-weekly accelerated payments and it will be interesting to see what we do in another year or so. I suspect we’ll have a smallish mortgage to renew – hopefully < $100k. Might consider an open mortgage or a 3 or 5-year variable closed and just pick away at it so I can continue to max out TFSAs every year. That's a major priority for us. I will have my $12k ready to go next week!! Very exciting. Thanks for the kind words about the journey and looks like you're doing well yourself. Great on you to max out your RESP for 2019! Best wishes for 2020 and stay in touch often. Mark
I have no problem to max out TFSA contribution every January. My goal will be investing that money asap. As I didn’t invest the $6K from 2019 yet, I am considering to buy CNR with the $12K. Anything in your mind to buy in TFSA, Mark?
Regarding reducing mortgage and max out your wife’s rrsp, have you considered max out rrsp first? In long run, maybe maxing out rrsp will generate a better return considering interest rate is still pretty low right now?
I have my eye on more EMA and some REITs for 2020 TFSA. I just calculated my REITs and they make up only 7.1% of my portfolio. Would like closer to 10-15% eventually for steady income in semi-retirement. Potentially CAR.UN for TFSA. SMU.UN as well. Not sure yet 🙂
Never considered maxing out my RRSP first because my RRSP room is < $10k per year and with my pre-authorized monthly contributions, it's always maxed out every year. I also have a pension at work that reduces my RRSP contribution potential. A good problem to have! Anything you have in mind for 2020 TFSA? Mark
I am considering CNR for growth and CM for income for TFSA. I want to deploy the money asap this time. Last year I wanted to buy NA but was scared, the money stayed in money market till now, very big mistake.
Did you see this?
May help your thinking a bit May – lots of decent choices in the As and Bs!
Thanks a lot. Good to see CM is the top one in that list. I guess they don’t consider CNR due to its low yield. I don’t mind low yield as I am not retired yet. I might switch to higher yield stocks once I retired.
Possibly not. CNR. On my list for more purchases for sure!
I hope to have my yield in the 3-4% range for semi-retirement in 5 years. Working on building that income portfolio now.
Maximizing your TFSA in January is great Mark as is the income it is producing.
Hope 2020 will be a good year for you as well as all your followers.
Me too! Got $12k ready to go in another week cannew!
Best wishes to you as well and we’ll have you on the site for the next book in 2020.