2019 Financial Goals – July Update

2019 Financial Goals – July Update

“The budget is not just a collection of numbers, but an expression of our values and aspirations.” – Jack Lew, American Public Servant.

Oh for sure.

And since our April 2019 goals update, our values have been centered around our new condo and all the big spending that goes with a new home…  It hasn’t been a frugal few months when it comes to our financial goals – read on.

Do you have typical financial goals?

You might recall, I wrote that many personal finance bloggers among others typically write about their goals in this much detail:

1. Build an emergency fund.
2. Save for retirement.
3. Get out of debt.

I believe generic plans lead to generic, underwhelming results.

Instead, you have to have a detailed plan.

For example, on the subject of our emergency fund, we were specific in terms of how much we wanted to keep.

When it comes to saving for our retirement, we focus on investing in two accounts:  maxing out our contributions to our Tax Free Savings Accounts (TFSAs) and then establishing monthly contributions throughout the year for our Registered Retirement Savings Plans (RRSPs) – in hopes of maxing out those accounts.  We know exactly what we contribute to these accounts every month and every year.

Our TFSAs are maxed out of contribution room for 2019 ($12,000 was invested in January 2019).

My RRSP contribution room is reduced every year because I contribute to a workplace defined benefit pension plan.  My 2019 RRSP contribution room (~$6,000) will be maxed out later this year.  My wife’s RRSP contribution room should be maxed out in the coming year or so.

Ultimately, we believe this is a better way to budget.  Essentially, making any savings for investment purposes automatic and spending what is leftover.

…and like I mentioned above…we have been spending…up go the goals in smoke!

2019 Financial Goals Progress

To recap, here are our financial goals:

1. 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.
2. Completing the My Own Advisor $5 daily money challenge. You’ll read about my update below.
3. Reduce our mortgage by $20,000 by the end of 2019.
4. Max out my wife’s RRSP. This is an incredibly aggressive goal beyond the above.

Let’s review where we are year to date:

Save for our 2020 TFSAs.  In April I mentioned we managed to save up $1,200 or just 10% of our eventual goal.  Well, we’re not much further ahead.  As of July, we have $4,800 saved up.  You’ll read more about our impact on this goal below; moving and getting acclimatized in our new place has been very expensive.

Completing the My Own Advisor $5 daily money challenge.  So far, so good since this money challenge has been automated since January and with just $5, I don’t miss the money coming out of the chequing account.  With six months down and six months to go, I’m very confident we’ll be able to save ~ $1,820 this year by saving just $5 per day.

Reduce our mortgage by $20,000 by the end of 2019.  Until our former house closed, we were paying a mortgage to the tune of $820 via bi-weekly accelerated payments.  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.  While this was anticipated to occur, we weren’t really fully prepared to hand over nearly $4,400 in cash recently among other new condo purchases.  There have been new light fixtures to install, new furniture to purchase (since the older, former house furniture did not fit in the condo space).  There have been new window treatments to order, a new BBQ to buy (not essential but we wanted one), and moving costs to cover.  All told, these expenses tally into the thousands.

Although we budgeted a healthy amount to cover all these expenses, it hasn’t been enough.  We’ve unfortunately had to dip into some of the savings set aside for our TFSAs in another 5 months – essentially putting any automatic savings for TFSA investment purposes on hold for now.

This is not where we wanted to be.  We’ve always been so good with our savings and investment goals over the years.  But certainly this year has been different than any other year.  I feel like we’re failing miserably.

Max out my wife’s RRSP.  This was always going to be incredibly aggressive goal beyond the above.  My wife has just a bit more than $20,000 left as part of her RRSP contribution room.  Given where we are with financial goal #1 above – I see little hope in how we can realize this goal this year.  I think 2020 is more realistic.  This goal will have to wait until then…

What now?

With new fixtures, new furniture, new window treatments and more purchased, I just might have the highest credit card statements I’ve ever had in July and August.  That’s not a good thing!

Moving and getting a new place is VERY expensive.  While they may be an asset, condos and houses are a major expense.

To be frank, if we didn’t have the proceeds from the house sale to draw from, for most of these expenses, I would be significantly more stressed.

We’ll be completing the final closing on the condo (and firming up the mortgage documents that go with it as part of a ported mortgage) in the coming month or so.  All told, we’ll have a small six-figure mortgage remaining to become fully debt-free and a home equity line of credit available to us – although we don’t want to use the latter as an automatic teller.

With 5 months to go, we’ve liquidated a good portion of our TFSA savings for 2020 and made little progress on striving to max out my wife’s RRSP completely out of contribution room, although her monthly RRSP contributions continue to occur at least.

We’ve got some work to do on these financial goals.  Stay tuned for a fall update to see how we might be able to recover.

Thoughts?  Will we get back on track this summer?  Do you think we have a shot at getting our TFSA savings in order for 2020?