2019 Financial Goals – December Update

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:

1. 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.
2. 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. 
3. 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.
4. 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!”

Well said.

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.

Happy Holidays,

Mark